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.
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“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.