Fortuna weighs lease of River Lodge to high school district

Fortuna’s budget squeeze has now landed on River Lodge, where city leaders are weighing whether a lease to Fortuna Union High School District could trim costs without selling one of the city’s most visible public assets. The adopted 2026-27 budget assumes the lodge will be leased by Jan. 1, 2027, after the city said it has poured more than $1 million from the General Fund into the building over the past five years.

City budget materials described a projected gap of more than $1 million for fiscal year 2026-27, driven in part by a $400,000 drop in transient occupancy tax revenue and a $615,000 jump in liability insurance costs. In one workshop presentation, staff put the general-fund deficit at $738,000 and said they were also looking at transit-service efficiencies as reserve shortfalls and a broader structural gap forced the city to tighten spending.

River Lodge has been a stubborn drag on the city’s books for years. A local report said it has not turned a profit or even broken even since it was built in 1998. In 2024-25, the lodge reportedly cost more than $376,000 and generated just over $209,000. In 2025-26, it cost more than $469,000 to maintain and brought in $194,000. Council had already rejected a sale as a first choice, and at the April 27 budget workshop, Councilmember Tami Trent made her position plain: “I don’t even want to look at that as an option.”

The public-agency path now under discussion would keep the city in ownership while shifting day-to-day operations to a tenant better able to absorb costs. Staff said city and district officials met and walked through the property, and the adopted budget includes a $180,000 reduction to River Lodge expenditures tied to a lease with a public or nonprofit entity starting Jan. 1, 2027. The staff report also flagged a Surplus Land Act issue: a lease longer than 15 years could trigger a surplus-land declaration, while a lease of 15 years or less, or one that bars development and demolition, might avoid that process.

A second proposal came from Kinetic Hospitality Group Inc., submitted June 10 by Fortuna resident Erica Thompson. Her five-year proposal would turn the lodge into a privately managed hospitality and event venue. Thompson said she had “deep personal and professional roots in Fortuna,” and the proposal said that at 50% event-driven occupancy, the lodge could generate an estimated $40,950 a month in transient occupancy tax for the city, or about $491,400 a year.

That private option is also the one local lodging interests are watching most closely. The Fortuna Lodging Alliance warned that any lease arrangement that would significantly reduce the lodge’s availability for events, conferences, weddings and other visitor-serving activities would hurt the hospitality economy. River Lodge itself, a roughly 6,000-square-foot conference facility overlooking the Eel River with banquet capacity in the 325 to 600 range, was originally built to increase bed-tax and sales-tax revenue and draw more hotel activity. How Fortuna chooses between public control and private use will shape not just River Lodge, but later decisions about the Depot Museum, city services and the Humboldt Transit Authority system.