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HomeMy WebLinkAbout26-08 Approving a Purchase and Sale Agreement with Schell 01-21-2026 (3)RESOLUTION NO. 26-08 A RESOLUTION OF THE BOARD OF TRUSTEES OF THE TOWN OF FIRESTONE, COLORADO, ACTING BY AND THROUGH ITS WATER ACTIVITY ENTERPRISE, APPROVING A PURCHASE AND SALE AGREEMENT WITH MARK W. SCHELL AND DEBORAH M. SCHELL; AND AUTHORIZING THE FILING OF A WATER COURT APPLICATION FOR CHANGE OF WATER RIGHTS PERTAINING THERETO WHEREAS, Mark W. Schell and Deborah M. Schell ("Schell's") desire to convey certain Water Rights which the Town of Firestone ("Town"), acting by and through its Water Activity Enterprise, desires to purchase, subject to the terms and conditions set forth in a Purchase and Sale Agreement; and WHEREAS, the Town Board of Trustees finds that the purchase the Water Rights from the Schellswill be of benefit to both the Town and the community; and WHEREAS, the Water Rights are currently decreed for irrigation use and, should the Town close on the Water Rights, it will need to go through the adjudicatory process in the State's Water Court to change the use of the Water Rights from irrigation to municipal use; and WHEREAS, the Board of Trustees finds it in the best interest of Town of Firestone and its citizens to change the use and seek a decree confirming the change of Water Rights for use in the Town of Firestone's municipal water system, including by lease to other parties, by filing an application ("Application") with the Division One Water Court ("Water Court"); and WHEREAS, prosecution of the aforementioned Application is consistent with the powers and authority of the Town of Firestone and the furtherance of the public interest. NOW, THEREFORE, BE IT RESOLVED BY THE BOARD OF TRUSTEES OF THE TOWN OF FIRESTONE, COLORADO: Section 1. The Purchase and Sale Agreement ("Agreement") between the Town of Firestone, acting by and through its Water Activity Enterprise ("Buyer"), and Mark W. Schell and Deborah M. Schell ("Seller") for Water Rights is approved in substantially the same form as the copy attached hereto and made a part of this resolution, and the Mayor is authorized to execute the Agreement. Section 2. The Interim Town Manager is authorized to execute and deliver all documents necessary in connection with the closing of the purchase of the Water Rights, and to do all things necessary on behalf of the Town to perform all obligations of the Town under the Agreement, including without limitation the execution and delivery of all documents necessary or required with closing. Section 3. The Board of Trustees authorizes the filing of a Division One Water Court Application for the change of Water Rights, upon a successful closing. Section 4. The Interim Town Manger or such person's designated Department Director is further authorized to do all things necessary and desirable on behalf of the Town to file the Application and prosecute the same to completion, including any final settlement with parties or trial before the Water Court, except that Board of Trustees approval shall be required for any appeal of any final decision of the Water Court. PASSED AND ADOPTED this 21st day of January, 2025. Carranco, Deputy Town Clerk •. APPRO TO FORM• Mar eith M , own Attorney PURCHASE AND SALE AGREEMENT (Water Rights) 11 This Purchase and Sale Agreement ("Agreement") is entered into thistj'day of 2026 ("Effective Date") by and between Mark W. Schell and Deborah M. Schell ("Seller" a d the Town of Firestone, acting by and through its Water Activity Enterprise ("Buyer"). Se er and Buyer may be referred to individually as a "Party" or collectively as "Parties." RECITALS WHEREAS, Seller owns and wishes to convey certain water rights as described below to Buyer; WHEREAS, Buyer desires to acquire said water rights pursuant to the terms and conditions contained hereafter; WHEREAS, the Parties acknowledge that Seller may, in the future, wish to convey certain remaining water rights not transferred under this Agreement; and WHEREAS, Buyer desires to obtain from Seller and Seller wishes to grant to Buyer a right of first refusal to purchase certain remaining water rights pursuant to the terms of this Agreement. NOW, THEREFORE, in consideration of mutual promises and covenants contained herein, the Parties hereby agree as follows: Description of Water Rights. Seller is the owner of twelve and twenty-five hundredths (12.25) Shares of the Highland Ditch Company, represented by Share Certificate No. 5206. The water rights represented by the Highland Shares have been historically used on the property located at 4886 Highway 66 in Weld County, Colorado (the "Property"). Seller wishes to sell the water rights represented by six (6) ofthese shares to the Buyer (the "Highland Shares"). Seller wishes to grant Buyer a right of first refusal with respect to the water rights represented by the remaining six and twenty-five hundredths (6.25) shares (the "Remaining Shares"). 2. Historical Use & Transfer. As further consideration, Seller, or Seller's Agent, agrees to provide Buyer any and all affidavits, prior to the time of closing specified in Paragraph 12, stating the manner in which the Highland Shares have been used by Seller, identifying which acreage has been historically irrigated with the Highland shares, the method of irrigation and what crops have historically been irrigated on the acreage with the Highland Shares. Seller agrees to cooperate and participate in good faith with any request made by Buyer to Seller concerning any change in the use approval process of the Highland Ditch Company or any related subsequent court proceedings as may be required to change the use of the shares. 