The Montana Department of Commerce (DOC) has responded to questions about their cancelation of the concessionaire contracts in Virginia City and the new contracts being offered to the concessionaires and published a frequently asked question page to help answer future inquiries. 

Authority for the DOC to set contract terms for the MHC properties

The DOC pointed towards SB 116, legislation sponsored by senator Tony Tezak who represents Virginia City and the surrounding areas during the 2025 legislative session, as the authority for the DOC to manage the contracts in place of an executive director appointed by the Montana Heritage Commission (MHC.) The bill changed the language in MCA 22-3-1002 to lower the number of members of the MHC from 9 to 14 and simplify the requirements for qualifications of the board members. 

SB 116 also replaces the language regarding the MHC’s ability to staff its efforts with language that reads; “ In compliance with the state pay plan, the department (DOC) shall provide all staff and services to the commission that the commission, in conjunction with the department, determines are necessary for carrying out the commission's programs and statutory requirements. The department shall assess the commission for reasonable costs."

“The leases and concessionaire contracts are part of MHC’s overall budget as earned revenue and fall under the category of administrative budget tasks – ensuring that MHC is meeting its budget authority as approved by the legislature by meeting the necessary earned revenues. Additionally, though not explicitly stated in the statute, it is common practice that small attached-boards and commissions do not have their own legal staff, such is the case with MHC. This means that Commerce legal leads the legal authority for MHC and provides legal services, including contract negotiations and ensuring that necessary clauses are included in all contracts,” said the DOC in a statement to The Madisonian. 

The statement went on to address the process for appointing an acting executive director for the MHC after Kal Poole ceased to be the executive director. 

“In compliance with state employment law, Commerce will not discuss the circumstances of Kal Poole's departure from MHC. The Commission did hold a closed meeting, which is posted on the MHC website, where an acting Executive Director was appointed. As per statute, Commerce made this recommendation as Commerce is responsible for providing all staff for the Commission. Please see SB 116 from the 2025 session which amends MCA 22-3-1002,” read the statement. 

15% gross revenue contracts

The statement to The Madisonian and the FAQ page also addressed how the department came to the conclusion that they should charge some concessionaires 15% of gross revenue as payment for the use of their facility. 

“As discussed in the (Dec. 5) MHC meeting, Commerce reviewed the capital investments it has with each business in making determinations on whether lease amounts would be based on a percentage of gross revenue or on a monthly flat lease amount. The businesses with 15% gross revenue were determined due to the large capital MHC has put into these businesses to make them “turnkey.” This includes equipment, machinery, furniture, furnishings, liquor licenses and more. Staff also reviewed other concessionaire contracts for tourism-based venues in making the final determination,” read the statement. 

Although the concessionaires of the Star Bakery and Wells Fargo disagree with the 15% terms, they do agree that the businesses are for the most part turnkey. Kirk and Shauna Belding, who have operated  Bob’s Pizza for 27 years, are also being offered a contract for 15% of gross revenues and dispute that their business is turnkey. 

“Bob’s Place should not be considered a turnkey business for the state,” read an email from the Beldings to The Madisonian. “When Kirk took the last spot available in 1997 he was taking on a bar without a liquor license. All restaurant equipment inside as well as tables and some chairs are owned by Kirk Belding. The beer and wine license is also in his name; it does not belong to the state.”

On the FAQ page the DOC addresses the reasons for giving a 15% of gross revenue contract to Bob’s Pizza with the following statement. 

“MHC contributed significantly to improvements and equipment since the business opened to make it turnkey or nearly turnkey, including a walk-in that was installed in 2024 worth well over $6,000 when the business paid less than $500 in rent for 2024. This business includes bathrooms and running water.”

Other businesses who have received 15% gross revenue contracts include the Opera House, The Brewery Follies, The Bale of Hay Saloon, The Wells Fargo Steakhouse, The Star Restaurant and Bakery in Nevada City, Wild West 406 LLC (who operates Bonanza Inn, Harding Home, Meagher Cabin and Daems and Corbett House,) and Destination Virginia City, MT (who operates Fairweather Inn/Annex and The Nevada City Cabins.)

Contrasting the contracts for  Virginia City and Reeder’s Alley

Concerns have also been raised about the comparison between the MHC contracts for  Reeder’s Alley properties in Helena and the properties in Virginia City. According to the FAQ page both Rock Starr BBQ and Cottontop Pastries LLC who are concessionaires for the MHC in Reeder’s Alley are being offered contracts with a flat rate payment of $800 a month and the MHC will pay for utilities as part of the contract. 

