Governor’s prison bill addresses some — not all — lawmaker concerns

The northeastern Sioux Falls site selected by Gov. Larry Rhoden’s administration for a new men’s prison. (John Hult/South Dakota Searchlight)

South Dakota Gov. Larry Rhoden’s new draft legislation addresses many of the details of a proposed $650 million, 1,500-bed men’s prison in Sioux Falls, but doesn’t address at least three areas of concern raised by lawmakers ahead of the Sept. 23 special session where they’ll consider the bill.

Those concerns were raised in the seven months since the collapse of an earlier, more expensive rural Lincoln County prison proposition during the regular legislative session:

• The bill calls for competitive bidding on the project’s subcontracts, but would not seek bids for a new construction manager at-risk.
• Neither the legislation nor Rhoden’s recently launched “Frequently Asked Questions” webpage contains a full accounting of millions of dollars already spent on the Lincoln County plan.
• Questions remain about potential one-time construction-related costs and ongoing costs, such as road improvements at the prison site and the operational budget for a newer, larger facility.

Some see need for more bids

Lawmakers raised questions about the first issue during meetings of the state’s Project Prison Reset task force.

The governor convened that group in the aftermath of the February legislative vote that halted a plan to build an $825 million, 1,500-bed prison on a controversial site in rural Lincoln County. 

The task force voted in July to back a plan for a 1,500-bed facility on undeveloped land in northeastern Sioux Falls. Its members also voted to cap the price of that prison at $650 million.

During the group’s final meeting in July, some members asked how many offers the state had when it first asked for a construction manager at-risk for the earlier, Lincoln County proposal. The answer was one — a bid from partners JE Dunn of Kansas City and Henry Carlson Construction of Sioux Falls.

House Speaker Pro Tempore Rep. Karla Lems, R-Canton, told South Dakota Searchlight she still has questions on why the state wouldn’t consider seeking bids for construction managers.

The specter of a Nebraska prison, being built for $313 million near Lincoln, was also an issue raised by the task force. The Rhoden administration, on its FAQ page, says the two facilities are too different for an apples-to-apples comparison.

Lems said Tuesday that lawmakers like her who weren’t on the task force need to know more about that.

“There’s just still so many questions that are swirling, whether it’s the cost, how they’re doing this in Nebraska, how come we only have one bid,” Lems said.

Sunk costs

Sen. Mike Rohl, R-Aberdeen, wasn’t on the task force, either, but said the state clearly needs a replacement for the oldest parts of the 144-year-old state penitentiary in Sioux Falls.

That doesn’t mean he’s satisfied with what he knows just yet. Lawmakers voted to let the Department of Corrections use up to $60 million to prepare the Lincoln County site back in 2024. By the time they voted against further funding for the project in February, about $50 million of that money had been spent or obligated.

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The prison FAQ page says the state was able to get back a share of that money by reusing design elements in its updated, lower-cost Sioux Falls prison design, but the page still says that an accounting of total sunk costs “will be available in early September but will be less than the amount spent at the site.”

Rhoden’s office did not offer an update when asked by South Dakota Searchlight on Thursday.

His administration entered into a purchase agreement with the owners of a plot of land on Benson Road in Sioux Falls, near the Sioux Falls Area Humane Society, for the new prison.

The state would pay $12 million for the land. It would also transfer its Lincoln County land, for which it estimated a $4.5 million agricultural value, to the private landowners who are selling the Sioux Falls site to the state. When the state transferred the Lincoln County land to Department of Corrections control from the Office of School and Public lands back in 2023, it was appraised at around $8 million.

Rohl wants to know why the value changed, why the state didn’t consider putting the land up for purchase by other South Dakotans, and exactly how much cash went into the site the state would hand off in a swap.

“We obviously spent some money on it, and they can’t tell me how much,” Rohl said. “But since we spent money on it, now we’re listing it as worth $4.5 million as part of a trade? There’s something wrong there. I think that’s my biggest holdup at the moment.”

Roads, ongoing costs

During the legislative session, lawmakers pressed corrections officials on the cost to upgrade roads around the Lincoln County site, and to operate the facility once it was built.

The answers put the cost of building higher than the $825 guaranteed maximum price for construction, and became a sticking point prior to that plan’s rejection.

The FAQ page says “more staff will be needed” for the new prison, but that closing parts of the penitentiary will offset some costs.

“The request for this increase will be debated and accomplished through the normal legislative budget process closer to 2029 when the facility would open. We will have more details at that time,” the page says.

Assistant House Majority Leader Marty Overweg, R-New Holland, said this week that questions like that are important. Overweg said he doesn’t see the need to rush into a vote, given that the Legislature will return for its regular session in four months.

“I know we need a new prison. I really like the new location. I just want to make sure that we have a firm price,” Overweg said.

Rhoden spokeswoman Josie Harms told South Dakota Searchlight on Thursday afternoon that lawmakers’ questions “will be answered in the coming days when the full plan is released.”