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The Railyard master plan calls for a “diverse, people-oriented community place”; proponents of a city proposal to buy office space here say city government’s presence could help achieve that.

Third Rail

Controversy heats up over the city’s plan to buy an empty part of the Railyard’s Market Station building

April 25, 2012, 12:00 am

Jagged shards of busted glass greet visitors at the northeast entrance to the second floor of the Railyard’s Market Station building. Inside, undeveloped rooms have been sitting vacant ever since construction ended in 2008.


But the dismal scene, which is doing little to live up to the Railyard master plan’s vision of a “diverse, people-oriented community place,” could drastically change if the Santa Fe City Council approves buying 22,000 square feet of the Market Station’s second floor and relocating city offices from the downtown US Postal Service building.


The purchase, which would cost the city $5 million plus moving expenses, would be a boon for Railyard Co. LLC, the local development company charged with developing parts of the Railyard. So far, Railyard Co. has been unable to lease Market Station’s upstairs to private companies; the city’s decision to take an albatross off Railyard Co.’s hands would provide the developer with a steady source of income and, proponents say, enliven the struggling Railyard.


But the proposal has largely lacked public input, and critics cast it as a bailout to a company that has failed to live up to its part of the bargain. 


City Manager Robert Romero says the purchase would cost slightly more than the approximately $400,000 a year the city pays to rent offices at the federal post office building. Romero says the city would also gain an asset while bringing life to the Railyard’s ghost-town atmosphere.  


Richard Czoski, the executive director of the nonprofit Santa Fe Railyard Community Corporation, which is charged with leasing out the land in the Railyard, says that, if the purchase proves successful, an occupied second floor at Market Station could prompt developers to rent the vacant space below. In addition, he says, people who have business with the city would have to come to the Railyard. 


“Hopefully, they’ll stay and have lunch,” Czoski tells SFR. “Or they’ll go to REI, or they’ll go to a gallery, or they’ll go to the farmers market.”


But questions linger about the wisdom of continuing to rely on a traditional pillar—government jobs—rather than fostering new economic directions for Santa Fe. Some critics also worry that the purchase would reward a company with a shoddy record and a tendency to threaten the city in order to get its way. 


“It’s been a long time with this company,” Mayor David Coss tells SFR. “There’ve been times when it’s been difficult to work with them.”


Up to this point, official discussions of the potential purchase have been held behind closed doors. But a week of drama in mid-April over an ethics investigation involving City Councilor Patti Bushee and Railyard Co. Principal Steve Duran has helped push the matter into the public sphere. (Duran has accused Bushee, a vocal opponent of the Market Station purchase, of failing to pay for plumbing work his brother did for her eight years ago; Bushee has denied the allegations, but the city gave an Albuquerque firm a $25,000 contract to investigate the matter.)


The larger dispute essentially boils down to Railyard Co.’s inability to make Market Station a success. To this day, a movie theater that the city contracted Railyard Co. to build next door remains a gaping hole in the ground. Likewise, the underground parking garage stalled before it was completed, which prompted Railyard Co. to threaten a lawsuit against the city—the same lawsuit city officials say they hope to avoid by proceeding with the purchase. 


The real estate collapse and the added federal regulations on bank loans contributed to delays in both projects, Czoski says. 


“[Railyard Co.] couldn’t deliver,” former City Council candidate Bob Sarr, who struggled with the city last year when it kicked his company, Santa Fe Southern Railway, out of the Railyard’s depot building, tells SFR. “It’s not their fault. It was the market.” 


But former City Councilor Karen Heldmeyer says other factors played a role in Railyard Co.’s  failures. Railyard Co. has a reputation of running into legal trouble: Since 2008, the company has been named a defendant in eight different lawsuits. Railyard Co.’s principals have even sued each other. 


In September 2010, principal Allen Branch sued fellow principals Steve Jaramillo and Duran, alleging that  they had illegally pocketed company funds. At the time, Jaramillo and Duran accused Branch of not investing any of his own money into the Railyard project. All three remain principals of the company today. 


Jaramillo has blemishes on his personal record as well. Between 2003 and 2006, he was charged four times under state law for writing bad checks. The cases were dropped when restitution was paid in full [news, Oct. 21, 2009: “Get the Picture?”]. 


Railyard Co., which only responds to written media requests, did not respond to SFR’s emailed questions before press time. 


Yet concerns about Railyard Co. extend beyond legal matters. Bushee notes that the Railyard master plan doesn’t include relocating city offices there. 


“We have resolutions in the books that say city government must be downtown,” Bushee says. “To come in and rescue what perhaps is a failing private interest, we’re bypassing the discussion of, ‘Do we want long-term government in the Railyard?’”


But Heldmeyer says the master plan—the result of countless community discussions and the input of approximately 3,000 people in the late ’90s—has often been bypassed, sometimes for Railyard Co.’s benefit.


“Time after time, they have asked for special treatment,” Heldmeyer tells SFR. “And time after time, they have gotten it.” 


Coss says that whether the city’s dealings with Railyard Co. amount to special treatment or just honest efforts to make the project work is in the eye of the beholder. He adds that Railyard Co. did build a 500-car parking garage, certainly no small task. 


“Setting characterizations aside, I want to look at what is best for the Railyard,” Coss says. “Certainly, we can do nothing and see if it fails.” 



At the 5 pm Wednesday, April 25 City Council meeting, City Attorney Geno Zamora will discuss threatened litigation against the city from Railyard Co. LLC. Both the threatened lawsuit and the city’s purchase of 22,000 square feet of office space at Market Station are listed as action items for the meeting. No public hearing is scheduled for either item.


 

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