A G E N D A
SPECIAL MEETING OF THE CITY COUNCIL
WATER/SEWER RATE FINANCIAL
STUDY SESSION – PART II
Monday, April 28, 2025 ~ 5:00 PM
City Council Chambers
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
This Agenda contains a brief general description of each item to be considered. No action or discussion shall be taken on any item not appearing on the agenda, except as otherwise provided by law. Supporting documents, including agenda staff reports, and any public writings distributed by the City to at least a majority of the Council Members regarding any item on this agenda are available for review on the City’s website at www.sealbeachca.gov.
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CALL TO ORDER
COUNCIL ROLL CALL
STUDY SESSION
A. Water and Wastwater Utility Financial Plan & Rate Study – Part II
ORAL COMMUNICATIONS
At this time members of the public may address the Council regarding items on the agenda. Pursuant to the Brown Act, the Council cannot discuss or take action on any items not on the agenda unless authorized by law. Matters not on the agenda may, at the Council' s discretion, be referred to the City Manager and placed on a future agenda.
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ADJOURNMENT
City of Seal Beach
Water and Wastewater Rate Study
City Council Study Session II
April 28, 2025
Raftelis Water and Wastewater
Financial Plan Project Team
Steve Gagnon, PE (AZ) Nick Kennedy Gina DePinto, APR
Project Manager Analyst Communications
28+ years experience 2+ years experience 35 years experience 16 years helping southern CA
agencies with financial plans and
rates
Water and wastewater cost of
service and rate design
modeling across southern CA
Former PIO in county, city,
special district agencies,
including OCWD
[email protected] [email protected] [email protected] ꢀ
Agenda
• Introduction and Recap of Study Session I
held March 10, documents posted at
utilityratestudy.sealbeachca.gov
• Why are we discussing revenue increases?
• Infrastructure Needs
• Financial Plan and Rate Options
ꢁ
Proposition 218
Requirements –
Paraphrased
Revenue must be
used to cover the
costs for which
the charge was
imposed
Cannot collect
more than what
you need
Must send a The charge must
be for a service
that is actually
used or
immediately
available
The fee may not
exceed the
proportional cost
to serve the
parcel
written notice to
customers no less
than 45 days
before a public
hearing
ꢂ
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. California Regulatory Updates
a. AB 2257 – Exhaustion of administrative remedies
b. AB 755 – Top 10% of users
c. SB 323 – 120-day statue of limitations
ꢃ
Why are rate increases
needed?
6 Why are we discussing the need
for rate increases?
As Ventura Water project costs
rise, city weighs rate increases
The updated price has ballooned to an
estimated $672.2 million, a staff
Water and Sewer Utilities are not covering expenses
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…
WHY?
Inflation: reached highest rate since 1981
Rain: FY 2023 and 2024 were very “wet” years =
decreased revenue "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.
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
https://www.vcstar.com/story/news/local/2024/06/24/risingcosts-for-ventura-water-facility-prompt-rate7 discussion/74175436007/ Why are we discussing the need
for rate increases?
Water and Sewer Utilities are not covering expenses
WHY? Item FY 2021 FY 2024
Volume Sold
(hcf)
Inflation: reached highest rate since 1981 1,409,000 1,202,000 Rain: FY 2023 and 2024 were very “wet” years =
decreased revenue Approximate
Lost
$600k
Wholesale Water Costs: Increased OCWD water
wholesale costs (partly due to PFAS), MWDOC –
Import water wholesaler
Revenue
Aging Infrastructure / Deferred Maintenance
Sewer: Not meeting required debt coverage ratio,
charges were reduced 25% in the last study
8 Why are we discussing the need
for rate increases?
Water and Sewer Utilities are not covering expenses
WHY?
