BOARD AGENDA MEMORANDUM
Government Code § 84308 Applies: Yes ☐ No ☒
(If “YES” Complete Attachment A - Gov. Code § 84308)
SUBJECT: Title
Approve the Fiscal Year 2025-26 Safe, Clean Water and Natural Flood Protection Program Annual Report with Proposed Text Adjustments and Authorize Submission to the Independent Monitoring Committee for Review.
End
RECOMMENDATION: Recommendation
A. Approve the Fiscal Year 2025-26 Safe, Clean Water and Natural Flood Protection Program Annual Report with text adjustments
B. Authorize staff to submit the Annual Report to the Independent Monitoring Committee for its review; and
C. Authorize staff to update the Annual Report with audited financials, as necessary.
Body
SUMMARY:
Fiscal Year 2025-26 (FY26) Safe, Clean Water Annual Report (Annual Report)
FY26 marked the fifth year for Santa Clara Valley Water District’s (Valley Water) voter-approved renewed Safe, Clean Water and Natural Flood Protection Program (Program). The voter-approved Program began July 1, 2021, and is implemented on a 15-year financial cycle. See Attachment 1 for Program background. The annual report (Attachment 2) provides FY26 progress for each project and the associated key performance indicators (KPIs).
Annual Report Improvements
This year’s Annual Report incorporates recommendations from the Safe, Clean Water Program independent audit (<https://tinyurl.com/SCWauditFY22-24>), along with feedback from the Independent Monitoring Committee’s (IMC) annual review, to further strengthen the clarity, transparency, and consistency of Program reporting. Enhancements include more comprehensive identification of project adjustments, including funding adjustments in addition to scope, text, and schedule changes, as well as improved financial reporting and explanatory notes. These improvements provide greater clarity on reserves, funding allocations, cost components, and reconciliation of financial figures. To access the IMC report and Valley Water management response, visit the following link and refer to the Independent Monitoring Committee Reports section <https://www.valleywater.org/SCW-reports-documents>.
FY26 Program Performance
Of the Program’s 31 projects, 28 (90%) were active, two (7%) were complete, and one (3%) was on hold. Projects D6: Restoration of Natural Creek Functions and D7: Partnerships for the Conservation of Habitat Lands have been completed. Project E3: Lower Berryessa Flood Protection (Phase 3) was put On Hold, with its funding deferred through FY46 to preserve Fund 26 capacity as capital costs increase.
Change Control Process Indicators - Modifications and Adjustments
In FY26, the following changes were advanced through the Program’s Change Control Process.
Modifications - In June 2026, the Board initiated public hearings for proposed KPI modifications to Project E5: San Francisquito Creek Flood Protection and Project F6: Good Neighbor Program, based on audit and staff recommendations.
In FY27, beyond the reporting period covered by this report, the Board held public hearings on July 14 and August 11, 2026, and subsequently approved the Project F6 modification.
For Project E5, the Board received numerous public comments requesting clarification regarding Valley Water’s participation in the Reach 2 portion of the project. Several commenters specifically requested that Valley Water assume a stronger leadership role in implementing Reach 2 beyond its current role. In response to these comments, the Board deferred action on the Project E5 KPI modification and proposed forming a joint Valley Water-SFCJPA Board Working Group to jointly address the public comments. The SFCJPA Board accepted the proposal on August 27, 2026.
To view the public hearings, visit the July 14, 2026, meeting at <https://scvwd.granicus.com/MediaPlayer.php?view_id=3&clip_id=2579> and the August 11, 2026, meeting and Board action on Project F6 at <https://scvwd.granicus.com/MediaPlayer.php?view_id=3&clip_id=3205>.
Adjustments
Schedule Adjustments - In FY26, the Board approved schedule adjustments for projects C1: Anderson Dam Seismic Retrofit, D4: Fish Habitat and Passage Improvement, E4: Upper Penitencia Creek Flood Protection, and E8: Upper Guadalupe River Flood Protection. These adjustments were made for various reasons, including project sequencing, external funding, rising delivery costs, and the Program's long-term financial capacity.
Funding Adjustments - Funding was adjusted for projects A3: Pipeline Reliability, E1: Coyote Creek Flood Protection, E2: Sunnyvale East and Sunnyvale West Channels Flood Protection, and E3: Lower Berryessa Flood Protection. Funding increases reflected updated project costs, delivery needs, and the long-term financial sustainability of the Safe, Clean Water Program.
