By Brent Gardner-Smith, Aspen Journalism
Thursday, May 17, 2012

The listing of the Crystal River by American Rivers as one of the top-10 most endangered rivers in America this year is designed to influence the boards of two regional water districts: the Colorado River District and the West Divide Water Conservancy District.

“It is purely to influence the districts,” said Matt Rice, the director of conservation in Colorado for American Rivers. “Our interest is having them play a leadership role in the protection of this river and protection means no new dams. And success would be that the districts abandon all conditional water rights on the Crystal and the river continues to flow free and be without a dam.”

But Chris Treece, the external affairs director for the Colorado River District, said his organization and the West Divide District already have the river’s best interests at heart.

“The Crystal River goes dry just about every year and certainly will this year, in this drought year,” Treece said. “Having a little bit of storage where we pick up spring snowmelt and hang on to it for later-season release, principally for the health of the river, could be a huge benefit to the Crystal River. And I wish American Rivers recognized that.”

The lower Crystal often flows at barely a trickle in late August and into September, in large part because of significant irrigation diversions in the middle reach of the river.

But American Rivers says high spring flows are important for river health and that a dam at Placita would flood an expansive wetland that provides valuable habitat for wildlife.

The Crystal River at Placita, looking upstream. Photo: Brent Gardner-Smith

The large diversion structure on the Crystal River between Redstone and Carbondale that takes water from the river and delivers it to the Crystal River Ranch. Photo: Brent Gardner-Smith

The two water districts have asked a judge in regional water court to keep conditional water rights on the books that would someday allow them to build a dam and a 4,000-acre-foot reservoir on the Crystal between Redstone and Marble, and a dam and a 5,000-acre-foot reservoir on Yank Creek, a tributary of Thompson Creek which flows into the Crystal above Carbondale. (One acre-foot contains 325,851 gallons of water.)

Treece said he did not speak with anyone at American Rivers before it made its announcement on Tuesday about the Crystal River being placed on the most-endangered list.

He called American Rivers a “public relations machine” and downplayed the effect the listing would likely have on the Colorado River District, which levies taxes in 15 counties on Colorado’s Western Slope, including Pitkin County.

“I’d disappoint them if I didn’t tell them the listing was a headache, but it doesn’t change our mission, which is to provide water for the future benefit of the district,” Treece said.

Rice said American Rivers does not contact organizations it is attempting to influence prior to the unveiling of its annual list because they often send out press releases trying to pre-empt the announcement.

“Our intention is not to paint the Colorado River District in a bad light,” Rice said. “They’ve already abandoned a significant portion of these conditional water rights, and we commend them for that. Our interest is having them play a leadership role in the protection of this river and they are in a position to make a very popular decision and abandon these water rights.”

Matt Rice, director of conservation in Colorado for American Rivers, being interviewed by Danielle Kreutter of KREX-TV in Grand Junction after a May 14 press conference on the banks of the Crystal River. Photo: Brent Gardner-Smith

Calling the potential reservoir on the Crystal River a “pond,” Treece downplayed the size of the 4,000-acre-foot reservoir that the districts want to retain the right to build at Placita, an old mining site just below the turn to Marble off of Highway 133 below McClure Pass.

The reservoir would be about four times as big as Grizzly Reservoir on Lincoln Creek outside of Aspen, which can hold 987 acre-feet of water at peak level.

Looking at it another way, it would be about one-quarter the size of Paonia Reservoir on the other side of McClure Pass, which holds 15,459 acre-feet of water.

A full Grizzly Reservoir on June 25, 2011. Photo: Brent Gardner-Smith

The potential Placita and Yank Creek reservoirs are part of the West Divide Project that dates back to the late 1950s. It was designed to take water from the Crystal River watershed and transport it in a series of long canals to the relatively dry mesas south of Silt and Rifle for irrigation, municipal, hydro and energy uses.

The water districts have asked the court to take the Osgood Reservoir, which would have put Redstone under a reservoir bigger than Ruedi Reservoir, off the books.

They’ve also asked the court to reduce the size of the potential Placita Reservoir from 62,009 acre-feet to 4,000 acre-feet and the potential Yank Creek Reservoir from 13,695 acre-feet to 5,000 acre-feet.

Other features of the filing include the right to divert 250 cubic feet per second (cfs) out of Avalanche Creek, a tributary of the Crystal, and the right to use 150 cfs of water from the Placita Reservoir for hydropower, which is three times the amount of water proposed to be used by the city of Aspen for a new hydro plant.

In the West Divide area itself, the districts also have filed to retain a variety of conditional water rights, including 45,000 acre-feet of storage in the Dry Hollow Reservoir; 15,450 acre-feet in the Kendig Reservoir, along with an enlargement right of 2,610 acre-feet; and 6,500 acre-feet in the West Mamm Creek Reservoir.

None of those reservoirs would receive water from the Crystal River as they would have under the original West Divide Project design.

Those reservoirs and related canals are likely one reason why Garfield County is supporting the two water districts in court.

But it is the two potential dams in the Crystal River watershed that have prompted American Rivers, Pitkin County, the Crystal River Caucus, the Crystal Valley Environmental Protection Association and Trout Unlimited to oppose the districts.

A trial in water court has been set for August 2013 over the diligence filings. In the meantime, the battle over the Crystal River will likely be waged in the court of public opinion.

The narrows just below Placita where a dam big enough to store 62,009 acre-feet of water was once planned by the Colorado River District and the West Divide Water Conservancy District. Photo: Brent Gardner-Smith

Editor’s note: This story was also published on May 17, 2012, in collaboration with the Aspen Daily News.

by Brent Gardner-Smith, Aspen Journalism
Wednesday, May 16, 2012

SNOWMASS VILLAGE — When Related Cos. announced May 1 that it had reached an agreement to buy its Base Village back from four European banks and settle ongoing litigation with those banks, executives at the private real estate company characteristically left many questions unanswered.

But after talking with a number of sources close to the deal, a few blanks can be filled in.

Is Related alone in the deal to acquire Base Village?

Yes, and no.

There are no other development partners besides Related, but there is a new financial lender involved that has not been disclosed, according to Snowmass Village Town Manager Russ Forrest.

Forrest was briefed on the deal earlier this month along with Snowmass Village Mayor Bill Boineau by representatives from Related, the banking consortium and Lowe Enterprises, which has been managing the asset for the lenders during and after foreclosure.

Pat Smith has no role in the new deal for Base Village, according to Forrest.

Smith, a developer from California, brought Related to Snowmass Village. He served as the first local point person for Related WestPac, the joint venture entity formed by Smith and Related Cos. to buy and develop Base Village and redevelop a long list of other property in Snowmass as part of a $2 billion project. Smith did not respond to requests for comment.

Aspen Skiing Co. is not in the deal either.

“We are not a financial partner with Related in any way on the Base Village project,” said Skico spokesman Jeff Hanle.

Skico and Intrawest sold the nascent Base Village project to Related WestPac in 2007 for $169 million.

Skico still owns commercial property in the completed section of Base Village, including the Treehouse children’s center and its ticket offices. It leases the Sneaky’s Tavern space.

A Little Nell Snowmass hotel, once planned to be operated by Skico, remains partially built in the stalled center of the project. It’s now unclear if the hotel will open with the Little Nell brand, which is owned by Skico.

“There is no current deal for this building,” Hanle said via email. “The Related Companies, in whatever new form of ownership they devise, will have to determine the prospective uses and operations in that building going forward, perhaps in the course of revising the entitlements and development phasing with TOSV.”

Skico still owns the Fanny Hill townhomes site just above Base Village. It has recently asked the town to continue its pending land-use application for the project until April 2013.

And, of course, Skico also operates the Snowmass Ski Area, where Base Village is located. The company has much to gain or lose depending on Base Village’s success or failure.

“We have been and will continue to be in discussions with all parties with regards to Base Village,” Hanle said. “We have a good working relationship with Dwayne Romero (president of Related Colorado) and Related and will continue to support this project however we can.”

Are the four European banks willing to say anything more about the purchase? Is Related?

No.

Andreas Henry, the spokesman for FMS Wertmanagement, an entity controlled by the German government and charged with selling Base Village on behalf of the failed Hypo Real Estate bank, confirmed that an agreement had in fact been reached with Related and that all four European banks had signed off on it.

“I can confirm that there is an agreement to sell Base Village to Related and that this settlement also involves litigation,” Henry said in an email from Munich. “But further than this I cannot give you any information, at least as long [as] the whole transaction has not been closed.”

When he met with reporters after the announcement, Related Colorado President Dwayne Romero said he could not comment beyond the four corners of the press release per directions from the lenders and Related executives in New York.

Related has not posted its press release about the acquisition of Base Village on its corporate website, and Joanna Rose, spokeswoman for Related, said the company has not talked with any media outlets outside of the Aspen area about the new deal to acquire Base Village. She also said that the company would say nothing more until the deal closed.

When is the deal expected to close?

Somewhere between four and seven months from now. Snowmass Village Mayor Bill Boineau said at a Town Council meeting two weeks ago that he was told it would take four months.

Forrest, the town manager, said during the same meeting the time frame was more likely sometime before the end of the year, which is just under seven months away.

While the contract price was not disclosed, is there a way to estimate what Related agreed to pay to buy back Base Village?

Not with much precision. Ascertaining the value of the project for Related and the banks was something only they could do, given their now long and contentious financial relationship. However, there are some public numbers worthy of consideration.

The Pitkin County assessor determined that as of mid-2010, the value of the property in Base Village now owned by the banks’ foreclosing entity, Snowmass BV HoldCo LLC, was $190 million.

But HoldCo, as it is known, appealed the county’s valuation on behalf of the banks, arguing that the property it owned in Base Village was only worth $96 million. Much of the difference of opinion revolves around whether the condos in the Viceroy hotel are valued as condos or hotel rooms.

The $96 million figure, however, might have been put forward by the banks for tax purposes, and might not have been the banks’ desired selling price.

Related originally took out a $520 million acquisition and construction loan from Hypo Real Estate Capital Corp. and other banks in 2007, which was enough to build most, but not all, of the project.

In early 2009, Related defaulted on its loan package and was sued by Hypo Real Estate Capital on behalf of the lending consortium.

By 2011, the banks said Related owed them $399 million in principal, $90 million in interest, $3 million in attorney’s fees, $2.7 million to pay for the receivership during foreclosure and other expenses. In all, the banks were seeking $507 million from Related.

In a foreclosure sale in November 2011, the banks put forward a credit bid of $138 million to take possession of the asset.

Related had earlier countersued the banks for failing to keep lending it money to build the project. The company told the court it had lost $213 million in investment funds in Base Village, as well as the chance to make $193 million in profits on the sale of $1.3 billion worth of real estate.

Once the deal closes, the transaction price will be disclosed, but it is not clear if the transaction price will be a clear indicator of the true market value of the project, as it might have had a new developer step in to buy the project.

The amount paid, however, will be subject to the real estate transfer tax in Snowmass Village, and is therefore of great interest to town officials.

What is the status of the property valuation appeal?

Michael Tande, a vice president at Lowe Enterprises, which has been managing Base Village and HoldCo for the lenders, said the valuation appeal is still ongoing and that he expected a hearing to be scheduled soon.

Tande could not comment on whether the appeal will continue, if still unresolved, past the closing. So it is not yet clear if the contested tax bill will be left to the banks or will become the responsibility of Related’s entity formed to purchase Base Village, Snowmass Acquisition Co. LLC.

The Elk Camp gondola is at the heart of the stalled Base Village project. The condos above the gondola are outside of the project’s boundaries. Photo: Brent Gardner-Smith

Does the deal include all of Base Village?

Yes, it includes everything within the Base Village planned unit development that was approved by Snowmass Village in 2004. It does not include the planned Fanny Hill townhomes, which are in a different planned unit development owned by Skico.

Today, Base Village includes seven completed buildings, three buildings where construction had been started and then suspended, two buildings that are designed and ready for building permits, and eight other buildings in the early stages of design.

The completed buildings include the Capitol Peak and Hayden lodges, which include the Treehouse children’s center. Other completed buildings include the building that now houses the Base Camp restaurant, the former Sweet Life building, Skico’s ticket-office building, and the first of two buildings planned at the Viceroy hotel.

The partially completed buildings include the arrival/transit center and the buildings that are to make up the Little Nell Snowmass hotel and condo complex.

