The city of Santa Fe has provided approximately 700,000 gallons of treated effluent for the club to water its 18-hole golf course. In exchange, the club allows city residents who aren’t members to play the course … an agreement that dates to the Cold War era. Attorney Andrew G. Schultz says the club’s operation of a golf course at no expense or risk to the city is an invaluable boon, something the city’s tourism department has used to market the city as a golf destination.
The city of Santa Fe, N.M filed a 26-page complaint seeking to end a decades-old arrangement under which the Santa Fe Country Club and Golf Association waters its golf course with city effluent in exchange for allowing city residents who aren’t members to play the club’s course, The Santa Fe New Mexican reported. The country club’s 44-page answer and counterclaim filed in August makes it clear the club is ready to do battle to preserve the agreement, which dates to the Cold War era.
At stake are the approximately 700,000 gallons of treated effluent the city provides for the club to water its 18-hole golf course, The New Mexican reported. The city says the water is worth more now than it was when the deal was made in 1959 — millions of dollars more — and access to the greens is less valuable than it was decades ago, especially since the city now owns and operates its own golf course.
In a recent interview, country club attorney Andrew G. Schultz said the club’s operation of a golf course at no expense or risk to the city is an invaluable boon, something the city’s tourism department has used to market the city as a golf destination, The New Mexican reported. Both say the conflict isn’t just about the dollar value of the assets on either side of the deal.
“The lawsuit is about the city’s right to control vital resources and renegotiate the contract for a fair value,” city spokeswoman Kristine Bustos-Mihelcic wrote in an e-mail last week.
For the club, Schultz said, it’s about keeping one’s word, or in this case honoring a legal contract, The New Mexican reported.
“It’s not just a question of the effluent,” he said. “It was a quid pro quo, for the city to do something and for the golf association to do something for the benefit of the city.”
The city agreed to provide water to the course as long as it was operated as a golf venue which was open to members of the public for play, Schultz told The New Mexican. The club has continued to operate a golf course and kept it open to the public for reasonable greens fees.
“The Santa Fe Country Club has lived up to its promise,” he said.
Rates at the club are about 20% higher than at the city-owned Marty Sanchez Links de Santa Fe, according to their websites, but Schultz said “every time there has been an increase, we have given notice to the City Council, and they have not objected,” The New Mexican reported.
Meanwhile, Schultz said the city has on numerous occasions failed to provide the water it is contractually obligated to deliver due to equipment malfunctions or failure to meet state standards for contaminant levels — forcing the club to close or purchase potable water to prevent its grass from dying, The New Mexican reported.
“So for the city to come forward now and say, ‘Gosh you’ve done everything we’ve ever asked, but now we think maybe things have changed’ — well that’s not the contract they entered into,” he said. “One party to a contract doesn’t get to say, ‘Gosh, we really don’t like the deal we made, so let’s just break it.’ That’s not the way it works.”
Schultz’s counterclaim on behalf of the club accuses the city of breach of contract and more nefarious things including regulatory takings, breach of covenant of good faith and fair dealing, unjust enrichment and more, The New Mexican reported.
The club’s filing says the city course operates at an annual deficit of more than $1 million per year and calls the city’s attempt to get out of its agreement “anticompetitive monopolistic behavior” in violation of federal and state antitrust laws, The New Mexican reported.
“The city brought the present lawsuit … in a deliberate effort to destroy its competition and monopolize the market for public golf in Santa Fe,” Schultz wrote in the club’s response to the lawsuit.
There is something else in play too, the club says in its filing — the property upon which the country club is located, The New Mexican reported. Schultz said the famed Catron family — whose patriarch Thomas Benton Catron, a lawyer, former mayor of Santa Fe and one of New Mexico’s first two senators after statehood, a man credited with developing the entire east side of the Santa Fe Plaza — conveyed the property to the city for use as a golf course in the 1930s.
According to Schultz, the city tried to run a golf course there for about a decade, but in 1949 leased the property to the Santa Fe Golf Association, The New Mexican reported. In 1959, he said, the city conveyed the property back to the Catron family. The family then conveyed it to the Santa Fe Golf Association, and the city and the club entered into the deal — water in exchange for the operation of the course.
The contract, Schultz says in the club’s counterclaim, contends if the club cannot continue operating a public golf course on the property, it will lease it to the city for $1 a year on condition the city operate it as a municipal golf course, The New Mexican reported.
Under the terms of the deal, if the city were to fail to run a golf course on the property, it would revert to the club, Schultz told The New Mexican. But if the club were to default on its mortgage and the bank were to foreclose on the land, the 1959 contract allows the city to redeem the property in foreclosure “and thereby acquire the property for pennies on the dollar.”
