Council approves major Silicon Valley Power upgrades, contract award and initiates eminent domain for two easements

The Santa Clara City Council took multiple related actions Tuesday on large electric system projects managed by Silicon Valley Power (SVP): it awarded a construction contract for two receiving-station rebuilds and adopted resolutions of necessity that authorize staff to commence eminent-domain proceedings for easements needed by the 115 kV transmission-line project.

Award of construction contract: SVP staff recommended awarding a single public-works contract covering the Keifer Receiving Station (KRS) and Scott Receiving Station (SRS) rebuilds to DMZ Builders. Acting SVP director Nico Prokos and electric division manager Ally Jackman explained that the projects replace end-of-life 60 kV and 115 kV switchyards, increase substation capacity and relocate transmission-line connections to support a target system capacity of about 1,300 megawatts.

Two bidders responded to the February solicitation. The apparent low bidder, Neutron LLC, initially submitted a bid that appeared to be missing a digit and later withdrew its bid after identifying an error. The second bidder, DMZ Builders, submitted a responsive bid of $117,688,674, which Jackman said was about 3 percent below the engineer’s estimate. Staff recommended awarding the contract to DMZ and requested a construction contingency limit up to 15% ($17,653,301) for a total not-to-exceed project construction amount of $135,341,975. SVP also requested a $15 million FY 2025–26 budget amendment to cover program and construction-management costs; staff said the electric utility would use a combination of other revenue and load-development fee proceeds and ultimately finance large equipment and construction with future bond proceeds.

Councilmember Chahal recused himself from the contract vote because he said he owned property within the project jurisdiction. The council later approved the DMZ Builders contract on a 6–0 vote.

Easements and resolutions of necessity: SVP staff also presented the route and environmental background for a roughly 2.24-mile overhead 115 kV line from the northern receiving station to Keifer Receiving Station. The project requires easements along multiple parcels in the southern segment of the route. SVP said it had negotiated with property owners but reached an impasse on two parcels and therefore requested council adoption of resolutions of necessity under California eminent-domain processes.

For 3800 Bassett Street, staff said they had negotiated for several months, provided an appraisal and made an offer. SVP described recent communications including a late potential settlement offer staff said it was still evaluating but asked council to proceed in case voluntary agreement could not be reached. The council adopted the resolution of necessity for 3800 Bassett Street after the public hearing by a recorded vote of 6–1.

For 891 Laurelwood Road, staff reported similar negotiations and a rejected offer; the council also adopted the resolution of necessity for that parcel after public hearing, again by a 6–1 vote.

Actions taken: council authorized award of the KRS/SRS contract to DMZ Builders in the amount of $117,688,674 with a construction contingency of up to 15 percent; approved the $15 million FY 2025–26 budget amendment for project costs; and adopted two resolutions of necessity to acquire easements at 3800 Bassett Street and 891 Laurelwood Road. Councilmembers said staff would continue to negotiate voluntary purchases while the city preserves the option to commence eminent-domain litigation if necessary.

Votes on the two eminent-domain resolutions required a five-vote threshold and passed with six votes in favor and one opposed in each case; the construction contract was approved 6–0 with Councilmember Chahal recused.