Mineral Wells Area News

By Amy Bearden / Mineral Wells Area News

“This is the piece that we’ve been looking for and I’m very confident that we are going to get this one to close,” stated Randy Nix, who has been the economic lightening rod in the revitalization of downtown Mineral Wells. “It’s been a pretty tedious process.”

Randy Nix

Randy Nix is the driving force of the restoration project of the nostalgic Baker Hotel and some naysayers think renovating the nearly century old building is a pipe dream, but not to Nix and his team of investors who have been working since 2009 to get the project organized. The potential restoration gathered steam in 2018 just before the economic fall out of Covid in 2020. Work on the building eventually slowed, but still continued.

Determined to see the project completed, Nix recently shared exciting news that the investor group secured approval of a large government backed loan that supports economic development in rural communities that will get the project moving again. The loan is a funding solution his team has been chasing the last six months at the suggestion of a bank executive from Breckenridge.

When MWAN spoke with Nix earlier this year about The Baker’s progress, he mentioned they were attempting their last effort to secure the bulk funding needed to complete the restoration project.

Private investors have poured $15 million into the building’s renovation thus far, but many problems have caused progress to slow down. Factors for the delay included Covid’s derailment of investments into the hospitality industry, along with increased construction costs, as well as the eventual spike of interest rates. The Baker Project looked to be at a lull, and despite the downturn of the economy across the globe, investors continued to funnel their own private equity into The Baker. They kept a small crew working on the interior of the dilapidated building as they continued to look for ways to raise more capital.

“We’re working everyday. Mark’s crew is in there every single day doing work. So we are making progress,” said Nix who indicated the biggest challenge remained the funding.

“The hardest piece was getting a bank that wanted to finance us. We’ve been through a lot of different banks and we had one about two years ago that we almost closed with, but then when we ran the numbers, we were $9 million over budget, and so that kept us from going forward with that bank,” said Nix.

Cue Clearfork Bank. Formerly known as First National Bank Albany/Breckenridge, Clearfork is the bank that secured financing for the historic Crazy Water Hotel renovation which was completed and re-opened in 2021 and has become the hub and heartbeat of the community. Clearfork Bank stepped in and took a risk when no other banks would according to investors, and now they are stepping up again, but this time for The Baker Hotel. Clearfork opened a branch in Mineral Wells in 2023 and is in the middle of building a new banking center not far from The Baker Hotel.

Nix credits Clearfork Bank’s Executive Vice President in Breckenridge, Johnathan Newton, for suggesting The Baker Investor Group look into a United States Department of Agriculture Loan through the Business and Industry(B&I) Loan Guarantee Initiative program that was expanded during Covid.

The program is designed to provide commercial lenders with opportunities for government backed loans to support rural economic development. Prior to the B&I program expansion, the maximum amount of a guaranteed loan available was not enough to complete The Baker project, however the ceiling was removed, opening a door for investors to apply.

“In the past, a USDA loan wouldn’t work because of the limits of the loan, it was not substantial enough to make the final piece of this work, but now I think the limits are $25 million and that’s close to what it’s gonna take to complete this project,” said Nix. “The USDA loan is NOT a grant. Its simply a government backed loan, similar to an SBA loan, where the government will back 80% of the loan. That guarantee allows banks to take the risk necessary to do projects like this,” stated Nix.

Confidence is high this financial opportunity will be closed and finalized before the end of 2024, with potential completion of the hotel and doors opening at the end of 2027. Nix said it’s the missing link they have been looking for, but haven’t been able to pull off, until the last month.

“We’ve had a few banks interested in it, but usually their terms were ridiculous because they were private equity banks that were charging a lot higher interest rates than conventional banks, but now by having this USDA guarantee, Clearfork is giving us a great loan, with great terms and an interest rate we can live with. This is the final piece we needed. It’s a done deal and we are signing it now. The conditional loan docs have been signed and we already have our allocation from the USDA,” Nix explained. “This is the final piece and the bank will give it to us during the course of completion.”

Nix says in addition to the USDA loan, they will likely still need a few more private investors and they are already lining them up. He’s prepared to raise $5 million more in private capital if needed to be able to close the deal.

“We have already put $15 million of equity into this project through private investors and we’ll likely be opening up another round of investment opportunity for about $5 million to complete any overages we might have going into this closing because two years has passed by and we have to rebid this project,” he said.

Nix understands some people in the public won’t like hearing the new timeline for completion, but laments that there have been so many uncontrollable factors. He said they were probably “overly optimistic” on the funding and construction timeline and “everything that could go wrong, did go wrong.”

Despite setbacks, Nix seems more confident than ever in the project and has hired a new consultant from the DFW area, Nolan Bradshaw, to oversee the next phase of the project. Nix says the upcoming three weeks will be spent reviewing the original specs of the project, looking at the scope of work and assessing specific details needed to ensure the financial requirements of the project are accurate. The original anticipated cost for the complete renovation was $60 million but Nix is having the project rebid by professionals to ensure those figures haven’t changed immensely from the initial projections.

“We are not going to miss these numbers so we are going to spend some time and rebid this project,” claimed Nix. “We have a third party estimator that we have hired to give us a non-partisan, non-biased estimate on what it should take to construct The Baker Hotel as per the specs that we have put out. So he’s going to take all trades and compile them into one without us having to actually go out and get the bid of what the actual cost is going to be.”

