Meeting Agenda
Monday, October 5, 2026 at 6:00 pm
621 11th Street, Fortuna CA
Regular Meeting Agenda
Zoom Option: 1-669-900-9128 Meeting ID 811 9686 6780 Password 797901 • We May Disagree, But We Will Be Respectful of One Another • All Comments Will Be Directed to the Issue at Hand, and Addressed to the City Council • Personal Attacks are Unacceptable
• The City Council May Take Action on any Item on this Agenda.
CALL TO ORDER / FLAG SALUTE / ROLL CALL
Council
Staff
• Council Member Kyle Conley
• Council Member Carlos Diaz
• Council Member Abe Stevens
• Mayor Pro Tem Tami Trent
• Mayor Mike Johnson
• City Manager Amy Nilsen
• City Clerk Siana L. Emmons
1. PRESENTATIONS / PROCLAMATIONS
a. Domestic Violence Awareness Month Proclamation
2. ORAL COMMENTS FROM THE PUBLIC
Members of the Public may be heard at this time on any item within the subject matter jurisdiction of the City that is not on the Public Meeting Agenda. It is the practice of this Council to hold public
3. comment for every item of business on the agenda at the time that item is heard. If a speaker cannot stay for a particular item of business, they may be heard during this time. Comments concerning the Consent Calendar may also be heard at this time. Speakers addressing the Council will be limited to 3 minutes per speaker. Be advised that, by law, the City Council can only deliberate or take action on items that are included on the agenda.
CONSENT CALENDAR
These matters are routine in nature and are usually approved by a single vote. Any member of the Council may pull a particular item for further discussion. a. City Council Minutes – September 21, 2026 (Regular Meeting) b. Report of Disbursements
c. Adoption of City of Fortuna Purpose Statement
Amendment to the Existing Solid Waste Franchise Agreement between Recology and the City of Fortuna
d.
Informational Update on GHD Professional Services Agreement for Lower Eel River Wetlands Acquisition Due Diligence
e.
4. CITY COUNCIL BUSINESS
a. Community Development Block Grant Program Income Application b. Public Hearing: Unmet Transit Needs
c. Hiring Freeze Exception for Full-Time Recreation Program Supervisor Approval of River Lodge Facility Lease with the Fortuna Chamber of Commerce
d.
5. 6. CITY MANAGER’S REPORT
FUTURE AGENDA ITEMS
At this time, members of the Council may consider or request items to be placed on a future agenda through a consensus of the majority.
7. CITY COUNCIL REPORTS AND COMMENTS
Council Member Kyle Conley
Redwood Region Economic Development Corporation (RREDC) Alternate, Parks & Recreation Commission, Humboldt Transit Authority Alternate a.
Council Member Carlos Diaz
Redwood Region Economic Development Corporation (RREDC), Redwood Coast Energy Authority (RCEA), Parks & Recreation Commission Alternate b.
Council Member Abe Stevens
Humboldt County Association of Government Alternate, Redwood Region Economic Development Corporation
c.
Mayor Pro Tem Tami Trent
Humboldt Transit Authority (HTA), Indian Gaming Commission, League of California Cities Public Safety Commission, Fortuna Business Improvement District (FBID), Humboldt Local Agency Formation Commission (LAFCo)
d.
8. Contact: Siana L. Emmons, City Clerk ([email protected] 707-725-1409) | Agenda published on 10/01/ 2026 at 5:15 PM
Mayor Mike Johnson
Humboldt County Association of Governments (HCAOG), Historical Commission, League of California Cities Transportation, Communication, & Public Works Commission e.
ADJOURN
Pursuant to Government Code Section 54957.5, any non-confidential documents or writings that the City distributes, less than 72 hours before a regular meeting, to all or a majority of the legislative body's members must be made available to members of the public at the same time as the distribution. Documents and information related to the agenda topics are available for review at City Hall, 621 11th Street, between the hours of 8:00 AM to 5:00 PM. Members of the public are invited to come to the meeting and comment. In compliance with the Americans with Disabilities Act, if you need special assistance to participate in this meeting, please contact the City Clerk at (707) 725-7600. Notification prior to the meeting will enable the City to make reasonable arrangements to ensure accessibility to this meeting.
9. In Recognition and Support of
Domestic Violence Awareness Month
October 2026
WHEREAS, October is annually recognized as National Domestic Violence Awareness Month; and WHEREAS, progress continues to be made toward violence prevention, domestic and intimate partner violence remains a serious issue affecting all people regardless of age, race, ethnicity, sex, gender, socioeconomic status, literacy, sexuality, ability, religion, culture, and immigration status; and WHEREAS, domestic and intimate partner violence survivors are deprived of dignity, security, and autonomy with the systematic use of control and power through physical, emotional, sexual, psychological, and economic abuse; and
WHEREAS, children exposed to domestic violence can experience long-term consequences including difficulty at school, substance abuse, behavioral problems in adolescence, and serious adult health problems;
WHEREAS, Humboldt Domestic Violence Services (HDVS) has been serving Humboldt County since 1977 to continuously support all those living with or escaping abuse; WHEREAS, all survivors deserve access to culturally responsive prevention programs and services to increase their safety and self-sufficiency. HDVS enlists a diverse array of allies, agencies, and community members in supporting survivors of domestic and intimate partner violence; WHEREAS, only together can we change the health and safety of our community by challenging the societal norms that perpetuate violence;
NOW, THEREFORE, BE IT RESOLVED, that the City Council of the City of Fortuna recognizes the month of October 2026 to be DOMESTIC VIOLENCE AWARENESS MONTH. The Council celebrates HDVS’s 48 years of effort to improve community safety by breaking the cycle of domestic and intimate partner violence.
SIGNED this 5th day of October 2026 at the City of Fortuna, in the State of California, and in witness thereof, the seal of Fortuna.
____________________________
Mike Johnson,
Mayor, City of Fortuna
Meeting Agenda
Minutes
Monday, September 21, 2026 at 6:00 pm
621 11th Street, Fortuna CA
Regular Meeting Agenda
Zoom Option: 1-669-900-9128 Meeting ID 880 7368 4104 Password 818002 • We May Disagree, But We Will Be Respectful of One Another • All Comments Will Be Directed to the Issue at Hand, and Addressed to the City Council • Personal Attacks are Unacceptable
• The City Council May Take Action on any Item on this Agenda.
CALL TO ORDER / FLAG SALUTE / ROLL CALL
Minutes:
Mayor Johnson called the meeting to order at 6:00 pm and led the flag salute. ROLL CALL: Council Member Conley - Absent, Council Member Diaz - Present, Council Member Stevens - Present, Mayor Pro Tem Trent - Present, Mayor Johnson - Present
1. PRESENTATIONS / PROCLAMATIONS
Proclamation: National Program of All-Inclusive Care for the Elderly Minutes:
Mayor Johnson presented the National Program of All-Inclusive Care for the Elderly (PACE) Proclamation to the Director of PACE Barbara Lahaia and HSRC CEO Melissa Hooven.
a.
2. ORAL COMMENTS FROM THE PUBLIC
Minutes:
Katey Garrison, Orval Garrison There being no additional public comments, Mayor Johnson closed the public comment section.
3. CONSENT CALENDAR
Minutes:
4. PUBLIC COMMENT: There being no public comments, Mayor Johnson closed the public comment section. CITY COUNCIL ACTION: Mayor Pro Tem Trent moved, seconded by Council Member Diaz, to approve the consent calendar. Voice vote.
AYES: Council Members Diaz, Stevens, Mayor Pro Tem Trent, Mayor Johnson NOES:
None ABSTAIN: None ABSENT: Council Member Conley MOTION CARRIED: 4/0 City Council Minutes – September 8, 2026 (Regular Meeting) & September 8, 2026 (Special Meeting)
a.
b. Administrative Monthly Report
c. Community Development Monthly Report
d. Finance Monthly Report
e. Parks & Recreation Monthly Report
f. Police Monthly Report
g. Public Works Monthly Report
h. Report of Disbursements
i. Approve the Investment Policy for Fiscal Year 2026-27, Resolution 2026-31 Authorization of Destruction of Selected Finance Department Files, Resolution 2026-32
j.
Consider Revisions to the Organizational Chart and Full-Time Pay Rate Schedule for the Community Development/Public Works Department k.
Authorization of Destruction of Selected River Lodge Files, Resolution 2026-33
l.
CITY COUNCIL BUSINESS
Second Reading and Adoption of Ordinance 2026-788, Adding Chapter 5.30 to the Fortuna Municipal Code Regulating Massage Establishments Minutes:
Interim Chief of Police Matt Eberhardt provided a staff on the adding Chapter
5.30 to the Fortuna Municipal Code regulating massage establishments.
PUBLIC COMMENT: There being no public comments, Mayor Johnson closed the public comment section. CITY COUNCIL ACTION: Council Member Diaz moved, seconded by Mayor Pro Tem Trent, to conduct the second reading and adopt Ordinance 2026-788, an Ordinance of the City Council of the City of Fortuna Adding Chapter 5.30 to Article 5 of the Fortuna Municipal Code Regulating Massage Establishments; read by title only. Roll Call vote. AYES:
Council Members Diaz, Mayor Pro Tem Trent, Mayor Johnson NOES: Council Member Stevens ABSTAIN: None ABSENT: Council Members Conley MOTION CARRIED: 3/1
a.
Approval of Amendments No. 5 and No. 6 to the Engineering Services Agreement with Jacobs for the Wastewater Treatment Plant NPDES Compliance Project
Minutes:
Public Works Director Brian Issa provided a staff report on amendments No. 5 and No. 6 to the Engineering Services agreement with Jacobs. PUBLIC COMMENT: There being no public comments, Mayor Johnson closed the b.
5. Contact: Siana L. Emmons, City Clerk ([email protected] 707-725-1409) public comment section. CITY COUNCIL ACTION: Council Member Diaz moved, seconded by Mayor Pro Tem Trent, to authorize the Public Works Director to execute Amendment No. 5 in the amount of $442,000 for final design and bid-phase services for the National Pollutant Discharge Elimination System (NPDES) Compliance Project and Amendment No. 6 in the amount of $2,539,015 for construction/implementation of the Supervisory Control and Data Acquisition (SCADA) component, including purchase and programming of hardware and related tasks described in the attached amendment; authorize the City to procure and contract directly with an electrical contractor for related electrical installation work to avoid Jacobs markup; and find that sufficient appropriations are available in the current fiscal year wastewater capital budget. Roll Call vote. AYES: Council Members Diaz, Stevens, Mayor Pro Tem Trent, Mayor Johnson NOES: None ABSTAIN: None ABSENT: Council Members Conley MOTION CARRIED: 4/0
CITY MANAGER’S REPORT
Minutes:
City Manager Amy Nilsen provided a verbal report.
6. FUTURE AGENDA ITEMS
Minutes:
None.
7. CITY COUNCIL REPORTS AND COMMENTS
a. Council Member Kyle Conley
b. Council Member Carlos Diaz
c. Council Member Abe Stevens
d. Mayor Pro Tem Tami Trent
e. Mayor Mike Johnson
8. ADJOURN
Minutes:
Mayor Pro Tem Trent moved, seconded by Council Member Diaz to adjourn the meeting at 6:24 pm. MOTION CARRIED: 4/0
9. Consent Agenda Item 4b
STAFF REPORT
Consent Agenda Item
DATE: October 5, 2026
TO: Honorable Mayor and City Council Members
FROM: Amy Nilsen, City Manager
SUBJECT: Report of Disbursements
STAFF RECOMMENDATION:
Receive staff report of disbursements that were processed for the City of Fortuna and the Successor Agency (Fortuna Redevelopment Agency) if applicable, as an informational item only.
REPORT OF DISBURSEMENTS:
Disbursement was processed as follows:
September 22, 2026 $107,918.40
RECOMMENDED COUNCIL ACTION:
Informational Item. Receive report by Consent Agenda vote.
ATTACHMENTS:
• Disbursements Detail Report for September 22, 2026
Amount
9/22/2026 2:23:52 PM Page 1 of 4
85838 09/22/2026 ONTIVEROS & ASSOCIATES IN 6782 Parcel Map - Goble 208.75 85838 09/22/2026 ONTIVEROS & ASSOCIATES IN 6783 Lot Line Adjustment - Vancil Reservoir 113.75 85837 09/22/2026 NORTH COAST JOURNAL 2026ci-7527 Public Notice - CDBG Loans 640 85838 09/22/2026 ONTIVEROS & ASSOCIATES IN 6781 Gulliksen Sub Phase - Surveyor Service 427.5 85836 09/22/2026 NAPA AUTO PARTS FORTUNA 105253 Gear Puller/Pulley Puller - Parks 45.24 85837 09/22/2026 NORTH COAST JOURNAL 2026152189 Public Notice - Regulating Massage Establishments 80 85836 09/22/2026 NAPA AUTO PARTS FORTUNA 105038 Fiberglass Resin Repair Kit - Transit 45.57 85836 09/22/2026 NAPA AUTO PARTS FORTUNA 105049 Body Mount Bolt Kit - General Services 33.34 85836 09/22/2026 NAPA AUTO PARTS FORTUNA 104359 Chrome Socket - General Services 27.83 85836 09/22/2026 NAPA AUTO PARTS FORTUNA 104899 Back-up Cameral Kit - Streets 135.99 85836 09/22/2026 NAPA AUTO PARTS FORTUNA 104032 Grease - Shop 91.9 85836 09/22/2026 NAPA AUTO PARTS FORTUNA 104103 Credit Return - WWTP -132.28 85836 09/22/2026 NAPA AUTO PARTS FORTUNA 104032 Grease - Shop 91.9 85836 09/22/2026 NAPA AUTO PARTS FORTUNA 104032 Grease - Shop 91.9 85836 09/22/2026 NAPA AUTO PARTS FORTUNA 103560 Brake Rotors - General Services 303.32 85836 09/22/2026 NAPA AUTO PARTS FORTUNA 103604 Impact Socket - Utilities 7.65 85835 09/22/2026 MISSION LINEN INDUS SERV 526750014 Police Mat Cleaning Service FY 26/27 59.36 85835 09/22/2026 MISSION LINEN INDUS SERV 526755347 Paper Towels - River Lodge 38.72 85834 09/22/2026 MCKESSON MEDICAL-SURGICAL INC 022025 River Lodge Deposit Refund Less Cancellation Fee -125 85835 09/22/2026 MISSION LINEN INDUS SERV 526740500 River Lodge Linen Service 109.12 85833 09/22/2026 JENNI'S CAR WASH 1017 Car Wash Tokens - PD 100 85834 09/22/2026 MCKESSON MEDICAL-SURGICAL INC 022025 River Lodge Deposit Refund Less Cancellation Fee 305 85831 09/22/2026 HUMBOLT CO FARM BUREAU 071326 River Lodge Deposit Refund 1000 85832 09/22/2026 HUMMEL TIRE & WHEEL 290924 Tire Repair - PD 185.79 85829 09/22/2026 H&S ENERGY GROUP HCL-071338-26 Car Wash Services - PD 14 85830 09/22/2026 HINDERLITER, DE LLAMAS SIN067900 Sales Tax Review Service FY 26/27 300 85828 09/22/2026 GHD INC 380-0097393 Speed Limit/Traffic Survey Study 1788 85828 09/22/2026 GHD INC 380-0097746 Mill Creek Habitat Connectivity Project 1197.9 85827 09/22/2026 GARCIA, EMMANUEL 021426 River Lodge Deposit Refund Less Cancellation Fee -250 85828 09/22/2026 GHD INC 380-0097378 Water System Master Plan 4123.45 85826 09/22/2026 FREEDOM FUEL 1019548 Equipment Fuel 77.16 85827 09/22/2026 GARCIA, EMMANUEL 021426 River Lodge Deposit Refund Less Cancellation Fee 500 85826 09/22/2026 FREEDOM FUEL 1019535 Equipment Fuel 76.71 85826 09/22/2026 FREEDOM FUEL 1019542 Equipment Fuel 91.01 85825 09/22/2026 FORTUNA FIRE PROTECTION 071526 Park Deposit Refund 500 85826 09/22/2026 FREEDOM FUEL 1019500 Equipment Fuel 41.64 85823 09/22/2026 FORTUNA ACE HARDWARE 413079 Building Maintenance Supplies - River Lodge 90.57 85824 09/22/2026 FORTUNA CHURCH OF THE NAZARENE 080426 Park Deposit Refund 250 85823 09/22/2026 FORTUNA ACE HARDWARE 413052 Shovel/Trowel/Paint/Tape - Parks 20.35 85823 09/22/2026 FORTUNA ACE HARDWARE 413052 Shovel/Trowel/Paint/Tape - Parks 26.24 85821 09/22/2026 ECOLAB 6359959073 River Lodge Dishmachine Rental FY 26/27 156.91 85822 09/22/2026 EUREKA SYMPHONY 090326 River Lodge Deposit Refund 1000 85819 09/22/2026 DEPARTMENT OF JUSTICE 71460 August Livescan Services 1488 85820 09/22/2026 ECO MEDICAL 49415 Medical Waste Disposal 56.6 85818 09/22/2026 CWEA 091626 CWEA Membership Renewal - A Bowles 259 85819 09/22/2026 DEPARTMENT OF JUSTICE 64962 July Livescan Services 751 85816 09/22/2026 COLANTUONO, HIGHSMITH & WHATLEY, PC 72270 Land Use Legal Services 525 85817 09/22/2026 CSG CONSULTANTS 67870 Franchise Agreement Negotiation Services 420 85814 09/22/2026 BSK ASSOCIATES AJ21317 Lab Testing 2560 85815 09/22/2026 CHACON, ISAAC 091526 Per Diem 9.29 - 10.1 (Distribution Cert Review) 227 85813 09/22/2026 BEDLINERS PLUS 38864 Tow Hitch - Utilities 253.49 85813 09/22/2026 BEDLINERS PLUS 38864 Tow Hitch - Utilities 253.48 85811 09/22/2026 AQUA-METRICS SALES CO INV0116085 Water Meters 21175.13 85812 09/22/2026 AT&T 5025 09260893 23484108935031 31.76 Expense Approval Report
CITY OF FORTUNA By (None)
Payment Dates 9/22/2026 - 9/22/2026
Payment Number Payment DateVendor Name Payable Number Description (Item) Amount
9/22/2026 2:23:52 PM Page 2 of 4
85853 09/22/2026 WOODS PEST CONTROL 1405732 Police Pest Service FY 26/27 85 Grand Total: 107918.4
85853 09/22/2026 WOODS PEST CONTROL 1405551 City Hall Pest Service FY 26/27 90 85853 09/22/2026 WOODS PEST CONTROL 1405616 Monday Club Pest Service FY 26/27 125 85851 09/22/2026 THE PEOPLE OF NEW DIRECTIONS 4430 Encampment Clean-up Services 960 85852 09/22/2026 TYLER BUSINESS FORMS 114345 1099/W2 Forms 635.55 85849 09/22/2026 SUNBELT RENTALS INC 189010040-0001 Tilt Trailer/Hitch Rental - PD 77.23 85850 09/22/2026 SWENSON, JEREMIAH 091526 Per Diem 9.29 - 10.1 (Distribution Cert Review) 227 85847 09/22/2026 STOEL RIVES LLP 8139084 Legal Services - River Watch Lawsuit 416.5 85848 09/22/2026 SUN RIDGE SYSTEMS, INC 9359 RIMS Annual Support Services - PD 34688 85845 09/22/2026 SHERLOCK RECORDS MANAGEMENT 4959 Finance Record Storage Service FY 26/27 50 85846 09/22/2026 SILKE COMMUNICATIONS 60008 FCC Radio License Modification - WWTP 375 85844 09/22/2026 RECOLOGY EEL RIVER 801267 Debris Disposal 143.2 85844 09/22/2026 RECOLOGY EEL RIVER 801279 Debris Disposal 73.6 85844 09/22/2026 RECOLOGY EEL RIVER 801228 Debris Disposal 118.4 85844 09/22/2026 RECOLOGY EEL RIVER 801249 Debris Disposal 128 85843 09/22/2026 PAPE MATERIAL HANDLING 1718926 Til Tooth x 12 - General Services 435.29 85843 09/22/2026 PAPE MATERIAL HANDLING 4014261 Steering Cylinder Repair - General Services 1355.28 85843 09/22/2026 PAPE MATERIAL HANDLING 17138712 Credit Basic Control Return - Parks -700.25 85843 09/22/2026 PAPE MATERIAL HANDLING 17138771 Credit Shield Return - General Services -288.05 85843 09/22/2026 PAPE MATERIAL HANDLING 17112822 Filters/Tire & Wheel - General Services 691.09 85843 09/22/2026 PAPE MATERIAL HANDLING 17138704 Credit Filter Head/Seal Kit Return - GS -184.16 85841 09/22/2026 OWSLEY ELECTRIC 12335 Network Cable Services 2712.5 85842 09/22/2026 PACIFIC GAS & ELECTRIC CO 09266726 44469516726 228.56 85840 09/22/2026 O'REILLY AUTOMOTIVE STORE 402286 Fuel Cap - General Services 16.57 85840 09/22/2026 O'REILLY AUTOMOTIVE STORE 402642 Body Mount Kit - General Services 199.29 85839 09/22/2026 OPENGOV INC INV28809 Annual Software Maintenance Agreement 11685 85839 09/22/2026 OPENGOV INC INV28809 Annual Software Maintenance Agreement 11685 Expense Approval Report Payment Dates: 9/22/2026 - 9/22/2026 Payment Number Payment DateVendor Name Payable Number Description (Item) 500-6045-6000Laboratory Services 2560
9/22/2026 2:23:52 PM Page 3 of 4
500-5715-6100Vehicle Repairs 99.55
500-5760-6100Water Meters 21175.13
500-5900-6100Tools & Small Equipment 253.49
210-6025-5300Professional Services 420
280-5715-4200Vehicle Repairs 135.99
350-6025-9123Professional Services 1197.9
160-5740-5800Building Repair and Maintenance 90.57
200-6618-4310SWMP Implementation 463.2
210-5735-5300Janitorial Services - HHW 56.6
160-5565-5800Janitorial Supplies 147.84
160-5706-5800Equipment Lease 156.91
160-5740-5700Building Repair and Maintenance 125
120-5710-3100Software Maintenance 11685
160-2222 River Lodge Deposits 2805
160-4330 River Lodge Rental Fees -375
100-6625-2000Livescan Fees 2239
101-6025-2000Professional Services 960
120-5710-3000Software Maintenance 11685
100-6025-3200Professional Services 750
100-6305-1400Publication Expense 80
100-6305-3200Publication Expense 640
100-6025-1200Professional Services 50
100-6025-1400Professional Services 300
100-6025-2000Professional Services 59.36
100-5900-5450Tools & Small Equipment 26.24
100-6005-4000Engineering Services 1788
100-6020-1400Legal Services 525
100-5720-5450Equipment Repair -655.01
100-5740-1500Building Repair and Maintenance 90
100-5740-2000Building Repair and Maintenance 85
100-5715-4100Vehicle Repairs 644.42
100-5715-5450Vehicle Repairs 91.9
100-5720-4100Equipment Repair 2037.28
100-5505-5450Vehicle Fuel & Oil 286.52
100-5710-2000Software Maintenance 34688
100-5715-2000Vehicle Repairs 377.02
100-1680 Distributed Office Supplies 635.55
100-2220 Refundable Park Deposits 750
100-5500-5450Department Supplies 20.35
560 - Wastewater Capital Fund 2712.5
590 - TDA Transit Fund 45.57
Grand Total: 107918.4
Account Summary
Account Number Account Name Payment Amount
280 - Gas Tax Fund 135.99
350 - Capital Projects Fund 1197.9
500 - Water Fund 25061.49
510 - Water Capital Fund 4123.45
550 - Wastewater Fund 912.7
101 - Transaction and Use Tax Fund 960
120 - Development & Building Fund 23370
160 - Riverlodge Fund 2950.32
200 - Storm Drainage Fund 463.2
210 - Solid Waste Fund 476.6
Expense Approval Report Payment Dates: 9/22/2026 - 9/22/2026 Report Summary
Fund Summary
Fund Payment Amount
100 - General Fund 45508.63
Project Account Key Payment Amount
**None** 107918.4
Grand Total: 107918.4
9/22/2026 2:23:52 PM Page 4 of 4
560-6005-0171Engineering Services 2712.5
590-5715-5000Vehicle Repairs 45.57
Grand Total: 107918.4
Project Account Summary
550-5500-6600Department Supplies 242.72
550-5900-6500Tools & Small Equipment 253.48
550-6025-6600Professional Services 416.5
500-7000-6100Travel, Conferences & Training 454
500-7015-6000Dues & Subscriptions 259
510-6025-9109Professional Services 4123.45
Account Number Account Name Payment Amount
500-6200-6100Telephone 31.76
500-6505-6000Utility - General & Electric 228.56
Expense Approval Report Payment Dates: 9/22/2026 - 9/22/2026 Account Summary
Consent Agenda Item 4c
STAFF REPORT
Consent Agenda Item
DATE: October 5, 2026
TO: Honorable Mayor and Council Members
FROM: Amy Nilsen, City Manager
SUBJECT: Adoption of City of Fortuna Purpose Statement
STAFF RECOMMENDATION:
1. Adopt the following City of Fortuna Purpose Statement: "Our purpose is to provide reliable public services, maintain resilient infrastructure, foster economic opportunity, and strengthen community character to ensure Fortuna remains a place where current and future generations can live, work, and prosper."
2. Direct staff to incorporate the adopted Purpose Statement into employee onboarding materials, recruitment materials, job postings, strategic planning documents, and other organizational communications as appropriate.
EXECUTIVE SUMMARY:
The City of Fortuna Strategic Plan 2026-2036 identifies development of a City Purpose Statement as a Priority 1 Near-Term Commitment and directs that the statement be embedded in Council meetings, job postings, and onboarding materials.
The Strategic Plan distinguishes a purpose statement from a mission statement. The Plan states that a mission statement describes what an organization does, while a purpose statement describes why that work matters. The Strategic Plan further notes that purpose helps guide decision-making when circumstances change and supports alignment across departments and organizational functions.
The proposed Purpose Statement was developed collaboratively by the City's Department and Division Heads through a series of facilitated discussions following adoption of the Strategic Plan.
Staff reviewed the Strategic Plan vision, core values, community engagement findings, and adopted priorities to craft a statement that reflects both the essential functions of municipal government and the broader purpose those functions serve in the community. The resulting statement is intended to provide a durable organizational guide for decision-making, employee onboarding, recruitment, strategic planning, and public service delivery. The Strategic Plan specifically directed development of a Purpose Statement by a staff team and its incorporation into City operations. Adoption of the statement fulfills a specific Strategic Plan implementation action and establishes a concise expression of the City's shared purpose for employees.
CORE VALUES: STRATEGIC PLAN 2026-2036:
The proposed Purpose Statement directly advances Strategic Plan Priority 1, which calls for development of a City Purpose Statement and its integration into City operations.
Consent Agenda Item 4c
The statement reflects the Strategic Plan vision that Fortuna be "a vital economic engine and a thriving, connected community for people of all ages," guided by clear direction and reliable services.
The statement also incorporates several adopted community core values, including:
• Committed Service through the commitment to provide reliable public services. • Economic Resilience through fostering economic opportunity. • Community Character through strengthening the elements that make Fortuna unique while accommodating growth.
• Clear Direction by establishing a durable statement intended to guide decision-making over time.
•
The Purpose Statement is also consistent with Strategic Plan priorities emphasizing reliable public services, infrastructure stewardship, economic development, and long-term community prosperity.
FISCAL IMPACT:
There is no immediate fiscal impact associated with adoption of the Purpose Statement.
Implementation would primarily consist of incorporating the statement into existing City communications, onboarding materials, recruitment materials, and City Council meeting procedures. Any future costs associated with broader branding, graphic design, or publication efforts would be addressed through existing departmental budgets or brought forward for City Council consideration as needed.
ALTERNATIVES TO STAFF RECOMMENDATIONS:
Alternative 1: Adopt the Purpose Statement with modifications.
This alternative would allow the City Council to revise wording while still implementing Strategic Plan Commitment 1N1. Adoption of a modified statement may require additional staff review to ensure consistency with the Strategic Plan.
Alternative 2: Continue the item and provide additional direction to staff.
This alternative would delay implementation of Priority 1 of the Strategic Plan and postpone incorporation of a Purpose Statement into City operations.
RECOMMENDED COUNCIL ACTION:
1. Motion to Adopt the following City of Fortuna Purpose Statement: "Our purpose is to provide reliable public services, maintain resilient infrastructure, foster economic opportunity, and strengthen community character to ensure Fortuna remains a place where current and future generations can live, work, and prosper."
2. Direct staff to incorporate the adopted Purpose Statement into employee onboarding materials, recruitment materials, job postings, strategic planning documents, and other organizational communications as appropriate. Consent agenda vote.
ATTACHMENTS:
N/A
Consent Agenda Item 4d
STAFF REPORT
Consent Agenda Item
DATE: October 5, 2026
TO: Honorable Mayor and Council Members
FROM: Amy Nilsen, City Manager
SUBJECT: Amendment to the Existing Solid Waste Franchise Agreement between Recology and the City of Fortuna
STAFF RECOMMENDATION:
Authorize the City Manager to execute an amendment to the existing Franchise Agreement between Recology and the City of Fortuna for the collection of solid waste, recycling and yard waste services to extend the term from September 30, 2026, through June 30, 2027.
EXECUTIVE SUMMARY:
The City and Recology (formerly Eel River Disposal) are parties to an existing solid waste and curbside recycling franchise agreement dated January 1, 1995. The current franchise agreement expires on September 30, 2026. City staff are completing a lengthy process to develop a new franchise agreement to assist the City with compliance with new state mandate Senate Bill (SB) 1383 which requires new mandatory organics collection programs, monitoring, mandatory outreach/education programs, reporting and other requirements and gain consensus with Recology on these new provisions. Since the current agreement is very outdated, the new agreement also includes several performance standard improvements, improved reporting, and a clear transparent rate setting process. These additions have taken additional time to prepare. On November 3, 2025, the City Council approved an amendment to the existing franchise agreement for a short-term extension from January 1, 2026, through June 30, 2026, and again, on June 1, 2026 the City Council approved an extension through September 30, 2026.
Since that time, new equipment and organics recycling space have had to be purchased/prepared to maintain compliance with SB 1383, and this has delayed the implementation of the new franchise agreement. In addition, work continues on the cost proposal and rate model with Recology. Therefore, staff recommend an amendment to the existing franchise agreement from October 1, 2026, through June 30, 2027. The new franchise agreement will likely commence on July 1, 2027.
BACKGROUND:
The City’s current franchise agreement predates many of California’s recycling mandates and has several outdated provisions. The new franchise agreement will comply with SB 1383 and will include these new provisions:
• Provide universal organics collection for all residents and businesses; • Provide color-compliant containers (gray/black: trash, blue: recycling, green: organics); • Complete contamination monitoring, inspections, and enforcement; • Complete mandatory outreach/education programs; and
Consent Agenda Item 4d
• Complete recordkeeping and reporting to the state;
Staff have been participating in a regional collaborative effort with the Cities of Arcata, Eureka, Rio Dell and the County of Humboldt to provide Fortuna residents and businesses with:
• Improved cost-effective recycling, organics, garbage programs for residents and businesses
• Meet SB 1383 requirements and other new state mandates to avoid penalties from CalRecycle (CA agency).
• Improved performance standards, reporting and added accountability for Recology • Provide cost effective outreach/education programs to increase diversion and reduce contamination in organics and recycling
Below is a comprehensive summary of jurisdictions responsibilities under SB 1383.
Staff are working to complete the new franchise agreement in coordination with Recology and the City’s consultant and will complete analysis of Recology’s cost proposal/related documents; staff will return to Council with the new franchise agreement and related documents for the Council’s consideration for approval.
STRATEGIC PLAN 2026-2036:
This action supports the following area(s) of your City Council’s Strategic Plan 2026-2036.
CORE VALUES:
Quality of Life: Family, Nature & Neighbors
Community Connection & Care
PRIORITIES:
Priority 3: Fiscal Foundation — Revenue, Cost Accounting & Honest Commitments Priority 4: Economic Development to Build Fortuna's Future Priority 5: A Development-Ready City — Permitting, Design & Standards Consent Agenda Item 4d
RECOMMENDED COUNCIL ACTION:
Motion to authorize the City Manager to execute an amendment to the existing Franchise Agreement between Recology and the City of Fortuna for the collection of solid waste, recycling and yard waste services to extend the term from October 1, 2026, through June 30, 2027. Consent agenda vote.
ATTACHMENTS:
• Amendment to the Franchise Agreement for Solid Waste and Recycling Collection Services between the City of Fortuna and Recology Eel River
AMENDMENT TO THE FRANCHISE AGREEMENT FOR SOLID WASTE AND RECYCLING
COLLECTION SERVICES BETWEEN THE CITY OF FORTUNA AND
RECOLOGY EEL RIVER
This Amendment (this “Amendment”) amends that certain Solid Waste and Curbside Recycling Franchise Agreement, effective as of July 1, 1995, between the City of Fortuna and Recology Eel River (as successor in interest to Eel River Disposal Company, Inc.) and is made and entered into as of May 18, 2026 by and between the City of Fortuna (“City”), and Recology Eel River (“Contractor”). The City and Contractor are collectively referred to herein as the “Parties” and individually as “Party”).
RECITALS
This Amendment is entered into with reference to the following facts and circumstances:
WHEREAS, the City and Recology Eel River are parties to that certain Solid Waste and Curbside Recycling Franchise Agreement, effective as of July 1, 1995, as amended (the “Franchise Agreement”);
WHEREAS, the Franchise Agreement expires on September 30, 2026; WHEREAS, the City and Recology Humboldt County, an affiliate of Contractor, are currently negotiating a new franchise agreement (the “2026 Franchise Agreement”) to, among other things, ensure compliance with new state mandate Senate Bill (SB) 1383; WHEREAS, the Parties previously anticipated that the 2026 Franchise Agreement would commence on October 1, 2026 and amended the Franchise Agreement to provide for a shortterm extension of the Franchise Agreement from July 1, 2026, through September 30, 2026.
WHEREAS, the 2027 Franchise Agreement will now commence no earlier than July 1, 2027 which will therefore require a short-term extension of the Franchise Agreement from October 1, 2026, through June 30, 2027.
NOW, THEREFORE, in consideration of the mutual promises, covenants, and conditions herein, the City and Contractor do hereby agree as follows:
1. This Amendment shall extend the term of the Franchise Agreement through June 30, 2027.
2. Except as set forth in this Amendment, all of the terms and conditions of the Franchise Agreement will remain unmodified and in full force and effect.
IN WITNESS WHEREOF, the City and Contractor have approved and executed this Amendment as of the date set forth above.
RECOLOGY EEL RIVER
By:
Printed Name: Salvatore M. Coniglio
Title: Chief Executive Officer
THE CITY OF FORTUNA
By:
Printed Name: Amy Nilsen
Title: City Manager
Consent Agenda Item 4e
STAFF REPORT
Consent Agenda Item
DATE: October 5, 2026
TO: Honorable Mayor and Council Members
FROM: Amy Nilsen, City Manager
SUBJECT: Informational Update on GHD Professional Services Agreement for Lower Eel River Wetlands Acquisition Due Diligence
STAFF RECOMMENDATION:
Receive and file this informational report regarding the City Manager’s execution of a professional services agreement with GHD for pre-acquisition environmental due-diligence services for the Lower Eel River Wetlands Acquisition.
EXECUTIVE SUMMARY:
The City is pursuing acquisition of approximately 244 acres along the Lower Eel River. The proposed acquisition would protect coastal wetlands and uplands, with approximately 7.2 acres retained by the City for a future riverfront park and the remaining property transferred to the Wiyot Tribe. As part of pre-acquisition due diligence, the State Coastal Conservancy requires a Phase I Environmental Site Assessment and a baseline conditions report. GHD will prepare these documents under a professional services agreement with a total not-to-exceed amount of $21,172.
