BOARD AGENDA MEMORANDUM
Government Code § 84308 Applies: Yes ☐ No ☒
(If “YES” Complete Attachment A - Gov. Code § 84308)
SUBJECT: Title
Conduct a Public Hearing to Consider the Santa Clara Valley Water District’s Capital Improvement Program Draft Fiscal Years 2027-31 Five-Year Plan.
End
RECOMMENDATION: Recommendation
A. Open and conduct a Public Hearing to receive public comments and Board feedback regarding the Santa Clara Valley Water District’s Capital Improvement Program Draft Fiscal Years 2027-31 Five-Year Plan; and
B. Continue the Public Hearing at the regularly scheduled Board Meeting on May 12, 2026.
Body
SUMMARY:
Santa Clara Valley Water District’s (Valley Water) Capital Improvement Program (CIP) Draft Fiscal Years (FY) 2027-31 Five-Year Plan (Attachment 1) includes 73 funded projects distributed among the following categories: 42 Water Supply, 13 Flood Protection, 12 Water Resources Stewardship, 3 Buildings and Grounds, and 3 Information Technology projects, for a total CIP value of $10.39B. This includes Valley Water's prior actuals and future years’ planned funding of $9.55B combined with received and planned outside funding of $835M, which includes grants from nonprofits, local public agencies, special districts, state and federal grants agencies, state subvention reimbursements and cost-share partnerships. Capital projects with excess funding will release excess funds to the respective operating and capital reserve fund upon completion and closeout of the project.
On March 10, 2026, the Board directed staff to release the CIP Draft FY 2027-31 Five-Year Plan for public review.
Subsequently, on March 11, 2026, the CIP Draft FY 2027-31 Five-Year Plan was released to all cities and land use authorities in Santa Clara County and the County of Santa Clara for review as to its consistency with their General Plans. Valley Water offered to meet with each of these agencies, and to date, the City of Santa Clara has requested a meeting to discuss projects and provide feedback on the CIP Draft FY 2027-31 Five-Year Plan.
As part of this outreach effort, staff requested letters of support. To date, Valley Water has received letters of support from the cities of Campbell, Mountain View and Cupertino (Attachment 2). Any additional letters received will be attached to subsequent public hearing items and to the May 12, 2026, agenda item recommending the adoption of the CIP Final FY 2027-31 Five-Year Plan.
Changes Identified for Final FY 2027-31 Five-Year Plan
Since the release of the CIP Draft FY 2027-31 Five-Year Plan, staff has identified the following pending change. The pending change is not incorporated into the CIP Draft FY 2027-31 Five-Year Plan. The finalized project plan update will be incorporated for the Board’s final review and adoption of the CIP FY 2027-31 Five-Year Plan on May 12, 2026, Board Meeting.
The following project has identified changes from the CIP Draft FY 2027-31 Five-Year Plan, as shown below:
1. Upper Llagas Creek Flood Protection Project (E6) (26174055)
Upper Llagas Creek Flood Protection Project - Phase 2B began construction in fiscal year 2025 with a contract bid award of $129M, not including the 10% contingency. The construction expenditures were distributed throughout FY25-FY27 for the construction of the flood protection improvements and throughout FY28-FY30 for the 3-year mitigation vegetation establishment period. Currently, construction is ahead of schedule as a result of the mild 2026-2027 winter, which allowed the construction contractor to continue to complete the contract work. FY26 projected construction budget has been spent, and there is now a need to reallocate $15M from the FY27 projected construction budget to pay for construction tasks being completed sooner than anticipated. In addition, to pay updated projected FY28 labor costs for Regulatory Compliance, $688,000 will be re-allocated from FY27 to FY28. The Total Project Cost will remain unchanged since no new scope is being added.
Small Capital Improvement Projects Forecast Revisions:
The small capital project forecasts are revised each year. Asset rehabilitation projects are added, removed, and rescheduled based on asset condition and project need. In addition, project costs are updated each year based on market conditions. These revisions to both schedule and costs cause several minor changes in expected expenditures over the forecasted period. The change is not caused by a single asset rehabilitation project but by the cumulative total of multiple changes.
The following small capital improvement projects will require updates which are anticipated to be completed for inclusion in the CIP Final FY 2027-31 Five-Year Plan:
1. 91214010s San Felipe (Reaches 1-3)
2. 92764009 Raw Water Transmission
3. 94764006 Treated Water Transmission
4. 93764004 Water Treatment
5. 73274008 Software Upgrades & Enhancements
6. 95274003 Water Utility Network Modernization
Administrative Project Plan Updates - Budget Reconciliation
Each year between the presentation of the CIP Draft Five-Year Plan and the CIP Final Five-Year Plan, the CIP team reviews the 2nd Pass Budget and, if applicable, 3rd Pass Budget to ensure CIP project planned expenditures for the next two Fiscal Years are in alignment with the proposed budgets. If necessary, the CIP team will reconcile the planned expenditures in the Five-Year Plan with the proposed budgets to ensure that the Final Budget and CIP Final Five-Year Plan that are presented to the Board each May are in alignment.
