If things go as planned, the largely dormant site on the eastern edge of San Antonio Road will eventually be home to a transitional housing complex for unhoused individuals, as well as two wastewater treatment plants.

One would be a salt-removal plant that would make local wastewater more suitable for redwoods and other sensitive trees and vegetation, allowing Palo Alto and Mountain View to use more recycled water for irrigation. The other one would be paid for and constructed by Valley Water and would purify wastewater to drinking standards.

But as the partner agencies move ahead with the planned facilities, they are confronting an obstacle: rapidly rising costs that are testing Palo Alto's commitment to the projects.

During a Monday discussion, several City Council members said they were stunned by the changing price tag for the salt-removal plant. Under a deal that Palo Alto, Mountain View and Valley Water signed in December 2019, the water district is expected to pay $16 million for a plant that was estimated at that time to cost about $20 million. The remainder would be split between Mountain View, which would pay 75%, and Palo Alto, which would foot the bill for the remaining 25%.

Today, the estimated costs for the salt-removal plant have risen to about $53 million, and city officials are hoping that the deal can be changed so that the water agency could contribute additional funds. At the same time, global concerns about sea-level rise are prompting fresh questions about the proposed designs of the Baylands facilities.

Council member Eric Filseth was one of several council members who marveled on Monday at the magnitude of the cost increase.

"How were we so far off five years ago when we came up with $20 million on those things? That's a lot of cost escalation," Filseth said.

Public Works staff noted that the initial cost estimate was intended to gauge the feasibility of the plant and did not consider numerous factors specific to the site. These include the need to drill down into the Bay mud to construct the pad for the facility and to raise all electric equipment by three feet, said Karin North, assistant director of Public Works. The initial cost, she said, was based on a similar plant that was built in San Diego.

City staff has identified other sources that the cities can tap into for the salt-removal facility. The city also is hoping to use $18.94 million from the State Water Project Tax program, which allows taxes paid by Palo Alto and Mountain View property owners to be spent on a broad range of water conservation and treatment projects. According to Public Works staff, about $10 million would come from Palo Alto taxpayers and $8.4 million would come from Mountain View.

Not everyone is thrilled about that allocation. Council member Greg Tanaka argued that any tax funds from the state program should be proportionately split between the two cities. If Mountain View uses 75% of the recycled water and Palo Alto uses 25%, as is proposed under the current deal, the tax funds should reflect that.

"Why should we pay more and get less of the benefit?" Tanaka asked.

The rising threat of sea-level rise is another factor that could complicate the construction of the new plants. Recent reports that the colossal Thwaites Glacier (commonly known as "Doomsday Glacier") in Antarctica is rapidly melting is prompting concerns among climate scientists about shifting coastlines. Mayor Pat Burt brought up the Doomsday Glacier and suggested that the plants be designed in such a way that they could be modified to adapt to rising sea levels.

"I want to make sure we're not locking ourselves into plants that constrain ourselves from adapting to new higher standards," Burt said.

Council member Greer Stone agreed and wondered if another site can be considered for the plant. Simply meeting the state and federal standards for sea-level rise may not be sufficient. Things are changing quickly, he said.

"It's as if we're on the deck of the Titanic and they're saying, 'Get into lifeboats,' and we're saying, 'Well, the ship is supposed to be unsinkable,' even though it's sinking all around us," Stone said.

Stone also suggested that the city discuss with Valley Water the prospect of having the water district increase its contributions. Planning Director Brad Eggleston said these discussions have already been happening.

"This has been raised as a big concern, that the estimate increased so much," Eggleston said.

Despite the challenges, officials from both Valley Water and Mountain View suggested on Monday that they remain fully committed to the projects, which are intended to boost the region's resiliency against the drought. The salt-removal plant would allow the city to shift away from potable water for irrigation. And the advanced purification plant would use a technique known as reverse osmosis to turn wastewater into drinking water.

Valley Water, which is charged with building the purification plant, would then provide the option to Palo Alto and Mountain View to buy that water. The water district is preparing to put out a request for proposals for design and construction of the plant and to perform an environmental impact report. Among the factors that the district will study in the report is the environmental impact of disposing waste byproducts from the treated water into the bay.

While the cities and the water district are moving ahead with plans for the new facilities, some of the details in the 2019 agreement may be revised given the recent cost escalations. Gary Kremen, who serves on the Valley Water board of directors, suggested Monday that the district may be willing to raise its share of the costs for the salt-removal plant, though this would require more support from other board members.

"Realistically, we understand that the salt removal project has escalated beyond the $20 million that we said," Kremen told the council. "I'm working hard to get three other votes to come up with some additional cash. I'm going to see what we can do on that."

Mountain View Council member Pat Showalter also highlighted the benefits of the partnership, which would allow her city to use more recycled water to serve more customers in the North Bayshore area, where Google and Intuit are based.

"We want to have better-quality water," Showalter told the Palo Alto council. "And combining water from advanced recycled water treatment plants that we're discussing with the existing tertiary supply will allow us to have just a very high caliber product and that is really important for all of us to be able to really market this water."