Rapid City is moving forward with the purchase of a portion of the former National American University campus where a proposed downtown homeless resource center will be based.
Under the resolution that passed Wednesday out of the Legal and Finance Committee, $3.9 million in Vision funds would go toward the $5 million purchase price of the Kansas City Street property, with Rapid City Collective Impact making up the difference. The organization's OneHeart campus, which plans to provide the homeless with counseling and transitional housing, will be leasing buildings at 121 and 217 Kansas City Street, 124, 216, and 218 Quincy Street, and 716 2nd Street for an annual rent of $1.
Council members Laura Armstrong, Steve Laurenti, Jason Salamun and Chad Lewis approved the resolution by a unanimous vote, though Lewis expressed a concern that the city could be on the hook for future maintenance costs.
"I'm not against the project by any means. I'm just trying to figure out the best way to do this with limited liability to the city, and I think there's others ways to protect our investment without actually owning it," Lewis said during the meeting.
The resolution will come before the full city council on Monday.
Because of the way the agreement is written, City Attorney Joel Landeen said that OneHeart will be responsible for the cost of maintenance and upkeep. In addition to acting as estate manager and landlord for participating organizations, OneHeart will also collect the income the property generates.
According to a copy of the lease, OneHeart's initial term will expire in 2026 with subsequent terms renewing automatically and lasting for five years each.
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Collective Impact Project Manager Charity Doyle said on Wednesday that OneHeart will assume lease agreements with current tenants until they expire. Current lessees include the South Dakota State Historical Society, whose archaeological research center is based 217 Kansas City Street, and a mix of residential renters at an apartment tower at 121 Kansas City Street.
Hani Shafai, whose development firm currently owns the property, said in a phone call Wednesday said that several new apartment complexes are being built across town that could accommodate anyone displaced from the latter.
Another $1.1 million in Vision funds will be used to reimburse Collective Impact for its share of the building purchase next year. The group is putting up $4 million of its own money for property renovations, which Doyle said will begin next summer.
One of 14 community-proposed projects chosen to receive funding from the city's Vision program this year, the campus in March received that $1.1 million — which had originally been earmarked for the renovation of Floyd Fitzgerald Stadium — in addition to the $3.9 million it had originally been awarded. The city council approved the transfer in a split vote to assist the group in its purchase of the former NAU properties.
Doyle said Wednesday that an assessment from several years ago indicated that the property was worth around $10 million and that it is likely worth more today. The property was purchased by Shafai in 2013 for $4.75 million and in 2018 generated about $80,000 in property tax revenue.
Doyle said the campus has identified funding sources of its own that will sufficiently carry it through the next several years of operation.