Valley Water officials have suspended the development of the Pacheco Reservoir Expansion Project, which the agency had been working on since 2017 and whose projected total cost has ballooned to more than $3 billion since then.
The Valley Water board of directors voted 6-0 to suspend the project at the Aug. 26 meeting, following a staff update that identified a number of ongoing challenges with the project. These challenges include rising costs, longer timelines for environmental reviews, uncertainty over the future of state and federal regulations and complex permitting processes.
The board also directed Valley Water Interim CEO Melanie Richardson to prepare a plan to close out the project and withdraw the agency’s application for state funding through the Water Storage Investment Program.
“After careful consideration and assessment, my fellow board members and I have determined that proceeding with the Pacheco project is not in Valley Water’s best interest at this time,” Valley Water Board Chair Tony Estremera said in a statement. “This was a difficult decision, but one we made with our community’s long-term water affordability in mind.”
Pacheco Reservoir is located in southeast Santa Clara County, about 13 miles southwest of San Luis Reservoir off Highway 152. The reservoir’s current capacity is about 5,500 acre feet, and Valley Water had proposed building a dam and expanding the water storage body to about 140,000 acre feet. The project was intended to safeguard the valley’s long-term water supply capacity, improve water quality, benefit the ecosystem and create new habitat for an endangered steelhead fish species, according to Valley Water.
Since 2017, the estimated cost of the proposed project has ballooned to more than $3.2 billion, according to Valley Water staff. Valley Water—the water district that provides water storage and flood protection for 2 million people in Santa Clara County—had previously secured about $484 million (later increased to $504 million) from the California Water Commission for the project, whose estimated total cost was about $1 billion in 2019.
Also since 2017, Valley Water has spent about $100.4 million on the initial design and planning costs for the Pacheco Reservoir Expansion Project, according to district staff. Of that amount, $24.2 million is from California Proposition 1 and $76.2 million is from Valley Water funds.
The project reached the “30% design” phase of development in August 2022.
Valley Water officials added that recent design changes also delayed the environmental review process, pushing release of the revised Draft Environmental Impact Report to late 2026 and final approval to late 2027.
Looking ahead, staff said Valley Water will continue evaluating other water supply, water storage and infrastructure projects outlined in its Water Supply Master Plan. “Valley Water remains committed to meeting Santa Clara County’s future water supply needs at the lowest cost to ratepayers,” staff said in a statement from Valley Water.
Despite the decision to suspend the Pacheco Reservoir project, Valley Water officials said the need to secure more water storage opportunities in Santa Clara County remains.
Director John Varela, who represents South County on the board, said that need is particularly acute as the threat of wildfires grows in California.
“We’re going to continue to find and store water in Santa Clara County to continue the firefight mission,” Varela said at the Aug. 26 meeting.
Estremera added in his statement, “Maintaining and rehabilitating our aging infrastructure is our priority to ensure safe and reliable water supply operations. Our agency will continue to evaluate numerous other water supply and infrastructure projects that could help meet Santa Clara County’s future water needs.
“Through our agency’s Water Supply Master Plan, we are studying the benefits and feasibility of these opportunities.”
