Department Of Commerce

Montana Heritage Commission Frequently Asked Questions for Lease and Concessionaire Contract Continuity Project for Virginia City, Nevada City and Reeder’s Alley

The Montana Heritage Commission is administratively attached to the Montana Department of Commerce. Over the course of the last year, Commerce has been reviewing the MHC's activities to improve oversight of taxpayer dollars and ensure that Virginia City, Nevada City and Reeder’s Alley can continue to attract visitors from across Montana and the United States. In 2024, major irregularities and criminal activity was uncovered by Commerce, which has resulted in a comprehensive review of MHC's activities. The purpose of this page is to provide information about recent activities and the overall state of the MHC.

Q: What is the MHC and how is it related to Commerce?

A: The MHC preserves and manages historic resources in Viriginia City, Nevada City and Reeder’s Alley and promotes the appreciation of history through quality visitor experiences. The MHC is administratively attached to Commerce. Members of the MHC are appointed by the governor, executive branch directors (or their designees) and by the Montana Senate President and the Montana Speaker of the House. Commerce provides supporting services, including legal counsel and financial oversight.

Q: Why are the MHC and Commerce canceling and reissuing contracts in Virginia City?

A: Recently, Commerce completed a review of all concessionaire agreements.  

The previous contracts varied widely in terms, rates and obligations, some offering preferential treatment or charging rents far below market value. The new agreements aim to ensure consistency across vendors, align with legislative mandates for earned revenue and reflect the level of investment MHC has made in each space used by each business (i.e. water infrastructure, improvements, square footage, etc.).

Additionally, Commerce has provided roughly $2.1 million additional funds to the MHC in the past 18 months.

MHC’s finances come from three sources: 

  1. 2% of the Lodging Facility Use Tax, also known as the Bed Tax 
  2. A portion of vehicle registration fees in support of state parks and facilities 
  3. Earned revenue through both tourism operations managed by the MHC seasonal staff as well as revenues earned through concessionaire contracts and leases.  

In the recent legislative session, the Montana State Legislature mandated that approximately 44% of the MHC’s budget authority shall come from funds which the MHC earns itself (earned revenues, leases and contracts) with about 56% of its budget coming from other revenue sources. This 44% amounts to about $1.1 million in budget needing to come from earned revenues. In the past several years, the MHC has earned an average of $750,000 or less per year, which is less than 75% of what the MHC should be earning. While restructuring the leases to be more fair is a necessary action to improve fairness, it is also needed to improve the MHC’s financial situation.

Q: Is this related to the investigation into a former MHC executive director?

A: Yes; 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. 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.

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 Viriginia City. Commerce has a fiduciary duty to correct these contracts.

Q: What are the funds used for?

A: 100% of the revenue generated by the MHC stays with the Commission. It is strictly used for historic preservation in Viriginia City, Nevada City and Reeder’s Alley or for operations.

Q: Did the MHC and Commerce cancel lease and concessionaire contracts for Virginia City and Reeder’s Alley businesses without notice?

A: No; lease and concessionaire contracts were not canceled without notice. Many lessees and concessionaires already received a written notice concerning cancellation of contracts during the weeks of December 5 and December 12, 2025.  Where contracts required notices to be sent by mail, the MHC also sent a courtesy copy of the notice and a draft contract to review.   

No contracts will be cancelled without written notice as required by the terms of every contract. All concessionaires or lessees will be offered a new lease or contract.   

Concessionaires and lessees who have not yet received notice can expect the notices related to their contracts to be provided prior to the end of December 2025.   

Because existing contracts vary significantly and are not uniform, the timeframe for response to the notices varies. The existing contract controls the response timeframe.  This is one of the items that will be corrected under the new lease and concessionaire contracts. New contracts will include uniform provisions to the extent possible. The inconsistency in these notice periods is just one other example of why the contract continuity review process is necessary.

It is important that concessionaires or lessees decide whether they want to sign a new contract in a timely manner. MHC will need to open the lease opportunities to others if concessionaires or lessees are unwilling to sign a contract. The opportunities will be opened well in advance of the summer season if necessary to encourage interested persons to contract before the summer season begins.

Q: What threats face the MHC now and in the future as a result of waste, fraud and abuse in the past?

A: The MHC executive director who resigned in 2024 pled guilty to the embezzlement of over $380,000 in addition to money laundering crimes and is set to be sentenced in mid-December 2025. 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. 

Q: Why did the MHC and Commerce cancel lease and concessionaire contracts for businesses in Virginia City and Reeder’s Alley? Why are some lessees having to pay 15% of their gross revenue and some not?  

