The Pagosa Area Water and Sanitation District (PAWSD) and San Juan Water Conservancy District (SJWCD) boards of directors approved a grazing lease, as well as a sand and gravel lease extension, with the Weber family for Running Iron Ranch at June 13 and June 17 meetings.
The two organizations jointly own the Running Iron Ranch.
PAWSD consideration
At the June 13 PAWSD meeting, PAWSD District Engineer/Manager Justin Ramsey opened the conversation by explaining that the board had been given copies of the grazing lease, which he noted is “not really a moneymaker.”
He added that the lease benefits PAWSD and SJWCD due to the Webers maintaining fences, and suppressing weeds and pests as part of the lease.
PAWSD board member Bill Hudson commented that the PAWSD Running Iron Ranch subcommittee had a meeting with members of the SJWCD board of June 12 and heard “positive feedback” on the grazing lease.
SJWCD board member Charles Riehm commented that weed suppression is a primary issue with maintaining the property.
The PAWSD board unanimously approved the grazing lease.
The board then considered a mining lease for the property.
Ramsey commented that this lease is “a little more complicated” and explained that Donald Andrew “Andy” Weber previously presented to the board that he had found a new source of gravel on the property that he wants to mine and sell it, with PAWSD being paid a royalty for the sale.
He stated that, in drafting a lease that would allow this, additional issues arose, including how much gravel PAWSD might need in the future and what role the SJWCD would play in such a lease.
Thus, Ramsey recommended that the board not move forward with a lease allowing additional mining, but that it should move forward with a lease extension allowing the Webers to continue to crush gravel being purchased by PAWSD, which he commented the Webers are currently doing but do not have a lease to do.
He indicated that the lease extension would have similar terms to the previous lease, including only crushing gravel that is already mined, selling only to PAWSD, not performing further mining and continuing reclamation work.
PAWSD board member Glenn Walsh commented that the “big departure” in the new lease is that the Webers would not be paying any money for the lease, unlike the previous lease where they paid approximately $48,000.
He added that this would be acceptable if the Webers are strictly crushing gravel for PAWSD, but that the lease also allowed Weber to use gravel for his personal projects, which is not addressed in the previous lease.
Ramsey explained the origins of this clause, indicating that, in a recent meeting with Weber, Weber stated that he believed that the previous lease allowed him to do this and he had been doing this.
Ramsey stated that, when he stated to Weber that any language relating to him using gravel from the property for personal projects should be taken out and he should not be using gravel for such uses, Weber reportedly replied that he would not be able to afford continuing work at the site or to complete the reclamation without being able to take gravel for his personal use.
“I didn’t get into an argument with him and say, ‘You had an agreement that you’re going to do this that didn’t say anything about us not giving you gravel,’ but it kind of depends on how much you want to fight this if they just walk away,” Ramsey said.
Walsh commented that, in the 2023 lease, Weber paid $48,000 to be able to continue mining to provide PAWSD with specialty gravel and to mine 20,000 tons outside of the gravel provided to PAWSD.
He stated that the previous agreement was “cooperative,” with PAWSD saving money on gravel and Weber making a “nice profit.”
However, Walsh noted that, the last time he visited the property, he saw stockpiles of gravel far in excess of the approximately 5,000 tons PAWSD requires and that he would like to know the amount of gravel stockpiled.
Ramsey indicated that Weber stated that the stockpile contained about 20,000 tons of gravel.
Walsh asked how Weber would define personal use and if PAWSD would receive a royalty on the gravel if it were sold.
He stated that he would not vote for the lease without an estimate of how much gravel is stockpiled and a royalty on gravel being sold from Running Iron Ranch, although he indicated a willingness to potentially provide accommodations for gravel being used for improvements to other properties owned by the Webers.
Ramsey proposed that PAWSD could require a royalty of $2 a ton for any gravel leaving the site outside of that being sold to PAWSD.
PAWSD board member Gene Tautges asked how hard such an agreement would be to police.
Following a brief discussion where Ramsey stated that he could get the software that the Webers use to measure their gravel and estimate the size of the pile, Riehm commented that the SJWCD is interested in PAWSD “not giving anything away and getting money. This property that you guys and us own should help pay for the note to own it and the more money you can extract from the land and the gravel for your benefit to cost offset, the better off everybody is.”
