Locked in: 30-year, multi-million dollar One Stop leases, state partner under microscope

Deals struck under Noem administration with developer, landlord raise long-term rent costs and alarm among South Dakota lawmakers

The state of South Dakota will spend about $200 million more on office rentals in Sioux Falls and Rapid City over the next three decades under two contracts cut by former Gov. Kristi Noem’s administration with a Black Hills developer with ties to the GOP.

Dealings between the state and Rapid City real estate mogul Hani Shafai have come under scrutiny as more than a dozen state agencies transition staff into a new, multi-story government office center on the eastern edge of Sioux Falls that Shafai’s development company custom-built for the state. The 284,000-square-foot building, dubbed the Sioux Falls One Stop, opened late last year on a 15-acre parcel at 1501 S. Highline Drive.

NEWS: Delbridge daughters bless Sioux Falls' plan to regift Brockhouse animals

The deal inked with Shafai’s Dream Design International in 2023 not only had the Rapid City-based development company tailoring a centralized services building at Dawley Farm Village near 26th Street and Veterans Parkway for the state, it made Shafai the state’s landlord until 2055.

“This is the first time that anyone knows of that a state bureaucrat has signed a lease for a building yet to be built at the same time the lease was signed,” reads an internal legislative memo obtained by The Dakota Scout, referring to the Sioux Falls One Stop as well as a similar state-leased campus in Rapid City that opened in 2022.

That facility — a 100,000-square-foot office building known as the Rapid City One Stop — was the first decades-long lease agreement entered into by the South Dakota Bureau of Human Resources and Administration for a building custom-built for state employees. The developer and landlord: Dream Design International.

And in both cases, Shafai stands to collect tens of millions more from the state than what had been spent piecemealing office space around Rapid City and Sioux Falls for employees of agencies like the Departments of Social Services, Corrections, Education, Health, Public Safety, Revenue and others now working out of the One Stops.

Rapid City developer to construct 'One Stop' government mall in Sioux Falls

Death of former cabinet secretary comes after abuse of power allegations