WSP02978

• File Number: 8447
• Description: South Platte River Project
• State: CO
• Basin: South Platte
• Date: 8/1/1969
• Author: Chase & Wampler
• Title: Basic Data Report of South Platte River Project for CWCB
• Water Supply Pro - Doc Type: Report/Study

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were also leased. Here, although there is something of a
trend from a higher to a lower royalty rate, going from
north to south, or from near to market to far from market,
the correlation is not very good, and it is not as directly
related to value as is a direct purchase. Also, royalty
rates are more affected by elapsed time than are acreage
prices. This is because at any given point in time there
is more or less a "going" royalty rate which gravel operators
are willing to pay, and over the years this rate has gradually
crept higher. The reason operators are more willing to pay
royalties than higher prices per acre, as time goes on, is
that the royalty does not represent a direct capital outlay
and is paid out of sales. Gravel operators much prefer to
lease land and put their money in equipment rather than
purchase real estate. Originally, at least for purposes of
this study, in the early 1950's and before, royalty rates might
be said to have been from about $0.05 to $0.07 per ton, sand
and gravel alike. Along about the mid-50's the general going
rate was about $0.10 per ton, and sometimes was $0.10 per ton
for gravel and $0.05 per ton for sand. Many lease contracts
had escalating clauses which were tied in to excess sales
over a certain base amount. At the present time, most lease
contracts which had a base for gravel of $0.10 and a base
for sand at about $0.05 have now escalated to $0.12 to $0.125
and $0.06 to $0.07 per ton respectively. Consequently, newer
lease negotiations tend to begin somewhere around the $0.12
per ton figure. In exceptionally good areas close to market,
the royalty rate may be $0.15 per ton. In one instance to
our knowledge, Lease No. L13, an operator was obliged to pay
royalties from $0.17 to $0.19 per ton due to a pressing need
for gravel reserves within that area. At the present time
within the area of general study, the base royalty rate
could be considered to be about $0.12 per ton on gravel.

As with royalty rates, yearly minimum payment figures
are also not as closely connected to acreage value as might
be expected. First of all, the highest rates tend to be in
connection with lease renewals, which are obviously made on
a known quality and quantity of reserve. Secondly, most
yearly payments were deducted from tonnage figures and were
cumulative. In other words, .several years advance payments
could be made before an operator began mining; however, once

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