The city of Mission may divert funding or seek a loan to pay a debt of $2.87 million in sales tax monies it owes to the Mission Economic Development Corporation because the Progress Times reported on it.
City Manager Randy Perez said during a “cash flow analysis” presentation at a city council meeting Monday that the city at some point discovered sales tax money not being transferred from the city into the EDC’s bank account.
It’s not clear when the city discovered that, and Perez did not make himself available for comment.
Mayor Norie Garza said after that presentation that the city is considering corrective action based specifically on reporting in the Progress Times making public the fact that the city owes those funds to the EDC.
“There was a plan, my understanding from our staff, that… there wouldn’t have been any detrimental situations or ramifications, that payments and obligations would have been made as needed and as required,” she said. “So I think that what transpired kind of just brought it to light, and maybe they’re not the best practices, so that’s what the council now is trying to recommend these best business practices.”
MEDC Board Member Noel Salinas told the Progress Times earlier this month that the city was withholding corporation funds to address a liquidity issue.
Salinas was then engaged in an unsuccessful city council bid. Garza, a supporter of one of his opponents, largely disputed his characterization of the situation and said he was creating controversy for political gain.
Despite Salinas’ transparency generating a lengthy presentation at Monday’s meeting, Garza remained critical of the public ever finding out that the city owes the EDC almost $3 million.
“We have some very important boards that deal with very critical situations,” she said. “That’s why MEDC and economic development items are in executive session, because they’re confidential. And now, any one of us could go out and talk to you about these MEDC economic development happenings or plans, but we shouldn’t, because as elected officials we have an obligation to our city to do what’s best for our city.”
So what will the city do about that debt? Nothing immediately.
Council weighed a proposal Monday to divert monies from other projects to paying off the debt. That proposal would have also relied on funds the city won’t have available until January and February.
The proposal also included corrective action. The most basic step included was to begin paying the EDC its sales tax monies monthly.
Proposed corrective action also included the implementation of new internal controls and a long list of fiscal austerity measures.
The council wound up tabling that proposal; Councilman Ruben Plata seemed less than pleased by it.
“There’s errors on dates, on some of this information. I really would like more time to review it,” he said.
Plata suggested the city may be better served by seeking a one-year tax anticipation loan rather than cobbling together enough money to pay the EDC.
Plata and freshman Councilwoman Marissa Ortega Gerlach were appointed to an ad hoc committee to investigate that finance situation Monday.
Aside from how best to pay back the EDC, the most pressing concern for council appears to be how the debt may impact the city’s fiscal ratings.
Financial advisors told the city Monday that the information would likely be in the city’s audited financial statement and reported to the bond market, though it likely wouldn’t necessitate any special reporting.
The council didn’t take any action Monday on Perez or City Attorney Victor A. Flores, both of whom it discussed behind closed doors in executive session.