CENTERVILLE — City officials are ecstatic: Not only did they manage to secure their largest chunk of financing for the Davis Cultural Arts Center, they also got a great interest rate.

You think your new 4.625 percent mortgage is good? Try a 2.97 percent rate on AA-rated sales-tax revenue bonds. Too bad your house isn't a public entity.

Of course, Centerville is borrowing about $12 million, so the lower the rate, the better.

But once the city closes on the bonds Tuesday, it can put that money toward construction costs of the nearly $14 million center, which is expected to be a new home for Centerville-based Rodgers Memorial Theatre.

Groundbreaking has been set for 10 a.m. May 28, said Blaine Lutz, Centerville's finance director.

When the center is completed in October 2010, it will include a 500-seat main-stage theater, rehearsal space and a black-box theater for smaller productions.

Though Centerville is pledging regular sales-tax revenue as collateral for the bonds, it plans to pay them off using revenue from special RAP (recreation, arts and parks) taxes imposed in Bountiful and Centerville. Residents in the two cities voted in 2007 to impose the taxes specifically to build the center.

Other revenue is coming from Davis County, which has pledged $2 million from its tourism fund to help with construction. And the future tenants of the theater have pledged to raise $500,000.

But the great interest rate wasn't the only thing that had officials happy. The arts center's contractor, Hogan Construction, told officials Monday that the first phase of bids has come in 7.5 percent below construction estimates.

In April, the center had an estimated cost of $14.38 million. Now, the cost is below $14 million, said Centerville Mayor Ron Russell.

Lower construction costs mean officials can include more amenities to make the theater even nicer, Russell said. Some of those amenities are certain curtains, rigging and lights that were originally left out of the center's budget. And if costs continue to drop, more items can be added.

"We can make this into a much better project," Russell said.

E-MAIL: jdougherty@desnews.com