San Jose study session outlines multibillion-dollar overhaul at Regional Wastewater Facility and new nitrogen limits

San Jose officials on Jan. 31 received a briefing on the San Jose–Santa Clara Regional Wastewater Facility’s decade‑long capital improvement program, the facility’s operational capacity and recent regulatory changes that staff say will require additional treatment investment over the next decade.

The study session, led by Laurie Mitchell, acting director of the Environmental Services Department, and a team that included the RWF general manager, deputy directors for capital programs and regulatory affairs, and the city’s real‑estate lead, reviewed completed projects, ongoing work, anticipated costs and new nutrient discharge limits adopted by Bay regulators in July 2024.

The update matters because the RWF treats sewage for San Jose, Santa Clara and multiple tributary districts, discharging treated effluent to the Lower South San Francisco Bay; regulators have imposed regionwide reductions in nitrogen loads after large algal blooms in 2022 and 2023 prompted concern about fish kills and toxins. Those limits will drive additional capital projects and financing decisions affecting ratepayers and regional planning.

Staff said the city has delivered a large portion of the plant master plan adopted in 2013 and highlighted several major completed projects, including a new headworks facility and a cogeneration plant. "The capital improvement program is a multi billion, multi decade long program intended to renovate and modernize the regional wastewater facility," Mariana, the plant general manager, told the council. The cogeneration project, completed using progressive design‑build, was described in the presentation as an award‑winning, $115,000,000 project that produces roughly 80% of the plant’s energy needs and provides resilience during external power losses.

City staff described program delivery changes since adoption of the 2013 master plan: the city created a program management office, repackaged about 100 identified master‑plan projects into roughly 33 larger projects, and transitioned most delivery roles from consultants to in‑house staff. Capelle Burma, deputy director for CIP, said the program now performs most project management internally.

Staff also listed constraints they said were not fully captured in the 2013 plan: the plant operates 24/7 and cannot be shut down, aging underground infrastructure that reveals hazardous materials (staff said crews found PCBs and lead in older construction), supply‑chain and labor competition with other regional capital programs, and faster‑than‑expected construction cost escalation. "Imagine that you own and drive a vintage car...how do you change that tire and start to improve and rebuild that engine while you are still driving down the freeway?" Burma said, describing the challenge of renovating an active treatment plant.

On regulation, Eric Dunleavy, deputy director for regulatory affairs and purified water, summarized the regional nutrient permitting changes under the Clean Water Act and the National Pollutant Discharge Elimination System (NPDES). He said regulators reissued a group nutrients permit in July 2024 that requires aggregate reductions in nitrogen loads based on 2022 discharge levels and sets interim and final limits on facilities across the Bay. The change came after a toxic algal red tide in summer 2022 that killed hundreds of thousands of fish and increased pressure for stringent nitrogen controls.

Dunleavy said the reissued permit requires that regional wastewater plants implement load reductions over the next 10 years and that the scale of upgrades for the Bay is large — staff cited regional cost estimates in the billions. He also said the RWF has already implemented significant nitrogen‑reducing upgrades and currently reduces a larger share of incoming nitrogen than many other plants in the region, which staff said improved the plant’s negotiating position with regulators. "These permits are reissued and updated every five years to reflect changes in operations and changes in regulatory requirements," Dunleavy said.

To meet the newly required reductions, staff said the most likely path for the RWF is additional treatment‑process upgrades — chiefly in the biological aeration and secondary treatment systems that remove nitrogen — rather than land‑based or nature‑based approaches, which staff said are generally less feasible at the scale of the RWF. Mariana said staff expect to have refined planning‑level cost and scope numbers by May and will return to council with those estimates.

On funding, staff summarized what they described as the program’s current financing: an earlier revenue note program and a later $300 million green bond issuance used to refinance short‑term borrowing. Staff said they had pursued State Revolving Fund (SRF) options years ago but were not prioritized at that time; they said state and federal participation will be important to keep rates affordable as nutrient work proceeds.

The presentation also covered land‑use and partner projects on RWF buffer lands. Kevin Ice, director of real estate (assistant to the city manager), outlined a planned solicitation to select a master developer for about 159 acres of economic‑development lands south of the main plant, restricted to industrial uses compatible with plant operations. The presentation described Microsoft’s need for utility easements and LS Power’s planned South Bay transmission line; staff said both entities will negotiate easements and that Microsoft’s planned work could fund local roadway and utility improvements. Staff also described a Valley Water‑led advanced water purification demonstration project for direct potable reuse (DPR), intended to treat roughly 0.5 million gallons per day in a pilot to validate technologies and waste‑stream management under recently adopted DPR regulations.

Councilmembers raised operational and community concerns during the question period: emergency preparedness for truck hauling of biosolids (staff said they maintain about three to five days of biosolids storage capacity and contingency plans), site safety and hazardous‑materials handling (staff said they no longer use chlorine gas and use sodium hypochlorite and have safety systems and coordination with the fire department), community outreach on buffer‑land development, and shoreline protection for sea‑level rise (staff said the U.S. Army Corps of Engineers project that would provide a levee is under funded and on a revised timeline).

No formal council motions or votes were taken during the session; staff said technical updates to the plant master plan are expected in draft final form in February with a target to return to council in May with updates on projects, costs and financing strategies.

Looking ahead, staff asked for council advocacy in seeking state and federal funding to help meet nutrient reduction costs and minimize rate impacts. They also described next steps: complete the plant‑master‑plan technical update, refine project phasing and financing strategies, and continue coordination with tributary agencies and regional coalitions on regulatory compliance.

The briefing closed after council questions and a brief public comment period in which TPAC representation and a visiting tributary representative praised operations and urged continued outreach and transparency.

Note: no formal votes, ordinances or appointments were recorded during the study session.