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Turning Water Into Whine

When Gary Antonoff set up his own private government, the town of Lochbuie got soaked.

On the last day of May 1985, on an isolated nine-acre patch of land in the middle of a former wheatfield 25 miles northeast of Denver, Gary Antonoff created his own personal government. It didn't have an army, or even any citizens to govern. But it had all a government needs in Colorado to be powerful: water and lawyers.

Antonoff, a 61-year-old fit, focused Iowa native, has been in the thick of large-scale Denver-area development for nearly two decades. He runs his projects out of lower downtown (the Antonoff Building is on Wazee Street) and manages a handful of city office complexes for their owners. But for the past fifteen years he has directed most of his energy toward the empty, fertile plains just northeast of the city.

Antonoff started acquiring his nearly 2,000 acres of land around Brighton and Lochbuie in the early 1980s. As was the case with a handful of Denver's largest real-estate developers, his timing couldn't have been better. Mayor Frederico Pena soon announced his intention to build Denver International Airport just miles away. Recognizing a once-in-a-lifetime opportunity, Antonoff took the lead in raising money for the campaigns that sold the $1.7 billion facility (whose cost ultimately rose to $4 billion) to the public.

Although Antonoff has not yet hit the jackpot with that property, he could be getting close. He has a 1,000-acre tract of land in Brighton on the market; the asking price is reportedly ten times what he paid for it. His Lochwood Farms development in Lochbuie is up and running. And his $100 million Highplains manufactured-home development, on the outskirts of Lochbuie, is in its final stages of planning. When complete, it will more than double the size of that tiny town.

For those reasons alone, Gary Antonoff would have been a major player as the area took off on its inevitable growth spurt, goosed by DIA and fueled by the completion of Interstate 76. Yet his greatest impact has been felt through his zealous control of the area's lifeblood.

"Up there, who controls the water controls the development," says Gary West, a "circuit-riding" city administrator who managed the government affairs of a half-dozen plains towns, including Lochbuie, until 1995. "Without water, there is no development. That has been Mr. Antonoff's motivation."

The government Antonoff created in 1985 is the Beebe Draw Water and Sanitation District, named for the alluvial-fed gully from which he pumped his water. In Colorado, such districts are official government agencies; they can levy taxes and float bonds, and their operations are generally overseen by public representatives of the areas they serve. Yet Beebe Draw has remained under the tight control of Antonoff and his family and business associates for the district's entire thirteen-year history.

Even more unusual is the tangle of relationships Antonoff has strung between the water district and his own development projects. For example, acting both as director of the public water district and as president of his development company, Antonoff negotiated--with himself--a generous deal that ensures that he, as a developer, will have cheap water for years to come. As a result, today his private company enjoys the right to purchase water taps from the district--essentially from Antonoff himself--at less than one-quarter the rate of others in the area.

Those close connections raised eyebrows at the state health department. "Our question to Mr. Antonoff was, as a public special district, why was Beebe Draw pushing a private subdivision for Gary Antonoff?" says Greg Akins, an investigator with the Colorado Department of Public Health and Environment.

Not only did Antonoff's development company benefit from its dealings with the district, but Antonoff may have made a substantial profit from the Beebe Draw Water and Sanitation District itself. Turning a public agency into a private, moneymaking venture would be highly illegal, and Antonoff vigorously denies that he ever took any money out of the special district. Indeed, he says the opposite is true--that over the years he has had to spend his own money to keep the district running.

But again, the tangled arrangement has created confusion. "We certainly looked at Beebe Draw as a cash cow for Mr. Antonoff," says Dan Law, executive director of the Colorado Water Resources and Power Development Authority, a quasi-state agency that finances municipal water systems. "Beebe Draw generated the money. But then it just flowed into his [private] companies."

Gary Antonoff's businesses and his Beebe Draw Water and Sanitation District blur the boundaries between public and private enterprises, a phenomenon that Jeff Withers, program manager of the state Division of Local Government, calls "publicization: private parties using a government structure to make money." It's a phenomenon, Withers adds, that can cause at least as much trouble as its more studied opposite, privatization.

Mixing publicization with water, the West's most precious resource, explains how a single developer was able to use a nine-acre plot of land topped by a small, rusting water tower to insert himself into real-estate developments potentially worth half a billion dollars.

But Gary Antonoff's water has done more than that. It has inspired a new state law written just because of him. It has created a legal swamp involving a who's who of Denver's biggest developers and compelled small local governments to spend hundreds of thousands of dollars in attorneys' fees they can ill afford. At the same time, though, it has kept money flowing to Antonoff.

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