Fortuna Council directs manager to seek River Lodge lease and HTA transit analysis as budget gap looms

Fortuna — The Fortuna City Council on April 27 voted to direct the city manager to pursue leasing the River Lodge to a public agency or nonprofit and to request an operational analysis from the Humboldt Transit Authority (HTA) to explore more efficient options for the city’s transit service as staff described a tightening general fund for fiscal year 2026–27.

Staff presented a detailed general‑fund overview at the workshop, saying the proposed budget shows a $738,000 gap made up of a $550,000 one‑time general‑plan update cost and $190,000 in one‑time employee stipends. Staff reported that rising costs — notably a roughly 28% increase in health‑insurance premiums (about $841,000) and a ~15% rise in liability insurance (about $87,000) — together with flat sales tax and hotel tax revenues have eroded purchasing power and left reserves below policy targets.

The presentation highlighted that Fortuna’s sales tax is down relative to inflationary expectations, leaving roughly a $1,000,000 loss in purchasing power over five years, and that transient‑occupancy‑tax revenue is projected at about $700,000 for FY26–27 versus an inflation‑adjusted expectation near $1.1 million. Staff said the city’s ending general‑fund balance is estimated at about $4,665,000, approximately $1.1 million below combined reserve policy targets.

Staff recommended a package of deficit‑reduction measures — including a hiring freeze for the next fiscal year, department supply‑and‑service cuts up to 10%, freezing certain vacant positions (including a full‑time police officer), and transferring some positions or costs to Measure E where appropriate. Staff also asked the council to consider leasing the River Lodge and to explore alternatives for transit operations.

On the River Lodge, staff said the facility’s annual budget is nearly $470,000; it was rented 163 days in the last 12 months, producing about $1,356 per rented day compared with a break‑even figure of roughly $2,880 per rented day. Staff noted the general fund has subsidized the River Lodge by more than $1 million over the last five years and recommended directing the city manager to pursue leasing or selling to local public agencies and return to council with a plan. Council modified the language to allow public agencies and nonprofits and adopted a motion to direct the city manager to pursue leasing; the motion was seconded and passed by roll call.

On transit, staff reported a decline in transit funding from about $600,000 in FY21–22 to roughly $414,000 projected for FY26–27. The city currently budgets about $277,000 for transit and provides approximately 6,500 trips annually (about $43 per trip). Staff said HTA had withdrawn nearly $300,000 in anticipated support (for buses and an app) and recommended pursuing an operational analysis to identify a more efficient provider or model. The council approved a motion directing the city manager to pursue sustainable long‑term transit options, including working with HTA on an operational analysis; the motion passed with one dissenting vote.

The museum also drew substantial attention. Staff reported last year’s museum budget at about $39,000, annual visitation near 2,600–2,700 visitors, donation revenue of roughly $3,000 and a donations fund balance near $22,000. Staff recommended closing the Fortuna Depot Museum from October through April and paying the part‑time curator from the donations fund to save about $24,000, while offering the alternate option of keeping the museum open year‑round at that cost to the general fund.

Members of the public urged the council to keep the museum open year‑round and to explore fundraising and operational alternatives before imposing cuts. Alex Servais, curator at the Fortuna Depot Museum, said the museum “has year‑round uses” and suggested expanding weekend functions as a tourist information resource and working with the historical commission and the curator on fundraising and expense reductions. Historical commission appointee Ruth Deckett warned that temporary closure risks permanent loss of the museum, and other speakers suggested committees, membership drives, and grant efforts as alternatives to staff cuts or closures.

Council members asked staff follow‑up questions about timing for an HTA analysis, whether an HTA review could precede purchasing a $100,000 bus, and whether fundraising might offset museum costs. Staff said an HTA analysis could be requested but the timeframe depends on HTA. On the museum, staff said an entry fee of about $14 per visitor would be required to break even given roughly 2,600 annual visitors.

Votes at a glance

- River Lodge leasing motion: moved by a council member, seconded; approved by roll call (unanimous in the recorded roll call). The council directed the city manager to pursue leasing the River Lodge to a local public agency or nonprofit and to return with recommendations on long‑term viability.

- Transit operational analysis motion: moved and seconded; approved by roll call with one recorded ‘No’ vote (Mayor Pro Tem Trent). The council directed the city manager to pursue sustainable long‑term options for Fortuna transit, including working with HTA on an operational analysis.

- Deferral of item C: the council voted unanimously to defer the unspecified item C to the May 4 meeting to consider additional funding options.

What’s next

Staff said deferred items can return at the May 4 budget workshop for additional council direction. For the River Lodge lease work and the HTA operational analysis, staff will return to the council with findings and any recommended agreements or cost estimates before final commitments are made.

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