Valley Water capital spend accelerates as utility eyes $1.2bn WIFIA capacity for Anderson Dam

Valley Water capital spend accelerates as utility eyes $1.2bn WIFIA capacity for Anderson DamThe California wholesaler has significantly increased its capital execution rate for major treatment and storage projects, prompting plans for long-term debt issuance in May.

Water Utility Fund capital spending hit 51% of budget at mid-year, up from 26% the previous year.

Spending is driven by the Rinconada Water Treatment Plant and Anderson Dam seismic retrofit projects.

Staff plan to request authorization in May to issue long-term debt to refinance $212 million in short-term capital costs.

The utility is awaiting federal approval to upsize its Anderson Dam WIFIA loan capacity by $639 million to a total of $1.2 billion.

The Santa Clara Valley Water District (Valley Water) reported a sharp increase in capital project execution for the first half of fiscal year 2025-26, driven by major investments in the Rinconada Water Treatment Plant and the Anderson Dam Seismic Retrofit Project. During a Board Audit Committee meeting on February 18, 2026, staff revealed that the Water Utility Fund had spent 51% of its capital budget by the mid-year mark, a significant improvement over the 26% recorded during the same period the previous year. This acceleration comes within a fiscal year where district-wide capital outlays were projected to exceed $600 million. Assistant Officer Luz Pena attributed the increased expenditure rate primarily to the Rinconada Water Treatment Plant Reliability Improvement Project, the Anderson Dam Tunnel Project, and the Anderson Dam Seismic Retrofit Project. "Capital expenditures are tracking higher than last fiscal year, so that's some good news," said CFO Darin Taylor. He noted that while the district historically faces challenges with underspending capital budgets, current projects are proceeding without "surprises about delays." To support this capital program, the district is advancing significant financing initiatives. Senior Management Analyst Steve Peters confirmed plans to ask the Board of Directors in May 2026 for authorization to issue long-term water utility debt. This issuance will refinance approximately $212 million in short-term debt used for water utility capital costs and refinance outstanding long-term debt—a move consistent with the district's typical capital structure, which relies on debt financing for approximately 60% of spending. The district is also awaiting federal approvals to expand its credit capacity for the Anderson Dam project. Peters stated that Valley Water is waiting for Office of Management and Budget (OMB) approval to upsize its Water Infrastructure Finance and Innovation Act (WIFIA) master agreement for the Anderson Dam Seismic Retrofit Project by $639 million. If approved, this would bring the total loan capacity for the project to $1.2 billion. Additionally, the utility is awaiting final approval of a $653 million master agreement with the U.S. Army Corps of Engineers for dam safety projects. Despite the accelerated spending, revenue from treated water sales is tracking slightly below budget due to the West Pipeline project, which has limited sales volume. However, staff noted this is partially offset by increased groundwater pumping by retailers.