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Montana’s Historic Ghost Towns Face Crisis Amid State’s Push for Higher Revenues
A tense standoff is brewing in Montana’s state-owned ghost towns as new lease terms threaten the future of longtime businesses that have become tourist staples in the region. Operators of popular attractions in Virginia City, Nevada City, and Helena’s Reeder’s Alley are pushing back against what they describe as unaffordable rent increases imposed by the Montana Department of Commerce.
The state is demanding a standardized 15% of gross sales from Virginia City restaurants and the town’s historic theater troupe, a significant increase from previous arrangements. Vendors have been given an ultimatum: accept the new terms or vacate by month’s end.
“To say that we ever had a gross, like a net profit, is laughable,” said Errol Koch, whose family has performed at the Virginia City Opera House for decades. “Everything we ever made either went to stockpile for the next season, to pay employees or to just survive the winter. The profit part is negligible at best.”
The commerce department estimates the Opera House generated $126,000 in 2025 before expenses. Under the new terms, rent would amount to $19,000, leaving just $107,000 to cover four months of payroll for approximately 15 employees. The acting troupe, which performs original plays and vaudeville acts in the opera house along Wallace Street’s wooden boardwalk, has been a cornerstone attraction in the 1860s gold rush town.
Beyond the percentage of gross income, Koch said the state also wants rent for the actors’ cabins and is demanding copyright ownership of material written by performers, a requirement he likened to practices of major entertainment companies like Disney. The commerce department maintains this copyright language has been in contracts since 2009.
The financial pressures come as state officials grapple with budget shortfalls. During a recent budget committee hearing, Commerce Deputy Director Mandy Rambo informed legislators that Montana heritage properties in these historic towns have consistently fallen hundreds of thousands of dollars short of annual revenue expectations for several years. Tourist season revenues, expected to exceed $1 million, have mostly hovered around $750,000 for the three locations.
Rambo cited mismanagement by the Montana Heritage Commission, including a years-long embezzlement scheme. Former executive director Michael Elijah Allen was recently sentenced to three years in prison and ordered to pay $280,000 in restitution, while accomplice Casey Jack Steinke received a one-year state custody sentence and a $100,000 restitution order.
“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 explained to lawmakers.
The changes coincide with the state’s new ability to offer 99-year leases to parties willing to invest substantially in improving heritage properties. This legal change, enacted earlier this year, preceded an elaborate proposal by California-based developer Auric Road to transform Nevada City into “a living frontier village” with luxury accommodations.
The Auric Road proposal included plans to restore the 14-room Nevada City Hotel to three-star standards, add guest cabins with multiple bedrooms, and introduce amenities like a speakeasy railcar serving craft cocktails. The developer has since withdrawn its proposal, according to the commerce department.
Local business owners worry about the direction of these historic sites. “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 in Virginia City. “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.”
Virginia City, with about 500 full-time residents, faces additional challenges including a seasonal housing shortage. Properties that once provided affordable shelter for seasonal workers have been converted to vacation rentals, though the town retains its authenticity as Madison County’s seat, with taxes and legal proceedings still conducted in the historic brick courthouse.
In Helena’s Reeder’s Alley, the oldest part of the capital city built in the 1870s, tenants have faced different problems. Chris Starr, who operates Rockstarr BBQ, said it took the state 10 months to bring the stairway and deck leading to his business into compliance with local regulations, nearly destroying his business financially during his first year.
Some regional legislators have questioned the commerce department’s approach. Representative Ken Walsh, a Republican from Twin Bridges, suggested during a committee meeting that a revenue share of 6% to 12% would be more feasible than the department’s 15% demand.
As the state attempts to balance preservation with financial sustainability, the fate of these historic properties hangs in the balance. Montana’s heritage assets include 250 properties and 1.3 million historic artifacts, creating a significant preservation challenge that extends far beyond the current lease disputes.
The situation highlights the delicate balance between preserving Montana’s rich historical landscape and generating the revenue necessary to maintain it, with local businesses caught in the middle of changing policies and ambitious development visions.
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5 Comments
This is a tough situation. On one hand, the state likely needs to generate more revenue from these properties. But on the other, it seems like the new lease terms could drive out some of the iconic businesses that draw tourists to these ghost towns. Hopefully they can find a compromise.
This seems like a tricky balance for the state – maximizing revenue from its assets while preserving the very attractions that make these ghost towns desirable for visitors. I hope they can find a solution that keeps these long-standing businesses viable and protects the character of these historic communities.
Interesting situation in Montana’s historic ghost towns. Sounds like the state is trying to squeeze more revenue from businesses, but the vendors argue the new lease terms are unaffordable. I wonder if the state could find a middle ground to support these long-standing attractions.
It’s a shame to see these small businesses in Montana’s historic towns being threatened by steep rent hikes. Maintaining the character and authenticity of these tourist destinations should be a priority. The state needs to take a more nuanced approach that balances its financial needs with supporting the local economy.
A difficult situation all around. The state likely needs to boost revenue, but driving out small businesses could backfire by reducing the appeal of these ghost towns. Perhaps a more gradual, collaborative approach would work better than imposing steep rent hikes all at once.