HomeMy WebLinkAboutWater and Sewer Utility Rate Study PresentationCity of Seal Beach
Proposed Water and Wastewater Rate
Adjustment
Public Hearing - July 14, 2025
Revised Financial
Plan- City Council
Workshop #1
2/26/25
Informational
Open House #2
6/14/2025
Financial
Analysis
Commenced
June 2023
Public Hearing
Rates Proposed
No Action Taken
2/12/2024
Timeline – Where We’ve Been
2023
Financial Plan
Presented
December 2023
City
Implemented
Final Rate
Increase from
Prior Rate
Adoption
1/1/2025
City Council
Workshop #2
3/26/25
TODAY
Public
Hearing
7/14/25
2024 2025
Informational
Open House #1
6/4/2025
City Council
Meeting
5/12/25
2
Community
Information
Sessions
3
Fire Station No. 48
3131 N. Gate Road, Seal Beach
1.Wednesday, June 4, 2025
2.Saturday, June 14,2025
What do my rates pay for?
Utility rates fund operations, maintenance, repairs, debt
payments, emergency reserves, and forward-looking capital
improvement projects.
Water
•Imported water and
groundwater replenishment
•73 miles of pipelines,
downtown has 120-year-old
pipe
•4 groundwater wells
•2 reservoirs
Sewer
•34 miles of sewer mains
•25% severe condition
•Over 100-year-old pipes
•6 pump stations
•800 manholes
4
Water and Sewer Utilities Are Not Covering Expenses
Inflation: Post Covid-19 reached highest rate since 1981 and has impacted
operational and capital project costs
Rain: FY 2023 and 2024 were wet years; net result is decreased revenue;
$600k lower revenue than anticipated each year
Wholesale Water Costs: Increased OCWD water wholesale costs (partly
due to PFAS), MWDOC – Import water wholesaler
Both OCWD and MWDOC have had or are proposing 2 years of double-digit
rate increases and historically increases have been in the mid single digits
Aging Infrastructure / Deferred Maintenance
Sewer: Not meeting required debt coverage ratio, charges were reduced by
25% in the last study
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Why Rate
Increases are
Needed:
6
Water
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 complete. Soliciting for construction bids.
•$4.5 M
•OCWD Producers Loan
•Lampson Well must be fully operational before the
rehabilitation of the Bolsa Chica Well, which currently
supplies the majority of the City's groundwater
Lampson Well, the City’s newest built in 2011,
produces a nuisance odor caused by naturally
occurring H2S.
7
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 complete
•Coastal Development Permit complete
•Coordinating construction with LCWA
•$2.5M Construction Value
•Anticipated SRF funding, pending rate approval
•Environmentally sensitive habitat
•Must be constructed with wetlands restoration –
Fall 2025
8
Water Financial Outlook Without Revenue
Increases (or bond issuances)
In the red before paying for capital expenses
9
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
Scenario 1 Scenario 2
Revenue Adjustments
5-Year Increase
FY 2026 38%
FY 2027 23%
FY 2028 5%
FY 2029 5%
FY 2030 5%
Total CAGR 96.5%
FY 2026 29%
FY 2027 15%
FY 2028 8%
FY 2029 7%
FY 2030 6%
Total CAGR 81.7%
CIP $44M
Does more projects sooner
$34M
Pushes out projects
Grants/Loans/Market Debt $25M Market Debt
$9.5M SRF Loan
$4.4M OCWD Loan
$19M Market Debt
$9.5M SRF Loan
$4.4M OCWD Loan
10
Revenue adjustments show increased revenue above prior year revenue
Water - Recommended CIP
11
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 $44,444,163
Allocation to Cost Causation Components
