COMMITTEE AGENDA MEMORANDUM
Safe Clean Water Independent Monitoring Committee (SCW IMC)
Government Code § 84308 Applies: Yes ☐ No ☒
(If “YES” Complete Attachment A - Gov. Code § 84308)
SUBJECT: title
Receive Information Regarding the Safe, Clean Water and Natural Flood Protection Program’s Draft 5-Year Implementation Plan for Fiscal Years 2027-2031 and Make Recommendations, as Necessary.
End
RECOMMENDATION: Recommendation
Receive information regarding the Safe, Clean Water and Natural Flood Protection Program’s Draft 5-Year Implementation Plan for Fiscal Years 2027-2031 and make recommendations, as necessary.
Body
SUMMARY:
On November 3, 2020, Santa Clara County voters overwhelmingly approved Measure S, a renewal of Valley Water's Safe, Clean Water and Natural Flood Protection Program (Safe, Clean Water Program or Program).
The renewed Safe, Clean Water Program addresses the following six community priorities:
Priority A: Ensure a Safe, Reliable Water Supply
Priority B: Reduce Toxins, Hazards, and Contaminants in our Waterways
Priority C: Protect Our Water Supply and Dams from Earthquakes and Other
Natural Disasters
Priority D: Restore Wildlife Habitat and Provide Open Space
Priority E: Provide Flood Protection to Homes, Businesses, Schools, Streets,
and Highways
Priority F: Support Public Health and Public Safety for Our Community
The Program is implemented through a structured framework designed to ensure transparency, accountability, and alignment with voter-approved priorities. The Safe, Clean Water Program’s 5-Year Implementation Plan for Fiscal Years 2027-2031 (5-Year Plan or Plan) outlines the approach for delivering Program projects within the broader 15-year financial planning cycle (FY22-36), while addressing evolving financial, regulatory, and implementation conditions.
The Plan reflects progress made during the first five years of implementation (FY22-26) and identifies work planned for the next five years (FY27-31) to achieve key performance indicators (KPIs). It includes financial information and defines roles and responsibilities for implementing, monitoring, and evaluating Program performance.
The Plan:
• Breaks down KPIs into 5-year targets and proposes measures to gauge progress toward them.
• Identifies Program challenges and strategies to continue advancing priority infrastructure.
• Supports flood protection, water supply reliability, and environmental stewardship goals.
In accordance with the Program requirements, staff is presenting the draft 5-Year Plan (Attachment 1) to the Independent Monitoring Committee (IMC) for review and recommendations prior to Board consideration and approval in June 2026.
Data Limitation
This draft Plan has been prepared prior to the completion of FY26, the final year of the first 5-Year Implementation Plan (FY22-26). It is based on preliminary financial and outcome data available as of March 2026 and is therefore subject to change.
An updated Plan will be published after FY26 closes in July 2026 and audited financial statements become available in December 2026/January 2027.
Change Control Process
As the Program progresses, adjustments or modifications to projects and sometimes the KPIs may be necessary due to inflation, regulatory changes, or evolving project conditions. Valley Water follows a Board-approved Change Control Process that distinguishes among the following three types of project changes, last updated by the Board on February 24, 2026.
• Adjustments: Changes to the Safe, Clean Water Program’s project text or funding allocation that do not impact the delivery of any project KPI, or changes to a project schedule. Adjustments may include change(s) to a KPI when the purpose of such change(s) is to clarify the project KPI to be consistent with the applicable project description in the approved Program.
• Modifications: Changes to the project description, project KPI, or funding allocation that impact the delivery of any KPI.
• Non-Implementation: A decision by the Board to not implement a project.
While modifications require noticed public hearings, adjustments can be approved by the Board during a regular agenda item without a hearing. The Change Control Process is available on Valley Water’s website at the following link: <https://www.valleywater.org/safe-clean-water-and-natural-flood-protection-program/safe-clean-water-program-archive>. Please refer to the section titled “Board-Approved Change Control Process.”
5-Year Plan Improvements
In prior annual report reviews, the IMC noted that year-by-year reporting does not provide a comprehensive multi-year perspective. To address this concern, the 5-Year Plan includes:
• A summary of progress toward the five-year targets.
• An overview of modifications, decisions not to implement a project, and adjustments to text, schedule, funding, and KPIs.
• Appendix D, which provides the cumulative status of all projects for FY22-26.
The Plan also includes visual comparisons of:
• Initial 15-year funding.
• Board-adjusted funding.
• Current funding forecast.
These comparisons are presented at both the project and priority levels.
Additionally, contributions from the Watersheds and Stream Stewardship Fund and the Water Utility Fund are illustrated to show how they support KPI achievement.
