When you first arrive in Rizolt City, a maid comes out and tells you about a place called the Forgotten Garden (more about that here).
After that, take a few steps forward, and Toril says Altore's party will arrive in the morning, so head on over to the inn for an in-depth look at Lita's back story.
After that scene, head to the co-op for, you guessed it - another scene.
Alex tells Altore that you're all ready to join the resistance, and he shares the details of what they found at Pheryl Town. Then, the talk turns to the items the resistance needs in order to attack the Overlord's castle.
Altore says the item they're looking for is rumored to be on an island floating in the sky - and the only to way get there is to (hopefully) convince a dragon to take you.
Pangie says there's a dragon in the Dragon's Den who she wants you to negotiate with, so that's your next destination.
Note: While you're in the co-op, talk to the Male Martial Artist next to the coin exchange to accomplish the task set out in Subquest 11. Now you can return to Gastra Village at any time and report your findings to Corona.