Inflation: reached highest rate since 1981
Rain: FY 2023 and 2024 were very “wet” years = Item FY FY FY FY FY FY 2021 2022 2023 2024 2025 2026 decreased revenue
OCWD Rate
($ / AF)
$487 $509 $558 $624 $688 $711
Wholesale Water Costs: Increased OCWD water
wholesale costs (due to PFAS), MWDOC – Import
water wholesaler
% Incr. 4.5% 9.6% 11.8% 10.3%
$1,395
3.3%
MWDOC
($ / AF)
$1,078 $1,104 $1,143 $1,256 $1,528
Aging Infrastructure / Deferred Maintenance
% Incr. 2.4% 3.5% 5.8% 3.9% 11.1%
Sewer: Not meeting required debt coverage ratio,
charges were reduced 25% in the last study
9 Why are we discussing the need
for rate increases?
Water and Sewer Utilities are not covering expenses
WHY?
Partial Listing of Capital Projects
FY 2026 FY 2027 FY 2028 FY 2029 FY 2030
$5.1M
Inflation: reached highest rate since 1981
Item
Rain: FY 2023 and 2024 were very “wet” years =
decreased revenue Lampson Well
Beverly Manor
PS Wholesale Water Costs: $2M $3M $3M Increased OCWD water wholesale costs (partly due to PFAS), MWDOC –
Import water wholesaler
LCWA
Watermain Lining
$2.5M
$0.5M
Aging Infrastructure / Deferred Maintenance Bolsa Chica Well Rehab
$4M
Sewer: Not meeting required debt coverage ratio, Infra. $0.5M $0.5M $0.5M $0.5M charges were reduced 25% in the last study Replacement & Compliance Prog
10 Why are we discussing the need
for rate increases?
Water and Sewer Utilities are not covering expenses
WHY?
Inflation: reached highest rate since 1981
Sewer has three loans for ½ million
Rain: FY 2023 and 2024 were very “wet” years = in annual debt service:
decreased revenue 1. 2011 Bond Re-funding
Wholesale Water Costs: Increased OCWD water
wholesale costs (partly due to PFAS), MWDOC –
Import water wholesaler
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
Aging Infrastructure / Deferred Maintenance
Sewer: Not meeting required debt coverage ratio,
charges were reduced 25% in the last study
11 Water
Capital Projects
12 Water Infrastructure
13 Lampson Well Treatment System
Project Timeline
• Construction: FY 2025-2027
Phase
• Design is completed
Financials
• $4.5 M
• OCWD Producers Loan
Constraints
• It must be fully operational before the rehabilitation of the Bolsa Chica Well, which currently supplies the
majority of the City's water
About Purpose & Benefits
Lampson Well, the City’s newest built in 2011,
produces a nuisance odor caused by naturally
occurring H2S.
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.
LCWA Water Main Lining
Project Timeline
• Construction: FY 2025-2026
Phase
• Design is complete
• Coastal Development Permit complete
Financials
• $2.5M Construction Value
• Anticipated SRF funding
Constraints
• Environmentally sensitive habitat
• Must be constructed with wetlands restoration –
Fall 2025
About Purpose & Benefits
Transmission line crossing Los Cerritos
Wetlands/Hellman Ranch that has experienced
several recent breaks.
Project will reline the transmission line to provide
water to southerly part of City to provide the
necessary fire flow.
