August 15, 2024 • 18 mins
WHO KNEW THERE WAS SO MUCH DRAMA WITH AURORA WATER? If you've lived here for a hot minute you know water is a very big deal. Where it is, who owns and who has paid for it. David Migoya from the Denver Gazette has been doing a great series on Aurora water and the drama around a water purchase from an old mine in Park County and you should read it all. The parts in order here and here and here and here. This is a primer on Colorado water rights and how they work that is very useful. David joins me today at 1 to discuss the tangled web between Aurora Water and the developer who doesn't seem to be the best businessman in the world. It's Aurora's own Chinatown.
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Episode Transcript
Available transcripts are automatically generated. Complete accuracy is not guaranteed.
Speaker 1 (00:00):
David mcgoya from the Denver Gazette, longtime journalist here in Colorado,
and he is a really fascinating piece or series of pieces,
I should say, about Aurora water. And we were talking
off the air here about the fact that if you
come from somewhere else, if you come from east to
the Mississippi, you have no concept of water rights or
(00:21):
how vicious the fighting over water rights can be. And
then you move to Colorado and you're like, can I
get a rain barrel? And they're like, no, Okay, you
can now, but when I moved here, you couldn't, and
you have to find out about water rights.
Speaker 2 (00:31):
First of all, Welcome back to the show, David.
Speaker 3 (00:33):
Thanks, I appreciate it.
Speaker 2 (00:34):
So where did this come from?
Speaker 1 (00:35):
Where did this series uncovering the tangled web of Aurora
water in a gold.
Speaker 2 (00:41):
Mine in Park County? Where did this come from?
Speaker 4 (00:45):
A lot of what we do in our business is
perusing the public record, trying to come up with an idea.
We do that all the time, and just taking a
look at what was happening in Aurora. I saw her
on one of their council meeting agendas, a contract that
was coming up, and what made it interesting.
Speaker 3 (01:01):
It was essentially talking about.
Speaker 4 (01:03):
An X ray machine at a gold mine, and just
as you dug into it a little bit, I said,
what in the world is this thing? So I got fascinated,
started doing the digging in and backstory and whatnot, and eventually,
over many months, many interviews with a lot of people,
many documents, the last count was about eighteen thousand pages
of documents, we came up with this tale that essentially
(01:27):
walked everybody through a deal that started in twenty eighteen
with a lot of fanfare, a lot of publicity, and
stayed quiet ever since and had changed quite a lot
of different ways and times.
Speaker 3 (01:38):
And decided to just tell that story.
Speaker 4 (01:40):
Where are we today with this big water thing that
they announced with a gold mine back in twenty eighteen.
Speaker 1 (01:46):
So the gold mining question is in Park County and
it has been London Mine is the name of the mine,
and it's been defunbed for how many years now?
Speaker 4 (01:55):
I think it closed in ninety one. As I recollect it,
they closed the lack of mining. Yeah, it's been closed.
Speaker 1 (02:00):
Well, it is also one of the biggest sources of
pollution into that part of the Platte River.
Speaker 2 (02:04):
Correct, it had.
Speaker 4 (02:05):
Been it's not quite what it was, but yeah, I
did many many years because the operation of mining basically
creates what's eventually.
Speaker 3 (02:14):
Called acid drainage.
Speaker 4 (02:15):
It's when all the oxygen mixes in with these minerals
and creates a lot of cadmium, leads, ankle, all these
different things and hits the water stream.
Speaker 3 (02:24):
So it's it's pretty toxic stuff. It's not very nice.
Speaker 1 (02:27):
Now in an effort to shore up their water supplies.
And this is a common theme, and this is why
I wanted to bring you on to talk about this
because this is about Aurora, but this can happen with
any municipality looking to shore up their water supply. Sure,
I mean it could have any of them. So the
story starts when Aurora teams up with a water Wait,
should we start with water rights first?
Speaker 2 (02:48):
Because this is where good convoys long enough for that, I.
Speaker 1 (02:51):
Know, and I don't want to have people like falling
asleep behind a wheel. But David also did a really
good primmer kind of article that explains the way water
rights work in Colorado, and that is a really important
part of this story because there's two kinds of water,
absolute and conditional. Can you give me like a thumbnail
sketch of those definitions.
Speaker 4 (03:09):
Well, it took me a long time to understand it.
Absolute water is pretty simple. This is water that absolutely
comes out and has a beneficial use.
Speaker 3 (03:18):
Okay, that's the key phrase.
Speaker 1 (03:19):
Beneficial use from a residences, businesses, something like that.
Speaker 4 (03:24):
All water in Colorado has to be put to a
beneficial use. If it isn't, then it has to go
back into the system and it works its way through.
Conditional water is a water right that exists but has
not yet been put to a beneficial use for a
period of time enough to go into court water Court
as a special court in Colorado to have it declared absolute.
(03:45):
Absolute doesn't mean it's always showing up, but it's an
absolute right.
Speaker 3 (03:49):
We don't lose that.
Speaker 1 (03:50):
Absolute water rights are worth a fortune.
Speaker 2 (03:53):
Conditional water rights.
Speaker 4 (03:54):
Not so much.
