BOARD OF WATER SUPPLY COUNTY OF MAUI REGULAR MEETING Held at the Kahului Shopping Center, Kaahumanu Avenue, Kahului, Maui, Hawaii, commencing at 9:00 a.m. on July 24th, 2002. REPORTED BY: LYNANN NICELY, RPR/RMR/CSR #354 IWADO COURT REPORTERS, INC. A P P E A R A N C E S COMMITTEE MEMBERS: Peter Rice, Chairman Kent Hiranaga Jonathan Starr Michael Victorino Ginnie Parsons Howard Nakamura Adoph Helm Clark Hashimoto STAFF PRESENT: David Craddick, Director Ed Kushi, Corporation Counsel Cathy Howard, Board Secretary CHAIRMAN RICE: Good morning, everyone. Call to order the Board of Water Supply, County of Maui, regular board meeting. It's Wednesday, July 24th. We're at the Kahului Shopping Center. And by my watch, it's 9 a.m. Present from my left is Jonathan Starr, Ginny Parsons, Howard Nakamura, Mike Victorino, Adolph Helm, Clark Hashimoto, and Kent Hiranaga. Present, Director David Craddick, Corp Counsel Ed Kushi, Jr., staff, members of the public. At this point on the agenda we have the approval of the minutes. MR. VICTORINO: I move that we approve the minutes from the meeting of June 12, 2002. CHAIRMAN RICE: Your motion includes that they be filed for 30-day review and then accepted? MR. VICTORINO: As stated. MR. STARR: Following our convention, I second it. CHAIRMAN RICE: Moved and seconded that the minutes be filed for 30-day review and if no comments are received, that they be accepted. All in favor, say aye. VOICES: Aye. CHAIRMAN RICE: Opposed, say nay. [No response.] CHAIRMAN RICE: Motion is carried. Testimony from the public. At this point if there is any testimony, either oral or written, from the public regarding any issue, we'll accept it at this time. However, if you would prefer to testify as a particular issue comes up, that's okay, too, I'll recognize you at the beginning of each agenda item. So is there anyone who wants to make any comments at this point, maybe has a schedule issue. Yes, ma'am, if you would like to come up here and sit next to this gentleman in the wonderful colorful shirt. If you could state your name. MS. ARBOR: My name is Kelly Arbor, speaking as an individual. I wanted to make a few comments on the discussion and possible action regarding a resolution not to approve any substandard water system. I did see your discussion, I read the minutes from the last meeting and I see where this conversation came from -- I mean this discussion. And I applaud you for taking up this issue. I think the issue of substandard water systems in general is one that we really need to look at how to take preventative measures to avoid in the future. A few years ago, you passed a rule that was confirmed by the county council that exempts the water department from having to review private water systems and I believe that was considered a cost-saving measure at the time. I believe that the impact of that, though, has been -- it was something that was, I think -- somebody in Land Use and Codes actually warned the board that this might be a problem later on. And what's happening now is that there are subdivision approvals going through with water systems that have yet to meet Department of Health standards, may never meet Department of Health standards, and some of the technical review and technical comments that I believe the subdivision people really need from the water department are not available. I know in certain cases, the Department of Health is trying to take a very careful look at it. I'm aware of one subdivision in which they're trying to design two separate water systems in order to avoid the EPA rules on safe drinking water. And I believe that's the reason why they're doing it. In some instances, it's certainly appropriate to have non-potable systems in agriculture land if that land is truly going to be used for farming and not primarily as a residential area. So it's a real challenge, I'm sure, but I really urge you to review that rule because I think one of the problems in the last few years with these private water systems starting to proliferate and they may proliferate more if there is any quick action on approval upcountry for water meters. I think you're going to end up having more problems down the road like where we've seen with a system that you had to bail out. The rule itself, I question whether it's really -- and maybe you can ask your attorney this -- in the mandate of the charter for you to pass a rule that actually affects the water director's responsibilities under the Maui County Code. Because when I look through the Title 18, the subdivision code, I see a lot of references to what the water director needs to review. And the public works department is interpreting your role to mean that the water department doesn't have to review certain sections. One section that I call your attention to would be 18-80-080(d), which talks about how the water system preliminary plat should show the quality and quantity of water on a preliminary plat approval. And I think that was put in there for a good reason so that you -- so that you would be able to review it -- the water department, I mean, should be able to review it and make comments on whether this is a safe system, whether it's a system that would last and hold up over time. And if that was properly done, I don't think we'd see the problems that we're having now. But I don't see all these water systems described on the preliminary plat, these private systems. In fact, I don't think I've ever seen one or heard of one. I've been in my spare time -- no, I do look at some of these subdivision approvals and I urge you to think about that, putting in these preventative measures because these systems -- some of them may very well collapse, especially -- I mean, they may be brought up to safe drinking water standards, but the delivery systems may be shoddy. That's all my comments. CHAIRMAN RICE: Thank you, Kelly. Is there any questions from the board members? Mr. Starr? MR. STARR: I know -- this is an issue that -- and frankly, it's a little bit confusing to all of us at what level we're looking at. And I think there is a definite decision either we kind of keep remaking about whether this entity is a utility which specifically makes water and supplies a customer base, or whether we're a part of government with regulatory oversight over people and into people and organizations that are not -- don't get -- that we don't serve or that are outside our boundaries and so on. And it's something I haven't quite come to grips with myself because we can't really have oversight over all of the waters of Maui County and all of the people using water. You know, there is no way we could have, say, oversight over the plantations. Or if someone is out in Kahikinui and we don't have a pipe within 20 miles of them, do we want to be deciding what they can do regarding water. On the other hand, we have cases before us which are inside our system and people are doing private water systems right in the middle of our system and we know that the track record for that is at some point that community will come to us and say we want to turn it over to you and be part of your system and then we have a substandard system that has to be upgraded. Can you share any more of your own opinions about this? Because it's a very complicated issue. MS. ARBOR: Exactly. You touched on really good points. If it's within the area that is currently served by public water, I think there is definitely a need for higher level scrutiny. That's why I think the water [inaudible], while it's not on your agenda to look at that rule, but when you're looking at whether you accept substandard systems, if they are within the area that you serve, there is a good chance that those people are going to come back later and say, well, when we bought, we thought we could manage this well and this GSE and everything like that, but it turned out we can't, and please take over. So you have to look futuristically and say, well, what's the likelihood that you're going to end up having to spend millions of dollars to upgrade these systems or half a million or whatever. And some of them are serving very small communities, so it's quite a big expense. So yeah, I think just as the areas that connect to county roads we expect them to be brought up to county standards. If they're way out in a rural place where nobody hardly accesses, we're much more lenient in our thinking about gravel roads and steep grades and things like that. So I really think that the rule could be perhaps revised in such a way that it would be within areas that are currently served, you define it geographically, that you would review those so that every two-lot subdivision in Huelo doesn't necessarily have to come before you. But I'm really concerned with trying to go under the radar screen with the EPA, too, and that may be the case in some of the rural areas as well that there are larger subdivisions going on that are trying to do things that are cost savings for them, but in the long run may endanger the public. CHAIRMAN RICE: Ginny? MS. PARSONS: Can I ask Mr. Craddick for -- CHAIRMAN RICE: No, let's limit our questions to the testifier. MS. PARSONS: It has to do with this. CHAIRMAN RICE: We're going to talk about this later in the agenda. We're taking testimony. Any other questions for Kelly? None. Thank you. MS. ARBOR: Thank you very much for this opportunity. CHAIRMAN RICE: Is there any other public testimony at this point in the meeting? We're taking public testimony on anything on the agenda, knowing that when we take up individual items, I will also give you an opportunity to testify at that time. So possibly you have a time constraint and you want to testify on something on the agenda, feel free to do that now. Otherwise I will move on. Okay. Hearing and seeing none, we're going to move on the agenda of board members -- at my request we changed the date to today and in doing so, Dr. Dantes has a meeting and I messed him up and if he could please be moved up on the agenda so he can attend his other meeting. If there is no objection. Doctor, we'll take up the issue on Old Business, Number B, Communication 02-19. And you received some additional information since our last meeting. And I believe at our last meeting, corp counsel was going to give us an opinion on the proposed document. Mr. Kushi? MR. KUSHI: Yes, Mr. Chair. I read the meeting of the last meeting that Dr. Dantes was here and again I was not involved in the previous meetings that he had had with fellow corp counsel and the director. However, after reviewing the proposed indemnity language and insurance language, it would meet my satisfaction provided that there would be added some kind of language saying that in the event an insurance policy is cancelled or about to be terminated, that the board is notified in advance, that type of language. I don't have the exact language, but I can figure it out. I believe we discussed that at the last meeting. So if the board chooses to adopt this policy, I think it would be satisfactory from my standpoint. However, I believe you should still have to wrestle with the issue about the whole concept and I think you should have the department's input in terms of which way you're going. I also would advise the board to get the Department of Fire Control's input in terms of what you may be waiving. But again, getting back to the specific point, I would sign off on the indemnity language if the board so