South Dakota Republican Gov. Larry Rhoden speaks during a press conference Feb. 6, 2025, at the Capitol in Pierre with Lt. Gov. Tony Venhuizen. (Seth Tupper/South Dakota Searchlight)
South Dakota Gov. Larry Rhoden announced a potential $17 million deal Friday to acquire land for a new men’s prison in northeast Sioux Falls and trade away state-owned land 15 miles south of the city that was formerly chosen as a prison site.
The plan is subject to approval by the Legislature, which is scheduled to convene for a special session Sept. 23.
“South Dakota needs a new prison to keep our people safe, and we are moving forward with delivering a proposal that prioritizes safety and conservative fiscal stewardship,” Rhoden said in a news release.
If approved, the transaction could resolve a controversy over plans to replace the oldest parts of the antiquated and crowded state penitentiary in Sioux Falls.
The controversy dates to 2023 when the administration of then-Gov. Kristi Noem announced the selection of state-owned land in rural Lincoln County, sparking opposition and a lawsuit from neighboring landowners. The fight culminated last winter in the Legislature’s rejection of funding for a prison project at the Lincoln County site. That spurred the new governor, Rhoden, to appoint a Project Prison Reset task force.
The task force, led by Lt. Gov. Tony Venhuizen, worked through the spring and summer considering prison plans and locations, ultimately endorsing a $650 million budget — including land acquisition — for a 1,500-bed facility on one of two large parcels of undeveloped land in the same area of northeast Sioux Falls. The area is bordered by Interstate 229, Benson Road and the Big Sioux River. Neither of the two site finalists encountered opposition similar to the backlash against the rural Lincoln County location.
Rhoden’s chosen site is along Benson Road, south of the Sioux Falls Area Humane Society and a National Guard facility, and north of Gage Brothers Concrete Products. Great Bear Ski Valley is across the Big Sioux River to the southeast. Venhuizen said in a Friday interview that the site is “a little bit better deal” and “a more regularly shaped parcel” that will better accommodate the state’s plans.
The state has a purchase agreement with TCB LLC (which is registered to Patty Nohr of Sioux Falls) and Lynnette Sue Unzelman. Under the terms of the agreement, the state would pay TCB $11.56 million for its 137 acres of Sioux Falls land, including a $1 million payment to the Myrl and Lois Unzelman Family Fund at the Sioux Falls Area Community Foundation. For the remaining 11 acres of land, the state would pay $937,858 to Lynnette Sue Unzelman.
In addition, the state would transfer ownership of its 320 acres in rural Lincoln County — worth an estimated $4.5 million — to TCB, raising the total value of the deal to $17 million.
A fact sheet published by the Rhoden administration says the owner of land neighboring the Sioux Falls site has indicated a willingness to sell an additional 28.98 acres. Venhuizen said the state hasn’t decided whether to make an offer for that property.
“As the design progresses, we’ll ascertain whether that’s necessary or not,” he said.
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When the state was planning to build on the rural Lincoln County site, the state was not required to follow county zoning, which was a point of contention in a lawsuit filed by neighboring landowners. Rhoden’s news release said the Lincoln County land will be privately owned and subject to county zoning if his plan is approved.
Prior to the Legislature’s rejection of the Lincoln County site, lawmakers had been budgeting money for several years in anticipation of a prison construction project. Rhoden anticipates having enough state funds to build the project without taking on any debt. The cost of land acquisition is $10 million less than the task force had conservatively estimated, Venhuizen added.
Questions remain, however, about how much of the money spent by the state on plans, site work and infrastructure agreements at the Lincoln County site is recoverable or transferable to the Sioux Falls location. The total amount of those expenditures is more than $50 million.
Venhuizen said the state will “put out a more specific breakdown about that in the next couple of weeks.”
“Quite a bit of it is transferable,” he said.
EDITOR’S NOTE: This story has been updated since its original publication with additional details from the purchase agreement.