Speaker 1 (03:55):
That's right, Okay, So that's a big part of this story.
I need to get that part out.
Speaker 4 (03:58):
And then the other key thing is the tributary and
non tributary water. Tributary water, in the most basic explanation,
is the stuff that's on the surface, right rivers and whatnot. Now,
it can come out from underground and make its way
into the river, but as soon as it hits that river,
it's tributary, okay. Non tributary water is essentially like an aquifer.
(04:20):
It's a big pool, a big puddle underground and doesn't
find its way into any of.
Speaker 3 (04:25):
Those tributary sources without help.
Speaker 4 (04:27):
That's right, and that's non tributary okay.
Speaker 3 (04:30):
Without help. Part is a pumping.
Speaker 4 (04:32):
There's an actual way to get into the ground, pump
the water and whatnot. This is a little bit different.
It is really unique with the London mind because this aquifer,
this really strange geologic anomaly that they created or God
created many many eons ago, captures all this water inside
London Mountain underneath it, and it doesn't go anywhere.
Speaker 2 (04:53):
There's a geologic fault that.
Speaker 4 (04:55):
Stops it from getting out and becoming tributary water. So
the idea point is that it actually went to the
Arkansas River system. And now, you know, the science has
changed enough that if they challenged it in court, they
might say eventually, well, you know what it actually is tributary,
here's where it comes out.
Speaker 2 (05:13):
But at the moment that has changed. David.
Speaker 4 (05:16):
So, because this aquifer is like a giant pool under
the mountain and captures the water, the water Court said
long ago, this is now non tributary water, so anybody
who owns the land on top of it has the
right to pop a hole through and get to that water. However,
the courts also realize you start doing that and you're
(05:37):
going to deplete that water really quickly, so they made
sure that there was a requirement to get to that water.
You had to do it only through bonafide mining activity.
You actually had to be looking for gold, lead, silver, whatever,
and happen to hit that water and that water comes out,
(05:58):
and now you can work on this additional nonconditional.
Speaker 1 (06:01):
Water and aboulutely this is like a nightmare soon. This
is government bureaucracy at its best.
Speaker 4 (06:06):
It's actually a pretty brilliant decision from the courts because
it really ensured that that body of water underneath wouldn't
be wasted quite so easily. Okay, in that process, Now
that's there was a number a bunch of water. Water
is measured not by gallons when it comes to water rights,
(06:26):
but by acre feet, and that's essentially one acre of
land one foot deep of water.
Speaker 3 (06:32):
That works out to roughly three.
Speaker 4 (06:34):
Hundred and some odd thou twenty six thousand gallons of water. Sure,
at some point in time, all the water courts and
the people who own that mine and pulled the water
out got absolute water rights roughly of about.
Speaker 3 (06:48):
One thousand acre feet or so.
Speaker 4 (06:50):
And then there's another three hundred acre feet three seventy
on top of that, a total of fourteen eleven fifteen
eleven that can come out of that mountain. Seventy is
still conditional. Nobody's ever gone to court and said, let's
make it absolute. But the rest is absolute. But that's
what's coming out naturally.
Speaker 3 (07:08):
If you go up there today, you play at the water.
Speaker 4 (07:09):
Charts, Roughly it's about fourteen hundred and fifteen hundred acre
feet a year.
Speaker 3 (07:14):
Of water is coming out.
Speaker 4 (07:15):
But the body of that aquifer is another five thousand
or so ecre feet that if it ever comes out,
you can have a home roughly give water for a
year to about thirteen thousand, four hundred homes in Aurora.
Speaker 1 (07:30):
So why isn't it coming out, and why isn't that
water being used?
Speaker 4 (07:33):
And the water hadn't been developed yet in order to
get the water out, you have to figure out a
way to get to it by using bona fide mining activity,
and all the water rights limit how much water until
you do that activity to get to it. Once you
develop it and it starts coming out, there's a period
of time that they look at to see it coming out,
and then you can prove the water is being put
(07:56):
to a beneficial use, which now it would be Aurora
Water owns all the water rights.
Speaker 3 (08:02):
Under the London Mind. Anything that comes out belongs to Aurora.
Speaker 4 (08:06):
So once it's developed, they're already putting it to a
beneficial use to the customers, right, and.
Speaker 3 (08:10):
Then they can get it, get it declared absolute.
Speaker 4 (08:13):
Getting at it, however, is tricky, and that's where the
issue is.
Speaker 1 (08:17):
So they signed up with this water developer and he
was he going to engage in actual mind activities.
Speaker 2 (08:22):
The plan is they used to do that?
Speaker 3 (08:24):
Sure?
Speaker 2 (08:24):
Sure, oh wait the plan. You don't seem convinced like that.
Speaker 1 (08:27):
That was a little breezy on your Sure, sure, that
was a little little cavalier for me.
Speaker 2 (08:32):
So what's actually happening, Well.
Speaker 4 (08:35):
At the moment, nothing, nothing more, much more than the
fourteen or fifteen hundred and eleven acre feet of water
is coming out of.
Speaker 3 (08:42):
There with any measure of regularity. No new water has
been developed.
