News & Announcements
Mutual Termination of Midtown Development Agreement
City Options Moving Forward
In a Special Session on January 28, 2021, the Governing Body voted unanimously to mutually terminate the Exclusive Negotiation Agreement (”ENA”) between developer KDC/Cienda and the City of Santa Fe regarding the Midtown property formerly known as the College of Santa Fe and formerly operated as the Santa Fe University of Art and Design.
Risk factors mostly associated with financial uncertainty caused by the COVID pandemic led to the mutual termination of the ENA. The chain of events evolved as follows:
- In response to the City's broad solicitation for development and business ideas, interests, and proposals for the redevelopment of Midtown, the city received highly professional responses, that included 7 master developers. (Due in Oct 2019)
- After evaluating the seven respondents, and interviewing three finalists, the Midtown Evaluation Solicitation Committee recommended a single finalist -- "Team Midtown" led by KDC Cienda.
- The Governing Body approved entering into an Exclusive Negotiation Agreement on May 4, 2020, that granted some exclusive rights for the master developer to undertake a series of industry-standard real estate studies and site assessments.
- In December 2020, City department leaders and the development team held a joint three-day workshop (a "charrette") to identify challenges and opportunities for moving forward with planning and developing the Midtown site. A series of key points were addressed, including: infrastructure, public finance, master planning, entitlements, existing buildings.
- As we all know, COVID-19 drastically changed economic conditions, which created significant development, investment, and financing risks that the developer determined made the project infeasible based on their underwriting and development risk analysis.
- Because of these significant risks the developer issued a letter to withdraw from the Exclusive Negotiation Agreement on January 21, 2021. The letter states: “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.” Read the letter from the developer here.
- In response, and acting as a good faith partner, the City proposed the mutual termination agreement that was approved by the Governing Body.
City officials and prospective partners have gained valuable information from the “due diligence” process. That knowledge will help guide choices for the best way to move ahead with the Midtown site.
The 64-acre campus is still regarded as a very exciting and desirable opportunity. It is the geographic heart of the city, suitable for a mix of education, housing and jobs, along with parks and public spaces, performing arts, and recreational spaces.
Teams from various City departments are now developing proposals and solutions for moving forward. While terminating the ENA, the KDC/Cienda team and many of its local partners have indicated an ongoing interest in continuing to participate in the development of the Midtown Site.
By the end of February there will be a recommendation for the Governing Body to consider.
Mayor Alan Webber: “With tonight’s unanimous vote, we continue to recognize the extraordinary opportunity at Midtown, and at the same time, move forward on a new path. The process of working with the master developer was extremely helpful and productive. We gained useful information, including how much needs to be invested to make the site shovel-ready. With the help of the State Legislature and the support of the people of Santa Fe, we’re going to do everything we can to convert the potential of Midtown into the future of Santa Fe.”
KDC/Cienda leadership statement: “While we both have mutually agreed to terminate the Exclusive Negotiation Agreement, there are plenty of future possibilities that Team Midtown would like to explore with the City as they build upon the work that needs to be done to increase its land value and marketability for Midtown.”