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 Sublette, Inc. (Second Reading - Approved on First Reading on December 20, 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 Sublette, Inc. (Sublette) for the Town’s Rothe Property in Weld County. Sublette, an adjacent landowner, has leased the property for the past seven years and is interested in renewing their lease on the Rothe Property. Over the past seven years, Sublette has used part of the property for growing crops, establishing dry-land with a native seed mixture, as well as hunting. As this lease expires this year, Sublette has expressed interest in renewing the lease with similar terms. Since the original lease was entered into in 2015, the lease rate has been increased by 24.47% to account for the Consumer Price Index (CPI-U) increases over the past 7 years.
History of Past Town Council, Boards & Commissions, or Other Discussions
On August 19, 2014, Town Council approved the Purchase Agreement for the Rothe Recharge project. As part of this purchase, 640 acres of land were acquired by the Town.
June 24, 2015, Utilities Commission was updated on the key points regarding the Rothe Surface Use Lease Agreement. Utilities Commission supported entering into a surface use agreement with Sublette, Inc.
On August 4, 2015, Town Council approved the 2015 Surface Use Lease with Sublette.
Castle Rock Water staff presented this item to the Castle Rock Water Commission at their meeting held on December 14, 2022, and the Castle Rock Water Commission voted 7 to 0 to recommend Town Council approval of the Resolution as presented.
Discussion
The Rothe Property, as shown in Attachment B, was purchased in support of the Box Elder Project. The Box Elder Project is part of the Town’s long-term renewable water plan. A key component of this project is the purchase of water rights in the South Platte Basin. In 2014, Castle Rock purchased the Rothe Water Rights as part of the project. As part of the Town’s purchase of the Rothe Recharge water rights, the Town also acquired 640 acres of land in southeastern Weld County. Successful implementation of the Box Elder Project requires that the Town maintain this property properly until it is sold or otherwise disposed.
Sublette, an adjacent landowner, has leased the property for the past seven years and is interested in renewing their lease on the Rothe Property. Being a good neighbor will provide local support for the Town’s project. More importantly, property management of the land will also maximize the availability of the Town’s water rights. The Town would like to enter into a new Agricultural Lease (Exhibit 1) with Sublette with similar terms.
The key terms of this agreement are as follows:
• 5-year cash lease, with two 1-year annual renewals;
• Annual rent due in the amount of $6,225;
• Hunting and grazing rights;
• Repairs to sprinkler system owned by Castle Rock shall be the responsibility of Castle Rock with support from Sublette with managing contractors installing and replacing equipment;
• Lease can be terminated by Castle Rock 120 days prior to the termination date;
• Lease can be terminated by Sublette 30 days prior to the termination date;
• Water used for irrigation shall come from Sublettes source of supply; and
• Sublette will be responsible for procuring and maintaining Comprehensive General Liability and Comprehensive Automobile Liability Insurance at its own cost.
This Agricultural 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 have eyes on the property at all times. 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 $6,225 in rent annually. The revenue will be deposited into Water Resources Fund Capital Leases account 211-4375-393.70-00.
Staff Recommendation
Staff recommends approval of the Agricultural Lease Agreement with Sublette, Inc. over the course of five years, with two one-year annual renewals which will generate a revenue of $6,225 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