HomeMy WebLinkAboutBOCC.packet 06112014 - Stapleton Brothers Ditch 1
AGENDA ITEM SUMMARY
REGULAR MEETING DATE: June 11, 2014
AGENDA ITEM TITLE: An Ordinance of the Board of County
Commissioners of Pitkin County, Colorado
Authorizing the Sale of Stapleton Brothers Ditch
Historic Consumptive Use Credits to Maroon
Creek, LLC
STAFF RESPONSIBLE: John Ely, County Attorney
ISSUE STATEMENT: This is the second reading and public hearing of an ordinance
authorizing the execution of a contract to sell historic consumptive use credits associated
with the Stapleton Brother Ditch to Maroon Creek, LLC in a form substantially similar to the
contract attached. The sale will convey 12 acre-feet for the consideration of $120,000. The
direct diversion flow rate of .436 cfs will be bypassed at the Stapleton Brothers Ditch
headgate and remain in the river system for augmentation purposes.
BACKGROUND: Pitkin County is the holder of an 8 cfs direct flow diversion right
from Maroon Creek through the Stapleton Brothers Ditch. The right was adjudicated in
1933 with an appropriation date of 1904. The decreed use for the water right is for
agricultural irrigation and the water had been historically applied to the northern half of
what is now the Pitkin County Airport (“Airport”). Exhibit A attached, illustrates in
green hash marks, the area of historical irrigation at the north end of the Pitkin County
Airport. The Stapleton Brothers Ditch has a diversion point on Maroon Creek
approximately even with Iselin Field. The ditch runs down through the Maroon Creek
Club and along Highway 82 to reach the Airport.
In 1999, as a result of previous Airport expansion, particularly runway and
taxiway construction, the County no longer needed to apply the full amount of its water
right for surface irrigation of the Airport property. Consequently, the County sought to
quantify its historic consumptive use in this water right. The amount of land no longer
needing to be irrigated at the airport is approximately 136 acres. Using a calculus of 1.62
acre-feet per acre for irrigation season running from May 1 to October 31, the County
obtained a decree adjudicating an historic consumptive use associated with the Stapleton
Brothers Ditch irrigation at the Airport of 220 acre-feet per year. The quantification of
historic consumptive use of the Stapleton Brothers Ditch right does not affect other water
rights the County has in relation to the Airport, such as its position in the Stapleton Ditch,
Owl Creek and Willow and Herrick Ditch.
Of the 220 acre-feet of historic consumptive use adjudicated to Pitkin County, 18
acre-feet were reserved for future Airport needs, 12 acre-feet were reserved for potential
other County needs, 70.5 acre-feet were sold to recover the costs associated with
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maintaining and preserving this water right and the balance, 119.25 acre-feet, slightly
more than half of the total water right, was subject to change of use application with the
CWCB.
The historic consumptive use credit will be used by Maroon Creek, LLC to
augment evaporative losses associated with ponds located on the golf course. This
augmentation use will by necessity require the County’s water right, once acquired, to be
bypassed at the headgate and left in the stream for so long as any other senior water right
might affect the maintenance of the golf course ponds, theoretically the state line.
Maroon Creek, LLC will purchase 12 acre-feet of annual historic use credits from the
County for $120,000. These credits represent .436 cfs which will remain in Maroon
Creek and the Roaring Fork River and will enhance stream flow and preserve riparian
habitat.
The proceeds will be credited to the airport enterprise as this was the source of the
original acquisition of the water rights.
Previously, the County used a portion of these historic use credits with the CWCB
to protect and enhance stream flow in Maroon Creek and the Roaring Fork River. This
was accomplished through the conveyance of a portion of these rights into a trust to be
managed by the CWCB. The uniqueness of the arrangement made the trust ultimately
very expensive and time consuming. The County’s costs were approximately $350,000
and the time to finally attribute water rights to the CWCB instream program was more
than three years.
