BOARD OF WATER SUPPLY
COUNTY OF MAUI
REGULAR BOARD MEETING
THURSDAY, JANUARY 29, 2004
Held at the Kahului Shopping Center Conference Room, 65 West
Kaahumanu Avenue, Unit 29, Kahului, Maui, Hawaii, commencing
at 9:03 a.m. on January 29, 2004.
REPORTED BY: Katherine Eismann, RDR, CRR, CSR #439
APPEARANCES
Chairperson: KENT HIRANAGA
Vice Chairperson: MICHAEL VICTORINO
Board Members: CLARK S. HASHIMOTO
KENNETH M. OKAMURA
GINNY PARSONS
DOROTHY R. PYLE
Deputy Corporation Counsel: DUDLEY G. AKAMA
Director: GEORGE TENGAN
Deputy Director: JEFFREY T. PEARSON
Board Secretary: CATHY HOWARD
Staff: HOLLY PERDIDO
HERB CHANG
PAUL SEITZ
ROBERT VIDA
WENDY TAOMOTO
JACKY TAKAKURA
From R.W. Beck: RICHARD CUTHBERT
ANN HAJNOSA
(Thursday, January 29, 2004, 9:03 a.m.)
CHAIRMAN HIRANAGA: Call the meeting to order.
In attendance, Kent Okamura, Clark Hashimoto, Mike
Victorino and myself Kent Hiranaga.
Are there any announcements?
Motion to approve the December 23rd, 2003,
minutes.
BOARDMEMBER VICTORINO: So move.
BOARDMEMBER HASHIMOTO: Second.
CHAIRMAN HIRANAGA: Any comments or corrections?
No? All in favor say aye.
(Chorus of ayes.)
CHAIRMAN HIRANAGA: Thank you.
(Ms. Parsons is now present.)
CHAIRMAN HIRANAGA: Is there anyone here that
wishes to provide testimony on the agenda items for the
public? You can provide, yes.
DIRECTOR TENGAN: I would just like to introduce
Mr. Dudley Akama, who is representing the Corp Counsel's
Office today. Mr. Kushi is unavailable today.
CHAIRMAN HIRANAGA: Thank you. You can provide
testimony now or when the agenda item is taken up. So, is
there anyone here wishes to provide testimony?
Seeing none, moving on to communications. A
letter from Duane Wells regarding water conservation methods.
Mr. Wells here?
Okay. Second item, communication letter from
Jimmy Muschietti. Is there anyone here that wishes to provide
testimony regarding this letter?
MR. MUSCHIETTI: I am Jimmy Muschietti.
CHAIRMAN HIRANAGA: Please come forward.
MR. MUSCHIETTI: Sit?
CHAIRMAN HIRANAGA: Yes, state your name.
MR. MUSCHIETTI: My name is Jimmy Muschietti,
M-U-S-C-H-I-E-T-T-I.
CHAIRMAN HIRANAGA: There is a mike here? Use
that mike.
MR. MUSCHIETTI: Jimmy Muschietti. I'm -- should
I just go?
CHAIRMAN HIRANAGA: Yes.
MR. MUSCHIETTI: Okay. As you have in the packet,
correspondence between myself and the Department of Water
Supply. This is regarding upgrade meter. I made an error on
the letter where I said five-eighths to three-quarters. It
should have been reversed. Three-quarter existing meter. We
are trying to get a five-eighths-inch meter.
And the problem I am having here is we were turned
down for the meter. And what I'm concerned about, when I
bring it to you, is that the lack of cooperation and any
support and help from the Water Department.
And there's a history behind this, which I didn't
really want to bring up, except it kind of painted me in a
corner. But during the most recent thing, when we received
the application, I was in contact with the Department, asking
them for some assistance in filling out the form.
And I made several calls to Herb Chang's office
and did not receive any calls back. And this is not the first
time this happened. Approximately 10 years ago, up in Lower
Kimo Drive, up on the Kekaulike Highway, the small wooden tank
that they called it the Field's tank -- Harry Field's tank was
leaking really badly.
And the Department was called, on numerous
occasions, to tell them. This was during one of the early
droughts also. And no calls were returned until I had Henry
Kaona, from Kaona Masonry out there, and he was working the
backhoe. The backhoe slipped in the mud that was coming on to
our property from this leak, flipped over and crushed his
foot.
So, at that time, I called the Department, and I
told them that neighbors were taking photographs, and there
was a liability. And then all of a sudden, they came out, and
they put a liner in there.
The second thing I can recall is during the Smith
Development, for the -- where they took over the Hagai -- I
think I am saying that correctly -- project on Lower Kimo.
And they had to put in this big water tank, 100 --
150,000-gallon tank. And they surveyed it right next to my
employer's house, so it would be right in his view.
So, I went to Smith Development and started
talking to them. Couldn't it be moved, et cetera. So, I
again went to the Water Department, again to Mr. Chang, and
asked for some assistance, just finding out are you going to
work with us; can it be moved. Maybe made five different
phone calls. None of them were returned.
Went to his office. Stood at the doorway while he
was in there on his computer. Politely waited. Did not look
up at all. And out of frustration, I went down to Alan
Murata's office, and I told Alan the problems I was having
with Mr. Chang.
Alan brought me into Mr. Tengan's office. I spoke
with him, and then Mr. Tengan assured me that the water tower
was going to be moved up into the water yard, and we wouldn't
have problem.
Now we move up to this expansion, and I need help.
Same thing. I am not getting any response from Mr. Chang or
anyone else when I go there. So, I ended up -- originally
turned it over to Wayne Arakaki, who is here, the engineer.
He had similar runaround problems where he would talk to
Mr. Chang, Mr. Chang would refer him to someone else, which
eventually would refer him back to Mr. Chang, and then nothing
was done.
Most recently, I have written the Department.
Number one, I made a complaint against Mr. Chang, and I have
not heard anything back. That's been probably two months now.
Any response on that complaint at all.
I have asked questions of Mr. Tengan regarding
what is their policy for returning phone calls to the public?
What is their policy for assisting the public? I also asked
him, when he said that it was his own discretion, even if
you -- if this Board said it approved it, that he did not have
to go on the Board's approval, because he had discretionary.
So, I asked him to refer me to those rules and regulations.
That was not responded to.
I asked finally to be put back on the upgrade
list, to receive an application for that. That was not
responded to. And then to be put on the list, that was not
responded to. So, it's sort of a pattern that's been going on
for quite a long time, and it's continued.
In this instance, it's hurting. I am just the
caretaker up there. The owners live on the mainland. This is
the estate that Princess Kapiolani Kawananakoa used to live in
with Mr. Harry Fields, who was a senator here.
And the house has been on the market, and this is
affecting that, because we can't really sell the house until
this is all dealt with and closed. We cannot close out the
building permits until this is taken care of. So, that's
basically what I have to say.
CHAIRMAN HIRANAGA: All right. Any questions by
the Board for Mr. Muschietti?
BOARDMEMBER OKAMURA: So, this is just a
communication from Mr. Muschietti.
CHAIRMAN HIRANAGA: The mike.
BOARDMEMBER OKAMURA: Is this a request?
MR. MUSCHIETTI: Yes, I am asking to appeal that
decision. I've -- because he said he would not necessarily
follow your direction, I have also appealed it to the Variance
and Appeals Board to try to get this -- so we can get this
meter.
And, you know, it doesn't -- I have been trying to
point out to him, does it make any sense we would apply for
this meter, receive it, and then just not want it? I mean, it
doesn't even make any sense. I think it's obvious that we had
problems in understanding, you know, how to fill out the form.
I didn't understand about how you -- how you add
up to figure out how much you need for water protection, you
know, fire protection, any of that. So, that's why I went to
the Department as just a citizen, not aware of your policies
and procedures, and asking for assistance.
CHAIRMAN HIRANAGA: Yes, Ginny.
BOARDMEMBER PARSONS: Do we know why this was
rescinded? Apparently, it was approved and then rescinded.
MR. MUSCHIETTI: He said the 30 days had passed.
BOARDMEMBER PARSONS: What 30 days?
MR. MUSCHIETTI: They have 30 days -- once they
tell you you can have the meter, you have 30 days to get
everything together.
BOARDMEMBER PYLE: The papers.
MR. MUSCHIETTI: Yeah, and I feel that I had gone
up there personally and asked for an extension. Left that on
at least one of my messages. I didn't do it really formally,
formal letters and things like that, which, going back, I
would have done.
But I feel like we have waited -- and also, I
pointed out in one of the policies -- I finally found that you
guys have a water -- a website. And it says in there that if
you have an error that's excusable, even if it's, you know, a
neglecting error, if there's an excuse, then that shouldn't
hold you to that 30-day time frame.
And so, I was appealing on that basis, too, that
maybe we made errors, on whoever's side. But, you know, why
does it have to be so strict and tight, I mean --
CHAIRMAN HIRANAGA: Clark.
BOARDMEMBER HASHIMOTO: Can we have a response
from the Water Department?
CHAIRMAN HIRANAGA: We will get to that. Do you
have a question for --
BOARDMEMBER HASHIMOTO: No.
CHAIRMAN HIRANAGA: -- Mr. Muschietti? You don't.
You can remain out there. I just wanted to provide the
director an opportunity to give additional comments. I know
he's provided us with a staff report, but if he wishes to add
to that.
DIRECTOR TENGAN: Mr. Chair, we have a staff
report prepared and submitted to you. Getting back to
Mr. Muschietti's letter, the one thing that kind of disturbs
me, the part where he says Mr. Tengan informed me that I could
appeal his Department's ruling. At the same time, he states
that he is not obligated to follow the Board of Water Supply
rulings, because he has discretionary powers.
