Gunnison opens public hearing on Tar Canyon well funding; council signals push for full CIB application and utility power

The Gunnison City Council opened and closed a public hearing to discuss a potential CIB (Capital Investment Board) application to cover remaining costs for the Tar Canyon Well Project and heard a staff presentation on funding options, project phasing and power supply choices.

"The purpose of this public hearing tonight is to discuss the potential CIB application for partial funding for the Tarkandi [Tar Canyon] Well Project," said Kelly (staff member), who presented project background, phases and financing scenarios to the council. Kelly said the city has three previously considered funding sources — a now-stalled community project award, USDA Rural Development, and CIB — and that the stalled community project award previously accounted for roughly $5 million of the project budget.

Staff described the work already completed (test well, planning, environmental assessment, water rights and property purchase) and quantified the city’s prior investment as $2,400,000. Remaining work includes well development (drilling, casing, test pump), power extension to the site, waterline construction (16-inch transmission and 12-inch distribution lines), road restoration and river crossings, plus well-house equipment and site improvements. Staff said the remaining funding need is about $6,700,000.

Kelly ran several grant-versus-loan scenarios during the hearing. Under a worst-case assumption that the remainder would be fully borrowed, staff estimated an annual payment that would translate to about a $35 increase to the city’s average water bill (average cited by staff at roughly $57). Other scenarios mixing CIB and USDA support reduced the estimated bill impact to figures between about $6 and $28 per customer depending on the grant/loan splits and terms discussed. Kelly also noted that a city-specific MAGI (median annual gross income) figure used in grant eligibility calculations had recently been published as $61,000 and that a third-party income survey could be commissioned to contest or refine that number for grant evaluation.

Council members asked questions about timelines for CIB prioritization and funding, USDA application status, and whether to split the project across multiple funders (which would require multiple bond closings and additional closing costs). Several council members expressed support for applying to CIB for the full shortfall and to seek an 80/20 grant/loan split in the CIB application while keeping USDA as a fallback.

Council discussion also addressed power options for the well site. Staff told the council Rocky Mountain Power has provided concept estimates and staff currently estimate power extension costs near $1,000,000; staff evaluated an alternative scenario of diesel-plus-solar generation with redundancy and estimated capital costs near $2,200,000. Over a 20-year comparison, staff said utility service was the lower-cost option in most scenarios, and council members who spoke favored pursuing utility power and ensuring a permanent backup generator was included in project planning.

The council unanimously approved motions to open and then to close the public hearing. No public members spoke during the hearing. Council members indicated consensus direction to pursue a full CIB application for the $6.7 million outstanding need, continue parallel work on USDA paperwork so the city has fallback options, and pursue utility power from Rocky Mountain Power while adding a permanent backup generator in project budgets. Staff said the next substantive step is to file the CIB application and to appear at CIB’s prioritization meeting in November or December if the application is accepted for consideration.