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