Seal Beach approves $6.7 million Lampson Well contract, authorizes $8.1 million OCWD loan amid warranty and cost concerns

The Seal Beach City Council voted to award the Lampson Well treatment contract to Pacific Hydratech Corporation and authorized staff to pursue an amended Orange County Water District (OCWD) loan of up to $8,100,000 to finance the project.

Mayor Lisa Landau made a substitute motion to accept Pacific Hydratech's bid and move forward with the OCWD financing; Councilmember Steele seconded the motion, which passed 4-to-1. The recommended construction contract award was $6,677,200 with a 10% construction contingency of about $670,000; staff estimated the total project cost at roughly $8,600,000 and said the OCWD loan amendment request to $8,100,000 would exclude previously incurred soft costs.

Why it matters: Lampson Well is a key component of the city's groundwater system. Staff said the treatment system, which will install four granular activated carbon (GAC) pressure vessels, is necessary to reduce hydrogen sulfide odor that currently limits the well's production. Restoring full operation at Lampson is a prerequisite for work at the city's older Bolsa Chica facility, staff said.

Public concerns and council questions: Dozens of residents and several council members pressed staff for more detail on why costs rose, who is contractually responsible for defects and how the loan will be structured. James Jensen urged an independent performance audit of Public Works, saying large project increases indicate accountability problems. "The council should order an independent performance audit of public works," Jensen said in public comment.

Residents and speakers highlighted the jump in key bid line items, noting, for example, that a vessels line in an earlier bid was shown at roughly $760,000 and later came in at about $1.2 million. Eugenia Yasmogrodzky asked whether long-lead items would be owned by the city or the contractor and whether warranties would be assigned and enforced; she also asked that independent bid- and constructability-reviews be made public.

Staff response on warranties, bonds and testing: City Attorney Garelli explained that bidders must provide a performance bond equal to the full contract amount; the bond requires the surety to finish the work or pay the city the value of incomplete work if the contractor fails to perform. Garelli summarized the construction warranty as a one-year warranty under the 'green book' standard specifications and noted the city has remedies for latent defects that can extend beyond that period under state law.

Public Works Director Lee said progress payments will be inspected and that the warranty period generally begins upon substantial completion and city acceptance. Cho, the deputy director, said the proposed construction timeline depends on long-lead items and estimated vessel lead times of about 28'2 weeks.

Financing questions: Councilmembers pressed staff for loan parameters and said they wanted to understand financing options, including whether soft costs should be borrowed or paid from reserves. Staff said OCWD previously offered a fixed, low-rate loan (about 3.336% discussed in staff materials) and that OCWD must be engaged to provide final amended terms; staff also said interest under the loan generally would not begin until substantial completion per the draft loan terms discussed.

Next steps: Staff will finalize the OCWD loan amendment, proceed with contract execution and begin procurement for long-lead items. The council directed staff to make relevant contract, warranty and loan documents available to council and the public; several council members also asked staff to provide a concise memo answering the public's specific questions about warranty, bonds, long-lead ownership and financing options.

Action taken: The council approved award of the construction contract to Pacific Hydratech Corporation (approximately $6,677,200), authorized a 10% contingency, approved right-of-way inspection services up to $30,000, and approved pursuing an OCWD loan amendment up to $8,100,000 (motion carried 4'to'1).