The real estate developer behind the $41 million overhaul of a former mental hospital in Fergus Falls, Minn., says the ambitious renovation project is quietly “plugging along,” and is still very much on track to become apartments, restaurants and an upscale hotel.

It’s been nearly 10 months since an entity associated with Georgia-based Historic Properties Inc. stepped forward to take on the challenging rehab project, rescuing the city-owned fortress from imminent demolition — at least for now.

The city entered into an exclusive letter of intent with the developer at that time, but the pact expired Oct. 30.

However, the City Council has made a commitment to work solely with Historic Kirkbride, a limited-liability corporation formed for the project, until it determines whether it is feasible, said City Administrator Mark Sievert. That will likely be “around September,” he noted. If the firm moves forward, the city will strike up a formal development agreement at that time.

Known locally as the “Kirkbride” for the physician who championed its castle-like design and the related therapy, the former Fergus Falls Regional Treatment Center was shuttered by the state in 2009 as care for the mentally ill moved to a community-based model. Since then, the fate of the vacant bat-shaped behemoth has flummoxed, and often divided, the central Minnesota community.

Enter Ray Willey, one of Historic Kirkbride’s partners, who discovered the building while perusing a historic preservation magazine last year. “We’re making progress. But it’s a long process, it’s a big project,” he said.

Willey and his partner Bill Brown, also of Historic Properties, have been involved in a number of historic renovation projects nationwide, although Fergus Falls is the group’s first foray in Minnesota.

Since signing the letter of intent with the city last summer, the duo has been exploring public and ­private financing for the project, probing the site’s infrastructure, and investigating what concepts might work there.

For now, the plan calls for a 120-room hotel bearing an upscale brand, which has yet to be determined. The hotel’s lobby and administrative functions would be located in the Kirkbride’s imposing central tower, with its rooms slated for the eastern wing.

On the western side, at least 60 apartments are planned, with distinctive themes for common areas connecting them. The top-floor attic space would be reserved for artist’s lofts, with “makers’ space” set aside for the large rooms connecting the residential areas. (Those rooms were formerly used as day areas when the hospital was an asylum.)

Makers’ space is a growing national movement where artists and craftsmen come together in community-shared workspace. Willey cites the Artisan’s Asylum (appropriately enough) in Somerville, Mass., as a model for the Kirkbride space.

A nonprofit organization, Artisan’s Asylum furnishes education, tools and workspace to “dedicated fabricators, including hobbyists, artists, and early-stage entrepreneurs, to create on large or small scale,” according to its website. With 40,000 square feet, the group says its Massachusetts operation is one of the largest “makerspaces,” or community craft studios, on the East Coast.

“We think it’s an amazing idea,” said Michele Anderson, Rural Program Director for Springboard for the Arts, a St. Paul-based art/economic development organization that has a chapter in Fergus Falls. “Artists in the area are looking for dedicated space where they can get together and collaborate and do their work.”

Springboard is a finalist for a $500,000 “creative placemaking” grant from ArtPlace America, which would help the group set up at the Kirkbride, and perhaps offer workshops and instructional sessions for artists and other creative people.

“The arts can and will play a big role in making the Kirkbride a destination,” Anderson said.

Additional floors in the Kirkbride could feature community space for musicians and techies, Willey said, with similar makers’ space for those disciplines. The idea is to offer a work/live/play model that would prove attractive to younger people, he added.

“In Fergus Falls, there are quite a few facilities for seniors, but we think there’s a niche that hasn’t been tapped” for younger folks, Willey said.

In addition, Willey foresees 83,000 square feet devoted to various restaurants, including pizza and barbecue eateries, a sports bar, a brewpub and a coffee/bagel shop.

Willey says he’s working on financing, which may involve private investors, federal and state historic tax credits, New Markets Tax Credits from the Treasury Department, a loan from the Department of Housing and Urban Development and the federal EB-5 Immigrant Investment Program, which attracts capital investment in U.S. projects by foreign investors.

“Ray is working on refining his concepts, and obtaining his financing sources,” Sievert said. “One major thing he’s working on is whether the project can sustain itself over the long-term.”

The Kirkbride, which welcomed its first patients in the 1890s, is structurally in good shape, but it occasionally attracts vandals. Earlier this month, police cited 11 people for vandalism after they were discovered on the Kirkbride property, some with cans of spray paint.