A project to replace one of the Bay Area's oldest dams is now underway. --Calaveras Dam and Reservoir is located east of Milpitas, along the Santa Clara-Alameda County lines. Friday, crews broke ground on the project to replace the 86-year-old earthen barrier. The project is critical, considering the old dam was ruled seismically unsafe 10 years ago. The dam holds back the reservoir which is San Francisco's largest local source of drinking water. The $416 million project is scheduled to be completed in 2015.