Article by Ed Quillen
Salida politics – October 1999 – Colorado Central Magazine
EVEN THOUGH SOME Crestone residents claim that they live in a vortex where great forces swirl and converge, it might be easier to make that case for a 51-acre irrigated pasture on the north side of Salida.
Water, wildlife, tourism, recreation, politics — they all meet in this spot that looks pretty much like any other artificial meadow.
The land is owned by the Colorado Division of Wildlife, and desired by some Salidans for an expansion of the municipal golf course from 9 to 18 holes.
Just two years ago, toward the end of 1997, the DOW had reached an agreement with the City of Salida. The city would get the land in exchange for a 48-acre gravel pit and shooting range a couple of miles upstream, plus some water rights.
DOW didn’t need to trade land so much as it needed water to make up for evaporative losses from the ponds and trout raceways at Mt. Shavano Fish Hatchery, which sits between the pasture and the gravel pit. Salida presumably had some surplus untreated water — the status of the city’s water supply depends on whom you ask.
In November of 1995, Salida voters narrowly defeated a proposal to finance golf-course expansion by selling an unused 4.6-acre triangle along Poncha Boulevard next to the current course, and by using the current course as collateral to borrow $1.4 million to build the new nine holes.
But that election directly concerned only the means of financing, not whether voters approved of expanding the golf course. If the land trade went through, and if the Salida Golf Club (a non-profit group which leases the course from the city for a nominal fee and maintains and operates the course) could find other financing, then golf-course expansion could proceed.
So after the 1995 election, the city government and the Golf Club continued negotiations with the DOW to make the trade, and by the end of 1997, a deal was on the table. All it would have taken was a favorable vote by the Salida City Council and approval by the Colorado Wildlife Commission, DOW’s governing body.
Then golf-course expansion could proceed. Or at least, the city would trade a wasteland gravel pit and some water it couldn’t use for an attractive meadow along one entrance corridor. Salida citizens could then have engaged in a lively battle about using the land for a golf course.
But it didn’t happen. The land is still in DOW hands, and it is likely to stay there for a long time. Tom Sandell, a retired Salida physician who worked for years on golf-course expansion and the land trade, said last summer that “we haven’t moved back to square one on this. We’re somewhere behind that, on square zero if we’re even on the board. To my knowledge, there’s nothing moving.”
So why did the deal fall apart, when everything appeared to be in place?
It’s a long story that wanders all over the map, from Salida to Delta to Denver to Washington, D.C. We can start with the 51 acres, which is part of a larger parcel, about 150 acres that also comprises the hatchery and Franz Lake, and we can go back nearly fourscore years.
FISHING FOR TOURISTS
In 1920, the U.S. Forest Service had its local ranger station up Bear Creek, and the Salida Commercial Club (ancestor of the current Chamber of Commerce) wanted it moved to town. Bear Creek was inconvenient for tourists who wanted forest information — and the Forest Service, in competition with the Park Service for tourist visits and consequent congressional support — obliged the Commercial Club.
The local forest ranger got into the spirit of promoting Salida, and saw the town as a potential fishing resort. In 1922, he persuaded a local group, the Salida Fish and Game Protective Association, to build and operate a hatchery along the Arkansas River north of town.
The next year, a Californian, H.A. Sackricer, purchased it and added a five-acre lake that he stocked with trout. The big expansion began in 1926, when Horace A. Frantz bought it and enlarged it into what was by some accounts the largest trout farm in the world.
Frantz built a water-supply system that tapped underground springs, and in 1948, added a 10-acre lake with boat rentals. He supplied other private fishing areas, and accommodated trout-minded tourists at Franzhurst. His Franzhurst Rainbow Trout Co. raised rainbows because he believed they tasted best, and they adapted well to hatchery nurture.
