BOARD OF WATER SUPPLY
COUNTY OF MAUI
REGULAR MEETING
Held at HGEA Conference Room, David K. Trask, Jr.
Office Building, 2145 Kaohu Street, Wailuku, Maui,
Hawaii, commencing at 9:00 a.m. on March 22, 2001.
REPORTED BY: LYNANN NICELY, RPR/RMR/CSR #354
IWADO COURT REPORTERS, INC.
A P P E A R A N C E S
BOARD MEMBERS:
Elmer Cravalho, Chairman
Bob Takitani
Jonathan Starr
Orlando Tagorda
Mike Nobriga
Clark Hashimoto
STAFF PRESENT:
David Craddick, Director
Mike Quinn
Howard Fukushima, Corporation Counsel
Fran Nago, Board Secretary
CHAIRMAN CRAVALHO: The regular meeting of the
Board of Water Supply will come to order. I see the
attorney for the board is walking in and I'm slightly
disappointed, I thought he was going to allow us to
practice law without a license without question. But
since he's here, we'll have to defer to him with all
legal matters.
Ms. Nago, will you determine if we have a quorum.
MS. NAGO: We have Chair Elmer Cravalho, we
have board members Clark Hashimoto, Michael Nobriga,
Jonathan Starr, Orlando Tagorda, and Robert Takitani.
So we do have a quorum.
CHAIRMAN CRAVALHO: A quorum is present. Are
there any minutes to be handled at this time? None on
the agenda. Shall we then proceed to -- yes,
Mr. Starr.
MR. STARR: I believe there were two as part
of the packet.
MS. NAGO: The special meeting of February 8th
and the regular meeting of February 22th.
CHAIRMAN CRAVALHO: Okay. Mr. Nobriga, the regular motion.
MR. NOBRIGA: Mr. Chair, I move that we
receive these minutes subject to 30 days review, at
which time if there is no corrections, additions,
deletions, it shall be filed.
MR. STARR: I second the motion, sir.
CHAIRMAN CRAVALHO: You've heard the motion
duly made and seconded for the acceptance of the
minutes based on a file for a period of 30 days
wherein any corrections, additions, or whatever may be
added. If none, then the minutes shall then be
approved as presented.
Are you ready for the question? All in favor,
say aye. Contrary? Carried.
Testimony from the public. We can have
testimony at this time on any matter to come before
the board. Or if an item is on the regular agenda, it
can be -- testimony can be given at that time. What's
the pleasure of the group?
MR. HUNTER: My name is Jamie Hunter. I'm a
licensed attorney. I'm also an engineer. I was here
a couple of months ago to request that you move the
priority list, especially for those of us in Haiku who
can be served by the addition of the Haiku well to the
system, which I understand since the last time I was
here is now on line.
I went to the Pukalani meeting and I
participated in that and I don't want to repeat
myself. I think you folks know my position.
I would, since I'm here, and since you have
fluoride on the agenda, and since I've been in the
bottled water business for many, many years, I've
continually faced the fluoride question because some
bottlers put fluoride in bottled water. We never did
so because we found a huge number of people are
strongly opposed to it. And we also found by looking
around that the cost of buying the tablets or the
drops is incredibly low. You can buy it retail for 5
cents per dose, buying only a hundred doses. If you
bought thousands, the price would be less than a
penny.
If you want to get to the kids on Molokai, the
way to do it is to run a program, you already have a
nurse at the school, you already have a cafeteria
where they're dishing out food. The way to do it is
to give it to people who want it who are in school
that way and not -- if you put it in the water, some
people are going to get 10 times more than they want
and other people aren't going to get it at all because
they drink juice instead of water.
So that's my advice, political and scientific.
And I would like to tell you that 20 years ago this
issue was considered in Hilo by the Big Island and an
amazing piece of research turned out. I don't know if
you folks -- any of you from the Big Island, but
Mrs. Hirose, a very respected person, I think she's
dead now, but she had the oldest and the biggest
nursery on the Big Island. And the reason that the
county determined not to add fluoride to the water was
because of her research. She put fluoride water on
all her anthuriums in her nursery and she found that
they had a shelf life after they were cut of less than
a third of what they had if they hadn't had fluoride
in the water. So that was the reason the Big Island
chose not to do it and I wanted to remind you of that
little bit of research.
I don't have any view that fluoride is bad for
you, if you follow me on that. I just think there is
a much more efficient, economical, and precise way to
administer it than putting it in the water.
I might remind you of the incident at the
swimming pool on Molokai when the chlorine machinery
caused people to get extreme doses of chlorine in the
pool. I would be frightened of fluoridation in the
water supply. Thank you very much. I appreciate your
time.
CHAIRMAN CRAVALHO: Thank you very much. If
there are no other people who wish to speak -- it
would be very helpful if you allow the Chair to
provide for an orderly sequence. If you indicate that
you wish to make a presentation to the board at this
time, you will be accorded to that privilege. Request
of the Chair is that are there any people in the
audience who wish to speak at this time. If so,
ma'am, followed by ma'am, followed by sir. Have you
signed up for your presentation?
MS. NAGO: I have the sign-in sheets, but I
don't know how we're -- the first person who signed up
was Mr. James Williamson. However you want to --
CHAIRMAN CRAVALHO: The Chair is going to hold
on to every possible prerogative of the Chair at this
time since it is the last time that the Chair is going
to occupy the position. So the Chair recognizes the
young lady as indicated. Proceed.
MS. WOOD: Donna Wood. Good morning, members
of the water board. I'm submitting to you a research
study of 30 years on the extreme hazards of
fluoridation.
This study was made not only from the United
States, but many parts of the world. The material was
compiled by the dedication of an 87 years young lady,
Ms. Thelma Martindale, and I'm going to read you a few
excerpts from the manual. And I don't have the manual
to present to you for study, but in a couple of days I
will be submitting to all of you board members such --
the complete manual.
Fluoride is not an essential nutrient. No
disease has ever been linked to a fluoride deficiency.
Humans can have perfectly good teeth without fluoride.
Where fluoridation has been discontinued in
communities from Canada, the former East Germany,
Cuba, Finland, dental decay has not increased but has
actually decreased.
The level of fluoride put into water, 1 ppm,
is a hundred times higher than the normally found in
mother's milk, 0.01 ppm. Institute of Medicine, 1997.
There are no benefits, only risks for infants
ingesting this highest level of fluoride at such an
early age. This is an age where susceptibility to
environmental toxins is particularly high.
Hypothyroidism is a major problem right now in
the United States. It is estimated that up to 13
million Americans suffer from it. People with
hypothyroidism should not be forced to drink thyroid
depressing medication in their water.
Fluoridation is unethical because individuals
are not being asked for their informed consent prior
to medication. This is standard practice for all
medication.
Some people are particularly vulnerable to
fluoride's toxic effects. These include the elderly,
diabetics, and people with poor kidney function.
Again, can we in good conscious force these people to
ingest fluoride on a daily basis?
Once fluoride is put in the water, it is
impossible to control the doses for each individual --
that each individual receives.
The chemicals used to fluoridate water in the
United States are not pharmaceutical grade. Now, this
is very important. Instead, they come from the wet
scrubbing systems of the sulfur phosphate fertilizer
industry. These chemicals, 90 percent of which are
sodium fluorosilicate and fluorosilic acid, are
classified hazardous wastes, contaminated with toxic
metals and trace amounts of radioactive isotopes.
Recent testing by the National Sanitation Foundation
suggests the levels of arsenic in these chemicals are
high and of significant concern.
Many scientists, doctors, and dentists who
have spoken out publicly on this issue have been
subjected to censorship and intimidation. Tactics
like this would not be necessary if those promoting
fluoridation were on secure scientific ground.
The public health policy must be based on
sound science, not political pressure. They have a
tool with which to do this; it's called the
precautionary principle. Simply put, this says if in
doubt, leave it out.
Exposure to fluoride from all sources has
increased substantially since the 1940s. Sources of
fluoride in the diet today include food and beverage
processed with fluoridated water, toothpaste, mouth
washes, and other fluoridated dental products, fruits
and vegetables containing fluoridated pesticide
residues, and some vitamins and pharmaceuticals.
According to a 1977 report from the National
Academy of Science, recent studies indicate the total
intake of fluoride is as high as 3 milligrams a day
rather than the earlier figure of 1.5 milligrams a
day, primarily because of increases in the estimated
levels of fluoride in food.
The question needs to be asked as to why we
need to supplement our already high fluoridated diets
with more fluoridated water.
I have to repeat this again. Most of the
fluoride used to fluoridate the water in the United
States is an industrial waste product. Over 90
percent of the water fluoridated in the United States
uses either hexaflourosilic acid or sodium
hexafluorosilicate, which are classified hazardous
wastes collected in the pollution scrubbing devices of
the superphosphate fertilizer industry. These
fertilizer companies cannot by law dump this material
into the sea or rivers or lakes, but they're allowed
to sell it to the public water utilities where it's
diluted down and given to us, the public.
Recent research by Varner and coworkers at
Sunny Bringham found that levels of 1 ppm fluoride
administered over a long period, one year, either as
aluminum fluoride, AIF3, or sodium fluoride, NAF,
damaged both the brain and kidneys of rats. The
fluoride also caused an increased uptake of aluminum
into the brain, along with the formation of amyloid
deposits which have been associated with the progress
of Alzheimer's disease and other forms of dementia.
You know, there is more, but I don't want to
take any more time. I will submit these to the board.
And thank you very much.
CHAIRMAN CRAVALHO: Thank you very much. The
Chair appreciates your participation. Ms. Raisbeck as
well as the other lady. It will be very helpful if
you will identify yourself and, in addition to that,
the subject matter you wish to make comments on.
MS. RAISBECK: Thank you, Mr. Chairman. I
will speak loudly so that the audience can hear, too.
I come to speak in reference to
Mr. Williamson's letter to the board which I had the
opportunity to read yesterday and which deals with the
safety of the Iao Aquifer. He can state it much
better than I can and I share his concern about the
aquifer and will be taking that concern, of course, to
the State Water Commission.
I also would like to make an offer to the
board. The controversy over the settlement agreement
with the Joint Venture Partners requires a great deal
of research and data. And I am retired. I did serve
25 years for Stanford Research Institute and MIT as a
data analyst and reporting on data. And I would be
very, very happy to contribute my services to the
board to assist in this difficult problem of finding
out how much of Iao Aquifer water has already been
used by the Joint Venture Partners.
I hope that people would consider me fair.
And it's a tremendous job to track down the amount of
water, the sales -- I'm sure the Joint Venture
Partners have good records about land they have sold.
I'm sure they have good records about water they have
used. I'm not so sure that the water department will
have good records going back 26 years. But I have in
the past professionally done research and written
reports on that research and I would definitely
promise to be fair if you chose to take advantage of
my offer.
Meanwhile, I think what Mr. Williamson has to
say -- Mr. Williamson is a modest person, but he has
an international reputation in these matters. His
resume is enormously impressive. And I certainly,
with his permission, will be taking his letter to the
State Water Commission. So thank you very much.
CHAIRMAN CRAVALHO: Thank you very much. The
Chair would like to point out that while the Chair
didn't rule on portions of your comments which dealt
with the matter of the alleged agreement because that
was action of the board previously, has been sent to
the corp counsel's office, and there is a pending
lawsuit. And so the appropriate place would be at the
appropriate time.
However, the Chair recognizes your concern and
the Chair recognizes also your comments with respect
to Mr. Williamson's communication to this board. And
so we want to be at all times sure that we're going to
be proceeding in an orderly and legal manner in all
matters that come before the board.
MS. RAISBECK: I stand corrected, Mr. Chairman.
CHAIRMAN CRAVALHO: I just added that. We
don't want to deprive you or anyone else of the
opportunity to be heard. But again with respect to
that lawsuit, that is in corp counsel's office and any
comments should be addressed there.
MS. RAISBECK: Thank you, Mr. Chairman.
CHAIRMAN CRAVALHO: Mr. Starr.
MR. STARR: I just wish to thank Ms. Raisbeck
for the generous offer and perhaps the time will come
when we can make use of that. And I do thank you for that.
MS. RAISBECK: Thank you. I know it's going
to be a tough job. Thank you.
CHAIRMAN CRAVALHO: Thank you. Mr. John
Stemet. Fluoridation.
MR. STEMET: Mr. Chairman, board members,
thank you. My name is John Stemet, I'm a licensed
Realtor in the State of Hawaii, and I would just like
to read this statement into the record.
"Why we must stop the fluoridation of Hawaii's
public water supplies. To protect our families and
future generations from being medicated against our
wills. Fluoride accumulates in the body from
uncontrolled dosages in drinking water and from
products that are processed with municipal water. We
do not want a medicated water supply.
"Do you know the risks associated with water
fluoridation? Number one, fluoride is
cancer-causing." This is referenced from publications
by the U.S. Public Health Service in 1991, the New
Jersey Department of Health in 1992, and others.
"Number two, dental fluorosis or poisoning
affects 8 to 51 percent of children in fluoridated
areas." This is from the U.S. National Research
Council in 1993, the Journal of American Dental
Association in 1984, and others.
"Number three, fluoride is more toxic than
lead, accumulates in the brain, and can reduce IQ
levels in children." This is from Neurotoxicology in
1995, and others.
