Recreation at Vallecito Reservoir is temporarily frozen – literally and legally – because of a legal dispute between the groups managing the lake.
Two managing groups – the nonprofit Vallecito Conservation and Sporting Association Inc. and its subcommittee, Vallecito Marina Board – are battling over who makes financial decisions for the marina. Because of their dispute, their bank, TBK Bank, has frozen the marina accounts, and VCSA has lost its contract to run recreational facilities at the marina.
At this point, everyone has lawyered up, and the marina is closed.
“We’re gonna try to get the marina open on schedule on April 15,” said Ken Beck, superintendent of the Pine River Irrigation District. “That’s our goal, so there’s the least amount of disruption or interruption to the recreating community and the Vallecito community.”
Vallecito Reservoir, 18 miles northeast of Durango, has two primary purposes: to release water for irrigation and to prevent flooding in downstream communities, like Bayfield and Ignacio, during spring runoff.
But people also go to the reservoir for camping, fishing, boating and swimming. Businesses in the area depend on the seasonal profits.
“Recreation is the lifeblood of the Vallecito Lake community, both for businesses and residents,” said Paul Eckenrode, president of the Vallecito Lake Chamber of Commerce and a resident near the lake.
Casta Narable, co-owner of Fur Trappers Steak House in Vallecito, said recreation draws customers to the area – especially in the summer, when the businesses rely on tourism.
“If it dropped during the summer, a lot of businesses up here would probably suffer, but we’d try everything we can to continue to stay in business,” Narable said.
The fundamental issue at play is that the marina subcommittee members are personally liable for a $126,035 loan with TBK Bank.
But the VCSA board has changed hands – and the new board members now have the authority to sign the checks.
Now, both groups disagree as to who should operate VCSA.
“My clients stuck their necks out for the benefit of this community,” wrote Joe Zebas, the subcommittee’s attorney, in an email to TBK Bank and the VCSA attorney. He called the financial obligation of the loan “beyond reasonable.”
“It is unfortunate that the actions of your clients will adversely impact the VCSA’s ability to conduct its operations ... and to pay its employee,” wrote Lindsey Nicholson, the VCSA legal representative with Goldman Nicholson Mack Attorneys at Law.
Both attorneys emphasized they want to reach a peaceful resolution, especially since their clients are neighbors in the small community, Zebas said.
A resolution is not entirely out of reach. The subcommittee members mainly want to be released from their personal liability, Zebas said. The VCSA board is willing to explore options to do that, Nicholson said.
Tangled red tape and frozen financesThe issue gets more complicated because PRID and the U.S. Bureau of Reclamation manage the reservoir, called the Pine River Project by the bureau.
In 2015, PRID, the local manager, hired VCSA to manage recreational operations on the lake, stipulating that PRID would oversee the nonprofit.
VCSA manages slips and/or moorings, public rentals for boats and recreational equipment, litter control and all facilities. The nonprofit has to ask PRID and the bureau for permission to hold additional activities, like ice fishing tournaments. (Although the marina is closed, PRID has authorized the annual Vallecito Lake Ice Fishing Tournament to continue as scheduled on Saturday, Beck said.)
On Feb. 6, PRID canceled the contract with VCSA Inc.
The cancellation was because the organization was in default on several contractual requirements, like selling Colorado fishing licenses and updating lists of VCSA-owned rental boats, according to a letter from PRID’s attorneys.
“It wasn’t something the board took lightly. We’ve discussed these problems for probably two years or more,” Beck said.
On Feb. 7, VCSA Inc. said the committee members no longer had any legal authority to make decisions about the marina because of the allegations of noncompliance, according to a letter from the nonprofit’s legal team.
On Feb. 11, TBK Bank announced it would freeze all the marina’s accounts because the confusion put the loan in jeopardy, according to an email from the bank’s attorney. It will unfreeze the accounts if certain conditions are met, like resolving the recreation contract with PRID.
TBK Bank could not provide any updated information because of privacy laws and confidentiality.
“We’re caught in the middle of it, and we’re just hoping they can get it resolved quickly,” said Mark Daigle, president of the bank’s mountain division.
Beck said the district will follow Bureau of Reclamation policies to form a new contract but is considering working with the VCSA board of directors. If the bureau process takes multiple months, PRID can approve a temporary contract, Beck said.
“We just feel really, really lucky that the board is very willing to work with us and to try to show a good faith effort to try and come back and make things right,” he said.
“So we’re excited about that.”