On July 5, 1996, at 0731 mountain daylight time, a Raven, Ralley RX7 Balloon, N4014K, made a hard landing near Gunnison, Colorado. The commercial pilot and two passengers were not injured and the balloon sustained substantial damage. The flight was an air tour flight operating under Title 14 CFR Part 91 and no flight plan was filed. Visual meteorological conditions prevailed. According to the pilot, she flew one tour and exchanged passengers. On the second part of the flight the winds increased to approximately 30 miles per hour. The pilot said she selected a landing area, told the passengers to hold on, and "ripped out" the balloon at 15 to 20 feet above ground level (agl). She said touch down was not hard and the basket was being dragged across the ground. During this excursion, the balloon became airborne to about 30 feet agl and the landing following this was hard crushing the floor of the basket, bending the uprights, and shearing the retention pins. Reported weather from the Gunnison AWOS taken approximately 4 minutes after the accident is detailed under Weather Information in this document. At the time, the reported wind at the Gunnison Airport, located approximately 3 miles southeast of the accident site, was from 360 degrees magnetic at 6 knots. The pilot operator report (NTSB Form 6120.1/2) is attached and provides no information on the passengers or maintenance on the balloon. The accident was not reported until a week following the occurrence when the operator took the balloon to a repair station.