A G E N D A
MEETING OF THE CITY COUNCIL
WATER/SEWER RATE FINANCIAL STUDY
SESSION
Monday, March 10, 2025 ~ 5:00 PM
City Hall Conference Room
211 Eighth Street
Seal Beach, California
LISA LANDAU
MAYOR
Third District
NATHAN STEELE
MAYOR PRO TEM
Fifth District
JOE KALMICK
COUNCIL MEMBER
First District
BEN WONG
COUNCIL MEMBER
Second District
PATTY SENECAL
COUNCIL MEMBER
Fourth District
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COUNCIL ROLL CALL
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STUDY SESSION
A. Water and Wastewater Utility Financial Plan & Rate Study
ADJOURN
Photo courtesy of Ken Lund (Flickr)
City of Seal Beach
Water and Wastewater Rate Study
City Council Study Session I
March 10, 2025
Agenda
• OCFA Presentation
• Background
• Why are we discussing revenue
increases?
• Infrastructure Needs
• Financial Plan Options
2 A message from
Orange County Fire
Authority
Kyle Cain
Administrative Captain
3 OCFA
CRITICAL INFRASTRUCTURE SUPPORT
MARCH 10, 2025
OCFA Fire Captain Kyle Cain
Why we need a reliable water system
Essential for firefighting
operations
Critical need for extinguishing
fires and protecting lives and
property
Without a reliable water supply,
firefighters would struggle to
effectively fight fires
Lack of reliable water leads to
increased risk to life safety and
more extensive property damage
1991 Oakland Hills Fire
• RUPTURED WATER LINES DEPLETED VOLUME
AVAILABLE FOR FIREFIGHTING
• PUMP STATIONS FAILED DUE TO ELECTRICAL FAILURE
AND NO BACK UP SYSTEM
2008 Freeway Complex Fire
Failed Pump House
PUMP HOUSES ARE CRITICAL IN
PROVIDING THE APPROPRIATE VOLUME
AND PRESSURE FOR FIRE FIGHTING
OPERATIONS
2016 Seal Beach Pier Fire
System Redundancy is Key
Water Distribution/Grid System
Primary feeders — Large pipes (mains), with
relatively widespread spacing, that convey large
quantities of water to various points of the system
for local distribution to the smaller mains
Secondary feeders — Network of intermediatesized pipes that reinforce the grid within the various loops of the primary feeder system and
aid in the concentration of the required fire
flow at any point
Distributors — Grid arrangement of
smaller mains serving individual fire
hydrants and blocks of consumers
Wet Barrel Hydrant
✓ Wet barrel Hydrants are the most
common type of hydrant in Orange
County.
✓ Frost-free or California hydrants
✓ Installed in warm climates
✓ Wet barrel hydrants have water
within the barrel or body of hydrant
at all times
✓ Separate horizontal compression
valve for each discharge. Allows
opening each orifice independent of
the other.
✓ Requires 10-15 rotations of the
valve stem to completely open
discharge
Dry Barrel Hydrant
✓ Least common in Orange County.
✓ Produced for freezing climates
✓ Found predominately in older water systems in
the county (Santa Ana, Los Alamitos, Rossmoor,
Fountain Valley, Placentia, Yorba Linda, Cypress)
✓ Cheaper to purchase than wet barrel hydrants
✓ Water is controlled by (1) main valve that is
located below base of hydrant (frost line)
✓ Prevents freezing by keeping barrel of hydrant
dry in freezing climates
✓ Requires 25 rotations of stem to fully open
✓ Firefighters and Engineers must be proactive
and place shutoffs and gated wyes on discharge
openings before hydrant is charged.
✓ This will allow for maximizing the hydrants
✓ available water supply
Hydrant Operations
Hydrant Operations
Hydrant Operations
Water Flow Expectations:
2 ½” supply +/- 450 gpm
3” supply +/- 750 gpm
4” supply +/- 1500 gpm
Alternative Water Supplies
2025 Palisades Fire
2025 Eaton Fire
Questions?
