BOARD AGENDA MEMORANDUM
Government Code § 84308 Applies: Yes ☐ No ☒
(If “YES” Complete Attachment A - Gov. Code § 84308)
SUBJECT:
Title
Conduct a Public Hearing to Consider the Santa Clara Valley Water District’s Capital Improvement Program (CIP) Draft Fiscal Years 2025-29 Five-Year Plan. (Continued from April 9, 2024)
End
RECOMMENDATION:
Recommendation
A. Open and conduct a public hearing to receive public comments and Board feedback regarding the Santa Clara Valley Water District’s CIP Draft Fiscal Years (FY) 2025-29 Five-Year Plan; and
B. Continue the public hearing to the regularly scheduled Board meeting scheduled for April 23, 2024, and the subsequent Special Budget Hearings currently scheduled for April 24, 2024, and if needed, April 25, 2024, and conclude the public hearing at the regularly scheduled Board Meeting on May 14, 2024.
Body
SUMMARY:
Santa Clara Valley Water District’s (Valley Water) Capital Improvement Program (CIP) Draft Fiscal Years (FY) 2025-29 Five-Year Plan (Attachment 1) includes 73 funded projects distributed among the following categories: 37 Water Supply, 15 Flood Protection, 13 Water Resources Stewardship, 3 Buildings and Grounds, and 5 Information Technology projects, for a total CIP value of $9.552B. This includes Valley Water's prior actuals and future years’ planned funding of $8.347B combined with received and planned outside funding of $1.205B, which includes grants from nonprofits, local public agencies, special districts, state and federal grants agencies, state subvention reimbursements and cost-share partnerships.
On February 27, 2024, the Board directed staff to update the CIP Draft FY 2025-29 Five-Year Plan prior to release for public review, to reflect the staff-recommended assumption presented in the 2024 Protection and Augmentation of Water Supplies (PAWS) Report, which in summary, excludes the Palo Alto Purified Water Project (PAPWP) and includes a preliminary projection for the San Jose Purified Water Project (SJPWP) - Phase 2 (full scale facility), and a preliminary projection for a Dam Safety Program (Almaden, Calero, Coyote, and Guadalupe).
Accordingly, staff updated the CIP Draft FY 2025-29 Five-Year Plan to remove the PAPWP from the CIP and placed it on the unfunded list. Moving the PAPWP project to the unfunded list allows the long-term groundwater production charge projection to remain under 10% annual increases for North County Zone W-2 in FY 26 and beyond, as currently projected. Placeholder dollars for the SJPWP - Phase 2 and Dam Safety Program were included in the CIP forecasting models. Placeholder projects for the SJPWP - Phase 2 and Dam Safety Program will be included in next year’s CIP Five-Year Plan development cycle.
Subsequently, on March 13, 2024, the updated CIP Draft FY 2025-29 Five-Year Plan was released to all cities and land use authorities in Santa Clara County and the County of Santa Clara for review as to its consistency with their General Plans. Valley Water offered to meet with each of these agencies, and to date, planning and public works staff at the city of Santa Clara has requested a meeting to discuss projects and provide feedback on the CIP Draft FY 2025-29 Five-Year Plan.
As part of this outreach effort, staff requested letters of support. Copies of any letters received will be attached to the May 14, 2024, agenda memo recommending the adoption of the CIP Final FY 2025-29 Five-Year Plan.
Changes Identified for Final FY 2025-29 Five-Year Plan
Since the release of the CIP Draft FY 2025-29 Five-Year Plan, staff has identified the following pending changes. The pending changes are not incorporated into the CIP Draft FY 2025-29 Five-Year Plan. Finalized project plan updates will be incorporated for the Board’s final review and adoption of the CIP FY 2025-29 Five-Year Plan on May 14, 2024, Board Meeting.
A list of the projects with potential pending changes is provided below:
1. Coyote Creek, Montague Expressway to Tully Rd (E1) (26174043) -
Additional hydraulic analyses and internal drainage studies were conducted, and corresponding analyses were performed for the Environmental Impact Report (EIR). As a result, a necessary flood protection element was added, and design alternatives were developed in coordination with the City of San José, to minimize impacts on City of San José parkland. As a result of the updates, the overall project cost of the Coyote Creek Flood Protection Project has decreased by $3.587M (inflated) due to the construction cost escalation factor being pushed out by one fiscal year.
2. Upper Penitencia Creek, Coyote Creek-Dorel Drive (E4) (26324001) -Additional review of the Planning Study Report (PSR) and the incorporation of an Environmental and Design consultant procurement resulted in the schedule being extended by 2 years to address these unforeseen circumstances. As a result of the updates, the Upper Penitencia Creek, Coyote to Dorel Drive Project has increased by $842K (inflated). Funding for the construction of the project has not yet been secured. Valley Water staff is pursuing grant funding for the project, and the Board remains committed to securing construction funding in the future.
Small Capital Improvement Projects Forecast Revisions:
The small capital project forecasts are revised each year. Asset rehabilitation projects are added, removed, and rescheduled based on asset condition and project need. In addition, project costs are updated each year based on market conditions. These revisions to both schedule and costs cause several minor changes in expected expenditures over the forecasted period. The change is not caused by a single asset rehabilitation project but by the cumulative total of multiple changes.