But he had financial problems. The available evidence suggests that he had borrowed money from a federal agency, the Reconstruction Finance Corporation, which was set up during the Depression to provide credit to private companies (most Colorado railroads in the 1930s relied on RFC loans for capital improvements).
The RFC foreclosed after Frantz apparently failed to make payments, and on June 3, 1953, the facility was sold at a sheriff’s auction to the RFC for $120,000 — probably the amount that Franz owed the RFC. Two years later, in 1955, the Colorado Division of Wildlife purchased the property for $130,000, and in 1956 christened it the Mt. Shavano Fish Hatchery. The idea, then as now, was to stock area waters with plenty of rainbow trout, so that tourists would come to fish and spend money when they passed through town.
So, there’s the hatchery, built and transferred from private hands to the federal government to the state government, along with some adjacent land, like the 51-acre pasture.
LAND RESTRICTIONS
For more than a generation, American anglers and hunters have willingly paid taxes to improve hunting and fishing.
The Pittman-Robertson Act, passed in 1937, established a federal excise tax on sporting guns and ammunition. The Dingell-Johnson Act of 1950 levies a similar tax on fishing gear. The proceeds go to the U.S. Fish & Wildlife Service, which keeps about 4% of the money for overhead costs, and distributes the rest to the states. The money must be used for wildlife and fishing purposes — purchasing habitat, acquiring access, education, etc. — with the state providing a 25% match to the federal dollars.
BUT COLORADO didn’t play by the rules. Colorado started lawfully years ago, with a state prison honor camp on 91 acres of Pittman-Robertson land in Delta County. The camp housed inmates who built access trails and constructed habitat improvements, and thus met legal requirements.
But in 1988, the Department of Corrections expanded the honor camp into a full-bore 300-bed minimum-security prison — a facility that had nothing to do with fishing or wildlife.
Tom Huerkamp, an avid hunter who owns an office-supply store in Delta, complained to the state, which essentially told him to shut up and get out of the way of the all-important expansion of the prison system.
I’ve met Huerkamp, and he’s a man with zero tolerance for crap. He went to the U.S. Fish & Wildlife Service with documentation about how the state was violating the law. In 1996, the environmental group Earthlaw filed suit against the state for misusing federal money.
The case hasn’t gone to trial, and it may never. But the feds made it clear that Colorado could lose the money from sportsmen’s excise taxes because it violated the law by putting a prison on wildlife land.
That federal money is vital to the Colorado Division of Wildlife, which gets no state general fund money. License sales provide most of its income, but the second-largest item, about $10 million a year, comes from the redistributed federal taxes.
Colorado didn’t have to tear down the prison it built illegally — a land trade was arranged between the Division of Wildlife and the Department of Corrections — but it did agree to a federal audit of all property that might have been purchased with Pittman-Robertson and Dingell-Johnson funds.
Detailed records as to precise funding sources don’t go back to 1955 when Franzhurst was purchased, according to Tom Malsbury at DOW in Denver. “For audit purposes, we treat all relevant property as though it were acquired with those funds,” he said.
The audit began in 1998, and one thing that concerned the auditors was whether land exchanges were made at fair-market value. And there, ready to go if the city moved, was the proposed land exchange between Salida and the DOW, with the 51 acres appraised at about $100,000.
Was that price, about $2,000 an acre, a fair market value?
It does seem low at first glance, but two factors reduced the valuation. One was that about 11 acres of the parcel consisted of federally designated wetlands. That land could be developed, but only if the developer constructed a replacement wetlands — an expensive process that could fail to satisfy the feds. So in practical terms, those 11 acres couldn’t be touched.
The other factor was that DOW had attached conditions to the rest of the property that banned the buyer from erecting any structures more substantial than a maintenance shed, or any infrastructure besides an irrigation system.
The restrictions wouldn’t affect proposed public uses like a golf course or a city park, but would forbid almost any other form of development. Thus the relatively low value placed on the pasture.
That was two years ago, though.
