The local developers behind Market Station—better known as the REI building in the Santa Fe Railyard—appear to be in deep financial trouble. And one way or another, they want Santa Fe taxpayers to bail them out.
At its May 26 meeting, the Santa Fe City Council will consider a request from Railyard Co., LLC, to lease office space at Market Station, which is built on city-owned land. “Strong-arming” might better describe Railyard Co.’s strategy, as the company has threatened to sue the city if action isn’t taken to satisfy them.
The legal threat has had the effect shutting down public scrutiny of the city’s negotiations with Railyard Co., as City Attorney Geno Zamora has advised councilors not to talk about the nature of the dispute.
Councilor Matt Ortiz, who has carried proposals favorable to the developers, sponsored a resolution that would authorize such a lease. “A do-nothing approach [to the Railyard] just exposes us to legal cases and the prospect of a taxpayer payout,” Ortiz tells
Mayor David Coss says there’s probably a better way forward. “We’ve got other options for where to lease office space,” Coss says.
In addition to the proposed lease, an earlier Council resolution raised the possibility of a city-backed bond of up to $42 million that would finance the construction of a new cinema next to Market Station [News, Oct. 21, 2009: “Get The Picture?”]. As part of that effort, Railyard Co. also has requested $25 million in tax credit support from the
The economic benefits of such a project are questionable, but the benefits to Railyard Co.’s owners are clear. Indeed, a publicly financed cinema may be their best option to satisfy old creditors.
Railyard Co. principal Rick Jaramillo explained the cinema’s importance to the company’s finances in a comment he posted online while applying for a loan.
“In light of the current market crisis, our current lender issued a willingness to provide a refinance and construction loan to Railyard Company if [tax credits for new businesses in low-income areas] have been attached to the [cinema] project,” Jaramillo writes in the Oct. 25, 2009 web post.
The comment was part of Jaramillo’s query regarding financing from Cohen Commercial Equity, a Modesto, Calif.-based lender that offers the equivalent of payday loans for “no credit score borrowers” and businesses that traditional banks have deemed unworthy.
“When Banks Say ‘No’, We say ‘Yes,’” Cohen’s shoddily designed website says. Its chief executive, John Corbin, tells
he isn’t sure if anything came of Jaramillo’s inquiry.
to Railyard Co. principal, attorney and spokesman Marco Gonzales, who would only take questions by email. Gonzales refused to answer specific questions, replying with a boilerplate statement that reads, in part: “We are going to
the city’s desire to keep certain information confidential.”
Earlier this month, the Journal North reported that the city had filed a counterclaim against Railyard Co. as part of a long-running legal dispute instigated by the contractor hired to build the underground parking garage.
has found a separate lawsuit filed last fall in Santa Fe’s 1st Judicial District Court by a plumbing parts supplier, Albuquerque Winnelson Co. That company claims it’s owed $53,000 by the Railyard Co. and Plumb-Tech Inc., a contractor owned by Bruce Duran, who is a brother and business associate of Railyard Co. principal Steve Duran. In a response filed Jan. 20, attorneys for Plumb-Tech deny the company owes Winnelson any money.
Case documents show that Plumb-Tech’s debt to Winnelson was secured by a lien on the Market Station building. Winnelson has asked the court to force the sale of the building in order to settle the debt.
The lawsuit names PNC Bank of
as having an interest in the property, along with an out-of-state company called 400 Market Street, LLC.
A Market Station tenant who requested anonymity says Railyard Co. has fallen behind on upkeep. “We’ve all had heating and air-conditioning problems,”’ the tenant tells
. “There’s no gutter to this building—they can’t afford to put one in. So when it snowed, chunks of ice fell over the side. It could kill somebody!”
That’s unlikely, so long as there are several long-term vacancies at the building.