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Our Opinion

OUR OPINION: Wanted: Better oversight of EGF’s EDHA

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opinion Grand Forks, 58203
Grand Forks North Dakota 375 2nd Ave. N. 58203

It’s not just the structure of East Grand Forks’ Economic Development and Housing Authority that needs reform.

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It’s also the oversight of the authority. For the EDHA had been somewhat slipshod in its money management for years, an independent audit suggests.

Why wasn’t the carelessness caught earlier? Why didn’t the East Grand Forks City Council learn about the authority’s practices years ago?

Most important, how will the council make sure it keeps a closer eye on the authority (and any other agencies like it) in the future?

As Herald readers and East Grand Forks residents have learned in recent weeks, a $510,000 loan from the EDHA to Boardwalk Enterprises went unpaid for more than a decade.

Now, the audit that brought the loan to light has been released, Herald staff writer John Hageman reported Thursday. And it turns out that “forgetting” or otherwise ignoring the overdue loan was not the EDHA’s only questionable call.

Consider:

  • “For one loan to restaurant Tortilla Flats, the audit notes that ‘no file was able to be produced, this loan was fully written off with a remaining balance of about $49,000,’” the story reports.
  • “The audit notes that for another loan to Way Cool 3D.com, a new repayment plan was reached in September 2013. “‘The commission minutes do not reflect approval of the new repayment agreement,’ the audit states. It also notes that the agreement states that ‘all payments made in repayment will be treated as a tax deductible donation.’” East Grand Forks’ city attorney is reviewing the legality of that repayment plan, the story reports.
  • “Another $25,000 loan was given to Surface Pride in early 2013, but the audit states the company went bankrupt by the end of the year. The audit notes that there was ‘no information in the file relating to a risk analysis or credit worthiness of the borrowers.’”

And so on.

A member of the East Grand Forks City Council said the authority needs to do a better job of documentation. He’s right, but the council itself also has to do a better job of oversight.

Ten years is too long for the council to have been unaware of an outstanding half-million dollar loan. And judging by the audit, other decisions were being made at EDHA that should have caught the council’s attention, too.

As they review the situation, the council members also should explore the council’s own activity, with an eye to understanding how the EDHA’s practices escaped council notice for so long.

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