theCITY EP81 Ford Ranch Purchase

[0:00:10] Welcome to the City. I'm Anthony Wilson, the Public Information Officer for the City of San Angelo. And today we have a special episode regarding a special case here in the City of San Angelo. As you've no doubt heard by now, the City Council has approved the purchase of the Ford Ranch, which covers 32,000 acres in some neighboring counties. And we're here to talk about how that came about and the reasons for doing that. Joining us are our City Attorney, Teresa James, and Jason Hill. He is a private council attorney who works for the city on water matters, so thank you guys for being with us. Thank you. Jason, I want to start with you by asking the most important question, and that is, why was purchasing the Ford Ranch which sits atop the Hickory Aquifer, the right move for the city to make? Well, it represented the opportunity for the city through a single transaction to firm up its existing water rights and really to make sure that those rights are going to be preserved for the future of the city's use in the Hickory Aquifer. And when we talk about the Hickory, obviously Theresa, you live and work here in San Angelo. How important is the Hickory Aquifer to our community? The Hickory is very important to our community and I think you can see that in the fact that We've invested already $120 million into water projects at the Hickory, and it's anticipated we're gonna invest millions more to shore up our water supplies. So let's back up for a minute, and let's start from the beginning, at the core of the City Council's decision to purchase the Ford Ranch are some legal concerns. That's why we're talking to two attorneys here that stem from contracts signed in 1971 and 1972, those regard the city's water rights in the Hickory. So Jason, what's the basis of those concerns? Well, it shouldn't be a big stretch for folks to recognize that a lot can change from the 1970s to the 20 teens, and a lot has changed, and particularly with respect to our understanding of some of the terms and the conditions that were in the city's existing water rights

[0:02:10] that were created back in the 1970s. So at the basis of those concerns were Modern thinking and and trying to apply modern understanding of some some very old legal concepts And that that in our mind raised some questions about about whether or not the city's rights were as farmed up as they should be And of course those contracts now are 40 plus years old Teresa had the city done anything in order to try to resolve some of those concerns in the past I think you know over time questions did arise But those rights have always been very important to us and we've always recognized City of St. Angelo needs every drop of water that's out there. So we've been very firm in our position that we have the right to that water and we're going to protect that right. And I think probably a lot of citizens thought that that we had those rights just fully under our own control. Could the city have done anything sooner in order to resolve some of these questions that may have arisen more recently? I don't think so. I mean, I think that the underlying concern has always been that we do not own the property that the Hickory Wells are located on. And throughout the time that the Wells have been there, and since the 1970s when those water contracts were signed, the property was owned by a trust and by a family who nobody anticipated would ever sell. So until the property was up for sale, there was no opportunity for us to truly firm up those rights. And you've mentioned, in fact, that had the property been for sale in 1971 or 72, the city might well have purchased it at that time. I think that that is a very reasonable expectation. You know, the Hickory Wellfield is one of our most valuable assets, and just like somebody's home, they would hesitate to build a home on property that they don't own. And so, at least without making sure that it's protected in every way possible. So as long as we didn't have the access to that property, I think it was necessary to take all steps to firm that up. Jason, did the city seek to negotiate any sort of compromise with the ranch regarding uses of city water?

