Latest / The Land Development Podcast with Ryan Glick / How Water Rights Can Make or Break a Development with Sean Flanagan - TLP186

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How Water Rights Can Make or Break a Development with Sean Flanagan - TLP186 · The Land Development Podcast with Ryan Glick

0:00
SPEAKER_01: Great job.
0:00
SPEAKER_01: We're excited to have you.
0:02
SPEAKER_01: Go find us some water and bring it to us, and then we'll serve you.
0:06
SPEAKER_01: I said, Oh, okay.
0:08
SPEAKER_01: Well, are you gonna pay for that water?
0:09
SPEAKER_01: And they said, no, you'll pay for it.
0:11
SPEAKER_01: Oh, okay.
0:12
SPEAKER_01: Who's gonna pay for the engineers and the attorneys?
0:14
SPEAKER_01: Well, the developer.
0:16
SPEAKER_01: But we have to give the water to the municipality and then they serve us, but we pay for everything and we don't control it.
0:21
SPEAKER_01: Yep.
0:37
SPEAKER_00: Hey, what's going on, everybody?
0:38
SPEAKER_00: Welcome back to the Land Development Podcast.
0:40
SPEAKER_00: I am your host, Ryan Glick.
0:43
SPEAKER_00: If this is your first time joining us, each week when you tune in, you're gonna hear a couple different types of shows.
0:48
SPEAKER_00: Sometimes when you tune in, we have an interview style show, which is what we're gonna have today, which I'll I'll introduce our guest here in just a second.
0:56
SPEAKER_00: Other times we have industry news.
0:58
SPEAKER_00: That's where we pull up a few different headlines and we talk about what it means for the land development industry.
1:03
SPEAKER_00: And I guess one quick housekeeping item before we intro today's guest.
1:07
SPEAKER_00: I haven't talked about this for at least a few episodes now, but those of you who have been tuning in for a while now, if you wouldn't mind taking the time to head over if you're listening on Apple and leaving us a rating and review over there, or if you're listening on Spotify, they don't have the review, but they have a rating.
1:23
SPEAKER_00: If you could leave a rating for the show, that goes a long way in helping more people find the show on those different platforms.
1:30
SPEAKER_00: And if you're tuning in on YouTube, well, you can hype this uh episode if you do that, and also make sure you're subscribed to us.
1:36
SPEAKER_00: So, with all of that out of the way, I'm excited today to have with me Sean Flanagan.
1:42
SPEAKER_00: Sean is a water resource broker at Hydrosource.
1:45
SPEAKER_00: Sean, thanks for joining me.
1:47
SPEAKER_00: Good morning, Ryan.
1:48
SPEAKER_00: Thanks for having me.
1:49
SPEAKER_00: Yeah, well, we uh talked before we recorded here that the topic we're going to be getting into today is not something we've talked about a whole lot on the show before.
1:57
SPEAKER_00: I mean, it's been mentioned mostly in passing, not necessarily a key topic, and that's the topic of water and water rights, and uh, I guess all things water.
2:07
SPEAKER_00: So definitely excited to get into this topic and uh help shed some light on it for all the people listening into the show.
2:14
SPEAKER_00: All right.
2:14
SPEAKER_00: Well, I think where I would like to start before we get into the details of that is where I start all of these episodes is really just getting into your background, how you got into this space.
2:23
SPEAKER_00: And so could you talk through uh how you went from you know being more on the commercial real estate side and then eventually getting into water resource uh management, water brokering or water brokering?
2:35
SPEAKER_01: Absolutely.
2:37
SPEAKER_01: I'll do my best to keep it uh focused here.
2:39
SPEAKER_01: Water is a bit of a rabbit hole, so sometimes it takes me in odd engagement paths I never expected to be on.
2:45
SPEAKER_01: But uh backing up a couple years, I've been in the water industry about two and a half years at this point, which blew by uh super fast.
2:54
SPEAKER_01: Prior to this, uh I was mostly involved in industrial speculative development and had a fancy corporate chair at a couple well-known shops here in the Denver market uh and wider, uh, always had kind of the national focus.
3:07
SPEAKER_01: But with the last corporate job that I had, when that job ended, I had a non-compete scenario that I had to deal with.
3:16
SPEAKER_01: And what I wanted to do was try to stay water, sorry, stay real estate adjacent as best that I could while attempting to learn something new.
3:25
SPEAKER_01: I'm one of those every learner type guys.
3:28
SPEAKER_01: And water rights are hyper complex.
3:31
SPEAKER_01: So they took a lot of focus and some cold calling of opportunities to try to get in front of some folks.
3:38
SPEAKER_01: Uh, nobody just handed me this chair or the all of this knowledge.
3:41
SPEAKER_01: In essence, there was a period of time where I couldn't call my normal industrial friends uh or brokers or developers or whoever, but I wanted to work.
3:49
SPEAKER_01: I wanted to stay active and I wanted to stay local.
3:51
SPEAKER_01: You heard me a moment ago say I was working national.
3:54
SPEAKER_01: Well, today I work more local than anything, uh, with intention.
3:57
SPEAKER_01: The core goal of that was to avoid getting on airplanes.
4:00
SPEAKER_01: Uh, I have nothing against traveling for work.
4:02
SPEAKER_01: Uh, it is fun in the early years.
4:04
SPEAKER_01: It starts to burn off that fun side later.
4:06
SPEAKER_01: But uh water is so hyper-local, it's so complex, it's so nuanced locally that I knew I'd be in my mobile office driving around in my truck.
4:16
SPEAKER_01: So it was kind of a scenario of I needed something to do.
4:22
SPEAKER_01: I wanted to stay close to what I was doing, but I needed to differentiate myself.
4:28
SPEAKER_01: And this is kind of my favorite part of these discussions is I wanted to ask you a question, Ryan.
4:33
SPEAKER_01: How many licensed real estate brokers do you think there are in the state of Colorado?
4:38
SPEAKER_01: There's no wrong answer here, but as this goes forward, you'll figure out why I'm asking this.
4:42
SPEAKER_00: What do you think?
4:42
SPEAKER_00: Oh gosh.
4:43
SPEAKER_00: I mean, you say uh is this commercial brokers or is this all brokers?
4:48
SPEAKER_00: Residential, farm and ranch, whatever.
4:50
SPEAKER_00: What do you think?
4:51
SPEAKER_00: Oh gosh.
4:52
SPEAKER_01: Maybe I don't know, 15,000, something like that?
4:57
SPEAKER_01: That's a good guess.
4:58
SPEAKER_01: One day I should validate this with a real data point, but my assumption is about 10,000, including all the residential folks.
5:05
SPEAKER_01: With water brokers, here's what's going to blow your mind.
5:08
SPEAKER_01: There are 10.
5:10
SPEAKER_01: 10 of us that I'm including myself in that now in the state of Colorado.
5:15
SPEAKER_01: And of those 10, about eight of them are over the age of 70.
5:20
SPEAKER_01: That simple scenario to me was a game changer.
5:25
SPEAKER_01: I realized if I can learn this, if I can start to build a client pool, if I can stay relevant, stay active, stay learning, I may be one of, on a single hand, folks actually doing this of any real skill and knowledge.