chooses. CHAIRMAN RICE: Thank you, Mr. Kushi. Any questions of Mr. Kushi, board members? Mr. Starr? MR. STARR: Can we get an overview of what we're dealing with? My memory is failing and -- CHAIRMAN RICE: Doctor, would you give us an overview quickly? DR. DANTES: Thank you. And I appreciate your accommodating my schedule today also. The county requires operators of transient vacation rental to apply for a conditional and in some cases state special use permits which are reviewed by -- which applications are reviewed by some state and county agencies, among them being the Department of Water Supply. Typically the Department of Water Supply will comment on these applications to the effect that the applicant should demonstrate that they can meet specified fire flow requirements. These requirements are typically not applied for residential use because of the two dwelling exemption. And even though the residential -- even though the use which is sought by the application is still residential, the water department feels obligated to apply these fire flow requirements which usually are around 1,500 gallons per minute and cannot be obtained in many parts of the agricultural or rural district without the owner upgrading the water system's infrastructure. In my particular case, I had mentioned that those upgrades would require bypassing a 400-foot length of 6-inch cast iron pipe with a 8-inch ductile iron pipe and that's three-quarters of a mile from where I live, and then replacing a standpipe with a fire hydrant, altogether costing at least $73,000. So to try to make the process more user friendly and reasonable, I'm asking that the board accept a proposal to modify the Department of Water Supply's policy so that an applicant for this type of permit for transient vacation rental has a choice of either demonstrating whatever fire flow they calculate is necessary and performing whatever upgrades are requisite for that, or else ensuring and indemnifying the Department of Water Supply against any claims arising out of property damage or loss of life from a fire because they're assuming that risk, the owner is assuming that risk. Right now the owners already have to have a policy, a general liability policy indemnifying the county for any adverse consequences coming out of their enjoyment of their permit. So all this would ask really is to add the Department of Water Supply as an additional insured under such liability policy and with the additional specifications that the director and the corporation counsel have recommended in terms of assuring that the insurance would remain in place or the department would have notice. CHAIRMAN RICE: Okay. Mr. Starr? You want to ask a question, make a comment? MR. STARR: Let me wait a minute. CHAIRMAN RICE: Okay. Mr. Victorino? MR. VICTORINO: I have two challenges. Number one would be I would like the fire department to be available for specifics because you're talking now a situation where when we build homes, new homes and subdivisions, we had required these new homes to put in fire hydrants, okay? We require that. And because I'm in the business that you've just talked about, I know my clients come to me and says we got to spend X amount of dollars to put a fire hydrant in because that's a requirement by the county. So if homeowners are required to do that and people of that nature, then I have a problem letting somebody else doing vacation rentals where a multitude of people come in, not have that done. Okay. I understand the cost. The cost is a factor. The other part about the insurance and being in that business, there is a real challenge in that area if it per se is not renewed or cancelled, even though 30 days notice is given. There are times and in different markets at different times, insurance may become almost unavailable for the situation that you're referring to, marketplace gets tight, and that's my business, so I understand that. And so then become a real dilemma because even if we're named as an additional insured, if for some reason it's cancelled or nonrenewed, and there is no available insurance, then you have a real challenge getting protection for both the County and the Department of Water Supply. So there is my two challenges. Required for one and not for the other, I'm not really happy about that. And then the insurance issue is a real cognizant sometimes because of the fact that the marketplace at this time knowing what I know is it's getting to be harder so some of these problem areas like you're referring to may become difficult or very expensive to find. DR. DANTES: I appreciate both your challenges. With respect to the second challenge, which I think is simpler, when the permit is issued, if it is issued, it has standard conditions and site-specific conditions. All these permits do. So this would be a standard condition that the permit requires this insurance to be in place. Now, if the market becomes tight and the applicant or the owner can't sustain the policy or it's cancelled, their permit isn't effective. And now as far as the first question, which I think is more difficult, in the case of homes which were already permitted without the requirement for 1,500 gallon permitted fire flow, when these -- when a room in such a home is rented to a guest, it doesn't change the use, it doesn't change the magnitude of the occupation. If you look at the Uniform Building Code which is incorporated into the Maui County Building Code, there is a category called Dwelling that's different than Hotel. A dwelling is defined as a congregate residence with 10 or less persons. So under these circumstances where there are 10 or fewer persons, it's a dwelling. And I think philosophically it's incorrect to assign it as a hotel and require it to meet commercial standards. If people want to say, well, it is commercial, you're making money, well, so is a long-term rental commercial and they're making money. I guess what I'm saying is that unless -- and I've used this probably politically incorrect example before, unless it can be shown that people become less flammable on the 180th day of their tenancy, there is no reasonable relation between the requirement to upgrade the infrastructure and the public welfare. CHAIRMAN RICE: Okay. Mr. Starr? MR. STARR: What is the zoning in your location and where is that? DR. DANTES: Our location is zoned agricultural, both county and state, and we're at 4320 Une Place, which is in Haiku off of Ulumalu Road. CHAIRMAN RICE: Mr. Starr? MR. STARR: I have more comments, but I'm waiting for board discussion. I don't know if I really want to debate it with Dantes. CHAIRMAN RICE: You're right. Questions for Mr. Dantes. MR. NAKAMURA: Dr. Dantes, is the proposal to provide the alternative of indemnification and insurance, are you looking at that being applicable just to existing projects which are now seeking to get permits after the fact, or are you looking for it to be applicable to all such projects? DR. DANTES: Well, I hadn't thought about that question before this moment, but for discussion purposes let's say all such projects. In either case, you can't get an application for a transient vacation rental in a building that is not lawful. So if it was built at a time that it substantially met code, fine. And if it was built recently or in the future, it must substantially meet code, that's also fine. CHAIRMAN RICE: Any other questions of Dr. Dantes? Mr. Craddick? MR. CRADDICK: I would like to say he mentioned something about normal insurance and I don't view this as normal insurance in any way, shape, or form because we're not insuring his property, we're insuring the people that get hurt because of the board allowing this waiver. And I think it not only affects him because as Board Member Starr pointed out at the last meeting, this is -- I don't know what they call it, TVR , there is also bed and breakfast, there is certain types of home occupancies such as preschools, elderly, things like that, that all kind of get caught in this situation. And the comment was brought up about people becoming less flammable on the 180th day. Well, I'm not quite certain how the first two houses are less flammable than the third house either, which is how they got into this situation that they're in and the wisdom of this county and it is a rule of this board the first two houses are exempt. People buy into these exempt situations and then convert for what they were intended to some other use unbeknownst to anybody. And probably they buy into that situation. So I think this insurance thing needs to be very clear that it's all risk insurance on what happens to those properties around as a result of us waiving the fire requirements. It's not limited to liability. It can be liability, property damage, whatever it may be. And I would also say that there would have to be some agreement that when the board gets rules to do -- fix the lines up in those areas, that they pay a pro rata share of the fix-up in that area. And I realize it's kind of hard for them because it's not a subdivision, they don't have the ability of getting the 50 percent reimbursement if they do the improvement because it's not a subdivision. So I do sympathize on some of these fairness issues. If he goes in and does it, if he was a subdivision, he would be entitled to 50 percent reimbursement. But at least if they agreed to pay a pro rata share when we get rules to do something like that along with this insurance, I think I could recommend to the board if the language were good enough on the insurance and we would have to talk with some insurance people on seeing that the language was correct to cover us. CHAIRMAN RICE: Go ahead, Ginny. MS. PARSONS: Would that be a transferable issue that if and when he sold the property, that it would transfer as part of the property? MR. CRADDICK: You're talking about the pro rata share of the payment? I would leave that up to you. It would be a good recommendation, yes. CHAIRMAN RICE: Okay. What is your pleasure, board members? Mr. Starr? MR. STARR: Yeah, are we over the testimony part? CHAIRMAN RICE: Yeah. MR. CRADDICK: Peter, we have Julie Higa here from Planning and Dave Goode from public works, so this was an issue that they have to deal with also. They're ex-officio board members. CHAIRMAN RICE: Doctor? DR. DANTES: I'm a little taken by surprise at the suggestion that there be a pro rata share of the cost of upgrading the infrastructure because in my previous discussions with the director and counsel, that was not mentioned. I think if you're going to assess all the residents who are benefiting by the upgrade a pro rata share, that's fine. But I don't think you can single out just the people that have a permit. By the way, the permits are not transferable at this point. And as far as the special type of insurance, to my understanding it's not too difficult to get a $1 million policy of the type that Mr. Craddick suggested. And I think at the last meeting he thought that it should be $2 million. I wanted to mention that there may be unusual cases where the property value of continuous dwellings is so high that $2 million would be appropriate, but that may not exist anywhere outside of perhaps Maui Meadows. To get a $2 million insurance policy, you're going to have to have go outside the state of Hawaii, buy it on the Mainland. That means that if something happens to that insurance company, there isn't the protection of the whatever that