At a May 29 special meeting, the Pagosa Area Water and Sanitation District (PAWSD) Board of Directors heard a proposal to purchase the Running Iron Ranch from Trey Fricke of Zipper Valley Ranch.
PAWSD jointly owns the Running Iron Ranch with the San Juan Water Conservancy District (SJWCD).
PAWSD has previously announced its intention to sell the property, which is the site for a proposed reservoir, and the two districts are involved in ongoing litigation about whether or not PAWSD has the right to sell the property without the SJWCD’s consent under the three-way agreement between PAWSD, SJWCD and the Colorado Water Conservation Board (CWCB) that governs the ownership and management of the property.
Under this agreement, PAWSD is tasked with paying back the loans from the CWCB that financed the purchase of the ranch while the SJWCD is responsible for advancing the reservoir project and finding partners to build it.
As discussed at previous PAWSD and SJWCD meetings, Fricke submitted an initial proposal for the purchase to PAWSD in the fall of 2024, and the PAWSD Running Iron Ranch subcommittee — consisting of PAWSD board members Bill Hudson and Glenn Walsh — discussed the proposal with him further after the initial submission.
The SJWCD has expressed consistent opposition to a sale and declined to discuss the proposal with Fricke when it was submitted.
PAWSD sued the SJWCD in an effort to establish that it could sell the ranch without SJWCD’s consent in December 2024, with the lawsuit still ongoing.
Fricke opened his presentation on May 29 by explaining that he and his wife own Zipper Valley Ranch and that he lives in Dallas, Texas, but has a desire to retire in Pagosa Springs.
He stated that he is working to save money to move to Pagosa Springs full time, as some of his family already have, and that he was working with a real estate agent who had already helped facilitate his purchases of other properties in the area, to purchase a ranch in Pagosa Springs after selling one in Texas.
He explained that the agent suggested that the Running Iron Ranch might be a suitable property to purchase, especially if he could present solutions that would satisfy the needs of the SJWCD and PAWSD.
He explained that his presentation would cover his perspective on the history of the ranch, outline the proposed transaction, provide background on Zipper Valley Ranch, discuss a proposed management agreement that would allow the construction of a reservoir and highlight the benefits to the districts and the community that would result from the transaction.
Fricke stated that he wants to operate the ranch as a ranch and is not interested in development on the property.
He then outlined the history of the reservoir project, noting that it was initiated on the basis of a report by water engineer Steve Harris and that, over the 18 years of the project, PAWSD has made millions in loan payments to the CWCB while the SJWCD has struggled to advance the project.
He commented that he did not mean his comments about the SJWCD struggling “personally towards San Juan,” but that he believes that a volunteer board like the SJWCD without paid staff is likely not the best way to advance such a project.
He added that PAWSD will pay $2.5 million in loan payments for the property through 2034 and is accruing $300,000 in deferred interest each year.
He stated that his proposal would save the community at least $6.7 million in costs.
Fricke commented that the Harris report significantly overestimated the area’s population and the water demand for the area.
He explained that he believes the appropriate size for the reservoir is 3,000 acre feet (AF), which is a significant reduction from the 11,000 AF size the SJWCD has considered in the past.
Fricke added that he personally believes that a 1,000 AF reservoir would be sufficient, but that this would be too small for a substantial reservoir project, so he was willing to pursue a larger size.
He commented that, over his 10-year timeline for the project, he believes that the project will need to involve private industry since the reservoir would not pencil out solely based on municipal water demand.
He added that he would be open to developing portions of the ranch if this would help support the completion of the reservoir.
Fricke commented that the project could help with forest fire mitigation, although experts he had spoken to downplayed its value for that purpose; provide an alternate water supply if current municipal water supplies are contaminated by forest fires or other events; and offer a source for future municipal water supply.
He then offered a comparison between the 3,000 and 11,000 AF sizes, highlighting that the smaller reservoir would stay within the boundaries of the ranch and not require additional property purchases and would have lower risks of flooding Pagosa Springs in the case of dam failure.
He added that he believes that it would be feasible to fund constructing a 3,000 AF reservoir within 10 years, while a larger reservoir might take 20 or 50 years.
Fricke commented that he would like the reservoir to be designed in such a way that firefighting helicopters could use it as a water source.
Under the proposal, Fricke explained that property for the reservoir would be gifted to the district running the project through an easement.
He also noted that this district would have full control over the project and the land for the project would be financed at zero percent interest compared to the current interest costs from the CWCB.
The reservoir project would function through a management agreement between the district overseeing the project and Zipper Valley, and would govern goals for advancing the project as well as granting an easement for the property needed for the reservoir once it is completed.