3. Purchase Price. The Purchase Price for the six (6) Highland Shares shall be Three Million, Nine Hundred Thousand Dollars ($3,900,000.00) or Six Hundred Fifty Thousand per share ($650,000.00/share). 4. Right of First Refusal. 4.1. Grant of Right of First Refusal. Seller does hereby grant unto Buyer an exclusive and continuing right of first refusal to purchase, upon the terms and conditions hereinafter set forth, Sellers remaining six and twenty-five hundredths (6.25) shares in the Highland Ditch Company (the "Right of First Refusal"). 4.2. Exercise of Right of First Refusal. If Seller receives a bona fide written offer from an unrelated third party to purchase the Remaining Shares that Seller intends to accept, Seller shall provide to Buyer written notice of the offer no later than seven (7) days after receiving the offer. The Buyer will have sixty (60) days from the date of Seller's Offer Notice (the "ROFR Deadline") during which to exercise its rights to purchase the remaining shares or to waive that right. If Buyer elects to exercise its right of first refusal, it shall notify Seller of such election in writing within such 60 -day period, and with such notice shall provide a purchase contract to Seller which incorporates the same price for the Remaining Shares as offer received by Seller. Any purchase by Buyer shall include sufficient dry -up for the Remaining Shares as a material term of the purchase contract. If Buyer fails to elect its right of first refusal by the ROFR deadline, Seller shall proceed to sell the remaining shares according to the terms in the Notice, and upon such closing, Buyer's right of first refusal shall terminate. 5. Earnest Money. Within 5 business days from the date that Buyer executes this Agreement ("Effective Date"), Buyer shall deliver and deposit with Land Title Guarantee Company earnest money payable in sum of One Hundred Thousand Dollars ($100,000.00), which shall become nonrefundable upon completion of the Due Diligence Period as defined in Paragraph 8 of this Agreement. The Earnest Money shall be applied as a credit to the Purchase Price at closing. 6. Dry Up Covenants. Seller shall provide Buyer, at least 10 days before the Closing Date, an executed dry -up covenant in the form acceptable to Buyer, for the lands historically irrigated by the Water Rights. The Seller shall provide in the dry -up covenant a permanent restriction of irrigation on half of the historically irrigated acres served by the 12.25 Highland Shares, which shall be no less than 100 acres of the Property, with the specific acreage to be identified by legal description and depicted on an exhibit attached to the dry -up covenant, all located in the East '/2 of Section 26, Township 3N, Range 68W. Seller warrants that any and all liens or encumbrances on Property are subordinate to the provided dry -up covenant and Seller shall be 2 responsible for acquiring all necessary agreements to ensure any liens or encumbrances are subordinate to the dry -up covenant. Seller shall be responsible for any revegetation of the Property historically irrigated by the Water Rights. 7. Warranty and Title. Seller warrants that the title to the water rights represented by the Highland Shares will be conveyed free and clear of all liens, encumbrances, assessments, and leases of any kind. Seller agrees to warrant and forever defend the Buyer against all and every person claiming any interest in the Highland Shares by and through Seller. This warranty shall survive the closing of the transaction specified in Paragraph 12 and continue in full force and effect subsequent to such closing. Subject to payment as above provided, and in compliance with the other terms and conditions by Buyer, Seller shall execute and deliver a Special Warranty Deed for the Highland Shares to Buyer at the date of closing. If the title to the Highland Shares is not merchantable and notice of the defect(s) is given by Buyer or Buyer's agent to Seller or Seller's agent on or before closing and such title shall not be rendered merchantable within 30 days of such notice, then this Agreement, at Buyer's option, shall be void and of no effect and each Party shall be released from all obligations hereunder. 8. Due Diligence. Buyer shall have 60 days following the Effective Date of this Agreement ("Due Diligence Period") to terminate this Agreement if Buyer is dissatisfied with the Highland Shares to be acquired hereunder for any reason. It shall be conclusively presumed that Buyer is satisfied with the Highland Shares if Buyer fails to send written notice to Seller to the contrary on or before the expiration of the Due Diligence Period. If Buyer sends notice of its dissatisfaction with the Highland Shares, Seller shall have 10 days following actual receipt of such notice of dissatisfaction to either (1) give notice that Seller elects to cure some or all of the issues described in the notice, or (2) give notice that Seller elects not to cure such issues. If Seller elects not to cure all such issues Buyer shall have as its exclusive remedies, the right to terminate this Agreement or to waive any issues the Seller has elected not to cure. 9. Assessments. All assessments levied by the Highland Ditch Company for the year 2025 shall be prorated up to the date of closing of the transaction specified in Paragraph 12 and be paid by Seller, along with outstanding assessments from years prior to 2025, if any. The prorated assessment after closing of the transaction specified in Paragraph 12 for the year 2025 and for the year 2026 and future years shall be paid by the Buyer. 