Consent Item 3f
STAFF REPORT
Consent Agenda Item
DATE: November 3, 2025
TO: Honorable Mayor and Council Members
FROM: Aaron Felmlee, Finance Director
THROUGH: Amy Nilsen, City Manager
SUBJECT: First Amendment of Loan to Debra Kay Chisum for 320 Main Street STAFF RECOMMENDATION:
Staff recommends the City Council approve a first amendment to promissory note Secured by Deed of Trust between the City of Fortuna and Debra Kay Chisum.
EXECUTIVE SUMMARY:
In 2020 the City Council authorized the City Manager to negotiate a sale of the City-owned real property located at 320 Main Street with Debra Kay Chisum, who operates a restaurant at the location. The City previously acquired the property through a judicial foreclosure sale. The material terms of the sale, which were previously approved by the Council, are as follows: the purchase price for the real property was $375,000, payable by way of a $15,000 down payment and a City carried promissory note in the amount of $360,000. The promissory note is secured by a first priority deed of trust in and to the property, as evidenced by a lender’s policy of title insurance issued by Fidelity National Title Company. The loan accrues interest at the rate of 5% per annum and, although amortized over a thirty-year period, all principal and interest is due and payable on the fifth anniversary of the close of escrow. During the five-year period, Ms. Chisum will make sixty (60) monthly payments to the City, each in the amount of $1,932.56, and a balloon payment in the amount of $330,583.29 due on November 1, 2025.
Ms. Chisum has expressed an interest in extending the balloon payment due date to allow for her to sell other properties she owns so that she can make the balloon payment. Ms. Chisum has regularly made her monthly payment and is current on her loan.
Staff recommends that the City Council approve the first amendment to the Promissory Note extending the due date of the balloon payment to April 1, 2026 while continuing interim monthly payments and maintaining all other terms in the original note.
FINANCIAL IMPACT:
The estimated earnings from interest on the extended loan terms is similar to the amount of investment interest the City would earn if the loan was paid off on the original payment date. This results in no overall fiscal impact to Fund 836, Business Loan Fund.
Consent Item 3f
RECOMMENDED COUNCIL ACTION:
Approve the First Amendment to Promissory Note Secured by Deed of Trust between the City of Fortuna and Debra Kay Chisum, extending the note’s maturity date to April 1, 2026, and authorize the City Manager to execute the amendment. Consent agenda vote.
ATTACHMENTS:
• Original Promissory Note Secured by Deed of Trust
• Draft First Amendment to Promissory Note Secured by Deed of Trust