Speaker 4 (08:46):
Okay, Aurora has prepaid for another six hundred or so
acre feet when it gets developed, but that there's no
timeline on that.
Speaker 3 (08:56):
That could take a long time.
Speaker 2 (08:57):
There's no date. I'm sorry, there was no date in
the you're going to tell there's no water until now.
Speaker 4 (09:02):
Well, yes there is, and there's not. There's no date
that says we want the water by now. It says essentially,
here's all this money we're prepaying you, in this case
four point two million dollars, and you have until October
of twenty twenty six to develop water. If you get
this much water, great, If you don't give us the
(09:22):
money back at four percent interest only, which is simple interest. Sure,
so that's sort of they don't want to call it
a loan, but there is a collateral, there is a
promissory note, there's repayment terms, and there's an interest rate.
Speaker 3 (09:36):
So by definition, that's a loon.
Speaker 1 (09:38):
Quick question, what happens if this water developer goes belly up?
Speaker 4 (09:44):
Well, that's a great question because if the water developer
and the owner of the mine ends up going out
of business, Aurora would have the ability under contract to
take ownership of everything.
Speaker 2 (09:58):
The concern on Aurora's part is.
Speaker 4 (10:01):
They believe that there's a liability that crosses over to
them as the owner of the mind for any of
the issues that are in the water, the.
Speaker 2 (10:10):
Pollution, the environmental damage.
Speaker 4 (10:12):
That doesn't really kick in unless they tried to develop
more than the fifteen hundred and eleven acre feet, So
there's no guarantee they'll own five thousand acre feet of rights.
But if you're not doing any work to get to it,
you're not liable for any of that contamination.
Speaker 3 (10:29):
That's what the EPA says.
Speaker 4 (10:30):
But if they decide that we're going after all that water,
then there's a liability issue. So essentially the guy can't
go out of business.
Speaker 1 (10:39):
But at one point didn't he essentially wasn't he awarded
a no bid contract for something completely different. Yes, when
he needed a cash infusion, Yes, to pay off a
hard money loan.
Speaker 4 (10:48):
Yes, there was a five point two million dollar deal
he was he was in the middle of a hard
money lender collection that he used his water.
Speaker 3 (10:59):
How do you call it?
Speaker 4 (10:59):
The amount of water that he was looking to profit
on by sale as the collateral for that loan, and
he got about a hunt one point five million dollars
at eighteen percent interest, it's ballooned up over the time
now to about five million, and he was in a jam.
They were collecting and he didn't pay him. He was
going belly up, and he made that clear to several officials.
When that came down, he went to Aurora and essentially
(11:22):
he said, I need help. And they figured out that
there's all this giant rock that's.
Speaker 3 (11:27):
What was called riprap rock, which say that five.
Speaker 4 (11:30):
Times fast, and that's the rock if you've driven by
any reservoir that aligns the sides of the reservoir, these
enormous boulders. Well, a number of years ago, when you're
standing at the gold mine and looking across, there's a
mountain there called Pennsylvania Mountain. There was a geologic change
and half of that mountain, or a portion of it
came crashing down.
Speaker 2 (11:49):
It separated and there was a big landslide.
Speaker 4 (11:51):
That landslide created these enormous pieces of riprap rock that
can be used for that purpose.
Speaker 3 (11:58):
So they went to Aurora and Auroras as well, Oh.
Speaker 4 (12:00):
We can't loan you any money. WHOA, we can't this,
We need an arm's length. Tell you what we'll buy
all that rock, and they bought about so I don't
know how many millions and pounds of that rock in
part to do maintenance. And I'm not sure where maintenance
comes from for large boulders, but okay, at their Spinny
reservoir which is up there in the mountains and then
(12:20):
possibly to be used at the new one they're looking
to be building in a number.
Speaker 2 (12:24):
Of years called wild Horse Reservoir.
Speaker 4 (12:26):
So that's the idea. We'll buy all your rock that's
in the way. Here, here's five million dollars. Oh and
by the way, we're not going to wait for you
to actually deliver it. We're going to prepay it. Here's
all the money. And by the way, council, he's in
a jam. Let's rush this through. Let's make it happen.
So they essentially helped the guy out, and he had
a really good quote. He said, I have rock, meaning
(12:48):
Aurora and he I have rock.
Speaker 2 (12:50):
They need rock. They have money. I need their money.
Speaker 1 (12:54):
So I mean, it's just it doesn't sound like anything
illegal has gone on. It just seems like this particular
developer has figured out a way to complete, you know,
to keep dipping his toe into the Aurora taxpayer funds.
Speaker 3 (13:13):
I'm not quite sure.
Speaker 4 (13:13):
If that was the way it gets set out at
the beginning, Right, it certainly turned out that looks that way.
I think it's more Aurora finds itself. And again this
is off the cuff here in a position that it
can't afford to have this developer go bankrupt because then
they're in a jam and everything really says that they
(13:37):
need to keep him in business in order to continue
to proceed trying to get this water. Otherwise I'll have
to get somebody else to take on all that liability,
and I'm not sure that that'll happen easily.
