County receives 6 more months to make VA decision

Star Staff Writer

The Custer County Board of Commissioners will have another six months to decide if the county will accept ownership of the former Miles City veterans hospital from the U.S. Department of Veterans Affairs.

The extension was granted this month by the VA, which plans to dispose of the facility, which includes the former veterans hospital and assorted outbuildings on the 14.5 acre site.

To help guide their decision, the commissioners have a feasability study accepted in November that outlines various options.

If the county declines to accept ownership of the former hospital, which closed about 20 years ago, it would be transferred to the federal General Services Administation (GSA) and auctioned off to the highest bidder. That process could take several years, according to the feasability study. The extension gives the county until June 29 to reach a decision.

Commissioners have said that they don’t want ownership of the building to be a burden on the taxpayers.

“From day one, if the county takes ownership, it needs to float [financially],” County Commissioner Jason Strouf said.

The feasability study, prepared by Stevenson Design of Miles City, includes Option A, which would have the county take over ownership “as-is.”

That option would include giving the four residential buildings on the plot, along with a garage, to Miles Community College (MCC).

MCC has expressed interest in acquiring the structures for student housing, and would pay to attach the buildings to public utilities.

The study in Option A lays out a roadmap for increasing the occupancy of the main hospital complex to 65-70 percent, which would help make the property more attractive to a prospective buyer in three to five years.

Current tenants include the VA, which has a long-term care facility  and a health-services facility in the structure; the Miles City Police Department (which stays rent-free in exchange for providing security), and a variety of non-profit agencies.

The study outlines five different options — take ownership as-is; sell or subdivide/condo; lease the facility to a private entity; vacate, raze, subdivide, and sell; or decline the offer and let GSA dispose of it.

The study makes the case for each option, and any decision will rest on whether the VA commits to keepings its current facilities in the structure and paying rent.

Commissioners said the VA is producing, but has not yet delivered, written confirmation of their desired lease terms and the amount of space they intend to occupy.

Option A has the county being only a temporary owner of the complex.

Strouf said he would be comfortable with the acquisition if “the county goes into the landlord business with the narrow purpose of getting the complex into the hands of a responsible citizen.”

He defined a “responsible citizen” as someone who would not allow the complex to become a burden to local taxpayers. Though nothing is guaranteed, the commissioners said they would be better-suited than the GSA to secure a private owner who has the best interests of the community in mind.

Strouf described an early meeting with GSA representatives where the commissioners were told, “make no mistake, [the GSA] is in the business of selling property.” Strouf explained that since disposal of excess federal assets is the GSA’s mission, the agency would auction the property as quickly as possible without any consideration to what the winning bidder might do with the property.

The former Holy Rosary Hospital that stood on the corner of Leighton Boulevard and North Jordan Avenue in the city serves as a cautionary example of allowing a building to be sold in a public auction. The property was auctioned off and then abandoned by its new owner in the mid 1990s, leaving locals officials to foot the demolition bill. The county commissioners want to avoid that possibility, while protecting taxpayers.

According to the study, the first option is more of a “first step” for the commissioners, if they accept ownership of the building, and plays directly into option B, which is to then sell or subdivide the complex.

After acquiring the complex, the commissioners could then seek to sell it as a whole, or in parts. The study acknowledges that subdividing is not ideal, but would be an option if there wasn’t serious interest about purchasing the unit as a whole.

The third option outlined in the study is to lease the facility to a private entity if a buyer can’t be found. While Option C provides some income while getting the county out of direct property management and shields the county from the liability of unanticipated expenses, it provides no tax revenue to the county and leaves open the possibility that they could receive the property back in worse condition.

In light of option E, which leaves the property to the GSA, the study recommends option D, which is to demolish, and then subdivide and sell the land. This option would give the county control over how and when the buildings are razed. The cost of demolition is also expected to be recovered with the sale of the land.
(Contact Austin Lott at or 406-234-0450.)