SANTA FE — 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 myriad of unforeseen issues.
Local officials have long heralded the Midtown campus, used for various college campuses over the decades, 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.
A Thursday letter from KDC/Cienda to the city cited the pandemic among reasons why it would not seek an extension to the negotiating agreement set to end in May.
“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 the developer have not responded to requests for comment.
Mayor Alan Webber said certain aspects of the developer’s proposal, such as commercial office space, were no longer viable since the pandemic has altered the working lives of so many.
But 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 wrote, and many of its buildings had “no commercial value.”
KDC/Cienda also warned of environmental contamination on the site, which Economic Development Director Rich Brown said was asbestos. The amount and location of the asbestos will be determined following an environmental impact study, Brown said.
Currently, dozens of homeless people are being housed in the campus’ dorms to prevent the spread of COVID-19. Brown said he’s unaware if there is asbestos in the dorms, but said he believes it is unlikely and that residents won’t be moved out.
Many of the buildings require expensive demolition, the letter stated, and the firm 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 last week between the city and the developer to discuss the viability of the project. James Feild , vice president of Cienda Partners, said the meeting showed “there’s a lot of things that are going to take more time than anyone expected going in.”
KDC/Cienda’s announcement 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 must decide the process for Midtown going forward, which Webber said is still being decided. He also said he doesn’t view KDC/Cienda’s termination as a setback for the city.
“It’s not a win-lose situation,” Webber said. “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 will be more open to the public going forward.
Meanwhile, the city still must pay the $1.7 million a year of debt service on its loan for Midtown with limited revenues. City figures show remaining payments on Midtown total almost $32 million and that the campus runs a deficit almost every year.