5:42
SPEAKER_01: So I found Hydra Source, they gave me an opportunity to join them, didn't necessarily hand me a whole bunch of money or free engagements or anything like that.
5:53
SPEAKER_01: Ask me how I was going to contribute to the company.
5:56
SPEAKER_01: So it was a scenario of they offered to teach me some of the basics and give me the opportunity to join the firm and maybe they would give me some engagements as as things went forward.
6:08
SPEAKER_01: They did end up providing me with some learning opportunities.
6:11
SPEAKER_01: Uh I made tens of dollars, not a lot in the first couple years.
6:15
SPEAKER_01: But I started to build my client book.
6:17
SPEAKER_01: I started to get familiar with different water rights that are frequently traded.
6:21
SPEAKER_01: Colorado Big Thompson units, that's an easy one to point towards, especially if you're in northern Colorado.
6:25
SPEAKER_01: There's a whole bunch of ditches in North Denver that are very active as well.
6:30
SPEAKER_01: And then there's some water rights down in the South Platte, sorry, not South Platte, the Arkansas Basin, so Colorado Springs to Pueblo, called Twin Lakes Canal Company shares.
6:39
SPEAKER_01: Also extremely hard to find on those.
6:41
SPEAKER_01: The other ones are a little bit easier, but I started to get some repetition, some real engagements with real activities, some valuation, broker opinions of values type stuff.
6:53
SPEAKER_01: And today I am confident that A, I don't know everything about water.
6:58
SPEAKER_01: I never will, but I'm confident that I can learn whatever it is nuance-wise in whatever local area I'm working in.
7:07
SPEAKER_01: Today I work on both sides of the Continental Divide, uh, West Slope and Front Range.
7:11
SPEAKER_01: Uh I work all the way up to Fort Collins, all the way down to Pueblo.
7:15
SPEAKER_01: I was down in the San Luis Valley valuing some 1800s water rights for an original ranch down there.
7:20
SPEAKER_01: So it's been fascinating.
7:22
SPEAKER_01: Uh I've got things I'm selling, I've got things I'm buying.
7:25
SPEAKER_01: Sometimes I just problem solve consult as well.
7:28
SPEAKER_01: But it's it's fascinating.
7:30
SPEAKER_01: And it is a scenario where I have almost completely flipped my land acquisition strategy.
7:36
SPEAKER_01: Uh the other side of my business is land use consulting, and I do still invest and try to self-develop.
7:43
SPEAKER_01: But with a different lens now, I look at the water problem or question first.
7:49
SPEAKER_01: Um, instead of going through a zoning evaluation or, you know, how dense could we make this, or, you know, what other typical title defects are there?
7:58
SPEAKER_01: Things like that.
7:59
SPEAKER_01: I ignore that, go straight to water.
8:00
SPEAKER_01: Does the land have water?
8:02
SPEAKER_01: If not, can it have water?
8:03
SPEAKER_01: If it doesn't have water, well, my value offer is going way down, but I know that I can go and solve that problem and find the water.
8:10
SPEAKER_01: So it's flipped my pursuit strategy completely on the investment and development side of my business.
8:17
SPEAKER_01: So I love it.
8:20
SPEAKER_01: It's complex, it's big dollars also.
8:23
SPEAKER_01: I mean, people might not realize that your$10 million land deals are probably closer to$7 million of water attached to$3 million of land.
8:33
SPEAKER_01: Uh so that's a generic example, not applicable to all.
8:38
SPEAKER_01: But the core concept I'd like to convey is that land without water, in my opinion, is worthless.
8:45
SPEAKER_01: There are solutions to bring water to land.
8:48
SPEAKER_01: There isn't always, but land that can't get water to it, to me, I wouldn't touch it.
8:54
SPEAKER_01: Um not at all.
8:55
SPEAKER_01: And I wouldn't focus on it for a minute.
8:56
SPEAKER_01: Uh yes, I get paid to solve people's problems.
8:59
SPEAKER_01: In that circumstance, of course, I will try.
9:01
SPEAKER_01: Uh, I'm always willing to try to help.
9:03
SPEAKER_01: But buying it personally, I wouldn't do it.
9:06
SPEAKER_00: Well, that's I mean, that's good.
9:07
SPEAKER_00: Like this this whole background that you have and just that initial synopsis of everything that you're involved in right now, I think that's a a good place for us to dig into a little bit deeper.
9:17
SPEAKER_00: And so for people listening in who may have water be an afterthought to them.
9:23
SPEAKER_00: And again, we've got people listening from all around the country, and so they it may or may not be something that is a part of their deal that they're really focused on.
9:33
SPEAKER_00: Um, they they may not think about it as much as maybe in Colorado or other states where maybe it's a bigger deal than it is in some other locations.
9:40
SPEAKER_00: But with that said, I want to back up a little bit and really go to the basics of this whole concept.
9:46
SPEAKER_00: And so when, you know, in your role, and we we think about the water rights for a piece of property, uh is the I guess my assumption to it is that, or I guess maybe not an assumption, but it uh sounds like if you own the land, if somebody previously may have the rights to the water on that land, and so that's something that you have to pay attention to.
10:12
SPEAKER_00: Could you kind of walk through these different scenarios when you're looking at a piece of land that you need to think about when it comes to water?
10:17
SPEAKER_01: Yeah, absolutely.
10:18
SPEAKER_01: So let's think about a piece of land that is adjacent to kind of the growth boundary.
10:24
SPEAKER_01: We are right on the cusp of call infrastructure, on the cusp of zoning, on the cusp of things physically existing, whether it's rooftops or warehouse roofs or whatever that may be.
10:37
SPEAKER_01: There's kind of two scenarios.
10:39
SPEAKER_01: The land itself can have water tethered to it.
10:43
SPEAKER_01: So, for example, you can have groundwater underneath your land that you own.
10:48
SPEAKER_01: You could also have land that has groundwater underneath you, but you don't own it.
10:53
SPEAKER_01: Those are two nuances with groundwater, and groundwater is a little different than surface water, and surface water, for example, are things like streams and ditches and springs and things like that.
11:05
SPEAKER_01: Your land can also have ditch rights attached to it.
11:09
SPEAKER_01: Let's say hypothetically that piece of land 50 years ago was an active uh farming operation or cattle operation, some ag operation where they're using water rights as part of their daily business.
11:23
SPEAKER_01: So you can have 100 acres with some senior ditch rights attached to it, and the water physically flows to your property as part of some old uh former operations in the ag world.
11:34
SPEAKER_01: You can also have land that doesn't have anything.
11:40
SPEAKER_01: Uh it has previously had some variation of either groundwater or surface water, but that water has been sold.
11:46
SPEAKER_01: So now you're looking at land that's called barren, but don't get scared off quite yet.
11:52
SPEAKER_01: Something to think about.
11:52
SPEAKER_01: How close are you to municipal boundaries?
11:55
SPEAKER_01: Are you within the municipal service district?
12:00
SPEAKER_01: Are you within a water conservation district boundary?
12:05
SPEAKER_01: Are there other opportunities for your waterless land to get served through new infrastructure dragging, drag a new pipe?