The costs of this proposed transaction will be paid by Maroon Creek, LLC in
addition to the consideration paid to the County and will net the County as much as
$275,000-$300,000. This transaction, in addition to putting the County in a positive cash
position, confers the same benefits to stream health created by the CWCB instream flow
program.
If the use of this water right is ever changed by Maroon Creek, LLC, an event that
would be unlikely as long as the golf course use continues, then the County will have the
present right to re-acquire its water right for one half the purchase price.
The price for these historic use credits is consistent with the value previously
established by the County. This value is far in excess of other augmentation water
available in the drainage as a consequence of its physical location so high in the drainage.
By comparison, round one Ruedi water transacts for $54-$256 per acre-foot.
LINK TO STRATEGIC PLAN: Environmental Protection. This transaction promotes
Pitkin County’s commitment to preserving the integrity of the Roaring Fork watershed
and protecting water availability and sustainability.
KEY DISCUSSION ITEMS: Terms of the contract and how it achieves the County’s
objectives
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BUDGETARY IMPACT: Eliminates the costs associated with adjudication of an
ongoing water court application and generates revenue for the airport enterprise.
RECOMMENDED BOCC ACTION: Adopt attached ordinance authorizing execution
of contract for sale of historic consumptive use credits.
ATTACHMENTS: Exhibit “A” map; Ordinance; Agreement for Purchase and Sale of
Water Rights
Legend
Diversion Point
-Ditch
Stream Reaches
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••••• Reach 2
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lS:SJ Area Historica lly Irri gated
Exhibit A
Stapleton Brothers Ditch
General Location Map
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Overview Map
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1 inch = 2.586 feel
1.300 2.600
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1
AN ORDINANCE OF THE BOARD OF COUNTY COMMISSIONERS
OF PITKIN COUNTY, COLORADO
AUTHORIZING THE SALE OF STAPLETON BROTHERS DITCH
HISTORIC CONSUMPTIVE USE CREDITS TO MAROON CREEK, LLC
ORDINANCE NO. _______-2014
RECITALS
1. The Board of County Commissioners of Pitkin County, Colorado (“BOCC”) owns an
interest in the Stapleton Brothers’ Ditch water right acquired with the real property occupied by
the Pitkin County Airport (the “SBD Water Right”).
2. As a result of previous Airport expansion, particularly runway and taxiway construction,
the County no longer needs to apply the full amount of its water right for surface irrigation of the
Airport property. Consequently, the County quantified its historic consumptive use in this water
right related to the amount of land no longer needing to be irrigated at the airport.
3. By decree entered in Case No. 99CW306, District Court, Water Division No. 5, the
BOCC obtained approval of a change of the SBD Water Right, confirming 220 acre-feet per year
of consumptive use credits associated with the SBD Water Right (the “SBD Credits”).
4. Maroon Creek, LLC owns water rights associated with and used for the benefit of the
Maroon Creek Club golf course and desires to purchase SBD Credits to augment evaporative
losses associated with ponds located on the golf course.
5. Previously, the County used a portion of these historic use credits with the CWCB to
protect and enhance stream flow in Maroon Creek and the Roaring Fork River, a costly and time
consuming arrangement.
6. In addition to putting the County in a positive cash position, the sale of historic
consumptive use credits to Maroon Creek, LLC confers the same benefits to stream health
created by the CWCB instream flow program.
7. The BOCC desires to sell and Maroon Creek, LLC desires to purchase, 12 acre-feet of
annual SBD Credits and the associated pro rata interest (0.436 c.f.s.) in the SBD Water Right for
$120,000.
8. The BOCC and Maroon Creek, LLC have agreed to the terms, covenants and conditions
of an Agreement for Purchase and Sale of Water Rights and the BOCC Chair or his designee, is
hereby authorized and directed to execute the Agreement on behalf of the County and any other
documents necessary to complete the transaction subject to approval as to form by the County
attorney.
