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Part one of two.
The City Council held a water and sewer rate workshop Monday night, April 28. The council took no action.
Members of the public expressed concerns about the proposed rate increases, the fairness of charges to Leisure World, and city management. (The Sun will go into details on the public’s comments in part two.
Consultants said the Seal Beach’s sewer utilities were not meeting the city’s debt coverage. (The same issues were raised during the March 2025 water and sewer workshop.) Project Manager Steve Gagmon said Seal Beach has three sewer longs for about half a million dollars in annual debt service. According to Gagmon, the city has three loans Consultants from Raftelis showed the council two scenarios for water financial planning: One with $44 million in improvement projects over five years; the other with $34 million in improvement projects over five years. The second scenario postpones some projects.
The City Council is expected to take its next look at the subject on May 12. However, the state-mandated process for water sewer rates is specific and requires written notice to the public 45 days before a public hearing. The city will be hold open houses on the water and sewer rates in May and June.
This article is not a transcript. It looks only at highlights from the workshop.
Background
Gagmon said they were discussing rate increases because of inflation; because fiscal years 2023 and 2024 were wet years, which decreased revenue; the cost of buy water has increased; and the sewer debt service. He described debt coverage as having 1.2 times the amount you half to pay your creditors. According to Gagmon, the city has three loans for the sewer system.
Gagmon said that during the last water and sewer rate study, Seal Beach decreased the sewer rates by 25%. “That undoubtedly contributed to where you are today,” Gagmon said.
Turning to improvement projects, Gagmon discussed pipes that were 60 years old and pipes that were about 120 years old.
He said the useful life of pipes is between 50 and 90 years.
In response to a question from District Five Councilman Nathan Steele, Public Works Director Iris Lee said last summer Seal Beach had to import water for three months which added $1 million burden to the city’s water enterprise fund.
The consultants went over the city’s water financial plan without revenue increases and with:
According to one of the consultant’s slides, without revenue increases the city would have zero dollars for debt service in fiscal years 2026 and 2027.
Rates
According to Gagmon, in scenario one, the city would increase water revenue by 38% in the first year. He said over five years, the growth in revenue would be 96%. He said that assumed the city would do the $44 million in capital improvements.
As soon as you go back to funding projects through cash, you start to burn through your reserves,” Gagmon said.
“We’ve modeled three more years to make sure that you’re OK for a couple of years,” Gagmon said. “Because as soon as you burn through your debt proceeds, you then burn through your cash and you end up right where you want to be a few years hence,” Gagmon said.
In scenario two, he said Seal Beach would increase revenue by 29% in the first fiscal year. He said the total five year growth in scenario two would be 82%. That was based on the assumption the city did $34 million in improvement projects.
Leisure World
Gagmon said Leisure World was unique. He said for a typical property, you have a water line in the street and a lateral line that goes to a meter, which serves only that property. He said Leisure World has two 12-inch meters; the water exits Leisure World through two 8-inch meters serving College Park West and College Park East.
According to one of his slides, the Leisure World bi-monthly fixed charge would increase to $2.26 per living unit.
