AGENDA MEMORANDUM
Public Facilities Financing Corporation
Government Code § 84308 Applies: Yes ☐ No ☒
(If “YES” Complete Attachment A - Gov. Code § 84308)
SUBJECT: title
Approve the Termination Agreement for the WIFIA Master Agreement and Related Agreements for the Pacheco Reservoir Expansion Project.
End
RECOMMENDATION: Recommendation
Approve the Termination Agreement for the WIFIA Master Agreement and related Agreements for the Pacheco Reservoir Expansion Project.
Body
SUMMARY:
On August 26, 2025, the Board of Directors of the Santa Clara Valley Water District (Valley Water) voted unanimously to suspend all efforts in the development of the Pacheco Reservoir Expansion Project (Pacheco) and direct the Interim Chief Executive Officer to develop a project closure plan, including terminating the Pacheco Water Infrastructure Finance and Innovation Act (WIFIA) master agreement and the related loan agreement, installment purchase agreement and term sheet (the “agreements”). The agreements are each dated as of October 30, 2023, and were entered into by and among the United States Environmental Protection Agency (EPA), the Santa Clara Valley Water District Public Facilities Financing Corporation (Corporation), and Valley Water.
At the meeting, prior to the Valley Water Board’s vote, the project team provided a project update guided by a PowerPoint presentation (Attachment 1). In its report, the project team concluded that Pacheco continues to face significant challenges, particularly in securing several key approvals from the federal Bureau of Reclamation and the anticipated significant increase in estimated costs. These challenges are also causes of concern for the California Water Commission, which had selected the project for a $504 million conditional grant under its Water Storage Investment Program.
The Corporation Board previously adopted Resolution No. 22-04 on December 6, 2022, which authorized obtaining loans of up to $2.5 billion for the Anderson Dam Seismic Retrofit and Coyote Percolation Dam Projects (Anderson Projects) and the Pacheco Reservoir Expansion Project. The resolution does not include language authorizing termination of the agreements, so staff is bringing this recommendation to the Corporation Board for approval.
The Pacheco master agreement provided for loans totaling $1.4 billion and the sole loan agreement (for design and planning costs) provided for $91.6 million in available loan funding. No loan draws have been made, and no amounts are currently owed.
Staff notified the EPA of Valley Water’s intention to terminate the agreements on August 29, 2025 (Attachment 2). A termination agreement was developed in consultation with EPA (Attachment 3) and, pending approval by the Corporation Board, will be executed by the Chief Financial Officer as authorized representative of the Corporation and Valley Water.
ENVIRONMENTAL JUSTICE IMPACT:
There are no environmental justice impacts associated with terminating the WIFIA agreements. This action is unlikely to or will not result in disproportionate impacts on any specific community(ies) relative to the general population from the termination of the agreements.
ATTACHMENTS:
Attachment 1: Project Update
Attachment 2: Termination Request Letter
Attachment 3: Termination Agreement
UNCLASSIFIED MANAGER:
Manager
Darin Taylor, 408-630-3068