12:12
SPEAKER_01: Um so even if you don't own the water rights, you can still potentially tap on to the municipal system and pay your standard tap fees.
12:21
SPEAKER_00: Can I can I ask a question just really quick on that?
12:23
SPEAKER_00: Oh, absolutely.
12:24
SPEAKER_01: Interrupt time.
12:25
SPEAKER_00: So the the water rights, so you you have to not only be concerned about the water rights on the piece of property that you're looking at, but also upstream, is that right?
12:33
SPEAKER_01: Yes.
12:34
SPEAKER_01: So seniority, uh, here's what you're you're hinting at is even though you own a ditch right, let's focus on ditch rights for half a second, your ditch right could be junior to somebody else's.
12:44
SPEAKER_01: So hypothetically, you've got uh, let's just make this very obvious.
12:48
SPEAKER_01: You've got a 1950s, very junior water right.
12:51
SPEAKER_01: Somebody took their water right to Watercourt, confirmed something.
12:55
SPEAKER_01: You're in the queue, but you're priority number 270.
12:59
SPEAKER_01: The farmer upstream or upditch has a 1850s water right.
13:06
SPEAKER_01: More realistically, it's probably the 1870s, 1890s, something like that.
13:10
SPEAKER_01: Very senior would be 1860s to 1890s.
13:13
SPEAKER_01: There isn't a lot of water rights before the 1850s because Colorado didn't exist back before then.
13:19
SPEAKER_01: There are other legal nuances that you can go through to try to quantify some of that stuff, but that's too deep into the weeds for today.
13:26
SPEAKER_01: Going back to the seniority concept, if your water right is junior, meaning you're in a higher number priority, you're not number one, you're not number two, you're not number three, well, if those farmers, ranchers, whoever need that water upstream and it's a drought year, such as this, what will happen is there will be a call on the river.
13:46
SPEAKER_01: The water commissioner or the local division operators will basically call everybody downstream that's junior and say, shut off your diversions.
13:55
SPEAKER_01: You're not allowed to have water right now.
13:56
SPEAKER_01: Your water is too junior, you're out of priority.
13:59
SPEAKER_01: And that farm at the top of the river, they're getting their water.
14:03
SPEAKER_01: But something to think about, what's a better scenario?
14:05
SPEAKER_01: Would you rather be at the bottom of the river with a very senior water right and an attorney, or would you rather be at the top of the river with a junior water right and a shovel?
14:17
SPEAKER_01: Both will take you to water court in the end, for sure.
14:20
SPEAKER_01: But either way, uh, just fun joke to think about.
14:23
SPEAKER_01: The just because you have water rights doesn't mean you're gonna get them every year.
14:28
SPEAKER_01: Uh the other concept to think about is, and this is dramatically different from land.
14:33
SPEAKER_01: If you don't use your water in Colorado, you could lose it.
14:38
SPEAKER_01: You could be forced into an abandonment scenario.
14:41
SPEAKER_01: In Colorado, you have to use your water and it has to be put to beneficial use, meaning it needs to go into a municipal system to serve domestic houses, or it needs to be put on the farm to water your corn or water your cattle, uh, those types of things.
14:56
SPEAKER_01: There's multiple other beneficial uses, but if you go for a period of 10 years and you're on a farm and you're not watering your crops and you have basically no data points to say I've used this water, the water commissioners can put you on an abandonment list and take it away from you.
15:12
SPEAKER_01: So just because you own it doesn't mean you own it forever.
15:15
SPEAKER_01: For example, with land, you can own land, never step foot on it, and you will never lose it, assuming you pay your taxes and all those types of things.
15:23
SPEAKER_01: With water rights, you could own it, you could own a piece of paper that means nothing and never get your drop of water ever.
15:30
SPEAKER_01: So in Colorado, there's a couple nuances to think about.
15:34
SPEAKER_01: It's called prior appropriation, which is the system that basically says first in time, first in right, which is what details that seniority concept we talked about earlier, which is different from the rest of the country.
15:47
SPEAKER_01: Uh the rest of the country is reparian rights, meaning if the water touches your land or you're adjacent to that river, you can use it.
15:54
SPEAKER_01: In Colorado, because a ditch runs through your property or a stream or a creek or a reservoir or whatever, doesn't mean you own that water.
16:00
SPEAKER_01: Doesn't mean you can use that water and take that water.
16:03
SPEAKER_01: Somebody upstream that was there before you, prior to appropriation, they'd use that water right.
16:09
SPEAKER_01: So it's a little bit of a nuance with water, but here's the upside to it, or maybe not the upside, but where I foresee more activity going on.
16:18
SPEAKER_01: And this is one of the reasons why I'm thankful you invited me to speak on your podcast today.
16:23
SPEAKER_01: And something that was a complete learning experience for me a few years back, when I first came back to Colorado, let me pause for half a second.
16:31
SPEAKER_01: I grew up in Castle Rock, so I'm a Colorado local in my mind.
16:34
SPEAKER_01: I moved to Chicago and spent 10 years in the speculative industrial development world, came back to Colorado, still with the development company, and was attempting to get building permits for a big project up in northern Colorado and was told, Great job, we're excited to have you.
16:51
SPEAKER_01: Go find us some water and bring it to us, and then we'll serve you.
16:56
SPEAKER_01: Oh, okay.
16:57
SPEAKER_01: Well, are you gonna pay for that water?
16:59
SPEAKER_01: And they said, No, you'll pay for it.
17:00
SPEAKER_01: Oh, okay.
17:01
SPEAKER_01: Well, are you gonna who's gonna pay for the engineers and the attorneys?
17:05
SPEAKER_01: Well, the developer.
17:06
SPEAKER_01: But we have to give the water to the municipality and then they serve us, but we pay for everything and we don't control it?
17:12
SPEAKER_01: Yep, that's pretty much how it works.
17:15
SPEAKER_01: So the difference between developing urban versus developing on that municipal periphery, like we talked about, in Colorado in the Mountain West, you're not guaranteed water.
17:27
SPEAKER_01: And even if you have a will serve letter, you still may be in a scenario where you can't get service unless you go out and buy water rights, which is what I do.
17:36
SPEAKER_01: Uh, as a water resource broker, it's my job to assist in that transaction, whatever that means, whether it's selling it, selling a resource that someone's not using, or finding a resource to bring it to a municipality to develop it.
17:49
SPEAKER_01: That's where I started in this business, not as a water broker, but as a developer being told go find water, and it blew my mind.
17:56
SPEAKER_01: I didn't understand it.
17:58
SPEAKER_01: It was the exact opposite of basically everything east of us.
18:04
SPEAKER_01: A scenario of, oh, just tap onto the system, pay us a big fee, and mitigate your wetlands so you can build a big box and move on.
18:11
SPEAKER_01: In Colorado, not the case.
18:13
SPEAKER_01: We got through it.
18:14
SPEAKER_01: We ended up acquiring the water, dedicating it, all that kind of stuff.
18:18
SPEAKER_01: The diligence process is different as well.
18:20
SPEAKER_01: Something to think about when it comes to is this water right going to be of use to you in your future development, Mr.
