EDINBURG — Santana Textiles continues to struggle to make payments on a $15 million loan it received from the Edinburg Economic Development Corporation, executive director Joey Treviño said.
The textile company has paid off about $1.36 million of a combined $15 million it borrowed from the corporation beginning in 2010. Santana, one of two denim manufacturers in the United States, still owes about $13.64 million.
The economic incentives the company received from EEDC have left taxpayers vulnerable and at risk for the entire amount of the loan, while the company has little to no skin in the game, EDC board members have previously said.
Santana Textiles, which began doing business as Denimburg in 2016, is responsible for monthly payments to the corporation totaling just over $75,000.
“Every month this last year payments have been late,” Trevino said in an email last week.
Denimburg paid EEDC a little more than $110,500 July 13, but that payment did not cover the July monthly payment, which was due July 21, and this month’s payment is due in less than a week.
The company has not responded to calls and invoices from the city, Treviño said.
A 2012 audit of the company revealed Santana used a significant portion of the funds it borrowed from EEDC to purchase a small aircraft.
Santana disclosed it used $2 million to finance the purchase of a Cessna airplane, according to financial statements the company provided to the corporation in 2012 as part of the loan agreement, Treviño said.
The executive director also noted that the land the corporation gifted the company has seen a minimal increase in value.
In 2008, when the development corporation gave the company more than 33 acres of land in the city’ North Industrial Park, the Hidalgo County Appraisal District valued each acre at about $33,000 for a total property value of about $1.1 million. Today, each acre is appraised at about $59,000 for a combined value of about $1.98 million.
However, the land would not have generated any property tax revenue under the ownership of EEDC because economic development corporations are exempt from paying property taxes on land they own. Former EDC Executive Director Gus Garcia, who executed some of the extensions and modifications for Santana, championed the state law that allows for the exemption.
The company has negotiated six extensions and loan modifications since it first borrowed money from the taxpayer entity.
During the 2015-16 fiscal year, Santana refinanced and “subjugates” the EDC’s first lean, turning it into a second lien, Trevino said.
“Even after refinancing, Santana comes to (the) EDC (for) one more extension,” the executive director wrote.
In November 2017, right before the city election gave way to a new administration, the previous EDC board granted Santana yet another modification and loan extension, Trevino said.
In May, the company once again asked the corporation for another extension, but this time the new board — comprised of almost all city council members, except for Homer Jasso Jr. — denied the request.