Projects Planned for Closure
Additionally, five (5) projects in the Board Adopted CIP FY 2026-30 Five-Year Plan are anticipated to be completed and/or closed out by June 30, 2026, as listed below:
1. Coyote Percolation Dam Replacement (91864009)
2. Pacheco Reservoir Expansion (91954002)
3. South County Recycled Water Pipeline, Short-term Phase 2 (91094010)
4. San Francisco Bay Shoreline, EIAs 1-4 (26444002)
5. Hale Creek Enhancement Pilot Project (26164001)
The projects listed above are planned for closure but will remain in the CIP FY 2027-31 Five-Year Plan to allow for close-out reporting of FY 2026 actuals. The projects will be removed from the CIP FY2028-32 Five-Year Plan unless a project plan update occurs, necessitating an extension of the schedule.
Operations and Maintenance Cost Forecast Revisions
It is understood that new capital projects impact future operations and maintenance (O&M), which is included in the financial analysis. Throughout the various phases of a capital project, projections of this impact are regularly considered and updated as needed to reflect changes in project elements. This information is considered during long-term forecasting by the respective operating project managers.
Communications and Community Outreach
Informing community members about the CIP efforts, process, and program details remains an integral part of Valley Water’s communications and public engagement. Staff regularly invites community members to participate in the CIP public comment period, the CIP public hearings, and other milestone dates through frequent posts across all of our social media platforms. Staff promotes monthly CIP committee meetings on Nextdoor, Facebook, and X (formerly Twitter), and boosts them on Facebook once the meeting agenda is posted online, typically within the week leading up to those scheduled meetings.
In early December 2025, a detailed blog about the CIP Five-Year Plan and process was shared with the community, and a three-blog series to highlight projects within the CIP launched in January. These blogs were posted on valleywaternews.org and shared in Valley Water’s newsletter, Facebook, and X. Staff also posts on the CIP webpage and project pages about how to submit public comments and other reminders about ways community members can participate in the CIP process.
Additionally, Valley Water’s public events, including scheduled Speakers Bureau presentations, serve as venues for staff to remind community members about the CIP efforts and how they can participate in that process, and CIP projects are highlighted at community events where Valley Water hosts booths throughout the year. In short, staff supports all Board-approved CIP efforts with year-round community engagement. CIP project outreach includes distributing information through mailings, social media updates, email blasts, Nextdoor notifications, hosting public meetings, during community events, and updating project webpages with details about current project progress. On average, staff posts about CIP projects approximately five times per month across all our platforms.
Next Steps
Pursuant to California Government Code §65403(d), the governing body of a special district is required to hold at least one Public Hearing before adopting a capital improvement program. The public was informed of the time and place of this Hearing through a notice published in the San Jose Post newspaper (Attachment 3).
To allow the public additional opportunities to provide comments, staff recommends continuing the Public Hearing, opened at this meeting, to the subsequent Special Board Meeting for the Budget Work Study Sessions currently scheduled for April 29, 2026, and if needed, April 30, 2026. The Public Hearing will conclude on May 12, 2026, at 1:00 p.m., when the Board will consider staff’s recommendation to adopt the resolution to approve the CIP Final FY 2027-31 Five-Year Plan.
ENVIRONMENTAL JUSTICE IMPACT:
Individual capital projects may have environmental justice impacts. When this occurs, staff will conduct outreach to and engagement with impacted communities, which will be reported to the Board accordingly. Conducting a Public Hearing for the CIP Draft FY 2027-31 Five-Year Plan has no environmental justice impact.
The CIP Draft FY 2027-31 Five-Year Plan is a projection of Valley Water’s capital funding for planned capital projects. Its purpose is to document planned capital projects to help integrate Valley Water work with the larger community by aligning Valley Water planning with other local agency planning efforts. The CIP Draft FY 2027-31 Five-Year Plan documents any changes to capital projects’ planned funding and expenditures. It is updated and brought to the Board of Directors for approval each year in February.
Each February, upon the Board’s direction, staff provides a copy of the CIP Draft Five-Year Plan to all cities and land use authorities in Santa Clara County and the County of Santa Clara to ensure meaningful engagement of all Santa Clara County communities in the decision-making process. It publishes a public notification for review before the Board of Directors adopts the Resolution to Adopt the CIP Five-Year Plan in May.
The CIP Five-Year Plan is thus produced each year in collaboration with government, academic, private, non-governmental, and non-profit organizations, as well as diverse and disadvantaged communities, and as such, adheres to the Board’s General Principles and Ends Policies, which are integral in ensuring that Valley Water meets its mission.
FINANCIAL IMPACT:
There is no financial impact associated with Board approval of the recommendations for this item. The total value of the CIP Draft FY 2027-31 Five-Year Plan is $10.39B, of which $835M may be funded by external sources.
CEQA:
The recommended action does not constitute a project under CEQA because it does not have a potential for resulting in direct or reasonably foreseeable indirect physical change in the environment.
ATTACHMENTS:
Attachment 1: CIP Draft FY 2027-31 Five-Year Plan
Attachment 2: Letters of Support
Attachment 3: Notice of Public Hearing
*Handout 3.5-A: City of Santa Clara Letter of Support
UNCLASSIFIED MANAGER: Manager
Luz Penilla, 408-630-2228