[0:04:12] You know, we had some discussions earlier on with the trustees of the ranch property, but to be quite candid, the city was really in a position where it wasn't willing to negotiate away any water rights to the Hickory Railfield. It was in a position really where it wasn't interested in compromising the city's future water supply. So there were some discussions early on, but those discussions really didn't go anywhere because the city was resolute about its commitment to the Hickory and what that water means for the future. And when the ranch was placed on the market for sale, was that a cause for any concern for the city? Well, it was a, I'd say that it was an opportunity presented and it raised some additional questions. So to go back a little bit, we had a great working relationship with the managers of the trust for the last several decades. And really, we've seen eye to eye with one another about what the city's water rights to the Hickory are. But when the ranch came up for sale, it raised the question of what would those new relationships be and what would they mean for the city's water rights going forward. And so that in and of itself presented some challenges in our mind about just simply from the fact that we had some uncertainties going back, we've had a great working relationship and sort of a stable working relationship with the ranch going back. So out of that set of challenges came the opportunity to purchase the ranch and sort of quail those concerns that the city had for the future going forward. And so one of the current concerns might be that future owners might view and interpret those contracts that were signed in the 1970s differently than we and the trust that currently owns the ranch do. Let me be clear that the city felt very confident in its position about its interpretation of those contracts, but there was definitely grounds for disagreement with other parties on what those contracts meant. And the Hickory simply was too important to the city to gamble on what those differing interpretations might mean

[0:06:14] for the city's access to that water in the future. And of course, Teresa, the ranch could be sold to multiple landowners. How would that have complicated questions regarding water rights? I think it just multiplies the issues that Jason just highlighted. For every dispute and interpretation, we have to multiply that by however many landowners they're now worth the ranch. So dealing with a singular property owner is infinitely easier from a legal perspective than fighting the same battle with multiple property owners. And what's the likelihood that the ranch would have ended up with multiple landowners? You know, I think it's just a guess at this point on our part, but I think every one of us who were involved in those discussions understood that there was a very real possibility that the ranch of that size today is going to be split up and sold to multiple owners. So we saw it as a real enough possibility that we decided to take action. And even if it was sold to one owner now it could have still been subdivided and sold to multiple owners in the future. That's correct. So Jason what are the risks associated with seeking to clarify the city's water rights in court, had we chosen that path? Well, even though I'm an attorney, and I like to wear my attorney hat, courts are fraught with challenges for anybody that's ever been in one, you know that the outcomes are far from predictable, and what the city really needed with these water rights was predictability. So I'd say the biggest challenge in trying to resolve this dispute really was twofold, one of which is just predictability, being able to rely on the outcome of that kind of fight, And it's simply an open question. The second is, is timing. Maybe the dispute doesn't arise tomorrow. Maybe it doesn't arise next year. Maybe it doesn't arise ever. But the chance that the cloud sort of hangs over that property going forward was very real and was something that the city just couldn't afford to take on. It was a cloud that the city really needed to get removed in order for those hickory rights to be as firm as it possibly could be. And if there were a court fight, the venue would likely

[0:08:15] been in McCullough County so pardon the pun here but we would not have had home court advantage in that regard. That's true I mean we always prefer to fight within the city of San Angelo and our own courts here so being in a different jurisdiction is not not something that we would prefer. And again if there were multiple landowners we could be facing a continual string of lawsuits. We could do that particularly if one of them prevailed on a particular issue then we would anticipate that a number of other suits would follow. So Theresa did the city ever consider initiating imminent domain proceedings in order to gain control of that property? You know throughout this process when we realized the property was up for sale we were very careful and very diligent making sure we considered every possibility and imminent domain which is essentially the city using its power to take property and have a price determined for what that was worth at a later date was something that was on the table but again it's an an adversarial process, the price, if we had gone through that process, was uncertain. We could have ended up at a much higher price than what we're actually purchasing the property for outright. And since the property was already for sale, there was no point in going through such an adversarial process. And you have mentioned to me before that in determining that price, it's not a negotiation. It's a third party who's actually setting that price. Explain how that works. Well, the court will appoint a committee, essentially, that will look at the property and they will look at appraisals and they will determine what the value of that property would be for the property owner and what the city will pay for it. So it's not ever a question of whether or not we can receive the property when we're using the imminent domain process. It's always a question of how much the property owner gets paid for that property. So Jason, you've said something I think that really helped crystallize for me this process. You said that the purchase is the option with the least amount of risk and the most certain and predictable outcome. Explain what you mean by that. Well, we've talked today so far about a series of uncertainties and potential risks that the city faces in dealing with this very important water supply.