"Number four, the elderly have a much higher
rate of hip fractures in fluoridated areas." This is
from the Journal of the American Medical Association
from 1990 to 1995.
"Does fluoridated water reduce tooth decay?
The answer is no. Number one, large-scale studies
fail to show decreased decay rates of permanent teeth
in fluoridation areas over non-fluoridated areas."
This is from the Journal of the Canadian Dental
Association in 1987, and Community Health Studies in 1987.
"Number two, U.S. Food and Drug has not
approved fluoride tablets and drops as safe or
effective," from Dentistry and Oral Epidemiology in
1981, and the Robert Wood-Johnson Foundation in 1983.
"Who benefits? Industries that produce
fluoride waste benefit. The aluminum and phosphate
fertilizer industries must pay large sums of money to
dispose of fluoride waste at high-level toxic waste
facilities, or they can sell their waste to
unsuspecting municipalities in the name of public
health. Yes, it sounds unbelievable, but it is true."
I've worked with Citizens for Health, which is
a national organization for public health advocacy, as
one of their national directors and in that capacity I
work closely with Citizens for Safe Drinking Water,
who is a coalition of citizens and parents and doctors
and dentists and scientists that have done the
research and are opened to fluoridation of public
water supplies.
I agree with the former comments that one of
the big problems with water fluoridation is you can't
regulate the dosages that each individual receives
because it ends up in manufactured food and beverage
products and people drink different amounts of water
so it will accumulate at different rates in different
individuals. There is no regulation on how much each
person will get.
I also firmly hold to the principle that the
water supply should not be medicated. Even if it was
vitamin C, we shouldn't put it in the water for
everyone to take because it's not appropriate for
everyone.
The biggest concern is for children and the
elderly, they're at the greatest risk. Children get
dental fluorosis, which is poisoning, and elderly are
very susceptible to higher rates of osteoporosis and
bone fracture because fluoride will increase the
brittleness of the bones.
I would also like to comment if there is a
move by the County to fluoridate the public supply,
that there will be a large public outcry and a large
movement of petitions and information to bring this
matter to the public's attention so that the water
supply will remain as clean as possible. Thank you
very much.
CHAIRMAN CRAVALHO: Thank you. Yes, ma'am.
To speak on the same subject matter? Have you signed
up to speak? Come on in.
MS. WELLS: My name is Megan Wells. I'm also
a Realtor here on Maui, and I'm here to passionately
oppose fluoridation of the water.
I would just like to read a couple paragraphs
and then I have a show and tell. This is from the
science editor of Newsweek magazine and they're
quoting a toxicologist. "Fluoridation is the greatest
case of scientific fraud of this century if not of all
time."
Also from the same article, this is a quote
from Consumer Reports. "The survival of this fake
controversy represents the major triumph of quackery
over science in our time."
And one more quote, which I find the most
interesting. This is a professional national federal
union of the U.S. Environmental Protection Agency.
"The EPA, scientists, biologists, toxicologists,
chemists, and engineers all voted 100 percent to take
a stand against fluoridating drinking water and they
also demanded unfluoridated bottled water for all EPA
workers."
So I'm assuming that -- I mean, I don't
understand why we're having to deal with this again.
I think it's been dealt all over the world many times.
But there is obviously money behind this.
When I called the state health dental health
department yesterday, and I asked her, I said, is
there FDA approval of the substance that you're going
to put in our water. And she had, oh, well, we don't
need FDA approval, this is considered a supplement. A
supplement.
Well, I have a sample of the supplement so
that I could share it with you and I actually I
probably need to put these on because the warning
label -- this is the actual substance that's going to
go in our water, according to the department of water
engineers, who also told me that it's a toxic
substance. So I couldn't believe this, but evidently
somebody here told me also it's against the law for me
to even move this around. But here it is right here.
Does this look like a supplement to you? This is the
exact stuff they want to put in our water. There is a
skull and cross bones on it. And I just want to read,
the first thing it says is, "Warning. Harmful if
swallowed." That's what it says on here.
So if you consider this a supplement, I've
actually brought nine cups, Dixie cups, and I'll add
it to your drinking water this morning so that the
board can taste what you're thinking about putting in
our water system here. And I thought, you know, a
picture is worth a thousand words, right? This is not
a lie. This is the stuff.
And I also have a question: Has anybody
researched what happens when you combine this with
chlorine? I mean, this hasn't even been raised. But
I -- from the sentiment of the department engineer, I
don't think he's real happy to have to handle this and
I don't really blame him. But this is not a
supplement. And whoever is saying this doesn't need
Food and Drug Administration approval because it's a
supplement, I would like to have them have a little
cup full. Anyway, that's my testimony. Would anybody
like to see closer?
CHAIRMAN CRAVALHO: Ma'am, you're going beyond
just the presentation. We appreciate your passion in
the matter.
MS. WELLS: Thank you.
CHAIRMAN CRAVALHO: Thank you for your
appearance. Shall we then proceed. Mr. Williamson,
If it's all right for you, can we possibly take your
testimony when your letter comes up? Or would you
prefer it now?
MR. WILLIAMSON: I prefer it now.
CHAIRMAN CRAVALHO: Up to you.
MR. WILLIAMSON: My name is Jim Williamson. I
would like to thank Sally Raisbeck for her kind words.
This is in connection with Communication
01-09, which is a letter that I sent to the chairman
of the board on March 22. Excuse me, on February 12.
CHAIRMAN CRAVALHO: Excuse me. For the
members of the board, it's page three on the agenda
under Item VI, Communication 01-09. Proceed, please.
MR. WILLIAMSON: I would like to summarize the
contents of my letter. My review of the last three
quarterly data reports -- I only had two at the time
of the letter -- from the USGS, show that despite a
reduction in pumping from the aquifer since 1996, the
long-term water level continues to drop and the salt
level rises inextricably. In fact, the USGS
observation report just announced that the Iao Aquifer
level was at a 19-year low last month, a very
disturbing statistic, which I checked out on the
website for the USGS. I called them and they guided
me into their website. And this was a monthly
observation that they had made. And they were
reporting on low water levels throughout Maui. This
is one of them.
One explanation given for the low water level
is the lack of rainfall. While lower elevation rain
gauges show less than average precipitation since 1998
-- that's just three years -- at the higher Puukokui
gauge, the rainfall remains above average and that is
the most important one.
Anyway, the aquifer's sustainable yield is
determined based on low rainfall conditions. The
aquifer level has decreased relatively uniformly since
1990. This I have checked and the USGS information
shows the same information.
The average pumping during that year -- that's
1990 -- was 16 to 17 mgd, and I believe that the
sustainable yield is close to that lower value than 20
mgd. Two recent USGS reports confirm my concern and
raise a red flag on the future of the aquifer.
The only conclusion from all of this is that
there is definitely a source problem with the Central
Maui system. I agree with the USGS that splitting the
pumping is simply a short-term solution. While
desirable, it's a short-term solution, since all of
the local underground sources are interconnected.
In my view, what is needed is a definite
commitment by the waterboard to immediately fast track
development of a new independent water source.
Considering the significant if not insurmountable
difficulties and the cost and time constraints of
developing the East Maui source, serious consideration
should be given to exploring the Kahakuloa aquifer.
Specifically, this investigation should be
concentrated mauka of the north trending inferred dike
boundary which is shown on the USGS maps to avoid
interconnection with the Iao/North Waihee aquifers.
Other recommendations to reduce pumping out of
these aquifer systems are: One, to attempt to obtain
supplemental water supplies. Two, continue with the
A&B Iao/Waikapu Ditch Agreement. Three, adopt a
policy of not supplying water to large developers such
as the Wailea 670 project which would have an average
potable water demand of more than 1.5 mgd. Four,
consider a moratorium on the issuance of water meters
until a new water source is on line. Thank you.
CHAIRMAN CRAVALHO: Thank you very much.
Shall we then proceed to the regular agenda? I am
sure that the board in its deliberations in the future
will be paying attention to all of your presentations
today. And may the record reflect that the points you
have raised and the concerns that you have expressed
have also been previously expressed a number of times
by your present Chair. I think the opinion of the
Chair is the situation is of grave importance and it
has a grave impact on the operations and the
well-being of this particular county and this
particular island at this time.
And with all due respect for various
individuals who have been passionately concerned and
have also expressed this concern in a variety of ways,
that if not viewed in its proper context and not
looked at in terms of the objectives, can very easily
result in the very simple things they have been
expressing concern about. And so it behooves all of
us to put the very, very best efforts that all of us
have to meet this challenge and this need and this
problem because I believe these are all true things.
At the same time, the Chair is a perpetual
optimist with a tremendous amount of faith in the
ability of people and of a community to meet their
needs in a most satisfactory manner. And we look
forward, hopefully, to your participation and
assistance. We may not agree on every single step
along the way, but I'm sure that we all share the same
objective. Bottom line is what is the best thing for
this particular place and I'm sure we can do all
right. We thank you very much, very much for your
concern and your expressions.
Shall we then proceed with consideration of
the regular agenda. Director's Reports, page 2,
request for exploratory well to the North Kupaa Well
No. 1. Mr. Craddick.
MR. CRADDICK: This is a CIP issue. Actually,
it says request for funds there, but it's really just
a change of the location. The funds are already in
our budget.
CHAIRMAN CRAVALHO: If there is no objection,
in deference to the new Chair that will be on board
1st of April, the Chair would like to refer this in
the normal manner to the committee so that the
incoming Chair would have the opportunity to review it
and make a final decision. If no objection, so ordered.
Director's Report 01-04. Mr. Craddick, please.
MR. CRADDICK: This one we have Ted Matsuo
here from the RUS group if there is any questions.
But basically this item here, we need to get Bond
Counsel on board. The Ulumalu/Peahi group is paying
for that Bond Counsel and we would ask that the board
see their way clear to go forward on this because it
is somewhat time sensitive. We're trying to get out
the bid by May of this year.
CHAIRMAN CRAVALHO: Mr. Matsuo.
MR. MATSUO: Good morning. My name is Ted
Matsuo. I'm the program director for USDA world
development water waste division. We got a loan and
grant program we offer to assist rural communities in
getting drinking water, safe drinking water. And for
the Ulumalu/Peahi area, we obligated a grant for a
little over $1.5 million and a loan for $295,000.
Now, the debt service is borne by the
residents. That's to retire the $295,000, and a grant
-- the purpose of the grant is to reduce the debt
service so that it's reasonable. We can offer that
program to any eligible borrower for any eligible
rural area. In this case, the loan was made to the
County of Maui and then part of the deal is because
it's a loan, because a loan is involved, we require
loan security. And in cases of public bodies, one of
the things we require is a General Obligation bond.
There are other types of securities, like we can go
with revenue bonds, measure of assessments, and that
sort of thing. We can do this for more projects if
you got needs in the County.
One thing I want to say is this is not a new
program. We've been here on Maui before, refinancing
the Napili-Honokowai sewer system. So we've been
around for a long time. And on the Big Island, we've
got a few projects, on Kauai we've got a project, on
Oahu we've got projects, so we're not a new agency.
We've been here for many, many years.
So I'm here to answer any questions you might
have concerning the bond. Does anybody have any
questions?
CHAIRMAN CRAVALHO: The Chair does. Did I
understand you to say that part of the security that's
necessary is either a General Obligation bond or a
revenue bond?
MR. MATSUO: Yes, sir.
CHAIRMAN CRAVALHO: Would either one of those
bonds be produced and counted against the bonding
limitations of the County of Maui? Or more precisely
this particular question, the Board of Water Supply?
MR. MATSUO: I'm not sure. Does it --
MR. CRADDICK: I would suspect it does. It's --
CHAIRMAN CRAVALHO: Would it not then also be
necessary as part of this bond that the assets of the
Board of Water Supply be also utilized potentially as
security?
MR. MATSUO: It would be the General Obligation --
CHAIRMAN CRAVALHO: I'm speaking about a
revenue bond of the Board of Water Supply.
MR. MATSUO: Oh, revenue bond, yeah.
CHAIRMAN CRAVALHO: And that's what's before
us now, is it not? Mr. Craddick?
MR. CRADDICK: I don't want to put words in
Ted's mouth, but his -- who's the guy that was here
that runs the program from Washington?
MR. MATSUO: Larry Bowen?
MR. CRADDICK: Yeah, okay, Larry Bowen. In
this GO bond/revenue bond possibility, we're also
looking at a third possibility, namely a loan with the
revenues of the Board of Water Supply backing it. And
in that loan agreement, the assets that have to be
pledged are the ones in Ulumalu/Peahi and that is all,
according to Mr. Bowen who runs the program for the
nation.
CHAIRMAN CRAVALHO: Do you have that in writing?
MR. CRADDICK: Well, Ted was sitting there at
the meeting with me. I don't have it in writing, but
I can get it.
CHAIRMAN CRAVALHO: The question before this
body at the present time is for authorization to
proceed with the bonding attorney.
MR. CRADDICK: Yes.
CHAIRMAN CRAVALHO: Is that not correct?
MR. CRADDICK: Yes.
CHAIRMAN CRAVALHO: If this board agrees to
get permission for the obtaining of a bonding
attorney, does that automatically, ipso facto, lead to
the security items being part and being pledged?
MR. CRADDICK: It will be in whatever document
is prepared, but it does not --
CHAIRMAN CRAVALHO: Will those documents be
brought back before this board?
MR. CRADDICK: Yes.