fund is in Hawaii that steps in if an insurance company goes belly up. And to uniformly request a $2 million limit I think is probably taking the solution and putting it kind of out of range and making it terribly useful. A million is enough for the county. CHAIRMAN NAKAMURA: Thank you, Doctor. At this point we're in board discussion. Mr. Starr? MR. STARR: I have a concern because I believe this is a much larger discussion that we're having. And although I have great sympathies for Dr. Dantes, and especially in light of the fact that he's in an agricultural area, I think that what we do with this is going to set the precedent on whether we're demanding fire flow or not for commercial type of activities. We have to be looking at it in that light. And that is a debate that this board has been going through over the years is do we want and need to demand fire flow; and if so, where. You know, does it need to be just in urban and rural or does it need to be in agricultural? And I'm not sure what the answer is, but I think that's what we need to be looking toward. Because the issue is not whether the house of the owner is going to burn, but whether if a fire were started there and the fire department is not able to put it out because there is not the water available and then it spreads to a whole bunch of other houses and maybe people die downwind from it in a dry condition, then that's really the issue. And whether the insurance policy would cover that, I don't know. I would look to Mr. Victorino for that. But my guess is with deep pockets, we would end up not only holding the financial bag but we would have a moral responsibility for having said no, you don't need fire flow requirements. MR. VICTORINO: Exactly. MR. STARR: So unless we make a decision that we're not demanding that the water be available to fight a fire, then my feeling is we should not be approving special cases. Especially -- I mean, I would like to approve Dr. Dantes, I like him and I think he has a good cause, but I'm just very concerned, you know. And I have heard the logic that we shouldn't be enforcing any fire flow requirements in agricultural districts, just in urban and rural. However, I had this discussion some years ago with Brian Miskae where I was saying why do we want to have fire flow in agricultural districts and he said because if you don't have it in agricultural districts, looking ahead you're building a substandard community because your rural boundaries tend to expand into agricultural areas. What's agricultural today, in five years from now may become rural or even urban. And then what happens if there is no fire flow built into the system, then you have a substandard rural or urban situation and it becomes the onus of the board to bring it up to fire flow standards at that time. Whereas if you build the fire flow into the area as it develops, then as, you know, as it later on when it becomes rural, it's already there. I don't know. I just see Mr. Goode here and I was going to ask if he had any suggestions. CHAIRMAN RICE: Ginny, do you want to make a comment? MS. PARSONS: Can I get one clarification? Are you building anything? DR. DANTES: No. MS. PARSONS: This is an existing structure that's been there. DR. DANTES: Yes. DR. DANTES: So this would be the same thing if ten members of your family came to visit, that's all you can house, it's the same thing, correct? DR. DANTES: Yeah. MS. PARSONS: And this is not -- I can understand this commercialism aspect of things. But technically, that's one of those gray areas. CHAIRMAN RICE: Commercialism isn't defined by how many people you can put in the structure. And if you're putting your family in there, it's one thing. But if you're renting, if someone is paying for the accommodations, that's an entirely different situation. MS. PARSONS: But isn't it the same thing as if you have an ohana and you're renting that out? Is that commercial? CHAIRMAN RICE: Yeah. MS. PARSONS: But it's not considered commercial by planning. You can have an ohana in R3. MR. HIRANAGA: I have a question for corp counsel, planning or public works, whoever has the answer. My recollection is that several years ago a ordinance was passed which allowed for certain home-based professions to operate from their residence; is that correct? If it is correct, I'm wondering if they were also required to meet fire flow requirements for commercial activities. CHAIRMAN RICE: Mr. Kushi, do you have -- MR. KUSHI: I don't know. Ask planning. MS. HIGA: I'm Julie Higa, I'm with the planning department. We have some home -- well, some occupations where if the person is living and there is no clients coming to the home or there is no changes made to the single-family dwelling at all, then they're permitted. So that's an administrative policy that we had. However, if they're in the state agricultural district, they have to have a state special use permit and we do circulate that information through the fire department. And generally the fire department has always requested that they meet fire flow requirements. I can point out that in one case where we had a transient vacation rental in the state agricultural district, this is actually about half a mile, a mile down the street from Dr. Dantes' property, the owner who lived in the property and in the house got a conditional use permit and a state special use permit and they put in a fire sprinkler in their home in order to meet the fire department's requirements. So in almost all cases where it's a home occupation, other than in the Wailuku project district, we have a definition for home occupation and in Wailuku home occupation is permitted and we do have a definition for that. In any other district, no home occupation is permitted. MR. HIRANAGA: Thank you. CHAIRMAN RICE: If I understand you correctly, Ms. Higa, you're saying in similar situations the fire flow requirements are complied with. MS. HIGA: Yes, as far as I know, all of the permits that have come through us, the fire department has requested that they meet fire flow requirements and meet their requirements. And they have allowed like water tanks, you know, in addition to the public system if it's inadequate, then they have allowed water tanks to provide extra fire flow or they have allowed the fire sprinkler systems. We've had like I know one special use permit which is the feed farm -- feed supply place in Haiku where McGrath, I can't remember the name of the -- MR. CRADDICK: One where they filled propane gass. MS. HIGA: Right. They also were required to put in a water tank. So they put in a water tank which also provided the fire flow -- fire sprinkler system as well as a water tank, so they put in both things in order to meet the fire department requirements. MR. CRADDICK: The requirements that we're asking for are just the normal requirements for a home as though the two house waiver was not there. We're not asking for commercial compliance with commercial and fire flow requirements. So it's -- CHAIRMAN RICE: Mr. Starr? MR. STARR: The suggestion I was going to make ties in with what Ms. Higa said, which was there are plenty of ways to meet it using a water tank. We even had a situation not too long ago where we approved someone using their swimming pool and a pump to meet the requirement. You know, I'm for one am very reluctant to create a precedent. I would like to ask corp counsel if we do approve this, don't we create a precedent that allows virtually anyone to come in and say -- demand that they exchange indemnification for fire flow? MR. KUSHI: I'll put it to you this way. You're not creating a rule, but if you grant Dr. Dantes this waiver or this special condition, if Mr. X comes in in two weeks and has the same factual situation, he would have a good case. I hate to say you create a precedent, but he would have a good case based on the same factual situation. CHAIRMAN RICE: Mike? MR. VICTORINO: And just to elaborate a little bit in the area of indemnifying the county and us, it has been my experience through the years that indemnification doesn't in many cases hold much credence, especially in the area of fatalities. And the state and this county has been sued on many occasions even though indemnifications have been put forward. That's number one. And the statement about the deep pocket and stuff Mr. Starr said is absolutely correct. As everyone knows, the governmental agencies or governmental bodies are generally the deep pocket when there is not enough insurance to pay it off. What's a million, two million, it don't make no difference, you know what I'm saying? The other thing is we make a rule for an exemption for your situation. And to counter what Ms. Parsons was saying, there is definite specific language in policy, both fire, homeowners, and as well as commercial policy, distinguishing what family, friends staying at your house, and someone who is renting from you. There are definite definitions in the policy. You take a moment, they are there, or you ask your insurance man, he will point it out to you. So to say that oh, I can go rent to 10 family members and put them in the house, there is some real definitional changes when you're referring to that. So if we say yes to something like this, we as a board opens not only Pandora's box in the sense of anyone else wanting to come, but if something does occur we put ourselves, the board, as well as the county at risk. So nothing against you, Dr. Dantes, I mean you seem like a nice person, but there are some real authentic concerns I have in my mind. And again without the fire department saying, hey, I think we can handle this, I would say if a code is there and it's been required and it's required of me if I want to put something there or you or anybody else, then the code must be followed. That's what we have these codes for. And I have a hard time saying yeah to an exempt in this case. Thank you, Mr. Chair. CHAIRMAN NAKAMURA: Ginny. MS. PARSONS: Does Mr. Dantes have the right or do we have the wherewithal to look at his system in one of our areas of upgrade and do the pro rata share among all the users on that line? Since he's brought it forward to us and it's an issue that's now before us, can we make it -- CHAIRMAN RICE: Wouldn't that then apply to everybody who was in a similar situation and wants the same thing? MS. PARSONS: Well, then maybe we should start looking at things that way because we need to move forward on the upgrades and this may be a way to make progress. CHAIRMAN RICE: Yeah, that's a little -- I think that issue is one that involves a discussion of priorities of capital money. I don't think that it's a decision that we should make today just based on this specific request without reviewing the other. And off the top of my head, I would say that that would be lower reason to put something higher on the priority list, you know, and we would have to look at the number of consumers in the area and everything else that Ellen reported to us at the last meeting. Yes, Mr. Kushi. Mr. Craddick. MR. CRADDICK: Probably both going to say the same thing. If you did that, you're going to have to pass rules if it's going to apply to anyone. This particular one, I'm just saying he unilaterally agreed he will pay a pro rata share when he will pass rules for that type of thing. CHAIRMAN RICE: Howard. MR. NAKAMURA: Mr. Chairman, I would generally agree with the comments made by Mr. Victorino. I'm sympathetic to Dr. Dantes. He