BOARD AGENDA MEMORANDUM
Government Code § 84308 Applies: Yes ☒ No ☐
(If “YES” Complete Attachment A - Gov. Code § 84308)
SUBJECT: Title
Approve Agreement No. A5792A with AQC Environmental Brokerage Services Inc. for Carbon Offset Brokerage Services for the Anderson Dam Seismic Retrofit Project, Project No. 91864005, for a Total Not-to-Exceed Amount of $5,000,000 (Morgan Hill, District 1).
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RECOMMENDATION: Recommendation
Approve Agreement No. A5792A with AQC Environmental Brokerage Services Inc. for carbon offset brokerage services for the Anderson Dam Seismic Retrofit Project, Project No. 91864005, for a Total Not-to-Exceed Amount of $5,000,000.
Body
SUMMARY:
The Anderson Dam Seismic Retrofit Project (ADSRP or Project) involves retrofitting and upgrading Anderson Dam and its associated facilities to meet public safety requirements imposed by the Federal Energy Regulatory Commission (FERC) and California Department of Water Resources Division of Safety of Dams (DSOD). Specifically, the Project will correct dam safety deficiencies that were identified between 2008 and 2016. The Project will allow Santa Clara Valley Water District (Valley Water) to maximize water supply and provide related benefits, while avoiding and minimizing environmental impacts. The Project also includes decommissioning the hydroelectric facility at the dam, implementing conservation measures along Coyote Creek to avoid and minimize adverse impacts, and conducting habitat and species monitoring during construction.
The Final Environmental Impact Report (FEIR) for ADSRP applies a net-zero greenhouse gas (GHG) threshold to Project construction emissions and includes enforceable mitigation measures to reduce and offset construction-related GHG emissions. Mitigation Measure GHG-1 requires construction emissions reductions via use of alternative fuels and electrified equipment, where feasible. Mitigation Measure GHG-2 requires Valley Water to offset remaining unavoidable Project-related construction GHG emissions to achieve no net increase in construction-related GHG emissions.
Valley Water does not maintain internal expertise or direct market access necessary to identify, evaluate, procure, transfer, and retire voluntary carbon offsets in accordance with the requirements of FEIR Mitigation Measure GHG-2. Specialized brokerage services are needed to support compliance with the mitigation measure and to navigate the voluntary carbon market.
Agreement No. A5792A with AQC Environmental Brokerage Services Inc. will provide carbon offset brokerage services needed to support Valley Water’s implementation of FEIR Mitigation Measure GHG-2, specifically the procurement of carbon offsets from the voluntary carbon market. The scope of services includes project management; annual evaluation of carbon market conditions; identification, evaluation, and sourcing of appropriate voluntary carbon offsets; development of annual procurement strategies and pre-transaction coordination; purchases of carbon offsets on Valley Water’s behalf; offset transfer and transmittals of chain-of-custody documentation; annual retirement of offsets; and annual reporting support.
In accordance with FEIR Mitigation Measure GHG-2, offsets procured under the Agreement must be voluntary and not otherwise required by law or regulation, must avoid double counting or competing ownership claims, and must not be used to satisfy any separate compliance obligation. The Agreement requires geographic preference to be applied using the hierarchy identified in Mitigation Measure GHG-2, prioritizing offsets originating within the San Francisco Bay Area Air Basin, then within California, and finally within other U.S. states. Offsets from outside the United States will not be used. Offsets must also meet applicable criteria for being real, additional, quantifiable, permanent, verifiable, and enforceable, and must be registered with recognized and reputable carbon registries.
On March 30, 2026, Valley Water issued Request for Proposals No. VW0680 for Carbon Offset Brokerage Services to support implementation of Mitigation Measure GHG-2 for the Anderson Dam Seismic Retrofit Project. Before advertising the RFP, Valley Water conducted outreach through its PlanetBids procurement portal to firms registered under the applicable National Institute of Governmental Purchasing codes and published the solicitation in accordance with Valley Water procurement requirements. The solicitation was distributed through the PlanetBids vendor network and Valley Water’s vendor list, and three timely electronic proposals were received.