Raftelis Water and Wastewater
Financial Plan Project Team
22 Gina DePinto, APR
Communications
34+ years experience
Former PIO in county, city,
special district agencies,
including OCWD
[email protected]
Nick Kennedy
Analyst
2+ years experience
Water and wastewater cost of
service and rate design
modeling across southern CA
[email protected]
28+ years experience
16 years helping southern CA
agencies with financial plans and
rates
[email protected]
Steve Gagnon, PE (AZ)
Project Manager
Background
1. Study commenced June 2023 and was postponed
2. Since then:
a. City implemented final water rate increases from the last rate study on Jan 1, 2025 b. City obtained an OCWD loan for $4.4M loan for the Lampson Well Treatment System c. City revised cost estimates for CIP projects – inflation has increased project costs d. City created two capital scenarios for water and sewer. Scenario 2 pushes out capital projects, to lower rate increases
3. Policy Updates
a. AB 2257 – Exhaustion of administrative remedies
b. AB 755 – Top 10% of users
c. SB 323 – 120-day statue of limitations
23 24
Why are rate increases
needed?
Why are we discussing the need
for rate increases?
25 Water and Sewer Utilities are not covering expenses
Inflation: reached highest rate since 1981
Rain: FY 2023 and 2024 were very “wet” years =
decreased revenue
Wholesale Water Costs: Increased OCWD water
wholesale costs (partly due to PFAS), MWDOC –
Import water wholesaler
Aging Infrastructure / Deferred Maintenance
Sewer: Not meeting required debt coverage ratio,
charges were reduced 25% in the last study
WHY?
https://www.vcstar.com/story/news/local/2024/06/24/risingcosts-for-ventura-water-facility-prompt-ratediscussion/74175436007/ As Ventura Water project costs
rise, city weighs rate increases
The updated price has ballooned to an
estimated $672.2 million, a staff
report shows, up by more than $115
million since the council discussed the
project in November. November's
projection, at $556.9 million, already
marked $182 million since 2022, when
the estimate stood at $374.4 million…
"Costs prior to 2023 were engineering
estimates that were lower than what we
experienced with inflation," said Gina
Dorrington, general manager for Ventura
Water, in an email. "As the projects
advanced through design, cost estimates
were refined based on actual price quotes
and inflationary factors." the estimate
stood at $374.4 million.
Why are we discussing the need
for rate increases?
26 Water and Sewer Utilities are not covering expenses
Inflation: reached highest rate since 1981
Rain: FY 2023 and 2024 were very “wet” years =
decreased revenue
Wholesale Water Costs: Increased OCWD water
wholesale costs (partly due to PFAS), MWDOC –
Import water wholesaler
Aging Infrastructure / Deferred Maintenance
Sewer: Not meeting required debt coverage ratio,
charges were reduced 25% in the last study
WHY? Item FY 2021 FY 2024
Volume Sold
(hcf)
1,409,000 1,202,000
Approximate
Lost
Revenue
$600k
Why are we discussing the need
for rate increases?
27 Water and Sewer Utilities are not covering expenses
Inflation: reached highest rate since 1981
Rain: FY 2023 and 2024 were very “wet” years =
decreased revenue
Wholesale Water Costs: Increased OCWD water
wholesale costs (due to PFAS), MWDOC – Import
water wholesaler
Aging Infrastructure / Deferred Maintenance
Sewer: Not meeting required debt coverage ratio,
charges were reduced 25% in the last study
WHY?
Item FY
2021
FY
2022
FY
2023
FY
2024
FY
2025
FY
2026
OCWD Rate
($ / AF)
$487 $509 $558 $624 $688 $711
% Incr. 4.5% 9.6% 11.8% 10.3% 3.3%
MWDOC
($ / AF)
$1,078 $1,104 $1,143 $1,256 $1,395 $1,528
% Incr. 2.4% 3.5% 5.8% 3.9% 11.1%
Why are we discussing the need
for rate increases?
28 Water and Sewer Utilities are not covering expenses
Inflation: reached highest rate since 1981
Rain: FY 2023 and 2024 were very “wet” years =
decreased revenue
Wholesale Water Costs: Increased OCWD water
wholesale costs (partly due to PFAS), MWDOC –
Import water wholesaler
Aging Infrastructure / Deferred Maintenance
Sewer: Not meeting required debt coverage ratio,
charges were reduced 25% in the last study
WHY?
