Commerce details years-long Heritage Commission misconduct, outlines lease changes for Reader's Alley

Deputy Director Mandy Rambo told the Legislative Finance Committee that an internal and external investigation of the Montana Heritage Commission (MHC) uncovered extensive mismanagement under a prior executive director, resulting in criminal charges and subsequent guilty pleas.

Rambo said the department's review, begun after complaints in 2023, found preferential contracts, improper pro-card spending and sweetheart deals for associates of the former executive director. She said the former executive director and a co-conspirator were arrested in December 2024, later changed pleas to guilty in September–October 2025 and were formally sentenced in December 2025. Rambo also described gift certificates given to acquaintances (about $20,000) and contract terms that allowed free tickets and other benefits to insiders.

The department presented a detailed breakdown of MHC's current finances and operations. Rambo said MHC's FY25 budget authority approved by the legislature is about $2.5 million (approximately $2.75 million including two line items added in HB2 for Reader's Alley brick work and the Virginia City Methodist Church). She said roughly $1.2 million of that authority is expected to come from bed-tax earnings (previously capped at $1 million), about $250,000 from vehicle-registration revenues, and the remainder must be earned revenues from concessions and visitor services. Because actual earned revenue has been closer to $700,000–$750,000, Rambo said the commission has only had roughly $570,000 available for capital improvements.

On operational impacts, Rambo told the committee that the department found health-and-safety problems in at least one concession ("mouse droppings everywhere," expired food and a pot with "dead mice"), requiring nearly $32,000 in hazard-mitigation cleaning to make the space lease-ready. She said the department has reasserted administrative oversight: commission members and the MHC executive director no longer sign off on invoices or pro-card receipts; contracts now route through Commerce's legal team; and Commerce staff attend commission meetings to prevent policy violations.

Rambo defended recent contract and rent changes for Reader's Alley and Virginia City as steps to stabilize earned revenue and make deferred maintenance feasible. The department said it used a mix of flat-rate leases and gross-revenue percentage leases, applying percentage rent to concessionaires that received substantial state investment (for example, state-owned liquor licenses or provided employee housing). The department said some concessionaires receive free employee housing as part of the overall arrangement and that market-adjustment clauses remain in contracts to protect the commission's finances against inflation and unexpected costs.

Committee members pressed for more transparency on how the new rent and percentage terms were calculated and whether the changes could push small concessionaires out. Rambo said the department compared similar turnkey-concession models (fairgrounds, state parks) and intentionally set percentages below some of the higher-market examples because Virginia City's season is short. She also said the department intends to conduct post-season closeouts and walk-throughs with concessionaires to review operations, revenues and building conditions so future adjustments can be informed by actual season data.

Rambo told the committee that the timing of many contract actions was driven by termination clauses in existing contracts that required notice before Jan. 1. She said the department will continue to pursue earned revenue targets (a stated goal of roughly $470,000 additional earned revenue overall) while trying to preserve concessionaire viability.

The department acknowledged it has received threats and harassment during the investigation and transition; Rambo said some meetings were moved to state-owned buildings to manage security and to protect staff. She urged a two-way approach to rebuilding relationships with local stakeholders but emphasized the department's responsibility to enforce state law and fiscal controls.

The committee did not take a formal vote; Commerce staff said they will follow up with requested documents, contract amendments and a season-close review after the summer operations.