CHAIRMAN CRAVALHO: For approval?
MR. CRADDICK: Yes.
CHAIRMAN CRAVALHO: Okay. The Chair doesn't
have any objection to the retention of bonding
counsel, provided, however, that the final documents
do come before this board for this board's review and
final agreement. Would that be satisfactory? That's all.
MR. FUKUSHIMA: If I can make a comment,
Mr. Chair. There is also the issue of whether this
board wishes to proceed with a revenue bond or a GO
bond. At a previous meeting, the board had requested
the department to investigate and look into the use of
a revenue bond to fund this particular loan. There
are advantages and disadvantages to a GO bond and a
revenue bond. Whether this board is making a final
decision as to going ahead with a revenue bond versus
a GO bond, or whether it's just approving bond counsel
and they are going to make the decision as to the
final direction that's going to be taken in the future.
CHAIRMAN CRAVALHO: The Chair particularly
appreciates the comments of corp counsel. But the
Chair's position is very clear and should not be
confused. The Chair's position is that the agreement
comes back to the board. We're not automatically
agreeing to an agreement that we haven't seen.
Now, with respect to the utilization of
revenue bonds versus general obligation bonds, it is
the recollection of the Chair and it is the opinion of
the Chair that what had been requested was a review,
not a commitment by the Board of Water Supply.
So to make sure that in the absence of any
clear-cut statement and clear-cut decision at this
time, the Chair wishes to emphasize that the agreement
comes back to this board. If that's fine, I have no
problem. It comes back to the board whether I'm here
or not. But the opportunity for the board to review
it should not be arbitrarily passed away.
MR. MATSUO: Oh, no, it's not.
MR. FUKUSHIMA: If I may again, Mr. Chairman.
The reason I raise that issue was because the bond
counsel that we retain has to know what his duties
are, whether he's going to be going ahead with revenue
bond or the type of GO bond. If it's a GO bond --
CHAIRMAN CRAVALHO: One moment, Mr. Counsel.
The Chair repeats that the Chair has made it eminently
clear what the Chair's position is with respect to
revenue and/or general obligation bonds and the
requirement that it comes back to this board. If the
board wishes to disregard or to supersede the Chair's
decision, be my guest. But I am reiterating the
Chair's concern that the final document does come
back.
Parenthetically, over the years plus, one of
the concerns that has been expressed more than once to
this board, and not just by the present Chair, that
far too often corp counsel or the office of corp
counsel has gone beyond its jurisdiction in making
public policy and public decisions. And the retention
of that right of this body to make those decisions I
will continue to fight for at all times, whether here
as a Chair or whether I'm sitting somewhere down the
line. Public policy is not determined, in the mind of
the Chair, by corp counsel's office. This has been
the habit in the past. As long as I'm around, I'll
fight against it.
Can we then have -- Mr. Starr.
MR. STARR: Mr. Chair, I just want to voice a
little bit of concern that I've had surrounding this
project. And I know that it occurred before I think
any of us or most of us were on this board. And it's
good to see a community trying to help itself up by
the bootstraps and improve its private water system,
which as I understand it that's what it is.
The question of whether the public should be
encumbered and whether the water board should be
encumbered in order to make that happen is something
that I've considered, you know, and I do understand
that there were board members and members of staff who
live in the community and that might have helped make
it happen in this particular community instead of
other possible different communities getting the
assistance.
So I do have a little bit of concern and I'm
not really happy if it's going to affect our bond
rating or it's going to create an obligation for this
board, you know. It should be creating the obligation
for the people in the community who have the private
water system who are going to be aided by it.
CHAIRMAN CRAVALHO: Mr. Craddick.
MR. CRADDICK: I just would like to calm Board
Member Starr's fears that the community ultimately is
paying for this. If they do not pay, they lose the
meter and the fee that they would have to pay to get
the meter back exceeds the loan amount for each
individual house. So --
CHAIRMAN CRAVALHO: The Chair particularly
appreciates your comments and your explanation. But
based on experience with this body over the period of
last year plus, the Chair always wants to see it in
writing. Because there have been cases and there has
been a slip twixt the cup and the lip.
If there is no objection, may we approve and
proceed with the bond counsel as requested with the
very clear, unambiguous understanding it comes back to
the board. If no objection, so ordered.
Shall we go on to the next item.
MR. CRADDICK: Items 5 through 8 are all
construction projects.
CHAIRMAN CRAVALHO: Shall we then refer all
matters to the capital improvements and budget
committee in deference again to the incoming
chairperson as to particular manner they wish to
handle matters.
Are we then ready to go to Director's 01-09?
MR. CRADDICK: On this matter here, we have
Donald Gasatake from the Department of Health Care. I
don't know if you'll have any questions about it. But
the letter in the package says what the Health
Department wants us to do. We are asking for funding
to do that. We've asked for the worst case funding.
We suspect that if we order just enough chemicals to
go to the end of this fiscal year, it may be less than
$10,000 and wouldn't be an issue to bring before this
board, but because we're adding something into the
water, I felt it important to let the board know
because we are having an informational meeting with
the public April 4th and I didn't want us to be going
to that meeting without the board knowing what was
going on and why it was going on.
CHAIRMAN CRAVALHO: What's the pleasure of the
board? Mr. Starr?
MR. STARR: Mr. Chairman, I want to be sure
that the public has a real opportunity not only to
know what's happening but also to participate on it.
Because we're going to be adding phosphates into the
Upcountry water system, we're being mandated to do
this by the state. But I really feel that the people
who are going to be drinking the water should have a
real understanding of what we're adding to the water
and why, and, you know, that this is something we're
being mandated do. The reason is because the lead in
consumers' pipes has a tendency to come off the pipes
into the water and when measured at the tap in a
consumer's home, there are traceable amounts of lead
being found. And by changing the chemistry of the
water, it's been found that it's possible to lower
that. But that does introduce, you know, another
substance into the water and I do feel that it is
ultimately the consumer's right to know and the
consumer's right to decide.
So I don't know what this April 4th meeting is
going to be, but I want to be sure that it's a real
opportunity for the public to understand it and say
their peace. And if that's not the way it's set up, I
think we should schedule a separate meeting. So I
would like to have a better description of what's
intended, where, when, how, on April 4th.
CHAIRMAN CRAVALHO: Mr. Craddick?
MR. CRADDICK: Exactly as you say is how it's
intended. We want public input because there are a
couple of options in doing this. One, there is what
they call an orthophosphate, zinc orthophosphate, and
polyphosphate that can be put in. One has a much
quicker reaction with the frozen materials in the
pipe; the other one is a much longer period of time.
And that's a concern for all the staff and one, quite
frankly, that we don't have an answer to right off the
top of our head and one that we wanted to get some
community input on before we made that decision. So
we expect to try and get full community input on this
matter.
MR. STARR: Where will the meeting be held?
MR. CRADDICK: Pukalani Community Center.
MR. STARR: And what time?
MR. CRADDICK: Six o'clock.
MR. STARR: And how will this be advertised?
MR. CRADDICK: We've sent individual notices
to every single person Upcountry that has a water service.
MR. STARR: Can you be sure that it gets in
the Akaku, Maui News -- I see Harry is here --
Haleakala Times, and grapevine or whatever.
MR. CRADDICK: Yes.
MR. STARR: And then the public will be able
to give testimony; is that correct?
MR. CRADDICK: Yes.
CHAIRMAN CRAVALHO: Okay. No objection?
Mr. Nobriga?
MR. NOBRIGA: Can I ask Mr. Quinn for an
explanation of where these funds will be derived from?
MR. QUINN: Depending on what the board
authorizes, $70,000 actually can be handled within the
chemical portion of the treatment plant budget right
now. I'm not sure what the board's actions are going
to be, but the funds are available in the operating
budget that was already approved by the board.
MR. STARR: And the Chair would also like to
point out that in the adoption of our annual budget,
we did request the department to get involved in a
certain percentage of savings which can be brought
back to the attention of the board and this can be a
case, doesn't need any additional appropriation, but
utilizing part of the savings from the operating
budget for the year. It will not be requiring any new
monies. So noted. And I'm sure that we have adequate
publicity to take care of the situation.
MR. TAGORDA: Mr. Chairman. This is a mandate
from the State Department of Health, right?
MR. CRADDICK: No, it's a federal law.
MR. TAGORDA: If we cannot meet a certain date
for their requirement, are we subject to liabilities,
fines, and penalties?
MR. CRADDICK: Donald, would you want to try
that one?
MR. YASUTAKE: My name is Donald Yasutake and
I'm with the Safe Drinking Water branch with the
Department of Health.
The federal law specifies that if you don't
meet corrosion control treatment within two years of
approval of the treatment process, you can be subject
to fines. It's a federally mandated law.
CHAIRMAN CRAVALHO: The Chair recognizes the
expertise of our director in dancing around some of
these questions very, very effectively and protecting
the best interests of the County in those areas over a
series of cases, not just this one.
Shall we proceed to the next item then?
MR. NOBRIGA: Do we move to approve that item, Mr. Chair?
MR. TAGORDA: I second.
MR. STARR: Discussion?
CHAIRMAN CRAVALHO: Yeah, we can be as
irregular as we want to today.
MR. STARR: I want to criticize our
legislators who have increased the funding for this
program, which is very, very important, and I'm glad
that we are participating in it because it's essential
for the future of the watershed.
CHAIRMAN CRAVALHO: There is a pending motion
for the approval. All in favor, say aye. Contrary.
Carried.
It's a very good situation, is it not, when
the economy and the county is strong enough
financially and otherwise to meet its needs and to be
less dependent over a period of time. And the
strength and the vigor of this department so far has
been good and something for all of us to be very
pleased with. As long as we're very careful that we
don't kill the goose that lays the golden egg as we
call it. I think it's very pertinent, very pertinent.
Shall we proceed?
Director's 01-10.
MR. CRADDICK: On this matter, this is a
similar issue with the West Maui partnership to do
similar sorts of things, not miconia related over
there but watershed protection.
CHAIRMAN CRAVALHO: Shall we possibly combine
10 and 11 in our discussions? Hearing no objection,
shall we then proceed then. The Chair would entertain
a motion for the approval.
MR. TAKITANI: So moved.
MR. HASHIMOTO: Second.
CHAIRMAN CRAVALHO: You've heard the motion
duly made and seconded for the approved of the
requests in Director's Report 01-10 and 01-11 that was
with respect to the research -- Tri-Isle Research
Conservation and Development Counsel, and 01-11,
approval of West Maui Watershed Partnership. Is there
any discussion? If not, are you ready for the
question? All in favor, say aye. Contrary. Carried.
Director's Report 01-12.
MR. CRADDICK: On this item here, I had
requested that one of the Joint Venture people be here
and they have been unable to attend, so I would ask
that we could defer on this.
CHAIRMAN CRAVALHO: Defer it.
Communications 01-08 from Deborah Von Tempsky,
asking for a waiver. Is Ms. Von Tempsky here? If
not, shall we defer action to the next regular
meeting?
We've handled the matter of Mr. Williamson in
his communication. The record also reflects the
decision and concern on an ongoing basis of the board.
Next item, Communication 01-10, request from
Adam Patel with respect of Upcountry Flowers for water
rates. Any comments or any presentations? Refer to
staff to be handled subsequently by the appropriate
committee and the new coming Chair.
Communication 01-11 from Katie Romanchuk with
respect to approval of a condominium of property. Any
comments or presentations? If not, refer to staff
and back to the waterboard with its recommendations.
Communication from John F. Mink of Mink & Yuen
regarding the East Maui Water Development Plans or the
SEIS monitor.
MR. STARR: I have a few problems with this --
the monitor well --
CHAIRMAN CRAVALHO: That's the communication we're on.
MR. STARR: I understand that there is quite a
lobbying effort on the part of the director to get the
well size increased back up after the board had voted
to decrease it, that he still wants to try to turn it
into a production well sometime, which I feel will
make it a lot more difficult to not only reach a
meeting of the minds but it will also eliminate our
ability to have a real monitoring well at the location
long term which I believe that's the main purpose of
it, so we have a real monitor well, not that we have
something that can be pretended to be a monitor well
for show and tell and then turned into a production
well so that we never have any gauging. Because we
need to have gauging before we proceed with any East
Maui wellfield.
So I kind of take umbrage with the director
for having not followed the board's decision which had
been voted on to decrease the size of the well to make
it a monitor well and instead go back to the
hydrologists and try to change it.
And I have a little bit of concern about the
location because I understand that the location --
which I had gone and visited on a beautiful spot up on
hogback ridge but it's a knife edge ridge, and this is
a little ways away from the spot that was circled on
the map and approved by the court. And the fact that
it's on a knife edge ridge as it is means that it
might not be a suitable location for the test that's
supposed to be done. In other words, it's going to be
very hard for water to intrude, you know, into the
well or out into the ground when it's up on top of
almost a 1,000 foot knife edge ridge.
So I think we need to make sure that all sides
sign off on the location and that it be made a real
monitor well before we produce with this. And I leave
it up to the Chair as to the mechanism for doing this.
I would be very happy to offer my services to try to
get it worked out. But I do think we need to get it
-- everyone happy with it before we proceed and then
we should proceed ASAP.
