BOARD AGENDA MEMORANDUM
Government Code § 84308 Applies: Yes ☐ No ☒
(If “YES” Complete Attachment A - Gov. Code § 84308)
SUBJECT:
Title
Consider the June 9, 2023, Water Storage Exploratory Committee Recommendation to Approve, and Authorize the Chief Executive Officer to Execute, Amendment No. 5 to the Los Vaqueros Reservoir Expansion Project Cost Share Agreement in the Amount of $1,239,000 to Fund Additional Planning and Design Costs.
End
RECOMMENDATION:
Recommendation
A. Consider the June 9, 2023, Water Storage Exploratory Committee recommendation to Approve Amendment No. 5 to the Multi-Party Cost Share Agreement for the Los Vaqueros Reservoir Expansion (Project 91251001; Agreement No. A4239S) in the amount of $1,239,000 to fund additional project planning and design costs through June 2024; and
B. Authorize the Chief Executive Officer to execute Amendment No. 5.
Body
SUMMARY:
Santa Clara Valley Water District (Valley Water) continues to evaluate participating in the Los Vaqueros Reservoir Expansion Project (LVE Project). At the August 23, 2022 Valley Water Board meeting, the Board directed staff to pursue up to 50,000 acre-feet of storage and adequate conveyance to deliver stored water in dry years. The LVE Project has potential to diversify Valley Water’s storage and conveyance portfolio to increase flexibility during wet and drought years; Valley Water continues to evaluate the LVE Project benefits through the Water Supply Master Plan process. The LVE Project Joint Powers Authority (JPA) has proposed Amendment No. 5 to the 2019 Multi-Party LVE Cost Share Agreement (MPA) to fund Project activities through June 2024. The cost to Valley Water to continue participating in the project is $1,239,000.
On June 9, 2023, the Water Storage Exploratory Committee (WSEC) unanimously approved staff’s recommendation that it request the full Board’s consideration and approval of this Amendment No. 5.
JPA Administration
Valley Water is one of eight members that make up the LVE JPA, which is responsible for planning, constructing, coordinating partner use of facilities, ensuring adequate funding, and delivering project water. Director Eisenberg was appointed to represent Valley Water on the JPA Board with Director Santos as the alternate. The JPA now has an Executive Director, legal counsel, Clerk of the Board, and recently contracted with The Hallmark Group to provide program management services.
Project Cost Sharing Agreement
Since project planning started in 2016, project funding has been provided by state and federal funding and cost share agreements funded equally by all project partners. Starting in 2019, cost sharing continued via the MPA, which has been amended four times to extend the cost share value, time period, and scope of work. In addition to in-kind work, Valley Water has approved $3.3 million in cost sharing since 2016 to fund LVE Project planning and design. Proposed Amendment No. 5 will extend the MPA through FY2024, when the Service Agreement is scheduled to be approved. The cost of Amendment No. 5 is $1,239,000 to each JPA member (Attachment 1) split into two equal payments due in September 2023 and January 2024. The FY24 budget has adequate funds for the cost share.
Agreement Development
Several agreements will need to be negotiated and finalized between the JPA and Contra Costa Water District (CCWD), the East Bay Municipal Utilities District (EBMUD), and state and federal agencies prior to the completion of a Service Agreement that will define each agency’s share in storage and conveyance and establish associated cost allocations for construction and operations. The JPA Board and each of the member agencies will need to approve the Service Agreement to meet the requirements for final Water Storage Investment Program (WSIP) funding and to start construction of the LVE Project. The target to complete the Service Agreement (and all other related agreements) is the spring of 2024.
Other key agreements the JPA Board will need to approve include:
1. Facilities Usage Agreements - the JPA will enter into agreements with CCWD and EBMUD for the use of their facilities. CCWD owns and operates the facilities to divert water from the Delta and convey it to Los Vaqueros Reservoir. EBMUD will allow use of their Freeport intake near Sacramento and has an intertie with CCWD. Partners submitted a counterproposal on the fees proposed by CCWD; however, CCWD recently rejected most of the counterproposal. Partner concerns include factoring in the full capacity of CCWD facilities rather than the capacity that partners are able to use, CCWD retaining priority use of the system, and lack of any property rights for LVE Project partners while expecting partners to contribute to land costs. The JPA Board formed an ad-hoc committee at its May meeting to address these concerns.
2. Design & Construction Agreement - will define the roles and responsibilities between the JPA and CCWD during construction. CCWD will be the lead for constructing the new and expanded facilities. To increase JPA involvement and oversight in agreement development, the JPA Board formed an ad-hoc committee which has met twice and provided feedback on this Agreement.
3. Contracts for Administration of Public Benefits - the JPA needs to enter contracts to specify and guarantee the public benefits required for state and federal funding of the LVE Project. Public funding is expected to be received through WSIP, the Water Infrastructure Improvements for the Nation Act (WIIN Act), and the Bipartisan Infrastructure Law.
Off Ramps
The Service Agreement is scheduled to be brought to Valley Water’s Board for consideration in spring 2024. The Valley Water Board can still withdraw from the LVE Project and JPA without incurring further obligations until the Board approves the Service Agreement. Once the Service Agreement is approved and the Final Funding Agreement is awarded by the California Water Commission (CWC), withdrawal from the LVE Project must be approved by the JPA Board.
Next Steps
Staff will continue to evaluate participation in the LVE Project and will make a final recommendation through the Water Supply Master Plan process. CCWD is continuing to work on negotiations for water rights and environmental permits with state and federal agencies necessary to complete the LVE Project. Staff will continue to provide regular updates to the Water Storage Exploratory Committee on the Service Agreement negotiations and related agreements. The current timeline for expected LVE Project milestones is:
• Spring 2024: WSEC and Board consideration of Service Agreement
• Summer 2024: Final Funding Agreement with CWC
• Fall 2024: Start of construction on the initial LVE Project elements
• 2024-2025: Construction of Transfer-Bethany Pipeline
• 2027-2029: Construction of dam raise, pumping facilities, and conveyance improvements
• 2030: LVE Project in full operation
ENVIRONMENTAL JUSTICE IMPACT:
There are no Environmental Justice impacts associated with this item.
FINANCIAL IMPACT:
The cost of MPA Amendment No. 5 is $1,239,000, which will be split into two payments due in September 2023 and January 2024. Funding for this item is included in the fiscal year 2024 budget for project number 91251001 - Los Vaqueros Reservoir Expansion.
CEQA:
The recommended action does not constitute a project under CEQA, because while it supports continued planning for the LVE Project, it does not commit Valley Water to participate in construction or operations of the project. The EIR prepared by CCWD for Los Vaqueros Reservoir Expansion will be brought to the Board as part of consideration of the future service agreement.
ATTACHMENTS:
Attachment 1: Amendment No. 5
UNCLASSIFIED MANAGER:
Manager
Vincent Gin, 408-630-2633