Speaker 1 (13:47):
This And I'm trying to think of a way to
say this without casting aspersions. This seems like if you
were knowledgeable enough about these the issues around liability, when
it comes to ownership of the mine, all of these
different things, then you could conceivably set up a scheme
where you went into business with something with incredibly deep
(14:08):
pockets and no sense of the sunk cost fallacy, right,
And that would be a municipality. I know that there's
been other water developers, and I'm putting that in air
quotes for then I'm moving over to a different water
developer here who by land say we're going to develop it,
get money from the county, and then eventually get the
environmentalists involved. They show up to protest and they say, oh,
(14:29):
we're not going to do this project. Just take over
the land for twice what we paid for it. It's
like a little bit of a racket, you know, because.
Speaker 2 (14:36):
Water is so important.
Speaker 4 (14:38):
Water is so complicated. Yeah, And I think Aurora because
it has.
Speaker 3 (14:43):
A pretty much an insatiable need for water.
Speaker 4 (14:45):
Yeah, and it's one of the largest municipalities to acquire
water next to Denver in the Front Range. Any water
sail out there is a tough get. They're all fighting
for the same water, right. This was a cache of
water that was really different, and it's a replenishable cash
and it's a cache of water that can be used
(15:07):
over and over and over again until depletion. It's a
good get. I mean, theoretically it's a good get. But
that whole thing about bonafide mining activity. Even if you
come in with a company, any company that is a
gold mining outfit, for instance, it's not an easy do
(15:27):
to start drilling holes.
Speaker 3 (15:29):
There's a whole process that's.
Speaker 4 (15:30):
Very very expensive, very time consuming, and then you find
yourself against Like you said, environmentalists and a number of
different people that are objecting to the process, and good
luck trying to beat that down in a short period.
So Aurora likes to see this as a long term solution.
But here we are already eight years later and no
(15:53):
new water has been developed, and all that conditional water
has never been made absolute.
Speaker 1 (15:57):
What about the toxic stuff in the water? What about
the pollution in the water? Are they addressing that.
Speaker 3 (16:02):
They're working on it?
Speaker 4 (16:03):
But as the city has acknowledged, there's a hard metal problem.
Speaker 3 (16:07):
There's a lot of zinc, it's a lot of cadmium.
Speaker 4 (16:09):
That keeps coming up, and the state keeps citing them
for exceeding the standards that are in place since twenty
twenty two. They had lesser standards previous.
Speaker 3 (16:19):
And then there was a change to the.
Speaker 2 (16:21):
Law that the Gold King mind thing that sometime thereafter.
Speaker 4 (16:25):
Yeah, no, it's funny because this same developer, gold mining
guy that owns all of this is the same guy
that came in and helped clean up the Gold.
Speaker 2 (16:34):
King of doing this.
Speaker 4 (16:36):
Oh yeah, absolutely bona fide when it comes to all
of that, I mean very much. I don't mean to
suggesss these not in other things, Well.
Speaker 2 (16:42):
Doesn't business man.
Speaker 4 (16:43):
It's very complicated, and like I said, the whole point
of this story is giving folks an update, but more
importantly to show how Aurora has gotten itself essentially into
a jam. It's very difficult to find its way out
from under this.
Speaker 1 (16:57):
And there's no great answers here for Aura unless magically.
Speaker 2 (17:01):
Someone comes in with a mining company and.
Speaker 1 (17:02):
Says, we're going to drill for copper exactly in the
location that the aquifer is, and we'll see what happens.
Speaker 4 (17:09):
I mean, they would have the right to come in
and try to purchase the mine and the ore rights
from the guy who owns it.
Speaker 2 (17:14):
Now, he may turn around and.
Speaker 4 (17:17):
Say fine, but I imagine that there's a right to
refusal on Aurora's part, seeing as that would impact whatever
water they're pulling out now.
Speaker 2 (17:27):
So plus't close the fact too.
Speaker 3 (17:29):
Seasonally, Colorado was very.
Speaker 4 (17:32):
Affected by the seasons and rainwater, of course, so when
there's not as much snow or snow melt, they're not
pulling as much water.
Speaker 3 (17:39):
Out of that thing as they expected.
Speaker 4 (17:41):
So they've had a couple of years where they've gotten
perhaps one hundred acre feet, but certainly not in the
volume that everybody's been expecting.
Speaker 1 (17:48):
David mcgoyad did a great series. There's two long articles.
Even if you don't read the other articles about Aurora,
please read the piece on Denver water rights. It will
clarify the most convoluted, complex thing I have ever seen
for the most necessary thing for us to live.
Speaker 3 (18:04):
Be sure you have a big pot of coffee when
you try.
Speaker 1 (18:06):
Amen to that, David, I appreciate it. I'll go watch Chinatown,
David said, I haven't seen Chinatown in years.
Speaker 2 (18:11):
It still stands up.
Speaker 1 (18:13):
It's it comes off a wee bit campy in a
way that it is a film noir.
Speaker 3 (18:17):
I remember it's Fade Dunaway and Michael Douglas.
Speaker 2 (18:20):
No no, Jack Nicholson, right, so good, Okay, I totally forget.
Speaker 4 (18:27):
I didn't even remember that movie until once the editors
had started seeing Oh yeah, the copy as I was writing.
