To: Honorable Mayor and Members of Town Council
Through: David L. Corliss, Town Manager
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 Between the Town of Castle Rock and Rupple Farms, LLC (Second Reading - Approved on First Reading on November 15, 2022, by a vote 7-0) [Weld County, Colorado]
Body
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Executive Summary
Castle Rock Water is seeking Town Council approval of an ordinance (Attachment A) for 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 are interested in continuing to work with the farmer that has previously farmed the land. The Rupple’s will lease 560 acres of farmland for three years including grazing rights for a total price of $14,608.75. The annual rent and grazing fees were increased by the Consumer Price Index (CPI) increase from December 2019 (prior lease execution date) to September 2022. The price is reasonable for leased farmland in this location based on available data regarding other farm leases in the area. Either party may terminate the agreement with 120 days’ notice.
History of Past Town Council, Boards & Commissions, or Other Discussions
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.
Novemeber 5, 2019, Town Council unanimously approved the First Reading for the 2020 Agricultural Lease with Rupple Farms.
December 3, 2019, Town Council unanimously approved the Second Reading for the 2020 Agricultural Lease with Rupple Farms.
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 potentional 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, 2020, 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 $23 per acre farmed, up to 560 acres annually. Additionally, a $1,728.75 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 $14,608.75 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 $14,608.75 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 $14,608.75 annually.
Proposed Motion
“I move to approve the Ordinance as introduced by title.”
Alternative Motions
“I move to approve the Ordinance as introduced by title, with the following conditions: (list conditions).
“I move to continue this item to the Town Council meeting on _____ date to allow additional time to (list information needed).”
Attachments
Attachment A: Ordinance
Exhibit 1: Lease Agreement
Attachment B: Location Map