9. The Board finds that adoption of this ordinance is necessary for the immediate
preservation of the public health, safety and welfare of the citizens of Pitkin County.
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NOW, THEREFORE, BE IT ORDAINED by the Board of County Commissioners of Pitkin
County, Colorado that the Chair or his designee is authorized to execute an Agreement for the
Sale and Purchase of Water Rights in substantially the form approved by the County Attorney
and to execute such further instruments as shall be necessary to convey to Maroon Creek LLC,
12 acre-feet of annual historic consumptive use credits in the Stapleton Brothers Ditch and the
associated pro rata interest (0.436 c.f.s.) in the Stapleton Brothers Ditch water right for $120,000.
INTRODUCED, FIRST READ, AND SET FOR PUBLIC HEARING ON MAY 28, 2014.
NOTICE OF PUBLIC HEARING AND TITLE AND SHORT SUMMARY OF THE
ORDINANCE PUBLISHED IN THE ASPEN TIMES WEEKLY ON MAY 29, 2014.
NOTICE OF PUBLIC HEARING AND THE FULL TEXT OF THE ORDINANCE POSTED
ON THE OFFICIAL PITKIN COUNTY WEBSITE POSTED ON THE OFFICIAL PITKIN
COUNTY WEBSITE ( www.aspenpitkin.com ) ON MAY 30, 2014.
ADOPTED AFTER FINAL READING AND PUBLIC HEARING ON JUNE 11, 2014.
PUBLISHED BY TITLE AND SHORT SUMMARY, AFTER ADOPTION, IN THE ASPEN
TIMES WEEKLY ON THE ______DAY OF_______________2014.
POSTED ON THE OFFICIAL PITKIN COUNTY WEBSITE POSTED ON THE OFFICIAL
PITKIN COUNTY WEBSITE ( www.aspenpitkin.com ) ON THE ____ DAY OF ___________
2014.
THIS ORDINANCE IS EFFECTIVE ON JUNE 11, 2014.
ATTEST: BOARD OF COUNTY COMMISSIONERS
By _________________________ By: _____________________________
Jeanette Jones Robert A. Ittner, Jr., Chair
Deputy County Clerk
Date: ______________
APPROVED AS TO FORM: MANAGER APPROVAL
___________________________ _________________________________
John Ely, County Attorney Jon Peacock, County Manager
1020334-4 1
AGREEMENT FOR THE PURCHASE AND SALE
OF WATER RIGHTS
This Agreement for the Purchase and Sale of Water Rights (“Agreement”) is made and
entered into effective the _____ day of _______________, 2014 by and between the Board of
County Commissioners of Pitkin County (“Seller”) and the Maroon Creek Limited Liability
Company, a Colorado limited liability company (“Buyer”).
RECITALS:
WHEREAS, Seller owns an interest in the Stapleton Brothers’ Ditch water right,
originally decreed on October 16, 1933 in Civil Action No. 3000, Pitkin County District Court,
State of Colorado, in the amount of 8.0 c.f.s. absolute, with an appropriation date of June 30,
1904 (“SBD Water Right”);
WHEREAS, by decree entered in Case No. 99CW306, District Court, Water Division
No. 5, Seller obtained approval of a change of the SBD Water Right, confirming, inter alia, 220
acre-feet per year of consumptive use credits associated with the SBD Water Right (the “SBD
Credits”);
WHEREAS, pursuant to the decree entered in Case No. 99CW306, of the 220 acre-feet
per year of SBD Credits, 18 acre-feet per year was reserved for use by Seller to irrigate
landscaped acreage on the Aspen-Pitkin County Airport property;
WHEREAS, after entry of the decree in Case No. 99CW306 and prior to execution of
this Agreement, Seller has sold or entrusted 190 acre-feet of the SBD Credits, or 6.9 c.f.s. of the
SBD Water Right, to third parties;
WHEREAS, Buyer owns water rights associated with and used for the benefit of the
Maroon Creek Club golf course; and
WHEREAS, Seller desires to sell and Buyer desires to purchase a portion of the SBD
Credits and associated interest in the SBD Water Right, as set forth herein.