The group then discussed how the gravel is weighed and invoiced, as well as how to track the amount of gravel used, with Ramsey outlining that PAWSD could either trust information by Weber or inspect the gravel stockpile, calculate its size and then use this, PAWSD gravel purchases and additional measurements to calculate royalties owned.
Walsh commented that “there are a lot of ways we could get sideways here” and suggested that the $2 per ton royalty would be fair and reasonable.
PAWSD Programs Manager Renee Lewis asked how often the measurements to determine what gravel is leaving the site would occur.
Ramsey stated that he believed monthly measurements would be sufficient.
PAWSD board member Paul Hansen commented that he had never encountered a reason to distrust the Webers.
Ramsey commented that the calculations for the amount of gravel leaving the site would be relatively simple.
Lewis stated that staff would need guidance from the board on how to delineate personal use from other gravel leaving the site, commenting that there are circumstances that staff is aware of where the Webers took gravel for personal use, which does not require an invoice, but it was still a financial benefit to them since they did not have to purchase the gravel from elsewhere.
Walsh stated that PAWSD would subtract its own purchases from the total amount at the site and charge royalties for all other rock leaving the site, barring “reasonable” requests for exemptions from the Webers.
He then moved to approve the sand and gravel lease with the addition of terms that a $2 per ton royalty will be charged by PAWSD for use, sale or transfer of any gravel not being purchased by PAWSD.
The board then unanimously approved the lease.
Following the approval, the board briefly discussed holding a work session on a new mining lease for Running Iron Ranch.
Walsh commented that he and other members of the Running Iron Ranch subcommittee would like to discuss the issues and potential paths for such a lease with staff prior to a work session, which the board agreed to.
He also commented that PAWSD’s gravel needs could be highly variable and that the gravel could also have other community benefits, such as selling it to local governments like Archuleta County.
Ramsey stated that he discussed the proposal with the county and that the county indicated a willingness to potentially purchase 20,000 to 30,000 tons a year.
Walsh remarked that Weber previously stated that the amount of gravel available to mine might be around 80,000 tons.
He added the Webers have enough crushing to do this year that further mining would not be an immediate issue.
Riehm commented that the SJWCD would like the Running Iron Ranch, which he noted is “public property,” to service public interests and not be used to sell gravel commercially.
“We want to be sure that we’re moving public gravel to public utilities and other organizations,” Riehm said.
He added that the SJWCD board does not otherwise object to the amount of mining.
Walsh commented that it is unlikely that any entity outside of the county and other governments would need the amounts of gravel potentially being mined.
He added that the gravel could also be used in public private partnerships, such as working with the Pagosa Springs Community Development Corporation on its affordable housing projects.
Riehm closed the discussion by emphasizing that such partnerships or projects should be local.
SJWCD consideration
At the June 17 SJWCD meeting, Riehm began discussion of the leases by outlining the proposal for additional mining by the Webers and the current situation of the gravel-crushing operations on the property.
He added that the lease approved by PAWSD is for crushing operations for the gravel stockpiled at the site and that the board would potentially consider a lease for further mining in the future.
The leases were discussed at several meetings, Riehm explained, including at May and June meetings with the PAWSD Running Iron Ranch subcommittee and meetings with the Webers.
Board member Candace Jones added that the SWJCD approved a grazing lease for the Webers in January, but that it was delayed due to various proposed edits.
Following further discussion of the benefits of the grazing lease, the board agreed that a vote was not needed on the grazing lease and that it could be signed off on.
Riehm moved on to discuss the sand and gravel lease, emphasizing that there is no mining included in that lease and that it does not include the provisions about mining additional gravel that were previously discussed.
He added that the lease requires the Webers to continue crushing gravel for PAWSD and to continue reclamation work.
The lease also includes, Jones explained, arrangements for the Webers to be able to “sell” the gravel currently on the property in excess of PAWSD’s needs.
Riehm and Jones added that PAWSD would charge a $2 a ton royalty for any gravel that leaves the property besides that sold to PAWSD.
Riehm stated that “it was discussed” at the PAWSD meeting that it is not a “good idea” for PAWSD or the SJWCD to go into commercial gravel sales, but that gravel could be beneficial for local government uses.
He added that he commented at the PAWSD meeting that the SJWCD would be opposed to setting up a commercial sale operation at the Running Iron Ranch.
Jones pointed out that the lease approved by PAWSD does not restrict where the Webers can sell the gravel currently on the site.
