Gypsum files for condemnation of biomass plant property
October 4, 2016
GYPSUM — On Monday, the town of Gypsum filed condemnation papers against Clearwater Ventures LLC, claiming its efforts to negotiate for the purchase of 69 riverfront acres have been largely ignored by the company that owns the land where the Eagle Valley Clean Energy biomass plant is located.
In July, town officials passed an ordinance to "acquire or condemn" the property and stated it was their intention to launch a negotiation process to determine a fair market price for the 69 acres located along the Eagle River. The town stated it wants the property for future wastewater treatment plant expansion and to preserve the river open space access.
But Gypsum officials say their attempts at negotiation have not produced any progress and have veered off on unrelated topics such as water rights. Additionally, the town noted Clearwater has filed a lawsuit alleging the Town Council did not follow proper procedure when it approved the July ordinance and Eagle Valley Clean Energy has filed its own condemnation proceeding against Clearwater Ventures.
"It's all a very confusing situation," said Gypsum Town Manager Jeff Shroll. "We are not sure how or why they are doing that (proceeding with their own condemnation)."
When contacted Monday, Dean Rostrom, of Clearwater Ventures LLC offered the following comment:
"Nobody at Gypsum has told us about this new development, even though we talked with their negotiator again just a few days ago, but it would really be unfortunate if Gypsum now plans to carry out its threat to take away our property by force when they've so publicly insisted that they want to negotiate a friendly, good faith purchase rather than a hostile takeover," said Rostrom. "We've repeatedly asked Gypsum to assure that Clearwater's tenant, the Eagle Valley Clean Energy biomass power plant, will have continuing access to water on the property, and security that it needs for its business, but the town has refused to respond to those needs or to negotiate in good faith."
Recommended Stories For You
Clearwater representatives have been adamant since the beginning of the issue that the town always intended an eminent domain taking of their property.
"Of course the moment a government announces its intention to condemn land, the property value plummets and the true open market value can never be realized by the seller, but the government shouldn't be able to use that to its benefit," said Rostrom during the July hearing when the town approved the ordinance.
By filing the condemnation, Shroll said the town will launch a process to resolve the issue. Ultimately a panel will make a ruling on the condemnation, but the first step in the process is a property appraisal.
"Under the law, they will have the right to get their own appraisal, which the town will pay for and we will certainly do that," he said.
Negotiations and lawsuits
Since July, town officials say they have repeatedly attempted to contact Clearwater's representatives to negotiate for the land purchase.
Gypsum Town Attorney Bob Cole said that on July 1, the town originally offered to pay $506,000 for the property based on appraisal information. Rostrom said that appraisal applied a per acre value of $7,600 to the land when Gypsum required Clearwater Ventures to pay a public land dedication fee that reflected a per acre value of $22,500. By applying the higher per acre figure to the proposed purchase, the town would have to pay more than $1.5 million for the land.
Town officials said the difference is the property they are seeking is largely wetlands and land that cannot be used for development, while the town's public land dedication requirement is for useable property.
After its initial offer was rejected, Cole said on Aug. 1 the town sent a second notice offering $600,000 that did not generate a response. On Aug. 10, town officials say they sent a third notice, offering to pay $800,000 for the property. That offer also failed to generate a response.
Gypsum has compiled a list of email contacts dated during July and August between Clearwater's attorney and the town, including communication from Don Ostrander, the town's representative for the attempted negotiations. After his repeated attempts to negotiate a purchase, Cole said Ostrander concluded that Gypsum had gone to great lengths to initiate a purchase negotiation and had acted in good faith, but Clearwater's team was not responsive to the town's efforts.
Rostrom responded that since the July town action approving the condemnation ordinance, no one had called him or his business partner regarding a purchase.
"The only communication with the town has been a few emails of little substance between myself and Jeff Shroll and the several emails between our attorney and the town's broker and lawyers."
Rostrum said no meaningful negotiations have occurred because "the town is unwilling to have a substantive discussion on protecting the access rights needed by the biomass plant to get its water from the property. Any sale of the property has to come with assurances that the biomass plant has continuing access to the water it needs, and the town's unwillingness to concede that access is an ongoing stumbling block."
Cole responded that the town has never sought to obtain water rights from the property.
Eagle Valley Clean Energy condemnation
The condemnation action brought by Eagle Valley Clean Energy against Clearwater Ventures, filed in September, baffled town officials and partially prompted their own condemnation proceeding, said Shroll.
Rostrom said the action was taken "in order to protect its access to water on Clearwater Ventures' property."
"Eagle Valley Clean Energy filed a condemnation action in Eagle County District Court on Aug. 1, seeking to acquire property rights from Clearwater necessary for its continuing operations."
Eagle Valley Clean Energy company officials stated, "Reliable and continuing access to property and water is essential to the biomass plant's operations, so we have taken this extraordinary action to protect our interests and to ensure our future security."
But because of the overlap between Clearwater Ventures and Eagle Valley Clean Energy, town officials have noted the action appears as though a company is suing itself.
"If they can't negotiate with themselves, it's not really too surprising the town hasn't been able to negotiate with them," said Cole.
When questioned on that point, Rostrom said the companies are not one in the same.
"They are entirely different companies with different lines of business and different ownership groups, and share only a limited amount of management overlap," Rostrom said. "The relationship between the companies is that Clearwater owns the property in Gypsum and leases 18 acres to Eagle Valley Clean Energy for the biomass plant, and conveys easements to it for water access."