Photo: San Juan Water Conservancy District board treasurer Joe Tedder (center, maroon shirt) reports on legal expenses at a January 20, 2025 special meeting.
The fabled Dry Gulch Reservoir project has been messy in the past. A lawsuit concerning the water rights for the reservoir resulted in two trips to the Colorado Supreme Court, for example, in 2007 and 2009. In the meantime, the community expressed its outrage at oppressive new “Water Resource Fees” heaped onto home builders during an economic recession. Fraudulent information was distributed to the taxpayers. An ugly divorce between our two local water districts took place in 2013.
We’ve covered most of those stories along the way, here in the Daily Post.
In 2016, it appeared that the conflict between the two water districts — Pagosa Area Water and Sanitation District (PAWSD) and San Juan Water Conservancy District (SJWCD) — had been, to some degree, mitigated through a joint agreement. The PAWSD customers would repay the financial obligations for the purchase of the Running Iron Ranch, and SJWCD would manage the proposed reservoir design and construction, with the agreement that PAWSD could sell the Ranch at its sole discretion.
But that was then.
A group of eight people — the current SJWCD Board of Directors — have determined that SJWCD never actually agreed, in 2016, to allow PAWSD to sell the Running Iron Ranch at its sole discretion… even though “sole discretion” is specifically indicated in the 2016 contract.
Disclosure: I currently serve as a volunteer member of the PAWSD Board of Directors, but this editorial reflects only my own opinions, and not necessarily the opinions of the PAWSD Board and staff.
Back in October, a local citizen activist, Lee Stopher, submitted a letter to the weekly Pagosa Springs SUN, which correctly stated that PAWSD and SJWCD jointly own the Running Iron Ranch, purchased with loans (plus a grant) from Colorado Water Conservancy Board (CWCB).
She referenced a SUN article written by reporter Josh Pike:
According to the article, SJWCD does not want to sell [the Ranch] but PAWSD claims it has the sole discretion to decide to sell, according to the 2016 three-way agreement between PAWSD, SJWCD and CWCB. It sounds like litigation is in the future if parties cannot agree.
She is again making an accurate statement. PAWSD claims to have the right to sell the Ranch at its sole discretion. From the 2016 agreement:
4.2.2. The PAWSD may decide to abandon the Project and sell the Running Iron Ranch pursuant to the terms of Paragraph 5 below.
This sentence would seem — to a reasonable person — to indicate that PAWSD can decide to sell the Running Iron Ranch. Pursuant to Paragraph 5.
5.2.1. PAWSD agrees to make every effort to retain the Running Iron Ranch during the Planning Period made possible by this Agreement. In the event that PAWSD, in its sole discretion but after consultation with SJWCD and CWCB, does sell the Running Iron Ranch during the Planning Period, the following terms shall take effect…
I want to note the language written here. “In the event that PAWSD, in its sole discretion… does sell the Running Iron Ranch during the Planning Period…”
Sadly, the current SJWCD is now claiming that PAWSD has no right to sell the Ranch “during the Planning Period”, because PAWSD agreed to “make every effort to retain the Running Iron Ranch during the Planning Period…”
Two self-confident government boards, reading the same written agreement with very different eyes… and both ready to spend taxpayer money on lawsuits.
Because PAWSD and SJWCD cannot agree, PAWSD placed the question before a judge. Does the 2016 contract give PAWSD the right to sell the Ranch “at its sole discretion… during the Planning Period…” Or does it not?
The 2016 agreement has been shared in past Daily Post articles, and in PAWSD meeting documentation. You can download it here.
When two parties sign a contract and then, later, disagree about what the contract says, there is typically only one way to determine who is reading the contract correctly.
A lawsuit, and attorney fees. Plenty of attorney fees.
Of course, the two parties — once they realize how expensive the lawsuit is going to be — can still sit down together and come up with a compromise settlement. Such an approach might be especially appropriate, when the two parties are spending taxpayer money.
At the Monday, January 20, special meeting of the SJWCD Board of Directors, Board Treasurer Joe Tedder gave an update on the district’s 2025 budget. His report included this comment about the district’s projected legal expenses for 2025:
“We’re going to be looking at high legal expenses. We have $10,000 extra in the budget, that we decided to put in legal, for [opposing] the proposed sale of the Running Iron Ranch.
“It’s unfortunate that we’re having to spend money — good money, good public money — on that situation. But we did spend almost $4,600 just in January…”
And January… was barely half over?
“So… again… very unfortunate that we’re having to spend public money on that.
“So, any questions?”
No one on Mr. Tedder’s board had any questions.
But I have some questions.
If Director Tedder truly feels bad about spending public money — good money, good public money — defending SJWCD in the declaratory judgment lawsuit filed by PAWSD…
…then why did Mr. Tedder vote, a few minutes earlier — with the rest of his eight-member board — to not only answer the lawsuit filed by PAWSD, but to also authorize SJWCD attorney Jeff Kane to file “counterclaims that we may have, in time for the January 31 deadline?”
For any of our readers not familiar with “counterclaims”… when a party is named as a defendant in a lawsuit, they will often file counterclaims that are reasonably related to the original lawsuit. Often, these “counterclaims” will make the argument that the plaintiff — in this case, PAWSD — has caused some kind of financial or emotional harm to the defendant — in this case, SJWCD.
Did the SJWCD board just come out of an 80-minute closed-door executive session with the SJWCD attorney… and vote to make an expensive lawsuit even more expensive?
Another question: Did the SJWCD attorney advise them to make the lawsuit more expensive? If so, why might an attorney do such a thing?
Read Part Two, tomorrow…