He noted that the district for the agreement could be PAWSD or the SJWCD, although he was currently focusing on PAWSD since he had conversed with it more.
Fricke stated that he would like to work with PAWSD to negotiate with the CWCB to have it apply a $1 million grant used to fund the purchase of the ranch and the interest payments made so far on the property back to the project through the management agreement.
He stated that this would amount to $3.2 million in funding for the project.
The CWCB is not opposed to this concept based on conversations with them, Fricke added.
He also noted that he would pay $10.4 million for the ranch, which would pay off all PAWSD’s loans and interest on the property.
Fricke then explained his terms for purchasing the property, including that he would accept the property as is and that he would pay for repairs to the Park Ditch that runs through the property, repairs to the fences and weed control.
He commented that the property has not been “maintained properly” and that these expenses could be significant.
Fricke stated that he would want to close on the property by July 11, adding that he believes that this timeline is feasible even though he acknowledged that others might be skeptical.
He explained that Zipper Valley Ranch has owned property in the Pagosa Springs area since 2008 and has experience with wetland projects on other sites.
Fricke then outlined the conditions of the management agreement, including that the district would have sole responsibility for designing, funding and building the reservoir and would have to spend at least $50,000 a year on the project, potentially on hiring a grant writer or manager.
He stated that the district would have to provide a biannual report on progress to Fricke and other stakeholders.
In exchange, Zipper Valley would provide $10,000 a year to support the project and provide the land (for the reservoir) through an easement, Fricke stated.
He indicated the management agreement would run through 2035.
He commented that his proposal would transfer focus from the current lawsuit to an actionable plan, eliminate the debt on the project, potentially provide $3.2 million in funding for the project and create a “certain path” forward for the reservoir, which the current litigation does not provide.
He stated that the SJWCD and PAWSD could benefit from the proposal by eliminating debt, avoiding an expensive lawsuit, removing the threat of the land being sold and having a path forward for a reservoir.
Fricke added that the community would also gain a reservoir site and potentially a significant reservoir from the deal.
He then asked the PAWSD board to consider the benefits of his proposal, instruct the subcommittee to finalize a contract of sale and management agreement with Zipper Valley designating PAWSD as the district overseeing reservoir construction, seek court approval of the contract of sale in June, close on the property early in July, and open discussions with the SJWCD about designating it as the district managing the reservoir.
He commented that these requests were “sharp,” but that he might need to refocus on other projects if the purchase does not move forward.
PAWSD chairman Gene Tautges noted that the PAWSD board would make no decisions on the topic at the meeting and that this was the first time several of the PAWSD board members had heard Fricke’s proposal.
In response to a question from PAWSD board member Alex Boehmer, Fricke explained that the management agreement would require the managing district to make two partnership or funding requests per year and to raise $1.5 million every three years for the reservoir.
Tautges commented that he was pleased that Fricke had spoken with the CWCB and done his “homework.”
Hudson commented that he was impressed with the potential of the proposal.
PAWSD board member Bruce Jones asked if Fricke’s offer is contingent on the reservoir construction proposal.
Fricke stated that the offer is not contingent on the reservoir construction project.
Hudson asked if Fricke’s concept that having $3.2 million in project funding available would make the project more attractive for potential grants was based on discussions with granting foundations or agencies or was his idea.
He stated that it was his idea and that no funders he spoke to explicitly commented on how having the funding available would impact the project.
Walsh commented that he is impressed with Fricke’s willingness to remove PAWSD’s debt and his “personal passion” for building a reservoir.
He noted that the idea of constructing the reservoir was Fricke’s idea and that this was why the PAWSD board recommended that he speak to the SJWCD about his proposal.
Walsh commented that Fricke was treated “dismissively” and “in an embarrassing fashion” by the SJWCD.
He claimed that a member of the SJWCD board who had previously served as board president had referred to Fricke as a “Texas carpetbagger.”
Walsh then thanked Fricke for his dedication to the project and his efforts to move the project forward.
He commented that the SJWCD has failed to find any partners for the reservoir projects in the last 13 years and has obtained no grant funding for the project.
“And now this gentleman is walking in, willing to pay more than the market price and give 125 acres … the prettiest heartland of that ranch, to the community to build a rational reservoir,” Walsh said. “If we don’t act on this … what fools are we.”
Fricke commented that, although he did not want to become involved in a disagreement, he believes that PAWSD has the right to sell the ranch based on his own and his attorney’s reviews of the three-way agreement.
Walsh commented that building an 11,000 AF reservoir would likely cost $400 million or $500 million and asked Fricke if he would oppose such a project if state or federal funding for it existed.
Fricke commented that he thought this would be possible and that such a reservoir might be possible, especially through the use of eminent domain.
