Overland Property Group (OPG) is preserving a key piece of its hometown history as well as providing needed housing in downtown Salina, Kansas. OPG, with partner Flint Hills Holdings, has converted a historic warehouse that was the birthplace of Lee jeans into 53 apartments and its corporate headquarters on the ground floor.
“This is where Lee jeans got their start,” says Matt Gillam, managing partner at OPG. “There are blue jean stains on the fourth story of the first building.”
The building that has become H.D. Lee Mercantile Lofts and other warehouses on the site are where wealthy businessman and oil tycoon H.D. Lee opened a wholesale grocery store; ground, roasted, and packed coffee and tea products; created the Union-Alls, a one-piece coverall designed for farm and factory workers; and manufactured additional denim clothing during the late 1880s and early 1900s. The H.D. Lee Co. relocated its headquarters to Kansas City, Missouri, in 1950 to focus on the garment business, and the site then was used for storage and warehouse space off and on until becoming vacant.
With many of the current and former partners of the firm hailing from Salina, OPG had looked at the buildings for potential adaptive-reuse in the past, but the timing hadn’t been right. The construction of a downtown fieldhouse on the site of a dilapidated hotel spurred a renewed interest in revitalizing downtown. In addition, the University of Kansas School of Medicine opened a satellite campus in Salina in response to a shortage of doctors in rural areas among a concerted effort through a $60 million to $70 million STAR Bond investment (hotel, museum, entertainment, and restaurants).
“All the pieces were starting to come together, and this opportunity came up again,” says Gillam. “We thought it was the right time. We felt the momentum in the downtown area, and if someone was going to do it, it had to be us.”
The $10.8 million H.D. Lee Mercantile Lofts, which opened in September 2020, benefited from 9% low-income housing tax credits as well as state and federal historic tax credits. Financing partners included Kansas Housing, Red Stone Equity Partners, Bennington State Bank, and Commerce Bank.
While Salina had not had any market-rate housing in over three decades, the city wanted to see the building break the stalemate and serve a mix of incomes so it stepped up with $500,000 in financing to help fill the gap for those market-rate units.
Of the 53 units, 38 are affordable for households earning 40%, 50%, and 60% of the area median income, while the remainder are market rate.
Historic features, such as windows and the original wood storefronts, were preserved or remade. In addition, individual HVAC systems for each unit and common areas were installed as well as new mechanical, fire suppression, and electrical systems. The roof was replaced, and a new elevator was added to the building. The building also touts energy-efficient and water-saving measures, such as LED lighting and Energy Star appliances.
“We’re stewards of this building,” adds Gillam. “This building will outlast all of us. It really belongs to the community and the people who live there. We’re just trying to do right by the history. When you look back on certain developments, this is a milestone for us on what it means from the town’s perspective and how it turned out.”
The development team is not done with the site. It is working on the second phase, which would target a wider income range—serving 30% to 80% of the AMI. Construction is slated to begin in February, with those units coming online in 2024. OPG also would like to do a third phase that would provide additional market-rate housing for the revitalized area.