The Pagosa Area Water and Sanitation District (PAWSD) and the San Juan Water Conservancy District (SJWCD) solidified their unwillingness to reach a compromise over the potential sale of the Running Iron Ranch at a June 30 joint work session.
PAWSD moved to sell the ranch (which PAWSD and the SJWCD jointly own) in the fall of 2024 against the opposition of the SJWCD, which is working to plan and build a reservoir at the site.
The ranch was purchased by PAWSD and the SJWCD in 2008, with PAWSD using loans from the Colorado Water Conservation Board (CWCB) to finance the project.
Disputes over the sale led to PAWSD suing the SJWCD in December 2024 in an attempt to get a judge to rule that the 2015 three-way agreement between PAWSD, the SJWCD and the CWCB governing the management of the property and the reservoir project allows PAWSD to sell the ranch without the SJWCD’s consent.
Litigation in the case is still ongoing.
At a May 29 special meeting, the PAWSD board heard a proposal for purchasing Running Iron Ranch from Trey Fricke of Zipper Valley Ranch, which included an easement which would allow for the creation of a 3,000 acre-foot (AF) reservoir on the ranch and a contribution of $10,000 a year to reservoir planning from the purchaser.
The SJWCD’s most recent goal was to create a reservoir with a size of 11,000 AF.
Fricke’s proposal would also place spending and grant acquisition conditions on the district developing the reservoir. The purchase price of $10.4 million that Fricke offered would be sufficient to pay off all of PAWSD’s debt on the property.
PAWSD initially received a proposal from Fricke to purchase the ranch in the fall of 2024 and continued to negotiate with him in private up until the public presentation of the offer, according to PAWSD board member comments at previous meetings.
At PAWSD’s request, Fricke also provided his proposal to the SJWCD in the fall of 2024, but that board declined to meet with him and publicly stated its unwillingness to sell the property, a decision that led to condemnation by the PAWSD board at their meetings and contributed to the district’s eventual lawsuit.
Due to Fricke’s desire to avoid paying taxes on the sale of another ranch in Texas by purchasing a new property, which he explained at the May 29 work session, his offer to purchase the Running Iron Ranch would expire on July 11.
The June 30 work session occurred at the PAWSD administrative offices where PAWSD board meetings are held, with PAWSD board members seated in chairs behind a large desk and SJWCD board members seated in the public seating area and interspersed with members of the public and other meeting attendees.
Much of the approximately two-hour work session focused on discussion of community water demand, with the boards largely agreeing that PAWSD’s current reservoirs are sufficient to meet future municipal water demand in PAWSD’s service area, but disagreeing on the need for further water modeling and what other water demands might occur in the future.
This discussion was frequently tense, with board members trading barbs and reiterating grievances and disputes from the long, conflicted history of the reservoir project and from the recent clashes between the boards over the sale.
Several times, PAWSD chairman Gene Tautges threatened to end the meeting due to escalating disputes between board members.
The boards also discussed the details of the proposal from Fricke, including an offer from Fricke himself, who attended the meeting, that he would double the size of the easement to allow for a 6,000 AF reservoir if the SJWCD is concerned about a 3,000 AF reservoir being insufficient.
PAWSD board member Bill Hudson, who serves on the PAWSD Running Iron Ranch subcommittee that has been in discussions with Fricke, also suggested that PAWSD might be willing to contribute $75,000 a year for five years to the reservoir project.
Following Fricke’s proposal, Tautges asked what the boards could do at the work session to move the proposal forward.
“I’m just afraid that if we carry this on much further, nobody’s going to get a reservoir anywhere,” Tautges said.
He then attempted to explain the legal dispute between PAWSD and the SJWCD over the three-way agreement, which led to a dispute between him and SJWCD president Candace Jones over the meaning of the agreement.
PAWSD board member Alex Boehmer asked if Fricke’s offer to potentially double the size of the reservoir easement would “move the needle” for the SJWCD board.
“Is there any negotiating we can do to try to make this deal work, or is this just a no, a solid no?” Boehmer asked.
Jones commented that the SJWCD is pursuing a path forward.
She explained that the PAWSD board was asking the SJWCD if it would be willing to risk losing a piece of property that could benefit the community while the water supply in the area is declining.
She added that planning for potential decreases in water supply and increases in demand needs to be done now, but that she did not believe this planning could be finalized in 10 days.
“There could be a path forward, but not under the gun of … 10 days …” Jones said.
“So, the answer is no,” Boehmer interrupted.
