Virginia City businesses sue state, legislators send letter
Jordan Hansen
(Daily Montanan) Multiple Virginia City businesses are in a lawsuit with the state’s Department of Commerce, and state legislators and the mayor have taken notice.
A group of 24 members of the Montana House signed onto a letter expressing “concern” with Commerce’s intention to “significantly increase lease rates” at the historic town and popular tourist destination. It goes on to ask Commerce to reconsider the lease rates.
The letter from the Montana House and a separate letter from Justin Gatewood, Virginia City’s mayor, are both dated Jan. 20. Gatewood’s letter says about 600,000 people visit Virginia City each year from May to September, generating about $75 million in economic impact. About $45 million of that stays in Madison County, his letter reads.
His letter asks the court to issue relief and maintain the status quo concessionaire leases in Virginia City, which are operated through the Montana Heritage Commission.
“The Department of Commerce’s recent decision to terminate existing MHC leases has left the Town questioning not only our long-held partnership with the State but also the future of Virginia City,” Gatewood’s letter reads.
The Department of Commerce did not immediately respond to a request for comment Monday on the litigation.
Late last year, saying they were under significant financial pressure, the Montana Heritage Commission moved to cancel contracts with some Virginia City businesses. The commission was created to manage historic properties in the state, including Virginia City and Reeder’s Alley in Helena. The contracts are for leases with businesses who operate at the site, which is controlled by the state.
Some of those businesses were getting better deals than others, then acting commission director Mandy Rambo said, adding that some contracts were missing, “statutorily- or state-policy-required language or clauses.”
On Dec. 29, Kirk Belding and Jason Lange, who are Virginia City business owners, filed the lawsuit in Madison County District Court against Commerce, the Heritage Commission and April Armstrong, who is listed as executive director in court documents and acting executive director on Commerce’s website.
The suit asks the court to accept jurisdiction and issue a preliminary injunction to halt the state from terminating concession contracts. It also asks the court to set a hearing asking the state to explain why the injunction shouldn’t be permanent. That hearing is scheduled for Feb. 23.
Court documents state Belding was given a lease saying that he would be charged 15% of gross sales, his prices would jump up to 20% and that the change would put him out of business.
They also say Belding has tried to find middle ground with the Heritage Commission, but a “brick wall” has been thrown up every time.
The suit goes on to call the new contracts “overreaching” and “oppressive.” It also outlines similar concerns from Lange.
In a response, the state says the business owners don’t have a case and that it should be in Lewis Clark District Court, which is what their contracts stipulate. The contract, which is attached to the response, says any disputes with that contract “must be” brought to Helena.
“In their attempt at injunctive relief, Applicants cannot satisfy their obligation to demonstrate that they are likely to succeed on the merits because they have not asserted a legally cognizable claim against which the Court can measure their likelihood of success,” the state’s response, filed on Jan. 15, says. “Applicants’ cause of action is structurally flawed and should be dismissed.”