Third time isn’t a charm

The vast majority of the former State Treatment and Rehabilitation (STAR) Academy campus is still in possession of the state of South Dakota after the most recent attempt to auction the sprawling property last Wednesday failed to receive a bid.

The state held the auction at the Custer County Courthouse and, despite five individuals signing up for bid numbers and seemingly plenty of interest, nobody bid on the bulk of the property, although two chances to do so were offered.

The auction was not without some action, however, as Mike and Sheila Young of Valentine, Neb., purchased a 40-acre parcel offered for purchase either as a part of the entire campus or separately. The couple purchased it separately for the minimum required bid of $320,000.

Don Gustin of Farmer’s National Co. in Rapid City, placed the bid on behalf ofthe Youngs. In an interview after the auction, he said the Youngs don’t have any immediate or specific plans for the property.

“They sold some property and they wanted to invest,” he said. “I thought this might be a good investment.”

Gustin said the Youngs like the property’s proximity to Custer and Hwy. 385, as well the terrain and that it has electricity available.

School and Public Lands Commissioner Ryan Brunner said that piece of the property—40 of the 173 acres in total—was offered separately because it isn’t tied into the main campus’s water and wastewater system, has electricity and has room for a septic system. Other potential separate pieces of land that were looked at for separation had issues such as homes or the water tower spilling onto them.

Brunner said, while it would have been ideal to sell the entire campus, selling 40 acres of the property represents a step forward.

“We were able to reduce the state’s footprint out there,” he said. “I think we got close to finding a buyer to put it back into useful production, but sometimes things don’t work out. But we were able to put some land back on the tax rolls.”

Among those in the audience were representatives of a potential shrimp farming operation, the idea for which was pitched to the county commission by Rapid City realtor Tammy Ackerman of EXIT Realty Black Hills, who also attended.

Brunner said over 20 different groups came to look at the campus prior to the auction and close to 50 tours were given. Those interested included people from nine states. Some who toured the campus noted the sheer volume and size of the buildings, and the subsequent maintenance and heating costs they would require.

“I have seen a lot of variations as to what they think it would cost to remodel the facility,” Brunner said.

He said renovating the campus into a different use other than a boys correctional facility will be a challenge, and some who looked at the campus did not like the idea of it having its own wastewater facility rather than being connected to city utilities.

“It’s like owning your own city,” he said. “It used to have 400 people out there. It’s like buying a town that could house 400 people. That gets to be difficult for some people.”

Roughly 35 people attended the auction, which was started with a welcome from Brunner, who worked with Mike Cornelison, a land agent for School and Public Lands, to explain how the auction would work and how the property would be offered. 

Bidders had three options: buying all 173 acres and 168,880 square feet of buildings for the minimum appraised price of $2 million; purchasing the separate 40-acre plot, which includes a pond, for the minimum bid of $320,000; or purchasing the main campus of 133 acres with the buildings, etc., minus the north 40 acres, for a minimum bid of $1,680,000.

Brunner said all bidders must agree to a cash sale and that no contract for deed would be offered. He added no potential buyers had requested a contract for deed and Gov. Kristi Noem  was against such a deal.

Whoever purchased the property was required to put down 10 percent of the successful bid the day of the sale, with closing 60 to 120 days out. He told buyers if the closing fell through, the 10 percent down would not be returned by the state. Brunner also said the state retains mineral rights on all of the property, per the state constitution.

Once bidding began, the total 173 acres was offered first and received no bids. Bidding for the 40-acre parcel and 133 acres with buildings also received no bids. Following a 25 minute recess for potential buyers to ask questions or talk to people they were representing, a second round of bids was taken, which is when Gustin placed his bid on the 40 acres for the Youngs.

Brunner said his office will put together a list of options for the governor’s office on what to do with the remaining 133 acres and buildings, which includes the main building, administration building, Brady Academy, the gymnasium and eight houses.

Among the options are another auction in 30 days, winterizing the facility and holding another auction at a later date, selling off more parcels of land or demolishing some of the buildings to potentially make the campus more attractive to buyers, which has been done with other state campuses in the past.

“It’s really hard to say,” Brunner said. “Ultimately, it’s up to the governor’s office.”