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Turning Water Into Whine

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

"The town has determined that it will not do business with people or entities which are a continuous source of burdensome litigation," read one.

"The town...no longer wishes to do business with a water district which uses the threat of water rate increases as a means to compel concessions from the town...for the benefit of an affiliate," says another, referring to Antonoff's Highplains project.

Finally, Fisher pointed out, "It is not in the best interests of the town to enter into a long-term water agreement with a district whose affiliated developer is the major owner of undeveloped land within the town boundaries. It is impossible to draft a water agreement which attempts to administer all of these conflicts of interest."

Yet shaking Antonoff was to prove difficult. That summer, Lochbuie applied for a series of grants and loans to develop its own water system from the Colorado Water Resources and Power Development Authority and from Rural Development, a division of the U.S. Department of Agriculture. But Antonoff vigorously argued that Lochbuie should not get the loans; he contended that Beebe Draw and Lochbuie still had a deal.

"He wanted the town to take out a loan to pay him so he could upgrade the water system," recalls Law, executive director of Colorado Water Resources and Power Development Authority. "But his cost was going to be two or three times what theirs was." In late August 1996, the authority sided with Lochbuie, providing the town with more than $800,000 in loans and grants.

Even then, Antonoff didn't give up. In September 1996, he filed a demand for a temporary restraining order in Weld County District Court, claiming that if Lochbuie were to begin building its own water system, Beebe Draw "may suffer real, immediate and irreparable injury." The motion was denied.

In January 1997, in a last-ditch attempt to prevent Lochbuie from receiving the $2 million it was seeking from the Department of Agriculture, Antonoff wrote to Representative David Skaggs, whose second congressional district includes Lochbuie. The two were acquainted: Antonoff had steadily escalated his campaign contributions to Skaggs, having given $250 in 1989-90, $500 in 1993-94, and $1,000 in 1995-96, according to Federal Election Commission records.

Antonoff now complained to Skaggs that another water system in the area was "wasteful, unnecessary, redundant and inefficient." He also argued that Lochbuie could ill afford the debt--although the town's legal fights against Antonoff already cost Lochbuie plenty.

Skaggs wrote USDA director Ruth Rodriguez, asking her to look into the matter. Later, according to LeRoy Cruz, director of Community and Business Programs for Rural Development, Rodriguez, Antonoff and a representative from Skaggs's office sat down and went over the town's loan application. Despite Antonoff's request for intervention, however, his concerns were brushed aside and the town won the USDA loan.

In October 1996, Lochbuie cut the water service line from Beebe Draw and hooked into its own, brand-new system. The following month, Beebe Draw, which still had not cleaned up the nitrate problem, was notified by the state health department that it could no longer be a source of public drinking water. Seven months later, on May 6, 1997, Lochbuie passed an official resolution severing any and all ties with Gary Antonoff's private government.

West, the former town manager, says Lochbuie will be paying for its battles with Antonoff for years to come. "Lochbuie has spent an awful lot of time and money over the years--time and money they really couldn't afford to spend," he says. "I think the whole town has suffered; the town government has lived hand-to-mouth to try to afford to do what they had to do."

Rural Development's Cruz agrees. "Mr. Antonoff tried every angle," he says. "By far, this has been the most expensive project we've ever been involved in, largely because of the many lawsuits brought by Mr. Antonoff."

And it's not over yet. Antonoff and Lochbuie are still wrestling in court over who will have the right to sell water to Antonoff's massive Highplains project: Beebe Draw or Lochbuie's new water system.

The origins of Antonoff's next potential payday are buried in the heyday of the savings and loan scandals that rocked Colorado and the rest of the country.

In 1984 a handful of Denver-area developers, led by a high-roller named Bill Walters, proposed a massive development on the edge of Brighton called Bromley Park, which would have tripled the size of that town. The bulk of the venture, which also involved such big-name developers as Burt Heimlich and Harvey Deutsch, was financed by a $26 million loan from Silverado Savings and Loan.

Hopes were high that the massive development would revive the economically sagging region, and Brighton annexed Bromley Park in 1985. As a condition of getting the project past local planners, the developers, who called themselves the Brighton Company, had to prove that their project had enough water. The Brighton Company did so by signing a deal to buy water from a nearby company called Grand Homes, Inc., owned by Gary Antonoff.

In 1988, Silverado collapsed and was taken over by the federal government. The Brighton Company dissolved. Bromley Park was dead--almost.

In 1993, Robert Lembke, a real-estate attorney and former Greenwood Village city councilman, found himself flush. He and some partners had invested in a number of mini-storage-unit facilities, and a New York businessman bought the lot of them for $14 million. "So I was blessed with a little cash to invest," Lembke recalls. "And the Bromley Park parcel came up."

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