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Turning Water Into Whine

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

But the real financial questions surfaced after Beebe Draw opened for business. Buried deep in the contract of that original deal between Antonoff's district and Antonoff's companies was an odd provision, in which Beebe Draw agreed to hand over to Weld County Associates all the money collected by the district that was not needed for the cost of doing business. Essentially, the contract created a way for Antonoff's government to funnel money into his private company. "There is no other special district that I know of in Colorado set up that way," says Goulding.

Antonoff admits that money flowed from the district back to Weld County Associates. But the arrangement was not illegal, he says. The clause was added to the contract because Beebe Draw had vastly underpaid Weld County Associates for the water, he explains, and the district still owed Antonoff money for the water he'd sold himself.

"When the district was formed in 1985, we had an appraisal of the water rights at about $10 million," Antonoff says. "But Weld County Associates agreed to provide water to the district for only $3.5 million. After the district paid for overhead and its debts, money would go back to Weld County Associates in payment for the difference between the $3.5 million the water sold for and the $10 million it was valued at."

But that original $10 million appraisal was done by an engineer named James Carbondale, who was hardly a disinterested party. He was one of Antonoff's original partners and served on Beebe Draw's first board of directors.

Subsequent appraisals of the water's worth have been much lower. In August 1986, in an independent appraisal, Spronk Water Engineers Inc. pegged the district's water rights at just over $3 million. If accurate, that would mean Antonoff had paid himself plenty for the district's water.

A month later--at Antonoff's request--Spronk redid its calculations. This time the engineers concluded the district's rights were worth $6.6 million. But that valuation was based on Antonoff's own exceedingly optimistic interpretation of the district's rights, Spronk's report noted; Spronk recommended that Antonoff have his attorneys closely review what, exactly, Beebe Draw owned. "Anyone relying on this appraisal should be aware that the value of these water rights [could] be reduced significantly" depending on the legal interpretation, the report concluded.

Carbondale, who is retired and has an unlisted number, could not be reached for comment. Brent Spronk died two years ago. His partner, Dale Book, says the question of how much Gary Antonoff's water is worth is complicated and will be settled in court someday.

The 1986 contract between Antonoff's district and his companies contained another lucrative provision, this one involving the purchase of water taps.

Tap fees are the cost of hooking a residence or business up to a municipal or special-district water system. The fees vary, but as the Front Range has grown, the price of water--and thus tap fees--has invariably soared. So for a developer, having a cheap source of ready water can be a tremendous advantage.

Which is exactly what Antonoff guaranteed himself when he--as president of Weld County Associates--signed the deal with himself to sell water to the Beebe Draw Water and Sanitation District. In that contract, the district effectively agreed to sell Antonoff's private development company as many water taps as it needed for the next quarter-century. Antonoff also agreed--with himself--that the price per tap would be $1,825.

Twelve years ago, Antonoff points out, $1,825 was the going price for water, and so he was not providing himself any special advantage. But today the cost of hooking up to water systems in the area surrounding Beebe Draw's service district is far higher than the price Antonoff's company still enjoys. Brighton, for instance, charges $8,400 for a new home to hook into its municipal water system. Lochbuie charges more than $6,000.

And at times the lines between private developer Antonoff and public servant Antonoff have been so fuzzy that there's some question as to whether one of his large Lochbuie projects paid for its water taps at all.

"When Gary was developing Lochwood Farms, he was supposed to be making tap fee payments to the district," recalls Gary West, Lochbuie's former manager. "I think there were 120 taps on about 160 acres. But we never saw any record that he paid for them." (Antonoff says Lochwood Farms did pay Beebe Draw to hook into the district's water system.)

Such financial vagaries were a constant source of concern for Lochbuie officials. "We didn't ever feel that we could get good, accurate books from Beebe Draw," West recalls. "There certainly was some blurring of the divisions. Beebe Draw and Weld County Associates were essentially one and the same. You'd have an agreement between Beebe Draw and Weld County Associates and Mr. Antonoff signing on behalf of both of them. That happened several times."

Robert Lembke, another developer who is now one of Antonoff's most vigorous legal opponents, recalls other occasions when the divisions between Antonoff-the-government-official and Antonoff-the-private-developer seemed to disappear. "In one instance," he says, "Gary stood up in open session and said, 'The town owes $16,000 to Beebe Draw, and my development company owes the town $13,000: Why don't we just make it a wash?'

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