Water Scenario 1 - Recommended CIP
WATER - SCENARIO 1 - RECOMMENDED CIP
Encumbered Rollover Projects
FY 2025 FY 2026 FY 2027 FY 2028 FY 2029 FY 2030 Total
$431,300 $0
$500,000
$300,000 $1,500,000
$50,000 $50,000
$0 $4,000,000
$0 $0 $0 $0 $431,300
O-WT-1 Water Infrast. Replacement & Compliance Program
WT2701 Navy Reservoir Rehabilitation
$0 $500,000 $500,000
$0
$500,000
$0
$500,000 $2,500,000
$1,800,000
$250,000
$0 $0
$50,000
$0
WT1801 SCADA Improvement Upgrade Project
WT1603 Bolsa Chica Water Well Rehabilitation
WT2401 Seal Way Sewer/Water Upgrade
WTXXXX Leisure World Well Reestablishment
SS1902 6th Street Alley Water/Sewer Replacement
WT1704 Lampson Ave Trans Main Repl. (to Seal Bch Blvd)
WT2102 College Park East Waterline Improvements
WT2301 College Park West Water System Improvements
Subtotal
$0 $50,000
$0
$50,000
$0 $0 $4,000,000
$2,150,000
$6,000,000
$2,000,000
$3,300,000
$2,200,000
$200,000
$0 $0
$0
$0
$0
$0
$0
$150,000 $2,000,000 $0 $0
$0 $0 $3,000,000 $3,000,000
$0 $2,000,000 $0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$300,000 $3,000,000
$0 $200,000 $2,000,000
$0 $0 $200,000
$431,300 $850,000 $6,200,000 $7,550,000 $4,050,000 $5,750,000 $24,831,300 WT1902 Lampson Well Treatment System
WT0904 Beverly Manor Water Pump Station Rehabilitation
WT2103 LCWA Watermain Lining
$0 $5,072,863
$0 $0 $2,000,000 $3,000,000 $3,000,000
$0 $2,500,000 $0 $0 $0
$0 $7,572,863 $2,000,000 $3,000,000 $3,000,000
$0 $40,000 $2,000,000 $2,000,000 $0
$0 $0 $0 $0
$0
$0
$5,072,863
$8,000,000
$2,500,000
Subtotal - SRF and OCWD Loan Projects
WT2001 Advanced Metering Infrastructure
$0 $15,572,863
$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
16 Water Scenario 2 – Modified CIP
(Absolute Minimum Required Projects)
WATER - SCENARIO 2 FY 2025 FY 2026 FY 2027 FY 2028 FY 2029 FY 2030 Total FYE 2024 Rollover Projects into FY 2025
O-WT-1 Water Infrast. Replacement & Compliance Program
WT2701 Navy Reservoir Rehabilitation
WT1801 SCADA Improvement Upgrade Project
WT1603 Bolsa Chica Water Well Rehabilitation
WTXXXX Leisure World Well Reestablishment
Subtotal
$431,300 $0 $0 $0 $0 $0 $431,300
$5,000,000
$1,800,000
$250,000
$4,000,000
$3,000,000
$0 $1,000,000 $1,000,000 $1,000,000 $1,000,000 $1,000,000 $0
$0
$0
$0
$300,000 $1,500,000 $0 $0 $0
$50,000
$0
$50,000
$0
$50,000 $50,000 $50,000
$0 $2,000,000 $2,000,000
$0 $0 $0 $0 $3,000,000
$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
WT0904 Beverly Manor Water Pump Station Rehabilitation
WT2103 LCWA Watermain Lining
$0 $5,072,863
$0 $0 $2,000,000 $3,000,000 $3,000,000
$0 $2,500,000 $0 $0 $0
$0 $7,572,863 $2,000,000 $3,000,000 $3,000,000
$0 $40,000 $2,000,000 $2,000,000 $0
$0 $0 $0 $0
$0
$0
$5,072,863
$8,000,000
$2,500,000
Subtotal - SRF and OCWD Loan Projects
WT2001 Advanced Metering Infrastructure
$0 $15,572,863
