Founded in 1869 on 1,000 acres of land once owned by the Roosevelt family, the Hudson River Asylum for the Insane, as it was then known, operated on the concept that its patients, most of them from New York City, would heal in a country setting. The English architect Frederick Clarke Withers designed its grand neo-Gothic buildings, and the landscaper Calvert Vaux created tree-lined walkways similar to his earlier work with Frederick Law Olmsted for Central Park in Manhattan.

A nine-member Board of Managers was created and appointed to initiate and oversee construction of the actual building. They chose architect Frederick Clarke Withers to design a building according to the Kirkbride Plan, then a popular theory for the design of mental institutions.

The centerpiece of his design was the administration building, which branched off into two wings, composed of six parallel pavilions that flanked the central structure. The two wings, designed to hold 300 patients of either sex, were divided by a chapel placed between them in the yard behind the administration building so that patients could not see into the rooms of the opposite sex. The building and landscape plan were meant to aid in patients' recovery, by giving them adequate space and privacy and imbuing their healing with a sense of grandeur.

With plans completed in 1867, construction began in 1868, with the cost estimated at $800,000. Cost-saving measures included the construction of a new dock on the Hudson so that building materials could be shipped more directly to the site, quarrying and cutting the foundation stones on site, mixing concrete from local materials and hiring local craftsmen instead of a general contractor. The board also deviated from the plan it had sent the state, in particular by building a shorter female wing when it came to believe that fewer patients of that sex would be admitted. As a result it is one of the few Kirkbride hospitals to have been built with asymmetrical wings.

The main building was completed and opened, with 40 patients admitted, in October 1871.

Buildings continued to be opened and reopened in the 20th century, and as late as 1952 the institution was treating as many as 6,000 patients. The medical procedure of lobotomies was still performed here until 1957. Then, changes in the treatment of mental illness, such as psychotherapy and psychotropic drugs, were making large-scale facilities relics and allowing more patients to lead more normal lives without being committed. By the late 1970s the hospital administration had decided to shut down the two main wings as few patients were residing in them and due to neglect some of the floors had collapsed. The state offices of Mental Health and Historic Preservation clashed over a plan to demolish the wings, even after the National Historic Landmark designation in 1989.

In the 1990s, more and more of the hospital site would be abandoned, as its services were needed less and less. It was consolidated with another Dutchess County mental hospital, Hudson Valley Psychiatric Center, in 1994 and closed in 2001.

The state had decided to sell the property for redevelopment, and in 2005 the Empire State Development Corporation sold 156 acres -including the Main Building to Hudson Heritage LLC, a subsidiary of the Chazen Companies, for $2.75 million. Hudson Heritage and Chazen plan to thoroughly renovate the Main Building into a combination hotel/apartment complex as the centerpiece of a residential/commercial campus, Hudson Heritage Park.

However, these plans hit two setbacks later in the 2000s. In 2005, the Town of Poughkeepsie imposed a moratorium on new construction while it adjusted its zoning to deal with its growth. Hudson Heritage has been seeking to have a "historic revitalization district" created for the property that would help spur its growth. Then, on May 31, 2007, lightning struck the south wing, causing one of the most serious fires in Dutchess County's history. It is unclear whether that portion of the building can be effectively restored after such severe damage.

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