Anderson Dam: Cost to rebuild key Bay Area dam nearly doubles to $1.2 billion
In the latest setback for a project that has been fraught with delays and cost overruns for more than a decade, the price tag to rebuild Anderson Dam — Santa Clara County’s largest — to improve earthquake safety is nearly doubling, from $648 million to $1.2 billion.
The news comes one year after the Santa Clara Valley Water District, the government agency that owns the dam near Morgan Hill, announced that another of its large construction plans, a proposal to build a huge new reservoir near Pacheco Pass, also had doubled in price, from $1.3 billion to $2.5 billion.
“It’s terrible news,” said Tony Estremera, chairman of the district, on Thursday of the Anderson cost increases. “It’s just gotten worse and worse.”
Water rate increases will pay for the additional costs, Estremera said. The board of the district, which provides drinking water and flood control to 2 million people in Santa Clara County, will hold a special meeting on Monday in San Jose to discuss the issue.
But pulling the plug on Anderson Dam’s rebuilding isn’t an option, Estremera said.
The 240-foot high earthen dam, built in 1950 near Highway 101 between Morgan Hill and San Jose, is a key part of Silicon Valley’s water system, and the tallest dam in Santa Clara County. When its reservoir is full, Anderson holds 89,278 acre feet of water — more than the water district’s other nine reservoirs combined.
The district drained it a year ago under orders from federal dam safety regulators. Crews broke ground in July on the first part of the repair job, building a huge new outlet tunnel, which is scheduled to be completed in 2024. The entire job to rebuild the dam and spillway won’t be finished until 2030.
“There’s no question we have to do it,” Estremera said. “This is a priority. It’s a safety project.”
The staff of the district said Thursday that the cost overruns are a result of higher-than-expected labor and materials costs, and stringent requirements to enhance fish and wildlife by federal and state agencies that must issue permits for the massive project.
“It’s unfortunate, but it’s necessary,” said Chris Hakes, the district’s deputy operating officer for dam safety. “It’s the type of thing where if we would have constructed this in 1950 all the regulators wouldn’t have been involved and it would go quicker, but it would be more environmentally costly in terms of damage.”
Critics said the district too often has costly overruns and is not a good steward of public money.
“This is the standard modus operandi for these folks,” said Mark Hinkle, president of the Silicon Valley Taxpayers Association. “There’s always more money that they need. It’s never enough.”
Hinkle said an outside auditor or investigator, like the Santa Clara County Civil Grand Jury, should look into the repeated delays and cost overruns on the Anderson Dam project.
When the district built the dam in 1950, scientists thought the nearby Calaveras Fault was inactive. And water district officials believed that the dam was anchored in bedrock.
But an engineering firm performing tests required by federal regulators in December 2008 found that the dam’s foundation contains sand and gravel, which could shift in a major quake. Specifically, a 6.6 magnitude quake on the Calaveras Fault directly at Anderson Reservoir, or a 7.2 quake centered one mile away, could cause the huge earthen dam to slump and fail.
Although unlikely, a complete failure of Anderson Dam when the reservoir is full could send a 35-foot wall of water into downtown Morgan Hill within 14 minutes, engineers concluded. The waters would be 8-feet deep in San Jose within three hours, potentially killing thousands of people.
At first, in 2011, the district planned to strengthen the existing dam. Then, district officials said the cost would be $193 million, with construction beginning in 2017 and taking three years. But new trace faults found in the area required a new dam to be constructed, doubling the price by 2016 to $400 million.
Now the price is three times higher.
“The money we spend now is going to be a drop in the bucket compared to what we would have spent if we fixed it later,” Hakes said. “Or if there was an emergency. If something happened to the dam, it would be catastrophic to Silicon Valley.”
Frustrated at the slow pace and alarmed by the near-failure of Oroville Dam in Butte County during major storms in 2017, the Federal Energy Regulatory Commission in February 2020 issued a dramatic order requiring the district to drain Anderson and repair it.
Just before that, the district had drawn up a $563 million plan to rebuild the dam, a new outlet tunnel and new spillway over five years, between 2022 and 2027. But Hakes noted that when federal regulators issued their order to drain Anderson, they also required the district to build the outlet tunnel first to ensure the reservoir could be drained quickly in an extremely wet year.
Breaking the project into two segments — the tunnel and the dam rebuilding afterward — increased the timeline from 5 to 10 years, he said, which has further raised the price tag.
To pay the bill, Estremera said the district’s board may have to delay other projects, including flood control work and the proposed Pacheco Dam.
“We’re trying our best,” he said. “We’ll have to look at other projects to see how we can balance it out. We’re hoping we can get some help from the feds or the state, but you never know how things are going to go.”
