BOARD AGENDA MEMORANDUM
Government Code § 84308 Applies: Yes ☐ No ☒
(If “YES” Complete Attachment A - Gov. Code § 84308)
SUBJECT: Title
Approve Funding of Planning and Pre-Construction Work for the Delta Conveyance Project for Calendar Years 2026 and 2027 in an Amount Not-To-Exceed $9,690,000 and Adopt a Resolution Making Responsible Agency Findings Under the California Environmental Quality Act.
End
RECOMMENDATION: Recommendation
A. Receive an update on the Delta Conveyance Project;
B. Adopt the Resolution CONSIDERING THE FINAL ENVIRONMENTAL IMPACT REPORT FOR THE DELTA CONVEYANCE PROJECT AND MAKING CEQA RESPONSIBLE AGENCY FINDINGS FOR PRE-CONSTRUCTION WORK; APPROVING FUNDING OF PLANNING AND PRE-CONSTRUCTION WORK FOR CALENDAR YEARS 2026 AND 2027 IN AN AMOUNT NOT TO EXCEED $9,690,000; and
C. Delegate authority to the Chief Executive Officer to sign the CEQA Notice of Determination for the Pre-Construction Work and Execute Funding Letter Agreement.
Body
SUMMARY:
On September 24, 2019, Valley Water’s Board of Directors declared support for Governor Newsom’s single tunnel project and provided direction on proceeding with the Delta Conveyance Project (DCP) by adopting Guiding Principles (Resolution 19-69, Attachment 1). Then, Valley Water committed $11,006,349 for planning and permitting activities for the DCP from January 1, 2021, through December 31, 2024 (Resolution 20-91, Resolution 22-22). Attachment 2 describes the milestones achieved since 2021, as well as information that staff used to evaluate the DCP. The previously committed funding will support DCP planning costs through 2025, but additional funding is needed for continued planning and pre-construction work in calendar years 2026 and 2027 to be used by the Department of Water Resources (DWR) and Delta Conveyance Design and Construction Authority (DCA) to cover these activities:
• General administration and program management support
• Community engagement and outreach
• Property and easements
• Permitting: Water rights, Delta Stewardship Council Certification of Consistency, Clean Water Act
• Mitigation
• Engineering
• Geotechnical field investigations and other field surveys
DWR and DCA estimated the cost of the 2026-27 planning and pre-construction work to be $300,000,000; at our current participation level of 3.23 percent, Valley Water’s share would be $9,690,000. Pursuant to Section 5 of the previously approved Funding Agreement (January 21 Agreement), Valley Water may provide additional funds to the DWR by providing a letter and a copy of a resolution authorizing such additional funding; in return, Valley Water would continue to reserve a portion of conveyance capacity in the DCP proportional to its financial contributions.
The recommended Board action would approve a Resolution to authorize this expenditure and comply with CEQA (Attachment 3).
BACKGROUND
The State Water Project (SWP) is an important source of water and provides critical access to supplemental supplies for Valley Water, as well as for the entire State. A recent economic study found that the SWP is one of the most affordable sources of water in California and is one of the most cost-effective sources when compared to alternative sources. The conveyance of SWP water through the Sacramento-San Joaquin Delta (Delta) is increasingly challenged by climatic factors, including more frequent extremes in hydrology (i.e., severe droughts immediately followed by extreme wet periods), as well as regulations to protect Delta fisheries and water quality. Recent modeling by the DWR projects up to a 22 percent decline in SWP supplies due to climate change alone if no action is taken. In cooperation with the participating SWP Public Water Agencies (PWAs), DWR has been developing the DCP to modernize the SWP by safely capturing water through screened intakes and conveying it underground to existing SWP infrastructure in the South Delta. The DCP objectives are to restore declining water supplies while protecting the SWP from the potential effects of regulatory pressures, earthquakes, and climate change.
