A nearly $1 million expenditure could help turn a downtown eyesore into dormitory-style housing for Midwestern State University students.
Property developer Will Kelty was approved Dec. 7, by the Wichita Falls 4B Sales Tax Corporation Board of Directors for a forgivable loan of up to $800,000 toward a fire suppression/alarm system for the Petroleum Building, 726 Scott Ave.
Kelty purchased the former hotel/office building in 2016, with an aim to turn it into much-needed housing for the downtown area. His first project at this site was turning a portion of the first floor into the popular restaurant and bar, the Highlander Public House, which opened in March.
The building rests on the site of an oil-boom era hotel, the Kemp Hotel, which boasted famous guests including presidents and movie stars. The Kemp was demolished in the 1960s, and the Downtowner was built. It later became a Holiday Inn, went through several owners and finally became The Crescent Plaza – a pay-by-the-week residential hotel. The spot became a hotbed of crime, with police responding to more than 250 calls about the site in a year. The Crescent closed suddenly in 2011, and all residents were evicted. It sat vacant until purchased by Kelty five years later.
In a presentation to the Wichita Falls 4B Sales Tax Corporation Board of Directors, Kelty said he would like to use the upper floors (two through nine) of this building for student and apartment-style housing for Midwestern State University students and other residents. The second through fifth floors could hold 110 housing units. The rooms would lease for $500-$600 a month with all bills paid. MSU representatives toured the facility earlier in the year and found the idea to be a viable project. If approved, the housing could be available as soon as the summer of 2018.
Kelty said downtown student housing is an option used in many cities with a college or university. The housing encourages integration of college students into the downtown area and could aid in their decision to stay in Wichita Falls after college. The arrangement could further Wichita Falls’ goal to make the city a “college town” and benefits MSU by providing housing space not possible on the land-locked campus.
With a total estimated price tag of $8.8 million for renovation, the developer said making the location livable will be twice the cost of what makes sense, financially.
Kelty said he is willing spend more than $4 million toward the project and is seeking help of 4B, the city and county for the remaining $4 million.
Many building in downtown were constructed before fire-suppression equipment was required. An ongoing effort by 4B has helped new businesses thrive in the area by partially or completely funding these systems in their renovated downtown properties.
As a hotel (deemed transient, not permanent housing), the building was not originally required to have sprinklers. Changing to student housing, Kelty said the building must be fitted with sprinklers and a fire-alarm system. Paying out-of-pocket for these changes, he said, would make the project “unfeasible.”
Along with 4B help, Kelty said other assistance from entities could take the form of: transportation to and from campus (through the city bus system), property tax-rate lock for up to 10 years (county assistance), or a sales-tax abatement. Kelty approached the Wichita County Commissioners Court in May about possible purchase of the Lindemann building to use the garage for resident parking, but no decision was made.
Kelty said he expects the project to be completed in two phases. The first phase would be installation of the fire-suppression system, renovation of floors two through five and upgrade of the outdoor swimming pool. The second phase will be renovation of 60 units on floors six through 10, which will be larger, multi-room apartments.
If approved by city council Tuesday, the 4B funds will be awarded in a five-year forgivable loan, with conditions.
The funds will be dispersed after documentation of costs and a certificate of occupancy for the first 110 units is provided to the city by July 2018. The project must also secure approval for a dedicated bus route from the building to MSU. There may be some further requirements which are still under review by the city attorney.
Total project funds will be released after Kelty operates the building, as stated, for at least five years. During the period, 20 percent of the loan will be forgiven for each year of successful operation.
Kelty has been a major investor in the revitalization of downtown Wichita Falls. Based in California, the investor began interest in the area when he purchased the “Big Blue” building and has gone on to revamp many nearby properties. Kelty said he fell in love with Big Blue and all of downtown Wichita Falls and is invested, financially and personally, into making the area thrive again. Many of his projects, he said, really don’t make financial sense, but he said investing in downtown is more important to him than a purely monetary decision.