That sounds like an arrogant statement that I
wouldn't make. And you know, maybe what I said, at the time,
was taken differently. But I just want to say that it doesn't
sound like a statement that I would make. And if the Board
has any particular questions, I will turn it over to staff.
CHAIRMAN HIRANAGA: Just looking at the time line
here, the Department first provided notice on January 30th,
2003, is that correct? That he was eligible for a water
meter?
DIRECTOR TENGAN: I believe the first letter went
out January 30th, so he had -- technically, he had until the
end of February or the beginning of March to respond to this,
to this letter. And it seems that we waited until July to --
to inform him that, you know, that he hadn't respond --
responded in the appropriate time, and that his name would be
taken off the list.
CHAIRMAN HIRANAGA: So, the process is that he
must fill out this metering size worksheet? Can he also just
apply for the meter to document his interest?
DIRECTOR TENGAN: As to the exact procedures,
maybe I should turn it over to staff.
MR. CHANG: Depending on the situation, in this
particular case, we -- the Department was not sure whether a
meter upsize was required. So, this particular application,
for this particular situation, a meter sizing worksheet was
submitted along with the certified letter.
And the purpose of this meter sizing worksheet is
to determine if the new structures or buildings would require
additional water service over and above the capacity of the
existing meter.
So, once this work sheet was completed, the
Department has an idea whether or not this property actually
needs a water meter -- a new water meter. So, that's the
first step. And let me get into a little bit -- a little
detail.
July of 1999 we got a calculation from Wayne
Arakaki who, I assume, works for the property owner. And it
was incomplete, but it showed the existing three-quarter-inch
meter was adequate for the proposed project. But again, there
was mistakes on the calculations, so we sent them back, but we
didn't hear any comments back from Arakaki. So, it's still
questionable whether this property does indeed need additional
service.
CHAIRMAN HIRANAGA: So, he has a
three-quarter-inch meter, and he's asking for an additional
five-eighths inch meter; is that correct?
MR. CHANG: Correct.
CHAIRMAN HIRANAGA: Looking at the letter of
January 30th, 2003, where does it say that he must respond to
this request within 30 days?
BOARDMEMBER PARSONS: I think as a Board, I think
we determined that they would have a 30-day period after the
notification.
CHAIRMAN HIRANAGA: No, but how would the --
BOARDMEMBER PYLE: How would the guy know about
it? It's not in the letter.
BOARDMEMBER PARSONS: Wasn't that in the first
letter that we sent out?
BOARDMEMBER VICTORINO: December 16th.
CHAIRMAN HIRANAGA: We are talking about January,
2000, the first letter saying he's eligible for a meter.
BOARDMEMBER HASHIMOTO: Page 19.
CHAIRMAN HIRANAGA: That's July 18th. The 30 days
have already lapsed.
BOARDMEMBER PARSONS: I think it was a public --
it was a public notice, basically, and there were newspaper --
I seem to recall that they did carry it in the newspaper that
we were giving a 30 day. So, maybe the Department assumed
that -- it should have been in the letter, but maybe the
Department assumed that that was enough notice.
CHAIRMAN HIRANAGA: Yes, George.
DIRECTOR TENGAN: Mr. Chair, with regard to that
requirement or the reference made to it is in the first big
paragraph towards the bottom, where it makes reference to the
water meter issuance rule affecting the Upcountry area.
CHAIRMAN HIRANAGA: I know, but --
DIRECTOR TENGAN: But it doesn't specifically
state 30-day period.
BOARDMEMBER PARSONS: Yeah.
CHAIRMAN HIRANAGA: If --
BOARDMEMBER PARSONS: And we did give -- I am
sorry. I think we did give more extension of time in a lot of
cases, too, because I was following it pretty closely while
Herb was working on different files.
And we extended -- especially Upcountry, we
extended the time allotment beyond the 30 days. Didn't we,
George? In many cases?
DIRECTOR TENGAN: We may have with a couple of
them.
CHAIRMAN HIRANAGA: I think the Department should
look at this letter that they are sending out if it's a
standard form, and specifically inform the applicants that
they do have 30 days to respond. Because I don't believe the
general population is that familiar with the water meter
issuance rule affecting the Upcountry area.
My concern is wouldn't you accept the water meter
application first and determine if you are going to approve
that application? I mean, to have verbal communications
seems -- creates a situation that he finds himself in.
DIRECTOR TENGAN: Was that a question to me?
CHAIRMAN HIRANAGA: Yeah. I mean, it seems like
the meters are so valuable to these people, they have been
waiting for them for 10 years. I think you need to tighten
your process up.
I mean, if someone is genuinely interested in
obtaining a meter, they need to show their good faith effort
by providing some type of a payment, a deposit. And that
should be, I think, requested in the initial letter, saying
you must respond to this letter within 30 days and provide
your payment within so and so, so that we don't have a
situation like this.
BOARDMEMBER PARSONS: Wait a minute. Can I say
something about that? Because we did take payments from
Upcountry, and we sent them back. So, if we are going to make
that kind of policy, we need to make it very detailed that
these payments are accepted. If the letter goes out, these
payments are accepted, that they -- they have a right of
reliance on -- on the process.
CHAIRMAN HIRANAGA: But you can receive the
payments. That doesn't mean you are going to approve the
application.
BOARDMEMBER PARSONS: Then we have to state that,
too.
BOARDMEMBER PYLE: Yeah.
CHAIRMAN HIRANAGA: I agree with you. Let's put
that in there, too.
BOARDMEMBER PARSONS: Okay.
CHAIRMAN HIRANAGA: I'm just saying the process
right now is very -- it's not very formalized.
MS. PARSONS: Right.
CHAIRMAN HIRANAGA: You know, you are having
verbal communications. There's no documentation.
DIRECTOR TENGAN: Herb, can you review the
procedures when people come in and say that yes, they want to
accept the meter, and what procedures are following that with
regard to putting up the deposit and filling out the
reservation form?
MR. CHANG: We can review the procedure. I am not
sure whether -- because page two is missing from this exhibit,
which is a whole bunch of other descriptions. Do you have
page two?
DIRECTOR TENGAN: Mr. Chair, I notice, if you look
to the January 30th letter, the second sentence of the last
paragraph, there is specific reference to the water meter
issuance rule and the water system development fee rule. And
it refers to the addressee of the letter that these rules
apply.
CHAIRMAN HIRANAGA: It appears we are missing page
two of the letter dated January 30th, 2003.
BOARDMEMBER VICTORINO: Where is it?
DIRECTOR TENGAN: What happened to page two?
MS. HOWARD: I just copied what Herb gave me. I
don't have any page two.
BOARDMEMBER VICTORINO: Let me ask you a question
then. Does that page contain the necessary information on 30
days? I mean, I guess that's something formal. I guess
that's all we are asking, and that's all we need to see, if
there was something formally written to this gentleman in that
regard.
MR. CHANG: Normally, there is a 30 day, but
again, it could have been omitted because of these -- we try
to do the standard letter, but we modify, and that phrase may
have been accidentally deleted. Because normally, there is a
30-day provision in there.
BOARDMEMBER VICTORINO: Herb, the question is, is
there something in writing?
MR. CHANG: I don't know.
BOARDMEMBER VICTORINO: Because if the letter is
sent to -- like the two previous Board Members have mentioned.
If a letter is sent to me, and I have no idea that there is a
30-day window to work on, then I probably not respond, like
this gentleman, in a timely manner.
So, that's what I am asking. This page two, does
the page two that we are missing, is there anything in
reference to the 30 days?
Well, okay. That's what we need to find out
though. Do you have a copy of the second page?
MR. MUSCHIETTI: No, it's not on mine either, but
I wanted to add -- could I add one more thing?
CHAIRMAN HIRANAGA: Sure. Sure.
MR. MUSCHIETTI: A couple things. I think, at
some point, I was aware of the 30 days. I know that. They
told me. But I think I was in -- what I am saying, I was in
correspondence, maybe in a casual way, with the Department, to
let them know I needed help or was not able to fill this out.
Therefore, I needed time.
Second of all, in regards to what Mr. Tengan just
said, in his letter December 16th, 2003, the last paragraph on
the first page: To answer your inquiry, I am pursuing an
appeal of the director's decision to denied the request, you
may pursue your request to the Board of Water Supply. Please
be aware the Board of Water Supply reviews and acts on issues
in an advisory capacity to the Department of Water Supply.
The director of the Department of Water Supply has the
discretion to accept or reject the Board's recommendations.
BOARDMEMBER VICTORINO: That is a fact.
MR. MUSCHIETTI: Yeah, but that's what I am
saying. It's almost like saying don't bother, because I have
already told you you can't have it, you know.
BOARDMEMBER VICTORINO: Yeah.
CHAIRMAN HIRANAGA: Let me interject, and I guess
maybe this is a question for Corp Counsel.
The appeal process is still in place as far as the
Board of -- the rules of the Board of Water Supply; is that
correct?
DEPUTY CORPORATION COUNSEL: Yes, that's correct.
He is asking, I think, for an appeal to the Board of Water
Supply, but the hearing ultimately will be held at the Board
of Variances and Appeals. So, if it has to -- but this Board
can act in an advisory capacity in terms of this -- in terms
of this denial.
