Santa Fe officials weigh labeling midtown campus a blighted area to spur development

Jun. 1—The word evokes unpleasant thoughts: disease, damage, ruin.

But "blight" might be the term needed to help kick-start new development at the city of Santa Fe's long-dormant midtown campus on St. Michael's Drive.

The City Council last week heard a presentation on establishing the 64-acre property and some surrounding neighborhoods as a Metropolitan Redevelopment Area. The state government designation could bring in additional public funding to help renovate the former college campus and create a commission to oversee economic improvements.

To do so, however, the city would have to deem the campus and nearby properties as a "blighted area," a legal definition used by governments to describe sites in need of an overhaul.

"It doesn't mean what, maybe, the common parlance" might mean, City Attorney Erin McSherry said. "It could mean that as well, but it is a broad amount of factors that could qualify an area for this designation."

The City Attorney's Office told councilors the Metropolitan Redevelopment Act is a state statute that would provide the city with access to a bevy of tools, including economic development grants meant to uplift a blighted area — which is classified as a place with deteriorated structures, poor street layout, a lack of adequate housing and out-of-date or improper planning, which leads to low levels of commercial or industrial development, among other factors.

"Midtown and the property surrounding Midtown have a number of these characteristics," the City Attorney's Office wrote in its presentation.

The city would have to create a redevelopment plan addressing any resident displacement that might occur and create a commission dedicated to the "planning, preservation, rehabilitation, redevelopment, development or management" of the area.

The Metropolitan Redevelopment Area designation would allow the council to maintain control of the project and gather community feedback through open commission meetings.

Since identifying the site for a massive redevelopment expected to take at least a decade to complete, the city has run into roadblocks.

The city purchased the campus — the longtime home of the College of Santa Fe — from the Christian Brothers in 2009 for around $30 million. The Santa Fe University of Art and Design later began operating on the property but closed in May 2018.

Two years later, the city selected the Dallas-based firm KDC Real Estate Development & Investments/Cienda Partners as its prospective midtown campus master developer, but the firm backed out of the agreement in January 2021 due to concerns about the site, such as deteriorating buildings, and economic uncertainties tied to the coronavirus pandemic.

In a letter explaining its decision to back out as master developer, KDC/Cienda estimated renovation costs to be as high as $30 million — although, how the firm came to that number has never been explained to city officials.

The city has explored other options to develop the site, one of which includes establishing a Metropolitan Redevelopment Area.

The proposal is not without drawbacks.

A Metropolitan Redevelopment Area would add another layer to the approval process through the creation of a commission, which likely would need staff support. The commission would only be able to lease property on a one-year basis. Longer leases would have to be approved by the council.

The City Attorney's Office provided three proposed mock-ups for a Metropolitan Redevelopment Area designation, two of which include nearby neighborhoods, and another that includes Franklin E. Miles Park.

Concerns have been raised in previous city meetings about whether a "blight" designation would have a negative impact on property values.

Marcos Martinez, a senior assistant city attorney, said the office reached out to Albuquerque, which often has used the Metropolitan Redevelopment Area designation, and was told "anecdotally" the designation didn't have any impact on property value.

"It is not a pejorative connotation," he said. "It is simply prescriptive of a state of affairs."

City Councilor Carol Romero-Wirth also questioned why the blight district would need to include anything but the 64-acre campus and whether including outside areas would then require the city to renovate them.

She said the designation could be an opportunity to address problems in neighbors, but Romero-Wirth wondered, "Does it actually get fixed?"

The city would have to outline a blight mitigation plan, Martinez said, adding it was "tricky to say" whether all of the issues cited actually would be improved.

The city previously explored a request for expression of interest, which allows a developer time to do exclusive due diligence on a site before being selected as the final partner. Martinez said the city could explore the option again.

That process ultimately led to KDC/Cienda pointing out many of the infrastructure problems at the property that could lead to a blight designation.

Martinez said the city also could attempt to offer additional incentives for businesses to participate in the midtown campus development or even sell the property.

Assistant City Attorney Andrea Salazar said the Metropolitan Redevelopment Area designation provides a "diversity of options" for tackling what has become a long-gestating project.

The city used a Metropolitan Redevelopment Area designation to develop the Railyard District, but instead of having a Metropolitan Redevelopment Area agency oversee the area, the city contracts with a nonprofit, the Santa Fe Railyard Community Corp., to manage the site.

The city later entered into a lease and management agreement for Railyard development, in which the city avoids acting as a landlord and rental rates have remained low. However, the deal also removed any city oversight of the nonprofit and created a sometimes confusing delineation, with the city retaining ownership of the land and the nonprofit owning the buildings.

Albuquerque often uses Metropolitan Redevelopment Areas to help spur development in its more economically stressed areas. One of its more successful examples is the renovation of the Sawmill area, which was once an industrial lumberyard but is now a mix of housing, museums, hotels and a slate of other local businesses.

Las Cruces also used a Metropolitan Redevelopment Area to help revitalize its downtown area.

City Councilor Renee Villarreal said she was a fan of the way the Sawmill area is developing in Albuquerque and was interested in exploring a similar model in Santa Fe, especially for homeowners.

"The [Sawmill] Community Land Trust in Albuquerque has been highly successful," Villarreal said. "Sure, they have had some bumps along the road, but they have been able to maintain an area that has stayed affordable."

Romero-Wirth said she recently visited the Sawmill area for a museum exhibit and gave the development high marks.

"It is fascinating to see what has come about," Romero-Wirth said. "It is very vibrant, it is very mixed use, and in my mind it is an incredible success."

Councilor Signe Lindell said she still had concerns about Santa Fe's proposal, noting she has questions about financing.

"I would really have to have a complete financial analysis of what this means for the city," she said. "It all looks so great here. It all looks terrific, but we are going to be asked to put some very, very sizable money into this project."