Almost thirty years later, Thomas Judd and Thomas P. Cottam had a survey made and started work on a canal. In June 1889 the La Verkin Fruit and Nursery Company was incorporated with a capital stock of $25,000.00. Its objectives were to establish nursery orchards and vineyards, to manufacture wine and liquor, and to promote fruit raising, stock raising, and general farming.

Work on the canal and tunnel was most difficult; a major part of the canal was made through the solid rock limestone of the precipitous cliff wall, other portions through talus slides that had broken off the limestone ledges above. A tunnel through the Kaibab limestone escarpment east of the bench was eight hundred feet in length. It was worked on from both sides, and when the two crews met, the sections fitted together almost perfectly. A row of lighted candles from each end was used as a mark to keep the lines straight as the men on both sides of the ridge drove toward the center. They built a dam two miles up the river from the place where the tunnel penetrated the mountain. Water was turned into the ditch in April 1891.

Leaks in the canal where it coursed through gypsum formations plagued the project. When cement became available, the worst of the leaking places in the canal were cemented, and the canal gave less trouble.