One change since then is the federal audit, which inspired DOW managers to show they were properly using the land in their care, and if they were going to trade it, to get the best possible deal. Another change was a new state administration elected in 1998, which established new policies after taking office in 1999.
Fair-market value now means full market value, and as few restrictions on the potential buyer as possible. There’s nothing the state can do about federal wetlands protection, but the state could remove the development restrictions on the rest of the parcel — and it did.
Despite rumors that Salida City Councilor Bob Engel, or local resident Mark Emmer, persuaded the state to remove the development restrictions in early 1999 in order to raise the price so as to derail golf-course expansion, they had nothing to do with it. The decision was made in Denver, and it was made on account of a federal audit of DOW land dealings that came about because the state illegally used wildlife land to build a prison.
If you’ve got to blame somebody, blame the Colorado Department of Corrections. If it had obeyed the law (the agency presumably exists to punish people who do not obey the law), there wouldn’t have been a suit, and no resulting audit and change in policy.
Not that this convoluted account will quiet those who prefer to shout simple accusations about local “obstructionists,” but one does feel compelled to try.
SALIDA POLITICS
Tom Spezze is as responsible as any one person for taking the 1997 land-trade deal off the table. He’s the area manager for the Colorado Division of Wildlife, and he came to work in early 1998.
“We pulled back then [on the land and water trade] for several reasons,” he explained. “The audit was underway, and until it was completed, we tried to put land trades on hold.”
Salida politics also contributed. “The agreement had been reached at the end of 1997, right after the municipal election that put in a new mayor and five new council members, with the expectation that a new city administrator would be hired in 1998 to replace Patsy Brooks.
“To have gone ahead and made the land transfer then, just as the old administration was leaving office, would have looked terrible, like we were sneaking something through behind people’s backs,” Spezze explained.
So even though the agreement was still in place, Spezze said, DOW wasn’t pushing it.
Nor, apparently, was anyone else. I asked Patsy Brooks about it after a council meeting in late 1997, and she said that the city and DOW had pretty much come to terms, and an agreement might appear before the council in the near future.
But it never did. I never heard of it coming up on any council agenda, and the city officials I talked to never saw an agreement for the council to vote on, one way or another, in the first months of 1998.
The Golf Club proponents might have been biding their time, waiting for the new mayor, council, and administrator to settle in before resuming their efforts to get the city to make the trade.
But by then, the city government had good reasons to have second thoughts, and third thoughts and more, about the deal.
PART OF THE WATER ISSUE
Remember, it wasn’t just a land trade; water was involved, too. The DOW would give the city the 51 acres and its associated water right in the Briscoe Ditch, used to irrigate the pasture (the hay it grows is used to compensate ranchers for game losses) and presumably available to irrigate a golf course.
That water right amounts to about 51 acre-feet on a normal year. But in a dry year, there might not be any water with the right because it’s a relatively junior water right.
(In Colorado, it’s “first in time, first in right.” Assume that you and your neighbor both have rights to take one cubic foot per second from Backwater Creek. But your neighbor’s right is dated 1861, and yours is 1922. If there’s at least 2 cfs in the creek, you both get your water. But if there’s only 1 flowing because it’s a dry year, your neighbor gets his full 1 cfs, and you don’t get any. Thus senior rights are much more valuable than junior rights.)
To get the pasture and its water, the city would give DOW the gravel pit, which appraisers said was worth $23,000 less than the pasture and its ditch water.
To make up the difference, DOW wanted Salida to provide 75 acre-feet of water a year, which DOW needed to make up for evaporative losses from its hatchery ponds.
THOSE LOSSES used to be pretty much ignored in Colorado water accounting. But a decade ago, Kansas irrigators complained that they weren’t getting their fair share of Arkansas River water because Colorado agricultural wells were depleting the river’s flow in violation of an agreement between the states.