Speaker 2 (18:33):
It's, oh my gosh, it's just like Chinatown is.
Speaker 3 (18:35):
Oh my god, God, that thing was water.
Speaker 2 (18:38):
It's all about water. So go watch that. David macgoya,
thank you, man. I'll talk to against Sam.
Speaker 3 (18:42):
Always happy to be here.
David mcgoya from the Denver Gazette, longtime journalist here in Colorado,
and he is a really fascinating piece or series of pieces,
I should say, about Aurora water. And we were talking
off the air here about the fact that if you
come from somewhere else, if you come from east to
the Mississippi, you have no concept of water rights or
(00:21):
how vicious the fighting over water rights can be. And
then you move to Colorado and you're like, can I
get a rain barrel? And they're like, no, Okay, you
can now, but when I moved here, you couldn't, and
you have to find out about water rights.
Speaker 2 (00:31):
First of all, Welcome back to the show, David.
Speaker 3 (00:33):
Thanks, I appreciate it.
Speaker 2 (00:34):
So where did this come from?
Speaker 1 (00:35):
Where did this series uncovering the tangled web of Aurora
water in a gold.
Speaker 2 (00:41):
Mine in Park County? Where did this come from?
Speaker 4 (00:45):
A lot of what we do in our business is
perusing the public record, trying to come up with an idea.
We do that all the time, and just taking a
look at what was happening in Aurora. I saw her
on one of their council meeting agendas, a contract that
was coming up, and what made it interesting.
Speaker 3 (01:01):
It was essentially talking about.
Speaker 4 (01:03):
An X ray machine at a gold mine, and just
as you dug into it a little bit, I said,
what in the world is this thing? So I got fascinated,
started doing the digging in and backstory and whatnot, and eventually,
over many months, many interviews with a lot of people,
many documents, the last count was about eighteen thousand pages
of documents, we came up with this tale that essentially
(01:27):
walked everybody through a deal that started in twenty eighteen
with a lot of fanfare, a lot of publicity, and
stayed quiet ever since and had changed quite a lot
of different ways and times.
Speaker 3 (01:38):
And decided to just tell that story.
Speaker 4 (01:40):
Where are we today with this big water thing that
they announced with a gold mine back in twenty eighteen.
Speaker 1 (01:46):
So the gold mining question is in Park County and
it has been London Mine is the name of the mine,
and it's been defunbed for how many years now?
Speaker 4 (01:55):
I think it closed in ninety one. As I recollect it,
they closed the lack of mining. Yeah, it's been closed.
Speaker 1 (02:00):
Well, it is also one of the biggest sources of
pollution into that part of the Platte River.
Speaker 2 (02:04):
Correct, it had.
Speaker 4 (02:05):
Been it's not quite what it was, but yeah, I
did many many years because the operation of mining basically
creates what's eventually.
Speaker 3 (02:14):
Called acid drainage.
Speaker 4 (02:15):
It's when all the oxygen mixes in with these minerals
and creates a lot of cadmium, leads, ankle, all these
different things and hits the water stream.
Speaker 3 (02:24):
So it's it's pretty toxic stuff. It's not very nice.
Speaker 1 (02:27):
Now in an effort to shore up their water supplies.
And this is a common theme, and this is why
I wanted to bring you on to talk about this
because this is about Aurora, but this can happen with
any municipality looking to shore up their water supply. Sure,
I mean it could have any of them. So the
story starts when Aurora teams up with a water Wait,
should we start with water rights first?
Speaker 2 (02:48):
Because this is where good convoys long enough for that, I.
Speaker 1 (02:51):
Know, and I don't want to have people like falling
asleep behind a wheel. But David also did a really
good primmer kind of article that explains the way water
rights work in Colorado, and that is a really important
part of this story because there's two kinds of water,
absolute and conditional. Can you give me like a thumbnail
sketch of those definitions.
Speaker 4 (03:09):
Well, it took me a long time to understand it.
Absolute water is pretty simple. This is water that absolutely
comes out and has a beneficial use.
Speaker 3 (03:18):
Okay, that's the key phrase.
Speaker 1 (03:19):
Beneficial use from a residences, businesses, something like that.
Speaker 4 (03:24):
All water in Colorado has to be put to a
beneficial use. If it isn't, then it has to go
back into the system and it works its way through.
Conditional water is a water right that exists but has
not yet been put to a beneficial use for a
period of time enough to go into court water Court
as a special court in Colorado to have it declared absolute.
(03:45):
Absolute doesn't mean it's always showing up, but it's an
absolute right.
Speaker 3 (03:49):
We don't lose that.
Speaker 1 (03:50):
Absolute water rights are worth a fortune.
Speaker 2 (03:53):
Conditional water rights.
Speaker 4 (03:54):
Not so much.
Speaker 1 (03:55):
That's right, Okay, So that's a big part of this story.
I need to get that part out.
Speaker 4 (03:58):
And then the other key thing is the tributary and
non tributary water. Tributary water, in the most basic explanation,
is the stuff that's on the surface, right rivers and whatnot. Now,
it can come out from underground and make its way
into the river, but as soon as it hits that river,
it's tributary, okay. Non tributary water is essentially like an aquifer.
