What's the future of the School for the Deaf property in Sioux Falls?

In the heart of Sioux Falls is a $6.6 million property owned by the state that’s been on and off the market for the last five years.

Part of the South Dakota School for the Deaf property is an underutilized football field and track now mostly only used when it's mowed. The other part is an aging building that houses services meant to help hundreds of deaf and hard of hearing children each year, located in a prime location with a nearby bus route and resources for the homeless half a mile away. 

But for the last year and a half, despite urgency from former Gov. Dennis Daugaard and at least one offer from a church willing to pay more than the property's appraised value, the South Dakota Board of Regents has failed to sign on the dotted line.

“Quite frankly, they don’t have to sell it. They can sit on it,” said Brent Norgaard, Celebrate Community Church's chief operating officer.  “It’s housing several organizations. It’s underutilized, but it’s not killing them. It’s not the end of the world if it doesn’t, but at least from our perspective looking from the outside in, they weren’t as motivated to sell it as we would’ve liked.”

Now the regents may have plans to officially take the School for the Deaf off the market.

After years of trying to sell — and the board denying any progress has stalled out — the regents decided in February to only sell part of the property and remodel the rest, according to board meeting minutes. The decision follows two failed attempts from buyers, and at least one attempt to acquire a different property for SDSD.

It was a decision “best for all parties involved,” according to meeting minutes. But the regents have been mostly mum about the difficulties behind selling the property, and the decision to walk away from the idea has left about the $1.8 million underutilized football field on the table and at least two local church ministries left looking for other options to expand their services.

Planned renovations will better accommodate SDSD's outreach services and the additional tenants in the building, which now includes about 23,000 square feet for the state's Department of Health. The health department is expected to rent the building for at least 10 years, according to regents' meeting minutes. The department moved into the building within the last year. 

More:Governor: If you don't sell School for the Deaf, get it rented out

Five years on the market

The School for the Deaf has been under the regents' since the 1940s, Superintendent Marje Kaiser said. Kaiser's been at the school for nine years, and also serves as superintendent for the state's School for the Blind and Visually Impaired.

The school started to struggle about 12 years ago when it began seeing a decline in the number of students it served on campus and when the school's dorm closed the year prior, she said.

That's when the school became more focused on offering and expanding its outreach services, Kaiser said. Currently, the school's outreach services help more than 570 students each year statewide with 11 outreach consultants total, and that number is expected to increase, she said. 

SDSD also offers a couple mobile audiologists who screens and tests about 17,000 children a year as a partner for public school districts. 

"We're really the kind of group of experts in the state," Kaiser said.

Until the board had decided to renovate the building, the future of where those services would be housed was in limbo, she said. 

The School for the Deaf has been for sale since 2014, but it's been in a holding pattern since September 2017 when a state task force told regents not to sell the property unless someone was willing to pay more than it's appraised value of $6.6 million. 

More:Report: State shouldn't sell School for the Deaf unless buyer pays more than it's worth

Within the last year, the property has had at least two bids from two separate church ministries, almost acquired a new building for the school and was even suggested by a Sioux Falls School District board member in July as an idea for the reconstruction of a nearby 94-year-old middle school.

At the time, the regents' president Kevin Schieffer wasn't able to go into any details about any interest from buyers, and denied the sale of the building had stalled out. 

“The more visibility the story gets, the more interest it generates," Schieffer said in July 2018. "So that's good news."

More:Could School for the Deaf property be used for the new Whittier campus?

Norgaard, with Celebrate, sat down with the Argus Leader last week to shed light on why the congregation had to walk away from buying the property for $6.9 million in December after almost a full year of negotiations. 

The offer would've been $300,000 more than the building's appraised value. 

"Many years ago, we thought that would be a great location," Norgaard said. "We wanted to be in the heart of the city with our mission."

Why didn't Celebrate buy the property?

Celebrate Community Church had planned to buy the property to expand its congregation, and also its outreach services, Norgaard said. 

Initially, the dream,was to have a campus with multiple buildings; buildings that would have served as a place for students to learn and grow, a seminary school, an after-school program and even transitional housing for those in need, he said. 

