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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.

Drive a short distance northeast of downtown Denver, and it's not difficult to see why the area has become one of the most active real-estate markets in the metro region. The hard industrial landscape of Commerce City quickly gives way to vast, empty fields. The still-white concrete expanse of I-76, completed in 1993, propels drivers quickly away from Denver. The city's skyline shimmers against the jagged profile of the Front Range. Planes from nearby DIA lift lazily into the sky.

"It's the last corridor of undeveloped land that's still within easy commuting distance to Denver. And the land is ideally located for DIA," Dan Law points out. "There are big, big stakes out there."

Finding itself at ground zero of all the sudden big-money activity is the tiny town of Lochbuie. Developed in the early 1960s as the Spacious Living Mobile Home Park--and later known as Space City--the town was incorporated in 1974. A quarter-century later, with its small lots, manufactured homes and rough roads that disappear into fields, Lochbuie still retains the feel of a place left behind.

Originally, the town's water was supplied by a succession of various developers through a corporation called the Lochbuie Water Company. In the early 1980s, yet another development company bought up a large tract of land, gaining control of the water in the process. The developer was Grand Homes, Inc. In May 1985, Grand Homes' owners, Gary Antonoff and his partner, Hale Davenport, formed the Beebe Draw Water and Sanitation District.

Although Antonoff would end up running the district like a closely held family business, Evan Goulding, executive director of the Special District Association of Colorado, says there's no question about how special districts should operate. "A lot of people make the mistake of referring to special districts as 'quasi-governmental,'" he says. "But they're not 'quasi-' anything: They are government agencies."

The districts are set up to provide a particular service to a very specific area, a service usually reflected in their names. There are water and sanitation districts, parks and recreation districts, fire protection districts, hospital districts--even cemetery and mosquito-control districts. In all, Colorado has 870 of them.

By forming a special district, residents of a particular area agree to pay for a service. Thus, says Goulding, "special districts have the considerable power to impose property taxes and float bonds."

The latter power has a particular appeal for developers. Goulding describes a typical scenario: An investor buys a chunk of ground and begins developing it. Because he must provide water and a water system for his future homes, he forms a special district, the formation of which must be approved by a district court judge. Under state law, a special district is required to have a board of directors with at least five members, so initially the developer names friends or colleagues to the board. Now officially a legal government entity, the district can vote to sell bonds to finance the new water system--which, for the developer, is the whole point: It's cheaper and less trouble than borrowing the money from a bank.

The district's board doesn't stay private, though. Land ownership is a requirement for board membership. As residents begin to move into the development, they acquire voting rights and gain representation on the district board. In that way, homeowners soon control their own destiny, deciding, say, whether to upgrade their water system or what water rates should be. "They are allowed to collect money and develop resources, but it must be for a public purpose," concludes Goulding.

The Beebe Draw Water and Sanitation District took a sharp detour from that standard path.

Antonoff set up his district on 9.04 acres of vacant Grand Homes property that included Beebe Draw, from which water was pumped. In order to gather the district's five boardmembers, over the years he gave a small interest in the parcel to a handful of friends, relatives and business associates so they would be qualified to serve. Beebe Draw's current board includes Antonoff, his wife, his son and two employees.

Then Antonoff added another level of insurance to his control of the ostensibly public district. According to various court filings in Adams County, whenever he handed over a portion of the nine acres to a new boardmember, Antonoff had the director sign a quit-claim deed back to him. Antonoff kept the document on file--like a pre-signed letter of resignation--so that the boardmember could lose his property rights at any time the developer desired and thus be disqualified from board membership.

Even more unusual than the district's setup, though, was what the Beebe Draw Water and Sanitation District did with the money that flowed into it--starting with how the district got its water in the first place.

On February 12, 1986, Grand Homes and Weld County Associates, another Antonoff development company, sold various water rights to Beebe Draw for $3.43 million. As president of the development companies and as head of the new district, Antonoff signed the deal for both sides, selling the water to himself.

(Adding to the confusion was where the money for that deal came from and where it went. Antonoff borrowed $3.5 million from Colorado National Bank, on whose board of directors he was then serving. He used the money to pay off development debts and buy the water rights from himself. Seven years later, after leaving CNB's board, Antonoff defaulted on the loan; he settled with the bank for a mere $500,000. "There wasn't any clandestine activity going on," says Antonoff. "There was no insider trading on this transaction.")

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?'

"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.

"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."

Although Lembke says, "I had a number of people wondering about my sanity," he figured the failed development, which was being unloaded by the Federal Deposit Insurance Corporation, had potential. "DIA was under way--it was going to happen," he explains. "I-76 was being built, and Bromley Park had three interchanges along it. And I thought that if you had a piece of property on an interstate, across the road from Barr Lake, fifteen minutes from DIA--well, it seemed like it might work."

Also figuring prominently in his calculations was the fire-sale price on the property: Lembke paid less than $3 million for the failed development. Lembke and his new partners (much to the annoyance of some Brighton-area officials, they have included former members of the Brighton Company, including Deutsch and Heimlich) now control 2,600 acres of prime, ready-for-development real estate--a tract of land three times the size of the Denver Tech Center. When he is done, Lembke says, the development will boast 12,000 business, industrial and residential units.

