Homeland- Spring 2017: Water is King: What water and water rights can mean for real estate
February 24, 2017
Water is the world's number one commodity—it's highly sought-after, but often overlooked. The success or failure of many enterprises relies upon the availability of water. That is why understanding and knowing everything possible about the water situation on a piece of property prior to purchasing or developing is crucial.
The ranchers and farmers of eastern Colorado have become experts on the matter. Geoffrey Mills, a fourth generation rancher with Mills Cattle LLC said his family's ranch in Vona is a part of the Republican River Water Conservation District that sits in the Republican River Basin. The Basin covers most the eastern side of Colorado before it stretches into Nebraska and Kansas.
"The conservation district is an agreement between Colorado, Nebraska, and Kansas to provide irrigation water for all producers in the region, while protecting the aquifer," Mills said. "The program is completely voluntary, but we felt an obligation to conserve water and joined in."
According to http://www.republicanriver.com, "The District promotes conservation through voluntary participation. By utilizing federal programs, the District has brought in millions of federal dollars to offer financial incentives to producers who voluntarily retire water rights to reduce consumptive use to the stream flows. These water retirements reinforce the District's efforts to conserve the Ogallala Aquifer for future generations.
"Current focus toward compact compliance is through a $60,000,000 locally funded pipeline project. The water source for the pipeline comes from existing irrigation wells with pumping limited to historic use."
Mills believes in the importance of conservation, but it created some problems for the ranch. "The problem for us was that the pipeline pumps water from pre-existing wells. In the end, our conservation efforts overtook our bottom line and we lost several irrigation and stock wells. Bigger problem was that several of our other wells got too shallow to function and we had to discontinue use.
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"The conservation district serves a good purpose in providing ample irrigation water for people further down the river in the basin and those producers benefit greatly, just didn't work for us to lose that much water," Mills said.
Eventually the Mills family decided the increasing shortage of water was too much to overcome and they started looking for a different situation. "Prior to irrigation problems and dry wells, we never thought too much about our water situation," Mills said. "But when looking for a different ranch, it was on the forefront of our priorities. I would encourage producers to do their due diligence in researching the water rights associated with a piece of property or a farm prior to acquiring it. I know it certainly was not fun without having enough water."
Zach Coryell and his family farm in Burlington and have a wide range of experience with different water programs. Coryell says, "In the future, I think we will see more restrictions and regulations with our irrigation practices and there may be some opportunities to close some wells through the conservation program to conserve the aquafer. For now, though, I think the farmers and ranchers in our community do an excellent job handling how the water is managed."
Zach and his family take a very interactive approach to water management when they are looking to acquire a new piece of land. "Most of the farm ground we have purchased in recent years we had been farming for a while. This is our preferred method of buying land because we feel this gives us an inside advantage on the water situation for a parcel of ground. We know if the ground water is good and if the well will hold up." Unfortunately, however, it is not always that easy.
Coryell says, "In a situation where we are naïve to acreage available for purchase, we think it is good practice to have a well driller do a pump test and get an idea on the amount of water present."
County extension offices are a great place to start looking when researching for water data in an area. The Coryell family thinks the best insight on all things water comes from local producers. "We won't get really excited about buying new real estate if we haven't talked to guys who know the area best. Their input can be really valuable."
The input of a knowledgeable realtor can also be very beneficial. Tammi Schneider is a real estate agent for REMAX in Elbert County, Colorado and has been selling real estate in eastern Colorado for the last 20 years. Schneider says the most common question she deals with is whether the purchaser gets the water rights along with the property. "That question often results in a complex answer and I feel sometimes people get a little too caught up in worrying about the value of water on a piece of property. This is especially true with people who are selling or very serious about buying. I ask people what water rights they think they should have, and usually they don't have a concrete response. They just know they want to make sure they will always have water."
It is tough to know for sure how much water and for what period a person will need water in any given area. "Creek bottoms and running water are things that are easy to understand a desire for, especially if there are livestock involved. Domestic wells, which are more common in my line of work, are trickier to deal with because there are no concrete regulations with how those are to be managed," Schneider said.
"Any time I deal with a new property, I always start with the Department of Colorado Water Resource website. This website has a wealth of information about local water regulations, rules, and management practices. I try to learn what I can about the property to best help both the buyer and the seller," Schneider says, "But at some point, both parties and especially the buyer, need to research extensively any water related topics on the piece of real estate that they feel would affect them."
Learning as much as possible about the water conservation and use for any section of land is crucial. "I think on bigger allotments the best route is to hire a water attorney and make sure everything is handled appropriately," Schneider said. "There are so many different guidelines it can become overwhelming. A simple thing like transferring well permits in the allowed 60-day timeframe is easily overlooked."
There are plenty of challenges surrounding water that are associated with leasing land as well. Matt Brown of the MJB Ranch near Grass Lodge, Montana, deals with this daily. "Many of our summer range pastures are on lease ground through absentee owners. We must work very closely with the broker and the owner to develop water conservation strategies that benefit all parties," Brown says. "We want to provide constant and clean water for our cattle without disrupting the wishes of any land owners. Thus, we spend time building and creating natural watering holes that satisfy all parties involved." This outside-th-box approach is a key factor in a positive, long-term lease agreement. "Whether you're buying, selling, or leasing land for crop and livestock production there is always a way to ensure proper water management if you are just willing to put in the proper time and effort," Brown says.
Water regulations are most likely only going to tighten as years go by, so understanding all the facts before purchasing any real estate is crucial. Ask around, research, and spend appropriate time so there are no surprises when the water hydrant is turned on at the new place.