The city of Santa Fe’s massive Midtown campus development project was dealt a stunning blow Thursday when Dallas-based KDC/Cienda Partners, the master developer selected by the city, declared its desire to terminate the agreement due to a myriad of unforeseen issues including the COVID-19 pandemic.
Local officials have long heralded the Midtown campus, formerly the Santa Fe University of Art an Design and the College of Santa Fe before that — as a once-in-a-lifetime opportunity to create a new urban center at the heart of Santa Fe. Among the proposals were new housing, job opportunities and higher education centers.
But now the future of the campus — and what shape it’ll take once completed — has come to a standstill, as city officials regroup to figure out the next steps.
A letter from KDC/Cienda to the city detailed numerous reasons as to why it would not seek an extension to the negotiating agreement that was to end in May. One of those was the COVID-19 pandemic.
“The complications and uncertainty caused by COVID and government-ordered shutdowns have created greater risk and cost to this development that neither party could have anticipated,” the letter states.
Representatives from KDC/Cienda have not responded to requests for comment.
The City Council would have to approve a mutual agreement to terminate the contract at its Jan. 27 meeting, although either party can finalize the termination at an earlier date.
Mayor Alan Webber told the Journal certain aspects of the developer’s proposal, such as commercial office space, were no longer viable since the pandemic has forced so many people out of work and others to telecommute from home.
“COVID basically changed the economic facts of life,” Webber said.
However, the letter also points to long-standing issues with the 73-year-old campus’ infrastructure that complicated the development process, namely the condition of Midtown’s many buildings.
The campus’ infrastructure is “incomplete and obsolete,” KDC/Cienda noted, and would have required $30 million in public subsidies and added more time to the development process. The buildings had “no commercial value.”
The letter also warned of probable contamination at the campus, but did not specify exactly what type. It stated the city would need a Brownfield designation from the federal government, in which contaminated sites are rehabilitated, to obtain any private-sector investors.
Many of the campus’ buildings would require expensive demolition, it stated, and claimed it had assumed all the financial risk of due diligence in the project, while the city had taken none.
All this came after a three-day meeting was held last week between the city and the developer to discuss the viability of the Midtown project. James Feild , vice president of Cienda Partners, later said the meeting showed “there’s a lot of things that are going to take more time than anyone expected going in.”
Some of the issues concerned rezoning much of the campus to be a multi-use area, access to vehicles and traffic caused on nearby neighborhoods.
The decision to terminate the agreement was the city’s first public update on the Midtown Campus in months, a process many have criticized for lacking transparency. Even the selection of KDC/Cienda as the developer in April was announced only hours before city councilors approved the deal.
Now, the city will have figure the process for Midtown going forward and Webber said those exact details still need to be decided. He also said he did not view KDC/Cienda’s termination as a setback for the city.
“It’s not a win-lose situation,” Webber said. “What we learned from it was a great deal of valuable information — it does mean that we’re going to have really hard decisions to make.”
Other reactions to the announcement were more subdued.
“It’s really disappointing and it’s very unfortunate for the city,” Councilor JoAnne Vigil Coppler said.
Webber said the process for Midtown will be more open to the public going forward.
Meanwhile, the city, which purchased the campus in 2009, still must pay the $1.7 million a year of debt service on its loan with no future tenant in sight. Figures released by the city Thursday show remaining payments on Midtown total almost $32 million and that the campus runs a deficit almost every year.