$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
17 Water
Financial Plan
18 Water Financial Outlook Without Revenue
Increases (or bond issuances)
• Does not include needed capital projects
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
$1,632,896 $2,250,908 $2,376,601 $2,465,225
$2,562,447 $3,074,071 $3,230,820 $3,410,563
$6,212,715 $6,876,772 $7,283,358 $7,685,799
Maintenance and Operations
Water Purchase Costs
Subtotal Expenses
Debt Service
Cashflow
$103,850 $117,000 $0 $0
$172,323 ($84,103) ($233,701) ($635,900)
19 Water Financial Plan Scenarios
December 2023 Scenario 1 Scenario 2
Revenue Adjustments FY 2024 $2,044,567
FY 2025 $2,060,056
FY 2026 $2,669,658
FY 2027 $2,229,867
FY 2028 $596,247
FY 2029 $626,059
FY 2030 $657,362
FY 2026 $2,037,371
FY 2027 $1,359,418
FY 2028 $833,776
FY 2029 $787,919
FY 2030 $722,634
FY 2026 $1,751,047
FY 2027 $1,446,159
FY 2028 $1,349,749
5-Year Increase
CIP
Total $8,651,577 Total $6,779,195 Total $5,741,118
$38M $44M $34M
Higher Due to Two
Years of Inflation
Does more projects
sooner
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
Revenue adjustments show increased revenue above prior year revenue December 2023 Revenue adjustments show if they were in place for a full year 20 Water Financial Plan Scenarios
December 2023 Scenario 1 Scenario 2
Revenue Adjustments FY 2024 33%
25%
17%
12%
10%
FY 2026 38%
23%
5%
5%
5%
FY 2026 29%
15%
8%
7%
6%
FY 2025
FY 2026
FY 2027
FY 2028
FY 2027
FY 2028
FY 2029
FY 2030
FY 2027
FY 2028
FY 2029
FY 2030
5-Year Increase
CIP
Total CAGR 139.6% Total CAGR 96.5% Total CAGR 81.7%
$38M $44M $34M
Higher Due to Two
Years of Inflation
Does more projects
sooner
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
Revenue adjustments show increased revenue above prior year revenue 21 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
22 Water Scenario 1- Debt Coverage and
Reserves
• Plans for reserves after the rate study
23 Water Scenario 2- Debt Coverage and
Reserves
• Plans for reserves after the rate study
24 25
Bi-monthly Fixed Charge & Leisure World
Assumptions (Scenario 1 Shown for Illustrative Purposes) Scenario 1
• Certain costs centers: Meter Fixed Charges Fixed Charges Scenario 1 Scenario 2 Maintenance and Capacity are
allocated to customers classes
based on the number and size of
meters
with LW with LW Difference
$
Difference
$
1/1/2025
Current
$52.38
Meter Size
5/8''
3/4''
1"
1.5"
2"
3"
4"
6"
8"
10"
12"
1 - 6" Meter 2 - 12" Meters
$72.28
$72.28
$70.68
$70.68
($1.60)
($1.60)
($2.66)
($5.43)
($8.59)
($15.91)
($26.62)
($53.10)
($85.08)
($122.16)
NA
($1.50)
($1.50)
($2.49)
($5.08)
($8.03)
($14.87)
($24.88)
($49.64)
($79.53)
($114.19)
NA
$52.38
$77.92 $107.53
$208.28
$315.10
$560.63
$932.80
$1,836.79
$2,937.91
$4,205.26
NA
$104.87
$202.85
$306.50
$544.72
$906.18