(04:20):
It's a big pool, a big puddle underground and doesn't
find its way into any of.
Speaker 3 (04:25):
Those tributary sources without help.
Speaker 4 (04:27):
That's right, and that's non tributary okay.
Speaker 3 (04:30):
Without help. Part is a pumping.
Speaker 4 (04:32):
There's an actual way to get into the ground, pump
the water and whatnot. This is a little bit different.
It is really unique with the London mind because this aquifer,
this really strange geologic anomaly that they created or God
created many many eons ago, captures all this water inside
London Mountain underneath it, and it doesn't go anywhere.
Speaker 2 (04:53):
There's a geologic fault that.
Speaker 4 (04:55):
Stops it from getting out and becoming tributary water. So
the idea point is that it actually went to the
Arkansas River system. And now, you know, the science has
changed enough that if they challenged it in court, they
might say eventually, well, you know what it actually is tributary,
here's where it comes out.
Speaker 2 (05:13):
But at the moment that has changed. David.
Speaker 4 (05:16):
So, because this aquifer is like a giant pool under
the mountain and captures the water, the water Court said
long ago, this is now non tributary water, so anybody
who owns the land on top of it has the
right to pop a hole through and get to that water. However,
the courts also realize you start doing that and you're
(05:37):
going to deplete that water really quickly, so they made
sure that there was a requirement to get to that water.
You had to do it only through bonafide mining activity.
You actually had to be looking for gold, lead, silver, whatever,
and happen to hit that water and that water comes out,
(05:58):
and now you can work on this additional nonconditional.
Speaker 1 (06:01):
Water and aboulutely this is like a nightmare soon. This
is government bureaucracy at its best.
Speaker 4 (06:06):
It's actually a pretty brilliant decision from the courts because
it really ensured that that body of water underneath wouldn't
be wasted quite so easily. Okay, in that process, Now
that's there was a number a bunch of water. Water
is measured not by gallons when it comes to water rights,
(06:26):
but by acre feet, and that's essentially one acre of
land one foot deep of water.
Speaker 3 (06:32):
That works out to roughly three.
Speaker 4 (06:34):
Hundred and some odd thou twenty six thousand gallons of water. Sure,
at some point in time, all the water courts and
the people who own that mine and pulled the water
out got absolute water rights roughly of about.
Speaker 3 (06:48):
One thousand acre feet or so.
Speaker 4 (06:50):
And then there's another three hundred acre feet three seventy
on top of that, a total of fourteen eleven fifteen
eleven that can come out of that mountain. Seventy is
still conditional. Nobody's ever gone to court and said, let's
make it absolute. But the rest is absolute. But that's
what's coming out naturally.
Speaker 3 (07:08):
If you go up there today, you play at the water.
Speaker 4 (07:09):
Charts, Roughly it's about fourteen hundred and fifteen hundred acre
feet a year.
Speaker 3 (07:14):
Of water is coming out.
Speaker 4 (07:15):
But the body of that aquifer is another five thousand
or so ecre feet that if it ever comes out,
you can have a home roughly give water for a
year to about thirteen thousand, four hundred homes in Aurora.
Speaker 1 (07:30):
So why isn't it coming out, and why isn't that
water being used?
Speaker 4 (07:33):
And the water hadn't been developed yet in order to
get the water out, you have to figure out a
way to get to it by using bona fide mining activity,
and all the water rights limit how much water until
you do that activity to get to it. Once you
develop it and it starts coming out, there's a period
of time that they look at to see it coming out,
and then you can prove the water is being put
(07:56):
to a beneficial use, which now it would be Aurora
Water owns all the water rights.
Speaker 3 (08:02):
Under the London Mind. Anything that comes out belongs to Aurora.
Speaker 4 (08:06):
So once it's developed, they're already putting it to a
beneficial use to the customers, right, and.
Speaker 3 (08:10):
Then they can get it, get it declared absolute.
Speaker 4 (08:13):
Getting at it, however, is tricky, and that's where the
issue is.
Speaker 1 (08:17):
So they signed up with this water developer and he
was he going to engage in actual mind activities.
Speaker 2 (08:22):
The plan is they used to do that?
Speaker 3 (08:24):
Sure?
Speaker 2 (08:24):
Sure, oh wait the plan. You don't seem convinced like that.
Speaker 1 (08:27):
That was a little breezy on your Sure, sure, that
was a little little cavalier for me.
Speaker 2 (08:32):
So what's actually happening, Well.
Speaker 4 (08:35):
At the moment, nothing, nothing more, much more than the
fourteen or fifteen hundred and eleven acre feet of water
is coming out of.
Speaker 3 (08:42):
There with any measure of regularity. No new water has
been developed.
Speaker 4 (08:46):
Okay, Aurora has prepaid for another six hundred or so
acre feet when it gets developed, but that there's no
timeline on that.
Speaker 3 (08:56):
That could take a long time.
Speaker 2 (08:57):
There's no date. I'm sorry, there was no date in
the you're going to tell there's no water until now.