has an unusual situation that has arisen in the county regarding this issue of transient vacation rentals which seems to be beyond just water. But I am concerned with the concept of permitting for whatever reason and under whatever circumstance a substandard system according to the code; and then in lieu of requiring compliance, accepting indemnification and insurance, which I think in some cases is difficult to monitor. So I would have some real questions about the approval of this particular request. One just a side remark, the director talked about the fact that because Dr. Dantes or a similar party is not a subdivider, if they made the improvements, they would not be entitled to the reimbursement. Personally I think that's wrong and that if there is a proposal to change that whereby anybody who puts in, whether it's a subdivider or a building permit, puts in an improvement that is going to benefit others, I think they should be entitled to reimbursement. It shouldn't be that narrow. But that's kind of a side issue. On this particular issue, I do have a problem. CHAIRMAN RICE: Adolph. MR. HELM: Just to add to Mr. Nakamura and Mr. Victorino's concern about the liability issues, I also have reservations about that. But we need to actually look at what alternatives in terms of options with regards to what Ms. Higa said, what alternatives are out there for fire flow, whether it's sprinklers or inline booster bumps to increase the pressure. To me that seems like a more logical approach where the expense is not that high to meet fire flow requirements. Whether the department -- fire department is responsible for the Board of Water Supply to assure that they meet those kind of standards. I would look at that as being an alternative to some of some of these other issues. CHAIRMAN RICE: Thank you. Kent Hiranaga? MR. HIRANAGA: I [inaudible] what Adolph just said. It seems like there are some alternatives besides -- between offsite improvements and a waiver from the requirements. More specifically, I guess some kind of on-site improvements specific for that particular property. May not be as costly. And I think there is a solution that is between offsite improvements and the waiver. MR. STARR: I have a motion to make. I move for denial of the request. MR. VICTORINO: Second. CHAIRMAN RICE: Moved and seconded to deny the request to approve the language as presented. Is there any discussion on the motion? All in favor of the motion to deny, say aye. Opposed, say nay. Motion is carried. DR. DANTES: Thank you for the opportunity. MR. VICTORINO: Thank you, Dr. Dantes. CHAIRMAN RICE: Okay. We're back at the beginning of our agenda. Director's Report 02-25, request to enter into a Memorandum of Agreement with the State Commission on Water Resources Management. Mr. Craddick? MR. CRADDICK: This particular proposal came from the Water Commission and they have entered into a what they call an aquifer monitoring working group over in Honolulu and they felt it may be of some advantage over here also, even though we're not designated as Pearl Harbor is. But the objective of the group is to have a comprehensive and consistently monitored groundwater data network, assure accurate and timely data collection, provide this data to the public in a timely manner, and use the data to verify groundwater models, identify and collect data needed to calibrate and refine future models, ensure protection of the groundwater resources consistent with uncertainties surrounding sustainable yields, and optimize existing and future well infrastructure. And because this is somewhat of a community group, there would be community members in the group with expertise in hydrology or geology and there is a sample of the agreement in here. We don't have anything specific for us. If the board would like to move forward on this, we would prepare a specific agreement specific to our situation. CHAIRMAN RICE: Mr. Starr? MR. STARR: Yeah, I'm very happy to see this. I think it's a good direction. I do have one concern that I would like to get clarified is how do these members of this group become selected? MR. CRADDICK: Off the top of my head, Jonathan, I couldn't tell you that. I presume that the group sits down together and sees if anybody wants to participate and checks out their credentials. CHAIRMAN RICE: Mr. Craddick, why don't you find out how it's been done in the other situation for us? Mr. Starr? MR. STARR: Well, I would be willing to make a motion to proceed with it with the caveat that the selection process be open to members of the community representing different segments of the community. My concern is the way it's expressed is that in my -- if you have to have a credential in hydrogeology, that would exclude representatives of the community. So I just want to be sure that there is a broad base to it. I leave it to the chair whether we want to defer it or whether we want to make a motion with some wording similar to what I mentioned. CHAIRMAN RICE: Well, the Chair would be happy to approve it going forward and that if the director would report back to us on the intended selection process so that we can have input into that. I think we can -- I mean, we are a member of the monitoring group, so when we speak with the other members, we can communicate your comments to them. Before we do that, maybe at the next agenda Mr. Craddick can report on how it was done in the Pearl Harbor group. But I don't think that should hold us up from going forward. MR. VICTORINO: So your motion to move forward on this? MR. STARR: I will make a motion and a bit of discussion. I make a motion that we approve the request to enter into the Memorandum of Agreement and as part of the motion is that the board and the greater community of Maui will have input into the selection of the members. MR. VICTORINO: Second for discussion. CHAIRMAN RICE: Discussion. Okay. Ginny, you're first. MS. PARSONS: I don't think that we can tell them how to make their selection. I mean, it's like telling a business how to make their selection of members, until we know exactly how the process is taking care of. And I don't think putting the caveat in there that they have to have some of the public that may not be as well informed in this issue. One of the biggest problems that we've had in managing the aquifer has been the lack of qualified personnel to give us the data that we need. So I don't necessarily think that someone without that qualification -- it may not be the way that they operate. So I would not be voting for something that has a caveat. CHAIRMAN RICE: Mr. Nakamura? MR. NAKAMURA: One comment I guess and one question. The question is whether there are any cost implications to this other than perhaps the time of staff and others. MR. CRADDICK: There are maybe cost implications, but what this does is it allows the state to go to the legislature and say we're in this partnership, we need this monitoring well, and here's how it's working, here's how all the data collection and stuff is working, so the state understands that once they put this money out, there is some buy-in participation with the whatever aquifer it is that they're monitoring. Because some aquifers, like say Pearl Harbor, for instance, have a number of people using it, so you've got a lot of people sitting at the table. MR. NAKAMURA: Well, also my understanding of this is that we would be -- we as an entity, the board, would be a partner with the USGS and with the Commission on Water Resource Management in this particular project. Is that not correct? MR. CRADDICK: This is not any particular project. This is a general concept. MR. NAKAMURA: When I'm talking about the project, I'm talking about the monitoring group. You know, if there were supposed like an executive committee, I mean, we would be an equal partner in that executive committee, would we not? MR. CRADDICK: Yes. MR. NAKAMURA: That would make decisions on things like how the others are to be selected and how you proceed, what the program is, what the scope is. MR. CRADDICK: That is what I would think. It wouldn't be any unilateral decisions by any one partner. MR. NAKAMURA: But we don't know that yet because we don't have a specific agreement to look at. CHAIRMAN RICE: Mr. Starr? MR. STARR: I believe the motion is consistent with that, just that we have input into that. CHAIRMAN RICE: Maybe I can clarify. The intent of the motion would be that if there was a decision-making about who participated, it would be made by this board. MR. STARR: I think it should be this board along with the other entities. CHAIRMAN RICE: Yeah, but not other people. This board. Ginny, does that satisfy your -- MS. PARSONS: Yes. CHAIRMAN RICE: Mr. Starr? MR. STARR: I would like to, if you'll bear with me for a minute, buried in the package here along under this item is a very, very important document and I -- which is separate and in no direct relationship related to this. I have a real concern about the way this has been handled by staff. And approximately a month ago -- CHAIRMAN NAKAMURA: Okay. We have a motion on the table. MR. STARR: I can deal with it -- I just want to be sure I can deal with this after. CHAIRMAN RICE: Yeah, I was going to bring it up anyway, actually, because I was curious. Okay. MR. VICTORINO: Call for the question. CHAIRMAN RICE: We have a motion on the table to approve the request to enter into an MOA with the State Water Commission and the USGS for the purpose of aquifer monitoring. Any other discussion? All in favor, say aye. Opposed, say nay. Motion is carried. Okay. I believe what Mr. Starr is referring to is the proposal by the USGS that's included in here but it's not on the agenda to participate in the -- MR. CRADDICK: The only thing I can say, Peter, is I don't think Kathy knew this wasn't part of this. This was just a communication that came in and I guess she thought it was part of this. It has nothing to do with it. CHAIRMAN RICE: So we're going to have that on another agenda? MR. CRADDICK: Yes. CHAIRMAN RICE: Mr. Starr? MR. STARR: I do have a problem with the way this was handled. A month ago the USGS, at our request, sent us a proposal and they sent it to the director and they sent it to individual cc copies to the director in care of each of the board members with our names on it. And it finally comes to us, not the copy sent by them but buried in another item. And, you know, this is typical of the way the director works, which is to try to hide information because I know he doesn't like this program. He doesn't want some things to be done. Which I just wish that when mail is addressed to this board, it's delivered to the board member who it's addressed to. I would like to ask the Chair, Peter, did you receive a copy of this? CHAIRMAN RICE: No. MR. STARR: So in other words, he's been holding it on his desk for a month even though it was addressed to the chair and addressed to board members. I really feel we should see the end of this kind of thing. MS. PARSONS: I would like to make a clarification. Jonathan, this is letter is not addressed to the board members. It is cc. It is the U.S. Department of Interior's -- that's their provision to send a copy to us, not necessarily for David to give us a copy. It is addressed to Mr. David R. Craddick, Director, Department of Water Supply, County of Maui, P.O. Box 1109, Wailuku, Hawaii 96793. Dear Mr. Craddick." At the very end of the letter, it says "Enclosure cc." Now, they