State agency: East Grand Forks meetings regarding unpaid loan were improperly closed
The city of East Grand Forks improperly closed meetings to the public twice in the past few months, a state agency said Tuesday. The meetings were regarding a $510,000 economic development loan the city gave in 1999. City staff members revealed e...
The city of East Grand Forks improperly closed meetings to the public twice in the past few months, a state agency said Tuesday.
The meetings were regarding a $510,000 economic development loan the city gave in 1999. City staff members revealed earlier this year that no payments had been received.
The Minnesota Department of Administration advisory opinion released Tuesday was requested by Grand Forks Herald editor Steve Wagner on Sept. 5. The opinion is non-binding and carries no penalty.
The opinion, signed by the department’s Acting Commissioner Matthew Massman, argues that at least portions of June 24 and Aug. 11 joint meetings between the East Grand Forks City Council and Economic Development and Housing Authority were not properly closed according to the attorney-client privilege exception to the open meeting law, which the city cited in both instances.
The most recent meeting included a closed-door discussion with representatives of Boardwalk Enterprises, the business that received the $510,000 loan. Among the representatives was Dan Stauss, a brother of East Grand Forks Mayor Lynn Stauss.
The mayor was not in attendance during either closed session, citing perceptions of a conflict of interest. He has repeatedly said he’s not involved with Boardwalk and didn’t know about the loan.
The city disagreed with the opinion in a press release issued Tuesday night. It said that if “every discussion between the governing body and its legal counsel are open to the public, the opposing party benefits to the detriment of the general public.” It also indicated that settlement conferences can be closed to the public.
Wagner praised Massman’s opinion, and called on the city of East Grand Forks to “immediately release recordings of the discussions.”
“The Herald will continue pressing for government transparency and public dialogue through open meetings and records laws,” Wagner wrote in an email.
Massman concluded that “the participation of Boardwalk Enterprises conflicts with the need for absolute confidentiality between the city and its attorney; the presence of a third party in these circumstances essentially invalidates the application of the attorney-client privilege.”
He added that if the parties’ attorneys or less than a quorum of the council or EDHA board met with Boardwalk, the gatherings would not be subject to the open meeting law and would have not been an issue.
Massman’s opinion did state, however, that the portion of the closed meeting without Boardwalk representatives in attendance was proper. He found that the city had taken the first steps toward litigation by serving a notice of default and entering into settlement negotiations.
“Allowing the opposing party to be privy to the city’s conversation with its attorney at an open meeting at that juncture could have revealed legal advice and put the city at a significant disadvantage in pursuing the public’s interest in the matter,” the opinion stated.
Brad Sinclair, the Fargo-based attorney the city hired for its loan recovery efforts, told the Department of Administration that the purpose of the Aug. 11 meeting was to allow Boardwalk representatives to respond to the default notice and discuss settlement. The council and EDHA board then discussed Boardwalk’s settlement offer and “implemented further litigation strategy,” he added.
The June 24 meeting, however, was improperly closed because the city had not yet decided to serve a notice of default, Massman’s opinion stated.
Sinclair told the department the “sole purpose of the meeting was to discuss Boardwalk’s obligation, the enforceability of the obligation, defenses to the enforcement, counterclaim and legal strategies.”
Massman’s opinion stated that “collecting on a loan is undoubtedly a subject of public concern about which the public has a right to be informed.”
“Similarly, a public body’s deliberations over whether to pursue litigation may have a significant impact on a community, both fiscally and politically,” the opinion added. “The public’s right to see its elected officials make decisions about matters of significance to the communities they serve is at the heart of the policy behind the (open meeting law).”
To read the Department of Administration's opinion, click here