Business Agenda Item 5a
STAFF REPORT
City Council Business Item
DATE: August 17, 2026
TO: Honorable Mayor and Council Members
FROM: Amy Nilsen, City Manager
SUBJECT: River Lodge Operations and Management Request for Proposals – Review of Proposals and Recommendation for Operator Selection
STAFF RECOMMENDATION:
1. Receive the report regarding proposals submitted for the management and operation of the River Lodge; review the recommendation provided by the Redwood Region Economic Development Commission (RREDC) and staff evaluation results;
2. Select the Fortuna Union High School District (FUHSD) as the preferred operator for the River Lodge; and
3. Authorize the City Manager to negotiate and execute a lease and operating agreement, subject to final City Council approval. The recommendation is based on the overall evaluation of the proposals, the District's demonstrated financial capacity, assumption of operational responsibilities, commitment to facility maintenance, and the independent financial analysis provided by RREDC.
DISCUSSION:
On April 21, 2025, the City Council heard a presentation on the City’s budget outlook and this included: limited investment in vital services, particularly City wages, a review of wages across local jurisdictions; climbing city-wide turnover percentage; potential revenue generation options; and creation of a Revenue Generation Ad Hoc Committee.
On September 2, 2025, the City Council received an update from the Revenue Generation Ad Hoc Committee which provided a detailed analysis of the River Lodge. The River Lodge had an overall financial subsidy of almost $1,000,000 over the last five years as shown below.
The Ad Hoc Committee came up with three options for the Council to consider. • Stay the course and continue to utilize General Fund dollars to fund the River Lodge. • Infuse additional funds into the River Lodge to make it a top-of-the-line facility and increase advertising effort/funds. One example could entail updating the sound system.
Business Agenda Item 5a
• Lease the River Lodge to a 3rd party. This could entail releasing a request for proposal (RFP) and/or talking with local external organizations. In this scenario the General Fund would no longer provide any financial support.
At that time the Council directed staff to keep the River Lodge and pursue marketing opportunities to help address the recurring deficit that the River Lodge facility has operated in for many years.
On April 27, 2026, during the budget workshop for Fiscal Year 2026-27 budget reductions were proposed in order to adjust to the declining revenues and increasing expenses for over a 5-year period, in particular, sales tax revenues and lack of inflationary growth in the amount of $1,000,000, lack of inflationary growth for transient occupancy tax in the amount of $400,000 and the increased costs in liability insurance of over $500,000. Steps to reduce the budget included eliminating the full-time River Lodge Manager and River Lodge Coordinator positions, as well as leasing the River Lodge to another public entity.
On June 15, 2026, the City Council heard an update on leasing the River Lodge to another public entity. During this meeting the City Council directed staff to issue a Request for Proposals and expand the search to include private entities as well.
An RFP was issued on June 18, 2026 with a response deadline of July 7, 2026 at 4:00 pm. The RFP sought an organization to operate, manage, market, and maintain the River Lodge facility.
The City's objective was to identify a qualified operator capable of maintaining public access to the facility, increasing utilization, reducing the financial burden on the City, and providing longterm stewardship of this community asset.
The City received three proposals:
1. Fortuna Union High School District (FUHSD)
2. CAL FIRE / California Department of General Services (CAL FIRE)
3. Fortuna Chamber of Commerce & Visitor Center (Chamber) Pursuant to the RFP, proposals were reviewed by City staff consisting of the City Manager, Finance Director, and Parks and Recreation Director. In addition, the City requested an independent financial review from the Redwood Region Economic Development Commission (RREDC). The RREDC analysis was limited to evaluation of the financial components of each proposal and did not assess programmatic content or community benefits.
PROPOSAL SUMMARIES:
Fortuna Union High School District
The FUHSD proposal presents a public-to-public partnership model focused on educational programming, youth development, civic engagement, and regional conferences. FUHSD proposes:
• An annual lease payment of $25,000.
• Assumption of routine operating costs, utilities, groundskeeping, custodial services, and day-to-day maintenance.
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• A dedicated maintenance and asset preservation approach funded through the District's existing facilities programs.
• A three-year operating and cash flow projection demonstrating a plan toward financial sustainability.
• An initial investment of approximately $40,000 in technology upgrades and additional operational support during the start-up period.
The proposal emphasizes use of the facility for educational conferences, professional development opportunities, Fortuna civic events, and community organizations while maintaining affordability and public access with youth-focused emphasis.
CAL FIRE
CAL FIRE proposes to operate the River Lodge as a regional Public Safety Training and Emergency Services Conference Center. The proposal includes:
• An annual lease payment of approximately $50,000.
• Relocation of the Humboldt-Del Norte Unit Training Bureau to the facility, providing daily staff presence and oversight.
• Use of the facility for public safety training, emergency preparedness, governmental meetings, workforce development, and community education. • Year-round utilization through training programs and conferences conducted by CAL FIRE and partner agencies.
