Audit: $1 sale of former DOT shop in Vermillion illegal The sale of this shop in Vermillion by the South Dakota Department of Transportation to the South Dakota Bureau of Administration for $1 was an illegal transaction that robbed the state's highway fund of nearly $290,000, according to a routine audit conducted by the state Department of Legislative Audit. by David Lias A routine audit of the South Dakota Department of Transportation (DOT) for the fiscal year ending June 30, 1999 has revealed three improper sales of state property.
Two of the sales occurred in Sioux Falls. The third involves the DOT�s former maintenance shop in Vermillion.
According to the Nov. 3 audit report, conducted by the South Dakota Department of Legislative Audit, the former DOT maintenance shop site located in Vermillion was determined to be excess property.
Its appraised value was $360,000. The DOT conducted a public auction for the property, but no bids at the appraised value were received and the property was not sold.
The DOT received an offer of $165,000 from a private individual, according to the audit report, but the offer was refused because it was less than 80 percent of the appraisal price required by state rules.
The report states that the DOT then sold the shop site to the South Dakota Bureau of Administration (BOA) for $1 and other valuable considerations.
Those considerations were:
? The DOT would be allowed to maintain a sand/salt stockpile on the property in an area designated by the BOA for as long as the BOA owns the property.
? The DOT would have one parking stall within the building to be used for loader storage and maintenance for as long as the BOA owns the property.
The DOT requested and received approval from the Transportation Commission to sell this property to the BOA. The audit report states that since the property was appraised at $360,000, the DOT should have sold it to the BOA for a minimum of 80 percent of the appraised value, or $288,000.
As a result, the highway fund, which can only be used for the construction, maintenance and supervision of state highways as mandated by the South Dakota Constitution, did not receive 80 percent of the appraised value for the maintenance shop site property.
The audit report recommends that state property be sold in accordance with South Dakota codified laws and administrative rules. It also recommends that South Dakota Attorney General Mark Barnett be contacted to help resolve the sale of the Vermillion parcel and the two properties in Sioux Falls.
SD skirts law in Sioux Falls
The sale of the two parcels of land in Sioux Falls to a credit card company and a businessman last year illegally shut the public out of the bidding process, according to the audit.
The audit recommends the state declare the Sioux Falls land sales void, then reclaim the property and resell it, passing the transaction through the city of Sioux Falls with no money exchanged.
One parcel includes 24 acres at the northwest corner of Interstate 229 and Benson Road. The state Department of Transportation sold the land to the Governor�s Office of Economic Development (GOED) for the appraised value of $79,755. The GOED then sold the property to a private individual.
The DOT sold a second parcel of Sioux Falls property to the GOED for $603,000, which was below the appraised value of $639,200. The DOT requested and received approval from the Transportation Commission to sell this property.
The GOED then sold the property to the nonprofit Sioux Falls Development Foundation for $603,000. The land was then purchased by a Sioux Falls businessman.
The GOED did not have statutory authority to purchase or subsequently sell this parcel of land, according the the audit. As a result, this sale may be null and void.
The audit recommends that the state reacquire the land in Sioux Falls and resell it in accordance with state law. That means the state would either have to allow the public to bid on it or would have to sell the land to another political subdivision, such as the city of Sioux Falls, for its appraised value.
No significant corrective action plan is stated in the audit report, however, regarding the Vermillion property.
The report simply states, �The Department of Transportation will ensure that all future property transactions with other state agencies are accomplished in accordance with state statute and administrative rules.