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Gunnison council approves CIB match for $5M Tarr Canyon grant, declines USDA loan
Summary
The Gunnison City Council voted unanimously to proceed with the Tarr Canyon water project using $125,000 from an existing $2.7 million CIB loan as the required 25% non‑federal match for a $5 million Community Project Funding award and to forego pursuing a USDA loan after USDA officials described a streamlined review process for CPF awards.
The Gunnison City Council voted Feb. 18 to proceed with a funding approach for the Tarr Canyon water project that uses CIB loan funds as the non‑federal match for a $5 million Community Project Funding (CPF) award, rather than applying for a USDA loan.
City Administrator Dennis Marker told the council that although the city has been awarded $5 million in CPF funds it must still complete the formal application and environmental review processes. According to Marker, USDA officials clarified that CPF‑awarded projects are eligible for a streamlined, expedited review even without an accompanying USDA loan. Marker recommended against seeking a loan solely to “grease the wheels.”
Why it matters: The decision determines how the city meets the federally required non‑federal match and affects the mix of debt and the timing of project work. Council members said they want residents to understand future water‑rate changes in the context of state policy changes as well as project financing choices.
Details of the decision: Marker told council members that USDA indicated a loan would have had a minimum size of $500,000 at roughly 3.75% interest amortized over 40 years. Instead, staff recommended and the council approved using $125,000 from an existing $2.7 million CIB loan as the 25% match required for the CPF funds. Staff estimated that using the full CIB loan could translate to an average monthly increase of about $12 for the typical customer, though actual impacts will depend on the final loan amount and project costs.
Council discussion also flagged legislative risk. Members raised concerns about House Bill 501, which would tie municipal funding eligibility to water‑rate thresholds based on statewide median income calculations; they worried the bill’s required rate structure could increase rates beyond those caused by the Tarr Canyon project alone. Council members noted an additional state water‑system monitoring fee is scheduled to begin July 1, 2027.
The council approved “Option A” (use of the CIB funds as match) by voice and roll call: motion by Councilor Kim Pickett, second by Councilor Donald Childs; votes recorded in favor from Councilors Brian Nielson, Kim Pickett, Rohn Peterson, Donald Childs and Stella Hill. Staff will proceed with the CPF application and required environmental review and continue project design and permitting work, including ongoing drilling‑rig setup at the Tarr Canyon well site.
Next step: Staff will complete the CPF formal application and environmental review as required and report back to council on any material changes to project cost or proposed financing.