The following small capital improvement projects will require updates which are anticipated to be completed for inclusion in the CIP Final FY 2025-29 Five-Year Plan:
1. 91214010s San Felipe (Reaches 1-3)
2. 92764009 Raw Water Transmission
3. 94764006 Treated Water Transmission
4. 93764004 Water Treatment
5. 62084001 Watersheds Asset Rehabilitation
6. 73274008 Software Upgrades & Enhancements
7. 95274003 Water Utility Network Modernization
Administrative Project Plan Updates - Budget Reconciliation
Each year between the presentation of the CIP Draft Five-Year Plan and the CIP Final Five-Year Plan, the CIP team reviews the 2nd Pass Budget and, if applicable, 3rd Pass Budget to ensure CIP project planned expenditures for the next two FYs are in alignment with the proposed budgets. If necessary, the CIP team will reconcile the planned expenditures in the Five-Year Plan with the proposed budgets to ensure that the Final Budget and CIP Final Five-Year Plan that are presented to the Board each May are in alignment.
Projects Planned for Closure
For reporting on FY 2023-24 expenditures, the CIP Draft FY 2025-29 Five-Year Plan includes the seven (7) projects listed below that are anticipated to be completed and/or closed by June 30, 2024:
1. Cross Valley Pipeline Extension (91864010) - Planned for completion.
2. Coyote Warehouse (91234011) - Planned for completion.
3. Almaden Lake Improvements (26044001) - To be closed.
4. RWTP Residuals Remediation (93294058) - Planned for completion.
5. Permanente Creek, SF Bay to Foothill Expressway (26244001) - Planned for completion.
6. Berryessa Creek, Lower Penitencia Creek to Calaveras Blvd. - Phase 1 (40174004) - Planned for completion.
7. IT Disaster Recovery (73274001) - Planned for completion.
Operations and Maintenance Cost Forecast Revisions
It is understood that new capital projects impact future operations and maintenance (O&M), which is included in the financial analysis. Throughout the various phases of a capital project, projections of this impact are regularly considered and updated as needed to reflect changes in project elements. This information is considered during long-term forecasting by the respective operating project managers.
Communications and Community Outreach
Informing community members about the CIP efforts, process, and program details remains an integral part of Valley Water’s communications and public engagement. Staff regularly invites community members to participate in the CIP public comment period, the CIP public hearings, and other milestone dates through frequent social media posts. Staff promotes monthly CIP committee meetings on Nextdoor, Facebook, and Twitter (X) and boosts them on Facebook once the meeting agenda is posted online, typically within the week leading up to those scheduled meetings.
In early December 2023, a detailed blog about the CIP Five-Year Plan and process was shared with the community, and a three-blog series to highlight projects within the CIP launched in January. These blogs were posted on valleywaternews.org and shared in Valley Water’s newsletter, Facebook, and Twitter (X). Staff also posts on the CIP webpage and project pages about how to submit public comments and other reminders about ways community members can participate in the CIP process.
Additionally, Valley Water’s public events, including scheduled Speakers Bureau presentations, serve as venues for staff to remind community members about the CIP efforts and how they can participate. Staff supports all Board-approved CIP efforts with year-round community engagement. CIP project outreach includes distributing information through mailings, social media updates, email blasts, Nextdoor notifications, hosting public meetings, meeting with neighbors as needed, and updating project webpages with details about current project progress. On average, staff posts about CIP projects approximately five times per month across all our platforms.
Next Steps
Pursuant to California Government Code §65403(d), the governing body of a special district is required to hold at least one public hearing before adopting a capital improvement program. The public was informed of the time and place of this hearing through a notice published in the San Jose Post newspaper (Attachment 2).
To allow the public additional opportunities to provide comments, staff recommends continuing the public hearing, opened at this meeting, to the regularly scheduled Board meeting on April 23, 2024, at 1:00 p.m. and the special Board meetings to be held for the Board’s Budget Work-Study Sessions currently set for April 24, 2024 at 5:00 p.m. and if needed, April 25, 2024 at 5:00 p.m., and the Special Board meeting on May 14, 2024, at 1:00 p.m. The public hearing will conclude on May 14, 2024, at 1:00 p.m., when the Board will consider staff’s recommendation to adopt the resolution to approve the CIP Final FY 2025-29 Five-Year Plan.
ENVIRONMENTAL JUSTICE AND EQUITY IMPACT:
Individual capital projects may have environmental justice impacts. When this occurs, staff will conduct outreach to and engagement with impacted communities, which will be reported to the Board accordingly. Conducting a public hearing for the CIP Draft FY 2025-29 Five-Year Plan has no environmental justice impact.
The CIP Draft FY 2025-29 Five-Year Plan is a projection of Valley Water’s capital funding for planned capital projects. Its purpose is to document planned capital projects to help integrate Valley Water work with the larger community by aligning Valley Water planning with other local agency planning efforts. The CIP Draft FY 2025-29 Five-Year Plan documents any changes to capital projects’ planned funding and expenditures. It is updated and brought to the Board of Directors for approval each year in February.
Each February, upon the Board’s direction, staff provides a copy of the CIP Draft Five-Year Plan to all cities and land use authorities in Santa Clara County and the County of Santa Clara to ensure meaningful engagement of all Santa Clara County communities in the decision-making process. It publishes a public notification for review before the Board of Directors adopts the Resolution to Adopt the CIP Five-Year Plan in May.
The CIP Five-Year Plan is thus produced each year in collaboration with government, academic, private, non-governmental, and non-profit organizations, as well as diverse and disadvantaged communities, and as such, adheres to the Board’s General Principles and Ends Policies, which are integral in ensuring that Valley Water meets its mission.
FINANCIAL IMPACT:
There is no financial impact associated with Board approval of the recommendations for this item. The total value of the CIP Draft FY 2025-29 Five-Year Plan is $9.552B, of which $1.205B may be funded by external sources.
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: CIP Draft FY 2025-29 Five-Year Plan
Attachment 2: Notice of Public Hearing
UNCLASSIFIED MANAGER:
Manager
Luz Penilla, 408-630-2228