One of the 15% gross revenue contracts for a Virginia City property shared with The Madisonian includes the following language regarding the payment of utilities. 

“Concessionaire shall be solely responsible for paying for all Facility operational costs, including those associated with water and sewer, trash removal, and any and all other utilities, including, without limitation, lighting, heating, fuel, power, communication, and other utilities and services associated with the use, occupancy, operation, and management of the Facility during the term of this Contract, including any period during the term of this Contract when the Facility is closed or otherwise not operating.”

The legacy of Elijah Allen

The DOC FAQ page puts the blame for much of this process on the shoulders of former MHC executive director Elijah Allen who is scheduled to be sentenced on Dec. 18 after pleading guilty to embezzlement and money laundering charges relating to his time with the MHC. 

“A previous MHC executive director who resigned in 2024 and recently pled guilty to embezzling more than $380,000 from MHC and to money laundering,” reads the FAQ page. “After the executive director departed from the MHC, Commerce brought in more of the MHC’s responsibilities within Commerce. It was also discovered that former MHC commissioners signed off on fraudulent purchases and made other decisions that were in violation of state policy and process, harming the MHC and the long-term vibrancy of Virginia City.”

As of the date of publication, The Madisonian is not aware of any charges filed against former members of the MHC regarding their participation in signing off on fraudulent purchases or violations of state policy. Additional language on the FAQ page regarding the legacy of Allen includes the following statements. 

• “A review of contracts finalized under previous leadership identified significant irregularities. Some of these agreements appeared to be far below market values that did not serve MHC well or the long-term viability of Virginia City. Commerce has a fiduciary duty to correct these contracts.”

• “These crimes, in addition to poor management during his tenure as executive director, have severely damaged the MHC and put all parties and stakeholders at risk of further losses.”

• “In addition to criminal activity, the previous executive director, who resigned in 2024, engaged in mismanagement, waste, fraud and abuse over many years, and Commerce, with the current members of the MHC, have a responsibility to correct these issues. Eliminating the discrepancies, inconsistencies and unfairness of current lease and concessionaire agreements is a component of Commerce and MHC’s course of corrective actions intended to remedy MHC’s circumstances to position the commission, Virginia City, Nevada City, Reeder’s Alley and the state for greater success in the future.”

At the Dec. 15 Madison County Board of Commissioners work session, Virginia City mayor Justin Gatewood acknowledged the crimes of the former director, but pointed out that it was unfair for the concessionaires to be punished for his crimes. 

“These are the people they should be proud of,” said Gatewood referring to the concessionaires. “These are one of the few successes that Heritage Commission's had in the last couple years. To treat them like this is just wrong.”

“The Department of Commerce and the Montana Heritage Commission, as some of you well know, had a criminal within their ranks for 10 years, and he's admitted and pled guilty to embezzlement and money laundering charges. The Town of Virginia City and these poor concessionaires had nothing whatsoever to do with this. For the Department of Commerce and Heritage Commission to allow this individual to exploit taxpayer dollars for that many years, they're going to punish us by terminating their agreements. That is misguided and wrong headed,” Gatewood continued.

The budget deficit of the Virginia City concessionaire contracts

At the Dec. 5 MHC meeting Department of Commerce deputy director Mandy Rambo reported that the 2025 Montana Legislature had lifted the $1 million cap on funds from the bed tax and provided $1.2 million from bed tax income as revenue for the MHC. When asked how that compared to the losses from the concessionaire contracts the DOC gave the following response. 

“Ms. Rambo took the increase into account in her financial report. Had Commerce not been able to remove the $1 million bed tax cap, that would have meant that MHC’s budget would have been made up of $1 million bed tax, about $250k vehicle registrations and $1.3 million in earned revenues. With the change, the budget is now made up of $1.25 million from bed tax, $250k in vehicle registrations and $1.1 million in earned revenues,” read the statement. 

At the Dec. 5 MHC quarterly meeting, DOC assistant deputy director Mandy Rambo indicated that the concessionaire lease revenue required for the MHC to meet its budget statute is only about $750,000 of the $1.1 million the properties are expected to earn. 

The FAQ page indicates that the DOC is not trying to push existing vendors out and points out that it has given them first opportunity to sign the new contracts. Jason Lange, who runs the Wells Fargo Steakhouse, has indicated that the new terms will likely put him out of business. 

This is a rapidly developing story. Look for updates in The Madisonian as they become available.  You can find the DOC FAQ page at https://commerce.mt.gov/About/Boards/Montana-Heritage-Commission/Concess...