Lenders re­lin­quish spring in their step to bottle wa­ter

The Denver Post - - FRONT PAGE - By Ja­son Blevins

Lenders back­ing Vaspen wa­ter are putting up for sale a high-alpine ranch near Sweet­wa­ter Lake where the pre­mium prod­uct would have been bot­tled at the source.

The evap­o­ra­tion of the Vaspen plan marks yet an­other strug­gle for en­trepreneurs plumb­ing the West for en­tree into the bil­lion-dol­lar bot­tled­wa­ter in­dus­try. And a sale of the his­toric prop­erty — which has hosted a mod­est, yet bustling, lake­side lodge and restau­rant for the past cen­tury — floats hope among Sweet­wa­ter res­i­dents that grand plans for fu­ture de­vel­op­ment of a huge re­sort vil­lage and bot­tling

plant also may fade with a new owner.

The 488-acre Sweet­wa­ter Lake Ranch in­cludes the 77-acre lake and abun­dant wa­ter rights in a quiet en­clave of moun­tain homes above the Colorado River, about 10 miles away from it north­west of Dot­sero.

Cas­tle Rock in­vestor Steve Miller has owned the ranch for a dozen years, la­bor­ing to se­cure lo­cal, state and fed­eral ap­proval to bottle wa­ter pour­ing from a spring on the land. In 2015, he be­gan court­ing in­vestors for his pro­posal to sell lo­cally bot­tled spring wa­ter un­der the Vaspen name.

But Miller’s Cas­tle Rock­based SCC Part­ners Group last year filed for Chap­ter 11 bank­ruptcy pro­tec­tion, cit­ing li­a­bil­i­ties be­tween $10 mil­lion and $50 mil­lion. Top lenders be­hind the Vaspen plan en­dorsed a re­or­ga­ni­za­tion ap­proved by the bank­ruptcy court in December, in­clud­ing Coul­ton Creek Cap­i­tal of Green­wood Vil­lage, Miller’s own MidCi­ties En­ter­prises. Coul­ton Creek forced the bank­ruptcy fil­ing, cit­ing nearly $6.6 mil­lion in un­paid loans and fees.

The ranch re­cently hit the mar­ket, of­fered by lenders. But a sale does not mean Vaspen is dead. “We are eval­u­at­ing al­ter­na­tives avail­able to us,” said Miller, de­clin­ing fur­ther com­ment.

Miller is one of a hand­ful of en­trepreneurs try­ing to feed Amer­i­cans’ ap­par­ently un­quench­able thirst for bot­tled wa­ter. Few have found an easy road bring­ing wa­ter into a mar­ket dom­i­nated by bil­lion-dol­lar com­pa­nies.

A New York in­vestor planned to siphon his Amer­i­can Sum­mits wa­ter from an alpine spring at the foot of the Beartooth Moun­tains in north­west Wy­oming. But his re­quest for a zon­ing vari­ance to build a bot­tling fa­cil­ity in a ru­ral area was re­jected by Wy­oming’s Park County com­mis­sion­ers two sum­mers ago. (The com­pany’s founder said he was re­work­ing the zon­ing re­quest for the county.) The BIOTA bot­tled wa­ter brand in Ou­ray ran afoul of lenders in 2007 af­ter its spring was tem­po­rar­ily con­tam­i­nated. The com­pany never re­cov­ered.

Miller spent sev­eral years en­gi­neer­ing his Vaspen bottle and brand. Wa­ter tests showed the wa­ter from his spring was es­pe­cially pure, with nat­u­ral al­ka­lin­ity and ben­e­fi­cial min­er­als such as cal­cium and mag­ne­sium. In 2014, he de­scribed the re­sponse from in­vestors as “ex­cel­lent.”

A re­or­ga­ni­za­tion plan pro­posed in June 2016 sug­gested that Miller, with more sup­port from his lenders, would con­tinue to de­velop the Vaspen spring. De­vel­op­ing the spring would add value to the Sweet­wa­ter prop­erty be­cause im­prove­ments could be used to sell wa­ter in bulk and sup­ply wa­ter to a fu­ture real es­tate de­vel­op­ment, ac­cord­ing to the plan pre­sented to lenders.

