Second of two parts.
The Seal Beach water and sewer rate hearing will continue on Monday, Feb. 26. The council is expected to make a decision after the hearing closes that night.
Land parcel owners have until that meeting, which will start at 7 p.m., to submit written protests against the proposed water and sewer rate increases.
If the city receives written protests from more than 50% of parcel owners prior to the meeting, the council cannot legally raise rates. According to City Attorney Nicholas Ghirelli, the protest procedure was set by California Prop. 218.
So, what is 50%?
The numbers were 2,523 for water and 2,347 for sewer, according to a Feb. 1 email from Assistant City Manager Patrick Gallegos.
No decision was made during the Feb. 12 City Council hearing, but the council took comments from the public during the start of the hearing.
Due to the length of the meeting (the entire council meeting was about four hours long) and limited space, what follows will be some of the highlights from the meeting.
Before the hearing, during council comments, District Five Councilman Nathan Steele commented on the water rate proposal’s potential impact on Leisure World.
“I am acutely aware that the people that are living in Leisure World at least 50% of them live on fixed incomes and they are literally going hand to mouth on a month-to-month basis and so the rate increases that have already been implemented are a serious item for these people; it is a serious burden for those people and so I wish there was something I could do to help them,” Steele said.
He didn’t state a position on the proposed rate increases during the meeting, but after the meeting he emailed an opinion piece to the Sun arguing in favor of them. (See page 6.)
Background
Steve Gagmon, the project manager and vice president of the consulting firm Raftelis, described what he said was driving the rate increases.
He started with debt service. He said Seal Beach had five loans: two in the water utility and five in the wastewater utility.
“When any city enters in issues debt, it takes on a covenant, which is an agreement that assures bond holders that they will get paid back and in particular the city has pledged to recover 1.2 times its expenses that means for every dollar of expenses you have, you need to set rates such that you collect a $1.20 revenue,” Gagmon said.
He said Seal Beach was not meeting that debt service ratio.
He said the plan that was in front of the council assumes that the city will take on more debt for water and sewer systems and if the city doesn’t, the city will have to cash-fund projects, which means rates will have to go up even more than are being proposed.
Gagmon said inflation was another reason for the proposed increases.
Another reason he cited was lowered water use.
According to Gagmon, the combined increase of water saving during the drought and decreased water use in 2023, which he called one of the wettest years on record.
According to Gagmon, that caused a $600,000 hit to the city’s water utility.
He said the city’s wholesale costs have increased.
“Item number five is aging infrastructure,” Gagmon said.
According to Gagmon, Seal Beach has pipes that are more than 100 years old.
(During a 2020 council meeting, the late Steve Myrter, who was Public Works director at the time, said Seal Beach planned to invest $3.28 million a year in funding for water-related projects that he had described as “critical”.)
Gagmon said Old Town has a lot of old pipes.
He said the country has a lot of infrastructure for water and sewers that is from 50 to 100 years old. Gagmon said that was causing extra inflation above regular inflation.
Another issue Gagmon raised is the size of Seal Beach. “Unfortunately the smaller the utility is, the more usually the rates are,” Gagmon said.
According to both staff and the consultant, the city can only recover costs for water and sewer service.
Public hearing
Thirteen members of the public spoke during the hearing. The audience applauded after nearly every speaker.
The first to speak was Michael Thomas, of the Hill, a former Planning Commissioner who said he has worked in water for 25 years.
“Water has always been undervalued, under-invested, and all those things,” Thomas said.
According to Thomas, the proposal is for 140% increase in rates. (Later in the meeting, resident Hope Horning gave the same figure.)
“So that’s a that’s a really, really big number,” Thomas said.
According to Thomas, the average family in Old Town, the Hill, and College Park East and West, would be looking at an additional annual cost of $1,340 a year.
Thomas said the water rate report probably should not have seen the light of day and should have been sent back for more polishing.
Thomas also suggested looking at water rates for a shorter period than four years. He suggested two years.
One man who did not give his name wanted a guarantee that the money would not go to management salaries.
Jim Akers was worried about the next generation.
“I’m not worried about myself I mean that’s doesn’t really bother me but I’m thinking about younger people in town to take a hit like that just didn’t feel right to me,” Akers said.
He suggested looking at water and sewer rates every two years. He also suggested belt tightening for the city.
Tom Quinn challenged the assumptions made during the presentation. He said inflation is coming down quickly.
Quinn argued that Seal Beach should take projects one at a time.
“You raise rates and they never go down, ever” he said.
He suggested putting something on the ballot.
“We have a very expensive government. And I love our government,” Quinn said.
“But I think we have to reconsider how 25,000 people can swim in a pond where everyone else is a couple hundred thousand people,” Quinn said.
He also said 50% plus one is not democratic, apparently referring to the required written protests.
One of the later speakers was Teresa Miller of Old Town.
“I want to remind everyone to that the initial the last rate study
that was done was in 2019,” Miller said.
She said the rate was increased for the next five years.
According to Miller, at that time people were attending to the sick, there was a lockdown, love ones were dying.
She said the water issue was “skated on through”.
“I agree with everything that’s been said by everybody about the rate increases just being excessive,” Miller said.
She argued the proposal was being rushed.
She said she listened to the consultant during the Strategic Planning meeting.
“There was a like a hardcore press on the City Council to do the right thing, which meant side with the city on all of the issues that should be the responsibility of our town,” Miller said.
“Prices are going up everywhere people can’t do it uh and the people who can I are feeling bad for the people who are maybe 25 or 30,” Miller said.
“I don’t think my kids could afford to live here just based on the outlay that they have to have over and above housing. I think you have to really look at this. We’re tired of it. There’s a problem of trust and transparency and that doesn’t mean that there’s no communication. I don’t care about Facebook and having things be you know pushed out on a website that’s not what it means,” Miller said.
“It means that there’s a shared responsibility of communication and accountability on everything instead of pushing it on the backs of Seal Beach residents to shoulder every single increase that’s coming along,” Miller said.
“And that goes right to the whole half cent uh sales tax that’s being floated around, too,” Miller said.
“When is it going to end?” Miller said.