Funding Adequacy and Computational Capacity for Project F3
During the FY25 annual review of the Safe, Clean Water Program, the IMC requested an evaluation of the remaining funds for Project F3: Flood Risk Assessment Studies, including whether sufficient resources are available for high-performance computing.
Staff determined that:
• The project is adequately funded to deliver its existing KPIs.
• Existing computational capacity and software are sufficient for advanced modeling.
• Current tools support regional-scale predictive analysis beyond FEMA flood maps.
Valley Water will continue monitoring computational needs; however, no additional funding for high-performance computing is anticipated at this time.
FY22-26 (Q1-Q3) Key accomplishments
Water Supply
• Project A2: Water Conservation Rebates and Programs
Converted nearly 4.1 million square feet (sq ft) of lawn to low-water-use landscaping; exceeded $5.4 million.
• Project A3: Pipeline Reliability
Began construction on two of the four planned line valves. Work is underway on West Pipeline valves near Quito Road in Saratoga and near Granada Avenue in Cupertino.
Flood Protection
• Project E6: Upper Llagas Creek Flood Protection Project
Completed construction of the first two phases of the three-phase project, with the third and final phase currently under construction. Secured $80 million in grant funding from the Natural Resources Conservation Service (NRCS), of which Valley Water has already received approximately $21 million in reimbursements.
• Project E1: Coyote Creek Flood Protection Project
Completed the Coyote Creek Flood Management Measures Project (Phase 1) of the project. Phase 1, part of the Anderson Dam Federal Energy Regulatory Commission (FERC) Order Compliance Project for Anderson Dam Seismic Retrofit, is funded by the Water Utility Enterprise Fund.
The Board approved advertisement of the Coyote Creek Flood Protection Project (Phase 2) for construction bids in April 2026.
Stewardship
• Project D6: Restoration of Natural Creek Functions
Completed the project and delivered the KPI with the construction of the Hale Creek Enhancement Pilot Project and the Bolsa Road Fish Passage Improvements Project.
• Project D7: Partnerships for the Conservation of Habitat Lands
On track to complete the project and deliver the KPI in FY26 by contributing $3.95 million to support Peninsula Open Space Trust’s 2,284-acre Sargent Ranch acquisition. In FY24, Valley Water contributed $4 million toward the Santa Clara Valley Habitat Agency’s 3,653-acre Richmond Ranch purchase.
• Project F5: Good Neighbor Program: Encampment Cleanup
Managed 18,090 acres between FY22-FY26 (Q1-Q3) to clean up encampment-generated trash, debris, and hazardous pollutants, exceeding the KPI of managing 300 acres annually.
• Project F9: Safe, Clean Water Grants and Partnerships
Awarded approximately $5.2 million in grants and partnerships for stewardship activities.
• Project D4: Fish Habitat and Passage Improvement
Completed the construction of the large woody debris and gravel augmentation project to improve the fish habitat along Uvas Creek in Gilroy.
Outcome Performance
At the end of the first five years, the Safe, Clean Water Program included 31 projects, following the Board’s FY24 decision not to implement Project A1: Pacheco Reservoir Expansion. Of these, 30 projects were active, while Project E3: Lower Berryessa Flood Protection is scheduled to begin in FY32. Among the active projects:
• Projects that met their targets: 20 (67%)
• Projects that partially met their targets: six (20%)
• Projects that did not meet their targets: four (13%)
See Attachment 2, which lists the projects and their status toward achieving the 5-year targets.
Transparency and Accountability
To ensure transparency and accountability, the Safe, Clean Water Program requires the Board to conduct independent professional audits at least every five years. Additionally, the program mandates that a Board-appointed Independent Monitoring Committee (IMC) perform annual reviews and provide annual reports assessing progress toward achieving the Program’s intended results.
Although an independent audit is required at least every five years, the Independent Monitoring Committee (IMC) requested an earlier review of the Program, and the Board concurred.
In FY23, the Board initiated the Program’s first independent audit, covering its first three years of implementation (FY22-24). The audit, presented to the Board on Nov. 12, 2025, commended Valley Water for an established and transparent governance structure, adherence to annual reporting requirements, public access to information, a comprehensive capital project management framework, effective performance of operational projects, and strategic use of tiered KPIs for risk management.
The audit report includes nine (9) findings, two of which recommend that Valley Water evaluate whether to change certain project KPIs to ensure they are financially sustainable, remain aligned with current project activities, and that their descriptions clearly articulate the project’s scope and deliverables.