Item FY 2026 FY 2027 FY 2028 FY 2029 FY 2030
Lampson Well $5.1M
Beverly Manor
PS
$2M $3M $3M
LCWA
Watermain Lining
$2.5M
Bolsa Chica Well
Rehab
$4M
Infra.
Replacement &
Compliance Prog
$0.5M $0.5M $0.5M $0.5M $0.5M
Partial Listing of Capital Projects
Why are we discussing the need
for rate increases?
29 Water and Sewer Utilities are not covering expenses
Inflation: reached highest rate since 1981
Rain: FY 2023 and 2024 were very “wet” years =
decreased revenue
Wholesale Water Costs: Increased OCWD water
wholesale costs (partly due to PFAS), MWDOC –
Import water wholesaler
Aging Infrastructure / Deferred Maintenance
Sewer:
• Not meeting required debt coverage ratio
• Charges were reduced 25% in the last study
WHY?
Sewer has three loans for ½ million
in annual debt service:
1. 2011 Bond Re-funding
2. State Revolving Agreement 10838
3. State Revolving Agreement 10842
4. Debt coverage = 1.20 means City
must set rates so that yearly
cashflow = 1.2 x $500k = $600k
otherwise it is breaching bond
covenants
30 Water
Capital Projects
31 Water Infrastructure
Phase
Lampson Well Treatment System
About Purpose & Benefits
Project Timeline
Financials
Constraints
Treatment system to remove nuisance odor,
allowing increased pumping capacity. May need to
import water at double the cost of groundwater if not
producing at capacity.
• Construction: FY 2025-2027
• Design is completed
• $4.5 M
• OCWD Producers Loan
• It must be fully operational before the rehabilitation of the Bolsa Chica Well, which currently supplies the
majority of the City's water
Lampson Well, the City’s newest built in 2011,
produces a nuisance odor caused by naturally
occurring H2S.
LCWA Water Main Lining
About Purpose & Benefits
Project Timeline
Project will reline the transmission line to provide
water to southerly part of City to provide the
necessary fire flow.
Transmission line crossing Los Cerritos
Wetlands/Hellman Ranch that has experienced
several recent breaks.
Phase
Financials
Constraints
• Construction: FY 2025-2026
• Design is completed. CDP Approved.
• $2.5M Construction Value
• Anticipated SRF funding
• Environmentally sensitive habitat
• Must be constructed with wetlands restoration –
Fall 2025
Beverly Manor Pump Station
About Purpose & Benefits
Project Timeline
Pump station upgrade including new pumps,
discharge piping, emergency generator, Variable
Frequency Drives, and electric controls. Without
Beverly Manor in full operation, system may not
maintain adequate pressure and fire flow.
Constructed in 1969, the booster station is
responsible for connecting Beverly Manor
Reservoir to the distribution system.
Phase
Financials
• Construction: FY 2026-28
• Design is substantially completed
• Production well in service. Fully manual
• $8M Construction Value
• Anticipated SRF Funding
Constraints
• Antiquated system with no supporting parts for maintenance • Inability to fully pump reservoir water to distribution system Navy Reservoir Rehabilitation
About Purpose & Benefits
Project Timeline
Tank provides necessary water storage to address
water demand fluctuations, including emergency
needs
Navy Reservoir, constructed in 1963, has a
usable storage capacity of 2.5 million gallons.
Project will rehabilitate reservoir that has
deteriorated due to corroded steel tank coating,
will also rebuild the booster pumps.
Phase
Financials
• Construction: FY 2026-28
• Assessment is completed
• $1.8 M
Constraints
• Timely completion to prevent further corrosion,
which can lead to tank failure
Water Infrastructure Replacement
& Compliance Program
About Purpose & Benefits
Project Timeline
Replace aging infrastructure to improve reliability,
meet regulatory compliance, and increase capacity
to meet fire flow and pressure needs. Mainline
emergency repairs are costly and will cause service
disruptions.