CHAIRMAN HIRANAGA: Isn't that one of the problems
is that the rules have not been revised? And I believe that
the appeal is made to the Board of Water Supply. It's not
made to the Board of Variance and Appeals. And you haven't
instituted that formal process.
MR. MUSCHIETTI: Yes, I have.
CHAIRMAN HIRANAGA: Not to the Board of Water
Supply. You have --
MR. MUSCHIETTI: I am sorry. Oh, well, I asked
for this appeal. I thought that is what I was doing now.
CHAIRMAN HIRANAGA: This is not an appeal. This
is a communication. There is another process.
MR. MUSCHIETTI: When I wrote the director, which
his response I just read, I was saying who do I appeal this
to? I would like to appeal this decision.
CHAIRMAN HIRANAGA: There is an appeal process.
MR. MUSCHIETTI: Well, then I would say what
happened is with the last complaint, I was saying I have asked
for a lot of things and got no response. You can add that to
it. I was not advised.
And I was advised by someone else to go to the
Board of Variance and Appeals, because they said they would
have the power over the director, if he could then say -- say
your Board said, yeah, give him the meter, and he said, naw, I
don't want to, then that Board would be the one to have the
final say. That's what I was told.
And I don't know. I am not -- you know, I am not
into the county government.
CHAIRMAN HIRANAGA: If this meter is very
important to you, you may want to speak to legal counsel,
because you may be the first person, since the Charter change,
to try and see what would happen with an appeal -- filing an
appeal with the Board of Water Supply based on -- over the
director's decision. Because I think that's -- yes, Ginny.
BOARDMEMBER PARSONS: Is there a reason why he
can't have his upgrade? I mean, do we have a specific reason
why he cannot have it, other than this time issue?
I mean, is there a physical reason why he cannot
have it? Are we not -- do we not have enough water supply?
Do we need to get Pookela well on line first?
DIRECTOR TENGAN: The only reason because he
hasn't followed or completed the process.
BOARDMEMBER PARSONS: I am sorry?
DIRECTOR TENGAN: He hasn't followed or completed
the process of following the time lines.
BOARDMEMBER PARSONS: And that's our only reason
that we are denying this water meter?
DIRECTOR TENGAN: Well, we got to go out. You
know, if people don't respond, you know, you have been one of
the very ones to push us on these items here. And you know,
if people don't respond, we got to get them off the list and
go down the list to other people. We can't leave the other
people hanging.
BOARDMEMBER PARSONS: I am not saying that, but
he's had conversations with the Department.
DIRECTOR TENGAN: Right.
BOARDMEMBER PARSONS: And we moved so slow last
year anyway, that as long as he's had some conversations, he
has responded. I am talking about -- when I am talking about
getting people off the list, those are people that have not
responded period.
I mean, if they don't -- if we send out a
notification, and then we send a second notification, and they
don't respond, then you need to get them off the list. But
not somebody who has necessarily been in correspondence or
contact with the Department.
I mean, these are lay people out here, and they
don't know how to fill out these forms. They don't know
what's required. They don't necessarily -- you don't
necessarily take a request for a water meter to an attorney.
So, this is -- they shouldn't have to. This is
the public. They should not have to do that. So, if he's
been -- if he's been in correspondence, and there's no
physical reason why he shouldn't have it, if you have the
water, can you reconsider giving him his water meter upgrade?
I mean, right now, he's -- he's one of many people
Upcountry that just needs it in order to move forward, and the
longer that we hold these people back, time is money. And it
would cost them, which, ultimately, could cost us.
MR. MUSCHIETTI: Can I have one final thing? Just
if I am reading this properly, your own Maui County
Administrative Rules, Title 16, Chapter 102, Rules and
Practice Procedures for the Maui County Board of Water Supply,
under Subchapter 4, intervention in contested cases, extension
of time, number three, permit the act to be done after the
expiration of a specific period where failure to act is
clearly shown to be the result of excusable neglect.
I believe this rule would apply to this situation,
because I think maybe we -- I was neglectful, but I did it out
of being a lay person. I did it while trying to respond to
the Department and get as much help as I can.
So, I think it was an error on my part for sure,
in the time frame. But, also, I feel during that time I was
asking for help and an extension. So, that's all I have to
say.
CHAIRMAN HIRANAGA: Is it correct that your first
formal written communication to the Department was in
December 11th of 2003?
MR. MUSCHIETTI: I'm -- probably. I couldn't say
for sure. If that's what the record shows, I wouldn't, you
know, dispute it.
CHAIRMAN HIRANAGA: This is what I have in my
report. So, I am just asking you to confirm if that's your
first written correspondence to the Department.
MR. MUSCHIETTI: It probably is the first written,
yes. But I was physically there, and I made numerous
telephone calls.
CHAIRMAN HIRANAGA: My personal opinion is the
issue is with the letter of January 30th, 2003. If we can
find, on page two, that it specifically states that he must
perform certain tasks within the 30-day period, I think it
places more of a burden on the applicant.
If it doesn't state that you have 30 days, then I
suggest the Department strongly look at revising their letter.
You know, you are allowed one year to -- to lapse before you
started corresponding in writing, and it seems to me to be
like a very long period of time.
You know, when you say you have had verbal
communications, that's hearsay. Your word against Herb's.
MR. MUSCHIETTI: I understand that, but I think I
could back it up, because during that same time, I had been
talking to Wayne Arakaki.
CHAIRMAN HIRANAGA: It's still hearsay.
MR. MUSCHIETTI: Yes, maybe so, but I think the
facts speak for themselves. I mean, you know, we applied for
the meter because we need the meter. And I don't see why we
would just ignore that meter. And I think, you know, we were
looking for help.
You have to understand, during this timeframe, the
administration change was happening with the Water Department,
and that had an effect also on how we were responded to.
So -- and, you know, it was only because of the secretary
there, Jerry, that I even was able to do this appeal.
She's the only one that even directed me and said,
you know, you can appeal this to you guys. So, I am not
getting any assistance during that time, but I'm also being
relaxed and laid back, because it wasn't a real hurry
necessarily. And I know how the Departments -- obviously,
other Departments in the state also work.
I worked in Human Services. You know, you don't
push. And I am not an arrogant kind of person to come and say
give me this today. So, maybe, you know, I should have been
more aggressive. But the truth of the matter is, applied for
the meter, need the meter, still need the meter, and would
like to have the meter.
BOARDMEMBER PYLE: Mr. Chair.
CHAIRMAN HIRANAGA: Yes, Dorothy.
BOARDMEMBER PYLE: In listening to what this
gentleman has had to say, it just strikes me that he is an
example of what happens to a lot of citizens in this County,
which is they have good faith that their County Departments
are going to assist them.
And they come in, they use the telephone, they
come in in person, and because we don't have the resources or
the County does not have the resources, we don't keep track of
those things. We don't have phone records. We don't have
logs of visitors. It's very unfortunate that we don't,
because then we can say, oh, it's your word against his word.
But these are the -- this is the public we are
dealing with. They are the ones who pay the taxes. It does
really seem to me that in this particular case, given the
circumstances, the fact that we can't even find copies of the
letters that may or may not have been sent to him -- he may
not have even gotten three pages of this letter -- that we
should, as a Board, ask the Department to reconsider.
And if there is no valid reason except the fact
that he did not follow-up procedure that was not clearly
stated, then perhaps they should grant him his water meter.
CHAIRMAN HIRANAGA: Thank you.
MR. MUSCHIETTI: And one final thing on the
hearsay you were mentioning. I would also point out that you
can go to the Department, to Alan Murata, who is an engineer
there. And I went to Alan Murata personally, and I told Alan
of my problems with Mr. Chang.
And I didn't want to make a stink or anything, and
I just said, I don't know what to do, Alan. So, I have
complained to the Department. And you can bring Alan in, and
he will tell you I have made numerous phone calls, numerous
visits to the Department with no response at all.
CHAIRMAN HIRANAGA: Thank you.
BOARDMEMBER PARSONS: One more thing.
CHAIRMAN HIRANAGA: Go ahead, Ginny.
BOARDMEMBER PARSONS: I would like to, for the
Department, apologize for you not getting return phone calls.
And I -- and nobody else has said that at this point. I am
sure we all feel the same way. And I'm not making an excuse,
but they have been inundated.
MR. MUSCHIETTI: I understand.
BOARDMEMBER PARSONS: They have a workplace that's
just -- it's burdensome. And we probably need -- Herb, of all
people, probably needs a good personal assistant who can at
least get back phone calls. Because if he returned every
single phone call that he got on a really timely basis, he
wouldn't be getting any work done period. So, I am sorry
about that. I really am, and this is something we do need to
look into.
MR. MUSCHIETTI: Thank you very much.
CHAIRMAN HIRANAGA: I think it's important that we
see the missing page two of this letter before a decision is
made or a recommendation is rendered.
I think the Department should look at formalizing
the process more, some type of a deposit to show, you know,
good faith effort that they really want to proceed. You know,
the Department, in their defense, needs to move through this
list as quickly as it can, because there are people waiting.
And, so, we need to find out who really wants the
meter and who doesn't. So, it's kind of a -- it's a fine line
between trying to go back and accommodate someone a year back,
when they had their opportunity, versus trying to move forward
and accommodate someone who is further down the list who is
still waiting for a meter.
So, I can't render a recommendation or a decision
on the recommendation without seeing that second letter,
second page of that letter.
BOARDMEMBER VICTORINO: Maybe we should defer this
matter until we --
BOARDMEMBER PYLE: Actually, Mr. Chair.
CHAIRMAN HIRANAGA: Yes.
