The late 1960s and early 1970s were a time of great change for Park County. The sweeping vistas of South Park that had once been defined by seclusion and historic ranching operations were beginning to be replaced by subdivisions as residents of the growing Front Range looked West for an accessible escape from the drone of urban living. On July 24, 1970, Park Development Company acquired 10,000 acres of land, portions of which would ultimately become Indian Mountain subdivision. In this purchase Park Development Company – and its general partner Meridian Properties, Inc. – also acquired the senior water rights that would ultimately form the Indian Mountain Augmentation Plan. After this purchase, Park Development Company and Meridian Properties, Inc. began to subdivide and plat the Indian Mountain Subdivision. At full build out the development was to include approximately 5,250 single-family residential equivalent units, including a mix of single and multi-family residences. Park Development and Meridian designed and built a ski area, an executive golf course and other amenities to serve the development which were conveyed to the predecessor of Indian Mountain Metropolitan District, the Indian Mountain Recreation and Park District. The key to Park Development and Meridian’s plans was to utilize the ground water resources underlying the budding subdivision to supply water to residences and the subdivision amenities as had been done in other subdivisions across the state. Just as the subdivision was beginning to take shape however, a sea change in the law governing subdivision development in this state changed Park Development and Meridian’s plans.
In the early 1970s, high density developments such as Indian Mountain were beginning to spring up across Colorado. A growing public awareness of the changes that development was creating across this state led to a one-two punch of legal and administrative changes that dealt a setback to Park Development and Meridian’s development plans. First, legislator’s passed new laws that required those developing land to demonstrate that there was an adequate water supply – both physically and legally – for the anticipated population in the subdivision. This coincided with a change in water rights administration in Colorado that recognized that ground water pumping was depriving surface water users of water that they were legally entitled to utilize. The result of these two changes required Park Development and Meridian to develop a plan to replace the surface water depletions that would result from the pumping of ground water in Indian Mountain. So long as these depletions – which accrue to the Upper South Platte River – were replaced, the wells in Indian Mountain could continue to pump when they would otherwise be required to be shut down.
Fortunately, the water rights that Park Development and Meridian had purchased with the original 10,000 acres were “senior” to many other water rights on the South Platte. (For more information on the operation of the Indian Mountain Augmentation Plan and water rights in Colorado, please click here) These rights had been used to irrigate hay meadows in the bottom lands of the ranch that had previously occupied the 10,000 acre subdivision. Once changed from irrigation to augmentation use, these senior water rights would provide the basis of the augmentation plan that would allow pumping in Indian Mountain to continue so long as the rights were in priority. To do so, Park Development and Meridian filed an application in Division 1 Water Court asking to change the decreed use of the rights from irrigation to storage and augmentation use. On January 2, 1974, Meridian obtained a decree for the Indian Mountain Augmentation Plan from the Division 1 Water Court in Case No. W-7389, a copy of this decree can be found here. Importantly, the decree makes no provision for the transfer of the plan from Meridian to the subdivision or any other entity, a decree term that would become common in later years.
Obtaining the decreed augmentation plan was costly for Park Development and Meridian. After the change in the law, the pair were unable to receive approval of additional plats to continue the development of the subdivision until the augmentation plan was in place. In the meantime, Park Development and Meridian were incurring the costs of obtaining the decree itself, including legal fees and engineering analyses. Moreover, Tarryall Ranch Reservoir 1 and 2 had to be modified to create additional storage capacity for the changed water rights. All of the debt related to these costs proved to be too great for Park Development and Meridian. In 1976, Park Development conveyed all of its interest in the platted and unplatted lands in Indian Mountain subdivision to a new entity, Indian Mountain Corp (“IMC”). IMC continued to subdivide and plat lots in the Indian Mountain subdivision and operate the Indian Mountain Augmentation Plan at its own cost. From 1976 into the 1980’s IMC sold lots in the subdivision and eventually was able to pay off the debt incurred by Park Development and Meridian. Even after it had sold off the remaining lots in the subdivision, IMC continued to operate the Indian Mountain Augmentation Plan, as it continues to do today. Through the efforts of IMC, no well in Indian Mountain subdivision has ever been curtailed, and no application for a well permit within the subdivision has ever been denied due the Augmentation Plan being out of compliance with the W-7389 Decree.
In 2013, IMC was sold to Bar Star Land, LLC. The same year, Indian Mountain Recreation and Park District sought and was given approval to amend its service plan to, among other things, own and operate the Indian Mountain Augmentation Plan. The Indian Mountain Metropolitan District’s (“IMMD”) amended service plan can be found here. Also in 2013, IMC through its sole shareholder and owner, James Ingalls approached IMMD regarding conveying the Indian Mountain Augmentation Plan to the District. Negotiations for the sale of the Augmentation Plan from IMC to IMMD broke down and the District threatened to sue IMC via a class action lawsuit to simply take the Augmentation Plan from IMC. The meeting minutes where this course of action was approved by IMMD can be found here (June 14, 2014).
During this time IMC continued to maintain and operate the Indian Mountain Augmentation Plan at its own cost. When IMMD refused to pay invoices sent by IMC for its operation of Plan in 2012 and 2013, IMC offered to provide augmentation service pursuant to the W-7389 decree directly to lot owners. Faced with what would likely be a costly class action lawsuit, IMC proactively filed a declaratory judgment action in Park County District Court against IMMD seeking to confirm its ownership of the augmentation plan water rights on June 20, 2014 in case number 14CV30056. After trial in March 2015, the Court ruled that IMC owned the Indian Mountain Augmentation Plan but held the water rights in constructive trust for the benefit of all Indian Mountain lot owners. The Court also ruled that so long as IMC retains ownership of the water rights, it is entitled to reimbursement for its actual and reasonable costs associated with its operation and maintenance of the plan. IMC appealed portions of the Court’s ruling in case number 14CV30056 in Colorado Court of Appeals case number 15CA1055.
On Thursday, August 11, 2016, the Colorado Court of Appeals issued its opinion in Case Number 15CA1055. The Court of Appeals reversed the ruling by the Park County District Court that IMC water rights were held in constructive trust for the benefit of Indian Mountain subdivision lot owners, preventing IMC from charging fees for the use of those rights. In the opinion, the Court of Appeals found that the Metropolitan District’s theory of ownership was, “directly refuted by documentary evidence in the record.” As a result, the Court concluded in part that “IMC is the legal title holder to the water rights and augmentation plan and that the elements of unjust enrichment have not been proved [in the trial court].” The Court of Appeals directed the Park County District Court to “enter judgment in favor of IMC consistent with this opinion.”
Forty years of operating the augmentation plan without payment and substantial legal fees led IMC to be dissolved and the augmentation plan water rights conveyed to Bar Star Land, LLC (D/B/A Bar Star Water Company) to offset the legal and operation costs incurred on IMC’s behalf.
Today, Mr. Ingalls and Bar Star Water Company continue to work tirelessly to insure that the Indian Mountain Augmentation Plan continues to operate effectively and efficiently for the Indian Mountain lot owners.