Developer’s exit brings new opportunities

Adeveloper’s decision to end its involvement in Santa Fe’s midtown campus doesn’t have to be a devastating setback. problem? Certainly. A revealing look into the reality of the COVID-19 economy? Yes.

But community leaders must consider this an opportunity, one that allows the city of Santa Fe to have a more transparent process in determining the fate of the 64-acre plot smack dab in the middle of town.

The decision by Dallas-based KDC Real Estate Development & Investments/Cienda Partners to back out clearly is bad news, if only because it’s taken months to get to this point. The company acknowledged the post-COVID-19 landscape in its decision, but also blamed deteriorating conditions for campus buildings and site contamination, apparently a longstanding asbestos dump. The developer estimated a need for $30 million in repairs.

It’s also clear the Texas company did not appreciate New Mexico’s strict pandemic rules for business.

The challenges ahead are a lot for any developer to take on, particularly in an environment where more companies are reducing office space because workers are telecommuting and in-person retail shopping is in decline.

While Mayor Alan Webber seems unfazed by the news, pointing out other developers had expressed interest in the project last year, those companies also are going to be proceeding cautiously given the uncertain economic conditions. COVID-19 has created a chilling effect for ventures that rely on vision and money, and that will be Webber’s charge: pushing the possibilities while also making sure no one — future developers and, for sure, the city — takes a bath.

In any case, the future is uncertain for the midtown campus.

However, parts of the broader deal being planned still work. Garson Studios is functioning and the film business remains robust in New Mexico. The pairing of film production with higher education — whether moviemaking or digital training — remains likely for portions of the former college campus.

Because of the developer’s research, the city now knows which buildings may need to be demolished and which can be maintained for future renovation and restoration. Now, concentrate on maintaining the taxpayers’ investment — the city purchased the campus for $30 million and pays $2.23 million annually on the loan. Even with renting the studio, revenue coming in doesn’t cover the mortgage.

But any long-term development project, especially one this big, will have its fits and starts. Just look at the many iterations of the Santa Fe Railyard, which took decades to develop and open — only to stumble initially because of the 2008 recession.

The midtown campus, with its size and possibility, was never going to happen overnight. This is another bump in what will be a long road ahead.

The City Council will consider whether to terminate the contract Wednesday — the developers want out and would like it to be a mutual decision. So long as Santa Fe’s interests are protected, severing the deal seems reasonable.

We know from earlier community meetings and online surveys that residents are interested in housing, educational institutions, film, nonprofits and recreational uses for the campus, once home to the College of Santa Fe and later, the Santa Fe University of Art and Design.

To pay for it all, the developer wanted to put in retail and office spaces, with a variety of partners — everyone from Santa Fe Community College, YouthWorks, Christus St. Vincent Regional Medical Center and the University of New Mexico. It’s likely that even without a master developer, Christus still will need additional space. YouthWorks still wants to develop a commercial kitchen on the campus.

Many possibilities remain; Los Alamos National Laboratory had wanted space in the development, something many community members oppose. However, the lab is one entity that has plenty of money to spend. Its workers — the lab is hiring — also need housing. There’s potential there for a fruitful partnership.

For now, the city needs to maintain its investment and look for partners who can move the project forward. City leaders knew rezoning would be necessary for some potential uses, and there’s no reason to delay those changes. Who knows? Someone may want to buy the place — real estate, as we all know, keeps booming. Sixty-four acres of land is valuable, however you slice it.

The key is to turn that value into a winning return, one that repays taxpayer investment but also improves the city. As we have said before, this remains a once-in-a-lifetime opportunity. The city — current and future councils and mayors — must rise to the occasion. Don’t blow it.