BOARDMEMBER PYLE: Can we make the motion, since
it necessarily isn't your decision alone to make that?
CHAIRMAN HIRANAGA: I am just saying personally,
my personal opinion. I am not saying you can't make a motion.
BOARDMEMBER VICTORINO: So, go ahead.
BOARDMEMBER PYLE: Maybe that's not exactly
appropriate to say what your personal opinion is. I move that
as the -- as a Board, the Board of Water Supply recommend to
the Department their reconsideration of this issue based on
the lapse in communication that seems to be the central cause
of this issue.
CHAIRMAN HIRANAGA: Is there a second?
BOARDMEMBER PARSONS: I will second.
CHAIRMAN HIRANAGA: Discussion.
BOARDMEMBER VICTORINO: I guess the only thing I
would have to add to that is I would vote against a motion for
the strict aspect that I would like to see the page two of the
letter, and that's what I would like to see.
I agree in concept with you, but I cannot render a
decision without all the facts in front of me, and I would
like to see the second page.
BOARDMEMBER PARSONS: I think the second page
would be really nice to see, too. However, we can't even be
sure that he received the second page. This is what was given
to him out of the file. Perhaps this is all that he received.
And even if they could come up with a second page,
that doesn't mean that it was necessarily mailed to him. I
think it's irrelevant at this point.
What is in front of us is what we have to make a
decision on. And if you were -- if you were in a court
process, Mr. Victorino, the judge isn't going to call a recess
and say, oh, go find that other sheet of paper, that other
exhibit. It's not going to happen.
This is all we have to go on, and this is what we
need to make our decisions on. And the fact that the
Department didn't supply us with this is the Department's
problem internally, and they need to talk about it.
We need to make a decision based on the
information before us and not keep putting off until tomorrow
what needs to be decided today.
BOARDMEMBER VICTORINO: Thank you, Miss Parsons.
CHAIRMAN HIRANAGA: Just a reminder. Please don't
direct your testimony to other Board Members. Just direct it
to the forum, because we don't want to get into a debate.
State your opinion, but don't address it to specific Board
Members.
BOARDMEMBER HASHIMOTO: Ken.
CHAIRMAN HIRANAGA: Yes.
BOARDMEMBER HASHIMOTO: I agree with
Mr. Victorino. I think I would like to see the second page of
it. If they can't come up with it, then we will reconsider,
but I think we would like to see the second page and give the
benefit of the doubt to the department.
MR. MUSCHIETTI: In closing, can I only say let's
assume the second page is here right now.
CHAIRMAN HIRANAGA: I am sorry. You can't
comment, because there is a motion on the floor.
MR. MUSCHIETTI: Okay.
BOARDMEMBER PYLE: But I would like to comment.
CHAIRMAN HIRANAGA: Of course.
BOARDMEMBER PYLE: As much as I would hesitate to
even say such a thing, at this point in time, anybody could
write anything and make it the second page.
CHAIRMAN HIRANAGA: Okay. That's true.
BOARDMEMBER PYLE: So, what are we waiting for?
CHAIRMAN HIRANAGA: For the discussion.
BOARDMEMBER OKAMURA: Mr. Chairman.
CHAIRMAN HIRANAGA: Yes, Ken.
BOARDMEMBER OKAMURA: I think also, if you put it
out, it will give time for the gentleman here to get more
testimony or support that he would like to show that he did
have communications with the Department during this period.
So, I think I would like to see the second page
also. I think we need to make a careful decision, because --
but it's been a good discussion, I think.
CHAIRMAN HIRANAGA: Any further discussion?
BOARDMEMBER VICTORINO: I call for the question,
Mr. Chair.
CHAIRMAN HIRANAGA: All in favor of the motion,
please so indicate by saying aye.
(Boardmembers Parsons and Pyle responded aye.)
CHAIRMAN HIRANAGA: Two ayes by Ginny and Dorothy.
Those opposed.
(Boardmembers Victorino, Okamura, Hashimoto and
Hiranaga responded no.)
CHAIRMAN HIRANAGA: The motion does not carry.
Open the floor to another motion.
BOARDMEMBER VICTORINO: Mr. Chair.
CHAIRMAN HIRANAGA: Yes.
BOARDMEMBER VICTORINO: I move that we have this
matter brought up at our next meeting for a decision making,
and that the second page either be included, and if it does
not exist or we do not have it, then the decision can be made
without it.
And I would then, at that point, make a decision,
because all the facts would be in front of me. And if not,
then that's all I am going to -- that's my motion. So, to
bring this matter back at our next meeting to make sure this
is an agenda item for our next meeting.
BOARDMEMBER HASHIMOTO: Second.
CHAIRMAN HIRANAGA: Any discussion? All in favor,
so indicate by saying aye.
(Boardmembers Victorino, Okamura, Hashimoto and
Hiranaga responded aye.)
CHAIRMAN HIRANAGA: Opposed.
(Silence.)
CHAIRMAN HIRANAGA: No opposed. Motion carries.
Next agenda item, we have a presentation by R.W.
Beck & Associates regarding the update on water rate increase.
Yes, Mr. Williams.
MR. WILLIAMSON: Mr. Chair, I have testimony.
CHAIRMAN HIRANAGA: Would you like to provide
public testimony at this time?
MR. WILLIAMSON: I would.
CHAIRMAN HIRANAGA: Okay. Let me open this -- one
moment. Let me open it up to public testimony before they
provide their presentation. And Mr. Williamson.
MR. WILLIAMSON: Good morning. My name is Jim
Williamson. I am speaking as an individual, being variously
associated with the Maui Meadows Homeowners Association, and I
am on the Stakeholders Committee. But I would like to speak
as an individual.
My main concern with this whole rate issue is how
the subject of financing of capital improvements will be
addressed by this rate review. As you know, the Department of
Water Supply rates have historically only been meant to cover
the cost of operation and maintenance. The cost of capital
improvements is borne by the revenues from the sales of water
meters.
This is indeed one of the reasons, I believe, why
the cost of water meters is set at what I consider to be a
relatively high value, which would -- which happened during
the reign of the previous director.
I have been concerned for sometime that the
development fund solely derived from meter sales is sufficient
to cover the cost of future capital improvements or that the
amount available restricts the funding for such timeliness of
such development of the necessary additional water sources.
This is particularly important when other sources
must be brought on line as soon as possible to reduce the
demand on the overpumped Iao and Iao-Waihee aquifers supplying
central and south Maui and Paia. Further, increasing costs
are expected for Upcountry development.
I believe Beck's terms of reference should include
the whole gamut of water supply costs for Maui, including
capital improvements as well as O&M costs. If water meter
sales are insufficient to pay for capital improvements, it may
be necessary to issue bonds, in which case, the debt service
payment would come from the rate base.
In any case, there should be a clear understanding
of the scope of water rate increase up front, by all involved,
including the consultant and the Stakeholders Committee.
Thank you for the opportunity to testify.
CHAIRMAN HIRANAGA: Any questions for
Mr. Williamson? Thank you.
MR. WILLIAMSON: You are welcome.
CHAIRMAN HIRANAGA: Anyone else wishes to provide
testimony regarding this agenda item?
Okay. I will close the public hearing. I will
invite R.W. Beck to present their -- call for a five-minute
recess, and we will reconvene at 9:50.
(Recess, 9:45 a.m. Resumed 9:54 a.m.)
CHAIRMAN HIRANAGA: Call the meeting back to
order.
DIRECTOR TENGAN: Mr. Chair.
CHAIRMAN HIRANAGA: Yes.
DIRECTOR TENGAN: Today we have Mr. Richard
Cuthbert and Miss Ann Hajnosz from R.W. Beck out of Seattle.
R.W. Beck & Associates are nationally known consultants in the
process of rate setting.
I have had experience of working with R.W. Beck in
the past, not with Miss Hajnosz and Mr. Cuthbert, but I've
worked with the firm, and I do believe they will do a good job
for us.
As part of this process, we had asked certain
members in the community representing the various segments of
the community to sit in on a committee to kind of discuss the
issues and maybe set some direction also in this rate study.
We have on the committee Mr. Bruce Faulkner. I
believe he's here today. Mr. Faulkner is with Maui Hawaiian
Realty, and he would be representing the Realtors Group.
We have Miss Elliot Krash. I am sure you all know
her. She's representing the Kula Community Association. We
also have Mr. Jim Williamson. We all know Jim also. He's
representing the Maui Meadows Community Association.
We have Mr. Charlie Jencks. Charlie there. He's
representing the Maui Contractors Association. We have
Miss Lani Correa. Lani is right there. She's representing
the Maui Hotel Association.
I don't see Lynne Woods here today. Do we have a
representative from -- anyways, she's agreed to sit in on the
committee, too. We have Maui -- I mean, Warren Watanabe.
He's a former Board Member, and he will be representing the
Maui County Farm Bureau.
The next person would be Mr. Joe Pluta. Is Joe
here? He is representing the West Maui Taxpayers Association.
Scott Jensen, Scott's a staff planner with the Office of
Aging. Blossom Feiteira, anyway, Blossom responded this
morning and said that she would be willing to sit in on the
committee. She's representing the Hawaiian Community Assets
Group.
We haven't had a response from Mr. Danny Mateo,
who is the Water Resources Committee Chair, but I believe the
Council will be having somebody sitting in on the committee.
And finally, we have Mr. Ron Sturtz. Ron
represents the group Maui Tomorrow. And I would like to also
suggest that at least one or two members of the Board sit in
on this committee also. If the Board would either work with
the Board Members and get somebody to sit in on this committee
meetings, that would be great.
