Lenders relinquish spring in their step to bottle water
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.”