BOARD AGENDA MEMORANDUM
Government Code § 84308 Applies: Yes ☐ No ☒
(If “YES” Complete Attachment A - Gov. Code § 84308)
SUBJECT: Title
Receive an Informational Update on the Capital Improvement Program Prioritization Process Enhancements.
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RECOMMENDATION: Recommendation
Receive an informational update on the Capital Improvement Program Prioritization Process Enhancements.
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SUMMARY:
In response to the challenges identified in executing Santa Clara Valley Water District’s (Valley Water) Capital Improvement Program (CIP) and the feedback received from the Board during the August 29, 2025, workshop, staff has implemented a series of refinements to the CIP Prioritization Process. These enhancements aim to better align project prioritization with risk to public health and safety, strategic goals, and financial feasibility, ensuring that limited funding is directed toward the most critical and impactful projects.
To support the Board’s review of the enhanced process, staff have prepared a PowerPoint presentation (Attachment 1).
The enhanced process will be used in this year’s CIP Development Cycle to prepare the CIP Preliminary FY 2027-31 Five-Year Plan, which is scheduled to be presented to the CIP Committee on December 15, 2025, and to the Board on January 13, 2026.
Funding Categories
To assist with decision-making and resource allocation, projects will continue to be organized into three funding categories that reflect their risk exposure and urgency:
Category 1 - High Risk Exposure
• Urgent repair or replacement needs
• Projects that are regulatory/mandated or driven by public health and safety
• Projects currently under construction or requiring immediate continuation
Category 2 - Moderate Risk Exposure
• Critical repairs or replacements needed to maintain service reliability
• Projects primarily addressing public health and safety, but without the immediacy of Category 1
Category 3 - Low Risk Exposure
• New infrastructure or placeholder projects that support long-term goals
• Projects that align with strategic and master planning priorities but are not urgent
These categories serve as initial funding filters, enabling the Board to focus resources on high-risk and mandated projects while maintaining visibility of longer-term investments in the capital pipeline.
Evaluation Criteria for Further Project Assessment
Staff will use four key evaluation criteria to refine prioritization within each Funding Category. These criteria ensure that funding decisions are risk-informed, strategically aligned, and financially responsible.
• Criteria A - Public Health, Safety, and Regulatory Compliance
Evaluates the extent to which a project addresses urgent health or safety risks or fulfills mandated requirements, including Board Directives, and commitments to the Safe, Clean Water Program and other Valley Water commitments.
• Criteria B - Implications of Deferral
Considers the operational, financial, or compliance risks if a project is delayed.
• Criteria C - Alignment with Strategic and Master Plans
Assesses consistency with Valley Water’s Watershed and Water Supply Master Plans and regional objectives. Projects originating from these plans typically undergo extensive needs assessments and multidimensional risk analyses, which serve as the criteria used for prioritizing recommendations to the Board.
• Criteria D - Funding and Partnership Opportunities
Evaluates the financial feasibility of a project, including available funding sources, partnership potential, and cost certainty.
Projects not originating from master or strategic plans will be evaluated under Criteria A, B, and D to ensure sound investment prioritization.
Strategies for Addressing Financial Feasibility
To enhance flexibility and fiscal responsibility in the CIP decision-making process, staff will implement strategies to manage funding limitations and optimize available resources. Examples of these strategies may include the following:
• Phased Implementation: Break projects into smaller, manageable phases to distribute costs over multiple years.
• Prioritize Key Areas: Focus on critical “hotspots” or segments where immediate intervention yields significant benefits.
• Rescope Project Goals: Adjust project scope to better align with available funding or partnership opportunities.
• Consider Deferral: Where appropriate, defer lower-priority projects to future cycles to secure additional resources or improve readiness.
ENVIRONMENTAL JUSTICE IMPACT:
There are no environmental justice impacts associated with receiving an informational update. This action is unlikely to or will not result in disproportionate impacts on any specific communities relative to the general population from the implementation of this project/program.
FINANCIAL IMPACT:
There is no financial impact associated with conducting a Board workshop.
CEQA:
The recommended action does not constitute a project under CEQA because it does not have potential for resulting in direct or reasonably foreseeable indirect physical change in the environment.
ATTACHMENTS:
Attachment 1: PowerPoint
UNCLASSIFIED MANAGER: Manager
Luz Penilla, 408-630-2228