Amid cost increases, Valley Water continues to progress with Anderson Dam and other priority projects

Valley Water is responsible for operating and maintaining large infrastructure that serves Santa Clara County’s water needs. The existing water supply infrastructure was built decades ago. Dams such as Anderson in Morgan Hill were built in the 1930s and 50s. Water treatment plants were built in the 1960s, 70s and 80s.

Valley Water is making investments to repair and replace the existing infrastructure and to prevent outages or disrupted service. Our agency also needs to invest in new projects to ensure a reliable water supply for future generations.

Currently, Valley Water’s largest project is fixing Anderson Dam. This reservoir is an essential source of water storage for Santa Clara County. Built in 1950, Anderson is the largest of Valley Water’s ten reservoirs and could fit the other nine reservoirs inside it.

The scope of the Anderson Dam Seismic Retrofit project has expanded multiple times since Valley Water first began efforts to retrofit the dam in 2012. The projected cost of modernizing Anderson Dam to current safety standards increased during the past year from $1.2 billion to $1.9 billion. Multiple factors are driving the increase, including:

• An increase in the cost of materials such as concrete and steel, which have almost doubled in the past few years
• New features to the design, such as extending the emergency spillway by 800 feet
• Anticipated markups by contractors bidding on the project under current market conditions

In 2020, the Federal Energy Regulatory Commission (FERC) ordered Valley Water to follow certain guidelines related to our work at Anderson Dam. To comply with the FERC order, Valley Water began work on five projects directly related to our efforts at Anderson Dam. The projected cost of these projects is about $423 million. The projects, which must be completed before work on rebuilding Anderson Dam begins, include:

Anderson Dam Tunnel ($253 million): Valley Water continues making steady progress in its effort to construct a new, larger outlet tunnel next to the dam. Through January 10, 2024, contractors excavated more than 1,400 feet of the 1,736-foot-long tunnel, which will provide greater control over reservoir water levels.  

Coyote Creek Flood Management Measures ($117.5 million): Valley Water is building new floodwalls along Coyote Creek to minimize flood risk. These floodwalls are needed to allow the creek to safely carry the increased flow when water is released from the new Anderson Dam tunnel during storms or emergencies.

Coyote Percolation Dam Replacement ($17.7 million): Valley Water is replacing the existing steel flashboard dam at the Coyote Percolation Pond with an inflatable rubber dam. The new dam will also help Coyote Creek safely handle the increased flow from the new Anderson Dam tunnel. The inflatable rubber dam will also help keep water in the Coyote Percolation Dam at levels necessary to recharge the groundwater basin.

Cross Valley Pipeline Extension ($12 million): Valley Water extended an existing pipeline to continue providing water to Coyote Creek and the Coyote Percolation Pond during construction at Anderson Dam.

Coyote Creek Chillers ($23 million): Valley Water is installing three large water-cooling units next to the existing Coyote Pumping Plant to keep Coyote Creek at a suitable temperature for federally threatened Steelhead. The units will chill water imported from outside the county and deliver it to Coyote Creek.

Combined, the Anderson Dam Seismic Retrofit Project and five associated projects are forecast to cost $2.3 billion. Valley Water is pursuing investment partners, including the state and federal government, to help us complete these projects and keep water rates affordable.

On Feb. 14, 2023, Valley Water closed on a master agreement with the U.S. Environmental Protection Agency under the Water Infrastructure Finance and Innovation Act, which will provide low-cost federal loans for up to half of the total project costs of the Anderson Dam Seismic Retrofit Project and Coyote Percolation Dam Replacement Project. Valley Water estimates that these loans will save Valley Water hundreds of millions over the life of the loans.

Valley Water also received $5.8 million in grant funding from the California Dept. of Water Resources to help fund the Cross Valley Pipeline Extension Project.

Rebuilding Anderson Dam is Valley Water’s top priority. This project will help ensure public safety, protect our regional water supply and provide environmental benefits for generations to come.