A summary of the project developed for Lowe Enterprises states there is 1 million square feet of development planned in Base Village, with 844,000 square feet of residential space (including shared areas), 25,000 square feet of commercial services space, 68,000 square feet of retail and restaurant space, 45,000 square feet of ski-related facilities, and 52,000 square feet of community facilities.

In all, there were 611 residential units planned for the project.

Has the ongoing litigation in New York State Supreme Court between Related and Hypo Real Estate Capital Corp. been resolved?

Yes, and no.

The press release from Related states that the agreement “resolves all outstanding litigation between the parties.” While that appears to be the case, nothing has been officially filed with the New York State Supreme Court notifying it of a pending settlement.

There are five lawsuits between Hypo and various Related entities that have been rolled into one controlling suit. In that suit, all documents were to be provided by both sides by June 25 and depositions were slated to start on Sept. 23 and run through March 11, 2013. A trial appeared likely by mid-2013.

One source close to the deal suggested that the court likely would soon be informed of the pending settlement agreement, but that the lawsuit would be kept active on the docket in case the deal falls apart between now and closing.

Are there other ongoing lawsuits regarding Base Village?

Not between Hypo and Related. But a group of 29 buyers in the Capitol Peak Lodge have sued Related, as well as Skico and Intrawest, claiming the developers purposely overstated the size of the condos they sold. The owners are trying to get their purchase-money back.

That suit remains active in Pitkin County District Court and was not part of the settlement agreement between Related and Hypo.

What other projects is Related currently working on?
Since 2008, Related has been developing the Hudson Yards project on the west side of Manhattan, as well as big projects in Los Angeles, Chicago, Boston and Abu Dhabi. The company still has a real estate portfolio valued at more than $15 billion.

In January, Related announced it had raised $825 million from investors for a Related Real Estate Recovery Fund, which is focused on “the acquisition of distressed loans that were originated for new development.”

The Base Village project appears to be the only project in Related’s portfolio directly overseen by its top executives based in New York that was left idle in the wake of the 2008 financial crash. An affiliated company, the Related Group, ran into trouble with several condo projects in Miami, but those projects were being overseen by Jorge Perez, a longtime business associate of Stephen Ross, Related’s founder.

Jeff Blau, president of Related, owns residential property in Aspen. He signed several loan guarantees for the Base Village project and was actively involved in most aspects of the project.

On its website, Related continues to maintain that one of its core strengths as a company is its “financial strength and expertise,” including its “significant net worth and liquidity, access to capital, financial flexibility, and ability to minimize risk.”

It also states its “access to capital is unmatched in the industry” and that its financial position gives the company “ample reserves to handle any potential uncertainty.”

Snowmass Village Town Hall. Photo: Brent Gardner-Smith

Is Related going to approach the town for changes to its approvals?

Nothing is expected to be brought forward until after the deal closes, Forrest said.

A provision in the original approval required that certain elements of the project, including the Little Nell Snowmass, had to be open by 2014. That now appears impossible, and so the town feels it will have the opportunity to require the developer to come in and discuss potential changes to the project, Forrest said.

What is Related’s reputation in Snowmass Village?

Decidedly mixed.

Forrest said it was a relief that it appears there will soon be a development entity ready to sit down and talk with the town about the future of the stalled project.

“I think we’re cautiously optimistic,” he said. “We’ll be able to have real conversations about Base Village. They know the property. They know the project. They know exactly what they are getting into.”

Related Colorado also owns substantial amounts of property in Snowmass Village outside of Base Village, including the Snowmass Center. Mayor Boineau said that the company has earned a decent reputation regarding how it has managed those properties since the downturn.

On the other hand, Forrest acknowledged that there are many in Snowmass Village who feel Related left Base Village twisting in the post-recession wind and that it was not, as Related has claimed in court, all the banks’ fault.

When asked if Town Council could trust Related as a developer, Forrest said the town has learned a lot recently about performance bonds and other ways to ensure that more than a developer’s words are backing a project.

See also:

Base Village litigation ends; assets to transfer ownership, The Aspen Times, May 1, 2012

Related again takes Base Village reins, Aspen Daily News, May 2, 2012

The approach used by the city of Aspen to gain federal approval for a proposed hydropower plant was cited as a bad example by a critic of the project in testimony last week before a House subcommittee on energy and power in Washington, D.C.

The Colorado conservation director for American Rivers, Matt Rice, on May 8 called into question the city of Aspen’s initial approach toward gaining approval for its proposed Castle Creek hydro plant.

He testified in person and submitted written testimony to a subcommittee of the House Energy and Commerce Committee in support of the Hydropower Regulatory Efficiency Act of 2012 (H.R. 3680).

The bill seeks to reduce the regulatory hurdles for certain types of hydropower projects, including “conduit” projects. Conduit projects involve installing small hydropower generators in existing pipelines, canals and tunnels that were not designed or built to generate power.

The proposed legislation, introduced earlier this month by Rep. Cathy McMorris Rodgers (R-Wash.) and Rep. Diana DeGette (D-Colo.), would exempt conduit projects from review by the Federal Energy Regulatory Commission (FERC), but includes a 45-day public review to vet any issues that could become controversial or are called into question, prompting a more thorough review.

Rice said the review period would be a “safeguard” that’s “critical to catch projects being proposed by developers that are intent on bending the rules,” Rice said via email after his testimony.

He noted that American Rivers, a Washington D.C.-based nonprofit dedicated to protecting and restoring the nation’s rivers and streams, worked to include the 45-day review period in the bill and has been dubbed “the Aspen provision.”

“The city of Aspen, Colorado is proposing to rebuild a 1.1 megawatt conventional hydropower project that operated from 1890 to 1958,” Rice wrote. “The proposal includes a significant increase in diversion from two streams beyond their municipal water supply demands to feed the facility. The proposed project is extremely controversial within the community and Aspen is currently in litigation with upstream water right holders.

“In an effort to expedite the permitting and avoid environmental review of the project, Aspen chose to pursue a small conduit exemption for the project,” Rice wrote in his testimony, which is posted on the house committee’s website. “But Aspen had a problem: It did not have a conduit. So the city built what was in reality a hydropower penstock and misleadingly labeled it as a conduit in order to receive favorable regulatory treatment.

“While Aspen eventually backed off of its pursuit of a conduit exemption because of public pressure, it continues to maintain that the project should qualify for FERC’s conduit exemption.

“If H.R. 3680 were to become law without this critical provision for a notification period, neither the local community nor affected water rights holders would have had an opportunity to challenge Aspen’s incorrect characterization of the project, and Aspen may well have been able to construct the project without any meaningful public review,” Rice wrote.

The route of the city’s penstock/emergency drain line crosses the Marolt Open Space. The photo was taken in late winter from the Thomas Reservoir looking toward Highway 82. Photo: Brent Gardner-Smith

City officials have contended that the pipeline built two years ago was necessary — first and foremost because it serves as an emergency drainline for Thomas Reservoir, where municipal water is stored at the top of Doolittle Drive and above residential neighborhoods. The pipeline also would serve as a penstock to carry water from the reservoir to the proposed site of the hydropower turbine to be located underneath the Castle Creek Bridge.

After being criticized by a group of residents, and American Rivers, for pursuing its conduit exemption and subsequently a less-stringent environmental review, Aspen chose to seek regulatory approval from FERC by submitting an application.

It then asked FERC to review its application under its “Traditional Licensing Process” and not its “Integrated Licensing Process,” which is a more comprehensive review.

American Rivers urged FERC not to choose the “traditional” process to review Aspen’s application, but the federal agency did so nonetheless.

A FERC official also submitted testimony to the House subcommittee and offered some insight into the differences between the “traditional” and the “integrated” processes.

“The integrated licensing process (ILP) front-loads issue identification and environmental study to the period before an application is filed, and is thus well-suited to complex cases with substantial issues,” wrote Jeff Wright, the director of FERC’s Office of Energy Project, in testimony in support of the proposed legislation.

“The traditional licensing process (TLP), in which environmental and other work can occur after the application is filed appears to work best for less controversial matters. The TLP may be the process that is best-suited for many simple cases involving exemptions or small, low impact licenses,” Wright’s testimony states.

The proposed Hydropower Regulatory Efficiency Act of 2012 encourages FERC to streamline its regulatory review of small hydropower projects; Wright also told the subcommittee that the approach taken by project opponents can either make FERC’s job harder or easier.

“To the extent that a proposed project, even one of small size, raises concerns about water and other environmental issues, it may be difficult for the Commission (FERC) to quickly process an application,” Wright stated. “It is also important to remember that the small capacity of a proposed project does not necessarily mean that the project has only minor environmental impacts.”

Wright also said that community relations matter when seeking federal approvals.

So far in its development process, the city of Aspen has generated mistrust among some in the community by its approach to FERC licensing.

“Another, and related factor is the extent to which project developers reach out to affected stakeholders,” Wright told the House subcommittee. “If a developer contacts concerned citizens, local, state, and federal agencies, Indian tribes, and environmental organizations, and works with them to develop consensus as to what information is needed to understand the impacts of a project and what environmental measures may be appropriate, and to develop support for the project, the application and review process is likely to be simpler and quicker.

“Where a project comes as a surprise to affected entities or where a developer does not respond to expressed concerns, the commission’s job becomes more difficult,” the FERC official stated.

Editor’s note: This story was also published in the Aspen Daily News on Monday, May 14, 2012.

Postscript: On Wednesday, May 16, Aspen Journalism belatedly asked Mitzi Rapkin, the city of Aspen’s community relations director, if the city had a response to Rice’s testimony. This is the comment from the city sent by Rapkin:

“Matt Rice criticized Aspen and its hydroelectric project as part of his testimony before a Congressional subcommittee considering a hydroelectric bill. He is a vocal opponent of Aspen’s project, and works for an organization – American Rivers – that will never support hydro projects that divert additional water from streams.

“Aspen takes great offense at his statements to Congressional and federal representatives that the City constructed a conduit solely to seek a FERC conduit exemption for its Castle Creek hydroelectric project, in order to avoid environmental review and meaningful public input. This is untrue. The conduit is an emergency drainline Aspen needs to protect property and was built under the advice of our engineer. It is needed whether or not the hydroelectric project goes forward.

“Furthermore, Aspen has engaged the public since the beginning of the Castle Creek hydroelectric project. Aspen has not only held public meetings and posted all relevant data about the Castle Creek Energy Center on its website, but has been through mediation with interested parties and entered into an unprecedented agreement with the Colorado Division of Parks and Wildlife to protect the stream habitat. To our knowledge, until Aspen’s commitments, no hydroelectric project had ever agreed to severely limit energy production in order to protect stream habitat as part of the start-up process of a project.

“Locally, Aspen is the greatest protector of the rivers, being the only water user to affirmatively protect instream flows absent a river call, and to tie stream habitat protection to its water use activities. Matt Rice’s characterization of Aspen as a city intent on “bending the rules” is disingenuous at best, since all along Aspen has complied with applicable laws and regulations, and taken extraordinary steps to ensure protection of fisheries and stream habitat.”

We then asked Rice if he had a response to the city’s comments. Here’s what he sent:

“The city’s claim is not supported by facts. American Rivers has signed agreements supporting the operation of more than 8,000 MW of hydropower at dozens of hydropower projects across the country, and we’ve indirectly supported the operation of almost 200 hydropower projects generating more than 11,200 MW of power across the country.

“We’ve supported legislation that provided production tax incentives to hydropower projects built on existing water infrastructure. Last week, we testified in support of legislation that would encourage the development of conduit hydropower projects, some of which may include additional diversions.

“Plain and simple, Aspen tried to cheat and take shortcuts. American Rivers even offered to work with the city to help them design the project in a way that would allow it to move forward while protecting both Castle and Maroon Creek. The city flatly refused to work with us, and instead responded by publicly impugning our motives and attacking the credibility of our organization and our staff.

“American Rivers will fight hydropower projects that divert more water than the river can safely provide. If a project can divert water responsibly, we would consider supporting it. And we will absolutely, unquestionably oppose projects that try to break, bend, or subvert the rules in order to avoid environmental review, which is precisely what Aspen did when it tried to cloak this project as a conduit exemption.

“As for the ‘drain line’ vs. hydropower argument, Aspen raised funds for this project and presented it (before citizens and even before FERC) for months if not years as a pure hydropower project. It wasn’t until much later that the need for a ‘drain line’ arose in the context of their regulatory strategy. This is supported by dozens of emails between city staff and consultants obtained through open records requests.”

For more on the city’s position on whether the pipeline is a penstock, a drain line, or both, see Thomas Reservoir Drainline FAQ, a document produced by the city in the last several years, apparently by Rapkin’s predecessor, Sally Spaulding.