Kansas won the legal struggle, and the result was much tighter accounting all the way up the Arkansas to its headwaters. The DOW was deemed to be losing 75 acre-feet a year by evaporation from the hatchery ponds, and it had to make up that water.
(Since the wind generally blows from west to east here, it would appear that Kansas would end up with that evaporated water anyway as it wafted east and then fell onto the Sunflower State, but this natural phenomenon was apparently ignored by the water court).
Thus the DOW need to acquire additional water, perhaps as part of a trade with the city of Salida, and the DOW needed very solid water rights that would be there in a dry year.
McLaughlin Water Engineers, the city’s consultants for such matters, met with the city council on March 16, 1998. Three days later, the company told the city that the trade might not be a good deal.
The engineers estimated the Briscoe Ditch rights (associated with the pasture, and with a junior priority date) as worth $100,000. In exchange for that, DOW wanted a firm annual 75 acre-feet, which would have to come from a senior water right. “Our best estimate,” McLaughlin wrote to the city, “of present cost to acquire 75 AF/yr of firm yield consumptive use water is about $750,000.”
Perhaps the city wouldn’t have had to go out and buy that water, but the engineers said it should be valued at replacement cost — if the city gave up 75 firm acre-feet to the DOW, what would it cost to replace that water?
Further, the engineers wrote, “Our present opinion is that, under strict river administration during a drought period, Salida does not now have enough water augmentation for its existing customers.”
In other words, the city doesn’t have all the water rights it might need in a dry year, so it shouldn’t be dealing any away. Any water the city did trade to DOW, because the DOW wanted firm rights rather than some which might vanish in a drought as the call dates moved back, would be very expensive to replace.
That wasn’t what I heard from Patsy Brooks, city administrator in 1995. She said then that the city water that DOW wanted was virtually worthless to the city, that it was more or less “paper water.” Salida had a good supply of raw water, she said, but a shortage of treatment capacity. Thus nobody would suffer if the city traded away some water it couldn’t treat or deliver.
But that’s not how the engineers saw it when her successor, Scott Hahn, made inquiries.
The engineers’ report, coupled with a confirming letter from the city’s water attorneys, evaporated any municipal enthusiasm for this water trade.
On April 6, 1998, Hahn gave the city council a memo which explained that DOW wanted $750,000 worth of water and was offering only $100,000 worth of water — to make up for only $23,000 difference in land values back when the restrictions were in place on the 51 acres.
“I suggest a land trade only,” he wrote, “or, at most, provide them a few augmentation credits, based on $10,000 per credit value, for the small difference in value their property has over our property. I do not recommend anything close to what they propose.
“If you do not provide what they want the deal may be over.”
Council took no recorded action at that meeting, and it appeared that the deal was over. But then the Salida Golf Club began pushing the issue again in 1999.
TOURISM AND TROUT
By early this year, the Mt. Shavano Trout Rearing Unit had been through a major overhaul to fight whirling disease.
Part of the renovation was a change in the water supply — all water would come through pipes from underground springs; previously, part had come through a ditch, which made it more susceptible to picking up whirling disease spores.
State fish-stocking policies, as whirling disease spread in the 1990s, were more than controversial.
“We were under a lot of pressure from two directions,” Spezze said.
Many tourists come to fish. “I don’t know that we could put a dollar value on it,” said Anita Northwood at the Salida Chamber of Commerce, “but a lot of people who come in ask about fishing. It’s a major attraction, and if we didn’t have fishing, we wouldn’t draw as many tourists.”
But if there aren’t enough stocked trout, some unhappy tourists will go somewhere else on their next trip, Spezze noted. “Eventually a fish shortage shows up as a shortage in local cash registers, and you get some mighty unhappy people.”
And that could show up in DOW’s budget, since it relies so heavily on license fees for revenue.
