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Sullivan City weighs switch from economic development corporation to municipal development district

Sullivan City may replace the moribund Sullivan City Economic Development Corp. with a municipal development district.

The City Commission discussed the proposal with Ramon Segovia — a consultant who previously served as the Palmview city manager — during a workshop on Dec. 6.

SullivanCityLogo“We’re pushing to get it done,” said Mayor Leo Garcia, who supports the proposal.

The Sullivan City EDC collects a half-cent sales tax, which is earmarked for development projects.

Under the proposal, the City Commission would place a proposition on the May ballot to dissolve the Sullivan City EDC and create a new economic development entity called the Sullivan City Municipal Development District.

The half-cent sales tax would shift from the old Sullivan City EDC to the new Sullivan City MDD.

Under state law, municipal development districts enjoy more flexibility and fewer reporting requirements than economic development corporations.

The City Commission created the Sullivan City EDC in March 2008, according to records filed with the Texas Secretary of State’s Office.

Members of the initial board included then-Mayor Rosendo “Cheno” Benavides and Oscar “Coach” Salinas, who now serves on the La Joya school board.

The Sullivan City EDC, though, quickly started collecting dust. It never filed a public information report with the state, which triggered a tax forfeiture in May 2010.

Garcia started reviewing ways to revive the Sullivan City EDC after winning the May 2017 mayoral election.

He discussed the issue with Segovia, who suggested three options: dissolving the Sullivan City EDC, reviving the Sullivan City EDC or replacing the Sullivan City EDC with a municipal development district.

“My job right now is just to inform them of the different options that they have,” Segovia said.

Segovia supervised the switch from an economic development corporation to a municipal development district in Palmview.

While similar to a Type B economic development corporation — the kind that Sullivan City created — a municipal development district offers several advantages.

Perhaps the most important: Unlike an economic development corporation, which may only collect sales tax within city limits, a municipal development district may collect sales tax in the city’s extra-territorial jurisdiction too.

The municipal development district would be supervised by an all-volunteer board appointed by the City Commission. Members would be required to live in Sullivan City and couldn’t work for the city government.

Making the switch would require voter approval.

During the Dec. 6 workshop, Garcia, City Commissioner Sylvia Castillo and City Commissioner Adriana Rodriguez appeared to support the idea. City Commissioner Gabriel Salinas and City Commissioner Daniel Flores didn’t attend.

“It’s in the best interest of the city to go with the MDD,” Garcia said.

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