NOW, THEREFORE, for and in consideration of the mutual promises and covenants set
forth herein, the parties agree as follows:
1. Incorporation of Recitals. The foregoing Recitals are incorporated herein as if set
forth in full.
2. Agreement to Sell and Buy Water Rights. Seller agrees to sell to Buyer and
Buyer agrees to buy 12 acre-feet of annual SBD Credits and the associated pro rata interest
(0.436 c.f.s.) in the SBD Water Right (the “Subject Water Rights”). The 12 acre-feet of annual
SBD Credits shall be available to Buyer, pro-rata, based on physical and legal availability of the
SBD Water Right as measured at the Stapleton Brothers’ Ditch headgate. Any shortage will be
1020334-4 2
shared proportionally among the owners of the SBD Water Right based on each party’s
ownership interest.
3. Conveyance. At closing, Seller shall convey the Subject Water Rights to Buyer
by special warranty deed, free and clear of any encumbrances.
4. Purchase Price. Buyer agrees to pay Seller One Hundred Twenty Thousand
Dollars ($120,000.00) (equivalent to $10,000 per acre-foot of SBD Credit) for the Subject Water
Rights.
5. Earnest Money Deposit. Upon execution of this Agreement, Buyer shall deposit
Twelve Thousand Dollars ($12,000.00) into an account for the benefit of Seller (“Earnest Money
Deposit”). In the event that Buyer terminates this Agreement pursuant to paragraph 6 below,
Seller shall refund the Earnest Money Deposit, plus any accrued interest, to Buyer within ten
(10) days of Buyer’s written notice of termination.
6. Due Diligence Review; Right to Terminate. Buyer, through any employees,
agents, or other designees of Buyer’s choosing, has the right to review and inspect any
information relating to the SBD Credits and the SBD Water Right, including any information
Seller or its employees, agents, attorneys, or engineers has pertaining to the SBD Credits and
SBD Water Rights, which shall be made available to Buyer at its request. If Buyer determines,
in its sole subjective discretion, that the Subject Water Rights are not satisfactory to Buyer due
to: (i) Seller’s title to or the status of Seller’s interest in the Subject Water Rights; (ii) the
historical use of the Subject Water Rights; or (iii) Buyer’s determination that the Subject Water
Rights are not satisfactory for Buyer’s intended uses, then Buyer may provide written notice of
unsatisfactory condition (“Notice of Unsatisfactory Condition”) to Seller within 60 days of the
date of this Agreement. Seller and Buyer shall have 15 days from the date of Buyer’s Notice of
Unsatisfactory Condition to reach a resolution and, if no resolution is reached, Buyer may
terminate the Agreement, in which case the Earnest Money Deposit, plus any accrued interest,
shall be returned to Buyer.
7. Seller’s Warranties. Seller hereby makes the following representations and
warranties to Buyer, which representations and warranties shall be applicable and effective as of
the date of this Agreement and as of the date of closing:
A. Seller owns good and marketable title to the Subject Water Rights, free and clear of
any and all liens, encumbrances, and adverse claims to the use and enjoyment
thereof.
B. There is or has been no intent to abandon or other action taken to abandon, in whole
or in part, the Subject Water Rights.
C. The SBD Credits have been quantified by the water court in the manner required by
law. Since the quantification of the SBD Credits in Case No. 99CW306, Seller has
not undertaken any other action, change, or requantification affecting the Subject
1020334-4 3
Water Rights and has complied with all of the terms and conditions of the decree in
that case.
D. Seller has taken all actions and received all authorizations necessary to enter into
this Agreement and make it a valid and binding obligation of Seller.