We passed out this little chart here. It kind of
shows what the relationships and how the work would flow
between the Stakeholders Committee, the Board, the Department,
and finally down to the Mayor and the Council.
Anyway, this is generally how we would be working,
and we probably would be making some revisions to this chart
that would go along. So, if you have any questions on the
chart, maybe you can come and see me later on.
So, at this time, I'd like to turn it over to
Richard and to Ann.
MR. CUTHBERT: Thank you very much, George. I am
very pleased to be here today, as we really are initiating the
rate setting process here in Maui.
Our purposes really are twofold. One is to
introduce all of you to the rate setting process, explain what
we anticipate going through over approximately the next 11
months.
This process is designed to lead to any changes to
Maui's water rates that will be effective hopefully next
January, if this process goes successfully forward. And to
get your -- solicit your input. There is a lot of interest in
water in Maui, and as we talked about future improvements to
the water system, all of those have rate impacts and rate
concerns.
And, so, I'm very pleased. We were working with
the Department yesterday to try and kind of outline how this
process might work better, and George has discussed that. I
would be happy to address any questions associated with that.
But, with that, we have a short presentation. Ann
and I will be sharing that. And then at the conclusion, we
will entertain any questions you might have.
We have a short -- let me just look at this for
one second.
Okay. Boy, I have done this for about 15 years
and technical problems are always very exciting. Just in
terms of some introduction about R.W. Beck, George mentioned
our firm briefly. We have been actually working water rate
issues here in Hawaii for more than 50 years.
We are a Seattle-based national management
consulting engineering firm. And the work here goes, really,
with each of the islands and the establishment of the water
system back in the 1950s. In the last four years, we have
completed rate studies for the Honolulu Board of Water Supply
and the Department of Water Supply and the Department of Water
both on the Big Island and in Kauai.
What we want to discuss with folks today, first of
all, is to review what the scope of services are for the 2004
water rate study here on Maui. We are going to give you an
overview of the approach that we anticipate using in setting
water rates. Give you an understanding of the rate setting
philosophy that we use, as part of that approach.
We are going to give you some background in terms
of comparative water experience of other water utilities.
It's very helpful to look at this in the context of how the
water rates here in Maui are compared to the other islands.
We are here, really, to talk also about the role
of the Board and the stakeholders in the rate setting process,
and then we will give you an idea of kind of the time line we
anticipate going through in this rate review process.
Finally, I would like to have an open discussion
of anything that comes up in terms of questions that we could
address. And if we can't address them, things we can be able
to prepare to answer in the future.
In terms of the scope of services for this, we
have set this up as a two-phase process. Phase one, revenue
requirements analysis. In other words, of determining what
are the revenues and the rate proportion of those revenues
that the Department of Water Supply needs to continue
operating.
This revenue requirements will look out for five
years and look at what type of costs, both debt, capital, and
operating costs, that we anticipate the Department of Water
Supply facing during the next five years; and, therefore, what
type of rates they need to support those level of revenues.
The second phase of that, once we have an idea of
the overall picture of what type of rate changes might be
possible, we will look at cost of service analysis. In other
words, who should be paying for those revenues. How the
various customer groups get affected by the rate changes.
We will be coming up with three different rate
options and a final rate proposal. We will be coming up with
a long-term financial planning model that will allow the
Department to look at these issues interactively over the
future years. We will be attending various public meetings
and presentations that will help to sell that to the community
and helping with the preparation of draft and final reports,
the documents in this process.
And with that, I'm going to turn the technical
aspect of this over to Ann Hajnosz.
MS. HAJNOSZ: Thank you and good morning everyone.
It's a pleasure to be here in Maui and beautiful weather,
compared to where we are from in Seattle.
So, as Richard mentioned, we are going to be going
through several phases in this rate study. This is really
kind of a snapshot of the different steps that we are going to
be undertaking in the rate process.
It begins with getting utility information. And
we have already gone through that step. We provided a data
request to the Department of Water Supply, and, you know, we
have been working through getting all the data that we need.
And, so, the types of information include things
like customer and usage information, O&M, you know, revenues,
and all those kinds of things that are going to help us put
together a financial model to project all these elements of
the Department's financial plan into the future.
Once we do that, as Richard mentioned, we get into
a revenue requirements analysis. And I am just going to go
through this really briefly right here just to give you a big
picture. We will go through more details later.
From the revenue requirements analysis it takes us
into the cost of service analysis, which is really going to
help us determine what are the true costs of service for the
different customer classes that we have here on Maui.
Out of that analysis, we will start doing the rate
design. And we are going to look at three different rate
options for Maui. The big part of the rate design is not only
looking at the different types of structures that could come
out of this, but, also, we need to make sure that once we do
decide on a rate proposal, if we go back and make sure that we
are going to have enough revenues under that particular rate
structure. And that's where we have a check adequacy of
rates.
Okay. Once we have done all those checks, we can
come out with a final rate proposal that will ultimately go
through the approval process.
So, let's get into the nitty gritty a little bit
about what revenue requirements is all about. It includes
things like operation and maintenance cost, and, so, just your
standard labor, materials, equipment, supplies, things like
that. We are going to be looking at, you know, what does that
really translate into in terms of operating the Water
Department over the next five, six years? What does that mean
in terms of staffing levels? What does that mean in terms of
utility costs, electricity?
You know, we are going to have to get a feel for
what we think electricity costs, pumping costs are going to do
in the next five years, things like that.
Other operating costs, such as your obligations
for taxes. You have got administrative costs that I know go
back to the County government, all these kinds of things.
It's almost a line item analysis. We look at what you have
paid in the last three years. We look at what you are going
to be paying in the next six.
Debt service is an important component of revenue
requirements. This is -- if you take the example of your
house, most people have house payments. This is kind of like
your mortgage. You have got to pay that every year based on
the level of borrowings that you have for capital improvement
funding.
So, we are going to be looking at, of course, not
only what you are paying, but what you may have to pay in the
future to fund capital.
And then there could be capital that's funded
strictly from rate revenues. Okay. And, so, we are going
to -- we know that the Department has had a policy of funding
some capital directly from rate revenues in the past, so
that's through the CIP reserve fund. And we are going to be
taking a look at that policy. How appropriate is that for the
future?
On the flip side of the revenue requirements
analysis is the revenues. So, we will be taking a look at
consumption patterns, customer growth patterns to get a better
feel for really what -- you know, what do we anticipate for
the future on Maui? We will take a look at your historical
growth and make adjustments to decide is that level of
historical growth going to be appropriate for the future?
And this is where we need input, you know, from
you guys, to make sure that those numbers that we are
projecting are accurate from the perspective of all the
different stakeholders.
We look at things like interest and other income.
I mean this -- this line item, because of the swing in
interest rates in the last five years, you have seen
tremendous differential in the amount of income that we are
getting from interest income for all utilities. So, that kind
of has been an item of interest for other systems.
We are going to look at water system development
fees, because that's important just because you recently had a
change in water system development fees. That level increased
significantly. So, we are going to have to figure out how are
we going to project revenues from water system development
fees in the future.
Now, in addition to the revenue side, we are also
going to look at capital funding. How are we going to fund
capital here on Maui? And as I mentioned before, you have got
options such as bonds and rate revenue, and we also have a
state revolving loan fund. I don't think -- you know, federal
and state grants are a pretty small percentage, if any, of any
utilities nowadays, but we always throw that in, if there's a
chance we can get funding that way.
Other sources could include developer
contributions, private contributions, things like that. That
pretty much takes us through the revenue requirements.
Once we get our revenue requirements analysis
done, we will have an idea of what the general system rate
increase level will be, if any. In other words, we will take
what our revenues are projected to be, what our revenue
requirements are projected to be, and then we will find out
what the rate increase needs to be.
We take that number, the revenue requirements
number, and now we are going to have to do a cost of service
analysis and allocate those costs of service to the specific
customer classes that receive service, that particular level.
So, we like to use this graphic, because it really
helps under -- you know, helps you understand the concepts of
cost of service. We have a typical water system here with
your groundwater supply, your wells, surface water, the
treatment plant. You have got your storage. These are sort
of the major functions involving water systems operations.
The cost of service study is going to help us
assign the -- all these costs associated with these major
functions to the customers that receive that service. So, for
example, right here we have the direct service customer. This
customer is just taking service right off of the transmission
mains. It could be an industrial customer. It could be a
hotel. It could be a, you know, a big agricultural processing
company.
The costs for this customer would include supply,
treatment, storage, and transmission. Those costs would be
allocated to that customer. On the opposite side of this
white dotted line, you see houses, residential subdivisions,
maybe other customers. They are taking service that includes
not only this whole piece here, but also the distribution
function going right up to the meter, to the houses or the
shops.
These customers would get the full allocation of
costs, sources, supplies, storage, treatment, transmission,
and distribution. And, so, this, in its most simple form, is
really what cost of service is all about.
And it's not nearly as straightforward as this
suggests. There are lots of things that are sort of gray
areas that we are going to have to make judgments on, based on
input from the Department, based on input from the
Stakeholders Committee. Okay. But this is, in essence, what
we are going to be looking at for cost of service.
In the end, the cost of service summary, one of
the summaries that could come out of this -- there are a
number of options, but this is sort of a typical cost of
service summary.
Now, I know in Maui, we don't have these customer
classes, the residential, commercial, industrial. You have
got general use and ag. And, so, we will be looking at those
existing customer classes to determine, you know, if there are
specific costs associated with general service that may
differentiate themselves from ag. So, we will be coming up
with something like that.