By Brent Gardner-Smith, Aspen Journalism
Tuesday, May 1, 2012

A new U.S. Geological Survey stream gauge on lower Castle Creek began recording public data on April 26 as a result of $34,000 in funding from the Aspen nonprofit group Saving Our Streams.

The group is fighting the city’s proposed hydropower plant on Castle Creek and wanted the stream gauge installed so the public could tell whether the city was keeping its pledge to leave at least 13.3 cubic feet per second (cfs) of water in the stream.

“It is going to really give us a true picture of what’s left in the stream,” said Maureen Hirsch of Saving Our Streams. “It is just going to be data. And that’s going to be beneficial to the community.”

The new USGS stream gauge is number 09075400 and is called “Castle Creek at Aspen.” The data it collects is published on the USGS website at waterdata.usgs.gov/nwis/uv?site_no=09075400.

The process to develop a complete USGS stream gauge begins by installing a staff gauge to measure the height of the river. The staff gauge allows a visual reading of the water height and also includes a sensor in the river. Once different water heights are recorded for a specific location, a formula is then used to calculate how much water is moving past the gauge in a measurement known as cubic feet per second or cfs.

The stream gauge is one of about 7,600 such gauges operated by the USGS, which prides itself on offering the public accurate and unbiased streamflow information.

The city of Aspen currently monitors how much water it leaves in Castle Creek by tracking how much water it bypasses at its primary diversion dam and also by taking manual streamflow measurements on lower Castle Creek below its three irrigation ditches.

While city officials said their method is reliable, the information it collects is not readily available to the public for review.

David Hornbacher, the city’s director of utilities and environmental initiatives, said that may soon change, however, as the city has gotten numerous requests to make its data public.

Hornbacher also said the new USGS gauge was in a “good location” and would produce good information.

“They’ve done something valuable,” he said.

A city employee taking a manual measurement of how much water is in Maroon Creek. Photo: Brent Gardner-Smith

The new stream gauge was installed last week by USGS technicians on private property owned by the dePagter family.

Yasmine dePagter is a member of Saving Our Streams. She reached a money-free agreement with USGS to have the stream gauge installed on her family’s property, which is river-right just upstream from the proposed hydropower plant location on Power Plant Road.

The location is below the city’s diversion dam and its irrigation ditches, and above the location of the proposed hydropower plant’s tailrace where diverted water is to be returned to the stream.

Hirsch, meanwhile, signed an agreement with the USGS to have the stream gauge installed and maintained by USGS, which frequently works with private entities to install gauges.

It cost $18,000 to install the stream gauge, which sends out readings of water levels to a USGS website every 15 minutes. And it cost $16,000 for a year of maintenance and operations.

David Brown, the head of the USGS office in Grand Junction, said the one-year operations agreement with Saving Our Streams is standard.

Hirsch said the intent is for Saving Our Streams to raise additional funds to continue operation of the gauge in subsequent years.

Hirsch and dePagter said the money for the gauge came primarily from one of the members of Saving Our Streams, who they declined to identify.

But they both said the money did not come from billionaire Bill Koch, who has publicly aligned himself with Saving Our Streams. Koch owns an estate on upper Castle Creek near Ashcroft.

Saving Our Streams is suing the city in an effort to strip it of its hydropower water rights and stop the city’s proposed plant, which is now under review by the Federal Energy Regulatory Commission.

“The gauge was probably one of the first things we talked about when forming Saving Our Streams,” said dePagter. “It has been on Maureen’s mind since day one.”

USGS stream gauges were in place on both upper Castle Creek and upper Maroon Creek from 1970 to 1994 before being taken out of operation for funding reasons.

Data collected during that time period is being used by the city to estimate how much water is available for hydropower from the streams.

Saving Our Streams also is working to install another gauge on Maroon Creek, but Castle Creek was a higher priority.

Hirsch said no one from Saving Our Streams talked with the city about the location of the new stream gauge.

“The city could have done this a long time ago,” said Tom Hirsch, Maureen’s husband.

Hornbacher said the city is not opposed to gauges, but does feel it is getting reliable information about stream flow on Castle Creek without spending the additional money.

Maureen Hirsh pointed out that if the city had contracted for the gauge with the USGS, it would have cost half as much because of a government policy that gives a 50 percent discount to tax-paying entities.

On Monday, the gauge showed a “gauge height” of 3.51, which may not be all that informative to a layperson.

Once a series of gauge heights have been taken, a flow measured in cfs will then be presented online by the USGS, although that could take weeks or months, according to USGS officials, depending on how the water levels in the stream fluctuate this spring.

“It takes a while to create a rating, which is the relationship between gauge height and cfs,” wrote Teresa Krizman, the database administrator for the USGS’s National Water Information System in Colorado, via email. “They have begun collecting the gauge height record and now they will begin measuring cfs through a larger range of stage so they can develop a reasonable rating.

“Once a rating is established, it will apply back to the start of the gauge height record and cfs will be available for the entire period,” Krizman said. “Unfortunately, it takes time to get measurements from very low gauge heights to very high gauge heights and is dependent on conditions of the stream.”

Another local nonprofit, Friends of Rivers and Renewables, recently announced one of its first projects is to install stream gauges on other locations in the Roaring Fork River watershed.

The group’s director, Chelsea Congdon Brundige, said she thought the new Castle Creek stream gauge was in a good location and the USGS system is considered the “gold standard” of gauges.

“In a perfect world, you’d also want to have a gauge upstream of the diversions,” she said. “You want gauges to help you bracket diversions so you can tell the difference before and after the diversions.”

Editor’s note: A version of this story was published in collaboration with the Aspen Daily News on Tuesday, May 1, 2012.

By Brent Gardner-Smith, Aspen Journalism
Monday, April 30, 2012

The Roaring Fork Conservancy and the Colorado Water Trust are asking owners of water rights in the upper Roaring Fork River basin and in the Crystal River basin to leave some of their water in the river this summer to benefit fish and the environment.

The two nonprofit organizations are seeking water owners who might be willing to lease their water on a short-term basis to the Colorado Water Conservation Board (CWCB) — without endangering their water rights — as part of an innovative program launched in the face of a looming drought.

“We’ve personally contacted them,” said Sharon Clarke, a land and water conservation specialist with the Roaring Fork Conservancy, about a number of major water rights owners in the valley. “We’re trying to reach out and get as many people to know about the program as possible.”

The snowpack in the Roaring Fork River basin was at 22 percent of average on April 29 and conditions are similar to 2002, when the Roaring Fork through Aspen was reduced to a trickle.

A meeting has been set for Thursday at 5:30 p.m. in Carbondale Town Hall for interested water rights owners to meet with representatives from the Water Trust and the Conservancy to discuss the program, which is called “Request for Water 2012.”

The deadline for water rights owners to sign up for the program is May 11. The initial round of screening is set to be wrapped up by June 6 and the leases are to be implemented — and the first round of checks to owners to be sent — by July 1.

That’s working at warp speed compared to how Colorado water law usually proceeds, but the Water Trust has designed the facilitated process in conjunction with the CWCB, which will lease the water and hold the water right for up to six months.

The Colorado Water Trust is not a policy or advocacy organization but instead works “with willing sellers and lessors to put senior water rights back into rivers to benefit the natural environment.”

The price paid for the leased water is to be equal to the market value of the crops that would have been produced by the irrigation water. That price is likely to vary in each situation, according to the Water Trust.

The scope of the program is between $400,000 and $500,000, according to Colorado Water Trust Executive Director Amy Beatie, who said the nonprofit is also fundraising against the opportunity and may approach Pitkin County’s Healthy Rivers and Stream Board for support.

The Salvation Ditch diversion structure on the upper Roaring Fork River. In the drought of 2002, there were times when there was more water in the ditch than in the river. Will that happen this summer? Photo: Brent Gardner-Smith

The goal is to keep at least enough water in the rivers to meet the environmental instream flow levels as set by the CWCB.

For example, the “minimum streamflow” needed to protect the Roaring Fork River “to a reasonable degree” as it flows through Aspen between Difficult Creek and Maroon Creek is 32 cubic feet per second (cfs), according to the CWCB.

On the Crystal River, the CWCB’s instream flow right is 100 cfs from Avalanche Creek to the Roaring Fork from May 1 to Sept. 30, and 60 cfs after Oct. 1.

However, the CWCB’s environmental instream flow rights are typically junior to more senior water rights, which means that the “minimum streamflow” levels are often not met, especially in drought years when Colorado’s priority system for water is enforced.

In many years, the lower Crystal River is left nearly dry and well below the level of the state’s instream flow rights, in large part because of a series of irrigation ditches used to water crops and fields on ranches in the Crystal River valley.

Left, the Salvation Ditch.

During the severe drought of 2002, the Roaring Fork through Aspen was nearly dry while about 35 cfs of water was still flowing through the Salvation Ditch, which diverts water from the river just above the Aspen Club and sends it to fields and homes along the ditch’s 20-mile route to lower Woody Creek.

Gary Beach of Beach Resource Management, which manages several ditch companies including the Salvation Ditch, said the owners in the Salvation Ditch would likely consider the Colorado Water Trust’s program.

“I think the idea is a good idea,” Beach said. “In dry years, everybody needs water, including the fish.”

He agreed that the 2003 state law underpinning the program protects water-rights holders against claims of abandonment, but he warned that leaving water in the river instead of diverting and consuming it could reduce the economic value of a water-rights portfolio were a change-of-use ruling sought as part of a sale.

However, Beatie, the executive director of the water trust, said there was a provision in the revised law that created the water leasing opportunity that protects water-rights owners in that regard. Instead of logging a “zero” on a list of historical consumptive use because of a lease, under the 2003 law an “NA” or “not applicable” would appear.

“This year would be like a skip on your record, not a zero,” Beatie said.

In any event, Beach said that for owners not planning to sell their water rights anytime soon, that consideration may be relatively minor. And he put the owners of the Salvation Ditch in that category.

“I think the Salvation Ditch has a history of being accommodating to the stream,” he said. “It has reduced diversions during the Ducky Derby, for example.”

Beatie said the Roaring Fork and Crystal rivers made the list of rivers that are part of the pilot program for a number of reasons.

One, they have instream flow rights held by the CWCB. Two, they were on a watch list of rivers created by a drought task force. Three, they are in a community where people buy into the idea that leaving water in a river for environmental reasons makes sense.

“The program is probably not going to go over well in places where they are not fans of the state’s instream flow program,” Beatie said.

On the other hand, reaction to the program that was announced last week has been positive, she said.

“We are actually being offered water statewide,” Beatie said. “Water owners aren’t even paying attention to our priority list, they are just offering to help.”

Another look at the Salvation Ditch diversion structure. Photo: Brent Gardner-Smith

There are a number of nuances to the Colorado Water Trust leasing program.

Owners must control at least 1 cubic foot per second of water or 50 acre-feet of storage water to be eligible.

A water right must be on the main stem or tributary of one of the rivers on the Water Trust’s list. This includes the Roaring Fork River above its confluence with the Fryingpan River and the Crystal River.

There are three types of water leases available: a 3-in-10 years lease, a single-year lease, or a split-season lease for part of the irrigation season.

The water in question must be left in the river and cannot be used for irrigation during the period of the lease. However, owners can keep irrigating during the application process.

The water owner must be willing to permit a preliminary inspection of the diversion infrastructure in question and allow for follow-up inspections.

Owners must work with the water trust in a timely fashion to ensure the water is in the river this summer.

The value of the water in question will vary in each situation and will likely require negotiations between the owner and the water trust.

The initial screening of the appropriateness of a water right is confidential, but if an owner enters the formal program, it becomes public information.

Owners do not have to go to water court. The short-term loans are administered by the CWCB and the state’s water engineer.

Editor’s note: A version of this story was also published in the Aspen Daily News on Monday, April 30, 2012.

Related articles:

Salvation for the Roaring Fork?, The Aspen Times, March 25, 2007

In-stream water loan bill cruises in House, The Aspen Times, Feb. 7, 2005

Salvation Ditch under new management, The Aspen Times, May 12, 2003

Salvation Ditch may save a lot of fish … next year, The Aspen Times, Sept. 24, 2002

Water-sharing deal is closer, The Aspen Times, Sept. 20, 2002

Water official: Fork’s fish have few rights, The Aspen Times, Sept. 18, 2002

State official stands in way of water deal, The Aspen Times, Sept. 17, 2002

Ditch owner works to give river a boost, The Aspen Times, August 23, 2002

A group of citizens, officials and reporters on April 10, 2012, taking a tour of the proposed Castle Creek hydro plant location below the Castle Creek highway bridge. On the tour were two officials from the Federal Energy Regulatory Commission, which is reviewing the city of Aspen’s application for the plant. Photo: Brent Gardner-Smith

ASPEN – City of Aspen officials are working to correct several mistakes in a report submitted last week to the Federal Energy Regulatory Commission regarding its proposed hydropower plant on Castle Creek.