The property would've been ideal, but then the state started piecemealing parts of it to other buyers, he said. Yet, the main campus and football field were still available, and the church started asking about the property in January 2018, he said. 

As talks continued, the church made two offers. The first was rejected by the regents because it didn't meet what it was appraised for, Norgaard said. The second came as close to signing on the dotted lines as possible with contingencies.

Ultimately, the offer fell through after the state refused to fix issues found during the inspection process. Church officials also realized they would still need to construct a large welcome center, sanctuary and parking lot, Norgaard said.

"It's an older building," Norgaard said. "We found some asbestos. The pool was broken and empty, there was a pump that needed to be replaced and there some structural things that were a problem."

The Board of Regents and realtors did not return multiple requests for comment about the inspections and property sale, and the Argus Leader has filed an open records request for more information about the alleged inspection issues. 

Kaiser denied such issues with the building existed.

"These buildings have been incredibly well-maintained," Kaiser said. "The gym is an older building, but that's been extensively remodeled. ... There was an inspection for asbestos, but nothing that really needed to be abated and if there was, it was minor. That was within this last year."

At one point during the process, Norgaard said he walked through the campus and saw living and dead bats in the building.

Norgaard wouldn't release copies of the inspection reports made to the building, but said the church submitted a 12-point list of its most concerning issues to the regents. 

"They came back and said they weren't going to make any changes," Norgaard said. "They said you have to buy it as is, the way it is, and you'll have to do your own improvements. Honestly, they were saying, 'We've stretched as far as we can go to make this a good deal for us.' But we had stretched as far as we could go to make it work for us."

The church was going to invest not only in buying the property, but also planned to spend another $7 million or $8 million on property improvements, most of which would have been done through donations and fundraising, he said. 

But church leaders knew they weren't going to be able to go more than what was already offered, he said. The property was too much of a risk, and the church had to draw the line somewhere, he said.

"We were disappointed, but we also know they're trying to maximize their property and the values of their properties," he said. "We respected it, and they respected our views. It was a very cordial conversation. It wasn't adversarial or anything, we just couldn't get it done."

What happens next?

Still, little details surround what’s next for the property.

The regents have yet to decide on a budget for renovations, but board meeting minutes state the regents’ are looking at using up to — but not more than —$1.7 million of its reserve funding to finance the changes because of a cash flow issue.

If the renovations cost more than $1.5 million, then the board will look at forming a building committee on the matter.

But that still leaves Celebrate Community Church and one other ministry with questions about what direction to go.

As of Friday, the Sioux Falls Ministry Center was still in negotiations for a second time regarding School for the Deaf property, said Rich Merkouris, King of Glory Church’s senior pastor.

Back in January, he had a strategy for wanting to move the nonprofits in the center onto the School for the Deaf site by buying the property to also expand services and better serve some of the city’s most needy.

That included the possibility of the Boys and Girls Club of the Sioux Empire moving into the building as well, CEO Rebecca Wimmer said.

The center came close to getting approval. An agenda item from Jan. 25 — never voted on by regents — laid out a plan to sell the School for the Deaf building, and then the regents would move into the former TCF Bank Building at 4101 West 38th Street.

However, the ministry center could not pull the necessary items together to make it happen and needed more time, Merkouris said.

“We are back in negotiations right now trying to pull all the different parties together,” Merkouris said Monday. “We hope to know more by the end of this week.”

He wouldn't go into further detail because real estate negotiations are protected under state law.

As of early Friday afternoon, it was still unclear how the Sioux Falls Ministry Center fit into the regents’ new plans for the property, and Merkouris said the center had not signed anything yet.

Celebrate Community Church, on the other hand, will be trying to figure out how to do the same thing planned for the SDSD campus on a smaller scale, Norgaard said. 

"We had a lot of people in favor of us doing this; the mayor for one," Norgaard said. "...We're going to still do that here. It might not be to the same extent, and we might have to do it in different ways, but our vision and purpose didn't change."