The town of Oak Creek has cleared a major bureaucratic hurdle for its Sheriff Reservoir Dam safety upgrade project, making headway toward securing a $3.5 million federal grant, but now must tackle rising construction costs and fill a multi-million-dollar funding gap left by the Colorado Department of Local Affairs.

At the regular meeting of the Oak Creek Board of Trustees on Thursday, Sept. 25, which also served as a joint meeting with the Routt County commissioners, town officials provided an in-depth update on the ongoing effort to address critical safety and infrastructure needs at the aging Sheriff Reservoir Dam, an essential water supply and flood control structure.

Built in the 1950s and located 12 miles southwest of Oak Creek within the Medicine Bow-Routt National Forest in Rio Blanco County, the Sheriff Reservoir Dam is owned and operated by the town of Oak Creek.

The dam is currently subject to storage restrictions and is considered a “high-hazard embankment dam,” according to the state Division of Water Resources.

Conditions leading to that designation include inadequate spillway capacity and operational issues linked to an aging low-level outlet works gate. Other issues include a sinkhole discovered in the dam’s foundation and outlet issues linked to a stem casing that is not watertight and a gate that does not close properly.

At the Sept. 25 meeting, Town Administrator Louis Fineberg announced a key bureaucratic milestone: acceptance by the Federal Emergency Management Agency of the town’s hazard mitigation record of change, which officially gets the ball rolling for a $3.5 million federal grant. 

The “good news” is partially offset by “not-so-good news,” said Fineberg: despite the progress toward the FEMA grant, the project continues to face significant funding gaps that require additional sources. 

Fineberg noted the original cost estimate from the project’s engineer in August 2024 was $5.5 million. Given inflation, construction cost trends and tariffs imposed by the Trump administration, however, he now anticipates the project to cost considerably more — possibly as much as $7 million by the likely construction start date in 2027. 

“We’re going to need an updated cost estimate on this project, and even kind of padded, if we’re looking out to a 2027 build, which I think is the soonest we’re going to get to this,” said Fineberg at the meeting. “It’s not going to happen in 2026, I can almost guarantee it.”

The Colorado Department of Local Affairs, which had been targeted to fill most of the approximately $2 million balance, is now underfunded for 2026, said Fineberg, and no longer “has the capacity” to fill that gap. DOLA may be “back in the mix” by 2027, he added, but said “there’s no way to know right now.” 

As a result, the town is exploring various avenues for potential funding, such as support from the Colorado Water Conservation Board. Fineberg said he is meeting with the conservation board some time this month to see if they can help, but cautioned that “it usually doesn’t work out that simply.” 

One attendee at the meeting asked for clarification on what makes the spillway “inadequate.”

“The spillway cannot dispense of the volume of water that could potentially fall through it,” responded Oak Creek Town Trustee Bernie Gagne. “If it overflows the spillway, it gets into sand and rock, and then there are lives downstream that are immediately at risk.”

Mayor Melissa Dobbins stressed that the recent Crosho Fire, which nearly reached the Sheriff Reservoir watershed, heightened awareness of the dam’s vulnerability under increasingly frequent wildfire and flood risks. Burn scar flooding resulting from wildfires could overwhelm the spillway capacity, raising devastating flood risks downstream.

“I just had this vision of burn scar flooding into Sheriff (Reservoir), and we have a moderate-failure dam,” she said. “We aren’t immune to the risks of that, so making sure that we’re taking care of our infrastructure is absolutely critical.”

Dobbins implied that the current momentum on the project is a huge turnaround from just six weeks ago, when prospects felt bleak, referring to a call from U.S. Sen. John Hickenlooper. 

In an interview with the newspaper, Fineberg said that Dobbins received a phone call from Hickenlooper during the Crosho Fire. 

“Shortly after that, this process for the dam funding seemed to start moving forward,” he said, referring to the FEMA grant. “We don’t know for a fact if there’s a connection there. It appears there’s one.” 

Routt County Commissioner Sonja Macys encouraged town officials to consider congressionally directed spending to fill the remaining gap, noting the importance of linking wildfire, water security and infrastructure resilience issues to unlock multiple funding sources.

“Congressionally directed spending … is always an option for infrastructure. We should probably be thinking about if this is something that should rise to that level,” said Macys, who indicated county support for town officials should they choose that route. 

“The more that we can be talking about wildfire and water and the threat to communities, the better off we are, because it opens up all the different avenues of funding,” she added.

The town remains committed to “pecking away” at solutions, said Dobbins, drawing on past advocacy success and growing regional awareness of wildfire and flood risks to secure resources needed to modernize the Sheriff Reservoir Dam.