SUPPLY EXTRA CAPACITY
(Peaking Costs)
CONSERVATION METER
MAINTENANCE
CUSTOMER
SERVICE
Cost of Service
12
Volumetric Rate ($/HCF)Fixed Charge by Meter Size
BASE
DELIVERY /
COSTS
Bi-monthly Fixed Charge & Leisure World
Assumptions (Shown for Illustrative Purposes)
•Certain costs centers: Meter
Maintenance and Capacity are
allocated to customers classes based
on the number and size of meters
•Prior assumption: Leisure World (LW)
needed the equivalent of one 6” meter
•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
13
1/1/2025
Fixed Charges
with LW
Fixed Charges
with LW
Scenario 1
Difference
Scenario 2
Difference
Meter Size Current 1 - 6" Meter 2 - 12" Meters $$
5/8''$52.38 $72.28 $70.68 ($1.60)($1.50)
3/4''$52.38 $72.28 $70.68 ($1.60)($1.50)
1"$77.92 $107.53 $104.87 ($2.66)($2.49)
1.5"$150.93 $208.28 $202.85 ($5.43)($5.08)
2"$228.33 $315.10 $306.50 ($8.59)($8.03)
3"$406.25 $560.63 $544.72 ($15.91)($14.87)
4"$675.94 $932.80 $906.18 ($26.62)($24.88)
6"$1,331.01 $1,836.79 $1,783.70 ($53.10)($49.64)
8"$2,128.92 $2,937.91 $2,852.83 ($85.08)($79.53)
10"$3,047.29 $4,205.26 $4,083.10 ($122.16)($114.19)
12" NA NA $7,458.19 NA NA
2" Aquatic Park $344.58 $475.52 $476.01 $0.49 $0.45
Aquatic Park includes a capital surcharge due to under sea pipelines
Scenario 1
Proposed Water Bi-Monthly 5-Year fixed
Charges (assumes 2 -12” meter for LW)
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FYE 2026 FYE 2027 FYE 2028 FYE 2029 FYE 2030
Water 1/1/2025 8/1/2025 7/1/2026 7/1/2027 7/1/2028 7/1/2029
Bi-monthly Fixed Charges
All Customers
5/8''$52.38 $70.68 $86.94 $91.29 $95.85 $100.64
3/4''$52.38 $70.68 $86.94 $91.29 $95.85 $100.64
1"$77.92 $104.87 $128.99 $135.44 $142.21 $149.32
1.5"$150.93 $202.85 $249.51 $261.99 $275.09 $288.84
2"$228.33 $306.50 $377.00 $395.85 $415.64 $436.42
3"$406.25 $544.72 $670.00 $703.50 $738.68 $775.61
4"$675.94 $906.18 $1,114.60 $1,170.33 $1,228.84 $1,290.28
6"$1,331.01 $1,783.70 $2,193.95 $2,303.64 $2,418.82 $2,539.77
8"$2,128.92 $2,852.83 $3,508.98 $3,684.43 $3,868.65 $4,062.08
10"$3,047.29 $4,083.10 $5,022.21 $5,273.32 $5,536.99 $5,813.84
12" Leisure World $1,331.01 $7,458.19 $9,173.58 $9,632.26 $10,113.87 $10,619.56
2" Aquatic Park $344.58 $476.01 $585.49 $614.76 $645.50 $677.78
Private Fire Charges
4"$54.42 $75.10 $92.37 $96.99 $101.84 $106.93
6"$158.07 $218.14 $268.31 $281.72 $295.81 $310.60
8"$336.86 $464.87 $571.79 $600.38 $630.39 $661.91
10"$605.79 $835.99 $1,028.27 $1,079.68 $1,133.67 $1,190.35
12" NA $1,350.35 $1,660.94 $1,743.98 $1,831.18 $1,922.74
Proposed Water Volumetric Rates ($ / hcf)
15
FYE 2026 FYE 2027 FYE 2028 FYE 2029 FYE 2030
1/1/2025 8/1/2025 7/1/2026 7/1/2027 7/1/2028 7/1/2029
Volumetric Rates ($ /hcf)
Residential
Tier 1 $3.77 $5.20 $6.40 $6.72 $7.06 $7.41
Tier 2 $3.99 $5.51 $6.77 $7.11 $7.47 $7.84
Multi-Family Residential & Leisure World
Tier 1 $3.77 $5.20 $6.40 $6.72 $7.06 $7.41
Tier 2 $3.94 $5.44 $6.69 $7.02 $7.37 $7.74
Commercial $3.77 $5.20 $6.40 $6.72 $7.06 $7.41
Irrigation $3.86 $5.33 $6.55 $6.88 $7.22 $7.58
City $3.82 $5.27 $6.48 $6.81 $7.15 $7.51
Aquatic Park $4.27 $5.89 $7.25 $7.61 $7.99 $8.39
16
Sewer
Sewer Financial Outlook Without
Revenue Increases
•A debt service coverage ratio of 1.2 means the City has promised bondholders to set
rates so that net cashflow (before CIP expenses) is about $650k (positive)
•Revenue is decreasing due to lower interest earned in cash balances