10. Transfer and Escrow Fees. Any fees by Highland Ditch Company to complete the transfer of the Highland Shares shall be paid by the Buyer. Buyer shall pay escrow fees to Land Title Guarantee Company. 11. Delivery of the Stock Certificate. Possession of the original certificate evidencing ownership of the Highland Shares shall be delivered to the Buyer at the time of closing together with properly executed assignments, Special Warranty Deed and any and all other documents necessary to effectuate the transfer of the Highland Shares from Seller to Buyer. 12. Closing. The closing of the purchase and sale of the Highland Shares will take place within 10 business days after the completion of the Due Diligence Period or such other date as the Parties mutually agree upon. Closing Date may be extended up to 30 days by mutual agreement of the Parties. Payment to seller will be in the form of a cashier's check. 13. Lease Back. If requested by Seller at Closing, Buyer agrees to lease the subject Highland Shares to Seller under a no -cost lease for a period of up to five years. Seller agrees that any use of the Highland Shares shall be consistent with the historical use of the Highland Shares and shall not take any action which would decrease the value of the Highland Shares to Buyer. 14. Default. Time is of the essence herein and if any payment or any other condition thereof is not made, tendered or performed by either Party, then this Agreement, at the option of the Party who is not in default, may be terminated and each Party shall be released from all obligations hereunder. 15. Contingencies: Delivery and Consumptive Use. This Agreement is contingent on a determination by Buyer, in its sole discretion, that there is adequate consumptive use transferable for the agreed price. This Agreement shall be contingent on any diversion structures, storage structures or other devices necessary for the delivery and use of this water being undamaged and in good working condition. Should any of the contingencies herein not be met between the Effective Date and Closing Date, this Agreement may, at the option of the Buyer, be declared null and void and each Party shall be released from all obligations hereunder. In the event that this Agreement is terminated, all Earnest Money paid shall be returned to the Buyer. 16. Costs and Expenses. Each Party shall pay their own consulting, attorney, and brokerage fees and costs incurred as part of this transaction. 17. Notices. All notice and operational communications under this Agreement shall be in writing (including electronic form) except as otherwise provided for in this Agreement. All such notices and communications shall be deemed to have been duly given on the date of service, if delivered and served personally, or served via e-mail on the person to whom notice is given. All notices which are delivered by US Mail shall be addressed to the following address unless otherwise agreed upon by the Parties: Buyer: Town of Firestone Attn: Julie Pasillas 9950 Park Ave. Firestone, CO 80504 Seller: Mark Schell 521 CR40 Berthoud, CO 80513 18. Force Maleure. Neither Party shall be liable or deemed in default for any delay or failure in performance under this Agreement resulting from causes beyond its reasonable control, including but not limited to acts of God, fire, flood, earthquake, explosion, war, terrorism, civil unrest, labor disputes, governmental actions, pandemics, or any other event that makes performance impossible or impracticable. The affected Party shall promptly notify the other Party in writing of the occurrence of such event and shall use commercially reasonable efforts to resume performance as soon as practicable. If such event continues for more than ninety (90) days, either Party may terminate this Agreement upon written notice without liability. 19. Entire Agreement. This agreement represents the complete agreement between the Parties and no oral modification shall be recognized. Any amendment or additions shall be made in writing and signed by both parties. 20. Survival of Closing. The representations, warranties, and indemnities made by the parties to this Agreement and the covenants and agreements to be performed or complied with by respective parties under this Agreement before the Closing Date shall be deemed to be continuing and shall survive the closing. 21. Confidential Terms. Buyer and Seller agree that disclosure of negotiations and the terms of any subsequent agreement to third parties may negatively impact the ability of both parties to complete the proposed transaction. The parties agree it is mutually beneficial that the terms and conditions of an agreement remain confidential and, except as required by law, shall not be disclosed to any person or third party. 22. Binding Effect. This Agreement shall be binding upon and inure to the benefit of the Parties hereto and their respective heirs, administrators, successors, and assigns. 23. Jurisdiction and Venue. This Agreement shall be governed and its terms construed under the laws of the State of Colorado and venue shall be in the County of Weld. IN WITNESS WHEREOF, the Parties hereto have executed this Agreement on the date and year first above written. BUYER: TOWN OF FIRESTONE SELLER MARK W. SCHELL & DEBORAH M. SCHELL Mark W. Schell i /