East Grand Forks’ attorney requesting information from recipients of unpaid $510,000

June 11--The city of East Grand Forks is waiting for a recommendation from an attorney it hired to work on an unpaid $510,000 public loan, but it may have to act soon.

City Administrator David Murphy said Tuesday that he met last week with Brad Sinclair, the Fargo-based attorney the city hired to help recover the economic development loan that was made in 1999 but has remained unpaid. Murphy said if the city were to take any legal action on the mortgage, it would have to come by October because that's when the statute of limitations expires.

Murphy said Sinclair is reviewing the loan file and it hasn't been decided whether the city will take legal action.

The Economic Development and Housing Authority board was notified during a public meeting in late April that the state-funded flood recovery loan had gone unpaid, although annual $30,000 payments from Boardwalk Enterprises were supposed to begin in 2003. The loan was used to help construct the Boardwalk building, with its current tenants being the Boardwalk Bar and Grill and Drunken Noodle/Little Bangkok restaurants.

Sinclair will provide the East Grand Forks City Council with his opinion on the case and a recommendation within three weeks, Murphy said.

Request for info

Sinclair, an attorney at Kaler Doeling who the City Council voted to hire last week, will also serve Boardwalk Enterprises with a request for a response. That will include a request for information on who the partners in the company are, and who is their legal representation, Murphy said.

Dan Stauss, a brother of East Grand Forks Mayor Lynn Stauss, has been listed in previous property records as a partner in Boardwalk Enterprises. The mayor has said he didn't know about the loan and isn't involved with Boardwalk.

Boardwalk Enterprises is listed in Polk County property records as the owner of the building.

Murphy also said during the EDHA board meeting Tuesday that the League of Minnesota Cities Insurance Trust may cover much of their costs for hiring Sinclair. The city agreed to pay him $190 an hour.

Former EDHA Executive Director Jim Richter retired last month after being put on paid administrative leave. An independent audit released afterward, which cost the city roughly $8,100 according to Murphy, cited that unpaid loan and other questions regarding EDHA policies and procedures.

EDHA restructuring

EDHA board members also appeared supportive Tuesday of the idea to restructure the agency.

Murphy said he met with Lee Meier, executive director of the Northwest Minnesota Multi-County Housing and Redevelopment Authority in Mentor, Minn., to talk about the potential for them to take over housing duties that are currently the EDHA's responsibility. The EDHA's director would focus more on economic development.

"I think we've got enough going on here between here and Grand Forks with all the aerospace stuff," Murphy said.

Mark Olstad, a City Council representative on the EDHA board, was supportive of the idea.

"I think having someone ... on economic development is probably the way to go," he said.

Murphy presented more details about a potential partnership with the Mentor agency during a City Council work session later Tuesday. Under a proposed timeline, the housing program would transfer away from the city in October.

Murphy said he's holding off on hiring Richter's replacement until the potential restructuring process moves forward. He said he's confident that there will be a lot of interest in the open position, considering the economic boom the Grand Forks area is going through.

"I think we'll be in a good position to attract a high-quality candidate to this area," he said.

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