The North Dakota Development Fund board voted Thursday to immediately suspend all new business financing.
The move comes as state lawmakers weigh potential reforms to the program following a scathing performance audit that scrutinized the agency’s internal controls.
The pause affects all new financing transactions and unsigned applications. It does not, however, apply to the fund’s child care loan program, according to a report by The Dakotan.
Commerce Commissioner Chris Schilken initiated the motion. He stated the move reflects a serious approach to addressing performance audit findings and preparing for economic development policy changes in the 2027 legislative session.
The board convened for the first time since the Oct. 20 resignations of Chair Jim Albrecht and Vice Chair Rob Lindberg. In their departure letters, both cited a need for a “new vision” and a restructuring of the state’s economic development efforts.
The 2019-2024 performance audit presented to the board identified operational failures, including insufficient documentation for transactions and inconsistent conflict-of-interest procedures. The review also highlighted nearly $4 million in funding linked to two board members.
Fund CEO Brian Opp told the board that current policies now prohibit “related party” transactions, and the fund has implemented stronger documentation requirements.
Sen. Jeff Magrum, who chairs the Legislature’s audit review committee, is drafting legislation to repeal the Development Fund and potentially the Commerce Department. His committee has already recommended that the 2027 Legislature shutter the fund, transfer its assets to the general fund, and shift management of its loan portfolio to the Bank of North Dakota.
“I like that mentality for all of these funds – just get rid of them all and start over again because there should be a component in every one of these agencies to follow all of the money that's being distributed through them,” Sen. Jeff Magrum said.
Simultaneously, the North Dakota Ethics Commission launched an inquiry into the fund’s operations in late October. The commission is currently seeking documents related to the performance audit, including conflict-of-interest disclosures. This follows a decision by Attorney General Drew Wrigley to decline a criminal investigation, citing a legal conflict of interest and a lack of evidence of criminal conduct.
Despite the freeze on new deals, the Commerce Department confirmed the board will continue to oversee its existing portfolio of loans and investments. The board also reviewed a separate, recent financial audit that identified four common findings; the fund intends to address these through a new agreement with the Bank of North Dakota.
“But we do have a responsibility as board and as staff to respond to this audit finding in a constructive way,” said Board Chair Joel Brown.
The board is expected to provide regular updates on its progress toward addressing audit recommendations in future meetings.
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