Water and water rights in northern NM

[Learner]

I am interested how appraisers handle water and water rights.

For those unfamiliar with the subject:

Basically, there is one type of water -- well, stream, or precipitation -- it's all H20.

On the other hand there are many types of water rights. The basic division is between well or groundwater rights and surface water rights. The latter is usually delivered down a ditch or acequia and it often arrives smelling of something. Realtors tend to call these "irrigation" rights but this is misleading. (See below)

There are variations on well water rights, but if you have the better type then you can use it for anything including irrigation or livestock. Thus -- if you had to choose -- for most homeowners, well water is better since most would not use ditch water to brush their teeth for instance and you don't have to disinfect the tomatoes before you eat them.

In the Pojoaque Valley, surface rights are not subject to litigation. Under Aamodt settlement, most homes will eventually lose well water rights. Some will not.

In practice rights are complex. Litigation could strip away your well rights. In time of drought, senior users could take your surface water.

Again, water is simpler. The village furthest upstream has water -- everyone one else has less. Thus Nambe is green and has more water than it wants or needs. The river flows and the wells pump out water. This cannot be assumed as you travel downstream.

So drive thru Nambe and see green trees hang over the road. Then drive west and see what El Rancho has.

The problem is that most realtors know nothing about water. So many enter "irrigation rights" and nothing else -- nothing about seniority or quantity of rights or actual flow of water in recent years. Some property owners think they have water rights they are just not using and pass this on to the realtor.

Question is: What do appraisers think about this??? How does it enter into their determination of market value?

 

[Restrain]

State of Texas tried to control the aquifer water, but the courts threw out the law stating the fact that people own all rights under their land unless they have been sold off. It will all depend on the specifics of our state laws and market effect

 

[berniek]

The problem with water rights is that many are not recorded and title companies will not insure water rights. Each state has their own laws and Colorado is probably one of the most difficult to interpret.

 

[PropertyEconomics]

It is my understanding that under the NM constitution every property owner is entitled to three acre feet of water annually. The Aamodt suit, to my knowledge, delt with water rights in the middle Rio Grande Basin and essentially was a claim of water rights among property owners and various Indian Tribes.

It is my understanding the Upper Rio Grande Basin has already been adjudicated, which would be from the Otowi Gage on the Rio Grande River northward.

I have appraised numerous water rights through the years in the three major basins, Upper, Middle and Lower Rio Grande Basin as well as various smaller basins thoughout the state.

 

[David Mescon]

Water and riparian rights vary widely from state to state, so there is no one size fits all answer. In those situations where such rights are applicable and have value, I have always performed separate analyses of those rights.

 

[Learner]

Let me try again the question.

Two NM Pojoaque Valley properties are next to each other. Property A, according to its agent, has surface water rights. She knows that the current owner has a piece of paper saying that it has water rights of 1.63 acre feet. She knows nothing more on the subject. She does not know the seniority of the rights or the actual flow of water in recent years. Property B does not have surface water rights.

Other wise the two properties are identical. Each has a pre-moratorium well with rights to 3 acre feet. Neither agent knows anything the wells. They do not know the actual flow. They do not how the properties will be impacted by the Aamodt settlement. (Most properties will lose their wells eventually; but some will not.)

You appraise property B (without surface water rights) at $250,000.

You would appraise property A (with surface water rights) at ????

I would appreciate any help.

 

[Lobo Fan]

Surface water rights are considered to be personal property and do not always transfer with the land. Appraising water rights is a specialty field.

 

[Terrel L. Shields]

An appraiser should be apprised of the senority issues, but that is not always the case. And my understanding is that the original rights to the "ditch" or surface irrigation water was for irrigation, not domestic uses. "Water wars" are a part of the history of the West. Oliver Lee was said to have had a man murdered for his spring up Dog Canyon where the state park is.

In most cases I would say the appraiser knows no more than they are told about the water rights, therefore, are unlikely to parse the differences except in the most extreme cases where they have some evidence.

From what I have seen, Colorado is no better. Wells drilled prior to a certain date are grandfathered in, after that date they are metered in many districts and you not only have to pay for drilling the well, but have to pay regular water rates to the local Water District.

The bigger issue is that many basins have seen huge chunks of the water sold off to Denver and elsewhere. Ultimately, you reach the point of no return. In some of the instances, such as you mention, you already see where junior interests are left high and dry in drought times. In 2002, when I visited Cortez, CO, many areas that normally had access to irrigation water was parched and the alfalfa fields were brown. There simply isn't enough water to go around.

Appraisers probably are under-educated enough for sure, but perhaps the bigger issue is that of transparency. Where do you go to find the information on the senority of many of these properties and particularly, the seniority position of the comparables. Did it even affect value if they buyer was equally ignorant?

 

[PropertyEconomics]

Surface rights are typically not nearly as valuable as underground rights. Not knowing the specific property or the data it is impossible to answer the question regarding value.
Surface rights are typically subject to the availability of the water since its not always present thus cannot always be used. Underground rights, on the other hand can be pumped from the ground as needed (and owned) in order to be placed to beneficial use.

Are the surface rights associated with a stream system? Are they riparian rights?


Priority dates are established by hydrographic surveys which are prepared typically by engineers which are then submitted to the State Engineer for approval and concurrence. Unfortunately, to my knowledge, the only time the SE will take action is when there is an application to transfer the water rights changing point of diversion and often times changing the use.

Historically, small amounts of water rights are not attractive to buyers since the costs associated with proving the rights, legal fees, and their transfer make such purchase not economically feasible. However, that being said, in some areas of the state historical rates have been $50,000 per acre foot or more which would tend to suggest in low water areas such a small transfer may be worth the effort. The problem is with the information provided it is impossible to provide much assistance to the original poster.

 

[JRS at OBX]

Basically, there is one type of water -- well, stream, or precipitation -- it's all H20.

No no no no no...

There are two types of water....
Saltwater and freshwater.