Sunsets ahead for Vonk and Hollingsworth

Two talented Cabinet members are departing the Daugaard administration in the weeks ahead as the governor prepares to start his second term. Health Secretary Doneen Hollingsworth deserves her reputation as a very nice person who believed in improving public health. She’s been in the post since 1995 when then-Gov. Bill Janklow appointed her. She stayed through Janklow’s fourth term, two terms of Mike Rounds and now the first term of Dennis Daugaard. She retires Dec. 12. Then there’s Game, Fish and Parks Secretary Jeff Vonk, who spent most of his life as a civil servant in the natural-resources field in other places before Rounds appointed him in 2007. His skill set includes the ability to work with/under the person who preceded him as GFP secretary, John Cooper, who was appointed by Rounds to the GFP Commission in 2010. Vonk retires Jan. 8, 2015. It seems no replacements are lined up yet. Said the governor’s new chief of staff Tony Venhuizen today, “The governor hopes to have successors for Vonk and Hollingsworth in place before they retire, but he always prioritizes finding the right person over speed. He’s open to appointing an interim if need be.”

Must have been a great going-away party last Thursday night for Dusty Johnson, whose last day as chief of staff was the next day. Four years ago he gave up a second term on the state Public Utilities Commission, after he had already won it, to work on the Daugaard transition team and then be the chief of staff. Johnson headed home to his family at Mitchell last weekend and a new job in the telecommunications industry.  Venhuizen, who is a son-in-law of the governor, moved up one rung to succeed Johnson. Venhuizen has been director of policy and communication. Also moving up to the governor’s senior team is legal counsel Jim Seward and policy advisor Nathan Sanderson. Others in the top tier are Lt. Gov. Matt Michels, senior advisor Kim Malsam-Rysdon, commissioner of economic development Pat Costello and state finance commissioner Jason Dilges.

Otter Tail wants to recover more from customers

Otter Tail Power wants permission from the state Public Utilities Commission to increase its electricity rates for South Dakota customers because of several transmission projects and additional costs for participating in the mid-continent (MISO) grid. Much of the filing has received confidential treatment from the PUC, but there is enough public information in the company’s petition to get a sense of the effect, including this statement:

“The impact of the change in rates for a residential customer using 750 kWh per month is an increase of 49 cents per month. For a large general service customer using 486 kW and 222,350 kWh, the bill impact of this update is an increase of $72.30 per month.”

The pending increases can be found here on the proposed customer notice and rate impact. The commission will start its discussion of Otter Tail’s request this afternoon. Otter Tail wants to start the new rates March 1, 2015.

Regents lose Randy Morris to cancer

Lung cancer took the life of Randy Morris on Saturday night. Morris, of Spearfish, was the retired long-time director for Black Hills Special Services Cooperative. Since July 2001, he had served on the state Board of Regents, whose members oversee South Dakota’s public universities and two special schools. Then-Gov. Bill Janklow appointed Morris to the board to succeed Dan Cronin of Gettysburg, who had died of cancer. Gov. Dennis Daugaard will appoint a successor to fill the final two years of Morris’ term. Morris learned of his cancer only in the past few months. The illness was at an advanced stage. He went to Phoenix for attempts at treatment. Word spread in October that he was sick, when he wasn’t able to attend the regents’ business meeting at Northern State University in Aberdeen. He was an advocate for Black Hills State University in Spearfish and for holding down tuition and fees for students. Funeral arrangements haven’t been announced.

Bollen answers GOAC’s EB-5 questions

On Sept. 30, the Legislature’s Government Operations and Audit Committee chairman, Sen. Larry Tidemann, sent a list of 75 questions to Joop Bollen regarding operation of the EB-5 immigrant investor program in South Dakota. (The questions are here on the Legislative Research Council’s website.) Bollen was head of the EB-5 operations as a state employee until late 2009 and from then until September 2013 under a state contract. Bollen responded to the questions Monday, Nov. 10, by email. Bollen’s answers are here and also here (one page was left out of the original posting of his answers on the LRC website and appears in the second posting). Legislators received the answers Monday. The document at that time was considered confidential until they could be posted on the LRC website by Tim Flannery, who works for the state Department of Legislative Audit and is the staff person assigned to GOAC.