Text Adjustments - Project descriptions, benefits, and KPI language were updated for seven projects to improve clarity, reflect current planning and implementation practices, and better align performance measures with project scope and program objectives. The projects are A2: Water Conservation Rebates and Program, D1: Management of Riparian Planting and Invasive Plant Removal, D5: Ecological Data Collection and Analysis, E4: Upper Penitencia Creek Flood Protection, E5: San Francisquito Creek Flood Protection, E8: Upper Guadalupe River Flood Protection, and F3: Flood Risk Assessment Studies.
FY26 Key Accomplishments
The Annual Report documents progress across water supply, flood protection, and stewardship. Notable FY26 accomplishments include:
Water Supply
Pipeline Reliability: Completed a West Pipeline valve installation near Quito Road in Saratoga and began construction on the West Pipeline valve in Cupertino and the East Pipeline valve in San José.
Anderson Dam Seismic Retrofit: Provided $6.4 million to support the Anderson Dam Seismic Retrofit Project. Valley Water secured all major environmental permits and approvals required and awarded the construction contract in July 2026 (FY27), with construction anticipated to begin in January 2027.
Water Conservation Rebates and Programs: Provided $1.16 million for water conservation activities, supporting the conversion of more than 850,000 square feet of lawn to low-water-use landscapes.
Flood Protection
Upper Llagas Creek Flood Protection Project: Valley Water completed construction of the first two phases of this three-phase project in Morgan Hill in FY22 and FY25, respectively, with construction of the third and final phase underway in FY26. Of the $80 million secured in grant funding from the Natural Resources Conservation Service (NRCS), Valley Water had received more than $54 million in reimbursements by the end of FY26, significantly offsetting project costs.
Coyote Creek Flood Protection Project: Advertised Phase 2 for construction bids in April 2026; the construction contract was awarded in FY27.
Vegetation Control and Sediment Removal: Managed 1,710 acres of in-stream vegetation and removed 24,112 cubic yards of sediment across more than 178 miles of improved channels to preserve flood protection capacity.
Stewardship
Partnerships for the Conservation of Habitat Lands: Completed the Program’s $8 million commitment to conserving habitat lands. This included a $3.95 million contribution in FY26 toward Peninsula Open Space Trust’s acquisition of 2,184 acres at Juristac (formerly known as Sargent Ranch) to help protect culturally and ecologically significant lands. Combined with an earlier $4 million contribution toward the 3,653-acre Richmond Ranch acquisition, these investments are permanently protecting thousands of acres of habitat supporting wildlife corridors and special-status species.
Safe, Clean Water Grants and Partnerships: Valley Water awarded more than $2 million in grants, including $1.78 million in the standard grants program and $105,000 in water bottle filling station (Refill Station) grants.
Good Neighbor Program: Encampment Cleanup: Removed 197 tons of encampment-related trash, debris, and hazardous pollutants along local waterways.
Next Steps
Following Board approval, staff will email the annual report to the IMC on November 12, 2026, and provide hard copies the following week. The annual report will be made available to the public on Valley Water’s website <https://tinyurl.com/SCWFY26AnnualReport>.
The IMC is scheduled to convene on December 2, 2026, to establish the review process and schedule. Staff will update the report tables and appendices with audited financial information, if needed, and provide the updated report to the Board and IMC when the financial audit is complete, expected in late December 2026 or early January 2027.
ENVIRONMENTAL JUSTICE IMPACT:
There are no environmental justice impacts associated with this item.
FINANCIAL IMPACT:
The Annual Report is produced and printed internally and budgeted for in the Safe, Clean Water Implementation Project (26061012).
CEQA:
The recommended action does not constitute a project under CEQA because it does not have the potential for resulting in direct or reasonably foreseeable indirect physical change in the environment.
ATTACHMENTS:
Attachment 1: Safe, Clean Water Program Background
Attachment 2: FY26 Safe, Clean Water Annual Report
Attachment 3: Project Text Adjustments, Redlined
Attachment 4: Project Text Adjustments, Clean
Attachment 5: PowerPoint
UNCLASSIFIED MANAGER: Manager
Luz Penilla, 408-630-2228