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Kalispell City Council to consider call-center deal with TeleTech Holdings Inc.
A proposal to lease the city-owned space in Gateway West Mall to a new call center firm comes before the Kalispell City Council for final approval on Monday.
A special meeting has been called to address a resolution approving a lease buyout agreement for Stream International, a new lease agreement with TeleTech Holdings Inc. and a job credit agreement.
By William L. Spence
The Daily Inter Lake
Under the terms of the deal, TeleTech would open a new call center in the mall.
In return for a 100 percent rent abatement, it would employ at least 125 people during the first year of operation, 250 the second year and 425 every year thereafter. At least 80 percent of the positions would be full time, with a minimum hourly wage of $8 plus 20 percent benefits.
Kalispell and the Flathead County port authority acquired 60,645 square feet in the Gateway West property four years ago as part of a complex incentive package that convinced Stream International to locate here.
However, Stream decided to close its facility last August, 6 1/2 years early than expected.
As part of the lease buyout agreement, Stream would pay the city $1.36 million to cover the remaining years of rent. The company also would pay off the balance of a $1 million loan the city gave it for building improvements.
The new lease agreement requires TeleTech to pay any necessary common area expenses, utility bills or insurance costs for the property. The Colorado-based firm also would pay Kalispell a minimum beneficial use tax of $140,000 per year in lieu of property taxes.
The base rent for the space would be $275,328 per year. That would be rebated if TeleTech meets the annual job target. The term of the lease is 10 years, although the company could terminate it in three years if it can’t find enough qualified employees to meet its needs.
Even if TeleTech exercises that option, Kalispell City Manager Chris Kukulski said the city’s investment is covered.
Kalispell and the county port authority borrowed $2.5 million from the Montana Board of Investments to acquire the mall space. Their annual debt payments are $140,000 and $125,000, respectively, Kukulski said. Those payments will continue through 2010.
The port authority’s payments are covered by a county mill levy.
The city’s share would be covered by TeleTech’s $140,000 beneficial use tax — or by a portion of Stream’s $1.36 million lease buyout, in the event TeleTech leaves before 2010.
"Based on the (Stream) payout and the guaranteed, three-year cash flow from TeleTech, the city will meet its financial obligations and will own the Gateway West asset free and clear," Kukulski noted in a report to the council.
The only public cost associated with this proposed deal is that the city and port must jointly purchase a 2.5-acre lot near Gateway West. The property will provide 250 new parking spaces to be added to the 250 existing spaces in the mall parking lot that are allocated for the tenant’s use.
The cost of the lot is about $436,000, half of which would be paid by Kalispell using tax increment revenue from the westside urban renewal district.
If the deal is approved on Monday, TeleTech’s lease would begin immediately.
The company might have to make some improvements or changes to the facility’s telecommunications infrastructure before operations could begin. A TeleTech spokeswoman could not be reached for comment about when any actual hiring would begin or when the call center would open for business.
Teletech offers the same kind of customer support and technical services that Stream did.
Teletech recently signed agreements with electronics retailers Best Buy and Circuit City to provide product inquiry, availability, order tracking, warranty and delivery information to customers via Internet and telephone.
The publicly traded company lost $38.9 million on revenues of $731 million through the third quarter, which ended Sept. 30. Figures for the fiscal year haven’t been released yet.
TeleTech employs about 31,000 people worldwide. In January, the company announced that it would close its Topeka, Kan., call center in April, laying off 790 people. That call center opened five years ago.
The council meeting will take place at City Hall beginning at 6:30 p.m.
It will be followed by a workshop on the 2004-05 budget goals and objectives for the community development and public works departments.
Reporter Bill Spence may be reached at 758-4459 or by e-mail at [email protected]
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