Valley Water targets localized affordability gaps following demand and elasticity study

Valley Water targets localized affordability gaps following demand and elasticity studyFollowing a consultant report identifying 120 census tracts with unaffordable water service, Santa Clara Valley Water District is pausing a board presentation to build a coordinated low-income assistance strategy with retail agencies.

A Raftelis and Hazen and Sawyer study found that while regional affordability metrics are largely met, roughly 37,000 households exceed the 5% threshold for discretionary income spent on water.

The study confirmed water demand remains relatively inelastic, with a 10% rate increase yielding a 2% reduction in consumption.

Valley Water currently allocates $1 million annually through property taxes to a local non-profit for ratepayer assistance, but committee members are demanding better performance tracking.

Staff will consult the Water Commission on April 8 to inventory retailer assistance programs before returning to the committee with comprehensive policy recommendations.

A planned update on the Sites Reservoir project was delayed to May after staff noted 'unexpected things' in a newly released draft water right.

Santa Clara Valley Water District (Valley Water) is reevaluating its customer assistance framework after a newly completed consultant study revealed hidden pockets of unaffordable water service across its jurisdiction. During a March 23, 2026, Water Supply and Demand Management Committee meeting, consultants from Raftelis and Hazen and Sawyer presented the final results of a three-part study analyzing water use projections, demand elasticity, and customer affordability. While macro-level data indicated that the service area generally meets standard affordability thresholds, granular census-tract data painted a different picture. According to Kevin Kostek of Raftelis, the Affordability Ratio at the 20th percentile (AR-20) averages 2.5% across the district—well below the 5% threshold. However, an analysis of intra-retailer data identified 120 census tracts where the cost of essential water service exceeds 5% of discretionary household income. Consultants estimate this impacts approximately 37,000 households, or nearly 6% of the service area. Additionally, the study found that the hours a minimum-wage earner must work to pay for typical water service slightly exceeds the industry threshold, sitting at 4.6 hours compared to the recommended 4 hours. The elasticity portion of the study, presented by a representative from Hazen, confirmed that regional water demand is relatively inelastic. Historical data indicates an elasticity range of -0.18 to -0.21, meaning a 10% increase in water prices typically yields only a 2% reduction in demand. In response to the affordability findings, committee members zeroed in on the district's existing ratepayer assistance efforts. Valley Water currently budgets $1 million annually from ad valorem property taxes to fund an assistance program administered by Sacred Heart Community Service. While a staff member noted the program has cumulatively assisted over 5,000 households, committee members expressed a desire to scale the impact and improve performance monitoring. Director Richard Santos and Vice Chairperson Shiloh Ballard advocated for closer coordination with the municipal and investor-owned retail water agencies that purchase wholesale water from the district. Retailer assistance programs currently vary widely, with some offering direct discounts, some relying solely on tiered rates, and others offering no programs at all. Rather than advancing the study directly to the full Board of Directors as originally planned, the committee directed staff to first present the findings to the Water Commission on April 8. Chief Financial Officer Darin Taylor suggested staff use the time to inventory existing retailer-level assistance programs and develop a coordinated package of next steps before bringing the issue back to the committee. Separately, a staff member noted that a planned April committee discussion on the Sites Reservoir project has been delayed to May, as a newly released draft water right for the project contained "unexpected things" requiring additional evaluation.