Growth in northern El Paso and southern Douglas County has long depended on a single factor — and it’s not roads, drainage infrastructure, government regulation or land costs.
It’s water. Without reliable and predictable sources of water to sustain development for the long future, communities can neither grow nor thrive.
A variety of small providers supply water to the largely residential communities of that region, which stretches roughly from the northern boundary of Colorado Springs to Castle Rock. As well fields become less productive and additional water sources become less reliable and more expensive, uncertain water supplies increasingly inhibit further development.
But that may be about to change.
When Philip Anschutz acquired The Broadmoor in 2011, he also acquired other significant assets owned by Oklahoma Publishing Co., including adjudicated water rights to non-tributary water beneath 7,640 acres of the Greenland Ranch in Douglas County, just north of Monument Hill off Interstate 25.
The ranch, one of the largest tracts of undeveloped land between Denver and Colorado Springs, has had a tangled history. First settled 150 years ago, it remained the property of the Higby family until 1980, when it was sold to a partnership that included Treasury Secretary William “Bill” Simon, Oklahoma businessman Ed Gaylord and Colorado Springs developer Bruce Shepard.
The partnership’s development plans fizzled, as did plans to develop the property’s subsurface water resources. In 2000, the entire 21,000-acre ranch was purchased by the Conservation Fund in a complex partnership with Great Outdoors Colorado, Douglas County, Colorado Division of Wildlife, Colorado State Parks, and Denver billionaire John Malone. The property is protected by a conservation easement, which forbids surface development in perpetuity.
But on the portion of Greenland Ranch formerly owned by Gaylord, water rights were severed from surface rights. A confidential memo offering the rights for sale prior to Anschutz’ acquisition describes the process:
“As part of the sale of the Greenland Ranch in 2000, Sun Resources Inc., a subsidiary of The Oklahoma Publishing Company, reserved the right to all non-tributary groundwater beneath 7,640 acres of the Ranch. The water right entitles the owner to withdraw 1 percent of the total amount per year (14,562 acre-feet) for 100 years. The right is decreed as non-tributary and, therefore is not subject to surface water priorities. In addition, (Sun) has completed significant legal work, as well as preliminary engineering, technical and market analysis. These work products and reports will be transferred with the water right. The right has accompanying surface land easements for well field, treatment facilities, and pipeline infrastructure development that will also be conveyed in the sale. As a result, no further legal proceedings are necessary to develop and sell the water.”
The 14,562 acre-feet would be roughly equivalent to 20 percent of Colorado Springs’ current annual needs. A typical suburban home consumes about half an acre-foot annually.
This isn’t Anschutz’ first rodeo. In 1967, the Anschutz family acquired Crystal River Ranch in Carbondale. Soon, Anschutz asked water engineer Chuck Fisk to analyze the ranch’s water rights. In his introduction to Fisk’s engaging autobiography, Dan Tyler (who grew up on the ranch) describes the process.
“Located on a large mesa,” Tyler wrote, “the Crystal River Ranch has always depended on a long and vulnerable nineteen-mile ditch that weaves its way through rocky and unstable ground, up and down ravines, and under seasonal streams by means of corrugated steel flumes. It brings water from the west bank of the Crystal River to irrigate approximately 1,600 acres on the main ranch.”
Forty-six years later, the historic ranch is still in the family, owned and operated by Anschutz’s sister, Sue Anschutz-Rodgers.
Anschutz isn’t standing still. Last fall, Sun Resources, now an Anschutz-owned company charged with developing the water rights, drilled two deep test wells on the Greenland Ranch property to confirm 1995 estimates of available water.
One well, tapping the Arapahoe aquifer, was drilled to a depth of 2,040 feet, and flowed at a rate of 650 gallons per minute during a 72-hour test. The other targeted the Denver aquifer at 1,490 feet and flowed at 350 GPM. These results tended to confirm the 1995 estimates, said Sun CEO Gary Pierson.