But in the end, this helps us -- this kind of
analysis helps us determine the relative costs of ag, to
commercial, to general usage. Okay. And from there, we can
decide, okay. How far off is the ag rate from its true cost
of service? How far off is the general use rate from its true
cost of service?
And then we take the next step. We go into rate
design. And, so, in the rate design phase, what we are going
to be doing is using the results of the cost of service to
say, okay, now what do we do with our rate structure?
One of the things we are going to be looking at,
as that previous slide suggested, is whether or not we are
going to go with different customer classes, if that makes
sense.
Okay. But let's assume that we just stay with the
regular class that we have. We are going to use cost of
service to adjust rates. Now, this includes or could include
adjustments to the monthly service charge, you know, the meter
charge that everyone pays. It also will include adjustments
to the volume charge, okay, what you do on a per thousand
gallon basis.
And we typically will look at other fees including
things like fire protection, that sort of thing. This is
where we get to, with input from you, make decisions on where
we want those rates to be, based on cost of service issues as
well as a host of other issues.
Okay. And I will be talking a little bit about
those a little later. An important part of the rate design
analysis is looking at the specific impacts of the new rates
on various customer classes. And, so, we will look at impacts
on typical residential family, on a commercial user, on ag, on
hotels and other major businesses. We want to -- we want to
understand what the new rates are going to do to these
peoples' water bills.
Okay. And finally, as I mentioned earlier, in
that overview slide, we check for revenue adequacy to make
sure that our rates, when we put them against the usage
patterns that we are projecting in the future, are going to
return the revenue that's needed to keep the Department
stable, fully funded, and also to provide for some rate
continuity in the future.
I want to jump into our rate setting philosophy
now, because this is where it gets a little bit gray, you
know, and we need to -- while we want to be able to achieve
all of these things, we know that we can't do them all
together, because they have to be balanced.
First one is promote revenue stability. We
absolutely want to make sure the Department is fully funded
and financially strong, financially stable. That's of prime
importance.
We also want to make sure that the rates reflect
the cost of service. This is where it becomes tricky, because
if, for example, the cost of service study comes out saying
one class is subsidizing the other or vice-versa, you know,
what do we do about that? Is that a policy that we are going
to continue in the future? Is it -- you know, is everyone
okay with that? Do we need to make some adjustments to that
policy? And that's what I mean by it becoming a little bit of
a gray area.
We want to make sure that rates are fair,
equitable and nondiscriminatory. Again, using the cost of
service results, we can determine how equitable they are.
But, for example, if the cost of service says a certain class
is really not paying their full share, how much of an
adjustment do we want to make?
We need to then decide how far do we want to make
that adjustment. Do we want to do it all at once? Do we want
to do it over two or three years? That's where the fairness
element comes into play. Because I think most people would
agree that we want to pay fair rates or an equitable rate, but
to have somebody's bill double, in the course of a year, may
not seem that fair. We may want to try and phase it in.
Easily understood by customers. We work with some
rates that are so complicated, that the utility staff can't
explain it to their customers, you know. So, this is where we
again need to balance elements of we can have a very
complicated rate structure, that fits cost of service to a T,
but how complicated is that rate structure going to be, not
only for the customers to understand it, and then change their
usage patterns based on that, because that's ultimately what
you want your rates to do. To give a signal to your customers
to say I need to use water efficiently.
But they must be able to understand what they are
doing, and the utility staff certainly needs to be able to
understand it. They need to be easy to administer. They need
to be -- the utility staff needs to be able to generate --
read the water meters, generate the bills, and collect the
revenues for these rates that we are designing.
So, again, we need to balance sort of the issues
of fairness and, you know, try to get to the cost of service
finish line versus how easy are these rates to administer.
We want to promote rate continuity. And what that
means is for -- you know, we can take it all the way down to
the household level. We all have our own family budget to
manage. Businesses have their own budgets to manage. We want
to make sure that people can look at their rate bill or their
line item bill on their budgets and say what are my -- what
are my expenses for water going to be into the future?
We don't want them spiking and going all over the
place. It needs to be continuous and provide some assistance
for people to manage their own budget.
Enterprise fund cost accounting, that just
essentially means that the Water Department has got to be
fully funded, so their revenues have got to cover their
expenses, and their expenses are operating expenses as well as
capital expenses. So, that's essentially what that means.
And I think I alluded to this earlier about
providing rate signals to the customer. That really is what
you want your rate to do, to be able to say to your customer,
if I use my water efficiently, my water bill is going to be
reasonable. If I don't use water efficiently, I am going to
pay a lot of money.
Okay. And finally, what we are going to be doing
is talking to the DWS about policy -- certain policy
objectives to be accomplished in this rate study. How much
debt do we want to issue? What kind of debt ratio do we feel
comfortable with? You know, how do we want to fund future
capital? How much should be funded from rates and how much
should be funded from debt? Things like that.
And, so, the Stakeholders Committee, the Board
will be hearing us come back to you with questions like that
that we will have to consider.
Okay. Because we have done a lot of work on the
other islands, we thought it might be helpful for you all to
kind of hear what our experience has been and to hear about
the different issues that have come up on the other islands,
because a lot of them are going to be similar.
There will be, obviously, some specific ones just
to Maui, but it just kind of helps put things in perspective.
I start off with this is just a synopsis of DWS's rates and
charges. You have a service charge that varies per meter
size. So, as the meter increases, you have a higher monthly
charge.
Your general use rate, again, over a two-month
billing period starts at a dollar 42 per thousand gallons for
the first 10,000 gallons. And again, you will hear us talk a
lot about monthly bills and things like that. We like to kind
of talk about things on a monthly basis.
And, so, for example, here, even though it's a
zero to 10,000 gallons, we like to think of that as really
zero to 5,000 gallons on a monthly basis. That is your first
block. And when I mean blocks, this is the first block,
second block, third block of usage.
Okay. And, so, we are going to try to keep those
straight. I know all the other islands also use bimonthly
blocks, but you will see there is quite a difference when we
get to that.
You have what is called an inverted block rate,
which means the higher usage you have, the more you are going
to pay on a per thousand gallon usage. And that's
something -- we call that a conservation-oriented rate. It
helps encourage conservation.
Agricultural rates are similar for the first two
rate blocks, but in the third rate block, you have a declining
block rate. Okay. And this is a big issue. No surprise.
For all of the counties, what do we do about ag? Do we -- do
we keep that policy? Do we need to look at that more closely
and decide whether that's an appropriate policy to maintain?
And then you have the third category of nonpotable
rates, all usage at the flat rate of 76 per thousand gallons.
Okay. Now, when we were at the Honolulu Board of
Water Supply a couple years ago, we did a big study for them,
and the result was no rate increases projected until
January 2005. The primary reason for that was they -- despite
a very big Capital Improvement Program, they were really
experiencing delays in getting that capital -- all those
capital projects pushed out, for a number of reasons,
including regulatory-related delays, just purely
administrative delays in getting all the appropriate permits
and approvals to go forward on their projects.
What we kept hearing over and over again, from all
the counties, was that there was a shortage of engineers.
They were having difficulty getting engineers on staff,
utility staffs to help them push out these projects. And as a
result, for a number of years, they have had large capital
fund balances building up, in the current -- you know, based
on their current rate schedule.
And they basically said, we can't justify a rate
increase at this time. Until we can move our capital programs
forward faster, we can't justify a rate increase.
On the Island of Hawaii, they had a big capital
program also, but it wasn't nearly as big as Board of Water
Supply. But at the same time, they were really trying to
catch up on a lot of capital projects. They needed their rate
increases. And they were successful at passing two pretty
high rate increases. As you can see, 28 percent and
15 percent rate increase. Both of these rate increases have
been implemented, so you will see that their rates are the
highest in the state.
In addition to these rate increases, they added a
fourth rate block. You recall from Maui we have got three
rate blocks. They added a fourth rate block that basically
said if you are a really high user, you know, you are really
going to pay a lot of water -- a lot of money for your water
in that last block.
On Kauai, they have a uniform rate structure where
they had one rate for all usage, dollar 78 for all your water
usage, and that had been in effect for a long time. And they
came to us, and they said, we need to get the conservation
message out to our ratepayers. And, so, we designed an
inverted block rate structure for them.
Okay. They passed two 32 percent rate increases
there a couple years ago. And this is a slightly different
story, because they actually implemented the first rate
increase, but because of delays in their capital program, this
second rate increase has been deferred. So, again, it's
another issue of raising rates, accumulating a lot of money to
pay for capital, and then not being able to get the capital
accomplished. And as a result, you have significant fund
balances building up, and they could not justify another rate
increase for the second time.
And I have to mention that when we did all these
studies, we did them on a five-year basis, which I think was
very, very helpful in helping -- in letting the Department
look out five years and say where are we going? We are not
just going to plan for one year. We are going to plan for
five years, but there is an option to say do we really need
that second rate increase?
Okay. We have got the first one. We know we need
that. It will get us through for the first year or two. But
after the second year, do we really need that rate -- the
second bump?
Okay. This is a slide that shows the Maui rates
in comparison to Honolulu Board of Water Supply. And I know
there are a lot of numbers here, so I am not going to go
through all of them. You can see them yourself. But the one
thing I did want to point out, when we talk about the rate
blocks again, zero to 10 thousand gallons, bimonthly period,
this is also bimonthly period, which essentially means your
first block is 5,000 gallons a month. And Honolulu Board of
Water Supply is 13,000 gallons, okay, for the first block.
