AUBURN – How to get a bank to spend $16 million on a new call center in the middle of a recession: Have a mall owner willing to deal; extend a Pine Tree zone just a bit; have the bank anxious for space and in the rare position of expanding.

TD Banknorth on Monday announced plans to build a $16 million call center in the former Steve & Barry’s at the Auburn Mall. Officials said the new center is expected to employ 250 people at opening next year and another 250 by the end of 2011. It will look anything but traditional office-like – with floor tiles that resemble cobblestone, recycled wood, bamboo gardens.

Two hundred of the jobs will come from the bank’s existing local call centers.

CEO and President Bharat Masrani said Auburn had been in competition with other cities for the new venture. The deal has been in the works for months.

TD Banknorth has 2,700 employees in Maine, 1,000 of them in Lewiston-Auburn.

Gov. John Baldacci, speaking at the announcement, remembered a year ago, around the time TD merged with a New Jersey bank, a conversation he’d had with Masrani.

“You assured me in the end, it would work out very well for Maine,” Baldacci said. “This is terrific news in the state of Maine.”

U.S. Congressman Mike Michaud praised the company as a good corporate citizen.

“You will not go wrong with this investment,” he said.

TD spokesman Neil Parmenter said the center will largely take inbound calls, helping bank customers with transfers, balances and bill pay questions. It’ll have 500 seats and operate several shifts. Most jobs will be full time. Starting wage will be $10.50 to $11 an hour with health insurance and 401k.

The bank’s growing mortgage department will take over space in the Bates Mill where a current banking call center is housed, he said.

TD, which has signed a 10-year lease, will start retrofitting the former retail anchor space to LEED-certified standards this year.

“It’ll draw people. It’s good, real good,” said mall owner George Schott. “All malls are now looking for occupancy in both veins (retail and office.)”

He said the news would be great for restaurants and the new hotel across the street. The call center will have a separate entrance and dedicated parking at the back of the mall.

Auburn economic development chief Roland Miller said the City Council extended the Pine Tree designation to that end of the mall several months ago, anticipating this project. That gives certain tax benefits. The project also falls under an existing Tax Increment Financing deal. He said he’ll bring some changes to that TIF before the council as soon as July.

Having the existing space to retrofit was a “huge factor,” Miller said. He also praised Schott’s willingness to negotiate.

“Every community in the world would love to have this particular investment in their area,” he said.

U.S. Sen. Susan Collins called the expansion at a time like this a testament to TD’s skill and foresight.

“Isn’t it remarkable that in the midst of the worst economic recession since the Great Depression we are celebrating the addition of hundreds of new, good jobs in the region,” Collins said, adding, “the sooner, the better.”