didn't mail it to me. I don't know whether they mailed it to the department or not. MS. HOWARD: Yes, with your name on it. And I put it in the packet, believing it was part of this Memorandum of Agreement. MS. PARSONS: In a timely manner. MS. HOWARD: I put it in the next agenda after we received it. I did not know it was a separate matter. I would have listed that. MS. PARSONS: I think that's a fine explanation, but I don't think we need any more character assassinations on the director or the department for an issue that technically if they were going to cc us, they could cc us to our home address. CHAIRMAN RICE: Mr. Starr? MR. STARR: Mr. Chair, when mail is sent to the department for board members, I think that we have a right to have it given to us in a timely manner, not a month later and not buried in another agenda packet but in the envelope that it comes to the department. And I would really feel that we've been wronged here. Thank you. CHAIRMAN RICE: Yes, Mr. Victorino. MR. VICTORINO: Just so that we can move on and I sometimes get a little appalled at some of the personal feelings that do come out in these meetings, but I accept Cathy's explanation. She is new. It's something that we learn from from here on in, knowing that these kinds of things are important matters, not to be just part of. If she has a question about it, then maybe check in with the Chair and with your director. So Kathy, that's fine with me, I accept that. And as far as the rest of the statements that were made, what is the past is the past. I am very confident that the future will be different. And I think Mr. Craddick knows that we need this kind of information to make good decisions and we need it in a timely manner. So in the future, Dave, if these things do come like this, and Kathy, that it get to us in a timely manner. CHAIRMAN RICE: Board members, we're going to talk about procedures later in the agenda so this is something we can take up under procedures and we will do so. Okay. Let's move on. Okay. Director's Report 02-26. This is a personnel matter. And from what I know of it, I think we need to discuss this with our counsel in Executive Session. MR. VICTORINO: I think -- CHAIRMAN RICE: If there is no objection, I'll move that to the back of the agenda. (Brief recess.) CHAIRMAN RICE: The meeting is called back to order. We're on Old Business, A, reconsideration of Moretti matter. Mr. Jorgenson and Mr. Moretti are present. We also have present David Goode from Public Works as some of the issues in our discussions at the previous meeting involved David Goode. And I know that I did indicate to the public that I would take testimony on individual items and I believe there are people here to testify. So let's hear the public testimony before we get into anything. Sir? MR. PESTANA-TORRES: My name is Riki Pestana-Torres. I was here at the last meeting. There is a group of us that are very concerned about this project and the potential pollution of the bay with projects like this along the coastline, the Hamakua coastline of Maui. For example, the Big Island had a development in Kealakekua that destroyed the bay. On Kauai, development by Mr. Pfluger did destroy the bay. And his rich, powerful connection is how he only got a slap on the wrist. For us local boys and fishermen, surfers, what do we do when developers come along to our islands and destroy the fishing grounds, our lifestyle. This is the concern of some of us. We're not totally against this project. We just want to make sure that this guy does not pollute our lifestyle. And that is a heavy statement because look at Maui. It's getting polluted every day. Look at Kihei; it's like being in California. Look at beautiful Lahaina. It's sad. Now we live on Hamakua, Maui. It's the coastline from Wailuku all the way to Hana. Please, in your positions of decision-making and power. I was told the last time that I was in front of the wrong board. Then why is he here with his lawyer in front of your board? I interrupted him once when he said it's just semantics. But the semantics of what's going on here is so very important because lawyers with his knowledge and his brain, they twist law for the developers. And us local boys, what we end up with, pollution of our lifestyle. And I humbly ask you guys with the power that you guys have, please make the decisions and think not just about four years from now, but then 20, 50 years from now so all our keikis can enjoy the ocean. Mahalo. CHAIRMAN RICE: Thank you, Riki. Any questions for Riki? Any other public testimony? I think there is a need to clarify. Ed, if you would help me. In this case, we don't approve or disapprove this gentleman's request for subdivision. We're dealing with the fact that they have a water agreement that runs with the land. So Mr. Goode -- or I'm going to go ahead with you, Dave. MR. JORGENSON: I'll just reintroduce myself. I'm Dave Jorgenson, appearing on behalf of Francesco Moretti, who is the applicant in this particular subdivision project. As I mentioned the last time I was here and I apologized again for not being here at the first meeting when this came up, our request to this board is very simple. There was an agreement that the county entered into with A&B in I believe it was '96. That agreement does run with the land. We don't suggest it doesn't. Our request to you is Mr. Moretti is proposing to do a private water system for this project. The rules of the department are clear that the department does not have jurisdiction over subdivisions with private water systems. So what we are asking for is for the parties, including Mr. Moretti, to acknowledge and agree that the deferral agreement is still binding on the land but does not apply to this project because of the manner in which the project is designed. In other words, because it is using a private water system. Board Members Starr and Parsons last time asked, well, if you're saying you don't have jurisdiction, why are you here? And that's a good question. But as I responded, the reason why we're here is the procedures of the county for subdivisions for building permits require that things pass through the water department. They made it to the water department. Mr. Moretti's subdivision application made it to the water department and there it sits because Mr. Craddick is saying Mr. Moretti, you have to make all of these improvements even though it's a private water system. And we're asking you to clarify that the department -- confirm that the department does not have jurisdiction over private water systems that are part of a subdivision and that the process move forward. So in an elongated nutshell, and I did dress down today, that's why we're here again. And we thank you for your time and we're available for questions and we're interested in what the other speakers may have to say. CHAIRMAN RICE: Okay. Wait a second. Because I've been studying this a little bit and I don't want this to end up taking all day. As Mr. Jorgenson reported, that was the gist of our last discussion. And based on his comment that we don't have jurisdiction over private water systems, I think that's a fact. Mr. Kushi? Does that exemption rule? MR. KUSHI: Yes, that's my understanding. CHAIRMAN RICE: Okay. Then the question is why is he here. The answer to the question is we have an agreement with the prior owner of the land that requires them to do certain improvements in order to get water. They're not asking us for water. So does that agreement in any way involve them in that they don't request water from us? The other issue that came up was does the director sign off on every request for subdivision where there is private water. And the answer to that is no, he does not and he's not required. Mr. Goode is here to tell us what the procedures have been. If it's a private water system, the director has in the past sent the letter to Public Works saying that it's a private water system and that it's up to the Public Works to enter into an agreement with the developer if they so desire. And without this agreement running with the land, I believe that would have been the standard procedure. So there is a legal question as to whether the agreement that runs with the land affects this particular request. Mr. Starr? MR. STARR: Just to clarify, I have a slightly different reading on it. You said that the agreement that runs with the land was something that was related to them getting the water for this location. I don't think so. I think it was something that was in relation to the subdivision that had occurred previously. In other words, it was a commitment made so that the subdivision which occurred some years ago by A&B could occur. So in other words, it's owed from something back then, it's not something relating to a future action of getting water. CHAIRMAN RICE: Okay. And I don't disagree. Therein lies the question as to whether that agreement applies or not. If it was, if that agreement was intended to be a commitment that at any point a developer when they wanted to develop would put in these improvements -- make these improvements as required, then I think the issue is clear that it is a jurisdictional issue for us. MR. HIRANAGA: Unfortunately I was not present at the last meeting, but I do have some -- I guess some knowledge about this subdivision. My question is in the 88-acre lot and the 44-acre lot, was that not created from a lot line adjustment subdivision? I've heard -- I forgot the actual ordinance number. It was done through the lot line adjustment ordinance which did not require any type of infrastructure improvements. So I'm a little confused as to the basis for the agreement and I guess I would like to have a better understanding as to why A&B executed this agreement. CHAIRMAN RICE: Mr. Craddick? MR. CRADDICK: This is part of the Haiku agricultural subdivision, Haiku Hill, and this -- there was one lot, made two lots, on 60.6 acres and the other one 44.1 acres. And then also, the agreement is not only to provide water, but it is to construct water system improvements in accordance with standards, provide fire protection in accordance with standards, and provide water service to each lot. Not just provide water and it's [inaudible] private therefore the agreement doesn't apply. MR. HIRANAGA: Mr. Craddick, are you certain that this was a two-lot subdivision and not a lot line adjustment subdivision whereby they initially started with two lots and consolidated and resubdivided into two lots? I think you need to investigate that thoroughly. Because my understanding is that process was -- that creates confusion for me as to why this agreement was signed, so I would like to know why the agreement was signed because it seemed unusual. So I don't know if there is some underlying basis for the agreement. CHAIRMAN RICE: Is there any answer of staff to the question by Mr. Hiranaga? MR. CRADDICK: If it's a lot line adjustment? CHAIRMAN RICE: No, why was the agreement signed, what was the reason that A&B signed this agreement. Mr. Goode? MR. GOODE: Thank you, Chairman. In reading the referral agreement, we can draw some conclusions. And I don't know specifics outright. But it does say in the whereas section, the applicant subdivider submitted an application to subdivide the property into two lots, lots 1 and 2, one being 44 acres which I think is the subject of discussion today, and another lot containing approximately 60 acres that I believe