CUSTER | A Custer man representing a group of local partners submitted the winning $2.34 million bid to buy a state-owned former juvenile detention center Thursday, but a group of legislators who opposed the sale hinted they might try to stop it from being finalized.
Jared Carson was the only one of three registered bidders to raise a bid card Thursday during a public auction at the Custer County Courthouse in Custer. His bid of $2.34 million for the campus of the former State Treatment and Rehabilitation Academy, aka STAR Academy, was the minimum set by state officials on the basis of an appraisal.
While speaking to the media after the auction, Carson described himself as a 37-year-old partner in a real estate firm and a former mayor of Custer. He was there to represent a local partnership, he said, but he declined to identify the other partners.
The partners plan to bring a business to the campus of the former academy, Carson said, and will also invite other businesses to locate there. He spoke generally about the plans and issued a later news release that referred to the project as "SLICe — Sustainable Light Industrial Complex and energy," but he declined to immediately reveal more specific details.
“We are going to, over the next year, turn it into an ecologically minded, clean-air, light industrial project that not only provides an opportunity for us to bring a new technology to South Dakota,” Carson said, “but also to provide a place for economic development for our community, for all of the light industrial projects that are currently hindered by our lack of space in this community.”
Custer, a city of about 2,000 residents, is surrounded by mountainous and forested terrain in a portion of the Black Hills about 40 miles southwest of Rapid City.
The campus of the former Star Academy is about 5 miles south of Custer. It includes 173 acres of land and a collection of buildings totaling 168,880 square feet. The campus was closed by the state government in 2016 following juvenile-justice reforms that resulted in a dwindling number of children at the facility.
An overflow crowd of perhaps 75 people attended Thursday’s auction, which was held in a small room in the courthouse. Some of the attendees opposed the sale of the property. One woman — who wore a sweatshirt emblazoned with the logo of a Rapid City-based group known as Citizens for Liberty — filmed the auction with a smartphone and displayed handmade signs bearing slogans critical of the sale. One sign said “Legalized Piracy — Aaargh!!”
Several legislators who attended the auction hinted at a possible effort to stop the sale when the Legislature convenes next week for its 2018 lawmaking session.
One of those legislators, Sen. Neal Tapio, R-Watertown, said recent juvenile-justice reforms by state government have not worked as intended, and have instead passed the burden of juvenile behavior problems down to local governments and schools. He said a facility such as the STAR Academy is still needed to treat troubled youth.
“There are an incredible number of legislators who think the system is broken,” Tapio said in an interview after the auction. “It’s going to be a matter of talking with them to find out what our next option is.”
Tapio, who has said he plans to seek this year’s Republican nomination to run for U.S. House, was one of the three registered bidders Thursday. Besides Carson, the other registered bidder was Wade Wilkins, of Hot Springs. William Bear Shield, a Rosebud Sioux Tribe member who had publicly expressed interest in forging an intergovernmental partnership to operate an addiction treatment center on the campus, attended the auction but did not register to bid.
Tapio and his fellow concerned lawmakers might face an uphill battle in the Legislature, which is the very body that voted last winter to put the STAR Academy campus up for sale. The final votes in favor of the action were 46-21 in the House of Representatives and 20-15 in the Senate, and the bill received Gov. Dennis Daugaard’s signature. Since then, Daugaard has remained committed to selling the campus, even after a first public auction in October attracted no bids.
Ryan Brunner, state commissioner of school and public lands, oversaw both auctions. He said after Thursday’s auction that Carson’s partnership wants to execute a contract for deed. The proposed terms include payments totaling 15 percent of the purchase price by an as-yet unscheduled closing date (including 1 percent of the purchase price immediately and 10 percent within 30 days). The partners would then make annual payments for 10 years at 4 percent interest, after which a final balloon payment would be due.
The money, by state law, would go into a state trust fund to be invested. Thereafter, the interest and dividends on the money would be paid to the state Department of Corrections, which managed the facility while it was operational.
The sale and terms are subject to approval by Daugaard. That approval could happen by next week, said Daugaard’s Chief of Staff Tony Venhuizen in email correspondence Thursday with the Journal.
“He is excited for the new business development and year-round jobs the purchasers plan to create,” Venhuizen wrote. “As a small-government conservative, he believes it is far better for the state to put surplus property back on the tax rolls.”
Carson said he is confident the deal will get done and the campus will begin undergoing a transformation this spring. He said the purchasing partners hope to turn the closure of the STAR Academy into a positive by bringing businesses to the campus that could employ a total of 100 to 150 people with wages of $15 to $30 per hour.
“We decided it was time to take ownership of our economics and destiny here and capitalize on the state’s decision,” Carson said.
