The bank accounts of the city of Mérida, Yucatán, and real estate it owns were placed under an embargo on Wednesday due to the municipal government’s failure to pay a 10-year-old debt owed to the bank Santander.
A Yucatán court set a deadline of 5:00 p.m. Wednesday for the city to pay the 588.8-million-peso (US $28.9 million) debt or reach a repayment agreement with the bank but neither occurred.
A clerk of the court consequently placed an embargo on the city’s assets.
According to Santander, all of the municipal government’s bank accounts as well as 85 properties and five movable assets it owns and two lines of public funding are subject to the embargo.
Santander said it remains open to finding a solution that would allow the embargo to be lifted in a timely manner so as to avoid the adverse impacts of such a mechanism.
The large debt dates back to March 2011 when the municipal government signed a contract for street lighting with AB & C Leasing that was financed by Santander.
When the municipal government changed in 2012, authorities notified the bank that it wouldn’t make repayments to the loan, arguing that there were irregularities with it. The mayor at the time was Renán Barrera Concha, who is currently serving a second term at the head of the municipal government.
Barrera said the 5,000 Chinese-made streetlights rented by the municipal government led by Angélica Araujo didn’t work and ordered their removal. He took the decision to cease making 8-million-peso monthly repayments to Santander.
Araujo has described that decision as irresponsible and warned that the citizens of Mérida would be adversely affected by it.
The 2012-15 government led by Barrera launched legal action aimed at extricating itself from responsibility to pay back the loan but in 2014 a Mexico City judge ordered it must do so, ruling that the contract and the previous administration’s transfer of responsibility for it to Santander were legal.
During a period of several years, the Mérida council continued to wage a legal battle against its responsibility to service the loan but had no success. Late last month, a Mexico City court once again ruled that it must repay the loan, paving the way for the Yucatán court to set Wednesday’s deadline.
Mayor Barrera has not commented publicly on the matter. He was elected to a third term as mayor at elections held on June 6.