Program helps fund on-going state and federal
regulatory compliance efforts, and methodically
and systematically improves the aging water
infrastructure, in particular areas that have
shown deterioration and need for capacity.
Phase
Financials
• Ongoing
• Ongoing, especially 100-year-old pipes
• $500,000 to $1M annually
Constraints
• 30,000 linear feet of pipeline that is past its useful life identified in 2012. Thirteen years later, this
number is higher.
Bolsa Chica Well Rehabilitation
About Purpose & Benefits
Project Timeline
Well improvements include replacing pumps,
generators, motors, and a water treatment system.
Pump failure may lead to water imports, which is
double the cost of groundwater.
The project will rehabilitate the groundwater well
site that was built in 1979.
Phase
Financials
• Construction: FY 2027-29
• Design is completed
• $4 M
Constraints
• Lampson Well needs to be fully operational before
this well can be shutdown
Advanced Metering Infrastructure
About Purpose & Benefits
Project Timeline
AMI provides numerous benefits, including:
1. Reduces in-person manual reading
2. Complies with ongoing water efficiency and conservation mandates
3. Provides on-demand customer user interface (i.e., leak detection) Existing manual meters are at the end or have
surpassed serviceable life, warranting
replacement. AMI (Advanced Metering
Infrastructure) is a two-way communication
system to collect detailed metering information.
Phase
Financials
• Construction: FY 2026-28
• Preliminary Study - Completed
• Conceptual Design
• Water Enterprise - $4 M
• BOR Grant – $2M
Constraints
• Not billing for water provided
• Eliminate manual/in-person meter reading
• Multi-year process
SCADA Improvement Upgrade
About Purpose & Benefits
Project Timeline
Supports operations and management monitoring
and automation, to better address and respond to
emergencies and reduce in-person response under
time-sensitive constraints. Used to optimize energy
use.
SCADA – Supervisory Control and Data
Acquisition for Water and Sewer Systems.
Phase
Financials
• In Progress
• Implementation at select locations
• In-Progress
• $50k/year Water
• $50k/year Sewer
Constraints
• Replacement of antiquated equipment for
compatibility
Photos is for demonstration purposes only.
Seal Way Water/Sewer Upgrade
About Purpose & Benefits
Project Timeline
Upsize pipe from 6-inch to 8-inch to meet demands.
Has had frequent water main breaks that can lead
to service interruption, and sewer blockages that
can lead to overflows.
Area has frequent blockage and sewer cleaning
needs. CCTV shows sewer mainline
delamination. One of the older water/sewer
mainlines in the city.
Phase
Financials
• Construction: FY 2033-34
• Planned
• $2.2 M Water
• $2.2 M Sewer
Constraints
• Concrete alley, tight working quarters, high
water table
6th Street Alley Water/Sewer Replacement
About Purpose & Benefits
Project Timeline
Address sewer line offset and delamination,
manhole upgrade, and waterline upsizing to meet
demands. Delamination and/or offset in the lines will
lead blockages & service interruptions.
CCTV identified issues. Pipe joint sections can
shift, sink, or be invaded by roots causing them
to become unaligned with the rest of the pipe.
Phase
Financials
Constraints
• Construction: FY 2033
• Design is completed
• Project On Hold
• $2.0M Water
• $2.6M Sewer
• Concrete alley, tight working quarters, high water
Photos are for demonstration purposes only. table
Lampson Transmission/CPE
Waterline Improvements
About Purpose & Benefits
Project Timeline
Increase the volume of water that can be delivered
from Lampson Well and improve water pressure
throughout the city.
Upsizing Lampson Avenue transmission main to
maintain pressure during peak demands. Project
will run the span of Lampson Avenue from Seal
Beach Boulevard to easterly City limits, in
phases.
Phase
Financials
Constraints
• Phase I Construction: FY 2029-31
• Planned
• $3.3 M for Lampson Transmission Phase I
• $2.2M for Lampson Transmission Phase II
• $2.2M for CPE Waterline Improvements
• TBD
College Park West Water System Improvements
About Purpose & Benefits
Project Timeline
Establish an additional connection point to the
College Park West neighborhood to provide an
alternate water supply in the event of an
emergency.
