From the beginning, lack of water kept back the growth of Three Mile Creek, as there was much more land than water to irrigate it. In the fall of 1894 a reservoir was partially completed at the head of Three Mile Creek Canyon. Before the project was completed, however, frost stopped the work and winter set in. The next year no work was done to finish the dam; but because it was a low water year, nothing happened.

In June 1896 a rainstorm that occurred before the snow was all melted caused a heavy flow of water into the reservoir which resulted in a terrible flood. Homes were lost and farms were covered with mud, gravel, and debris, but no lives were lost. In 1923 a series of cloudbursts caused a second flood; however, damage was not quite as great that time.

When the railroad passed through the western part of Three Mile Creek in 1868-69, it brought much-needed revenue to the residents, who hauled timber and telegraph poles from the canyon. Some men made as much as thirty dollars a day. The railroad also paid high prices for goods. Hay sold for fifty dollars a ton, and grain, eggs, and butter were also very much in demand.