Metro-area water development could leave Weld high and dry
The $5.2 million Rothe property, located off of U.S. 34 near the Riverside Reservoir in eastern Weld County, came to the town of Castle Rock through Union Colony Agriculture, LLC, an affiliate of San Diego-based Summit Global Management. The hydro-commerce company has been active on the Colorado water market since 2008, sparking concern of water speculation due to its ambitious plans to purchase and resell water rights at a premium price.
Union Colony Agriculture managers Eric Vanderhye and John McIntyre declined to comment on the Castle Rock project or provide any details on the company’s management or business plans.
United Water and Sanitation District President Bob Lembke collaborated with the company during its early efforts to build a portfolio of water properties in Colorado through Summit Water Development Group (SWDG) and its subsidiaries. Lembke shares ownership with his partners at Summit of another Colorado company, Gilcrest Reservoir, LLC. He is currently in the process of buying out Summit’s holding in the company to move forward with reservoir development plans.
Lembke said Summit has failed to find the success it had hoped for in Colorado and is currently liquidating its assets.
“Some years ago Summit came into town. They were talking to a number of folks in the water sector and they had, what was at the time, a great idea to add some capital to water. At that time, they purchased a piece of my water portfolio,” Lembke said. “I think they’ve decided they don’t have the ability to meet the goals they articulated six or seven years ago and I believe they are liquidating most of their Colorado assets.”
Among the properties purchased by Summit under Lembke’s guidance was the Rothe property. Other assets recently sold by Union Colony Agriculture include approximately 50 to 100 acre feet of water transferred to the city of Greeley. The sale must still go through the state’s water court.
In February 2012, Northern Water rejected a transfer request made by another Summit Global Management company, also managed in part by Vanderhye, called Longview Agriculture. Northern Water became concerned that the company’s plan would artificially inflate prices for Colorado-Big Thompson project water and harm the district.
The company’s intention to later resell the shares provoked concern at Northern Water that Summit meant to trade water as one might trade stocks in a company.
In 2012, Longview Agriculture was also rejected by the Central Colorado Water Conservancy District in the purchase of Fulton Ditch shares.
As residents of Weld County celebrate one of the best years for water availability in recent history, the Denver metro area’s population boom could mean a much drier future.
Building on momentum from previous water purchases by Thornton, Aurora and Arapahoe County, the town of Castle Rock has begun making plans for two southern Weld County farm properties in an $81 million pipeline project that would connect the Box Elder Creek Basin to the town’s faucets by 2030. Still in its early stages, the project already is stirring debate in Weld County over the drying up of productive agricultural lands.
According to preliminary planning documents, Castle Rock would divert 2,500 acre feet of water annually from the South Platte tributary’s aquifer, supplying up to 10,000 homes a year.
While the transfer is just a drop in the bucket for the metro-area’s total needs, the pipeline plan represents the growing pressure on Weld County to provide water for burgeoning communities upstream. Castle Rock, for instance, sits atop the non-renewable Denver Basin Aquifer and faces the difficult task of securing water supplies that do not exist on its home turf.
With calls from the Western Slope declaring “no more water across the Divide,” Weld County could play an important role in providing those supplies, said Jim Witwer, a water attorney who represents clients in Northern Colorado.
“It probably seems innocuous when it happens little by little and under the radar,” Witwer said. “But if you get out a map and start to show which entities are acquiring water where and draw arrows, it would start to look a little like a WWII battlefield map of Europe. People are swooping in all over Weld County with cash jingling in their pockets.”
For many farmers, water rights serve as their retirement plan, creating pressure to sell assets to the highest bidder. In many cases, Weld County communities and individual farmers have not had the available funds to compete, said Brian Werner, communications director for Northern Water.
“We’re concerned. We’ve been concerned since 1986 when the city of Thornton bought 180 farms in Northern Colorado. It was a big deal. That served to wake us up that we can’t just say, ‘We’ve got pretty good supplies and we’re going to stay like this.’ No, that’s not reality,” Werner said.
Former Weld County Commissioner Bill Jerke projected that 20 to 30 years from now, “the vast majority of water that had been used, owned and put to beneficial use in Weld County may not be owned and put to beneficial use in Weld County any more.”
The potential impacts on Weld water users range from environmental to financial.
“That’s a major concern for our economy, as well as for land use. Water adds value to property, adds value to our quality of life and adds income to farmers and ranchers,” Jerke said.