Installation of a new emergency interconnection
transmission line to enhance system reliability
and provide greater failover capability,
minimizing the risk of service disruption in an
emergency.
Phase
Financials
Constraints
• Phase I Construction: FY 2028-29
• Planned
• $3.3 M Water for Phase I
• Negotiations with neighboring water agencies for
emergency intertie
Water Scenario 1 - Recommended CIP
44 WATER - SCENARIO 1 - RECOMMENDED CIP FY 2025 FY 2026 FY 2027 FY 2028 FY 2029 FY 2030 Total Encumbered Rollover Projects $431,300 $0 $0 $0 $0 $0 $431,300 O-WT-1 Water Infrast. Replacement & Compliance Program $0 $500,000 $500,000 $500,000 $500,000 $500,000 $2,500,000 WT2701 Navy Reservoir Rehabilitation $0 $300,000 $1,500,000 $0 $0 $0 $1,800,000 WT1801 SCADA Improvement Upgrade Project $0 $50,000 $50,000 $50,000 $50,000 $50,000 $250,000 WT1603 Bolsa Chica Water Well Rehabilitation $0 $0 $4,000,000 $0 $0 $0 $4,000,000 WT2401 Seal Way Sewer/Water Upgrade $0 $0 $150,000 $2,000,000 $0 $0 $2,150,000 WTXXXX Leisure World Well Reestablishment $0 $0 $0 $3,000,000 $3,000,000 $0 $6,000,000 SS1902 6th Street Alley Water/Sewer Replacement $0 $0 $0 $2,000,000 $0 $0 $2,000,000 WT1704 Lampson Ave Trans Main Repl. (to Seal Bch Blvd) $0 $0 $0 $0 $300,000 $3,000,000 $3,300,000 WT2102 College Park East Waterline Improvements $0 $0 $0 $0 $200,000 $2,000,000 $2,200,000 WT2301 College Park West Water System Improvements $0 $0 $0 $0 $0 $200,000 $200,000 Subtotal $431,300 $850,000 $6,200,000 $7,550,000 $4,050,000 $5,750,000 $24,831,300 WT1902 Lampson Well Treatment System $0 $5,072,863 $0 $0 $0 $0 $5,072,863 WT0904 Beverly Manor Water Pump Station Rehabilitation $0 $0 $2,000,000 $3,000,000 $3,000,000 $0 $8,000,000 WT2103 LCWA Watermain Lining $0 $2,500,000 $0 $0 $0 $0 $2,500,000 Subtotal - SRF and OCWD Loan Projects $0 $7,572,863 $2,000,000 $3,000,000 $3,000,000 $0 $15,572,863 WT2001 Advanced Metering Infrastructure $0 $40,000 $2,000,000 $2,000,000 $0 $0 $4,040,000 Total $431,300 $8,462,863 $10,200,000 $12,550,000 $7,050,000 $5,750,000 $44,444,163 FY 2025 to FY 2030 Year CIP $44,444,163
Water Scenario 2 – Modified CIP
(Absolute Minimum Required Projects)
45 WATER - SCENARIO 2 FY 2025 FY 2026 FY 2027 FY 2028 FY 2029 FY 2030 Total FYE 2024 Rollover Projects into FY 2025 $431,300 $0 $0 $0 $0 $0 $431,300 O-WT-1 Water Infrast. Replacement & Compliance Program $0 $1,000,000 $1,000,000 $1,000,000 $1,000,000 $1,000,000 $5,000,000 WT2701 Navy Reservoir Rehabilitation $0 $300,000 $1,500,000 $0 $0 $0 $1,800,000 WT1801 SCADA Improvement Upgrade Project $0 $50,000 $50,000 $50,000 $50,000 $50,000 $250,000 WT1603 Bolsa Chica Water Well Rehabilitation $0 $0 $0 $0 $2,000,000 $2,000,000 $4,000,000 WTXXXX Leisure World Well Reestablishment $0 $0 $0 $0 $0 $3,000,000 $3,000,000 Subtotal $431,300 $1,350,000 $2,550,000 $1,050,000 $3,050,000 $6,050,000 $14,481,300 WT1902 Lampson Well Treatment System $0 $5,072,863 $0 $0 $0 $0 $5,072,863 WT0904 Beverly Manor Water Pump Station Rehabilitation $0 $0 $2,000,000 $3,000,000 $3,000,000 $0 $8,000,000 WT2103 LCWA Watermain Lining $0 $2,500,000 $0 $0 $0 $0 $2,500,000 Subtotal - SRF and OCWD Loan Projects $0 $7,572,863 $2,000,000 $3,000,000 $3,000,000 $0 $15,572,863 WT2001 Advanced Metering Infrastructure $0 $40,000 $2,000,000 $2,000,000 $0 $0 $4,040,000 Total $431,300 $8,962,863 $6,550,000 $6,050,000 $6,050,000 $6,050,000 $34,094,163 FY 2025 to FY 2030 Year CIP $34,094,163
