BOARD AGENDA MEMORANDUM
Government Code § 84308 Applies: Yes ☐ No ☒
(If “YES” Complete Attachment A - Gov. Code § 84308)
SUBJECT: Title
Receive an Overview of the Initially Validated and Currently Unfunded Capital Projects.
End
RECOMMENDATION: Recommendation
A. Review the list of initially validated and currently unfunded Capital Projects; and
B. Provide feedback as necessary.
Body
SUMMARY:
The annual update of the Capital Improvement Program (CIP) Five-Year Plan includes project plan updates for all existing capital projects and a Validation Process to review and evaluate potential new capital projects for inclusion in the CIP, along with review points for the CIP Committee and decision points for the Board.
CIP Development Process Overview
Each year, Santa Clara Valley Water District (Valley Water) staff can submit new projects to be considered for inclusion in Valley Water’s CIP. For each potential new project, staff develops a business case to compare capital, non-capital, and non-asset alternative solutions; evaluates the lifecycle costs of these solutions; and identifies a recommended solution that minimizes lifecycle cost while balancing service levels and risk.
From May through September, staff submits the business case for review by their respective Deputy Operating Officer (DOO) or Deputy Administrative Officer (DAO). If staff’s respective DOO/DAO approves the project, it is submitted to the CIP coordinator. Simultaneously, project managers update their existing capital projects to reflect changes to scope, schedule, and project cost/planned expenditures, which are also subject to approval by the respective DOO/DAO.
Between October and November each year, these newly proposed, initially validated projects will be presented to the CIP Committee and Board, along with a list of currently unfunded projects that have been validated during prior years, for review and comment. Committee and Board feedback will be considered when preparing the funding scenarios for the CIP Preliminary Five-Year Plan.
Initially Validated Unfunded Projects
There are 11 unfunded projects for the Board’s consideration this CIP Development Cycle: three initially validated projects and eight previously validated/currently unfunded projects. Project descriptions of each of the Initially Validated Projects are included in the PowerPoint (Attachment 1). For a high-level overview of the Initially Validated Unfunded Projects List, see the table below:
Water Supply - WS
Water Resources Stewardship - WRS
Flood Protection - FP
* Llagas Capacity has prior year actuals = $6,947, TPC = $105,778
** Planning and Design phases of these projects are currently funded in the CIP Five-Year Plan.
*** PAPWP Fund 61 unfunded cost is $14,633,000; Public Private Partnership (P3 contribution for PAPWP) is $1,082,443,000
Annual Process for Development of the CIP Preliminary Five-Year Plan
Project Plans updated annually. Every year, capital project managers update their project plans to reflect changes to project scope, schedule, and cost. In the fall of each year, CIP and Finance staff compile the data from existing CIP project plans, collect the operational forecast information, and run the financial models.
Board consideration for removal or inclusion of projects in the CIP. Due to increasing capital costs, Valley Water’s Funds are facing constraints. To address this, staff held a Board workshop on August 29, 2025, which outlined the financial challenges and identified potential funding solutions. Staff will return on November 12, 2025, to present this year’s list of validated unfunded projects and to discuss prioritization strategies for the upcoming development of the CIP Preliminary Five-Year Plan. Feedback from the Board will assist staff in developing scenarios for financial analysis and preliminary CIP recommendations.
Staff analysis and recommendations. The CIP Evaluation Team (Chief Executive Officer (CEO), Assistant CEO, Chiefs and Deputies of the divisions initiating, delivering, implementing, and operating capital projects) will then meet on November 18, 2025, to consider the Board’s feedback and review the financial models. The Team will determine which, if any, unfunded projects should be recommended for inclusion and whether any of the currently funded capital projects should be recommended for removal, re-scoping/phasing, deferment, or placement on the unfunded list for the next CIP Five-Year Plan being developed.
To ensure Valley Water’s high-priority business needs are met in adherence to Board policy, the CIP Evaluation team reviews the projects based upon:
• Board Priorities
• Asset’s remaining lifespan
• Available funding
• Urgency of investment
CIP Committee review and feedback. Based upon the outcome of its review, the CIP Evaluation Team will provide recommendations regarding whether any projects should be recommended for inclusion, removal, re-scoping/phasing, deferment, or placement on the unfunded list for the next CIP Five-Year Plan being developed. Funding scenarios that include these recommendations will be presented to the CIP Committee in December, for review and feedback, along with the CIP Preliminary FY 2027-31 Five-Year Plan. In addition, the CIP Committee will receive an overview of the significant project plan updates from prior year’s Board-adopted CIP FY 2026-30 Five-Year Plan.
Board direction. Each January, CIP and Finance staff update the funding scenarios to include staff and CIP Committee recommendations, which will be presented to the full Board during a Funding Scenario Workshop, as part of the CIP Preliminary Five-Year Plan and Groundwater Charges item. Each year, direction regarding capital project funding is provided by the Board through its approval of CIP Preliminary Five-Year Plan.
ENVIRONMENTAL JUSTICE IMPACT:
There are no environmental justice and equity impacts associated with receiving an overview of the Initially Validated and Currently Unfunded Capital Projects.
FINANCIAL IMPACT:
There is no financial impact associated with this item.
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: PowerPoint
UNCLASSIFIED MANAGER: Manager
Luz Penilla, 408-630-2228