Developer sues North Weld County Water District over tap moratorium

LUCERNE — A Weld County residential developer has sued the North Weld County Water District over its moratorium on new taps.

Eagle View Farms LLC, which is developing a 24-lot residential community just west of Lucerne and north of Greeley at Colorado Highway 392 and Weld County Road 35, filed suit Tuesday in Weld County District Court, alleging violations of a Water Service Agreement through which North Weld agreed to provide water service for the project.

Eagle View is seeking monetary damages in an amount to be determined, an injunction forcing the district to provide water service via taps for the project and other judgments, including attorney fees and expenses.

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Eric Reckentine, district manager for the North Weld County Water District, declined to comment on the lawsuit.

“I cannot comment on pending litigation,” Reckentine said. “We just don’t want to make any statements to the press while we’re working through this issue.”

Eagle View Farms LLC’s filing with the Colorado Secretary of State names Greeley-based Keirnes Cos. LLP as the registered agent. Kenneth Skogg, an attorney with the Denver law firm Kutak Rock LLP, representing Eagle View Farms, declined to comment.

“I will tell you that the allegations in our complaint are, we think, self-explanatory, and we will not be commenting further on the ongoing litigation,” Skogg said in a voicemail to BizWest.

The North Weld County Water District imposed a moratorium on new taps in September, citing uncertainty over 1041 regulatory processes in Fort Collins and Larimer County over its planned NEWT III pipeline extending from North Timberline Road in Fort Collins 5.3 miles east into Larimer County.

So-called 1041 regulations — named for Colorado House Bill 1041, passed in 1974 — allow local governments to exercise greater control over certain land-use projects, such as water pipelines.

The Fort Collins City Council in October exempted NEWT III from its 1041 regulatory process, but Larimer County has not yet done so.

North Weld’s moratorium prompted Severance to impose a building-permit moratorium, and Eaton to impose an “effective moratorium.”

But North Weld’s tap moratorium also affects projects in unincorporated areas, such as Eagle View Farms, located just outside the Greeley city limits. The 63-acre project is located near Seeley Lake and includes 24 estate lots of at least 1.75 acres, according to the project’s website.

Eagle View Farms and North Weld executed a Water Service Agreement in May 2006, the lawsuit states, through which the district committed to provide 24 residential water taps and one tap for irrigation and open space.

The district in December 2019 provided a Conditional Acceptance Letter stating that “all requirements have now been met for conditional acceptance of water system improvements as constructed for the [development],” the lawsuit states.

The letter included a two-year warranty period and “projected that final approval, dedication and acceptance of the water system improvement would occur at the end of the two-year warranty period, Dec. 20, 2021.”

Eagle View received a letter from the district on Jan. 5 stating that the “warranty period obligations regarding Eagle View Farms PUD were satisfied in full effective at the close of business on Dec. 19, 2021,” according to the lawsuit.

Eagle View contracted with a buyer on Dec. 13 to sell a residential lot, with a closing date of Jan. 14, conditioned on receipt of water-service confirmation from the district.

That confirmation never came, with the district citing its tap moratorium.

Eagle View had contracted to sell a lot, with a closing date of Jan. 14, but, “As a direct result of District’s failure to provide confirmation of water service for the Lot and to commit to sell a water tap for the Lot, the Buyer did not close on the Lot and the Contract to sell that Lot to the Buyer was terminated.”

The lawsuit states that the district “repudiated its contractual obligations to Developer by refusing to provide water service and refusing to sell a Tap for the Lot and by stating in its December 30, 2021 letter to Developer that ‘[b]ecause of the moratorium, the District is not selling any water taps at this time’ and that ‘the District cannot [guarantee] the timeline of availability of taps to [Developer].’ These statements constitute District’s present, positive, and unequivocal refusal to perform its obligations under the WSA.

“District’s anticipatory breach of the WSA caused and is continuing to cause harm to Developer in the form [of] the lost sale of the Lot referenced herein, and reputational damage in the form of financial loss as a result of Developer’s inability to sell lots in the Development with water service.”

Reckentine previously told BizWest that he will recommend that the district board partially lift the tap moratorium at its Feb. 14 meeting, but it’s unclear how many taps will be authorized.

The Weld County District Court case, Eagle View Farms LLC v. North Weld County Water District, is 2022CV30072.