The im­prove­ments also “can be sev­ered from the prop­erty and sold sep­a­rately with the spe­cific Vaspen spring wa­ter right,” the plan says.

Now, Miller’s lenders, specif­i­cally Coul­ton Creek Cap­i­tal, are sell­ing the Sweet­wa­ter ranch for $9.3 mil­lion. The pri­vate equity firm’s on­line list­ing of as­sets in its port­fo­lio in­cludes the “Sweet­wa­ter Canyon Club” and notes that it pro­vided $7.5 mil­lion in debt fi­nanc­ing to the prop­erty in 2010.

The list­ing em­pha­sizes wa­ter, in­clud­ing springs. The ranch comes with 18 cu­bic feet per sec­ond of wa­ter rights for ir­ri­ga­tion and do­mes­tic use, plus ad­di­tional con­di­tional rights and 240 acre-feet of stor­age in Sweet­wa­ter Lake. The list­ing says, “Ex­ten­sive le­gal and en­gi­neer­ing work has been com­pleted for the wa­ter rights.”

Miller also was work­ing with lo­cal and fed­eral reg­u­la­tors to se­cure con­di­tional wa­ter rights to bottle as much as 50,000 gal­lons of spring wa­ter a day. And he got Garfield County to des­ig­nate the prop­erty a “vil­lage cen­ter,” which al­lows for more dense de­vel­op­ment and com­mer­cial ac­tiv­i­ties.

While the abun­dance of wa­ter is ap­peal­ing, po­ten­tial buy­ers prob­a­bly will be at­tracted to the unique set­ting of a high-al­ti­tude lake prop­erty sur­rounded by White River Na­tional For­est land, said Ranch Mar­ket­ing As­so­ciates bro­ker Christy Bel­ton. who is col­ist­ing the Sweet­wa­ter Lake Ranch with Dave Banzhaf of Bea­con Moun­tain Farm and Ranch.

The prop­erty in­cludes sev­eral build­ings and cabins, but no sprawl­ing home — and that’s go­ing to look good to buy­ers, Bel­ton said.

Ranches with large homes seem to be lin­ger­ing on the mar­ket, she said. “Buy­ers are more in­ter­ested in these be­cause it of­fers a clean slate for them to per­son­al­ize and make their own.”

Neigh­bors in the Sweet­wa­ter com­mu­nity are ready for a new owner. Miller’s prop­erty does not in­clude all the lake­front. The For­est Ser­vice has a camp­ground on the south end of the lake. A scat­ter­ing of cen­tury-old cabins and a restau­rant on the prop­erty — op­er­ated by AJ Brink Out­fit­ters — host guests and serve as a com­mu­nity gather­ing place.

Adrian Brink has been host­ing guests at the lake for 33 years — of­fer­ing guided horse­back trips into fed­eral land for as long as a week or as lit­tle as an hour. She has worked with six own­ers in that time, se­cur­ing an­nual leases to run her trips, to house vis­i­tors in the cabins and to feed them in her restau­rant. She liked Miller and his team.

The new pri­vate-equity own­ers, she said, “seem to be in a hurry to sell it as a gen­tle­man’s ranch, when they need to sell it as it is, a his­toric re­sort that draws thou­sands of people ev­ery year for a one-of-a-kind ex­pe­ri­ence.”

“We have tried to eke out an ex­is­tence in a place where no pre­vi­ous own­ers have in­vested much,” Brink said, not­ing that her team pro­vides horse trips for crit­i­cally ill campers at nearby Roundup River Ranch. “The pre­vi­ous group in­vested a lot in their de­vel­op­ment plan, but not much else.”

Lo­cals are ea­ger for a new owner who isn’t look­ing to launch a wa­ter-bot­tling busi­ness or ma­jor res­i­den­tial de­vel­op­ment.

“It would be won­der­ful if there was some as­pect that re­tained the his­tory up there,” said Matt Kap­sner, whose fam­ily owns lake­front acreage on Sweet­wa­ter. “Re­gard­less, as long as they are not build­ing 250 homes with 20 cabins and com­mer­cial space, a golf course and a wa­ter-bot­tling plant — which the pre­vi­ous owner has threat­ened for years — we will be happy.”


In­vestors were courted to sell bot­tled spring wa­ter un­der the Vaspen name.

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