•Does not include capital projects
17
FY 2024 FY 2025 FY 2026 FY 2027
Projected Total Revenue $2,625,899 $2,589,328 $2,477,265 $2,410,373
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
Revenue Less Expenses $416,469 $122,763 ($152,219)($369,260)
Debt Service $545,583 $545,623 $545,183 $544,263
Cashflow ($129,114)($422,860)($697,402)($913,523)
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
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Sewer Financial Plan Scenarios
Scenario 1 Scenario 2
Revenue Adjustments
5-Year Increase
FY 2026 34%
FY 2027 21%
FY 2028 14%
FY 2029 13%
FY 2030 4%
Total CAGR 117.2%
FY 2026 34%
FY 2027 20%
FY 2028 9%
FY 2029 8%
FY 2030 7%
Total CAGR 102.5%
CIP (today’s $)$19.2M
•Does more projects
sooner, compared to
scenario 2
$15.7M
•Pushes out projects
Debt $14 M Market Debt $15 M Market Debt
19
34% is needed in the 1st year to meet debt covenants!
Revenue adjustments show increased revenue above prior year revenue
Proposed Sewer CIP
20
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
Proposed Sewer Bi-Monthly
5-Year Rates & Charges
FYE 2026 FYE 2027 FYE 2028 FYE 2029 FYE 2030
Fixed Charge Current 8/1/2025 7/1/2026 7/1/2027 7/1/2028 7/1/2029
Single-Family Residential
Fixed Charge $48.04 $64.37 $77.89 $88.80 $100.34 $104.35
Customers with a Fixed Charge and
Volumetric Rate Current 8/1/2025 7/1/2026 7/1/2027 7/1/2028 7/1/2029
Multi-Family Residential
Fixed Charge $1.22 $1.63 $1.98 $2.26 $2.55 $2.65
Volumetric Rate ($/hcf)$4.00 $5.36 $6.49 $7.39 $8.35 $8.69
Commercial and City
Fixed Charge $1.22 $1.63 $1.98 $2.26 $2.55 $2.65
Volumetric Rate ($/hcf)$4.00 $5.36 $6.49 $7.39 $8.35 $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 $1.22 $1.63 $1.98 $2.26 $2.55 $2.65
Sewer Meter Volumetric ($/hcf)$0.24 $0.32 $0.39 $0.44 $0.50 $0.52
Aquatic Park
Fixed Charge $1.22 $1.63 $1.98 $2.26 $2.55 $2.65
Volumetric Charge ($/hcf)$4.00 $5.36 $6.49 $7.39 $8.35 $8.69
Sewer Service Equity Charge $997.50 $1,336.65 $1,617.35 $1,843.78 $2,083.47 $2,166.80
Sewer Capital Equity Charge $1,322.00 $1,771.48 $2,143.49 $2,443.58 $2,761.24 $2,871.6921
22
Bi-Monthly
Customer Bill Impacts
Proposed First Year Combined Water & Sewer
Bill Impacts (Bi-Monthly)
23
Proposed Multi-Year Combined Residential Water
& Sewer Bill Impacts (Annual & Bi-Monthly)
24
Proposed Leisure World - Combined Water &
Sewer Bill Impacts (Annual)
25
≈$19 bi-monthly
increase per dwelling
unit or $9.51 monthly
for first year
Summary
•Proposed revenue increases will restore the utilities’ financial health so the City can:
›Continue to deliver safe, reliable water and sewer services
›Maintain and upgrade aging infrastructure
›Maintain good credit standing and be able to issue debt
•Consequences of delaying:
›$222k/month for water and $67k/month for sewer
›Projects may be affected if delayed
–LCWA Watermain Lining and Beverly Manor Well assume an SRF loan
–Lampson Well Treatment System assumes an OCWD Producers Loan
–Need to demonstrate that the City can pay current and future loans back
›WW enterprise remains in technical default
•The rate study follows standard rate setting practice and uses available data to determine
the cost to serve each class
26
27
Myths
Myth Busters
•Myth 1: The Water & Sewer Enterprise Funds will subsidize the
General Fund.
o FACT: By law, revenues generated by water and sewer rates may only
be used for costs of providing water and sewer services.
