The Pagosa Area Water and Sanitation District (PAWSD) Board of Directors has started the steps necessary to sell the Running Iron Ranch, which it jointly owns with the San Juan Water Conservancy District (SJWCD), leading to a series of special meetings and executive sessions by both boards.
At its Sept. 12 special meeting, the PAWSD board voted unanimously to direct staff to notify and consult with the SJWCD and the Colorado Water Conservation Board (CWCB) on a potential sale of Running Iron Ranch.
The board continued discussion of the sale at a Sept. 27 special meeting.
The ranch, which is the proposed site for a reservoir, is jointly owned by PAWSD and the SJWCD, and PAWSD is currently paying on loans from the CWCB that were used to purchase the property.
The terms of the two district’s involvement in the reservoir projects and the loans from CWCB are laid out in a three-way agreement between PAWSD, SJWCD and the CWCB signed in 2016.
This agreement gives PAWSD the right to sell the property “in its sole discretion” following notification of the other two parties and consultation with them.
The agreement also lays out that CWCB holds a right of first refusal on the property.
PAWSD staff have previously estimated at PAWSD board meetings that the district’s debts for the purchase of the property are approximately $10 million.
Following an executive session at the special meeting, PAWSD board member Glenn Walsh moved to direct staff to comply with the consultation obligations with the CWCB and the SJWCD included in the three-way agreement.
The motion passed unanimously.
In response to a Colorado Open Records Act (CORA) request for documents pertaining to the decision, PAWSD provided a Sept. 10 letter of intent (LOI) given to the district that outlines terms for a buyer, whose name was redacted, to purchase the Running Iron Ranch for a price which was also redacted.
PAWSD legal council Marcus Lock explains in an email that CORA requires that the district redact commercial or financial information submitted to it by a third party that would harm the district’s ability to gather information in the future or that would damage the competitive position of the person providing the information.
He adds that the redacted information qualified for redaction under these criteria.
The LOI also states that the offer contained within it would expire if it were not signed by Sept. 13.
In an interview, PAWSD District Engineer/Manager Justin Ramsey explained that PAWSD spoke with the individual making the offer about the timeline, with the result that the timeline for accepting the offer was extended and the offer remains open.
Later, at a regular meeting directly following the special meeting, the PAWSD board discussed authorizing the district’s Running Iron Ranch subcommittee to meet with real estate agents with clients potentially interested in purchasing the ranch.
Board member Bill Hudson commented that Ramsey is “tired of meeting with Realtors who might have or might not have clients interested in the Running Iron Ranch and asked if the subcommittee could take over the job of meeting with future clients.”
Hudson added that he and Walsh, who both serve on the subcommittee, are “comfortable” with this arrangement and asked the rest of the board if it would approve of him and Walsh meeting with and giving a tour of the ranch to a local real estate agent who has a client potentially interested in purchasing the ranch.
PAWSD chairman Jim Smith stated that he approved of this approach.
The remaining PAWSD board member, Gene Tautges, was absent for this portion of the meeting.
The board also agreed that PAWSD staff should direct those interested in purchasing the ranch to speak with Hudson.
According to notes written by SJWCD president Candace Jones contained in the board packet for a SJWCD Oct. 2 special meeting, PAWSD, SJWCD and CWCB representatives met on Sept. 24 to hold the consultation required by the three-way agreement.
According to these notes, Lock repeatedly emphasized that PAWSD has the right to sell the property in its sole discretion and asked if there was agreement between SJWCD and PAWSD on this right and SJWCD’s obligations to comply with it.
According to the notes, Jones responded that the SJWCD is opposed to the sale of the property and that both parties have obligations under the agreement.
Lock countered that PAWSD’s position is that it has a sole right to sell the property and that any actions by the other parties in the agreement to interfere with this process besides making public statements on the issue would be a violation of the agreement, the notes relay.
At the meeting, the notes suggest, CWCB representatives also questioned if PAWSD has other plans for ensuring sufficient water supply if the reservoir project does not move forward.
PAWSD representatives stated that the district has other, more cost-effective approaches to increasing its water supply but has not pursued them due to the work on the reservoir project, according to the notes.
PAWSD representatives also confirmed that they expect to get a sale price for the property that would cover the loans on the parcel and that they would not oppose CWCB exercising its right of first refusal granted in the three-way agreement, the notes state.
They add CWCB Finance Section Chief Kirk Russell also asked if PAWSD is opposed to a reservoir as a matter of policy or if its sale of the property is an effort to eliminate the debt it carries on the property.
PAWSD representatives reportedly replied that they do not oppose the creation of a reservoir.
At the Sept. 27 meeting, the PAWSD board entered executive session to discuss the ranch and the three-way agreement.
Following the executive session, Walsh commented that the board received advice from its legal counsel and directed its negotiators and staff to act on this advice.
On Sept. 27, Lock sent a letter to SJWCD legal counsel Jeffrey Kane requesting assurances that the SJWCD accepts that selling the ranch is within PAWSD’s sole discretion, that it has no right to prevent a sale, and that it has and will honor its contractual obligation to execute the deeds that would convey the ranch to a buyer.
In the letter, Lock expresses concerns about Jones’ comments at the Sept. 24 consultation meeting that the SJWCD opposes the sale and “would use every tactic available to prevent Running Iron Ranch from being sold.”
He then requests assurances in writing no later than Oct. 11.
Lock adds that, if these assurances are not provided or the assurances “equivocate in such a way that it is anything other than crystal clear that PAWSD has the ‘sole discretion’ to sell Running Iron Ranch,” PAWSD reserves the right to file a civil suit against the SJWCD.
“PAWSD understands and accepts that SJWCD may be philosophically opposed to the sale of Running Iron Ranch, but that is a very different matter than SJWCD seeking to improperly interfere with the sale of the ranch or asserting, in bad faith, a non-existent legal right to prevent the sale of the ranch,” Lock states.
At the Oct. 2 special meeting, the SJWCD board met in executive session to receive legal advice and determine negotiating positions regarding the sale of the ranch.
After the executive session, Jones stated that the board directed negotiators on issues related to the sale, but had otherwise made no decisions.
josh@pagosasun.com