City officials say once the mistakes in the report are corrected, the estimate of net power to be produced by both the new Castle Creek hydro plant and the existing Maroon Creek plant will likely be shown to be 6.1 million kilowatt hours a year, down from a previously estimated 6.2 million hours.

The report, as it was submitted to the federal government, indicated that the net power generated by both plants would be 5.4 million kilowatt hours.

The report, an “assessment of project operation, stream flow and power generation” relating to the proposed Castle Creek Energy Center, was dated Wednesday, April 4, and submitted to FERC the same day.

It was prepared by Kerry Sundeen, a hydrologist and president of Grand River Consulting in Glenwood Springs, who has been advising the city on its proposed hydro project for several years.

At least some of the information in the report was specifically requested by officials at the FERC, which is in the process of reviewing the city’s license application for the new hydro project.

Mitzi Rapkin, the city’s communications director, said that Aspen City Manager Steve Barwick noticed some of the mistakes over the weekend while reading the report, and that a story in Monday’s Aspen Daily News prompted other city officials to take a closer look at the report.

Rapkin said the errors in the report led to errors in the news story, which she said was otherwise well-researched (see letter, page 8).

“The city was rushing to try and get the report in before the officials from FERC came to town,” Rapkin said. “There was not a mandatory deadline, they just wanted it to get it in. It is unfortunate.”

Officials from FERC are expected in Aspen today for a site visit and a public meeting about the hydro project.

On Monday evening, Rapkin said there were apparently several errors in the materials used to prepare the report, including the elevation of Thomas Reservoir, which relates to how much force water would have as it enters the proposed Castle Creek hydro plant.

Another mistake was that a side-stream that pours about 2 cubic feet per second (cfs) of water into Castle Creek near the Aspen Music School campus was overlooked, which means that more water may be available to power the hydro plant.

And there was apparently confusion over the size of the pipe that city officials have already installed that will serve as a penstock to the new plant from Thomas Reservoir.

While the report says the pipe has the ability to move 52 cfs of water to the new plant, which Rapkin says is correct, there were still apparently some erroneous calculations done assuming that the pipe was a 36-inch pipe, not a 42-inch pipe.

City officials are convening Tuesday morning to continue to go over the report and nail down correct numbers on a range of calculations, Rapkin said. Once that’s done, the report will be resubmitted to the federal government.

Editor’s note: This story was published in collaboration with the Aspen Daily News on Tuesday, April 10, 2012. There was an error in the Daily News story, as the city’s prior estimate of power production was 6.2 million kilowatt hours, not 6.4 million as cited in the Daily News story. The error was made by Aspen Journalism. It has been corrected in this story.

Post-script: On April 12, 2012, the Aspen Daily News published an editorial on the city’s report and its handling of the mistakes. On April 13, Aspen Mayor Mick Ireland wrote a letter to the paper apologizing for suggesting that the newspaper, and the reporter, were at fault in the original story about the city’s report. As of April 26, the city was still working on correcting the report.

The city of Aspen’s diversion dam on Castle Creek, about 3 miles above the stream’s confluence with the Roaring Fork River. Photo: Brent Gardner-Smith

Editor’s note: This story was done in collaboration with the Aspen Daily News and was published in the newspaper’s Monday, April 9, edition. After publication, city officials said there were several errors in the report and that they were revising the report to reflect more accurate estimates of how much water was available and how much power would be produced. As of late Monday evening, when the story was posted on Aspen Journalism, city officials said they thought the amount of net power produced by the new Castle Creek plant and the existing Maroon Creek plant would be 6.1 million kilowatt hours, not 5.4 million kilowatt hours as stated in the report. We are posting the story here, as it ran in the Daily News, for the record, with the expectation that a follow-up story will be published after city officials have corrected their report.

ASPEN – Consultants for the city have lowered the estimate of how much electricity Aspen would likely produce if it built and operated a new hydro plant on Castle Creek and continued to operate the existing hydro plant on Maroon Creek, according to a new hydrologic report.

Instead of 6.2 million kilowatt hours a year as stated since last year by the city, the net annual amount produced by the two plants is now estimated to be 5.4 million kilowatt hours at full production and 3.1 million during the proposed “slow start” period. The new, lower estimates are a result of a more comprehensive look at available water against existing water priorities.

“We will update the financials accordingly,” David Hornbacher, the city’s director of utilities and environmental initiatives said Friday about the new power production estimate. “I would anticipate that it will slightly affect the number of years to pay back. But it will also still show a very positive economic impact over the project’s lifetime.”

In the report released April 4, hydrologists from Grand River Consulting have also clarified how much water Aspen proposes to divert from Castle and Maroon creeks to meet its various municipal, irrigation, hydropower and environmental goals.

Calculations based on the report reveal that from August through April each year, the city intends to divert at least 48 percent of the water from Castle Creek.

Matt Rice, the director of conservation in Colorado for American Rivers, said the organization has embraced new ecological studies that indicate taking more than 20 percent of a river’s water causes long-term environmental degradation.

Castle Creek on April 9, 2012, flowing near the Marolt housing project. Photo: Brent Gardner-Smith

With a proposed new hydro plant running at full production, the city intends to divert a monthly average of between 12.6 cubic feet per second and 40 cubic feet per second (cfs) of water from Castle Creek to meet its municipal, irrigation and hydro needs.

That would leave 375 cfs in Castle Creek in June during high runoff, but only 13.3 cfs in the stream each year from January through May.

In June, the city would be diverting only 10 percent of the peak runoff, but in January the city would be diverting 64 percent of the stream to meet its municipal and hydro needs.

From Maroon Creek, the city expects to divert between 9.8 cfs and 34.5 cfs of water, leaving 342 cfs in June but only 14 cfs of water during the seven months from October through April.

That’s diverting between 9 percent and 66 percent of the water from Maroon Creek at the point of the city’s diversion dam, just above the T Lazy 7 Ranch.

“They are taking everything they can right down to the minimum streamflow,” said Ken Neubecker of the Western Rivers Institute. “It is going to effect the health of the stream’s riparian system.”

Neubecker developed the depletion percentages using data from the city’s report.

The city has previously released figures indicating that at full production, the hydro plant would take a maximum of 39 percent of water from Castle Creek and 29 percent from Maroon Creek during winter months.

However, those figures apparently did not take into account the city’s municipal and irrigation diversions, and the information in the new report is a conservative estimate of how much water will be in the streams at the city’s diversion points.

Water impounded behind a dam on Maroon Creek entering a diversion structure on Monday, April 9. On this day, about 9 cfs of water was being taken out of the stream and sent to the existing Maroon Creek hydro power plant about a mile-and-a-half downstream. At higher flows, over 50 cfs of water is diverted toward the plant. Photo: Brent Gardner-Smith

The report was prepared by Grand River for the city and submitted on April 4 to the Federal Energy Regulatory Commission. The city is seeking approval from the federal agency for a new hydro plant on Power Plant Road under the Castle Creek highway bridge.

The report estimates how much water in both streams would likely be available by analyzing streamflow data collected on Castle and Maroon creeks from 1970 through 1994, when gauges on both streams were then taken off line by the U.S. Geological Survey, which operated them.

The 25-year period included one of the driest years in the last 100 years — 1977 — and one of the wettest years in 1984.

By the time Castle Creek reaches the city’s diversion dam, about 3 miles above the stream’s confluence with the Roaring Fork River, only about 2 cfs has been diverted and consumed by upstream users.

And so in an average water year, there is an average of 415 cfs available in June, but only 25.9 cfs in April.

On Maroon Creek, about 9 cfs of water is taken out of the river and consumed by the Herrick Ditch before the stream reaches the city’s diversion dam.

The resulting monthly average flow in June on Maroon Creek at the city’s diversion point is 376 cfs. In March, it is 24 cfs.

Next, hydrologists at Grand River Consulting looked at the city’s water priorities.

The highest priority is meeting municipal water demands, for which the city diverts between 7.3 cfs and 7.9 cfs from Castle Creek and essentially nothing from Maroon Creek.

The city’s actual use requires between 2.8 cfs and 3.2 cfs of water from Castle Creek, but the city diverts a steady base flow of 4.5 cfs to fill the Thomas Reservoir at the city’s water treatment plant.

The small reservoir serves as a buffer against large instantaneous demands in the city, such as in the case of a fire. Unused water is returned to Castle Creek via an existing drain line running under Castle Creek Road.

The city’s second priority is to meet minimum streamflows designed to protect the environment.

On Castle Creek, the city has committed to leaving at least 13.3 cfs in the stream, both below its primary diversion point and below its three irrigation ditches farther downstream.

The state has set a minimum streamflow of 12 cfs for Castle Creek, but the city has embraced 13.3 cfs upon the recommendation of its biological consultant.

On Maroon Creek, the city has committed to leaving at least 14 cfs in the stream, which is consistent with the state’s minimum level.

The third priority for the city is to divert water from Castle Creek for irrigation into the Si Johnson Ditch, the Holden Ditch and the Marolt Ditch. This requires between 4.8 cfs and 15 cfs of water from May through October.

One of the city’s irrigation ditches that carries water from Castle Creek toward the city’s golf course. Photo: Brent Gardner-Smith

Next, the city intends to divert at least 10 cfs of water to the existing Maroon Creek hydro plant.

After that level, the city intends to divert more water from Maroon Creek into a pipe leading to Thomas Reservoir and down a penstock to the new Castle Creek hydro plant.

But the report notes that due to the “hydraulic properties of the Maroon Creek pipeline … when water is diverted to Thomas Reservoir and to the Castle Creek Energy Center, the effective capacity of the pipeline to the Maroon Creek hydroelectric plant is decreased.”

“You’ve got a push and pull there,” said Kerry Sundeen, a hydrologist and president of Grand River Consulting. “The more you put through Castle Creek the less you put through Maroon Creek.”

Today the Maroon Creek hydro plant generates about 1.9 million kilowatt hours of electricity a year using between 9.8 cfs and 59 cfs.

The report estimates that in the future, without the new Castle Creek plant, there would be enough water in Maroon Creek to produce an average of 2.2 million kilowatt hours of power a year.

But with a new Castle Creek plant running at full production, only 730,000 kilowatt hours a year would be produced at the existing Maroon Creek plant.

The new Castle Creek plant at full production is expected to generate 6.8 million kilowatt hours a year.

But subtract the 1.4 million hours of power no longer being produced at the Maroon Creek plant, and the net power production of the two plants drops to 5.4 million kilowatt hours a year.

Last year, the city published a primer on the project that says 6.2 million kilowatt hours would be produced annually after installation of the new Castle Creek plant.

While the primer does not explain the concept of “net” power production between the two hydro plants, Hornbacher, the city’s utilities director, confirmed Friday that the 6.2 million kilowatt figure used was a net number.

About 9 cfs of water flowing out of the Maroon Creek hydro plant on April 9, 2012. Photo: Brent Gardner-Smith

The report also details how much water would be diverted, and how much power would be produced, under the proposed “slow start” plan.

That plan is designed to initially leave more than the state’s minimum streamflow in both creeks and then monitor the health of the streams to see if more water can eventually be diverted.

Under the slow start scenario, the city would leave — in an average water year — between 18 cfs and 24 cfs in Castle Creek from December through April, as compared to leaving a consistent 13.3 cfs during the same period.

The slow start scenario does not significantly change the amount of water the city would leave in the stream below its Maroon Creek diversion point, however, as there would still be seven straight months when the streamflow was maintained at 14 cfs.

The slow start scenario does, however, significantly lower the amount of net power produced using water from both streams to power both hydro plants.

Instead of a net of 5.4 million kilowatt hours during full production, the slow start produces an average of 3.1 million kilowatt hours.

Lower Red Mountain, where several billionaires have homes. Photo: Brent Gardner-Smith

At least 50 billionaires on Forbes’ most recent wealth lists own property or have strong ties to property in the Aspen area.

Their combined net worths total more than $242 billion and the value of their local personal property tops $741 million.

