Empire Ranch bankruptcy case in Carson City still ongoing

An Empire Ranch loan in the ongoing golf course bankruptcy case may be on track with all parties, but differences over a city wastewater effluent disposal pact remain part of the case.

A $1.3 million loan to Empire Ranch by a second-in-line creditor, which would pay off top creditor GSR Investments, LLC, looks probable if an Oct. 15 hearing goes as expected in the aftermath of a golf course sale not going through to pay off all creditors. The loan would be to pay off Garth Richards, of GSR Investments and Silver Oak Golf Course, with more than $1.1 million of the proceeds. It would leave about $83,000 for Empire Ranch operations.

GSR Investments is currently the senior lienholder and the loan would come at 4.5 percent annual interest from Patricia Thompson, second-in-line creditor in conjunction with Stanton Park Development. The loan’s note would come due Oct. 1, 2018, and Thompson would enjoy “a continuing interest in, and lien upon, borrower’s real property,” according to the U.S. Bankruptcy Court of Nevada case’s documentation.

In a filing, Carson City government raised the point of contention regarding its effluent contract with Empire Ranch and the debtor-in-possession, Dwight Millard, as well as other matters.

“The purpose of (Thursday’s) response was to protect Carson City’s ability to collect taxes and fees from the debtor in a timely fashion and to communicate with unmistakable clarity the extent and limits of the debtor’s contractual rights with respect to Carson City’s effluent wastewater,” District Attorney Jason Woodbury said Friday.

“It is critically important to avoid any misunderstanding or unfounded assumptions on the part of the court, the debtor and the lender in that regard,” he added.

The wastewater effluent dispute, according to city government’s filing, stemmed from what was branded as a “misleading” interpretation.

“The city does not object to the lender having a security interest in the contractual rights to the effluent water,” city government said. “But the city disputes debtor’s characterization, and reserves all rights against the debtor, lender, all creditors and any other person seeking a determination as to the nature of the rights and duties of the parties relative to the subject effluent water agreement.”

Basically the dispute stems from wording 1,385 acre feet of effluent water are due annually, while the city contends a more accurate description is the golf course has agreed to accept not less than 790 acre feet, subject to limitations, with an option to go to 1,385 acre feet, subject to availability. In the drought, availability questions have arisen; there also are other effluent contracts.

One city interest also is in having access to state prison farm lands and golf courses throughout the community during more flush times because effluent can’t be discharged into the Carson River because of federal clean water dictates. In addition, city government said it’s misleading to view effluent wastewater contractual rights as real property.

“Contractual rights are considered personal property,” the city said, “and the effluent water agreement is a contract to supply reclaimed wastewater for irrigation.”