Bollen’s answers reveal much more information about EB-5 operations and the involvement of Northern State University officials and officials in then-Gov. Mike Rounds’ administration. Bollen states in the answers that he originally wasn’t the owner of SDRC Inc., the private company formed in late 2007 and registered with the South Dakota Secretary of State in January 2008. It’s not clear from his answers who did own SDRC Inc. Bollen says he came to become the owner of SDRC Inc. The private company received a state contract to be state government’s EB-5 administrator in 2009. Bollen by that time was the owner and signed the contract.

The original articles of incorporation for SDRC Inc., signed on Jan. 3, 2008, and filed with the secretary of state on Jan. 10, 2008, carry only the name of Joop Bollen as registered agent and as president. He also signed the paperwork, with his name over the title of president. The secretary of state has removed many of the SDRC documents from its corporations website. Therefore I can’t provide a link to the incorporation filing or to many of the subsequent filings. The most recent filings show Bollen as president. From April through June in 2009, James Park was shown to be registered agent. In June 2009, Bollen’s name reappears on the SDRC Inc. documents.

The ownership, or not, by Bollen is an important point. Until signing the state contract in 2009, Bollen worked at NSU as director for the South Dakota International Business Institute. SDIBI was jointly funded by NSU and the Governor’s Office of Economic Development within the state Department of Tourism and State Development. While at SDIBI, Bollen signed a memorandum of understanding in 2008 for SDRC Inc. to work with SDIBI. Signing for SDRC Inc. was James Park, a lawyer with the Hanul law firm of Los Angeles, California, and Seoul, South Korea. Park, for Hanul, worked with SDIBI on immigrant investor projects. Bollen in his answers to GOAC says the memorandum of understanding wasn’t a contract. Bollen addressed some of the same points in a deposition in a dispute involving SDIBI, Hanul, Park and a recruiting company, Darley International. In the deposition, Bollen explained why SDRC Inc. was formed. It is likely legislators now will look at how the two sets of information from bollen — the GOAC answers and the deposition in the Darley lawsuit — fit together or have inconsistencies.

Bollen’s answers to GOAC reveal some information, such as he was interviewed twice in 2013 by the FBI. There also appears to have been, based on his answers, a steady flow of discussion and information between Bollen and NSU officials and state officials regarding EB-5 activities in 2007 through 2009. Bollen also reveals he recruited Richard Benda to work for SDRC Inc. in late 2010 after it became known Benda wouldn’t be retained as secretary of tourism and state development by the incoming administration of Gov.-elect Dennis Daugaard. Benda signed the 2009 contract with Bollen giving SDRC Inc. the management responsibilities for EB-5. At one point in Bollen’s answers to GOAC the name “Neil” pops up. This would seem to be a reference to Neil Fulton, who was chief of staff at that time for Gov. Rounds. Bollen doesn’t make any references to meetings or correspondence or conversations with Rounds in his GOAC answers. Bollen says in his GOAC answers he didn’t have permission or authorization to sign the 2008 contract / memorandum of understanding on behalf of SDIBI with SDRC Inc. In his deposition in the Darley contract dispute, Bollen said SDIBI didn’t have a contract with Hanul. He also talks in the deposition about why Park signed the 2008 contract / memorandum of understanding on behalf of SDRC Inc. with SDIBI.

GOAC members meet Thursday. The day-long agenda includes two items related to EB-5. One is consideration of Bollen’s answers. (He previously declined an invitation by the committee to testify.) The other is an appearance by Jack Warner, executive director for the state Board of Regents, to talk about the 2008 contract / memorandum of understanding that Bollen signed with SDRC Inc. while Bollen was a NSU employee. Warner was asked to meet with GOAC. He will be one of the highest-ranking officials in state government to actually speak with the committee. Daugaard was willing to do so, but instead the committee asked Daugaard and Rounds for written answers to written questions.

