PIERRE, S.D. (SDBA) — South Dakota lawmakers debated a controversial 30-year state office lease agreement during Thursday’s House session, highlighting tensions between government spending and operational efficiency.
Representative Julie Auch, R-Yankton, challenged the lease for two One-Stop centers in Sioux Falls and Rapid City.
The One Stop centers consolidate state services in one building and replace facilities spread throughout Sioux Falls and Rapid City.
The Sioux Falls location, a 284,000-square-foot building at 1501 S. Highline Drive, saw annual rent increase from $2.06 million to $7.64 million — a 270% jump. The lease rate is $26.92 per square foot, with planned inflationary increases every five years.
A companion Rapid City facility, a 100,000-square-foot building, experienced similar cost escalations with a 177% increase in office expenses.
Representative Jack Kolbeck, R-Sioux Falls, defended the procurement process. The Bureau of Administration conducted a public request for proposal in 2022, receiving multiple vendor responses.
Representative Bethany Soye, R-Sioux Falls, warned about potential legislative power erosion.
The proposed bill would have required legislative approval for leases exceeding 15 years or $20 million. The measure failed, with 31 votes in favor and 37 opposed.
The leases, awarded to Dream Design International — owned by Rapid City developer Hani Shafai — were originally negotiated during former Governor Kristi Noem’s administration. Shafai has denied political influence, though he acknowledges making campaign contributions.
State officials argue the One-Stop centers will improve government services and potentially save $31.6 million over 30 years. The Joint Committee on Appropriations has formed a subcommittee to investigate the projects further.
There is a similar bill pending in the Senate.
The controversy underscores ongoing debates about government spending, transparency, and long-term financial commitments.
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