Price tag drops on massive reservoir expansion near Bay Area

A $1 billion plan to raise the height of the dam at one of California’s largest reservoirs, San Luis Reservoir between Gilroy and Los Banos, to provide more water to Santa Clara County and parts of the Central Valley during droughts, has received a major and unusual boost: The cost has gone down.

In an era when large public works projects, from high-speed rail to new reservoirs, routinely see big jumps in price, the cost to expand the reservoir, originally built in the 1960s, has fallen by about 20% — from $1.06 billion to $847 million.

The reason: In recent months, Caltrans endorsed a cheaper alternative for how a section of Highway 152, a busy road adjacent to the reservoir, will be raised and rebuilt to accommodate the higher water level.

“This is incredibly favorable news,” said Scott Petersen, a spokesman for the San Luis and Delta Mendota Water Authority, which is overseeing the project. “This means the water is going to be more affordable.”

Already the fifth-largest reservoir in California, San Luis would expand by 130,000 acre feet enough water for 650,000 people a year under the project, which calls for raising its 382-foot earthen dam by 10 feet to store more water during wet years. Construction is expected to start in 2028 or 2029.

Santa Clara County residents would be the main beneficiaries.

Under the original plan, the Santa Clara Valley Water District, a San Jose agency that provides water to 2 million residents in Santa Clara County, would contribute $511 million of the $1.06 billion cost of the project. It would receive the largest share of the new water, 63,560 acre-feet, or the equivalent of building three new reservoirs the size of its Lexington Reservoir in Los Gatos. Those costs are expected to drop to $414 million now that the overall price tag has fallen.

The federal Bureau of Reclamation, which serves farmers in the Central Valley, would get 39,000 acre-feet of the new water. And five other agencies would split the remaining 27,440 acre-feet, each paying proportionally for their share: Westlands Water District in Fresno, the Byron-Bethany Water District in Contra Costa County, the city of Tracy, the San Benito County Water District and the Del Puerto Water District in Patterson.

Scientists and water planners say climate change has shifted California’s water picture. Because of hotter temperatures, droughts are becoming more severe. And in wet years, atmospheric river storms often bring more frequent drenching conditions because warmer temperatures cause more moisture to evaporate into storms. Warmer temperatures also melt the Sierra snowpack earlier in the year.

“We need more storage to be able to capture more water in wet years for dry years,” said Cindy Kao, imported water manager for the Santa Clara Valley Water District. “This storage would be extremely helpful to offset our projected shortages during droughts.”

Unlike many other large water projects, this one has been surprisingly uncontroversial. Neighboring landowners have not sued. Gov. Gavin Newsom’s administration supports it. And the Trump administration supports it.

Environmental groups that have fought new dams on rivers for decades say they generally do not oppose the project, because the dam — twice the length of the Golden Gate Bridge — is already in place and does not block a free-flowing river.

San Luis is the largest off-stream reservoir in the United States. Construction began when President John F. Kennedy pushed a dynamite plunger there in 1962 at a ceremony with former Gov. Pat Brown. Today, water from the massive lake, fed by the Sacramento-San Joaquin Delta, irrigates farms across the Central Valley and provides drinking water for Silicon Valley, including San Jose.

The expansion plan ran into a political controversy after Caltrans at first told project planners that the 1-mile section of Highway 152 closest to the water’s edge not only would need to be raised by 11 feet, but that the slope under the roadbed would need to be significantly wider and less steep than it is now to comply with modern Caltrans rules.

That would involve moving 1.1 million cubic yards of dirt — enough to fill more than 100,000 dump trucks — in a project requiring 16 barges and about 130 workers over two years.

The cost of the road project was estimated to be $490 million — as much as raising the dam. A group of 15 state lawmakers, led by State Sen. Dave Cortese, D-San Jose, wrote to the California Transportation Commission asking for state highway funding to help pay costs. Much of the work had nothing to do with the rising reservoir level, they said, and was a highway seismic upgrade project that state road funds, not water users, should pay for.

Cortese had multiple conversations with top Caltrans leaders last year to emphasize the point.

“Highway 152 is such a massive corridor between the Bay Area and the Central Valley — the idea of shifting the burden of seismic safety improvements on that road to water ratepayers in Santa Clara County or Los Banos didn’t seem right,” Cortese said. “Why should they have their water bills go up when people from all over the state use that thoroughfare?”

Caltrans officials did not provide answers Friday to questions about the project.

In October, however, Caltrans issued a letter to the San Luis Delta Mendota Water Authority saying it had done its own updated engineering estimate and that a wider, less-sloped embankment below the road was not needed to conform to state seismic standards after all.

In December, the U.S. Bureau of Reclamation agreed.

“Caltrans talked to their engineers,” said Sen. Anna Caballero, D-Fresno, who joined Cortese in pushing for the lower-cost option. “They took a look at the seismic issues and said, ‘We don’t think it’s going to cost that much money because we don’t think the seismic issues are that significant.’ I’m pleased. This is a critical project. If we can store more water in wet years, that’s money in the bank.”