But these billionaires’ stake in Aspen is greater than the sum of their local property values. Besides playing a significant part in Aspen’s economic engine in terms of employing maids, caterers, gardeners, attorneys, accountants, and real estate agents, these are people who have power and influence — and it’s often felt locally.

Many give money to or fundraise for local organizations and causes, allowing for a proliferation of nonprofits unheard of in towns of similar size. That in turn allows arts and culture, as well as educational, social, and environmental efforts to flourish here. Several sit on boards or councils of such organizations as the Aspen Institute and Aspen Music Festival, helping to create programs and fund expansions that benefit a wider community.

On the flip side, these second-home owners have bought into a real estate culture that some say has been detrimental to the Aspen community. The building sites of new mega-mansions scar huge swaths of land; once-bustling neighborhoods sit empty most of the year; and escalating real estate prices have driven an untold number of locals downvalley or out of the valley altogether.

Some have chosen to get even more involved locally — for better or for worse, or sometimes both. Bill Koch, for example, number 14 on the Forbes 400 list with a net worth of $4 billion, is one of several plaintiffs suing the city of Aspen over its plan to use water from Castle and Maroon creeks for hydropower. Is he in this case using his power and money to highlight a really bad idea, or to obstruct a widespread community benefit? Koch also wants to install guardrails (on his dime) along winding Castle Creek Road which leads to his home— a self-serving measure that would ostensibly make the road safer for all.

Stewart and Linda Resnick, 29th on this year’s Forbes 400 list, waged a legal war against local governments in the early 2000s over an employee housing project to be built near their home. They claimed in part that the worker housing would devalue their property, now worth $15.3 million. The Stillwater housing was eventually built, but with major design modifications.

Others’ influence is felt more broadly. Stephen Ross is head of New York’s Related Cos., which developed Snowmass Base Village but then defaulted on a major loan, leading to foreclosure on the property and a partially built development that has had major business ramifications and has been the source of much local concern.

But not every billionaire with an Aspen address made the Forbes cut. The cutoff for the most recent Forbes 400 list was $1.05 billion, leaving those with a mere $1.04 billion and below in the dust.

Then there are the heirs of billionaires, and those whose fortunes could rise (or fall) by a few million, who might make the list next year.

Starwood, where several billionaires have homes. Photo: Brent Gardner-Smith

Three prominent Aspen names are notably missing from this year’s Forbes lists.

Lester Crown, patriarch of the family that owns the Aspen Skiing Co., was number 208 on Forbes World’s Billionaires list in 2010 and the 66th richest American in 2011. But the family, which are majority shareholders of one of the largest defense industry contractors in the world, saw its fortunes plunge by $1 billion along with General Dynamics’ stock price during the Great Recession, according to a Forbes profile of Lester in 2009. A member of the Forbes 400 since it started in 1982, Lester Crown’s $4 billion of net worth is now spread out among family members, according to Forbes.

Those include his son Jim, who oversees the Skico for the Crown family. Jim and his wife Paula own a home at the base of Buttermilk valued at $8.7 million. Another son, Steve, has a home just outside of Aspen worth $11 million. Daughter Susan owns a property in the Owl Creek valley worth $18.1 million. And Lester and his wife Rene have owned a condo at the Aspen Club since 1980 that is now valued at $2.5 million.

Matthew Bucksbaum, a longtime second-home owner who with his wife Kay gave $25 million to the Aspen Music Festival and School for a new campus, has been on Forbes 400 lists since 2005, most recently number 379 in 2011. A grocer’s son, he built his General Growth Properties into one of the nation’s largest shopping mall empires, causing his family’s net worth to peak at $3.3 billion in 2007. But in 2009, General Growth filed for the largest real estate bankruptcy in U.S. history, according to Forbes, and the family lost billions of dollars tied up in the company’s stock — and their place on the Forbes 400 list.

Brothers Sam and Charles Wyly, each reportedly worth $1 billion, are known locally for their funding of the Wyly Community Art Center (Charles and wife Dee) and for buying Explore Booksellers (Sam and wife Cheryl) when it was in danger of being closed. Charles died tragically in a car accident last year, and Sam has been on either the Forbes 400 or World’s Billionaires lists since at least 2004. But at number 393 on the Forbes 400 list in 2011, Sam Wyly was close to the cutoff point and was officially dropped this year.

Following are the Aspen 50 — the 50 billionaires that appear on the most recent Forbes 400 and/or Forbes World’s Billionaires lists and own a piece of Pitkin County, whether it’s residential (in two cases it’s through close family) or through business interests.

Their connections to Pitkin County, which can be seen through public records, were identified by Aspen Journalism, using as primary sources the Pitkin County clerk and recorder’s office and the county assessor’s office. And this list may not be complete:
It’s likely that even more billionaires on Forbes’ lists have a vested interest in Aspen, but have made their connections difficult to trace.

The home values cited are from the Pitkin County assessor, and represent the most recent valuation period, which ended June 30, 2010. They are the values issued for tax year 2011. The billionaires are listed below by their rank on the Aspen 50 and their net worth as estimated by Forbes.

#1 Charles Koch, $25 billion: Charles Koch is CEO of Koch Industries, an oil, gas, and chemical conglomerate which is the second largest privately held company in the U.S. Three Koch brothers own property in Pitkin County; Charles’ West End home is worth $6.3 million. Well known for their conservative politics, Charles and David (see below) are major Tea Party funders who are determined to unseat President Obama. They hold twice-yearly seminars to promote their agenda and recruit money and support for their political causes; one such event was held in Aspen in June 2010. Charles co-founded the libertarian Cato Institute in 1976.

#1 David Koch, $25 billion: David Koch runs Koch Industries along with brother Charles, and is New York City’s — and probably Aspen’s — richest resident. He owns two homes in the West End, valued together at $11.8 million, and serves on the board of the Aspen Institute, where a building is named after him. Fiercely political like his brothers, David Koch was the vice-presidential candidate for the Libertarian Party in 1980, and at one of the brothers’ conservative gatherings described President Obama as “a hard-core socialist,” according to Forbes.

#3 Jeff Bezos, $19.1 billion: The founder of the world’s largest online retailer, who is also 26th on the Forbes Billionaires list, can be considered visionary: Amazon wasn’t profitable for the first seven years of its existence. Locally, the Bezos family, which includes parents Jackie and Miguel, partnered with the Aspen Institute to create the Bezos Scholars Program, which brings high school students to the Aspen Ideas Festival. The Bezos family also supports the Aspen Writers’ Foundation and Theatre Aspen. Jackie and Miguel Bezos own a $20 million home on lower Red Mountain, and Jeff is known to be a frequent visitor with his family.

#4 Michael Dell, $15.9 billion: Known for founding Dell computers in 1984, Michael Dell now earns much of his wealth from his investment firm MSD Capital, which owns a percentage of The Related Cos., the former developer of Snowmass Base Village. Though frequently cited in media reports for being an Aspen resident, it’s actually Dell’s parents, Alexander and Lorraine, who own a $10.5 million home on Red Mountain.

#5 John Paulson, $12.5 billion: Hedge fund titan John Paulson made local headlines in 2010 when he paid $24.5 million for a home on McLain Flats, one of the largest prices ever paid for a single-family home in the Aspen area. But the man who became a billionaire by betting against the subprime mortgage sector in 2007 saw his net worth take a $3 billion hit in 2011. His Aspen estate is now valued at $15 million.

#6 Roman Abramovich, $12.1 billion: When Roman Abramovich paid $36.3 million for an estate on Wildcat Ridge above Snowmass in April 2008, it was the second highest amount ever paid for a home in the Aspen area, and the beginning of a wave of wealthy Russian visitors in Aspen. Although none were as wealthy as Abramovich, the one-time richest man in Russia who made his fortune with a series of controversial oil export deals in the early 1990s. But even with his stakes in giant extractive companies dealing in steel, gold, aluminum and natural gas, his fortunes have plunged since 2008, when he was worth $23.5 billion. Currently facing a potential net worth loss of $5 billion from a lawsuit by a former partner, Abramovich counts among his toys the world’s largest yacht, an ice boat, a Boeing 767, and the U.K.’s Chelsea soccer team. His fleet of crash pads includes homes in London, St. Barts, Sardinia, France, the Wildcat mansion (now worth $24 million), and a second Snowmass home valued at $7 million. It must be hard to take care of every detail — a contractor filed a lien against Abramovich in Pitkin County in 2010 for nonpayment of a $5,000 masonry bill.

#7 Richard Kinder, $8.2 billion: Co-founder of natural gas company Kinder Morgan, Richard Kinder owns a home valued at $11 million on the Roaring Fork River in lower Woody Creek. A former Army captain and Enron president, Kinder has personally done well from the recent acquisition of El Paso Corp. for $38 billion. The combined company, with some 80,000 miles of pipelines, is banking on future shale development to create massive demand for its product.

#8 Leonard Lauder, $7.1 billion: The son of cosmetics company founder Estée Lauder owns three homes and a vacant lot in Aspen’s West End with a collective value of $23 million. An avid art enthusiast, Lauder collects European skiing posters in one of his Aspen homes. He also serves on the board of the Aspen Institute, which has exhibited his posters and where he gave a lecture last year on the art of the poster. His son Gary, a venture capitalist who co-created the Aspen Institute’s Socrates Society, also owns a home in the West End; it is worth $14.3 million.

#9 Philip Anschutz, $7 billion: Denver billionaire Philip Anschutz apparently spends some time in the Roaring Fork Valley: He was one of the guests of the Koch brothers’ private meeting in Aspen in June 2010 (see above), and his older sister Sue Anschutz-Rodgers owns the Crystal River Ranch outside of Carbondale. The oil, telecom, sports, media, and entertainment mogul, whose Anschutz Entertainment Group controls sports teams like the NBA Lakers and manages pop stars including Justin Bieber, also has local business interests. His Anschutz Corp. is taking over ownership of NRC Broadcasting, which currently holds the FCC licenses for local radio stations KSPN (Aspen) and KNFO (Basalt). Anschutz is one of just a handful of people who have been on the Forbes 400 list since its 1982 inception.

#10 Graeme Hart, $5.7 billion: The wealthiest person in New Zealand is also a relatively new Aspen homeowner. Self-made billionaire Graeme Hart, who once drove a tow truck and made his fortune through investments, bought a mansion above McLain Flats in February 2011 for $16 million. According to New Zealand’s National Business Review, the packaging tycoon “snaffled” (got a great deal on) his Aspen estate, which was once listed for $32 million but is now, according to the county assessor, worth $16.6 million. Hart also owns two properties in New Zealand, a Fijian island, and a $100 million yacht — although he’s working on getting a bigger one.

The sign at the entrance to Wildcat Ranch, where several billionaires own homes. Photo: Brent Gardner-Smith

#11 Jeffrey Hildebrand, $5.3 billion: Houston oil magnate Jeffrey Hildebrand struck it big last year with an investment into Texas oil shale that resulted in a $3.5 billion sale to Marathon Oil. As his Hilcorp’s fortunes rose, so did his investment in Aspen. He and his wife Melinda have bought three properties east of the downtown core since 2006. They’ve created a family compound with two homes and a landscaped vacant lot, all now valued at $12.8 million. They also own a residence in the Snowmass Creek valley that they paid $13.3 million for in 2011.

#12 Richard DeVos, $5 billion: Another attendee of the Koch brothers’ 2010 Aspen political confab, Richard DeVos made his fortune from his company Amway (now called Alticor), which sells personal care and home products in more than 80 countries. He owns the NBA’s Orlando Magic and a ski-in, ski-out home in Snowmass Village valued at $5 million. He and his wife Helen are also donors to the Aspen Music Festival and School.

#13 Leslie Wexner, $4.3 billion: The Ohio law school dropout started The Limited in 1963 with a loan from his aunt; now the Limited Brands chain of mall staples can be found around the world. His personal empire has spread out, too: Wexner owns a home and plenty of acreage on upper Red Mountain valued at $31.4 million. He’s also made headlines locally for the past three years for his land holdings near Carbondale. He has proposed a federal land swap that would consolidate his 3,900-acre estate on the flanks of Mount Sopris and make public some lands that have recreational value. The Pitkin County government is against the swap, which typically requires an act of Congress to approve. Now Wexner, another member of the Forbes 400 since its first list in 1982, is pursuing an administrative decision by the BLM.

