Lawsuit filed over Railyard Flats apartments
Bank, condo group concerned about loss of parking spaces
New tenants of the Railyard Flats apartment project are expected to begin signing leases in February and move into the 58-unit building by early next summer.
But as construction on the $7.8 million project moves toward completion in the Santa Fe Railyard, behind Warehouse 21 and along the railroad tracks, a new controversy has erupted over its location and the impact it might have on an adjacent commercial building owned and managed by Century Bank.
The Santa Fe-based bank and the ArtYard Master Condominium Association filed a complaint Monday in the state’s First Judicial District Court against the Santa Fe Railyard Community Corp., which manages the cityowned parcels of land under both structures. The footprint of the new apartment building violates the ArtYard’s lease with the Community Corp., the lawsuit says, and deprives tenants of the two-story, 24,800-square-foot live-work complex — and their customers — of promised shared parking and common space.
The bank and its tenant association argue that since construction on Railyard Flats began, prospective tenants have backed away from leases at the ArtYard, and the potential value of the building in any sale has been reduced.
“The scope and density of the apartment development goes well beyond what was originally contemplated in the Master Plan as acceptable,” Santa Fe attorney James Jurgens said in the complaint, which has been assigned to state District Judge Sarah Singleton.
Century Bank acquired the ArtYard building as the result of a foreclosure in 2013, when the original ownership group defaulted on a $4.2 million loan.
The city of Santa Fe owns the land under the ArtYard complex and the Railyard Flats project as part of the 50-acre Railyard development. Railyard parcels are assigned longterm leases structured to sustain investment.
Some of them have been leased to Warehouse 21, the Farmers Market Pavilion, the Violet Crown Cinema and Second Street Brewery.
The leases and the Railyard property, which includes a park, a public parking lot and a plaza, are managed for the city by the Railyard Community Corp., which has a professional staff but is governed by a 17-member board of directors, which includes planners, architects, elected officials and community members.
The Railyard Community Corp. backed the Railyard Flats apartment project and supported its development through the city review process.
In its complaint, Century Bank claims the organization’s approval of the new project violated its agreement with the ArtYard, which promised the adjacent parcel would have a similar commercial use rather than dense apartment living.
The land lease between the Railyard Corp. and the ArtYard Condominium Master Association was for 50 years commencing in 2007, with an initial monthly payment of $47,573, but that has since increased 2 percent a year, according to court filings. The lease with Railyard Flats and its developer, Peter Auberg, is not public at this time.
Jurgens argues that the apartment project “will cause traffic congestion, parking problems and excessive noise which will substantially deprive plaintiffs of the beneficial use of the ArtYard Property.”
The lawsuit claims there have been financial losses to the plaintiffs already, with some potential tenants backing away from leases and others agreeing to terms “only with below market rents.” Likewise, the suit says, the potential sale of the complex has been affected.
The apartment project and the ongoing problems it will cause to the ArtYard “are a reoccurrence of an adverse condition which constitutes a constructive eviction,” Jurgens said in the complaint.
Richard Czoski, executive director of the Santa Fe Railyard Community Corp., said the legal process was just beginning and that he could not comment on the lawsuit.
Douglass Lawder, a trainer and consultant with Railyard Fitness, the anchor tenant of the ArtYard complex for almost eight years, said his clients come to use the facilities several times a week, and parking is an important part of his business.
He said the apartment project “is a huge difference” from what was planned at the site, which was something akin to the ArtYard. “That was the original concept,” Lawder said.
“My customers come here three, four, five times a week,” he said. “If this building doesn’t have parking, we might as well just close it up.”
In 1995, the city spent $24 million buying the 50-acre Railyard and another $4.5 million on a community planning process that brought in a national architectural and planning team.
Though leases at the Railyard can run for 90 years with extensions, the Santa Fe Railyard board retains approval for tenants to ensure they keep with the character of the urban development, and all new construction must go through the city approval process.
The Railyard Flats project, by Texas-based developer Auberg, calls for 25 studio apartments, 26 one-bedroom units and seven two-bedroom units. Rents would range from $920 for a studio to $1,800 for a two-bedroom unit.
The Santa Fe City Council gave unanimous approval to the project May, 26, 2016, after a public hearing that drew more than a dozen speakers, many of whom raised concerns about the impact on parking in the neighborhood adjacent to the Railyard.
At an earlier hearing, the city Planning Commission approved the project, but only after it was determined that apartment residents would be assigned 65 parking spaces that previously were accessible to the public.
Among those who testified was Bob Bidal, president of the ArtYard Condominium Master Association and an executive vice president of Century Bank. He said they opposed the size and density of the project, as well as a plan to create covered parking spaces.
“Century Bank presently has unrented commercial space on the ground floor in the ArtYard. It serves to reflect what we fear might occur to the entire building if this plan is approved as presented,” he said.