On May 6, KOAA News 5 posted an article on its website describing details about Cherokee Metropolitan Districtís acquisition of water rights from the Sundance Ranch, located in northwestern Black Forest. In the article, former CMD board member Steve Hasbrouck said the district purchased the water rights from Rodney Preisser in 2011; however, Hasbrouck said Preisser did not own the water rights at the time of the sale.Sean Chambers, CMD general manager, said the district had been experiencing a water deficit since at least 2004. ìWe had more commitments on our bank accounts at the Colorado Division of Water Resources than we had money in our accounts,î he said. That scenario led the district to begin purchasing water from Colorado Springs Utilities in 2007, Chambers said.The contract cost CMD more than $2 million per year to lease the water from the Springs, and the district could not financially maintain the agreement. The CMD board of directors gave specific direction to Chambers and the district employees to find another source of water, Chambers said.Since then, he said CMD has acquired six different water rights, from six different sellers. ìIn all of those transactions, weíve worked hard to get those deals to get water at or below market rates,î Chambers said. ìAny time you can acquire a natural resource that you can sell in perpetuity, those are opportunities a municipal entity should take.îJan Cederberg, CMD board president, said Preisser had presented a request for proposal to be a source of water for the Sundance Ranch. ìThere was another source called Little Horse Creek,î Cederberg said. ìThe board was kind of torn because we knew we needed water. Steve (Hasbrouck) and Larry (Keleher, CMD director) were leaning towards that one.îCederberg said the problem with the Little Horse Creek option meant that all the farmers along the proposed pipeline route would need to agree to the purchase of the water rights. One farmer had already made it clear he would never agree to the purchase, Cederberg said.In the end, the board voted to purchase the water rights for Sundance Ranch from Preisser, without knowing he did not own the property at the time, she said.Hasbrouck, who was on the board at the time of the transaction, told The New Falcon Herald in a separate interview that the Sundance Ranch property was in foreclosure at that time. Preisser did not yet own the property when CMD purchased the water rights from him, Hasbrouck said. ìRodney Preisser had a contract for the purchase of the property, before he had the money,î he said.Chambers said Hasbrouck is correct in that Preisser was depending on the money from the sale of the water rights to CMD to purchase the property from the bank. ìThe seller (Preisser) had the property under contract but didnít own it,î Chambers said. ìIt was under contract with the bank. What the Cherokee board did in electing to purchase the water rights was to set a closing date in which there would be a three-party closing.îA number of the other properties considered in the request for proposal process were controlled by entities that did not own them but had them under contract, he said.Chambers said the CMD board authorized the district to purchase the water rights from Preisser for $3.475 million. ìThe seller had negotiated a better deal for the property out of foreclosure,î Chambers said. ìWe were unaware of what the seller was paying for the property; that was a contract entered into with the seller and the bank, not with us.îBoth Chambers and Hasbrouck said Preisser purchased the property using the money from Cherokee, but he only paid $2 million to the bank, leaving people wondering where the other $1.5 million went.Keleher said that when he found out Preisser paid $2 million for the entire ranch but sold CMD just the water rights for $3.475 million, he did not think it was fair and went to see a lawyer about the deal. ìThe lawyer I saw said to go to the district attorney, so thatís what I did,î Keleher said. He suspected that Preisser paid $2 million to the bank for the property and pocketed the remaining $1.5 million, he said.Hasbrouck said he agrees with Keleher that Preisser pocketed the money but he also thinks Chambers took a cut. He said the relationship between Preisser and Chambers goes back to when the pair worked together at the Sunset Metropolitan District for an eight-year span.Chambers had a firm grasp on Preisserís financial situation during that time, and the duo worked together to get Chambers hired to the CMD and to convince the board to purchase the water rights from Preisser, Hasbrouck said. They split the profit they made off the deal, he said.ìThatís not factual,î Chambers said. ìI used to work for Mr. Preisser at the Sunset Metro District for eight years. At that time, I operated the water and wastewater operations for him and did special district management. Thatís as far as the relationship goes. I got no consideration or compensation for making the (Sundance Ranch) deal.îChambers said a few days after the KOAA 5 article was posted, the Sundance Ranch pipeline was connected and began providing water to the CMD community.Jacqueline Kirby with the El Paso County Sheriffís Office said they sent a detective out to investigate the fraud allegations. She said the sheriffís office is still doing interviews and hopes to have their piece of the investigation wrapped up and delivered to the district attorney in the near future. The DA will decide whether there is justification to file charges, she said.Keleher said he had spoken to a sheriff’s deputy after the KOAA News 5 article was posted. The deputy told Keleher they had not discovered any criminal activity, but the transaction could be considered an unethical business practice.Editorís note: Rodney Preisser is now deceased. The NFH will continue to follow up on the investigation.
