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StarTek: We're not returning to Victoria or repaying tax abatements

By Gabe Semenza
Aug. 2, 2010 at 3:02 a.m.


READ THE TAX ABATEMENT DEALTo read the 22-page abatement deal, visit www.VictoriaAdvocate.com and click this story.

StarTek has no plans to reopen in Victoria or repay tax abatements it received for doing business here, the company says.

The call center signed a tax abatement agreement with Victoria County and the city of Victoria in December 2007. It opened its doors shortly thereafter.

To avoid default, the company must continuously employ at least 10 workers through December 2013, according to the agreement. Thus, StarTek appears to have defaulted on the agreement when it closed its doors in January - almost four years before the contract ends.

"Based on our analysis of the tax abatement documentation, we have determined that we have no obligation to repay the abatements previously received," Rosemary Hanratty, a company spokeswoman, said in an e-mail.

StarTek received incentives from the city and county to renovate the once-dormant building at 1309 E. Red River St., location of the old Albertson's building. The company also met minimum employment requirements.

The agreement notes that if the owner closes its doors before Dec. 31, 2013, the tax abatement agreement is in default.

In the event of default, all taxes which otherwise would have been paid - without benefit of abatement - are owed to the city and county, according to the agreement. The amount owed - on $5.1 million in abatement-eligible property - includes penalties and interest, the agreement notes.

The city's and county's positions on this agreement and whether StarTek owes delinquent taxes remain, perhaps, surprisingly unclear.

Thomas Gwosdz, the city's attorney, said the company is in default of the agreement, but deferred a legal opinion until he studies the contract. The company had a grace period after closing its doors - a time in which it could resurface from default. That period recently ended.

After studying the contract, Gwosdz will next notify the company in writing about whether local municipalities believe money is owed, he said.

Dale Fowler, president of the Victoria Economic Development Corp., suggests money is owed, although he deferred an official legal opinion to the attorney.

"It's unfortunate when these companies close, but that's why we have agreements with these folks," he said. "If they fall below the minimum employee level, that triggers paying back taxes they were relieved of. That's what appears to have happened."

Fowler is a proponent of the StarTek incentives, he said, because by offering them, the company renovated the rundown building, employed as many as 269 people and helped to boost the economy.

StarTek and two other companies - Dolphin Associates and Whisper Capital - signed the abatement deal. All three companies were dubbed the "Owner" in the contract, and all contract stipulations pertain to the "Owner."

This contract nuance, as well as other unknowns, raise other questions:

Does StarTek have a deal with the other companies that absolves it, but not the others, of unpaid taxes?

Because Dolphin Associates owns the building and leased to StarTek, does Dolphin Associates solely owe the taxes?

How much in tax abatements were given by the city and county?

Phone calls and e-mails to the companies on Monday were unreturned. The city and county said calculations of the abatements given will soon be calculated.

"It's not a dead issue," County Judge Don Pozzi said. "It's certainly something we're looking at."

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