46 Water
Financial Plan
Water Financial Outlook Without Revenue
Increases (or bond issuances)
• Does not include needed capital projects
47 FY 2024 FY 2025 FY 2026 FY 2027
Projected Total Revenue $6,488,889 $6,909,669 $7,049,657 $7,049,899 Personnel $2,017,372 $1,551,794 $1,675,937 $1,810,012
Maintenance and Operations $1,632,896 $2,250,908 $2,376,601 $2,465,225 Water Purchase Costs $2,562,447 $3,074,071 $3,230,820 $3,410,563 Subtotal Expenses $6,212,715 $6,876,772 $7,283,358 $7,685,799 Debt Service $103,850 $117,000 $0 $0
Cashflow $172,323 ($84,103) ($233,701) ($635,900)
Water Financial Plan Scenarios
December 2023 Scenario 1 Scenario 2
Revenue Adjustments
5-Year Increase
FY 2024 $2,044,567
FY 2025 $2,060,056
FY 2026 $1,751,047
FY 2027 $1,446,159
FY 2028 $1,349,749
Total $8,651,577
FY 2026 $2,669,658
FY 2027 $2,229,867
FY 2028 $596,247
FY 2029 $626,059
FY 2030 $657,362
Total $6,779,195
FY 2026 $2,037,371
FY 2027 $1,359,418
FY 2028 $833,776
FY 2029 $787,919
FY 2030 $722,634
Total $5,741,118
CIP $38M $44M
Higher Due to Two
Years of Inflation
Does more projects
sooner
$34M
Pushes out projects
Grants/Loans/Market
Debt
$22M Market Debt
$11M SRF Loan
$25M Market Debt
$9.5M SRF Loan
$4.4M OCWD Loan
$19M Market Debt
$9.5M SRF Loan
$4.4M OCWD Loan
48 Revenue adjustments show increased revenue above prior year revenue December 2023 Revenue adjustments show if they were in place for a full year Water Utilities Need Reserves!
• Utilities need to plan for reserves
› Enterprise reserves are nearly depleted
• City’s reserve targets are:
› Operating reserve = 25% of expenses
› Capital reserve = 25% of average future 5-
year capital expenses
• Ranges from about $2 to $3.5 M
49 Water Scenario 1- Debt Coverage and
Reserves
50 • Plans for reserves after the rate study
Water Scenario 2- Debt Coverage and
Reserves
51 • Plans for reserves after the rate study
52 Sewer
Capital Projects
53 Sewer Infrastructure
Pump Station #35
About Purpose & Benefits
Project Timeline
Project will provide emergency sewage by-pass,
mechanical/electrical upgrades, and emergency
back-up power generation. This a very important
pump station – an outage would cause sewer
backups in the southern part of the City.
Originally constructed in 1973, and subsequently
upgraded. PS #35 is the main sewer station that
serves the Hill, Bridgeport, Naval Weapons
Station, Old Town.
Financials
• Phase I - Under construction
• Phase II – FY 29/30
• $1.6 M construction value
• $3.3 M Phase II
Constraints
• Critical system to transport wastewater to OCSan
regional system
• Noticeable increase of Fats, Oils, Grease (FOG)
discharge
Sunset Aquatic Park Pump Station
About Purpose & Benefits
Project Timeline
Project will provide additional capacity and pump
station upgrades. Overflows from this system would
go directly into the Anaheim Bay and City would be
fined.
