Valley Water advances $404m treatment plant overhaul amid calls for aggressive grant-hunting

Valley Water advances $404m treatment plant overhaul amid calls for aggressive grant-huntingThe California utility is finalizing a 30-year master plan for its treatment facilities, starting with a massive rehabilitation of the Santa Teresa plant. However, looming rate hikes have prompted board members to demand targeted federal and state grant strategies.

The first 10 years of the Water Treatment Plant Master Plan require an estimated $404 million in uninflated capital to rehabilitate three facilities.

The $242.67 million Santa Teresa Rehabilitation Project is already in the preliminary CIP, targeting aging ozone generators, valves, and piping.

Committee members directed staff to develop a targeted financing and grant-hunting strategy to ease the burden on ratepayers.

The master plan's programmatic environmental impact report is expected to be finalized in late 2026.

Santa Clara Valley Water District (Valley Water) is finalizing the planning phase of its 30-year Water Treatment Plant Master Plan, outlining a $404 million uninflated capital investment over the next decade to rehabilitate its aging facilities. During a March 16, 2026, Capital Improvement Program Committee meeting, staff presented the near-term roadmap for the Santa Teresa, Penitencia, and Rinconada water treatment plants. The master plan identified 590 unique needs over the first ten years, which have been consolidated into three major capital project packages. The first to advance is the $242.67 million Santa Teresa Rehabilitation Project, which has already been integrated into the district's preliminary capital improvement program (CIP). The eight-year project will replace aging assets dating back to the plant's construction in 1990. Key upgrades include replacing valves and piping, improving carbon systems, and renewing ozone generation equipment. Staff noted that standardizing ozone generators across both the Santa Teresa and Penitencia plants will simplify maintenance and parts procurement. While the committee supported the infrastructure upgrades, the $404 million price tag sparked concerns over affordability. Director Jim Beall pointed to recent reports projecting steep tariff increases, urging staff to pursue an "aggressive grant-hunting" strategy to shield ratepayers. "I would like to see a financing strategy for the water treatment facilities," Beall said. "We have to be a little more aggressive these days with grants that we try to get to stop the rates from going up too high." Valley Water staff noted that while major capital programs are typically financed through the capital markets and supported by water rates, the district will actively explore specific project funding opportunities, including federal WIFIA loans and cybersecurity-focused grants for its related SCADA master plan. The district expects to finalize the master plan's planning study report and implementation plan in the coming months, with a final programmatic environmental impact report slated for autumn 2026. The Penitencia and Rinconada rehabilitation packages are expected to be formally introduced to the CIP committee within the next one to two years.