Turning Water Into Whine

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

"If I wasn't there," Lembke adds, "I wouldn't have believed it."
Antonoff says the close relationship between his various enterprises was natural and necessary. "The only developer in the town of Lochbuie, then and today, is Weld County Associates," he points out. "Beebe Draw was being asked to build infrastructure and provide water, and the district needed to make sure that it would have customers."

He has been diligent in keeping his business finances independent of the district's, Antonoff adds. "We are very, very careful to be sure that all expenses from the various entities are put in the right place," he says. "Nothing we did has been contrary to public policy."

Not until 1991, that is.

When Antonoff formed the Beebe Draw Water and Sanitation District, it claimed a service area of 6,000 acres straddling the border of Adams and Weld counties. Yet in its thirteen-year history, Beebe Draw has had only one customer for its water: the town of Lochbuie.

In the beginning, relations between Lochbuie and Antonoff were cordial, if guarded. After all, Antonoff was the largest landholder in the area; for better or for worse, the town's future depended on him. And despite Antonoff's closely held control of the water district, it had charged Lochbuie's residents water rates within the range of those being assessed its neighbors.

But beginning in late 1990, water-quality tests conducted on Beebe Draw's primary well indicated a rising level of nitrates in the water. By December of that year, the nitrates, a chemical associated with fecal contamination, exceeded state standards.

In July 1992, the state health department notified Antonoff's district that Beebe Draw was in violation of Colorado's drinking-water standards. Lochbuie began issuing coupons to residents, redeemable for two gallons of bottled water at the Brighton Wal-Mart. Pregnant and nursing women were urged not to drink the water from their taps or give it to infants.

Antonoff's response was to raise the town's water rates 500 percent the following month.

Explanations for why Antonoff chose that particular time to ratchet up water rates vary widely. Antonoff maintains the price hike was Lochbuie's own fault: The town owed Beebe Draw money from unpaid water bills dating back to 1987, he says, and the higher rate was to cover the spread.

Yet town officials figured that once Beebe Draw's drinking water supply became unhealthy, they shouldn't have had to pay for it. And as negotiations over what to do about the town's water continued, they began to suspect a more Machiavellian reason for Antonoff's sudden rate hike.

In September 1992, Lochbuie sued both Beebe Draw and Antonoff personally. Citing the rate increase, the lawsuit claimed that the lines between Antonoff's public and private enterprises had once again blurred. "The District has made this change in order to apply pressure to the Town to forgive obligations of other entities controlled by Mr. Antonoff," the town charged.

In other words, says Lembke, "Water rates had become a bargaining chip." Indeed, the minutes of the Beebe Draw Water and Sanitation District's August 5, 1992, meeting hint at such an arrangement: "Mr. Antonoff indicated that the District would be willing to negotiate the [increased water] rate if the town would be willing to discuss and resolve the various issues."

Of particular concern, recalls West, was that Antonoff seemed to want to trade more reasonable water rates for Lochbuie's approval of the developer's latest development project--a proposed 850-unit division called Highplains that the town had criticized.

(Within a few years, this quid pro quo had become explicit. In a June 7, 1996, letter to Lochbuie's mayor from Beebe Draw, titled "Outline for Negotiation of Agreement for Water Service by Beebe Draw Water and Sanitation District to the Town of Lochbuie," Antonoff concluded that "the proposal contained in this letter is subject to the approval by the town of the preliminary plat for Highplains subdivision.")

The dueling disputes--did Lochbuie really owe Beebe Draw money? Who was legally obli-gated to clean up Beebe Draw's water?--dragged on as legal fees mounted, infuriating many townspeople.

Vicki Smith's home is in Antonoff's Lochwood Farms development. "We didn't find out for six or seven months after we bought it that the water was non-potable," she says. "To me, it's unfathomable that anybody would continuously provide water that's harmful to others and then oppose efforts to fix that. Morally, it's just unfathomable to me."

In late 1994, the state health department noted that Beebe Draw nitrate levels still exceeded state standards. That October the agency issued an enforcement order, demanding that the water be cleaned up. Two months later, Lochbuie, Beebe Draw and Antonoff agreed to settle their various legal actions. (Antonoff had countersued Lochbuie earlier in the year.)

As part of the deal, Lochbuie agreed to hand over 250 sewer taps within the town and freeze the price of future taps for Antonoff's development company. Antonoff says the free and discounted taps, worth an estimated $550,000, cleared up the debt the town owed the district. In exchange for the taps, Beebe Draw released Lochbuie from its contract to buy water from the district as long as the nitrate problem persisted.

But town officials still chafed at their ties to Antonoff, and in early 1996 Lochbuie decided it would rather drill its own wells and build its own treatment system than deal with Beebe Draw anymore. In a scathing July 1996 letter to Antonoff and Beebe Draw, Lochbuie mayor Jerry Fisher listed a half-dozen reasons why the town wanted nothing to do with either.

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