North Dakota law does not give county job development authorities the ability to buy stock in private businesses, Attorney General Wayne Stenehjem said.

Stenehjem issued a legal opinion on the issue Tuesday in response to a request from Stuart Larson, the Traill County state's attorney.

Larson said a local business is having difficulty repaying loans from the county's Economic Development Commission, and commission officials wanted to know if they could convert the loan into an ownership stake in the business.

Larson, who is a member of the commission's board, estimated that $175,000 was owed. Rick Forsgren, the commission's director, could not be reached for comment Tuesday.

Stenehjem's opinion says the Legislature outlines what local political agencies may do, and lawmakers have not given county job development authorities power to acquire ownership stakes in private companies.

The law does allow them to provide other forms of business aid, including loans, loan guarantees, money grants and property, Stenehjem wrote.

"The JDA can still fulfill its duty to encourage and assist in the development of employment and promotion of tourism … without the power to take equity positions in private companies," his opinion says. "A county JDA is not dependent on the ability to take equity positions in private companies to fulfill its purpose."

Carol Goodman, president of the Economic Development Association of North Dakota, said she was not aware of a county jobs development authority taking an ownership stake in a company.

Goodman is executive director of the Cavalier County Job Development Authority in Langdon. She said the Cavalier County agency has not made a similar arrangement with a company, though the possibility has been discussed in some circumstances.

"The thing that we all do is, we work very hard to help a business stay in business," Goodman said. "It involves, occasionally, a restructuring of a loan or whatever we could do."

Taking an ownership share of a company, Goodman said, "may have been something that a few organizations have used."

Gaylon Baker, executive vice president of Stark Development Corp., said the Dickinson agency does not own shares of private companies.

"That might not be a good idea, for a number of reasons," Baker said. "When you become an owner, you have all the responsibilities of ownership."

For example, if a person sued a company that was partly owned by a county jobs development association, the JDA could be made to pay damages, Baker said.

"A good lawyer looks for a deep pocket, and you might be it," Baker said. "You might end up losing your taxpayer dollars to that kind of a lawsuit."