CHAIRMAN CRAVALHO: The Chair would like to
make a couple of comments with respect to recognition
of Mr. Starr of the director's lobbying efforts or
whatever. I believe that the director may have been
reacting to concerns expressed by the Chair. And
because the understanding of the Chair that the work
that had been done by Mr. Mink and Yuen before coming
to this board when the decision was made from 8 inches
versus 14, that the work had been done and completed
with respect to the 14 gauge trailer. And in the
interests of furthering the concern of this board with
respect to a finalization of the EIS statements, et
cetera, a concern that had been expressed many times
by Mr. Starr as to the undue delay that has been our
experiences in the past, that it behooved this board
to review again the question whether we accept and
move with the 14-inch versus 6-inch or an 8-inch which
would be time delay. And the Chair, for whatever it
may be worth, would strongly suggest that this board
give appropriate attention and approve a 14-inch. And
the Chair is retreating from his original position,
the Chair wishes to acknowledge that. But in the
interests of speed and movement -- and this interest
in speed or this necessity for speed and movement have
been emphasized within the past couple of weeks. And
it has been re-emphasized again in testimony presented
by interested parties in the community today.
So the Chair would like to strongly suggest
and encourage that we look at the 14-inch. And the
Chair would ask for -- Mr. Craddick.
MR. CRADDICK: In response to Mr. Starr's
concern over lobbying. At the meetings when that
decision was made, I'm not quite certain why Mr. Mink
didn't say something. I believe Howard or Corp
Counsel has also talked with Isaac -- I believe Isaac
knew that we were doing 14-inch; is that correct?
MR. FUKUSHIMA: That's correct.
MR. CRADDICK: And I think that the concern
here is if you're going to do a small hole and only be
able to pump it at a fraction of what the production
well will produce at, the question can always be
raised what is going to be the actual condition under
actual pumping conditions. And we don't want any
delay because we have done a small little hole and
only have a fraction of the information. And that's
what Mr. Mink says. And my interest in this thing is
moving forward as quickly as we can possibly go. And
that's -- if there was some lobbying effort, that's
what it was. Not because I think that we're not going
to do monitor wells. I know there is going to be more
monitor wells out there than this one. There is also
going to have to be a deep monitor well to monitor the
saltwater interface before this project is all
finished. But to get this information for the EIS
which is interaction with stream flow, we need the
fullest information that we can possibly get.
CHAIRMAN CRAVALHO: Mr. Starr.
MR. STARR: My concern is to just make sure
that the sizing and type of well and the location is
agreed upon by both sides. And I do share your
urgency.
I did want to make one other suggestion to see
if it might be feasible, though, to speed this thing
up even more, which is that the test drilling rig that
is operated by the USGS, of which this board has
purchased a share, is on Maui right now. It was
supposed to go to Kauai after drilling on Molokai, but
it came to Maui. And I think the community is
fortunate that it's drilling -- getting ready to drill
a test hole up for Hawaiian Homelands up at Waiahole
below the green tank up there. And there was
discussion about it being kept up there to drill a
second test well, but I've not been able to find
anyone who can give me the reasons to drill a second
test hole up there. You know, the rig is not capable
of drilling production wells, both legally and also
physically. So it seems that it's going to drill one
hole there and possibly a second one that won't really
have any purpose and then it will go off to Kauai.
And I understand that the department had given
permission for Hawaiian Homes to use the rig and I'm
glad that they did. However, I think that it might be
possible, if we were to act expeditiously and get
everyone involved on one wavelength, to be able to
move it after drilling one hole over to that hogback
area and use it to drill the test hole and get it done
really fast and get it done by the USGS so that we
know it's done right.
CHAIRMAN CRAVALHO: That's the -- let the
Chair try to recap. It appears that the only
difference of opinion then, in terms of getting
parties in agreement, is with respect to the size.
The corp counsel's office has advised us that it's a
court order that makes reference to 14-inch, so that
particular question then becomes moot. So it's to
expedite, to get -- Mr. Hall has presented to us, has
been in consultation. We appreciate his participation
in this, what the Chair has urged in the past, as long
as we keep in mind at all times he is not a member of
the corp counsel's office. His input is necessary and
important where relevant. So then if we can proceed.
MR. STARR: We must get the location agreed on.
CHAIRMAN CRAVALHO: That can be worked on
relatively easily, I believe. So then if we get the
location, we get the drilling apparatus ready, we
recognize the court order of 14 inches, we recognize
the participation and contributions of a valuable
nature in this particular case of Mr. Hall, that we go
ahead fast so we can work a series of problems and
needs that we have. If no objection, shall we then
proceed. Yes, Mr. Corp counsel.
MR. FUKUSHIMA: Short recess.
(Brief recess.)
CHAIRMAN CRAVALHO: Shall we reconvene? With
respect to the question before this body, may the
record reflect if there are no objections that by
unanimous consent of the board this is the process
we're going to be following to speed up the agreement
on site location, 14-inch, so we move. Any objections
on the part of the members of this board? Hearing
none, so ordered.
Shall we proceed to the next one. Committee
reports. Capital programs and finance committee, both
people are not here. What's the pleasure of the
board? Mr. Takitani?
MR. TAKITANI: Mr. Chair, I've been asked to
substitute in the absence of Mr. Rice and Mr. Nakamura
and present to the board their recommendation.
So for Director's Report 01-01, the committee
would like to recommend that the department be
authorized to seek bids for the project and to proceed
with the construction, provided that the total cost
including contingencies not exceed $700,000.
MR. NOBRIGA: Second that motion.
CHAIRMAN CRAVALHO: You've heard the motion
duly made and seconded for the project to be initiated
and proceeded with, authorized, and that the total
cost would be not to exceed $700,000 including
contingencies. You've heard the motion. Any
discussion? If not, are you ready for the question?
All in favor, say aye. Contrary. Carried.
MR. TAKITANI: For Director's report 01-02,
perhaps I should read some of the background so people
here might understand. Request for appropriation of
funds for engineering design services for the Lower
Kula Road Waterline Replacement project from Ka Drive
to Kimo Drive and on Waokala Place.
The proposed improvements include replacement
of inadequate water lines on Lower Kula Road from Ka
Drive to Kimo Drive and on Waokele Place.
The Committees noted that the project is
included in the fiscal year 2001 Pipeline Replacement
project. The Committees further noted that the
project will alleviate a potential health and safety
issue relative to the Waikele Place system.
The recommendation of the joint committees of
finance and capital improvement is to recommend the
authorization of $50,000 for design services.
CHAIRMAN CRAVALHO: Do I hear a motion?
MR. TAKITANI: So moved.
MR. NOBRIGA: Second.
CHAIRMAN CRAVALHO: You've heard the motion
duly made and seconded for the approval and the
allocation of $50,000 for the specific projects listed
thereon. Any discussion? If not, are you ready for
the question? All in favor, say aye. Contrary.
Carried.
Oversight committee.
MR. NOBRIGA: Mr. Chairman, Communication
00-52, request from William S. Worcester for a waiver
of fire protection. The committee met. The applicant
has been afforded an opportunity to participate in a
CIP by sharing for one hydrant. Unfortunately, there
has been some difference of opinion and I would like
to move that the request be denied.
CHAIRMAN CRAVALHO: You've heard the motion.
Is there a second?
MR. HASHIMOTO: Second.
CHAIRMAN CRAVALHO: You've heard the motion
duly made and seconded for the denial of
Mr. Worcester's request for the waiver. Any
discussion? If not, are you ready for the question?
All in favor, say aye. Opposed. Carried.
MR. NOBRIGA: Mr. Chairman?
CHAIRMAN CRAVALHO: Mr. Nobriga.
MR. NOBRIGA: Communication 01-02, request
from Ron and Donna Richmond for waiver of the
subdivision requirements, Manawai Homesteads. This
applicant is creating 3-lot subdivision with one lot
that contains our meter to be sold and two other lots
created using a private water system.
The committee recommends approval of the
matter with the provision that all rules of the
department that apply be executed by the applicant.
CHAIRMAN CRAVALHO: You've heard the motion.
Is there a second?
MR. HASHIMOTO: Second.
CHAIRMAN CRAVALHO: You've heard the motion
duly made and seconded. Mr. Craddick?
MR. CRADDICK: The request is for a waiver
from the rules, so I don't know how you say you're
going to approve the request but they have to comply
with all rules.
CHAIRMAN CRAVALHO: All the rules that are not
covered in the motion. That means any other rule that
may be applicable. Relatively simple. Don't go look
for spiders when you don't need to. It's simple,
very simple. You looking for a way to deny. Get away
from that. Oh, Mr. Craddick, you've done this many
times. You've done this many times. You've
questioned the intent of the board, you've questioned
the intent of the motion. It's clear the request is
being met. If there are other rules that have been
duly promulgated and adopted in the proscribed form so
that they have legal standing, then those rules have
to be met. The requirements have to be met because
the board cannot grant a waiver from a portion of the
law. That is clear. You know that; I know that. And
you've danced around I don't know how many times
during my experience here to avoid that. And the net
result has been, perhaps unintentionally -- and I
believe it has been unintentionally, but the net
result has been people have been hurt unnecessarily.
So let's not go look for spiders when there are none.
Okay. You've heard the motion. All in favor?
Yes, Mr. Takitani.
MR. TAKITANI: May I ask what the corporation
counsel's opinion was regarding the subdivision
containing both private and --
MR. FUKUSHIMA: If I may, I believe our
opinion was a little late. The attorney working on it
had some other matters to attend to. However, the
opinion was submitted I believe to the department
yesterday. In essence what that opinion provided for
was that a private system and a public system may
exist within the same subdivision at the same time, in
essence.
CHAIRMAN CRAVALHO: In essence, that's
correct. Mr. Tagorda.
MR. TAGORDA: Mr. Chairman, thank you very
much. I would like to speak against the motion of
Mr. Nobriga, my friend, because I believe strongly
that strict applications of our department's rules and
regulations may apply here. The person -- the request
was for subdivision requirements. And in our
department rules and regulations, we have numbers of
provisions that pertains to this requirement. We have
general requirement Section 2-1, page 4, you recall
that. We need to have the suit divider put on fire
protection even if we have to go on private system.
You need to have the extension. You need to know the
capabilities of our water system in that area. And
without meeting all those requirements, we are trying
to complicate matters.
CHAIRMAN CRAVALHO: Any further discussion?
MR. TAGORDA: And also, Mr. Chairman, I would
like to add one more. I just think of this again.
[Inaudible] rule again Mr. Nobriga, water system
development, it states so clearly -- and this is
Section 16-8-5, water surveys, all new premises
resulting from a subdivision of the original premise
will be required to have a separate water meter. Now
it's going to a private water system, there is two
lots, not going to get a water -- a meter. And I
don't know if the requestor have gone far enough to go
to Maui Fire Department and ask them if they really
have considered such subdivision there without fire
protection.
CHAIRMAN CRAVALHO: The Chair has a couple of
questions. Have these matters been reviewed by you
and your committee or --
MR. TAGORDA: Yes.
MR. NOBRIGA: Yes.
CHAIRMAN CRAVALHO: Fine. And the report has
been submitted from the committee?
MR. NOBRIGA: Yes.
CHAIRMAN CRAVALHO: Then we can prolong the
agony a little while.
MR. STARR: Call for the question, please.
CHAIRMAN CRAVALHO: The question has been made
for the approval. Any other comments? Mr. Craddick?
MR. CRADDICK: I just want to say in addition
to what Howard is talking about, Corp Counsel also
said that even though you can have this co-existing
private and public or hybrid system, it did not waive
the requirements of the subdivision requirements.
CHAIRMAN CRAVALHO: That's correct. Those
that are not relating to the particular question.
Again, we're going through corners. The question has
been asked for. Let's go have a roll call.
MS. NAGO: Clark Hashimoto.
MR. HASHIMOTO: Aye.
MS. NAGO: Mike Nobriga.
MR. NOBRIGA: Aye.
MS. NAGO: Jonathan Starr.
MR. STARR: Nay.
MS. NAGO: Mr. Cravalho, will you be voting?
CHAIRMAN CRAVALHO: At the end. You have the
members. The Chair is always the last person to vote.
MS. NAGO: Orlando Tagorda.
MR. TAGORDA: No.
MS. NAGO: Bob Takitani.
MR. TAKITANI: Aye.
MS. NAGO: Elmer Cravalho.
CHAIRMAN CRAVALHO: Aye.
MS. NAGO: There is four ayes and two nays.
CHAIRMAN CRAVALHO: So there is an
insufficient number of five. And if you recall the
statement of the Chair earlier, let's prolong the
agony for another time. The Chair is very able and
counting, I can assure you of that. So it's merely an
opinion of the Chair, it's merely a matter of time.
Shall we go on to the next one?
MR. NOBRIGA: Mr. Chair, we have a Revised
Communication 99-31. The Hoekstras was afforded a
waiver of fire protection by this body and
unfortunately has met with some difficulty again from
the department and the committee re-reviewed our
report and would like to move at this time that we
approve the private water system's modifications for
subdivision provided for the Hoekstras for the use of
their one-and-a-half-inch meter.
CHAIRMAN CRAVALHO: Is there a motion?
MR. HASHIMOTO: Second.
CHAIRMAN CRAVALHO: You've heard the motion
duly made and seconded which in essence approves the
request with all the clarifications contained thereon.
Any questions? If not, are you ready for the
question? Discussion.