18:27
SPEAKER_01: Developer?
18:28
SPEAKER_01: Or is this water right useless and worthless?
18:30
SPEAKER_01: Just because you own a water right doesn't mean it's valuable either.
18:34
SPEAKER_01: There are so many contradictions in the water right business that it just kind of blows my mind.
18:39
SPEAKER_01: And it's absolutely a scenario where it's kind of a rabbit hole.
18:44
SPEAKER_01: As I learn more, I keep digging.
18:47
SPEAKER_01: There's a water court system that is how all of this kind of gets sorted out.
18:52
SPEAKER_01: It goes all the way back to the beginning of time in Colorado.
18:56
SPEAKER_01: They have documents that are recorded that are handwritten, cursive, that go back to the early 1900s that are the justification and the actual legal rights to all this.
19:05
SPEAKER_01: Because there is no title records for water rights.
19:08
SPEAKER_01: There is no title insurance for water rights.
19:12
SPEAKER_01: There are exchanges via deed.
19:15
SPEAKER_01: Usually it's special warranty deed.
19:17
SPEAKER_01: Um, but that's not always on title or on record.
19:21
SPEAKER_01: Uh so it's it's a scenario where it's important to do your diligence up front.
19:26
SPEAKER_01: And usually that means hiring an expert.
19:29
SPEAKER_01: Of those experts, usually there's an attorney involved, uh, usually there's some engineering, some analysis involved.
19:35
SPEAKER_01: But typical to real estate, your broker can do a lot of this work with the help of those professionals.
19:42
SPEAKER_01: Obviously, I can't wear a legal hat.
19:44
SPEAKER_01: I am a licensed real estate broker because water rights are real property in Colorado, so I do have to abide by all the rules for typical brokers as well.
19:54
SPEAKER_01: But that doesn't mean I can't convey my opinion based on diligence that I've done, research that I've gone through, discussions I've had with those attorneys and engineers, things like that.
20:05
SPEAKER_01: But yeah, the water diligence is a little bit different.
20:09
SPEAKER_01: Um, a couple comments here to think about.
20:11
SPEAKER_01: With water, it's kind of a combination of three or four different things.
20:16
SPEAKER_01: You've got to have the legal right, so you've got to own a piece of paper, a deed, and whatever that says you're allowed to have this much water.
20:24
SPEAKER_01: You've got to physically be able to get wet water.
20:26
SPEAKER_01: Just because you own a piece of paper doesn't mean there's actual water that's available.
20:31
SPEAKER_01: Climate change is real.
20:33
SPEAKER_01: You've got to be able to move that water, convey it somehow, whether it's a ditch system or getting it into a municipal system or whether it's a well that pulls water out of your ground to get it up to the surface.
20:47
SPEAKER_01: You also have to prove non-injury.
20:49
SPEAKER_01: Here's another concept that's going to blow your mind, right?
20:53
SPEAKER_01: In water rights, just because you have a water right and you want to change it to do something different with it doesn't mean you're automatically allowed to do that.
21:01
SPEAKER_01: It doesn't mean you're not allowed to do it either, but when you go through the water court process, you have to prove non-injury.
21:08
SPEAKER_01: And it's the exact opposite of our criminal system, whereas you're innocent until proven guilty.
21:13
SPEAKER_01: Well, in water rights, basically you'll file your application, and everybody on the river system, on the ditch system, will put up their hand and say, You're killing me! Whatever you're doing, it's gonna destroy my business.
21:25
SPEAKER_01: My crops are dying, the cows are you know shriveling up, and oh, I'm dying here.
21:31
SPEAKER_01: That's how it all starts.
21:33
SPEAKER_01: Every single person on that ditch is gonna oppose whatever you're doing.
21:37
SPEAKER_01: Because they don't know.
21:38
SPEAKER_01: They don't know that you're not injuring them.
21:40
SPEAKER_01: So then it's on the change whoever's doing the water court application, it's on them to prove that they're not damaging the other senior water right holders upstream or downstream.
21:51
SPEAKER_01: So that's that's different.
21:52
SPEAKER_01: And then, of course, the last piece of the puzzle is of course financial feasibility.
21:56
SPEAKER_01: Just because you found a piece of paper that says you own something.
22:00
SPEAKER_01: It's attached to real wet water, call it a spring or a stream or a heavy use river.
22:05
SPEAKER_01: You can get the water the way you want.
22:07
SPEAKER_01: You're not injuring anybody.
22:08
SPEAKER_01: Well, maybe it costs too much.
22:11
SPEAKER_01: Then you're back to square one.
22:13
SPEAKER_01: You know, just because it's available and you can check all these other boxes, there's still a buyer and a seller, typical negotiation on value.
22:20
SPEAKER_01: Sometimes we don't get there.
22:22
SPEAKER_01: I have been selling water in a wide variety of values.
22:27
SPEAKER_01: In the agricultural world, if I'm selling water rights to farmers and ranchers to stay agricultural, the value is a little bit lower.
22:35
SPEAKER_01: If we are selling a senior water right that was agriculturally used, but it's getting dedicated to a municipal system, that water right tends to have more value.
22:49
SPEAKER_01: And it's a density game.
22:50
SPEAKER_01: It has nothing to do with, you know, knocking on the farmers or, you know, beating up the ranchers in comparison to the tech world or anything like that.
22:58
SPEAKER_01: It just has to do with density.
23:00
SPEAKER_01: Think about how the water is being used.
23:02
SPEAKER_01: When it goes into the municipal system, it goes into households.
23:05
SPEAKER_01: There's a sink, there's a refrigerator, there's a shower, there's a toilet, there's ten toilets, there's whatever that may be.
23:11
SPEAKER_01: On the farm, you've got one tap and it just kind of flood irrigates or it goes into a pivot and it's being used that way.
23:18
SPEAKER_01: So the more dense you can use water, the higher the value is.
23:23
SPEAKER_01: Similar to real estate.
23:24
SPEAKER_01: Usually raw land, a little bit cheaper than a multifamily building.
23:29
SPEAKER_01: So it's somewhat counterintuitive, it's hyper complex, but it's fascinating, and I find that I'm on the earlier front end to land development deals, and I'm aware of things that are coming down the pipeline years ahead of other groups.
23:44
SPEAKER_01: Because the smart developers are figuring out their water problems first.
23:49
SPEAKER_00: This episode of the Land Development Podcast is brought to you by Groove.
23:53
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24:50
SPEAKER_00: All right, let's get back to the show.
24:52
SPEAKER_00: I have a bunch of things I wrote down here while you were talking there that I I want to I want to dig into a little bit more.
24:58
SPEAKER_00: One of those is uh we talked about you had mentioned the abandonment uh concept where you have this piece of land, you haven't been using your water rights that you have.
25:10
SPEAKER_00: But if you own this piece of land and you sell the water rights to somebody else, even though you're not using them, you obviously don't have the rights anymore anyway, because you sold them.
25:21
SPEAKER_00: But when people sell them, are they is this a perpetual license forever?
25:27
SPEAKER_00: Like is this something they're selling it forever, or is it for a certain term?
