News Column

East Grand Forks to look at EDHA restructuring

May 28, 2014

By John Hageman, Grand Forks Herald



May 28--East Grand Forks City Administrator David Murphy will research potentially restructuring the city's Economic Development and Housing Authority.

The possible move comes after the EDHA executive director Jim Richter retired last week. Richter had been on paid administrative leave after it was revealed that a $510,000 loan that he had signed had gone unpaid for more than a decade.

Murphy said Tuesday an option for restructuring would be to contract the housing duties to an outside entity and have the city position focus on economic development.

"I think with what we have going on in Grand Forks ... and the amount of growth going on here, I think we're well-served to have a person that that's all they do is focus on economic development," Murphy said during an EDHA board meeting Tuesday.

Murphy said last week that the EDHA would be led by him and two city staffers for the time being.

Timeline

Meanwhile, City Attorney Ron Galstad Tuesday provided EDHA board members with a basic timeline of events leading up to the revelation in late April that the loan had gone unpaid. But it's still unclear exactly how or why there were no payments on the loan, he said.

The loan with Boardwalk Enterprises was used to help construct the building where the Drunken Noodle/Little Bangkok and Boardwalk Bar and Grill restaurants are currently. Annual $30,000 payments were supposed to begin in 2003.

Galstad said that David Parker, who originally signed the loan agreement as a managing partner of Boardwalk Enterprises, approached the city in March 1999 about constructing a building between Whitey's and the Blue Moose Bar and Grill.

The East Grand Forks City Council approved a development agreement in April 1999, Galstad said.

The loan agreement was given to Richter in October 1999 by then-City Attorney Karl Lindquist, he added.

"After that, it doesn't appear to show up anywhere," Galstad said, adding that he's still reviewing some meeting minutes. "At this point, I don't see any other references to that loan."

'Never addressed'

Galstad did bring up a few instances over the years that EDHA board members said could have been opportunities to catch the unpaid loan.

In May 2006, Richter went before the Polk County Board of Commissioners to request forgiveness on Boardwalk's penalties for delinquent taxes based on a "miscommunication" between the city and Boardwalk, Galstad said.

"Wouldn't that have jarred something that says, 'I need to find that file'?" EDHA board member Chip Shea said.

Galstad the development agreement, which included information about the loan, was brought up during various discussions over the years.

Galstad said an audit, which could be released today, was performed earlier this year.

"Mr. Richter then presented the file that we're talking about to the city, essentially saying that the file had been outstanding and it needed to be resolved," Galstad said. "It appears, at least from my standpoint at this time, it just was never addressed."

City officials met with Boardwalk representatives in early May about the loan, and agreed to gather more information before meeting again. Murphy saidTuesday he contacted Dan Stauss, a partner in Boardwalk and the brother of East Grand Forks Mayor Lynn Stauss, about setting up another meeting.

City Council member Greg Leigh said the city needs to do a better job of communicating to the public about the issue, and make clear that they're pursuing loan payments. He said a number of constituents have been critical of the city.

"I try to explain that there's a process to the whole thing, and it's not going to happen overnight," Leigh said.

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Source: Grand Forks Herald (ND)