• Up to twelve workdays of grounds maintenance annually.
The proposal identifies significant opportunities to increase regional visitation and generate economic activity. Follow-up questions were asked to better understand the allocation of operating and maintenance costs between CAL FIRE and the City, as well as CAL FIRE's anticipated use of the River Lodge after completion of its new headquarters.
CAL FIRE indicated that it would utilize existing personnel, equipment, and administrative resources to operate and maintain the River Lodge. With respect to the Lodge's role following completion of the headquarters project, which is currently anticipated in 2032, CAL FIRE stated that it is premature to determine the long-term use of the facility beyond the headquarters development period.
Fortuna Chamber of Commerce & Visitor Center
The Chamber proposes integrating River Lodge operations into its existing tourism and destination marketing activities. The proposal includes:
• A phased lease payment schedule beginning at $1 annually during the start-up period and increasing to $24,000 annually and later $36,000 annually. • Expanded marketing efforts intended to increase event bookings, tourism activity, and overnight stays.
• Operation of the facility through Chamber staff, including a proposed office manager and event-support personnel.
• Coordination with local businesses, tourism partners, and community organizations to increase utilization of the facility.
Business Agenda Item 5a
The proposal emphasizes tourism promotion, community events, and economic development initiatives built upon the Chamber's existing visitor services and marketing infrastructure. Followup questions were asked to better understand the allocation of operating and maintenance costs between the Fortuna Chamber and the City. The Chamber indicated that it would utilize existing staff for day-to-day operations and maintenance, while contracting for specialized services such as HVAC maintenance and groundskeeping.
Additional follow-up questions were also asked regarding operating cash flow and payroll obligations. The proposed operating budget includes a $100,000 contribution from the Humboldt Lodging Alliance (HLA), which currently appears to be a one-time funding source. Without this contribution, projected revenues would not fully cover operating expenses.
Redwood Region Economic Development Commission Financial Review At the City's request, the RREDC conducted an independent review of the financial elements of the three proposals. The review analyzed:
• Financial capacity of each proposer;
• Clarity and reasonableness of multi-year financial planning; and • Financial impact to the City of Fortuna.
Based on its analysis, RREDC concluded that the Fortuna Union High School District proposal is the strongest and most complete proposal from a financial perspective. RREDC cited the District's demonstrated financial capacity, its inclusion of a detailed multi-year operating and cash-flow projection, and its commitment to facility operations, maintenance, and capital preservation.
RREDC noted that while CAL FIRE proposed the highest annual lease payment, it did not provide sufficient detail regarding ongoing operating expenses, maintenance responsibilities, or allocation of financial obligations.
RREDC also expressed concerns regarding the Chamber proposal due to limited financial reserves, uncertainty surrounding proposed outside funding, and the lack of detailed multi-year operational projections.
Staff Evaluation
City staff independently reviewed and evaluated each proposal using the criteria established in the RFP. Reviewers included the City Manager, Finance Director, and Parks and Recreation Director.
The evaluations reflected differing perspectives regarding the strengths of the proposals. The City Manager, Finance and Parks and Recreation Directors all ranked the FUHSD proposal first and ranked the CAL FIRE proposal second. All three reviewers ranked the Fortuna Chamber of Commerce proposal third. Based on the collective evaluation process, staff determined that the FUHSD and CAL FIRE proposals were the strongest submissions received.
Business Agenda Item 5a
Rank Proposal
City
Manager
Finance
Director
Parks and
Recreation
Director
1 Fortuna Union High School
District 915 945 810
2 CalFire
878 895 795
3 Fortuna Chamber of
Commerce 783 760 740
After considering the independent financial review prepared by RREDC, the strengths and weaknesses identified during the staff evaluation process and asking follow up questions of all three proposals, and the City's objectives of reducing operational costs while maintaining longterm public access and facility stewardship, staff recommends selection of the FUHSD as the River Lodge operator.
CONCLUSION:
Each proposal offered a distinct vision for the future of the River Lodge. The Chamber proposal focused on tourism promotion and destination marketing; CAL FIRE proposed converting the facility into a regional public safety training and emergency preparedness center; and FUHSD proposed a public-to-public partnership emphasizing educational programming, community access, conference activities, and long-term facility stewardship.
The independent review prepared by the RRDEC concluded that the FUHSD proposal was the strongest proposal from a financial perspective due to the District's financial capacity, detailed multi-year operating plan, and commitment to maintenance and capital preservation. RREDC specifically identified the FUHSD proposal as the most complete and financially sustainable of the three proposals reviewed.
