The Richland City Council sent a warning to Fortify Holdings in December about assuming the lease on the Riverfront Hotel and changing its use to micro-apartments but is still considering transferring the lease to them.
“Traum Ventures, LLC has requested a transfer of the lease, and it is anticipated that it will come before the City Council in March,” City Manager Jon Amundson wrote the Observer in an email.
Fortify President Ziad Elsahili told the council that the company wouldn’t buy the Riverfront Hotel, originally called the Rivershore Motor Inn and later the Shilo Inn, unless the city sold them the land under it. But he changed his position when the city declined to sell.
The warning to Fortify was not the first in the twisted history of the property. The original developer, Charles Opgenorth, received warnings too. In Opgenorth’s case, the 1961 lease, on land then prohibited for human habitation, didn’t have the provisions the council needed to do anything but warn.
The lease and other restrictions do cover the concerns of the current council.
“The Richland zoning code is clear that dwelling units in the City’s Waterfront District must meet a minimum dwelling unit requirement of 500 square feet. Violation of the City’s zoning code will result in enforcement action by the City against Fortify Holdings, LLC. In addition, the existing ground lease clearly identifies that the property is to be used for operation of a hotel with related amenities (shop/restaurant/bar) and for no other purpose,” then-mayor Ryan Lukson wrote in a Dec. 21 letter to Fortify.
Fortify Holdings and the lease that is still a good deal
The lease that Fortify wants to assume from Traum was written in 1961 and amended in 2012 to extend the lease for 44 more years with the possibility of 40 more, and to require higher yearly rent. It’s still a good deal.
Even though the rent went from $7500 a year in 2011 to $75,000 a year in 2022, the higher amount only represents 1.5% of the value of the just over 20 acres that is assessed by Benton County at over $5 million. In 2035, the lease payment will be $150,000 a year, just three percent of the current assessment.
The Observer has used the Richland City Council minutes from 1959-1969, the city of Richland’s lease files for the Riverside Motor-Hotel, the archives of the Tri-City Herald, Opgenorth’s grave marker in Sunset Memorial Gardens, documents from the Benton County Auditor’s Office and a video of the January 17, 2012, city council meeting to research the history of the hotel. The Dec. 21 letter from Lukson to Fortify was printed in the Tri-City Herald.
Vision, frustration, tragedy, the backstory on the 61-year-old Riverfront Hotel lease
“There’s a back story on this lease but it’s for another day,” Director of Community and Development Services Gary Ballew told the council when the 1961 lease was being revisited for its 44-year extension in 2012.
The backstory is one of vision and tragedy and the frustration of an almost 10-year quest, mostly by one man, Charles Opgenorth, to build a hotel on the riverfront south of Howard Amon Park. As the years dragged on, the Richland City Council regularly warned Opgenorth that they would cancel his lease if he didn’t live up to its terms even as the lease left them little recourse and local investors objected.
Barely 32 years old, Opgenorth, who operated a marina and sport shop from a building on Lee Blvd., had bid and won the right in 1958 to lease a 300-foot by 250-foot chunk of riverfront land from the Atomic Energy Commission (AEC). He planned to build a 50-boat marina on the Columbia River south of Howard Amon Park at the bottom of Bradley Road.
By the end of 1959, Olgenorth had successfully completed the marina construction on the waterfront leased from the AEC. He then saw opportunity in the land south of the marina.
The land had been seized from owners during World War II when the U.S. government’s top-secret plutonium project began in Hanford. In 1959, the government deeded the land to the newly incorporated city of Richland.
Opgenorth asked the council for the option to lease 500 more feet of riverfront property for a 72-room hotel and an additional 120 additional dock spaces. He noted that it would cost him $100,000 to develop the area under the U.S. Army Corps of Engineers specification. Opgenorth formed a company, Richland Marina Inc., and began soliciting local investors.
The proposal was met with enthusiasm. “It’s refreshing to have a group come and offer to pay the city some money instead of the other way around,” Councilmember Joyce Kelley said.
A big hurdle stood in the way of the hotel
A big hurdle lay in Opgenorth’s path. The U.S. Army Corps of Engineers still had jurisdiction and the land Opgenorth wanted to lease came with Corps restrictions, “…in particular, said restrictions prohibit construction or maintenance of structures for human habitation.”
The land was low and in a flood zone. The new city wanted a hotel and city councilmembers viewed the land with the restrictions as almost worthless. They were happy to give Opgenorth a good deal on the lease.
The 1961 lease required Opgenorth to pay the city one percent of the gross profits for the hotel and all the businesses in it not to be less than $3000 a year or more than $7500 a year. The lease was for 55 years with the option for 44 more.
Opgenorth had to pay the rent but there were no construction deadlines included. That omission would turn out to be a problem for the city.
