How to grow Durango just add water: Ute development would be largest in town's history.

• Author: Titus, Stephen

Durango is in the middle of nowhere, but close to everywhere. It's a day's drive or a two-hour flight to the West Coast; an afternoon trip to Denver or a quick hop to Mesa Verde National Park or Durango Mountain Resort ski area, the old Purgatory resort.

It's no wonder that developers say it's another example of a city that missed out on the real estate depression.

"Durango has become an expensive market and it's mostly because of the supply and demand ratio. I don't want to overstate: We're not going to absorb the same units as Douglas County; we'll absorb maybe 500 units (annually), but it's a different animal," said Patrick Vaughn, president of GF Properties Group, which is owned by the Southern Ute Indian Tribe. "There is so much Indian-owned land and so much federal land (surrounding the town); what you have left is restricted by topography or water or both."

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The Southern Ute Tribe is proposing the largest development in Durango's history. Called Three Springs, it is 689 acres east of town that calls for 1,989 homes, 864,000 square feet of commercial space and a 600,000 square-foot hospital.

Vaughn said the tribe, well known for its coal-bed methane gas operations, is using the project to diversify its assets over the next 30 to 40 years, which is the projected build-out of the development. He said the Southern Ute's ability to finance the project out of pocket rather than through sales will make a huge difference in how it unfolds.

"When you do long-term developments you need patient money," Vaughn said. "So many times you make mistakes because you need to meet a quarterly or yearly revenue projection, and sometimes that's not in the best interest of the development or the investor."

The Three Springs project falls within the heart of the Grandview Area Plan, a 5.9-square-mile spread of land that the City of Durango hopes to annex in the near future. Some developers are calling it a plan for a new city, and with potential for about 11,046 homes and 4.87 million square feet of commercial space, it would certainly qualify as one.

But Durango planner Vicki Vandegrift points out that development like that could take 75 years or more. Drawing up a plan for it, she said, is more about controlling growth in one of the last parcels of developable property near town.

As Vaughn points out, the city is surrounded by geographical boundaries and burdened with a limited water supply--both of which restrict growth.

Water...