Editor's Note: This story has been changed to reflect a correction. In the original story, the population of the city of Custer was misstated.
A Rapid City casino employee has been arrested after police say he staged two robberies at the business.
Carlos Guerrero, 28, has been charged with two counts of conspiracy to commit grand theft and one count of grand theft.
Guerrero called 911 to report a robbery on Dec. 26 at the Jackpot Casino Too on North Lacrosse Street. Once investigators arrived to interview him, his story began to fall apart, according to a Rapid City police report.
Guerrero told police that two males entered the business around 11:10 p.m. while he was opening the safe, hit him in the back of the head and made off with around $10,000.
But, according to the report, Guerrero didn't have any marks on the back of his head. In an interview at the casino, Senior Officer Marc Cote asked Guerrero if he could take a look at his cellphone, but before he handed it over he pulled it close to his chest and began rapidly typing, the report said.
"What are you doing?" Cote asked. Guerrero responded that there was a photo in the background that he didn't want Cote to see. "He clarified and said 'It's my wife's backside,' " the report said.
Cote took the phone and as he waited for a detective to arrive at the casino, Guerrero asked him what the punishment was for first-degree robbery. He also told Cote that he had been arrested for robbery in Florida.
Police reviewed security camera footage and concluded that the robbery appeared staged. "Carlos opened the safe when the suspects are halfway there," the report said. "The suspects walk into the office and move the chair Carlos was sitting in. Carlos did not react. One of the suspects pushed on Carlos' shoulder and Carlos falls to the ground."
Detective Trevor Tollman wrote in a separate report about the incident that "it almost appeared as if Carlos waited for them to get well into the casino before actually opening the safe."
He added that Guerrero, who is 5 feet 8 inches tall and weights 360 pounds, was easily overtaken by two people who were both much smaller.
Police later searched a van owned by Guerrero's girlfriend that had been purchased the day after the robbery and found 12 $20 bills on the floor board. They believe the money was part of the $12,622 that had been taken from the casino, and that the stolen cash had been used to buy the van.
After further investigation, police determined that Guerrero had also staged a robbery at the same casino on Dec. 7. He was arrested Jan. 3, and authorities have a identified two juveniles who police say conspired with Guerrero to commit the Dec. 26 robbery.
Investigators are still working to identify a juvenile with whom they say Guerrero conspired to commit the Dec. 7 robbery, police spokesman Brendyn Medina said.
Guerrero remains in the Pennington County Jail on a $10,000 bond.
One of Rapid City’s oldest national retail stores is closing later this spring.
Sears Holdings, Chicago-based parent company of Sears and Kmart stores, announced Thursday it had informed employees at 39 Sears locations, including the Rapid City store located at 2200 North Maple Ave., in the Rushmore Mall, that it would be closing in late March or early April.
The company also announced Thursday the closing of 64 Kmart stores, but the Rapid City Kmart in the Northgate Shopping Center was not on the list.
A voicemail message seeking comment left at the Rapid City Sears store was not immediately returned.
However, the company released the following statement on its website in announcing the latest in a series of store closures over the past several months.
“Sears Holdings continues its strategic assessment of the productivity of our Kmart and Sears store base and will continue to right size our store footprint in number and size,” the company said in a statement.
“In the process, as previously announced we will continue to close some unprofitable stores as we transform our business model so that our physical store footprint and our digital capabilities match the needs and preferences of our members."
Sears Holdings spokesman Larry Costello couldn't say how many employees worked at the Rapid City store.
“The majority of these jobs are part-time positions,” he said in an email.
Sears said eligible employees impacted by the closures will receive severance and have the chance to apply for open positions at other Sears or Kmart locations.
Liquidation sales will begin at the affected Sears and Kmart stores as early as Jan. 12, the company said.
Sears, Roebuck & Co. operated a store at 512 Main St. in downtown Rapid City in what is now the Shops at Main Street Square. The Sears name can still be seen in the concrete threshold in front of the entrance of the former store, built in 1947, according to county records.
Sears was one of several downtown stores, including J.C. Penney, that eventually moved to the then-new Rushmore Mall.
Sears has anchored the east wing of the Mall since the late 1970s, but the company has closed hundreds of stores in recent months in the face of changing consumer buying habits, which have seen exponential growth in online shopping at the expense of traditional brick-and-mortar retailers.
Rushmore Mall manager Brandon Boyster said in an email Thursday that the mall is seeking a replacement tenant for Sears.
“As for the announced closing of Sears, retail brands come and go and that has always been the case in the retail industry,” Boyster said. “We plan to re-tenant the space and our leasing team is currently in discussions with potential new tenants.”