MR. TAGORDA: Again, I cannot support my Chair
on this for subdivisions that this subdivision
requests to use the inch-and-a-half meter to two more
new lots.
Actually, if I may, Mr. Chairman, this
subdivision, the owner of this subdivision, had an
agreement with the Board of Water Supply way back in
'95. They subdivided a three-lot subdivision and they
got final approval from the board. But in that final
approval, they entered into so many agreements and
they followed some requirements by the board to go
into a private water system. And they was able to get
two water meters. So they had three meters in that
three-lot subdivision.
Now the request that comes to us is to
subdivide one of those lots into three more lots using
the department's one-and-a-half inch meter to provide
service to those three lots. And I know we have
authority to modify such requirements, but we have to
really remember that in that provision with
modification of subdivision requirements, it states so
clearly, Mr. Chair, before we utilize such authority
of the board, that those people that are serving that
area will not be jeopardized by this new action by the
board.
And again, that's the reason why I strongly --
I'm strongly against this because of my strong belief
that this board should strictly apply the department's
rules and regulations and be fair and consistent.
Thank you.
CHAIRMAN CRAVALHO: Yes, ma'am.
A VOICE: I just want to ask that my case be
deferred because my attorney had to leave, he had the
case. Could you please defer this?
CHAIRMAN CRAVALHO: What's the pleasure of the
board? The question has been made by the applicant
for deferral. Mr. Chairman? That's you.
MR. NOBRIGA: Yes, I will grant that deferral.
CHAIRMAN CRAVALHO: If there is no objection,
deferred to the next regular meeting.
Recess has been asked for. No objection. So ordered.
(Brief recess.)
CHAIRMAN CRAVALHO: The meeting will come to
order. Operations review committee reports.
Mr. Starr.
MR. STARR: Thank you, Mr. Chair. The
committee has sat through a lot of testimony and
received a lot of written testimony as well on items
one and two which we're going to handle as one unit.
And this relates to meter issuance policies upcountry
and the priority list. And we seem to have found
several themes. One is that it's somewhat unfair to
people who have been waiting a long time to be able to
make the minimal -- very minimal use of their
property. And the other theme is that we don't want
to overstress the system so that we get back into the
severe droughts that we've had in the past and
enforced cutbacks. And it seems that watching the
system through a very dry year, if we're willing to do
the pumping and spend the resources as we have been,
we've been able to keep water flowing. And it seems
that we probably have maybe 200,000 gallons or so per
day that could be utilized.
So I'm going to offer a motion for at least
discussion here that a single 5/8" meter be offered
and issued to the members who have been waiting so
patiently on the priority list, starting at the top of
the list and moving down that list until 200,000
gallons of water per day have been allocated and that
if we get through the whole list, then we can take
another look at the situation. So that is my motion
that the director will proceed on that basis.
CHAIRMAN CRAVALHO: Is there a second to the motion?
MR. NOBRIGA: Yes, I second that motion, Mr. Chairman.
CHAIRMAN CRAVALHO: You've heard the motion
made by Mr. Starr, seconded by both Mr. Tagorda and
Mr. Nobriga, and we can go alphabetically or who's
first is immaterial. The gist of the motion, as the
Chair understands it, is that all people who are
applicants for meters be issued a 5/8" meter. We hope
-- the objective being to work within a 200,000
gallons plus-minus allocation. Plus doesn't mean
going to 2 million. But there is a recognition of
fluctuations that do come from time to time.
It is the understanding of the Chair -- and
correct the Chair if the Chair is in error -- that
preference should be given to family subdivisions and
things of that nature. Would you object to that?
MR. STARR: I would prefer to go in the order
of the list the people have been waiting and that each
applicant just be offered one if they were in a
position to receive it. In other words, I don't --
some people on the list are waiting for 20 meters.
But my desire is that each name on that list be at
least given the opportunity to get one.
CHAIRMAN CRAVALHO: One meter.
MR. STARR: Yes, sir.
CHAIRMAN CRAVALHO: Is there a -- question.
Is there a cut-off period, experiment for six months
or nine months or whatever? Or just go and attend to
it from time to time?
MR. STARR: Well, I think that we should offer
those meters out and if they get through the list and
there is still water available, then we look at it
again. We don't take away anyone's rights that's been
waiting on the list for larger meters.
CHAIRMAN CRAVALHO: Would the Chair set a
timetable in terms when this board would review it for
sure periodically?
MR. STARR: Please.
CHAIRMAN CRAVALHO: Six months time.
MR. STARR: Six months.
CHAIRMAN CRAVALHO: Six months. Subject to
review of the board. Mr. Takitani.
MR. TAKITANI: Is there a time period in which
the applicant has to respond to put in his private
meter? In other words --
MR. STARR: The Chair just said six months.
MR. TAKITANI: -- could he defer it for a
year, two years?
MR. STARR: The Chair just said we would
review after six months.
CHAIRMAN CRAVALHO: It is also the
understanding of the Chair that, more particularly,
this may require the setting up of this procedure in a
rule process. And we're not trying to circumvent the
rule or the requirement for the rule process to be
met, but this is basically the objective the Chair may
impose upon the members of this board.
When the Chair agreed to serve on the board,
it's been the understanding it would be for the
minimum period and it would not be subject to any
reappointments. Those were the conditions and
requirements.
It has also been the position of the Chair
over a period of long years -- much too long, in my
estimation -- that the job is a relatively simple one.
It's to take it from where it is, water, to where it
is needed. And if we keep our eyes focused on that
attention, we're going to be able to do it.
It was the opinion of the Chair, privately
perhaps, that there would be a time frame to
accomplish this. I'm extremely pleased, Mr. Starr,
that in spite of our differences -- and we like to
think of those differences as being procedural rather
than substantive when we're aiming in the same
direction.
And as the Chair has indicated in the past and
more particularly past couple of weeks, that if the
very best efforts of a whole variety of people are
brought to bear on these challenges, we're going to
succeed and we're going to succeed extremely well.
History has been very kind to this county.
And perhaps in spite of our inadequacies, we seem to
have been fortunate to be blessed that we have been
able to succeed. It's been the hope of the Chair that
as we 25 years ago rewrote the history of this island
in terms of objectives and statements of confidence of
what could be done and pursued, that we were being
blessed one more time, one more time, in being able to
structure a process and a utilization of assets and
people for the next generation if not more. And I am
extremely grateful and appreciative of the foresight
that has been and is being exercised. Together it can
be done.
The other comments I have will be reserved for
the ending of this meeting, but the mood is there, do
it now. For all possibilities, this will be the very
last meeting that I may be able to attend. I'm slated
for some major surgery on the 6th of April. I don't
know what the results may or may not be. But I'm an
optimist. Failure has not been part of my vocabulary.
So I'm optimistic. And I'm optimistic if Mr. Starr's
motion passes, and this body works in unity and this
community begins to work in greater unity yet, success
is going to continue to be ours and the very enviable
position that Maui County has today as being Maui
island, the favorite and foremost island of quality
for visitors, can continue for another generation.
In addition to that, this waterboard has done
in the past year has put a premise on agriculture and
has brought the farming element -- not just the big
ones, but the small guys, brought that element into
the bargaining table as full-fledged members and
participants in the future of this community with a
recognition of their value and their importance to our
success.
So to all of you and Mr. Starr and the members
of your committee and the members of the board and the
members of the public, my cup runneth over. Good
fortune will continue to follow for all of us. Never
mind the disagreements, never mind the differences,
because I think you have them in perspective and we
can move.
The Chair wishes to thank the patience and the
support that has come from the members of the board.
It has been difficult. The Chair recognizes that.
But the Chair is pleased with the support. And if
there is no objection, the Chair would like to call
for the question. All in favor, say aye. Contrary.
Carried.
The Chair would like to end this meeting with
the full recognition of the participation and the
assistance of our Vice Chair, and the Chair then would
like to be able to sit next to my friend Mr. Craddick
and have the Vice Chair preside for the rest of this
meeting, if there is no objection. Hearing none, so
ordered. Mr. Tagorda.
MR. FUKUSHIMA: For clarification, at that
last motion, was that a direction to corporation
counsel to start developing a rule that we work on the
proposed rule relating to the list and allocations of
that list?
MR. STARR: It was a direction to proceed, but
if counsel feels that a rule is necessary to proceed
then we can proceed on that path. If not, then
perhaps we can proceed a little more directly.
MR. FUKUSHIMA: It is our opinion that a rule
is necessary to carry out that policy the board has
adopted.
MR. TAGORDA: If I may, Mr. Counsel, I think
the motion by Mr. Starr is to issue 5/8" meters based
on the priority list and that motion was approved by
the full board, so it becomes the policy of the full
board to issue the 5/8" meters unless you --
MR. FUKUSHIMA: What I'm trying to say,
Mr. Vice Chairman, that we believe that a rule is
necessary if there are going to be classifications and
the issuance of meters based upon certain other
requirements other than where they are on the list.
We believe that is important and we believe that it is
the appropriate way to approach that policy --
implement that policy.
MR. STARR: Mr. Chair, may I suggest that
counsel come back at the next meeting and perhaps the
committee can also assist in looking at this and
seeing what the most expeditious way of proceeding
will be.
MR. FUKUSHIMA: Certainly.
MR. TAGORDA: Okay. It's been agreed that we
are going to meet next meeting and see what we can --
how we can get it done with the corp counsel on the
matter.
MR. STARR: Mr. Chair, I have some more of my
committee report, if it's all right.
MR. TAGORDA: Continue, Mr. Starr.
MR. STARR: Yes, sir. The operations review
committee met a number of times and went through the
previous evaluations of the director. And taking
points from many different sources, including the last
few evaluations, a criteria letter that Mr. Takitani
had created a few years ago, and the QualServe report
and also other comments that had come from the minutes
of meetings of the board, and we have come up with a
criteria and that is based on a number of questions
and we came up with 10 questions. And if it's the
pleasure of my fellow board members, I would like to
move at this point for discussion purposes that a pool
of questions be adopted at this meeting so that later
on we can proceed with the evaluation under that
basis. I do have a list of 10 suggested questions and
I would be happy to amend them or leave some out if
some of the board members would like to. But for
right now my motion is that we adopt a set of ten
questions and that the questions be graded by each
member in the numerical manner from zero to five and
that then the answer -- the upgrades be put on this
answer sheet that each board member has and be passed
to the Chair who will then grade the evaluation and
find out if the total is more than three, the director
will be deemed to have -- equal to a greater than
three or satisfactory, the director will be deemed to
have the confidence of the board. And if it's less,
he will be deemed to lack the confidence.
MR. TAGORDA: You have heard Mr. Starr's
mentioning all of those things that -- all the
questions, a number -- ten of them, and what he wants
to do. It's a long motion and I can't really repeat
all that. Can I hear a second for discussion?
MR. NOBRIGA: I'll second for discussion. I
would prefer if Mr. Starr could restate his motion.
MR. STARR: Let me restate. My restating is
that I move that we proceed as per the committee
report which is called the recommended evaluation
criteria for the director and that we adopt this
criteria.
MR. CRAVALHO: Mr. Chairman, I would like to
suggest -- well, with respect to the motion, speaking
on the motion as made, I speak in opposition to the
motion. Not that I disagree. My only disagreement
was with basically one word: Adoption. I would like
to suggest that we look for the acceptance of the
report. And this is in fairness not only to all of
the members who are here now, but for those who are
not here so that they can amply participate. So if
there is no objection on the part of the movant to
change the word from "adoption" to "receipt and
acceptance by the board for discussion," I have no
problems.
MR. STARR: I look at that as a friendly
amendment and it can be so included in the motion.
MR. TAGORDA: So the motion of Mr. Starr was
amended. Instead of using the word adopted, it's
going to be accepted by the full board for discussion.
Any more discussion?
MR. TAKITANI: I would like to speak in
opposition to this motion. My opposition is that I do
not believe that these are the top ten goals and
objectives of the Board of Water Supply. Because as
we heard here, I still believe that the top priority
of the board is to gain more source water. And I
believe that our director should be evaluated on the
basis of how he does what the board intends in its
goals and objectives.
The number of questions that have been
presented here appear to me to be more of a polling
device to get feedback from others. And I grant you,
feedback from others is extremely important. However,
this board comes down to its own position of
evaluating its director and we need to have the best
criteria available in which to evaluate. And I
believe that gaining more source water is extremely
important. The Iao Aquifer situation and the jeopardy
of downgrading of the aquifer, the pumpage, et cetera,
is another that's extremely important. Those should
be the kinds of questions on which the director should
be evaluated. How we have done as a board and the
director as to alleviating the problem of upcountry
droughts, providing more groundwater for upcountry so
they don't have to rely completely on surface water
and be subject to all the drought that they have in
the past. That should be another extremely important
objective. And I believe those are the kinds of ways
that we should evaluate the director, not on a polling
device that would get feedback from people who may not
be that happy with the performance of the director.
And I truly believe that to perform a
performance evaluation, you need to have your criteria
set prior to the period even so that the incumbent
knows what he's being judged against. Don't come up
with a set of rules that is difficult for anyone to
grade highly upon. And that's the way I see this
device. It would be extremely difficult for anyone to
poll highly on this device.
MR. TAGORDA: Mr. Cravalho.
MR. CRAVALHO: Mr. Chairman, I believe the
points raised by Mr. Takitani are very valid.