#14 Daniel, Dirk, and Robert Ziff: $4.2 billion each: Sons of publishing magnate William Ziff whose Ziff-Davis company included titles such as Car and Driver and Popular Aviation, the three Ziff brothers created their own empire with a small percentage of their father’s fortune (95 percent of the business was sold to Forstmann Little) and reinvestment in financial and real estate interests. Also thanks to their father, they are now deeply invested in Aspen — they’ve expanded the family holdings to include three homes in Starwood valued together at $26 million. The Ziffs also own $20 million worth of land in Starwood and $1 million worth of mining claims in the Aspen area.

#17 Gustavo Cisneros and family, $4.2 billion: Venezuelan businessman Gustavo Cisneros’ diversified empire includes Venezuelan TV stations, telecom, a brewery and a baseball team. He also owns two homes in Aspen under Shadow Mountain, one valued at $5.4 million and the other at $7 million.

#18 Bruce Halle, $4.2 billion: The founder of the world’s largest independent tire and wheel retailer, Discount Tire, owns a $30.3 million home in the Wildcat subdivision outside of Snowmass Village. Locally, his family foundation supports Aspen Valley Medical Foundation and Aspen Santa Fe Ballet, among others.

#19 William Koch, $4 billion: The twin of David Koch (see above), Bill Koch is only one-sixth as rich as his brothers but still has plenty of money to burn. He converted the old Elk Mountain Lodge in the upper Castle Creek valley into his own private residence; his four properties there are worth $47.5 million. He reportedly paid $3.1 million for a faux Colorado ghost town that he moved to his 5,000-acre ranch near Paonia. Once a part of Koch Industries with his brothers, he sold out to them but later sued for more in a case that dragged on for 18 years. His penchant for legal action also includes being a plaintiff in a lawsuit against the city of Aspen over its desire to use water for hydropower from Castle and Maroon creeks and suing the interior designer he hired for his Aspen home for not properly decorating the home in a Western theme. Bill Koch’s political tastes run close to his brothers’ — he and his energy development company Oxbow Carbon (which runs a coal mine near Paonia) gave a collective $1 million to the pro-Romney super PAC Restore Our Future.

#20 Ann Walton Kroenke, $3.9 billion: A Wal-Mart heiress, Ann Walton Kroenke has the perfect billionaire love story. She met her billionaire husband, sports titan Walter Kroenke (see below), on a skiing trip to Aspen. As the couple’s fortunes rose (her net worth is up with a 14 percent rise in Wal-Mart stock this year), they increasingly invested in Aspen and made the most expensive residential purchase of 2011 for their Red Mountain mansion.

A skier slides down to the base of the Two Creeks lift through the luxury neighborhood of the same name. Photo: Brent Gardner-Smith

#21 John A. Sobrato, $3.4 billion: Silicon Valley real estate magnate John A. Sobrato’s eponymous company owns and manages 8 million square feet of commercial office space, and his family owns eight wholly owned units at the Timbers Club in Snowmass Village valued at a combined $16 million.

#22 Stanley Kroenke, $3.2 billion: Worth about $700 million less than his heiress wife Ann Walton, Stanley Kroenke can partially thank her family for his fortune. He made millions developing shopping centers anchored by Wal-Marts. He owns the Denver Nuggets and the Colorado Avalanche, and has increased his stakes in the St. Louis Rams and the English soccer club Arsenal. He’s also been busy acquiring Aspen property: Besides a $6.5 million townhome at the base of Aspen Mountain and a retail building downtown, Kroenke last year paid $20.75 million for two adjacent properties on Red Mountain.

#23 Stephen Ross, $3.1 billion: Although Stephen Ross doesn’t appear to own personal property in Pitkin County, his Related Companies still owns $42 million worth of property in Snowmass Village, even after a consortium of European banks foreclosed on the partially built Base Village in 2011. The New York-based development powerhouse founded by Ross — who according to Forbes has been “on the prowl” for distressed properties since the economic downturn — once planned through its joint venture Related WestPac an 80-acre, master-planned development including Base Village, the Snowmass Center, and the Snowmass Mall area.

#23 Edward Lampert, $3.1 billion: A self-made billionaire investor, Edward Lampert’s most well-known acquisitions are Kmart and Sears Roebuck and Co.; he acquired the former in bankruptcy and the latter is his largest investment. Owner of a $14 million home in the gated Starwood neighborhood, Lampert has connections to other Aspen homeowners: He worked alongside Daniel Och (see below) at Goldman Sachs early in his career, and more recently, he bought $130 million worth of Sears stock from his own ESL Investments when his Starwood neighbors the Ziff brothers (see above) reportedly wanted out.

#25 James Jannard, $3 billion: James Jannard made his fortune from sunglasses company Oakley, which he took public and expanded to include goggles, ski/snowboard wear, bags, and footwear. Oakley bought the high-end Optical Shops of Aspen chain in 2004, which started in Aspen but now includes 36 boutiques. Jannard sold Oakley to optics giant Luxottica in 2007 for $2.1 billion, but still has a share of the now larger company.

#25 Ken Griffin, $3 billion: Ken Griffin has seen his fortunes fall and rise dramatically in the last few years. Griffin’s firm, Citidel, manages about $11 billion, although it recently sold its investment banking unit to Wells Fargo. Personally, Griffin owns a home at the base of Tiehack worth $9.4 million, and invests in Republican presidential candidate Mitt Romney — he gave the Romney-supporting super PAC Restore Our Future $100,000 in February.

#27 Haim Saban, $2.9 billion: Israeli tycoon Haim Saban has a $6 million home near the Aspen Club. He made his fortune with the Power Rangers brand, and his Saban Brands also owns Paul Frank, whose cartoon Julius the Monkey adorns clothing, accessories and other products. Saban is chair of Spanish-language broadcaster Univision, which he bought with investors for $13.7 billion from Gustavo Cisneros, another Aspen-homeowning billionaire (see above).

#28 Daniel Och, $2.6 billion: The founder of hedge fund firm Och-Ziff Capital Management got his career start at Goldman Sachs’ risk arbitrage department with fellow Aspen homeowner Edward Lampert and struck out on his own with a reported $100 million from the Ziff brothers. Like the Ziffs, he owns more than one Aspen property: a home on Willoughby Way valued at $20.3 million, and a Red Mountain pad valued worth $13.5 million.

#29 John Doerr, $2.4 billion: California venture capitalist John Doerr earned much of his fortune from savvy early investments into Internet companies Amazon, Netscape, Sun Microsystems and Google, and later paid top dollar for stakes in Facebook, Twitter, and Groupon. His investment in Aspen is also very high profile: The Aspen Institute trustee is one of two namesakes of the nonprofit’s newest building, the Doerr-Hosier Center, with a reported contribution of $3 million. Doerr also owns a home along Hunter Creek valued at $12.7 million and was the founding funder of Aspen nonprofit For the Forest, which targeted beetle-infested lodgepole pines on Smuggler Mountain — Doerr’s backyard.

#30 Mortimer Zuckerman, $2.3 billion: The owner of U.S. World and News Report and the New York Daily News shares, Zuckerman also knows a thing or two about real estate: He co-founded Boston Properties and took it public in 1997. He owns a home on Red Mountain valued at $8.3 million. Zuckerman has at least one more thing in common with some other Aspen homeowners — his charitable foundation was ripped off by Bernie Madoff.

The Timbers Club at the base of Snowmass Ski Area. A number of billionaires own condos, or parking spaces, at the Timbers Club. Photo: Brent Gardner-Smith

#31 William Wrigley, Jr., $2.2 billion: Fourth-generation gum manufacturer William Wrigley, Jr. oversaw the sale of the family company to candy maker Mars for $23 billion in 2008. He left the combined company in 2011, according to Forbes, “to pursue philanthropic interests.” And to spend more time in Aspen? Wrigley bought a $10 million home overlooking the Rio Grande Trail in October 2011, creating a family compound, which, combined with two earlier real estate purchases, is worth $38 million. In December he sold a mansion and two penthouses in his native Chicago for a combined $12.3 million.

#31 Thomas Pritzker, $2.2 billion: The chairman of Hyatt Hotels and industrial conglomerate Marmon Holdings, Thomas Pritzker is one of 11 members of the Pritzker family on a Forbes’ billionaires list. He is also one of at least two family members (see below) with Aspen holdings — Pritzker owns a $10.4 million home on Maroon Creek Road and serves on the Aspen Strategy Group of the Aspen Institute, where his wife Margot is a trustee.

#33 J. Christopher Reyes, $2 billion: The food and beer distribution conglomerate that J. Christopher and brother Jude Reyes founded, Reyes Holdings, moves more beer than any other distributor in the U.S. and delivers burgers and fries to all the McDonald’s in Canada, Latin America, and Ireland. But while Reyes Holdings is worth $15 billion, J. Christopher Reyes’s Buttermilk home dropped steeply in value — he paid $31.5 million in 2010 and it’s worth $19.9 million now.

#33 Stewart and Linda Resnick, $2 billion: Stewart and Lynda Resnick together own a number of companies including POM Wonderful, flower delivery service Teleflora, agricultural producers Paramount Farms and Paramount Citrus Companies, and Fiji Water, which was at one point headquartered in Basalt. The newcomers to the Forbes 400 also own a home east of Aspen valued at $15.3 million and are major donors to the Aspen Institute, where Lynda sits on the board of trustees. Their gift of $3 million to renovate the Paepcke Auditorium caused a flap when it was initially announced that the building housing the auditorium would be named in their honor. The auditorium kept the name of the institute’s founder and the Resnicks went ahead with their donation anyway.

#33 Neil Bluhm, $2 billion: Neil Bluhm is a self-made Chicago-based real estate and casino magnate with stakes in real estate private equity firm Walton Street Capital and commercial developer JMB Realty. Like fellow double billionaire Ted Turner, he also owns millions of dollars’ worth of property in the West, but in Bluhm’s case, it’s a $25.5 million mansion on Aspen’s Red Mountain.

#36 David Bonderman, $1.9 billion: The co-founder of private equity behemoth Texas Pacific Group apparently likes his deals complex, although his company’s investments, including Continental Airlines, Burger King, and J. Crew, have paid off — the firm currently manages $50 billion. Life is probably more simple at “Bondo’s” $25.1 million Wildcat estate outside Snowmass Village, where he apparently likes the neighborhood: He also owns five lots in nearby Cougar Canyon valued at $7.5 million collectively and three lots on Cozy Point Ridge totaling $3.6 million. Bonderman, who flew a bunch of Aspen pals to Las Vegas when he hired the Rolling Stones to play his 60th birthday party there, also is politically liberal. He and his wife recently gave a collective $75,000 to a super PAC that supports Democratic senators and candidates.

#37 Mark Pincus, $1.8 billion: Entrepreneur Mark Pincus made his fortune through social media and online gaming. An early investor in Facebook, Pincus founded social media gaming company Zynga, which makes games such as FarmVille, Mafia Wars, and Words With Friends. He owns a home in Woody Creek valued at $3.8 million.

#37 Penny Pritzker, $1.8 billion: The younger (and slightly poorer) first cousin of Thomas Pritzker (see above) owns a home on lower Castle Creek Road valued at $9 million. Besides both owning Aspen real estate, the cousins are charged with selling assets of the family’s vast business empire. The Chicago businesswoman was national finance chairwoman of Barack Obama’s 2008 presidential campaign and is one of the key fundraisers for his re-election bid. Pritzker was a speaker at the 2011 Aspen Ideas Festival and is listed as one for this summer’s program as well.

#37 Herbert Simon, $1.8 billion: Simon Property Group, the successor of the firm Herbert Simon co-founded with his deceased brother Melvin, is the largest publicly traded real estate investment trust in the U.S. The company’s interests are largely in shopping malls — it has grown to control 263 million square feet of leasable space and 392 properties in this country as well as in Europe and Asia. Simon has owned his $5.5 million condo at the base of Aspen Mountain since 1997. He also owns the Indiana Pacers basketball team.

#40 Thomas Friedkin, $1.6 billion: Thomas Friedkin’s Gulf States Toyota has exclusive rights to import and distribute Toyota vehicles in five southern states (giving him a cut of every car and truck sold there since 1968). He is also a former Hollywood stunt pilot and small part actor who collects and flies World War II fighter planes, the owner of a hunting safari company who maintains a huge game preserve in Tanzania, and chair of the Texas Parks and Wildlife Commission. Friedkin has owned a condo at the base of Aspen Mountain since 1987; it is worth $2.3 million.