[0:10:19] Having the opportunity to purchase the property outright and consolidate those rights and determine once and for all what you want your water future to be was the opportunity that they gave the city the most control and the outcome. The purchasing process is straightforward and sort of a known quantity for the city and anybody that's been through that process before. And so it was really just an opportunity through good faith negotiations to negotiate an outcome that favored the city and provided it with the most predictable result possible. Theresa, you said that the ranch being for sale represented a singular opportunity. How so? Well, you know, when we first entered into the agreements for the water rights on that property, it was owned by a trust. And it was anticipated that that trust would go on forever and ever and ever. So when we first heard that the ranch was for sale, it was a little bit of a shock. I mean, nobody thought that the ownership of that property would ever be in question. So the fact that it is now for sale is kind of historic in its own right. And then going forward, looking at how property of that size is sold and marketed now, as we We said before, the likelihood of it being broken up into smaller pieces is a pretty good likelihood. So the opportunity just to deal with one property owner with whom we already have a historic relationship is something that we just couldn't pass up because it won't come again probably ever. And so to be clear, the same family has owned this ranch for more than 100 years since the very beginnings of the state of Texas. So this wasn't just a once in a lifetime opportunity. This was once in a more than lifetime opportunity. That's right. Absolutely. So both you guys were in the room as the City Council obviously discussed and deliberated the possibility of this purchase after all the questions were asked and answered and all the options and likely outcomes fully explored. Was there ever any hesitation by anyone, any member of the City Council to purchase this

[0:12:20] property? No, in the end there was never any hesitation. You know, it was more than one conversation that took place. We had multiple conversations in executive session regarding this purchase and our ability to to do it and whether it was the right thing to do. There were a lot of questions asked that we thought were appropriate questions to be asked. It was clear that the council understands the enormity of this purchase and took it very, very seriously. In the end, everybody understood that this was really the only opportunity we had to purchase this property. It was the right thing to do. And there wasn't any hesitation at all on the part of anybody at the table. Now, for those who may be wondering, explain why those discussions happen in executive session versus open session? Well, you know, under the Open Meetings Act, we do have the ability to go into executive session to discuss issues dealing with real property and on advice for counsel, particularly when those discussions will infringe upon a municipality's ability to negotiate a price. So because we knew we were going to be selling or purchasing a property, the seller knowing who we are is going to harm our position in that bargaining. So the legislature kind of foresaw that we would be harmed by that and passed these rules that allow us to do that. And so you feel very comfortable the city council has done its due diligence and asked every question that you might have expected them to ask. Absolutely. I don't think there was one question that I thought, well they're going to ask this that they didn't. Every question in my mind they asked. Every process that we went through they asked about. concern that I think could have possibly been raised was addressed. Jason, is this purchase meant to grow the amount of water that we can draw from the Hickory? I don't think that that's the right way to look at it. I mean really what we're doing is we're shoring up, we're strengthening the the foundation that our water rights out in the Hickory well-filled are built on. So while unfortunately it may not provide us with any additional water it definitely brings some more certainty and firms up

[0:14:22] up the reliability of those water rights into the future. Did we buy the ranch for what it was listed? No, we didn't. In fact, the ranch was originally listed at $60 million, and the ultimate purchase price is negotiated based on a price per acre, and that ultimate purchase price is going to be somewhere in the $43 million price range. Still, a tremendous amount of money. It's a significant investment, but the city clearly did its due diligence in protecting the public purse and its negotiations over this project? And who wasn't who negotiated the sale? We secured the services of a licensed real estate broker. His name's James King, he operates out of Fort Davis. He's been in a business for over three decades, very well known ranch real estate broker who served the city quite well. He's been familiar in large scale transactions like this transaction and has dealt with municipalities in the past as well. So he understood the process that we had to work through and sort of the challenges there that come with a city trying to acquire property through Arm Flink's transactions and did the city a very good job. And so explain why the use of a broker. Well you set the scale aside, the process is not a whole lot different than what many people might be exposed to in purchasing a home, you negotiate with the buyer through an intermediary, either a real estate agent or real estate broker. In this instance, we wanted to make sure that we had somebody who was highly qualified in ranching and large-scale ranch transactions to represent us, and that's exactly what we did. We had somebody operate as our intermediary and negotiating final purchase price for the project. And Theresa, you've told me that that's not an unusual process for the city when it's acquiring property because sellers often think that the city has an endless river of money into

