SAN JOSE – On Aug. 26, 2025, the Valley Water Board of Directors voted to suspend development of the proposed Pacheco Reservoir Expansion Project. The Board also directed Interim CEO Melanie Richardson to prepare a plan to close out the project and withdraw the agency’s application for state funding through the Water Storage Investment Program (WSIP).
The decision followed a staff update that identified several challenges, including rising costs, longer timelines for environmental reviews, uncertainty in regulations, and complex permitting processes.
“After careful consideration and assessment, my fellow board members and I have determined that proceeding with the Pacheco project is not in Valley Water’s best interest at this time,” Valley Water Board Chair Tony Estremera said in a statement. “This was a difficult decision, but one we made with our community’s long-term water affordability in mind.”
Since 2017, the estimated cost of the proposed project has risen sharply, reaching $3.222 billion as reported to the Board on Aug. 26. Design changes also delayed the environmental review process, pushing release of the revised Draft Environmental Impact Report to late 2026 and final approval to late 2027.
Valley Water had secured $484.5 million in conditional WSIP funding in 2017, which later increased to $504 million. A portion of these funds supported planning and environmental permitting efforts that helped inform the Board’s decision. By withdrawing from the WSIP, Valley Water’s action is intended to allow the California Water Commission to redirect the funds to other projects across the state.
Looking ahead, Valley Water will continue evaluating other water supply, water storage and infrastructure projects outlined in its Water Supply Master Plan. Valley Water remains committed to meeting Santa Clara County’s future water supply needs at the lowest cost to ratepayers.
Photo caption: A view of the existing Pacheco Dam.