Not long ago, Lembke says, he and his partners sat down to calculate the worth of Bromley Park. Lembke declines to release the number they came up with. "It's so big that it's scary," he admits.

Yet that number won't be reached unless and until Lembke solves his project's water woes. In a long and complex series of legal disputes scheduled to culminate in a trial in Adams County later this year, Lembke, Antonoff and the city of Brighton have been squabbling over who will provide water to the massive development.

Antonoff maintains that the contracts he holds (a 1990 contract between Beebe Draw, Bromley Park and Brighton also gives the district standing to sell water to Bromley Park) are still valid and that he should be the one pumping water to the massive development. Lembke, who has another contract to buy water from the city of Brighton, wants no part of Antonoff's district.

For starters, Lembke says, Beebe Draw, which lacks both a treatment plant and sufficient storage capacity, doesn't have the ability to serve such a huge development. Antonoff disagrees: "I am ready, willing and able to deliver them water," he says, although he acknowledges that he will first have to build a new treatment plant.

More important, though, is that Gary Antonoff is not someone Lembke wants associated with Bromley Park. "When you provide homes and businesses for people, you want to make sure they get served," Lembke explains. "And there's a certain public-service attitude that's needed for the good of the community. I wouldn't have minded writing Gary checks for water. But the only way to judge future actions is by past performance."

Which, in the case of Antonoff's dealings with Lochbuie, was a clear example of elevating private gain over the public good, Lembke says. "There was a certain mindset Gary had--it's my right pocket or my left pocket, so what's the difference?" he notes. "Well, the government is not supposed to be a pocket. It's not even supposed to be the same pair of pants."

Yet, as was the case with Lochbuie, Antonoff is pursuing Bromley Park relentlessly. The reason is plain: Should Beebe Draw win, Lembke estimates that Antonoff stands to earn as much as $20 million from the deal--the difference between the cost of pumping his water out of the ground and its sale price to Bromley Park's 12,000 new businesses and residents.

Antonoff could also profit off of Bromley Park by agreeing to sell his water rights to Lembke in exchange for dropping out of the Bromley Park water lottery. Although there remains great dispute over the value of Beebe Draw's water--both Cruz and Law say a major reason their agencies agreed to lend money so that Lochbuie could build its own system was that, in their opinion, Antonoff's water wasn't worth much--Antonoff continues to believe his wells are gold-plated.

"We have a wonderful supply of water," Antonoff asserts. "And if it was worth $10 million in 1985, what do you figure it's worth now?" By Antonoff's estimates, the answer is about $26 million.

In 1996 the dispute over Bromley Park's water supply spilled over into the state legislature, where an innocuous-sounding clause found its way into HB 96-1023. On the surface, the bill addressed regional transportation. But the buried provision, written largely by Lembke, required that if one special district wanted to provide service inside another district, it had to first get the permission of the second district's residents. While written in convoluted legalese, the measure was clearly aimed at allowing Bromley Park to separate itself from Antonoff--a fact not lost on the governor.

"A complex provision was added to a non-controversial bill, without full and open debate," Roy Romer wrote in a scolding letter to members of the House that April. "Some have argued that this bill was drafted to give one side the advantage in an ongoing legal dispute between specific parties. I do not believe that this legislation, or any other legislation, should be passed to give either side an advantage in existing legal proceedings."

Although Romer refused to sign the bill, it passed into law without his signature.

Both Antonoff and Lembke continue to spend an enormous amount of time, energy and money figuring out how to defeat each other once and for all. (Each man now employs a public-relations firm to spin his side of the dispute.) But lately, Lembke seems to have gained the upper hand.

Four months ago, at a meeting at the Pepperpod Restaurant in Hudson, Lembke sat down with about two dozen business associates and still-furious residents of Lochbuie and hatched a plan to swipe Beebe Draw from under Antonoff's control. Then he put the plan into action.

First, and unbeknownst to Antonoff, Lembke purchased the mineral rights to the land underneath Beebe Draw. Next, he sold a small interest in the rights to thirteen associates. Because that group now owns an interest in the land, its members are entitled to vote in the Beebe Draw Water and Sanitation District. On May 11, Lembke's forces filed petitions to boot Antonoff off Beebe Draw's board of directors.

Antonoff fought back hard, taking the recall case all the way to the Colorado Supreme Court. But last month the state's highest court refused to hear his arguments. And so on August 25, the new voting members of Beebe Draw will try to oust Antonoff and his son from the Beebe Draw board.

If they succeed, Lembke says, he intends to dismantle Gary Antonoff's personal government. "I would like for Beebe Draw to pay its debts, wrap up its affairs and go out of business," he says. "Government isn't supposed to run this way--having a private business interest in its operations."

Having exhausted his legal remedies, Antonoff seems reconciled to the recall election. But he isn't happy with Lembke's tactics. "I believe that this is simply a matter of right and wrong," he explains. "What he's doing may be legal. But it's wrong."

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