$1,783.70
$2,852.83
$4,083.10
$7,458.19
$476.01
• Prior assumption: Leisure World
(LW) needed the equivalent of one
6” meter
$150.93
$228.33
$406.25
$675.94
$1,331.01
$2,128.92
$3,047.29
NA
• Revised to 2 – 12” meters
• LW would no longer be charged for
their 4 private fire accounts
• LW bi-monthly fixed charge =
$14,916 equates to a $2.26 increase
per dwelling unit
2" Aquatic Park $344.58 $475.52 $0.49 $0.45
Aquatic Park includes a capital surcharge due to under sea pipelines 26 Water Proposed Bi-Monthly 5-Year fixed
Charges (assumes 2 -12” meter for LW)
Scenario 1 Scenario 2
FYE 2026
8/1/2025
FYE 2027 FYE 2028 FYE 2029
7/1/2028
FYE 2030
7/1/2029
FYE 2026 FYE 2027 FYE 2028
7/1/2027
FYE 2029
7/1/2028
FYE 2030
Water 1/1/2025 7/1/2026 7/1/2027 Water 1/1/2025 8/1/2025 7/1/2026 7/1/2029 Bi-monthly Fixed Charges Bi-monthly Fixed Charges
All Customers All Customers
5/8'' $52.38
$52.38
$70.68
$70.68
$86.94
$86.94
$91.29
$91.29
$95.85
$95.85
$100.64
$100.64
5/8'' $52.38
$52.38
$66.07
$66.07
$75.98
$75.98
$82.06
$82.06
$87.81
$87.81
$93.08
3/4'' 3/4'' $93.08
1" $77.92 $104.87
$202.85
$306.50
$544.72
$906.18
$1,783.70
$2,852.83
$4,083.10
$7,458.19
$476.01
$128.99 $135.44 $142.21 $149.32 1" $77.92 $98.03 $112.73 $218.07
$329.49
$585.57
$974.14
$1,917.47
$3,066.79
$4,389.33
$8,017.56
$511.71
$121.75 $130.28 $138.09
1.5" $150.93
$228.33
$406.25
$675.94
$1,331.01
$2,128.92
$3,047.29
$1,331.01
$344.58
$249.51 $261.99 $275.09 $288.84 1.5" $150.93
$228.33
$406.25
$675.94
$1,331.01
$2,128.92
$3,047.29
$1,331.01
$344.58
$189.62
$286.51
$509.19
$847.08
$1,667.37
$2,666.78
$3,816.81
$6,971.79
$444.96
$235.51 $252.00 $267.12
2" $377.00 $395.85 $415.64 $436.42 2" $355.85 $380.76 $403.60 3" $670.00 $703.50 $738.68 $775.61 3" $632.42 $676.69 $717.29 4" $1,114.60
$2,193.95
$3,508.98
$5,022.21
$9,173.58
$585.49
$1,170.33
$2,303.64
$3,684.43
$5,273.32
$1,228.84
$2,418.82
$3,868.65
$5,536.99
$1,290.28
$2,539.77
$4,062.08
$5,813.84
4" $1,052.07
$2,070.87
$3,312.14
$4,740.48
$8,658.96
$552.64
$1,125.72
$2,215.83
$3,543.98
$5,072.31
$9,265.09
$591.33
$1,193.26
$2,348.78
$3,756.62
$5,376.65
$9,821.00
$626.81
6" 6"
8" 8"
10" 10"
12" Leisure World
2" Aquatic Park
$9,632.26 $10,113.87 $10,619.56 12" Leisure World
$614.76 $645.50 $677.78 2" Aquatic Park
Private Fire Charges Private Fire Charges
4" $54.42
$158.07
$336.86
$605.79
NA
$75.10
$218.14
$464.87
$835.99
$1,350.35
$92.37
$268.31
$96.99
$281.72
$101.84
$295.81
$106.93
$310.60
4" $54.42
$158.07
$336.86
$605.79
NA
$70.20
$203.91
$434.55
$781.47
$1,262.29
$80.73
$234.50
$499.73
$898.69
$1,451.63
$87.19
$253.26
$539.71
$970.58
$1,567.76
$93.29
$270.98
$98.89
6" 6" $287.24
8" $571.79 $600.38 $630.39 $661.91 8" $577.49 $612.14
10"
12"
$1,028.27
$1,660.94
$1,079.68
$1,743.98
$1,133.67
$1,831.18
$1,190.35
$1,922.74
10"
12"
$1,038.53
