STAR Academy buyers plan to build, subdivide

Ron Burtz

By Ron Burtz

The new owners of the former State Treatment and Rehabilitation (STAR) Academy south of Custer say they are looking primarily to subdivision and development of the property for residential housing as the way they will recoup their $1.3 million investment in the land.
After three unsuccessful previous tries over several years, the 133 acre STAR Academy property was sold at auction by the state Office of School and Public Lands on Feb. 12. The winning 10th bid entered on behalf of then-unidentified local bidders by Custer realtor Faith Lewis was in the amount of $1,325,000.
When Gov. Kristi Noem signed off on the sale last Wednesday it was revealed the buyers were Mark and Kim Nielsen and Paul and Haylee Vershure, all of Custer. The Nielsens operate Nielsen Enterprises, LLC, a local excavating contractor and Vershures own Alpha Builders which is a residential contracting company.
On Monday morning, the couples discussed their reasons for buying the property and their plans for getting a return on their investment.
“We’re a builder, they’re an excavator,” said Paul in explaining the group’s interest in the property.
He said residential development of the approximately 100 acres of the property which is currently undeveloped will be the primary focus of the new owners. They say they believe the new subdivision will be attractive to potential buyers because of its proximity to town (3.6 miles from Custer city limits), convenient access to Hwy. 385, easily buildable lots in a valley with ponds and beautiful scenery and nearness to the Mickelson Trail which is just across the highway to the west.
“It’s beautiful land back there,” said Haylee. “It backs up to forest service and it’s really some nice property....That was our main interest.”
Paul noted that because over 90 percent of the land in the area is publicly owned there is a shortage of buildable acreages.
“Lots seem to be selling pretty quickly around here,” he observed.
At present the couples are considering breaking the property up into lots of between three and five acres which they say seems to be the size most buyers are looking for. While they don’t yet have a master plan for the development they say it will be a typical rural development built to county specs with regard to roads, utilities and other factors. They say they will consult with local realtors on the plan because ”they know what people want.” Challenges to the process will include cleaning up the property and building the road infrastructure to service the area.
With regard to the existing structures which take up about 25 acres of the land, and several of which are nearly 100 years old, the couples are taking a wait-and-see approach.
“There are some parties that have some ideas,” said Kim. “We haven’t had a chance to have meetings with them yet but we will and we’ll listen to their ideas and see if it’s feasible.”
“If someone had a slam-dunk idea we would entertain it,” added Mark.
Paul acknowledged that part of the problem of trying to find a new use for the existing buildings is the cost of repairs, maintenance and utilities. He said a full-time plant manager would need to be employed just to maintain the water system, the sewage treatment plant and antiquated steam heating system. In addition, an appraisal of the property by Simpson & Associates, Inc. commissioned by the state estimated an annual cost of over $350,000 just to maintain the facility and pay for utilities.
“You’re looking at probably close to a half-million dollars plus per year just to maintain those facilities,” he said. “For somebody to come in and utilize that, it’s gonna take a special person or company to do that.”
Added to those costs would be the expense to repair damage caused by vandals several months ago estimated at $100,000 and repairs needed because of a lack of maintenance for several years. The appraisal estimated it could cost half a million dollars to restore the buildings and that was before the vandalism occurred.
However, Mark remains optimistic that someone might take on that challenge.
“If somebody has that appetite I think it could happen,” he said.
The new owners say one large house on the property, which was the original doctor’s house from the days when it was a tuberculosis hospital, will probably have to be torn down due to damage from a fallen tree. Other homes will probably be razed too because of crumbling foundations.
“As far as the existing infrastructure, I think there are uses out there for some of those buildings,” said Mark, “and some of the buildings are gonna be more of a challenge.”
Paul commented that some of the newer buildings, such as the gymnasium, might have potential “community uses.”
The couples say their interest in the property is fairly recent (within four weeks of the auction date) and was mainly prompted by the state’s lowering the minimum bid to an even $1 million.
“It was kind of a last minute decision in a text message and here we are,” said Paul.
“I think we all just kind of recognized the opportunity and just happened to start chatting about it and decided to take a chance,” added Haylee.
The couples, who have known each other for about two and a half years beginning with working on construction projects together, toured the facilities and grounds of the campus in the weeks leading up to the auction and decided it was a good investment.
“It seemed like an opportunity was knocking and we put our minds together  and decided to go for it,” commented Mark.
When the auction was over, they admit they were surprised at the result, especially knowing some of the other parties who were interested in the property.
Because of the uncertainty of the auction format of the sale, the group had not gone through the steps to form a corporation or even to decide on the name for it but they say they are meeting with an attorney this week to do that.
“So we’ve got a lot to do here,” remarked Kim.
Indeed, the group has laid out an ambitious schedule for itself. Beyond setting up the structure for the business and the closing, which under the terms of the sale is to take place in 60 days, the couples will be getting down to work deciding how they will divvy up the property for home sites in hopes of breaking ground on new homes this spring.
“Our primary focus is subdividing the land and to get that rolling this summer,” said Mark.
Beyond their personal benefit, the couples say they are pleased with the potential of the project to bring good things to the community.
“It will stimulate our local economy and put the real estate back on the tax roles,” said Mark.  “The county will benefit from the taxes and local contractors will hopefully pick up most all of the work. I think all-in-all it’s a win-win for everyone.”
“It’ll be a fun project and will keep a lot of people busy,” added Paul.

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