An accounting issue contributed to a $510,000 economic development loan going unpaid for more than a decade in East Grand Forks, according to the city attorney.

Newly released minutes and audio recordings from a closed meeting of the East Grand Forks City Council and Economic Development and Housing Authority Board in June 2014 describe how the loan was missed. The funds came from federal Community Development Block Grant money to the city in the wake of the 1997 Red River flood, city attorney Ron Galstad said during the meeting.

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"I'm not sure who was supposed to have done it, but the money never showed up in the (EDHA) books because it wasn't their money in the first place," Galstad said in an interview. "And there was never an entry on their books creating a loan fund."

He said city departments use the administrative or finance office as their "accountants, so to speak."

The loan agreement between the city and Boardwalk Enterprises states that the money would be paid back to the EDHA. Galstad said the city created a loan "to be paid back to the (EDHA) so that that $510,000 could be used for other economic development."

The loan was originally made in 1999 to help build the Boardwalk building. The city also hadn't filed the mortgage on the property until last year, when the existence of the outstanding loan was made public.

Galstad said there have been many questions about how auditors and the EDHA Board could have missed the loan for so long.

"To be paid back, there was never an entry in the (EDHA's) books that there was supposed to be money coming back to them," Galstad said. "If there would have been entry made creating a loan fund for the (EDHA), then it would have come up on a yearly basis being tracked. Since it wasn't there, for whatever reason, it never came to the attention of the board, it didn't come to the attention of the auditors."

Galstad said during the June 24 meeting that he was a member of the City Council and EDHA Board for a few years, and that the unpaid loan never came up.

The former EDHA Director Jim Richter retired a few weeks after the loan was made public in April 2014.

The City Council last week voted not to pursue foreclosure or civil action on the loan. As a result of that vote, audio recordings and meeting minutes of two closed meetings were released to the Herald.