$1,677.51
$1,100.84
$1,778.16
27 Water Proposed Volumetric Rates ($ / hcf)
Scenario 1 Scenario 2
FYE 2026
8/1/2025
FYE 2027
7/1/2026
FYE 2028 FYE 2029
7/1/2028
FYE 2030
7/1/2029
FYE 2026
8/1/2025
FYE 2027
7/1/2026
FYE 2028
7/1/2027
FYE 2029
7/1/2028
FYE 2030
1/1/2025 7/1/2027 1/1/2025 7/1/2029
Volumetric Rates ($ /hcf) Volumetric Rates ($ /hcf)
Residential
Tier 1
Tier 2
Residential
Tier 1
Tier 2
$3.77
$3.99
$5.20
$5.51
$6.40
$6.77
$6.72
$7.11
$7.06
$7.47
$7.41
$7.84
$3.77
$3.99
$4.86
$5.15
$5.59
$5.92
$6.04
$6.39
$6.46
$6.84
$6.85
$7.25
Multi-Family Residential & Leisure World Multi-Family Residential & Leisure World Tier 1
Tier 2
Commercial
Irrigation
City
$3.77
$3.94
$3.77
$3.86
$3.82
$4.27
$5.20
$5.44
$5.20
$5.33
$5.27
$5.89
$6.40
$6.69
$6.40
$6.55
$6.48
$7.25
$6.72
$7.02
$6.72
$6.88
$6.81
$7.61
$7.06
$7.37
$7.06
$7.22
$7.15
$7.99
$7.41
$7.74
$7.41
$7.58
$7.51
$8.39
Tier 1
Tier 2
Commercial
Irrigation
City
$3.77
$3.94
$3.77
$3.86
$3.82
$4.27
$4.86
$5.08
$4.86
$4.98
$4.93
$5.51
$5.59
$5.84
$5.59
$5.73
$5.67
$6.33
$6.04
$6.31
$6.04
$6.18
$6.12
$6.84
$6.46
$6.75
$6.46
$6.62
$6.55
$7.32
$6.85
$7.16
$6.85
$7.01
$6.94
Aquatic Park Aquatic Park $7.76
28 Sewer
Capital Projects
29 Sewer Infrastructure
30 Sunset Aquatic Park Pump Station
Project Timeline
• Construction: FY 2027-29
Phase
• Planned
Financials
• $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
About Purpose & Benefits
Due to previous force main failures, current flow
is diverted to 2 - 2” mains across the Bolsa
Chica Channel.
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.
Sewer Scenario 1 – Recommended CIP
SEWER - SCENARIO 1 FY 2025 FY 2026 FY 2027 FY 2028 FY 2029 FY 2030 Total FYE 2023 Encumbered Rollover Projects
O-SS-2 Sewer Mainline Improvement Program
SS2303 Sunset Aquatic Park & Forcemain Upgrade
WT2401 Seal Way Sewer/Water Upgrade
WT1801 SCADA Improvement Upgrade Project
SS1902 6th Street Alley Water/Sewer Replacement
SSXXXX Adolfo Lopez Pump Station & Forcemain Upgrade
SS2204 Boeing Pump Station & Forcemain Upgrade
SSXXXX Pump Station 35 Upgrades - Phase 2
SSXXXX 1st Street Pump Station & Forcemain Upgrade
Total
$3,645,000 $0
$500,000
$0 $0
$500,000
$0
$0
$500,000
$0
$0
$500,000
$0
$3,645,000
$2,500,000
$2,700,000
$2,150,000
$250,000
$0 $500,000
$0 $200,000 $2,500,000
$0 $0
$50,000
$0
$150,000 $2,000,000
$50,000 $50,000
$0 $2,600,000
$0 $0
$0 $50,000
$0
$50,000
$0 $0 $2,600,000
$0 $0 $0 $200,000
$0
$0
$0
$0 $0 $200,000
$0 $0
$0
$0 $200,000 $1,500,000 $1,700,000
$3,300,000
$150,000
$0 $0
$0
$300,000 $3,000,000
$0 $0 $0 $150,000
$3,645,000
$19,195,000
$750,000 $3,200,000 $5,350,000 $2,350,000 $3,900,000 $19,195,000 FY 2025 to FY 2030 CIP
32 Sewer Scenario 2 – Modified CIP
SEWER - SCENARIO 2 FY 2025 FY 2026 FY 2027 FY 2028 FY 2029 FY 2030 Total FYE 2024 Projects rolled over into FYE 2025