The State Coastal Conservancy, one of the granting agencies supporting this acquisition, is requesting these docments by November 1, 2026. The City’s Purchasing Procedures authorize the City Manager to approve purchases of goods or services from $10,000 to $100,000. Accordingly, Council approval is not required for execution of this agreement. This report is provided to keep the City Council informed of the work, cost, schedule, and funding source.
CORE VALUES: STRATEGIC PLAN 2026-2036:
This work supports the community core values of Quality of Life: Family, Nature & Neighbors, Clear Direction, and Community Character. It also advances Strategic Plan Priority 6, Parks, Trails & Outdoors - Fortuna’s Natural Advantage, which identifies protection and activation of the Eel River and development of Lower Eel River Park with river access as long-term direction. The environmental due-diligence documents will provide information needed to evaluate the proposed acquisition.
FISCAL IMPACT:
The agreement has a total not-to-exceed amount of $21,172 and provides for time-and-materials compensation. Costs will initially be paid from general park acquisition and improvements account, 9105, which has a total budget of $145,000 for FY 26/27. These funds are expected to be reimbursed by the State Coastal Conservancy.
Consent Agenda Item 4e
ALTERNATIVES TO STAFF RECOMMENDATIONS:
Because this is an informational item and no Council action is requested, no alternatives are presented.
RECOMMENDED COUNCIL ACTION:
1. Receive and file informational report. Consent agenda vote.
ATTACHMENTS:
A. Attachment A: GHD Professional Services Agreement
PROFESSIONAL SERVICES AGREEMENT
CITY OF FORTUNA
PROFESSIONAL SERVICES AGREEMENT
This Agreement (“Agreement”) for professional services is made on October 5, 2026, between the City of Fortuna, a California municipality (“City”), and GHD (“Consultant”).
1. Scope of Services. Consultant shall provide to City the professional services described in the Scope of Services, attached hereto as Attachment A and incorporated herein (the “Services”). Only the City’s governing body or the City Manager may authorize any change or addition to the Scope of Services specified in Attachment A.
Any such authorization shall be in writing and signed by the parties to be effective.
Consultant acknowledges that all documents created under this Agreement are public records and shall be provided to the City promptly upon request to comply with the California Public Records Act.
2. Term. This Agreement shall become effective on October 2, 2026 and shall continue in effect until the Services are completed, unless terminated sooner in accordance with Section 12 of this Agreement. Time is of the essence in respect to all provisions of this Agreement that specify a time for performance. City may suspend all or part of the work for its convenience upon written notice.
3. Compensation. For the full and satisfactory completion of the Services, City shall compensate Consultant on a Time and Materials as needed basis as described in Attachment B.
4. Prevailing Wage Laws. Services by persons deemed to be employees of Consultant possibly may be subject to prevailing wages under California Labor Code Sections 1770-1781. Consultant has the sole responsibility to comply with those requirements, should they apply. If a dispute based upon the prevailing wage laws occurs, Consultant, at its expense, shall indemnify, defend (including Consultant’s providing and paying for legal counsel for City), and hold harmless City, its officers, agents, employees, and representatives from and against all liability, claims, suits, demands, damages, fines, penalties, wages, costs, or expenses pertaining to the prevailing wage laws.
5. Payment. City shall pay Consultant for services satisfactorily provided during each calendar month within thirty (30) days following City receipt and approval of a detailed invoice. Amounts unpaid 30 days after receipt of the invoice shall bear interest from the date payment is due at the rate of one percent (1%) per month until paid. The invoice must include, at a minimum:
5.1 A description of the specific Services provided,
5.2 the name of the individual providing the Services,
5.3 the date(s) upon which the Services were provided,
5.4 the time spent providing the Services,
PROFESSIONAL SERVICES AGREEMENT
5.5 the amount due for the Services and the basis for calculating the amount due, and
5.6 an itemized summary of Allowable Reimbursable Expenses.
6. Independent Contractor.
6.1 Consultant understands and acknowledges that Consultant is an independent contractor, not an employee, partner, agent, or principal of City. This Agreement does not create a partnership, joint venture, association, or employeremployee relationship between the Parties. At its own expense, Consultant is responsible for providing compensation; employment benefits; disability, unemployment, and other insurance; workers’ compensation; training; permits and licenses; and office space for Consultant and for Consultant’s employees and Subconsultants. Consultant has, and shall retain, the right to exercise full control over the employment, direction, compensation, and discharge of all persons whom Consultant uses in performing the Services under this Agreement. Consultant shall provide the Services in Consultant’s own manner and method, except as this Agreement specifies. Consultant shall treat a provision in Consultant Agreement that may appear either to give City the right to direct Consultant as to the details of doing the work, or to exercise a measure of control over the work, as giving Consultant direction only as to the work’s end result.
6.2 Consultant shall indemnify, defend (including Consultant’s providing and paying for legal counsel for City), and hold harmless City for any obligation; claim; suit; demand for tax or retirement contribution, including any contribution or payment to the Public Employees Retirement System (PERS); social security; salary or wages; overtime, penalty, or interest payment; or workers' compensation payment that City may be required to make on behalf of Consultant, an employee of Consultant, or any employee of Consultant construed to be an employee of City, for the work done under this Agreement.
7. Consultant’s Warranties.
7.1 Consultant warrants that all Services provided under this Agreement shall be performed in accordance with generally accepted professional practices and standards for Consultant’s profession in the state.
7.2 Consultant warrants that all Services provided under this Agreement shall be performed in accordance with applicable federal, state, and local laws and regulations.
7.3 Consultant warrants that Consultant has no present interest which would conflict in any manner with the performance of Services on the City’s behalf.
7.4 Consultant represents and warrants that it is now, and will remain for the duration of its Services, properly licensed, qualified, experienced, and equipped to perform the Services.
PROFESSIONAL SERVICES AGREEMENT
7.5 Consultant possesses the competence, experience, expertise, skill, facilities, equipment, personnel, financial wherewithal, and other resources necessary to perform this Agreement and the Services in a professional and competent manner.
7.6 Consultant represents and warrants that the Services and the sale or use of the Services shall not infringe, directly or indirectly, on any valid patent, copyright or trademark, and Consultant shall, at Consultant 's sole cost and expense, indemnify, defend and hold harmless the City from and against any and all claims and causes of action based on alleged or actual infringements thereof.
7.7 These warranties shall survive the expiration or termination of this Agreement, and are in addition to any warranties provided by law. No payment to Consultant for any Services performed hereunder (including, without limitation, final payment) shall constitute a waiver of any Claims by the City against Consultant relating to the Services.
7.8 Consultant shall comply with the City of Fortuna Conflict of Interest Code and the California Political Reform Act and applicable regulations promulgated by the Fair Political Practices Commission.
7.9 Consultant shall perform all services in accordance with the degree of care and skill ordinarily exercised by professionals in the same field and locality under similar circumstances, as required by Civil Code § 2782.8.
8. Notice. Any notice, billing, or payment required by this Agreement must be made in writing, and sent to the other party by personal delivery, U.S. Mail, a reliable overnight delivery service, facsimile, or by e-mail as a .pdf (or comparable) file. Notice is deemed effective upon delivery unless otherwise specified. Notice for each party shall be given as follows:
City: City of Fortuna
Attn: City Manager
P.O. Box 545
Fortuna, CA 95540
Phone: (707) 725-1410
Email: [email protected]
Consultant:
GHD
Att: Andrea Hilton
718 3rd Street
Eureka, CA 95501
Phone: (707) 267-2262
Email: [email protected]
PROFESSIONAL SERVICES AGREEMENT
9. Indemnity.
9.1 General. For purposes of the following indemnification provisions, the phrases “design professional” and “design professional services” shall have the same meaning as set forth in California Civil Code section 2782.8. If any term, provision or application of this Section 9 is found to be invalid, in violation of public policy or unenforceable to any extent, such finding shall not invalidate any other term or provision of this Section 9 and such other terms and provisions shall continue in full force and effect. If there is any conflict between the terms, provisions or application of this Section 9 and the provisions of California Civil Code Sections 2782 or 2782.8, the broadest indemnity protection for the City under this Section 9 that is permitted by law shall be provided by Consultant.
9.2 Indemnification for Design Professional Services Claims. Consultant shall indemnify, defend and hold harmless the City, its governing board, directors, officers, employees, and agents against any claims that arise out of, or pertain to, or relate to the negligence, recklessness, or willful misconduct of Consultant, its employees, subcontractors, and agents in the performance of design professional services under this Agreement, excepting only liability arising from the sole negligence, active negligence or willful misconduct of City, or defect in a design furnished by City, but in no event shall the amount of such Consultant’s liability exceed such Consultant’s proportionate percentage of fault as determined by a court, arbitrator or mediator, or as set out in a settlement agreement. In the event one (1) or more defendants to any action involving such claim or claims against City is unable to pay its share of defense costs due to bankruptcy or dissolution of the business, Consultant shall meet and confer with the other parties to such action regarding unpaid defense costs. Notwithstanding the foregoing, for any direct claims initiated by the City exclusively against Consultant unrelated to, and without limitation on, Consultant’s indemnity or defense obligations for third-party claims, Consultant will not be obligated to provide the City a defense for the direct claim but, in the event the City prevails in such direct claim, Consultant shall be subject to Section 15.13, below, concerning the the reimbursement of its reasonable attorneys’ fees and court costs.
9.3 Indemnification for All Other Claims or Loss. For any claim, loss, injury, damage, expense or liability other than claims arising out of Consultant’s performance of design professional services under this Agreement (e.g., those types of claims usually covered by general liability insurance or automotive liability insurance), Consultant shall indemnify, defend and hold harmless City, its governing board, directors, officers, employees, and agents against any claim for loss, injury, damage, expense or liability resulting from or alleging injury to or death of any person or loss of use of or damage to property, arising from or related to the performance of services under this Agreement by Consultant, its employees, subcontractors, or agents, excepting only liability arising from the sole negligence, active negligence or willful misconduct of City, or defect in a design furnished by City.
PROFESSIONAL SERVICES AGREEMENT
9.4 Indemnification Not Limited by Availability of Insurance; Survival. The obligations set forth in this Section 9 (including, without limitation, the indemnification and defense obligations) are not limited by any limitation on the amount, coverage or type of damages available under any applicable insurance policy held by Consultant and shall survive the expiration or early termination of this Agreement with respect to any liability subject to the indemnity obligations created by this Agreement.
10. Insurance. Consultant shall comply with the Insurance Requirements for Professional Services, as described in Attachment C hereto and incorporated herein, during the Term of this Agreement.
11. Dispute Resolution. In the event that any dispute arises between the parties in relation to this Agreement, the parties agree to meet face to face as soon as possible to engage in a good faith effort to resolve the matter informally. In the event that any dispute arises between the parties in relation to this Agreement, and the dispute is not resolved by informal discussions, the parties agree to submit the dispute to mediation.
11.1 Either party may give written notice to the other party of a request to submit a dispute to mediation, and a mediation session must take place within sixty (60) days after the date that such notice is given, or sooner if reasonably practicable. The parties shall jointly appoint a mutually acceptable mediator. The parties further agree to share equally the costs of the mediation, except costs incurred by each party for representation by legal counsel.
11.2 Good faith participation in mediation pursuant to this Section is a condition precedent to either party commencing litigation in relation to the dispute.
11.3 Consultant shall continue to perform Services during any dispute or mediation unless the City directs otherwise in writing.
12. Early Termination.
12.1 Termination for Convenience. City may terminate this Agreement for convenience by giving ten (10) calendar days written notice to Consultant. In the event City elects to terminate the Agreement without cause, it shall pay Consultant for services satisfactorily provided up to the effective date of termination.
12.2 Termination for Cause. If either party breaches this Agreement by failing to timely or satisfactorily perform any of its obligations or otherwise violates the terms of this Agreement, the other party may terminate this Agreement by giving written notice ten (10) calendar days prior to the effective date of termination, specifying the reason and the effective date of the termination. Consultant shall be entitled to payment for all services satisfactorily provided up to the effective date of termination, except that the City may withhold from that payment the amount of
PROFESSIONAL SERVICES AGREEMENT
costs the City incurred, if any, because of Consultant’s alleged breach of the Agreement.
13. Work Product. Consultant’s pre-existing proprietary materials, software, models, and tools shall remain the property of Consultant, but Consultant grants the City a perpetual, royalty-free license to use any such materials included in the deliverables.
14. Audit. During this Agreement’s Term and for a period of four (4) years after the expiration, cancellation, or termination of this Agreement, or any extension of it, Consultant shall:
14.1 Keep and maintain, in their original form, all records, books, papers, or documents related to Consultant’s performance of this Agreement; and
14.2 Permit City or its authorized representatives, at all reasonable times, to have access to, examine, audit, excerpt, copy, photocopy, photograph, or transcribe all records, books, papers, or documents related to Consultant’s performance of this Agreement including, but not limited to: direct and indirect charges, and detailed documentation, for work Consultant has performed or will perform under this Agreement.
15. General Provisions.
15.1 Assignment and Successors. Neither party may transfer or assign its rights or obligations under this Agreement, in part or in whole, without the other party’s prior written consent. This Agreement is binding on the heirs, successors, and permitted assigns of the parties hereto.
15.2 Third Party Beneficiaries. There are no intended third party beneficiaries to this Agreement.
15.3 Nondiscrimination. Consultant shall comply with all applicable federal, state and local laws, rules and regulations regarding nondiscrimination in employment because of race, color, ancestry, national origin, religion, sex, marital status, age, medical condition, disability, or other prohibited basis. All nondiscrimination rules or regulations required by law to be included in this Agreement are incorporated by this reference.
15.4 Choice of Law and Venue. This Agreement shall be governed by California law, and venue shall be in the Superior Court for the county in which City is located, and no other place.
15.5 Severability. If any provision of this Agreement is determined to be illegal, invalid, or unenforceable, in part or in whole, the remaining provisions, or portions of the Agreement shall remain in full force and effect.
PROFESSIONAL SERVICES AGREEMENT
15.6 Amendment. No amendment or modification of this Agreement shall be binding unless it is in a writing duly authorized and signed by the parties to this Agreement.
15.7 Provisions Deemed Inserted. Every provision of law required to be inserted in this Agreement shall be deemed to be inserted, and this Agreement shall be construed and enforced as though included. If it is discovered that through mistake or otherwise that any required provision is not inserted, or not correctly inserted, this Agreement shall be amended to make the insertion or correction.
15.8 Entire Agreement. This Agreement constitutes the final, complete, and exclusive statement of the terms of the agreement between the parties regarding the subject matter of this Agreement and supersedes all prior written or oral understandings or agreements of the parties.
15.9 Attachments. If any provision in any attachment to this Agreement conflicts with or is inconsistent with the provisions set forth in the body of this Agreement, the provisions set forth in the body of this Agreement shall control over the conflicting or inconsistent provisions in the attachment.
15.10 Waiver. No waiver of a breach, failure of any condition, or any right or remedy contained in or granted by the provisions of this Agreement shall be effective unless it is in writing and signed by the party waiving the breach, failure, right, or remedy. No waiver of any breach, failure, right, or remedy shall be deemed a waiver of any other breach, failure, right, or remedy, whether or not similar, nor shall any waiver constitute a continuing waiver unless the writing so specifies.
15.11 Force Majeure. If either party is delayed or hindered in or prevented from the performance of any act required hereunder because of strikes, lockouts, inability to procure labor or materials, failure of power, riots, insurrection, war, fire or other casualty, or other reason beyond the reasonable control of the party delayed, excluding financial inability (“Force Majeure Event”), performance of that act shall be excused for the period during which the Force Majeure Event prevents such performance, and the period for that performance shall be extended for an equivalent period. Delays or failures to perform resulting from lack of funds shall not be Force Majeure Events.
15.12 Headings. The headings in this Agreement are included for convenience only and shall neither affect the construction or interpretation of any provision in this Agreement nor affect any of the rights or obligations of the parties to this Agreement.
15.13 Attorneys Fees and Venue for Disputes. If litigation becomes necessary to enforce the terms and provisions of this Agreement or as a result of any breach
PROFESSIONAL SERVICES AGREEMENT
by Consultant or the City of this Agreement, the prevailing party in any such litigation shall be entitled to recover reasonable attorney’s fees and costs. The Humboldt County Superior Court for the State of California shall have exclusive jurisdiction over any dispute arising out of this Agreement or Consultant’s provision of Services hereunder, and shall serve as the venue for any such dispute.
All parties expressly consent to this designation of jurisdiction and venue.
15.14 Execution in Counterparts. This Agreement may be executed in any number of counterparts, each of which shall be an original, but all of which together shall constitute one instrument.
15.15 Authorization. Each individual executing this Agreement, or its counterpart, on behalf of the respective party, warrants that he/she is authorized to do so and that this Agreement constitutes the legally binding obligation of the entity which he/she represents.
15.16 Government Code 1097.6 Safe Harbor. Consultant’s duties and services under this agreement shall not include preparing or assisting the public entity with any portion of the public entity’s preparation of a request for proposals, request for qualifications, or any other solicitation regarding a subsequent or additional contract with the public entity. The public entity entering this agreement shall at all times retain responsibility for public contracting, including with respect to any subsequent phase of this project. Consultant’s participation in the planning, discussions, or drawing of project plans or specifications shall be limited to conceptual, preliminary, or initial plans or specifications. Consultant shall cooperate with the public entity to ensure that all bidders for a subsequent contract on any subsequent phase of this project have access to the same information, including all conceptual, preliminary, or initial plans or specifications prepared by contractor pursuant to this agreement.
SIGNATURE PAGE FOLLOWS THIS PAGE
PROFESSIONAL SERVICES AGREEMENT
The parties agree to this Agreement as witnessed by the signatures below:
CONSULTANT:
GHD, Inc.
s/_________________________
Christopher Wolf, Business Group
Leader
Name/Title [print]
Date: October 1, 2026
CITY:
________________________________
s/_Amy Nilsen, City Manager
______________________________
Name/Title [print]
Date:
____10/1/2026_________________
Attachments:
Attachment A:
Attachment B:
Attachment C:
Scope of Services
Consultant’s Fee Schedule
Insurance Requirements for Professional Services
PROFESSIONAL SERVICES AGREEMENT
Attachment A
Scope of Services
718 Third Street
Eureka, California 95501
United States
ghd.com
The Power of Commitment
GHD
October 01, 2026
Ms. Amy Nilsen
City Manager
City of Fortuna
621 11th Street
Fortuna, CA 95540
Acquisition Support Environmental Studies
Dear Ms. Nilsen,
GHD is pleased to submit this proposal to complete a Phase 1 Environmental Site Assessment (ESA) and Baseline Conditions Report of Assessor’s Parcel Numbers 200-362-005, 106-091-040, 106-091-030, and 106-091-044 totaling 244 acres to support an acquisition funded by the Coastal Conservancy. GHD will provide the requested services detailed in the scope of work below.
Task 1 – Project Administration
GHD will provide overall project management and administration, coordination with City staff, schedule tracking, and budget management.
Task 1 Deliverables
– Project schedule, with periodic updates
– Monthly invoices
Task 2 – Phase 1 Environmental Site Assessment
The Phase I ESA for the four parcels (Site) will be tailored based on the type of property and will be conducted in general accordance with the ASTM International standard. The Phase I ESA will consist of the following three primary components, in addition to reporting.
Records Review
A review of standard state and federal record resources, as well as records regarding current and prior use of the Site and adjoining properties will be conducted, all of which are at the Site, or are publicly available, practically reviewable, and reasonably ascertainable.
An online search of publicly available federal and state databases will be conducted at distances specified in the ASTM standard. Such a review may yield information related to the use, storage, and/or discharge of hazardous substances and/or petroleum products on or close to the Site, including permits or notices of violation regarding materials handling practices, and/or the proximity of solid waste disposal sites, sites already under investigation and/or remediation due to environmental damage, and/or sites with registered underground storage tanks (USTs)/aboveground storage tanks (ASTs), and records regarding chemical uses and storage, waste handling and disposal, and hazardous materials planning.
A review of standard historical record sources such as fire insurance maps, city directories, aerial photographs, topographic maps, property tax files, and/or recorded land title records (the latter as provided by City of Fortuna or subcontracted by GHD at additional cost) will be undertaken to attempt to identify uses of the Site from the present, back to the property's obvious first developed use, or back to 1940, whichever is earlier. Such a review 13006344 | Acquisition Support Environmental Studies 2
may uncover evidence of prior excavation, landfilling activities, structure additions/demolitions, and/or other activities with the potential to have released hazardous substances and/or petroleum products to the environment that would impact the Site.
A review of environmentally related liens and/or activity and use limitations (AULs) connected with each Site will be conducted by GHD as part of the Phase I ESA.
Site Reconnaissance
A site reconnaissance including review of the former and ongoing operations, waste/chemical handling, and waste/chemical storage practices associated with the Site and a walk-through inspection of any Site structures and surrounding grounds will be conducted. The objective of the Site reconnaissance is to obtain information indicating the likelihood of identifying recognized environmental conditions (RECs) in connection with the Site.
Such indications may include:
– Evidence of surficial contamination related to releases, leaks, or emissions of hazardous substances or petroleum products
– Evidence of the generation, storage, or presence of hazardous substances or petroleum products at the Site
– Evidence of on-Site surficial or subsurface solid and/or liquid waste disposal areas – The potential presence of polychlorinated biphenyl (PCB)-containing liquids in electrical, hydraulic, or other equipment, including transformers, capacitors, switchgear, starters, and circuit breakers – The presence and configuration of surface drainage features including interior floor drains, the areas of contribution to surface drainage systems, the location and configuration of stormwater sewers or drainage ways, and the ultimate receptor(s) of discharges from such systems – The source and type of wastewater generated at the Site, the location and configuration of Site wastewater sewers, and the ultimate receptor(s) of wastewater discharges – Air emissions sources and discharge points
– The potable and process water supply systems and other utility systems for the Site – The current land use of adjoining properties
– The topographic features of the Site
– The extent and configuration of remedial soil or groundwater programs currently in place and operating, or historically operating, at the Site, if applicable
– Evidence of the existence or former existence of USTs or ASTs at the Site – The location and condition of chemical receiving and storage areas and containers such as drums, totes and ASTs, including measures in place to control potential releases to the environment – The location and condition of liquid and solid waste handling, accumulation, and storage areas, including measures in place to control releases to the environment.
Observation of these activities is primarily confined to the Site under evaluation, although activities on adjoining properties are also reviewed. During the Site reconnaissance, a photographic record of pertinent features is obtained.
Interviews
Interviews of Client-identified individuals associated with the Site will be conducted and will include one or more of the past and current owners, Key Site Managers, operators, and occupants of the Site familiar with the historic and current use and operating practices of the Site, to the extent practicable. The objective of interviews is to obtain information indicating potential RECs in connection with the Site's historical operating conditions and practices such as:
– Waste disposal practices
– Previous Site use by others
13006344 | Acquisition Support Environmental Studies 3
– Use of adjoining properties
– Historical spills or releases
– Past agency administrative or legal actions
– Third party complaints or legal actions
GHD will also conduct interviews with or prepare written requests for information from local government officials and/or review of reasonably ascertainable, practically reviewable public agency files. A reasonable attempt will be made to interview at least one staff member of any one of the following local governmental agencies (local fire department, local health department, and local agency or local/regional office having jurisdiction over hazardous waste disposal or other environmental matters in the area in which the Site is located).
Task 2 Deliverables
– Draft and final report
Task 3 – Baseline Conditions Report
GHD will prepare a concise technical memorandum documenting existing conditions of the acquisition parcels consistent with State Coastal Conservancy acquisition documentation requirements and modeled after the previously prepared Elk River baseline conditions report shared by the City as an. The memorandum will be based on desktop review and will summarize key parcel characteristics including property location, ownership, acreage, existing and historical land uses, zoning and land use designations, biological and aquatic resources, public access opportunities and constraints, hydrologic and physical site conditions, existing infrastructure and improvements, including a quantitative desktop review of wetlands and aquatic resources on the four parcels from the U.S. Fish and Wildlife National Wetlands Inventory database. The memorandum will be supported by figures, photographs, and parcel summary tables, as appropriate, and will be prepared for use by the City and Coastal Conservancy to document baseline property conditions at the time of acquisition.
Task 3 Deliverables
– Draft and final baseline conditions report
Assumptions and Exclusions
The following assumptions and exclusions are incorporated into this scope:
– GHD’s costs are based on our current understanding of the project at this phase and are based on the level of effort expected considering the nature, complexity, and anticipated level of controversy associated with the project.
– The costs presented are for the completion of tasks according to the schedule provided. – GHD assumes this project will remain active for a period of two months. Extension of the project duration or additional internal meetings may require a modification. – A cultural resources investigation and biological field review are not included. – Access to the project site will be provided by the City. The City will complete all required landowner notification and coordination.
– The City will coordinate landowner interviews to support the Phase 1 ESA. Landowner interviews will be coordinated to align with field review.
– One round of consolidated comments will be provided by the City at each deliverable stage. – All deliverables will be provided electronically.
13006344 | Acquisition Support Environmental Studies 4
Fee
Our cost estimate is based on the above scope of work and assumptions, not to exceed $21,172 as summarized in Table 1, consistent with the staff rates and other terms and conditions established in the existing on-call agreement. GHD may balance billing across tasks but will not exceed the project total without prior written agreement. Mileage will be charged at the current federal rate.
Table 1 Fee Overview
Task No. Task Name Fee
Task 1 Project Administration $2,990
Task 2 Phase 1 ESA $12,000
Task 3 Baseline Conditions Report $6,182
Total $21,172
Timeline
GHD will commence within ten business days of an issued task order and will complete all services within a two-month period assuming City review time for submitted deliverables is kept to ten business days or less.
GHD will complete all draft deliverables by November 1, 2026 assuming a signed agreement is received by October 2, 2026.
Regards,
Andrea Hilton
Sr. Environmental Planner
707-267-2262
[email protected]
Andrea Hilton
Sr. Environmental Planner
707-267-2262
[email protected]
PROFESSIONAL SERVICES AGREEMENT
Attachment B
Consultant’s Fee Schedule
Consultant fees shall be as detailed in the current Professional Services Agreement between the City and GHD dated February 24, 2026.
GHD | City of Fortuna | On-call Consulting Services | 1 GHD Rate Schedule
2026 Rate Schedule Notes
Effective January 2025
GHD
Class GHD Description GHD Class GHD Description
Discount Standard Discount Standard
A001 Senior Technical Director 1 322.00 $ $ C001 Business Services Manager 460.00 1 $ 248.50 $ 355.00 A002 Senior Technical Director 2 301.00 $ $ C002 Business Services Manager 430.00 2 $ 231.00 $ 330.00 A003 Senior Technical Director 3 280.00 $ $ C003 Senior Business Services 400.00 1 $ 182.00 $ 260.00 A004 Technical Director 1 $ 269.50 $ C004 Senior Business Services 385.00 2 $ 171.50 $ 245.00 A005 Technical Director 2 $ 255.50 $ C005 Business Services 1 365.00 $ 154.00 $ 220.00 A006 Senior Professional 1 $ 238.00 $ C006 Business Services 2 340.00 $ 143.50 $ 205.00 A007 Senior Professional 2 $ 220.50 $ C007 Business Services 3 315.00 $ 115.50 $ 165.00 A008 Professional 1 $ 213.50 $ 305.00
A009 Professional 2 $ 185.50 $ S001 Senior Construction Manage 265.00 r $ 283.50 $ 405.00 A010 Professional 3 $ 171.50 $ S002 Construction Manage 245.00 r $ 245.00 $ 350.00 A011 Vacationer / Intern $ 161.00 $ S003 Lead Site Engineer/Superviso 230.00 r $ 217.00 $ 310.00 S004 Senior Site Engineer $ 196.00 $ 280.00
V001 Executive Consultant 1 $ 395.50 $ S005 Site Enginee 565.00 r $ 189.00 $ 270.00 V002 Executive Consultant 2 $ 371.00 $ S006 Lead Inspector 530.00 $ 182.00 $ 260.00 V003 Senior Consultant 1 $ 311.50 $ S007 Senior Inspecto 445.00 r $ 157.50 $ 225.00 V004 Senior Consultant 2 $ 280.00 $ S008 Inspector / Specialist 1 400.00 $ 140.00 $ 200.00 V005 Consultant 1 $ 234.50 $ S009 Inspector / Specialist 2 335.00 $ 126.00 $ 180.00 V006 Consultant 2 $ 192.50 $ S010 Clerk / Specialist 3 275.00 $ 122.50 $ 175.00 V007 Consultant 3 $ 164.50 $ S011 235.00 Senior Site Manager 1 $ 115.50 $ 165.00 S012 Senior Site Manager 2 $ 112.00 $ 160.00
B001 Lead Design Technician 1 $ 290.50 $ S013 415.00 Senior Site Manager 3 $ 108.50 $ 155.00 B002 Lead Design Technician 2 $ 269.50 $ S014 385.00 Senior Site Manager 4 $ 105.00 $ 150.00 B003 Lead Design Technician 3 $ 245.00 $ S015 Operator/Labourer 1 350.00 $ 98.00 $ 140.00 B004 Senior Design Technician 1 $ 241.50 $ S016 Operator/Labourer 2 345.00 $ 91.00 $ 130.00 B005 Senior Design Technician 2 $ 231.00 $ S017 Operator/Labourer 3 330.00 $ 77.00 $ 110.00 B006 Design Technician 1 $ 213.50 $ 305.00
B007 Design Technician 2 $ 199.50 $ D001 Project Support Manager 1 285.00 $ 304.50 $ 435.00 B008 Drafting/Design 1 $ 192.50 $ D002 Project Support Manager 2 275.00 $ 280.00 $ 400.00 B009 Drafting/Design 2 $ 168.00 $ D003 Senior Project Support 1 240.00 $ 259.00 $ 370.00 B010 Drafting/Design 3 $ 157.50 $ D004 Senior Project Support 2 225.00 $ 224.00 $ 320.00 B011 Drafting/Design 4 $ 154.00 $ D005 Project Support 1 220.00 $ 213.50 $ 305.00 B012 Intern Drafting/Design $ 133.00 $ D006 Project Support 2 190.00 $ 199.50 $ 285.00 D007 Project Support 3 $ 185.50 $ 265.00
D008 Project Support 4 $ 168.00 $ 240.00
D009 Project Support 5 $ 147.00 $ 210.00
D010 Project Support 6 $ 112.00 $ 160.00
PROJECT SUPPORT
2026 US Rate 2026 US Rate
PROFESSIONAL
CONSULTANT
TECHNICAL
ADMINISTRATION
SITE BASED
GHD FY2025 Standard Rate Schedule
1. Rates are for employees of GHD companies.
2. An administration fee will apply to all invoices to cover in-house disbursements (Associated Project Costs) on a project.
This will be charged at a rate of:
y Hourly rate of USD $6.50
3. All other project related disbursements, expenses and subcontractor costs will be invoiced with a markup of up to 15%.
4. 2026 Fee schedule is subject to annual increase of 3%.
5. Leased and personnel vehicles, field equipment and disposable field supplies will be invoiced at established rates.
Personal vehicle milage rates will be charged in accordance with government regulated standard rates.
6. All other reimbursable fees and expenses are subject to approval by the City (noting that the City will not pay for lodging, per diem or travel expenses from outside of Humboldt County) Attachment B
11 PROFESSIONAL SERVICES AGREEMENT
Insurance Requirements for Professional Services
Consultant shall procure and maintain for the duration of the contract insurance against claims for injuries to persons or damages to property which may arise from or in connection with the performance of the work hereunder by the Consultant, its agents, representatives, or employees.
MINIMUM SCOPE AND LIMIT OF INSURANCE
Coverage shall be at least as broad as:
1. Commercial General Liability (CGL): Insurance Services Office Form CG 00 01 covering CGL on an “occurrence” basis, including products and completed operations, property damage, bodily injury and personal & advertising injury with limits no less than $1,000,000 per occurrence. If a general aggregate limit applies, either the general aggregate limit shall apply separately to this project/location (ISO CG 25 03 or 25 04) or the general aggregate limit shall be twice the required occurrence limit.
2. Automobile Liability: Insurance Services Office Form Number CA 0001 covering, Code 1 (any auto), or if Consultant has no owned autos, Code 8 (hired) and 9 (non-owned), with limit no less than $1,000,000 per accident for bodily injury and property damage.
3. Workers’ Compensation insurance as required by the State of California, with Statutory Limits, and Employer’s Liability Insurance with limit of no less than $1,000,000 per accident for bodily injury or disease. (Not required if Consultant provides written verification it has no employees)
4. Professional Liability (Errors and Omissions) Insurance appropriates to the Consultant’s profession, with limit no less than $2,000,000 per occurrence or claim, $2,000,000 aggregate. The Retroactive Date must be shown and must be before the date of the contract or the beginning of contract work. Insurance must be maintained and evidence of insurance must be provided for at least five (5) years after completion of the contract of work. If coverage is canceled or nonrenewed, and not replaced with another claims-made policy form with a Retroactive Date prior to the contract effective date, the Consultant must purchase “extended reporting” coverage for a minimum of five (5) years after completion of contract work. A copy of the claims reporting requirements must be submitted to the Entity for review.
5. Cyber Liability / Technology E&O: Minimum $1,000,000 per claim, covering data breach, privacy liability, and network security.
If the Consultant maintains broader coverage and/or higher limits than the minimums shown above, the Entity requires and shall be entitled to the broader coverage and/or
PROFESSIONAL SERVICES AGREEMENT
higher limits maintained by the Consultant. Any available insurance proceeds in excess of the specified minimum limits of insurance and coverage shall be available to the Entity.
Other Insurance Provisions
The insurance policies are to contain, or be endorsed to contain, the following provisions:
The Entity, its officers, officials, employees, and volunteers are to be covered as additional insureds on the CGL policy with respect to liability arising out of work or operations performed by or on behalf of the Consultant including materials, parts, or equipment furnished in connection with such work or operations.
General liability coverage can be provided in the form of an endorsement to the Consultant’s insurance at least as broad as one of the following ISO ongoing operations Forms: CG 20 10 or CG 20 26 or CG 20 33 (not allowed from subcontractors), or CG 20 38; and one of the following ISO completed operations Forms: CG 20 37, CG 20 39 (not allowed from subcontractors), or CG 20 40.
Primary Coverage
For any claims related to this contract, the Consultant’s insurance coverage shall be primary insurance coverage at least as broad as ISO CG 20 01 04 13 as respects the Entity, its officers, officials, employees, and volunteers. Any insurance or self-insurance maintained by the Entity, its officers, officials, employees, or volunteers shall be excess of the Consultant’s insurance and shall not contribute with it.
Notice of Cancellation
Consultant shall provide immediate written notice if (1) any of the required insurance policies is terminated; (2) the limits of any of the required polices are reduced; (3) or the deductible or self-insured retention is increased. In the event of any cancellation or reduction in coverage or limits of any insurance, Consultant shall forthwith obtain and submit proof of substitute insurance.
Waiver of Subrogation
Consultant hereby grants to Entity a waiver of any right to subrogation which any insurer of said Consultant may acquire against the Entity by virtue of the payment of any loss under such insurance. Consultant agrees to obtain any endorsement that may be necessary to affect this waiver of subrogation, but this provision applies regardless of whether or not the Entity has received a waiver of subrogation endorsement from the insurer.
However, the Workers’ Compensation policy shall be endorsed with a waiver of subrogation in favor of the Entity for all work performed by the Contractor, its employees, agents and subcontractors.
