The NRCDC sold the portion of the Vandaveer Ranch that included the Forest Service Building and liquidated the debt on the property. (See Ark Valley Voice Report.) The City and the NRCDC then discussed (see joint work session) the future of the remaining 100 acres and the use of the surplus funds, following cooperative action by Salida City Council. At its December 11, 2017 Special Meeting, Council took the first step to reduce the state of legal hostilities with the NRCDC. It did so by withdrawing two motions pending before the Water Court relating to a dry-up demand made by the City relating to 29.4 acres of the Vandaveer Ranch. The City followed up by backing off efforts to cloud title to Vandaveer Ranch property sold by the NRCDC that the City started in early 2017.
Both the new Salida City Council and the board of the Salida Natural Resources Center Development Corporation (NRCDC) expressed interest in meeting to discuss issues between them and the future of the Vandaveer Ranch which it did and directed its city attorney to do. The result was action taken on December 12, 2018, when the NRCDC transferred its assets to the City. (See AVV, 12/13/2018.)
Background
The City of Salida purchased the 190 acre Vandaveer Ranch near the south east corner of Salida in 2004 in order to obtain its water rights. In 2009, the Salida Natural Resource Center Development Corporation (NRCDC), a Colorado non-profit corporation, was formed to enable financing for the construction of the Forest Service building on the Vandaveer Ranch without incurring taxpayer liability. The Vandaveer Ranch was transferred to the NRCDC by deed, and the City retained certain rights and control over the NRCDC and the property under a Development Agreement and the NRCDC’s articles and bylaws. The Forest Service building was constructed and leased to the US Forest Service, with financing provided by the High Country Bank of Salida, without recourse to the City.
In 2016 and 2017, the City adopted a policy opposed to the NRCDC and the City’s interest in the Vandaveer Ranch. Under the guidance of the then Salida City Attorney, Benjamin Kahn, the city dealt with the NRCDC as an adversary and the Vanaveer Ranch as a liability. (See City Attorney Legal Work, Lowry/Belmont and Fire Sale.) After failed legal efforts, the Salida City Council passed a face-saving resolution divesting itself of the NRCDC by repudiating the development agreement and by consenting to removal of the City’s rights and powers in the NRCDC articles and bylaws. (See City Attorney Legal Work, Divestiture.) This gave the Vandaveer Ranch to the NRCDC with no control or enforceable residual being retained by the City.
Following the Divestiture and until a new council was elected in November, 2017, the City continued to assert questionable legal claims against the NRCDC. The NRCDC largely ignored these baseless claims, and proceeded to enter into contracts to sell parcels of the Vandaveer Ranch and the Forest Service building with the goal of using the proceeds to eliminate the debt.
Following the November 2017 municipal election, outgoing Mayor Jim LiVecchi urged continuation of the City’s hostile positions toward the NRCDC. In a November 20, 2017 Guest Opinion in The Mountain Mail, he advocated further pursuit of claims against the NRCDC regarding the Vandaveer Ranch, including title challenges, land dry-up demands, and indemnity claims. The NRCDC did not consider these claims of any merit. The City, under the new council, regarded the title challenges as based on alleged warrantee deed defects of the City’s own making, regarded the indemnity claims to be based on a development agreement repudiated by the City in its divestiture resolution and no longer enforceable, and regarded the dry-up demand as insubstantial (see TMM 10/6/2017 report).
In the first meeting of the new Salida City Council on November 21, 2017 (see minutes in packet of 12/5/17 council meeting), NRCDC Board President Ron Mazzeo proposed that Council schedule a joint work session between City Council and the NRCDC Board to discuss the title issues, the dry-up demand, opening of the blocked Palmer Street right-of-way, the indemnity demands, and possible reversal or nullification of the divestiture. He further stated that two land sales were scheduled to close that would pay off the bank debt and enable return of the balance of the land of about 100 acres to the City. The city’s Divestiture resolution deprived the city and the public of any say in these land sales, but the NRCDC’s suggestion offered hope that all issues between the city and the NRCDC might be resolved. With the newly elected members of City Council having stated during their campaigns that the NRCDC should be treated as a partner rather than as an adversary, the legal claims previously advocated by the City and the legal costs to pursue them further could go away.
As a first step, the City met with Jennifer DiLalla, its water counsel, in executive session on December 5th to review the City’s options. At the December 11th special council meeting, the Council voted to withdraw two motions of the City pending in the Water Court demanding that the NRCDC dry-up the land of 29.44 acres of the Vandaveer Ranch along the South Arkansas River. That proceeding in the Water Court was initiated by prior city officials. It was characterized by the NRCDC and some others as an attempt to force the NRCDC to defend its title to the Vandaveer Ranch. By withdrawing the motions, the City gained time to evaluate the costs of pursuing the dry-up case, including legal costs and dry-up costs, the value of the additional water that it might sell as a result of the dry-up, the engineering opinions on whether and how the land might possibly be dried up, and the value to the City of the land in its present wetland condition as well as having the water from the wetland area available for future needs. In making its decision to withdraw the motions and suspend the Water Court case, the City considered an expanded report provided by Joe Stone outlining the situation. (Joe Stone was at the time a member of the board of the Upper Arkansas Water Conservancy District, the water reporter for The Mountain Mail, and managing editor of Ark Magazine.) His report suggests that one option for the City was to merely do nothing further regarding the dry-up of the 29.44 acres of the Vandaveer Ranch that were involved.