#SanJuanRiver Headwaters Project (Dry Gulch Reservoir) update

Dry Gulch Reservoir site. Credit The Pagosa Daily Post

From The Pagosa Sun (Chris Mannara):

A recap of the current agree- ment between the Pagosa Area Water and Sanitation District (PAWSD) and the San Juan Conser- vation District (SJWCD) regarding Running Iron Ranch, San Juan River Headwaters Project (formerly known as Dry Gulch Reservoir) and various leases on the property were topics of discussion by both boards at a joint work session on Jan. 23.

The property is jointly owned by PAWSD and SJWCD, PAWSD Manager Justin Ramsey explained, and there is also an agreement with the Colorado Water Conservation Board (CWCB) that includes terms for both entities to abide by.

There is an ongoing 15-year lease with the Weber family on the property; that lease expires on Jan. 3, 2023, Ramsey added…

The purchase of the property was made via a $9.2 million loan that PAWSD has with the CWCB and a $1 million grant that the SJWCD received.

However, in 2015, the property was appraised for about $4.5 mil- lion, he explained…

Park Ditch included with the prop- erty, specifically 9.1 cubic feet per second (cfs), Ramsey noted…

PAWSD’s loan with the CWCB was restructured in 2016 and, with that restructuring, the loan was broken into two parts, “Loan A” and “Loan B.”

Loan A was described by Ramsey as the “planning period,” which en- compasses 20 years — from Sept. 23, 2016, to 2036 — on how PAWSD and the SJWCD will move forward with a project on the property.

The amount for Loan A is $4.2 million and PAWSD is paying that off with a 1.75 percent interest rate.

After that planning period ends, PAWSD will go into an “optional extended planning period,” or Loan B.

“We can extend it for another 20 years and then we’ll start paying on the remaining $4.5 million, but it’s deferred for 20 years,” Ramsey said, noting the loan would be deferred from 2036 to 2056. “We’re not pay- ing anything on it, so it’s a fairly sweet deal at this point.”

Loan B’s interest rate will be for 3.5 percent, Ramsey added later.

According to PAWSD Director of Business Services Aaron Burns, the current remaining balance for Loan A is $3.35 million.

Since the restructured agree- ment, the annual payment on Loan A is $256,000, Burns noted…

Weber leases

There are four separate par- cels of property that encompass the Running Iron Ranch prop- erty, Ramsey explained, noting that those four parcels have been leased to the Weber family.

One parcel is 68.11 acres, an- other is 5.49 acres, one is 40 acres and the final one is 552.73 acres, according to Ramsey.

Additionally, there is a sand and gravel lease on that property, Ramsey noted.

“When the property was pur- chased, we went into a 15-year lease agreement with the Webers, the regional owners of the ranch. It was four different agreements for a $1 a year,” he said. “I think we got $60 out of this and not just $15.”

The lease agreement is from Jan. 3, 2008, to Jan. 3, 2023, according to Ramsey.

Additionally, the lease agree- ment can be extended via written consent from both the landlord and the tenant, and Ramsey explained that if it is extended the lease should be more for $1 a year.

The lease agreement also states that the Webers kept 18 acres of retained property that PAWSD has to provide access to, Ramsey noted, adding later that a legal access easement to the retained property has been provided.

Other requirements under the lease with the Webers is that PAWSD has to provide irrigation to the retained property, but this expires if the Webers no longer own the property.
Both districts also have to pay all fees associated with the Park Ditch and the Webers get use of the water, Ramsey explained.

“We promised that we won’t interfere with their development of that retained property if they are going to develop something in the future,” Ramsey said. “At this point, I have heard nothing of anything being developed out there.”

One thing the Webers have to do is comply with all applicable laws, including environmental laws, Ramsey noted.

“It’s kind of nice that the state oversees that,” he said. “So, it made me feel much more comfortable that I learned of that.”

If the lease with the Webers ends, the Webers are obligated to restore the premises and take other actions required by applicable min- ing laws and regulations, Ramsey explained.

The Webers must also remove all personal property and improve- ments at the conclusion of the lease, he added later.

According to Ramsey, the Webers are interested in extending the lease.

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