Things are escalating into a standoff at Montana’s state-owned ghost towns, where rising rents and theme park ambitions, along with a case of embezzlement, are frustrating the owners of some of the state’s top tourist attractions in neighboring Virginia and Nevada cites in southwest Montana and Reeder’s Alley in Helena.

Operators of popular attractions like the Illustrious Virginia City Players, a beloved seasonal theater and vaudeville show, say new lease terms drafted by the Montana Department of Commerce are unaffordable. The state is asking for a standardized 15% of gross sales from Virginia City restaurants and the town theater troupe, this after years of collecting smaller and varying amounts from businesses. Vendors have been told to accept the new terms or clear out by the end of the month, said Errol Koch, whose family has performed at the Virginia City Opera House for decades. 

“To say that we ever had a gross, like a net profit, is laughable,” Koch said, “because everything we ever made either went to stockpile for the next season, to pay employees or to, like, just survive the winter. The profit part is negligible at best.”

The commerce department estimates that, before expenses, the Opera House brought in $126,000 in 2025. Rent would be $19,000 under the new lease terms. That would leave $107,000 to cover four months of payroll for roughly 15 employees.

Actors spend the summer performing original plays and vaudeville acts in a small opera house anchoring the west end of the Wallace Street wooden boardwalk. The players are a main draw of the 1860s gold rush town that sprang up along the banks of Alder Creek and was the territorial capital until 1875. 

The acting troupe lives in a collection of small cabins, also owned by the state. In addition to wanting a 15% cut in gross income, Koch said the state also wants rent for the cabins, and it wants the copyright for any material written by the performers, an ownership requirement Koch said is typically associated with major entertainment companies like Disney. The commerce department told Montana Free Press the copyright language has been in opera house contracts since 2009. 

In a state budget committee hearing last week, commerce Deputy Director Mandy Rambo told legislators that Montana heritage properties in Virginia City, Nevada City and Helena’s Reeder’s Alley have fallen hundreds of thousands of dollars short of annual revenue expectations for several years. Tourist season revenues have been expected to exceed $1 million, but have mostly come in at $750,000 for the three locations. 

Rambo cited mismanagement by the Montana Heritage Commission, a part of the commerce department that oversees the properties. Losses include a years-long embezzlement by a former executive director, Michael Elijah Allen, who earlier this month was sentenced to three years in prison and ordered to pay $280,000 in restitution. An accomplice, Casey Jack Steinke, was sentenced to one year in state custody and ordered to pay $100,000 in restitution.

“It is a mismanagement of funds through several scenarios, not charging rent to people, not charging market rents to people who are renting from the Heritage Commission, overspending funds that the commission did not have,” Rambo told lawmakers. 

LUXURY LODGINGS?

The changes come as the state eyes 99-year leases for parties to invest a “substantial amount” in improving heritage property. The change in the law, passed by the Legislature earlier this year, preceded by several months an elaborate proposal by California-based developer Auric Road to transform Nevada City into “a living frontier village — a 21st-century homestead camp where guests can immerse themselves in  Montana’s heritage while enjoying modern comforts.”

Nevada City is the site of several buildings and antiques relocated from various locations by the former Virginia City curator Charles Bovey, whose estate sold its heritage assets to the state of Montana in 1997 for $6.5 million. The location is a less robust attraction than Virginia City.

The commerce department said last week that Auric Road withdrew its plan sometime after presenting it to the Montana Heritage Commission in September.

The pitch was luxurious, especially when compared to current Nevada City conditions. The local hotel is closed for major repairs. The proposal included three-star accommodations at a restored 14-room Nevada City Hotel, guest cabins with multiple bedrooms and enough extras to transform Nevada City into a year-round destination, according to Auric Road. There were also wall tents and Conestoga wagons with full indoor bathrooms. There was to be candle making, gold panning and glamorous camping, or “glamping,” at an area dubbed the “River of Gold.” The plans also called for adding a speakeasy railcar where craft cocktails would be served.

Rambo, testifying for the law change before the House Administration and Veterans Affairs Committee last February, specifically offered Nevada City Hotel renovations as an example of why the change in law was needed to attract companies with deep pockets, including a $1 million cost estimate for raising the two-story building to do foundation work. 

Auric made inroads into Montana’s heritage properties this summer when it took over management under contract for Virginia City’s Bale of Hay Saloon, which touts itself as Montana’s oldest bar. State officials said the contract, awarded July 24, spanned the remainder of the 2025 season. A contract for 2026 hasn’t been created. 

Like other Virginia City properties, the 1863 bar is a state-owned enterprise leased to private vendors. After the commerce department parted ways with the previous vendor, Marie Clark, Clark took to social media, accusing the state of driving her out to make room for what she called “Lone Mountain Ranch,” a Big Sky-area resort property also owned by Auric Road.

