City agrees to purchase Ford Ranch
Mayor explains ranch's purchase
My vote to purchase the Ford Ranch may be the most right of any I’ve cast in 14 years on the City Council.
That’s not to say the decision was easy to spend approximately $43 million buying about 32,000 acres. But the stakes – San Angelo’s continued access to water that is rightfully ours – were too high not to fully and forever secure.
At the core of the decision to buy the ranch is a legal concern regarding contracts signed some 40 years ago.
The City first purchased water rights to the Hickory Aquifer, which lies beneath the Ford Ranch, in 1971 and 1972. Had the ranch been for sale then, City leaders might’ve purchased it, recognizing that as the surest route to shoring up San Angelo’s water supply.
In the water rights contracts, the City granted the ranch free use of water from City wells for limited purposes. The latter agreement treated one City well differently; it potentially gave the ranch rights to water from the well with no limitations on its use.
Even so, the ranch’s claims to water were not unlimited. The contracts prevented the ranch from giving the use of water to anyone else (including future owners) without the City’s OK.
For decades, the contracts served the ranch and the City well. When questions rose as to the use of the water, they were resolved with little fuss.
But a number of factors have changed over the years.
First, the ranch’s management changed. For decades the City worked through issues with a Texas bank that managed the estate. Resolving concerns with a new entity with whom we had no relationship added uncertainty to discussions regarding use of the water.
Second, the Hickory’s importance to San Angelo grew as our lakes dwindled. That’s evident from the $120 million the City invested to pump and treat Hickory water. More recently, we’ve been discussing developing the Hickory to its max capacity of 12 million gallons per day.
Lastly, when the ranch was listed for sale, it asked the City to allow its new owners to use an undefined amount of our water.
That worried us. New owners might view our contracts differently and look to use as much of our water as they want without limits. That could jeopardize not only our multi-million-dollar investment in the Hickory, but San Angelo’s future.
The City identified three options to resolving the concern.
One, the City could seek to clarify our water rights in one or more lawsuits. While we’re confident in our position, going to court always carries risk. Losing such a suit could result in our losing access to some of the current and future water supply upon which we’re depending – along with the $120 million spent developing it. That was unacceptable.
Two, we could seek to renegotiate the 1971 and ’72 contracts. In fact, we’ve tried this. We discovered it would require compromise – chiefly relinquishing some of our water for the ranch to use – and we need every drop of our rights for our future.
Three, we could seek to legally condemn the property through eminent domain. That would be contentious and could cost the City more than buying the ranch now.
With the ranch being for sale, we had a once-in-a-lifetime opportunity: We could purchase it. That, of course, comes at a price – about $43 million (down from the initial price of $60 million).
If someone else bought the ranch, the property could be divided and resold, leaving the City to deal with multiple owners and, potentially, multiple water disputes for years. That’s too much uncertainty for a water supply we critically need.
After asking lots of questions, the City Council unanimously concluded – and with not one of the seven members showing any hesitation – that purchasing the ranch was the least risky option with the most certain outcome. That is, we could fully determine how much water any future owner could use. In doing so, San Angelo could protect what is rightfully ours … with the added benefit of reselling the ranch once we had and recouping much of the purchase price.
This purchase is not meant to grow San Angelo’s water supply. But it definitely reinforces the Hickory so it will hold up to our needs for years to come.
The City can afford this purchase. The water rate structure the City Council approved last year was built partly to fund water supply projects. Those funds cannot be used for purposes unrelated to water, including rebuilding streets and raising police officers’ pay. The ranch’s purchase fits into the water rate structure without the need for an additional increase.
This purchase is a critical step in moving toward the Hickory’s full and final development to deliver us up to 12 million gallons per day. Proceeding with that expansion while a cloud hung over our stake in the Hickory would not have been prudent.
Moving forward, we will take our time to ensure San Angelo’s water supply is protected from future encroachment. Once we’ve done that, the City will market the property to recoup much of the purchase price. We and our broker are convinced the ranch will be a sought-after property.
Some of you will wonder if the City should’ve seen this coming and should’ve resolved this sooner.
No one could’ve foreseen the Ford Ranch selling after 100-plus years of family ownership.
For decades, the relationship between the City and the ranch’s trust was friendly. With the ranch for sale, we could no longer rely upon that relationship to protect our water rights. We could, however, seize upon the sale as an opportunity to fortify what rightfully belongs to San Angelo.
After exploring every option to protecting San Angelo’s water, we are convinced this purchase yields the best and surest outcome. I’m as sure of that as I’ve been of anything during my time on the City Council and as your mayor.
City Council statement on ranch purchase
We are steadfast in our solid belief the purchase of the Ford Ranch is not just the surest avenue for protecting San Angelo’s stake in the Hickory Aquifer; it is the only responsible resolution for the City to pursue.
The City has invested $120 million building the infrastructure to pump, deliver and treat Hickory water. We have a financial duty to preserve that investment. But of far greater importance is the very survival of our community. Our lakes will not be able to keep up with San Angelo’s demand for water. We need the Hickory’s water – life-giving water. San Angelo is banking on the Hickory to someday soon provide us up to 12 million gallons per day. To lose any portion of that resource could be catastrophic.
With the ranch for sale, there was a very real concern a new ranch owner (or owners) would move to encroach on water that San Angelo is rightfully due. That was a chance we simply could not take.
Negotiating new language with the ranch to clarify the City’s current water rights could have meant giving up more of our water. This was not an option we could consider.
We also considered making our case in court. But with potentially multiple new ranch owners, that could have meant a never-ending string of lawsuits -- any one of which could cost the City more than just money; it could cost us precious water upon which we are depending.
We even considered taking the property through eminent domain. But that’s a contentious process that could cost the City more than the purchase price of approximately $43 million.
Purchasing the ranch carries two significant advantages.
First, it gives the City complete control over the use of our allotment of Hickory water. We can fully protect that water from future uses or encroachment on the ranch we deem to be potentially harmful. The purchase yields both the least risk and the surest outcome in that regard.
Second, it gives the City an opportunity, once it has cemented its water rights, to market the ranch and recoup most of the purchase cost. Our broker assures us the ranch will be a highly sought property.
This is not to say the decision to purchase the ranch was a snap. We, City staff and our legal counsel asked an avalanche of questions, plumbed every option and carefully weighed each outcome. In the end, we agreed without hesitation and in lockstep unison to take advantage of this singular opportunity to ensure San Angelo gets every drop of Hickory water to which we are entitled. This is the right decision … and it may well be the decision our predecessors in 1971 would’ve made had the ranch been for sale then.
That’s the year the City Council showed great boldness by securing water rights this community wouldn’t need for another 40-plus years. This move – to purchase the ranch – is equally bold. It’s also in keeping with the underlying premise of those 1971-72 water rights contracts: San Angelo needs water, and we must be willing to strike fearlessly in order to secure it.
Money matters regarding the ranch's purchase
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