The Merced County Economic Development Corp. will cease operations by Sept. 30.</p><p>MCEDCO's executive committee recommended the decision and the board of directors approved the action during its meeting last week.</p><p>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.</p><p>The organization has been unable to generate sufficient funds to sustain its operations, according to the news release.</p><p>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. </p><p>"We couldn't go forward and we can't reorganize," he said of MCEDCO, "so it was best to dissolve."</p><p>Los Banos, the city of Merced and the county 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.</p><p>Los Banos Mayor Mike Villalta said in the beginning he liked the concept of MCEDCO.</p><p>"I thought it was a good idea when it started because it was all private sector money. I stopped supporting it when they started taking public sector money. The public sector does not create jobs," Villalta said. "It won't hurt our economy, MCEDCO had more of a countywide affect. We need Los Banos people to help Los Banos."</p><p>Some officials differ with Villalta's opinion. </p><p>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. </p><p>"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."</p><p>Mike McAdam, a former Los Banos councilman and member of MCEDCO's board of directors, praised the organization's efforts to attract companies to Los Banos in years past. However, McAdam declined to speak to the Enterprise about MCEDCO this week because, he said, the board decided that Spaur would be the sole spokesman. </p><p>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.</p><p>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.</p><p>Reporter Corey Pride contributed to this article.