Historic developer offers plan for Fergus Falls mental hospital

The faded fortress of Fergus Falls — a former mental hospital that dates back to the early 20th century — suddenly has a besotted suitor.

After years of staring down seemingly imminent demolition, plans are in the works to develop the Fergus Falls Regional Treatment Center into a $41 million multiuse complex boasting a 120-room luxury hotel, 60 apartments, restaurants and a coffee shop.

The Fergus Falls City Council last week voted to enter into a letter of intent with an entity associated with Historic Properties Inc., a Georgia-based developer that specializes in renovating historic structures.

"Everyone's pretty optimistic, so far," said Mark Sievert, Fergus Falls' city administrator.

The massive, city-owned facility — also known as the "Kirkbride," for the physician who pioneered its unusual architecture — was shuttered by the state in 2009, as care for the mentally ill moved to a community-based model. Since then, city officials have struggled to attract developers to repurpose the behemoth, which housed up to 2,000 patients during the Great Depression. At one point, the structure ended up on Craigslist.

Faced with a dearth of interest, some city officials contemplated tearing it down, much to the dismay of a dedicated preservation group called Friends of the Kirkbride. Last year, the city hired Twin Cities-based Colliers International to market the property, an effort that yielded national press coverage on the facility's tenuous fate.

Enter Ray Willey, chief executive of Historic Properties, who saw a photo of the Kirkbride while flipping through a historic preservation magazine. "It looked like a European castle, it was stunning," he said. "I couldn't imagine it being demolished."

Willey and his partners have formed the group Historic Kirkbride LLC, which was chosen over a proposal for a wellness campus submitted by Twin Cities businessman Terrence Scholz of Colonnade Design Group.

Now, Willey's group will work with city officials on developing a full-fledged development agreement. If all goes accordingly, renovations to the Kirkbride could be completed by late 2015 at the earliest.

The city would essentially sell the property for $1, since it has a negative appraisal value, Sievert said.

Willey said he is exploring funding from private investors, federal and state historic tax credits, a loan from the U.S. Department of Housing and Urban Development, and the federal EB-5 Immigrant Investor Program, which attracts capital investment in U.S. projects by foreign investors. His group of investors may also involve "celebrities and professional athletes," but he said it was too early to divulge any names.

The Fergus Falls project is Willey's first foray in Minnesota — and would be the largest project the firm has tackled to date.

The Fergus Falls facility features a batwing design, anchored by an imposing tower that once served as the hospital's administrative center, as well as living quarters for the staff. Willey envisions the administration building as the hotel lobby with a bar, with apartments on the west wing, and hotel rooms slated for the eastern wing. The restaurants may include pizza and barbecue eateries, a sports bar and a coffee shop.

"Structurally, the building is in phenomenal shape," he said.

"We're grateful that it will be saved," said Eugene Schmidt, who, with his wife, Maxine, co-founded Friends of the Kirkbride. The Schmidts have led hundreds of tours through the facility over the past nine years — and requests continue to surge.

But the Schmidts are a bit reserved in their enthusiasm about Historic Kirkbride's plans. "We've seen so many developers come and go," Maxine Schmidt said. "But I would say, in general, people in Fergus Falls are excited."

Janet Moore • 612-673-7752