further subdivide into what is known as the Haiku Makai subdivision. So just look at the whereas section, it kind of tells it was a large lot, about 144 acres, and subdivided into two lots. Mr. Hiranaga has suggested maybe it was a consolidation and resubdivision, that maybe there was a small lot on the large lot. I personally don't know. But the way this is written, it seems to indicate that it was one large lot, subdivided into two large lots. CHAIRMAN RICE: And so would the answer to your question be the reason that they signed this agreement is so they could get subdivision approval? MR. HIRANAGA: I am 99 percent sure that this was a consolidation resubdivision. My understanding via that ordinance, no infrastructure requirements are required to do that. It's a paper subdivision. So in order to create two lots, I'm just curious or puzzled as to what motivated A&B to sign this agreement. If my understanding is -- unless I'm incorrect. But it would assist me in making a decision I think if, first of all, that was confirmed whether this was a consolidation resubdivision. And if it was, what was the underlying reason for the agreement that was created. CHAIRMAN RICE: Mr. Victorino? MR. VICTORINO: Myself also was not present at the last meeting, so I apologize. However, let me ask you, Mr. Moretti, if I may, did you or were you aware of this agreement when you originally purchased the property? MR. MORETTI: Yes. MR. VICTORINO: And you understood its ramifications when you read it through. MR. MORETTI: [Witness nodding.] MR. VICTORINO: And was Mr. Jorgenson your attorney at that time or was somebody else involved with you at that point? MR. MORETTI: No, he wasn't my attorney at that time. But I did get a consultant on it and I was told that this was applying only to request for -- I asked a consulting engineer about this water situation and they explained to me that this agreement was made only for the request for counsel by the County of Maui so they receive water meters. And the same engineer explained to me that there was no water available, water shortage and all of that. And I would not have bought the land in this condition. And he said to me that with the private water system, I could do this subdivision and I went ahead and purchased on this basis. MR. STARR: Excuse me. Who told that to you? MR. MORETTI: My engineer. That is civil engineer. Arakaki. MR. STARR: Maybe you should have legal recourse to him. CHAIRMAN RICE: Okay. Any other -- Mr. Victorino. MR. VICTORINO: And the last thing I'll say and to you, Dave, maybe what we need and I hate to keep deferring this, but again, if we don't have all the facts in front of us and we make a decision one way or the other, it [inaudible]. So with what Mr. Hiranaga has said, I think we need that in my mind to clarify this matter. I mean, what I see in front of me kind of says no, that you need to put that in because it was required by the A&B which the agreement you went and purchased the land, you saw this and I would have assumed by reading this over, whatever -- whoever gave you the information, it still was readily knowledgeable to you. It wasn't something that somebody cam in and put on you after you purchased the land. So I would have to get the information from Mr. Hiranaga or Mr. Hiranaga is requiring and then go from there. MR. MORETTI: Excuse me. I just realized I also asked the same information to subdivisions, Land Use & Code, and then going through the difference and the ordinance at the office of subdivision and they were telling me that private water system would not have gone through that. MR. JORGENSON: And from our side, I mean the underlying question is that as Mr. Craddick said, that the agreement talks about and it's not limited to providing water, but the gist of it is that it's to provide water to this subdivision. If they are going to get water from the county system, you have to make improvements to the county system, to the infrastructure of the project. If you're not using county water, yes, this agreement was executed by A&B; yes, it does run with the land; yes, Mr. Moretti was aware of it. He did get information, he did consult with the people who told him that the agreement would not apply if there was a private system. If Mr. Moretti had come to me, I would have told him the same thing. This agreement applies if you're going to do -- if you're going to connect into the county system. To require a developer who's not going to use the county water to improve the county system is not contained within the rules of the liquor department. So you certainly want the board to have all information necessary to make a decision. I'm not disagreeing with that, but what I'm saying is that should not be dispositive in your decision-making. We believe that the rules of the department say the department does not have jurisdiction to impose subdivision requirements on a private water system. So in that sense, the underlying premise of the agreement is wrong, could not be enforced. The agreement says make subdivision improvements if you do this, but if it's a private system, the department's own rules say they can't do that. So we're saying that again that the agreement is to bind on the land. If anybody later in this project in this subdivision comes to the county and says, hey, we want to be in the county system, they are going to have to make the improvements. Improvements will have to be made when somebody is going to connect into the county system. But unless and until that happens, it just doesn't apply. CHAIRMAN RICE: Mr. Starr? MR. STARR: There are some other issues involved here and I would like to reiterate them. I know some of our members missed the last meeting. And for one thing, I believe the state has said they will not approve the private water system. And, you know, that's stated in our packet. MR. JORGENSON: That was clarified at the last meeting that the Department of Health has rescinded that recommendation. MR. STARR: But in any case, there is an issue with a family that had been in Maliko Gulch for many generations and for these many generations they have been utilizing the water from a spring, a natural spring that comes out the side of Maliko Gulch and has also flowed there for -- since time immemorial. Now, an issue had come before this board about a year and a half ago when we were getting ready to use the well at Hamakua Poko and there was concern that the use of those wells would endanger the spring. And what the Board of Water Supply did at that time was it indemnified this family by saying that if their spring dried up, then for time immaterial we would provide them with fresh water for free. And I think that's a right thing to do. However, the proposed wells in this subdivision are right above where that spring comes out into Maliko Gulch and in my mind there is a probability that pumping of these wells will cause that spring to dry up. So if that occurs and there is a commitment that goes back from the previous subdivision where they promised to expend certain funds to do certain things and in exchange for that they got certain value or were allowed to do their subdivision or something. No one seems to really be clear because it goes back a while what, you know, what the exact situation was. But when they signed this agreement, A&B, they got benefit. And now we're being told that the new person here who -- and I respect the person and respect his plans, but he's trying to say that he doesn't want to follow the commitment that he made. And if we say well, you don't have to follow the commitment and then ultimately in the larger picture of things it causes these people who have been living off a spring in Maliko Gulch for generations to lose their water, I think that we'll be culpable for that. Whether we're legally culpable or not, I know if we'll have to provide them water, but I for one would have trouble sleeping at night knowing that we have directly or indirectly been responsible for that kind of injustice to occur. So I feel that when I make a business deal, when I buy something and it has an agreement with it, I go along with the agreement that I signed. I don't try to sneak out of it, you know. And I think that's what's happening here. So I for one feel that we should deny the request. CHAIRMAN RICE: Ginny? MS. PARSONS: I need a clarification whether or not we are talking -- still talking two wells. We are still talking two wells? One of the reasons that the health department would not make an opinion on the two-well situation is because it doesn't -- it's not applicable in a two-well situation. I have a little trouble in my mind understanding why -- why there is two wells. Why not just have one good well? Other than to slide under some of the rules, is what it appears to be. And I can't -- I can't quite -- and I've said this before, I can't quite understand why you wouldn't want to have a well that is accepted by the Department of Water to our standards and eliminate your liability and our future liability. It just doesn't make sense to me. Other than to try to slide under and do something less quality. CHAIRMAN RICE: Howard? MR. NAKAMURA: I think, Mr. Chairman, the discussion about the spring and the private wells and the lifestyle, although I certainly appreciate that, again, you know, we're not a planning agency. The lifestyle issue -- my mother was raised in Maliko, for those of you who are interested. But I think the issue is pretty simple. Either we buy Mr. Jorgenson's argument that we have no jurisdiction because it's a private water system, or we uphold the provisions of the deferral agreement, the subdivision agreement. And to be honest, two meetings ago I was persuaded by Mr. Jorgenson that his position was appropriate. But in reading this agreement further, you know, there was a benefit to the ultimate or to the subdivider at that time which was to create two lots. In return for the ability to create the two lots, they entered into an agreement to defer improvements. And those improvements I assume were specified at that time, were they not, David? MR. CRADDICK: Other than to say that they must build to standard, I don't believe any list of requirements were made. MR. NAKAMURA: But in any event, there were lots created, the agreement was executed. The agreement says that the requirements for each lot of the subdivision are deferred until such time as each of the lots are developed. And it doesn't say that it's developed using a private water system or a public water system. And I think it's pretty clear. So I think that we're looking at a situation that as we have in the past where we have this creeping approvals where people come in on one thing and the next thing you know they're in with something else and then they're in with something else. Two meetings ago I would have supported your position, Mr. Jorgenson, but frankly right now I cannot support that position because I think the agreement is pretty clear and it says that the requirements are deferred until such time that each of the lots are developed and the proposal is to develop these lots. MR. JORGENSON: Can I respond to that real briefly? Mr. Craddick made a comment in response to Mr. Nakamura that the water system be built to county standards. I mean, if you're doing a private system, is that -- we need to know what exactly is the department saying are these requirements. We understood it was actually extend