Benda died Oct. 20, 2013, in what was ruled a suicide by a self-inflicted shotgun wound to his abdomen. By that time, state Attorney General Marty Jackley was ready to meet with a grand jury and had prepared an arrest warrant for Benda on theft charges. A state Future Fund grant that eventually made its way to Northern Beef project at Aberdeen was increased by $550,000 in late 2010. Northern Beef diverted $550,000 from another Future Fund grant to an escrow account with SDRC Inc. Benda was hired in January 2011 by SDRC Inc. as a loan monitor for the Northern Beef project. Bollen addresses some of these points in his answers to GOAC. Bollen said Benda’s employment as loan monitor ended in February 2013.

Bollen’s answers to GOAC include a long timeline, including a specific reference to activities of the state attorney general’s investigation. Bollen writes: “October 11, 2013 — Potential grand jurors receive notice of a grand jury proceeding to begin the 28th. The subject of the grand jury was to be potential theft charges against Richard Benda.” Missing from the timeline is any reference to the decision in September 2013 by Pat Costello, the commissioner of economic development for Gov. Daugaard, to terminate the state contract with Bollen and SDRC Inc. The information about Bollen, Benda, SDRC Inc. and the $550,000 became public only after the Governor’s Office of Economic Development had already taken back direct control of the program and stopped engaging in new EB-5 activities in South Dakota and after Benda’s death.

The most important holiday

Today, November 11, our nation honors all who have ever served in the U.S. armed forces. Originally it was Armistice Day, proclaimed in 1919 to mark the one-year anniversary of World War I, by President Woodrow Wilson. Armistice Day was made a federal holiday in 1938. In 1954 Congress approved and President Dwight D. Eisenhower signed the law making it Veterans Day to honor all. For a decade in the late 1960s and much of the 1970s the holiday was moved to the fourth Monday of October, but in 1978 the official date returned to Nov. 11.

Without the sacrifices of our nation’s veterans, dating to before those days in July 1776 when our nation’s independence was declared by our revolutionary congress, we might have only some or perhaps none of our other holidays. We might not have our elections. We might not have our rights. Time after time after time after time, for what’s now some 240 years, men and women defended our people’s thirst to be free and to achieve. We owe our veterans so much. We don’t give them enough. If there is one thing our elected officials and taxpaying citizens ought to be able to agree on, that should be to give our veterans more.

We can start today with our thanks.

One circuit judge shown door by voters

South Dakota voters in most areas didn’t have any competitive contests for circuit judges. There were four races. One featured an incumbent, Ronald Roehr, and a challenger, Robert Spears, competing for a judgeship based in Watertown in the Third Circuit. Spears won, gathering 12,521 votes to 12,238 for Roehr. Spears let voters know that he will be able to serve the full 8-year term, while Roehr would need to retire before then upon reaching age 70. Then-Gov. Walter Dale Miller appointed Roehr in 1994. Roehr was state’s attorney for Grant County 1977-1984. Spears was state’s attorney for Deuel County 1991-1993 and a public defender in Codington County 1996-2011. Spears won Beadle, Brookings, Clark, Hamlin, Hand, Jerauld, Kingsbury, Lake,  Miner, Moody and Sanborn counties. Roehr won Codington, Deuel and Grant counties. At least some of the voters in the counties won by Spears evidently didn’t like the idea of the governor appointing their next circuit judge.

For the three open judgeships, magistrate and former state legislator Joni Cutler with 57.5 percent defeated James Power, while Minnehaha County commissioner John Pekas with 52.7 percent defeated magistrate John Hinrichs seats in Circuit Two (Minnehaha and Lincoln counties); and magistrate Heidi Linngren with 55.8 percent beat Jane Farrell for a seat in the Seventh Circuit.