The most recent models show that the long-term average annual SWP exports with DCP would be about 403 thousand acre-feet (TAF) higher than the no DCP scenario in 2070. Valley Water’s portion, at our current participation level, would be 13 TAF on average, with significantly greater amounts delivered in wet years and significantly lower quantities delivered in dry years. The DCP would also mitigate risks associated with sea-level rise and levee failures that could lead to saltwater intrusion into the South Delta, where the current SWP and Central Valley Project (CVP) diversion points are located. Additionally, the DCP would create flexibility for water transfers, potentially when water is less expensive, and complement water storage projects, such as the B.F. Sisk Dam Raise, Sites Reservoir, and groundwater banking. For these reasons, staff recommends the continued funding of planning and pre-construction work, including geotechnical studies that are described in the Final Environmental Impact Report (EIR).
Before funding pre-construction work, Valley Water must consider the DWR’s Final EIR, make Responsible Agency Findings, adopt DWR’s CEQA Findings of Fact, and adopt a Statement of Overriding Considerations for the Pre-Construction Work.
https://water.ca.gov/-/media/DWR-Website/Web-Pages/News/Files/FINAL-12-14-2023---The-Economy-of-the-State-Water-Project.pdf
PROJECT PROGRESS
The following are key milestones that DWR and DCA completed using the funding to date:
• Conceptual design and preliminary geotechnical studies, which supported the development of the EIR project descriptions and alternatives analyses.
• Certification of the DCP Final EIR and approval of the easternmost tunnel alignment with two intakes, a capacity of 6,000 cubic feet per second, and a tunnel that terminates near the existing Bethany Reservoir (Bethany Alternative).
• Updated cost estimate to reflect the Bethany Alternative, which totaled $20.1 billion (2023 dollars).
• Statewide benefit-cost analysis was completed resulting in a benefit-cost ratio of 2.2, meaning the monetary value of benefits are two times greater than the costs.
• Submittal of environmental permit applications.
• Development of the Community Benefits Program’s Draft Implementation Plan and Guidelines, which is currently available for public review.
Additional details are provided in Attachment 2.
PROJECT COSTS
An updated cost estimate was prepared by the DCA in May 2024 (Table 1). The project cost is estimated to be $20.1B in real 2023 (undiscounted) dollars and includes construction, soft costs, environmental mitigation, a $200 million Community Benefits Program, and a 30 percent contingency. If DCP is approved and implemented, Valley Water’s previously committed planning, design, and Pre-Construction funds will be reimbursed or applied to Valley Water’s share of implementation costs.
Table 1. Project Implementation Costs
|
Cost (2023 $) |
Total Project Implementation Costs |
$20,120,000,000 |
Valley Water’s Share (3.23%) |
$649,876,000 |
UPCOMING ACTIVITIES
In 2025, DWR will prioritize the completion of state and federal permitting for the DCP, including a change in point of diversion for its water rights permits with the State Water Resources Control Board (SWRCB). Additionally, DWR will continue engagement efforts to develop the Community Benefits Program. DWR’s finance plan and draft SWP contract amendments are also expected in 2025.
In 2026-2027, the DCA will advance design to approximately 30 percent. Permitting support tasks and engineering studies to evaluate conceptual design refinements will be ongoing. DWR anticipates completing the SWRCB and the DSC processes by the end of 2026. Refined costs and benefits, informed by final permit conditions, will be provided in 2027 prior to final participation decisions in 2027.
ENVIRONMENTAL JUSTICE AND EQUITY IMPACT:
Approximately 27 million people receive water from the SWP, including millions of people in disadvantaged communities. One of the objectives of the Project is to protect the reliability of these relatively affordable supplies.
DWR has continued to engage with Environmental Justice Communities, including Tribal community members, in-Delta communities, and historically underrepresented populations, initially as part of the EIR process, which shaped the development of the Community Benefits Program. The Community Benefits Program was approved when the Final EIR was adopted and will offer $200 million through grants to benefit the Delta communities most impacted by construction activities.
FINANCIAL IMPACT:
The financial impact for Valley Water’s share of the DCP planning and pre-construction work for calendar years 2026-2027, which spans the next three fiscal years (FY), is $9,690,000.
