Hotel Dream Almost Reality Developer Planning Renovation Of Carlyle

An $8.1 million deal that’s “98 or 99 percent” complete would renovate the historic Carlyle Hotel for some of Spokane’s poorest elderly and mentally ill residents.

The proposal by Spokane developer Jim Delegans is a weave of public loans, bonds and other financing.

Should city and state loans be approved, the lives of 70 residents could improve dramatically.

Nicknamed “Eastern State Hospital’s east wing,” the Carlyle’s history has been pocked by fires and suicides. For decades, it’s been the downtown housing of last resort.

Delegans’ proposal would continue a half-finished remodeling effort that stalled under previous ownership.

A limited liability corporation controlled by Delegans stepped in in March amid the pending foreclosure against previous owner Ed Hoffman. Delegans has been putting together the complex financing ever since; 18 attorneys came to one recent meeting.

His plan calls for the seven-story building at 206 S. Post to be completely remodeled by the end of 2001, with halls resembling nursing home wards. He would hire 35 staffers to cater to the health and psychological needs of tenants.

Fifty-five rooms would be designated as assisted living, and 15 others would be used by tenants with less severe health needs. Medicaid would make up the difference between tenants’ meager incomes and costs.

Tenants seemed unaware of the deal-making Thursday, focused instead on their medical problems. The average annual income for current residents is $8,000.

A blood disease and emphysema keep Hank Cook, 63, too weak to stray far beyond his apartment’s cracked walls. He keeps his room warm to help circulation, using an electric stove to keep the place heated.

“I’ve been here for 13 years, and it’s just like one big family,” he said. His girlfriend lives down the hall; she just talked him into dying his beard brown.

Some current tenants who don’t fit within the remodeling plan - serving very low income and medically needy residents - may have to move after the project is done, Delegans said.

It’s unclear how many that would affect, but managers expect it would be just a handful.

Public officials are looking favorably on the plan. They had invested more than a half-million dollars in Hoffman’s stalled project and feared they wouldn’t be repaid when U.S. Bank threatened to foreclose.

“There was a good chance we’d lose it all” if the foreclosure had gone through, said Melora Sharts, a city Community Development official.

U.S. Bank is now backing Delegans’ request for a $4.7 million bond issue - two-thirds at sub-market interest rates - by the Washington State Housing Finance Commission. The bank guaranteed repayment with a line of credit.

“The feeling in Spokane is there’s a tremendous need for the segment of the market it’s intended to serve,” bank vice president Alan Owens said from Minneapolis. “This project represents one of very few that is intended to serve the lower-income elderly who are physically disadvantaged and may also be mentally challenged.”

Local officials share the feeling. One reason cited for chronic over-crowding at Eastern State Hospital is a lack of structured housing for the mentally ill in Spokane.

Delegans cautioned that the deal is not done. The state commission is holding a public hearing on the bond issue in Seattle on Sept. 14. The deal also is contingent on City Council approval of a $952,000 subsidized federal loan to Delegans’ company. The council is expected to hear the proposal later this month.

Historic tax credits also will be used. The Carlyle was built in 1890 as a warehouse and carriage company on the bottom floor and hotel above. It was expanded in 1909 to its current seven floors.

Delegans has built a reputation as an innovative landlord for the troubled and poor on West First. At the Commercial Building, which his company owns, and the adjacent Otis Hotel, which it manages, his staff integrates mental health and drug and alcohol counseling with work preparation.

Delegans praised the new wave of socially minded landlords remodeling historic downtown slums.

“I’m really excited about the direction of where the community is going for housing the low-income community,” he said. “There is no reason why there are slumlord conditions in this community.”