Due to previous force main failures, current flow
is diverted to 2 - 2” mains across the Bolsa
Chica Channel.
Phase
Financials
• Construction: FY 2027-29
• Planned
• $2.7 M construction value
• Sunset Aquatic Park Equity Fund
Constraints
• Force mains are undersized and frequently have
blockages
• Coordination with Huntington Beach to receive
wastewater
Adolfo Lopez and Boeing Pump Stations
About Purpose & Benefits
Project Timeline
Project will rehabilitate components and evaluate
the feasibility of constructing a parallel force main.
Pump station and electrical failures may result in
wastewater leaching and system overflow, which
can potentially be a substantial water quality fine.
Adolfo Lopez Station was constructed in 2005; the Boeing Pump Station was constructed in 2003. Both stations are reaching a point where more frequent failures and repairs are needed, in particular electrical components.
Furthermore, settling and corrosion is apparent in the
piping and wet wells.
Phase
Financials
• FY 2027-29
• Planned
• $1.7M Adolfo Lopez
• $1.7M Boeing
Constraints
• Force mains are original and near end of
serviceable life.
• Electrical repair requires frequent contractor callouts.
Sewer Mainline Improvement Program
About Purpose & Benefits
Project Timeline
Program will address structural and capacity
deficiencies, manhole upgrades, and point repairs.
The sewer system is on average 80 years old. Inability
to properly convey wastewater may result in blockages,
overages, and ultimately a health hazard.
Continuous repair of sewer infrastructure per
CCTV assessment to address deficiencies (e.g.,
cracks, offsets, delamination, capacity, flow).
Phase
Financials
• Ongoing
• CCTV Analysis (2023)
• Next target area – The Hill/Old Town
• $500,000 to $750,000 annually
Constraints
• On-going CCTV/cleaning per state requirements
• Aging infrastructure that was not built for existing
demands
Sewer Scenario 1 – Recommended CIP
58 SEWER - SCENARIO 1 FY 2025 FY 2026 FY 2027 FY 2028 FY 2029 FY 2030 Total FYE 2023 Encumbered Rollover Projects $3,645,000 $0 $0 $0 $0 $0 $3,645,000 O-SS-2 Sewer Mainline Improvement Program $0 $500,000 $500,000 $500,000 $500,000 $500,000 $2,500,000 SS2303 Sunset Aquatic Park & Forcemain Upgrade $0 $200,000 $2,500,000 $0 $0 $0 $2,700,000 WT2401 Seal Way Sewer/Water Upgrade $0 $0 $150,000 $2,000,000 $0 $0 $2,150,000 WT1801 SCADA Improvement Upgrade Project $0 $50,000 $50,000 $50,000 $50,000 $50,000 $250,000 SS1902 6th Street Alley Water/Sewer Replacement $0 $0 $0 $2,600,000 $0 $0 $2,600,000 SSXXXX Adolfo Lopez Pump Station & Forcemain Upgrade $0 $0 $0 $0 $0 $200,000 $200,000 SS2204 Boeing Pump Station & Forcemain Upgrade $0 $0 $0 $200,000 $1,500,000 $0 $1,700,000 SSXXXX Pump Station 35 Upgrades - Phase 2 $0 $0 $0 $0 $300,000 $3,000,000 $3,300,000 SSXXXX 1st Street Pump Station & Forcemain Upgrade $0 $0 $0 $0 $0 $150,000 $150,000 Total $3,645,000 $750,000 $3,200,000 $5,350,000 $2,350,000 $3,900,000 $19,195,000 FY 2025 to FY 2030 CIP $19,195,000
Sewer Scenario 2 – Modified CIP
