by Timothy Charles Holmseth
East Grand Forks City Attorney Ronald Galstad addressed council members at the EDHA meeting Tuesday with an update on the situation of the un-paid $510,000 EDHA loan to Boardwalk Enterprises.
“With staff’s help I’ve been kind of trying to piece together a scenario of what ended up happening,” Galstad said.
Galstad provided what was a sometimes confusing, and sketchy timeline of events, full of gaps, which began in 1999.
One particular fact immediately stood out from the narrative.
Galstad said a communication in the official file revealed that in August of 2008 Boardwalk Enterprises confronted the City regarding a perceived debt, associated with a breached financial agreement, which was contained in the development agreement.
“There was a letter dated August 11, 2008 from Mr. Stauss to Mr. Richter claiming additional cost overruns. It also claims he hadn’t paid $72,000 in taxes that according to the development agreement, was the City’s responsibility. And at that time he was claiming that he had off-sets or he had money owed to them-him by the City in the amount of approximately $190,000. He had requested from Mr. Richter that this file needed to be taken care of and the problem be resolved. And then after that I don’t see that it was ever addressed at this point,” Galstad said.
But – the confusing financial issues that existed as late as 2008 could not have been completely foreign to Galstad.
“In 2002 – Mr. Stauss, through Boardwalk Enterprises, LLP had received a, basically, a tax delinquency notice, and it appears there must have been some discussion with Mr. Richter at that time,” Galstad said.
“On June 3 of 2003, I [Ronald Galstad] sent a letter to Mr. Stauss amongst Gary Sander – the City Administrator – Mr. Richter – the administrative committee, because there was a project going on – on the Boardwalk – a paver project – and for some reason the Opp Construction hadn’t been paid a portion of that bill going to Boardwalk Enterprises – so I asked that be resolved or should we set up a meeting? From my standpoint I never heard anything after that regarding whether it was resolved or wasn’t resolved,” Galstad said.
Galstad understood that Boardwalk Enterprises was receiving a portion of a bill for work being performed by Opp Construction but the bill was not being paid. He acted as a quasi referee and sent out a letter suggesting the matter be re-solved or a meeting be scheduled.
Six days later on June 9, 2003 – Galstad’s ‘referee’ letter suggesting the matter be resolved, or a meeting be scheduled, was attached to a letter sent from Stauss to Richter.
“On June 9 of 2003, Mr. Stauss itemized – uhh – sent a letter to Mr. Richter itemizing what he’s characterizing as cost overruns and in that letter he attached – and itemization – he attached an itemization of what he believed the cost overruns were – he provided documentation of the tax – the tax statements – he provided itemization of – uhh – well – of uhh – the- uhh – my letter – and also what he did at that point in time he also attached a copy of that development agreement in June of 2003 which outlined everything in this loan – I don’t see where it went anywhere other then the EDHA and Mr. Richter – after that it really just kind of died”.
It “died” until April of 2006.
“In April of 2006 there was tax delinquencies that were going on because the building went into tax foreclosure – there was notices by the Polk County that went to Boardwalk Enterprises and Mr. Richter got involved at that time again and indicated there was a mistake in communication between the City and Mr. Stauss and the reason the taxes had not been paid in that time frame – there was actually a meeting in May of 2006 where Mr. Richter went in on behalf of the City and Mr. Stauss to the Polk County commission and requested the penalty and taxes be forgiven based upon the miscommunication. It appears from a newspaper article as well as the Minutes that the Polk County Commission at that time granted that request,” Galstad said.
In April of 2006 Richter went to bat on behalf of the City of EGF and Boardwalk Enterprises and the Polk County Commission appeared more than happy to forgive a massive tax debt based upon “miscommunication”.
Eight years passed.
By April of 2014 – Boardwalk Enterprises had still not made a payment on the loan.
Nobody on the EGF City Council or local government can tell the tax-paying public all the names of the partners that now, or have ever, comprise, Boardwalk Enterprises.