Western Building project approved for tax credits

Jason E. Silvers/Tribune photo City officials recently confirmed that Flint Hills Holding Group LLC, the developers of the former Western building downtown, has recently been awarded tax credits through the Kansas Housing Resource Corporation, which officials said were needed in order to continue redevelopment of the property into senior living units.

Development of the former Western Insurance building is now on track to continue.

On Friday, Heather Griffith, director of economic development for Fort Scott, confirmed the news that Flint Hills Holding Group LLC, the property developers, have recently been allocated tax credits through the Kansas Housing Resource Corporation.

The developers, who applied for the tax credits earlier this year, have a plan to convert the property into about 40 senior living units.

Griffith said continuation of the redevelopment project was dependent on award of the tax credits.

"These are federal tax credits," Griffith said. "Rehabilitation of a building of that magnitude requires a huge investment and to be able to make a return on that investment in a reasonable time frame. The developers utilize various tax credits they can sell to investors to make the project cash flow. The developer manages the project. It makes the project financially viable. Without it, it's not worth the investment."

The award of the tax credits comes after a letter writing campaign that Griffith helped organize aimed at saving development of the former Western building. Local leaders spearheaded a community campaign to help with the tax credit approval process as this year, the tax credits, which go through the KHRC, were "very competitive," officials said.

Tony Krsnich, of Flint Hills Holding LLC, purchased the old Western building for $1 during a county tax sale in 2014. At the time, Krsnich told city officials of his plan to convert the property to about 40 senior living units. City commissioners unanimously agreed to kick in about $1 million city capital improvement funds to gut the interior, which contained asbestos and mold. Industrial Wrecking Co., Inc., of Kansas City, Mo., was awarded the contract to do the demolition.

The remainder of the estimated $9 million project will be paid for by the property development company, which works with historic buildings.

Environmental cleanup of the two structures that make up the property has been completed. Complete demolition of the non-historic structure to the west could not take place until it was known if the tax credits had been awarded.

"What has been done already, the city has paid for environmental remediation of both buildings and they are clean," Griffith said. "KDHE has been through both buildings and they are free of asbestos and mold. What's remaining with our contract is demolition of the tower building."

City and chamber officials said they were trying to reach out to as many individuals and groups as possible in an effort to get letters or emails supporting the project. According to Griffith, assistance was needed in writing a support letter to demonstrate how much the Fort Scott community is behind the project to save the Western building.

The city of Fort Scott views the project as an "excellent opportunity for economic development by taking an underutilized property and redeveloping it for valuable use," Griffith said in a March email when the letter-writing campaign began. "We have worked diligently for several years with the Kansas Department of Health and Environment, through the Brownfields program, to identify environmental hazards and determine potential future use for the former Western Insurance property."

"The Western Building senior apartments will be a significant improvement over the existing blighted structure," Griffith said in the email.

Numerous letters and emails gathered in the campaign were sent to Griffith and Fred Bentley, director of Rental Housing Development with the KHRC.

Griffith said before continuing the redevelopment project, officials have been waiting on approval of the tax credits and local companies to complete relocation of utilities and system upgrades for the project.

"What we've been waiting on and why there's a lull ... we've been waiting on tax credits," Griffith said. "Also, Westar Energy is currently relocating some transformers in the alley (between the buildings) and some services in adjoining buildings. AT&T relocated a cable that runs through the building."

Griffith said the city is not spending any money for the utility relocations and system upgrades. Westar has contributed about $48,000 and AT&T will spend another $8,000 to $10,000 for the work.

Griffith said Industrial Wrecking Co., Inc., will return in mid-June or early July to start demolition of the non-historic tower and the structure that joins both buildings.

"We're shooting for an Aug. 1 start date for construction as far as renovation and redevelopment," Griffith said. "I've been told there will be 75 to 100 people on site every day through the process."

The redevelopment will be focused on preserving the historical characteristics of the building while incorporating high-quality apartments.