25:30
SPEAKER_00: So that way maybe you're not going to be there for 10 years, but you eventually want to use that piece of land to develop something later on.
25:38
SPEAKER_00: Do people sell rights for like a 10-year term, or is it when you sell them, you're selling them?
25:43
SPEAKER_00: More often than not, once they're sold, they're sold.
25:46
SPEAKER_00: Okay.
25:46
SPEAKER_01: They're they're done and gone.
25:49
SPEAKER_01: And what I would tell you is a lot of times when you sell your water rights to a municipality, that municipality will never let go of that water.
25:58
SPEAKER_01: They will hold on to it in their system, and sometimes they'll issue you a municipal tap credit, which you could transfer and sell to another developer in their system.
26:08
SPEAKER_01: But for the most part, yeah, they're gone.
26:11
SPEAKER_01: The abandonment piece is really a scenario of attempting to make sure that water is always put to beneficial use.
26:19
SPEAKER_01: In the state of Colorado and within the Mountain West, each state California, Nevada, Arizona, Utah, uh, New Mexico, they all have their own slight different nuances to how they deal with water rights.
26:31
SPEAKER_01: But in Colorado, which is where I focus, water rights are an asset of the people, meaning you can't physically own them permanently.
26:42
SPEAKER_01: You can use them, and yes, you have an ownership right to it, so it's a little bit gray there, but it's an asset of the people.
26:48
SPEAKER_01: And so where I'm going with this is another concept that's important to mention.
26:52
SPEAKER_01: You can't buy water rights in Colorado just to hold them for value appreciation.
26:57
SPEAKER_01: It's called speculation.
26:58
SPEAKER_01: Uh, it is frowned upon in the water industry.
27:01
SPEAKER_01: Yes, it does happen.
27:02
SPEAKER_01: Yes, there are groups that that is their primary strategy.
27:07
SPEAKER_01: There are also scenarios where those transactions don't occur because they get quashed in water court or at the ditch board meetings or whatever.
27:16
SPEAKER_01: And so it's a concept of really trying to make sure the water rights are beneficially used always.
27:23
SPEAKER_01: And so going back to the abandonment piece, if we're trying to make sure the water is always in beneficial use and you're not using it on your farm, well then that water is going to get used by somebody else upstream.
27:33
SPEAKER_01: The ditch rider will split it up, apportion it out to the those who have senior rights, or they'll offer it to somebody that's slightly more junior than you if you're not using it or whatever.
27:43
SPEAKER_01: But you can still go to water court and fight that and try to get your water rights off the abandonment list and bring them back.
27:51
SPEAKER_01: So even if you lose them, there is scenarios where you can appeal that.
27:55
SPEAKER_01: And it's such a rabbit hole of fun and complexity.
27:58
SPEAKER_01: And I'm not an attorney, but I do have to understand a lot of this and have fun with it as best I can.
28:05
SPEAKER_00: Yeah, well, you and you talked about one of the other things I was gonna ask about too, was you know, I I've seen just read articles over the last couple of years of different areas.
28:15
SPEAKER_00: I'm not sure if in Colorado this is happening, but there's other areas out west where certain developments are being declined because of water issues, right?
28:23
SPEAKER_00: There's not enough water to support the number of uh people that they're going to move into that particular area.
28:30
SPEAKER_00: Um, I guess for you in in the call, you know, in Colorado or in the Denver area, are you seeing that happen there?
28:36
SPEAKER_00: Or do you think how water rights work today, do you think it's going to change in the future?
28:42
SPEAKER_00: And because you had mentioned water is a it's it's something that is really owned by the people, but these uh the people who have water rights are essentialing uh although that money's I don't I don't know where the money goes either, too.
28:57
SPEAKER_00: So it goes to the person who owns the water rights.
28:59
SPEAKER_00: So if the people own it, um I can't I don't imagine any of that money is going back to the people necessarily, like via taxes or anything like that.
29:07
SPEAKER_00: So, and I'm I'm kind of rambling here on what I'm trying to get at, but what I'm trying to get at is do you think this process of how it works today is going to change in the future as far as how this water rights process works?
29:19
SPEAKER_01: It could absolutely change.
29:21
SPEAKER_01: I would say probably in overall, probably not.
29:26
SPEAKER_01: Most of the nuance to Colorado water rights is designed to prevent this scarce resource from diminishing.
29:33
SPEAKER_01: Um so when we talk about beneficial use, if it's not being used, then it gets reallocated over here so it can continue to be used.
29:41
SPEAKER_01: There aren't new water rights being found or created today.
29:44
SPEAKER_01: We think that a lot of the finding of water rights is done.
29:49
SPEAKER_01: That that happened decades ago with the original water buffaloes.
29:52
SPEAKER_01: Uh, if you do some historical reading about some of the Bureau of Reclamation dam projects, things like that.
29:58
SPEAKER_01: That was kind of the heyday of developing water.
30:01
SPEAKER_01: We think that's done.
30:02
SPEAKER_01: We think now it's more of a re-jiggering of how water is used, how do we improve efficiency, how do we catch the second-use water, things that are flowing through uh the sewer septic systems and things like that to reuse it.
30:18
SPEAKER_01: The water is emotional and political too.
30:22
SPEAKER_01: So you had touched on it a half a second ago of developments being basically told no, no, you can't go forward.
30:28
SPEAKER_01: And it's not a scenario of we're gonna physically prevent you from building those houses.
30:33
SPEAKER_01: You could build them, but there'll be no water in your pipes to connect it to, so you're gonna have some angry residents if you try to go and sell those.
30:41
SPEAKER_01: What comes to mind most is thinking about Colorado Springs.
30:44
SPEAKER_01: So Colorado Springs has on its eastern side several large residential housing master plan communities that are in the early throes of what they're doing.
30:57
SPEAKER_01: One of them was annexed within the Colorado Springs several years back.
31:02
SPEAKER_01: Um, earlier, it's called the Banning Lewis Ranch, and with that annexation, Colorado Springs committed to serve however many houses are in that development plan.
31:12
SPEAKER_01: Well, now if you're Colorado Springs Utilities and so-and-so developer adjacent to the Banning Lewis Ranch is also proposing another, let's call it 5,000 homes.
31:23
SPEAKER_01: But Colorado Springs Utilities only has so much physical water supply, and they have to choose well, are we going to supply Banning Lewis Ranch that we've already annexed and committed to, or are we going to try to supply this new development that's trying to annex?
31:36
SPEAKER_01: Well, it gets very political, and as you can imagine, the county commissioners have to make decisions.
31:42
SPEAKER_01: Sometimes they have to say no.
31:44
SPEAKER_01: Uh, and what it actually looks like is the last several years, several projects, Amara being the name of one of them, was not successful in its annexation process because of water.
31:55
SPEAKER_01: The political folks at the Banning Lewis Ranch basically said, whoa, whoa, whoa, hey, if you Colorado Springs utilities continue to grow and make dedications and commitments, well, you won't be able to serve our projects.
32:07
SPEAKER_01: So it gets political, and absolutely those projects get put on hold or paused or denied.
32:14
SPEAKER_01: And that's just one example.
32:15
SPEAKER_01: It happens in northern Colorado as well.