•Myth 2: Nothing was done with the revenue from the last rate study.
o FACT: On the contrary, many of the projects identified in the 2020 Rate
Study have already been designed. However, due to various external
factors, construction has been delayed. As a result, funding through
debt issuance has not yet been pursued since the projects have not
moved into the construction phase.
28
Myth Busters
•Myth 3: The CIP schedules are not attainable.
o FACT: While the Option 1 CIP schedule is ambitious, it is not
unattainable—many of the projects are already designed and
considered "shovel ready." Option 2 includes fewer projects, making its
completion timeline even more manageable.
•Myth 4: Delays won't have an impact.
o FACT: Each month of delay is approximately $300k of revenue loss
that could have been used towards enhancing your utility. Also, delays
jeopardize external funding opportunities to help augment burden to
rate payers and construction windows.
•Myth 5: The rates are subsidizing future developments.
o FACT: The rates fund current system needs to keep your water and
sewer systems reliable today.They are not designed to subsidize or
fund future developments.
29
30
Summary of Objections
and Responses
31
AB 2257
•Established a formal written objection procedure for ratepayers to raise
specific legal concerns
•Must include specific grounds for alleging noncompliance of the proposed rates with
Proposition 218
•Designed to address disputes during public participation period
•Permits agency to resolve issues during participation period
•Creates an exhaustion of administrative remedies procedure
•Requires ratepayers to bring a specific legal objection prior to the deadline
established as part of the rate setting process to preserve their ability to file a legal
challenge
31
AB 2257 Objection Tally
32
Written Objections Received 3
As of the 5 p.m. deadline on July 7, 2025, the City received:
33
Objection Letter #1
a.Object to proposed water and wastewater rates, citing inequity in the rate structure
based on:
o Fixed charges are not “per door,”
o Lower use parcels unfairly pay less,
o Burden on those without ability to pay (i.e. fixed- and low-income, large families)
o Lack of per door fees leads to unstable revenues
a.Object to wastewater rates, citing rate Single-Family customers are subsidizing others
b.Object to Sunset Aquatic Park sewer rates, citing all other customers are subsidizing
Aquatic Park
Written Objections Summary
Objection Letter #3
a.Proposed rates are excessive and not proportional to her property
b.Object to proposed rates, stating they appear to exceed proportional cost of service to the
objector’s property.
c.Object that the City has not demonstrated that the revenues will be used exclusively for each utility
d.The notice lacks sufficient detail to determine if the methodology is consistent with Constitutional
requirements, citing detailed financial analysis and rate modeling was not available to the public
e.The public process lacked transparency
34
Objection Letter #2
a.Object to proposed rates, citing they are excessive
b.Object that the proposed rates circumvent Proposition 13
c.Object to personnel compensation increases, citing they are unjustified
d.Object to public process, citing lack of transparency
Written Objections Summary
Response Summary
The City acknowledges residents' concerns about proposed water and sewer rate increases but asserts
that they are necessary, legally compliant, based on detailed studies, and designed to ensure the long-
term reliability and equitable funding of essential water and wastewater services.
•Written Objections did not demonstrate noncompliance with Proposition 218; therefore, the publicly
noticed and available proposed rates, 2025 Financial Plan and 2020 Cost of Service Study Report
stand.
•Water and Sewer revenues are restricted and accounted for in Water Enterprise and Sewer
Enterprise Funds, separate from the City’s General Fund. Rate revenues pay for water and sewer
expenses only.
•The City undergoes an independent annual financial audit to ensure compliance with generally
accepted accounting principles in which expenditures from utility Enterprise Funds are noted.
•Written Responses to the Written Objections are included in the City’s Administrative Record and
included in the Public Hearing agenda packet.
