Hayden — To ensure Hayden has adequate funds to make $1.4 million worth in improvements to the town’s water plant, town officials are applying for a $1 million loan from a state agency.

Last week, town officials sent in a loan application to the Colorado Water Resource and Power Development Authority requesting $1 million to make improvements to the 25-year-old plant.

The town decided to apply for the maximum amount as a precaution, said Town Manager Rob Straebel.

The town intends to use $900,000 of the loan to upgrade the water plant. The town has budgeted $200,000 and is hopeful to get a $300,000 Energy Impact Grant to fund the rest of the project.

“There is not a penalty to apply for $1 million,” Straebel said. “And there is no obligation to spend all of the money.”

The town’s water facility is in need of major upgrades. A consulting firm has identified $2.3 million worth of improvements need to be done within the next 10 years.

At least $1.4 million of the improvements need to be done by next year.

Improvements the town intends to get done by next year include adding a high-service pumping station to increase capacity. The town also plans to improve the plant’s chlorine process.

Mayor Chuck Grobe and the rest of the Town Board of Trustees agreed to submit the loan application for the maximum amount.

“If we go for $900,000 and it turns out we need $930,000 to finish the project, we would have to reapply for another loan,” Grobe said. “We won’t spend the million if we don’t need it.”

Trustee Richard “Festus” Hagins agrees.

“We are going for $1 million because it will make sure we cover our bases,” Hagins said.

The town’s application is being reviewed by the authority. The agency has 30 days to review the application before submitting it to the Colorado Public Health Department.

The health department is expected to approve of the loan in November, said Lisa Johnston, town clerk.

The town expects to get the loan because the project meets the state requirements for financial assistance.

“We now have to jump through the hoops to get the money,” Johnston said. “We have to prove to the state the town can repay the loan.”

If the town uses $900,000 of the loan, the town would have to pay an annual payment of about $66,000 for 20 years. Repayment of $1 million would be $73,000 a year.

In the meantime, town officials are preparing a presentation it will give to members of the state’s Energy Impact Review Board, who will decide whether the town receives the grant.

Town officials will give the presentation to the board in October in Leadville. The town will be notified if it receives the grant in November. Officials are optimistic the town will get the grant because the project was ranked the top project by a local grant committee.

At the end of June, the review committee, which consisted of officials from Steamboat Springs, Hayden, Yampa, Oak Creek, two county coal mines and Routt County commissioners, ranked the project as the most important in the county.

Because of the plant’s capabilities, the Town Board has issued a water restriction for residents.

Residents are allowed to water their lawns during two time periods a day, between 6 and 10 a.m. and 6 and 10 p.m.

The water restriction was put in place to ensure one of the plant’s two pumps does not break down this summer and to allow the Public Works crew time to work on other projects during the day.