Tautges stated that he would like to hear from other SJWCD board members about if they believed a compromise would be possible on Fricke’s proposal.
SJWCD board member Charles Riehm stated that he did not believe a compromise could be reached in 11 days, although he expressed belief that a compromise might be reached in a larger time window.
He added that the size of the reservoir would be driven by further engineering work that is not complete and that the SJWCD is not ready to settle on a definitive reservoir size with the information it has available.
Tautges commented that he appreciated Riehm’s honesty and stated that he believed, if Fricke’s offer was not seriously considered, it is likely that no reservoir will ever be constructed.
SJWCD board member Randy Cooper then spoke, starting by commenting about the fact that he had wanted to contribute to the previous conversations and have his questions answered, but that he had not been called on.
He then raised concerns about the lack of transparency around the profits and expenses experienced by PAWSD during its ownership of the ranch.
Cooper concluded that he agrees with Jones that the SJWCD is not ready to accept Fricke’s offer.
SJWCD board member Susan Nossaman commented that Tautges, who assumed the position of PAWSD board chair in May following the end of previous chair Jim Smith’s term, was the first to discuss the offer with the SJWCD.
She stated that PAWSD did not ask the SJWCD about having a joint meeting in the fall of 2024 when the boards first received the offer from Fricke.
Nossaman commented that she was glad that PAWSD finally requested a joint meeting, but felt negatively about PAWSD suing the SJWCD in December 2024 and “trying to push us into a corner.
“And, when Bill says, ‘Well, all you’ve gotta do is drop the lawsuit,’ he’s putting that on us that we aren’t the ones that started a lawsuit.”
Tautges asked if Nossaman’s answer was that no compromise is possible, which Nossaman confirmed.
SJWCD board member Joe Tedder commented that the SJWCD has been working to relieve PAWSD’s debt on the Running Iron Ranch property for two years, with efforts this year being stymied by the ongoing litigation between the districts.
Tedder noted that the PAWSD board and particular board members have a bias on the issue, but asked the board to see the issue from the SJWCD’s point of view, pointing out that it was making progress on developing financial partners and engineering for the reservoir.
“The process was moving and suddenly we get process interruptus by a threat to sell,” Tedder said.
He added that the reservoir planning process is slow and that he wants to continue that process.
Tautges interrupted to ask Tedder if his answer was no, which he confirmed before attempting to provide a clarification on his answer, which was cut off by Jones and Tautges.
SJWCD board member Rob Hagberg commented that he found Fricke’s proposal attractive and that he found him a “genuine person.”
He added that the possibility of a 6,000 AF reservoir is “interesting,” but that the SJWCD is still in the midst of a process, and its planning and efforts to relieve PAWSD’s debt were being inhibited by the conflicts between the boards and PAWSD’s lawsuit.
“So, there’s nothing we can do to move you out as long as that’s going on and every grant agency in the world wants public support and other sorts of things which we have been unable to engender,” Hagberg said.
He commented that the district has been able to provide valuable public education to the community, although this effort has been “disparaged” by certain PAWSD board members.
“So, my answer is no, but I’m flexible,” Hagberg said.
SJWCD board member John Kappelman commented that he agreed with other board member comments that the SJWCD is engaged in a lengthy planning process.
He added that there is “no rational basis” for the 3,000 AF or 6,000 AF reservoir sizes proposed by Fricke and that the SJWCD would only know what an appropriate reservoir size is once more planning is done.
He concluded that he does not agree with or accept Fricke’s offer.
Tautges commented that there appeared to be “absolutely no room for compromise,” although he noted that PAWSD has enough water for domestic water needs.
He added that PAWSD cannot cover agricultural and recreational water needs due to its institutional responsibilities and that asking PAWSD to cover these costs is unfair.
SJWCD board member Bill Nobles commented that the boards were “a day late and dollar short.”
He stated that he liked the possibilities, but that he would need to see a contract in writing and be able to make changes to it.
Tautges asked him if his answer was no.
Nobles stated that he does not believe negotiating a contract in 10 days is feasible, although he stated he would be interested in the 6,000 AF reservoir if it was put in writing and negotiated for the benefit of PAWSD and the residents of the community.
He added that “it’s not really been us that’s been dragging our feet on this. This has been an issue with PAWSD for a while.”
He stated that he understands that PAWSD has larger financial issues and noted that Hudson had told him that the costs associated with the ranch are not a large budgetary issue for PAWSD.
Nobles concluded that he did not believe the contract could be completed in 10 days, although he would like to see it.
