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File #: ORD 2019-038    Version: Name:
Type: Ordinance Status: Passed
File created: 10/21/2019 In control: Town Council
On agenda: 12/3/2019 Final action: 12/3/2019
Title: Ordinance Approving an Agricultural Lease Agreement with Rupple Farms, LLC (Second Reading - Approved on First Reading on November 5, 2019 by a vote of 7-0) [the Box Elder Well field property]
Attachments: 1. Attachment A: Ordinance 2019 Rupple Farm Lease Agreement, 2. Exhibit 1: Rupple Farms LLC Agricultural Lease v2, 3. Attachment B: Location Map, 4. Presentation

To:                     Honorable Mayor and Members of Town Council

 

From:                     Mark Marlowe, P.E., Director of Castle Rock Water

                     Matt Benak, P.E., Water Resources Manager

                     Lauren Moore, Water Resources Program Analyst

 

Title

Ordinance Approving an Agricultural Lease Agreement with Rupple Farms, LLC (Second Reading - Approved on First Reading on November 5, 2019 by a vote of 7-0) [the Box Elder Well field property]

Body

________________________________________________________________________________

 

Executive Summary

 

Castle Rock Water is seeking Town Council approval of an ordinance (Attachment A) to renew an agricultural lease with Rupple Farms, LLC (Rupple’s) for the Box Elder Well Field property.  The Town closed on the Box Elder property on Dec. 30, 2016 and is interested in continuing to work with the farmer that has previously farmed the land.   The Rupple’s will lease 560 acres of farm land for three years including grazing rights for a total price of $12,700 per year.  The price is reasonable for leased farm land in this location based on available data regarding other farm leases in the area.  Either party may terminate the agreement with 120 days’ notice.  The Town collected $76,350 from the Rupples for their original lease (2017-2019).  Of the $76,350, $38,250 was for reimbursements and $38,100 was in revenue.

 

History of Past Town Council, Boards & Commissions, or Other Discussions

 

On February 22, 2017, Castle Rock Water Commission recommended the agreement be taken to Town Council for approval.

 

March 28, 2017, Town Council unanimously approved the Agricultural Lease with Rupple Farms, LLC.

 

Discussion

 

As part of the Town’s hybrid renewable water solution, the Town purchased Box Elder Farm and closed on the property on December 30, 2016.  This farm is located approximately six miles east of Lochbuie, CO in southern Weld County as shown in Attachment B.  The water rights associated with this property have the potential to serve as a supply and/or augmentation source, along with the Lost Creek Basin wells, for the increased water demands that the Town will face as population growth continues.  Should the Town obtain additional water rights in the South Platte River basin, this property is located along a section of Box Elder Creek, which may prove to be a useful diversion point for a northern water supply.

 

Rupple Farms, LLC, had a crop share lease with the previous property owner, Box Elder Properties, LLC, from January 1, 2011 through December 31, 2016, for 700 farmable acres.  Up to 650 out of 850 acres were cultivated while areas with structures and riparian areas along Box Elder Creek remained uncultivated and/or grazed.  The current lease of 560 acres with grazing rights, which began on January 1, 2017, expires at the end of this year and Castle Rock Water would like to renew for another three-year term. 

 

Rupple Farms, LCC utilizes irrigation water from Henrylyn Irrigation District (HID) and Farmers Reservoir and Irrigation Company (FRICO) and it is estimated that approximately 200 acres can be irrigated and 360 acres can be dry farmed.  The lease rate will be $20 per acre farmed, up to 560 acres annually.  Additionally, a $1,500 grazing right can be leased each year for up to 60 head of livestock.  The farmer will reimburse the Town for annual assessments to Henrylyn Irrigation District (HID) and FRICO.  The value of a cash lease with this area of land farmed, including grazing rights is $12,700 with the tenant paying all annual assessments.  The key terms of the agreement are as follows:

 

                     3-year cash lease;

                     Town will pay all property taxes and assessments against the real estate and personal property on the farm as well as insurance premiums for the structures and liability insurance coverage;

                     Town will provide Tenant with limited power of attorney to administer the farm’s participation in government programs;

                     Town may purchase the existing irrigation pivot installed by the Tennant for fair market value at the end of the lease if it is not extended or the Tenant may remove it;

                     Tenant’s participation in Agricultural Risk Coverage Program (ARC-CO) and other government program participation is the sole responsibility of the tenant (The Town will execute documents as necessary);

                     Lease can be terminated by either party 120 days prior to the termination date;

                     All crops and proceeds from the crops shall be the Tenant’s;

                     Tenant shall furnish all labor, power, machinery and movable equipment, and all related operation and maintenance expenses to operate the farm;

                     Repairs such as replacing well pumps, well screens, and pivot gear boxes on the pivots owned by Castle Rock shall be the responsibility of Castle Rock with support from the Tenant with managing contractors installing and replacing equipment;

                     Tenant shall cut the weeds along ditches, roads, and property boundaries whenever necessary to prevent reseeding;

                     Tenant shall be responsible for reimbursing the Town all paid annual assessments which include but are not limited to FRICO assessments, HID, Chemigation Permit renewals, etc.;

                     Hunting and grazing rights; and

                     Tenant will have the right to call on the FRICO and HID water rights. 

 

This farm lease will show the surrounding community that the Town is willing to work with the nearby neighbors.  The Town will also be good neighbors by the fact that we are not letting the property become overrun with weeds and we are choosing to continue to farm it.  The Town will also be able to generate some revenue from the property. 

 

Budget Impact

 

If Council approves the agreement, Castle Rock Water would receive $12,700 plus reimbursement for the total cost of annual assessments for FRICO, HID, and Chemigation Permits.  The revenue will be deposited into Water Resources Fund Capital Leases account 211-4375-393.70-00.

 

Staff Recommendation

 

Staff recommends approval of the farm lease agreement with Rupple Farms, LLC for 560 acres of farmed land over the course of three years which will generate a revenue of up to $12,700 annually.

Proposed Motion

 

“I move to approve the Ordinance as introduced by title on second reading.”

 

Attachments

 

Attachment A: Ordinance

Exhibit 1: Lease Agreement

Attachment B: Location Map