Even within the family, the early history of the deal is just folklore, The New Mexican reported.
“I’m afraid too many generations of my family have passed for me to be of any use to you,” Santa Fe attorney Fletcher Catron wrote in a Jan. 6 e-mail to The New Mexican when asked about it.
“I was told by my father, Thomas Catron III that his uncle, Charles Catron, had given the land to the country club in return for a perpetual membership for himself and his family,” Fletcher Catron added. “I know that his brother, my grandfather, Fletcher A. Catron, was a great golfer, and I assume that Charlie must’ve been too.
“I’m also aware, of course, of the city’s attempt to wiggle out of its contract to supply water to the golf course,” he added.
Schultz rejects the suggestion that what might have been a good deal for the citizens of Santa Fe many decades ago might not be as appropriate in the eyes of current leaders who live in a world where water has become more valuable and golf courses less scarce, The New Mexican reported. It wasn’t just some long-dead deal-makers who felt the country club’s golf courses provided a valuable service to the community, he said. Multiple city administrations have formally recognized the value of the course over the years.
“The city over and over again has confirmed commitment to this contract,” Schultz said.
For example, he said, when the club filed a quiet title action in 1965, the city went to court to establish its reversionary interest in the property, The New Mexican reported.
“They weren’t afraid to say the value of the contract existed when they wanted to assert an interest,” Schultz said.
In 1981, he said, the city contemplated selling water to Santa Fe Downs, adding the club was nervous about what that might mean for its deal, The New Mexican reported. The city passed a resolution reaffirming its deal with the club.
The Santa Fe Golf Association has made investments based on those assurances, Schultz said, building a new pipeline to transport the water when the city built a new wastewater treatment plant and investing in pumphouses and irrigation systems to more efficiently manage the water, The New Mexican reported.
Schultz claims the city’s main goal is to retroactively force the club to enter into a new deal which would comport with a 2003 Treated Effluent Management Ordinance, The New Mexican reported. That requires all agreements be limited to four-year time spans and all effluent to be sold at market value.
But even that ordinance, Schultz told The New Mexican, recognized the commitment the city already had made to the club, noting that it was a “go-forward ordinance” which expressly said it only applies to post-1999 agreements.
“They want to break the 60-year-old agreement so they can try to renegotiate a deal under this ordinance,” Schultz said.
If the city is allowed to do so, he wrote in the club’s response, “Santa Fe Country Club will be deprived of all economically beneficial use of its property.”
It’s not exactly clear when the city’s thinking about the arrangement began to shift, The New Mexican reported. Schultz said the city approached the club about renegotiating the contract in 1998.
According to Kristine Bustos-Mihelcic, the city spokeswoman, the city attorney wrote the club in late 2021 requesting to renegotiate the deal, and those discussions continued throughout the spring of 2022, The New Mexican reported.
During the negotiations, the city attorney suggested the city would be willing to transition to a contract that could include the possibility of “a graduated pricing scheme that phases in over time,” or “non-monetary compensation” according to a timeline provided by Bustos-Mihelcic.
But the club repeatedly indicated it was not interested in a contract that would expire or require the club to pay for the treated effluent, forcing the city to take the issue to court, The New Mexican reported. The city has filed a motion asking the court to dismiss the club’s counterclaims, contending allegations of bad-faith dealings, takings or breach of contract simply haven’t happened.
“The country club claims that the 1964 contract indefinitely binds the city to provide it with 700,000 gallons of treated effluent per day, free of charge no matter the circumstances,” attorney Seth T. Cohen wrote in the motion, The New Mexican reported. “In the face of drought and climate change, and with increasing demand for water and dwindling supply, this impediment to the city’s ability to manage a vital resource is untenable,” the motion says.
The city hasn’t stopped providing water to the club or broken its contract, the motions says, The New Mexican reported. “Instead, while maintaining the status quo … the city took the measured approach of seeking judicial determination of its rights to terminate the contract.”
It will now be up to state District Judge Matthew Wilson to decide the matter, The New Mexican reported. He’s scheduled to hold a pre-trial conference in the case in March.
In the meantime, former Santa Fe Chamber of Commerce president and avid golfer Simon Brackley said in a recent conversation “we’ve got two wonderful courses, both on the south side of town, both assets to the community.”
Many nonmembers like him enjoy playing both courses, he said, and he sees the value of having two public courses, both watered with effluent, The New Mexican reported.
The Santa Fe Country Club has done a great job of keeping the course open to everyone for the past half-century, Brackley told The New Mexican.
“It’s not private,” he said. “It’s not a behind-a-stone-wall kind of place. It would be terribly sad if it was not able to stay in business and was built over.
“Let’s figure it out,” he added. “Surely there is a way to make it work.”