Fricke commented that the documents for the proposal had been available to both boards for at least a month.
Jones noted that the SJWCD received the documents on May 29.
She then stated that the agreement would include construction financed by the public “for Mr. Fricke to have a private lake.”
Tautges and Jones then disputed if having no public access to the reservoir would be problematic, with Tautges noting that there is no public access to several of PAWSD’s reservoirs, which were partially built with SJWCD support.
Tautges added that he felt the meeting was over and that he hopes the SJWCD understands the consequences.
Jones countered that she hopes that PAWSD understands the consequences if its decision is wrong.
She began to speak about public views and engagement with the reservoir proposal before Tautges halted her and asked Hudson to speak, as Hudson previously requested.
Hudson commented in response to Kappelman that the reservoir sizes in Fricke’s proposal met the water needs expressed in a Wilson Water Group study commissioned by the SJWCD and that he was willing to accept these calculations in this report, although he had voted against accepting the report due to other objections about its content when he was serving on the SJWCD board and the board considered the report.
Jones began speaking over Hudson, commenting that the figures he cited reflected the low estimate for water demand contained in the report.
This led to a clash between her and Hudson about her interrupting him.
Following this, Hudson stated that he believes that accepting Fricke’s offer is the only possibility that the SJWCD will have of creating a reservoir since no other buyer would pay $10 million and allow the creation of a reservoir on the property.
Hudson concluded by expressing hope that the SJWCD would consider Fricke’s offer and reiterating that PAWSD sued the SJWCD due to it publishing a statement opposing the sale of Running Iron Ranch and not considering Fricke’s offer in 2024.
Kappelman stated that his comments about Fricke’s reservoir size numbers being “out of the blue” were in reference to these sizes having no engineering basis.
Hudson then attempted to interrupt Kappelman, but Kappelman continued, noting that Hudson was now trying to interrupt him despite accusing others of doing the same to him.
Kappelman stated that the SJWCD is trying to determine the best size for the reservoir, which it currently believes to be around 11,000 AF, and commented that Fricke’s offer provided no engineering justification for the size of the reservoir.
He concluded that the lack of an engineering justification was his reasoning for opposing the offer and believing that the reservoir sizes in Fricke’s offer came “out of the blue.”
Tautges stated that he appreciated Kappelman’s comments and was preparing to close the meeting because “we’ve got your answer; the answer’s no.”
Following Tautges commenting on how the entire community would experience the “consequences of this action,” the meeting ended, with both boards separately adjourning.
SJWCD special meeting
Following an executive session to discuss the Running Iron Ranch at a July 3 special meeting, Jones offered further comments and justifications for the SJWCD’s position on the sale of the Running Iron Ranch and Fricke’s offer.
Jones noted that the SJWCD’s responsibilities include long-term planning for water demand, which has not been done comprehensively in the community.
She added that it is “tempting” to accept an offer to build an 11,000 AF reservoir, but she noted that the SJWCD already has the opportunity to build such a reservoir and the buyer is not offering more beyond that.
She added that the buyer was offering terms that are “not practical” for meeting the conditions the buyer set.
Jones stated that, under the three-way agreement, the SJWCD has 10 more years for reservoir planning, although she noted that PAWSD disputes this.
However, she commented that giving up 10 years of planning time in exchange for conditions that are unlikely to be met would be irresponsible.
Jones added that there are also ambiguities in Fricke’s proposal about if his purchase would include gaining control of the water rights owned by the SJWCD.
She stated that the SJWCD believes that there are opportunities for discussion with PAWSD and for finding partners to build a reservoir.
However, she noted that reservoir planning and construction takes time and that compelling the SJWCD to “do something in two or three years … is really not a fair or appropriate place to expect this board to concede.”
She also expressed disappointment with the “dynamics” of the previous joint work session and expressed her desire for a work session where board members from both boards would sit around a table and be able to discuss the issues for which the work session was called.
Jones noted that the topic of the June 30 work session was supposed to be domestic water use, but that it “kind of veered off into a different direction.”
Tautges, who attended the SJWCD meeting, apologized for those issues, and Jones expressed her appreciation for that.
She added, in response to accusations that the SJWCD had “drug our heels” about having a joint work session, that she had invited a joint work session between the boards through correspondence with Smith previously, but that other PAWSD board members stated that they had not been notified about this invitation.
She concluded that the SJWCD board would welcome and invite future opportunities for productive discussions with PAWSD.
josh@pagosasun.com
>