STAR Academy auction next week

Is the third time the charm?

The former State Treatment and Rehabilitation (STAR) Academy will hit the auction block again a week from today and state officials are undoubtedly hopeful this year’s auction turns out better than the last time the campus was sold to the highest bidder.

The state will sell the former youth corrections center Sept. 16 at 11 a.m. for a minimum bid of $2 million. The property is 173 acres and includes seven homes, part of what was an estimated 170,000 square feet of building space. However, that estimate included four homes that have since been removed from the campus.

The auction will once again take place at the Custer County Courthouse in the commissioner’s room, unless COVID-19 numbers are such that the auction will be held outside the courthouse in the parking lot.

The sale will follow the repossession of the facility last year from the ill-fated SLIC-e, which went belly up after SLIC-e Holdings bounced a $116,588 check to the state for an annual payment that was more than four months overdue. When the check bounced, the state repossessed the facility, which SLIC-e holdings,  operated by Kevin Teasley of Custer, bought at auction and was purchasing on a contract for deed.

State officials said this time around the state wants a cash sale, although ultimately Gov. Kristi Noem will make the final call on whether financing will be allowed.

When the STAR facility didn’t have a bidder the first time it was auctioned, the state put it back up for bid with the stipulation a potential buyer could purchase it via contract for deed, which is what SLIC-e ended up attempting.

“We’re not going down that road,” said state school and public lands commissioner Ryan Brunner.

Brunner said any purchaser this year will need to put 10 percent down after successfully bidding and pay the balance within 60 days.

He said potential buyers could purchase the property whole, or it could be split into the main campus and buildings, which would be about 132 acres, and a 40-acre parcel, which would be sold at a minimum of $320,000, as it was appraised at $8,000 per acre. If the land is split, the state still has to receive a combined $2 million from sales: $320,000 for the 40 acres minimum and $1,680,000 for the 133 acres and buildings.

However, Brunner said there is a possible scenario where, if no one bids on the entire campus or the 133 acre parcel at $1,680,000, the state could still sell an individual 40-acre parcel for a minimum of $320,000 even if no one bids on the buildings. That is based on the appraisal of $8,000 an acre.

One well on the campus pumps 75 gallons per minute and another well around a half-mile away that STAR Academy utilizes that pumps 50 gallons per minute. That well crosses Forest Service property, for which the state  has an easement. Brunner said the state intends to transfer that easement to whomever purchases the campus, but the Forest Service will have to be involved in that process. The on-site well will automatically be a part of the sale. The wastewater treatment plant on the campus can handle 50 gallons per minute.

Brunner said the campus has attracted a lot of interest this time and multiple private tours have been given to interested parties. One party of investors already declared its interest in purchasing the property by having a realtor present plans for the campus should it be the successful bidder. That plan includes a shrimp farm, biochar and a technical/trade school.

“We have a series of prospects we are working with,” Brunner said. “At the end of the day you don’t know who is going to show up to bid until we get to the auction.”

Brunner said some who tour the campus comment just how large it is and how large of a plan will be needed to make the campus a viable commercial location.

“We understand that. There’s a lot of valuable Black Hills land there working to its advantage,” he said. “We’re certainly hoping we have a positive result. With the amount of interest we have had, a group will be able to get together and put it to good economic use for the area, bring economic development and create jobs.”

Should the property fail to sell, Brunner it would be up to Noem, her staff and the Department of Corrections as to what steps to take next. It could be parceled differently, another auction could be held or myriad other options, but Brunner said it’s hard to predict what would happen next.

Brunner is confident the right buyers will come forward to buy the property and turn it into a prosperous area for the community.

“I’m optimistic and hopeful we will be able to find someone to do that,” he said.