After years of planning, engineering, regulatory reviews and preliminary construction work, one of California’s most significant water infrastructure projects is finally ready to move forward.
The Santa Clara Valley Water District, known as Valley Water, has awarded a major construction contract for the $2.8-billion Anderson Dam Seismic Retrofit ProjectNew Anderson Dam – Santa Clara Valley Water DistrictStatusUnder ConstructionValue$1.2BLocationUS-101, Morgan Hill CASectorPublic – CountyTypeWater/Sewer · New ConstructionData as of August 14, 2026View Project Page →, clearing the way for work to begin in early 2027.
The milestone follows notice recently that key federal regulators have approved the project and marks the next chapter in restoring the region’s largest reservoir to full operation.
Located in eastern Santa Clara County, Anderson Reservoir has been at the centre of seismic safety concerns for years. Built in 1950, it is the biggest of Valley Water’s 10 reservoirs and is so large the agency says all nine of its other reservoirs could fit inside it.
Concerns about the dam’s performance during a major earthquake prompted restrictions on reservoir storage levels, leaving the facility operating at only a fraction of its capacity while solutions were developed.
Now, with regulatory approvals in place and supporting infrastructure nearing completion, construction crews are preparing to begin a comprehensive overhaul of the dam.
Valley Water’s board of directors formally awarded a $1.88-billion construction contract to the Flatiron Dragados Sukut ADSRP Joint Venture, which will carry out the massive rebuilding effort.
Construction is expected to take about seven years.
“Rebuilding Anderson Dam is our top priority,” Valley Water board chair Tony Estremera said in a statement. “This milestone reflects years of hard work, collaboration and perseverance by our staff, contractors, regulators and community partners.”
The upcoming work, he noted, “marks the next phase of one of Santa Clara County’s most important water infrastructure projects that will benefit our community for generations to come.”
The project received a significant boost earlier this year when federal regulators gave it the green light.
In spring 2026, the Federal Energy Regulatory Commission approved the retrofit project and authorized decommissioning of the hydroelectric generating facility formerly located at the site. The hydroelectric operation had served the dam for roughly three decades but has been inactive since 2018.
A second major regulatory milestone followed in June when the U.S. Army Corps of Engineers issued a critical water resources permit. Together, the federal approvals kept the project on schedule and cleared the way for Valley Water to advance toward construction.
Under the approved plan, major portions of the existing dam and spillway will be rebuilt to meet modern seismic and safety standards.
The work will involve reconstructing portions of the dam embankment and spillway, installing new outlet pipes and carrying out a series of major safety upgrades designed to address earthquake risks and improve long-term operations.
Valley Water will rebuild the dam to meet modern safety standards and implement environmental measures.
When completed, the retrofitted facility will allow Anderson Reservoir to return to normal operating levels.
But the benefits extend well beyond improving dam safety. Valley Water says the rebuilt facility will help enhance water supply reliability, support groundwater recharge, provide greater flood protection and restore recreational opportunities at the reservoir and along the nearby Coyote Creek corridor.
For the two million residents served by Valley Water’s integrated water management system, the improvements are expected to play an important role in securing future water supplies while protecting communities downstream.
Before the main retrofit can begin, however, a series of supporting projects required by regulators will have to be completed. They are necessary to safely manage water flows during construction.
Most of the preparatory work has already been finished.
The centerpiece is the Anderson Dam Tunnel Project, which is now in its final stages and expected to be completed later this year. The tunnel replaces the dam’s existing four-foot-diameter outlet pipe with a much larger 13-foot-diameter outlet.
The upgraded tunnel is considered essential to the success of the larger dam reconstruction effort. It will allow Valley Water to release larger volumes of water into Coyote Creek while the reservoir remains empty during construction, and it will provide greater flexibility for managing reservoir levels during future storms and emergency situations.
Valley Water expects the new tunnel to be functional before the start of the coming winter season and available for use if significant rain events occur.
The tunnel is one of five supporting projects that Valley Water launched to prepare for the seismic retrofit. Agency officials say all five projects are on track to be completed before construction on the new dam begins.
The projects will enable Valley Water to safely maintain an empty reservoir throughout the reconstruction period while minimizing impacts on surrounding waterways and communities.
The dam rebuild has required a substantial financial commitment. Since 2023, Valley Water has secured more than $114 million in state and federal grants for critical water infrastructure projects.
In addition to the 10 dams and surface water reservoirs, Valley Water manages three water treatment plants, an advanced recycled water purification centre, water quality laboratory, nearly 280 acres of groundwater recharge ponds and 350 miles of waterways.
