The former Washington Elementary School could become the latest affordable housing in the Stonepost developments in Hays, but the USD 489 school board would have to decide at one of its two January meetings to sell the property.

Matt Gillam, vice president of development and a partner in Overland Property Group, Leawood, outlined a proposal for the group to purchase the property where Early Childhood Connections operates at 305 Main.

In his presentation, he offered no solid figures of a proposed purchase price, nor how much the development would cost or how many units the development would contain.

He did offer a timeline, however. Overland could apply for federal tax credits through the state in February with a response by May, Gillem said.

“I would be looking to close on the school and start construction end of calendar year to first quarter,” he said.

“While this may seem fast and I’m approaching you and saying ‘Hey I’d like to do something here,’ the lead time with this type of funding and resources is rather long.”

Superintendent John Thissen pointed out the board would have to take action next month for the plan to proceed.

“To go to the state, I would need an option contract. So I would need to show the state I have site control and I am not putting in an application for a site that I do not control,” Gillem said.

“So yes, it’s something we would have to work pretty quickly on to get an option-type contract together that would give me the ability to show site control to the state,” he said.

The group’s goal, Gillem said, would be to keep the structure intact and pursue federal historic tax credits as an additional funding mechanism for the construction costs.

Developers can sell tax credits to financial institutions, which offset’s the investor’s federal income tax liability. Gillem said Wells Fargo has been one of the investors of the Stonepost developments.

In October, the school board voted to accept a $1.4 million federal Head Start/Early Head Start grant to renovate the former Oak Park Medical Complex, 2501 E. 13th, and pursue a $2 million lease-purchase of the properties. The board signed documents regarding the lease-purchase and renovation as well Monday night. The board has not yet had discussion or taken any action regarding sale of the Washington property.

ECC has been housed in the former Washington Elementary for about two years, after the 93-year-old building was closed as a school.

The building has had problems with plumbing, heating and cooling, and is not completely ADA compliant.

Overland Group, which has an office in Salina, has developed three phases of its Stonepost apartments on the south end of Main and near Larks Park beginning about 12 years ago. They include two- and three-bedroom units with washer and dryer and wireless internet among their amenities, as well as a clubhouse for each development.

The federal Low Income Housing Tax Credit program stipulates residents have income at or below 60 percent of the area’s median income.

The previous Stonepost developments were under a 15-year compliance period with those rules, but new developments would be under a 30-year compliance, Gillam said.

After those time periods, the property owner can rent to anyone and charge market rates for rent.

Last year, the group attempted to acquire the Fort Hays trailer park, 618 E. Fifth, to develop a fourth complex, but was denied the state tax subsidies by the Kansas Housing Resources Corp. A 2014 proposal for a development on East 22nd Street was likewise unsuccessful.

That had much to do with the location, Gillem told school board members, and he said that should make the Washington property more likely to receive tax credits.

“Ever since we built phase one of Stonepost here in Hays, the state has recognized the need and demand for apartments here,” he said.

“They like the demographics of downtown. They believe, and we’ve demonstrated, that there’s significant demand here,” he said.

In addition, Gillem said, if the Washington building can be used, Overland Group could pursue historic tax credits to help fund the project. He showed the board several examples of the group’s historic preservation projects, which included the Tabor Grand Hotel in Leadville Colo., and the Lee Mercantile and Lee Hardware buildings in Salina, which the group expects to close on next month to renovate into loft apartments and commercial space.

“My first target would be to save the school,” Gillem said.

“It allows me to ask for less housing tax credits and put that back with some historic tax credits,” he said.

Those tax credits for low-income residents help bring new housing to a region that not many developers are looking to build in, he said.

“So we've just done two things, we've taken care of the affordable need, and then once they go out of the program, we can rent them to anyone. And that gives us new apartments in western Kansas, which they otherwise wouldn't have,” he said.

In addition, new construction will be under new tax rules allowing the income limit to be within 80 percent of the area’s median income.

“So your first-year teachers, firefighters, policemen, and some even potentially older teachers in the district now will be able to qualify for that which they hadn't before,” he said.

In other business:

• The board approved contracts and authorized signing of documents related to the purchase of the Oak Park Complex, which the district plans to renovate with a federal grant and turn into the home for Early Childhood Connections. They authorized the board vice president to sign the lease purchase agreement, site lease purchase agreement and escrow agreement between the district and Bank of Hays; and tax compliance agreement and procedure.

They also approved the contracts with construction manager Nabholz for $30,000 plus other costs, architect DLR Group for $150,000 and an addendum allowing one of the sellers to qualify the transaction as part of a tax-deferred exchange.

All the motions passed by the same vote, 4-2, with Lance Bickle and Greg Schwartz the nay votes each time.

• Thissen introduced Keith Hall, superintendent of Osborne USD 392 as interim director of finance. He begins Jan. 2.