South Dakota State Engineer Stacy Watters, left, and Vance McMillan of JE Dunn testify to the Project Prison Reset task force on July 8, 2025, in Sioux Falls. (John Hult/South Dakota Searchlight)
SIOUX FALLS — South Dakota can’t build the prison it needs at the price it wants without sacrificing quality and longevity.
That was the message delivered Tuesday to the Project Prison Reset task force by the state’s construction manager, the state engineer and the consultant hired earlier this year to evaluate the options for addressing prison overcrowding.
The message didn’t take.
Citing the political realities of a skeptical Legislature, the task force voted unanimously to recommend that lawmakers support a men’s prison at a price point of $650 million during a special session whose date has yet to be set.
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That’s $50 million higher than the limit the group set last month. It’s also $75 million less than the experts said the group’s preferred project would cost hours before the vote.
Lt. Gov. Tony Venhuizen, who leads the task force, said the figure is a compromise that moves the state toward a replacement for the 144-year-old penitentiary in Sioux Falls.
“There is no appetite, none, for going above $650 million,” Venhuizen said.
House Speaker Jon Hansen, R-Dell Rapids, said securing a two-thirds majority in both chambers — required for spending bills — will mean convincing lawmakers that the job can be done without cost overruns and supplemental budget requests.
“We’re going to need to know that we can actually do it for $650 million,” Hansen said.
Sioux Falls selected
The group also endorsed two vacant plots of industrial land in northeastern Sioux Falls just off Interstate 229, near Gage Brothers, a precast concrete company. The choice of which was left to legislators.
The task force voted to shoot down options in Mitchell or Worthing early on during its final meeting Tuesday, which took place at the Military Heritage Alliance in Sioux Falls. Other site options were ruled out during earlier meetings, and some communities, including Box Elder, removed themselves from consideration after submitting proposals.
Unlike the residents of Mitchell and Worthing, Joe Bunker of Gage Brothers told the group his company had no qualms with having a prison as a neighbor.
“I just want you to know that we’re not opposed to it,” Bunkers said.
The buildings on the recommended prison campus should be designed to last 100 years, the task force decided, with 1,200 beds for higher security inmates and another 300 for lower-security inmates.
That configuration was one of 14 options presented Tuesday morning from Arrington Watkins, the consulting firm hired to assess the prison system’s space needs.
The price estimate for the northeastern Sioux Falls prison complex is $725 million. That’s $100 million less than a 1,500-bed men’s prison proposed for Lincoln County, whose failure to earn the support of the Legislature back in February spurred the creation of the task force.
The two sites in northeast Sioux Falls selected as potential prison locations.
Multiple sites shot down
Mike Quinn of Arrington Watkins ran the task force through the options Tuesday morning. None came in below $600 million, the price cap the task force adopted previously.
In addition to brushing off Mitchell and Worthing as site options, the group’s final recommendations eliminated options that would have placed buildings in multiple locations. Those included a small prison just north of the penitentiary across a Big Sioux River diversion channel and an additional dormitory-style building in Springfield, current site of Mike Durfee State Prison.
Those options were an outgrowth of questions from task force members about the need for a single high-security facility.
Minnehaha County Sheriff Mike Milstead, a task force member, asked Quinn if any of the multi-building setups would be “the best option for the taxpayer.”
The answer was no. Each prison site, regardless of size, Quinn said, would need to have recreation areas, kitchens and mess halls and other support areas.
“When you build three facilities, you’re building those buildings three times,” Quinn said, adding “it’s never more economical to split it up into smaller units.”
Lieutenant governor suggests cheaper facility in Nebraska is ‘sub-par’
Hansen was one of several task force members to ask about a 1,512-bed Nebraska prison priced at $313 million for inmates at a variety of security levels.
South Dakota State Engineer Stacy Watters said the state of Nebraska has refused to release specifications for that facility, and denied a records request from South Dakota for more details, citing nondisclosure agreements with its contractors.
What the state did learn, Watters said, was that the $313 million price only includes construction, not site preparation or design, and that it doesn’t include the intake area or medical facilities that South Dakota’s proposal does. Nebraska has already spent $130 million on buildings with those services over the past seven years, she said, and plans to use cheaper piping for its plumbing in the new prison project.
The design and materials being used in Nebraska are unclear, but “we had to assume that at that price, there was a reduced level of construction,” said Vance McMillan of JE Dunn, the state’s construction manager at-risk.
Hansen questioned why Nebraska would hold back on sharing its design features for a public project. Venhuizen suggested that Nebraska is building a “sub-par” facility, and “that’s not something they’re really looking to admit.”