There are a number of estates owned by billionaires above McLain Flats Road. Photo: Brent Gardner-Smith

#41 Ed Bass, $1.5 billion: Although Fort Worth resident Ed Bass made his fortune in a very traditional Texas way —inheriting and building up their namesake oil empire with his brothers — he is, according to Forbes, “the most free-spirited brother.” Along with interests in architecture and ecology (he reportedly spent at least $100 million on the Biosphere 2 experiment in Arizona that sought to recreate the earth in a self-contained environment), he has also invested in a Puerto Rican rainforest, a Nepal hotel, and an Australian ranch. He owns a condo at the Aspen Club worth $2.3 million, and at his $3.9 home east of Aspen, he won government approval to dredge and excavate a portion of the Roaring Fork River in order to improve trout habitat and help stem erosion.

#41 Daniel Gilbert, $1.5 billion: Yet another businessman with sports interests, Daniel Gilbert owns the NBA’s Cleveland Cavaliers. He made his fortune with his Quicken Loans, which made it through the mortgage mess relatively unscathed and wrote $30 billion in new mortgages in 2010. Gilbert continues to add to his empire with tech start-ups, casinos in Ohio, and bargain Detroit real estate. Meanwhile, his Wildcat estate, for which he paid $9 million in 2004, is currently valued at $11.2 million.

#43 Farris Wilks, $1.4 billion: Former mason Farris Wilks went into the family business with his brother Dan (see below) in 1995, but the pair got really rich when they branched out into hydraulic fracturing and oil field services. Also the pastor of a church in his hometown of Cisco, Texas, and the co-owner (with Dan) of a 66,000-acre Montana ranch, Farris bought the most expensive ski-accessible home in Snowmass Village just one month after the brothers sold their combined interest in Frac Tech for $3.5 billion. Farris paid $16 million for the seven-bedroom home in The Pines that is now worth $13.3 million.

#43 Dan Wilks, $1.4 billion. A close partner in business with his brother Farris, he’s also a fan of Aspen. He owns two homes in Aspen close to the downtown core. One is worth $8.3 million and the other, along the river, is worth $4.9 million.

#43 Evgeny (Eugene) Shvidler, $1.4 billion: A Russian with U.S. citizenship who lives in London, Evgeny Shvidler, like his best friend Roman Abramovich (see above) owns property in Snowmass Village, a Two Creeks home valued at $10 million. The self-made oil and gas and investment tycoon has a stake in Russia’s largest steelmaker, as well as Moscow real estate, gold mining, a French vinyard, and cash from oil and media deals.

#46 Christopher “Kit” Goldsbury, $1.3 billion: Christopher “Kit” Goldsbury made his fortune on salsa. He married the daughter of the founder of Pace Foods, worked in the salsa factory, became president, bought his wife’s half when they divorced, and sold the entire outfit to Campbell Soup at a healthy profit. His private equity firm Silver Ventures invests in the food industry and real estate, and Goldsbury invested in Aspen. He owns a home on lower Castle Creek valued at $16.3 million and, like fellow Aspen 50 billionaire Bill Koch, is a plaintiff in a lawsuit aimed at preventing the city of Aspen from building a hydropower plant that would divert water from the creek that runs past his property. Goldsbury has water rights to a small spring on his property that feeds into a pond.

#47 Frank Fertitta, $1.25 billion: Las Vegas resident Frank Fertitta started out in the family casino business but became a billionaire through ultimate fighting. He and his brother’s Station Casinos, which emerged from bankruptcy in 2011, is one of the biggest local casino operators in Vegas. His company, Zuffa LLC, runs the Ultimate Fighting Championship, which is widely televised and has gone mainstream. Like Farris Wilks (see above), Fertitta has a home in The Pines valued at $7.4 million.

#48 Peter Lewis, $1.2 billion: Peter Lewis is chairman of the insurance company his father founded, Progressive Corp., and a fervent liberal activist and philanthropist. He recently gave a Democratic-leaning super PAC $200,000, is one of the country’s biggest proponents of medical marijuana, and reportedly hosted several other billionaires and liberal leaders at the Aspen Institute in 2004 to talk about how to defeat then President George W. Bush in the upcoming election. Lewis owns an $8.3 million home in the West End overlooking Hallam Lake, while his family members have more notorious connections to their nearby properties. His son Jonathan bought the former home of modern Aspen founders Walter and Elizabeth Paepcke and tore it down in the late 1990s to much local outrage. And the family, apparently led by Jonathan, recently purchased the University of Colorado’s former Given Institute for $13.8 million and tore it down to make way for a single-family home.

#49 Dan Snyder, $1.1 billion: Dan Snyder owns the Washington Redskins (the second most valuable NFL team) as well as a $14 million home near Buttermilk. The college dropout made his first million when he was 20 in a business that marketed to college students and built his wealth with a marketing company that he took public as the youngest CEO of a New York Stock Exchange company. His Red Zone Capital has interests ranging from restaurants to broadcasting and TV production. Snyder’s private jet can be easily identified at Aspen/Pitkin County Airport — it has a Redskins logo on it.

#50 Paul Singer, $1 billion: Singer, founder and CEO of Elliott Management in New York, which specializes in distressed debt investing, is one of several Aspen-homeowning financial industry executives to donate to the pro-Romney super PAC Restore Our Future. Singer gave $1 million in October 2011; he also was a major sponsor in 2011 of the National Disabled Veterans Winter Sports Clinic in Snowmass Village, where he owns two ski homes in the Two Creeks neighborhood, one worth $9.4 million and the other $8.9 million.

Below is a table, created by Aspen Journalism, that illustrates the connections between people on the Forbes billionaires lists and Pitkin County. The table can be expanded to show all 50 people at once.

By Brent Gardner Smith, Aspen Journalism
Thursday, March 8, 2012

A highly regarded expert on rivers who has worked for both Pitkin County and the city of Aspen has recommended that a channel dug by the city in 1992 as a kayak course along the John Denver Sanctuary be filled in because it is harming the ecosystem in the Roaring Fork River.

“With regard to the kayak park at the John Denver Sanctuary, we would recommend the complete removal of the course and reclamation of the area occupied by the course to a functional flood plain,” wrote Bill Miller of Miller Ecological Consultants Inc. of Fort Collins. “There are a number of potential problems associated with the kayak course that impact river function.”

The main issue, according to Miller, is that the kayak channel diverts too much water during low-flow months, thus compromising fish habitat.

Miller prepared a study of the condition of the Roaring Fork River in 2011 along with Ayres Associates Inc.

The study, called a “Geomorphic Assessment of the Stability of the Roaring Fork River Through the City of Aspen, Pitkin County, Colorado,” was done at the behest of the Pitkin County Healthy Rivers and Streams Board.

The study was an extension of similar work done by Miller for the county on the North Star section of the Roaring Fork east of Aspen.

A view of the kayak park, looking upriver. The main channel of the river is to the left, the kayak channel to the right. Photo: Brent Gardner-Smith

Another problem, according to Miller, is that during high water, the water in the kayak channel erodes dirt from the banks and leaves it in the seven man-made pools in the 675-foot-long channel, thus reducing their viability as quality river habitat.

Still another problem is that the small boulder dams in between the pools “create an obstruction to fish passage during low flows” and fish can get trapped in the pools.

“The sediment and organic material deposition in the pools, the limited habitat, and potential summer heating of the water in the pools can be detrimental to any fish stranded in the kayak channel during the summer months,” Miller wrote.

Miller also said that when warm water from the pools drains back into the main channel, it’s unhealthy for the river ecosystem.

In all, Miller would like to see the kayak course replaced by a more river-friendly, low-lying riparian area.

“The kayak channel could be reclaimed by removing the excavated material from the intervening island and refilling the kayak channel with little to no effect on in-stream habitat on the main channel of the river,” Miller wrote. “Reshaping of the left bank of the river and replanting riparian vegetation on the reclaimed island/floodplain area would also contribute to habitat diversity in this reach.”

One of the seven pools in the kayak channel where at low flows, fish can find themselves in hot water. Photo: Brent Gardner-Smith

Miller identified a number of other structures and man-made efforts to control the river that are also having a potentially negative impact on the river, especially at low flows.

For example, there is a 5- to 6-foot-tall dam across the river just below Stillwater Drive that is used to divert water into the Salvation Ditch canal, which Miller notes is an “impediment to fish passage.”

There are also a number of locations where small rock structures have been placed in the river to help protect utility pipelines that cross the stream.

Those structures are just high enough to make it difficult for fish to freely move about in low water, and they also cause very shallow areas to form upstream of the structures.

Additionally, the banks of the river in many spots through town have been fortified with boulders by property owners to prevent flooding, which is not ecologically healthy for the river.

“The reach of the Roaring Fork River through the city of Aspen is significantly encroached upon as a result of urban development,” Miller notes. “Very little of the of the river’s floodplain remains along the river corridor and upstream diversions, and man-made perturbations within the watershed have changed not only the hydrology of the system, but also a whole host of other functions and processes.”

This is the view looking downriver at the top of the kayak course where a small peninsula of boulders splits the river. The main channel heads to the right. Photo: Brent Gardner-Smith

While Miller’s study, completed in February 2011, is posted on the river board’s website — www.pitkincountyrivers.com — and was given by Miller to David Hornbacher, the city’s director of utilities and environmental initiatives, it has not gotten much attention until now.

“We need to look at this report openly and have a dialogue with the county and determine the best approach moving forward,” Hornbacher said this week when asked about the report.

The channel was dug by the city in 1992 to improve the aesthetics of the Rio Grande Park area. Prior to that, the city used the land along the river to dump snow cleared from city streets. And the city once disposed of large chunks of concrete there.

The kayak course was also dug out in an effort to reduce the prospect of flooding at the Aspen Art Museum building.

Now at high water, the kayak channel directs about a third of the river’s flow to the inside corner of a bend in the river, thus reducing the amount of water that rushes directly toward the museum building.

While it is called a “kayak park” and a “whitewater course,” the channel has rarely been used.

It does not create the kind of surfable waves that modern kayak parks are based on, nor is that stretch of the river popular with either kayakers or rafters so it is not a fun play feature in the middle of a run.

The city of Aspen, however, did secure a recreational water right through the area in 2004 based on use of the channel as a “whitewater course.”

Along the way, however, the city needed to sign stipulations with the Colorado Water Conservation Board, the state water engineer and Trout Unlimited that it would leave 32 cfs in the main stem of the Roaring Fork.

The city diverts water into the kayak channel by virtue of an imprecise rock weir, so the stipulations hold the city to diverting no more than a third of the river when it reaches 48 cfs.

A view of the channel along the John Denver Sanctuary. Many people value the calm water in the park. Photo: Brent Gardner-Smith

Today, the series of pools in the channel are probably more highly valued as a burbling amenity in the John Denver Sanctuary, which it borders, than as a kayak park.

Stephen Ellsperman, the city’s director of parks and open space, said the flow of water in the channel by the John Denver Sanctuary is an important part of the park to many people.

But he also noted the parks department has been working hard through other projects, such as the current stormwater management system being installed in the Rio Grande Park area, to improve the health of the Roaring Fork River.

“Our goal is to have the healthiest stream in the world,” he said. “And to that end, anything we can do, we are willing to do.”

Jeff Woods, the manager of the city’s parks and recreation department, seconded that concept.

“To me, this is an exciting opportunity to make the park more environmental,” Woods said. “I think we have an opportunity to make the river better.”

River “poems, prayers, and promises” in the John Denver Sanctuary. Photo: Brent Gardner-Smith

Editor’s note: this story was also published in the Aspen Daily News on Thursday, March 8, 2012.

By Brent Gardner-Smith, Aspen Journalism
Wednesday, March 7, 2012

Editor’s note: Please also see the “document trove” at the bottom of this story.

Attorneys for 29 condo owners in the Capitol Peak Lodge claim in a lawsuit that Aspen Skiing Co. “participated in a joint scheme” with other Base Village developers to defraud condo buyers.

The suit claims that Skico, along with Intrawest, The Related Cos., Related WestPac and other corporate entities involved with Base Village, purposely overstated the size of the condos in the Capitol Peak Lodge in order to charge buyers more and increase profits.

The lawsuit also claims that entities associated with Related later took steps to conceal the true size of the condos from buyers by failing to list the size of the units on an official condo map and by providing overstated figures to the Pitkin County assessor.

Skico’s attorneys at the Denver law firm of Dufford and Brown have moved to dismiss the claims against Skico in the suit, which has been unfolding in Pitkin County District Court since June 2011.

“The amended complaint fails to allege any particular conduct of Aspen Skiing Co. in relation to the allegation of misrepresentation or concealment,” Skico’s attorneys claim, adding that “Aspen Skiing Co. was not a party to the contracts for sale of the condominium units.”

