Valley Water greenlights $10.3 billion CIP and $600 million bond issuance

Valley Water greenlights $10.3 billion CIP and $600 million bond issuanceThe Santa Clara Valley Water District has formally adopted its FY 2027-2031 Capital Improvement Program, featuring 73 projects, while simultaneously authorizing major debt issuances to support the district's water utility enterprise.

The $10.3 billion CIP spans 73 capital projects from FY 2027 to 2031 and is projected to generate over 11,000 local jobs.

The board authorized $600 million in water system refunding bonds and revenue notes, unlocking $100 million in new funding for the water utility.

The district has secured $119.6 million in external funding and capital reimbursements for the CIP, with an additional $49.1 million pending.

Directors also approved a 2.5% increase to the Safe Clean Water Special Tax, expected to generate $56.6 million next fiscal year.

The Santa Clara Valley Water District (Valley Water) Board of Directors unanimously approved its $10.3 billion Five-Year Capital Improvement Program (CIP) for fiscal years 2027-2031 during its May 12, 2026, meeting. The comprehensive investment plan will fund 73 capital projects across the district's service area. To support the district's infrastructure goals, the board concurrently authorized the issuance of up to $600 million in water system refunding bonds and revenue notes. According to Treasury and Debt Manager Steve Peters, the financing plan includes refinancing $327 million of short-term debt into long-term debt to provide $100 million in new funding for the water utility. It also refinances $50 million of outstanding bonds, which is estimated to generate $8.6 million in total savings. The $10.3 billion CIP incorporates updated construction cost escalation factors and market rate projections. Staff noted that the district has secured $119.6 million in external funding and capital reimbursements to support the five-year plan. The district is also pursuing two pending grant applications that could provide an additional $49.1 million. Alongside the capital program, the board approved several rate and tax adjustments for the upcoming 2026-2027 fiscal year. This included adopting resolutions to increase charges for groundwater production, raw surface water, treated water, and recycled water after receiving zero valid protests. Furthermore, the board approved a 2.5 percent increase to the Safe Clean Water and Natural Flood Protection Special Tax rate, aligning with inflation data from the Bureau of Labor Statistics and projected program costs. The special tax is estimated to generate $56.6 million in revenue for the next fiscal year. Looking ahead to future operational costs, staff addressed the emerging threat of golden mussels within the system. While eradication is not feasible, the district has allocated $1 million to $2 million in the upcoming budget for mitigation efforts, including UV treatment, drying, and hot water washing to protect cooling systems, small diameter piping, and treatment plants.