Self-Insured Retentions
PROFESSIONAL SERVICES AGREEMENT
Self-insured retentions must be declared to and approved by the Entity. The Entity may require the Consultant to provide proof of ability to pay losses and related investigations, claim administration, and defense expenses within the retention. The policy language shall provide, or be endorsed to provide, that the self-insured retention may be satisfied by either the named insured or Entity.
Acceptability of Insurers
Insurance is to be placed with insurers authorized to conduct business in the state with a current A.M. Best’s rating of no less than A:VII, unless otherwise acceptable to the Entity.
Verification of Coverage
Consultant shall furnish the Entity with original Certificates of Insurance including all required amendatory endorsements (or copies of the applicable policy language effecting coverage required by this clause) and a copy of the Declarations and Endorsement Page of the CGL policy listing all policy endorsements to Entity before work begins. However, failure to obtain the required documents prior to the work beginning shall not waive the Consultant’s obligation to provide them. The Entity reserves the right to require complete, certified copies of all required insurance policies, including endorsements required by these specifications, at any time.
Subcontractors
Consultant shall require and verify that all subcontractors maintain insurance meeting all the requirements stated herein, and Contractor shall ensure that Entity is an additional insured on insurance required from subcontractors.
Special Risks or Circumstances
Entity reserves the right to modify these requirements, including limits, based on the nature of the risk, prior experience, insurer, coverage, or other special circumstances.
Business Agenda Item 5a
STAFF REPORT
Business Agenda Item
DATE: October 5, 2026
TO: Honorable Mayor and City Council
FROM: Katey Schmidt, Senior Planner
SUBJECT: Community Development Block Grant Program Income Application STAFF RECOMMENDATION:
Adopt Resolution 2026-34 authorizing submission of a Community Development Block Grant Program Income (CDBG PI) Only application to the California Department of Housing and Community Development for a Business Assistance Loan Program and Downtown Façade Improvement Grant Program.
INTRODUCTION:
The Community Development Block Grant (CDBG) program provides funding to eligible nonentitlement jurisdictions for local community development needs. CDBG activities must meet one of three National Objectives: benefit low- and moderate-income (LMI) persons, aid in the prevention or elimination of slums or blight or address an urgent community development need.
Under the Low- and Moderate-Income Area Benefit (LMA) National Objective, at least 51 percent of the residents in an activity’s service area must be low- and moderate-income. Fortuna’s citywide LMI percentage is 51.5 percent based on HUD-approved census data. Each proposed activity must also meet the applicable National Objective and HCD documentation requirements. The program is authorized under Title I of the Housing and Community Development Act of 1974, Public Law 93-383, as amended, 42 U.S.C. 5301 et seq.
Under 24 CFR Part 570.489(e), Program Income (PI) is gross revenue received by a grantee or its subrecipients that is directly generated from the use of CDBG funds, including revenue generated through the use of PI. HUD considers PI resulting from activities funded through the State CDBG program to be additional State CDBG funds. Accordingly, these funds remain subject to all applicable CDBG program requirements and must be administered and expended in compliance with those requirements.
EXECUTIVE SUMMARY:
HCD requires the City to report, budget, and timely expend locally held Program Income on eligible activities that meet a CDBG National Objective. The City has approximately $1,005,000 in Program Income from repayments of prior CDBG-funded housing rehabilitation loans. The proposed application would allocate $900,000 to a Business Assistance Loan Program and $100,000 to a Downtown Façade Improvement Grant Program. The final HCD-approved budget will address the remaining funds and any eligible administration or activity-delivery costs. Council action would authorize submission of the application only. It would not approve individual loans or grants, select a consultant, or authorize implementation of the façade program.
Business Agenda Item 5a
The proposed programs respond to requests from the business community for small business support and flexible financing for expansion, equipment purchases, and other eligible investments.
The community has also identified downtown improvements as a priority for creating a more vibrant, economically active area. The programs would support small business growth and retention, encourage private investment, and improve downtown properties.
Planning staff held a public workshop on September 24, 2026, to receive input on potential CDBGfunded activities. Staff reviewed the CDBG program, application requirements, National Objectives, eligible activities, and options for submitting comments or proposing other activities.
Attendees supported the proposed Business Assistance Loan Program and Downtown Façade Improvement Grant Program. No additional activities were proposed.
PROPOSED APPLICATION:
Staff recommend that the City Council authorize submission of a Community Development Block Grant Program Income Only application for the following activities:
Business Assistance Loan Program $900,000:
The City will administer the Business Assistance Loan Program to support eligible business expansion, equipment purchases, job creation or retention, and other qualifying economic development activities. Draft guidelines based on an HCD template are attached for Council review. The guidelines address applicant eligibility, underwriting, loan terms, eligible uses, National Objective documentation, servicing, and compliance. Each loan will be reviewed for project feasibility, reasonable costs, committed financing, and applicable CDBG public-benefit and beneficiary requirements. Following HCD approval, the City will competitively procure a qualified consultant to assist with underwriting, servicing, portfolio management, and compliance.
Loan repayments will remain CDBG Program Income and will be recirculated through the Loan Program or used for future approved program income activities.
Downtown Façade Improvement Grant Program $100,000:
The Downtown Façade Improvement Grant Program will assist eligible downtown commercial property owners and business tenants that have property-owner authorization. Eligible improvements may include storefront renovations, signage, exterior painting, lighting, accessibility improvements, and other work allowed under the final guidelines. Each project must qualify as an eligible CDBG activity and meet an applicable National Objective. The program is intended to encourage private investment, improve commercial properties, and support a more vibrant downtown.
The façade program responds to community requests made through the strategic planning process for downtown improvements that support a vibrant, economically active area. Staff will develop the program with input from downtown businesses, property owners, and other stakeholders. Draft guidelines will establish the service area, grant limits, any matching requirements, eligible improvements, application and selection process, design standards, and compliance procedures.
The guidelines will return to the City Council for approval before the program begins or any grants are awarded.
If authorized, staff will submit the CDBG PI application to HCD. Following HCD approval, staff will complete any required environmental review, procure loan-program support services, and finalize program procedures. The Business Assistance Loan Program will use the attached draft guidelines, subject to HCD approval and any required revisions. The Downtown Façade Business Agenda Item 5a
Improvement Grant Program guidelines will return to the City Council for approval before the program begins.
STRATEGIC PLAN 2026-2036:
The proposed programs support the City Council’s Strategic Plan 2026–2036 by expanding access to business capital, encouraging private investment in downtown properties, and improving downtown appearance and activity. These efforts support economic resilience, community character, and the City’s economic development priorities.
CORE VALUES:
Economic Resilience
Community Character
PRIORITIES:
Priority 4: Economic Development to Build Fortuna's Future FISCAL IMPACT:
The proposed activities would use approximately $1,000,000 in existing CDBG Program Income.
The application proposes $900,000 for the Business Assistance Loan Program and $100,000 for the Downtown Façade Improvement Grant Program. The final budget, including the remaining Program Income and eligible administration or activity-delivery costs, will be subject to HCD review and applicable cost limits. No General Fund contribution is proposed.
ALTERNATIVES TO STAFF RECOMMENDATIONS:
The City Council may decline to authorize the application, continue the item, or direct staff to revise the proposed activities or funding amounts. If the application is not submitted or approved, the programs will not proceed as proposed. The City would remain responsible for reporting and timely expenditure of the Program Income on other eligible CDBG activities. If an eligible use is not approved within HCD requirements and timelines, the City may be required to remit the unexpended funds to the State.
RECOMMENDED COUNCIL ACTION:
1. Receive the staff presentation and respond to Council questions.
2. Open the public hearing, receive public comment, and close the public hearing.
3. Adopt Resolution 2026-34 authorizing submission of a Community Development Block Grant Program Income Only application to the California Department of Housing and Community Development for the Business Assistance Loan Program and Downtown Façade Improvement Grant Program; read by title only. Roll Call vote.
ATTACHMENTS:
• Resolution 2026-34, A Resolution Approving an Application for Funding and the Execution of a Grant Agreement and Any Amendments Thereto from the 2025 Funding Year of the State CDBG Program
• Draft Business Assistance Loan Program Guidelines based on the HCD template 1 Department of Housing and Community Development
Resolution Form Revised 3/18/2025 2025 CDBG NOFA
Appendix C: Resolution Template of the Governing Body
(Required)
Applicants are required to use the resolution form on the following page with no changes to content other than what is in the fillable fields.
When completing and preparing the Resolution, please refer to section V.D. of the 2025 NOFA.
Please note: On the next page, hidden text is used to provide instructions. Once a document is printed or converted to a pdf, the hidden text will be omitted.
To display hidden text:
1. Go to the Files Tab
2. Select Options from the bottom of the left-hand column
3. Click on the “Display” option
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Note 1: The attesting officer cannot be the person identified in the Resolution as the authorized signer.
Note 2: Unless there is a city ordinance stating otherwise, the mayor must be the designated official in Section 5.
Resolution of the Governing Body
RESOLUTION NO. 2026-34
A RESOLUTION APPROVING AN APPLICATION FOR FUNDING AND THE
EXECUTION OF A GRANT AGREEMENT AND ANY AMENDMENTS
THERETO FROM THE 2025 FUNDING YEAR OF THE STATE CDBG
PROGRAM
BE IT RESOLVED by the City Council of the City of Fortuna as follows:
SECTION 1:
The City Council has reviewed and hereby approves the submission to the State of California of one or more application(s) in the aggregate amount, not to exceed, of $1,000,000 for the following CDBG activities, pursuant to the 2025 CDBG NOFA:
List activities and amounts
Activity Dollar Amount Being Requested for the
Activity
Business Assistance Loan Program $ 900,000
Downtown Facade Improvement Grant Program $ 100,000
$
$
$
SECTION 2:
The City Council hereby approves the use of Program Income in an amount not to exceed $1,000,000 for the CDBG activities described in Section 1.
SECTION 3:
The City Council acknowledges compliance with all state and federal public participation requirements in the development of its application(s).
SECTION 4:
The City Council hereby authorizes and directs the Mayor or designee*, to execute and deliver all applications and act on the City’s behalf in all matters pertaining to all such applications.
SECTION 5:
If an application is approved, the Mayor or designee*, is authorized to enter into, execute and deliver the grant agreement (i.e., Standard Agreement), any recordable or nonrecordable contract documents, and any and all subsequent amendments thereto with the State of California for the purposes of the grant.
SECTION 6:
If an application is approved, the Mayor or designee*, is authorized to sign and submit Funds Requests and all required reporting forms and other documentation as may be required by the State of California from time to time in connection with the grant.
PASSED AND ADOPTED at a regular meeting of the City Council of the City of Fortuna held on 10/5/2026 by the following vote:
AYES: Enter # of votes or names
NOES: Enter # of votes or names
ABSENT: Enter # absentees or names
ABSTAIN: Enter # of abstains or names
Mike Johnson, Mayor
City Council
STATE OF CALIFORNIA
City of Fortuna
I, Siana Emmons, City Clerk of the Choose an item. of Fortuna, State of California, hereby certify the above and foregoing to be a full, true and correct copy of a resolution adopted by said City Council on this 5 day of October, 2026and that said resolution has not been amended, modified, repealed, or rescinded since its date of adoption and is in full force and effect as of the date hereof.
Siana Emmons, City Clerk of the City of Fortuna, State of California
______________________________________
By: City of Fortuna City Clerk
for
Economic Development Business
Assistance Loan Program
Operated By
City of Fortuna
with
Community Development Block Grant
(CDBG) Funding
DRAFT
CONTENTS
List of Attachments with Support Documents ............................................................................................... 1
1. INTRODUCTION................................................................................................................................... 2
2. BUSINESS ASSISTANCE PROGRAM OVERVIEW............................................................................ 2
2.1. PROGRAM ADMINISTRATOR..................................................................................................... 2
2.2. PROGRAM SERVICE AREA........................................................................................................ 2
2.3. SOURCE OF PROGRAM FUNDS................................................................................................ 2
3. CDBG PROGRAM REQUIREMENTS.................................................................................................. 3
3.1. ELIGIBLE LOAN APPLICANTS.................................................................................................... 3
3.2. ELIGIBLE PROJECT COSTS....................................................................................................... 3
3.3. INELIGIBLE PROJECT COSTS.................................................................................................... 4
3.4. MEETING NATIONAL OBJECTIVE STANDARDS....................................................................... 4
3.5. MEETING PUBLIC BENEFIT STANDARDS................................................................................. 5
3.6. MEETING SIX UNDERWRITING STANDARDS .......................................................................... 6
3.7. MEETING OTHER FEDERAL REGULATORY REQUIREMENTS............................................... 6
4. LOAN PROCESSING AND APPROVAL ............................................................................................. 8
4.1. FAIR LENDING COMPLIANCE .................................................................................................... 8
4.2. LOAN APPLICATION PROCESSING........................................................................................... 8
4.3. PROGRAM LOAN APPROVAL PROCESS ................................................................................ 10
4.4. LOAN APPLICANT CONFIDENTIALITY..................................................................................... 10
4.5. APPLICANT DISPUTE RESOLUTION / APPEALS PROCEDURE............................................ 10
4.6. EXCEPTIONS / SPECIAL CIRCUMSTANCES........................................................................... 11
4.7. LOAN CLOSING PROCESS....................................................................................................... 11
5. DESCRIPTION OF LOANS ................................................................................................................ 11
5.1. DETERMINATION OF LOAN AMOUNT ..................................................................................... 11
5.3. DETERMINATION OF LOAN INTEREST RATE ........................................................................ 12
5.4. LOAN PROCESSING FEES....................................................................................................... 12
6. LOAN UNDERWRITING STANDARDS ............................................................................................. 13
6.1. INITIAL LOAN EVALUATION...................................................................................................... 13
6.2. PERSONAL AND BUSINESS CREDIT REQUIREMENTS ........................................................ 14
6.3. PERSONAL AND BUSINESS FINANICAL INFORMATION....................................................... 14
6.4. COLLATERAL REQUIREMENTS............................................................................................... 15
6.5. BUSINESS EXPERIENCE AND MANAGEMENT CAPACITY.................................................... 16
7. LOAN SERVICING.............................................................................................................................. 16
7.1. LOAN SERVICING RESPONSIBILITIES.................................................................................... 16
7.2. LOAN SERVICING POLICIES.................................................................................................... 17
8. PROGRAM OVERSIGHT BY LENDER.............................................................................................. 17
8.1. OVERSIGHT OF PROGRAM ADMINISTRATOR....................................................................... 17 HCD Revised October, 2022 Page 1
List of Attachments with Support Documents
ATTACHMENT A: Sample Lender Loan Approval Memo
ATTACHMENT B: Lender CDBG Business Assistance Loan Agreement ATTACHMENT C: Lender Required Documents:
1. Loan Application Form
2. Jobs Tracking Form
3. Self-Certification of Income Form
4. Loan Disbursement Schedule
5. Certification of No Conflict of Interest
6. Certification of No Job Pirating
7. Certification of Federal Regulatory Compliance.
ATTACHMENT D: Lender Adopted Business Loan Servicing Policies HCD Revised October, 2022 Page 2
COMMUNITY DEVELOPMENT BLOCK GRANT (CDBG) BUSINESS
ASSISTANCE (BA) LOAN PROGRAM GUIDELINES
1. INTRODUCTION
The City of Fortuna, hereafter called “Lender” has established a Business Assistance Loan Program, hereafter called “the Program” and “BA Program”. The Program is designed to use public taxpayer dollars to stimulate economic growth and improve living conditions of low / moderate income residents in Lender’s community. The Program provides low-cost loans to eligible for-profit businesses. In return, businesses are required to provide documentation of Public Benefit (commonly, the creation of new job), and meeting a National Objective (typically filling most of the new job positions with persons qualified as low-moderate income). These Program guidelines describe policies and procedures required for award of loan funds to eligible borrowers. The guidelines have been adopted via resolution by the Lender and approved by the California Department of Housing and Community Development, here after called “Department”.
2. BUSINESS ASSISTANCE PROGRAM OVERVIEW
2.1. PROGRAM ADMINISTRATOR
The Lender has secured the services of a qualified program administrator here after called “the Administrator”. The Administrator will be charged with originating business assistance loans, documenting compliance with CDBG regulations and these Program guidelines. The contact information for the Administrator is:
Agency: City of Fortuna
Department: Community Development
Address: 736 F Street, Fortuna CA
95521 Phone Number: 707-822-5955
2.2. PROGRAM SERVICE AREA
Financing under this Program is available to all eligible businesses physically located within the jurisdictional limits of the Lender. These funds may not be used in jurisdictions that receive CDBG funds from the federal Department of Housing and Urban Development (HUD) entitlement program. This Program is subject to CDBG service area requirement of substantially benefiting residents in the service area.
2.3. SOURCE OF PROGRAM FUNDS
The Program is financed with CDBG federal funds provided by HUD to the Department, who in turn provides the CDBG funds to the Lender. As such, CDBG funds are federal money administered by the Department so both federal and state laws and regulatory requirements must be followed.
CDBG funds come to the Lender from two sources: 1) an active grant contract agreement HCD Revised October, 2022 Page 3
between the Department and Lender originating from annual competitive application process; 2) CDBG program income administered under a PI reuse agreement between Department and Lender.
3. CDBG PROGRAM REQUIREMENTS
3.1. ELIGIBLE LOAN APPLICANTS
CDBG funds under this Program can only be expended on the eligible activity authorized under Title I of the Housing and Community Development Act of 1974 (hereafter called “Act”), section 105(a)(17): special economic development, providing direct financial assistance to private for-profit businesses.
An eligible applicant is:
• An existing business legally operating, with any required local business license, insurance, and permits per local, state and federal requirements; or • A start-up business that may not have all required licenses or insurance, but will obtain all required licenses, insurance, and permits prior to closing; or • A person or persons wishing to buy an existing business; or • A business leasing tenant space or owner-occupied business in the service area.
In addition, the loan applicant must provide documentation that the proposed “project” or, use of loan proceeds, will meet CDBG eligibility criteria of National Objective and Public Benefit per Sections 3.4 and 3.5. The loan applicant must provide documentation of meeting standard commercial underwriting criteria outlined in Section 6 of these guidelines as well as the HUD CDBG mandated six underwriting standards described in Section 3.6. An eligible loan applicant must document compliance with all CDBG regulations listed in Section 3.7.
Specific ineligible loan applicants include:
• A business with an existing CDBG BA loan that has not been closed out with HCD • A business operating a private “exclusive” recreational facility • A non-profit business, not eligible under this program • A businesses or person(s) with unresolved state / federal tax liens • A business or person in the process of filing for bankruptcy, as they are not eligible until bankruptcy process is complete.
3.2. ELIGIBLE PROJECT COSTS
CDBG funds are non-discretionary and restricted to certain eligible costs. These eligible costs cover most expenses associated with economic development projects. Specifically, eligible CDBG economic development costs include:
• Operating capital and inventory
• Furniture fixtures and equipment (FF&E), with or without installation costs • Project site improvements, new construction or rehabilitation of leased space or owned building
• Engineering and architectural plans and required permits or fees HCD Revised October, 2022 Page 4
• Purchase of manufacturing equipment (with or without installation costs) • Refinancing of existing business debt when done in conjunction with restructuring of other existing private financing debt(s)
• Purchase of real property, when it provides positive cash flow for new jobs • Relocation grants for persons displaced due to funding of the project • Purchase of an existing business, including documented value of good will.
These eligible costs must be connected to the business’ ability to meet an eligible CDBG National Objective per section 3.4 of these guidelines. Lender will only use CDBG loan funds to reimburse borrower for actual eligible / approved project costs.
3.3. INELIGIBLE PROJECT COSTS
CDBG funds are non-discretionary, limited to certain eligible costs described in Section
3.2 above. There are also a number of ineligible costs. Some ineligible costs include:
• Costs incurred prior to submittal of BA loan application and environmental review completion
• Costs associated with residential housing development, i.e. for mixed use projects • Costs associated with supporting “other” businesses the applicant owns • Costs on a funded project NOT meeting a National Objective • Personal expenses such as cars, home repairs, not directly associated with the business
• Costs of paying off credit cards (personal or business) • Costs of paying off any personal debt not directly associated with business • Providing CDBG loan as a revolving line of credit (LOC) is not eligible • Cash payments of any kind made directly to the assisted business owner(s) (wages or draws) from loan proceeds
• Costs associated with a funded project when the owner(s) or business is found to be on federal debarred list
• Public infrastructure in support of the business
• Research and development costs for future production (speculative).
Once approved, loan funds cannot be shifted from one approved type of cost to another without formal written approval of Lender. If there is a substantial change in the project scope of work or underwriting, then the loan must be re-evaluated and re-approved by Lender, per state and federal regulations, prior to loan closing or disbursement of CDBG funds.
3.4. MEETING NATIONAL OBJECTIVE STANDARDS
All eligible activities funded under this program must meet a CDBG “National Objective” as described in the Act, Section 104(b)(3) and federal regulations 24 CFR Part 570.483.
Detail on documenting meeting National Objective standard for a project is contained in Department’s guidance in its most current Grants Management Manual. Projects that do not meet a National Objective are ineligible activities. Below is a general description HCD Revised October, 2022 Page 5
of documenting how a BA project meets the National Objective of benefit to lowmoderate income (LMI) persons. The Lender will use Department specific guidance for ensuring each eligible project funded is documented as meeting a National Objective.
BA projects normally meet a National Objective standard when they create jobs and provide over half, at least fifty one percent (51%), of the new job positions to LMI qualified persons. BA projects proposing to provide most of newly created jobs to LMI persons must agree to allow the Lender, or their designated representative, to meet with each job applicant prior to hiring and complete a Department Self Certification of Income Form, see Attachment C. After all new hires are made, payrolls must be collected by the Lender and compared to the job applicant Income Certification forms to prove over half of all newly created job positions were provided to low-moderate income persons.
This will prove the project’s job creation met the National Objective of principally benefiting LMI persons and allow the Lender to close out the project with the Department and HUD. All documentation of National Objective for jobs falls under Section 4.5 on confidentiality.
Some BA projects may require CDBG funding to retain jobs. In this case CDBG loan funds will assist in keeping the business from closing or to avoid terminating some staff.
This type of project must document that, at the time of application, over half of existing employee positions to be eliminated are held by LMI persons. As such, the business must agree to allow the Lender or their designated representative to interview existing employees and help them complete the Department’s Self Certification of Income Form.
The business must also provide financial documentation that, if not for CDBG funding, the job positions will be lost and staff laid off. The business must also document that with the investment of CDBG funds, the business will continue operations and jobs can be retained. If approved and funded, the business employees must have SelfCertification of Income completed again, prior to Lender closing out the project. By verifying that, at the time of loan application and after loan disbursements, over half of the retained positions were LMI, then the project will have LMI National Objective met and it can be closed out with the Department and HUD. All documentation of National Objective for jobs falls under Section 4.5 on confidentiality.
3.5. MEETING PUBLIC BENEFIT STANDARDS
All eligible project activities funded under this program must meet a minimum CDBG “Public Benefit Standard” as described in the Act, section 104(b)(17) and federal regulations; 24 CFR Part 570.483(f)(g). Public Benefit is provided by the BA loan recipient in return for use of subsidized federal funds and provides a funding limit or “cap”. Meeting the Public Benefit Standard is very different than meeting National Objective Standard and should not be confused. Lender will use detailed guidance on meeting Public Benefit Standards provided in the Department’s most current Grants Management Manual.
For BA projects meeting National Objective via jobs provided to LMI persons, the Public Benefit standard is jobs, and the maximum CDBG loan funding available is limited to $35,000 per job. The Lender will require BA loan applicants to provide an estimate of Public Benefit generated by investment of CDBG funds into the project via the Job Tracking Form, see Attachment C. This proposed level of Public Benefit will be verified HCD Revised October, 2022 Page 6
after investment of CDBG funding. The actual level of Public Benefit (loan funds per job) may be greater than or less than the level proposed at the BA application stage. All Public Benefit data falls under the confidentiality Section 4.5.
CDBG Public Benefit requirements of the program will be disclosed by the Lender at the start of the application process. Lender will use financial underwriting to identify the need for BA loan subsidies and determine reasonable Public Benefit that will be generated from the project, i.e. the number of jobs created from proposed project. Projects with small amounts of Public Benefit may be required to bring in other sources of funding because of CDBG funding limits imposed by this standard.
3.6. MEETING SIX UNDERWRITING STANDARDS
In addition to documenting that the project meets CDBG Public Benefit standard, the project must also be documented as meeting six HUD underwriting standards, per federal regulation 24 CFR Part 570.483(e). These underwriting standards are required to document a minimum “due diligence” of the Lender and ensure projects are financially sound enough to meet Public Benefit and National Objective standards, i.e. create new or retain existing job positions. The six HUD underwriting standards are general, qualitative and are supported by commercial underwriting standards in Section 6 of these guidelines. See the Department’s most current Grants Management Manual for detailed guidance on compliance with each of the six HUD underwriting standards.
The Six Underwriting Standards are:
1. Project costs are documented as reasonable (typically, third party cost estimates)
2. All sources of funding for the project are documented with final commitments
3. To the extent practicable, CDBG funds are not substituted for private (nonfederal) funds
4. Documentation that project is financially feasible (based on cash flow projections to support jobs and debt service, etc.)
5. To the extent practicable, the return of the owner’s equity investment is not unreasonable (based on level of equity and proposed CDBG loan terms)
6. To the extent practicable, CDBG funds are disbursed on a pro-rata basis with other financing provided for the project.
3.7. MEETING OTHER FEDERAL REGULATORY REQUIREMENTS
Since these CDBG BA loans are from a federal funding source, there are a number of federal laws and requirements which are triggered by their use. The Lender and Administrator will require BA loan applicants to provide project information which allows them to make a determination of required project compliance. BA applicants are required to sign loan disclosures and work with Lender to ensure each project is in compliance with any of the triggered, applicable regulations listed below.
National Environmental Policy Act (NEPA): Every project funded under the Program must be reviewed under HUD NEPA regulations 24 CFR Part 58 and the Lender must sign and certify an Environmental Review Record (ERR) for each project prior to approval or disbursement of loan funds. The Lender is required to sign and certify the HCD Revised October, 2022 Page 7
correct NEPA EER, per current Environmental Review Requirements Chapter of Department’s Grant Management Manual (GMM), along with any state review under California’s Environmental Quality Act (CEQA).
The ERR level of review is based on the project’s “aggregated” scope of work, which includes all proposed project funding. Any construction or equipment installation proposed will require more review work on the ERR. The ERR will be done early in application process, as soon as the project is deemed eligible, and scope of work is finalized. No costs will be charged to the Borrower for this process. Applicants must sign Department certification form that no “choice limiting action” under NEPA regulations has or will take place. The form is included in Attachment C.
Prevailing Wage Compliance: If a project proposes to use CDBG funds to pay costs for any construction, then federal and state labor standards compliance must be documented. Davis-Bacon Act (40 USC 276a – 276a-5) and related laws are “triggered” when any CDBG funding is used to pay for any project construction costs. Lender will follow Department guidance in current Labor Standards Chapter of the GMM for prevailing wage compliance on funded projects.
Additional labor costs will be added to projects proposing to use CDBG to pay for new construction, rehabilitation, or equipment installation. The Administrator and Lender will work with loan applicants to ensure project compliance. The additional time and work required by prevailing wage regulations will be disclosed to the borrower as soon as possible. Any additional costs resulting from this regulation will be incorporated into the CDBG loan approval.
Acquisition and Relocation Laws: All BA applicants proposing to use CDBG funds for purchase of real property must comply with 49 CFR Part 24 Acquisition laws. Lender will provide required Seller Disclosure for execution as part of meeting this requirement.
All BA applicants proposing projects which trigger relocation compliance i.e. result in displacement of persons per Uniform Relocation Act (URA), must work with Lender to ensure compliance with this law. Additional costs associated with relocation compliance will be disclosed to the applicant prior to CDBG loan approval and included in project loan approval.
Required Prohibition of Job Pirating Certification: All BA applicants must sign a Certification of No Job Pirating. Job pirating is prohibited per CDBG federal regulation 24CFR 570.482 (h). Job pirating is defined as using CDBG public funds to facilitate the moving of a business and associated jobs from one jurisdiction to another (business attraction). As such, CDBG federal funds cannot be used to attract / subsidize a business to move from one labor market area to another or keep a business from moving out of a labor market by making a retention argument. Lender will require all applicants to sign a non-job pirating certification, Attachment C. Any questions regarding possible job pirating will be submitted to the Department for final determination.
Conflict of Interest Certification: BA loan applicants will sign a Certification of No Conflict of Interest. In accordance with state and federal regulations, no member of the governing body and no official, employee or agent of the local government, nor any other person who exercises policy or decision-making responsibilities (including members of HCD Revised October, 2022 Page 8
the loan committee and officers, employees, and agents of the loan committee, the administrative agent, contractors and similar agencies) in connection with the planning and implementation of the CDBG BA program shall directly or indirectly be eligible for this program. Lender will require all applicants to sign a non- conflict of interest certification, Attachment C. Any questions regarding possible federal conflict of interest will be submitted to the Department for final determination. Any questions about state conflict of interest laws will be referred to Lender’s legal council for final determination.
Required SAMs Unique Entity Identification (UEI) number, federal debarred verification and demographic data: All BA program applicants must obtain a UEI number, if they do not already have one. The UEI number is free and can be obtained online. In addition, prior to loan approval, the Lender will document that the business being assisted, and all owners and affiliated businesses, are verified as NOT on the federal debarred contractors list. HUD also requires that the Department and the Lender collect certain income and demographic data from the business and any beneficiaries of CDBG funds.
Required Benefit to Citizens of the Jurisdiction: Applicant must work with Lender to document substantial benefit to residents in the Program service area is obtained. This requirement does not apply to job retention. For projects proposing to document providing goods or services, the service area of the business must be within the jurisdictional limits.
4. LOAN PROCESSING AND APPROVAL
4.1. FAIR LENDING COMPLIANCE
The Program will be implemented in ways consistent with the Lender’s commitment to fair lending laws. No person or business shall be excluded from participation in, denied the benefit of, or be subjected to discrimination under any program or activity funded in whole or in part with Program funds on the basis of his or her religion or religious affiliation, age, race, color, ancestry, national origin, gender, marital status, familial status (which specifically refers to the number or ages of children in the household), physical, intellectual or emotional disability, sexual orientation, or other basis. All personal information of loan applicants will be kept confidential, per Section 4.4.
4.2. LOAN APPLICATION PROCESSING
Loan applications will be processed on a first come first served basis. Immediately upon receipt of the application, the administrator will create a file that will contain the application and all subsequent documentation collected. The Administrator will begin by reviewing the application and documents for initial eligibility per Section 6.1. Applicants that do not meet basic CDBG requirements of the program will be sent a letter of explanation. All BA applications received, regardless of the outcome, will be kept on file to document fair lending standards. Applications that meet basic eligibility requirements will continue to underwriting.
The business will be required to provide accurate financials for past, current and future projection of the business operations. All owners will have credit checks conducted as part of loan underwriting per Section 6.0. The Administrator may provide sample financial Excel forms (balance / cash flow sheets, profit and loss, personal financial statements, and proforma) but in no instance will the Administrator’s or Lender’s staff HCD Revised October, 2022 Page 9
generate financial numbers for an applicant. The applicant will be offered referrals to local business support organizations to assist applicants in producing proper financial statements, develop a business plan, conduct a market study or develop industry accounting practices.
Loan Flow:
1. It is recommended that an applicant speak with City staff regarding BA financing requirements before submitting an application.
2. Application is submitted and reviewed for completeness, and whether it meets National Objective and Public Benefit standards.
3. Application is reviewed to ensure it meets HUD underwriting standards and any additional City requirements.
4. A complete loan file is assembled.
5. Staff presents approval memo to Loan Advisory Committee for approval, approval with additional conditions, or denial.
6. If approved, the applicant is advised of the approval and any additional conditions, and staff begins the process of loan documentation, and making arrangements for signing.
7. If declined, the applicant is advised of the process for appeal.
8. Upon loan closing and perfection of any liens, information is provided to the loan servicer.
Loan applicants are responsible for providing accurate and timely information to the Administrator as part of the loan process. This may include:
• Disclosure of all business owners with twenty percent or more ownership • Disclosure o f all other businesses the owners have an ownership interest of twenty percent (20%) or more
• Current personal financial statements for each owner
• Sources of collateral and security
• Business historic financial information, including year to date • Sources of cash for any equity investment proposed
• Third party documentation of eligible project costs
• Market study or document basis of future sales projections • Management capacity documentation for ability to execute • Necessary information to clear federal overlays in Section 3.7.
If the loan applicant does not provide required information and documentation to the Administrator in a timely fashion, then there will be delays in the loan approval process.
Once the Administrator has compiled a complete loan file with all the credit, financial, and underwriting information needed to show loan is eligible under these guidelines, then a loan approval memo will be drafted. The memo will be submitted to Lender for their approval. Once approved, the Administrator and Lender will submit project set up report to Department and craft loan documents for signing at closing with the Borrower.
HCD Revised October, 2022 Page 10
4.3. PROGRAM LOAN APPROVAL PROCESS
The Lender’s Loan Advisory Committee (LAC) shall be made up of an odd number of persons, and consists of the Community Development Director, Finance Director, and City Manager or their designee.
The LAC authority includes, but is not limited to, loan approval, modification of existing loans, recommending special circumstances or exceptions requests to the City Manager, making recommendations to the City Council, and declining loan applications.
See Attachment A for Lender loan approval memo format.
Loan Advisory Committee meetings will be scheduled by Lender staff in conjunction with Administrator staff once a loan has been underwritten and is ready for review and approval. Lender staff will be responsible for reviewing each loan application funding proposal and recommending approval or rejection for the loan. Committee members may request additional information and or attach contingencies on closing or funding of the loan. If the loan is approved, then the project can move forward with loan closing.
If Lender approval is not obtained, then the BA loan applicant can take dispute resolution actions, per Section 4.5 of these guidelines.
4.4. LOAN APPLICANT CONFIDENTIALITY
Administrator or Lender or any persons involved in the loan process for this Program will not disclose any of applicant’s business or personal confidential information as part of loan review and approval process. All confidential information of businesses will only be disclosed to persons required to view the information as part of loan review and approval. All personal and business confidential information of loan applicants will be kept in a locked secured storage facility and are not available to persons outside of the program. If the Lender or Administrator or Department receives a formal public records request for a loan applicant file, then only non-confidential information, as verified by legal counsel, will be provided.
4.5. APPLICANT DISPUTE RESOLUTION / APPEALS PROCEDURE
If an application for assistance through this CDBG program is denied, and the applicant is dissatisfied with the decision, an appeal may be made. The appeal must be made in writing to the Administrator and/or the Lender, and the appeal will be presented to the City Manager for a decision. An appeal shall be made in writing, state specific and pertinent facts, and provide the basis for appeal. The appeal must be made within 10 business days of the date of the actual date of denial. The appeal must be limited to information that was not known at the time the decision that is being appealed was made.
When an appeal is filed, the Lender shall prepare a report for the City Manager. The appellant may be required to attend. The appellant is encouraged to present documentation supporting their position. At the appeal meeting, the City Manager may consider any issue involving the matter that is the subject of the appeal, in addition to the specific grounds for appeal.
The City Manager may:
HCD Revised October, 2022 Page 11
• Affirm, affirm in part, or reverse the decision which is the subject of the appeal, based on findings of fact about the appeal.
• Adopt additional conditions of approval that may address issues or concerns other than the subject of the appeal.
The Administrator or Lender will provide written notification to the appellant of approval or denial of the appeal, with explanation.
4.6. EXCEPTIONS / SPECIAL CIRCUMSTANCES
Exceptions are defined as any action which would depart from policy and procedures stated in the guidelines. The Lender or Administrator’s staff may initiate consideration of an exception or special circumstance to the policies in these guidelines as long as it does not violate CDBG federal / state requirements. A written analysis of the exception will be prepared and submitted with loan approval request. This analysis shall contain a narrative, including the staff's recommended course of action and any written or verbal information supplied by the applicant. The loan approval shall be made after review and acceptance of the exception or special circumstances request.
