San Luis refinances loan for call center
SAN LUIS, Ariz. — The prospect of paying off the debt sooner and at lower interest rate is prompting this city to refinance a loan it incurred more than a decade ago to bring a call center to San Luis.
The San Luis City Council recently voted to approve reissuing up to $14 million in bonds to pay off what the city owns on the purchase and remodeling of a vacant commercial building on the city’s west side that now houses Advanced Call Center Technologies.
The vote marks the second time the city has refinanced the cost of purchase and remodeling of the former San Luis Price Center building, located on Plaza Center.
In 2005, the city got $15 millon for the building through the Greater Arizona Development Authority. Four years later, the city issued bonds to refinance the project over a 30-year period.
“On that occasion (the project) was refinanced at 8 percent interest,” said Mark Reader, manager director of Stifel, the firm that has prepared the new plan for the city. “We are optimistic that it can be done under better conditions, at an interest of 4 percent, saving the city at least $3.5 million, if not more, and paying off the debt five years sooner than under the original schedule.”
Reader said he foresees the bonds being attractive to investors, given the city’s good credit rating and its financial stability.
“The council and the administration have made good financial decisions,” he said. “We think the city will get favorable conditions under this debt refinancing.”
The city acquired and upgraded the then-vacant commercial building with the hope of attracting tenants that in turn would create jobs for San Luis residents.
While the call center has, in fact, created more than 100 jobs, it occupies only part of a nearly 84,000-square-foot building that otherwise remains unoccupied. Rent payments by the tenants were supposed to go toward paying off the loan, but have fallen short, forcing the city to subsidize debt retirement with money from the general fund.
Mayor Gerardo Sanchez said the project did not work out as intended in 2005.
“The intention was to create jobs, and up to a certain point it was justified,” said Sanchez, who was not in office when the project was approved. “But when you have to subsidize it with the city budget, then there are problems.”
The lack of tenants other than the call center means the city has to earmark nearly $1 million annually to help retire the debt, Sanchez said.
“Government should facilitate (creation of) jobs, but in this case, we are paying for them. We are correcting the situation, trying to save money and pay off the debt sooner.”