NorthlakeTown staff proposes larger municipal development district to replace two development corporations

Staff presented a plan to replace Northlake's two development corporations with a single municipal development district (MDD), telling the Economic Development Corporation (EDC) and Community Development Corporation (CDC) that the change would consolidate governance, expand the boundary to include most of the extraterritorial jurisdiction (ETJ), and alter how local sales tax is allocated.

Nathan, the town's staff presenter, said the MDD's duties and project authority are similar to the existing EDC and CDC but that an MDD can include ETJ territory in addition to town limits, expanding the potential sales-tax base. "One big advantage of the MDD is the boundaries can include the ETJ as well as the town limits," Nathan said. Staff described a proposed local-sales-tax distribution of 1.25% to the general fund and up to a 0.5% allocation to the MDD (the latter reflecting the state law maximum).

Nathan cautioned that some revenue details are proprietary and therefore not in the packet, but he said staff do not expect the larger district to materially reduce town revenues because the MDD boundary would add sales-tax-generating businesses. He added that the existing quarter-cent sports-venue tax would remain unchanged. Board members pressed for clarity on who would pick up outstanding obligations if the EDC/CDC are dissolved; Nathan said any outstanding incentive agreements or Pioneer grants would remain obligations of the entity that holds the funds and noted the current fund balances are "almost $1,500,000 each." The town would receive EDC/CDC fund balances and could transfer them to the MDD via interlocal agreement.

Because state law limits an MDD to a half-cent sales-tax allocation, staff framed the change as a reallocation rather than a new tax. Nathan emphasized that two ballot propositions must both pass for the conversion to occur: Proposition A would create the MDD (voters in town limits and included ETJ would vote) and Proposition B would terminate the EDC/CDC sales taxes (only town-limit voters can vote on that proposition). "Both of these would have to pass. One of them can't pass on its own," Nathan said. The council has scheduled the special election for May 2, with early voting in April.

Board members asked why Harvest was excluded from the proposed MDD boundary; Nathan said Harvest contains many voters who could sway the outcome of a public vote and that staff wanted to avoid that electoral uncertainty. Directors also asked how projects now in progress would be handled; Nathan said outstanding obligations would have to be honored and that the town could transfer fund balances to the MDD by agreement so the MDD could fulfill remaining commitments.

The board did not take an action to adopt any ordinance at the meeting; staff said more public information will be provided before the May election and recommended additional meetings to clarify transition details, including a possible April meeting to discuss unfinished business.

The town will present full ballot language and factual informational materials as required by election rules.