Examples of potential exception scenarios include, but are not limited to:
• A person of color does not have the traditionally recognized or minimal length of experience in the business
• A low-income person does not have the credit history or collateral required by underwriting.
4.7. LOAN CLOSING PROCESS
After Lender approval and submittal of a BA Loan Certification and Project Set Up Report to Department, the Administrator and Lender will prepare for the loan closing.
Loans may be closed through an Escrow Agent or the Administrator, as determined on a case-by-case basis. The Administrator will prepare the loan closing documents; prepare title and lien searches, and UCC-1 filings, if appropriate. Lender legal counsel will review all agreements and documents, as necessary. An Escrow Agent may be used to close loans and secure liens. Upon closing, funds will be disbursed according to the Loan Agreement.
The Borrower will sign all the necessary documents and agreements. The Lender will request reimbursement of eligible costs from the Department after Borrower has submitted documentation of eligible expenditures and Lender has paid for those costs.
5. DESCRIPTION OF LOANS
5.1. DETERMINATION OF LOAN AMOUNT
The Program has a minimum loan amount of $20,000. There is no maximum loan amount.
Typical loans are anticipated to be less than $200,000 per applicant. Loans greater than $200,000 shall also be approved by the City Manager. Loans in excess of $300,000 must be approved by the City Council, and, if required, reviewed and approved by the State CDBG Program as an Over-the-Counter (“OTC”) grant to the City, which is in turn loaned to the applicant.
HCD Revised October, 2022 Page 12
A borrower will be eligible for a second loan for the same business if the borrower’s current loan accounts are in good standing.
Actual loan amounts will be based on the business’ need for capital to conduct the proposed project’s scope of work and meet Public Benefit standards. Most often the amount of CDBG funding is limited based on “gap” in project financing or ability of business to support new debt or pay for required jobs from business future cash flow projections or by the amount of collateral that the business can provide as security for the CDBG debt. If there are not sufficient CDBG funds for the project, then the Administrator can assist in finding other project funding.
5.2. DETERMINATION OF LOAN TERM
The loan term is determined by the loan amount, debt coverage ratio, and anticipated profitability. The Lender will balance the payoff term with the business’ ability to make payments based on the pro forma developed during underwriting. The Lender may offer flexible terms with interest only periods not to exceed one year and/or longer-term loans to ensure the loan funds have maximal impact on business success. The Lender may also approve deferrals of up to 12 months if project proforma demonstrate need. Interest will accrue during deferrals.
Generally, loans under $50,000 will have a term of five to seven years, and loans over $50,000 will have a 10 year term. If the loan is for real property improvements and can be secured on real property, then the terms can be extended out to 20 or 30 years. A loan amortization term can be longer than the loan term, so an equipment loan may have a term of ten years but an amortization term of fifteen years, which will create a lump sum payment at year ten. Administrator will confirm that the term is correct, based on the use of the CDBG funds and loan security / collateral being provided.
5.3. DETERMINATION OF LOAN INTEREST RATE
Loan interest rates will start at three percent (3.00%). This rate will be increased if the investment of CDBG funds at the three percent level causes the business to have an excessive profit or return on investment (ROI). See HUD underwriting standards discussion of undue enrichment in the Department’s most current Grants Management Manual for direction on how to set interest rates to comply with this standard. By allowing the interest rate to move and not be fixed, the Lender can best tailor the loans under this program to meet the cash flow needs of different businesses in the community and ensure Public Benefit and National Objective standards are met.
Other factors that may affect the interest rate include the amount of equity brought to the loan request; capacity of the business to service the proposed debt; the rate of return (ROI) the applicant would receive with a lower rate; credit risk factors; and management experience.
5.4. LOAN PROCESSING FEES
Loan application, origination, and set-up, escrow fees, and other costs associated with underwriting, including appraisal or other valuation cost and environmental review shall be paid by the applicant at time of application. These fees are non-refundable and are based on direct cost of providing the underwriting and loan review service. Fees for direct service are non-refundable.
HCD Revised October, 2022 Page 13
Project costs that may be included in the loan amount include labor standards compliance cost, and relocation costs.
6. LOAN UNDERWRITING STANDARDS
6.1. INITIAL LOAN EVALUATION
CDBG funds are designed to support people, communities, and businesses who have not historically (and often do not presently) have access to traditional forms of financing.
The lender can use the questions below to identify the people and businesses who would benefit the most from CDBG support, and as a way to mitigate the harm done by a financial system that fails to include them.
The City will strive to use care in working with small business applicants. Some applicants seeking funds through the CDBG process may experience stressors which can affect interactions with the Lender, particularly persons of color and others who have experienced systemic impacts in working with local and state funding sources.
Lender and Administrator seek to support and advance all persons applying for business assistance loans regardless of their prior background and experiences to develop business acumen and be successful in working through the CDBG program processes.
Each project/business will be evaluated based on past performance, future financial forecasts, and the extent to which supporting the business supports the mission of the CDBG program. The following questions should be asked upon receipt of a loan application. While answers will vary by applicant, these questions are designed to identify eligibility but also highlight areas of assistance to support applicants in successfully completing the terms of the loan.
• Is business an eligible applicant, per Section 3.1?
• Are the proposed project costs eligible, per Section 3.2 & 3.3? • Will project meet a CDBG National Objective, per Section 3.4? • Will business meet Public Benefit jobs required in Section 3.5? • Does project appear to meet six HUD underwriting standards, per Section 3.6? • Are federal overlays triggered that will adversely impact project development? • Does the business and owner pay bills on time, collect on time? • Does owner have a detailed “business plan”?
• Does owner have documented market demand for projected sales? • Does owner have management capacity to operate the business? • Does owner have financial accounting capacity to operate the business? • Is the owner contributing a reasonable amount of equity? • Is the owner able to get conventional bank financing, if not, why not? • Was the business financially viable in the past (net income covers debt)? • Are there reasonable financial assumptions for future viability/success? • Is there enough collateral available to secure the proposed loan? HCD Revised October, 2022 Page 14
• Is the owner’s personal financial status stable?
By collecting enough initial application information to answer the above list of questions, the Administrator will have a good sense of how strong a borrower is, and how successful they will be, if assisted with a CDBG loan. Most of this information is collected on the loan application form and verified verbally at the initial site visit with the owner.
By meeting the borrower and asking these questions the Administrator will know what additional information/documentation needs to be collected to provide a clear picture of how CDBG funds can be used to assist the BA loan applicant. These questions demonstrate the need for CDBG funds and business eligibility.
After the initial review, the Administrator / application processor will collect the information required for loan underwriting. The required documentation is listed in the CDBG underwriting guidance document provided in the Department’s most current Grants Management Manual. At this same time, Administrator and Lender will begin regulatory compliance documentation, per Section 3.5. The amount of documentation and detailed underwriting is based on size of the loan and type of business (existing or start up) and what LMI National Objective is used. Additional documentation may be required for a business with special circumstances.
6.2. PERSONAL AND BUSINESS CREDIT REQUIREMENTS
Each applicant will have third party credit reports obtained showing credit scores and payment history. All owners and their spouses with twenty percent (20%) or more interest in the business will have their credit reports reviewed.
For this program, credit scores of 620 and above are preferred, although scores of 550 to 619 may be accepted as a Special Condition or Exception. If a personal credit report provides a low credit score or poor credit history, applicants must provide a written explanation and justification.
It is not uncommon for business owners and/or businesses to have a low credit score or lack of credit history. If a personal credit reporting service provides a low credit score or shows poor credit history. The City seeks to support and advance all persons applying for business assistance loans regardless of prior background and experiences to develop business acumen and be successful in working through the CDBG program processes.
If it is available, the Dunn and Bradstreet report for the primary applicant business and all associated businesses of the owners (20% or more ownership) will be reviewed. If a Dunn and Bradstreet report is not available, as is commonly the case, the Lender will contact vendors or suppliers of the business to inquire as to the business payment history.
6.3. PERSONAL AND BUSINESS FINANICAL INFORMATION
Personal financial statements will be required for each person who owns 20% or more of the business. Financial statements need to show all assets and liabilities of the person. In addition to these statements, federal tax return statements for owners and the business for the past three years are needed to give a historic perspective of income.
For the business fiscal year, historic financial statements will be required. These will HCD Revised October, 2022 Page 15
consist of past three year’s balance sheets and cash flow statements, generated from past tax returns and quarterly year to date statements. These statements should be put together by the person responsible for doing the bookkeeping and finance management for the business. Past tax returns will be provided to document the statements provided.
Based on these statements the Lender / Administrator can develop ratios for debt service and payment history, etc.
The business will also need to provide future projected financials. These will consist of proformas showing projected revenue and costs for the business on a monthly basis for each fiscal year for a minimum of three years from application date. Start-ups may need to provide up to five years of projection statements to show “break even” point of business. Two sets of proformas need to be completed: one showing the business projections with CDBG financing; and a second set showing the business with conventional financing. This will provide evidence of the benefit / increased profit the business is receiving by using the more affordable CDBG loan. These proformas must also show the increased costs to the business from adding the new job positions and the CDBG debt service.
A project sources and uses form must be provided to show all funding required for completing all project activities. This form will show the owner’s equity as well as private bank financing and any other investments from other sources. The sources and uses give a clear idea of what costs the CDBG loan will cover and its information must be reflected in the proformas as described above.
Using the information in these financial statements, along with any back up documentation required, will allow the Administrator to do the project’s underwriting analysis. This analysis will include both the conventional lending underwriting and HUD required underwriting. This analysis will be provided to the LAC for use in loan approval.
6.4. COLLATERAL REQUIREMENTS
All loans under this program will be collateralized using normal commercial lending standards. Collateral coverage will be assessed based on assets available as security and the level at which there are existing liens on the assets. CDBG funding is typically in a subordinate position to banks and other lenders.
It is the goal of the Program to get the best lien position possible to ensure loan repayments. Types of collateral may include:
• Secured liens on real property,
• UCC liens on machinery, equipment, or other fixtures, • Lease assignments, as appropriate,
• Personal and corporate guarantees, as appropriate, and • Life insurance assignment and other collateral, as appropriate.
Appraisal of assets may be required as part of determining how to obtain the best lien positions for the CDBG loan. Combined loan to value ratio on collateral for the typical CDBG loan should not exceed ninety percent (90%). Equipment and inventory secured should be properly discounted to reflect actual resale value when doing loan to value calculations.
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Under-secured and unsecured loans must be approved as Special Circumstance based on the factors of the specific request. In general, unsecured loans will only be approved for less than three (3) years and an increased interest rate may be required. An unsecured loan may be for a maximum of 50% of the overall project cost and significant private funds or owner equity will be required.
6.5. BUSINESS EXPERIENCE AND MANAGEMENT CAPACITY
The BA loan applicant will provide resumes and management histories to show the experience of business owners and their management staff in successful operation of the existing business or something comparable. Existing businesses proposing to use CDBG BA funds to create jobs must have an updated business plan at a minimum, if not a new plan.
A comprehensive business plan will be required for BA loan applicants proposing to use CDBG funds for a currently non-operational start-up businesses, or applicants that wish to use CDBG funds to purchase an existing business, or applicants that wish to use CDBG funds for job retention (to keep the business from closing). The comprehensive business plan will include a detailed analysis of what management capacity is needed for the business to be successful and identify resources that the business will utilize to meet the identified capacity needs.
The City may require an applicant to seek business counseling support through the local Small Business Development Corporation or other entity to refine the business plan. At a minimum, the plan must include assessment of the market, including competition, a pro forma outlining the revenues and expenditures, the breakeven, and return on investment (ROI), as well as a set of specific milestones to execute the plan.
7. LOAN SERVICING
7.1. LOAN SERVICING RESPONSIBILITIES
Lender or Administrator will provide information to the Borrower regarding how the loan will be serviced. The Lender will retain all original project / loan files within locked storage. Original legal documents will be kept in locked fireproof filing system for future loan servicing. Lender or Servicing Agent will provide annual income tax interest statements to the borrower for their tax purposes.
BA loan repayments will be collected by Lender’s loan Servicing Agent:
Name: Fortuna Economic Development Corporation
Address: 707 K Street, Eureka CA 95501
Phone: 707-798-6132
Email: [email protected]
All loan payment will be made directly to the Servicing Agent and deposited into current CDBG PI accounts. When payments are collected by a third-party Servicing Agent, all gross collected CDBG BA loan payments will be provided to the Lender on a quarterly basis for deposit into the proper CDBG program income account.
The borrower may be required to provide periodic business financial statements and proof of insurance annually to the Lender or Servicing Agent. Upon reviewing the HCD Revised October, 2022 Page 17
borrower’s financial statements, the Lender may require the business to take actions that improve the business cash flows. Borrower may be required to meet with business development staff to assist in stabilizing or building capacity.
Borrower must disclose any sale of equipment or assets that are used as loan security.
If the business is not able to fully service CDBG debt repayments, or if they wish to prepay the loan by making one or more larger payments, the borrower may submit a written request to the Lender to change the CDBG loan terms.
7.2. LOAN SERVICING POLICIES
The Lender has adopted a set of loan servicing policies that outline how the loan servicing agent will proceed if payments are late or no payments are received. The policies also outline how loan files will be set up and protected. A copy of these adopted loan servicing polices will be provided to each BA loan recipient at loan closing.
8. PROGRAM OVERSIGHT BY LENDER
8.1. OVERSIGHT OF PROGRAM ADMINISTRATOR
The Lender is ultimately the responsible entity for the CDBG BA loan program. Lender will oversee the Administrator and communicate with the loan applicants and borrowers as needed to explain CDBG compliance.
The Administrator is responsible to the Lender and loan applicants to assure that the Program is implemented in compliance with these program guidelines, and state and federal regulations. In addition, Administrator staff will ensure that loan applicant projects are underwritten in a timely and responsible manner. This includes working closely with BA loan applicants to ensure they provide accurate financial statements through documenting BA project compliance for project close-out with Department and HUD. Administrator will review all loan documents with borrowers prior to loan closing.
Attachment A
Sample Lender Loan Approval Memo
K:\ComDev\2 Redev\5 Programs\_LAC
Attachment A
Loan Advisory Committee Report
Date
Title
Applicant
Business Name
Personal Address
Business Address
Project Description
Applicant Meets Basic Program Requirements
☐ Business is Located in Fortuna
☐ Business is an Eligible Applicant
☐ NEPA is Complete
☐ Proposed Loan Meets National Objective (Type)
☐ Proposed Loan Meets Public Benefit
☐ BA Job Creation: Click or tap here to enter text.
☐ BA Job Retention: Click or tap here to enter text.
☐ Microenterprise: Business has 5 or Fewer Employees Including Owner(s) ☐ Microenterprise: All Owners Make < 80% of HUD Median Income ☐ Business has UEI and is not Debarred
☐ Project Costs are Eligible
☐ Business has Business Plan
☐ Business has Marketing Plan
☐ Financial Projections Prepared
☐ Tax Returns are Available and Reviewed
☐ Financial Statements are Available and Reviewed
☐ Credit Score of 620 or Better
☐ Credit Score Less than 620 with Explanations
☐ Applicant has Worked or is Working with the SBDC
☐ Loan will Stabilize or Grow the Business, Creating Jobs ☐ Acceptable Use of Loan Proceeds (Note Proceeds are for Business Use Only) ☐ Complete Application Submitted
K:\ComDev\2 Redev\5 Programs\_LAC
Proposed Terms
Loan Amount
Interest Rate
Term
Payment
Collateral
Special
Circumstances
The Business
Loan Purpose
HUD Underwriting Standards
Project Costs Documented
Other Sources – Final Commitments
CDBG Not Substituted for Private
Financial Feasibility
Owner ROI is Not Unreasonable
Capacity to Service Debt
Applicant Cash Injection into Project
Collateral
Management
[In addition to narrative, cut and Paste Special the loan purpose from the Underwriting Worksheet] [In addition to narrative, cut and Paste Special the projections from the Underwriting Worksheet] [In addition to narrative, cut and Paste Special the sources/uses from the Underwriting Worksheet] K:\ComDev\2 Redev\5 Programs\_LAC
Strengths
Weaknesses and Mitigation
Special Circumstances and Rationale
ATTACHMENTS:
A: Underwriting Worksheet
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Attachment B
Lender CDBG Business Assistance
Loan Agreement
BUSINESS LOAN AGREEMENT Attachment B
Referencesin the boxes above are for Lender's use only and do not limit the applicability of this document to any particular loan or item.
Borrower:
Any item above containing "***" has been omitted due to text length limitations.
Lender:
THIS BUSINESS LOAN AGREEMENT dated Loan Date, is made and executed between Borrower Name ("Borrower") and The City of Fortuna ("Lender") on the following terms and conditions. Borrower has received prior commercial loans from Lender or has applied to Lender for a commercial loan or loans or other financial accommodations, including those which may be described on any exhibit or schedule attached to this Agreement. Borrower understands and agrees that: (A) in granting, renewing, or extending any Loan, Lender is relying upon Borrower's representations, warranties, and agreements as set forth in this Agreement; (B) the granting, renewing, or extending of any Loan by Lender at all times shall be subject to Lender's sole judgment and discretion; and (C) all such Loans shall be and remain subject to the terms and conditions of this Agreement.
TERM. This Agreement shall be effective as of Loan Date, and shall continue in full force and effect until such time as all of Borrower's Loans in favor of Lender have been paid in full, including principal, interest, costs, expenses, attorneys' fees, and other fees and charges, or until Maturity Date.
CONDITIONS PRECEDENT TO EACH ADVANCE. Lender's obligation to make the initial Advance and each subsequent Advance under this Agreement shall be subject to the fulfillment to Lender's satisfaction of all of the conditions set forth in this Agreement and in the Related Documents. Loan Documents. Borrower shall provide to Lender the following documents for the Loan: (1) the Note; (2) guaranties; (3) together with all such Related Documents as Lender may require for the Loan; all in form and substance satisfactory to Lender and Lender's counsel.
Borrower's Authorization. Borrower shall have provided in form and substance satisfactory to Lender properly certified resolutions, duly authorizing the execution and delivery of this Agreement, the Note and the Related Documents. In addition, Borrower shall have provided such other resolutions, authorizations, documents and instruments as Lender or its counsel, may require.
Payment of Fees and Expenses. Borrower shall have paid to Lender all fees, charges, and other expenses which are then due and payable as specified in this Agreement or any Related Document.
Representations and Warranties. The representations and warranties set forth in this Agreement, in the Related Documents, and in any document or certificate delivered to Lender under this Agreement are true and correct.
No Event of Default. There shall not exist at the time of any Advance a condition which would constitute an Event of Default under this Agreement or under any Related Document.
CDBG REPRESENTATIONS AND WARRANTIES.
CDBG funds are public monies which require compliance with a number of federal and state laws and regulations. Borrower makes the following representations and warranties regarding meeting CDBG Principal Loan Date Maturity Loan No Call / Coll Account Officer Initials City of Fortuna
736 F Street
Fortuna, CA 95521
707-822-5951
Borrower
DBA: if any
Address
Fortuna, CA 95521
federal regulations, including (but not limited to) National Objective and Public Benefit requirements; prevailing wage, procurementstandards, and Section 3 for construction projects; acquisition and relocation laws; and equal opportunity.
Fulfillment of CDBG National Objective of Benefit to Low- to Moderate-Income Group. Borrower agrees that at least 51% of all full-time equivalent jobs retained or created shall be provided to low- to moderate-income individuals who qualify under published CDBG income guidelines. Borrower shall perform any covenant, condition, or agreement set forth herein, including the creation or retention of jobs, making payroll records available for inspection, and making household income certifications available for new or retained employees.
Fulfillment of CDBG Public Benefit. Borrower understands and agrees that creation or retention of full-time jobs, as defined by the current CDBG Grants Management Manual, is required to meet the public benefit requirement of one new or retained employee per each $35,000 in CDBG loan funds provided under this agreement.
REPRESENTATIONS AND WARRANTIES. Borrower represents and warrants to Lender, as of the date of this Agreement, as of the date of each disbursement of loan proceeds, as of the date of any renewal, extension or modification of any Loan, and at all times any Indebtedness exists:
Organization. Borrower is a Sole Proprietorship for profit which is, and at all times shall be, duly organized, validly existing, and in good standing under and by virtue of the laws of the State of California. Borrower is duly authorized to transact business in all other states in which Borrower is doing business, having obtained all necessary filings, governmental licenses and approvals for each state in which Borrower is doing business. Specifically, Borrower is, and at all times shall be, duly qualified as a foreign corporation in all states in which the failure to so qualify would have a material adverse effect on its business or financial condition. Borrower has the full power and authority to own its properties and to transact the business in which it is presently engaged or presently proposes to engage. Borrower maintains its principal office at: Business Address. Unless Borrower has designated otherwise in writing, this is the principal office at which Borrower keeps its books and records including its records concerning the Collateral. Borrower will notify Lender prior to any change in the location of Borrower's state of organization or any change in Borrower's name.
Borrower shall do all things necessary to preserve and to keep in full force and effect its existence, rights and privileges, and shall comply with all regulations, rules, ordinances, statutes, orders and decrees of any governmental or quasi-governmental authority or court applicable to Borrower and Borrower's business activities.
Assumed Business Names. Borrower has filed or recorded all documents or filings required by law relating to all assumed business names used by Borrower. Excluding the name of Borrower, the following is a complete list of all assumed business names under which Borrower does business:
Business Name.
Authorization. Borrower's execution, delivery, and performance of this Agreement and all the Related Documents have been duly authorized by all necessary action by Borrower and do not conflict with, result in a violation of, or constitute a default under (1) any provision of (a) Borrower's articles of incorporation or organization, or bylaws, or (b) any agreement or other instrument binding upon Borrower or (2) any law, governmental regulation, court decree, or order applicable to Borrower or to Borrower's properties.
Financial Information. Each of Borrower's financial statements supplied to Lender truly and completely disclosed Borrower'sfinancial condition as of the date of the statement, and there has been no material adverse change in Borrower'sfinancial condition subsequent to the date of the most recent financial statement supplied to Lender. Borrower has no material contingent obligations except as disclosed in such financial statements.
Legal Effect. This Agreement constitutes, and any instrument or agreement Borrower is required to give under this Agreement when delivered will constitute legal, valid, and binding obligations of Borrower enforceable against Borrower in accordance with their respective terms.
Properties. Except as contemplated by this Agreement or as previously disclosed in Borrower's financial statements or in writing to Lender and as accepted by Lender, and except for property tax liens for taxes not presently due and payable, Borrower owns and has good title to all of Borrower's properties free and clear of all Security Interests, and has not executed any security documents or financing statements relating to such properties. All of Borrower's properties are titled in Borrower's legal name, and Borrower has not used or filed a financing statement under any other name for at least the last five (5) years.
Hazardous Substances. Except as disclosed to and acknowledged by Lender in writing, Borrower represents and warrants that: (1) During the period of Borrower's ownership of the Collateral, there has been no use, generation, manufacture, storage, treatment, disposal, release or threatened release of any Hazardous Substance by any person on, under, about or from any of the Collateral. (2) Borrower has no knowledge of, or reason to believe that there has been (a) any breach or violation of any Environmental Laws; (b) any use, generation, manufacture, storage, treatment, disposal, release or threatened release of any Hazardous Substance on, under, about or from the Collateral by any prior owners or occupants of any of the Collateral; or (c) any actual or threatened litigation or claims of any kind by any person relating to such matters. (3) Neither Borrower nor any tenant, contractor, agent or other authorized user of any of the Collateral shall use, generate, manufacture, store, treat, dispose of or release any Hazardous Substance on, under, about or from any of the Collateral; and any such activity shall be conducted in compliance with all applicable federal, state, and local laws, regulations, and ordinances, including without limitation all Environmental Laws. Borrower authorizes Lender and its agents to enter upon the Collateral to make such inspections and tests as Lender may deem appropriate to determine compliance of the Collateral with this section of the Agreement. Any inspections or tests made by Lender shall be at Borrower's expense and for Lender's purposes only and shall not be construed to create any responsibility or liability on the part of Lender to Borrower or to any other person. The representations and warranties contained herein are based on Borrower's due diligence in investigating the Collateral for hazardous waste and Hazardous Substances. Borrower hereby (1) releases and waives any future claims against Lender for indemnity or contribution in the event Borrower becomes liable for cleanup or other costs under any such laws, and (2) agrees to indemnify, defend, and hold harmless Lender against any and all claims, losses, liabilities, damages, penalties, and expenses which Lender may directly orindirectly sustain orsuffer resulting from a breach of this section of the Agreement or as a consequence of any use, generation, manufacture, storage, disposal, release or threatened release of a hazardous waste or substance on the Collateral. The provisions of this section of the Agreement, including the obligation to indemnify and defend, shall survive the payment of the Indebtedness and the termination, expiration or satisfaction of this Agreement and shall not be affected by Lender's acquisition of any interest in any of the Collateral, whether by foreclosure or otherwise.
Litigation and Claims. No litigation, claim, investigation, administrative proceeding or similar action (including those for unpaid taxes) against Borrower is pending or threatened, and no other event has occurred which may materially adversely affect Borrower'sfinancial condition or properties, other than litigation, claims, or other events, if any, that have been disclosed to and acknowledged by Lender in writing.
Taxes. To the best of Borrower's knowledge, all of Borrower's tax returns and reportsthat are or were required to be filed, have been filed, and all taxes, assessments and other governmental charges have been paid in full, except those presently being or to be contested by Borrower in good faith in the ordinary course of business and for which adequate reserves have been provided.
Lien Priority. Unless otherwise previously disclosed to Lender in writing, Borrower has not entered into or granted any Security Agreements, or permitted the filing or attachment of any Security Interests on or affecting any of the Collateral directly or indirectly securing repayment of Borrower's Loan and Note, that would be prior or that may in any way be superior to Lender's Security Interests and rights in and to such Collateral.
Binding Effect. This Agreement, the Note, all Security Agreements (if any), and all Related Documents are binding upon the signers thereof, as well as upon their successors, representatives and assigns, and are legally enforceable in accordance with their respective terms.
AFFIRMATIVE COVENANTS. Borrower covenants and agrees with Lender that, so long as this Agreement remains in effect, Borrower will:
Notices of Claims and Litigation. Promptly inform Lender in writing of (1) all material adverse changes in Borrower's financial condition, and (2) all existing and all threatened litigation, claims, investigations, administrative proceedings orsimilar actions affecting Borrower or any Guarantor which could materially affect the financial condition of Borrower or the financial condition of any Guarantor.
Financial Records. Maintain its books and records in accordance with GAAP, applied on a consistent basis, and permit Lender to examine and audit Borrower's books and records at all reasonable times.
Financial Statements. Furnish Lender with the following:
Annual Statements. As soon as available, but in no event later than one-hundred-twenty (120) days after the end of each fiscal year, Borrower's balance sheet and income statement for the year ended, prepared by Borrower.
Interim Statements. As soon as available, but in no event later than thirty (30) days after the end of each fiscal quarter, Borrower's balance sheet and profit and lossstatement for the period ended, prepared by Borrower.
Tax Returns. As soon as available, but in no event later than one-hundred-twenty (120) days after the applicable filing date for the tax reporting period ended, Borrower's Federal and other governmental tax returns, prepared by Borrower.
Additional Requirements. 180 Days after closing, interim financial statements, prepared by Borrower.
All financial reportsrequired to be provided under this Agreement shall be prepared in accordance with GAAP, applied on a consistent basis, and certified by Borrower as being true and correct.
Additional Information. Furnish such additional information and statements, as Lender may request from time to time.
Insurance. Maintain fire and other risk insurance, public liability insurance, and such other insurance as Lender may require with respect to Borrower's properties and operations, in form, amounts, coverages and with insurance companies acceptable to Lender. Borrower, upon request of Lender, will deliver to Lender from time to time the policies or certificates of insurance in form satisfactory to Lender, including stipulations that coverages will not be cancelled or diminished without at least ten (10) days prior written notice to Lender. Each insurance policy also shall include an endorsement providing that coverage in favor of Lender will not be impaired in any way by any act, omission or default of Borrower or any other person. In connection with all policies covering assets in which Name of Guarantor
n/a
Amount
n/a
Lender holds or is offered a security interest for the Loans, Borrower will provide Lender with such lender's loss payable or other endorsements as Lender may require.
Insurance Reports. Furnish to Lender, upon request of Lender, reports on each existing insurance policy showing such information as Lender may reasonably request, including without limitation the following: (1) the name of the insurer; (2) the risks insured; (3) the amount of the policy; (4) the properties insured; (5) the then current property values on the basis of which insurance has been obtained, and the manner of determining those values; and (6) the expiration date of the policy. In addition, upon request of Lender (however not more often than annually), Borrower will have an independent appraiser satisfactory to Lender determine, as applicable, the actual cash value or replacement cost of any Collateral. The cost of such appraisal shall be paid by Borrower.
Guaranties. Prior to disbursement of any Loan proceeds, furnish executed guaranties of the Loans in favor of Lender, executed by the guarantor named below, on Lender's forms, and in the amount and under the conditions set forth in those guaranties.
Other Agreements. Comply with all terms and conditions of all other agreements, whether now or hereafter existing, between Borrower and any other party and notify Lender immediately in writing of any default in connection with any other such agreements.
Loan Proceeds. Use all Loan proceeds solely for Borrower's business operations, unless specifically consented to the contrary by Lender in writing.
Taxes, Charges and Liens. Pay and discharge when due all of its indebtedness and obligations, including without limitation all assessments, taxes, governmental charges, levies and liens, of every kind and nature, imposed upon Borrower or its properties, income, or profits, prior to the date on which penalties would attach, and all lawful claims that, if unpaid, might become a lien or charge upon any of Borrower's properties, income, or profits. Provided however, Borrower will not be required to pay and discharge any such assessment, tax, charge, levy, lien or claim so long as (1) the legality of the same shall be contested in good faith by appropriate proceedings, and (2) Borrower shall have established on Borrower's books adequate reserves with respect to such contested assessment, tax, charge, levy, lien, or claim in accordance with GAAP.
Performance. Perform and comply, in a timely manner, with all terms, conditions, and provisions set forth in this Agreement, in the Related Documents, and in all other instruments and agreements between Borrower and Lender. Borrower shall notify Lender immediately in writing of any default in connection with any agreement.
Operations. Maintain executive and management personnel with substantially the same qualifications and experience as the present executive and management personnel; provide written notice to Lender of any change in executive and management personnel; conduct its business affairs in a reasonable and prudent manner.
Environmental Studies. Promptly conduct and complete, at Borrower's expense, all such investigations, studies, samplings and testings as may be requested by Lender or any governmental authority relative to any substance, or any waste or by-product of any substance defined as toxic or a hazardous substance under applicable federal, state, or local law, rule, regulation, order or directive, at or affecting any property or any facility owned, leased or used by Borrower.
Compliance with Governmental Requirements. Comply with all laws, ordinances, and regulations, now or hereafter in effect, of all governmental authorities applicable to the conduct of Borrower's properties, businesses and operations, and to the use or occupancy of the Collateral, including without limitation, the Americans with Disabilities Act. Borrower may contest in good faith any such law, ordinance, or regulation and withhold compliance during any proceeding, including appropriate appeals, so long as Borrower has notified Lender in writing prior to doing so and so long as, in Lender's sole opinion, Lender's interests in the Collateral are not jeopardized. Lender may require Borrower to post adequate security or a surety bond, reasonably satisfactory to Lender, to protect Lender's interest.
Inspection. Permit employees or agents of Lender at any reasonable time to inspect any and all Collateral for the Loan or Loans and Borrower's other properties and to examine or audit Borrower's books, accounts, and records and to make copies and memoranda of Borrower's books, accounts, and records. If Borrower now or at any time hereafter maintains any records (including without limitation computer generated records and computer software programs for the generation of such records) in the possession of a third party, Borrower, upon request of Lender, shall notify such party to permit Lender free access to such records at all reasonable times and to provide Lender with copies of any records it may request, all at Borrower's expense.
Environmental Compliance and Reports. Borrower shall comply in all respects with any and all Environmental Laws; not cause or permit to exist, as a result of an intentional or unintentional action or omission on Borrower's part or on the part of any third party, on property owned and/or occupied by Borrower, any environmental activity where damage may result to the environment, unless such environmental activity is pursuant to and in compliance with the conditions of a permit issued by the appropriate federal, state or local governmental authorities; shall furnish to Lender promptly and in any event within thirty (30) days after receipt thereof a copy of any notice, summons, lien, citation, directive, letter or other communication from any governmental agency or instrumentality concerning any intentional or unintentional action or omission on Borrower's part in connection with any environmental activity whether or not there is damage to the environment and/or other natural resources.
Additional Assurances. Make, execute and deliver to Lender such promissory notes, mortgages, deeds of trust, security agreements, assignments, financing statements, instruments, documents and other agreements as Lender or its attorneys may reasonably request to evidence and secure the Loans and to perfect all Security Interests.
LENDER'S EXPENDITURES. If any action or proceeding is commenced that would materially affect Lender's interest in the Collateral or if Borrower fails to comply with any provision of this Agreement or any Related Documents, including but not limited to Borrower's failure to discharge or pay when due any amounts Borrower is required to discharge or pay under this Agreement or any Related Documents, Lender on Borrower's behalf may (but shall not be obligated to) take any action that Lender deems appropriate, including but not limited to discharging or paying all taxes, liens, security interests, encumbrances and other claims, at any time levied or placed on any Collateral and paying all costs for insuring, maintaining and preserving any Collateral. All such expenditures incurred or paid by Lender for such purposes will then bear interest at the rate charged under the Note from the date incurred or paid by Lender to the date of repayment by Borrower. All such expenses will become a part of the Indebtedness and, at Lender's option, will (A) be payable on demand; (B) be added to the balance of the Note and be apportioned among and be payable with any installment payments to become due during either (1) the term of any applicable insurance policy; or (2) the remaining term of the Note; or (C) be treated as a balloon payment which will be due and payable at the Note's maturity.
CESSATION OF ADVANCES. If Lender has made any commitment to make any Loan to Borrower, whether under this Agreement or under any other agreement, Lender shall have no obligation to make Loan Advances or to disburse Loan proceeds if: (A) Borrower or any Guarantor is in default under the terms of this Agreement or any of the Related Documents or any other agreement that Borrower or any Guarantor has with Lender; (B) Borrower or any Guarantor dies, becomes incompetent or becomes insolvent, files a petition in bankruptcy orsimilar proceedings, or is adjudged a bankrupt; (C) there occurs a material adverse change in Borrower's financial condition, in the financial condition of any Guarantor, or in the value of any Collateral securing any Loan; or (D) any Guarantor seeks, claims or otherwise attemptsto limit, modify or revoke such Guarantor's guaranty of the Loan or any other loan with Lender; or (E) Lender in good faith deems itself insecure, even though no Event of Default shall have occurred.
DEFAULT. Each of the following shall constitute an Event of Default under this Agreement:
Payment Default. Borrower fails to make any payment when due under the Loan.
Other Defaults. Borrower fails to comply with or to perform any other term, obligation, covenant or condition contained in this Agreement or in any of the Related Documents or to comply with or to perform any term, obligation, covenant or condition contained in any other agreement between Lender and Borrower.
Default in Favor of Third Parties. Borrower or any Grantor defaults under any loan, extension of credit, security agreement, purchase or sales agreement, or any other agreement, in favor of any other creditor or person that may materially affect any of Borrower's or any Grantor's property or Borrower's or any Grantor's ability to repay the Loans or perform their respective obligations under this Agreement or any of the Related Documents.
False Statements. Any warranty, representation or statement made or furnished to Lender by Borrower or on Borrower's behalf under this Agreement or the Related Documents is false or misleading in any material respect, either now or at the time made or furnished or becomes false or misleading at any time thereafter.
