Seal Beach study session outlines steep water and sewer rate increases to pay for aging system

Seal Beach public works staff and consultants told the City Council at a study session that the city’s water and sewer enterprise funds are operating in the red and that large rate increases will be needed to fund repairs and meet debt covenants.

Public Works Director Iris Lee, the presenter and moderator for the session, said, “we are in the red, we have failing infrastructure, and we need to adjust the rates to protect your health and safety.” The meeting was explicitly a study session and the council took no formal vote.

The presentation by Raftelis project manager Steve Gagnon and Raftelis analyst Nick Kennedy laid out two capital improvement program (CIP) packages and the rate changes that would be needed to pay for them. The staff‑recommended option (scenario 1) would fund roughly $44 million in water and sewer projects over five years; the lower alternative (scenario 2) would fund about $34 million by delaying or reducing some work.

Why the increases: consultants cited higher construction costs from inflation, rising wholesale water charges from outside agencies, weather‑driven revenue declines and aging facilities. Kennedy summarized the legal backdrop, noting, “Prop 218 requires the city to comply with certain procedural requirements prior to increasing the city's water and wastewater fees, including holding a public protest hearing,” and reiterated the city must show fees do not exceed the cost to provide service.

Key numbers and scenarios

- Water CIP: scenario 1 (staff recommended) $44,000,000 over five years; scenario 2 $34,000,000. Scenario 1 assumes $25,000,000 in market debt, nearly $10,000,000 in a State Revolving Fund (SRF) loan and a $4,400,000 Orange County Water District loan…