On the other hand, “we’re supposed to be protecting Colorado wildlife — that’s part of our mission, too. And putting infected fish into our lakes and streams isn’t what most people would call protection.” It certainly didn’t sit well with the local chapter of Trout Unlimited, which favors native cut-throats, or with the Park County Commissioners, who passed a resolution against stocking infected fish, even if it meant fewer tourist dollars.
DOW cut back on stocking then, but still put infected trout in infected rivers, until it could purge its hatcheries of whirling disease — a process nearly completed. It was a compromise between its two goals of promoting wildlife and protecting wildlife, and probably the only course a public agency could take.
It also meant that the Salida argument about acquiring the land for the golf course had a new tourism angle. It had been that golfing tourists might stay an extra day in Salida because it had 18 holes. Now some said that the city should do everything it could for the DOW — even donate $750,000 worth of water — because fishing was so important to the local tourist economy, and a lot of the fish came from the hatchery.
It was then, in the spring of 1999, that DOW’s asking price for the 51 acres went up — from about $100,000 with the restrictions to a “fair-market price” without restrictions.
THE NEW PRICE
No formal appraisal of the 51 acres and its junior Briscoe Ditch rights, without restrictions, has come to light.
Estimates of a fair market price run from $500,000 to $1 million. Tom Bruenich, a Salida real-estate broker and a fervent advocate for expanding the golf course, estimated $600,000, based on recent sales of comparable parcels.
DOW’s official position is that the development restrictions were removed on account of the federal audit. So maybe it’s just a coincidence that when the city learned that its water was worth a lot more, DOW decided that its land could be worth a lot more.
Since then, negotiations have continued, rather than progressed. Salida Mayor Ralph Taylor said that “Once we learned that DOW wanted $750,000 worth of city water, we couldn’t justify the deal.”
But the Golf Club was still interested last spring, “so we appointed a committee from the Golf Club to negotiate with DOW. I was glad to be out of it, because I just didn’t see it going anywhere. But if they could come up with something that might work, then the city could come back in.”
Having only the Golf Club negotiate didn’t sit well in some municipal circles, Taylor said, “so then we appointed a city committee to negotiate with DOW. They haven’t reported, so I don’t know where it stands.”
Administrator Hahn was on the committee, and in August, he wrote to DOW suggesting that the land and water parts of the trade be separated. The land issue had become more complicated, partly because of lead — a toxic material — in the shooting range site which was part of the 48-acre parcel. As for water, Hahn wrote, it “has been far more contentious than even the land issues.”
Some water from local water districts is theoretically available to the city at a reasonable cost, and the city first asked the Upper Arkansas Water Conservancy District, based in Salida.
“They always say ‘We’re here to help,'” Taylor said, “but I’ve never been so confused by a meeting in my life. As nearly as I can tell, they can’t sell water directly to DOW, and we can’t buy it to transfer it to DOW.”
And then the much larger Southeastern Water Conservancy District, based in Pueblo, came to the same conclusion.
The city is legally able to buy Fryingpan-Arkansas project water for municipal purposes — but putting water into the river to make up for evaporative losses from a fish hatchery isn’t a municipal purpose.
“So it looks like we’re kind of stuck,” Taylor concluded.
HE WASN’T THE ONLY ONE who felt that way. “As far as I know, it’s totally stalled,” according to Tom Sandell, who has worked for more than a decade on behalf of the Golf Club toward making the trade and expanding the course. “I’m not aware of anyone from the Golf Club negotiating with the Division of Wildlife about that trade.”
The 51 acres is the only open land close to the golf course that might be affordable, he noted, “and we’ve always tried to keep our greens fees low. We want to operate a public course that the public can afford and enjoy, not some kind of exclusive private club.”
So if the 51 acres is now priced beyond what the city and its golfers can afford, “we’ll have to start looking at other possibilities, and I don’t really know what they are. That’s why I say we’re back to somewhere before Square One.”
The Golf Club might start a fund-raising campaign for expansion, but it couldn’t just buy the 51 acres, Spezze pointed out. “Even if you walk in the door with cash in hand, the DOW can’t sell you land. We can only exchange property.”