Insolvency. The dissolution or termination of Borrower's existence as a going business, the insolvency of Borrower, the appointment of a receiver for any part of Borrower's property, any assignment for the benefit of creditors, any type of creditor workout, or the commencement of any proceeding under any bankruptcy or insolvency laws by or against Borrower.
Defective Collateralization. This Agreement or any of the Related Documents ceases to be in full force and effect (including failure of any collateral document to create a valid and perfected security interest or lien) at any time and for any reason.
Creditor or Forfeiture Proceedings. Commencement of foreclosure or forfeiture proceedings, whether by judicial proceeding, self-help, repossession or any other method, by any creditor of Borrower or by any governmental agency against any collateral securing the Loan. This includes a garnishment of any of Borrower's accounts, including deposit accounts, with Lender. However, this Event of Default shall not apply if there is a good faith dispute by Borrower as to the validity or reasonableness of the claim which is the basis of the creditor or forfeiture proceeding and if Borrower gives Lender written notice of the creditor or forfeiture proceeding and deposits with Lender monies or a surety bond for the creditor or forfeiture proceeding, in an amount determined by Lender, in its sole discretion, as being an adequate reserve or bond for the dispute.
Events Affecting Guarantor. Any of the preceding events occurs with respect to any Guarantor of any of the Indebtedness or any Guarantor dies or becomes incompetent, or revokes or disputes the validity of, or liability under, any Guaranty of the Indebtedness.
Change in Ownership. Any change in ownership of twenty-five percent (25%) or more of the common stock of Borrower.
Adverse Change. A material adverse change occurs in Borrower's financial condition, or Lender believes the prospect of payment or performance of the Loan is impaired.
Insecurity. Lender in good faith believes itself insecure.
EFFECT OF AN EVENT OF DEFAULT. If any Event of Default shall occur, except where otherwise provided in this Agreement or the Related Documents, all commitments and obligations of Lender under this Agreement or the Related Documents or any other agreement immediately will terminate (including any obligation to make further Loan Advances or disbursements), and, at Lender's option, all Indebtedness immediately will become due and payable, all without notice of any kind to Borrower, except that in the case of an Event of Default of the type described in the "Insolvency" subsection above, such acceleration shall be automatic and not optional. In addition, Lender shall have all the rights and remedies provided in the Related Documents or available at law, in equity, or otherwise. Except as may be prohibited by applicable law, all of Lender's rights and remedies shall be cumulative and may be exercised singularly or concurrently. Election by Lender to pursue any remedy shall not exclude pursuit of any other remedy, and an election to make expenditures or to take action to perform an obligation of Borrower or of any Grantor shall not affect Lender's right to declare a default and to exercise its rights and remedies.
EMPLOYMENT CONDITION. The business will employ one full-time equivalent employee for each $35,000.00 borrowed or fraction thereof. Borrower will provide Lender with annual verification of the number of employees.
SITE VISIT. Lender will perform site inspections annually or as scheduled periodically with Borrower.
DISBURSEMENT AND ADVANCE PERIOD. Loan funds must be disbursed within 10 days of signing the Note.
CITY OF FORTUNA PROVISION. City of Fortuna must review financial statements 180 days after closing to approve amortization of outstanding of balance over 60 months.
MISCELLANEOUS PROVISIONS. The following miscellaneous provisions are a part of this Agreement:
Amendments. This Agreement, together with any Related Documents, constitutes the entire understanding and agreement of the parties as to the matters set forth in this Agreement. No alteration of or amendment to this Agreement shall be effective unless given in writing and signed by the party or parties sought to be charged or bound by the alteration or amendment.
Attorneys' Fees; Expenses. Borrower agrees to pay upon demand all of Lender's costs and expenses, including Lender's attorneys' fees and Lender'slegal expenses, incurred in connection with the enforcement of this Agreement. Lender may hire or pay someone else to help enforce this Agreement, and Borrower shall pay the costs and expenses of such enforcement. Costs and expenses include Lender's attorneys' fees and legal expenses whether or not there is a lawsuit, including attorneys' fees and legal expenses for bankruptcy proceedings (including efforts to modify or vacate any automatic stay or injunction), appeals, and any anticipated post-judgment collection services. Borrower also shall pay all court costs and such additional fees as may be directed by the court.
Caption Headings. Caption headings in this Agreement are for convenience purposes only and are not to be used to interpret or define the provisions of this Agreement.
Consent to Loan Participation. Borrower agrees and consents to Lender's sale or transfer, whether now or later, of one or more participation interests in the Loan to one or more purchasers, whether related or unrelated to Lender. Lender may provide, without any limitation whatsoever, to any one or more purchasers, or potential purchasers, any information or knowledge Lender may have about Borrower or about any other matter relating to the Loan, and Borrower hereby waives any rights to privacy Borrower may have with respect to such matters. Borrower additionally waives any and all notices of sale of participation interests, as well as all notices of any repurchase of such participation interests. Borrower also agrees that the purchasers of any such participation interests will be considered as the absolute owners of such interests in the Loan and will have all the rights granted under the participation agreement or agreements governing the sale of such participation interests.
Borrower further waives all rights of offset or counterclaim that it may have now or later against Lender or against any purchaser of such a participation interest and unconditionally agrees that either Lender or such purchaser may enforce Borrower's obligation under the Loan irrespective of the failure or insolvency of any holder of any interest in the Loan. Borrower further agrees that the purchaser of any such participation interests may enforce its interests irrespective of any personal claims or defenses that Borrower may have against Lender.
Governing Law. This Agreement will be governed by federal law applicable to Lender and, to the extent not preempted by federal law, the laws of the State of California without regard to its conflicts of law provisions. This Agreement has been accepted by Lender in the State of California.
Choice of Venue. If there is a lawsuit, Borrower agrees upon Lender's request to submit to the jurisdiction of the courts of HUMBOLDT County, State of California.
No Waiver by Lender. Lender shall not be deemed to have waived any rights under this Agreement unless such waiver is given in writing and signed by Lender. No delay or omission on the part of Lender in exercising any right shall operate as a waiver of such right or any other right. A waiver by Lender of a provision of this Agreement shall not prejudice or constitute a waiver of Lender's right otherwise to demand strict compliance with that provision or any other provision of this Agreement.
No prior waiver by Lender, nor any course of dealing between Lender and Borrower, or between Lender and any Grantor, shall constitute a waiver of any of Lender's rights or of any of Borrower's or any Grantor's obligations as to any future transactions. Whenever the consent of Lender is required under this Agreement, the granting of such consent by Lender in any instance shall not constitute continuing consent to subsequent instances where such consent is required and in all cases such consent may be granted or withheld in the sole discretion of Lender.
Notices. Any notice required to be given under this Agreement shall be given in writing, and shall be effective when actually delivered, when actually received by telefacsimile (unless otherwise required by law), when deposited with a nationally recognized overnight courier, or, if mailed, when deposited in the United States mail, as first class, certified or registered mail postage prepaid, directed to the addresses shown near the beginning of this Agreement. Any party may change its address for notices under this Agreement by giving formal written notice to the other parties, specifying that the purpose of the notice is to change the party's address. For notice purposes, Borrower agrees to keep Lender informed at all times of Borrower's current address. Unless otherwise provided or required by law, if there is more than one Borrower, any notice given by Lender to any Borrower is deemed to be notice given to all Borrowers.
Severability. If a court of competent jurisdiction finds any provision of this Agreement to be illegal, invalid, or unenforceable as to any circumstance, that finding shall not make the offending provision illegal, invalid, or unenforceable as to any other circumstance. If feasible, the offending provision shall be considered modified so that it becomes legal, valid and enforceable. If the offending provision cannot be so modified, it shall be considered deleted from this Agreement. Unless otherwise required by law, the illegality, invalidity, or unenforceability of any provision of this Agreement shall not affect the legality, validity or enforceability of any other provision of this Agreement.
Subsidiaries and Affiliates of Borrower. To the extent the context of any provisions of this Agreement makes it appropriate, including without limitation any representation, warranty or covenant, the word "Borrower" as used in this Agreement shall include all of Borrower's subsidiaries and affiliates. Notwithstanding the foregoing however, under no circumstances shall this Agreement be construed to require Lender to make any Loan or other financial accommodation to any of Borrower's subsidiaries or affiliates.
Successors and Assigns. All covenants and agreements by or on behalf of Borrower contained in this Agreement or any Related Documents shall bind Borrower's successors and assigns and shall inure to the benefit of Lender and its successors and assigns. Borrower shall not, however, have the right to assign Borrower's rights under this Agreement or any interest therein, without the prior written consent of Lender.
Survival of Representations and Warranties. Borrower understands and agrees that in making the Loan, Lender is relying on all representations, warranties, and covenants made by Borrower in this Agreement or in any certificate or other instrument delivered by Borrower to Lender under this Agreement or the Related Documents. Borrower further agrees that regardless of any investigation made by Lender, all such representations, warranties and covenants will survive the making of the Loan and delivery to Lender of the Related Documents,shall be continuing in nature, and shallremain in full force and effect until such time as Borrower's Indebtedness shall be paid in full, or until this Agreement shall be terminated in the manner provided above, whichever is the last to occur.
Time is of the Essence. Time is of the essence in the performance of this Agreement.
DEFINITIONS. The following capitalized words and terms shall have the following meanings when used in this Agreement. Unless specifically stated to the contrary, all references to dollar amounts shall mean amounts in lawful money of the United States of America. Words and terms used in the singular shall include the plural, and the plural shall include the singular, as the context may require. Words and terms not otherwise defined in this Agreement shall have the meanings attributed to such terms in the Uniform Commercial Code. Accounting words and terms not otherwise defined in this Agreement shall have the meanings assigned to them in accordance with generally accepted accounting principles as in effect on the date of this Agreement:
Advance. The word "Advance" means a disbursement of Loan funds made, or to be made, to Borrower or on Borrower's behalf on a line of credit or multiple advance basis under the terms and conditions of this Agreement.
Agreement. The word "Agreement" means this Business Loan Agreement, as this Business Loan Agreement may be amended or modified from time to time, together with all exhibits and schedules attached to this Business Loan Agreement from time to time.
Borrower. The word "Borrower" means Borrower Name and includes all co-signers and co-makers signing the Note and all their successors and assigns.
Collateral. The word "Collateral" means all property and assets granted as collateral security for a Loan, whether real or personal property, whether granted directly or indirectly, whether granted now or in the future, and whether granted in the form of a security interest, mortgage, collateral mortgage, deed of trust, assignment, pledge, crop pledge, chattel mortgage, collateral chattel mortgage, chattel trust, factor's lien, equipment trust, conditional sale, trust receipt, lien, charge, lien or title retention contract, lease or consignment intended as a security device, or any other security or lien interest whatsoever, whether created by law, contract, or otherwise.
Environmental Laws. The words "Environmental Laws" mean any and all state, federal and local statutes, regulations and ordinances relating to the protection of human health or the environment, including without limitation the Comprehensive Environmental Response, Compensation, and Liability Act of 1980, as amended, 42 U.S.C. Section 9601, et seq. ("CERCLA"), the Superfund Amendments and Reauthorization Act of 1986, Pub. L. No. 99-499 ("SARA"), the Hazardous Materials Transportation Act, 49 U.S.C. Section 1801, et seq., the Resource Conservation and Recovery Act, 42 U.S.C. Section 6901, et seq., Chapters 6.5 through 7.7 of Division 20 of the California Health and Safety Code, Section 25100, et seq., or other applicable state or federal laws, rules, or regulations adopted pursuant thereto.
Event of Default. The words "Event of Default" mean any of the events of default set forth in this Agreement in the default section of this Agreement.
GAAP. The word "GAAP" means generally accepted accounting principles.
Grantor. The word "Grantor" means each and all of the persons or entities granting a Security Interest in any Collateral for the Loan, including without limitation all Borrowers granting such a Security Interest.
Guarantor. The word "Guarantor" means any guarantor, surety, or accommodation party of any or all of the Loan.
Guaranty. The word "Guaranty" means the guaranty from Guarantor to Lender, including without limitation a guaranty of all or part of the Note.
Hazardous Substances. The words "Hazardous Substances" mean materials that, because of their quantity, concentration or physical, chemical or infectious characteristics, may cause or pose a present or potential hazard to human health or the environment when improperly used, treated, stored, disposed of, generated, manufactured, transported or otherwise handled. The words "Hazardous Substances" are used in their very broadest sense and include without limitation any and all hazardous or toxic substances, materials or waste as defined by or listed under the Environmental Laws. The term "Hazardous Substances" also includes, without limitation, petroleum and petroleum by-products or any fraction thereof and asbestos.
Indebtedness. The word "Indebtedness" means the indebtedness evidenced by the Note or Related Documents, including all principal and interest together with all other indebtedness and costs and expenses for which Borrower is responsible under this Agreement or under any of the Related Documents.
Lender. The word "Lender" means The City of Fortuna, its successors and assigns.
Loan. The word "Loan" means any and all loans and financial accommodations from Lender to Borrower whether now or hereafter existing, and however evidenced, including without limitation those loans and financial accommodations described herein or described on any exhibit or schedule attached to this Agreement from time to time.
Note. The word "Note" means the Note dated Loan Date and executed by Borrower Name in the principal amount of $Loan Amount, together with all renewals of, extensions of, modifications of, refinancings of, consolidations of, and substitutions for the note or credit agreement.
Related Documents. The words "Related Documents" mean all promissory notes, credit agreements, loan agreements, environmental agreements, guaranties, security agreements, mortgages, deeds of trust, security deeds, collateral mortgages, and all other instruments, agreements and documents, whether now or hereafter existing, executed in connection with the Loan.
Security Agreement. The words "Security Agreement" mean and include without limitation any agreements, promises, covenants, arrangements, understandings or other agreements, whether created by law, contract, or otherwise, evidencing, governing, representing, or creating a Security Interest.
Security Interest. The words "Security Interest" mean, without limitation, any and all types of collateral security, present and future, whether in the form of a lien, charge, encumbrance, mortgage, deed of trust,security deed, assignment, pledge, crop pledge, chattel mortgage, collateral chattel mortgage, chattel trust, factor's lien, equipment trust, conditional sale, trust receipt, lien or title retention contract, lease or consignment intended as a security device, or any other security or lien interest whatsoever whether created by law, contract, or otherwise. // Acknowledgement and Signature Page Follows //
BORROWER ACKNOWLEDGES HAVING READ ALL THE PROVISIONS OF THIS BUSINESS LOAN AGREEMENT AND BORROWER AGREES TO ITS TERMS. THIS BUSINESS LOAN AGREEMENT IS DATED Loan Date.
BORROWER: Borrower Name
By:
Name:
Title:
LENDER: City of Fortuna
By:
Name: Fortuna Economic Development
Corporation Servicing Agent for the City of
Fortuna
Attachment C
Lender Required
Documents
City of Fortuna, Community Development
Department
736 F Street, Fortuna CA
95521 707-822-5955
Business Credit Report: By signing below you authorize the City of Fortuna to obtain a business credit report.
Attachment C - 1
Business Loan Application
Name of Business Name of Primary Contact
Physical Business Address
Business Mailing Address(if different)
Business Phone Primary Contact Phone Primary Contact Email Federal Employer ID # Name of Insurance Company DUNS
Business Organization: Sole Proprietorship Corporation LLC Partnership Non-Profit Owner Names(s) and Information
Name Address Phone Email Ownership %
Any Affiliates or Subsidiaries? Yes No (If yes, we will request additional information later) Type of Business
Loan Amount Requested
Describe How Funds Will be Used (describe, and enter estimated amounts) Purchase Inventory Working Capital
Leasehold Improvements Purchase Equipment
Certification and Authorized Signature(s):
I hereby certify under the penalty of perjury that all the information contained in the CDBG request for funding (including all supporting documentation) is true and correct. I understand and acknowledge that making false statements on this document and any documents submitted in support of it, is a crime under federal and California state laws, which may result in criminal prosecution.
Name (Print) Signature Date
Name (Print) Signature Date
City of Fortuna, Community Development
Department
736 F Street, Fortuna CA
95521 707-822-5955
Sources
Proposed CDBG Loan
TOTAL
Uses
TOTAL
Sources and Uses
List ALL Sources of funding and all Uses of funding.
Documentation for Uses of Funds
• Provide third-party cost proposalsfor inventory and asset purchases. • Provide salary schedules, rental agreement, and accounts payable invoices.
Profit and Loss Projections
Cash Flow Projections
Projections are necessary to evaluate the loan proposal. You may use your own form, or our model spreadsheets, which may be found at https://ca-Fortuna.civicplus.com/188/Economic-Development under "How to Apply".
City of Fortuna, Community Development
Department
736 F Street, Fortuna CA
95521 707-822-5955
Business Debt Schedule
Date
Date should be the same asthe current business financialstatement Loan balances and total paymentsshould agree with the current business financialstatement
CREDITORNAME ORIGINAL
AMOUNT
ORIGINAL
DATE
CURRENT
BALANCE
RATE MATURITY
DATE
MONTHLY
PAYMENT
COLLATERAL CURRENT?
TOTAL
BALANCE
TOTAL
PAYMENTS
Name (Print) Signature Date
Name (Print) Signature Date
City of Fortuna, Community Development PFS Page 1
Department
736 F Street, Fortuna CA
95521 707-822-5955
Personal Financial Statement
Name(s) Phone Email
Residence Address
Name of Business Loan Applicant
1 Life Insurance Held Face Amount Cash Surrender Company Beneficiary 2 Stocks / Bonds # Shares Name Cost Total Value
3Real Estate List each property separately. Add attachments as needed.
Property A Property B Property C
Type
Address
Date Purchased
Original Cost
Current Market Value
Mortgage Holder Name
Mortgage Balance
Monthly Payment
Mortgage Status
4 Other Assets Type of Asset Value Pledged?
ASSETS
Cash
Savings
Retirement
Life Insurance – Surrender Value 1
Accounts/Notes Receivable
Stocks/Bonds 2
Real Estate 3
Autos
Other Assets 4
TOTAL ASSETS
LIABILITIES
Accounts Payable
Notesto Banks/Others 5
Loan on Life Insurance
Mortgages on Real Estate 3
Other Liabilities 6
TOTAL LIABILITIES
NET WORTH
736 F Street, Fortuna CA
95521
707-822-5955
Income
Salary
Net Investment Income
BusinessIncome
Other Income 1
TOTAL INCOME
Contingent Liabilities
As Endorser / Comaker
Legal Claims / Judgements
Provision for Taxes
Other Special Debt
5 Notes to Others Noteholder Name Original Balance Current Balance Payment Secured? 6 Other Liabilities Describe other liabilities below
1Other Income. Describe below
Other Business Ownership. List other businesses where you have a ≥20% interest Additional Questions. If the answer to any is yes, please attach a written explanation Have you ever declared personal bankruptcy? Yes No If Yes, provide information below Chapter Filed Date Filed Case Number Status
Dismissed Payment Plan Discharged Pending
Have you experienced foreclosure, repossession, judgement, or criminal penalty in the last 7 years? Y N Are any legal actions(claims, lawsuits, etc.) pending against you? Y N I authorize the City of Fortuna and/or its servicer to make inquiries as necessary to verify the accuracy of my statements. I certify this information and information in any attachments is true and accurate as of the stated date. The statements are made for the purpose of obtaining a loan or guaranteeing a loan. I understand false statements may result in forfeiture of benefits and possible prosecution by the U.S. Attorney General (Reference 18 U.S.C. 1001).
Print Name Signature Social Security # Date
Print Name Signature Social Security # Date
City of Fortuna, Community Development Department PFS Page 2 City of Fortuna, Community Development
Department
736 F Street, Fortuna CA
95521 707-822-5955
Borrower Name
Personal Budget Information
Income Monthly
Gross Salary:
Gross Salary:
Owner Business Draw
Rental Income
Interest/Dividend Income
Other Income:
Other Income:
TOTAL MONTHLY INCOME
Expenses Monthly
Mortgage / Rent
Auto(s)
OtherInstallment Payments
Credit Cards
Credit Line
Utilities
Insurance
Child Care
Contingent Liabilities
Other Expense:
Other Expense:
TOTAL MONTHLY EXPENSES
I/We hereby certify that the above information is valid and correct to the best of my/our knowledge.
Name (Print) Signature Date
Name (Print) Signature Date
City of Fortuna, Community Development
Department
736 F Street, Fortuna CA
95521 707-822-5955
Management Resumè
Name Date of Birth Place of Birth
Phone Email
Residence Address
From: To:
Previous Address
From: To:
Employed by US Government? Yes No Agency
US Citizen? Yes No If no, Alien Registration Number:
Education
College/Technical Training (Name/Location) Dates Major Degree/Certificate Military Service Yes No Branch: From: To:
Employment Experience
Company Name and Location:
From: To: Title
Duties:
Company Name and Location
From: To: Title
Duties:
Company Name and Location
From: To: Title
Duties:
Additional Pertinent Experience:
Signature Date
City of Fortuna, Community Development
Department
736 F Street, Fortuna CA
95521 707-822-5955
Authorization for Credit File Disclosure
I hereby authorize City of Fortuna to obtain a consumer credit and/or investigative report from Contemporary Information Corporation (CIC) on myself. I understand that such information may be derived in whole or in part from Experian, Equifax, and/or CIC.
Signature Date
Full Name (Print)
Home Address
City State Zip
Social Security # Driver’s License or ID Number Date of Birth City of Fortuna, Community Development
Department
736 F Street, Fortuna CA
95521 707-822-5955
Business Asset Schedule
Date
Please list all assets, values, and whether they are pledged as collateral for another loan Asset Estimated Value
Amount of Loan
Secured by Asset Lienholder
1 2
3 4
5 6
7 8
9 10
11 12
13 14
15 Attachment to Business Loan Application
Cash Flow Projections Model - Annual
Month 1 Month 2 Month 3 Month 4 Month 5 Month 6 Month 7 Month 8 Month 9 Month 10 Month 11 Month 12 Annualized
BEGINNING CASH
Sales
Other Income
CASH AVAILABLE $
CASH OUT
Cost of Goods Sold
Wages / Salaries
Legal/ Accounting
Ads / Promotion
Supplies
Utilities
Telephone
Taxes/ Lecenses
Insurance
Rent
Miscellaneous
Loan Payments
Owner Draws/ Salary
Other
Other
Other
Other
Other
TOTAL CASH OUT $
- $ - $
- $ - $
- $ - $ - $
- $ - $ - $
- $ - $
- $ - $
- $ - $
- $ - $
- $ - $ - $ -
- $ - $ - $ -
ENDING CASH $ - $ - $ - $ - $ - $ - $ - $ - $ - $ - $ - $ - $ - Attachment to Business Loan Application
Profit and Loss Projections Model - Annual
Sales
Other Revenue
Less Discounts
Month 1 Month 2 Month 3 Month 4 Month 5 Month 6 Month 7 Month 8 Month 9 Month 10 Month 11 Month 12 Annualized Total Income
Total COGS
$ - $ - $ - $ - $ - $ - $ - $ - $ - $ - $ - $ - $ -
$ -
Gross Profit $ - $ - $ - $ - $ - $ - $ - $ - $ - $ - $ - $ - $ - Cost of Goods Sold
Wages / Salaries
Legal/ Accounting
Ads / Promotion
Supplies
Utilities
Telephone
Taxes/ Lecenses
Insurance
Rent
Miscellaneous
Loan Payments
Owner Draws/ Salary
Other
Other
Other
Other
Other
Total Expenses $ - $ - $ - $ - $ - $ - $ - $ - $ - $ - $ - $ - $ - Net Ordinary Income $ - $ - $ - $ - $ - $ - $ - $ - $ - $ - $ - $ - $ - Other Expense
Taxes
Net After Tax $ - $ - $ - $ - $ - $ - $ - $ - $ - $ - $ - $ - $ - Attachment C - 2
Jobs Tracking Form - PROPOSED Project
Company Name Sample Business
List existing employees and proposed new positions
Job Creation Project Job Retention Income Limits Date: 6/15/2023 Name / Job Position
New, Existing, or
Retained Job
Annual
Hours Annual Wage Range
Full / Part
Time LMI Date of Hire
1 Sample Retained 2160 50% $19,801 to $33,000 Full Time Yes NA 2 Sample 2 Retained 630 50% $17,351 to $28,900 Part Time Yes NA 3 Sample 3 Retained 150 30% $0 to $26,750 Ineligible Yes NA 4 Sample 4 2600 80% Full Time No NA
5 Ineligible
6 Ineligible
7 Ineligible
8 Ineligible
9 Ineligible
10 Ineligible
11 Ineligible
12 Ineligible
13 Ineligible
14 Ineligible
15 Ineligible
16 Ineligible
17 Ineligible
18 Ineligible
19 Ineligible
20 Ineligible
21 Ineligible
22 Ineligible
23 Ineligible
24 Ineligible
25 Ineligible
26 Ineligible
27 Ineligible
28 Ineligible
29 Ineligible
30 Ineligible
Full and Part Time Positions LMJ % LMJ
Total
Employees
Total Full Time 2 1 4
Total Part Time 1 1
Grand Total Full Time 2.5 2
Rounded Per CDBG 2 1 25.00%
Attachment C - 3
COMMUNITY DEVELOPMENT BLOCK GRANT EMPLOYEE SELF CERTIFICATION Business Name Click or tap here to enter text.
The City of Fortuna is collecting the following information to participate in the U.S. Housing and Urban Development’s (HUD) Community Development Block Grant (CDBG) program which is administered by the State of California Housing and Community Development Department (HCD). To meet federal regulations, Click or tap here to enter text. is required to collect statistical data on your family income, race/ethnicity, and employment status. This information is reported to HUD and eventually used by the U.S. Congress to measure the effectiveness of the CDBG program. Your name and personal information will be kept private, and your income, race and unemployment status information only shared with the federal government anonymously.
INSTRUCTIONS: Please complete sections 1, 2, and 3, then sign and date the form certifying the information is correct.
Your information can only be accepted if the form is completed in full.
1. Show your current family income in the following table. “Family income” means income from all people living in your household.
FAMILY INCOME – Humboldt County 06-15-23
Check the number Check your family income in the same row asthe number of people in your family. of people in your
family below. 30% EL 50% L 60% 80% M
☐ 1 ☐ $0 to $17,350 ☐ $17,351 to $28,900 ☐ $28,901 to $34,680 ☐ $34,681 to $46,200 ☐ 2 ☐ $0 to $19,800 ☐ $19,801 to $33,000 ☐ $33,001 to $39,200 ☐ $39,201 to $52,800 ☐ 3 ☐ $0 to $22,300 ☐ $22,301 to $37,150 ☐ $37,151 to $44,580 ☐ $44,581 to $59,400 ☐ 4 ☐ $0 to $24,750 ☐ $24,751 to $41,250 ☐ $41,251 to $49,500 ☐ $49,501 to $65,950 ☐ 5 ☐ $0 to $26,750 ☐ $26,751 to $44,550 ☐ $44,551 to $53,460 ☐ $53,461 to $71,250 ☐ 6 ☐ $0 to $28,750 ☐ $28,751 to $47,850 ☐ $47,851 to $57,420 ☐ $57,421 to $76,550 ☐ 7 ☐ $0 to $30,700 ☐ $30,701 to $51,150 ☐ $51,151 to $61,380 ☐ $61,381 to $81,800 ☐ 8 or more ☐ $0 to $32,700 ☐ $32,701 to $54,450 ☐ $54,451 to $65,340 ☐ $65,341 to $87,100
2. Check the box that most closely identifies your race. Note that federal (HUD) and state (HCD) agencies understand that the choices listed in the box below do not include all the ways that people self-identify, and that many people identify with more than one of the categories listed. Please check the box that most closely represents your identity. ☐ White ☐ American Indian / Alaskan ☐ American Indian / Alaskan Native ☐ Black / African American Native and White and African American ☐ Asian ☐ Asian and White ☐ Other Multi-Racial
☐ American Indian / Alaskan
Native
☐ Black / African American and
White
☐ Prefer Not to Answer
3. Please answer these questions:
☐ Yes ☐ No Do you consider yourself as being of Hispanic ethnicity ☐ Yes ☐ No Are you currently unemployed, or were you unemployed prior to employment with this business ☐ Yes ☐ No Are you a female head of household
☐ Yes ☐ No Does your employer provide healthcare for your position What is your job position Click or tap here to enter text.
I certify that the information provided above is correct to the best of my knowledge.
Click or tap here to enter text.
Click or tap
here to enter
text.
Printed Name Signature Date
$0
Date of
Borrower's
Project Cost
Description of Eligible CDBG Project Cost Amount
Date of
Lender's
Check
CDBG FUNDING DISBURSEMENTS FOR ECONOMIC DEVELOPMENT
PROJECT WITH CDBG FUNDING
Date of
CDBG
Reimb.
Attachment C - 4
Date of Loan Application:
ACTUAL CDBG DISBURSEMENTS Date of Loan Approval:
Date of NEPA Competion:
Total Loan
I hereby certify under the penalty of perjury that all the information contained in this form (including all supportive documentation) is true and correct. I understand and acknowledge that making false statement on this certification, including any documents submitted in support of it, may repayment of loan funds.
Signature of Business Owner: Date:
Signature of Jurisdition Staff: Date:
Enter Name and Title
Attachment C - 5
BORROWER CERTIFICATION OF NO CONFLICT OF INTEREST
IN RECEIVING COMMUNITY DEVELOPMENT BLOCK GRANT (CDBG)
City of Fortuna, hereafter called Grantee, will use federal CDBG funds to provide financial assistance to eligible program participants, hereafter called Participants. These CDBG funds are administered by the State Department of Housing and Community Development hereafter called Department. As part of receiving CDBG funds from the Department, the Grantee is required to ensure there is no conflict of interest created when using these funds on eligible CDBG activities. As such, all Participants must certify that no conflict of interest has been created.
State Conflict of Interest: Pursuant to California Government Code 87100, et seq. CDBG financial assistance is not available if there is a conflict of interest. Any person / business loan participant that is an employee of the Grantee, an elected official, or consultant involved in administering a business assistance activity would not be eligible to receive CDBG funds due to a conflict of interest. If there is a real or perceived conflict of interest, the Grantee must have a legal determination that will be placed in the Participant’s file.
Federal Conflict of Interest: Pursuant to the Code of Federal Regulations, Section 24 CFR 570.489 (h) a conflict of interest is not allowed when using CDBG funds as follows:
Conflicts prohibited. Except for eligible administrative or personnel costs, the general rule is that no persons described in paragraph (h)(3) of this section who exercise or have exercised any functions or responsibilities with respect to CDBG activities assisted under this subpart or who are in a position to participate in a decision-making process or gain inside information with regard to such activities, may obtain a financial interest or benefit from the activity, or have an interest or benefit from the activity, or have an interest in any contract, subcontract or agreement with respect thereto, or the proceeds thereunder, either for themselves or those with whom they have family or business ties, during their tenure or for one year thereafter.
Persons covered. The conflict of interest provisions for paragraph (h)(2) of this section apply to any person who is an employee, agent, consultant, officer, elected official or appointed official of the state, or of a unit of general local government, or of any designated public agencies, or subrecipients which are receiving CDBG funds.
If there is a real or perceived conflict of interest relative to the federal language above, the Grantee must submit a request to the Department for an exception to the Conflict of Interest determination. The Department will render a written decision that will be placed in the Participant’s file.
By signing below, I certify that no conflict of interest, as prohibited by California Government Code Section 87100 et seq. and/or by the Code of Federal Regulations Section 24 CFR 489 (h), is created.
Signature of Borrower Date
Enter Name and Title
Signature of Borrower Date
Enter Name and Title
Attachment C - 6
BORROWER'S CERTIFICATION CONCERNING NO JOB PRIATING
IN CONNECTION WITH COMMUNITY DEVELOPMENT BLOCK GRANT (CDBG)
ECONOMIC DEVELOPMENT (ED) FINANCING
City of Fortuna use federal CDBG economic development funds to make loans to eligible projects. These federal funds are available from local program income funds or from grant contracts issued by the State Department of Housing and Community Development. These CDBG ED loans are not eligible if their use supports job pirating. Job pirating is not allowed under 24 CFR 570.482(f) of federal regulations. CDBG ED activities trigger this prohibition of funds as follows:
1. Statement of Job Pirating Provisions:
Use of CDBG funds, to assist directly, the relocation of any industrial or commercial plant, facility or operations, from one labor market area to another labor market area. ☐ Yes ☐ No
If yes, what is the total number of jobs to be relocated: Click or tap here to enter text..
2. Certification of no Job Pirating:
Will a significant loss of jobs take place due to the relocation of the business operations (Definition of significant is 25 or more full time positions.). ☐ Yes ☐ No
If yes, CDBG assistance is prohibited.
If no, business certifies that neither it nor any of its subsidiaries has plans to relocate jobs, as of the date of the CDBG loan agreement.
3. Consequences of Job Pirating Violation:
Use of CDBG funds, to assist directly, the relocation of any industrial or commercial plant, facility or operations, from one labor market area to another labor market area will result in the repayment of all CDBG funding invested in the project.
I hereby certify under the penalty of perjury that all the information contained in the CDBG request for funding (including all supporting documentation) is true and correct. I understand and acknowledge that making false statement on this certification, including any documents submitted in support of it, is a crime under federal and California state laws, which may result in criminal prosecution.
Signature of Borrower Date
Enter Name and Title
Signature of Borrower Date
Attachment C - 7
BORROWER'S CERTIFICATION OF COMPLIANCE WITH FEDERAL OVERLAYS
RELATED TO COMMUNITY DEVELOPMENT BLOCK GRANT (CDBG)
ECONOMIC DEVELOPMENT (ED) FINANCING
City of Fortuna, hereafter referred to as Responsible Entity (RE), is being requested to use federal CDBG ED funds for a project located at: Click or tap here to enter text., Fortuna, CA 95521. The RE received a CDBG application for funding from the Business Assistance (BA) loan applicant on Click or tap here to enter text..
There are three (3) significant federal overlay laws that must be adhered to as part of receiving CDBG ED BA funding: 1) federal environmental regulations; 2) federal relocation and real property acquisition laws; and 3) federal prevailing wage laws. All projects proposing to use CDBG federal funding must be documented as being in compliance with these laws.
ENVIRONMENTAL REVIEW: To be in compliance with federal environmental review law, National Environmental Policy Act (NEPA), an Environmental Review Record (ERR) must be completed and executed by the RE prior to awarding the project any CDBG funds. The ERR must also be completed prior to any additional work being done on the project after the date of application submittal, as shown above.
Any site work or legal agreements associated with the project, after the date of the CDBG application, could trigger a “choice limiting” action under NEPA regulations. Such an action will prohibit the RE from awarding CDBG funds to the project. Specific choice limiting actions to be avoided by the applicant after BA application date are: 1) signing any contracts for any work on the project; 2) signing any real property purchase agreements or leases; 3) conducting any construction / maintenance work at the site.
Loan applicant does hereby acknowledge and certify that there is and will be no choice limiting actions taking place at the site until the RE has completed an ERR for the project.
Applicant agrees to disclose the existing conditions of the project and will not proceed with any development work until such time as the RE has provided written permission to do so.
1. Statement of Project’s Site Control.
Full site control, i.e. fee simple interest ownership of the property or executed lease agreement, was in place prior to BA loan application submittal date. ☐ Yes ☐ No
If no, what is proposed date will site control to be in place: Click or tap here to enter text..
2. Statement of Project’s Construction Status.
Construction was started on the project prior to BA loan application submittal date stated above.
☐ Yes ☐ No
If yes, construction must stop at the date of application, or CDBG is prohibited.
If no, business certifies NO construction contracts will be executed and no work at the site will start until RE provides written approval.
3. Consequences of Choice Limiting Action.
Any changes which trigger NEPA violation will force the RE to cancel the application.