“The board sitting there was clear that they thought the public use customers was the way,” Riehm said. “If we’re going to sell it, that’s a boundary they’d consider putting in there.”
SJWCD board member Rod Proffitt asked if the mining permit is still active for the property.
Riehm stated that the permit for the upper portion of the ranch is active, and PAWSD board member Bill Hudson added that a mining permit for the lower portion of the property by the San Juan River has been closed.
The board then discussed a 2.5-acre area on the property that was excluded from the grazing lease due to PAWSD’s potential plan to build a recreational vehicle (RV) park for employees and the issues with the demolition of buildings on the property, many of which contain asbestos.
Following this, the board then began discussing if it had received the final version of the lease from PAWSD, with Riehm indicating that he had received a final version of the lease at 3:30 p.m., prior to the 4 p.m. meeting.
Jones explained that this lease is the lease approved by the PAWSD with the addition of some drafting changes.
Lewis explained that she sent a lease version to the SJWCD on June 14 with the “substantive terms” approved by the PAWSD board.
Lewis added Jones reviewed the lease earlier on June 17, prior to it being sent to the board, and provided comments on the lease, catching some typographical and drafting errors.
She stated that she and Jones finalized these revisions, and Jones added a term clarifying that the Webers could sell gravel to any party they wished and that neither board would have veto power over such sales or would hold a preference for who the gravel would be sold to.
Lewis indicated that PAWSD would discuss the potential mining lease more in the future, which would supersede the current lease.
She concluded that the lease that was distributed to the SJWCD that afternoon “is what the PAWSD board voted on.”
Riehm commented that he was unsure if the board could act on the lease that was distributed to the board and claimed that restrictions on who the Webers could sell gravel to were discussed for the present lease, although he added that such terms were not added to the lease, and that he was unsure if the PAWSD board had voted on such terms.
“But they were nodding their heads, not shaking their heads, during that, so it should be a nonissue,” Riehm said.
SJWCD board member Rob Hagberg asked if Jones reviewed the lease and if she had issues with it.
Jones stated that she had reviewed it and elaborated on the drafting errors she had identified in the leases, which Lewis had corrected.
She added that the only change made to the gravel lease was to clarify that PAWSD is responsible for paying for any gravel PAWSD purchases and that the SJWCD is not liable for these payments.
Jones also stated that the primary change in the lease is that it would not allow additional mining and would allow the Webers to sell gravel already mined at the site, with no limitations on who this gravel could be sold to.
“I think we’re done,” Riehm said before asking if the board should move to sign the lease when PAWSD finalizes it or if it should wait until the next SJWCD meeting.
Lewis stated that the lease would likely be executed by the PAWSD board “this week.”
She added that the board acted at its meeting with the intention that the leases would go to the SJWCD and was “hoping that you would take action on them.”
Jones commented that the question before the SJWCD board was if it is willing to authorize an extension of the lease with the business terms presented.
Hagberg commented that he did not need to review the lease “in detail” if Jones and Riehm already reviewed and approve of it.
He then moved to authorize Riehm and Jones to sign the lease when they felt satisfied with it, which SJWCD board member Susan Nossaman seconded.
Riehm expressed comfort with the lease terms.
Proffitt raised the issue of if the excess gravel at Running Iron Ranch could be sold to “anyone” instead of being restricted to public entities.
Riehm asked Lewis if she understood that the Webers planned to sell the gravel commercially, adding that he understood that the lease does not “exclude them from doing that.”
He also reiterated that he brought up this issue at the PAWSD meeting.
Lewis stated that, in her understanding, the PAWSD board did not move to add any restrictions on who the gravel could be sold to.
Hagberg clarified that these sales would only involve the rock that has already been mined and commented that he did not object to the current proposed lease.
“It’s not that much,” SJWCD board member Bill Nobles said.
Lewis noted the Webers stated that they objected to being restricted in terms of who they could sell this gravel to due to operational and financial reasons.
The board then discussed the issue, with Riehm reiterating that he had spoken in favor of restricting the sale of the already-mined rock to public use at the PAWSD meeting and Jones stating that she is comfortable with the already-mined rock being sold to the public if it would generate additional revenue for PAWSD.
She added that she would potentially support restrictions on who sales could be made to for a further mining lease.
Riehm commented that he would not oppose the current lease, but would like further discussion of who sales could be made to if further mining occurs at the property.
Hagberg asked if approving the lease without restrictions on sales would set a precedent for further leases and make imposing restrictions more difficult.