A: Commerce and MHC want to ensure that there is no perception of favoritism or preferential treatment. As written now, there are several contracts which provide preferential terms to concessionaires. The Montana State Legislature has mandated the MHC earn revenue to make up to 44% of its budget, and it cannot do this with the previous contracts in place.  

Most contracts will pay a flat monthly lease to the MHC. In cases where the MHC has invested a substantial amount of capital into the business being turnkey or nearly turnkey, the contracts will require payments of 15% of gross revenue instead of a flat lease amount. Some examples of the MHC investments include equipment, machinery, furniture, other furnishings and liquor licenses. These large-scale investments by the MHC require the MHC to be a beneficiary of the gross earnings from these businesses.

Q: What was wrong with the old contracts? 

A: Several of these contracts included outdated language, inaccurate or no insurance requirements and clauses which varied greatly. In addition to the inconsistencies from contract to contract, these contracts also gave a small number of concessionaires and lessees preferential rent terms with very low rent or revenue payments to be made to the MHC. These lower-than-average contracts have resulted in financial instability issues for the MHC as it continued to lose money on these contracts, where the MHC should be generating revenue from them.

Q: Is the desire of the MHC and Commerce to replace the current lessees and concessionaires?

A: No. While the MHC and Commerce cannot provide preferential terms to lessees and concessionaires, the current contract holders are given first choice. However, should a current lessee or concessionaire choose not to renew under new terms, the MHC and Commerce anticipate that other businesses and entrepreneurs will show interest.

Q: Can the MHC and Commerce provide details on the current contracts so the public can understand the inconsistencies and issues that are being remedied? 

A: Yes. As these agreements are public information, the information below includes the name of the business, the terms and price with the actual amounts paid in the last year and proposed updated terms. This information is provided to give context to all parties involved and to illustrate how the updated contracts restore fairness among the lessees and concessionaires.

As part of the efforts to restore fairness, transparency and financial stability, all lease and concessionaire agreements have been reviewed and standardized. The previous contracts varied widely in terms, rates and obligations, some offering preferential treatment or charging rents far below market value. The new agreements aim to ensure consistency across vendors, align with legislative mandates for earned revenue and reflect the level of investment the MHC has made in each space used by each business (i.e. water infrastructure, improvements, square footage, etc.). Below is a comparison of previous and proposed rents to illustrate how these updates affect each leaseholder.

Virginia City + Nevada City 

Business 

Rent Due Under Old Contract 

Rent Due Under New Contract 

Increased Rent Under New Contract?   

Stephano’s Fine Art Studio 

$3,376.53 annually plus 5% of gross sales for 2026.   

$3,278.20 in 2026 with 3% annual increases beginning in 2027. 

No. Rent decreased for uniformity.  

Virginia City Coffee Depot 

$3,182.00 annually for 2026. 

$3,278.20 in 2026 with 3% annual increases. 

Yes. $19.24 increase each month for five months or approximately 3%. 

Ruby Chang 

$1,492.75 for 2026, which is $298.55 per month for five months.  3% increase expected annually. This is less than half of any other vendor.  This lease with favorable terms was set to go through October of 2035.   

$3,278.20 in 2026 with 3% annual increases. 

Yes. Rent increased to be uniform with similarly situated leases.   

Calamity Janes 

$2,985.10 for 2026 and 3% increase annually.   

$3,278.20 in 2026 with 3% annual increases.   

Yes. $58.62 increase each month for five months or a bit over 9%. Rent increased to be uniform with similarly situated leases.  

Virginia City Trading Company 

15% of gross revenues. In 2025, $4,089.10 paid. 

Switching to flat rate of $4,089.10 annually, with 3% annual increases.   

No. Space is significantly larger than Calamity Janes or Ruby Chang; larger rent is justified.  Removed percentage of income because MHC did not provide turnkey operation or contribute to equipment, licenses or housing. 

Montana Photo Gallery  

$6,722.91 for 2026 with 3% increases. 

$6,722.90 for 2026 with 3% increases. 

No. To be paid at $1,344.58 per month for five months, which represents a one cent decrease for the year. This business includes two buildings in the lease – Photo Shop and Boots and Shoes. MHC contributes significant display items. 

Wells Fargo Coffeehouse (Steakhouse) – 

MHC provides a full liquor license.   

5% of gross alcohol sales only. Did not include sale of food, non-alcohol beverages or other retail items. In 2025, the business paid rent of $5,700 without showing alcohol sales records. Because payments were even amounts, does not appear to reflect contract terms. This contract reflects terms that are significantly more favorable than any other contract. 

15% of all gross revenues. Includes uniform requirement for all leases to provide copy of resort tax filing and is subject to audit of records.   