RELOCATION AND ACQUISITION REVIEW: To be in compliance with federal acquisition and relocation law, the RE must verify that no “persons” have been displaced because of the use of CDBG funding AND that if CDBG funds are being used, in whole or in part to acquire real property, that federal laws are being complied with prior to award of funds.
Projects using CDBG funding for acquisition of real property are required to provide the seller with a proper disclosure of no use of eminent domain as part of the transaction.
Projects using CDBG funding that cause a person (resident of a housing unit, business or non-profit) to move as a direct result of the project’s activity must follow federal relocation process and provide those affected persons with permanent relocation benefits.
1. Statement of Project’s Use of Funds for Acquisition.
CDBG funds are being used to assist in purchase of real property. ☐ Yes ☐ No
If yes, what date was seller provided Acquisition Notice? Click or tap here to enter text.
2. Statement of Project’s Relocation Compliance.
Persons were or will be displaced because of the proposed CDBG funding project activity / scope of work.
☐ Yes ☐ No
If yes, RE must evaluate relocation benefits required for the project to move forward and disclose the costs of the relocation to the BA applicant.
If no, business certifies NO persons are displaced by the project.
3. Consequences of Non-Compliance with Relocation or Acquisition Laws.
Any misrepresentations that result in these federal laws being triggered will force the RE to cancel the application.
Loan applicant does hereby acknowledge and certify that there will be no relocation of persons taking place at the site until the RE has completed its review and analysis of any required relocation benefits. Applicant agrees to disclose the existing conditions of the project and will not proceed with any property purchase or development work until such time as the RE has provided written permission to do so.
FEDERAL PREVAILING WAGE REVIEW: To be in compliance with federal prevailing wage laws (Davis Bacon and associated legislation), the RE must verify that no CDBG funds are being utilized for project construction costs. If any CDBG funds are used for construction, then RE must ensure federal prevailing wage rates will be paid by contractors. These wages will increase the project’s costs.
1. Statement of Project’s Use of Funds for Construction.
CDBG funds will pay for project construction costs.
☐ Yes ☐ No
If yes, what date was RE labor standards monitoring certification submitted to the Department? Click or tap here to enter text..
If no, federal prevailing wage compliance is not required.
2. Consequences of Non-Compliance with Davis Bacon and Related Acts.
Any misrepresentations that result in these federal laws being triggered can require the RE to pay wage compensation to workers doing the construction.
Loan applicant does hereby acknowledge and certify that there will be no signing of construction contracts for any work taking place at the project site until the RE has completed its review and analysis of required labor standards compliance. Applicant agrees to disclose the existing conditions of the project and will not proceed with any property development work until such time as the RE has provided written permission to do so.
I hereby certify under the penalty of perjury that all the information contained in the CDBG request for funding (including all supporting documentation) is true and correct. I understand and acknowledge that making false statement on this certification, including any documents submitted in support of it, is a crime under federal and California state laws, which may result in criminal prosecution.
Signature of Borrower Date
Enter Name and Title
Signature of Borrower Date
Enter Name and Title
Attachment D
Lender Adopted Business Loan
Servicing Policies
Attachment D
Administrative Contractor Contact
Company: Fortuna Economic Development Corporation Address:
100 Ericson Court, Suite 100, Fortuna CA 95521
Phone Number: 707-822-4616
Adopted Business Loan Servicing Guidelines
A complete loan file shall be maintained for each applicant and each approved loan. The file shall contain all legal documents, including loan documents, collateral documents, and insurance. The file shall also contain the day-to day administrative records of the loan, financial statements and loan report, and all documentation required for CDBG compliance. Administrative Contractor shall maintain records of all borrower reporting and loan monitoring requirements.
File: At a minimum the file shall include:
A. Note
B. Loan Agreement, including Non-Financial Employment Plan C. Mortgage
D. General Security Agreement
E. Personal Guaranty
F. Corporate Guaranty
G. Subordination Agreement
H. Hazard Insurance Policy and Assignment, and renewals I. Documentation of National Objective and Public Benefit (TIG, job creation, slums and blight) J. Project Sources and Uses
K. NEPA and other Federal Overlay requirements
L. Loan Underwriting
M. Application form,
N. Businessfinancial statements and/or tax returns
O. Personal financial statements and/or tax returns
P. Credit report
Q. Resume of principals
R. Release of information form
S. Collateral review
T. Loan Committee Report
U. Disbursements (copies of all requests and actual disbursements) V. Current financial statements as they are collected.
Borrower Reporting: On a regular basis, the loan recipient shall provide the AC with the following information:
A. Quarterly and annual profit and loss statements within 60 days of the close of the quarter B. Annual balance sheet within 60 days of the close of calendar or fiscal year C. Summary of any substantial changes in the business operation D. Proof of fire and liability insurance
E. Proof of all business taxes paid on a current basis
F. Annual copies of personal and business tax returns
G. Current number of employees on a quarterly basis
H. Other documents which may be relevant to the financial viability of the RLF loan.
The AC will monitor and analyze the financial reports and discuss trends and changes in financial conditions with the loan recipient. If at any time during the term of a loan it is discovered that a business is willfully out of compliance with any of the conditions of the loan, the AC shall meet and make arrangements with the Borrowers to come into compliance. If the Borrower refuses to meet or arrangements cannot be mutually agreed upon which will make the loan in compliance, the entire outstanding loan balances shall become due and payable within ninety (90) days of the discovery and written notification by the AC of noncompliance. Loans will also become due and payable if the business receiving the loan moves from the City. Negotiating arrangements may be made on a case-by-case basis after review by the City’s Community Development Director.
Quarterly Reports: A quarterly RLF report for each loan and the loan portfolio as a whole shall be submitted to the City within 15 days of the end of each quarter. The monthly receipts from the lender on each loan will serve as the basis for this report. The AC shall be responsible for preparation of this report. The report will be used by the AC and City to monitor the loans and identify problems. A separate report is to be submitted for each source of funds in the RLF portfolio. The report shall be submitted on forms provided by the City and shall contain a quarterly summary of the beginning loan balances, principal and interest recaptured during the quarter, disbursements made during the quarter. The quarterly report shall also include the last payment date and loan balance. Delinquent loans shall be identified and a narrative summary of actions to date to collect delinquent loans shall be included.
Loan Status Report: Annually, or more often as needed or requested, AC shall provide City Staff with a summary of the Borrower Reporting requirements outlined in Section 8.3 of this policy.
This status report for each project includes the dates for receipt of financial statements, employment information, review dates, insurance renewal, and other key dates.
Employment Report: Quarterly, during the hiring/expansion period of each loan, AC shall provide to City Staff a report on each project detailing the jobs created/retained, and those hired that meet the targeted income group criteria. The hiring/expansion phase of the loan typically is the first 24 months, but will be specified in the Loan Agreement.
Business Agenda Item 5b
STAFF REPORT
Business Agenda Item
DATE: October 5, 2026
TO: Honorable Mayor and City Council
FROM: Kaylyn Stainbrook, Parks & Recreation Director
SUBJECT: Public Hearing for Unmet Transit Needs
STAFF RECOMMENDATION:
Hold a public hearing on unmet transit needs in collaboration with the Humboldt County Association of Governments.
EXECUTIVE SUMMARY:
Humboldt County Association of Governments (HCAOG) is a Joint Powers Agency composed of the County of Humboldt and Cities of Fortuna, Arcata, Blue Lake, Eureka, Ferndale, and Rio Dell. HCAOG is responsible for allocating specific public funds for transportation improvements.
Each year, HCAOG evaluates the adequacy of local transportation services by asking local agencies to conduct public hearings on unmet transit needs. HCAOG’s Social Services Transportation Advisory Council (SSTAC) then evaluates the public comments and other input received. If the SSTAC determines that an identified need meets the applicable criteria, HCAOG must allocate funding to address that unmet transit need before allocating eligible funds to other local non-transit projects, such as street and road projects. If no unmet transit needs meet the criteria, agencies may use excess funds for allowable nontransit purposes.
Attached is HCAOG’s synopsis of the Unmet Transit Needs Assessment, including the complete assessment process and criteria.
Fortuna Transit, the City of Fortuna’s curb-to-curb paratransit service, currently serves city residents who are age 50 or older or have a disability. Pre-scheduled rides are available Monday through Thursday from 8:30 a.m. to 4:00 p.m., subject to availability. Fortuna Transit staff are working closely with the Humboldt Transit Authority, RideCo, and the Customer Elation Answering Service to expand service to the general public by the end of fall 2026.
In addition to operating Fortuna Transit, the City of Fortuna compensates the Humboldt Transit Authority (HTA) to provide several Fortuna stops along Redwood Transit System (RTS) fixed routes.
Business Agenda Item 5b
STRATEGIC PLAN 2026-2036
This action supports the following areas of the City of Fortuna Strategic Plan 2026–2036.
CORE VALUES:
Quality of Life: Family, Nature & Neighbors
Community Connection & Care
Committed Service
PRIORITIES:
Priority 8: Youth, Recreation & Community Life
Priority 9: Building A Communication Culture & Fortuna's Voice FINANCIAL IMPACT:
The recommended action has no immediate financial impact. Any future service changes resulting from identified unmet transit needs would require separate evaluation and could be funded through fares, transit subsidies, grants, or other available revenue sources.
ALTERNATIVE TO STAFF RECOMMENDATION:
The City Council may choose not to hold the public hearing. If the recommended action is not approved, the City may not provide residents with a local opportunity to identify unmet transit needs for consideration through HCAOG’s annual assessment process. Public input may therefore not be included in HCAOG’s evaluation, potentially limiting the City’s ability to document qualifying unmet transit needs and seek available transit funding. This alternative is not recommended.
RECOMMENDED COUNCIL ACTION:
1. Receive staff presentation and review Council questions with staff.
2. Open the Public Hearing.
3. Close the Public Hearing.
4. No further Council action is required.
ATTACHMENTS:
• HCAOG’s Synopsis: Citizen Participation Process for Transit Needs Assessment
HUMBOLDT COUNTY ASSOCIATION OF GOVERNMENTS
Regional Transportation Planning Agency
Humboldt County Local Transportation Authority
Service Authority for Freeway Emergencies
611 I Street, Suite B
Eureka, CA 95501
(707) 444-8208
www.hcaog.net
Citizen Participation Process for Transit Needs Assessment Transportation Development Act
The Humboldt County Association of Governments (HCAOG) is responsible for allocating Transportation Development Act (TDA) funds within the region. The TDA provides two major sources of funding, Local Transportation Funds (LTF) derived from a ¼ cent of the general sales tax and State Transportation Assistance Funds (STAF) derived from a tax on diesel fuel. Together, these TDA funds are a revenue source for public transit in Humboldt County. The “Unmet Transit Needs” process is carried out annually to identify and evaluate the adequacy of existing public transportation services.
HCAOG is required to assess transit needs prior to allocating LTF money for non-transit purposes, while STAF is programmed to public transit agencies.
Each jurisdiction has its own LTF account. The Cities of Arcata, Eureka and Fortuna use the entirety of their LTF allocation for transit purposes and the County of Humboldt increasingly uses all or almost all of its LTF for transit. The City of Rio Dell, Blue Lake, and Trinidad typically have funds remaining after paying their share for eligible transit uses. In these cases, the TDA allows LTF to be applied to local streets and roads budgets, including pedestrian and bicycle projects. The City of Ferndale claims its whole LTF allocation for its streets and roads maintenance.
Public Process to Make a Finding
HCAOG’s Social Services Transportation Advisory Council (SSTAC) leads the process.
One required hearing is held at the HCAOG Board, and other jurisdictions may hold hearings as well. Comments are solicited through an online survey, ads, and information sharing between organizations serving people who rely on transit. The SSTAC considers all public testimony and input, determines if the suggestions meet the adopted definition of an unmet transit need and applies adopted criteria to determine if the need is “reasonable to meet”. Public comments are accepted throughout the year and close on December 31st.
The SSTAC will consider the draft Unmet Transit Needs report and forward one of the following findings to the HCAOG Board for consideration:
(a) there are no unmet transit needs; or
(b) there are no unmet transit needs which are “reasonable to meet”; or (c) there are unmet transit needs, including those that are “reasonable to meet” Examples of Past Public Input and Findings
Unmet needs include Sunday service, Saturday night service on Redwood Transit System, and later evening service on the Eureka Transit System. These services are often found “not reasonable to meet” based on projected farebox returns and very low estimated ridership that would result in a high operating subsidy. Additionally, unmet needs must be considered financially sustainable based on there being enough money available from identified sources of funding to pay for the marginal operating cost of the service continuously for three years.
Comments received through this annual process can provide valuable feedback to transit operators. Not all operational requests can be met, but the Humboldt Transit Authority makes every effort to respond where feasible. Public comments are beneficial as a record of community need and can help to secure competitive grant-funded projects such as first-last mile mobility solutions to expand access to transit.
Opportunities for Public Comment on Unmet Transit Needs • Navigate to the project page at https://www.hcaog.net/programs-projects/publictransportation or find the survey at bit.ly/UnmetTransitNeeds • At one of the advertised public meetings;
• Written comments and/or feedback gathered from staff during direct outreach; • Comment submittals by email or telephone: [email protected] or 707-444-8208.
UNMET TRANSIT NEEDS
DEFINITION & REASONABLE TO MEET CRITERIA
Unmet transit needs are, at a minimum:
(1) Trips requested from residents who do not have access to public transportation, specialized transportation, or private transport services or resources for the purpose of traveling to medical care, shopping, social/recreational activities, education/training, and employment; or
(2) Proposed public transportation, specialized transportation, or private transport services identified in the following, but not limited to: a Transportation Development Plan, Regional Transportation Plan, Coordinated Public Transit–Human Services Transportation Plan. (3) Sufficient broad-based community support exists, meaning that persons who will likely use the service on a routine basis demonstrate support with at a minimum two requests for general public service and for disabled service.
Additionally, unmet transit needs do not include:
Improvements funded or scheduled for implementation in the next fiscal year. Minor operational improvements or changes such as bus stops, schedules, and minor route changes. Minor operational improvements are changes to service which do not affect the operating cost of the transit service either by requiring additional staff and/or additional vehicle hours of service or miles of service. Trips for primary or secondary school transportation
Sidewalk improvements or street and road needs.
Reasonable to meet criteria:
(1) To be considered “reasonable to meet”, a service must be operationally feasible and financially sustainable, as defined below:
a) The service must have adequate roadways and must be safe to operate. b) Enough money should be available from identified sources of funding to pay for the marginal operating costs of the service continuously for three years. (2) The service must be projected to meet a minimum “marginal farebox-return-ratio” of 10 percent within two years. Performance measures including estimated subsidy per passenger trip and passengers per vehicle hour of service will also be considered. For new service, ridership and farebox-return-ratio thresholds will be considered. (3) Pursuant to the requirements of TDA Statutes (Public Utilities Code Section 99401.5c, a determination of needs that are “reasonable to meet” shall not be made by comparing unmet transit needs with the need for streets and roads, for the allocation of TDA funds. (4) Once a service is determined to be "reasonable to meet" and is implemented, it can be expected that the ridership in the first 1-2 years of the new service will be less than the projected optimal ridership. Ridership should be evaluated at 6-month intervals to determine if service is meeting performance standards adopted by the transit provider, and specifically, whether the service meets a minimum 10 percent marginal fareboxreturn-ratio. If the service is being adequately promoted and fails to be within 60 percent of the identified standards after six months, 90 percent with the first year, or 100 percent within two years, the service may be cancelled and deemed "no longer reasonable to meet." An exception to this rule is when a community or group is willing to participate in sharing the ongoing cost of the new service.
Business Agenda Item 5c
STAFF REPORT
Business Agenda Item
DATE: October 5, 2026
TO: Honorable Mayor and City Council
FROM: Kaylyn Stainbrook, Parks & Recreation Director
SUBJECT: Hiring Freeze Exception for Full-Time Recreation Program Supervisor STAFF RECOMMENDATION:
Approve an exception to the current hiring freeze to allow recruitment and appointment of the Full-Time Recreation Program Supervisor position.
EXECUTIVE SUMMARY:
The Recreation Program Supervisor position will become vacant on October 9, leaving the Department without the position responsible for day-to-day supervision and coordination of its recreation workforce and programs.
The Recreation Program Supervisor is an experienced-level position that works under the general direction of the Parks and Recreation Director to plan, direct, create, promote, and conduct recreation programs with minimal guidance and substantial independent judgment.
The position directly supervises 22 predominantly part-time and seasonal employees and is responsible for their hiring, onboarding, training, evaluation, and ongoing support. Because many employees balance school, outside employment, and other obligations, maintaining adequate coverage requires continuous collection of availability, preparation of weekly schedules, and adjustment of shifts. These responsibilities require consistent supervision and cannot easily be absorbed by other staff on an intermittent basis.
The responsibilities documented for this position extend across every major recreation program and require a high level of accuracy, organization, and sustained time commitment. The Recreation Program Supervisor oversees year-round and seasonal services including public roller skating, private roller-skating parties, summer and school-break camps, Hot Shots youth basketball, men’s and women’s basketball leagues, men’s and women’s softball leagues, coed softball league, dropin activities, and plans, coordinates, and executes community events such as the Annual Spook-AThon and Annual Forest Moon Festival. Several of these programs, including Hot Shots youth basketball and adult sports leagues, are the only programs of their kind offered in the Eel River Valley. Additionally, Parks and Recreation’s Summer Fun program operates throughout the Fortuna Elementary School District’s entire summer break. School-sponsored camps have historically excluded the first and last couple of weeks of the break, creating a childcare gap that Summer Fun helps fill for local families.
Each program requires substantial advance work to create, plan, coordinate, promote, staff, and execute, followed by evaluation and cost analysis. The Supervisor develops schedules and operating materials; conducts coach and staff meetings; coordinates equipment, supplies, officials, vendors, and City-owned and external facility use. Because programs operate during evenings, Business Agenda Item 5c
weekends, holidays, and school breaks, the position also responds to after-hours callouts and timesensitive operational issues. The Supervisor additionally builds and monitors CivicRec activities; manages participant changes, refunds, payments, rosters, eligibility, waivers, incident reports, and behavioral records; and maintains detailed childcare subsidy records and supporting documentation. Errors or delays can directly affect participant eligibility, family accounts, program revenue, staffing coverage, safety compliance, facility access, and continuity of service.
Leaving this position vacant would transfer its supervisory and administrative duties—and the extensive hands-on work required to develop and deliver recreation programs—to the Parks and Recreation Director and remaining staff. This workload cannot be covered through occasional oversight; it requires continuous planning, detailed coordination, staff and coach/volunteer communication, facility scheduling, evening and weekend availability, and timely response to operational issues. At the same time, the Director is transitioning River Lodge to a new operator, moving transit to new software and opening the service to the general public, addressing the loss of an Office Assistant, and training a new Administrative Assistant. Absorbing direct supervision of 22 recreation employees, their complex coverage needs, and the daily and after-hours execution of multiple programs and events is not sustainable. Delayed recruitment would create a substantial risk of inadequate staff coverage, missed administrative and subsidy requirements, facility or scheduling conflicts, reduced program quality, delayed public communication, and interruption or cancellation of recreation services. Recruitment is necessary to maintain responsible supervision, financial and regulatory accuracy, safe operations, and reliable community service.
STRATEGIC PLAN 2026-2036:
This action supports the following area(s) of your City Council’s Strategic Plan 2026-2036:
CORE VALUES:
Quality of Life: Family, Nature & Neighbors
Community Connection & Care
Community Character
Committed Service
PRIORITIES:
Priority 1: Clarity, Culture & Capacity for Organizational Health Priority 2: Our People — Staff Retention, Pay & Succession Priority 8: Youth, Recreation & Community Life
FISCAL IMPACT:
No additional appropriation is required at this time. The Recreation Program Supervisor is an existing, budgeted position that is funded by Measure E. This request does not create a new position or increase authorized staffing levels.
ALTERNATIVES TO STAFF RECOMMENDATIONS:
Denying the exception – Not recommended. This would leave the Recreation Program Supervisor position vacant and transfer supervision of 22 recreation employees to the Parks and Recreation Director, increasing the Director’s total number of direct reports from 18 to 40.
Business Agenda Item 5c
Given the Department’s concurrent River Lodge and transit transitions, office staffing loss, and administrative training responsibilities, this approach is not sustainable. It would increase the risk of inadequate staffing, documentation errors, and reduced program quality across high-demand services such as Summer Fun, School-break camps, youth basketball, adult sports, and rollerskating programs. Depending on available planning capacity and staffing coverage, programs could be delayed, reduced, or cancelled.
RECOMMENDED COUNCIL ACTION:
1. Receive staff presentation and review Council questions
2. Open and close Public Comment
3. Motion to approve an exception to the hiring freeze for the Full-Time Recreation Program Supervisor position. Roll call vote.
Business Agenda Item 5d
STAFF REPORT
Business Agenda Item
DATE: October 5, 2026
TO: Honorable Mayor and Council Members
FROM: Amy Nilsen, City Manager
SUBJECT: Approval of River Lodge Facility Lease with the Fortuna Chamber of Commerce
STAFF RECOMMENDATION:
Approve the River Lodge Facility Lease with the Fortuna Chamber of Commerce and authorize the City Manager to execute the lease substantially in the form presented as Attachment A, subject to prior approval and execution by the Chamber Board and any minor or non-substantive revisions approved by the City Attorney.
EXECUTIVE SUMMARY:
The City Council is asked to approve a lease transferring day-to-day operation of the River Lodge Conference Center to the Fortuna Chamber of Commerce effective November 1, 2026. The proposed arrangement is intended to maintain the River Lodge as a community and event facility while shifting routine operations, customer administration, and related operating responsibilities to a local partner.
On August 17, 2026, the City Council reviewed future lease options of the River Lodge and at this meeting the Council directed staff to negotiate a lease with the Fortuna Chamber of Commerce.
Staff and the City Attorney subsequently prepared the proposed lease now presented for approval.
Under the transition plan, the Chamber will assume responsibility for existing reservations, scheduled events, customer commitments, deposits, cancellations, refunds, disputes, and deposit reconciliation beginning November 1. Existing reservations and deposits are identified in the lease under Exhibit D, and the related deposit funds will be transferred to the Chamber. This establishes a record of the obligations being transferred and supports continuity for customers with existing bookings.
The Chamber plans to interview current River Lodge employees near the end of October to determine whether it will offer employment to any of them. Some current employees may continue working at River Lodge as Chamber employees. Current City employees who are not hired by the Chamber will proceed through the City’s applicable personnel process.
The Chamber Board considered the lease on September 28, 2026. Council authorization is conditioned on prior Chamber Board approval and execution. The City Attorney prepared the proposed lease. Approval of the lease is not a project subject to the California Environmental Quality Act.
Business Agenda Item 5d
The lease allocates routine facility operations to the Chamber while retaining specified capital responsibilities with the City. Because the City does not currently have funds available for capital improvements at the River Lodge, a City-funded capital repair would require staff to return to Council for a supplemental budget appropriation before committing City funds.
CORE VALUES: STRATEGIC PLAN 2026-2036:
This action supports the City’s core values of Economic Resilience, Clear Direction, Community Connection and Care, and Committed Service. It advances Strategic Plan Priority 3, Fiscal Foundation: Revenue, Cost Accounting and Honest Commitments, including the commitment to update and act on the River Lodge decision process by evaluating full-burdened costs, communityuse value, and alternatives. The lease responds to the Compass questions of who benefits and bears the cost, whether the City has the capability and resources to sustain current operations, whether the action protects City capacity, and how affected employees and the community are impacted.
The partnership also relates to Priority 4, Economic Development to Build Fortuna’s Future, which calls for partnership with the Chamber and other economic development partners. The retained capital obligations remain an identified fiscal risk because funding is not currently available for future capital improvements.
FISCAL IMPACT:
The Chamber will assume the operating responsibilities and customer obligations assigned to it under the lease beginning November 1, 2026. Existing customer deposits will be transferred to the Chamber and itemized in Exhibit D to the lease so the deposits and corresponding reservations can be reconciled at transition.
The City will retain responsibility for the capital repairs assigned to it under the lease. The current fiscal year budget does not contain sufficient appropriations for River Lodge capital improvements. If a covered capital repair is required, staff will return to Council with the scope, funding source, and supplemental budget appropriation request before committing City funds.
Approval of the lease does not itself approve a supplemental appropriation for an unidentified future repair.
The Chamber will pay rent to the City as follows:
(a) Lease Year 1 (November 1, 2026 through October 31, 2027): $1.00; (b) Lease Year 2 (November 1, 2027 through October 31, 2028): $1.00; (c) Lease Year 3 (November 1, 2028 through October 31, 2029): $24,000; (d) Lease Year 4 (November 1, 2029 through October 31, 2030): $36,000.
ALTERNATIVES TO STAFF RECOMMENDATIONS:
An alternative to the staff’s recommendation is for Council to not approve the lease. This means the City Manager would not be authorized to execute the agreement presented as Attachment A, and the planned November 1, 2026 transition to Chamber operation would not proceed under this lease. The City would remain responsible for determining how River Lodge operations, existing customer commitments, staffing, and facility costs would be addressed. This is not recommended.
RECOMMENDED COUNCIL ACTION:
1. Receive staff presentation and review Council questions.
2. Open and close public comment.
3. Motion to approve the River Lodge Facility Lease with the Fortuna Chamber of Commerce and authorize the City Manager to execute the lease substantially in the Business Agenda Item 5d
form presented as Attachment A, subject to prior approval and execution by the Chamber Board and any minor or non-substantive revisions approved by the City Attorney. Roll call vote.
ATTACHMENTS:
• Exhibit A – River Lodge Lease
• Exhibit B - Equipment, Furniture, Fixtures, Kitchen Equipment, A/V, and Inventory • Exhibit C - Pre-Occupancy Condition Report and Photographs • Exhibit D - Existing Bookings, Deposits, Cancellations, City-Retained Event Obligations, and Transition Schedule
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FACILITY LEASE AGREEMENT
This Facility Lease Agreement (“Lease” or “Agreement”) is entered into as of November 1, 2026 (“Effective Date”), by and between the CITY OF FORTUNA, a California municipal corporation and charter city (“City” or “Landlord”), and FORTUNA CHAMBER OF COMMERCE, a California mutual benefit corporation (“Chamber” or “Tenant”). City and Chamber are sometimes referred to individually as a “Party” and collectively as the “Parties.”
RECITALS
A. City owns the land, stand-alone building, parking lot, drive aisles, sidewalks, landscaped areas, exterior areas, fixtures, equipment, and appurtenant improvements commonly known as the River Lodge Conference and Event Center, located at 1800 Riverwalk Drive, Fortuna, California 95540, as more particularly described in Exhibit A.
B. River Lodge has historically been operated as a conference, event, meeting, and community facility. City desires to preserve public ownership of River Lodge while transitioning day-today operation and management of the facility to a qualified operator in a manner that reduces the City’s operating burden, protects the public asset, preserves community and visitor-serving uses, and provides ongoing public and economic benefit.
C. Chamber desires to lease, operate, and manage the Premises as a conference and event facility and for Chamber offices, visitor-center and tourism functions, meetings, trainings, communityserving activities, economic-development activities, and related uses, subject to the terms of this Lease.
D. The Parties intend this Lease to be a robust modified triple net lease for a stand-alone building.
Chamber shall be responsible for all costs of possession, use, occupancy, operation, utilities, routine maintenance, routine repair, insurance, taxes or charges arising from Chamber’s use or possessory interest, and ordinary compliance obligations, except for Landlord Capital Repairs expressly retained by City.
E. The Parties acknowledge known concerns requiring clear allocation before occupancy, including existing event bookings, HVAC condition and service, commercial hot water heater condition, kitchen hood and fire suppression compliance, ADA/accessibility responsibility, parking lot maintenance, public trash receptacles, and deferred maintenance.
F. The Parties intend that this Lease, including any renewal or extension options included in this Lease as of the Effective Date, will remain within the applicable Surplus Land Act lease-term exclusion and will not grant Chamber any purchase option, right of first refusal, right of first offer, development right, demolition right, or other disposition right except as expressly and lawfully provided in this Lease.
G. This Lease is conditioned upon all required approvals and legal compliance steps, including City Council approval, Chamber governing board approval, CEQA compliance to the extent required, insurance approval, and satisfaction of the other conditions precedent stated in this Lease.
NOW, THEREFORE, in consideration of the covenants, conditions, agreements, rent, and mutual promises contained in this Lease, the Parties agree as follows:
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1. DEFINITIONS
1.1 Additional Rent means all sums, charges, costs, reimbursements, taxes, assessments, utilities, insurance premiums, maintenance costs, repair costs, service contract costs, penalties, interest, fees, indemnity amounts, and other monetary obligations payable by Chamber under this Lease other than Base Rent.
1.2 Base Rent means the monthly base rent payable under Section 5.
1.3 Commencement Date means November 1, 2026, or the later date on which all conditions precedent stated in this Lease are satisfied or waived in writing by the Party entitled to the benefit of the condition.
1.4 Chamber Parties means Chamber and its board members, officers, officials, employees, agents, contractors, subcontractors, consultants, volunteers, invitees, licensees, authorized users, and any person or entity entering the Premises under Chamber’s authority or for Chamber-related purposes.
1.5 Event of Default means any default described in Section 28 after expiration of any applicable notice and cure period.
1.6 Landlord Capital Repairs means the capital repairs, replacements, and structural responsibilities retained by City under Section 13.
1.7 Lease Year means each twelve-month period during the Term beginning November 1 and ending October 31 of the following calendar year, except that a partial first or last year shall be prorated.
1.8 Operating Expenses means all costs and expenses incurred in connection with the operation, use, management, maintenance, repair, service, inspection, security, utilities, and ordinary compliance obligations for the Premises, except Landlord Capital Repairs.
1.9 Premises means the real property, building, parking lot, exterior areas, and appurtenant improvements described in Section 2 and Exhibit A.
1.10 Rent means Base Rent and Additional Rent.
1.11 Term means the Initial Term and any renewal term properly exercised pursuant to Section 4.
2. LEASE OF PREMISES
2.1 Lease. City leases to Chamber, and Chamber leases from City, the Premises on the terms and conditions stated in this Lease.
2.2 Description of Premises. The Premises consist of the River Lodge Conference and Event Center located at 1800 Riverwalk Drive, Fortuna, California 95540, including the standalone building, conference rooms, offices, commercial kitchen, restrooms, storage areas, fixtures, equipment listed in Exhibit B, parking lot, drive aisles, sidewalks, walkways, exterior lighting, landscaped areas, irrigation systems, trash enclosure or receptacle areas assigned to Chamber, - 3 -
signage areas, and appurtenant improvements shown on Exhibit A, except any reserved areas expressly identified in Exhibit A.
2.3 Parking Lot Included. The parking lot is a material part of the Premises and is subject to the use, maintenance, public-access, and capital-repair provisions of this Lease.
2.4 Reserved Areas and Rights. City reserves all areas identified as reserved in Exhibit A and all rights not expressly granted to Chamber, including access for inspection, utilities, emergency response, repairs, public access areas, City-reserved events if any, and public rights or easements existing as of the Effective Date.
2.5 No Easement or Permanent Interest. This Lease creates a leasehold interest only.
It does not create a fee interest, easement, covenant running with the land, dedication, permanent access right, or other property interest in favor of Chamber or any third party except as expressly required by law.
2.6 No Merger or Transfer of Governmental Authority. Nothing in this Lease transfers City’s police power, regulatory authority, ownership discretion, legislative authority, or governmental functions to Chamber.
3. CONDITIONS PRECEDENT; DELIVERY OF POSSESSION
3.1 Conditions Precedent. Chamber shall have no right to occupy the Premises, and this Lease shall not become effective for occupancy purposes, until all of the following have occurred: (a) completion of any environmental review or determination required under CEQA in connection with City approval of this Lease; (b) City Council approval; (c) approval by the Chamber Board of Directors; (d) execution by authorized representatives of both Parties; (e) delivery and approval of insurance certificates, endorsements, or other evidence required by Exhibit H; (f) completion of the pre-occupancy inspections required by this Lease; (g) completion of the inventory and condition report; (h) Chamber’s delivery to City of the initial operating budget and financial information required by Section 30; and (i) City’s delivery of possession subject only to rights expressly reserved in this Lease.
3.2 Delivery Date. City shall use reasonable diligence to deliver possession on the Commencement Date. If City cannot deliver possession due to legal compliance, regulatory review, pending inspections, or other matters, Rent shall abate until possession is delivered, and Chamber’s sole remedy shall be delayed commencement unless the delay continues beyond the Outside Delivery Date.
3.3 Outside Delivery Date. If City has not delivered possession by December 1, 2026 (“Outside Delivery Date”), either Party may terminate this Lease by written notice before delivery occurs, in which event neither Party shall have further liability except for obligations that expressly survive termination.
3.4 Chamber Assumption of Existing Bookings. Chamber assumes liability and responsibility for all existing reservations, facility-use agreements, deposits, refunds, cancellations, event contracts, vendor commitments, representations, or third-party use rights relating to any booking or event scheduled after the Commencement Date as expressly listed in Exhibit D and expressly assumed by Chamber in writing.
3.5 City Responsibility for Existing Events. City shall remain solely responsible for all event reservations, facility-use agreements, deposits, cancellations, refunds, claims, - 4 -
chargebacks, vendor communications, and third-party rights relating to any booking or event scheduled before the Commencement Date or scheduled by City for any date after the Commencement Date, except for obligations expressly assumed by Chamber in Exhibit D.
3.6 Delivery Free of Third-Party Rights. As of the Commencement Date, City shall deliver the Premises free of third-party event rights, occupancy rights, licenses, storage rights, vendor rights, and access rights except rights expressly listed in Exhibit D or otherwise approved by Chamber in writing.
3.7 Transition Cooperation. Before the Commencement Date, the Parties shall cooperate in good faith on transition planning, including inspection scheduling, inventory, key control, access credentials, utility transfer, technology needs, security protocols, public communications, event cancellations, and records transfer relevant to facility operations.
4. TERM; RENEWAL; NONRENEWAL; EARLY TERMINATION
4.1 Initial Term. The initial Term shall commence on the Commencement Date and expire October 31, 2030, unless earlier terminated as provided in this Lease.
4.2 Renewal Options. Provided Chamber is not then in default beyond any applicable notice and cure period, Chamber shall have two successive options to renew this Lease, each for an additional period of five (5) years. The first renewal term shall commence November 1, 2030, and expire October 31, 2035. The second renewal term shall commence November 1, 2035, and expire October 31, 2040. The second renewal option may be exercised only if Chamber has timely exercised the first renewal option and the Lease remains in effect. The Initial Term and both renewal options included in this Lease total fourteen (14) years. No additional renewal, extension, option, holdover right, or continued possession right shall be implied.
4.3 Exercise of Renewal Options. Chamber must exercise each renewal option, if at all, by irrevocable written notice delivered to City not less than twelve (12) months before expiration of the then-current Term. Exercise of each renewal option shall be effective only if Chamber is not in default beyond any applicable notice and cure period both when notice is given and when the applicable renewal term commences, Chamber has maintained the insurance required by this Lease, and the extended Term remains consistent with Section 18 and applicable law.
4.4 Expiration if Renewal Option Not Exercised. If Chamber does not timely exercise an available renewal option in accordance with Section 4.3, this Lease shall expire at the end of the then-current Term without further notice. City shall have no obligation to provide a separate notice of nonrenewal or expiration.
