Council votes to sell village water rights
The Los Lunas Village Council approved the sale of 256.31 acre-feet of pre-1907 water rights, even though some residents were against the sale.
Although the village owns the water rights, it didn't purchase them. They were transferred to village wells when Curb South, LLC began developing the Huning Ranch subdivisions.
The village requires developers to purchase water rights to accommodate any subdivision or building enterprise before they submit a plat plan. In return, the village supplies them with paper water credits.
Stan Strickman, of Curb South, said his company began purchasing water rights in 2005 when they started the subdivision. They purchased more water rights than needed because the process to acquire them is timely.
When the economy tanked, Curb South was left holding a bag of costly loans for water rights.
Technically, the village can keep those water rights, but when Curb South is ready to use them, the village would have to provide them, said village attorney Larry Guggino.
If the village were to lease any of them out, and Curb South was ready to use them, the village might have to buy water rights to replace them.
In a 3-to-1 vote, with Councilor Gerard Saiz casting the only "no" vote, the council passed the ordinance that allows the sale of water rights it owns.
"The purpose being to extinguish water credits, but also to provide for potential development with the Huning Ranch area," said Guggino.
The sale still has to be approved by the State Engineer's Office, and it cannot violate the village's permit with the office, which requires the village maintain 2,560 acre-feet of diversion rights to meet projected water demand through 2017.
The sale also must not cause the village to violate any other surplus water leasing agreement it has.
The village currently has almost 2,700-acre-feet of pre-1907 water rights, not including the 256.31 from Curb South. It also has 400-acre-feet of San Juan Chama diversion water, Guggino said.
"So, the village actually has 3,182 (acre feet)," he said.
For Curb South to convert water credits to cash, the village has to approve selling them, sell them, then transfer the money to the developer.
Vidler Water Company, a water investment firm out of Nevada, is prepared to buy the water rights, which can only be used for development within Rio Grande Basin — anywhere from Santa Fe to Elephant Butte, said Strickman.
He hopes the sale will be completed within a few months. He said he's eager to repay the loans and get out from under the interest payments.
The sale could net the village more than $500,000 through a 10 percent fee on the total sale, plus $740 per acre-foot sold.
Vidler agreed to pay $13,750 per acre-foot, $350 more than the appraised value. The appraised value of a water credit is currently $13,010.
But Los Lunas residents Evelyn Archuleta, Gene Sais and Victor "Bud" Williams echoed concerns about water shortages across the state and the village's future water needs.
"I'm still against giving up pre-1907 water rights from the village, because they are going to come in handy sooner or later," Williams said.
Last year, the council directed staff to start the process to sell the water rights and purchase Curb South's water credits.
"What (Strickman) is saying is, 'I want to get rid of these credits because I'm not building anything now, I want my money back,' and that's what we're doing," said Councilor Charles Griego.
In addition to the water for current and near future needs, the village also has more than 1,000-acre-feet of surplus water leased to the Interstate Stream Commission.
If the village has other developments that affect its water draw downs, such as large-scale residential, commercial or industrial development, the village has legal options to withdraw up to 500-acre-feet from the lease agreement, said Guggino.
The lease expires in 2022, and there are other water leases that expire in 2018.
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