There is a wish list, he said, of land the DOW wants, as well as a list of land the DOW doesn’t need. “Deals are made all the time, where somebody wants a DOW parcel that we don’t need. They go buy something we want of comparable value, and then we make the trade.”
DOW is also looking elsewhere for the water it must buy to cover its evaporation losses, Spezze said. “There are a lot of possibilities that don’t involve the city of Salida.”
It is possible the Salida Golf Club could raise money and buy land that DOW wants to trade for the 51 acres, then donate the 51 acres to the city for use as the back nine.
That might be the only course if a city trade falls through, as looks increasingly likely. Or the city might put more on the table, Spezze said. “Salida owns some land along U.S. 50 that we could use for our own office building.
“There could still be a deal between the DOW and the city of Salida, but it will probably involve a lot more than a pasture and a gravel pit and some water. There’s nothing like that deal on the table now.”
As for the Salida Golf Club, an 18-hole course represents more than a decade of dreams and hard work that almost came to fruition in 1995, only to have city voters narrowly reject an expansion financing plan.
At the time, I argued for a no vote, because the Golf Club’s cost estimates were so vague — somewhere between $450,000 and $1.2 million for expansion, and because we didn’t know where they’d find the additional golfers necessary to support the larger course. The Golf Club, I urged, should show more respect for the public by putting together a solid package for the 1996 election — and that it would probably pass.
If the financing had been approved by voters in 1995, then the land and water trade probably would have gone through shortly thereafter. The Salida Golf Club had a fund-raising consultant’s report at hand then, and was ready to start raising expansion funds as soon as the city acquired the land in 1996 and turned it over to the Golf Club to manage.
Salida might well have had an 18-hole course by now. But it would take a lot of golfing tourists spending vast sums of money to make up for the trade of $750,000 in senior water rights in exchange for $100,000 in junior water rights (these rights would have been needed for the golf course and thus not available to meet domestic needs) — and that’s the deal that Salida would have made.
That’s the deal that Bruenich called a “no-brainer” then. In a way, that phrase perfectly described Salida’s end of the proposed transaction: a $650,000 loss on what was supposed to be a straight-across deal.
NOW MUCH has changed. The city knows what its water is worth, and DOW has changed its mind about what the 51-acre pasture is worth.
The sticking point isn’t really a rather arbitrary valuation of the 51 acres. It is DOW’s continued insistence that 75 acre feet of senior water rights be part of the deal and Salida’s reluctance to give up those rights when it doesn’t really have enough water now to serve its population in a dry year.
Thus the current talk of building a reservoir, perhaps on the gravel-pit site (though if it were traded to DOW, arranging for city use would be another complication). “In theory,” Hahn said, “we might be able to provide that 75 acre-feet if we had some storage capacity to hold spring run-off.”
What looked like a relatively simple deal a few years ago — 48 acres of gravel and a little water in exchange for 51 acres to make a larger golf course — has become more complicated and confusing than a computer manual.
But the issue isn’t likely to go away. A generation of Salida school administrators wanted a middle school, and despite several electoral defeats, they kept at it until voters approved one that opened this fall.
Salida golfers want an 18-hole municipal course, and they’ll stay at it until they get one. For a variety of reasons, but mostly cost, the Golf Club and its consultants have decided that the 51-acre pasture, right across County Road 160 from the current nine holes, represents the best expansion option.
There’s nothing wrong with wanting an improved public recreation facility — the city has managed to build hiking trails, a skateboard park, and a roof over the swimming pool in recent years — but this deal hasn’t added up yet.
An 18-hole course could be a municipal asset, but only if the price is right. And nobody seems to know what the real price is, let alone whether it’s the right one.
Ed Quillen, who helps publish this magazine, neither fishes nor plays golf, which should make him quite objective about these matters.