The city of East Grand Forks spent nearly $70,000 in legal costs over the past two-plus years in an attempt to recover a long-unpaid economic development loan.
The dispute over the $510,000 Boardwalk Enterprises loan, first approved in 1999, was resolved in late June. The city received $250,000 as part of the settlement, but there were no provisions in that agreement that covered its legal costs, City Administrator David Murphy said.
The city spent $68,704.96 in legal costs since May 2014, just after the existence of the unpaid loan was made public, according to a spreadsheet Murphy provided to the Herald.
"We have to aggressively defend our position, and unfortunately sometimes those legal costs are the cost of doing business," Murphy said.
City staff members first said in April 2014 the loan to Boardwalk Enterprises, the entity that owns the commercial building at 415 Second St. N.W., had gone unpaid for more than a decade. Subsequent discussions with Boardwalk partners Dan and Scott Stauss failed to reach a resolution.
Boardwalk Enterprises had cited construction costs and real estate taxes it argued the city was responsible for, and an audit said the city failed to file mortgage documents with the county when the loan was first approved. The loan was part of a development agreement to construct the Boardwalk building after the 1997 Red River flood.
The issue was finally put to rest in late June, just as the City Council was poised to deny a liquor license to Boardwalk Bar and Grill, which is located in the Boardwalk building and shares similar ownership with Boardwalk Enterprises. The settlement required the City Council to renew a liquor license for Boardwalk Bar and Grill, and it mandated the dismissal of a lawsuit filed by the Boardwalk entities against the city.
The two sides said in a joint news release they were "pleased to announce that they have resolved all disputes between them."
"The settlement is based on all parties recognizing the expense and risks of not bringing their disagreements to a close," the statement added.
The legal costs detailed in the city spreadsheet show $33,142.12 was paid to the Kaler Doeling law firm, from which the city hired attorney Brad Sinclair, as well as $25,117.99 to City Attorney Ron Galstad. Another $10,444.85 was labeled under "appraisal and consulting."