It's a big letdown for Mid-Market.

The developer who had proposed and was planning a space for performance arts groups to be called 950 Center for the Arts & Education has just informed a surprised City Hall that it won't be building the center after all. The community-based performing arts center was to be a highlight of a larger project and the biggest, most ambitious new arts plan for Market Street. The Chronicle reports that the city can instead expect a less-expensive development at 950 Market. This one, unlike the previous proposal, wouldn't require the negotiations over zoning that were one in a series of contentions between the developer, Group I, and the city.

When Group I purchased a majority of the 25,000-square-foot site in 2013, the cost was $16 million. Then Group I paid another $7 million for the eastern end of the block. Since that time, they'd been working with City Hall staffers on a deal to surpass current height restrictions by 80 feet. The exchange: performance spaces for Tenderloin theater and dance troupes, subsidized office space for arts groups, 300 housing units, and a 250-room hotel.

But Group I was also adamant from the get-go that arts nonprofits pay for 50 percent of construction costs. That would have been an estimated $15 million. The city seemed willing to go ahead with the rezoning, but expressed the opinion that with that added height and value, Group I wouldn't need construction cost help from the arts nonprofits. Yet Group I Project Director Steve Kuklin tells the Chronicle that he was still looking for the funding, which seems to have been a serious point of disagreement with the city. “We couldn’t keep pushing when there were so many loose ends on so many pieces," he said. "There was a big need for arts funding to make this happen, and the arts groups we were targeting didn’t have the resources to support the project... the numbers just didn’t work out."

A disappointed Supervisor Jane Kim said that “The 950 arts center was something the community had been excited about for a long time, and something we always envisioned would play a central role in the Mid-Market arts corridor.”

Group I is still retaining the project's designer but will be shifting things around. Though the development will still call for a hotel and housing, fewer rooms are expected. The building, when it arrives, will be greeted by whatever replaces soon-to-close 21 Club. And by then it will be around the corner Loco’l, Daniel Patterson and Roy Choi's fast-food overhaul expected to open over the summer.

Previously: Holy God, 950-974 Market Street Is Going To Be Huge