Yes; amount is unknown. MHC provided a turnkey or nearly turnkey restaurant business space, including equipment, a full liquor license as well as free house for business employees. This business also includes bathrooms for customers and running water. Because of MHC’s significant contribution, a profit rental model is appropriate.   

Destination Virginia City, MT 

(Accommodations including Fairweather Inn/Annex and Nevada City Cabins.) 

12% of gross on revenues up to $300,000 and 10% of gross revenues thereafter. Business paid rent of $31,864.02 in 2025. 

15% of all gross revenues. Includes uniform requirement for all leases to provide copy of resort tax filing and is subject to audit of records. 

Yes. Gross revenues cannot be verified without review of business records, but based on rent paid for this business in 2025, gross revenue was at least $265,533 for around four months of operations. MHC contributed significantly to equipment and furnishings to offer a turnkey or nearly turnkey operation when vendor first took over the operation, including furnishings for the rooms and Inn. Additionally, MHC invested significantly to improvements since that time.  This business includes running water and bathrooms for customers.   

Wild West 406 LLC 

(Accommodations including Bonanza Inn, Harding Home, Meagher Cabin and Daems and Corbett House.)  

Contract specifies that business is to pay base rent of a specific amount (in 2025 it was $10,927.27) and then 10% of gross receipts over $60,000. Business paid $13,188.45 in rent in 2025.   

15% of all gross revenues. Includes uniform requirement for all leases to provide copy of resort tax filing and is subject to audit of records. 

Unknown. If gross revenues remain the same in 2026, rent would be projected at $13,321.65, which is an increase of $133.20 for the full year, or $26.42 per month spread over five months. Gross revenue for this business in 2025 was at least $88,811.80 based on amount paid under contract for around four months of operations.  MHC contributed significantly to equipment and furnishings to offer a turnkey or nearly turnkey operation when vendor first took over the operation, including furnishings for the houses and inn.  This business includes bathrooms for customers and running water. 

Brewery Follies 

(MHC provides housing for staff and a beverage license as part of this lease.) 

$10,000 plus 5% of all sales as of 2015.  A 1% increase to base was to occur under contract. Base was $11,046.22 through 2025. Also requires business to provide 50 free tickets to MHC annually and reduced ticket prices for other promotional tickets MHC wants. Paid rent of $16,654.57 in 2025. 

15% of gross sales. Removed requirement to provide free tickets or reduced fee tickets for MHC.  

Possibly. Based on 2025 rent payments, the gross receipts were $112,167 if the business paid rent according to the contract for about four months’ income. If that income remains the same, rent under new contract would be $16,825.05; an annual increase of less than $200. This business includes bathrooms and running water. 

Opera House, including 10 additional buildings, including several for staff housing. 

5% of the first $110,000 if gross revenue; 10% of additional gross revenue. Business must sell products from films to MHC at wholesale and provide 350 free tickets to MHC each season. If commission exceeds this amount, extra tickets must be provided at $15 per ticket. Business paid $7,158.71 in rent in 2025. 

15% of gross sales.  Removed requirement to provide free tickets or reduced fee tickets for MHC.   

Yes. Based on 2025 rent payments, the gross receipts were $126,587.10 if the business paid rent according to the contract for about four months’ income. If that income remains the same, rent under new contract would be $18,988.065.  Note: Under the existing contract, this business’ gross sales are much more than the Brewery Follies’ and it pays less than half the amount the Follies pays in rent. This business includes right to use Bale of Hay bathrooms, including running water. 

Bob’s Place 

$7,222.36 annually for 2026 with a 3% annual increase.  Also, rent for four employee houses at $5,500 annually (prorated), totaling $12,722.36 for both. 

Business stated that it charged  employees for rent, which did not comply with contract terms.   

15% of gross sales.  Removed rent for four employee houses, which matches contracts of Opera House, Brewery Follies and Steakhouse.    

Possibly. Rents under both contracts match at gross sales of $84,815.73. If gross sales exceed that amount, then rent under the new contract is higher than the old contract. 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. 

Bale of Hay 

15% of gross sales was the rent for the last contract in 2025, with no employee housing.  Contract was in place for a very short period of time in 2025. Current contract does not exist for this concession.   

15% of gross sales will be offered; it will include option for up to two employee houses. 

No. Terms are more favorable to lessee.  MHC provides a turnkey or nearly turnkey restaurant business space, including equipment and a full liquor license. Because of MHC’s significant contribution, a profit rental model is appropriate. This business includes bathrooms and running water. 

Star Restaurant and Bakery 

Annual rent for 2026 $4,377.50 with 3% increases.   

15% of gross sales and includes up to one employee house. 