4.5 City Termination for Superior Public Purpose. City may terminate this Lease upon not less than twelve months prior written notice if the City Council determines in open session that termination is required for a superior public purpose, emergency planning, legal compliance, public health or safety, funding restriction, grant or bond covenant, or City operational need. If City terminates under this Section while Chamber is not in default, the Parties shall meet and confer regarding orderly transition; provided, however, City shall not be liable for relocation costs, lost programs, lost funding, lost grants, lost revenue, lost opportunities, consequential damages, or reimbursement for Chamber improvements, equipment, moving, staffing, or transition costs unless expressly approved by the City Council in a separate written agreement. - 5 -
4.6 Termination for Legal Constraint. City may terminate this Lease upon written notice if City determines, in good faith and after consultation with the City Attorney, that continued performance would violate or materially risk violation of applicable law, including CEQA, land use law, building or fire code requirements, grant restrictions, deed restrictions, bond covenants, court order, or other legal obligation. City’s good-faith determination, after City Attorney consultation, shall be conclusive for purposes of this Lease. Before termination under this Section, City shall provide Chamber with a written statement of the legal constraint, shall meet and confer with Chamber in good faith, and shall allow Chamber a reasonable opportunity to propose a lawful amendment, operational change, or other cure if the legal constraint can reasonably be cured without impairing City’s legal obligations, public ownership, funding, or policy discretion. Unless a shorter period is required by law, court order, regulatory deadline, emergency, or risk to public health or safety, termination under this Section shall be effective not less than ninety days after City’s written notice. City shall not be liable for relocation costs, lost programs, lost funding, lost grants, consequential damages, or improvement reimbursement due to termination under this Section.
4.7 Termination by Mutual Agreement. The Parties may terminate this Lease at any time by written agreement approved by the governing bodies or officials whose approval is required by law.
4.8 No Automatic Extension. No renewal, extension, holdover, or continued possession shall occur except as expressly provided in this Lease and in compliance with Section
18. City’s acceptance of Rent during any holdover shall not create a renewal, extension, or new term.
5. BASE RENT; ADDITIONAL RENT; PAYMENT
5.1 Base Rent. Chamber shall pay City Base Rent as follows:
(a) Lease Year 1 (November 1, 2026 through October 31, 2027): $1.00; (b) Lease Year 2 (November 1, 2027 through October 31, 2028): $1.00; (c) Lease Year 3 (November 1, 2028 through October 31, 2029): $24,000; (d) Lease Year 4 (November 1, 2029 through October 31, 2030): $36,000.
Base Rent shall be payable monthly in one-twelfth installments of the above-recited annual amounts in advance on the first of each month, without invoice, offset, deduction, recoupment, or counterclaim except as expressly provided in this Lease.
5.2 Renewal-Term Rent Adjustment. Beginning on the first day of the first renewal term, annual Base Rent shall be increased by two and one-half percent (2.5%) over the annual Base Rent payable during the immediately preceding Lease Year.
On the first day of each Lease Year thereafter during the first and second renewal terms, annual Base Rent shall again be increased by two and one-half percent (2.5%) over the annual Base Rent payable during the immediately preceding Lease Year. Base Rent during each renewal term shall be payable in equal monthly installments in accordance with Section 5.1. The increases provided by this Section shall compound annually, and there shall be no separate fair-market-rent adjustment upon commencement of either renewal term.
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5.3 Additional Rent. Chamber shall pay all Additional Rent required by this Lease.
Unless another payment time is stated, Additional Rent is due within thirty days after City’s invoice or within the time required by the third-party payee.
5.4 Modified Triple Net Intent. The Parties intend that City receive Base Rent net of all Operating Expenses, except Landlord Capital Repairs and City-retained obligations expressly stated in this Lease.
5.5 Proration. Rent for any partial month shall be prorated on a daily basis using a thirty-day month.
5.6 Late Charge. If any Rent is not received within ten days after written notice of delinquency, Chamber shall pay a late charge equal to 10% of the delinquent amount as a reasonable estimate of City’s administrative cost, subject to any limitations applicable to public agencies.
5.7 Default Interest. Any delinquent amount shall bear interest at the lesser of ten percent per annum or the maximum rate permitted by law, from the due date until paid.
5.8 Application of Payments. City may apply payments to any Rent or other obligation then due, in any order City determines, unless prohibited by law.
5.9 No Accord and Satisfaction. Acceptance of partial payment, late payment, or payment marked as payment in full shall not constitute accord and satisfaction or waiver unless City expressly agrees in writing.
5.10 No City Operating Subsidy. Except for costs and obligations expressly assigned to City under this Lease, City shall have no obligation to subsidize or financially support Chamber’s operation of the Premises, fund operating deficits, make payroll, or reimburse Chamber for utilities, staffing, maintenance, repairs, supplies, marketing, programming, event costs, or other operating expenses.
6. INTENTIONALLY OMITTED
7. PERMITTED USE; OPERATIONS
7.1 Permitted Use. Chamber may use, operate, and manage the Premises as the River Lodge Conference and Event Center, including for weddings, receptions, conferences, meetings, trainings, banquets, community events, nonprofit events, business and corporate events, private events, public-agency events, recreational and cultural events, Chamber offices, visitor-center and tourism functions, economic-development activities, and other similar or incidental uses consistent with operation of a conference and event facility.
7.2 Ancillary Uses. Ancillary food and beverage service, catering, alcohol service, entertainment, vendor services, marketing activities, temporary displays, and similar activities are permitted to the extent consistent with this Lease and all applicable permits, licenses, insurance requirements, health and safety requirements, and laws. Chamber shall be solely responsible for obtaining any license or permit required for the sale, furnishing, or service of alcoholic beverages.
7.3 Prohibited Uses. Chamber shall not use or permit the Premises to be used for residential occupancy, overnight lodging, vehicle or fleet storage unrelated to an event, commercial cannabis activity prohibited by Fortuna Municipal Code section 17.06.120.5, adult - 7 -
entertainment, gambling except as lawfully authorized for a permitted event, unlawful activities, nuisance, waste, Hazardous Materials other than ordinary lawful quantities associated with permitted operations, or any other use materially inconsistent with operation of River Lodge as a conference, event, community, and visitor-serving facility. For avoidance of doubt, a lawful cannabis-related business is not prohibited from renting or using the Premises for an otherwise permitted event solely because of the nature of its business, provided that no commercial cannabis activity prohibited by Fortuna Municipal Code section 17.06.120.5 occurs at the Premises. Lawful advertising or sponsorship by such a business shall not be prohibited by this Section, subject to applicable law and the facility-use and signage requirements of this Lease.
7.4 No Material Change in Use. Chamber shall not materially change the character or intensity of the Premises’ use, occupancy classification, assembly load, kitchen use, traffic generation, parking demand, fire load, or code classification without City’s prior written consent and all required permits and approvals.
7.5 Continuous Operation and Staffing. Chamber shall diligently operate, manage, market, and maintain the Premises as an active conference and event facility throughout the Term and shall maintain sufficient staffing, supervision, security, janitorial service, maintenance, booking, marketing, and event coordination appropriate to its operations. Chamber shall use commercially reasonable efforts to preserve the availability of River Lodge for public, private, nonprofit, community, business, conference, wedding, and visitor-serving events.
7.6 Confidential Information and Security. Chamber shall be solely responsible for protection of Chamber records, employee records, customer and event records, payment information, confidential information, computer systems, files, and security-sensitive materials located at the Premises.
7.7 No Warranty of Suitability. City makes no warranty that the Premises are suitable for Chamber’s intended operations. Chamber shall satisfy itself regarding suitability, subject to City’s express delivery obligations and Landlord Capital Repair responsibilities.
8. PARKING LOT; EXTERIOR AREAS; PUBLIC ACCESS
8.1 Parking Lot Use. Chamber may use the parking lot for approved Chamber operations, employee parking, visitor parking, Chamber meetings, trainings, public meetings, community-serving events, and related uses. Chamber shall not use the parking lot for overnight parking, bus storage, fleet storage, equipment storage, construction staging, commercial paid parking, camping, or unrelated storage without City’s prior written consent.
8.2 Emergency and ADA Access. Chamber shall not block fire lanes, emergency access routes, accessible parking spaces, access aisles, curb ramps, accessible routes, utility access, City access, sidewalks, or public access areas reserved by City.
8.3 Routine Parking Lot Maintenance. Chamber shall maintain the parking lot and exterior areas included in the Premises in good, clean, safe, sanitary, and orderly condition.
Chamber’s routine obligations include sweeping, litter removal generated by Chamber use, ordinary signage maintenance, striping touch-up, curb marking, wheel stop maintenance, exterior lighting bulb replacement, routine landscape and irrigation maintenance in assigned areas, ADA route obstruction removal, ordinary pothole patching, crack sealing, and traffic coordination for Chamber uses.
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8.4 Parking Lot Capital Work. City shall remain responsible for major resurfacing, major reconstruction, subgrade repair, major drainage reconstruction, and capital replacement of the parking lot, except to the extent required because of Chamber’s misuse, overloading, abnormal use, alterations, failure to maintain, or acts or omissions of Chamber Parties.
8.5 Large Event Parking Plan. For large events, public meetings, or other uses reasonably expected to generate parking demand, traffic, congestion, or public-safety impacts materially greater than ordinary River Lodge operations, including any event reasonably expected to exceed available on-site parking capacity, Chamber shall provide parking management, traffic coordination, signage, security, staffing, and public-safety measures reasonably necessary to preserve emergency access and orderly operation. City may require a written parking and traffic management plan when reasonably necessary based on the anticipated attendance, parking demand, traffic conditions, or public-safety impacts of the event.
8.6 Public Parking and Access. The Parties acknowledge that portions of the exterior areas may be used by members of the public for parking, levee access, trail access, public art viewing, dog walking, or other activities unrelated to Chamber’s use of the Premises. Chamber shall not be responsible for conditions, impacts, waste, or damage arising solely from such independent public use, except to the extent caused or materially contributed to by Chamber’s operations or Chamber-authorized users. Chamber shall remain responsible for cleanup and damage caused by Chamber’s operations or Chamber-authorized users as otherwise provided in this Lease. Public use and maintenance of the levee, walking path, downslope area, and riverbank are further addressed in Sections 8.7 and 8.8..
8.7 Levee, Walking Path, and Riverbank Areas. Notwithstanding Sections 8.3, 12.1, or any other provision of this Lease, Chamber shall have no responsibility for routine maintenance, repair, mowing, vegetation management, erosion control, grading, stabilization, inspection, or other work on the levee embankment, the downslope area extending toward the Eel River, the riverbank, or the public walking-path segment identified on Exhibit A. City shall retain control over those areas and shall determine the nature, extent, and frequency of any maintenance or other work to be performed there, including any work required of City under applicable law or separate agreements with Humboldt County, the United States Army Corps of Engineers, or other governmental agencies. Chamber shall not perform or direct any work on the levee embankment, downslope area, or riverbank without City’s prior written approval. Chamber shall remain responsible for cleanup of litter, debris, or damage in such areas to the extent directly caused by Chamber’s operations, events, employees, contractors, invitees, licensees, or other Chamberauthorized user.
8.8 Limited Use; No Additional City Obligation. The levee embankment, downslope area toward the Eel River, and riverbank are not intended or represented as part of the River Lodge event-use area. Chamber shall not advertise, designate, or use those areas as part of an event, program, or other Chamber activity without City’s prior written approval. City makes no representation or warranty to Chamber regarding the suitability of those areas for Chambersponsored events or activities. Nothing in this Lease creates or enlarges any maintenance, inspection, repair, improvement, supervision, or other obligation of City to Chamber with respect to the levee, walking path, downslope area, or riverbank beyond any obligation City may otherwise have under applicable law or a separate agreement. For avoidance of doubt, Chamber is not a party to, third-party beneficiary of, or otherwise entitled to enforce any agreement, permit, easement, obligation, or arrangement between City and Humboldt County, the United States Army Corps of - 9 -
Engineers, or any other governmental entity concerning the levee, walking path, riverbank, or related areas.
8.9 Trash and Waste Generated by Chamber. Chamber shall be responsible for trash, recycling, and waste generated by Chamber’s employees, visitors, invitees, contractors, licensees, third-party users, and other Chamber-authorized users. This Section does not allocate responsibility for public-area receptacles, household dumping, dog waste, or other non-Chamber waste, and any such allocation must be addressed, if at all, outside this Lease or by written amendment approved by the Parties.
8.10 No Warranty of Parking Count. City makes no representation that the parking lot contains a particular number of spaces or is sufficient for Chamber’s intended uses. Chamber shall inspect and satisfy itself as to parking adequacy.
9. UTILITIES AND SERVICES
9.1 Chamber Responsibility. Chamber shall pay before delinquency all charges for electricity, gas, water, sewer, stormwater, telephone, internet, data service, garbage disposal, trash disposal, recycling, alarm monitoring, security service, and all other utilities and services used at or serving the Premises during the Term.
9.2 Utility Accounts. Chamber shall place utilities in Chamber’s name as of the Commencement Date to the extent permitted. If any account cannot be transferred, City may maintain the account and invoice Chamber, and Chamber shall pay the invoice as Additional Rent within thirty days.
9.3 Deposits and Service Requirements. Chamber shall pay any utility deposits, service fees, connection charges, capacity charges, or other utility-related costs arising from Chamber’s use or requested service changes.
9.4 No Warranty of Capacity. City does not warrant that existing utility capacity is sufficient for Chamber’s operations, equipment, technology, food service, events, or programs.
Chamber shall be responsible for utility upgrades required by Chamber’s specific use, subject to City approval and permits.
9.5 Interruption. City shall not be liable for utility or service interruptions unless caused by City’s gross negligence or willful misconduct. Rent shall not abate unless an interruption caused by a City-responsible condition renders substantially all of the Premises unusable for more than ten (10) consecutive days.
10. TAXES, ASSESSMENTS, FEES, AND POSSESSORY INTEREST
10.1 Chamber Payment Obligation. Chamber shall pay before delinquency all taxes, assessments, fees, charges, permit fees, inspection fees, license fees, possessory interest taxes, and other public charges assessed against, imposed upon, or arising because of Chamber’s occupancy, possession, use, operation, or leasehold interest in the Premises.
10.2 Possessory Interest Notice. Chamber acknowledges that this Lease may create a possessory interest subject to property taxation. Chamber shall be responsible for any possessory interest tax or similar charge unless exempt by law.
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10.3 Exemptions. Chamber shall be responsible for applying for any exemption Chamber believes may apply. City makes no representation that any exemption is available.
10.4 Proration. Any charge assessed for a period including time before or after the Term shall be prorated so Chamber is responsible only for the portion attributable to Chamber’s period of possession, use, or occupancy.
10.5 Contests. Chamber may contest any tax, assessment, fee, or charge in good faith if Chamber gives City prior written notice, prevents any lien foreclosure or impairment of City’s title, pays the amount under protest or posts security reasonably acceptable to City, and indemnifies City from all costs, penalties, interest, and liabilities arising from the contest.
10.6 City Excluded Taxes. Chamber shall not be responsible for taxes measured solely by City’s income or unrelated City obligations, except to the extent such taxes replace or are imposed in lieu of taxes or charges otherwise payable by Chamber under this Lease.
11. CONDITION OF PREMISES; PRE-OCCUPANCY INSPECTIONS
11.1 Inspection and Acceptance; As-Is Delivery. Chamber shall inspect the Premises before occupancy and shall satisfy itself as to the condition, suitability, code status, parking adequacy, building systems, equipment, fixtures, accessibility, and operational needs of the Premises. Except for City’s express obligations in this Lease, Chamber accepts the Premises in their then-existing, AS IS, WHERE IS, WITH ALL FAULTS condition as of the Commencement Date, subject to the pre-occupancy condition report and any punch-list obligations expressly assumed by City in writing.
11.2 Condition Report. Before the Commencement Date, the Parties shall conduct a joint inspection and prepare a written condition report with photographs identifying the condition of the building, parking lot, roof, HVAC units, hot water heater, kitchen hood, fire-suppression system, fire/life-safety systems, ADA parking and accessible routes, exterior lighting, landscaping, irrigation, trash areas, and equipment inventory.
11.3 HVAC Inspection. Before the Commencement Date, City shall obtain or allow Chamber to obtain an inspection of all HVAC units by a qualified contractor. The inspection shall identify condition, known deficiencies, maintenance recommendations, and any immediate repair needs.
11.4 Commercial Hot Water Heater. Before the Commencement Date, City shall disclose available information regarding the age, condition, service history, and replacement needs of the commercial hot water heater. Capital replacement shall be City’s responsibility unless replacement is required because of Chamber misuse, abnormal use, or failure to maintain.
11.5 Kitchen Hood and Fire Suppression. Before the Commencement Date, City shall deliver the kitchen hood and fire-suppression system in inspected, tagged, and compliant condition, or shall disclose any noncompliance in writing and specify responsibility for correction.
After the Commencement Date, Chamber shall be responsible for routine inspection, tagging, cleaning, testing, and compliance associated with Chamber’s use.
11.6 Fire and Life Safety Systems. Before the Commencement Date, City shall provide available records for fire alarm, fire suppression, fire extinguishers, emergency lighting, exit signage, and other life-safety systems. After the Commencement Date, Chamber shall be - 11 -
responsible for routine inspection, testing, monitoring, tagging, and servicing, except for Landlord Capital Repairs.
11.7 No Implied Warranty. No statement by City or City personnel regarding the condition, ADA compliance, suitability, expected life, or maintenance needs of the Premises shall modify this Lease unless included in a written amendment.
11.8 No Representation Regarding Suitability. City makes no representation or warranty, express or implied, regarding the suitability of the Premises for Chamber’s intended use, programs, staffing, confidential records, technology systems, security needs, food service, meetings, or future operational changes. Chamber’s decision to enter into this Lease is based on Chamber’s own inspections, investigations, and approvals, subject only to City’s express obligations in this Lease.
12. CHAMBER REPAIRS AND MAINTENANCE
12.1 General Obligation. Chamber shall, at its sole cost, keep the Premises, including the building interior, fixtures, equipment, sidewalks, parking lot, landscaping, exterior areas, and all portions under Chamber’s control, in good condition and repair, ordinary wear and tear excepted, except for Landlord Capital Repairs.
12.2 Routine Maintenance. Chamber’s routine maintenance obligations include janitorial and custodial service, trash and recycling service assigned to Chamber, interior painting, minor wall repair, floor care, carpet cleaning, window cleaning, pest control, interior doors and hardware, keys and access systems, light bulbs and ordinary lighting maintenance, plumbing fixtures and clogs, toilets, faucets and drains, ordinary electrical fixtures and outlets, routine kitchen equipment service, routine HVAC service, filters, belts, thermostats and service calls, fire extinguisher inspections, alarm monitoring, signage, landscaping, irrigation, and parking lot routine maintenance.
12.3 Service Contracts; Records. Chamber shall maintain preventative maintenance service contracts for HVAC, kitchen hood and fire-suppression systems, alarm/fire monitoring, commercial kitchen equipment if used, pest control, and other systems reasonably required by City. Chamber shall keep complete service records, contractor reports, inspection tags, maintenance logs, and proof of corrective action, and shall provide copies to City upon request. If City reasonably determines that Chamber’s maintenance program is inadequate to protect the Premises, City may require Chamber to submit and implement a written maintenance plan using qualified contractors reasonably acceptable to City.
12.4 Repairs Caused by Chamber. Chamber shall promptly repair, or reimburse City for the cost to repair, all damage caused by Chamber Parties, Chamber use, misuse, negligence, failure to maintain, abnormal wear, alterations, or overloading.
12.5 Maintenance Standards. All maintenance and repairs shall be performed in a good and workmanlike manner, with properly licensed contractors when required, in compliance with law, permits, manufacturer recommendations, warranty requirements, and public-facility standards.
12.6 Failure to Maintain. If Chamber fails to perform required maintenance or repairs, City may, after reasonable notice and opportunity to cure except in emergencies, perform the work and recover all costs as Additional Rent with interest at the Default Rate. - 12 -
12.7 Waiver of Repair-and-Deduct. To the fullest extent permitted for a commercial lease, Chamber waives any right to make repairs at City’s expense or deduct repair costs from Rent except as expressly provided in this Lease.
12.8 Immediate Protective Action. If Chamber’s failure to maintain, repair, secure, service, or inspect any portion of the Premises threatens deterioration of the Premises, loss of warranty, regulatory noncompliance, unsafe conditions, interruption of fire/life-safety systems, or material damage to City property, City may require immediate corrective action. In an emergency or where prompt action is reasonably necessary to protect persons, property, public funds, or City’s reversionary interest, City may perform the work without prior notice and recover all costs as Additional Rent.
13. LANDLORD CAPITAL REPAIRS
13.1 City Responsibility. City shall be responsible for Landlord Capital Repairs, except to the extent caused or materially exacerbated by Chamber Parties, Chamber use, misuse, negligence, alterations, abnormal use, overloading, or failure to perform Chamber maintenance obligations.
13.2 Included Capital Repairs. Landlord Capital Repairs include: (a) foundation; (b) structural framing; (c) structural exterior walls; (d) roof structure and roof membrane replacement; (e) major HVAC unit replacement, but not routine service, filters, belts, controls, inspections, or minor repairs; (f) major electrical service and main distribution equipment, but not lighting, outlets, switches, fixtures, or Chamber-added loads; (g) major plumbing lines outside the building envelope, but not clogs, fixtures, drains, faucets, toilets, or user-caused issues; (h) capital replacement of the commercial hot water heater, except replacement required because of Chamber misuse, abnormal use, or failure to maintain; (i) capital replacement of fire/life-safety systems, but not routine testing, monitoring, tagging, inspection, or service after the Commencement Date; (j) major parking lot resurfacing, subgrade repair, or reconstruction; and (k) pre-existing structural ADA barriers assigned to City.
13.3 Capital Repair Notice. Chamber shall promptly notify City of any condition Chamber believes constitutes a Landlord Capital Repair. City shall inspect within a reasonable time and determine responsibility under this Lease.
13.4 Performance of Capital Repairs. If City determines that work is a Landlord Capital Repair, City shall perform the work within a commercially reasonable time, subject to procurement, design, permitting, funding, emergency conditions, availability of contractors, and City Council approval if required.
13.5 Temporary Measures. If an emergency threatens imminent injury or material property damage and City cannot be reached after reasonable efforts, Chamber may take reasonable temporary measures necessary to protect persons and property. Chamber shall notify City as soon as practicable and shall not perform permanent Landlord Capital Repairs without City approval unless required by governmental order.
13.6 No Constructive Eviction. City’s performance of repairs, inspections, capital work, or compliance work shall not constitute eviction, constructive eviction, or breach if City uses reasonable efforts to minimize unnecessary interference with Chamber operations. - 13 -
13.7 Chamber-Caused Capital Work. Notwithstanding any provision assigning Landlord Capital Repairs to City, Chamber shall be responsible for the cost of any capital repair, replacement, code correction, or system failure to the extent caused or materially exacerbated by Chamber’s use, misuse, abnormal loading, alterations, failure to maintain, failure to service, failure to timely report, unauthorized work, contractors, employees, agents, invitees, licensees, event patrons, third-party users, and other Chamber-authorized users. City may require reimbursement, direct repair by Chamber, additional preventive maintenance, or reasonable operational restrictions to prevent recurrence.
14. ALTERATIONS; IMPROVEMENTS; LIENS
14.1 City Approval Required. Chamber shall not make alterations, additions, improvements, installations, penetrations, signage, technology infrastructure changes, security system changes, building system changes, or physical modifications without City’s prior written approval.
14.2 Minor Nonstructural Work. City may authorize minor nonstructural alterations below a stated dollar threshold in writing, provided the work does not affect structure, building systems, roof, exterior appearance, ADA routes, occupancy classification, fire/life-safety systems, hazardous materials, or public access.
14.3 Plans and Permits. Chamber shall submit plans, specifications, contractor information, insurance, bonding if required, schedule, and permit information for City approval before work begins. Chamber shall obtain all required permits and approvals.
14.4 Prevailing Wage and Public Works. As between City and Chamber, Chamber shall be responsible for determining whether any alteration, improvement, installation, repair, maintenance, construction, or other work undertaken by or on behalf of Chamber is subject to California prevailing wage, public works, apprenticeship, contractor registration, certified payroll, or other requirements of the California Labor Code or applicable law. Chamber shall ensure compliance by Chamber and its contractors and subcontractors with all such requirements determined to be applicable. Nothing in this Lease constitutes a representation or determination by City that any particular work is or is not a public work or subject to prevailing wage requirements.
Chamber shall provide City reasonable advance written notice before commencement of any material alteration, improvement, construction, or repair work. City may require Chamber to provide documentation concerning applicable labor-law compliance before work begins. To the fullest extent permitted by law, Chamber shall indemnify, defend, and hold harmless City and its officers, officials, employees, agents, and volunteers from claims, assessments, penalties, liabilities, costs, or expenses arising from Chamber’s or its contractors’ failure to comply with applicable prevailing wage or public works requirements. Nothing in this Section relieves City of any obligation that applicable law expressly makes nondelegable.
14.5 Ownership. Permanent improvements, fixtures, and building system modifications shall become City property upon installation unless City requires removal or the Parties agree otherwise in writing.
14.6 Removal and Restoration. City may require Chamber to remove Chamberinstalled improvements and restore the Premises at expiration or termination, except for improvements City elects to retain.
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14.7 Liens. Chamber shall keep the Premises free from mechanics’ liens, stop payment notices, bonded stop notices, and similar claims arising from Chamber work. Chamber shall promptly discharge any lien or provide security reasonably acceptable to City.
14.8 Notice of Work. Chamber shall give City at least ten days’ prior written notice before commencing any work that could give rise to a lien so City may post or record notices of nonresponsibility or take other protective steps.
15. FURNITURE, FIXTURES, EQUIPMENT, AND TRADE FIXTURES
15.1 Inventory. Before the Commencement Date, the Parties shall prepare an inventory of City-owned furniture, fixtures, kitchen equipment, audio-visual equipment, tables, chairs, appliances, stage equipment, and other personal property available for Chamber use, attached as Exhibit B.
15.2 Chamber Use of City Equipment. Chamber may use City Equipment only for approved uses at the Premises and shall maintain it in good condition, ordinary wear and tear excepted.
15.3 Specialized Equipment. City may require training, certification, vendor service, or written procedures for use of kitchen equipment, A/V systems, fire pits, stage equipment, lighting systems, or specialized equipment.
15.4 Repair or Replacement. Chamber shall repair or replace City Equipment damaged, lost, or destroyed due to Chamber Parties, Chamber use, misuse, negligence, theft, or failure to follow operating procedures.
15.5 Chamber Property. Chamber’s furniture, equipment, technology, supplies, records, and personal property shall remain Chamber property. Chamber shall remove all Chamber property upon expiration or termination unless City agrees otherwise in writing.
15.6 Trade Fixtures. Chamber may install trade fixtures approved by City. Trade fixtures remain Chamber property if removable without damage and if Chamber repairs all damage caused by installation or removal.
15.7 Abandoned Property. Property remaining after surrender may be handled under applicable law governing abandoned property in commercial premises. City may remove, store, dispose of, or retain such property as permitted by law, at Chamber’s cost.
16. SIGNS; EXTERIOR APPEARANCE
16.1 Sign Approval. Chamber may place and remove temporary, nonstructural signs, banners, flags, and similar event-related signage without separate approval from City in its capacity as Landlord, provided that such signage complies with Fortuna Municipal Code section
17.05.180 and all other applicable laws, permits, and approvals and does not penetrate, attach to, damage, or physically modify the building or other City improvements. Chamber shall obtain City’s prior written approval as Landlord for permanent signage and for any signage involving anchorage, attachment, penetration, electrical work, structural modification, or alteration of the Premises. Nothing in this Section waives any sign permit, building permit, encroachment permit, or other regulatory approval otherwise required by law. - 15 -
16.2 Maintenance. Chamber shall maintain approved signs in good appearance and repair.
16.3 Removal. At expiration or termination, Chamber shall remove Chamber signs if required by City and repair any damage caused by installation or removal.
16.4 Public Identity. Any signage shall preserve the public character of the Premises and shall not imply that City endorses Chamber policies, programs, or activities beyond the lease relationship.
17. COMPLIANCE WITH LAWS; ADA; CASp; OPERATIONS
17.1 General Compliance. Chamber shall comply with all federal, state, county, and local laws, regulations, ordinances, codes, permits, licenses, orders, and requirements applicable to Chamber’s use, occupancy, operations, employees, invitees, contractors, licensees, and activities at the Premises.
17.2 City Regulatory Authority. Nothing in this Lease limits or transfers City’s police power, regulatory authority, permitting authority, land-use authority, building or fire code authority, or other governmental functions. Any consent or approval given by City in its capacity as Landlord shall not constitute or substitute for any permit, license, regulatory approval, or other governmental authorization required by law.
17.3 Chamber Compliance. Chamber shall be solely responsible for compliance with laws applicable to its nonprofit, employment, event, food and beverage, alcohol, business, facilitymanagement, and other operations at the Premises.
17.4 ADA Allocation. City shall be responsible for pre-existing structural accessibility barriers to the extent City is legally required to correct them and they are not caused or triggered by Chamber’s particular use, alterations, furniture layout, equipment, programs, services, or operations. Chamber shall be responsible for accessibility obligations arising from Chamber’s programs, services, activities, staffing, furniture, equipment, communications, signage, temporary layouts, operations, and alterations.
17.5 Shared ADA Issues. If an accessibility improvement serves both a pre-existing structural condition and a Chamber-specific program need, the Parties shall meet and confer in good faith regarding cost allocation, but Chamber shall remain responsible for ensuring that Chamber’s programs and services are accessible.
17.6 CASp Disclosure. The Premises have not undergone inspection by a Certified Access Specialist (“CASp”) and have not been issued a disability access inspection certificate. A Certified Access Specialist (CASp) can inspect the subject premises and determine whether the subject premises comply with all of the applicable construction-related accessibility standards under state law. Although state law does not require a CASp inspection of the subject premises, the commercial property owner or lessor may not prohibit the lessee or tenant from obtaining a CASp inspection of the subject premises for the occupancy or potential occupancy of the lessee or tenant, if requested by the lessee or tenant. The parties shall mutually agree on the arrangements for the time and manner of the CASp inspection, the payment of the fee for the CASp inspection, and the cost of making any repairs necessary to correct violations of construction-related accessibility standards within the premises.
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17.7 Energy and Benchmarking Disclosures. City shall provide any energy benchmarking or similar disclosures required by applicable law for the Premises, if any. Chamber shall reasonably cooperate by providing utility and operational information necessary for compliance during the Term.
17.8 Permits and Licenses. Chamber shall obtain and maintain all permits, licenses, approvals, and inspections required for Chamber’s operations, including, as applicable, business licenses, food-service and health permits, assembly and occupancy approvals, alcohol licenses or permits, public-event permits, fire and life-safety approvals, and other permits or licenses required by law. Chamber shall not be required to obtain a separate City special-event permit for each ordinary facility rental solely because the event occurs at the Premises. A City special-event permit shall be required only when an event otherwise meets the City’s then-applicable special-event permit requirements. Nothing in this Section excuses any other permit, license, approval, or inspection otherwise required by applicable law.
17.9 No Unauthorized Occupancy Change. Chamber shall not change occupancy classification, occupant load, assembly use, kitchen use, fire load, or code classification without City’s prior written approval and all required permits.
18. SURPLUS LAND ACT; CEQA; LAND USE
18.1 Surplus Land Act Term Limitation. The Parties intend that this Lease shall not constitute a disposition of surplus land under Government Code section 54221 because the Term of this Lease, inclusive of all extension or renewal options included in this Lease as of the Effective Date, is fifteen years or less. The Parties further intend that this Lease does not authorize development or demolition of the Premises except for alterations, repairs, maintenance, and improvements expressly approved by City under this Lease.
18.2 No Implied Extension Beyond SLA Threshold. Notwithstanding anything to the contrary, no amendment, extension, renewal, option, holdover, right of first refusal, right of first offer, purchase right, development right, demolition right, or other modification shall be effective if it would cause this Lease or any later transaction to require compliance with the Surplus Land Act unless City first determines, in consultation with the City Attorney, that all required Surplus Land Act procedures have been satisfied or that an applicable exclusion or exemption applies.
18.3 No Purchase or Disposition Right. This Lease does not grant Chamber an option to purchase, right of first refusal, right of first offer, equitable ownership interest, development entitlement, demolition right, or other vested right to acquire, develop, demolish, or dispose of the Premises. Any future transaction involving sale, transfer, long-term lease, disposition, development, or demolition of the Premises shall require separate City approval and compliance with all applicable law.
18.4 CEQA. This Lease, Chamber’s occupancy, and any future alterations, improvements, changes in use, or physical changes to the Premises are subject to the California Environmental Quality Act to the extent required by law. Chamber shall not commence any activity requiring CEQA review until City, as lead agency or responsible agency as applicable, has completed any required review and approved the activity.
18.5 Land Use and Code Compliance. Chamber shall use the Premises only in compliance with applicable zoning, land use approvals, building code, fire code, health code, occupancy limits, permits, and other governmental requirements. Chamber shall not change the - 17 -
occupancy classification, occupant load, assembly use, kitchen use, parking use, fire load, or code classification of the Premises without City’s prior written approval and all required permits or approvals.
18.6 Chamber Cooperation. Chamber shall reasonably provide information requested by City to evaluate CEQA, land use, code, insurance, operational, or other legal compliance issues associated with Chamber’s proposed use, operations, alterations, or improvements.
19. ENVIRONMENTAL MATTERS
19.1 Definitions. For purposes of this Lease, “Hazardous Materials” means any substance, material, waste, pollutant, contaminant, chemical, petroleum product, fuel, asbestoscontaining material, lead-based paint, mold condition requiring remediation, biological contaminant, medical waste, universal waste, electronic waste, pesticide, herbicide, cleaning solvent, laboratory chemical, or other material regulated under any Environmental Law. “Environmental Laws” means all federal, state, regional, county, and local laws, regulations, ordinances, orders, permits, and requirements relating to pollution, contamination, hazardous substances, hazardous waste, human health, environmental protection, air, water, soil, groundwater, stormwater, wastewater, and hazardous materials management.
19.2 Limited Permitted Use. Chamber shall not use, generate, handle, store, release, discharge, dispose of, transport, or allow Hazardous Materials at, on, under, or from the Premises except for ordinary quantities of cleaning supplies, maintenance materials, kitchen materials, office supplies, and similar materials reasonably necessary for Chamber’s approved use, provided that all such materials are used, stored, labeled, handled, and disposed of in compliance with Environmental Laws, manufacturer instructions, safety data sheets, Chamber policies, and this Lease.
19.3 Prohibited Materials and Activities. Chamber shall not install underground or above-ground storage tanks; conduct vehicle fueling, vehicle maintenance, industrial activities, dry-cleaning, manufacturing, or hazardous waste treatment; store bulk chemicals; use pesticides or herbicides except in compliance with law and Chamber policy; dispose of grease, oils, chemicals, solids, or hazardous substances into drains, toilets, sinks, storm drains, sewer lines, landscaped areas, parking areas, or soils; or permit any activity that creates a release, nuisance, odor, contamination, illegal discharge, or regulatory violation.
19.4 Kitchen, Grease, and Janitorial Controls. If Chamber uses the commercial kitchen or permits food service, Chamber shall maintain grease traps, hood cleaning, waste oil handling, cleaning chemicals, floor drains, and sanitation practices in compliance with all applicable health, fire, plumbing, wastewater, and environmental requirements. Chamber shall not discharge fats, oils, grease, food waste, chemicals, or cleaning products in a manner that damages plumbing, violates law, or creates liability for City.
19.5 Stormwater and Exterior Areas. Chamber shall not allow trash, sediment, chemicals, wastewater, wash water, grease, paint, solvents, landscaping materials, or other pollutants generated by Chamber’s operations or Chamber-authorized users to enter storm drains, drainage facilities, landscaped areas, the parking lot, public access areas, waterways, or soils.
Chamber shall promptly clean up spills, debris, and pollutants resulting from Chamber’s operations or Chamber-authorized users.