However, those are the kinds of discussions and those
are the kinds of items that is being proposed by the
present motion. The present motion is only to accept
the transmittal of that particular item to this body,
to provide this body with the opportunity to view the
various criteria. So I'm not making, Mr. Chairman, a
judgment on the contents, but merely on the procedure
to return to this body again the opportunity to
analyze and to come up with a final kind of a position
as to what the values should or should not be.
The need for an evaluation is long overdue
and this has been stressed by all parties concerned.
This is merely, as I understand it, the first step in
implementing this evaluation process which this body
has adopted in the past the procedures that are
necessary. So I would strongly urge the members of
this body to vote in favor of the motion which is
merely the acceptance of the report and bringing it to
the attention and to the decision-making process of
the entire board. That's my understanding of what is
involved at this stage. Am I not correct? If so,
Mr. Takitani, I would like to ask you to kind of look
at the acceptance.
MR. TAGORDA: Mr. Starr.
MR. TAKITANI: In that light, I would be
amenable to Mr. Cravalho's comments --
MR. TAGORDA: Mr. Takitani, will you please
give Mr. Starr a chance.
MR. STARR: I would like to answer to the
comments which are well taken. And as I did state in
the presentation, I'm very happy to have the board
change some of the questions, leave some out, add some
in, whatever. This is a starting point. But I did
want to comment that out of these questions, two of
them do relate directly to what you said and four
others were lifted directly from your own memo of
several years ago where you set the criteria for the
evaluation of the director. However, the evaluation
had never taken place based on the criteria you had
created. So they come almost -- you'll see, four of
them come almost word for word from your own report on
how to create the criteria. So they're not things
from left field. They're from there, they're from the
QualServe where we paid consultants to come in and
evaluate, and they come, you know, from previous --
the discussions and previous evaluations which were
all -- where this does depart is this is not an essay
type questionnaire. In the past, the board members
have written essays, but that's not been empirical.
This is trying to take the same concepts and create
and empirical document.
MR. TAGORDA: Mr. Takitani.
MR. TAKITANI: I apologize maybe for the fervor
of my comments, but as I move closer to the exit door
following closely in line with Mr. Cravalho and at the
next meeting I would be sitting -- in PTA/golf
parlance, I will be sitting behind the ropes and not
inside the rope. So my fervor is intended to ensure
that the board would consider carefully the comment
that I have made and not try to judge primarily on
areas of interdepartmental relationship with others.
Look at the job that needs to be done, providing clean
water efficiently. And taken in that context, yes, I
would be able to support and know that the board would
do a good job in this evaluation which I agree has
been long, long overdue.
MR. TAGORDA: I think all your points are well
taken, Mr. Takitani. Any more discussion? Ready for
the question? Those in favor of the motion to accept
the recommendation of the operation committee on the
evaluation of the director, say aye. Opposed?
Carried.
MR. CRAVALHO: Mr. Chairman, clarification.
Not the acceptance of the recommendation, but the
acceptance of the document.
MR. TAGORDA: Acceptance of the document.
MR. CRAVALHO: Thank you.
MR. TAGORDA: Okay. Committee of the Whole.
Communication 00-38, request from Paul Horikawa on
behalf of Mr. and Mrs. James Amaral for water meter
for Lilikoi Farm Lots in exchange for water meter
under Service Number 934-01000.
MR. STARR: Mr. Chair, I move for approval.
MR. NOBRIGA: Second.
MR. TAGORDA: It's been moved for approval and
seconded by Mr. Nobriga. You don't have to talk. But
if you want to, it's up to you.
MR. HORIKAWA: What I wanted to do is just say
a few things. I know where the board is going and I
thank you for that. I just had a few things that I
wanted to say before I left.
One is that -- I'm not going to speak on the
merits because I'm considering that because of the way
the votes are lining up, that it's going to be
approved. But the committee did recommend approval on
March 6th and we believe that the committee discussed
the issue and that its recommendation is supported and
we would request that the committee adopt the --
excuse me, the board adopt the recommendation of the
committee and grant the requested relief.
But the thing I really wanted to say before I
leave is as far as Bob, I can't believe five years has
gone by so quickly. It seems as if you were just
being sworn in. And I guess as time goes by, it just
goes faster. On behalf of myself and the firm and if
I could be so presumptuous people in the community, we
would like to thank you for your service. I think
you've done a good job for the board. And thank you
for your service.
As far as Mr. Cravalho, I may be showing my
age, but about 30 years ago -- and I'm not that old --
about 30 years ago, I was one of your biggest critics.
Through time, maybe because maybe I got smarter, maybe
I got wiser, I don't know, I've come to respect you,
your intelligence and your points of view. I'm not as
an optimist as maybe you are, but I wish you the best
of luck, best of health in your operation, and hope
everything goes okay.
Mr. and Mrs. Amaral are here today, they're
here to answer any questions you may have regarding
their request. Mr. Chairman.
MR. TAGORDA: Any members have questions?
MR. HASHIMOTO: Call for the question.
MR. TAGORDA: Those in favor of the approved
recommendation of the Committee of the Whole, say aye.
Opposed. Carried. Thank you very much.
MR. HORIKAWA: Thank you, Mr. Chairman. Good
luck, Mr. Takitani and Mr. Cravalho.
MR. TAGORDA: Next item. Communication 00-44,
request from Mr. Edward T. Esty for approval to
temporarily use an existing water meter to fill a tank
to be used as the domestic water supply.
The recommendation of the committee is to deny
the applicant's request.
MR. NOBRIGA: So moved, Mr. Chairman.
MR. STARR: Second.
MR. TAGORDA: It's been moved and seconded
that the applicant's request be denied. Discussion?
Ready for the question? Those in favor of the motion,
say aye. Opposed. Carried.
Communication 00-45, request from Andrew and
Sheila Fujikawa for water meter, TMK 2-2-3-14:86, Kula
Haleakala Acres.
It says right here, applicant will be working
with staff since the director has indicated that there
may be a reasonable way to comply with the agreement.
MR. NOBRIGA: Can we have an update from staff?
MR. CRADDICK: Herb, anything?
MR. TAGORDA: Anything? No?
MR. CRADDICK: No.
MR. TAGORDA: So we leave it to the staff.
MR. CRAVALHO: Mr. Chair, I suggest that we
set a definitive time to have a response from the
staff for the next meeting or whatever the case may
be. And at the same time, Mr. Chair, slightly
different subject matter in terms of individuals.
Last meeting, Mr. Chair, we had a request had come in
from one of the Amarals to connect with some private
system upcountry and we said to refer it to staff and
to the director to report back. Can we expect a
report back at our next meeting?
MR. CRADDICK: Okay.
MR. TAGORDA: Thank you, Mr. Cravalho.
Communication 00-47, request from Sandy Daniells for
relocation of a water meter from TMK 2-7-14:44 to TMK
2-7-14:46. Applicant withdrew the request from the
board's agenda.
And next item, review and possible action
regarding the Memorandum of Understanding with Gerald
Hokoana. The Committee of the Whole recommended that
the board accept the MOU with Mr. Hokoana. Motion?
MR. STARR: Mr. Chair, I move that we accept
the recommendation and approve.
MR. TAGORDA: It's been moved to accept the recommendation.
MR. HASHIMOTO: Second.
MR. TAGORDA: It's been seconded. Discussion?
Question. Those in favor of the motion, say aye.
Opposed. Carried.
Communication 00-51, communication from Debra
Mapel of the Molokai Dental Health Coalition regarding
fluoridation of the Molokai water systems. Please
state your name for the record.
MS. MAPEL: Hi, I'm Deborah Mapel. I'm a
facilitator for the Molokai Dental Health Coalition
and I want to say good morning and thank the board
members, the chair, the secretary, and corporate
counsel for making the journey to Molokai. I realize
it wasn't an easy journey and required you to travel
at night, which we all admire. I also want to thank
this board for reviewing the large amount of materials
you've received on this issue.
Today I did bring you a few more items to
review. After the meeting, I was presented some
information on the history of Molokai and dentistry.
In 1975, then Mayor Cravalho assisted our island when
we were in a dental crisis. We did not have dental
service providers. We had a serious dental decay
problem at that time. And we only had one public
health dentist working there. We needed to open a gap
clinic to meet the needs of the people who were not
covered under the public assistance program. And the
County at that time worked with other agencies and the
Molokai Dental Task Force to provide a clinic and also
a means to recruit dental personnel to Molokai to live
there and open practices there.
At that time the task force did develop a plan
to address the issue of dental care and dental needs
on Molokai. The first was the opening of the office
and recruiting of personnel. The second was to do an
educational program for the island to make the public
aware of their dental health needs and to be
responsible for their dental health needs. And the
third was to provide fluoridation on Molokai. We did
have a history of fluoridation in one section of the
island which was very successful, but unfortunately
was ended due to lack of funding of a private source.
I'll remind you this was all in 1975 and you will be
receiving some paperwork covering that.
This is now 2001. We finally have an
opportunity to provide the fluoridation, third phase
of this project. And this opportunity presented
itself to Molokai due to our unique size and
population, something that oftentimes prohibits us
from receiving services.
Economics is a definite problem on Molokai.
It was in 1975 and it still is today. Some things do
not change.
When we talk about fluoridation, we talk about
it being economical. We know that it would cost $1.50
per person per year. There is no other economically
viable way to provide this service. It's efficient.
It is not a medication although it can come in a pill
form. It is a nutrient. We do not advocate passing
out pills. We do not have the control over that
means. In water fluoridation, it is very controlled,
it's very safe. Many of the times when people refer
to incidents involving fluorides and fluoridation,
these are not water fluoridation incidents. These are
often areas that have natural fluoride way above the
amount that we would have in the water. Engineering
today has made it much more safer than chlorination of
the water.
This is a very pure form of sodium fluoride.
It is not an industrial grade and it is not a
pharmaceutical grade, it is a food grade and it is
well regulated as is the chlorine that's added to the
water.
Basically today, although you've heard from me
many times and we appreciate the time you spent on
Molokai listening to the public, I did want to remind
the board that we're not asking for approval of
fluoridation. That has been approved from the Surgeon
General, down to the Department of Health, down to the
private practitioners on this island who feel that
this is very necessary for us to provide the best
service for our community.
It's a natural means, the best method to
differ this particular nutrient into the diet over a
lifetime. We are just asking for your permission to
accept this opportunity that was provided to our
community and to allow for the adjustment of the
fluoride concentration in the water.
So we appreciate all the time. I know you
have a very large agenda, many topics to cover, and
this is my specific topic, but we appreciate all the
time that you have done on this issue and we hope to
answer any questions that you have.
MR. TAGORDA: Members? No questions. Thank you.
MS. MAPEL: Thank you.
MR. TAGORDA: The last item -- yes, Mr. Starr.
MR. STARR: I'm trying to understand what
we're going to do with it -- what we're going to do
with this. I would be happy to make a motion to -- in
fact, I would like to move that this communication be
filed.
MR. CRAVALHO: What's the communication,
Mr. Chairman?
MR. STARR: The letter from Ms. Mapel.
MR. TAGORDA: Communication from Deborah Mapel
of the Molokai Dental Health Coalition regarding
fluoridation of the Molokai water system.
MR. NOBRIGA: Second.
MR. TAGORDA: It's been moved that this
communication be filed and be seconded by Member
Nobriga. Discussion? Question? Those in favor, say
aye. Opposed. Carried.
So it's going to be filed, Ms. Deborah Mapel,
and I don't know when the new chairman is going to
bring it out again the next agenda. But as the
Chairman of the Committee of the Whole who went to
Molokai and have a public meeting there on the 13th of
March, all the information gathered by me and my
members will be fully submitted to the board for the
rest of the members to study and review. When this
fluoridation issue comes up, they have all the
information that they need.
MS. MAPEL: I'm sorry, does that mean that I
need to reintroduce it again -- the Chair won't
reintroduce it?
MR. TAGORDA: No, we just have to all of us
study all the informations that we have from
testimonies, the petitions, the tapes, and all the
whole thing that we have is going to be filed. Thank
you again for the time.
MS. MAPEL: Thank you.
MR. TAGORDA: The next item on the Committee
of the Whole agenda is Board of Water Supply Rules and
Regulations for review, comment, and amendments if
determined by the board. Recommendation of the
Committee of the Whole is recommend creating a process
to do a complete review of the rules and that it be
done using working groups and workshop type setting
while going through the process. Yes, Mr. Starr.
MR. STARR: Mr. Chair, I move to accept the
recommendation of the committee.
MR. NOBRIGA: Second.
MR. CRAVALHO: Mr. Chairman.
MR. TAGORDA: Yes, Mr. Cravalho.
MR. CRAVALHO: I want to express the same
kinds of concerns that I've expressed in the past, the
difference between accepting a communication and
accepting all of the recommendations. I have no
problem with you accepting communication because there
is a pending matter right now that is in the Committee
of the Whole and it's up to the Chair at that time of
the new incoming chairman to work on the
methodologies. Always coming back. So if there is no
objection, Mr. Chair, we would like to see if we can
accept the communication, knowing it's still alive and
the new chairperson or the chair coming, whichever he
has, can work on it.
MR. STARR: That's fine. So moved.
MR. NOBRIGA: So ordered.
MR. TAGORDA: So ordered, Mr. Cravalho.
