City to Operate Gallup MainStreet Temporarily, Citing Financial Failures

The Gallup City Council voted on November 18 to place Gallup MainStreet under city management for an interim period after learning the nonprofit had significant unresolved financial compliance issues. Councilors said the organization had not filed 1099 forms for vendors who assisted with events in recent years and had not submitted federal Form 990 filings for several years, filings that are required for nonprofits that make fifty thousand dollars or more annually.

City Manager Frank Chiapetti Jr. told councilors he would seek guidance from New Mexico MainStreet and explore whether the city could assume operations. In talking with the mayor and several councilors, we definitely want to keep MainStreet in our area, he said. It is 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.]

Councilors and city financial staff framed the takeover as a way to safeguard ongoing projects and maintain grant eligibility while the nonprofit corrects its records. Chiapetti said he had already examined existing grant opportunities and reached out to the Levitt Foundation about the Levitt Amp Music Series as part of efforts to keep programming on track.

Chief Financial Officer Patty Holland warned of immediate tax risk to vendors and the organization. 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. Holland told councilors that, based on experience, it typically takes most 501 c 3 organizations two to three years to resolve comparable financial and reporting problems.

Gallup MainStreet Executive Director Michael Bulloch resigned on November 17. In his resignation letter he wrote that his resignation would hopefully give Gallup MainStreet a clean start. He also stated that it was clear to him that his remaining as director was one of the key problems the City Manager and City Attorney have with Gallup MainStreet.

Board President Michael Horn accepted responsibility on behalf of the board. 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. Vice President Mary Walker said she is working on a plan to address the organization s financial mistakes.

Councilors voted unanimously to have the city operate the program temporarily, with Chiapetti expressing hope the nonprofit could reclaim the program by the end of the 2026 fiscal year. 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. For Gallup residents and local vendors, the city takeover aims to stabilize downtown programming, ensure continued access to grants, and limit tax and liability exposure while compliance work proceeds.