“We’ve completed those test wells,” said Pierson, “and now we’re in some very intense discussions with interested parties.”
Creating a partnership
Full development of the water rights would be expensive. Dozens of production wells would have to be drilled throughout the property, power delivered to wellheads, and pump stations and pipelines built to transport the water to potential users.
While Pierson refuses to estimate the ultimate cost of such infrastructure, a senior official at a regional water provider says that it would be “at least $80 million — probably more.”
Such a sum is beyond the capacity of any small provider.
“We have a keen interest in the well-being of the folks in El Paso County and Douglas County,” said Pierson. “And we believe that the best solutions are county-wide solutions.”
Pierson believes that all of the different players will eventually understand that their mutual interests are best served by joining together and making a deal. Asked if that wouldn’t be a little like herding cats, Pierson chuckled.
“I wouldn’t use that phrase,” he said, “but we’re still in discussions. There are a lot of moving parts to the deal, so it’s not something you do overnight.”
Should communities rely upon non-renewable resources such as Greenland Ranch groundwater? Colorado Springs Utilities executive Gary Bostrom doesn’t think so.
“That depends on how it might integrate into an existing supply mix,” said Bostrom, who heads the CSU water resources department. “We have well fields, but the value (of non-renewables) is as a supplemental source. That may be attractive to some districts.”
Has Utilities talked to Sun about the Greenland Ranch water?
“Not directly, no,” said Bostrom. “Let’s just say that we’re aware of that resource.”
“People tend to denigrate subsurface (rights),” said Pierson, “but there will never be enough renewable water to support future development in this area. You have to have a mix, because the renewables just aren’t there.”
Despite being a non-renewable source, Greenland Ranch water may be attractive to potential users. Making a deal with Anschutz is not like making a deal with an ordinary promoter — you know Anschutz can deliver. His ability to fund a $100 million project is not dependent upon commitments from skittish lenders, or upon the solvency of unrelated parties to any deal.
The water is also of high quality, according to a 2009 independent analysis. It’s low in dissolved solids and uncontaminated by industrial pollutants. That quality likely will remain unchanged, since there will be no surface development either on or adjacent to the property.
Favorable water law
Most importantly, none of the resource is subject to prior appropriation.
Colorado water law is based on a simple tenet: first in use, first in right.
Every right to use surface water in this state or in the conterminous states of the American West is affected by this doctrine of prior appropriation. The first person who puts water to “beneficial use” has the first right of use in perpetuity. In a drought year, the senior right-holder is entitled to his full decreed allotment, even if junior rights-holders get nothing.
Many, if not all, of the surface rights owned by small providers in El Paso and Douglas counties are junior rights. In severe droughts, providers may be in a difficult situation.
“A really difficult situation would be a massive understatement,” said Pierson. “You can’t dry up your customers.”
Greenland Ranch water, decreed as non-tributary, therefore is not subject to surface water priorities, or any restrictions on its use. In its sweeping 1995 decree, the Water Court couldn’t have been more explicit.
“19. Appropriation Doctrine Inapplicable. The rights to groundwater determined herein are not subject to and shall not be administered in accordance with the prior appropriation doctrine or any priority of appropriation. C.R.S. 37-92-305 (11).”
The Water Court retains jurisdiction over any eventual Greenland water plan and, based on analysis of drilling results, may adjust the annual withdrawal rate. Pierson appears to believe any adjustment will be upward, mentioning a figure of 17,500 acre-feet annually. CSU’s Bostrom cites 10,000 acre-feet as more likely.
Bostrom’s lowballing may be attributable to competitive pressure. CSU will have more than $1 billion invested in the Southern Delivery System when the massive water development project is finished, and the city will have a surplus of deliverable water for many years to come. It may be in Bostrom’s interest to discourage potential customers from making long-term deals with Sun and Anschutz.
It’s never been reported what Anschutz paid for The Broadmoor and Sun Resources, nor what portion of the sales price was attributable to Greenland Ranch water rights.
So what are they worth? Perhaps in the billions.