Nix said historically the estimator has been within 5% of the actual, final cost.

“That allows us to know, pretty much without a doubt, what our expectation is that we’re going to have to raise in capital. Then we’re going to go out to the other lenders which we already have in place,” said Nix.

He also went on to rave about the consultant hired to oversee the completion of the restoration.

“It’s the best thing we ever did because now we have another set of eyes on this,” said Nix, even alluding sometimes investors want a project so much, its best to have a non-biased perspective. “It’s nice to have someone completely third-party, an arm’s length away from it, telling us that there’s things we need to be doing.”

Nix indicated Bradshaw, who has family ties to Mineral Wells, is taking the lead as the Project Manager of the hotel renovation and will stay on through the completion of the rebuild. Mark Rawlings will remain boots on the ground and overseeing the day to day progress as the Construction Manager.

“It gives us another check and balances on a really big project. I mean, and I don’t fault anybody on it because I do this. I mean we were small playing this. We have too many investors to get in here and not have that accountability that we really need in here, so having a Project Manager gives us that accountability and another set of eyes that make sure we are going to see this thru to completion.”

Nix doesn’t anticipate any hiccups in the finalization of the loan, but he hopes the figures he hears from the estimator isn’t out of reach.

“We are four to five months from closing the funding on this project. It’s complicated, and there’s a lot of legwork that we’re going to be going through. But it’s all necessary steps. We even have the architects going back and looking at this work again, to make sure that we have a clean set of specs to be able to go out to bid this thing because when we go out and bid it this time, we can’t take the chance that a contractor is going to run over budget and so we have to make sure that we have this things specifications to the smallest of details, so that we can so that we know the costs going in.”

New Timeline

Nix gave an estimated new projection date for completion before the end of 2027, but said they are waiting on more information they will soon receive from the estimator.

“You know, this is also what the third party estimator is going to give us. A timeline for construction of what the industry standard is. I hate to say it, because we’ve been working on this project all this time. I hate to think that we still have three years but it’s possible that after we get the funding, we still need three years to wrap it up. Because even though we’re working on it, I mean Mark’s crew has been incredible,” Nix said. “They’re working on plaster and redoing trim, but what they’re not working on is the major trades like the electrical, the plumbing, the MEP, or the air conditioning. Those are the ones that take time. And so I’m hopeful that the third party estimator comes back and says that we can do this in two and a half years. But I am prepared for it to be as much as 3 so let’s say 2.5 to 3 years after the four to five months of funding completion.”

Public Funds & Tax Dollars

Despite musings on social media, no Federal, State, County or City funds or tax dollars have been utilized so far in The Baker Hotel’s restoration.

“We have not put any public money or any grant money or any government money into this project. It’s all coming out of our own back pockets. The taxpayers have not paid one dime on this project,” exclaimed Nix.

In a 2014 election, Mineral Wells residents voted to reallocate 1/8th of 1 cent of the city’s sales tax toward the restoration project. The 4B tax funds will be paid to the developers once the project is complete.

“There was an election and the citizens voted and passed, with 96% approval, for the City of Mineral Wells to give $4 million to the Baker Hotel Investor Group through tax revenue, but stipulates that money doesn’t get paid into us until project completion. That money is never at risk in our agreement with the City until we receive our Certificate of Occupancy which is one of the final steps to opening the front doors,” stated Nix. “They are the last money in.”

The fund balance of the 4B is currently sitting at just over $1.6 million according to City Staff.

In addition to the 4B tax funds, the Baker Hotel Group will benefit from the Tax Increment Reinvestment Zone(TIRZ). The TIRZ basically allows investors to get their property taxes back to reinvest into the property.

“Think of it this way,” explained Nix. “If the Baker is not built out, it would always be worth $1.5 million, or whatever it was on the tax rolls when the TIRZ was implemented, and the City would never get a dollar off of it. But if it is developed, The Baker is going to get their own tax money back, except for the $1.5 million on the initial base value. In other words, eventually when we get The Baker completed, it will be worth, let’s say $60 million, so we will be paying $1.5 million to the City annually in taxes, despite the valuation. If it’s not rebuilt, they will only get taxes on the $1.5 million valuation, which is what, $45,000 to $50,000 in tax.”

Baker Hotel History

Conceived during the roaring twenties, businessman TD Baker developed the property after droves of people flocked to the area seeking better health and wellness by drinking the high mineral content water discovered underground Mineral Wells in 1881, aka “Crazy Water.”

The Baker Hotel and Spa opened in 1929 as a resort destination. The “Grand Ol’ Lady” flourished and was frequented by guests of Hollywood fame and political stature, professional athletes, business tycoons and even some infamous criminals. The hotel was the place to be seen and became a mecca of entertainment and attracted people from all across the country to drink the healing waters.

Advances in modern medicine led to a disinterest in the “health spa” aspect, causing a downturn in occupancy and the hotel struggled throughout the 1960’s. It closed down in 1963 and was reopened by a group of local civic leaders in 1965, but closed its doors for good in 1972. In 2009, a group of investors out of Southlake, along side Randy Nix, began the process of acquiring the property and restoring the building to its original glory.

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