John Hult/South Dakota Searchlight
SIOUX FALLS — State and local leaders broke ground on the costliest state-funded capital project in South Dakota history on Wednesday, with a prediction to bring it in under budget and pledges to double down on rehabilitation efforts for state prison inmates.
Gov. Larry Rhoden, moments before donning a plastic construction-site-grade cowboy hat for a series of ceremonial groundbreaking photos, spoke to an assembled crowd at the Bahnson Avenue site in northeast Sioux Falls. To mark the start of his speech, construction crews raised a massive South Dakota flag, which flapped violently for a few moments before high winds forced it to be lowered.
Rhoden said the 1,500-bed, $650 million men’s prison represents a generational investment in public safety.
“I’ve said before that no governor wants to be remembered for building a prison, but I’m proud of the work we did to get here,” Rhoden said.
Rhoden’s predecessor, former Gov. Kristi Noem, had championed a more expensive option at a different location some 15 miles to the south in rural Lincoln County. That plan met a buzzsaw of community opposition upon site selection in late 2023 and sparked a lawsuit against the state. That opposition helped animate opposition in the state Legislature, which voted down the initial $825 million prison plan in February 2025 — the month after Rhoden took over for Noem, who’d left her post for a job in the Trump administration.
Rhoden convened a Project Prison Reset task force to formulate a new plan to replace the oldest buildings on the campus of the 145-year-old South Dakota State Penitentiary in Sioux Falls. That group sifted through multiple site options across the state — some of which sparked significant community opposition — before landing on the plot chosen in Sioux Falls.
Sioux Falls Mayor Paul TenHaken had pushed to keep the project out of his city, but relented last year and threw his support behind the site on the city’s northeast edge.
“We have honestly become a bit of a NIMBY state,” TenHaken told the Wednesday crowd, a reference to the “not in my backyard” acronym associated with public opposition to construction projects, “and this was a NIMBY project.”
In offering the city’s support for a continued prison presence in Sioux Falls last year, TenHaken pleaded with the prison task force to pledge state support for rehabilitation efforts. A high share of released inmates stay in Sioux Falls, and TenHaken and local law enforcement leaders have frequently publicized the difficulties and dangers associated with misbehaving parolees.
On Wednesday, TenHaken said lawmakers “unfortunately” shot down $2.7 million in rehabilitation funding earlier this year to support programs like Leaders of Tomorrow, which offers training behind the penitentiary walls.
“When I talk with the guys up there,” at the penitentiary, the mayor said, “they talk less about the building — and I know we need the facility — but we talk a lot about the need for programs.”
TenHaken said he was encouraged by what he heard from state Corrections Secretary Nick Lamb, who told the crowd that the new facility will lay the groundwork for a modern, rehabilitative approach to public safety.
The old penitentiary, which predates statehood, was designed for an era when inmates were warehoused, not helped to readjust to society.
Lamb didn’t mention that South Dakota’s repeat offense rates are higher than those of neighboring states, but he and several others in attendance at the groundbreaking took part later Wednesday in the third meeting of a separate task force Rhoden created to address the state’s rehabilitation efforts and how to improve them.
“We have to do better” in South Dakota, Lamb said. “We have to get better at rehabilitation, and this facility will help us do that.”
There were questions last year about how much space the facility might have at a lower price point. The Lincoln County proposal would’ve cost $825 million.
Some of the questions came from Vance McMillan of JE Dunn, whose company is the state’s co-construction manager at-risk with its partner, Henry Carlson Construction.
Last year, McMillan said it would be possible to trim costs and hit the state’s hoped-for $650 million price point, but said doing so might make it difficult for the state to build enough prison to meet its programming and capacity needs.
The construction managers ultimately offered $650 million as a guaranteed maximum price. Some colleagues called him “crazy” for that, McMillan said. But on Wednesday, as he told the crowd he expects to be “putting concrete in the ground” by August, McMillan said he plans to be proven correct.
“We’re on track to really deliver a great project under budget,” McMillan said. “I’m probably a little bit bold making that statement, but that’s my statement. That’s my statement today, and I’m pretty sure the next time we see you, I’m going to back that up.”