35
Response Summary – 5 Themes
1. Necessity of Rate Increases - Objections did not provide specific information on alleged
non-compliance with Proposition 218. Proposed rate increases are deemed essential and not
arbitrary, driven by critical factors such as:
o Aging Infrastructure: The need for substantial investment in repairing, replacing, and
modernizing old water and wastewater systems to ensure reliability, prevent failures, and meet
public health standards.
o Regulatory Compliance: Adhering to increasingly stringent federal and state environmental and
public health regulations, which require significant capital and operational adjustments.
o Rising Operational Costs: Covering the increasing expenses for supplies, energy, chemicals,
and maintenance necessary for daily system operation.
o Long-Term Financial Stability: Ensuring a stable financial foundation for the utility to meet
current needs, fund future projects, and maintain reserves to avoid larger, unpredictable
increases.
36
Response Summary – 5 Themes
2.Equity in Billing Structure:
•Fair Cost Allocation: While promoting conservation through use-based billing, the overall rate structure aims to
recover fixed infrastructure costs equitably from all users. All customers with an account, even if they use no water, pay
the fixed charge. A customer pays in proportion to their 1) water use (on average is about 70% of the bill), 2) number of
meters, and 3) meter size.
•Fixed Cost Recovery: The proposed water fixed charge recovers the following costs:
o Customer Billing: only customers who get a bill cause this cost and therefore can be charged for it
The following are proportional to meter size:
o Meter Maintenance: only customers with meters can be charged for it because the costs are associated with
meter maintenance and meter reading
o Fixed Capacity (infrastructure): capacity costs are assessed in proportion to a customer’s meter size as meter
size is proportional to potential water use that affects infrastructure needs. Potential demand to serve multi-family
dwellings is reflected in their meter size. For example, a SFR ¾” meter fixed charge is currently $26/month
compared to a MFR 4” meter fixed charge is $338/month.
Continued next slide
37
Response Summary – 5 Themes
2.Equity in Billing Structure Continued:
•Single Family subsidizing other classes: Single family class pays in proportion to their estimated sewer discharge
•Subsidies and Sunset Aquatic Park: The City is committed to ensuring all customer classes, including multi -family
units and specific users like Sunset Aquatic Park, contribute their fair share based on their use and impact on the
system, in line with Proposition 218 which requires that no class subsidizes another.
•The City implemented Sunset Aquatic Park charges specifically to address equity concerns:
o Water - The fixed charge for Sunset Aquatic Park is higher than the fixed charge for other customers with the
same meter size. This is to recover the added capital cost associated with the water line feeding Sunset Aquatic
Park.
o Sewer – Sunset Aquatic Park has a separate sewer service equity charge and sewer capital equity charge to
recover the added costs associated with Sunset Aquatic Park sewer service.
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Response Summary – 5 Themes
3. Justification for Personnel Compensation:
Staff compensation is a significant part of the operational budget for any utility, as it relies on skilled
personnel to manage complex systems, maintain infrastructure, and ensure compliance.
The 8% annual personnel cost inflator is a comprehensive estimate that includes:
•merit increases,
•cost of living adjustments,
•retirement costs,
•insurance and
•other legally obligated personnel-related expenses.
It is based on recent cost trends and future obligations and is necessary to maintain service levels and
staffing. The personnel inflator is not used to inflate capital improvement projects. There is a separate
CIP inflator which is 5%, 4% , 3%, 3% and 3% for the 5-year proposed rates period.
39
Response Summary – 5 Themes
4. Compliance with Proposition 218 and Legal Standards:
o Prop 218 (User Fees) vs Prop 13 (Taxes): Water and wastewater charges are considered
property related fees, not property taxes, meaning Proposition 13 (pertaining to property taxes)
does not apply.
o Cost of Service Basis: All proposed rates are based on comprehensive, independent financial
analysis and cost-of-service studies designed to ensure that revenues do not exceed the cost of
service and that charges are proportional to the cost of serving each parcel, fulfilling Proposition
218 requirements.
o Restricted Funds: Revenues derived from these rates are legally restricted and exclusively
dedicated to the operation, maintenance, and capital improvement of the water and sewer
systems through each utility Enterprise Fund, separate from the General Fund.
