On October 17, 1909, the State Commission in Lunacy purchased 550 acres (2.2 km2) on Lake Mohansic for $135,000, with the intention of building an asylum to accommodate 2,000 (later 6,000) patients to relieve the overcrowding of institutions in New York City.
In 1911, a spur from the New York and Putnam Railroad was built from Yorktown Heights and across Crom Pond to the site.
Senator Robert F. Wagner cited concerns of pollution to the New Croton Reservoir and the New York City water supply from sewage the asylum would produce, and Senator Henry M. Sage cited the considerable amount the State had already spent developing the property at New York City's request.
New York State Governor Charles S. Whitman eventually ordered construction stopped to protect the watershed, and in 1918 he signed a bill which abandoned the hospital project.
The funds for Mohansic were re-appropriated for use in construction of an asylum in upstate New York, and the property was converted to a state park in 1918.