Valley Water is actively addressing all nine audit recommendations. To access the audit report, including management response to the recommendations, visit tinyurl.com/SCWauditFY22-24 </..//../Users/meenganj/AppData/Local/Microsoft/Windows/INetCache/Content.Outlook/KMKY6UJS/tinyurl.com/SCWauditFY22-24>.
Recommended Adjustments
As part of Finding #9, the audit identified two projects for which their existing KPIs do not fully reflect project activities that are currently undertaken. These two projects are Project D1: Management of Riparian Planting and Invasive Plant Removal, and Project F3: Flood Risk Assessment Studies. The Auditor noted that the KPIs for these two projects could be enhanced for clarity and scope to better align with current project activities and deliverables. In response to audit recommendations, staff has recommended KPI revisions for these two projects. As per the Board’s direction, the proposed revisions were presented to the Board Policy and Monitoring Committee (BPMC) on April 21, 2026, for review before they are presented to the full Board.
Additionally, as part of its 5-Year Plan development, staff identified the need to revise the project description of two other projects to update outdated information - D5: Ecological Data Collection and Analysis and Project E8: Upper Guadalupe River Flood Protection.
The above revisions meet the definition of “adjustment” pursuant to the Change Control Process and would not require formal public hearings prior to adoption. These adjustments are incorporated into the Draft 5-Year Plan, which will be considered for approval by Valley Water Board in June 2026. Details of the proposed adjustments are included in Attachment 3, with deletions shown in strikethrough and additions indicated in red font.
Proposed Modifications
In Finding #7, the audit noted misalignment between the KPI for Project E5: San Francisquito Creek Flood Protection and Valley Water’s role and authority. The auditor recommended evaluating the project KPI for potential revisions. In response to audit recommendations, staff has recommended revisions to shift the KPI from an outcome-based metric to one that measures Valley Water’s funding contribution to the project. The proposed revisions were presented to and supported by the BPMC on April 21.
While not part of the audit findings, staff also proposed expanding the scope of a KPI for Project F6: Good Neighbor Program - Graffiti and Litter Removal and Public Art to allow implementation or funding of eligible public art projects throughout Santa Clara County, without limiting public art projects to be located on Valley Water-owned infrastructure and property. Similarly, the BPMC supported staff’s recommended revisions to the KPI for Project F6.
The above revisions meet the definition of “modification” pursuant to the Change Control Process. As noted, modifications require noticed public hearings and will be brought forward to the Board at a later date in accordance with the updated public outreach process and timeline outlined in the Change Control Process.
For more information on staff recommendations to the BPMC, visit <https://scvwd.legistar.com/LegislationDetail.aspx?ID=7980009&GUID=C8253948-44BA-4D33-87E3-D9C2512AFAD2&FullText=1>
Addressing Financial Challenges
During the first five years of the Safe, Clean Water Program, capital project costs rose significantly, straining overall financial health due to a combination of factors. As projects advanced, evolving scopes, updated regulatory and environmental requirements, and increased public input expanded work beyond initial estimates. At the same time, market inflation, rising material and labor costs, supply chain constraints, and procurement challenges drove up construction expenses. Additional pressures from jurisdictional complexities, schedule delays, and site-specific issues further increased costs and required higher contingencies.
Confronted with cost increases, in November 2025, staff presented to the Board a potential path to financial stability and strategic changes to balance the CIP, including the Safe, Clean Water Program. The Plan outlines Watershed Project Implementation Pathways, which emphasize:
• Risk-based prioritization
• Phased project delivery
• External funding opportunities
• Strategic use of Watershed and Stream Stewardship funds
Key Funding Decisions
Additionally, to maintain the Program’s financial health while continuing to deliver Safe, Clean Water flood protection projects that are nearing or currently under construction, no additional transfers are planned for Project C1: Anderson Dam Seismic Retrofit (ADSRP) at this time. The Program has already transferred $12.8 million to the Water Utility Enterprise for the project, meeting the FY22-26 implementation plan targets. However, the project remains eligible for future funding, which will be evaluated annually based on available funding capacity and Program priorities. This funding approach does not impact the progress of ADSRP.
Similarly, Project E3: Lower Berryessa Flood Protection, including Tularcitos and Upper Calera Creeks, which was scheduled to begin in FY32, has been placed On Hold, with its funding deferred through FY46. Valley Water will reevaluate Program funding annually and, based on available resources, may prioritize advancing the project schedule.
ENVIRONMENTAL JUSTICE IMPACT:
There are no environmental justice impacts associated with this item.
ATTACHMENTS:
Attachment 1: Draft 5-Year Implementation Plan
Attachment 2: Project Target Status
Attachment 3: Recommended Adjustments
Attachment 4: PowerPoint
UNCLASSIFIED MANAGER:
Manager
Luz Penilla, 408-630-2228