Lack of funding has forced the Board of Mayor and Aldermen to put off demolishing the old Kuhn Memorial Hospital building at least until mid-January, when they should learn if the city will get a multimillion federal grant to raze the buildings and develop the property for a housing project.

Community Development Director Victor Grey-Lewis said the city is applying through the State of Mississippi for a $7.3 million U.S. Department of Housing and Urban Development National Disaster Resilience grant that would provide the funds to raze and clear the Kuhn property and transform it into a housing development of 35 to 40 single-family homes. Grants will be awarded in mid-January.

The money is part of HUD’s $1 billion National Disaster Resilience Competition to help communities hit by natural disasters between 2011 and 2013 become more viable. Vicksburg qualifies because of the 2011 spring Mississippi River Flood, which flooded areas of the city as the river reached a record level of 57.1 feet, .9 feet more than the 1927 flood.

The flood inundated the residential areas of Ford Subdivision and the Kings community in north Vicksburg and Cedars Subdivision in the south, and many of the homes remain vacant.

The 12.5-acre Kuhn property had been placed under city’s subdivision ordinance in August. When the parties with an interest in the property failed to present plans to either raze or renovate the two buildings on the site earlier this month, it clearing the way for their demolition.

But North Ward Alderman Michael Mayfield said the cost to demolish the larger of the two buildings is estimated at $250,000, and the cost to take down the building in the rear of the property would be even more, because it will have to undergo asbestos abatement, an expensive process to remove asbestos, a hazardous material from the building.

“The money is not there,” Mayfield said, adding the federal grant could provide the necessary money to improve the hospital property.

“The grant had absolutely nothing to do with Kuhn, except that the idea of utilizing the property for a housing project makes it a real attractive grant,” Grey-Lewis said. He said the grant program will be handled like a flood buy-out program and administered through the Mississippi Development Authority.

“With the buy-out, the program is also providing a place to move to, which introduces Kuhn Memorial Hospital,” he said. “We’ve been looking at doing something with Kuhn for the past two years. Now we’re moving over to this grant.”

He said the state, which is lead agency for the application, passed the first stage of the competition and is in the second stage, which according to HUD will lead to the grant awards at the close of the stage two. “There is no guarantee we will get the grant,” Grey-Lewis said.

There are 67 eligible applicants for the $1 billion program, according to information from HUD.

According to information accompanying the city’s grant application, the Kuhn proposal is called the “Martin Luther King Affordable Housing Relief Project.”

It involves the demolition of the buildings on the property, the construction of streets, lighting and sidewalks and the construction of the homes, which will be made available to low income residents, including residents living in the city’s floodplain areas, on a lease-purchase basis.

A former city hospital, the city sold Kuhn to the State of Mississippi in 1956 for $5, and the state operated the facility as a charity hospital, initially known as the Vicksburg Charity Hospital, until 1989, when Gov. Ray Mabus closed the state’s charity hospital.

The city regained the property in 1990 under an agreement with the state to turn it over to a private corporation.

In 1993, the building was considered as a possible veterans home, and in 1994, it was considered for a possible 38-bed adolescent psychiatric ward.

In 1999, the building was sold to the Lassiter-Studdard Group Inc., which planned to open a 100-bed clinic and assisted living center.

The plans fell through, and in 2000, the company donated the building to the Esther Stewart Buford Foundation.