[0:16:26] which they can dip. That's right. And we often hire an agent of some sort to operate on our behalf in those cases. I think that there's this belief that when a city is trying to purchase property, that's a very deep pocket. And it may be true that we have a deep pocket, but it's filled with taxpayer money. So we want to protect that to the greatest extent we can. So using somebody to act confidentially on our behalf is not an unusual process at all. So talk a little bit, Theresa, about the purchases, importance in relation to the investment that's already been made in Hickory. You know, I think that the importance for this is that we've invested a lot of money into a water source that is going to last us for a long time. We want to expand that water source. And it just isn't acceptable to leave any kind of instability in that transaction at all. We were given an opportunity to purchase the property and provide, you know, a very firm foundation by which we can develop that source without the cloud hanging over it that hangs over it today. It was just an opportunity that we all saw at the end of the day really was singular, as we said, in that we will never have this opportunity again and we had to take it. You mentioned foundations, and Jason, you have an analogy about this purchase as it relates to perhaps a homes foundation. Well, it's not a whole lot different, you know, what I want to be clear on again is we feel very resolute in our position about the interpretations of those contracts, but given the disagreements and the potential disagreements that we saw coming down the road, it's not a whole lot different than, you know, a home with a crack foundation. You've got cracks in your foundation, you got to make investments to fix those if you want everything that's built on that slab to hold up. You're not exactly gonna expand the footprint of your home, of the living space of the home, of those investments, but they're gonna ensure the long-term viability of that structure going forward. And that's exactly what the city did here. It's making investments into the foundation of its water rights and the hickory that are gonna serve the citizens of this community forever. Teresa, you mentioned about the investment that's been made

[0:18:27] and the city has spent $120 million to date so that it could pump, deliver, and treat water from the Hickory aquifer. How much of this purchase was related to protecting that specific investment? I think that 100% of this purchase is related to protecting that particular investment. When we look at the Hickory Wellfield and we look at the discussions going forward of expanding it to its full capacity, we had to protect that to the biggest extent we could. And having an unknown property owner owning that property just was unacceptable to us. And you mentioned that we still want to expand the infrastructure there so that we can develop and produce up to 12 million gallons per day of water from the hickory. Was that possibility threatened at all by some of the uncertainty that we've talked about here? You know, I think threatened is not the right word. As Jason has said, we feel really confident in the positions that we've taken with regard to the agreements that we operate under. But we did see that there is a cloud over it, and as long as there's a cloud in the legal world, that means the opportunity to be in court for years and years and years to resolve disputes is a possibility. And with an investment as large as we've made, with a resource, as valuable as that is, that was just not something that we should just ignore, which led to our decision to purchase the property. Jason, what are the plans for the ranch moving forward? Well, I think the city is going to take its time in assessing the ranch and the value of the ranch and what all rights that we need to consolidate to first and foremost make sure that we've got our water rights secure for the future. I anticipate that ultimately the city will make a decision as to whether or not to sell that ranch again to try to recoup its investments made, but that's going to be a process that's going to take time for the city to figure out and determine what it wants to do going forward. And I've heard before the term use methodical. We want to be methodical to make sure those