A multidisciplinary evaluation committee reviewed the proposals using the criteria established in the RFP, and all three proposers were invited to participate in interviews. Following the interviews, AQC Environmental Brokerage Services, Inc. was ranked first and determined to be the firm best qualified to provide the required services based on its overall qualifications, technical approach, and understanding of the scope of services.
The Agreement establishes a total not-to-exceed amount of $5,000,000. The majority of this amount is anticipated to be used for the purchase of carbon offset credits required to implement Mitigation Measure GHG-2, with the remainder covering brokerage commissions, consulting services, and other authorized compensation under the Agreement. Actual expenditures will depend on the quantity of offsets required and prevailing market prices during the Agreement term. Brokerage services will be provided throughout the Agreement term of three years and coordinated with Valley Water staff. The Agreement also provides Valley Water the option to extend the term for up to two additional two-year periods through written amendments executed prior to expiration of the Agreement. Purchase and retirement of carbon offsets will occur annually for the upcoming construction year (e.g., offsets for anticipated 2027 construction emissions would be purchased in 2026), as required by Mitigation Measure GHG-2.
ENVIRONMENTAL JUSTICE IMPACT:
There are no environmental justice impacts associated with this action. This action is unlikely to or will not result in human health or environmental effects. However, the carbon offsets procured through this Agreement may be derived from projects with positive environmental and community co-benefits, such as forest restoration, improved forest management, methane capture, or other project types that reduce or sequester greenhouse gases. To the extent such projects improve air quality, restore habitat, or provide other environmental benefits, they may result in positive environmental justice outcomes for the communities in which the offset projects are located.
FINANCIAL IMPACT:
The Anderson Dam Seismic Retrofit Project, Project No. 91864005, is included in the Capital Improvement Program (CIP) Fiscal Years (FY) 2027-31 Five-Year Plan and in the FY 2026-27 Adopted Budget. Approval of Agreement No. A5792A will authorize a total not-to-exceed fee of $5,000,000 for carbon offset brokerage services, including authorized carbon offset credit purchases, brokerage commissions, and consulting fees.
There are adequate funds in the Project’s FY 2026-27 Adopted Budget to encumber the anticipated expenditures for the Consultant’s services performed during this fiscal year. Funds to cover Consultant services in subsequent fiscal years will be included in the biennial budget process and recommended by staff during the annual fiscal year budget process or through budget adjustments, if needed.
Approval of Agreement No. A5792A does not change the total Project cost reflected in the CIP’s FY 2027-31 Five-Year Plan.
The Project may receive up to $54.1 million from the renewed Safe, Clean Water & Natural Flood Protection Program (Fund 26), with the remainder of the total project cost funded by the Water Utility Enterprise Fund (Fund 61), with 80.50% of the costs allocated to North County Zone W-2, 7.80% to South County Zone W-5, and 11.70% to South County Zone W-7.
A portion of the ADSRP project cost is projected to be financed by the Water Infrastructure Finance and Innovation Act (WIFIA) pursuant to the United States Environmental Protection Agency WIFIA Master Agreement with Valley Water entered into through its Santa Clara Valley Water District Public Facilities Financing Corporation, for the SCVWD Master Program for Water Reliability Program (WIFIA Agreement) dated February 14, 2023.
CEQA:
The recommended action does not constitute a project under the California Environmental Quality Act (CEQA) because it does not have the potential to result in a direct or reasonably foreseeable indirect physical change in the environment. In addition, all carbon offsets purchased under Agreement No. A5792A would be consistent with the requirements outlined in the Anderson Dam Seismic Retrofit Project Final Environmental Impact Report, which was certified by the Board of Directors on February 25, 2025.
ATTACHMENTS:
Attachment A: Gov. Code § 84308
Attachment 1: Agreement No. A5792A
Attachment 2: PowerPoint
UNCLASSIFIED MANAGER: Manager
Ryan McCarter, 408-630-2983