Speaker 4 (09:02):
Well, yes there is, and there's not. There's no date
that says we want the water by now. It says essentially,
here's all this money we're prepaying you, in this case
four point two million dollars, and you have until October
of twenty twenty six to develop water. If you get
this much water, great, If you don't give us the
(09:22):
money back at four percent interest only, which is simple interest. Sure,
so that's sort of they don't want to call it
a loan, but there is a collateral, there is a
promissory note, there's repayment terms, and there's an interest rate.
Speaker 3 (09:36):
So by definition, that's a loon.
Speaker 1 (09:38):
Quick question, what happens if this water developer goes belly up?
Speaker 4 (09:44):
Well, that's a great question because if the water developer
and the owner of the mine ends up going out
of business, Aurora would have the ability under contract to
take ownership of everything.
Speaker 2 (09:58):
The concern on Aurora's part is.
Speaker 4 (10:01):
They believe that there's a liability that crosses over to
them as the owner of the mind for any of
the issues that are in the water, the.
Speaker 2 (10:10):
Pollution, the environmental damage.
Speaker 4 (10:12):
That doesn't really kick in unless they tried to develop
more than the fifteen hundred and eleven acre feet, So
there's no guarantee they'll own five thousand acre feet of rights.
But if you're not doing any work to get to it,
you're not liable for any of that contamination.
Speaker 3 (10:29):
That's what the EPA says.
Speaker 4 (10:30):
But if they decide that we're going after all that water,
then there's a liability issue. So essentially the guy can't
go out of business.
Speaker 1 (10:39):
But at one point didn't he essentially wasn't he awarded
a no bid contract for something completely different. Yes, when
he needed a cash infusion, Yes, to pay off a
hard money loan.
Speaker 4 (10:48):
Yes, there was a five point two million dollar deal
he was he was in the middle of a hard
money lender collection that he used his water.
Speaker 3 (10:59):
How do you call it?
Speaker 4 (10:59):
The amount of water that he was looking to profit
on by sale as the collateral for that loan, and
he got about a hunt one point five million dollars
at eighteen percent interest, it's ballooned up over the time
now to about five million, and he was in a jam.
They were collecting and he didn't pay him. He was
going belly up, and he made that clear to several officials.
When that came down, he went to Aurora and essentially
(11:22):
he said, I need help. And they figured out that
there's all this giant rock that's.
Speaker 3 (11:27):
What was called riprap rock, which say that five.
Speaker 4 (11:30):
Times fast, and that's the rock if you've driven by
any reservoir that aligns the sides of the reservoir, these
enormous boulders. Well, a number of years ago, when you're
standing at the gold mine and looking across, there's a
mountain there called Pennsylvania Mountain. There was a geologic change
and half of that mountain, or a portion of it
came crashing down.
Speaker 2 (11:49):
It separated and there was a big landslide.
Speaker 4 (11:51):
That landslide created these enormous pieces of riprap rock that
can be used for that purpose.
Speaker 3 (11:58):
So they went to Aurora and Auroras as well, Oh.
Speaker 4 (12:00):
We can't loan you any money. WHOA, we can't this,
We need an arm's length. Tell you what we'll buy
all that rock, and they bought about so I don't
know how many millions and pounds of that rock in
part to do maintenance. And I'm not sure where maintenance
comes from for large boulders, but okay, at their Spinny
reservoir which is up there in the mountains and then
(12:20):
possibly to be used at the new one they're looking
to be building in a number.
Speaker 2 (12:24):
Of years called wild Horse Reservoir.
Speaker 4 (12:26):
So that's the idea. We'll buy all your rock that's
in the way. Here, here's five million dollars. Oh and
by the way, we're not going to wait for you
to actually deliver it. We're going to prepay it. Here's
all the money. And by the way, council, he's in
a jam. Let's rush this through. Let's make it happen.
So they essentially helped the guy out, and he had
a really good quote. He said, I have rock, meaning
(12:48):
Aurora and he I have rock.
Speaker 2 (12:50):
They need rock. They have money. I need their money.
Speaker 1 (12:54):
So I mean, it's just it doesn't sound like anything
illegal has gone on. It just seems like this particular
developer has figured out a way to complete, you know,
to keep dipping his toe into the Aurora taxpayer funds.
Speaker 3 (13:13):
I'm not quite sure.
Speaker 4 (13:13):
If that was the way it gets set out at
the beginning, Right, it certainly turned out that looks that way.
I think it's more Aurora finds itself. And again this
is off the cuff here in a position that it
can't afford to have this developer go bankrupt because then
they're in a jam and everything really says that they
(13:37):
need to keep him in business in order to continue
to proceed trying to get this water. Otherwise I'll have
to get somebody else to take on all that liability,
and I'm not sure that that'll happen easily.
Speaker 1 (13:47):
This And I'm trying to think of a way to
say this without casting aspersions. This seems like if you
were knowledgeable enough about these the issues around liability, when
it comes to ownership of the mine, all of these
different things, then you could conceivably set up a scheme
where you went into business with something with incredibly deep
(14:08):
pockets and no sense of the sunk cost fallacy, right,
And that would be a municipality. I know that there's
been other water developers, and I'm putting that in air
quotes for then I'm moving over to a different water
developer here who by land say we're going to develop it,
get money from the county, and then eventually get the
environmentalists involved. They show up to protest and they say, oh,
(14:29):
we're not going to do this project. Just take over
the land for twice what we paid for it. It's
like a little bit of a racket, you know, because.