O-SS-2 Sewer Mainline Improvement Program
SS2303 Sunset Aquatic Park & Forcemain Upgrade
WT1801 SCADA Improvement Upgrade Project
SS2204 Boeing PS & Forcemain Upgrade
SSXXXX PS#35 Upgrades - Phase 2
SSXXXX Adolfo Lopez PS & Forcemain Upgrade
SSXXXX 1st Street PS & Forcemain Upgrade
Total
$3,645,000 $0 $0 $0
$750,000
$0
$0
$750,000
$0
$0
$750,000
$0
$3,645,000
$3,750,000
$2,700,000
$250,000
$1,700,000
$3,300,000
$200,000
$150,000
$0
$0
$0
$0
$0
$0
$0
$750,000 $750,000
$200,000 $2,500,000
$50,000
$0
$50,000
$0
$50,000 $50,000 $50,000
$200,000 $1,500,000 $0
$0 $0 $0
$0
$0
$300,000 $3,000,000
$0 $0 $0
$0
$200,000
$0 $0 $150,000
$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
33 Sewer
Financial Plan
34 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
FY 2024 FY 2025 FY 2026 FY 2027
Projected Total Revenue $2,625,899 $2,589,328 $2,489,078 $2,450,759 Personnel
Maintenance and Operations
Subtotal Expenses
$1,451,291
$758,140
$2,209,430
$1,319,707
$1,146,858
$2,466,565
$1,425,284
$1,204,201
$2,629,484
$1,539,306
$1,240,327
$2,779,633
Debt Service
Cashflow
$545,583 $545,623 $545,183 $544,263
($129,114) ($422,860) ($685,590) ($873,137)
35 Sewer Financial Plan Scenarios
Dec 2023 Scenario 1 Scenario 2
Revenue Adjustments FY 2024 $774,657
FY 2025 $717,111
FY 2026 $801,492
FY 2027 $663,352
FY 2028 $535,104
FY 2029 $566,446
FY 2030 $196,949
FY 2026 $801,492
FY 2027 $631,764
FY 2028 $341,153
FY 2029 $330,539
FY 2030 $312,359
FY 2026 $703,964
FY 2027 $573,175
FY 2028 $348,755
5-Year Increase
CIP (today’s $)
Total $3,304,247 Total $2,763,343 Total $2,417,306
$16M $19.2M $15.7M
• Higher due to two
years of inflation
• Does more projects
sooner, compared
to scenario 2
• Pushes out projects
Debt $14 M Market Debt $14 M Market Debt $15 M Market Debt Revenue adjustments show increased revenue above prior year revenue December 2023 revenue adjustments show if they were in place for a full year 34% is needed in the 1st year to meet debt covenants! 36 Sewer Financial Plan Scenarios
Dec 2023 Scenario 1 Scenario 2
Revenue Adjustments FY 2024 35%
24%
19%
13%
7%
FY 2026 34%
21%
14%
13%
4%
FY 2026 34%
20%
9%
8%
7%
FY 2025
FY 2026
FY 2027
FY 2028
FY 2027
FY 2028
FY 2029
FY 2030
FY 2027
FY 2028
FY 2029
FY 2030
5-Year Increase
CIP (today’s $)
Total CAGR 140.9% Total CAGR 117.2% Total CAGR 102.5%
$16M $19.2M $15.7M
• Higher due to two
years of inflation
• Does more projects
sooner, compared
to scenario 2
• Pushes out projects
Debt $14 M Market Debt $14 M Market Debt $15 M Market Debt Revenue adjustments show increased revenue above prior year revenue 34% is needed in the 1st year to meet debt covenants! 37 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
38 Sewer Scenario 1- Debt Coverage and
Reserves
• Need 34% increase to meet debt coverage in FY 2026!