When Richland approved the 44-year option in 2012, then Mayor John Fox said, “I think probably a little naivete in the early days of the city. That lease was written only a couple of years after the city was incorporated and they didn’t seem as farsighted in its provisions.”
Struggle to find a builder
While Opgenorth applied for the Corps’ permits he needed to build on the land, he struggled to find a hotel builder willing to commit to constructing a hotel on land restricted for human habitation.
Opgenorth complains that he was “harpooned”
With hotel construction nowhere in sight, on July 1, 1963, the council ordered an investigation. Opgenorth was $5000 behind on his lease payments and that was the only leverage the council had with Opgenorth since the lease had no firm construction deadlines.
The council ordered the investigation while Opgenorth was out of town talking to potential funders. When Opgenorth learned of the investigation, he complained that he had been “harpooned” and the investigation put his efforts at obtaining funding in jeopardy.
He said that he had never been dishonest or unethical. “I can’t be. My whole life is staked on this going through,” he said.
Deadlines for payment, Investors rally
The council gave Opgenorth until Feb.1, 1964 to pay back rent or lose the lease.
Local stockholders in the company that Opgenorth had created, Richland Marina, Inc., rallied around him and collected $4,048.14 to pay some of the back rent and filled city hall for a Richland City Council meeting to show support.
Councilman Harry Kramer said he was skeptical but impressed by the backing of 72 citizens.
Councilmember Robert Bixler said he thought it “…wonderful that citizens have faith in the company. We need more people like Opgenorth in our community. We should get behind him.”
The deadline for payment was extended to May 1.
Corps issues requirements for building on the land
In October 1963, the Corps submitted their permit requirements. The Corps required that the land be filled to 364.5 feet above sea level and no structure for human habitation be constructed lower than that. The lease required Opgenorth’s company to pay the Corps the $7,700 charge for reducing the area of the floodplain.
Former city councilman sues
In Jan. 1965, Former City Councilman Paul Beardsley filed a lawsuit to force the hand of the city, demanding termination of the lease for breach of contract.
“Marina hassle covers 6 years and 30 discussions” the Herald wrote.
Opgenorth blamed the failures on other businessmen who he said wanted the land, and on news stories in The Herald, according to a Herald report.
At the end of February, Judge John C. Tuttle of Walla Walla ruled in favor of the city. Tuttle pointed out that there were certain restrictions placed by the Corps. The conditions included fill work completed within two years after granting of the permit, Oct. 1963; and completion of the structure by the end of three years. He ruled in favor of the city, explaining that the Corps restrictions gave Opgenorth until Oct. 1966.
Finally, financial commitment
In April, J. William Oldenburg, manager of commercial loans for Northwest Mortgages, Inc. in Seattle, told the city council that he would provide a firm financial commitment for the project by Aug. 1.
After receiving a letter promising a $1,050,000 loan for his hotel project, Opgenorth left with his wife and two young children and her parents for a camping trip to Idaho.
Opgenorth fell ill and was taken to a hospital in Missoula, MT. Doctors operated on him for what they thought was appendicitis. He was recuperating with relatives when he became ill again. Doctors then operated for an intestinal problem.
The report in the Herald said that he died four hours later July 28, 1965. Opgenorth was 39 years old.
For the next two years “Nothing is ever definite.”
For the next two years multiple businesses involved with the hotel project would come and go.
“Nothing is ever definite,” James Walker, Keystone Investments Inc. of Tacoma, told the Herald about the project in Feb. 1966.
Richland didn’t make the same mistake twice
In July 1967 Merit Company of Tacoma asked Richland to reassign the lease to them. The city didn’t make the same mistake with Merit that it made with Opgenorth. The city drew up an amendment to the 1961 lease that required Merit to complete construction by July 1, 1968, or the city could cancel the lease.
On New Year’s Eve 1968, almost 10 years after Opgenorth first proposed the hotel, people partied at the new Rivershore Motor Hotel.
Fortify would become the seventh lease holder
If the lease is reassigned to Fortify, the company will become the seventh lease holder. The lease has been transferred five times since Opgenorth obtained it.
Opgenorth’s company, Richland Marina, Inc. transferred the lease to Merit Inc. which built the Rivershore Motor Hotel in 1968. Merit transferred the lease to James Hemstreet of International Dunes, Inc., in 1978.
Jame Hemstreet’s son, Mark Hemstreet, owner of Shilo Inns, purchased the Rivershore in 1987 for $1,251,000 and renamed it the Shilo Inn – Rivershore. He transferred the hotel from his name to Shilo Inn Richland LLC in 1997. In 2012, the lease was extended 44 years with a possibility of 40 more and the yearly payment was increased. In 2018, Traum Ventures LLC purchased the hotel for $3,600,000.
The Richland City Council has to vote to approve the transfer of the lease from Traum Ventures, LLC to Fortify Holdings, Inc. during a public city council meeting. A specific date in March for considering the lease transfer has not been announced.