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In 1892, an artesian well containing sulphur water was discovered an a property owned by the Southwestern Lunatic Asylum. The water was leased to McClellan Shacklett who piped it from the Asylum about 400 yards to the current site of the Hot Wells ruins. At some point, a well was drilled on the current Hot Wells ruin site so water was no longer piped from the Asylum.
In November 1899, a group of local and Northern investors secured a 25-year lease on the Asylum's waters and announced plans to build a "large and commodious hotel with attractive grounds and park in addition to the bath house and all other conveniences and ample capital with which to make improvements of the highest class in accordance with modern demands and of a permanent nature."
The investors formed the Texas Hot Sulphur Water Sanitarium Company, purchased Shacklett's property and an additional tract, and by late 1900 had completed a bath house and three swimming pools. The bath house had three public 64' x 90' pools and 45 private rooms with marble partitions and solid porcelain tubs, separate facilities for ladies and gentlemen, and steam, Turkish, Roman, needle, and shower baths. By 1902 a hotel was completed with 80 rooms and modern-day conveniences such as hot and cold water, steam heat, electric and gas lights, and individual telephones. An ostrich farm was relocated from San Pedro Springs so that local ladies could easily acquire feathers, an important component of ladies' fashion of the day.