A municipal water tower stands over the east side of Granite Falls. The city was recently selected to receive a $750,000 state grant that will help add a loop system to the water mains on the east side of the city. City Manager Crystal Johnson said the project will help lay the groundwork for future development.

GRANITE FALLS — Utilities like water and electricity are important resources in attracting new development to area cities. And with the help of a $750,000 state grant, the city of Granite Falls hopes to make some needed upgrades to its water system.

“We’re really excited about this project moving forward,” said Granite Falls city manager Crystal Johnson.

Granite Falls is one of two cities chosen to receive an Energy Transition Grant from the Minnesota Department of Employment and Economic Development (DEED). Last week, DEED announced that a total of $1.4 million in grant funding was being awarded to the cities of Granite Falls and Fergus Falls. Granite Falls received $750,000 in grant funding.

The grant will help Granite Falls build add a loop system to its water mains on the east side of the city. The project will add stability to the water system in that part of Granite Falls, Johnson said.

“It helps us economically, by being able to have a stable utility,” Johnson said. Stable access to water would help encourage development and attract businesses to that part of Granite Falls. The east side of the city is where the Granite Falls Industrial Park is located, as well as a total of 25 lots for new housing development.

The residential lots are not city-owned, but Granite Falls provided infrastructure for that potential future development, Johnson said. Housing was a definite need in the area, she said.

One other development that could benefit from water system improvements was the possible construction of a new hospital in Granite Falls, DEED said in a news release.

“It has been the vision since Avera Granite Falls joined Avera that we would work toward a new hospital facility in the community in the future,” Debbie Streier, Regional President and CEO at Avera Marshall, said Thursday. “While we don’t have a formal plan or timeline in place at this point, that vision remains the same. We have a strong partnership with the city of Granite Falls, and we maintain open dialogue with city leaders on opportunities to enhance this thriving community.”

The grant would not cover the entire cost of the water main updates, Johnson said. The estimated total cost of the project comes to about $1.48 million, she said.

The Energy Transition Grant program is geared toward supporting economic development in communities where fossil fuel power plants recently closed, DEED said in a news release.

“The Community Energy Transition Grant program is one of the ways DEED is delivering support and financial resources to Minnesota communities when they need it most – including when local power plants close,” DEED Commissioner Matt Varilek said in a news release. “DEED is proud to partner with Granite Falls and Fergus Falls as they craft economic development strategies to increase their tax bases, create new jobs and build housing in the wake of their power plant closures.”

Granite Falls was the site of the Minnesota Valley Generating Plant. The plant was retired in 2009, and the plant building was demolished in 2022.

“We have been impacted over the years,” after the power plant closed, Johnson said. In 2021, the city saw a loss of $112,000 in property taxes, she said.

The Energy Transition Grant would help support future economic development in Granite Falls.

“We’re grateful for that partnership with DEED,” Johnson said.

Johnson said the next steps for the water main project will have to wait for a grant agreement. Once the city has an agreement, it can work on finalizing a design and specifications for the project. Construction would likely start in 2025, she said.