While staff recognized significant strengths within the CAL FIRE proposal, including professional facility management experience, year-round occupancy, and regional training opportunities, staff found that the FUHSD proposal provided the greatest overall balance of financial sustainability, operational responsibility, community benefit, and long-term stewardship. The District's willingness to assume routine operating costs, provide a guaranteed annual lease payment, and invest in facility improvements, provides a clear path toward reducing the City's financial burden while maintaining the facility as a community asset.
Accordingly, staff recommends that the City Council select the FUHSD as the preferred operator of the River Lodge and authorize negotiation of a lease agreement consistent with the proposal submitted by the FUHSD.
ADDITIONAL BACKGROUND INFORMATION ON THE RIVER LODGE:
Reservation data from July 2021 through June 2026 demonstrates that the River Lodge serves both local Fortuna users and a broader local audience. Based on the City listed in the reservation data, approximately 54% of reservations were from Fortuna users, while approximately 46% were from users outside Fortuna. When measured by total reserved days, Fortuna-based users accounted for Business Agenda Item 5a
approximately 53% of reserved days, while out-of-Fortuna users accounted for approximately 47%.
When “local” is defined more broadly as Humboldt County, the data shows that approximately 87% of reservations and 85% of reserved days were associated with Humboldt County users, while approximately 13% of reservations and 15% of reserved days came from outside Humboldt County.
Wedding-related reservations represented 44 of 665 total reservations, or approximately 6.6% of all River Lodge reservations from July 2021 through June 2026. However, because weddings commonly reserve the facility for multiple days, they accounted for 110 of 923 total reserved days, or approximately 11.9% of total reserved days. Wedding reservations averaged 2.5 days per booking, with a median duration of 3 days.
Wedding use also demonstrates the River Lodge’s role as a regional venue. Only 16 of 44 wedding reservations were associated with Fortuna users, while 28 of 44 were associated with users from outside Fortuna. However, 39 of 44 wedding reservations were still from within Humboldt County, indicating that weddings primarily serve a local and regional market rather than a predominantly out-of-county market.
Weddings typically require significant facility capacity. Of the 44 wedding-related reservations, 39 reserved the entire facility, and 38 included kitchen rental. This indicates that while weddings are not the largest category of use by number of reservations, they are an important facility use because they tend to involve full-facility rentals, kitchen use, and multi-day reservations.
Non-profit organization related reservations represented 194 events or approximately 29.2% of total reservations. Non-profit reservations use represented 360 of the 923 total event days, or 39% of total event-days.
Category Reservations Percent of 665
Nonprofit/community organization use 194 29.2%
School use 93 14.0%
Governmental/public agency use 84 12.6%
Weddings 44 6.6%
Baby showers 26 3.9%
Other/private/commercial 224 33.7%
Total 665 100.0%
STRATEGIC PLAN 2026-2036:
This action supports the following area(s) of your City Council’s Strategic Plan 2026-2036.
Quality of Life: Family, Nature & Neighbors: Safety, family life, care for youth, cleanliness, parks, forests, and rivers.
Priorities:
Business Agenda Item 5a
Priority 3: Fiscal Foundation – Revenue, Cost Accounting & Honest Commitments FISCAL IMPACT:
The fiscal impact varies significantly among the proposals.
FUHSD proposes a fixed annual lease payment of $25,000 while assuming responsibility for utilities, routine maintenance, groundskeeping, custodial services, and operational management.
CAL FIRE proposes an annual lease payment of approximately $50,000.
The Chamber proposes a phased lease payment schedule beginning at $1 annually during the start-up period and increasing to $24,000 annually and later $36,000 annually and anticipates one-time financial support from the HLA in the amount of $100,000.
RECOMMENDED COUNCIL ACTION:
1. Receive staff presentation and review Council questions.
2. Receive public comments.
3. Motion to select the Fortuna Union High School District (FUHSD) as the preferred operator for the River Lodge, and authorize the City Manager to negotiate and execute a lease and operating agreement, subject to final City Council approval. Roll Call vote.
ALTERNATIVE TO STAFF RECOMMENDATIONS:
As an alternative to staff's recommendation, the City Council could select one of the other proposals as the preferred operator and direct staff to negotiate a lease agreement with that organization. While staff recognizes several strengths in the other proposals, staff does not recommend this alternative because the proposals provide less financial or long-term commitment than the proposal submitted by FUHSD. Specifically, the independent review conducted by RREDC concluded that the FUHSD proposal was the strongest and most complete proposal from a financial perspective. RREDC found that FUHSD demonstrated the greatest financial capacity, submitted the only detailed multi-year operating and cash-flow projection, and provided specific commitments related to facility operations, maintenance, and capital preservation.
ATTACHMENTS:
1. FUHSD Proposal
a. Follow-Up Questions
2. CAL FIRE Proposal
a. Follow-Up Questions
3. Fortuna Chamber Proposal
a. Follow-Up Questions
4. RREDC Memo
5. Letter from Julie Winburn in Support of the Chamber
6. Letter from Michael Renner in Support of the Chamber