In hot water…
City to assume management of MainStreet
By Molly Ann Howell
Managing Editor
During their Nov. 18 city council meeting, the Gallup City Council decided the city will directly operate Gallup MainStreet for an interim period after learning the non-profit faces major financial troubles.
The city learned about Gallup MainStreet’s financial problems shortly before the organization’s Executive Director, Michael Bulloch, appeared before the city council to request a contract renewal during their regular Oct. 28 meeting. According to city officials, Gallup MainStreet hasn’t filed 1099 forms for any vendors who have helped them with events over the past few years. 1099 tax forms are used to report non-salary income to the IRS.
It was also revealed that Gallup MainStreet hadn’t completed a 900 form in years. Any non-profit organization that makes $50,000 or more in a year has to fill out a 990 tax form. The form helps the IRS gather information about non-profits and ensures they comply with tax laws.
After hearing about the non-profit’s financial trouble, the city councilors decided to hold a special work session to discuss the problem further. The council did not make an official decision at that meeting, although City Manager Frank Chiapetti Jr. said he would try to meet with New Mexico MainStreet director Daniel Gutierrez and ask if the city could take over Gallup MainStreet’s operations.
Recently, at the Nov. 18 city council meeting, Chiapetti reported that the City of Gallup could intermittently take over Gallup MainStreet’s operations.
“In talking with the mayor and several councilors, we definitely want to keep MainStreet in our area,” Chiapetti said. “It’s the potential for development and revitalization of downtown and the mechanism to apply for grants. So we’d definitely like to keep it. But at the same time, we have to be consistent in how we’re giving out money [to organizations.]”
Chiapetti also said the city plans to keep in line with what Gallup MainStreet does. He said he’s already looked into some existing grants and reached out to the Levitt Foundation about the Levitt Amp Music Series.
Several Gallup MainStreet board members attended the Nov. 18 meeting and addressed their organization’s situation.
Board President Michael Horn accepted responsibility for the non-profit’s failings.
“The deficiencies that you are finding fall on us as a board,” he said. “We take responsibility for that and I agree with you on the responsibility that the city has taken to have the conversation.”
He ultimately thanked the city for stepping in.
Vice President Mary Walker said she is working on a plan to address the organization’s financial mistakes.
In terms of a timeline, Chiapetti said he hopes the city can hand the reins back to the organization by the end of the 2026 fiscal year. He expressed hope that the non-profit will have a new executive director by then. Bulloch resigned from his position on Nov. 17.
In his resignation letter, Bulloch said his resignation would hopefully give Gallup MainStreet “a clean start.”
“It is clear to me that my remaining as director is one of the key problems the City Manager and City Attorney have with Gallup MainStreet,” he stated in his letter. “The MainStreet program is more important than a single individual, and I believe my departure will enable Gallup MainStreet to make a clean start with your new City Manager.
“Re-filing the 990s, completing the reconciliation in QuickBooks, and keeping those up to date seem to be the key points Mr. Eason and Mr. Chipetti are using to push their agenda of dismantling the current MainStreet program. They fail to take into account the amount of work it takes to bring a new city-run accredited program or another 501(c)3 online,” he finished.
After Chiapetti gave his hopeful timeline, the city’s Chief Financial Officer Patty Holland laid out a more realistic one.
She explained that, over her decades-long career, it took most 501(c)(3)s two to three years to fix financial issues such as Gallup MainStreet’s, and it usually took them about two to three years to resolve the situation.
During the council’s Nov. 3 meeting, Holland expressed her concern about Gallup MainStreet’s financial situation, especially the failure to file 1099 forms for vendors.
“If the IRS were to audit this right now, they would charge 28% backup withholding on each and every one of those payments that exceeds $600, maybe even on all of them because they have to be reporting this as income to those recipients of those funds,” she said.
Chiapetti said that the city doesn’t want to control Gallup MainStreet forever.
“Hopefully this group can get back on their feet in a reasonable amount of time and reapply to take it back and hire a director who stays on top of his stuff,” he said.
The council unanimously voted for the city to take over Gallup MainStreet.