40
Response Summary – 5 Themes
5.Transparency and Public Process:
•Adherence to Legal Process: The proposed rate adjustments followed the legally mandated Prop
218 process, including public notification and a Public Hearing. The Notice of Public Hearing provided
an explanation of cost and inflation drivers, capital needs, how proposed rates were determined, and
directed interested persons to the consultant's reports available on the website and from the City
Clerk’s Office.
•Transparent Public Process Included:
o Multiple publicly-noticed City Council workshops (February 26, March 26, 2025)
o Regular City Council Meetings (2023, 2024, 2025)
o Community information sessions (2023, 2024, 2025: June 4 and June 14).
o Meetings and information sessions were promoted across various City communication channels
(website, media releases, social media, e-newsletters, and within the Public Hearing Notice).
41
Summary of Requests:
1.That the City Council conduct a public hearing to accept comments on the proposed
water and sewer rate adjustments; and,
2.Upon the conclusion of the public hearing, that the City Council adopt Resolution
7668 responding to timely filed written objections to the proposed water and sewer rates
pursuant to the requirements of Assembly Bill 2257; and,
3.Upon the conclusion of the public hearing, provided a majority protest against the
proposed water rates does not exist, that City Council adopt Resolution
7669 establishing the water rates, effective August 1, 2025; and,
4.Upon the conclusion of the public hearing, provided a majority protest against the
proposed sewer rates does not exist, that City Council adopt Resolution 7670
establishing the sewer rates, effective August 1, 2025; and,
5.Receive and file the Water and Wastewater Financial Plan and Rate Study, prepared by
Raftelis Financial Consultants, Inc., dated June 17, 2025, as presented to the City
Council at this meeting and on file in the office of the City Clerk.
42
43
End of
Presentation
Revenue must be
used to cover the
costs for which
the charge was
imposed
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
Proposition 218 Requires:
Cannot collect
more than what
you need
Must send a
written notice to
customers no less
than 45 days
before a public
hearing
44
NOTE: Revenues collected from rates cannot be used for any other purpose.
Utility Enterprise Funds are separate from the General Fund.
Water Infrastructure
45
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 operation.
•$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.
•Next phase is design.
•$1.8 M
Constraints
•Timely completion to prevent further corrosion,
which can lead to tank failure
Water – Modified CIP
(Absolute Minimum Required Projects)
48
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
Modified Option Water Bi-Monthly 5-Year fixed
Charges (assumes 2 -12” meter for LW)
49
FYE 2026 FYE 2027 FYE 2028 FYE 2029 FYE 2030
Water 1/1/2025 8/1/2025 7/1/2026 7/1/2027 7/1/2028 7/1/2029
Bi-monthly Fixed Charges
All Customers
5/8''$52.38 $66.07 $75.98 $82.06 $87.81 $93.08
3/4''$52.38 $66.07 $75.98 $82.06 $87.81 $93.08
1"$77.92 $98.03 $112.73 $121.75 $130.28 $138.09
1.5"$150.93 $189.62 $218.07 $235.51 $252.00 $267.12
2"$228.33 $286.51 $329.49 $355.85 $380.76 $403.60
3"$406.25 $509.19 $585.57 $632.42 $676.69 $717.29
4"$675.94 $847.08 $974.14 $1,052.07 $1,125.72 $1,193.26
6"$1,331.01 $1,667.37 $1,917.47 $2,070.87 $2,215.83 $2,348.78
8"$2,128.92 $2,666.78 $3,066.79 $3,312.14 $3,543.98 $3,756.62