[0:20:27] rights are short up. No question about it. There is a sort of a no stone left unturned approach that the city is going to be taken and going forward and making sure that we've got our water rights protected. So while the intention is to at some point resell the ranch, people shouldn't expect that that's going to happen quickly. I wouldn't expect that it would. In In fact, you know, as a citizen, I would hope that the city takes its time and due diligence in how it approaches a sale of that property to make sure, as the saying goes, to make sure every eye is dotted and every tea is crossed. Theresa, how much did the fact the city could resell the ranch and recoup part of its purchase price play into the council's decision to approve the sale? You know, I think the council would have made the same decision regardless of whether or not we can sell the ranch. But the idea that we could resell this property and recoup some, if not all of the money that we invest in it, certainly sweeten the pot. We want to be good stewards of the citizens' money and knowing that ranches, particularly around Brady, do sell for a very good price was definitely a consideration. What aren't we doing as a result of expending these funds? Nothing. I think that there's often a concern that when we do something in the water department that takes money away from streets or it takes money away from police and fire and the reality is is those two funds are separate and can't be intermingled so the only projects we could use the money that we're spending on this property for were water related projects so we're just advancing our water goals we're not harming any other goals or opportunities within the city and is it fair to say to shoring up those water rights in the hickory is the first step towards the ultimate full development of that aquifer I do think that yes that is absolutely true. Once we have, you know, the full rights to that water, we proceed with much less uncertainty, with, you know, I don't want to say no uncertain because it's always uncertain in the world, but we certainly advance in a better position than we were otherwise. And do you anticipate that this purchase is going to impact water rates in any sort of

[0:22:29] way? No, it's, we actually anticipate it will not. This is already money that the current rates considers. Will the public have any access to the property? Now, all of our water properties, because this is our water infrastructure, you know, we have security concerns, so none of our water properties are open to the public, and this property will be the same. So, Jason, in summary, I want you to explain again how it is that the city got to this decision. Well, it started out with a long working relationship with the ranch that suddenly looked like it was going to change because of the listing of the ranch for sale. We knew for a long time that we had some ambiguous language in those old 1970s contracts with our water rights, but until the ranch was for sale, it was a problem that we felt we could live with because we had a good eye-to-eye relationship with the existing ranch managers. But with those new relationships, as I said, came concerns that we couldn't count on those same types of eye-to-eye viewpoints as we had going forward. So the city very methodically went through its options. It looked at whether or not there was opportunities to renegotiate the deal. The city wasn't willing to compromise in any of its position on those water rights there. We looked at, as Teresa said, the possibility of imminent domain. That was not a concept that the city really wanted to embrace. Sent lots of signals that the city didn't want to send and it ultimately was, I agree, could ended up costing the city way more than just a traditional arm's length purchase of the ranch. And we considered the costs both in time and uncertainty and in money of trying to fight these fights however and whenever they appeared in courts going forward and the uncertainty that that created was just something that the city couldn't live with. And so ultimately that we came to sort of the right decision which just sort of fell in our laps with this the uncertainties that that were created by the sale of this ranch, came the opportunity to put those uncertainties to rest by purchasing the ranch.

[0:24:30] Jason just mentioned a term, the right decision, it's something I've heard you say here in recent days that this is the right thing to do. Theresa, why is that so in your view? Because it does shore up rights that we already have to that water. And living at, we live on the edge of the desert and water is our lifeblood in a lot of ways. Without those sources of water, St. Angelo ceases to exist. Um, the opportunity again to purchase this ranch from one owner will never come again. And the ability to do that at the same time that we're thinking expanding the water development at the Hickory was really, you know, fortunate for us that those two things coincided the way they did. But it is, in my opinion, the only right thing to do. We've been talking with Teresa James. She is the city attorney and Jason Hill. He is a private council in regards to the city's water rights. If you want more information about the purchase of the Ford Ranch and about the Hickory Aquifer, please go to our website, coastatx.us slash Hickory Aquifer. And we hope you'll join us for the next episode of The City.

Transcribed 2026-07-27 with faster-whisper (base.en) · source: youtube.com/watch?v=qIH1ePe4WMc