BOARD AGENDA MEMORANDUM
Government Code § 84308 Applies: Yes ☐ No ☒
(If “YES” Complete Attachment A - Gov. Code § 84308)
SUBJECT: Title
Receive an Update on the Pacheco Reservoir Expansion Project Close Out, Project No. 91954002 (Santa Clara County, District 1; Merced County).
End
RECOMMENDATION: Recommendation
A. Receive an update on the Pacheco Reservoir Expansion Project close out; and
B. Provide input or direction to staff regarding the close-out efforts.
Body
SUMMARY:
On August 26, 2025, the Board of Directors voted to suspend development of the proposed Pacheco Reservoir Expansion Project (PREP or Project). The Board directed Santa Clara Valley Water District (Valley Water) to suspend all its current efforts in the development of the Project and directed the Interim Chief Executive Officer to (a) withdraw Valley Water’s application for state funding through the Water Storage Investment Program (WSIP); (b) develop a project closure plan and return to the Board at a later time to provide an update and seek the Board’s input as needed on key project closure elements; and (c) take necessary steps to document and preserve all project records and work product to facilitate development of future projects.
Staff identified and compiled a list of tasks required to document and preserve all project records and work products to facilitate development of future projects and to close out the Project. These tasks largely fall into four categories: Consultant Coordination, Real Estate, External Funding Agreements, and Other Tasks.
Project Close-Out Tasks
Consultant Coordination
On August 27, 2025, staff informed the consultants of the Board’s decision on August 26 and provided direction to stop work on PREP. Staff has since been coordinating with the consultants to compile a list of the various tasks in progress and identify their status. Tasks that are not final are being evaluated to determine the level of effort, including the time and costs, required to document the progress that has been made and to compile and preserve all work products and project records.
A Close-Out Task Order will be issued to the consultants to compile, preserve and deliver all project records. Staff will coordinate with Contracts and Accounting to close out the agreement(s) once the Close Out Task Order is completed and all invoices have been processed. The table below shows the main consultants that were retained to support the Project and the amount of consulting fees Valley Water has incurred to date.
|
Agreement Number |
CAS/PB No. |
Firm Name |
Services |
Current Expiration Date |
Not-To-Exceed Amount |
Amount spent to Date |
Estimated Expenses Remaining |
|
A4215A |
4843 |
AECOM TECHNICAL SERVICES, INC |
Planning/Design/ Environmental Support |
11/30/2028 |
$104,723,000 |
$61,280,850 (through July 2025) |
In Progress |
|
A4216A |
4858 |
MOTT MACDONALD |
Program Management |
11/30/2028 |
$25,420,000 |
$13,512,692 (through July 2025) |
In Progress |
|
A4326G |
5082 |
STANTEC CONSULTING SERVICES IN |
Additional Funding Support for Pacheco Reservoir Project |
12/31/25 |
$397,753 |
$144,223 (through Dec. 2024) |
In Progress |
There were also several smaller consultant agreements totaling $113, 589 in expenditures through July 2025.
Additionally, Valley Water has utilized some on-call consultants through task orders to provide services relating to water quality testing, environmental support, tribal monitoring and design support, such as the independent cost estimate that was recently completed by OCMI. These tasks are typically closed as the work is completed. Any open task orders will be closed once all invoices have been paid. It is estimated that $570,246 was spent through July 2025 in various on-call task orders.
Valley Water labor through pre-construction had been budgeted to be $33,931,458, and total labor spent through August 2025 is $20,657,044. Once all invoices have been processed, staff will disencumber any remaining encumbrances and any funds remaining will be returned to the Fund 61 Operating and Capital Reserves.
Real Estate
Property access rights have been obtained for properties within the project vicinity for field investigation purposes. Staff has reviewed the list of permissions to enter (PTE), which have no fee associated with them, as well as other access agreements. Some access rights have already expired while the remaining are set to expire by 2027. No action is needed for the field investigation property access rights.
One property has several monitoring instruments on site and access rights have already expired. Staff are currently negotiating with the owner representatives of this property for additional access to remove Valley Water’s monitoring instruments, including piezometers. It is anticipated that this work will occur in the spring of 2026. Two other properties have monitoring equipment on site and Valley Water’s access rights to those properties do not expire until 2030. Once staff has coordinated the removal of the equipment from those properties, staff will seek to terminate the associated access agreements.
On February 13, 2024, Valley Water entered into an option agreement to purchase a property on Cedar Creek, a tributary to Pacheco Creek, for PREP mitigation purposes. The agreement remains in effect until February 13, 2028, with a right to extend the agreement for two additional one-year terms. Staff are currently reviewing this option agreement to determine the appropriate next steps and will provide a status update to the Board in the future.
Valley Water has held an option agreement since August 2, 2018, to purchase the Pacheco Pass Water District’s (PPWD) North Fork Dam and Pacheco Reservoir (PPWD Property). This agreement, which is set to expire in 2033, grants Valley Water certain access rights for PREP-related activities, including surveying and investigations. We currently have monitoring equipment on the PPWD Property, but this will be removed soon. Once the equipment is fully removed and our need to access the PPWD Property is concluded, Valley Water will exercise its right to terminate the agreement early by serving PPWD with a written termination notice.