the line through the property to each of the lots. That's the requirements they were talking about. If he's saying that the department insists that the wells be built to county standards, that's a totally different issue. CHAIRMAN NAKAMURA: I don't know if that's a question, that's not quite the issue we're talking about. I'll make a note of that. Mr. Craddick and then Mr. Hiranaga. MR. CRADDICK: I don't think I can improve on what Board Member Nakamura said, but I don't read anywhere in here where it says if you want to connect to the system, then you comply. It just says you must comply. And as far as the issue of our standards, the standards are an interesting thing. There is a separate standards review board of which I'm a member of that board and that's what sets the standards for not only Public Works but the water department, not this board. There are provisions in the Maui County Code that require my approval. Now, once the board passed that rule to take the public or the private systems out of the board's review, that was mainly done because the board was routinely waiving the standards, not to stop our review of subdivisions that may be required. Because that's required by county code, not this board. Now, between Dave Goode and myself, I just have an understanding with him if the people are just flat out saying we're not going to build to standard, we're not going to connect to you, not going to use the water, then I've told them, you know, don't send me those. If we've got an agreement where they have to comply with standards or they're building to standard, you know, whether there is agreement or not, if they're building to standard, we'll review it if they want to us review it. Like for instance Hawaiian Homes does that over in Molokai. They routinely send us their stuff for approval even though it's not part of our system, but they want to know that they're building to standard I guess so in the future if they want to hookup, it's easy to do. Anyways, I think that's kind of the issue here. David sent me this because of this agreement and doesn't say if you want water from us, it just says you must comply with standards. MR. HIRANAGA: I just wanted to say personally whatever the rules are, the ordinance or regulations, that should be followed. If there is someone who has so-called discovered a loop hole, then they need to change the regulation or the rule or the ordinance. But you can't be massaging things based upon personal opinions or agendas because then the field is constantly evolving. You can't function in business in that fashion. People need to know what the rules are. If you're unhappy with what the rules are, you need to change them. Second of all, I guess again unfortunately I missed the last meeting. I wanted to get a clearer understanding as far as corporation counsel's interpretation. I looked at the staff report on page 2 and it says under item 5, very short response as saying that the subdivider must get the Board of Water Supply's approval. I was trying to get a better understanding of corporation counsel's position because the applicant's position was private system is not under the jurisdiction and this was not -- so I just want to see understanding more fully what corporation counsel has to say about that argument. CHAIRMAN RICE: Mr. Kushi, please. MR. KUSHI: Chairman Rice and board members, this was -- Rich Minatoya responded to the department's request and said go get board approval. Subsequently, we discussed this matter internally along with the applicant, along with the director. And it's my office's opinion and position that when you change the rule in 1996, you abdicated your responsibilities to private water system. And I don't care what he says, the director says about the code, the code says various things about subdivisions. Director Goode has the ultimate authority to approve or disapprove subdivisions. As a routine, they route it through this department. Now, Director Craddick is saying that notwithstanding the board's nonauthority over private subdivisions, he's doing it by himself, then he's split this board again. Do you understand? And I'm concerned about him reviewing private subdivisions. And a subdivision is okay and then later on it falls apart for whatever reason, then it's exposure to the department and the board. So I think this is a fundamental issue here. In terms of the agreement, this agreement in my understanding is a large lot subdivision and it's routinely granted. And there is always that type of language in there. So it's nothing new. To force an applicant to connect to our system, there is nothing in Title 18 that says you can do it. The agreement itself is still valid and the applicant says it would still be valid on the land in case anybody in that subdivision subsequently wants to connect to our system, public system, they would then comply. But if they wanted to -- the Ulumalu/Peahi situation, that might happen again. Okay. But that's the situation you're into. I say if you're going to review and control private subdivisions, private water systems, do it by rule. Reinstate that rule. If you don't, I think you get into areas where there is potential liability because you're not going to maintain the system that you're on. CHAIRMAN RICE: Mr. Starr? MR. STARR: I see this as a simple case of basically contract law where there is an agreement in place and we're being asked to take this agreement and unilaterally give up whatever rights are in it. I see it as a much simpler matter. You know, we're not being asked here to provide the improvements or anything like that. We're being asked to throw out an agreement that was made for consideration. So -- CHAIRMAN RICE: I don't think that's the case. I don't think we're being asked to throw out the agreement. We're down to what we started with here after all this talk. The agreement runs with the land, it does not change, it does not get removed. The staff report that says that the waiver of the agreement provision is not what they're requesting. They're requesting -- what they're talking about is the first part that Mr. Kushi talked about and that is whether the director has the right to approve or disapprove private water systems. And our own rule says that they don't. And counsel's recommendations if we want to change that, we should go back and change the rule so that we do. But while we have input into those, we are creating liability for the department. This agreement continues to run with the land and becomes the responsibility of -- continues to be a responsibility of Mr. Moretti and any subsequent assignee or purchaser of a lot in his subdivision, which he was not necessarily approved yet. Is that correct, Mr. Goode? MR. GOODE: Not approved. CHAIRMAN: It's not even approved yet. So it's not a fait accompli. It's been held up because of the issue of whether the director approves a private water system or not. And in other cases, we have not. We have sent letters to Public Works under the director's signature that say it's a private water system, it's up to you to make the agreement with the developer and approve the subdivision. That's on record and it's recent. MR. STARR: But was there an agreement in effect on those other situations? There weren't. And that's what makes this different is because there is a commitment to do certain things. CHAIRMAN RICE: So then the question isn't whether the director should be approving or disapproving the subdivision; the question is then a legal one as to whether this agreement applies to a developer that does anything. Then that's a different question. Then it goes right over there for a decision. MS. PARSONS: It should really go before a judiciary. CHAIRMAN RICE: You don't think the judiciary gets brought in because someone files a suit. You don't send it to the judge and say hey, decide on this. MS. PARSONS: You could take his decision, but they're still -- even if he advises yes and we go with that direction, somebody else in the public can file a lawsuit on it, so it's not -- it's one of those gray areas, those gray matters again. But my question is you said, David, that the charter says that you still approve the systems, private systems. MR. CRADDICK: The charter -- MR. KUSHI: The code. Not the charter. MR. CRADDICK: She's talking about the charter. The charter does have reference to it also and I think that's a little bit unclear, reading the charter. MS. PARSONS: And does the charter supersede -- do our rules supersede the charter? MR. KUSHI: No. MS. PARSONS: So that's a question I have, you know? CHAIRMAN RICE: That's not the question on the table right now. If we need to change the rule, if anything, that's something the board can decide to do and put on it the agenda for another meeting. Kent. MR. HIRANAGA: Just a clarification. What corporation counsel says is that the agreement is a legal and binding agreement, but the question is since the applicant is proposing a private system, does the department have jurisdiction over that application? Is that what basically you said? It is a legal and binding agreement, but does it apply in this particular situation because he is requesting a private water system. MR. KUSHI: Let me try to explain it this way. The agreement speaks for itself. It says that they had one lot, they divided it in two. And this happens all the time. When you subsequently subdivide the other lots, then you have to put in the requirements or improvements. That is [inaudible] on connecting to the public water system. Now, the applicant is going to go on private water system and the department has no jurisdiction over that. In response to the historic question about an agreement is an agreement. Jonathan, if I agreed to buy a car from you five years from now for $20,000 and then I changed my mind, do I still owe you $20,000? MR. STARR: If I provided you the car in advance. MR. KUSHI: No, if I waive my rights to the car. MR. STARR: No, you already got the car. MR. KUSHI: No. I'm going to buy it from you -- MR. STARR: A&B got the subdivision. So they got the car. And now you promised to pay for it and of course you have to pay because you've been enjoying the use of the car -- A&B sold the land, they got their profit. MR. KUSHI: I'm not going to argue with you. But if this thing goes to court, the agreement is premised and all agreements are premised on connecting to departmental requirements and code sections. In this case, it's a private water system. MR. CRADDICK: It doesn't say that in here. It doesn't say that -- it doesn't say it's premised on connecting. CHAIRMAN RICE: Mr. Craddick, we don't need legal advice unless you're licensed to the bar. MR. CRADDICK: But it doesn't say that in here. CHAIRMAN RICE: I understand your opinion. And I think that is -- in itself, if there is a question in my mind, the question is not whether the director approved private water system. The question is whether this agreement continues to apply to the owner of the land whether he puts in a private water systems or attaches to ours. That's the question. And that's a legal question, not a board question. The board can make a decision and say regardless of corp counsel's opinion, we think it applies. They can do it and be challenged, or vice versa. Mr. Starr? MR. STARR: Mr. Chair, I would like to make a motion to deny the request. MR. VICTORINO: Second. CHAIRMAN RICE: It's been moved and seconded to deny the