Audit: Recycled Water Program Needs More Financial Oversight

Drought, climate change and a growing population have heightened demand for reclaimed water in Silicon Valley. Yet more than half the region’s water supply still comes from the Sierra Nevada.

The South Bay Water Recycling program has tried to change that, evolving from a solely diversionary effort to a fundamental part of the regional water supply. Growing demand may soon allow it to cover costs through water sales instead of relying on sewer ratepayers for funding.

Before making that shift, the San Jose Regional Wastewater Facility, which runs South Bay Water Recycling, needs to get a better handle on its accounting. That’s according to a new audit up for review at Tuesday’s City Council meeting.

For the past 15 years, San Jose has recycled water through its regional wastewater facility, which provides non-drinkable water by way of 143 miles of purple pipes to the cities of Santa Clara, Milpitas, the San Jose Water Company and the San Jose Municipal Water System.

Every day, the facility pipes out about 10 million gallons of reclaimed water to 800 irrigation and industrial customers, including San Jose City Hall, Great America and Levi’s Stadium. The water courses through power plants, cooling towers, toilets and sprinklers.

Water treated in the Silicon Valley Advanced Water Purification Center is technically drinkable, but still goes toward non-potable uses, getting blended with recycled water to make it more pure.

This past fiscal year—for the first time—the facility earned more in recycled water revenue than it spent on its reclamation. And it looks like it will continue to break even for the foreseeable future, according to the report by the city’s lead auditor, Sharon Erickson.

To make more informed business decisions about water reuse, Erickson said, the city will have to come up with a more efficient way to track expenses for South Bay Water Recycling. Accounting separately for the South Bay would make it easier to get timely, accurate information, she added.

“Because costs are intermingled with other Wastewater Facility expenses and are not clearly identified, South Bay staff has to sift through myriad financial reports, and converse with management to understand South Bay’s estimated costs—all in a time-consuming and confusing manner, susceptible to minor errors, due to manual entry and undocumented changes to cost accounting,” Erickson wrote. “South Bay’s primary program analyst spends at least eight hours per month (about 5 percent of their time) creating the spreadsheets that track South Bay costs.”

With separate funds, she added, the city could cut the time spent crunching those numbers from hours to minutes

More from the San Jose City Council agenda for April 26, 2016:

  • The city will consider plunking down $1.2 million on a .4-acre lot to build affordable housing. The property on Gallup and Mesa drives could house up to 40 below-market-rate units.
  • To meet the goals laid out in its general plan, San Jose needs to get people to walk, bike, carpool or take public transit. The city plans to spend part of a $1.5 million grant on a consultant to survey the public and drum up a marketing campaign that promotes pedestrian, public and bike travel.
  • The California High Speed Rail Authority recently gave San Jose a $600,000 grant, which required the city to put up $200,000 in matching funds. The grant will pay for a project manager to come up with a financing strategy to develop the downtown area by Diridon Station.

WHAT: City Council meets
WHEN: 1:30pm Tuesday
WHERE: City Hall, 200 E. Santa Clara St., San Jose
INFO: City Clerk, 408.535.1260

Jennifer Wadsworth is the former news editor for San Jose Inside and Metro Silicon Valley. Follow her on Twitter at @jennwadsworth.


  1. Holy smoke something a government agency does that actually makes money?
    Clone it and fire the accountants.

  2. Wrongheaded, Empty Gun. Accountants are how you know that you are making money.
    And government is specifically for things that cannot, or should not be run profitably, although we might disagree on the “should not” part.

  3. Retrosurf’
    When they finish hiring all the accountants, supervisors and lawyers and put them in a building to watch over these people I guarantee there won’t be any profit left!

  4. Jenn W;

    Your article is substandard beyond belief.

    There is No-one in city government that can comment more analytically correct on SBWR than me. I have a level of detail that even the Honorable City Auditor does not currently have. Do a Public Record analysis on SBWR.

    Investigate SBWR’s debt structure for starters; then perform anaytical analysis on FUNDS 512 513 and related WPCP FUNDS if you can keep pace with this storm.

    SBWR is not “breaking even.” SBWR has been losing millions since its inception in the mid 1990’s. SBWR was never needed and is still not needed as it was and is put forward to the State and to the rate-payers. San Jose government officials knew back in the late 1990’s the threat to; the pickleweed, the mouse and the bird was non-sense; but-they would not ask the State to rescind the order and clear the NPDES permit requirement. SJ fruadulently, kept this loser project alive; expanded it and now transformed it into a potable water utility; violating the Sewer Service & Use Charge (the Fundiing source) which is governed by Porposition 218.

    Make no-mistake; millions upon millions of rate-payer dollars have been wasted on the SBWR project. For example; one little-tidbit for the readership; approximately $11 million dollars was transfered from the WPCP Capital FUND (FUND 512) to participate in the Advanced Water Purification Treatment Center with the Water District in complete violation of the Sewer Service & Use Charge. The city is now scrambling to find an alternate long-term funding source. Reparations to FUNDS 512 513 are just one “lawsuit” away.

    The Tributary Agencies are in open warfare with the City of San Jose. This “war” is going to last for sveral years to come and the rate-payers are going to pay for it. San Jose is the guilty party in this avoidable mess. SBWR costs will be part of their claims against the city as the Tributary Agency rate-payers are being squeezed and squeezed and squeezed by the City of San Jose over rate increases for SBWR and the WPCP CIP.

    If you think SBWR is a nightmare-do an analysis on the Capital Improvement Program (CIP) for the rebuild of the San Jose / Santa Clara Water Pollution Control Plant (WPCP). I am personally responsible for stopping tens of millions of contract expenditures entered into by San Jose government officials. Again, perform a Public Records search.You will find (even with a cursory, uneducated as to the issues at bar look) the WPCP CIP is powers of exponents; much, much, much worse.

    And lastly, ask yourself,”Is WPCP going to fail?” Let’s hope not.

    David S. Wall

  5. Thanks David,
    I feel vindicated and over taxed!
    Just out of curiousity can this water be used in the perk ponds to recharge the aquifers in the area?

    • Yes, with certain environmental parameters. There have been studies already done for this purpose as well as for the creation of large scale resovoirs. Direct groundwater recharge is not reccomended.

      By the way, and meaning NO disrespect-you have no idea how much we all have been over taxed from this piss-poor boondoggle!

      David S. Wall

      • A bit over $8000 a year a in my case! But I have had some boating and fishing interest that have been crushed by not having water in the ponds this last 2 years.
        Selfish me!

    • Have my own recycling system, it’s powered by recycled solar cells and it waters my Zeroscap Astro Turf lawn.
      Now if I could just keep the neighborhood dogs off it.

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