FERGUS FALLS, Minn. – After a sometimes tense discussion, the City Council here on Monday delayed a vote on whether to take a financial risk and try restoring the city’s historic Kirkbride property or demolish it.
For over a decade, this city has considered what to do with the former mental asylum built in the 1890s whose patients are now long gone.
Real estate development company Historic Properties Inc. has offered to take the property and turn it into a roughly $41 million complex with apartments, restaurants and a boutique hotel.
Standing in the way of the project is “the elephant in the room,” as one Fergus Falls City Council member described the $700,000 that the developer wants from the city the day an agreement is signed.
“The $700,000 up front is a very difficult challenge for us, or for me anyway,” council member Anthony Hicks said.
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Ray Willy, part owner of Historic Properties Inc., told council members he understands their risk, calling it “a valid concern,” but said his company needs that money to go forward.
Willy provided the council with a packet of information on Monday that he was supposed to have sent to council members days earlier. As a result, the council said it would need until its next scheduled meeting on Nov. 3 to review the information.
Willy blamed the packet’s lateness on the city’s Kirkbride consultant, Kent Mattson. Willy said Mattson emailed him with additional questions at the last minute.
That started a debate between the pair over what information Historic Properties Inc. should have to provide the council before it reaches a decision.
“I got an email on the 22nd, the day before it was due, the day I was going to send it all,” Willy said. “… There was a request in there for information that I could not do. It would probably take a week or more to do.”
Willy dropped a heavy stack of papers on the floor in a show of frustration at how much information Mattson wanted.
But Mattson said he just asked for some basic floor plans and designs, not highly detailed blueprints, for what a renovated Kirkbride might look like.
Mattson added that he has tried to set up weekly conference calls with Willy, who lives in California. The developer replied that the calls “weren’t working.”
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Willy’s proposed Kirkbride renovation includes two phases. The first phase is a $21 million project to build 80 apartments and 5 restaurants. The second phase would add a boutique hotel and cost about $20 million.
Historic Properties Inc. would borrow $10 million to invest in the first phase, Willy said. That prompted Mattson to ask why Willy and his business partner were not investing any cash.
Willy said that criticism made him “scratch my head a little bit,” because he considered investing the borrowed millions akin to investing his own money.
“We are on the line for $10 million,” Willy said. “That is skin in the game. That is borrowed money that has to be repaid by us.”
The Kirkbride property, also known as the Fergus Falls Regional Treatment Center, became vacant in 2005, Mattson said in an interview. Since then, the property has been divided up, and parts are now owned by the Minnesota Department of Natural Resources and Otter Tail County, he said, leaving the main Kirkbride building abandoned and threatened with demolition.
During public comment, one Fergus Falls resident accused the council of hypocrisy for shying away from risk when it came to Kirkbride, but spending unwisely on a golf course and hockey arena.
“I’ve seen a lot of negativity towards accomplishing, keeping our Kirkbride,” John Strauch said. “… I see it going down the road for destruction.”