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19.6 Compliance Records. Chamber shall maintain all permits, inspection records, disposal manifests, service reports, safety data sheets, training records, and other environmental compliance records required by law or reasonably necessary to document Chamber’s compliance with this Section. Chamber shall provide copies to City upon reasonable request, subject to applicable privileges and confidentiality laws.
19.7 Notice to City. Chamber shall immediately notify City of any spill, release, threatened release, illegal discharge, environmental complaint, regulatory inspection, notice of violation, enforcement action, hazardous condition, discovery of suspected contamination, or condition that may require reporting, investigation, cleanup, or remediation. Chamber shall provide City with copies of related notices, correspondence, reports, and agency communications promptly after receipt or issuance.
19.8 Response and Remediation. Chamber shall, at its sole cost, promptly investigate, contain, clean up, remediate, and restore any release, contamination, or environmental condition caused or exacerbated by Chamber or Chamber’s employees, contractors, agents, invitees, licensees, third-party users, or other Chamber-authorized users, to the extent required by Environmental Laws and to City’s reasonable satisfaction. Chamber shall not undertake invasive investigation, remediation, soil removal, groundwater work, or similar environmental work without City’s prior written approval except where immediate action is required to protect health, safety, property, or the environment.
19.9 City Participation. City may participate in, review, and approve the scope of any environmental investigation, reporting, remediation, or agency communication involving the Premises. Chamber shall not make admissions on City’s behalf, enter into settlements affecting City or the Premises, record environmental restrictions, or agree to institutional controls affecting the Premises without City’s prior written consent.
19.10 Pre-Existing Conditions. Chamber shall not be responsible for Hazardous Materials or environmental conditions existing before the Commencement Date except to the extent Chamber or Chamber’s employees, contractors, agents, invitees, licensees, third-party users, or other Chamber-authorized users disturb, release, exacerbate, migrate, mishandle, or fail to comply with applicable requirements after discovery of such condition. City makes no representation that the Premises are free of Hazardous Materials except as expressly stated in this Lease.
19.11 Chamber Indemnity. To the fullest extent permitted by law, Chamber shall indemnify, defend, and hold harmless City and its officers, officials, employees, agents, and volunteers from and against all claims, demands, liabilities, damages, penalties, fines, losses, costs, expenses, investigation costs, remediation costs, consultant fees, attorney’s fees, agency orders, and enforcement actions arising out of or related to Hazardous Materials or environmental conditions caused, released, discharged, generated, handled, stored, exacerbated, or permitted by Chamber or Chamber’s employees, contractors, agents, invitees, licensees, third-party users, or other Chamber-authorized users.
19.12 No Environmental Liens. Chamber shall not permit any environmental lien, administrative order, cleanup order, abatement order, penalty, or enforcement proceeding to attach to or impair the Premises because of Chamber’s use, operations, Hazardous Materials, or failure to comply with law. Chamber shall promptly discharge, bond around, or otherwise resolve any such lien or proceeding at Chamber’s sole cost.
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19.13 Mold, Moisture, and Building Conditions. Chamber shall promptly notify City of water intrusion, mold, unusual odors, persistent moisture, roof leaks, plumbing leaks, HVAC condensation issues, or other conditions that may affect indoor air quality or building integrity.
Chamber shall be responsible for mold, moisture, or indoor-air-quality conditions caused or exacerbated by Chamber’s failure to maintain, failure to ventilate, failure to report, misuse, alterations, or operational practices.
19.14 No Limitation. Chamber’s environmental obligations are in addition to, and do not limit, Chamber’s maintenance, repair, indemnity, insurance, compliance, restoration, or reimbursement obligations under this Lease.
19.15 Survival. Chamber’s obligations under this Section, including notice, investigation, remediation, restoration, reimbursement, indemnity, defense, and record obligations, shall survive expiration or termination.
20. INSURANCE
20.1 Insurance Requirements. Chamber shall procure and maintain, at Chamber’s sole cost, insurance, or authorized self-insurance acceptable to City for the duration of this Lease, in the types, amounts, forms, and endorsements required by Exhibit H. Chamber’s insurance obligations under Exhibit H are material obligations of this Lease.
20.2 Exhibit Controls. If any insurance requirement stated in this Section conflicts with Exhibit H, Exhibit H shall control, except that City may accept broader coverage, higher limits, or authorized self-insurance if approved by City’s risk manager, City Manager, or designee.
Chamber shall not occupy the Premises until City has received and approved the insurance documents required by Exhibit H.
20.3 Adjustment of Requirements. City may reasonably require additional insurance, higher limits, or additional endorsements based on the nature of Chamber’s use, third-party use, food service, events, construction, alterations, claims history, insurer, or other special circumstances, consistent with Exhibit H.
20.4 No Limitation of Liability. Insurance requirements do not limit Chamber’s indemnity, defense, reimbursement, maintenance, repair, environmental, or other obligations under this Lease. Failure by City to demand evidence of insurance shall not waive Chamber’s obligation to maintain required coverage.
20.5 Failure to Insure. If Chamber fails to maintain required coverage or provide required evidence, City may, but is not obligated to, obtain substitute coverage or take other protective measures. All costs incurred by City shall be Additional Rent due upon demand.
21. INDEMNITY; RELEASE; LIMITATION
21.1 Chamber Indemnity. To the fullest extent permitted by law, Chamber shall indemnify, defend, and hold harmless City and its officers, officials, employees, agents, and volunteers from and against claims, demands, causes of action, damages, losses, liabilities, judgments, fines, penalties, costs, and expenses, including reasonable attorney’s fees, arising out of or related to Chamber’s use, occupancy, operation, management, maintenance, or control of the Premises; Chamber events or programs; food or beverage service; alcohol service; contractors; employees; invitees; event patrons; licensees; third-party users; alterations or improvements; breach of this Lease; violation of law; or Hazardous Materials introduced, released, or exacerbated - 20 -
by Chamber or Chamber Parties, except to the extent caused by the sole negligence or willful misconduct of City.
21.2 City Indemnity. To the fullest extent permitted by law, City shall indemnify, defend, and hold harmless Chamber and its governing board members, officers, employees, agents, and volunteers from claims arising out of City’s sole negligence, willful misconduct, or breach of City’s express obligations under this Lease.
21.3 No Waiver of Public Agency Protections. Nothing in this Lease waives any claim-presentation requirement, immunity, limitation of liability, defense, or other protection available to City or its officers, officials, employees, agents, or volunteers under the California Government Claims Act or other applicable law.
21.4 Release of Insured Losses. To the extent covered by insurance actually maintained or required to be maintained, each Party releases the other from claims for property loss or damage to the extent of insurance proceeds, subject to waiver-of-subrogation provisions and except for intentional misconduct.
21.5 No Consequential Damages. Except for indemnity and defense obligations, thirdparty claims, Hazardous Materials obligations, intentional misconduct, fraud, unpaid Rent, Additional Rent, restoration obligations, and Chamber-caused damage to City property, neither Party shall be liable to the other for consequential, special, incidental, speculative, punitive, or exemplary damages, including lost profits, lost revenue, lost grants, lost funding, lost opportunities, program interruption, relocation costs, substitute facility costs, or business interruption damages. Nothing in this Section limits City’s right to recover Rent, Additional Rent, repair costs, restoration costs, environmental costs, attorneys’ fees, or other amounts expressly recoverable under this Lease.
21.6 Survival. Indemnity, defense, release, limitation, and reimbursement obligations shall survive expiration or termination.
22. ENTRY; INSPECTION; CITY RIGHTS
22.1 City Entry. City and its authorized representatives may enter the Premises at reasonable times upon reasonable notice to inspect, maintain, repair, show the Premises to public officials or prospective contractors, verify compliance, respond to emergencies, or exercise City rights under this Lease.
22.2 Emergency Entry. City may enter without prior notice in an emergency or where City reasonably believes immediate entry is necessary to protect persons, property, public safety, utilities, or the Premises.
22.3 Minimizing Interference. City shall use reasonable efforts to minimize unnecessary interference with Chamber operations, except in emergencies.
22.4 Confidential Areas. Chamber may designate reasonable confidential records areas. City entry into such areas shall be coordinated with Chamber when practicable, except emergencies, but City shall not be denied access necessary to protect City property or comply with law.
23. THIRD-PARTY USE; ASSIGNMENT; SUBLETTING
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23.1 No Assignment Without Consent. Chamber shall not assign this Lease, transfer any interest, or permit another entity to operate the Premises without City’s prior written consent, which may be granted, conditioned, or withheld in City’s discretion subject to applicable law.
23.2 Ordinary Event and Facility Use. Notwithstanding Section 23.1, Chamber may enter into short-term facility-use agreements, event rental agreements, licenses, catering agreements, vendor agreements, and similar arrangements with customers and event users in the ordinary course of operating River Lodge without obtaining City’s approval for each individual use, provided each use is consistent with the Permitted Use and applicable facility rules.
23.3 No Long-Term Sublease or Exclusive Occupancy. Chamber shall not sublease the Premises, grant another person or entity long-term or exclusive possession of all or a material portion of the Premises, dedicate space to a third party on a long-term basis, or otherwise create a tenancy or possessory interest in favor of a third party without City’s prior written consent.
23.4 Facility-Use Requirements. Chamber shall use written facility-use agreements and reasonably appropriate rules addressing insurance, indemnification, alcohol, food service, security, occupancy limits, cleanup, property damage, prohibited activities, and other operational risks. City may establish reasonable minimum requirements for such agreements and facility rules.
23.5 Third-Party Insurance and Indemnity. Chamber shall require third-party users to provide insurance, indemnity, waivers, and written facility-use agreements reasonably appropriate to the nature of the event or use and consistent with the requirements established by City under Section 23.4. Any waiver of such requirements shall be subject to standards approved by City.
23.6 No Release. No assignment, sublease, license, or third-party use shall release Chamber from obligations under this Lease unless City expressly agrees in writing.
24. DAMAGE AND DESTRUCTION
24.1 Notice. Chamber shall promptly notify City of any fire, flood, earthquake, vandalism, storm, casualty, or damage affecting the Premises.
24.2 City Repair Decision. If City-owned structures or major systems are damaged, City shall determine whether to repair, restore, rebuild, or terminate, subject to insurance proceeds, funding, procurement, permits, City Council approval, and public-interest considerations.
24.3 Chamber-Caused Damage. If damage is caused by Chamber Parties, Chamber shall be responsible for repair costs, deductibles, uninsured losses, increased premiums, and related costs, except to the extent covered by insurance and released under this Lease.
24.4 Rent Abatement. Base Rent shall abate proportionately only if the Premises are materially unusable due to casualty not caused by Chamber Parties and City elects to repair.
Additional Rent obligations shall continue to the extent they relate to Chamber’s property, operations, or obligations.
24.5 Termination for Major Casualty. Either Party may terminate if the Premises are substantially destroyed, if restoration is not reasonably feasible within twelve months, or if City determines restoration is not funded or not in the public interest. - 22 -
24.6 Insurance Proceeds. Insurance proceeds for City-owned improvements belong to City. Proceeds for Chamber property belong to Chamber. The Parties shall cooperate in claims handling as appropriate.
25. CONDEMNATION
25.1 Total Taking. If all or substantially all of the Premises are taken by eminent domain or similar governmental action, this Lease shall terminate as of the date possession is taken.
25.2 Partial Taking. If a partial taking materially impairs Chamber’s ability to use the Premises for the approved use, either Party may terminate by written notice within ninety days after the taking.
25.3 Restoration After Partial Taking. If the Lease is not terminated, City shall determine whether and how to restore the remaining Premises to a functional unit, subject to available condemnation proceeds, funding, permits, and public-interest considerations.
25.4 Award. City shall be entitled to condemnation awards for the fee interest, land, building, and City-owned improvements. Chamber may claim compensation for Chamber-owned personal property, trade fixtures, moving costs, or other separate compensable interests if allowed by law, provided Chamber’s claim does not reduce City’s award except as required by law.
26. FUTURE SALE OR DISPOSITION; NO PURCHASE OPTION
26.1 No Obligation to Sell. City has no obligation to sell, transfer, lease for a longer term, or otherwise dispose of the Premises. Nothing in this Lease limits City’s legislative discretion regarding future public use, retention, declaration of surplus or exempt surplus status, disposition, or other action concerning the Premises.
26.2 No Required Sale Process; Optional Discussions. City may, but is not obligated to, notify Chamber or meet and confer with Chamber if City later considers a potential sale, transfer, long-term lease, or other disposition of the Premises. Any discussion with Chamber shall be nonbinding unless and until approved by the City Council in a separate written agreement complying with all applicable law. No failure by City to notify, meet, confer, negotiate, or continue discussions with Chamber shall impair City’s discretion or create any claim, right, remedy, or defense in favor of Chamber.
26.3 No Right of First Refusal or First Offer. This Lease does not grant Chamber an option to purchase, right of first refusal, right of first offer, equitable ownership interest, preemptive right, matching right, development right, demolition right, or other vested right to acquire, lease, develop, demolish, or control the Premises after expiration or termination of this Lease.
26.4 Subject to Applicable Law. Any future sale, transfer, extension, renewal beyond the options stated in this Lease, long-term lease, purchase agreement, disposition, development approval, or demolition approval shall be subject to all applicable law, including the Surplus Land Act, CEQA, public hearing requirements, City Council approval, and any required review by the California Department of Housing and Community Development or other agency.
26.5 No Carryover Into Holdover. The nonbinding meet-and-confer process in this Section shall not apply during holdover unless expressly confirmed in writing by City and approved as required by law.
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27. SURRENDER; HOLDING OVER
27.1 Surrender. Upon expiration or termination, Chamber shall surrender the Premises in good, clean, safe, sanitary, and operable condition, ordinary wear and tear and casualty not caused by Chamber excepted.
27.2 Removal of Chamber Property. Chamber shall remove all Chamber personal property, business records, confidential records, technology, equipment, supplies, signage, and temporary improvements unless City agrees otherwise in writing.
27.3 Restoration. Chamber shall repair all damage caused by removal of Chamber property and shall restore the Premises as required by City for Chamber-installed improvements.
27.4 Confidential Records. Chamber shall be solely responsible for removal, protection, retention, and destruction of confidential Chamber records, including personnel records.
27.5 Holding Over. If Chamber remains in possession after expiration or termination without a written extension, Chamber shall be a month-to-month holdover tenant only, subject to all applicable terms of this Lease. During holdover, Base Rent shall be 150% of the Base Rent payable immediately before holdover, and Chamber shall continue paying Additional Rent.
27.6 No Renewal by Acceptance of Rent. City’s acceptance of Rent during holdover shall not renew or extend the Lease unless City expressly agrees in writing.
28. DEFAULT
28.1 Chamber Monetary Default. Chamber shall be in default if Chamber fails to pay Base Rent, Additional Rent, or any other amount due within ten days after written notice of nonpayment.
28.2 Chamber Nonmonetary Default. Chamber shall be in default if Chamber fails to perform any nonmonetary obligation and fails to cure within thirty days after written notice, or, if cure cannot reasonably be completed within thirty days, fails to commence cure within thirty days and diligently prosecute cure to completion.
28.3 Immediate or Short-Cure Defaults. Notwithstanding Section 28.2, Chamber shall be in default if Chamber fails to maintain required insurance, creates an imminent threat to health or safety, abandons the Premises, assigns or subleases without consent, commits waste, violates hazardous materials obligations, unlawfully uses the Premises, or causes a condition that materially threatens City property or public safety. City may require shorter cure periods or immediate action where necessary.
28.4 Materiality. The Parties agree that the obligations identified in this Lease as relating to payment, insurance, indemnity, maintenance, repair, legal compliance, hazardous materials, assignment, use, public safety, and surrender are material obligations.
28.5 City Default. City shall be in default only if City fails to perform an express obligation under this Lease and fails to cure within thirty days after written notice, or, if cure cannot reasonably be completed within thirty days, fails to commence cure within thirty days and diligently prosecute cure to completion.
29. REMEDIES
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29.1 City Remedies. Upon Chamber default, City may terminate this Lease, recover possession, recover unpaid Rent and Additional Rent, recover damages, perform Chamber obligations and recover costs as Additional Rent, seek injunctive relief, seek specific performance, or pursue any other remedy available at law or equity.
29.2 Continuation of Lease. To the extent permitted by Civil Code section 1951.4 or other applicable law, City may continue this Lease in effect after Chamber breach and abandonment and recover Rent as it becomes due, provided applicable legal requirements are satisfied.
29.3 Damages Upon Termination. If City terminates because of Chamber default, City may recover damages permitted by law, including unpaid Rent earned at termination, Rent that would have been earned after termination to the extent permitted by law, costs of reletting, repair costs, restoration costs, attorney’s fees if awarded, and other detriment caused by Chamber’s default.
29.4 City Cure Rights. City may cure Chamber’s default after required notice and opportunity to cure, except in emergencies or circumstances requiring immediate action. Chamber shall reimburse City for all costs as Additional Rent.
29.5 No Waiver. No delay, forbearance, acceptance of Rent, partial payment, or failure to enforce shall waive any breach or remedy unless City expressly waives it in writing.
29.6 Chamber Remedies. Upon City default, Chamber may pursue remedies available at law or equity, subject to applicable claims requirements, immunities, defenses, and limitations on public-agency liability.
29.7 Cumulative Remedies. All remedies are cumulative unless expressly stated otherwise.
30. RECORDS; AUDIT; PUBLIC RECORDS
30.1 Operational Records. Chamber shall maintain separate accounting records for the River Lodge operations. Revenues and expenses associated with the Premises shall be separately identifiable and available for City review and reasonably necessary to verify compliance with Rent, Additional Rent, Operating Expenses, maintenance, service contracts, third-party facility use, insurance, and repair obligations.
30.2 Inspection of Records. City may inspect relevant records upon reasonable notice during normal business hours, subject to personnel privacy, attorney-client privilege, attorney work product, and other applicable protections.
30.3 Retention. Chamber shall retain records relevant to this Lease for at least four years after the Lease Year to which they relate, or longer if required by law or pending claim.
30.4 Public Records. Chamber acknowledges that records submitted to or maintained by City in connection with this Lease may be subject to disclosure under the California Public Records Act. Chamber may identify records or information it believes to be confidential, proprietary, or otherwise exempt from disclosure; however, City shall retain sole responsibility for responding to public records requests and makes no representation or guarantee that any record will be withheld from disclosure except as authorized by law. - 25 -
30.5 Financial Reporting. Within forty-five days after the end of each calendar quarter, Chamber shall provide City with financial information reasonably sufficient to evaluate Chamber’s operation of River Lodge, including Chamber’s current balance sheet and River Lodge-specific profit and loss statement, cash-flow statement, and aging of accounts payable. No later than June 30 of each year, Chamber shall provide City with its proposed annual operating budget for River Lodge identifying anticipated revenues, expenses, staffing, grants, sponsorships, maintenance expenditures, and reserves or other resources available to support operation of the Premises.
30.6 Initial Operating Plan. Before the Commencement Date, Chamber shall provide City with a three-year operating and cash-flow projection for River Lodge and reasonable evidence of the funding or other financial resources available to commence and sustain operations.
30.7 Notice of Material Financial Events. Chamber shall promptly notify City in writing of any material circumstance reasonably expected to impair Chamber’s ability to timely satisfy payroll, utilities, insurance, taxes, maintenance obligations, Rent, or other material obligations under this Lease, including loss of a material funding source or material delinquency in amounts owed in connection with River Lodge operations.
30.8 Corrective Action Plan. If information provided under this Section reasonably indicates a material risk that Chamber will be unable to satisfy its obligations or continue orderly operation of River Lodge, City may require Chamber to provide a written corrective action plan within thirty days identifying the steps Chamber proposes to take to address the condition. Failure to timely provide or materially implement a required corrective action plan shall constitute a nonmonetary default subject to the notice and cure provisions of Section 28.
31. ESTOPPEL CERTIFICATES; MEMORANDUM OF LEASE
31.1 Estoppel Certificate. Within fifteen days after written request, each Party shall execute and deliver a reasonable estoppel certificate stating the Commencement Date, Term, Rent, payment status, modifications, known defaults, and other matters reasonably requested.
31.2 Reliance. Estoppel certificates may be relied upon by governing bodies, lenders, title companies, auditors, prospective purchasers, regulatory agencies, or other persons with a legitimate interest.
31.3 Memorandum of Lease. The Parties may execute and record a memorandum of lease if mutually agreed and if approved as required by law. The memorandum shall not include confidential or unnecessary business terms unless required.
32. DISPUTE RESOLUTION
32.1 Meet and Confer. Before commencing litigation, the Parties shall meet and confer through the City Manager and Chamber Chief Executive Officer, or designees, in good faith to resolve disputes.
32.2 Mediation. If the dispute is not resolved within thirty days after a written meetand-confer request, either Party may request nonbinding mediation. The Parties shall share mediator fees equally unless otherwise agreed.
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32.3 Emergency Relief. Nothing in this Section prevents either Party from seeking immediate injunctive, emergency, unlawful detainer, provisional, or other relief where necessary to protect persons, property, public funds, legal compliance, possession, or public operations.
33. NOTICES
All notices under this Lease shall be in writing and shall be delivered personally, by recognized overnight courier, by certified mail, return receipt requested, or by email with confirmation of receipt, to the addresses below or to such other addresses as a Party may designate by notice.
City Chamber
City of Fortuna
Attn: City Manager
621 11th Street
Fortuna, CA 95540
Email: [email protected]
With copy to:
City Attorney
THE MITCHELL LAW FIRM, LLP
P.O. Drawer 1008
426 First Street
Eureka, CA 95501
Email: [email protected]
Fortuna Chamber of Commerce
Attn: Chief Executive Officer
1800 Riverwalk Drive
Fortuna, CA 95540
Email: [email protected]
34. AUTHORITY; APPROVALS
34.1 City Authority. This Lease is not binding on City unless approved by the City Council and executed by an authorized City representative.
34.2 Chamber Authority. This Lease is not binding on Chamber unless approved by the Chamber governing board and executed by an authorized Chamber representative.
34.3 Representations. Each person signing represents that they are authorized to sign on behalf of the Party indicated.
34.4 City Public Funds. To the extent this Lease requires an expenditure of City funds, City’s obligations shall remain subject to applicable laws governing public funds, budgeting, appropriations, and municipal expenditures.
35. MISCELLANEOUS
35.1 Entire Agreement. This Lease, including exhibits, constitutes the entire agreement between the Parties concerning the Premises and supersedes all prior negotiations, proposals, term sheets, memoranda, and understandings.
35.2 Amendments. This Lease may be amended only by a written instrument approved and signed by authorized representatives of both Parties. Governing body approval may be required for material amendments.
35.3 No Reimbursement for Chamber Improvements. Unless expressly approved by the City Council in a separate written agreement, Chamber shall not be entitled to compensation, - 27 -
reimbursement, rent credit, relocation payment, buyout, or other payment for alterations, improvements, equipment, trade fixtures, moving expenses, program costs, or other investments made by Chamber in connection with the Premises, whether upon expiration, termination, nonrenewal, City capital work, or future City disposition of the Premises.
35.4 Governing Law and Venue. This Lease shall be governed by California law.
Venue shall be in Humboldt County Superior Court unless otherwise required by law.
35.5 Severability. If any provision is held invalid or unenforceable, the remaining provisions shall remain in effect to the maximum extent permitted by law.
35.6 No Third-Party Beneficiaries. This Lease is for the benefit of the Parties only and creates no rights in any third party.
35.7 Waiver. A waiver of any breach shall not constitute a waiver of any other breach.
No waiver is effective unless in writing.
35.8 Time of Essence. Time is of the essence in this Lease.
35.9 Counterparts and Electronic Signatures. This Lease may be executed in counterparts and by electronic signature, each of which shall be deemed an original.
35.10 Interpretation. This Lease shall not be construed for or against either Party based on authorship.
35.11 Headings. Headings are for convenience only and do not affect interpretation.
35.12 Force Majeure. Neither Party shall be liable for delay in performing nonmonetary obligations caused by events beyond its reasonable control, including natural disasters, war, terrorism, epidemic, governmental orders, strikes, supply shortages, or utility failures, provided the affected Party gives notice and uses reasonable diligence to resume performance. Force majeure shall not excuse payment of Rent or monetary obligations unless expressly required by law.
35.13 Survival. Obligations that by their nature should survive expiration or termination shall survive, including indemnity, defense, insurance for prior acts, environmental obligations, payment obligations, restoration, surrender, confidentiality, records, and reimbursement.
36. EXHIBITS
The following exhibits are incorporated into this Lease:
• Exhibit A - Legal Description, Site Plan, Premises, Reserved Areas, Parking Lot, Public Access Areas, and Exterior Areas
• Exhibit B - Equipment, Furniture, Fixtures, Kitchen Equipment, A/V, and Inventory
• Exhibit C - Pre-Occupancy Condition Report and Photographs • Exhibit D - Existing Bookings, Deposits, Cancellations, City-Retained Event Obligations, and Transition Schedule
• Exhibit E – Intentionally Omitted
• Exhibit F - Parking Lot, Public Access, Landscaping, and Exterior Responsibility Matrix
• Exhibit G - Utility Transfer and Service Account Schedule - 28 -
• Exhibit H - Insurance Requirements and Required Endorsements • Exhibit I - Facility Rules and Third-Party Use Rules
• Exhibit J - Approved Chamber Uses and Operational Restrictions
SIGNATURES
IN WITNESS WHEREOF, the Parties have executed this Lease as of the Effective Date.
CITY OF FORTUNA, a California municipal
corporation and charter city
By: ________________________________
Name: ______________________________
Title: _______________________________
Date: _______________________________
ATTEST:
By: ________________________________
City Clerk
APPROVED AS TO FORM:
By: ________________________________
City Attorney
Fortuna Chamber of Commerce, a California
nonprofit
By: ________________________________
Name: ______________________________
Title: _______________________________
Date: _______________________________
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EXHIBIT A - LEGAL DESCRIPTION, SITE PLAN, PREMISES, RESERVED AREAS,
PARKING LOT, PUBLIC ACCESS AREAS, AND EXTERIOR AREAS
Attach legal description and site plan. The site plan should identify the River Lodge building, parking lot, drive aisles, sidewalks, exterior walkways, landscaped areas, irrigation, exterior lighting, trash receptacle locations, fish sculpture area, levee/trail access points, public access areas, excluded areas, utility areas, and any City-reserved areas.
Legal Description:
1800 Riverwalk Drive, Fortuna CA, 95540 (APN 201-152-007) is owned by the City of Fortuna and generally known as the River Lodge Conference and Event Center. Per the Humboldt County Assessor, the premises comprises an 11, 280-square-foot single-story building in very good condition situated on 3.06-acre lot abutting the Eel River. - 30 -
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EXHIBIT B - EQUIPMENT, FURNITURE, FIXTURES, KITCHEN EQUIPMENT, A/V,
AND INVENTORY
Attach a room-by-room inventory of City-owned equipment and personal property made available to Chamber, including condition, serial numbers if available, maintenance records, and responsibility for repair or replacement.
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EXHIBIT C - PRE-OCCUPANCY CONDITION REPORT AND PHOTOGRAPHS Attach photographs and written condition notes for the building, roof, HVAC units, commercial hot water heater, kitchen hood and fire-suppression system, fire/life-safety systems, parking lot, drainage, striping, ADA spaces and routes, exterior lights, sidewalks, landscaping, irrigation, trash areas, and equipment.
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EXHIBIT D - EXISTING BOOKINGS, DEPOSITS, CANCELLATIONS, CITYRETAINED EVENT OBLIGATIONS, AND TRANSITION SCHEDULE List all 2026 and 2027 bookings, event names, dates, contract status, deposit amount, cancellation clause, refund obligation, vendor commitments, special representations, City-retained responsibilities, and any bookings expressly assumed by Chamber. - 34 -
EXHIBIT E -
[INTENTIONALLY OMITTED]
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EXHIBIT F - PARKING LOT, PUBLIC ACCESS, LANDSCAPING, AND EXTERIOR
RESPONSIBILITY MATRIX
This matrix should be confirmed before execution and revised to match the approved site plan. It should identify responsibility for sweeping, striping, ADA-accessible spaces, lighting, pothole patching, major resurfacing, drainage, landscaping, irrigation, event traffic control, towing, signage, and debris removal if applicable.
Itemized Exterior Maintenance Responsibility Responsible Party Parking lot sweeping Chamber
Parking lot striping touch-up and curb marking Chamber
Maintaining ADA-accessible parking spaces and routes free of obstructions
Chamber
Correction of pre-existing structural ADA barriers City, to the extent legally required and not caused or
triggered by Chamber use
Exterior lighting bulb replacement and ordinary lighting maintenance
Chamber
Ordinary pothole patching and crack sealing Chamber
Major parking lot resurfacing, subgrade repair, or
reconstruction
City, except when
required due to Chambercaused conditions
Routine drainage maintenance in Chamber-controlled areas Chamber Major drainage reconstruction City, except when
required due to Chambercaused conditions
Routine landscaping and irrigation maintenance in assigned areas
Chamber
Levee, walking path, downslope area, and riverbank
maintenance
City/County; Chamber
responsible only for
cleanup or damage
directly caused by
Chamber-authorized use
Event parking management, traffic control, signage, security, and staffing
Chamber
Towing from River Lodge parking lot and/or premise Chamber, subject to applicable law and Cityapproved procedures
Ordinary exterior and event-related signage maintenance Chamber Litter, debris, trash, recycling, and waste Chamber
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EXHIBIT G - UTILITY TRANSFER AND SERVICE ACCOUNT SCHEDULE List all utility and service accounts, account holder, meter number if known, transfer date, billing method, and any shared-meter allocation.
Utility / Service Account
Vendor name Account Number Account Holder Billing Method Expected Transfer Date AT&T Fiber 9391082149 City of Fortuna Statement 11/1/2026 AT&T Phone 9391062012 City of Fortuna Statement 11/1/2026 AT&T Phone 9391062011 City of Fortuna Statement 11/1/2026 AT&T Phone 9391061218 City of Fortuna Statement 11/1/2026 AT&T Phone 9391061209 City of Fortuna Statement 11/1/2026 City of Fortuna Water and
Wastewater
City of Fortuna Statement 11/1/2026
EcoLab City of Fortuna Invoice 11/1/2026
Eureka Oxygen City of Fortuna Invoice 11/1/2026
Optimum 07715-106238-01-6 City of Fortuna Statement 11/1/2026 Otis 678168 City of Fortuna Invoice 11/1/2026
Pacific Gas and Electric 59188610527 City of Fortuna Statement 11/1/2026 Pacific Gas and Electric 58771943881 City of Fortuna Statement 11/1/2026 Woods Pest Control City of Fortuna Invoice 11/1/2026
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EXHIBIT H - INSURANCE REQUIREMENTS AND REQUIRED ENDORSEMENTS Lessee shall procure and maintain for the duration of the Lease insurance against claims for injuries to persons or damages to property which may arise from or in connection with Lessee’s operation and use of the leased premises. The cost of such insurance shall be borne by Lessee.
Minimum Scope and Limit of Insurance. Coverage shall be at least as broad as the following:
1. Commercial General Liability. Insurance Services Office Form CG 00 01 covering commercial general liability on an occurrence basis, including products and completed operations, property damage, bodily injury, and personal and advertising injury, with limits no less than $2,000,000 per occurrence. If a general aggregate limit applies, either the general aggregate limit shall apply separately to this project/location using ISO CG 25 03 or CG 25 04, or the general aggregate limit shall be twice the required occurrence limit.
2. Workers’ Compensation and Employer’s Liability. Workers’ Compensation insurance as required by the State of California, with statutory limits, and Employer’s Liability Insurance with limits of no less than $1,000,000 per accident for bodily injury or disease, for lessees with employees.
3. Property Insurance. Property insurance against all risks of loss to any tenant improvements or betterments, at full replacement cost with no coinsurance penalty provision.
Broader Coverage and Higher Limits.
If Lessee maintains broader coverage or higher limits than the minimums shown above, City requires and shall be entitled to the broader coverage and higher limits maintained.
Any available insurance proceeds in excess of the specified minimum limits of insurance and coverage shall be available to City.
Other Insurance Provisions.
The insurance policies are to contain, or be endorsed to contain, the following provisions:
Additional Insured Status. City, its officers, officials, employees, and volunteers are to be covered as additional insureds on the commercial general liability policy with respect to liability arising out of work or operations performed by or on behalf of Lessee, including materials, parts, or equipment furnished in connection with such work or operations.
General liability coverage may be provided in the form of an endorsement to Lessee’s insurance at least as broad as ISO Form CG 20 10.
Primary Coverage. For any claims related to the Lease, Lessee’s insurance coverage shall be primary insurance coverage at least as broad as ISO CG 20 01 04 13 as respects City, its officers, officials, employees, and volunteers. Any insurance or self-insurance maintained by City, its officers, officials, employees, or volunteers shall be excess of Lessee’s insurance and shall not contribute with it.
Notice of Cancellation. Lessee shall provide immediate written notice if any required insurance policy is terminated, the limits of any required policy are reduced, or the deductible or self-insured retention is increased. In the event of any cancellation or reduction in coverage or limits of any insurance, Lessee shall forthwith obtain and submit proof of substitute insurance.
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Waiver of Subrogation. Lessee grants to City a waiver of any right to subrogation which any insurer of Lessee may acquire against City by virtue of payment of any loss under such insurance. Lessee agrees to obtain any endorsement that may be necessary to effect this waiver of subrogation, but this provision applies regardless of whether City has received a waiver of subrogation endorsement from the insurer. Lessee must obtain a workers’ compensation endorsement waiving subrogation against City.
Acceptability of Insurers. Insurance is to be placed with insurers authorized to conduct business in the State of California with a current A.M. Best’s rating of no less than A:VII, unless otherwise acceptable to City.
Self-Insured Retentions. Self-insured retentions must be declared to and approved by City. At City’s option, either Lessee shall obtain coverage to reduce or eliminate such selfinsured retentions as respects City, its officers, officials, employees, and volunteers, or Lessee shall provide a financial guarantee satisfactory to City guaranteeing payment of losses and related investigations, claim administration, and defense expenses. The policy language shall provide, or be endorsed to provide, that the self-insured retention may be satisfied by either the named insured or City.
Verification of Coverage. Lessee shall furnish City with original certificates of insurance including all required amendatory endorsements, or copies of the applicable policy language effecting coverage required by this Exhibit, and a copy of the declarations and endorsement page of the commercial general liability policy listing all policy endorsements, before work begins or occupancy occurs. Failure to obtain the required documents before work begins or occupancy occurs shall not waive Lessee’s obligation to provide them. City reserves the right to require complete, certified copies of all required insurance policies, including endorsements, at any time.
Special Risks or Circumstances. City reserves the right to modify these requirements at any time, including limits, based on the nature of the risk, prior experience, insurer, coverage, or other special circumstances.
Special Coverages for Chamber Operations. If required by City based on Chamber’s operations or particular risks, Chamber shall also procure and maintain automobile liability, cyber/privacy liability, liquor liability, abuse and molestation coverage, builder’s risk or installation floater coverage for construction or improvements, event-specific coverage, and any other coverage reasonably required by City. Liquor liability coverage shall be required whenever Chamber or a Chamber contractor sells, serves, furnishes, or otherwise controls the provision of alcoholic beverages unless City approves equivalent coverage in writing.
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EXHIBIT I - FACILITY RULES AND THIRD-PARTY USE RULES
Attach approved facility rules, third-party use agreement forms, insurance requirements for users, alcohol restrictions, food-service rules, kitchen rules, event security requirements, hours, decorations rules, noise rules, and cleanup requirements. - 40 -
EXHIBIT J - APPROVED CHAMBER USES AND OPERATIONAL RESTRICTIONS Attach any specific approved uses, excluded uses, occupancy limits, rooms dedicated to confidential records, public meeting uses, food service uses, and special conditions.
No operational restrictions at this time.