Jones commented that she was unsure if this would make negotiations more difficult, but that she felt the current lease is “different in kind” compared to a lease for further mining.
She added that, if restrictions on sales would not be feasible in a lease for further mining, she would potentially not be willing to move forward with approving such a lease.
Hagberg commented that the board appeared to be of a “unified mind” that gravel from the property should only be sold to PAWSD and other public entities and that, if those terms were inserted into the lease and communicated to PAWSD, he would be comfortable with authorizing Jones to sign the lease.
Riehm recalled that Ramsey stated that the county would potentially be interested in purchasing all the gravel available at the site.
He added that he didn’t see how having a deal between the county and the Webers would be a “big obstacle.”
Jones noted that the board “could only speculate” who Weber might sell the already-mined rock to and that the board could either insert a condition that the gravel only be sold to public entities or keep the sales open.
Hagberg then amended his motion to insert this restriction.
Proffitt seconded the amended motion.
Hudson commented that, in inserting this clause, the SJWCD board is “ignoring” Ramsey’s belief that the Webers would “walk away” from the lease if it includes such a restriction, causing PAWSD to not receive the gravel it needs for the Snowball Water Treatment Plant expansion and to lose the potential of further mining.
He added, if the SJWCD board wishes to include such a clause, “you’d better” speak with Weber and gain his approval since Hudson believed that Weber intended to sell the remaining gravel that has been mined to his “friends and family.”
Hudson recommended that the board go back to the initial motion and open a conversation with the Webers about restrictions on sales when discussing a lease for further mining.
He added that the SJWCD would potentially be taking money away from PAWSD by depriving it of royalties that it can use to help pay the loans on Running Iron Ranch by including this restriction.
“You know, the big problem, Bill, is you guys are giving us a lease half an hour before our meeting that’s been amended, and we thought we were agreeing to one thing and now who in the hell knows what it means, and I think that that’s grossly unfair,” Hagberg said.
Jones commented that this was a “change” from what was in the board packet for the meeting, but that she felt that discussion of restricting sales to public buyers had been focused on leases for further mining and that this was not currently before the board.
She added that, due to the benefits for PAWSD, she would be willing to approve the lease “as it has come to us” from PAWSD and would not be in favor of the current motion.
Nobles asked how much rock has already been mined at the site.
Hudson stated that there is approximately 20,000 tons of already mined rock with 80,000 more in the ground that could be mined.
Board members then began talking over each other, with Jones reiterating that the lease did not approve additional mining and Nobles commenting, “We’ve said that 20,000 times here.”
“So, here’s my point, guys,” Nobles said. “The Webers, whether you like it or not, they’re in this as a business and they’re producing rock for PAWSD because PAWSD needs the rock. What’s additionally left there, they basically dug that up in the past. I don’t think it matters who in the hell they sell it to because, No. 1, if you start discriminating and say, ‘Oh, only the county can buy it, only Forest Service can buy it,’ but, if [a customer] walks in there and says, ‘I need gravel because I can’t get up and down my road,’ and he’s willing to pay $40 a ton for it, I think that’s fine. I think that’s fine, guys. There’s only 20,000 tons. It’s not that much. It’s not that much gravel.”
Hagberg commented that he was concerned about the precedent that the current lease would potentially set.
Riehm stated that the board would have the ability to consider and not approve any future leases.
Nobles commented that mining is a “different scenario” which will likely “come to the table someday … but the reality is you’ve got the public that’s actually also gonna want to have a comment on that.”
“And I also want to make sure that we understand that we are … just breaching some new ground with cooperation between the two boards and there’s no reason on this lease to deny what they’ve already approved per se because they’ve removed the mining, that takes away the whole 80,000 and all the stuff that goes with it,” Riehm said.
He then called for a vote on Hagberg’s amended motion introducing restrictions on who the already mined-gravel could be sold to.
Proffitt voted in favor of the motion, and the rest of the board voted against it.
Hagberg then moved that the board approve the lease as approved by the PAWSD board and authorize Jones and Riehm to sign it, which Nobles seconded.
“I completely understand the point, but it’s not enough to dicker over with them,” Nobles said. “It’s not enough to cause hard feelings with everybody. It’s not you guys.”
Following Hudson pointing out that the board had not voted on the motion and a brief discussion of what motion was on the table, the board then voted to approve the lease as presented by PAWSD, with Proffitt casting the lone dissenting vote.
