Members of the South Dakota Legislature:
I am writing today with new information from the federal Veterans Administration that is good news about the State Veterans Home project. Due to this good news, I will be canceling the special session that I had called for June 22.
As you know, I called a special legislative session after bids for the Veterans Home project came in significantly higher than was estimated. I also accepted the low bid for the project, contingent on approval from the State Legislature to appropriate the additional funds.
As the materials sent to you on May 31 explained, we believed that delaying construction of the project into next year would lead to the State losing a $23.6 million grant from the federal Veterans Administration, as well as the loss of eligibility for Medicaid. A special session was the only way to appropriate the necessary funds without delaying the project.
That is no longer the case. We have been working with federal VA officials to find a way around this deadline. Yesterday, we received word that the grant can be extended so that we have until February 2014, rather than June 2013, to finalize construction plans.
We can also continue to be eligible for Medicaid, so long as work on a new facility is ongoing. This additional time will allow us to revisit the current plans, seek a scaled-back redesign, and rebid the entire project.
I have spent the last three weeks closely scrutinizing this project, with the hope that cost savings could be found to reduce the cost of the project. When I wrote to you on May 22, I said that I didn't believe that we could cut the cost of this project by $10 million and still build the facility that our veterans need. I now believe that additional cost savings are possible.
Now that we have received additional time, I am ordering that the entire project be reevaluated, redesigned, and rebid. We owe it to the taxpayers to be certain that we are building a durable, quality, and affordable facility. Scull Construction has agreed to set aside our contingent acceptance of the bid, and I very much appreciate that.
I am hopeful that design changes could lead to a total cost that we can all feel more comfortable with, although I would caution you that construction costs in the Black Hills do seem to be higher than many regions of the country. There will be additional information over the next several months, and a new plan will be presented to the 2014 Legislature.
Finally, I want to thank you all for the patience you have shown as we have worked through this difficult process. I know that many legislators had to change plans to attend the June 22 special session, and I truly appreciate that. We all want to honor our veterans with a home that will meet their needs for decades to come, even as we maintain our responsibility to the taxpayers we serve.