Farrell won Custer, Fall River and Shannon counties, but Linngren took Pennington County by a decisive margin of more than 5,300 votes.

The retiring judges from the Second Circuit are Stuart Tiede and Peter Lieberman while Thomas Trimble is retiring from the Seventh Circuit.

FOOTNOTE: Story tips sometimes come in odd ways to reporter. This one happened at the movie theater on Saturday night. (Let me also recommend the movie, St. Vincent.)

Turnout topped 70 % in many places

Voter turnout statewide was down somewhat for Tuesday’s elections in South Dakota. The final percentage was 54.17. Some counties have converted to voting centers, where any registered voter in the county can cast a ballot. They replace the still-widespread system of precinct polling places used through much of South Dakota. While looking for some data on another matter, I noticed some precincts where voter turnout exceeded 70 percent. So I went through each county that still used precincts and came up with a list of those that broke the 70 mark. Here they are:

Aurora County — Precinct 2, 74.73 %;

Beadle County — Precinct 15, 73.26 %;

Buffalo County — Precinct 1, 75 %;

Clark County — Precinct 4, 71.05 %; Precinct 6, 70.65 %; Precinct 7, 70.47 %; Precinct 10, 75.20 %;

Codington County — Precinct 0017, 76.42 %;

Corson County — Precinct 13, 73.25 %;

Deuel County — Precinct 1, 72.16%; Precinct 6,73.71 %;

Edmunds County — Precinct 4, 72.53 %;

Faulk County — Precinct 3, 70.59%;

Grant County — Precinct 47, 70.26 %;

Haakon County — Precinct 4, 70.76 %; Precinct 19, 70.24 %;

Hamlin County — Precinct 22, 75.46 %;

Hand County — Precinct 7, 75.17 %; Precinct 9, 71.58 %;

Harding County — Precinct 3, 70 %; Precinct 9, 72.73 %;

Jones County — Precinct 5, 71.24 %;

Lake County — Concord-Badus-Wayne/Ramona precinct, 73.87 %; Lakeview precinct 70.47 %;

Lyman County — Precinct 1, 78.21 %; Precinct 9, 71.95 %;

Marshall County — Precinct A1, 70.19 %;

Meade County — Elm Springs precinct 77.23 %; White Owl precinct 76.60 %; Chalk Point precinct 76.30 %; Fairpoint precinct 82.05 %; Union precinct 79.50 %; Alkali precinct 71.86%;

Pennington County — Precinct CR 81.43 %;Precinct SC 74.76 %;

Perkins County — Precinct 4, 71.26 %; Precinct 7, 82.09 %; Precinct 8, 75.71 %; Precinct 12, 77.98 %;

Stanley County — Precinct 2, 70.37 %;

Tripp County — Hamil precinct 74.77 %;

Walworth County — Precinct 1, 70.44 %;

Ziebach County — Glad Valley precinct 82.93 %.

Among counties that used voting centers, Hughes led the way with turnout of 64.94 %, followed by Yankton at 58.66 %. Brown at 54.10 % was a hair below the statewide average, as was Brookings at 53.40 %. Minnehaha, which doesn’t use voting centers for county-wide elections, came in at 50.20 %.

Bollen faces GOAC interrogation on EB-5

Sen. Larry Tidemann sent a letter on behalf of the Legislature’s Government Operations and Audit Committee to Joop Bollen regarding his activities and the involvement of his company, SDRC Inc., in promoting EB-5 immigrant-investor projects in South Dakota. Tidemann, R-Brookings, is GOAC chairman. You can read the 75-question letter. The matter is on GOAC’s Nov. 13 agenda. I will post a copy of the responses when we get them.

