Trustee seeks to gut would-be bowling alley
‘Equipment must be removed in order to make the premises leasable,’ lawyer says of Railyard site
A yearslong effort to open a brew pub and bowling alley at the Market Station building in the Santa Fe Railyard appears to be dead.
The brewing and bowl business was incorporated by the partnership that developed and opened the Market Station building in 2008, just at the start of the recession. Led by Santa Fe native Steve Duran, the group Railyard Co. LLC invested millions in the project and promised a centralized gathering spot where locals could eat and bowl. The city has not had a bowling alley since Silva Lanes closed in 2009.
But the U.S. Bankruptcy Court trustee appointed to manage Market Station has asked a judge for permission to sell the assets back to the manufacturer, US Bowling Corp., so he can move ahead with a new lease for the upper-floor area over what was once the Flying Star Cafe.
“The Trustee has investigated the highest and best uses for the premises and has determined the bowling equipment must be removed in order to make the premises leasable,” wrote Thomas D. Walker, an attorney for U.S. Bankruptcy Court Trustee Craig Dill.
Dill said a decision to sell the equipment won’t be made until all parties have had a chance to respond, likely the end of April. He confirmed that Duran and his business no longer have a lease and he will move forward with finding another tenant as soon as possible.
The apparent death of the bowling alley is an example of the struggles that the Railyard redevelopment has faced since the city purchased the property more than two decades ago. But with those struggles have come some successes.
Groundbreaking is scheduled Monday for an apartment project between Warehouse 21 and the ArtYard building. The $7.8 million project will bring 58 rental units to the edge of downtown with completion set for March 2018.
The lease on that project was awarded to Aberg Property Co. of Dallas.
The lower level of Market Station, where the bowling alley was to be located upstairs, is occupied by REI, Verizon and Daniella Clothing Jewelry & Accessories, a boutique shop for women’s clothing. The 6,500-squarefoot space that was occupied by Flying Star until its bankruptcy in 2015 is vacant, as are adjacent parcels of 900 square feet and 3,000 square feet.
Leases in the building are being offered through Ben Mohr of Barker Realty in Santa Fe.
At one time, Market Station was bustling with its anchor tenant REI, as well as Flying Star, which featured baked goods and a full menu of food. But the project fell into hard times with the collapse of the economy, a bevy of legal issues with the city and troubles with construction contractors.
After Flying Star closed, the Railyard Co. and partners Steve Duran, Rick Jaramillo and others lost control of the management of Market Station. A U.S. bankruptcy judge appointed Dill to manage Market Station at the request of the lender, Thorofare Asset Based Lending, a Los Angeles-based fund that invests in distressed real estate.
Even after the bankruptcy action, Duran and his partners pushed ahead with the bowling alley business, saying they had a long-term lease with themselves for the second-floor space.
But Dill and the creditor argued that a bowling business might not be compatible with the rights of other tenants at Market Station or future tenants. A judge agreed but ordered in December that the parties try to resolve the issue through mediation.
“The members, particularly Steve Duran, have put a great deal of time, money and effort in the bar/restaurant,” U.S. Bankruptcy Judge David T. Thuma wrote in a Dec. 3 order.
Dill hired an acoustics specialist to evaluate the impacts of the bowling business, and he reported back to the judge in February, saying the parties were unable to reach an agreement.
Market Station is a high-profile blight for a Railyard development that is seeing renewed successes with the Violet Crown Cinema, Second Street Brewery and events at the Santa Fe Farmers Market Pavilion.
The city bought the mostly vacant 50-acre railroad yards in 1995 for $20 million and issued gross receipts tax bonds to pay for the deal. The city selected the nonprofit Santa Fe Community Railyard Corp. in 2001 to oversee redevelopment and help generate revenue.
The Santa Fe Railyard Community Corp. writes long-term ground leases for those wanting to build and has final say in the approval of tenants and activities on the property.
The fate of the ground lease for the Market Station building is also part of the bankruptcy case.
The most recent financial statement filed by Dill indicates Market Station is collecting rent from three tenants for a total of $60,000 a month. But the bulk of that, $50,000, is from retailer REI, a merchandiser that specializes in outdoor clothing and equipment.
The rents go to cover utilities, maintenance and other fees for the complex, as well as the $8,100 monthly payment for the ground lease and related upkeep. The most recent financial report also shows a $49,734 payment to Response Dynamics, the firm hired to evaluate the acoustics of the bowling space.
In December, Duran said the bowling alley could have opened by the end of the year and employed 65 people. Duran also said he agreed to pay $22,000 a month in rent effective in March.
Railyard Co. LLC was among the first to sign a ground lease at the Railyard. Duran said in December that if it weren’t for local investors, the Railyard project would not exist, and now that the area is successful, the original investors who assumed the risk are being pushed out. “Personally I think we’ve been wronged, big time,” he said.
Duran asked to be sent questions for this article via email but did not immediately respond.