Council hears water and sewer CIP update; staff signals $25M debt packaging in 2026–27

At a May 2026 Seal Beach budget workshop, Public Works Director Iris Lee updated the City Council on water and sewer capital projects and fund balances, warning that several projects will require debt financing and that timing is dependent on securing loans and grant awards.

Lee said the Lampson Well treatment system — intended to mitigate nuisance odor at the Lampson production site — is ready for a construction contract award and that staff will seek to amend an OCWD producers loan to fund the construction phase. She described the $8.6 million figure as an “all‑in cost” that includes design, soft costs, construction and contingency; staff previously spent roughly $500,000 of rate‑funded money on design.

On another project, Lee said a water transmission main lining in the Los Cerritos Wetlands area is funded by the State Revolving Fund (SRF) and was out to bid with an apparent low bid expected May 21; an engineer’s construction estimate referenced by council was about $2.7 million. For a Navy Reservoir rehabilitation, Lee described a design‑funding plan through rate revenue and expected construction to be debt‑funded, with an approximate total project estimate of $2.0 million.

Lee said the water and sewer funds are projected to open FY 2026–27 with approximately $22 million (water) and $26 million (sewer) but that unrestricted fund balances look negative temporarily because of debt timing; once debt proceeds are secured, balances should normalize. She said staff is working with financial advisers to “package” a number of CIPs into a larger debt issuance rather than issuing many small financings: "It doesn't make sense to do small, like, a couple million here, a couple million there. So we are working with a financial adviser to package that up together to something that actually makes sense." Staff noted the rate study projects approximately $25 million of debt in FY 2026–27, and that any issuance would return to council for approval.

Councilmembers asked for clarity on whether construction estimates include financing costs and whether short‑term delays on Lampson would affect other projects such as Bolsa Chica Well; staff confirmed financing costs are not in hard‑construction estimates and that Lampson delays could delay Bolsa Chica production.

Why it matters: the water and sewer fund balances and planned debt issuance affect ratepayer obligations and long‑range infrastructure reliability; contracts, SRF loan amendments and bid results will determine final budgets and schedules.

What’s next: staff will present construction contract recommendations (Lampson Well) and return with refined debt timing and a more complete CIP roll‑up for the June council meeting.