Okay. And I know with this first block, generally
speaking, the 5,000-gallon level is -- could be considered
like a lifeline level. So, for people -- for people that
really don't use a lot of water, that's probably about the
minimum amount they would use. They don't take long showers
and wash their car. They don't have any irrigation, outdoor
irrigation. Okay.
It's maybe a single person, you know, older person
living by themselves, so that's like a minimum level. Other
utilities have opted to set their first block at more of an
average -- average water use level for, say, a family of, you
know, two or three people.
So, 13,000 gallons, in the case of Honolulu, was
about an average monthly water use level. So, as you can see,
there are -- this is the policy differential right here.
Where do you want to set your first block? Okay.
This continues with the two other islands. On the
Big Island, they have a similar first block lifeline rate.
You can call it that. Zero to 10,000 gallons right here.
Again, means 5,000 gallons for the first -- for a monthly
basis.
Kauai adopted the Honolulu Board of Water Supply
approach, where the first block is based on the average use,
which in Kauai was really about 11,000 gallons. Okay. But I
guess, as I am hearing, as you can see, the high-block users
were paying a lot of money on a per thousand gallon basis.
BOARDMEMBER HASHIMOTO: So, the other islands
don't have any ag rates?
MS. HAJNOSZ: They do. They do. These are for
general use customers. The Board of Water Supply does have
the different residential, commercial, industrial classes, but
all the other islands have your general use category.
Not surprisingly, after seeing those water rates,
the average for Maui is much less than the three-county
average on water service. And this is really a slide that we
like to use in public hearings when we are trying to explain
the reasons for the rate increase, because putting the water
bill up there relative to your wastewater and, you know, solid
waste and electric bills puts things in perspective.
And I know water managers like to get up here and
say water, you know, there is no substitute for water, and you
are not paying that much relative to what you pay for
electricity. Sometimes you put our internet bill up there,
internet service provider. You put our wireless providers
or -- you know, you are paying more for your wireless phone
service than you are for water, some people.
You asked about ag. This is what the ag rates
look like on other islands. And they all have pretty much the
same thing, where you have got the first two blocks or the
first block similar to the general use rate, then the deep
discount for any usage over a certain amount.
The Big Island, they did decide that we are just
going to have all usage go at $1.84, which was pretty much
close to the average cost of water there. So, they are really
not getting a huge, huge discount on the Big Island at all.
That was a very big issue on the Big Island, that
there were strong sentiments that ag needed to pay more of
their full share for water -- for water service. And again,
that varies according to the different islands, according to
the different stakeholder groups. I am sure that's going to
be coming up here.
Finally, we just want to make this one. This is
not really part of our study, because we know that you just
updated your water system development charge fee. But we just
did want to highlight the difference between -- this is for a
five-eighths-inch meter. So, on Maui, you are about 6,000.
Honolulu has not changed their development fee for a while,
but this is for a typical, you know, residential customer.
They use fixture units instead of meter sizes.
On the Big Island, they have a practice of giving
a deep discount to the first five-eighths-inch meter, and this
is really to kind of say to the people that have held land for
ages, decades. Okay. If you just want to build one house on
your property that you have had in the family for 20, 30
years, okay. You are going to pay this level. But anybody
else -- you know, they are talking about new development,
adding capacity to the system. Those types of customers are
going to pay something closer to the full cost of what it
takes to put in the new water service on the Big Island.
On Kauai, they are in the process of updating
their system development fee. We did a study for them and
have recommended about $4,600. So, this would go up about
$2,000 on Kauai, if that -- if it's recommended and approved.
Okay. So, that's kind of a snapshot of all the
experience that we have had on the other islands. We are
going to be bringing that to this rate study and hoping to get
a lot of input from you on how we are going to tackle those
issues. So, I am going to turn this back to Richard to wrap
things up.
MR. CUTHBERT: I know it's a lot of information,
but we really did want to give you an overview of some of the
issues that can come out in the rate study.
What are the roles going to be for the Board and
for the Stakeholder Group? As we talked to the Department
yesterday -- and part of what we would like is the feedback on
this. There was a process of working both with the Board and
the Stakeholder Committee to come up with a joint proposal to
the County Council in terms of what rate changes should be
adopted here.
So, what we are looking for, at this point today,
is to provide input, both for the Board and, to the degree
appropriate, for the Citizens Committee, to what types of
issues are important for us to consider in this rate study?
What types of changes should be considered as part
of this process going forward? As we move forward, both of
these groups will need to make decisions on various planning,
financial planning criteria, rate design policies. And those
will eventually be incorporated into this rate study.
We are looking for both groups to provide feedback
on potential impacts of the new rate changes. So, if Maui
decides to adopt a more conservation-oriented rate structure,
for example, we would like to identify for you what the
impacts of that would be, so that people are not blindsided by
that.
That was a huge issue on the Big Island when they
went to very conservation-oriented rates. Some very large
users, over on the east side -- I am sorry -- on the west side
of the Big Island had very, very large rate impacts. But the
Board went ahead there and adopted those, because they felt
the funding was important for maintaining the water quality
and the water service.
The other aspect for both the Stakeholder
Committee and the Board is to attend periodic review meetings
and to provide feedback on interim results.
So, what are some of the major issues that we
anticipate could be coming to be raised during this process?
Generally speaking, utilities are considered very
conservative. They are managed from a conservative
perspective. They like to make sure they are kept financially
very strong. We will probably propose continuing that
tradition. It means maintaining high, high debt service
coverage levels, but the level of debt that's being used to
pay for capital is one of the issues that needs to be
considered.
What level of rate increases are acceptable?
Obviously, capital usually is being funded by debt. Operation
and maintenance is being funded by rates. Capital
replacement, the payment of facilities that are wearing out
can be funded either by rates or by debt.
And, so, the level of rate increases kind of
becomes a balancing level between how much debt do we take on
versus how much the current ratepayers have.
The level of the rates of the water system
development fees is really not on the table here in terms of
what we are doing, because it was just adopted, but that has
been a major issue on other islands.
And then the agricultural rate subsidy. On all of
the islands, the charges for the agricultural water are below
cost of service levels. Whether there should be any increase
in that, any change in that, is part of what we are looking
for input on. Some very specific issues that we have heard,
as we have started this process, is the question of whether
there should be rates by customer class. This could be
residential, commercial, industrial, agriculture. Multifamily
would be another rate classification that can be considered.
Honolulu has customer class rates. The other two
islands do not. Another issue that's been raised, by some
people, is the idea of some type of either remote area or high
elevation pumping surcharge. As you might guess, it costs
quite a bit of money to serve areas that are remote or that
have a lot of pumping costs associated with them.
There have been utilities that have adopted
surcharges that basically reflect the higher cost of providing
water to those communities. Drought rates has been an issue
in a lot of the other islands. It's sort of an odd question,
because Hawaii has been in a drought situation for 10 years.
An argument could be made that we do have drought rates now.
But what we are talking about directly there is
some type of -- if there's some type of a curtailment in water
use because of severe drought, two things happen. One is
because of the drop in the water costs, the revenues go down
at the same time that the operating costs go up because of
higher pumping.
And, so, some type of an automatic mechanism that
says, in that type of situation, a surcharge would go into
effect to make up that difference is what drought rate
generally represents.
And then the question of the adequacy of the
Capital Improvement Program funding levels. There's been some
discussion about what is an appropriate level of reserve, or
whether there should be any reserves at all. That's a
question that might come up here.
So, in terms of where we go from here, the next
steps, in the rate setting process, we will be preparing a
rate model and, from that, beginning to develop revenue
requirement projections. Again, that will give us a direction
in terms of what the change in overall rates would be over the
next five-year period.
From that, as part of that, we need to develop key
financial assumptions to be used in the rate model. The way
we typically do that is we come up with a base set of
assumption, working with the County and with the Water
Department. And we run those by both the Board and the
Citizens Group to make sure that we get -- we are consistent
with the -- basically, the community's view of what those
assumption should be.
We will be incorporating Capital Improvement
Program funding assumptions. That's how much debt would be
used versus rate levels. We will get the input from the Board
and Stakeholders on various key policy issues that Ann
addressed earlier, and then meet eventually with the County
Council.
And this -- that's part of the question that does
come up is where does the County Council fit into this process
when do we get input to them? Are we at the end? And that's
something we would like to group to consider, is should we
have some informational meetings with the County Council?
Should we come up with a uniform proposal and provide it to
them at the end?
Later, after the revenue requirements and the rate
levels are done, phase two of this project will be that of
providing a cost of service analysis and rate design.
And, so, with that, we would be welcoming any
questions that came out of this or any process-related issues.
DIRECTOR TENGAN: If I recall, you know, the meter
charges on the Big Island were the first level.
CHAIRMAN HIRANAGA: Can't hear you.
DIRECTOR TENGAN: As I recall, on the Big Island,
the rate operations is that through subdividing of property,
the first meter would be at the $1,190. And the -- creating
like four or five lots, additional lots, the additional lots
would be paying the $5,500. Is that how it still works?
MS. HAJNOSZ: Yes, yes.
MR. CUTHBERT: Yeah, that's sort of a complicated
issue. I was over in Hilo on Tuesday meeting with them on a
different issue, and I clarified that. That's been quite a
controversial issue over there.
The notion was, if we have a local person, they
just want to put up one house, we really should not try to be
in the way of doing that. That was sort of the intent of
that. The way it's been implemented over the years, there's
been some real problems.