39 Sewer Scenario 2- Debt Coverage and
Reserves
• Need 34% increase in FY 2026 to meet debt coverage
40 Sewer Proposed Bi-Monthly 5-Year Rates &
Charges Scenario 1
FYE 2026
8/1/2025
FYE 2027
7/1/2026
FYE 2028
7/1/2027
FYE 2029
7/1/2028
FYE 2030
Fixed Charge Current 7/1/2029
$48.04
Single-Family Residential
Fixed Charge $64.37 $77.89 $88.80 $100.34 $104.35
Customers with a Fixed Charge and
Volumetric Rate Current
$1.22
8/1/2025 7/1/2026
$1.98
7/1/2027 7/1/2028 7/1/2029
Multi-Family Residential
Fixed Charge
Volumetric Rate ($/hcf)
Commercial and City
Fixed Charge
$1.63
$5.36
$2.26
$7.39
$2.55
$8.35
$2.65
$4.00 $6.49 $8.69
$1.22
$4.00
$1.63
$5.36
$1.98
$6.49
$2.26
$7.39
$2.55
$8.35
$2.65
Volumetric Rate ($/hcf) $8.69
Leisure World
Fixed Charge $1.22 $1.63 $1.98 $2.26 $2.55 $2.65
Flat Rate $2,198.06 $2,945.40 $3,563.93 $4,062.89 $4,591.06 $4,774.70 Navy
Sewer Meter Fixed Charge
Sewer Meter Volumetric ($/hcf)
$1.22
$0.24
$1.63
$0.32
$1.98
$0.39
$2.26
$0.44
$2.55
$0.50
$2.65
$0.52
Aquatic Park
Fixed Charge $1.22
$4.00
$997.50
$1,322.00
$1.63
$5.36
$1,336.65
$1,771.48
$1.98
$6.49
$1,617.35
$2,143.49
$2.26
$7.39
$1,843.78
$2,443.58
$2.55
$8.35
$2,083.47
$2,761.24
$2.65
$8.69
$2,166.80
$2,871.69
Volumetric Charge ($/hcf)
Sewer Service Equity Charge
41 Sewer Capital Equity Charge
Sewer Proposed Bi-Monthly 5-Year Rates &
Charges Scenario 2
FYE 2026 FYE 2027
7/1/2026
FYE 2028
7/1/2027
FYE 2029
7/1/2028
FYE 2030
Fixed Charge Current 7/1/2029
$48.04
8/1/2025
$64.37
Single-Family Residential
Fixed Charge $77.25 $84.20 $90.94 $97.30
Customers with a Fixed Charge and
Volumetric Rate Current 8/1/2025
$1.63
7/1/2026 7/1/2027 7/1/2028 7/1/2029
Multi-Family Residential
Fixed Charge
Volumetric Rate ($/hcf)
Commercial and City
Fixed Charge
$1.22
$4.00
$1.96
$6.43
$2.14
$7.01
$2.31
$7.57
$2.47
$5.36 $8.10
$1.22
$4.00
$1.63
$5.36
$1.96
$6.43
$2.14
$7.01
$2.31
$7.57
$2.47
Volumetric Rate ($/hcf) $8.10
Leisure World
Fixed Charge $1.22 $1.63 $1.96 $2.14 $2.31 $2.47
Flat Rate $2,198.06 $2,945.40 $3,534.48 $3,852.58 $4,160.79 $4,452.05 Navy
Sewer Meter Fixed Charge
Sewer Meter Volumetric ($/hcf)
$1.22
$0.24
$1.63
$0.32
$1.96
$0.39
$2.14
$0.42
$2.31
$0.45
$2.47
$0.49
Aquatic Park
Fixed Charge $1.22
$4.00
$997.50
$1,322.00
$1.63
$5.36
$1,336.65
$1,771.48
$1.96
$6.43
$1,603.98
$2,125.78
$2.14
$7.01
$1,748.34
$2,317.10
$2.31
$7.57
$1,888.21
$2,502.46
$2.47
$8.10
$2,020.38
$2,677.64
Volumetric Charge ($/hcf)
Sewer Service Equity Charge
Sewer Capital Equity Charge
42 Bi-Monthly
Customer Bill
Impacts
43 First Year Combined Water & Sewer Bill
Impacts (Bi-Monthly) – Scenario 1
44 F
I
45 Multi-Year Combined Residential Water & Sewer Bill Impacts (Bi-Monthly) – Scenario 1
46 Multi-Year Combined Residential Water & Sewer Bill Impacts (Bi-Monthly) – Scenario 2
47 Leisure World - First Year Combined Water & Sewer
Bill Impacts (Bi-Monthly) – Scenario 1
48 Leisure World - First Year Combined Water & Sewer
Bill Impacts (Bi-Monthly) – Scenario 2
49 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. 50 Communications
& Outreach
51 Public Information
• Rate Study Website
• FAQs, Press Releases, Video
• City Social Media Posts
• Notice of City Council Meetings and
links to Materials
• Next Council Mtg: May 12
• Upcoming Community Informational
Open Houses in May-June
UtilityRateStudy.sealbeachca.gov
[email protected]
(562) 342-7389
52 End of Presentation
53