Mayo Clinic Health System announced Friday it would no longer pursue selling the former St. John's Hospital building for a proposed housing development.

The project, that would have seen the site of the West Fourth Street building turned into a multi-unit apartment complex, has faced public backlash and ongoing discussions in City Hall. Now that a purchasing agreement with real estate developer Global Mercantile has expired, building-owner Mayo Clinic Health System is moving on.

“The purchase agreement has lapsed without the developer meeting the terms and criteria,” said Steve Gudgell, vice chair of administration at Mayo Clinic Health System in Red Wing, in a news release Sept. 13. “Given the recent limitations placed on the number of units in the proposed housing redevelopment, our decision is based on concerns about the viability of the project and our desire to find a solution that benefits the Red Wing community.”

Mayo Clinic Health System vowed to work with the city to explore other options.

Revised plans this summer called for a 102-unit apartment complex and 160-stall parking lot. Estimated rental costs ranged from $866 a month for a studio apartment to $1,114 for a two-bedroom unit. City Council then voted 5-2 on July 22 to cap the number of units at 65.

City Council members questioned the density of living units in the area zoned for multi-family residential use. Neighbors also voiced concerns about the potential for increased traffic and declining property values for surrounding homes.

Another roadblock to the controversial project came in August when City Council member John Becker was granted a harassment restraining order against Global Mercantile founder Pablo Murillo. Becker told the court that, in the days leading up to the July vote on the project, Murillo and another man went to Becker's Rochester business where Murillo allegedly told a story about Murillo's wife being nearly beaten to death. Following the July 22 City Council meeting, Becker further testified that Murillo had threatened him.

Mayo Clinic Health System announced the purchasing agreement with Global Mercantile in January. The former hospital building, which was most recently the Mayo Clinic Health System Professional and Community Center, was shuttered in 2018. For years it was home to a number of nonprofit groups renting the space at no cost.