Okay. Old business. Communication 01-04,
request from Michael Conway for a waiver of the fire
flow requirements for Kula Lodge Marketplace. What's
the pleasure of the board?
MR. STARR: Mr. Chairman, I move to defer so
the -- I guess the next chair can put it into the
committee.
MR. HASHIMOTO: Second.
MR. TAGORDA: Defer this until the next
chairman can do whatever he wants with this
communication. It's been seconded. Those who are in
favor of the motion, say aye. Opposed. Carried.
Director's Report 00-42, request approval of
electronic bill presentment service. It's on page 104
of your packet. Mr. Quinn.
MR. QUINN: Mr. Chair, essentially this
service allows for customers to view and pay their
water bills via their own PC. It's a service that's
offered currently by the Honolulu Board of Water
Supply. And as the board well knows, we utilize their
billing service currently.
There had been some questions raised by corp
counsel at prior meetings regarding the contract. We
have since received an addendum to the contract from
the Checkfree Corporation, Honolulu Board of Water
Supply, and it has been submitted to corp counsel and
they have reviewed and approved that addendum. So
that obstacle has now been overcome and we are
requesting approval for us to move forward and offer
this service to our customers.
MR. TAGORDA: Mr. Starr.
MR. STARR: I like this proposal, but I want
to -- I don't know how much this has been looked at.
Is this an old proposal or is this a new proposal, Mike?
MR. QUINN: It's a proposal that's been before
the board before. But there was a question, as I
said, regarding the contract, we've since resolved
that through corp counsel with the attorneys on both
sides.
MR. TAGORDA: Mr. Takitani.
MR. TAKITANI: I move for approval of
Director's Report 00-42, approval of the electronic
bill presentment service.
MR. STARR: I second.
MR. TAGORDA: It's been moved that director's
request, approval of electronic bill presentment
service be approved. Discussion?
MR. CRAVALHO: Mr. Chairman.
MR. TAGORDA: Yes, Mr. Cravalho.
MR. CRAVALHO: I always have grave concerns
about electronic transfers and matters that deal with
-- conceivably could deal with the confidentiality of
people's lives or activities or what have you. It is
my understanding, Mr. Chairman, that a system separate
and distinct from this system has not been perfected
to the degree that confidentiality is assured to all
matters and all people. And when we are dealing,
Mr. Chairman, with personal computers, and more
specifically if it's related to connections to an
Internet type of a setup or a website type of a setup,
the question of confidentiality is paramount. And
computer hackers historically have been able to get
information and to kind of mess things up in matters
that they shouldn't have been.
So if the director and staff can give us the
assurances that the confidentiality of the members of
the Board of Water Supply, its clients, are protected
without any danger, I have no problem. But if we're
not really sure that we can protect the information,
then I think we have a reason to be very cautious in
what we do.
MR. TAGORDA: Any more discussion, members?
MR. STARR: I would like Mr. Quinn to answer that.
MR. TAGORDA: Okay, Mr. Quinn.
MR. QUINN: Board Member Cravalho's concern is
a valid one and one that we had also. And we have in
writing that this Checkfree Corporation who's offering
this service, by the way, uses the strongest type of
encryption that is utilized on the Web at this point.
And that's -- that I have in writing. Whether that
ensures a hundred percent, I am not, you know,
protection -- all I can say is they utilize the best
type of encryption that's available now.
MR. CRAVALHO: Mr. Chairman, does the contract
have a provision where the Department of Water Supply
or the Board of Water Supply will be held harmless in
case of any kind of a violation?
MR. QUINN: Yes, it does. Corp counsel, would
you like to comment on that?
MR. FUKUSHIMA: Yes, there is a provision of
that sort. There are also very large insurance
policies regarding crime insurance. There is a
$25 million crime insurance where if someone
criminally enters the system. There is another
$50,000 umbrella with a $2 million minimum amount for
general liability insurance. There is an additional
errors and omissions liability of $2 million per
occurrence -- excuse me, $2 million excess liability
policy of $48 million. So there is substantial
insurance behind this.
There are provisions in the agreement which
agrees to indemnify and hold harmless the Board of
Water Supply -- the County Board of Water Supply.
MR. TAGORDA: Any more discussion, members?
Question. Those in favor of the motion to approve the
electronic bill presentment service, say aye.
Opposed. Carried.
Item C on Old Business. Presentation
regarding the System Replacement Needs Analysis and
Valuation Study. Mr. Quinn.
MR. QUINN: Mr. Chair and board members, we
have with us today consultants from Brown and Caldwell
who developed this particular model for the board and
the department. And essentially it does two things,
it has all our assets in this model and it has valued
those assets and it's broken them down into the
primary categories which are pipe, land, pumping, pump
stations, things of that nature. So that we have
assigned a dollar value to those assets.
And the purpose of -- so the purpose of this
model is two-fold, to do that, we get a good handle on
our assets, the dollar value of those assets, and then
to be able to predict going out into the future -- I
think in today's case we might be going out about 25
years, although I think we can go out even a hundred
years, but that's not very realistic -- to predict
what the board and the department will be faced with
in terms of financing the replacement of those assets
over the years.
So essentially what it is -- what we think it
is a very good tool that we can use and the board
will have available to it when it's developing its
long-range financial plans. And it's hard data, it's
not guess work. As a matter of fact, there was
considerable amount of effort that went into trying to
determine the value and how many pipes and the lengths
of pipes that we have out there. And it ties in
pretty well with what our planning department is doing
in terms of the hydrology model. And I believe our
planner is using it, Ellen can correct me, in the
current CIP development process. Is that right,
Ellen?
MS. KRAFTSOW: Yes, [inaudible].
MR. QUINN: So I think it's a useful tool.
Mr. Ken Harlow, who's going to present to you an
executive summary, so to speak, of this presentation.
And sitting next to him is Jeff Pearson, who is the
Brown and Caldwell representative on Maui. Is it all right --
MR. TAGORDA: Go ahead.
MR. HARLOW: This is a portion of the written
report that's discussed in the model of the
recommendations.
MR. QUINN: While we're setting this up, this
presentation was given to the Finance CIP Committee,
and I believe it was pretty well received by those
board committee members.
MR. HARLOW: Mr. Chairman, Mr. Vice Chairman,
board members, a brief word of introduction. Usually
bodies such as this one, boards and special agencies,
city councils, have grave concern with new water
supply issues which are obviously a very important
issue on Maui. New treatment requirements, water
quality changes, et cetera.
One of the areas that has historically, in my
opinion, been overlooked is how do we manage the
assets we have now. This is typically not a big issue
because an awful lot of the assets are essentially
contributed capital. A developer builds a new
subdivision, hands over the pipes for a dollar, and
the cost of those pipes is not reflected in the rates
unless the agency happens to be funding depreciation.
Not normally the case. And a lot of utilities across
the United States, particularly in big cities now, are
discovering that they have gotten what I would say
gotten behind the power curve. In other words, they
suddenly have system replacement and refurbishment
requirements that have rate impacts that are far
greater than they can afford. As a result, some
agencies are now trying to look forward into the
future to analyze what their future needs are going to
be in order to set financial policies now to deal with
those needs. And that's basically what this exercise
for the Maui Board of Water Supply was.
What we've got is a brief power point
presentation and then take a look at the model itself.
What was just handed out to you was the rather short
analysis section of the report we prepared for the
board, shows a couple or three alternatives. Let me
just open up our presentation.
With the permission of the board, I would like
to do this sitting down for two reasons. One is
getting old and tired, and number two is so I won't be
in anybody's way. Is that okay? I'll talk loud,
though, if I can.
The whole process is called system replacement
planning. And this is not an engineering process. In
other words, we're not looking specifically at what we
need to replace next year. What we're looking at is
the general shape of replacement needs over the
future. Normally this is done from a period from
anywhere from 20 years to 50 years. I'm told that
Sever Trent in England does this analysis for a
400-year period, which some people would consider a
little bit long. They will probably transmit water
through the air in 400 years and we won't have to
worry about all this.
The purpose of the system replacement planning
process is to help utilities formulate long-term
financial policies to deal with their infrastructure,
replacement, and refurbishment needs. Those of you
that have been following this know that it ties into
some things that are going on in the industry in general.
Why would you want to do this? First of all,
to establish your reserve policy if you don't have
one. Secondly, if you have reserves, if you have
replacement reserves, this process can justify them or
give you a guide whether they should be greater or, in
the case of one of my clients, whether they're
excessive and should be less.
A very important reason to me is to maintain
the long-term integrity of your infrastructure. This
is the part about not getting behind the power curve.
The concept is usually called sustainable
infrastructure.
Help comply with various regulatory and
financial requirements such as GASB 34, which I'm sure
some of the members of this board are familiar with
and which I know the county is dealing with with some
anguish right now.
And overall, it's a key component of good
asset management, managing the assets we already have.
We'll see why that's important in a minute.
This particular methodology that we use has
been used by quite a few people, mostly in Southern
California. It's spreading out, hopefully. Irvine
Ranch Water District, Orange County Sanitation
District -- which is the second largest, I believe,
wastewater treatment agency west of the Mississippi --
Orange County Water District, which is a major
groundwater management agency; Maui board, obviously.
This was originally presented I think in early
December to the finance committee. Since then, we
have completed work with the City of Oxnard, we're
wrapping up the City of Roseville, just starting for
the Metropolitan Water District of Southern California
which is the largest water wholesaler in the United
States.
And increasing interest -- because of the
increasing interest in asset management among water,
wastewater, store model utilities in general. So this
is -- it's for us a growing field and we think we have
a very good methodology which this presentation is
going to explain a little bit.
System replacement plan establishes policies
for reserves for the replacement and refurbishment of
capital assets without incurring new debt. That's the
basic concept here. Not only to analyze what you're
going to need in the future, but to set up financial
policies for dealing with current assets, the
refurbishment and the replacement, without issuing new
debt. Chances are with the changes in regulations and
the other things you're looking forward to, you're
going to be issuing enough debt without worrying about
your existing assets.
So debt may still be used for asset additions
that are caused by new supply issues, by new
regulatory requirements, simply by population growth.
And I see -- is that correct that Maui has grown 40
percent in the last 10 years?
A VOICE: Seven.
A VOICE: A part of Maui has grown 40 percent.
MR. HARLOW: Oh, okay, I saw it in the
Honolulu paper on Monday, it just said Maui, 40
percent.
MR. QUINN: It's been significant.
MR. HARLOW: It has. I can tell the
difference myself in coming back. Within the last two
or three years even. So you've got some issues there.
But debt is not incurred under this concept
for replacement and refurbishment of existing assets.
That's something you want to think about because there
is no law saying you can't issue debt for R&R of
existing assets.
Elements of a system replacement plan. You've
gotten inventories. Let me go back here, if I may.
You've got inventories of pipe and what we call plant,
which is everything except pipe. You need to be
concerned about the inflation rate because you're
dealing with a sinking fund concept. The replacement
costs of each of your assets. Their useful lives is
determined either by asset classes or by condition
assessment. Earnings rates of the fund, other
elements all go into this mix. What we're doing is
we're simulating over a long period of time what's
going to happen to your system and what's going to
happen if you adopt any particular financial policy.
These all go into what we call the RPM or the
Replacement Planning Model which calculates your
estimated R&R costs by year over a long period of
time. In this case, we've got it set at 25 years. It
then simulates the performance of your replacement
fund over that period of time and it allows you to set
parameters to keep that fund alive over what period of
time that is. We'll see some examples of that. And
those parameters are what your replacement funding
policy is.
The replacement fund itself is your
fundamental tool for accumulating money for
refurbishment and replacement. That fund pays for
replacement and refurbishment of existing assets only,
not for new assets. There are a lot of parameters, as
we'll see, but two of them are key. Number one is
what is the size of the replacement fund, the R&R
fund, you have now. And the second parameter is
what's the replenishment rate of the fund? What do
you appropriate to that fund every year? Those two
things have to be in balance. Obviously if you have a
big fund, then your annual appropriations are going to
be smaller. If you have a little fund, your annual
appropriations are going to be bigger.
Because this is a little heavy, I'm going to
interrupt and just ask if there are any questions to
this point on this concept. Okay.
Other funding sources might be considered for
replacement and refurbishment. Rate surcharges. I
have known utilities to stick a buck a month on rates,
for instance, and say this is dedicated to R&R for
existing assets.
Another thing we can do and actually already
have done is issue bonds for replacement and
refurbishment purposes that we expect to be repaid by
the fund itself, not by general revenues coming in
from water rates or connection fees.
And then we can also take into account
miscellaneous cash flows. We have one client who
funded their R&R fund from a bankruptcy settlement, so
anything can happen. There are sources of money other
than just the income stream we have every day.
So special bonds were considered in Maui's
funding options because of the existing state of the
revolving fund loan of almost $8 million received over
a two-year period. Those monies now are programmed to
be repaid from the R&R fund.
Establishing funding policy. That's going to
be a mix of the initial size of the fund at the
replenishment rate, as we mentioned, plus any other
sources of fund revenue. What we try to do in
recommending a policy is look for the balance of
factors of all these factors we could put together
that's going to have the smoothest rate impact over
time and also that's going to avoid the accumulation
of big fund balances. You don't want to have too much
money sitting in the bank because that can be a
political issue. It's also conceptually not a really
responsible use of your rate payer money. So we try
to -- I call this just-in-time replacement plan. We
try to manage the funds so that we don't accumulate
large balances. We'll see in one of the options
unfortunately that we've looked at does accumulate
large balances.
