Breakdown of Það er synd að aðstaðan sé svona slæm.
vera
to be
það
it / there (existential) / the one (n)
slæmur
bad
að
that (conjunction)
Questions & Answers about Það er synd að aðstaðan sé svona slæm.
Why is sé used in this sentence instead of er?
sé is the present subjunctive form of vera (to be). We use the subjunctive here because the að clause follows a value judgment: Það er synd (It is a pity). Whenever you express a personal evaluation, emotion, or judgment about a fact, Icelandic requires the evaluative subjunctive in the following clause.
Could I use the indicative er here in casual speech?
You might occasionally hear native speakers use the indicative (er) here in highly casual, everyday speech. However, in standard spoken and written Icelandic, the evaluative subjunctive (sé) is strongly expected after expressions like Það er synd, Það er gott, or Það er skrýtið.
Does the noun aðstaðan only mean "the facility"?
No, aðstaða is a very versatile word. While it often means "facility" or "facilities" (like a workspace or gym), it can also translate to "conditions", "circumstances", or "situation". Depending on the context, this sentence could just as easily mean "It is a pity that the conditions are so bad."
Why is the adjective slæm instead of the neuter form slæmt?
Slæm is feminine nominative singular because it describes aðstaðan, which is a feminine noun. Even though the main clause starts with the neuter dummy pronoun Það (It), the adjective inside the að clause must agree with the subject of that specific clause.