Speaker 2 (14:36):
Water is so important.
Speaker 4 (14:38):
Water is so complicated. Yeah, And I think Aurora because
it has.
Speaker 3 (14:43):
A pretty much an insatiable need for water.
Speaker 4 (14:45):
Yeah, and it's one of the largest municipalities to acquire
water next to Denver in the Front Range. Any water
sail out there is a tough get. They're all fighting
for the same water, right. This was a cache of
water that was really different, and it's a replenishable cash
and it's a cache of water that can be used
(15:07):
over and over and over again until depletion. It's a
good get. I mean, theoretically it's a good get. But
that whole thing about bonafide mining activity. Even if you
come in with a company, any company that is a
gold mining outfit, for instance, it's not an easy do
(15:27):
to start drilling holes.
Speaker 3 (15:29):
There's a whole process that's.
Speaker 4 (15:30):
Very very expensive, very time consuming, and then you find
yourself against Like you said, environmentalists and a number of
different people that are objecting to the process, and good
luck trying to beat that down in a short period.
So Aurora likes to see this as a long term solution.
But here we are already eight years later and no
(15:53):
new water has been developed, and all that conditional water
has never been made absolute.
Speaker 1 (15:57):
What about the toxic stuff in the water? What about
the pollution in the water? Are they addressing that.
Speaker 3 (16:02):
They're working on it?
Speaker 4 (16:03):
But as the city has acknowledged, there's a hard metal problem.
Speaker 3 (16:07):
There's a lot of zinc, it's a lot of cadmium.
Speaker 4 (16:09):
That keeps coming up, and the state keeps citing them
for exceeding the standards that are in place since twenty
twenty two. They had lesser standards previous.
Speaker 3 (16:19):
And then there was a change to the.
Speaker 2 (16:21):
Law that the Gold King mind thing that sometime thereafter.
Speaker 4 (16:25):
Yeah, no, it's funny because this same developer, gold mining
guy that owns all of this is the same guy
that came in and helped clean up the Gold.
Speaker 2 (16:34):
King of doing this.
Speaker 4 (16:36):
Oh yeah, absolutely bona fide when it comes to all
of that, I mean very much. I don't mean to
suggesss these not in other things, Well.
Speaker 2 (16:42):
Doesn't business man.
Speaker 4 (16:43):
It's very complicated, and like I said, the whole point
of this story is giving folks an update, but more
importantly to show how Aurora has gotten itself essentially into
a jam. It's very difficult to find its way out
from under this.
Speaker 1 (16:57):
And there's no great answers here for Aura unless magically.
Speaker 2 (17:01):
Someone comes in with a mining company and.
Speaker 1 (17:02):
Says, we're going to drill for copper exactly in the
location that the aquifer is, and we'll see what happens.
Speaker 4 (17:09):
I mean, they would have the right to come in
and try to purchase the mine and the ore rights
from the guy who owns it.
Speaker 2 (17:14):
Now, he may turn around and.
Speaker 4 (17:17):
Say fine, but I imagine that there's a right to
refusal on Aurora's part, seeing as that would impact whatever
water they're pulling out now.
Speaker 2 (17:27):
So plus't close the fact too.
Speaker 3 (17:29):
Seasonally, Colorado was very.
Speaker 4 (17:32):
Affected by the seasons and rainwater, of course, so when
there's not as much snow or snow melt, they're not
pulling as much water.
Speaker 3 (17:39):
Out of that thing as they expected.
Speaker 4 (17:41):
So they've had a couple of years where they've gotten
perhaps one hundred acre feet, but certainly not in the
volume that everybody's been expecting.
Speaker 1 (17:48):
David mcgoyad did a great series. There's two long articles.
Even if you don't read the other articles about Aurora,
please read the piece on Denver water rights. It will
clarify the most convoluted, complex thing I have ever seen
for the most necessary thing for us to live.
Speaker 3 (18:04):
Be sure you have a big pot of coffee when
you try.
Speaker 1 (18:06):
Amen to that, David, I appreciate it. I'll go watch Chinatown,
David said, I haven't seen Chinatown in years.
Speaker 2 (18:11):
It still stands up.
Speaker 1 (18:13):
It's it comes off a wee bit campy in a
way that it is a film noir.
Speaker 3 (18:17):
I remember it's Fade Dunaway and Michael Douglas.
Speaker 2 (18:20):
No no, Jack Nicholson, right, so good, Okay, I totally forget.
Speaker 4 (18:27):
I didn't even remember that movie until once the editors
had started seeing Oh yeah, the copy as I was writing.
Speaker 2 (18:33):
It's, oh my gosh, it's just like Chinatown is.
Speaker 3 (18:35):
Oh my god, God, that thing was water.
Speaker 2 (18:38):
It's all about water. So go watch that. David macgoya,
thank you, man. I'll talk to against Sam.
Speaker 3 (18:42):
Always happy to be here.
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