8. Dry-Up Covenant. Along with Seller’s deed for the Subject Water Rights, and as
a result of the sale to Buyer, Seller agrees to execute and deliver to Buyer a dry-up covenant for
the land irrigated by the Subject Water Rights.
9. Intended Use. The parties understand and agree that Buyer intends to use the
Subject Water Rights for augmentation purposes associated with the Maroon Creek Club golf
course. If Buyer ever uses the Subject Water Rights for purposes other than augmentation as
provided herein, Seller may, at its option, reacquire the Subject Water Rights from Buyer at a
price not to exceed one-half of the purchase price hereunder.
10. Water Court Approval. The parties understand and agree that it will be necessary
for Buyer to obtain water court approval for Buyer’s use of the Subject Water Rights for
augmentation purposes. Seller provides no assurances or guarantees as to whether the 12 acre-
feet of SBD Credits will be subject to requantification in the water court approval process. Seller
shall not file a statement of opposition or otherwise oppose Buyer’s water court application
involving the Subject Water Rights, and Seller agrees to cooperate with and assist Buyer as
needed by providing information necessary or helpful for Buyer to obtain a decree in such action.
The parties shall be responsible for their own costs and attorney fees associated with such action
or assistance.
11. Closing. The date of closing shall be 90 days following the effective date of this
Agreement. At closing, the following shall occur:
A. Buyer shall remit payment to Seller in the amount of $108,000.00 (the amount of
the purchase price minus the Earnest Money Deposit ($120,000 - $12,000 =
$108,000));
B. Seller shall deliver to Buyer a duly executed and acknowledged special warranty
deed conveying the Subject Water Rights to Buyer free and clear of any
encumbrances;
C. Seller shall deliver the dry-up covenant described in paragraph 8 above to Buyer;
and
D. The parties shall execute and deliver any and all other documents necessary to carry
out the intent of this Agreement and to comply with applicable law.
12. Time of Essence; Remedies. Time is of the essence in the performance of this
Agreement. If any obligation hereunder is not performed or waived as herein provided, the
parties shall have the following remedies:
1020334-4 4
A. If Buyer is in default: (i) Seller may elect to terminate this Agreem ent, in which
case the Earnest Money Deposit, plus any accrued interest, shall belong to Seller; or
(ii) Seller may elect to treat this Agreement as being in full force and effect, in
which case Seller shall have the right of specific performance or damages or both.
B. If Seller is in default: (i) Buyer may elect to terminate this Agreement , in which
case the Earnest Money Deposit, plus any accrued interest, shall be immediately
returned to Buyer; or (ii) Buyer may elect to treat this Agreement as being in full
force and effect, in which case Buyer shall have the right of specific performance or
damages or both.
13. Survival. All promises, covenants, representations and warranties contained in
this Agreement shall survive closing.
14. No Brokerage. Each of Seller and Buyer represent and warrant that said party has
dealt with no brokers or salespersons in connection with this transaction, and each party agrees
that, in the event of any claim by any broker or salesperson who may have rendered services in
connection with this transaction at the request of a party or with the knowledge or consent of a
party, then such party shall defend, hold harmless and indemnify the other party against such
claims and all costs and expenses (including reasonable attorney fees and costs), liabilities and
judgments resulting therefrom.
15. Complete Agreement. This Agreement embodies the entire and complete
agreement of the parties on the subject matter herein. All prior and contemporaneous
negotiations and understandings of the parties are fully integrated and merged into this
Agreement.
16. Modification. This Agreement shall not be modified or amended except by
subsequent written agreement signed by the parties.
17. Binding Effect. This Agreement shall be binding upon and inure to the benefit of
the parties hereto and their respective successors or assigns.
18. No Third Party Beneficiaries. Neither this Agreement nor any of the terms,
conditions or provisions hereof shall inure to the benefit of any persons or enti ties that are not a
named party or a successor or assign of a party as provided herein.
