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East Grand Forks hires attorney for unpaid loan

Boardwalk building

The East Grand Forks City Council voted Tuesday to hire an outside attorney to help in the city’s efforts to recover payments from a large economic development loan that has gone unpaid for more than a decade.

City Council members chose to hire Brad Sinclair, who is an attorney at Fargo-based Kaler Doeling firm. City Administrator David Murphy said the idea was brought to him by a couple of City Council members.

“This is just for removing any questions of conflict of interest or just to get a neutral third party to look at it,” Murphy said. He said the move doesn’t have to do with City Attorney Ron Galstad’s handling of the unpaid loan and that he’s still the city attorney.

Murphy said Sinclair is a certified public accountant and has an “extensive background in financial cases and contracts.” He will start in the role today, and will be paid $190 an hour.

His firm’s website lists his practice areas as including banking, debtor/creditor, business contracts, real estate, business organizations and landlord/tenant.

City Council member Greg Leigh said bringing in an outside attorney helps eliminate any appearances of a conflict of interest. He also said it doesn’t have to do with Galstad’s performance.

Galstad, an attorney at Galstad, Jensen & McCann in East Grand Forks, is a former City Council member.

City officials have been pursuing a $510,000 loan that the city’s Economic Development and Housing Authority agreed to give Boardwalk Enterprises in 1999. Annual $30,000 payments were supposed to begin in 2003, but haven’t come yet.

City officials have been in touch with Dan Stauss, who has been listed as a partner in Boardwalk Enterprises and is the brother of Mayor Lynn Stauss. The mayor has denied knowing about the loan and said he is not involved with Boardwalk.

The mayor would not answer questions from a Herald reporter after the meeting Tuesday.

The EDHA executive director Jim Richter, who originally signed the loan agreement, retired last month after being put on paid administrative leave.

Murphy has been researching the possibility of contracting the housing duties to an outside entity while keeping economic development a city function. Murphy told council members Tuesday that he has been in contact with other nearby housing agencies, and has been researching how other cities handle economic development.  

John Hageman

John Hageman covers local business and North Dakota politics. He attended the University of Minnesota in the Twin Cities, where he studied journalism and political science, and he previously worked at the Bemidji Pioneer.  

(701) 780-1244
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