Tautges commented that initial sizing of the reservoir was driven by an expectation that the county might have a population of 36,000 people by 2040, which is unlikely to happen within the lifetime of the people attending the meeting.
He added that the cost of a large reservoir would not “pencil out” for the community.
Fricke commented that the reservoir would likely be swampy and would not resemble the beauty of projects like Lake Nighthorse.
Walsh highlighted that PAWSD has also imposed aggressive water conservation measures and expanded Stevens Lake to provide more water storage.
He then asked Fricke if PAWSD could feasibly get a court date to get a sale ratified in the timeline he laid out, noting that his understanding is that getting a court date might take up to a year.
Fricke stated that a “simple summary judgment” could potentially get a quick hearing.
Walsh commented that he feels that, without significant changes in the SJWCD’s position and the involvement of the CWCB, it might be “pretty difficult to turn” by July 11.
Fricke commented that he would not want the community to look back on failing to accept his offer and regret not taking it.
He added that he would like to have dialogue with the SJWCD, but that this has not happened yet and that he has had to shape his current approach absent its involvement.
Jones asked Fricke how definite the July closing date is.
Fricke explained that he sold a ranch in Texas and was hoping to avoid paying taxes on the sale by purchasing another property.
The deadline for doing this would be July 11, he stated, and the tax benefits of the purchase were a key reason he is able to offer his current price.
He commented that, after this point, the deal might still be able to go forward, but that his offered price might change.
Alongside the discussion in the meeting, another discussion was occurring in the Zoom text chat for the meeting between Walsh and SJWCD board member Rod Proffitt.
Proffitt opened the discussion by questioning the plans for the ranch and commenting, “Nice speech Glenn,” in response to comments by Walsh.
Later, following Tautges’ comments on the sizing of the reservoir, Proffitt commented that Tautges was “misinformed” and that the statements being made about the cost of a 11,000 AF reservoir were inaccurate, with the SJWCD’s most recent estimate indicating that it would cost $70 million.
Walsh provided a figure for the cost of Bolt Lake, which he stated is a 1,200 AF reservoir that cost $75 million to build.
“You’re delusional here my friend,” he stated, adding that a 2024 study by SJWCD consultant Rick Ehat was a “joke” that the district had to have “redone within months.”
Proffitt replied that he was not familiar with Bolt Lake and that Harris provided the estimate for the Running Iron Ranch reservoir cost.
“As long as you continue to lie to the public, I will dispute each and every lie,” Proffitt added.
Walsh suggested that Proffitt familiarize himself with Bolt Lake and not rely on a “Steve Harris napkin guess,” adding that Proffitt has become a “disgrace.”
Proffitt concluded the dispute by replying that Walsh clearly had no valid argument or salient facts, so “you resort to personal slurs and disgusting insults. No wonder you filed suit. It’s just a furtherance of gutter politics.”
In the meeting, Fricke answered questions from the audience, including explaining that the reservoir would not be open for public use and that he would likely not use the reservoir for watering livestock.
He added that he is opposed to public access on the ranch due to the complexities it would introduce and due to the fact that there are a variety of other recreation destinations in the area.
He added that the SJWCD could purchase the ranch with other partners and build a lake if it wanted to have a public park.
Fricke also explained in response to audience questions that ranches are not profitable and that he would not profit from it.
He commented that the management agreement and the attached easement would hold him accountable to the public.
He added that, in his understanding, there is no gravel left on the property and that he would not restart gravel mining except for the potential purpose of sourcing gravel for roads on the property.
SJWCD board member Charles Riehm noted that the county has experienced 500 percent population growth over the last 50 years and could experience significant growth in the future, even if it presently seems unlikely.
He added that it is difficult to know what is coming based on past information and that there may be new demands for surface water in the community as groundwater becomes harder to access.
He also noted that PAWSD does not have water rights for significant expansion of its service and that the reservoir might offer a way to access expanded water rights.
Riehm continued his comments by stating the importance of properly sizing a reservoir before Tautges interrupted him, noting that the board had other issues on its agenda and needed to move forward.
Walsh then interrupted Tautges, stating that he wanted to provide context to Riehm’s comments.
Tautges attempted to halt Walsh, stating that he believed the board had enough context, but Walsh continued.
Walsh explained that water demand per person has declined since 2000 and that growth occurring in Pagosa Springs will likely follow different models than single-family homes, making the “scare tactics” about the community running out of water “not persuasive.”
Tautges then made closing comments, pointing out that PAWSD has to follow water quality standards set by the state of Colorado and the federal government, and that PAWSD follows the approach of having growth pay its own way.
He added that a reservoir is not the only approach to obtaining more water.
Tautges noted that the district has a variety of response plans.
