Economic slump forces closure of Merced County Economic Development Corp.

01/27/2012 10:32 AM

01/28/2012 1:12 AM

The Merced County Economic Development Corp. will cease operations by Sept. 30.

MCEDCO's executive committee recommended the decision and the board of directors approved the action during its Thursday meeting.

The decision to close the organization was the result of dwindling public and private financial support in the current economic downturn, according to a news release from the Merced County Association of Governments.

The organization has been unable to generate sufficient funds to sustain its operations, according to the news release.

David Spaur, president and chief executive officer, said he'll stay on through February to help coordinate an economic summit Feb. 23 funded and sponsored by Pacific Gas & Electric Co. "We couldn't go forward and we can't reorganize," he said of MCEDCO, "so it was best to dissolve."

Both the county and city of Merced cut off funding to the agency last year, halving its operating revenue. Since then, MCEDCO has been reliant on private sector contributions to survive, and apparently not enough of them came through.

MCEDCO shuttering its operations because of insufficient funding didn't come as a surprise to Supervisor Deidre Kelsey. "The original intent of MCEDCO was to operate as a tool for the private sector business community and interface with state and local government to expand existing businesses and recruit new industry to Merced County," she wrote in an email.

"While the concept was a good one, finding sufficient funding partners has been difficult from the beginning. Some of their efforts were fruitful, many were not. The business retention and recruitment will now fall squarely on the shoulders of city and county governments. Hopefully, a cooperative arrangement among these entities, which does already exist, can be strengthened and our county will realize more job opportunities and improved economic conditions in the near future."

Elaine Post, development manager for the city of Merced, noted that in her previous job in Los Banos, the Westside leaned heavily on MCEDCO for help until last year as the economy remained stagnant. "It's a shame we can't afford to have this type of organization," she said. "How are we going to promote all our cities? That's what MCEDCO did. When someone (a company) was looking at California, we'd know."

As MCEDCO's demise appeared inevitable, some officials had begun talking about forming a joint powers authority, which would require a memo of understanding from the county's various city councils and boards. An authority would need a board of directors, regular meetings and ways to promote the economic interests of all the cities. And it would face the same lack of funding that drove MCEDCO out of business.

Some analysts believe that unless the private sector becomes more engaged with helping to attract new investment, promote job creation and grow businesses, no single agency will be able to fill the role MCEDCO did for 18 years.

Frank Quintero, director of economic development for the city of Merced, likened the shutdown of MCEDCO to cities statewide losing their redevelopment agencies after an order from Gov. Jerry Brown.

"It's another lost tool from our economic development belt," he said. He did note that in the last quarter of 2011, 24 businesses opened in downtown Merced and that Gilroy-based Pinochio's Pizza had pulled a business license to open at the site of the former Bishop's on the Square.

Quintero said a Dollar General Market would soon open in the shopping center at Highway 140 and V Street.

Spaur had more than 25 years of experience as a consultant, economic development director, president/CEO and chief operating officer for public and private sector entities in more than 20 cities in four counties. Included were the city of Sacramento, Placer County, Fresno County, San Luis Obispo County, Mesa, Ariz., and Coconino County, Ariz.

MCEDCO, which was established in 1994 as a private/public nonprofit organization, focused on serving cities and unincorporated communities in Merced County by encouraging new employment, increasing investment and diversifying the county's economic base. It sought to do that through retention and expansion of businesses, recruitment of new enterprises and encouraging entrepreneurs and small business startups.

Executive Editor Mike Tharp can be reached at (209) 385-2456 or mtharp@mercedsunstar.com.

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