Box Elder Creek
For the town of Castle Rock, resources from the South Platte, and tributaries such as Box Elder Creek, will play an important role in achieving 75 percent renewable water supplies by 2030.
Castle Rock water broker Walraven Ketellapper of Stillwater Resources identified the Box Elder Creek property as a complement to an accompanying farm off of U.S. 34 near Riverside Reservoir. This second property, commonly referred to as the Rothe Recharge, would fulfill the city’s legal obligation to offset its footprint. The groundwater from this property naturally flows back into the South Platte, serving as “recharge” credit and replenishing water levels in the river.
While the Box Elder Creek property remains under option for Castle Rock, the recharge property has already been purchased by the city for the sum of $5.2 million from Union Colony Agriculture, LLC, an affiliate of San Diego-based company Summit Global Management.
Castle Rock Utilities Director Mark Marlowe said the city had yet to evaluate the environmental impact of the pipeline project, pending the final decision on how the properties will be managed. While much of the initial engineering plans have been outlined, the water purchased by Castle Rock will need to pass through the state court for final approval.
“An important thing to remember with this project is that it is very preliminary. We don’t know yet how we’ll get it to Castle Rock and we certainly don’t want to adversely impact the people of Weld County,” Marlowe said.
The effect of developing well fields to pump groundwater out of he Box Elder Creek Basin has provoked concern among some Colorado water developers.
Randy Ray, executive director of Central Colorado Water Conservancy District, based in Greeley, questioned the logic behind replenishing water downstream, rather than at the source of pumping. He said the current option could potentially dry up the basin.
“The right location would be directly on the creek. Replace it where you pump it,” Ray said. “Rothe would go to the South Platte downstream of the confluence of the South Platte and Box Elder Creek, not a long way downstream, but still downstream. They would not be able to replace water where it had been pumped, unless they piped it.”
Ray expressed concern that recharge downstream would diminish the Box Elder Creek area’s groundwater resources and leave users of shallow, alluvial wells without access to water.
“They would mine the aquifer down and create a situation where current water users wouldn’t have any water to pump,” he said. “It’s more of a closed type of basin and if you pump it out and don’t replace it, you’re just mining it down.”
Werner expressed concern over such “buy and dry” strategies that reduce available resources for future generations.
“Anytime you are looking at your base supply leaving the region, you are looking at fewer opportunities for those communities that are growing. That’s one of the concerns. The biggest problem is that when you start doing that — and water runs uphill to money — growing cities will find the water,” Werner said.
Castle Rock’s most recent analysis on the project indicated no intention to relocate the recharge point.
“Our consultants feel there is significant risk to the project if the town is required to replace depletions by delivering augmentation water to Box Elder Creek,” the city’s 2012 Legacy Water Projects report said.
An alternative option would be a 25-mile pipeline connecting the creek to the South Platte River. With an estimated $30 million price tag for such an addition, the town declined the option.
A separate Stillwater project on Box Elder Creek in Arapahoe County provoked similar debate about drying up ag land, particularly among local cattle ranchers. They feared the plan to pump 500 acre feet from the basin would dry wells and pools used by livestock, according to local media reports. The proposal would have pumped one-fifth of the quantity under consideration by the Castle Rock plan.
Ketellapper said that although the concepts for the two Box Elder Creek augmentation projects coincide in many regards, the Weld project is entirely separate. He did not acknowledge the same environmental concerns as those expressed in Arapahoe County but did say the Weld property would likely be converted to dryland agriculture.
“It will be 10 or 15 years before the water is going to be needed in Castle Rock. In the short term, that water would continue to be used in Weld County. In the long term, that farm would be repurposed into dryland agriculture or grazing from irrigated agriculture,” he said.
For future water sales, Werner proposed Weld County consider forming a fund to allow quicker action and improve competitiveness when water rights come up on the market.
“We’ve talked for a while about creating a water bank in Northern Colorado so that the farmers who are going to sell for whatever reason have somewhere to go. We’ve talked about the idea but have never come up with a way to fund it,” he said. “You need a chunk of money in order to pay these people. Instead of selling to East Cherry Creek Valley, or whoever it is, we could keep it here.”
Werner said that although the idea of creating a water bank is generally well-received, the difficult task would be to secure funding, possibly through a tax measure. ❖
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