Valley Water’s planned expenditures were included in the Delta Conveyance Project, Project No. 91601001, in the Long-Term Operations forecast and FY 2025-2026 and FY 2026-2027 Proposed Rolling Biennial Budget, with appropriations of approximately $1.9 million and $4.9 million, respectively. The balance of the obligation, approximately $2.9 million, would be included in the FY 2027-2028 budget, for further Board consideration.
CEQA:
Under CEQA and the State CEQA Guidelines, DWR, acting as Lead Agency, prepared and processed a Final EIR for the DCP. The DCP consists of the construction, operation, and maintenance of new SWP water diversion and conveyance facilities in the Delta that would be operated in coordination with existing SWP facilities. The DCP includes the following key components and actions:
• Two intake facilities along the Sacramento River in the north Delta near the community of Hood with on-bank intake structures that would include fish screens.
• A concrete-lined tunnel, and associated vertical tunnel shafts, to convey flow for 45 miles to the Bethany Reservoir Pumping Plant and Surge Basin at a location south of the existing SWP Clifton Court Forebay.
• A Bethany Reservoir Pumping Plant to lift the water from inside the tunnel below ground into the Bethany Reservoir Aqueduct for conveyance to the Bethany Reservoir Discharge Structure and into the existing Bethany Reservoir.
• Other ancillary facilities to support construction and operation of the conveyance facilities including, but not limited to, access roads, concrete batch plants, fuel stations, and power transmission and/or distribution lines.
• Efforts to identify geotechnical, hydrogeologic, agronomic, and other field conditions that will guide appropriate construction methods and monitoring programs for final engineering design and construction data collection and field work investigations, including ground-disturbing geotechnical work, water quality and hydrogeologic investigations, agronomic testing, the installation of monitoring equipment, construction test projects, pre-construction design work, and engineering work (pre-construction work).
DWR certified the Final EIR and approved the DCP on December 21, 2023. DWR also adopted CEQA Findings of Fact (Findings), a Statement of Overriding Considerations, and a Mitigation Monitoring and Reporting Program (MMRP) and filed a Notice of Determination (NOD) under CEQA.
The EIR identifies the State Water Contractor member agencies as responsible agencies, including Valley Water, for actions related to the DCP. DWR’s Final EIR, Findings, Statement of Overriding Considerations, MMRP, and NOD can be found at the official DWR website at: <https://www.deltaconveyanceproject.com/planning-processes/california-environmental-quality-act/final-eir/final-eir-document>. These documents are also available at the Valley Water’s website.
Although DWR has approved the Delta Conveyance Project, Valley Water is not approving or committing to the Delta Conveyance Project at this time. Instead, the narrow approval action before the Board today is to provide, at DWR’s request, continued funding for DCP planning and design costs which will allow DWR and the DCA to continue pre-construction work.
This pre-construction work has been evaluated as part of the EIR; thus, prior to the Board approving funding of this pre-construction work, staff recommends that the Board take actions under CEQA as a Responsible Agency, including by adopting the Lead Agency’ CEQA Findings and a Statement of Overriding Considerations regarding the potentially significant and unavoidable impacts that may result from the pre-construction work. A Resolution that would take these CEQA actions, approve this additional funding, and authorize the CEO to execute a further funding letter agreement with DWR is included for the Board’s consideration (Attachments 3 and 4).
ATTACHMENTS:
Attachment 1: SCVWD Resolution No. 19-69
Attachment 2: Additional Project Information
Attachment 3: Resolution
Attachment 4: Draft Funding Letter
Attachment 5: PowerPoint, Staff
Attachment 6: PowerPoint, DWR
*Handout 3.5-A: Public Comments
*Handout 3.5-B: Sierra Club
*Handout 3.5-C: Delta Counties Coalition
*Handout 3.5-D: Public Comments
*Handout 3.5-E: Public Comments
*Handout 3.5-F: Public Comments
UNCLASSIFIED MANAGER: Manager
Vincent Gin, 408-630-2633