Other sites create doubt
McMillan told the group it had done all the due diligence necessary to keep its estimates low, bidding out every piece of the project. A cheaper price would mean building a prison that would need replacing sooner.
Comparisons to Nebraska or other states weren’t “apples to apples,” he said.
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But House Majority Leader Scott Odenbach, R-Spearfish, said lower reported price points in other states have created enough doubt to put a new South Dakota prison in political jeopardy at the prices offered Tuesday.
“I’m sitting here as majority leader trying to figure out how I can sell this to a two-thirds majority of the Legislature not knowing all the answers,” Odenbach said.
The state has $566 million set aside in an incarceration construction fund, a balance built by infusions of COVID-19 relief money and earning interest. About $50 million of that is earmarked for a women’s prison in Rapid City, which is currently under construction.
The fund will grow by $23 million of interest in August, Corrections Department spokesman Michael Winder said Tuesday.
That the state has the money set aside makes the project more palatable, but Rep. Greg Jamison, R-Sioux Falls, said worries about ongoing operational costs and concerns that the state might not be getting the best deal have left some lawmakers unwilling to trust the experts.
“Other states are doing it for less. There’s a shadow of doubt, and we need to rebuild that trust,” Jamison said, to get legislative approval.
Jamison suggested that the group vote for 1,500 beds, cap the price at $600 million, and recommend looking for a new construction manager at-risk, as JE Dunn and Henry Carlson’s single proposal was the only one the state fielded back in 2023.
McMillan, as well as some task force members, bristled at the idea of dispensing with JE Dunn and starting from scratch. McMillan told the task force that every month wasted carries the potential for greater costs.
He urged them to make a decision, and insisted that the team that’s worked on prisons for the state for the past two years could meet whatever design specifications that lawmakers want.
“We would be happy to build you a steel structure that would last you 50 years. That’s a decision that you guys have to make,” McMillan said.
McMillan said it would be “a tall order” to build a 100-year facility for $650 million.
Decision: 100-year prison for $650 million
Judge Jane Wipf Pfeifle, a task force member, said switching gears on a construction manager would ultimately cost taxpayers. She also questioned the wisdom of setting an “arbitrary” cap on costs that could hamstring a new prison’s ability to meet the state’s needs.
Two consultants’ reports since 2022 have pointed to inmate population growth that will outpace the state’s ability to house prisoners without major policy shifts or new construction. The experts, she said, have shown their work to explain their prices and how their designs can address the problem.
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“They’re not saying ‘Gosh, I read in the newspaper that it’s cheaper in Arkansas or Nebraska,’” Wipf Pfeifle said.
Sen. Jamie Smith, D-Sioux Falls, was among the task force members to worry aloud about what the state would lose — including space for things like rehabilitation programming — by placing a cap of $650 million on the project.
Smith said he had little choice but to support the lower-cost compromise figure, but that “there are going to be corners that will have to be cut in order to get to that number, based on everything that you’ve seen today.”
Sen. Jim Mehlhaff, R-Pierre, expressed similar concerns. Based on a question from Mehlhaff, Corrections Secretary Kellie Wasko told the group that after closing up the penitentiary, she could likely fill 1,500 beds with the state’s current prison population.
“We might build a facility that is overcrowded the day we move in,” Mehlhaff said, adding that spending $600 million of saved-up money without solving the problem would be “a poor stewardship of taxpayer money.”
Even so, Mehlhaff said, he recognizes that his fellow lawmakers need to be willing to move forward. Mehlhaff moved that the task force recommend the Legislature to direct the Department of Corrections to “come up with a plan” to build 1,500 beds “in the most efficient way possible,” with 300 beds for lower-security inmates.
Attorney General and task force member Marty Jackley suggested a $650 million price cap as an amendment.
Prison work group peppered with public testimony in first Sioux Falls meeting
That addition was “not necessarily friendly,” the Mehlhaff said, “but if we could move the ball forward, I could accept that.”
Before the final vote, both Venhuizen and Hansen, a 2026 gubernatorial candidate, lauded the result as a win. Venhuizen said the task force had produced a workable compromise. Hansen said the group was able to find a location that, unlike the original Lincoln County proposal, is palatable to neighbors.
When asked if the lower price might force the Legislature to build a facility meant to last less than 100 years, Venhuizen said “I would rather build it smaller” than cheaper.
Compromises will need to be made, he said, but those decisions will need to come from the Legislature.
Hansen said he also wants to see a durable facility. He couldn’t speculate on what kinds of compromises might be necessary, but said there’s no question that a higher price tag is off the table.
“We’ll have to see what these guys bring to the Legislature,” Hansen said of the design team.
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