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The Problem with a Ten Year Lease, Part Three |
Bill Hudson | 10/13/08
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Read Part One
After about an hour of Town Council discussion and public testimony last Tuesday about the proposed lease of 400 GPM from the Town’s two geothermal wells — by my calculations, that's about 210 million gallon a year, for an apparent lease payment of $12,000 a year — Mayor Ross Aragon finally spoke up, with an obvious air of frustration.
 Judging from the several dozen Town meetings I've attended over the past four years, I'd suggest that Pagosa’s long-time mayor often reserves his personal opinion on matters before the Council — he generally concentrates on running an efficient public meeting, and lets the other six Council members argue and discuss. On the other hand, I have heard that Aragon does a good deal of organizing behind the scenes.
When Aragon does choose to speak his mind at a Council meeting, however, it’s not unusual for him to reprimand the public for not appreciating his hard work, or for questioning the wisdom of the Council’s decisions. Such was the general thrust of Aragon’s comments at last Tuesday’s meeting, in response to numerous public comments about the proposed geothermal water lease.
“It’s so easy to point fingers, it’s so easy to second guess and do the Monday morning quarterbacking.
“I just want to point out that, if we have done anything illegal, please — take us to court. I contacted our attorney today, and we have done nothing illegal. That’s according to our attorney. We have done nothing illegal and that’s the bottom line.
“It’s so easy to sit there and be judgmental. My emphasis, from the get go, has been to try and provide economic stability for our community. If we don’t have development, we die — honest to God, we will die. What’s happening on Wall Street can happen here. We have to be sensitive, as elected officials, to the global scenario. We have to be concerned about what’s happening here in our town. And it’s going to reach us. I’m not lobbying for anyone, I’m just making a statement.
“My perspective is, we need development. We cannot feed off each other forever. And that’s what we do, a lot of times, if we don’t have development. We have to have something going on.
“And if I alienate people, I just trying to do the best I can for our town. Kill me if you want to, I don’t care. But I have to do what I think is right.
“Whenever you have a $250 million development [like the proposed Springs Resort expansion] you have to be out of your mind not to — you have to listen to that. And we have listened to that.
“But the bottom line is, we haven’t done anything illegal. If we are harming anyone in any way, tell us.”
In fact, Aragon and the Council had heard, just minutes earlier, from Marsha Preuit, the owner of the Spa Motel, about possible harm to her water rights from the proposed lease. The Spa Motel, which has been making use of the geothermal aquifer since the 1920s, sits directly across the street from the Springs Resort — which began making use of geothermal baths in the early 1990s. But unlike the resort, which has expanded significantly over the past 20 years — and as noted by Aragon, has a $250 million expansion plan on the books — the family-owned Spa Motel has made only modest upgrades to their facilities since the early 90s.
Preuit had addressed the Council earlier this year, when a previous version of the Springs Resort geothermal lease was up for public comment. At that July meeting, she had questioned the wisdom of doubling the Town’s geothermal output from a limited resource like the Great Pagosa Springs aquifer — and she referred to that earlier testimony at last Tuesday's meeting.
“This is my second time to address you with my concerns. And I have more concerns, and I have expressed them to a few of you on the Town Council.
“I’m concerned about the filings by the Springs Resort on the waste water, which as I understand it, is contrary to the Town’s Home Rule Charter. In your Town Charter, it says that if they file [on a Town-owned resource] then the lease with them is null and void.
“That was four months ago?”
Preuit was presumably referring to the last line of Section 10.4 of the Town Charter, the section entitled “Water and Geothermal Water Rights and Control of Water Reserved to Town”:
C) No franchise, right, or privilege shall be granted affecting the use of water, geothermal water or water rights belonging to the Town, or affecting its water systems, without retaining ownership of such property in the Town. No such franchise right or privilege shall allow or create an encumbrance on such property in favor of a third party, or be for a term exceeding ten (10) years. Any such franchise, right, or privilege shall terminate automatically if necessary to preserve or maintain the property or right or the Town’s ownership.
The Springs Resort — formerly the Spring Inn — has twice filed with the District Water Court to claim rights to the Town’s geothermal waste water. The first filing happened in 1995 and resulted in a law suit involving the Spa Motel, the Spring Inn and the Town, which stretched out over many years. That lawsuit was finally settled when the Town agreed to lease no more than 200 GPM to the Springs Resort, for a period of 10 years.
(One might wonder whether that lease runs counter, in another sense, to the Charter’s legal language: “No such franchise right or privilege shall allow or create an encumbrance on such property in favor of a third party…” But that is possibly another discussion.)
The Springs Resort recently filed once again for the Town’s geothermal waste water, while in the midst of new negotiations to expand the lease to 400 GPM.
Besides the fact that the state of Colorado reportedly has no laws allowing claims to be filed on waste water, the resort’s filing has been interpreted by the Town as violating Section 10.4: “Any franchise, right or privilege shall terminate automatically if necessary to preserve or maintain the property or right of the Town’s ownership.” The Town supposedly ordered the Spring Resort to drop its waste water filing back in June, but as of last Tuesday’s meeting, the filing was apparently still active — to judge by Council and audience comments.
“Why have a Charter is you aren’t going to abide by it?” Preuit asked the Council rhetorically. “We made a settlement with the Town, allowing you to lease 200 GPM during the heating season — that's generally from September through May. I realize that your attorney has told you the heating season is year round. Well, common sense tells you it’s not; there’s not a single building up there on Main Street using the geothermal heat during the summer. I have a problem with that. We signed that agreement in good faith, for 200 GPM during the heating season. If an agreement with the Town means nothing, then I don’t understand why we spent all that money to get an agreement. And now you are talking about 400 GPM?”
Preuit’s comments do raise the question of legality — not only with the proposed 400 GPM lease, but also with the current lease — regardless of the Mayor’s assertion that the Town has “done nothing illegal.” Similar questions were raised in a letter to the Town from newly appointed Division 7 Water Commissioner Pete Kasper, written on May 13, 2008.
That letter states in part: “The Town was granted a water right for [wells] PS-3 and PS-5 for municipal heating from a geothermal resource as defined in SB 481, adopted in 1981. The State does not allow any water right holder to waste water. In the May 19, 1987 judgment and decree issued to the Town for PS-3 and PS-5, this is stated very clearly in item #17, which states, ‘The Town of Pagosa Springs shall operate its wells… to avoid waste of the geothermal resource.’ Therefore, it is the opinion of this office the Town should not be operating wells PS-3 or PS-5 unless it is producing geothermal heat with its heat exchanger.”
The Mayor is correct in one sense, however. If you think the Town is doing something illegal, the only way to finally resolve it is in a court of law. Without a judge’s ruling, any discussion is simply one lawyer’s opinion against another’s — or one Town Councilor’s opinion against another’s.
Except that the Town Council seems to be of one opinion: in favor of expanding its lease of geothermal water to the Springs Resort. There are seemingly just a few details that need to be addressed.
Read Part Four
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