Silicon Valley dam upgrade draws scrutiny over price tag

Residents and environmental activists continue to scrutinize the Santa Clara Valley Water District’s plans to expand a regional dam.

Valley Water employees presented updates and fielded questions about the controversial Pacheco Dam expansion — including questions about costs. The project’s estimated cost is $2.78 billion, but factoring financing and other contingencies could escalate the price tag to $5.5 billion. The Valley Water board of directors is slated to receive a more in-depth series of presentations in the coming months before making a final decision.

The water district wants to expand Pacheco Dam’s reservoir capacity from 5,500-acre feet of water to 140,000-acre feet of water. Situated atop the remote Pacheco Pass in Santa Clara County, the expansion project would require extensive geological and engineering work, which opponents claim would exacerbate environmental issues, flood private property and intrude on culturally significant land for local Indigenous tribes, including burial sites.

The presentation directors viewed during the Feb. 13 meeting was an update on the project’s benefits, such as how it would add about 100,000 acre-feet of emergency water to Valley Water’s supply and protect downstream communities from flooding. But Directors Barbara Keegan and Rebecca Eisenberg questioned the project’s ballooning costs.

Baked into Pacheco Dam’s finances is the hope that other governing bodies will help shoulder at least one-third of that price tag. If the district can find partners, the cost could come down to $3.3 billion.

“So much of this is based on the assumption that we’re going to have 35% funding partners, but we have had no success in obtaining funding partners for seven years, as the price ticket has gone up,” Eisenberg said.

Keegan asked how much the district has spent already. Employees could not provide an exact number, but Project Manager Ryan McCarter said the district estimates it is spending $20 million annually on planning, design and permitting efforts.

While Valley Water has not yet finalized any partnerships, spokesperson Matt Keller told San José Spotlight the district has preliminary agreements with Pacheco Pass Water District and San Benito County Water District and is discussing partnerships with multiple other agencies.

The district has secured outside funding sources on top of these potential partnerships, with a $504 million grant from the state’s Water Storage Investment Program and a $92 million loan from the federal Water Infrastructure Finance and Innovation Act.

During the meeting, multiple people spoke against the project’s increasing costs and measured benefits. Katja Irvin, co-chair of the Sierra Club Loma Prieta Chapter Conservation committee, said the amount of new information provided was disappointing, and asked for more information on how operational decisions will be made.

Last week’s presentation was only one part of a series of project updates on the dam expansion. Board Chair Nai Hsueh said future meetings on the finances will be upcoming.

“Today, we are not deciding whether to move forward or not move forward on this project,” Hsueh said.

Keller said the project team is deciding which topic to present next to the Water Storage Exploratory Committee in May and then to the full board in June.

Valley Water is planning and designing the project, but Keller said there are a few more steps before it can go to directors for final approval. This includes a research-based determination as to whether the expansion is necessary to meet water supply demands by 2050. As of right now, he said the board is scheduled to vote on a construction contract in late 2027.

Some residents said they found it concerning the presentation only showcased the project’s benefits.

“I don’t think this project qualifies as a good investment in our infrastructure,” county resident David Duperrault said during public comment. “We could accomplish many of the goals and benefits of this project much more efficiently and much more effectively.”

Contact B. Sakura Cannestra at [email protected] or @SakuCannestra on X, formerly known as Twitter.