BOARD AGENDA MEMORANDUM
Government Code § 84308 Applies: Yes ☐ No ☒
(If “YES” Complete Attachment A - Gov. Code § 84308)
SUBJECT: Title
Adopt a Resolution Making Responsible Agency Findings Under the California Environmental Quality Act and Approve and Authorize the Interim Chief Executive Officer to Negotiate and Execute the Site Works Agreement Among Valley Water, the City of San Jose, and Microsoft Corporation.
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RECOMMENDATION: Recommendation
A. Adopt the Resolution CONSIDERING THE FINAL ENVIRONMENTAL IMPACT REPORT FOR THE SAN JOSE DATA CENTER PROJECT AND ITS ADDENDUM AND MAKING CEQA RESPONSIBLE AGENCY FINDINGS FOR THE SITE WORKS AGREEMENT; and
B. Authorize the Interim Chief Executive Officer to negotiate and execute the Site Works Agreement among Valley Water, the City of San José, and Microsoft Corporation, in substantially the same form as the attached draft and sign the Notice of Determination.
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SUMMARY:
Microsoft Corporation (Microsoft) is developing a new data center on private property to the east of the existing Silicon Valley Advanced Water Purification Center (SVAWPC). As part of this project, Microsoft will be extending and modifying McCarthy Lane, which conflicts with the current location of the SVAWPC visitor center trailer. To address this conflict, Microsoft, Valley Water, and the City of San José negotiated an agreement (Site Works Agreement) to construct a new parking lot and certain required improvements and move the visitor center trailer. Under the Site Works Agreement (Attachment 2), Microsoft would perform the following work at no cost to Valley Water:
• Construct a new visitor parking lot with 48 vehicle and three bus parking spaces adjacent to the SVAWPC, including storm drainage, utility and communication connections and landscaping;
• Relocate the current visitor center trailer to the new parking lot, including packing and unpacking of contents;
• Relocate signage and install security fencing;
• Move manhole for source water line serving SVAWPC outside of widened Zanker Road roadway;
Microsoft is scheduled to begin construction of the work in early 2027. Microsoft broke ground on the data center project in June 2026.
The Recycled Water Committee (RWC) has received a detailed update on this negotiation in December 2025 and additional updates in February 2026.
ENVIRONMENTAL JUSTICE IMPACT:
There are no environmental justice impacts associated with this item.
FINANCIAL IMPACT:
There are no financial impacts to Valley Water from this agreement.
CEQA:
On July 13, 2022, CEC, as the lead agency, considered and certified the San Jose Data Center (SJDC) Final EIR and approved the SJDC Project. The SJDC Project is proposed by Microsoft Corporation and involves the construction of a data center facility and related supporting infrastructure improvement areas located on approximately 64.5 acres of land at 1657 Alviso-Milpitas Road in the City of San José.
Since the Final EIR was certified, the City of San Jose, as the Responsible Agency under the California Environmental Quality Act (CEQA) and local land use agency, has requested modifications to the supporting roadway improvements and utility infrastructure (City Modified Project) included in the SJDC Project. Given the location of the proposed modifications from SVAWPC and the data center facility, certain changes to the SVAWPC parking lot facilities and relocation of the current small modular visitor center (Valley Water Center Modifications) would also be triggered. As a result, the City of San Jose has determined that the Valley Water Center Modifications also need to be evaluated in the adopted Addendum.
City of San Jose adopted a resolution and filed an Addendum on April 10, 2025. Valley Water, acting as Responsible Agency under CEQA, will consider the Final EIR and Addendum to approve the Valley Water Center Modification Component of the Modified Project.
CEC Final EIR can be found here; California Energy Commission: Docket Log <https://url.us.m.mimecastprotect.com/s/B5bqCR6DqNtR4NMLtNhGU1LFsq?domain=efiling.energy.ca.gov>
SJ’s final Addendum can be found here: San Jose Data Center | City of San José <https://url.us.m.mimecastprotect.com/s/tRMACVOKxRs5qMWAHyiBUE3kKe?domain=sanjoseca.gov>
Staff recommends that, prior to any approval of the Valley Water Center Modifications, the Board take actions as Responsible Agency under CEQA, including considering the potential environmental effects of the Valley Water Center Modification as discussed in the Addendum and adopting the Lead Agency ‘s CEQA findings.
ATTACHMENTS:
Attachment 1: Resolution
Attachment 2: Draft Agreement
Attachment 3: Location Map
UNCLASSIFIED MANAGER: Manager
Kirsten Struve, 408-630-3138