The fate of the nearly vacant 93-year-old Washington Elementary School on south Main Street may no longer be in limbo.

After stalling for a year, historic renovation of the two-story brick building into 18 affordable housing apartments could get underway around February 2021.

Key to the deal is $4.8 million in federal housing tax credits for which the developers just won approval, said Matt Gillam, managing partner for Overland Property Group LLC, of Salina.

"It’s quite exciting for us and more exciting for the Hays community with regards to what this means, not only with 18 affordable housing units being added, but also being able to save that school building that’s located in such a prominent and high-traffic part of the community," Gillam said Tuesday morning in a phone interview. "It’s going to be kind of an additional remodeled cornerstone to the downtown, which is already a strong place."

The apartments could be ready to rent by December 2021, with the owners taking applications from prospective tenants starting three months before that.

Overland’s $500,000 purchase option with Hays USD 489 on the 31,500-square-foot property runs until early June. Gillam said Overland will seek an extension into December, when the investors could officially close on the purchase.

School board must vote

All that remains to seal the deal is a vote of approval from the USD 489 Board of Education, which could happen toward the end of the year, said board president Mike Walker.

Walker indicated it has been the intention of the board to sell the building to Overland since the privately held company made the pitch to the board more than a year ago.

"It does look like we can continue to move forward with the project," Walker said in phone comments Tuesday afternoon to The Hays Daily News.

The public has known for some time that the district wanted to move away from the aging building, he said, when Overland came to the board with the apartment project.

"They were the only group that came to us with an offer, and they said they wanted to buy it and do something with it," Walker said.

The board was impressed with Overland’s track record of preserving and developing historic buildings.

"That’s their niche," Walker said. The last thing the district wants is to leave Washington vacant, allowing it to deteriorate, he said.

"The only thing there at the moment is the adult education center," said Walker, referring to The Learning Center of Ellis County, which he noted will move back to the Rockwell Administrative Center, 323 W. 12th, if and when Overland buys the building.

"If we leave it empty, then it becomes an eyesore and a hazard, and that’s not fair to the community," Walker said.

The school was closed in 2018.

Federal tax credits key

Overland’s original application for the federal tax credits was turned down in May 2019 by the program administrator, Kansas Housing Resources Corp., which allocates the money. But Gillam said at the time that the agency encouraged the developers to reapply, so they did.

The most recent round of winners was announced May 15. There are typically four times the number of applications as there is money.

"They only had about two-thirds of the funding they do in a normal year," Gillam said. "So it’s a really highly competitive process, and not many communities receive developments and projects. It’s not only a win for Hays but specifically for the area."

A roughly $5 million investment in all, the tax credits are the bulk of the funding. The credits are sold to investors and the proceeds then go into the project. Overland will seek additional funding from investors and lenders who specialize in the highly regulated projects.

The school’s classrooms and offices will be renovated into 15 one-bedroom and three two-bedroom apartments. Every part of the plan must be approved by the Kansas State Historical Society and the U.S. Department of the Interior’s National Park Service, which overseas federally funded preservation projects.

"Things as simple as light fixtures, we have to get approval from them," Gillam said. "We’ve got to get all of the renovation work and the processes of that work signed off on by these historical folks to make sure it is complying with what the building looked like when it was built."

Overland is relying on historical consultants to make sure the design preserves the look and feel of the building, Gillam said.

Once finished, The Stonepost Lofts at Washington will be listed on the National Register of Historic Places.

"The history of that building’s going to be preserved and repurposed for really the next phase of it’s life, which is affordable housing," Gillam said. "I think it’s such an important part of that downtown area because of the visibility to people not only in the community but people coming from outside of it."

Overland experienced in renovations

The project is the fourth affordable housing project in Hays for Overland Property Group. Over the past 14 years, the group also developed Stonepost Apartments phases 1, 2 and 3 downtown, totaling 63 affordable housing units developed with tax credits.

Washington School sits across the street, bordered on various sides by city parks, walking and biking paths, a disc golf course, tennis courts, Larks Park baseball field, Hays Aquatic Center, single family homes, and downtown businesses, including restaurants and retail.

"Having a school building like this that will be historically renovated so the exterior is going to look as good as it did, maybe better, than the day it was built, that’s an important thing for the community to show," Gillam said.

The Washington project follows near completion of a similar one in downtown Salina, hometown of Overland’s four partners and the company’s corporate headquarters. Overland is about 30 days away from finishing up historic conversion and renovation of a warehouse into 53 affordable housing units. Overland has done about 70 other similar developments.

"There are a lot of steps, and it’s very in-depth, but we do this all over the country and have done this in about 70 different developments," he said. "So we’re very experienced in it."

The Washington School investment would bring to about $15 million the investment Overland Property Group has made in downtown Hays.

In western Kansas, the group also has done projects in Great Bend, Dodge City and Garden City. The company built Stonepost Phase 1 about 14 years ago and still owns it.

"We don’t invest in a community or build a project and then leave," Gillam said. "We look at these as investments in communities."