32:18
SPEAKER_01: You can see and hear about what's going on the Colorado River on the western slope as well.
32:23
SPEAKER_01: And that's the Colorado River slow-moving train wreck, as I like to call it, is slightly different than just a Colorado focus because you've got California, Arizona, Nevada, New Mexico, the Native Americans, the federal government, Colorado, Wyoming, you know, it there's so many bigger players involved in that with all their own demands and needs and historical data points that it's a little different than just denying it.
32:52
SPEAKER_01: How does Colorado go to California and say, no, we're not giving you your water?
32:57
SPEAKER_01: That's tricky.
32:58
SPEAKER_01: Uh I'm not exactly sure what's going to happen with the whole Colorado River negotiation, but water will, I believe, a continued will be a continued focus uh for developers and state legislatures for a period of time until we figure out how to cooperate a little bit more effectively with our fellow states.
33:18
SPEAKER_00: Yeah, well, it sounds like you had mentioned that it's it's a complex thing.
33:22
SPEAKER_00: And just hearing a lot of this the first time, because I don't have any background in this at all, but hearing all this, it sounds like as a developer, when you're looking to do projects in areas where water rights is a thing and it's an important thing, that it doesn't necessarily always matter if the property that you're looking at has water rights.
33:41
SPEAKER_00: You have to understand if it's senior or if there's other water rights around you.
33:45
SPEAKER_00: You also have to understand if the if you're in a drought year, are you going to have any water, even if you have water rights, are you even going to have any water come to that property to serve whatever you're going to develop there?
33:59
SPEAKER_00: So it sure feels like a pretty complex thing and and a lot of risk involved when you're operating in that type of environment.
34:07
SPEAKER_00: Do you see it the same way, or I guess what's your perspective on it?
34:11
SPEAKER_01: Oh, absolutely.
34:12
SPEAKER_01: It's probably the most complex process that I've ever approached.
34:18
SPEAKER_01: And I'm not a nuclear scientist or rocket scientist by any means.
34:21
SPEAKER_01: I'm sure those guys would have something different to say.
34:24
SPEAKER_01: But yeah, it's it's complex.
34:26
SPEAKER_01: There are, call it, five or six different potential deal-killing metrics in every evaluation.
34:33
SPEAKER_01: And that doesn't even include the land development side of things.
34:37
SPEAKER_01: Just the water side could destroy your project.
34:40
SPEAKER_01: But you hit the nail on the head, just because you don't have water rights doesn't mean there's not solutions.
34:46
SPEAKER_01: There are multiple types of water rights that could be bought that could solve the solutions.
34:50
SPEAKER_01: There are ditch company shares, there's trans basin sources, so things like the Colorado Big Thompson units, which is this is kind of a cool, I'll I'll hopefully keep it to a short, brief minute here.
35:01
SPEAKER_01: The history of the Colorado Big Thompson system is fascinating.
35:04
SPEAKER_01: And the Twin Lakes Canal Company system down in the south is similar, but essentially going back to World War II and FDR, Northern Colorado realized, hey, all the water is on the western side of the mountains, but all the people are on the eastern side.
35:19
SPEAKER_01: Um and if you know anything about water, uh, it's that it flows uphill towards money more often than not.
35:25
SPEAKER_01: And so the folks on the eastern side of the mountains basically said, okay, well, let's get our money going.
35:29
SPEAKER_01: Let's drill some holes to the western side and we'll pull the water back to the east.
35:34
SPEAKER_01: And so, with millions and millions of dollars, the federal government, um FDR physically signing this bill himself, essentially several hundred thousand acre feet of water was diverted from the western side to the eastern side.
35:50
SPEAKER_01: And that water, those are called CBT units.
35:53
SPEAKER_01: That's the most commonly traded water asset in the state of Colorado, and it's trendable, you can watch it.
35:59
SPEAKER_01: It's an asset that doesn't require water court to convert from agricultural to municipal.
36:05
SPEAKER_01: There is an administrative body that has their eyes wide open.
36:11
SPEAKER_01: They're looking for anti-speculation, they're looking to make sure that this water is used beneficially, they will deny transactions, but those transbasin sources are life-changing for the eastern side, the front range.
36:24
SPEAKER_01: There's also groundwater, which we talked about is very plevalent underneath the ground, but it's slow to recharge.
36:29
SPEAKER_01: It doesn't come back.
36:30
SPEAKER_01: And it the theory from a science perspective is that the groundwater aquifers recharge over either a hundred years or a 300-year period, depending upon what county you're in.
36:40
SPEAKER_01: So you've got limitations.
36:41
SPEAKER_01: Just because you have a well doesn't mean you can pump it to the end of the time.
36:45
SPEAKER_01: You could also buy municipal tax credits like we talked about earlier.
36:48
SPEAKER_01: Water that was raw, ditch ditch rights that was converted to municipal use.
36:54
SPEAKER_01: Um, and then the last scenario here is augmentation credits.
36:57
SPEAKER_01: There are quasi-municipal non-for-profit entities, Title 32 districts, kind of like metro districts, but they're sewer and sand districts or water conservation districts, things like that.
37:10
SPEAKER_01: They have and own water rights themselves, and they'll have augmentation ponds, and they'll they'll basically give you a contract that says, Ryan, you can pump your well five days a week, 15 gallons per minute, this six months a year, and we will release water downstream from one of our ponds to offset the water you use.
37:30
SPEAKER_01: And we'll give you an allotment contract.
37:32
SPEAKER_01: So there are those types of engagements as well.
37:34
SPEAKER_01: So there's lots of ways to solve the water what if or how do we get it problem, but not always.
37:41
SPEAKER_01: And water can have a massive economic up or or down, depending upon you know what what you're doing.
37:50
SPEAKER_01: If you think about what's going on or what has gone on historically in the Arkansas basin, it's funny.
37:55
SPEAKER_01: In water, we talk about hydrological basins being kind of the markets.
37:59
SPEAKER_01: So there's the South Platte Market, which is a hydrological basin, there's the Arkansas market, which is a basin, the Colorado River market, whereas with real estate, you're kind of thinking towns, you know, the town of Loveland or, you know, city of Denver, things like that.
38:16
SPEAKER_01: If you buy a farm and take that water and you dedicate it to a municipality, part of that process is what's called a dry-up covenant.
38:27
SPEAKER_01: You have to basically record on the record a statement that says, this water that was historically used on this farm to grow cucumbers or whatever, no longer will be used on this land and we will record a covenant to say we will dry it up and we'll no longer farm it.
38:45
SPEAKER_01: Well, when you record a bunch of dry-up covenants, it does have a larger impact on the community.
38:51
SPEAKER_01: If your community was historically getting water six months a year, and now it's not getting any because all the farms in that area were dried up, well, there's downstream ramifications too, because water doesn't just sit on one property and then disappear.
39:07
SPEAKER_01: It flows through the property and it gets used multiple times as it continues to flow downhill or uphill towards money.
39:15
SPEAKER_01: So there are massive economic challenges to large water changes.
39:22
SPEAKER_01: Um there's a lot of emotional challenge with this as well.
