Gunnison Rising runs out of money, for now

It’s been a quiet construction season at the Gunnison Rising development because its owners have run out of money — stalling progress until 2024. Following upheavals in the credit market, most of the work scheduled for the season has been pushed to next year. 

“It’s pretty obvious we’re not doing the work we intended to do this season … It's a very difficult time to be out in the market,” said Gunnison Rising project manager Jeff Prosapio. “We are turning over every stone that we can to find it, but right now we're not funded.”

Gunnison Rising is still not connected to a permanent power source following delays installing utility infrastructure, while progress on phase two, a future neighborhood that will hold some of the developments first homes, has been paused. Barely two years into construction, Gunnison Rising developers have already had a number of hiccups. Since construction crews broke ground, the project team is having trouble hooking up phase one to power, dealing with misplaced electrical lines and entangled in a lawsuit for contractors left unpaid. (See related story on A9.)

Although its owners are temporarily out of money, they are still hopeful about Gunnison Rising’s future. Due to the development’s size, the team supporting the project believe it may

help correct the housing market, one that is tightening as the Gunnison Valley runs out of land to build on. 

Empty pockets 

Already more than two decades in the making, the 630-acre Gunnison Rising development is located just east of town and stretches along both sides of Hwy. 50. The project is not only large by Gunnison Valley standards, but for anyone — with cost estimates for the total project between $120-130 million. 

Gunnison Rising is primarily supported by two investors, longtime Gunnison local Dick Bratton and Denver-based real estate lawyer and investor Byron Chrisman. The project broke ground in 2021 and is projected to take another 20 years to fully build out. 

The project will be split into multiple phases, and two are already underway, but far from finished. While a 38,000 square foot FedEx distribution center and the Bureau of Land Management Gunnison Field Office are finished and occupied, the rest of the property remains undeveloped.

Construction at the “government campus,” the project’s first phase, has been accompanied by the development of Gunnison Rising’s main utility lines. These are extensions of the city’s existing lines for electric, water and sewer, the capacity of which needed to be upgraded to support the project. Once it’s fully built out, Gunnison Rising will be a third of the size of the city, making infrastructure installation both a massive and costly undertaking. 

Prior to the start of 2023, Gunnison Valley Properties (GVP), the company behind the Gunnison Rising subdivision, was funding the development out of pocket. The cost burden of large developments is disproportionately front loaded, with costs that won’t balance out until midway through the multi-phase project, Prosapio said. He estimated that GVP has already invested close to $30 million in Gunnison Rising.

Prosapio said the primary reason the funding ran dry is because the project team anticipated closing on its first metro district bond offering in 2022, but the market went south when interest rates continued to climb. 

Metro district bonds are a common way to fund large infrastructure projects in Colorado and create an equivalent to a government entity or taxing body, such as a school district, that have the ability to place a tax on real estate. This helps pay for the infrastructure over a long period of time and shifts a small portion of the cost to future home and business owners. Now that the market is improving, Prosapio said he will continue to seek potential capital partners in the coming weeks. 

Power struggles 

Connecting Gunnison Rising to the city’s electric grid has been a challenge for both project managers and the city, which reviews and approves development plans since the property was annexed into city limits in 2007. With help from a contractor, the city’s Public Works Department upgraded one of its electric substations so that it had enough power to support Gunnison Rising.

The project team needs to run underground conduits from the substation in town south to Gunnison Rising to connect it to permanent electricity. The route ran through a mixture of private and state lands and had to be redirected because it passed through sensitive archeological sites. This reroute became another holdup to finishing phase one. 

Despite the challenge of finding the right route, Prosapio said all of the easements have finally been secured. Crews started to install the power feeds this spring, but had to stop almost immediately when money ran out. As a result, FedEx is still without power and has been running on generators for more than six months. 

Prior to the distribution center’s completion, FedEx signed an agreement with the developer that it would operate at its own risk until permanent power was supplied. The Times reached out to FedEx’s developer, Saad Development Corporation, based in Mobile, Alabama, but received no response. According to Prosapio, the team is working with the city engineer to come up with a different solution to connect FedEx to power before the end of the year. 

Phase one was expected to be fully energized this November. Water and sewer were finished late last year. Construction crews also planned to wrap up infrastructure at phase two, on the north side of the highway, this year. 

But now that’s a 2024 project, Prosapio said. In 2024, the total budget is another $30 million that may kick over into 2025. This will be accompanied by an aggressive work schedule to make up for delays this year. 

An island 

Gunnison Rising offers roughly 1 million square feet of commercial and office retail space in its master plan and enough room for the equivalent of approximately 1,700 single-family homes. Phase one, which offers larger, more industrial lots, is the only portion of Gunnison Rising that is publicly listed for sale. Four lots are still available. 

Earlier this year, local Bluebird Real Estate broker Brian Cooper was officially named as Gunnison Rising’s sales and marketing director. The Bluebird team will represent all of the sales within the development. Despite delays, Cooper said Bluebird has already received “tremendous interest” in the project from both residential and commercial developers.

“Everybody involved in this, including our team at Gunnison Rising, the owners of the project, as well as our developers here, know the demand for housing is not going away,” Cooper said. “It's not changing, it's not getting softer.” 

The current mission is to get the land ready for developers to come in with their own money and teams to build housing for all parts of the market — from affordable, deed restricted homes to the missing middle and those on the upper end. Some could argue that 2023 was a missed opportunity, but there will be the same opportunity in 2024, Cooper said. 

Besides Whetstone, right outside Crested Butte, no other large developments exist in the Gunnison Valley. Most other comparable mountain communities are running out of space to expand, with little room to take pressure off of rapidly-rising home prices. Crested Butte is one example close to home. 

“If we keep this town as it is, it’s going to get more expensive, just look at Crested Butte,” Cooper said. “Why Crested Butte? It is an island surrounded by open space. It might as well be the ocean … [Gunnison Rising] is the future of development in the Gunnison Valley. Period.” 

(Bella Biondini can be contacted at 970.641.1414 or bella@gunnisontimes.com.)