Now it’s BOR’s turn on EB-5

One of the questions reporters have been getting is whether the EB-5 immigrant investor issue will vanish now that the 2014 elections are done in South Dakota. EB-5 remains very much alive, because legislators have to consider various reforms in the 2015 session. That preparation work is under way. For example, the Legislature’s Government Operations and Audit Committee meets Nov. 13 and Jack Warner, the executive director for the state Board of Regents, has been invited to testify about changes made in the regents’ contracting process in the wake of the situation that developed on EB-5 at Northern State University. Joop Bollen, the man at the center of EB-5 activities for South Dakota’s government during the past decade under the Rounds administration, had an office at NSU where he worked on economic development matters. He was jointly funded through the university and the Governor’s Office of Economic Development. He answered largely to GOED and, it increasingly appears, himself. He invented the name South Dakota International Business Institute for his activities at NSU. While there, he created his private company, SDRC Inc., and signed a contract between himself as SDIBI director and his company. He used a lawyer for the Hanul law firm, headquartered in Seoul, South Korea, as the surrogate for SDRC Inc. on the contract. After Hanul and SDIBI were sued by a California company that wanted to recruit EB-5 investors in China and had a contract with Hanul in 2007 and 2008, relations turned chilly at NSU. Bollen testified in the lawsuit this year that he left NSU in 2009 and established a direct contract between SDRC Inc. and the state Department of Tourism and State Development, whose cabinet secretary was Richard Benda. When Benda wasn’t retained by the incoming Daugaard administration at the end of 2010, Benda worked with then-Gov. Mike Rounds to route Future Fund grant money to Northern Beef at Aberdeen, one of the EB-5 projects. Benda also worked with Bollen to get a job with SDRC Inc. monitoring the EB-5 loan activities for Northern Beef. The clinching piece of the deal was $550,000 that was diverted by Northern Beef from a Future Fund grant into an escrow account at SDRC Inc. to pay for the loan-monitoring position. To make Northern Beef’s grant funding whole, records show that two other Future Fund grants intended for Northern Beef were increased by a total of $600,000; only one of those grants, with a $550,000 increase, made it through a quasi-state agency, the South Dakota Development Corporation, to Northern Beef. When Warner testifies next week, GOAC members want his opinions on two proposed pieces of legislation. One would seek to make illegal the act of a state employee arranging in advance any contract or other financial arrangement that would benefit the employee for a full year after terminating state employment. That piece of legislation also would expand the current ban to include any person, including outside state government, who knowingly violates the ban. The second piece of legislation would broaden a current ban against self-interest contracts beyond public officers while they are in office; it would expand to include state employees and would create a new ban that makes the contract void. To read the two proposed pieces of legislation go here and click on the links under agenda item No. 5. Piece by piece, South Dakotans including legislators are learning more and more about the secret EB-5 program.

Highway panel must now make decisions w/Friday update

The Legislature’s interim committee on highway needs and financing began its final round of work today. The panel’s chairman, Sen. Mike Vehle, said 114 different people had testified in the first three days of full committee meetings and six regional hearings. Vehle, R-Mitchell, is the Senate Transportation Committee chairman during the regular legislative session. The interim panel will look this afternoon at possible recommendations and return Friday morning to assemble the final package of proposals for the 2015 session. “Everyone wants good roads,” Vehle said. “It’s just that no one wants to pay for them.”

UPDATE: Vehle’s suggestion is the Legislature set targets for pavement conditions on state highways. He said the targets can be used to determine if state government needs to invest more in its roads and bridges. “The longer you wait to do this, the tougher it gets,” he said. He added that county governments are already in a difficult spot where they can’t raise enough money to stay even or catch up.

SECOND UPDATE: Here are links to pieces of possible legislation that will be discussed by the interim panel: “A” which is a package of revenue increases; and “B-S” which is a set of individual increases. Here is the summary of the amounts raised by each possible increase. Vehle’s presentation to the committee can be seen here.

FRIDAY UPDATE: After four hours of debate and discussion, the committee voted 12-3 early Friday afternoon to approve an omnibus package of tax increases. The package will be presented Monday by Vehle to the Legislature’s Executive Board for final clearance. If the board agrees, the package will be submitted for consideration in the 2015 session of the Legislature. I will post a copy of the full version of the proposal when it becomes available from the Legislative Research Council.