19. Invalid Provision. If any term, condition, or provision of this Agreement is
determined to be invalid or unenforceable by a court of competent jurisdiction, then such term,
condition, or provision shall be severed or modified to the extent necessary to make it
enforceable, and the resulting Agreement shall remain in full force and effect.
20. Governing Law. This Agreement shall be governed under, and construed
pursuant to, the laws of the State of Colorado. Should either party institute legal suit or action
1020334-4 5
for enforcement of any term, condition or obligation contained herein, it is agreed that the venue
of such suit or action shall be in Pitkin County, Colorado.
21. Attorney Fees. Should this Agreement become the subject of legal action to
enforce or construe a term, condition or obligation of the Agreement, the prevailing party to such
legal action shall be entitled to reimbursement of its attorney fees and costs, expenses, and court
costs in such action.
22. Construction. The terms of this Agreement and all parts thereof shall be
construed as a whole according to their plain meaning and not strictly for or against any party.
Section or paragraph headings contained within this Agreement are inserted for convenience
only and shall not be construed to vary or add to the meaning of the Agreement or of any
paragraph.
23. Notices. Any notice required or permitted to be given under this Agreement must
be in writing and will be deemed given upon personal delivery, three days after the deposit
thereof in the United States mail, postage prepaid, or one day after deposit with a recognized
overnight express mail service (i.e., FedEx, USPS, UPS), addressed to the appropriate party at
the addresses set forth below. Any party may change its address for notices by giving notice to
the other party in accordance with this paragraph.
Notice to Seller: Board of County Commissioners of Pitkin County
Attn: John Ely, Esq.
Pitkin County Attorney
530 E. Main Street, Suite I
Aspen, CO 81611-2939
With copy to: Timothy J. Beaton, Esq.
Moses, Wittemyer, Harrison & Woodruff, P.C.
P.O. Box 1440
Boulder, CO 80301
Notice to Buyer: Maroon Creek Limited Liability Company
Attn: Andrew Hecht
c/o Garfield & Hecht, P.C.
601 E. Hyman Avenue
Aspen, CO 81611
With copy to: Nicole Garrimone-Campagna, Esq.
Garfield & Hecht, P.C.
420 Seventh Street, Suite 100
Glenwood Springs, CO 81601
24. Counterparts. This Agreement may be executed in counterparts, each of which
shall be deemed an original, and all of which, when taken together, shall be deemed one and the
same instrument.
1020334-4 6
25. Authorization. By executing this Agreement, the parties acknowledge and
represent to one another that all procedures necessary to contract and execute this Agreement
have been performed and that the person signing for each party has been duly authorized to do so
and to bind said party to the terms and conditions hereof.
IN WITNESS WHEREOF, the parties have executed this Agreement effective as of the
date set forth above.
BOARD OF COUNTY COMMISSIONERS
OF PITKIN COUNTY
By: __________________________________
Robert A. Ittner, Jr., Chair
ATTEST:
___________________________________
Secretary
STATE OF COLORADO )
) ss.
COUNTY OF PITKIN )
The foregoing Agreement for the Purchase and Sale of Water Rights was subscribed and
sworn to before me this _____ day of _______________, 2014, by Robert A. Ittner, Jr. as Chair
and ______________________ as Secretary of the Board of County Commissioners of Pitkin
County.
WITNESS my hand and official seal.
My commission expires: __________________
__________________________________
Notary Public
1020334-4 7
MAROON CREEK LIMITED LIABILITY COMPANY,
a Colorado limited liability company
By: __________________________________
Andrew V. Hecht, Manager
STATE OF COLORADO )
) ss.
COUNTY OF PITKIN )
The foregoing Agreement for the Purchase and Sale of Water Rights was subscribed and
sworn to before me this _____ day of _______________, 2014, by Andrew V. Hecht as Manager
of Maroon Creek Limited Liability Company, a Colorado limited liability company.
WITNESS my hand and official seal.
My commission expires: __________________
__________________________________
Notary Public