Auctioneer Scott Shuman, right, with Hall and Hall, helped sell 90 units of Colorado-Big Thompson Project water on Wednesday. Bidders had to be cleared to participate in the auction by the Northern Colorado Water Conservancy District, which manages and delivers the water to cities and farms on the Front Range. Credit: Heather Sackett/Aspen Journalism

ASPEN JOURNALISM: Auction of Colorado River water nets $4.7 million

Bidders paid an average of $74,600 per acre-foot

By Heather Sackett, Aspen Journalism

Longmont dairy farmer Jim Docheff has been in the dairy business for all of his 88 years, and his son Joe grows the corn and alfalfa for the dairy cows on the farm east of the city. On Wednesday, Docheff acquired six units of Colorado River water to use on his family farm by outbidding other would-be buyers in a water auction.

“I came with the idea of buying up to 10 units, but I only got so many dollars to spend,” Docheff said.

Docheff was one of 42 registered bidders who gathered at Barn A of the Boulder County Fairgrounds for a chance to buy some of the 90 units for sale of Colorado-Big Thompson Project water. The transmountain diversion project, built by the U.S. Bureau of Reclamation in the 1940s, takes water from the headwaters of the Colorado River in Grand County and transports it via a system of tunnels, pipes and canals to farms and cities in northeastern Colorado.

The first bid for one unit of C-BT water hit a high mark of $72,000, but prices soon stabilized at around $46,000 per unit. After a bidder won the round, they said how many units they wanted to buy, with some people scooping up two, five or 10 units. A buyer’s premium of 10% was added to the high bid to get the total purchase price, which averaged $52,488 per unit.

After all 90 units had a high bid, auctioneer Scott Shuman with auction company Hall and Hall offered the crowd a last chance to outbid their neighbors and reopen bidding on any of the units, or to buy the entire 90 shares.

“If you didn’t get as much water as you thought you would, here’s your opportunity to add something to it,” he said. “I do not want to say ‘sold’ and then have anybody meet me in the parking lot saying ‘I really wanted to get a couple of those units; I would have given you more for it.’”

But no bidders raised their hands.

“All right, happy Valentine’s Day, ladies and gentlemen, we sold all the water units,” Shuman told the crowd. “Give yourselves a hand, give the Yoakum family a hand.”

When all was said and done, the auction netted a total sale price of about $4.7 million for about 63 acre-feet of water. The seller was longtime Longmont farmer Carol Oswald Yoakum.

C-BT water regulated

It’s common for shares of C-BT water to change hands, but a large-scale sale by auction like the one held on Wednesday is rare. The last one was in 2019.

But not just anyone can own C-BT water. It is highly regulated and there are rules about its use. To participate in the auction, would-be buyers had to meet criteria set by the Northern Colorado Water Conservancy District, which manages and delivers the water to users. Northern does not allow more than three acre-feet of C-BT water per irrigated acre, and it’s best if a bidder is an existing water user like an irrigator or municipality within Northern’s delivery area who already has water from a different source since C-BT water is only meant to be used as a supplemental supply. And out-of-state investors looking to speculate get turned down immediately.

“If they don’t have a farm, if they don’t have a beneficial need for the water, then there’s a very high probability that (Northern) would not approve a contract for them,” said Sherri Rasmussen, contracts manager with Northern Water. “I’ve had calls from New York people wanting to buy C-BT and my first question is: What do you want C-BT for? And they’re like, ‘Well, for investment, what do you think?’ And it’s like no, you don’t qualify.”

The C-BT project provides supplemental water to farms and cities along the northern Front Range and eastward along the South Platte River. Northern delivers this water to 33 municipalities and 120 ditch, reservoir and irrigation companies, according to its website. The project diverts about 200,000 acre-feet a year from the Colorado River basin.

Each year in April, Northern Water’s board determines the amount of water that users will get for each unit depending on whether it’s a drought year and how much water is available. The board most commonly settles on 7/10 of an acre-foot. That means Wednesday’s buyers paid an average of $74,600 per acre foot to own the water in perpetuity. That’s up from an average of $36,300 per acre-foot buyers were paying for C-BT water in 2015, according to WestWater Research, a water market research firm.

According to Adam Jokerst, a regional director with WestWater, C-BT unit prices are simply a function of supply and demand.

“Population growth largely drives water prices on the Front Range and in areas with the fastest population growth in the northern Front Range, that’s where we see the highest water prices,” he said.

But not all the buyers Wednesday were cities looking to transfer water from agriculture to support their continued growth. According to Shuman, of the 15 buyers, six were farmers; four were dairies; two were developers; two were municipalities and one was a farm foundation.

According to Jeff Stahla, public information officer for Northern Water, dairy farming in the district has been growing in recent years.

“That’s one of the takeaways from today: A lot of this water is staying in agriculture,” he said.

Another water auction is set to take place on Feb. 28 in Ault, east of Fort Collins. The Carlson Family Trust will sell 96 units of C-BT water and 154 acres of land.

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