The owners of Skico, the Crown family, formed a partnership with Intrawest called Intrawest Brush Creek Development Co. LLC to develop Base Village, before selling the project to entities controlled by The Related Cos. and Related WestPac in 2007.

An official with another entity formed by the owners of Skico and Intrawest — Base Village Phase 1A Development Co., LLC — signed purchase and sale agreements in 2006 with prospective buyers of the 82 condos in the three Capitol Peak Lodge buildings at the bottom of Snowmass Ski Area.

When buyers later closed on their condo sales in 2008, they did so with Base Village Owner LLC, an entity controlled by The Related Cos. and Related WestPac, not Skico.

But the attorneys for the 29 condo owners who have filed suit, Matt Ferguson of Garfield and Hecht in Aspen and Michael Reiser of Walnut Creek, Calif., assert that Skico acted as a developer and an agent in the Capitol Peak Lodge sales and so had an active role in the deal.

“Skico’s insinuation that it had no involvement in the development and sales of the units in the Base Village project is disingenuous,” a brief filed by Ferguson and Reiser on Feb. 21 stated. “ … Skico aided and abetted and participated in a joint scheme with all other Intrawest defendants in an effort to defraud plaintiffs.”

The attorneys for the condo owners have grouped the nine different defendants named in their lawsuit into the “Intrawest defendants” and the “Related defendants,” depending on which phase of the project they were involved with.

Skico, given its association with Intrawest and its sales entity, Playground, has been deemed to be an “Intrawest defendant.”

When asked for comment on the claims in the lawsuit, Dave Bellack, a senior vice president and in-house counsel for Skico, responded by saying “We don’t believe that the Aspen Skiing Company had anything to do with any of the allegations of these plaintiffs.”

The Capitol Peak Lodge, just a few steps from Aspen Skiing Co.’s gondola to Elk Camp in Base Village. Photo: Brent Gardner-Smith

Like the Viceroy suit?

Ferguson and Reiser also represented over 60 prospective buyers of condos in the Viceroy hotel over a similar claim that the size of the condos in that building were also overstated.

In March 2011, District Court Judge Denise Lynch determined the Viceroy condos had in fact been smaller than advertised and ruled that would-be buyers could get out of their contracts and get their deposits back.

As in the Viceroy case, Ferguson and Reiser claim that the Capitol Peak Lodge developers used “bait and switch” tactics that violated the federal Interstate Land Sales Full Disclosure Act, commonly referred to as ILSA.

Under ILSA, they claim that Skico clearly was functioning as a “developer” and/or an “agent” in the sale and marketing of the condos.

They cite a number of letters to prospective buyers citing Skico, including one that refers to the “Base Village Partnership of Aspen Skiing Co. and Intrawest” and another letter sent to buyers and signed by Jim S. Crown in his role as director of the Intrawest Brush Creek Land Co., which was formed by Intrawest and by corporate entities controlled by the Crown family, which also owns Skico.

“While plaintiffs did not allege that Skico directly sold the units to plaintiffs, the allegations are clear that Skico offered to sell and advertised for sale, the units within the Base Village projects,” attorneys for the condo owners told the court. “ … Skico held itself out to plaintiffs as the developer and seller of the Base Village project by actively promoting its name as the face of the developer of the Base Village project.”

Given that, the attorneys argue, Skico has liability under ISLA because of the fraudulent actions of its partnership with the other “Intrawest defendants.”

Attorneys for Intrawest at Rothgerber Johnson and Lyons discounted their client’s purported infractions of ILSA, however.

“ILSA was not intended to insure buyers of luxury resort condominiums against market risk, but has nonetheless become an ‘increasingly popular means of channeling buyer’s remorse,’” they said, quoting another source on the topic.

In the suit over the Capitol Peak Lodge units, Ferguson and Reiser also claim that the developers failed to fully disclose their intention to issue $47.8 million in bonds to help cover construction costs on the project, and that they did not fully disclose information about the resulting property tax burden for condo buyers, which the plaintiffs’ attorneys say are 240 percent higher than it is for condo owners in Snowmass Village just outside of Base Village.

The attorneys also allege it was wrong for the Related defendants to issue the bonds in 2008 in the face of shaky finances for the project, which meant that the other condos planned for the project would not get built, and therefore would not help pay down the debt from the bonds.

“ … by April 2008, Related defendant knew of the high likelihood that the Base Village project would not be constructed beyond the first phase of the Viceroy hotel, and that as such, the issuance of the metro district bonds would cause the plaintiffs’ units to become significantly less valuable, due to the fact that the plaintiffs’ units would be subject to a financially insolvent metro district without sufficient property owners to adequately serve the metro district bond debt,” Ferguson and Reiser state.

Defendants beg to differ

Motions to dismiss the Capitol Peak Lodge suit have been submitted to Judge James Boyd from all the defendants in the case, including Skico, Intrawest and The Related Cos.

Attorneys for Intrawest and Related both say the claims from the Capitol Peak Lodge owners should be dismissed because proper disclosures about the “approximate” size of the units, and about potential additional property taxes from bond sales, was duly given in the purchase and sales agreements signed by buyers.

They also argue that the suit should be dismissed because the owners waived their right to file suit as individuals, because the owners closed on their units and accepted the units as is, and because in at least nine instances, the owners closed on their condos more than three years before the lawsuit was filed.

Attorneys for the defendants also say that the Capitol Peak Lodge buyers have filed a “copy-cat” lawsuit suit trying to capitalize on the victory by the prospective Viceroy owners. But, they say, Capitol Peak Lodge is no Viceroy.

“Plaintiffs’ case is fundamentally different from the Viceroy litigation because the Viceroy plaintiffs rejected the allegedly non-conforming condominium units proffered to them and sued for a refund of their deposits,” stated attorneys representing Related at Ballard Spahr in Denver. “In sharp contrast, plaintiffs here accepted their units, took title to them, and remained in possession for two-and-a-half to three-and-a-half years before suddenly purporting to notice that the units varied ‘substantially’ from what had been promised to them.”

And, attorneys for the defendants point out, it was only after the Viceroy lawsuit that they filed their own suit.

A detail from the Capitol Peak Condo Map on file with the Pitkin Court Clerk. Unlike some other condo maps, this one does not have a list of condos that includes the square footage of each condo, something the plaintiffs allege the developers did on purpose to deceive them. Source: screen grab of pdf

Approximate differences in size?

They also point out that the purchase and sales agreements signed by the prospective condo buyers clearly state that all measurements of condos are “‘approximate’ and that ‘final dimensions, square footage, and floor plans may vary.’”

But Ferguson and Reiser argue that it wasn’t until the condo owners got bills in 2009 from their homeowners association that they realized the actual size of their units differed from the “approximate” size of their promised units.

For example, Bruce Smith of Orlando, Fla., the lead plaintiff in the suit, was told the approximate size of his two-bedroom condo that he paid $1.4 million for would be 1,178 square-feet.

When built, it turned out to be 1,102 square-feet, or 76 square feet and 6.5 percent smaller than advertised.

So instead of paying $1,171 per square foot, Smith ended up paying $1,252 per square foot, which could be considered a cost increase of $95,164.

Ferguson and Reiser point out that every one of the condos bought by their clients was smaller than advertised, from between 42 square feet to 195 square feet smaller, or from between 4.5 to 15 percent smaller.

In all, Reiser said they estimated their clients essentially overpaid for the collective condos by about $3 million.

Referring to the defendants’ admonishments that buyers were duly told their units were of an approximate size, Reiser and Ferguson wrote that “ … when selling Aspen/Snowmass real estate at $1000′s per square foot, with people’s life savings on the line — approximating by ALWAYS overstating by significant amounts cannot be fairly disclaimed under Federal or Colorado law.”

They also claim, in response to defendants saying that they warned buyers about potentially higher property taxes in the metro districts, that they were relying on a “You-Should-Have-Known-We-Were-Lying-To-You” defense.

“Given defendants superior knowledge of a:) statutory, industry, and federal lending/appraisal standards for the measurement of the square footage of condominiums, b) the extraordinary special district taxes that were to be hatched by these developers and certain to attach to plaintiffs’ units; and c) the virtual certainty that the bonds issued by the Related-controlled metro district would end up in default (which default has now occurred), defendants knew exactly what they were doing in failing to fully disclose those material facts to plaintiffs,” Ferguson and Reiser argue in a Feb. 29 brief. “They were maximizing profits with false product sizes. They were also actively and knowingly transferring their known risks on an unwitting customer.”

Editor’s Note: The story above was published in collaboration the Snowmass Sun on Wednesday, March 7, 2012.

Capitol Peak Lodge lawsuit document trove

There are a growing number of legal briefs in the case, Bruce L. Smith, et al v. The Related Companies, Case No. 2011 CV 168 in Pitkin County District Court.

Below are some of the most relevant documents filed with the court to date, which are posted in Document Cloud.

The original lawsuit, or “complaint,” was filed in Pitkin County District Court on June 29, 2011, with 24 plaintiffs. The complaint from the plaintiffs was amended on Aug. 1, and then again on Dec. 5, 2011. So the prevailing complaint is the one from December – the “Second Complaint and Jury Demand.” It is a 52-page document and is broken into parts one and two below.

Second Amended Complaint, Part 1

Second Amended Complaint, Part 2

In response to the lawsuit, there have been a number of “motions to dismiss” filed, including motions from Aspen Skiing Co., Intrawest, and The Related Cos. Attorneys for Aspen Skiing Co. have actually filed two motions to dismiss, one on Oct. 21, 2011, and one on Jan. 10, 2012. Both are posted below.

SkiCo Motion to Dismiss, Oct. 21, 2011

Skico Motion to Dismiss, Jan. 10, 2012

Attorneys for the plaintiffs (the 29 condo owners in Capitol Peak Lodge) responded on Feb. 21, 2012, to SkiCo’s Motion to Dismiss. That legal brief is linked below:

Plaintiff’s Response in Opposition to Defendant Aspen Skiing Company, LLC’s Motion to Dismiss

Attorneys for Intrawest and various corporate entities affiliated with Intrawest also filed a motion to dismiss, on January 23, 2012. It is below:

Intrawest Motion to Dismiss

Attorneys for The Related Cos. filed a Memorandum of Law in support of their Motion to Dismiss on Jan. 9, 2012. It is a 60-page document and is in three parts below:

Memorandum of Law in Suport of Motion to Dismiss Second Amended Complaint – Part 1

Memorandum of Law in Support of Motion to Dismiss Second Amended Complaint – Part 2

Memorandum of Law in Support of Motion to Dismiss Second Amended Complaint – Part 3

In addition to Related’s memo, attorneys for Base Village Owner LLC and Related WestPac Real Estate LLC have also filed two memos in support of their motion to dismiss, one on Oct. 21, 2011, and one of Jan. 9, 2012. They are below.

Base Village Owner was the entity that took the lead on the development of Base Village. Related WestPac Real Estate is tied to Related WestPac, the entity formed by the partnership of The Related Cos., or at least a corporate entity it controls, and California developer Pat Smith.

Memo in Support of Defendants Base Village Owner LLC and Related WestPac Real Estate LLC to Dismiss First Amended Complaint, Oct. 21, 2011.

Memo in Support of Defendants Base Village Owner LLC and Related WestPac Real Estate LLC to Dismiss First Amended Complaint, Jan. 9, 2012

In response to the various motions to dismiss, attorneys for the plaintiffs filed two more briefs. One was a consolidated response to the Related motions to dismiss, and another focused on the nuances of the ILSA law in response to the motion from Intrawest to dismiss. They are both below:

Plaintiffs’ Consolidated Response in Opposition to Related Defendants’ Motion to Dismiss Second Amended Complaint.

Plaintiffs Resonse in Opposition to Defendant’s (Intrawests’) Motions to Dismiss Plaintiffs’ Second Amended Complaint.

As part of the Second Amended Complaint, attorneys for the plaintiffs filed a number of exhibits.

The exhibits below include a purchase and sale agreement as well as a list of the 30 condos purchased by the 29 plaintiffs and the differences in size between what they thought they were buying and what the received. The developers have responded that buyers were duly informed that the size of their condos was approximate.

Exhibit F of this collection of exhibits is a highlight. Exhibit D, also below, is the Base Village Purchaser’s Guide, which

Exhibits A-C and E-J Second Amended Complaint

Exhibit D to Second Amended Complaint

Also relevant to the story is the Capitol Peak Condominium Map, which is on file in the Pitkin County Clerk and Recorder’s Office.