Last week the Seal Beach City Council unanimously approved an agreement to finance the LCWA Watermain Lining project. The agreement would be for $3.175 million and would allow the city to increase the loan up to $3,765,411 if the California State Water Resources Control Board approves.
This item did not include a public hearing. No comments were taken from the public during the discussion of this item.
This was the last item on the agenda of the three hour 49 minute meeting of Monday, Sept. 14.
District Four Councilwoman Patty Senecal expressed concern about the loan. “I want to be clear to us that if we choose to repay this in a certain amount of time, it’s questionable whether they’re going to allow it or not. I’m just bringing that concern forward,” Senecal said.
“I’m not sure I’d be too in such a hurry to pay off something that’s 2.1%,” said District Five Councilman Nathan Steele.
“All I’m saying is I just want us to know going into this that there might not be the opportunity to pay this down in 20 years if we want to,” Senecal said.
She said Seal Beach would be paying $170,000 a year.
Background
The Water Control Board loan would have 2.1% interest for a 30-year term. According to the staff report, Seal Beach would pay interest annually until one year after the project is completed. After that, Seal Beach would pay both principal and interest. The council also authorized the city manager to execute the agreement.
“The 18” diameter LCWA Watermain serves as one of the City’s primary transmission facilities and provides critical redundancy for conveying potable water to Old Town and other portions of the service area,” according to the staff report by Public Works Director Iris Lee.
“Failure of this pipeline could significantly impact the City’s ability to maintain reliable water service, fire flow capacity, and operational flexibility during emergency conditions. Given the age and condition of the pipeline, proactive rehabilitation is more cost-effective than continued emergency repairs and reduces the risk of service disruptions,” Lee wrote.
“Given the condition of the watermain infrastructure and the frequency of main breaks within this area, the LCWA Watermain Lining–Trenchless Technology Improvements, CIP WT2103 (Project), was programmed into the Capital Improvement Program (CIP) to extend the pipeline’s serviceable life. Relining of the existing watermain was evaluated as the most cost-effective approach for extending the useful life of the facility while minimizing environmental impacts, construction duration, and overall project costs compared to full replacement. With the construction contract now awarded, the total construction-phase budget, including construction support and contingency, is estimated at $3,765,411,” Lee wrote.
“The Drinking Water State Revolving Fund (DWSRF) program is administered by the State Water Resources Control Board (Water Board) and provides favorable financial assistance for eligible drinking-water infrastructure projects,” Lee wrote.
“The financing is reimbursement-based. The City will initially pay eligible project invoices and then submit reimbursement requests to the Water Board. Staff will coordinate project expenditures and reimbursement requests to maintain sufficient Water Enterprise Fund cash flow throughout construction,” Lee wrote.
“The financing obligation will be repaid solely from Water Enterprise Fund revenues. No General Fund revenues will be pledged for repayment of the loan. Further, the Water Enterprise Fund will pay for the project and all requirements of the loan agreement (i.e., O&M requirements, monitoring and reporting requirements, etc.) the Water Board has indicated that it expects general funds to be available (but not obligated) to pay for obligations of the agreement unrelated to the loan’s repayment,” Lee wrote.
“Sufficient funds are included in the Fiscal Year 2026-27 Water Capital Improvement Program to cash-flow project expenditures before reimbursement is received from the Water Board,” Lee wrote.
Her report said debt service would be incorporated into the Water Enterprise Fund budget.