39:28
SPEAKER_01: Um, I was fortunate enough to do some consulting in my first year for um the southeastern Colorado Water Conservancy District.
39:37
SPEAKER_01: Basically, they run the Frying Pan, Arkansas Project, which is the Trans Basin JFK-approved water project to pull water from the west to the east.
39:48
SPEAKER_01: And I was presenting my findings to this board, completely not on topic of what I was talking about.
39:56
SPEAKER_01: One of the board members stood up, interrupted me.
39:59
SPEAKER_01: Before he said a word, he already had tears in his eyes, Ryan, and I was just kind of like, oh, I don't even know where this is going.
40:05
SPEAKER_01: I've given enough presentations to boards that you sometimes you don't know.
40:09
SPEAKER_01: And he asked me a simple question.
40:11
SPEAKER_01: He said, How would you feel, Sean, if the water that you'd been paying for through taxes for the last 50 years never actually got to you, and what you did get out of the stream was yellow, salty piss water.
40:26
SPEAKER_01: How would you feel?
40:27
SPEAKER_01: And I'm like, yellow piss water?
40:30
SPEAKER_01: That does not sound good to me.
40:32
SPEAKER_01: Uh at the bottom of the Arkansas, basically, the only water that's flowing through the Arkansas River is effluent.
40:38
SPEAKER_01: It's water coming out of the sewage treatment plant mixed with some, you know, true raw water, but for the most part, it's of horrible quality.
40:48
SPEAKER_01: And this board member happens to sit at the bottom of the Arkansas River, and with that whole municipal system, all of the counties within the system basically have been paying mill levies to get water, and some of them have never even gotten water yet.
41:04
SPEAKER_01: So absolutely he was emotional.
41:07
SPEAKER_01: I did not have a good answer for him.
41:08
SPEAKER_01: I definitely flopped on that one, but it was a good lesson for me that water is emotional, and just because I have a good use or a new idea for a use of water doesn't mean that somebody else wasn't using that water for 50 years or five generations, and they're emotional.
41:24
SPEAKER_01: Taking water out of somebody's faucet, you know, if you turn on your faucet and no water comes out, you might be a little worried.
41:31
SPEAKER_01: Humans can only survive a couple of days without water.
41:34
SPEAKER_01: We could survive a month without physically eating.
41:37
SPEAKER_01: Uh so water is absolutely emotional.
41:40
SPEAKER_01: And it's complex and it's legal and it's fun and it's expensive.
41:44
SPEAKER_01: It's all sorts of good stuff.
41:46
SPEAKER_00: Yeah.
41:47
SPEAKER_00: Well, do you have a uh favorite project that you've been a part of so far in your career?
41:51
SPEAKER_01: Oh man, on the water side of things, I don't know if it's my favorite, but at the moment, it's one I'm very actively focused on because I'd like to get this one across the goal zone.
42:04
SPEAKER_01: I am listing water for sale that was part of a defunct golf course that's no longer operational.
42:11
SPEAKER_01: It's the former Deer Creek golf course on essentially 470 and Kipling.
42:17
SPEAKER_01: I was brought in to sell the water uh to try to bring some assets back uh to help with the distressed portfolio overall.
42:26
SPEAKER_01: And I am quite confident that I am one of very few, if maybe the only person selling water in southwest Denver.
42:35
SPEAKER_01: And there's a this engagement touches almost everything we've talked about.
42:42
SPEAKER_01: The golf course has been shut down since 2022, so the county is claiming that we've abandoned our water rights, which is ridiculous because the golf course has only been closed for four years, nowhere near the 10-year mark.
42:54
SPEAKER_01: The county is also claiming that we are speculating because we're trying to sell the water rights, because the golf course is closed to pay taxes.
43:03
SPEAKER_01: The historical use nuance of these water rights is wildly complex.
43:09
SPEAKER_01: So, from a favorite perspective, I don't know if it's my favorite, but it's complex.
43:13
SPEAKER_01: I've been too deep into this for a long time.
43:16
SPEAKER_01: The portfolio owner is quite a character himself.
43:18
SPEAKER_01: I'm gonna leave his name anonymous for now, but it's it's a fun one.
43:23
SPEAKER_01: And I don't know where it's gonna go.
43:26
SPEAKER_01: Ultimately, I think that the water is gonna flow into Chatfield and we'll be able to paper trade it with the municipality to serve something in Douglas County, probably, but we'll see where that goes.
43:37
SPEAKER_01: Um but it's fascinating, and I've had to do a ton of diligence on that one.
43:42
SPEAKER_01: There's engineers and attorneys involved.
43:45
SPEAKER_01: Um, yeah, yeah, absolutely.
43:47
SPEAKER_01: Other than that, I would say second favorite engagement is probably up north.
43:54
SPEAKER_01: Um, I am listing a reservoir for sale, which is fascinating to.
44:00
SPEAKER_01: Because it's a municipal component to their infrastructure system for several municipalities, both Johnstown and Milliken, in the future, probably in the next five to ten years, will need to rely on this reservoir as part of their ultimate water utility service and system.
44:17
SPEAKER_01: Just because you have a bunch of pipes and you own a bunch of water doesn't mean you're going to efficiently be able to serve folks and you know houses.
44:26
SPEAKER_01: You have to be able to store that water uh as well.
44:29
SPEAKER_01: So I'm listing a reservoir for sale.
44:32
SPEAKER_01: So I'm selling golf course water and a reservoir, which are two things I never expected to be doing in my life.
44:39
SPEAKER_01: I've always been the buyer-builder in the equation of land and real estate.
44:43
SPEAKER_01: So to be on the exact opposite of that, I'm learning, it's fascinating.
44:49
SPEAKER_01: I get to hang out with the municipal folks uh as part of this process.
44:53
SPEAKER_01: So those are just a couple of them.
44:55
SPEAKER_01: Uh I have more than enough buy and sell activities to try to keep me busy most days.
45:01
SPEAKER_01: And I would bet water is going to continue to be more scarce uh as we continue to navigate the rest of this century.
45:07
SPEAKER_01: It's not getting cooler.
45:09
SPEAKER_01: Boy, this week was pure example of that 105 yesterday.
45:12
SPEAKER_01: Whew.
45:13
SPEAKER_00: Yeah, yeah.
45:14
SPEAKER_00: We had the same thing here in Iowa, so it's been been toasty.
45:18
SPEAKER_00: Well, that that was a good example to put a little bow on a lot of the stuff that you had talked about previously, just examples walking through the you know, the abandonment and the you know the due diligence and everything that you had to go through there.
45:30
SPEAKER_00: I think at this point, just looking at the time, we should probably shift into the last segment, which is a lightning round.
45:35
SPEAKER_00: So I've got five questions for you based on your experiences.
45:38
SPEAKER_00: Uh, first one, what's the best career advice you've ever received?
45:42
SPEAKER_01: Ask dumb questions.
45:44
SPEAKER_01: Don't be afraid.
45:46
SPEAKER_01: Just ask the dumb questions.
45:47
SPEAKER_01: It may feel dumb in the moment, but I guarantee you there's two other people on that call that also don't know, or in the room, or whatever.