Yes; amount is unknown because gross sales are not known to MHC.  MHC provided a turnkey or nearly turnkey restaurant and bakery business space, including equipment, two  buildings and an option for employee housing. Because of MHC significant contribution, a profit rental model is appropriate. This business includes bathrooms and running water. 

Reeder’s Alley 

Business 

Rent Due Under Old Contract 

Rent Due Under New Contract 

Increased Rent Under New Contract? 

Rock Starr BBQ 

$800 per month 

$800 per month 

No. MHC contributed significantly to this business, including partial kitchen and brand-new deck.   MHC pays for utilities for all renters.  MHC also pays to clean and maintain common areas. This unit also has water 

Merlin CCC 

$206 per month in 2026 with 3% increase yearly.  Contract specifically states “…Commission may perform an annual review of market rent conditions each December during the term of this contract, at its sole discretion, to determine whether an additional rent increase is warranted.  Commission will notify Lessee in writing of any rent increase at least (10) days prior to January 1st of each year in which the rent increase will become effective.” 

$206 for January and then $463.50 per month beginning in February to match other single unit contracts. 

Yes.  MHC pays for utilities for all renters, pays to clean and maintain common areas.  This renter paid $0 rent for the first six months of 2025.  The rent under the current contract is significantly less than other single units.   

Foundation for Montana History 

$463.50 per month for 2026 with 3% increase yearly. 

$463.50 per month for 2026 with 3% increase yearly. 

No. This property is a single unit.   

Dundee’s Barbershop 

$602.87 per month in 2025. Contract expired at end of 2025 

$602.87 per month for 2026 with 3% increase yearly.  This represents a per unit price of $301.435 per month 

No. This property is two units in the original Reeder’s Alley, which are now combined.  Instead of using the per unit rate and multiplying by the number of units, a bulk rent discount was offered.   

Cotton Top Pastries Inc. 

$795.67 for 2026 with a 3% yearly increase.  Lessee paid for utilities.  This is the only unit separately metered.  Contract specifically states “…Commission may perform an annual review of market rent conditions each December during the term of this contract, at its sole discretion, to determine whether an additional rent increase is warranted.  Commission will notify Lessee in writing of any rent increase at least 10 days prior to January 1 of each year in which the rent increase will become effective.” 

$795.67 for January and $800.00 per month beginning February with 3% increase yearly.  Requirement to pay utilities was removed to unify with other contracts. 

No. If you consider MHC will pay utilities, the rent decreased. Single unit. However, MHC contributed significantly to this business, including partial kitchen. This unit also has water and a bathroom.  Rent matches the most similar space: Rock Starr BBQ. 

Helena Tourism Business Improvement District 

$746.28 per month, which represents a per unit price of $149.256 per month. Contract scheduled to terminate at the end of 2026. This per unit pricing was significantly less than all other businesses that rented multiple units. The contract specifically states: “The Commission may perform an annual review of inflation rates and, if warranted, make a cost-of-living adjustment each December for the duration of this contract. After each annual review, rent for the Facility shall increase the following operating season by the COLA percentage ascertained during this review.  Lessee will be notified in writing of the new rental rate by January 1 of each year.”   

$746.28 for January and then $1,507.18 per month beginning February 2026 with 3% increase yearly. This represents a per unit price of $301.435 per month. Five-year contract offered. 

Yes. This business rents five units in the original Reeder’s Alley.  Four are combined and business rents a separate single unit. Bulk pricing discount applied.  MHC pays for utilities and cleans and maintains common areas. 

Western Environmental Law Center 

$1,803 per month, which represents a per unit price of $257.57 per month with a 3% annual increase.    Contract scheduled to expire in 2029.   

Contract specifically states: “…Commission may perform an annual review of market rent conditions each December during the term of this contract, at its sole discretion, to determine whether an additional rent increase is warranted.  Commission will notify Lessee in writing of any rent increase at least 10 days prior to January 1 of each year in which the rent increase will become effective.” 

$1,803 for January and then $2,173.35 per month beginning February 2026 with 3% increase yearly.  This represents a per unit price of $301.43 per month. Five-year contract offered.   

Yes. This business rents seven units in the original Reeder’s Alley.  Four are combined; two additional units are combined with each other and one is a separate single unit. Bulk pricing discount applied. MHC pays for utilities and cleans and maintains common areas. 

Unit #117 

N/A 

Rented as of Jan.1, 2026 for the single unit price of $463.50 per month to be uniform with all other single units. 

N/A 

Unit #113 

N/A 

Rented as of Jan. 1, 2026 for the single unit price of $463.50 per month to be uniform with all other single units. 

N/A 

Aizada Imports 

This contract expires at the end of 2025. Rent in 2025 was $300 per month. 

New contract offered to lessee for the single unit price of $463.50 per month to be uniform with all other single units.   

N/A