Through July 2025, Valley Water has spent $976,294 for property access, including the option agreement.
External Funding Agreements
In October 2023, Valley Water executed a $1.4 billion WIFIA Master Agreement, under which an initial loan agreement of $91.6 million was executed to provide up to 49% funding for the PREP planning and design costs (WIFIA Loan). The WIFIA Loan is administered by the United States Environmental Protection Agency (EPA). No loan amount has been drawn from this WIFA loan. On August 29, 2025, staff submitted a formal request letter to the EPA to terminate the WIFIA Loan after suspension of the Project. On September 17, 2025, the EPA provided the Termination Agreement which requires the approval of both the Valley Water and the Public Facilities Financing Corporation (PFFC) Boards. The Valley Water Board appointed three new PFFC Board members on September 23, 2025. The Clerk of the Board is in the process of scheduling the November 2025 annual meeting with the PFFC Board. Staff will request the PFFC Board’s approval of the WIFIA Loan Termination at the annual meeting. Upon such approval, the Valley Water Chief Financial Officer will sign the WIFIA Termination Letter and submit it to the EPA for final approval. The WIFIA Loan will be formally terminated upon receipt of the fully executed Termination Agreement, which is expected to occur in late November or December 2025.
In 2018, the California Water Commission (CWC) conditionally awarded Valley Water a grant of $485 million as part of the Water Storage Investment Program (WSIP). The conditional grant award was increased to $504 million since then and included $24.2 million in early funding, which Valley Water has already received as reimbursement for a portion of its planning and environmental permitting costs. On September 9, 2025 Staff sent a formal letter informing the CWC that Valley Water was withdrawing from the WSIP due to the suspension of PREP. CWC has requested that Valley Water attend their October 15, 2025, Commission meeting to discuss the withdrawal. Valley Water staff, including the Interim CEO, will attend.
Other Close Out Tasks
In June of 2018, Valley Water entered a Memorandum of Understanding (MOU) with San Benito County Water District (SBCWD) and Pacheco Pass Water District (PPWD). The MOU generally described how the parties would coordinate their efforts during the preconstruction phase of PREP, including cost sharing obligations and development of plans and operating procedures. Staff is currently evaluating terms within the MOU and will be recommending a course of action to be taken.
Staff has previously engaged with the Power and Water Resources Pooling Authority (PWRPA) through an Inter-Connection Agreement to work with PG&E on behalf of Valley Water to evaluate how PWRPA power needed for the operation of PREP can be conveyed through PG&E transmission lines. Since the PREP has been suspended, there is no longer a need for PWRPA and PG&E to move forward with this evaluation. Therefore, staff has requested that PWRPA seek to terminate the Inter-Connection Agreement it entered into with PG&E.
Valley Water obtained an Encroachment Permit, a Project Approval and Environmental Document and Plans, Specifications and Estimates (PAED & PS&E) Cooperative Agreement and a Right-of-Way (ROW) Cooperative Agreement with Caltrans for the PREP elements along State Route 152. Following the standard protocol, staff has requested termination of the encroachment permit via email. Termination of the two cooperative agreements will require signature from Valley Water’s Interim CEO and a Caltrans representative. Staff is coordinating with Caltrans to prepare the termination documents.
Staff also notified all regulatory agencies and other participants who have been attending the various environmental workshops held by Valley Water for the Project.
Staff will coordinate with the Records and Library Services Unit to archive all project files once the consultant Close-Out Task Orders are completed. Staff will conduct an internal lessons-learned meeting and document the findings as part of the close-out. Additionally, staff will prepare a close out report to be included in the archived files.
Management is carefully evaluating the transitioning and reassignment of staff who have previously supported PREP. Based on their backgrounds and technical expertise, the current thinking is for the impacted staff to remain within the Dam Safety and Capital Delivery Division, contributing to other critical capital dam projects such as both Anderson Dam projects, and the Calero Seismic Retrofit Project. Once the reassignment decisions are made, management will follow Valley Water’s existing process to implement the changes.
ENVIRONMENTAL JUSTICE IMPACT:
There is no environmental justice impact associated with this item.
FINANCIAL IMPACT:
The Pacheco Reservoir Expansion Project, Project No. 91954002 is included in the Board adopted Capital Improvement Program (CIP) Fiscal Years FY 2026-30 Five-Year Plan and in the FY 2025-26 Board adopted Budget. The cumulative budget to date is $145.9 million and the cumulative expenditures as of 9/22/25 are $101.9 million. Upon close out of the Project the excess funds will be returned to Fund 61 Operating and Capital Reserves.
CEQA:
The recommended actions do not constitute a project under CEQA because they do not have a potential for resulting in direct or reasonably foreseeable indirect physical change in the environment.
ATTACHMENTS:
None.
UNCLASSIFIED MANAGER: Manager
Ryan McCarter, 408-630-2983