45:55
SPEAKER_01: And eventually you will then start telling people to ask dumb questions because you will have learned so many little things by being confident enough to ask that it'll set you up for success.
46:05
SPEAKER_00: I love that one because that is a motto that I have for this podcast, because all the people that are listening out there, there's got to be somebody out there that would ask the same question that I'm gonna ask.
46:16
SPEAKER_00: So they'll be happy I asked it, even if I look stupid.
46:18
SPEAKER_00: So I'll all good there.
46:20
SPEAKER_00: All right, second one.
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SPEAKER_00: What's one lesson you've learned from a project that did not go as planned?
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SPEAKER_01: Just because you have a path to entitlements, and this is not necessarily water focused, this is maybe more land development focused.
46:34
SPEAKER_01: Just because you have a path to get there and it's very logical, doesn't mean you're gonna achieve success.
46:41
SPEAKER_01: Protect your spending.
46:43
SPEAKER_01: Even if you think it's the most straightforward yes you're expecting, who knows?
46:50
SPEAKER_01: I had a and I'll keep this brief, I had a project where I was taking a small piece of land that was zoned residential through a rezone to convert it to industrial.
46:59
SPEAKER_01: 360 degrees around this property was all industrial.
47:04
SPEAKER_01: The county wouldn't vote to rezone it.
47:07
SPEAKER_01: And it was like the the logic flaw was just mind-blowing.
47:13
SPEAKER_01: And before I committed to spend the six-figure spend on some engineering, I went all the way up to the board of commissioners.
47:20
SPEAKER_01: I had standalone one-off meetings, I tried to figure out whether I was gonna get there or not, and I didn't agree to spend that dollar for those hundred and thirty grand specifically, because I knew the county wasn't gonna vote in favor.
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SPEAKER_01: And it's even if it's the most logical path forward, don't spend until you have to.
47:39
SPEAKER_00: Alright, third one.
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SPEAKER_00: What's one thing young developers don't worry about enough?
47:44
SPEAKER_01: Ooh, that is a really good question.
47:49
SPEAKER_01: I think patience, they're not worried about patience enough.
47:54
SPEAKER_01: I think back to my own earlier days in in my career and I wanted to get everything done every day, and I believed that I could.
48:02
SPEAKER_01: Which is a fallacy.
48:03
SPEAKER_01: You can't you can't get through a full rezone, a full subdivision improvement, whatever in one day.
48:09
SPEAKER_01: And being so focused on finishing a task that you skip steps to get it done, that's gonna blow up in your face.
48:18
SPEAKER_01: You can't get everything done every day.
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SPEAKER_01: Take time, go slow, don't respond immediately.
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SPEAKER_01: Take your time.
48:27
SPEAKER_00: That's that's my guidance.
48:28
SPEAKER_00: Alright, fourth one.
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SPEAKER_00: Which asset class interests you the most today?
48:33
SPEAKER_01: Water rights.
48:33
SPEAKER_01: That's an easy one.
48:34
SPEAKER_01: Water is a secret, it's big dollars, uh, it's crucial.
48:39
SPEAKER_01: It's a scarce resource.
48:40
SPEAKER_01: You can't develop anything without water.
48:41
SPEAKER_01: So you gotta come to Hydrosource, you gotta call me.
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SPEAKER_00: And what's funny is coming into this, I wouldn't even have thought of water as an asset class.
48:49
SPEAKER_00: So very, very interesting.
48:51
SPEAKER_00: All right, last one.
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SPEAKER_00: What's one question you wish more developers would ask about water?
48:56
SPEAKER_01: How long is this going to take?
49:00
SPEAKER_01: Everybody seems to think things go so fast.
49:03
SPEAKER_01: And what I have found is water is so municipally tethered to approvals whether you're dedicating it, whether you're buying it from the municipality, whether any variation of any of that, there's municipal players involved.
49:20
SPEAKER_01: Anyone that has spent time in the entitlements realm, land or water, they'll know that if you think you have a six-month schedule and you have a municipal body that you need an approval from, you need to build in some contingency cushion.
49:33
SPEAKER_01: Maybe it's another 60 days, maybe it's another six months.
49:37
SPEAKER_01: Things never go as fast as you expect.
49:40
SPEAKER_01: Uh and con communicating or conveying a true appropriate timeline to a client is crucial.
49:47
SPEAKER_01: Most of the time they don't ask.
49:49
SPEAKER_01: And so if no one asks me, sometimes I forget that people don't realize how slow things go.
49:54
SPEAKER_01: And so it's on me to inform them.
49:56
SPEAKER_01: So I wish people asked me more.
49:58
SPEAKER_01: How long is this really gonna take?
50:00
SPEAKER_00: All right.
50:01
SPEAKER_00: Well, that brings us to an end here.
50:03
SPEAKER_00: Uh, Sean, what's the best way for people listening in to connect with you and learn more about your company?
50:08
SPEAKER_01: Yeah, absolutely.
50:09
SPEAKER_01: You can find me on LinkedIn, uh Sean Flanagan.
50:12
SPEAKER_01: That's probably the easiest.
50:14
SPEAKER_01: Uh, other than calling my cell phone, which is happy to provide a phone number, 720-362-0722.
50:21
SPEAKER_01: It's my same cell phone since high school.
50:23
SPEAKER_01: It hasn't changed.
50:24
SPEAKER_01: I'll be there.
50:25
SPEAKER_00: Perfect.
50:26
SPEAKER_00: Well, I will throw that on the show notes page.
50:28
SPEAKER_00: So, those of you listening in, if you look down in the description for this episode, you'll see a link there to the show notes page.
50:33
SPEAKER_00: And I will throw Sean's LinkedIn uh profile link there on the show notes page as well as his uh a link to his phone number.
50:40
SPEAKER_00: You can access him there.
50:41
SPEAKER_00: Otherwise, Sean, thanks for hopping on here and talking through this.
50:43
SPEAKER_00: A lot of really interesting things.
50:45
SPEAKER_00: I think you cleared up a lot of the questions I had coming into this.
50:49
SPEAKER_00: You also brought up a lot of things I hadn't even been thinking about.
50:51
SPEAKER_00: So uh really, really good stuff.
50:54
SPEAKER_01: Awesome.
50:54
SPEAKER_01: Well, Ryan, I am quite confident that we might need to have a follow-up to this one, but let it stew and we'll come up with some more good concepts to add because it there's probably another 30 minutes to an hour of stuff we barely even talked about that I'd love to go deeper on.
51:09
SPEAKER_01: So to know, till next time.
51:11
SPEAKER_00: Yeah, for sure.
51:12
SPEAKER_00: And and that brings up a good point, though.
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SPEAKER_00: So, those of you who are listening in, if there's things that we did not cover or things that you're still uncertain about, throw them in the comments and uh and let us know.
51:21
SPEAKER_00: And you know, when we do reconvene, we can bring up some of those topics and dig into them a little bit more.
51:25
SPEAKER_00: But with that said, we'll go ahead and come to a close here.
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SPEAKER_00: If you're not already subscribed, please click that button.
51:31
SPEAKER_00: We'd love to have you back for the next one.
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SPEAKER_00: Otherwise, we will talk to you all next week.