Key factors for Maui in particular. It's been
generic up to here, but Maui has some specific issues.
One, might mention the database. Our database has
13,000 assets in it. Most of that obviously is pipe.
But the total replacement value of your system, if you
were to build your system today, would be in the
neighborhood of $700 million. That's a lot of money,
particularly given that you only have about 29,000
accounts. That comes out to be about $25,000 per
account. Maui's system on this basis is a very
expensive system.
EPA estimates that the typical vertically
integrated water utility in the United States has an
investment per account of between four and eight
thousand dollars. Your investment is almost $25,000
per account, so you're a bit higher than the average.
What this means is when it comes time to replace those
assets, you're going to have significant replacement
costs in terms of your customer base and you're going
to have significant impact on rates.
Your system has about 727 miles of pipe. That
pipe represents two-thirds, almost exactly, of your
total asset value and this is another thing to bear in
mind. You know, we look around through the pump
stations, we see the plants, we think about all the
tanks, we think about those as being our system. But
really, the value of our system we never see. It's
underground, it's going to be the most expensive part
to replace.
Now, if we take that $715 million and we
assume the average life of an asset, just a very rough
estimate, of 50 years, that means we should expect to
be paying $14 million a year in replacement costs.
Now, in actuality right now the board is paying I
believe about $4 million a year in replacement costs.
Why are we paying 4 and not 14? We'll see that in a
minute when we look at the model.
And that's the end of the power point
presentation. Any questions, comments, to this point?
What I'm going to do now is just open up the model
itself. I should mention this model is now the
property of the Board of Water Supply. It's been
given to the board on a CD-ROM along with the final
report and a longer version of the presentation you
just saw. So that is in your hands. I hope it serves
you well.
You see the date on this is November is when
the model was finished.
This is what's called a control panel. This
is where much of the data is entered. And then we
have a lot of sub-menus to enter additional data and
so forth. And on each of the screens, we'll see down
in the lower right a thumbnail graph of what the
replacement fund is doing at that point.
So as you see, we've set this right now for
what we call the stepped option, which is basically
for a 20-year program that we want to set financial
policies that are good for 20 years. After that,
we're pretty anemic and we go quite negative after
year 23. If you were to look at a 40-year policy, it
might look quite different.
The number of reports available. The first
and most important is this one and this is in the
handout you got. You may want to look at the handout
so you can see the numbers more clearly. What this
shows is your estimated replacement and refurbishment
needs over the next 25 years. You'll notice that for
the years 2000 through 2002, those needs are in the
neighborhood of $4 to $4.5 million, which is in fact
based on management's estimates and their assessment
of the system, what the system needs right now. A
comforting fact that we appear through this
statistical method to be pretty close to management's
estimates.
However, you notice that this graph is wavy,
it's curved. There is a name for this, actually. The
most advanced forms of asset management for public
infrastructure are being built in Australia and New
Zealand and they all these curves "Nessie curves."
Obviously named after, I assume at least, named after
the Loch Ness monster. I've always assumed that to be
the case, but I've never asked, so I guess it's true.
And what we're seeing here is we're seeing
shadows of past development cycles in the County of
Maui. If we were looking in the past and calculate
when all the pipe went in the ground, we would
probably find out that there is a boom time and a lot
of subdivisions and so forth are built, then there are
the thin times and not much happens, and then there is
another boom period. And these are reflected in the
shape of our replacement needs.
So we see that right now $4 million sounds
about good. However, we go out to 2004 through 2007
and we get up to $8 million a year from the current
$4 million a year. Drop back down to $4 million a
year. And then we go, in the late teens, we're going
up to -- these are current dollars, mind you, there is
no inflation here -- we're going up to $14 to $15
million within that 20-year period that we're looking at.
This curve I think represents a significant
policy challenge for the Board of Water Supply. What
do we do now to prepare for these future replacement
costs if indeed we think this is going to occur? And
based on the analysis we did, my opinion is there is
certainly no reason to assume that they're not going
to occur. It is going to be something that happens.
You do have large scale system replacements that tend
to come in waves because of development pattern of the
society you live in.
So what we've tried to do is model the sinking
fund against this replacement cycle. And
unfortunately, we have a problem because if you say
okay, I'm going to put away so much money right now
and say increasing at the rate of inflation I'll put
that away each year -- I'm not going to run this
scenario -- what happens is the answer I believe is
about $8.5 million as opposed to the $4 million you're
putting away right now. However, you accumulate a
fund balance in intermediate years around 2010 to 2011
of about $30 million. And that's in current dollars,
not inflated dollars. And $30 million I think has two
problems. One is political and the other is, if I'm
not mistaken, you'd probably be in violation of the
reserve policy that's governed as a state law, Mike,
that governs that? And so I don't think you want to
go that way.
So we've looked at a stepped policy, which is
another one of the options that's in the handout,
where you go to $7.5 million from where you're at
currently and you either leave it there or you drop --
you could even drop it around 2010 to $6 million in
current dollars. And then in 2015, you would have to
have a rather large increase up to $18 million or
about $11.5 million in current dollars.
So it's an uncomfortable situation where you
would have to kind of keep changing every five, six,
seven years the level of appropriation of the fund in
order to avoid building up these large interim
balances.
There is one other option that we did not
analyze in the report but the board can certainly
analyze using this tool, and that is to actually
borrow money. If you remember the shape of the curve,
we could, for instance, go to say seven, seven and a
half million here, and borrow for these peaks, and
then we would repay during the valleys so that the
cost to the fund would rise in this period and
essentially anticipate the -- anticipate the peaks by
borrowing, use the increased fund balances to pay for
the replacements and refurbishments during the peak,
and the debt service then would fill in the valleys.
This is actually very easy to analyze with
this model because we don't have to assume 20-year
borrowing. We could borrow on other terms and make
things fit out quite well. So that's something the
board may want to look at in order to have a more
level policy.
However, the fact remains that it is very
unlikely that the current level of appropriations for
replacement and refurbishment, given your fund
balances now, are sufficient given the challenges
facing the board in the future. One way or another,
they are going to have to go up or the only
alternative -- well, two alternatives. One is to find
the money somewhere else and there may be monies
through the Water 21 initiative that's currently
struggling through Congress, that there may be
substantial additional monies in the future in the
state revolving fund for R&R purposes.
The other possibility is that the
infrastructure deteriorates, that the county gets
behind the power curve so to speak, and then has more
severe problems.
But since neither of those -- one is I think
unacceptable, the other one is unknown. At this time
we can only recommend that the board consider this
very carefully and start thinking about a substantial
increase in the amount of money programmed for the
replacement and refurbishment of the existing system.
That's the end of my presentation. I'll be
happy to answer any questions.
MR. QUINN: This year we're transferring
$4 million into what we call our CIP replacement fund.
If we were to do that for the next three years, what
would the effect be?
MR. HARLOW: We can look at that. The
question is what happens if we just stay with the
$4 million policy. And to do that, we just get rid of
these entries.
MR. QUINN: That takes us to what?
MR. HARLOW: That takes you to between 2003
and 2004. Now, in all likelihood what you would
actually do in real life if you only had that
$4 million a year is you would start putting off the
replacements that you need and the system condition
would start to deteriorate. You wouldn't actually
tank like this, but the system would start going
downhill.
MR. STARR: What does this point that we
really need to do to be able to stay above the line
for 25 years and not peak too high?
MR. HARLOW: My recommendation, based on this,
is that you would adopt a policy now of appropriating
seven to seven and a half million dollars to that fund
and then you would track and you would dust this off
every two or three years and look at your actual
replacement experience, adjust asset lives if
necessary based on the actual replacement experience,
and decide what the next step is.
The indication now is it looks likes it may be
able to be lowered after six or seven years. See if
that's true or not.
MR. STARR: Has your study gone one step
further and looked at what we would have to do to be
able to place this $7 million in the fund?
MR. HARLOW: You mean where the $7 million would come from?
MR. STARR: Yeah.
MR. HARLOW: Well, that wouldn't be to place
in the fund -- oh, you mean during the year?
MR. STARR: Yes.
MR. HARLOW: No, there is no rate impact
analysis associated with this at this point. But that
would be relatively easy to do.
MR. STARR: That would be the next step.
MR. QUINN: That's the next logical step.
MR. STARR: Could we get a short recess?
(Brief recess.)
MR. TAGORDA: The meeting is reconvened. Are
we still on presentation? Yes, Mr. Quinn.
MR. QUINN: I think that about wraps it up
unless the board has any more questions. I would just
like to thank Ken.
MR. STARR: I do have a question, which is how
do we go to the next step which is, you know, if we
need to be -- if it looks like we need to be putting
$7 million a year into this to be able to replace our
pipes, what -- how do we go the next step which is
what do we have to charge our rate payers to be able
to afford to do that? I would like to ask the
gentleman from Brown and Caldwell if he has any wisdom
to shed.
MR. HARLOW: A couple of comments, and bearing
in mind I'm not familiar with your political situation
or your customers' preferences except that they
probably don't like rate hikes, if they're like most
of the other customers I know, including myself.
One is to explore a concept of a more ramped
increase in rates and say maybe we don't go to
$7.5 million a day with the understanding that we may
have to incur additional debt for interim replacement
needs. That's being considered by another of our
clients right now and we're merely showing those as
unmet replacement needs as far as the fund goes.
Because really, there is no rules here. You can
handle this any way you like. On the assumption that
you do want to do ultimately pay for R&R out of the
fund, though, that would be one thing to explore is a
more ramped approach. But you would be with the
understanding that you would be looking at a series of
rate increases over a number of years that would still
be significant, rather than doing it all in one fell
swoop.
Another alternative would be to start looking
right now to see if there is additional money for this
in the R&R fund or, excuse me, in the state revolving
fund, and borrow now so you can turn those -- remember
that first peak that we expect over the next six or
seven years, so that you can shave that peak and fill
in the valley.
MR. STARR: As you pointed out, though, if you
just keep borrowing, you don't do much better. But I
mean, can you make any recommendations in terms of
what we would have -- how much rate increase we would
be looking at if we were to, you know, deal with it
right away?
MR. HARLOW: I'm sorry, I haven't even looked
at that. I would think you could make a rough back of
the envelope, however.
MR. STARR: Is there a way we can extend the
study to give us that? That's what we need now is to
know how to turn it into a policy.
MR. TAGORDA: Mike.
MR. QUINN: Board Member Starr's comment is
very relevant and I just would like to make the board
members aware that the Big Island and the island of
Kauai have both completed very exhaustive CIP similar
kind of study and then gone the next step and actually
suggested and I believe have gotten approval of their
boards for very significant rate increases over the
next -- depending on the island, two to five years.
And I'm talking about extremely significant increases,
both in terms of the rate per thousand gallons and in
terms of doubling the standby charges that they
currently charge.
MR. STARR: I believe we're going to have to
do it, but I do believe that when we go through that
process both with the public and also with the council
and the mayor and other bodies, that it would behoove
us to do it in a way that's very empirical and not
emotional. And by being able to utilize the services
of Brown and Caldwell and, you know, utilize this
model but go one step further, that might be the best
tool we could ever hope to have.
So right now we're one step away from having
what we need to go and, you know, create a policy to
do it. Can we -- is that a service we can buy from
Brown and Caldwell to give us some suggestion as to
some suggested rate structures that will take us there?
MR. QUINN: That could involve an amendment to
the contract or something of that order. And we could
bring that to the board in a future meeting.
MR. STARR: While we're on this, I see
Mr. Freedman is here and I know he's expert on this
stuff. Do you have any wisdom to impart to us, Carl?
MR. TAGORDA: I think, Mr. Starr, we have
enough information with us and let's just go on.
MR. STARR: Okay.
MR. CRAVALHO: Mr. Chairman, I would like to
toss in one word of caution. Whatever we do, whether
we're making reference to replacement costs for the
system, which I understand is what is before this
body, we have to tie in one way or another what would
be a replacement cost over this entire period of time
based on a rate of economic development and/or growth
in order for us to be able to have a very pertinent
figure. That's what we're talking about. What would
the burden be on a community if you had a certain
level of economic growth or you had a negative
economic growth.
So when we make reference to the raising of
rates, it has to be based on the capacity, the
financial capacity of a community to support. And my
concept of a community is not limited only to the
$5 million or $6 million estates in the Wailea area.
We're talking about the everyday kind of people who
having their homes, et cetera. So we cannot separate,
in my judgment, Mr. Chairman, we cannot separate one
from the other. We've got to keep the economic
stability so people are in a position to be able to
foot the bill that may come out of consultants or any
other person who may be working on the ideal kind of a
situation that is not dealing with the reality. And
what are the implications with respect to this -- to
again the economic development, the growth, the
posture of the farmers, the land utilization patterns
of the pineapple lands that may be with us or the
sugar cane lands or what have you. All of these got
to be looked at very, very cautiously before we decide
on what the paying capacity, as I said, of the movie
star or the Silicon Valley guy who lives in Wailea a
couple days out of the week.
MR. TAGORDA: Okay. Next item on the agenda,
Other Business. Evaluation of the director of the
Department of Water Supply. Mr. Starr.
MR. STARR: I think that it's been all --
MR. CRAVALHO: We took care of that already.
MR. STARR: I think there is still an item