BOARD AGENDA MEMORANDUM
Government Code § 84308 Applies: Yes ☐ No ☒
(If “YES” Complete Attachment A - Gov. Code § 84308)
SUBJECT:
Title
Receive Information on the Pacheco Reservoir Expansion Project, Project No. 91954002 (District 1, Merced County).
End
RECOMMENDATION:
Recommendation
Receive information on the Pacheco Reservoir Expansion Milestone Review, Project No. 91954002.
Body
SUMMARY:
On March 16, 2023, staff presented an update to the Board of Directors on the Pacheco Reservoir Expansion Project (PREP or project) as part of a Water Supply Master Plan update. In response to discussion during that Board meeting, staff will be providing quarterly updates to the Water Storage Exploratory Committee (Committee), followed by updates to the full Board.
Staff presented an updated timeline for PREP to the Committee on May 12, 2023. The updated timeline included major financial milestones from project inception through the project approval and award of construction contract. The necessary steps in securing partnership agreements have been detailed on the timeline at their anticipated completion dates. Additionally, the points at which Board approval will be required were identified.
Additional information has been added to the timeline (Attachment 1) in response to discussion during the Committee meeting to include adding project cost spent per fiscal year and additional detail to the environmental document timeline.
In response to Board comment during the March 16, 2023 meeting, staff worked with the consultant team to develop potential lost opportunity costs if the project does not move forward, with all opportunity costs presented in May 2023 dollars. Several potential lost opportunities were identified and studied, the first being securing emergency water supplies for Valley Water to use during outages and droughts. This opportunity cost took into account that 45% of Valley Water supplies are imported water allocations and assuming the probability that a large flood or seismic event will impact the Delta in the next 50 years, resulting in a Net Present Value of $903 million.
Public Safety opportunities included improving drinking water quality for Valley Water customers and addressing dam safety issues at the existing North Fork Dam. Staff did not have enough information to assign a dollar amount to the existing North Fork Dam spillway. The improved quality of drinking water by avoiding algae-laden water supplies was determined to be $143 million.
Improving habitat for threatened South-Central Coastal California Steelhead in Pacheco Creek represents lost environmental opportunity at a Net Present Value of $1.7 billion.
On the Environmental Justice side, the team also looked into the reduction of flood flows and related flood damages, in particular the flooding of disadvantaged communities. Based on the January 2023 flooding in Pacheco Creek, the expanded reservoir could have resulted in a 46% reduction of peak flows. This flow reduction would have been similar for the March 2023 flooding of the Pajaro River which Pacheco Creek flows into.
Another lost opportunity cost would be the loss of the $504 million in funding for Public Benefits from the California Water Commission.
Using the 2023 water year as a case study, the project team also identified a lost opportunity of up to $170 million from Captured Water Supplies in a singular year.
Project Development
The PREP team has been continuing to develop the 60% design package, to include design level plans, specifications, and an updated construction cost estimate. The team is also proceeding with additional environmental field investigations, to gather information necessary to allow Valley Water to move forward with the next phase of project design and refine the environmental analysis as appropriate. The Phase 2 Geotechnical Investigations will resume once Valley Water completes environmental review pursuant to the California Environmental Quality Act (CEQA).
Environmental Review
Pursuant to CEQA, Valley Water released a Draft Environmental Impact Report (DEIR) for public review and comments from November 17, 2021 to January 21, 2022. The comment period was further extended to February 15, 2022.
The DEIR evaluated five alternatives and identified the preferred project alternative as a hardfill dam located approximately one mile upstream of the existing North Fork Dam. After the DEIR was released, the Department of Water Resources Division of Safety of Dams (DSOD) rejected the hardfill dam design concept due to limited performance history available, and stated its preference for an earthfill dam design, which was already included and evaluated as an alternative in the DEIR.
After reviewing the public comments received on the DEIR and considering the revisions to the project design and refined environmental analysis that would have to be added to the DEIR, staff is planning to recirculate the DEIR for public comments before finalizing the EIR for project approval. Because implementation of the project would require approval by several federal agencies, environmental review under the National Environmental Policy Act (NEPA) would be required before the federal agencies take action on the project. To coordinate review between the federal and state/local agencies, staff is proposing to revise the DEIR into a joint Environmental Impact Statement (EIS) and EIR and release the draft EIS/recirculated draft EIR for public comments pursuant to NEPA and CEQA. The U.S. Army Corps of Engineers is expected to act as the lead federal agency for compliance with NEPA, Section 106 of the National Historic Preservation Act (NHPA), Section 404 of the Clean Water Act, and Section 7 of the Endangered Species Act.
Next Steps
Staff is continuing to develop a future storage project cost/benefit comparison to be presented at a future Committee meeting as part of a larger Water Supply Master Plan discussion. The PREP team is exploring partnership mechanisms and presenting the project to potential partners to discuss opportunities.
As discussed above, staff will continue to pursue environmental field investigations to gather additional data to support project design and further environmental analysis, and will proceed to prepare the draft EIS/recirculated draft EIR in compliance with CEQA.
The PREP team is also working on a lifecycle model that will allow for staff to analyze the cost per acre foot of water. This analysis will be presented at a future project update.
ENVIRONMENTAL JUSTICE IMPACT:
There are no Environmental Justice impacts associated with this item. However, the draft EIS/recirculated draft EIR will include an analysis of the project’s social and economic impacts including environmental justice, as required by NEPA. The environmental justice impacts of the PREP will be considered in future board actions. Some of the anticipated Environmental Justice Impacts include potential reduction of flood damages to several disadvantaged communities.
FINANCIAL IMPACT:
There is no financial impact associated with the recommendation in this item. The PREP is currently included in the Capital Improvement Program’s FY 2024-28 Five-Year Plan. Any future decisions on the course of the PREP may have financial impacts.
CEQA:
The recommended actions in this item do not constitute a project under CEQA because they do not have a potential for resulting in direct or reasonably foreseeable indirect physical change in the environment.
As discussed above, Valley Water continues to proceed with CEQA review of the PREP, and the final Environmental Impact Report will be presented to the Board for consideration before project approval.
ATTACHMENTS:
Attachment 1: PowerPoint
*Handout 8.1-A: Soluri Meserve
*Handout 8.1-B: Sierra Club
*Handout 8.1-C: Schmidt
*Handout 8.1-D: Giberson
UNCLASSIFIED MANAGER:
Manager
Ryan McCarter, 408-630-2983