59 SEWER - SCENARIO 2 FY 2025 FY 2026 FY 2027 FY 2028 FY 2029 FY 2030 Total FYE 2024 Projects rolled over into FYE 2025 $3,645,000 $0 $0 $0 $0 $0 $3,645,000 O-SS-2 Sewer Mainline Improvement Program $0 $750,000 $750,000 $750,000 $750,000 $750,000 $3,750,000 SS2303 Sunset Aquatic Park & Forcemain Upgrade $0 $200,000 $2,500,000 $0 $0 $0 $2,700,000 WT1801 SCADA Improvement Upgrade Project $0 $50,000 $50,000 $50,000 $50,000 $50,000 $250,000 SS2204 Boeing PS & Forcemain Upgrade $0 $0 $0 $200,000 $1,500,000 $0 $1,700,000 SSXXXX PS#35 Upgrades - Phase 2 $0 $0 $0 $0 $300,000 $3,000,000 $3,300,000 SSXXXX Adolfo Lopez PS & Forcemain Upgrade $0 $0 $0 $0 $0 $200,000 $200,000 SSXXXX 1st Street PS & Forcemain Upgrade $0 $0 $0 $0 $0 $150,000 $150,000 Total $3,645,000 $1,000,000 $3,300,000 $1,000,000 $2,600,000 $4,150,000 $15,695,000 FY 2025 to FY 2030 CIP $15,695,000
60 Sewer
Financial Plan
Sewer Financial Outlook Without Revenue
Increases
• Bond Covenants require the City to set rates so that net cashflow is about $600k (positive)
• Revenue is decreasing due to lower interest earned in cash balances • Does not include capital projects
61 FY 2024 FY 2025 FY 2026 FY 2027
Projected Total Revenue $2,625,899 $2,589,328 $2,489,078 $2,450,759 Personnel $1,451,291 $1,319,707 $1,425,284 $1,539,306
Maintenance and Operations $758,140 $1,146,858 $1,204,201 $1,240,327 Subtotal Expenses $2,209,430 $2,466,565 $2,629,484 $2,779,633 Debt Service $545,583 $545,623 $545,183 $544,263
Cashflow ($129,114) ($422,860) ($685,590) ($873,137)
Sewer Financial Plan Scenarios
Dec 2023 Scenario 1 Scenario 2
Revenue Adjustments
5-Year Increase
FY 2024 $774,657
FY 2025 $717,111
FY 2026 $703,964
FY 2027 $573,175
FY 2028 $348,755
Total $3,304,247
FY 2026 $801,492
FY 2027 $663,352
FY 2028 $535,104
FY 2029 $566,446
FY 2030 $196,949
Total $2,763,343
FY 2026 $801,492
FY 2027 $631,764
FY 2028 $341,153
FY 2029 $330,539
FY 2030 $312,359
Total $2,417,306
CIP (today’s $) $16M $19.2M
• Higher due to two
years of inflation
• Does more projects
sooner, compared
to scenario 2
$15.7M
• Pushes out projects
Debt $14 M Market Debt $14 M Market Debt $15 M Market Debt 62 34% is needed in the 1st year to meet debt covenants! Revenue adjustments show increased revenue above prior year revenue December 2023 revenue adjustments show if they were in place for a full year Sewer Utilities Need Reserves!
• City’s reserve targets are:
› Operating reserve = 25% of
expenses
› Capital reserve = 25% of average
future 5-year capital expenses
• Ranges from about $1 to $1.5 M
63 Sewer Scenario 1- Debt Coverage and
Reserves
64 • Need 34% increase to meet debt coverage in FY 2026! Sewer Scenario 2- Debt Coverage and
Reserves
65 • Need 34% increase in FY 2026 to meet debt coverage Summary
• Inflation, decreased revenue, wholesale water agency rate hikes and aging infrastructure all contribute to the current state of the water and sewer utilities • Proposed revenue increases will restore the utilities’ financial health allowing the City to
› Continue to deliver safe, reliable water and sewer services › Maintain infrastructure
› Maintain good credit standing and be able to issue debt (especially wastewater) • These services receive no tax revenue. The funds we collect for these services are used to operate and reinvest in your water and sewer systems. 66 67
Communications
& Outreach
Public Information
68 • Rate Study Website
• Frequently Asked Questions
• Video
• News Releases
• Social Media Content
• Infographics
• Prop 218 Notice
• City Council Meetings
• Informational Open Houses
UtilityRateStudy.sealbeachca.gov
(562) 342-7389
[email protected]
69 End of Presentation