10"$3,047.29 $3,816.81 $4,389.33 $4,740.48 $5,072.31 $5,376.65
12" Leisure World $1,331.01 $6,971.79 $8,017.56 $8,658.96 $9,265.09 $9,821.00
2" Aquatic Park $344.58 $444.96 $511.71 $552.64 $591.33 $626.81
Private Fire Charges
4"$54.42 $70.20 $80.73 $87.19 $93.29 $98.89
6"$158.07 $203.91 $234.50 $253.26 $270.98 $287.24
8"$336.86 $434.55 $499.73 $539.71 $577.49 $612.14
10"$605.79 $781.47 $898.69 $970.58 $1,038.53 $1,100.84
12" NA $1,262.29 $1,451.63 $1,567.76 $1,677.51 $1,778.16
Modified Option Water Volumetric Rates ($ / hcf)
50
FYE 2026 FYE 2027 FYE 2028 FYE 2029 FYE 2030
1/1/2025 8/1/2025 7/1/2026 7/1/2027 7/1/2028 7/1/2029
Volumetric Rates ($ /hcf)
Residential
Tier 1 $3.77 $4.86 $5.59 $6.04 $6.46 $6.85
Tier 2 $3.99 $5.15 $5.92 $6.39 $6.84 $7.25
Multi-Family Residential & Leisure World
Tier 1 $3.77 $4.86 $5.59 $6.04 $6.46 $6.85
Tier 2 $3.94 $5.08 $5.84 $6.31 $6.75 $7.16
Commercial $3.77 $4.86 $5.59 $6.04 $6.46 $6.85
Irrigation $3.86 $4.98 $5.73 $6.18 $6.62 $7.01
City $3.82 $4.93 $5.67 $6.12 $6.55 $6.94
Aquatic Park $4.27 $5.51 $6.33 $6.84 $7.32 $7.76
Modified Option Sewer CIP
51
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
52
Modified Option Sewer Bi-Monthly 5-Year Rates
& Charges
FYE 2026 FYE 2027 FYE 2028 FYE 2029 FYE 2030
Fixed Charge Current 8/1/2025 7/1/2026 7/1/2027 7/1/2028 7/1/2029
Single-Family Residential
Fixed Charge $48.04 $64.37 $77.25 $84.20 $90.94 $97.30
Customers with a Fixed Charge and
Volumetric Rate Current 8/1/2025 7/1/2026 7/1/2027 7/1/2028 7/1/2029
Multi-Family Residential
Fixed Charge $1.22 $1.63 $1.96 $2.14 $2.31 $2.47
Volumetric Rate ($/hcf)$4.00 $5.36 $6.43 $7.01 $7.57 $8.10
Commercial and City
Fixed Charge $1.22 $1.63 $1.96 $2.14 $2.31 $2.47
Volumetric Rate ($/hcf)$4.00 $5.36 $6.43 $7.01 $7.57 $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 $1.22 $1.63 $1.96 $2.14 $2.31 $2.47
Sewer Meter Volumetric ($/hcf)$0.24 $0.32 $0.39 $0.42 $0.45 $0.49
Aquatic Park
Fixed Charge $1.22 $1.63 $1.96 $2.14 $2.31 $2.47
Volumetric Charge ($/hcf)$4.00 $5.36 $6.43 $7.01 $7.57 $8.10
Sewer Service Equity Charge $997.50 $1,336.65 $1,603.98 $1,748.34 $1,888.21 $2,020.38
Sewer Capital Equity Charge $1,322.00 $1,771.48 $2,125.78 $2,317.10 $2,502.46 $2,677.64
Modified Option First Year Combined Water &
Sewer Bill Impacts (Bi-Monthly)
53
Modified Option Multi-Year Combined Residential
Water & Sewer Bill Impacts (Bi-Monthly)
54
Modified Option Leisure World - First Year Combined
Water & Sewer Bill Impacts (Bi-Monthly)
55
≈$15.20 bi-
monthly increase
per dwelling unit or
$7.60 monthly
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
•Next phase is 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
•On-going & 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
tablePhotos are for demonstration purposes only.
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 Financial Plan Scenarios
December 2023 Scenario 1 Scenario 2
Revenue Adjustments
5-Year Increase
FY 2024 33%
FY 2025 25%
FY 2026 17%
FY 2027 12%
FY 2028 10%
Total CAGR 139.6%
FY 2026 38%
FY 2027 23%
FY 2028 5%
FY 2029 5%
FY 2030 5%
Total CAGR 96.5%
FY 2026 29%
FY 2027 15%
FY 2028 8%
FY 2029 7%
FY 2030 6%
Total CAGR 81.7%
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
64
Revenue adjustments show increased revenue above prior year revenue
65
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
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 call -
outs.
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