Attorneys for an East Grand Forks bar and restaurant are arguing the city lacks evidence to show an economic development loan associated with the building housing the business has gone unpaid.

In a brief filed in the Minnesota Court of Appeals last week, attorneys for Boardwalk Bar and Grill said the city of East Grand Forks hasn't produced sufficient evidence to show a $510,000 loan to Boardwalk Enterprises, which owns the building the bar is in, is delinquent.

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"Although respondent actually compiled the record before the court ... respondent only produced a variety of documents evidencing potential obligations owed to either the city of East Grand Forks" or the Economic Development Authority, the brief, filed by Jade Rosenfeldt and Drew Hushka of the Vogel Law Firm, states. "Respondent, however, did not produce any evidence, such as monthly statements or ledgers, showing that payments on such obligations were untimely made or otherwise deficient."

Boardwalk Bar and Grill, located at 415 Second St. N.W., appealed the East Grand Forks City Council's June decision to make its liquor license renewal contingent on the loan being resolved within a year. The city cited similar ownership between the bar and the building for its decision, but Boardwalk attorneys have said the city cannot impose the conditions in part because Boardwalk Enterprises and Boardwalk Bar and Grill are separate entities.

"Without actual evidence of a delinquent debt, the court must find respondent's conditional renewal of relator's liquor license to be impermissible," the Boardwalk brief states.

In a brief filed last month, City Attorney Ron Galstad said Boardwalk's argument that the record lacks evidence of a delinquent loan is "without merit."

"There is no dispute that payments were to begin according to the promissory note in October 2003 and that payments have never been made by Boardwalk LLP on the loan," he added. "The ongoing dispute as to the delinquent financial claim is public record and has been the center of controversy in the media and between the parties since it was discovered in April of 2014."

In an email to the Herald, Rosenfeldt said "there is no evidence in the record presented to the Court of Appeals to establish that the loan has gone unpaid."

Controversy

City officials first said the $510,000 loan was unpaid in an April 2014 public meeting. An audit report later released to the public states "no payments have been made to date," and the mortgage had not been filed with county records.

City officials and Boardwalk representatives Dan Stauss, Scott Stauss and Jane Moss met behind closed doors in August 2014, but did not reach a resolution. Moss, operating manager of Boardwalk Bar and Grill, does not have ownership in Boardwalk Enterprises, according to court documents.

Dan Stauss has argued he wasn't aware of any outstanding loan in part because he did not become a partner in Boardwalk Enterprises until three years after the loan agreement was reached in 1999, and that the city is responsible for $742,000 in construction and other costs under the agreement. Attorneys for the city have argued Dan Stauss, brother of East Grand Forks Mayor Lynn Stauss, was aware of the loan, citing a letter he wrote in 2003.

The two sides were scheduled to meet in a mediation session over the debt Monday, but a scheduling conflict has postponed that meeting indefinitely.