request. Discussion? Mr. Hiranaga? MR. HIRANAGA: At this point I would like to have an answer to my initial question regarding the subdivision, was it on a lot line readjustment, and also what was the basis for the agreement. And if we're going to be voting on this matter at this time, I will be voting against the motion because I'm not prepared to deny the request until I have a full understanding of what I'm [inaudible]. CHAIRMAN RICE: Mr. Starr? MR. STARR: I have a question for Mr. Hiranaga. Were you an employee of A&B at the time of the subdivision and involved in the subdivision? MR. HIRANAGA: I was not. MR. STARR: Thank you. CHAIRMAN RICE: Mr. Nakamura. MR. NAKAMURA: Mr. Chairman, notwithstanding the fact that I personally feel that the agreement speaks for itself, my feeling is that if we have a legal interpretation or legal opinion that the agreement does not apply to the property because private water system is being proposed -- and I may personally disagree with that -- but having had that legal opinion, I feel that that is not a matter in which we can -- this board can approve or disapprove. I think it's -- if corp counsel makes a legal opinion that it's not applicable, then it doesn't even come to us, it goes straight to the departments to resolve. So notwithstanding my personal feeling that the agreement speak for itself, and at this point anyway I'll be voting against the motion based on corp counsel's opinion. CHAIRMAN RICE: Ginny? MS. PARSONS: Could we make a motion to have -- CHAIRMAN RICE: You have a motion right now. You can propose an amendment. Go ahead. MS. PARSONS: An amendment that we provide outside -- we get outside legal opinion on this issue before we move forward. MR. VICTORINO: Second to that amendment. CHAIRMAN RICE: Okay. Procedurally -- MR. STARR: I would be willing to withdraw my motion. I think that might be a -- MR. VICTORINO: You withdraw your amendment? I withdraw my second. MS. PARSONS: I would like to propose a motion to obtain outside legal counsel to review this issue as it is so very complicated. MR. VICTORINO: Second. CHAIRMAN RICE: You want to set a dollar figure? MS. PARSONS: Not to exceed $20,000. CHAIRMAN RICE: Mr. Kushi? MR. KUSHI: Just to remind the board, you need to go to council for this. Only county council. CHAIRMAN RICE: Do you understand what Mr. Kushi is telling you, Mr. Hiranaga? MR. HIRANAGA: My preference, rather than going for outside counsel, would be to have corp counsel provide us a written opinion that [inaudible]. CHAIRMAN RICE: Mr. Starr? MR. STARR: I don't -- I would not be satisfied with that. MS. PARSONS: I don't think I would either, I'm sorry. CHAIRMAN RICE: Mr. Craddick? MR. CRADDICK: It would be good for the other person to look at. So, you know, I mean once you get it in writing from them, it would -- that's -- I mean, because the other person is coming in cold turkey. MS. PARSONS: Not as an alternative. MR. STARR: I think they should provide what they're saying in writing, but I would like to call for the question on -- CHAIRMAN RICE: The Chair wants to make one comment. I think $20,000 is crazy. Let's say not to exceed $5,000. MS. PARSONS: Well, let's make it $10,000, it's a land issue. And I know -- well, it's a land issue and it's expensive. CHAIRMAN NAKAMURA: That's a lot of legal for review of a contract. MS. PARSONS: Well, get an opinion. I said not to exceed that. But I think you're -- CHAIRMAN RICE: I don't want somebody looking at the minutes and think they can bill us for $10,000. MS. PARSONS: Well, no, they are going to have to go out and look at the property physically and -- CHAIRMAN RICE: And the council has to think this is reasonable. MR. VICTORINO: I think the motion the way it was stated -- you then tried to amend it or tried to add something to it, so at this point -- so at this point the motion is whether we're going to seek outside assistance. I think that's what we need to decide on. The amount can be decided on afterwards. But let's stick with the motion, please. CHAIRMAN RICE: Okay. All in favor, say aye. Opposed, say nay. Let the record show Mr. Hiranaga voted nay. Okay. Mr. Starr? MR. STARR: Do we need a motion to defer as well? CHAIRMAN RICE: Yeah, I guess we do, subject to our -- MR. STARR: Move to defer until we have presentation from counsel. MR. VICTORINO: Second. CHAIRMAN RICE: All in favor, say aye. Opposed, say nay. Motion has been deferred. MR. JORGENSON: When can we ask that it be placed on -- CHAIRMAN RICE: Expeditiously. MR. NAKAMURA: Mr. Chairman, is it understood that we're also asking for a written opinion from corp counsel? CHAIRMAN RICE: I didn't hear that. That wasn't said and it wasn't -- MS. PARSONS: Do we need to make a motion? CHAIRMAN RICE: You can make a request. MR. VICTORINO: Make a request. CHAIRMAN RICE: Do you want that opinion from corp counsel in writing? MS. PARSONS: Yes, I think we should. CHAIRMAN RICE: Please, Mr. Kushi. MR. KUSHI: Make the question in writing, please. CHAIRMAN RICE: All right. VII, Other Business. "Discussion and possible action regarding a resolution not to approve an substandard water systems." A draft was circulated and I don't know who prepared it. Mr. Kushi did not prepare this. MR. KUSHI: No, I haven't prepared it and I wouldn't advise signing off on it. MS. PARSONS: Could I have a reason why? CHAIRMAN RICE: I know you brought it up in the last meeting, but who drafted this? Who drafted it, Mr. Craddick? The substance of what you want to do is one thing; the draft of something is another. Mr. Craddick is not an attorney, as I've said repeatedly, and I don't want documents drafted for approval that haven't been reviewed by corp counsel. And I believe that the substance of this is already in our rules or our charter. There is nothing that's not already required to do, I believe. Is that correct? MS. PARSONS: The reason that I wanted to have this front is because I'm not clear when the board in 1998 or '96 -- it was '98 when they -- '96? When they determined that they weren't going to review private water systems. And then the charter says that the director still has -- takes -- MR. CRADDICK: No, that's the code, the county code. The Charter just gives a nebulous thing about water rights, water department. MS. PARSONS: But there is some issues in there with regard to the water and with the code, that that doesn't make that 1996 rule basically void. Because I just asked Mr. Kushi do our rules supersede the charters and the codes. And if they don't, then that rule may not be valid to begin with, which is something we probably need to look at. CHAIRMAN RICE: Well then, let's look at it. Let's not make -- sit here and make judgments based on generalities. Look at actually what the charter says and compare it to what the rule says and what you would like to accomplish and let's see -- make sure that they are necessarily in conflict or they're not in conflict. Okay. And what we're trying to -- let's start from what we're trying to accomplish. And if the suggestion is to review the rule that was changed, then let's do it. If that's what the board wants to do. But let's not jump to some conclusion about what we're required to do or not, without having all of the documents in front of us and having looked at them. Okay. MS. PARSONS: Can we request that for the next meeting, to have a review? CHAIRMAN RICE: What would we like to do? Do you want to review the rule that's -- MS. PARSONS: That was changed? The charter and the code, as it relates to the rule. CHAIRMAN RICE: Or as it relates to -- MS. PARSONS: To water. CHAIRMAN RICE: Private water systems. MR. VICTORINO: That's what we're talking about. MS. PARSONS: Private water systems, right. CHAIRMAN RICE: So we want to review all the documentation that exists with regard to the department's responsibility for private water systems. Am I saying that correctly? MS. PARSONS: Yes. CHAIRMAN RICE: Mr. Starr? MR. STARR: Mr. Chair, I just want to say that I like the intent of what we're trying to do here and, you know, I think we do need to make sure that we're doing it in the right way. I think that one recurring theme that's been coming up over and over again is that there is no regulatory entity regarding water on the County of Maui. And this creates a lot of our problems and a lot of the confusion and, you know, I don't really think that that's the proper duty for this board in many cases. However, you know, if not us, then who? If private water systems become a way of circumventing any regulation or circumventing a protection of the public health, then that's not a good use for them. I myself live on a private water system in Kaupo, very far away from our system. And that makes sense because there is no -- you know, there is no alternative. But when inside of our system private water systems become a way of getting away from our rules and the EPA and everything else, there is no control over that, there is no control over wells, there is no record of how much water gets bumped, then there is a real problem. So I think we need to look ahead probably outside this board, but to create some kind of entity that would have oversight over these issues, you know, regarding the public trust and the public health and safety and then we could step aside from it with a clear heart and mind, knowing that there is someone watching the store and we're not just providing an avenue to circumvent rules which are there to protect the public good and health and safety. CHAIRMAN RICE: The Chair's opinion is that I agree with the intent of this also. What I'm trying to say is that there are a lot of permutations to this, as you just brought up, that you've got to look at totally. We had a rule that said one thing. Maybe we don't go back to the same thing. Maybe we go back to something that relates to private water systems within our service areas or something like that. But I think we have to look at all that before we go rushing into something. There is a lot of things that need to be reviewed. And I'm not -- I don't necessarily agree with you that we aren't the body to do that. But I think we can't be the body to do it if we do the review of all these different things that need review. Mr. Victorino? MR. VICTORINO: Just to tack on to that, also I would like to see the logistical set-up, who is the ultimate responsible parties involved in private systems? Like Jonathan had mentioned EPA, Department of Health, they got all these -- but who is -- like is this the entity that ultimately going to say yes or no to whoever. This is the governing body. I think we all know, but I think we need a real clear line of authority. If EPA says no, then everything from that point down says no. If State Department of Health says no, then everything from that point is no. So that we get this clear thing. Because sometimes we have other entities or other governmental agencies that are involved in these things and whether don't we set up another task force or board or commission or whatever, it will be null and void if these groups have the ultimate power. So let's get the clear defined definition line of who's responsible for what and who's the ultimately power and then we can move into these areas. And all these other factors, charter, codes, state, whatever, I need to get that because sometimes very confused, I'm thrown this, I'm thrown that, and then I kind of get lost in the shuffle. And I apologize. CHAIRMAN RICE: Adolph?