The city of Fergus Falls severed ties with a developer after three years of discussions about a makeover for a giant property that was once a state asylum.

City Council members voted Monday night to end negotiations with Ray Willey, chief executive of Georgia-based Historic Properties LLC, citing repeated missed deadlines and a loss of trust in the group’s commitment to redeveloping the ­former Regional Treatment Center, known locally as the Kirkbride.

The decision comes after a year of fits and starts between the city and developer over a proposed $41 million redevelopment for the four-story, 500,000-square-foot complex that housed 1,700 people at its peak and was the largest mental institution in the state.

Historic Properties, a company that specializes in renovating older buildings, got further into redevelopment discussions with city officials than any previous firm.

“The sad thing is that the city has put a lot of time and resources into the current developer, and the developer has put a lot of time and resources into the project, too,” Fergus Falls Council Member Justin Arneson said Tuesday.

The company planned to rehab the century-old structure in phases, the first one costing $21 million, yet the final point of contention was just $350,000. Willey asked for it upfront, but the city said it would provide it after a certificate of ­occupancy was secured.

“That was the hair that broke the camel’s back,” said Darren Appert, a City Council member. “We are willing to offer him something, just not right up front.”

Willey called Council Member Anthony Hicks hours before Monday’s meeting, agreeing to accept the money later, but it was too late. The council’s patience had finally worn out, and council members decided to start over by seeking a new partner.

“We were so close, and yet we were still pretty far away. It just seemed like they weren’t as committed as we were,” Arneson said. “It was frustrating to say the least.”

Historic Properties did not respond to a request for ­comment.

The state of Minnesota closed the hospital in phases between 2005 and 2009, officially handing over the keys for the building to Fergus Falls in 2007. The state set aside $4 million for the city to use to either renovate or demolish the building. Those funds will expire in 2016.

“It’s really upsetting news that we have to start over again. But the clock is ticking on that grant money and that might also be a reason the council felt they needed to cut ties now,” said Michele Anderson, rural program director for the Springboard for the Arts, who was also a member of the project’s advisory committee.

A public forum is scheduled for Aug. 10 when council members hope to gather community ideas and a master vision for the project, Arneson said. The council will then decide how to market the property and choose an approach for soliciting other private developers.


Kristen Leigh Painter • 612-673-4767