Auric Road did not respond to an interview request made through the company’s website for this article. Clark said in an email this week that she and the state have reached a settlement over her dismissal from the lease. The department confirmed last week that it had paid Clark $20,000. The agreement prevents her from further disparaging the department, Clark said, and she has removed her earlier criticisms of the commerce department from social media.

Auric Road’s now-withdrawn plans for Nevada City sound out of tune to Virginia City vendors, who say their combined community is a regional draw, attracting Montanans who want to see an intact territorial mining town. 

“There’s nothing they want to do that matches us at all,” said Shauna Laszlo Belding, who operates Bob’s Place, a pizza and sandwich restaurant, with her husband, Kirk Belding. “I go to (Auric’s) website, and you’re not staying in a room for $300 a night. Lone Mountain is $800 a night. Our clientele is regional families. They can’t afford that.”

In Virginia City, a community with about 500 full-time residents, the reality of the frontier west is grittier than fiction. It’s a place where alleged outlaws led by a mining town sheriff were accused of robbing miners and hanged on “boot hill” by vigilantes who apprehended and killed more than 20 people. The deformed foot of one of those hanged, “Clubfoot” George Lane, was removed from his body and put on display in 1907. The foot didn’t stop being a tourist attraction for a century, but was cremated at the request of Lane’s family in 2017, when the community received a replica foot for display.

Rocky dredge piles churned by mining operations that sifted through Alder’s placer 160 years ago are still heaped along the waterways, aka “River of Gold,” trailing from this community. 

Virginia City is changing, Koch said. There’s a seasonal housing shortage. Homes that once provided affordable shelter for seasonal workers are now vacation rentals. Virginia City is still the Madison County seat. Taxes are still paid and divorces are still filed in the historic brick courthouse. There’s a two-cell jail with bars down in the basement.

Still, one bald mountain pass to the east, Montana’s modern gold rush of real estate, fly fishing and cattle is spreading fast in Ennis, population 1,100. The runway at the county airport accommodates personal jets. There’s a private mountain backroad to the ski resorts of Big Sky, which otherwise takes an 87-mile trip around the Madison Range to access. 

The Beldings were five years into a 20-year lease when the commerce department informed them that the state wanted 15% of their gross income and their old lease was void. The new lease, non-negotiable, was also subject to annual revisions by the state.

Explaining the new terms to legislators last week, Rambo said the 15% was standard for “turnkey businesses,” meaning businesses with landlord-provided equipment and branding, capable of operating without tenant investment.

REEDER’S ALLEY

Tenants say not all the properties are ready for business. In Helena’s Reeder’s Alley, it took the state 10 months to bring the stairway and deck leading to Chris Starr’s barbecue business into compliance with local regulations. The brick-paved alley is the oldest part of Helena, built in the 1870s alongside housing for miners.

Starr said he learned the stairs were out of compliance the hard way, on his second day of business in Reeder’s Alley operating RockStar BBQ. Helena safety inspectors told him the stairs would have to be roped off until they were repaired. He then learned that the same order about fixing the stairs had also been issued 10 years earlier. This time, the poor conditions of the deck and stairway resulted in a pause in his liquor license.

In the winter months, the icy walk to Rockstarr’s back entrance made the restaurant uninviting, Starr said. The business became fully accessible in August, about nine months after Starr moved in November 2024. Starr said the condition of the site during his first year as a tenant almost broke him financially.

Last week, the commerce department published a list of new lease terms for 24 historic properties in Virginia and Nevada cities and Reeder’s Alley. RockStarr’s rent was listed as $800 a month with utilities paid, a “partial kitchen and brand-new deck.” 

One legislator from the Virginia City area bristled last week at the commerce department suggesting the Legislature mandated an increase in lease revenue by assuming that a percentage of the Heritage Commission Budget would come from leasing.

“I understand that, and appreciate [it], that you can’t spend money you don’t have, but I think the terminology is a little bit misleading that, you know, the Legislature demanded or mandated that you do that,” Rep. Ken Walsh, R-Twin Bridges, told Rambo in committee Dec. 17.

Walsh said he recently consulted with former vendors of seasonal businesses and learned that a revenue share of 6% to 12% to the state was more feasible. Rambo had said the 15% rate was similar to what county fairs charge concessioners. 

Lawmakers representing the Virginia City area were instrumental in making changes to the law sought by the commerce department concerning the management of the state’s heritage properties. Walsh carried a bill to allow the state to issue leases of up to 99 years.

Republican Sen. Tony Tezak, R-Ennis, carried a bill giving the commerce department more supervisory control over the heritage properties, a move away from the loose management by the Montana Heritage Commission during the embezzlement scandal.

The state’s heritage properties number 250. There are also 1.3 million historic artifacts, according to testimony from commerce department officials to the Legislature in February.