One of those is that if someone puts an ohana on
their property, that's charged the $5,500. The idea was, is
that really, the $5,500 is almost a full cost of what it costs
to provide the supply and new level, and it's not too
different from the 6,000-dollar number that's here.
But, what they did there is they had this charge
for somebody who just -- kind of the idea of a local discount.
But the implementation of that, as you might guess, has been a
little bit hit and miss. You had a question, I think.
BOARDMEMBER OKAMURA: I notice as far as
agriculture use, subsidizing the rates, you base your -- you
are going to base the study on the cost of service.
For certain uses, like agriculture, there is an
economic benefit. And, you know, that's the reason for having
an agriculture rate, because you see an economic benefit to
the community. Agriculture depends on a lot on low-cost
water.
So, are you going to address the specific issues
relating to agriculture? The rates that we could charge, and
the economic benefit that we get from -- from the industry?
MR. CUTHBERT: That's a really good question, and
as I said, we have wrestled that, particularly in Kauai and on
the Big Island.
Putting that question slightly differently, I
think that if you go back, there are some language in the
State Constitution that each of the counties will support
agriculture. What the exact impli -- what is the role of
water and the Department of Water in that help is really the
policy question that comes here.
What's unfortunate is, is that the costs
associated with providing high level potable water to
agriculture users is very expensive. Providing treatment to
it, the storage, and sometimes, in more remote areas, even the
cost of it is there.
The benefits, there's no question that I think
most all of the customers recognize the value of agriculture.
The notion of Hawaiian Islands without any agriculture
anywhere, with barren fields, is sort of a notion that most
people would like to avoid.
That is an issue that we really are looking at
input from the Board. We will provide you a quantification of
how much it's costing to provide the water to the agricultural
users. That is what the cost of service provides. We will
then show what the current rates are, and we can show you what
the differential is. The policy question is, is that an
acceptable level of support.
BOARDMEMBER OKAMURA: But let's say if somebody
were to water their lawn, for example, there is no economic
benefit in that as opposed to somebody who waters a crop.
There is some economic benefit to that. So, has it ever been
done where you can measure the economic benefits of providing
water service?
MR. CUTHBERT: We have not done that type of a
study. I think there could be value to doing it. I know that
on the Big Island, there is a considerable effort going into
trying to find ways to take agriculture customers off of the
potable water system, to really address this issue, and trying
to get the State more involved.
A very good example of this would say, okay, this
is a State issue. We should have State support. One way of
doing this would say, okay, let's get some State support to
pay for this agriculture subsidy.
Let's just say there is a million dollars of money
coming in, and the cost of service is two million. Instead of
having our ratepayers pay that, instead of having a
grandmother living in an apartment pay that, as part of her
water bill, let's try and get this out of some type of a tax
revenue.
We are not really going to go into the details of
that level in terms of what the benefits are of agriculture.
What other funding sources there are. That would be
appropriate, either through the Board or from, perhaps, the
Stakeholder Committee to say let's try and identify what those
benefits are, so we can justify it.
I think we are more at the point of just saying
what type of level of support should there be for agriculture,
and looking for you to provide guidance on that.
BOARDMEMBER HASHIMOTO: Since we are on the
subject of agriculture, the State is inputting a bill on a
water system with nonpotable water for agriculture. Are you
going to be assisting in setting those rates, because I think
the Board of Water Supply is going to be implementing or
assisting in obtaining of the nonpotable water.
MR. CUTHBERT: I will let George answer that one.
DIRECTOR TENGAN: Setting of those rates would be
done by the State Department of Agriculture. We have an
agreement whereby we would be operating and maintaining that
water system, but we would also charge back to the state the
cost of the operation and maintenance.
MR. CUTHBERT: So, I think that means we are not
going to be setting -- helping setting the rates for that.
BOARDMEMBER VICTORINO: Yeah, I think you made a
lot of good points that we now have to, with the Stakeholders
as well as the Board, start looking at how we approach this.
I think a couple of points that I would like to see brought to
the forefront, both for the Stakeholders and for ourselves,
you mentioned conservative rates.
I think conservation is very key in everything we
do, and our water is a precious resource, and we have got to
start to learn to use it in a more efficient manner. And I am
talking all aspects of our community.
The other thing is, Maui, we are at a crossroad,
because we are heading into areas where development has been,
to put it mildly, rapid, and then you have other areas where
development has been lagging, and where systems are needing
replacement big time, and other areas where accessibility or
distance -- you know, portability is another issue with
pumpage.
I think the other area that we are going to really
start, you know, to feel the impact is the changing
demographics of our community and where can we get the water
from. There's battles right now, just like on the Big Island.
The east end and west end are tremendously different.
So, we have the same thing here on Maui. The east
end, and the west end, and the central have different needs,
and the availability of water comes basically a lot from
certain sources. And, so, we have got to make sure that all
these approaches that we take now, and the rates we set for
the future, which is necessary, like you said, have to be
balanced. But more importantly, have to be futuristic in how
we look at them.
We are going -- five years out is great, but I
think we have got to think further out. And I am not saying
set rates further out, but think further out. Because our
community, in five years, will change drastically again.
And I think of all the islands growth beyond Oahu,
Maui has been -- has been really changing very quickly. I
think industrial use and those areas need to be looked at,
because we have never looked at that area.
We have always had two rates, you know, basically
agriculture and residential. Maybe we need to look at other
rate setting and all that. And the most important thing is,
and I think this is the word I want to, you know, emphasize is
balance. And I think that's very important.
Because if you use balance, in all your -- your
philosophies and making it fair for all, I think no one walks
away unhappy. Yeah, not everybody is going to get what they
want, whether it's agriculture or other areas, but I think a
fair, balanced rate for all is important.
Now, you can scale it, and usage, and drought, and
all other things can be thrown in. But I think when you come
down, the public will accept what is fair for all. But they
will not accept if someone is being enormously used to pay the
bill of someone else. And also, the last thing I like to say,
is I think having the Council a part of every step we take,
informational meetings, is going to be very important.
Because like I say, they make the final decision.
We can recommend to the consumers, but if they don't know
what's going on, or they don't feel that that is what they
think is right, they are going to just change it all, and we
have worked hard -- not hard for nothing, but maybe not get
the results that we so well deserve.
So, I think those are the comments I wanted to
make, and I thank the stakeholders for being here. I think
that is a great opportunity to meet them, and understanding
how they work, and hopefully we will work very closely with
them and yourself in getting these rates and something out to
the public in the near future, but it's a process that we all
have to work harder.
MR. CUTHBERT: Thank you. Those are good
comments.
MS. LEE: I have a question. Why is the
Department considering a rate increase? Why are we
considering a rate increase? Is there a deficit?
MR. CUTHBERT: At this point, I can answer that.
That we are really not considering a rate increase.
MS. LEE: We are just exploring?
MR. CUTHBERT: We are exploring what the
relationship over the next five years will be in terms of
really the balance between expenses and revenues. I don't
know the answer where it will end up. Yes.
BOARDMEMBER PARSONS: I wanted to know whether we
are taking into consideration the 1993 study of these CIP for
the fire protection, fire flow into this -- into this study
that we are doing?
I think we have $65 million worth of deficiency
within the three-mile radius of our fire departments for fire
flow. Is that correct? Something in that nature? Have you
seen that study?
MR. CUTHBERT: I have not seen that yet.
BOARDMEMBER PARSONS: Because I wanted to answer
one of Brenda's questions, because we don't have sufficient
fire flow in most of our neighborhoods, in a lot of our
neighborhoods.
And right now, anytime somebody wants to do
development or just put a cottage on their property, they may
have to come up with thousands of dollars, if not close to a
million, in some cases, for improvements to the fire flow,
just in order to have fire protection. So, that may be some
of the -- I would hope that that's some of what we are looking
at.
DIRECTOR TENGAN: Yeah, I think the study refers
to -- if I recall correctly, if we were to change out the
lines at the time, that cost would amounted to something like
$65 million back in '92 dollars.
In responding more specifically to your question,
we anticipate that our CIP monies will be pretty much used up
by the end of next -- the next fiscal year, the next budget
year. So, we need to look at our revenues. We have to
certainly make sure that we have sufficient funds to operate
and maintain the water systems.
As it is today, we can only transfer about
$2 million from our general revenues into the CIP fund. With
inflation and additional costs, I anticipate that if we don't
have any rate increases in the near future, that $2 million
will be gone, and we will be operating in a deficit mode.
MR. CUTHBERT: Okay.
BOARDMEMBER PYLE: I know that earlier, George
said something about wishing to have members of the Board
perhaps be with the Stakeholders. So, I'm just wondering if
that's appropriate from your perspective, or if you would like
to keep the Stakeholders and the Board separate. Perhaps
that's the first part of my question. And the second part --
MR. CUTHBERT: Well, I think that our goal here,
going back to your comment of balance, is that we are trying
to come up with a rate proposal for this community.
Now, ideally, that will be a proposal that comes
from the Board, given the input from the Citizens Committee,
to the Council. Now, and one of the things we put on that is
we hope that at the end of this process, that the Citizens
Committee is providing a letter of support, possibly some
suggestions to the County Council from their review of this.
I think that it would be more than appropriate, as
part of that process, for some -- because there's probably
going to be a number of those meetings, more than the
once-a-month process that this Board has.
If at least one or two of the members of the Board
here were involved with that, it would be sort of an ad hoc
group that could kind of make sure that they can provide that
bridge of some of the long-term decision making that this
Board has made in terms of priorities and make sure that that
gets fixed into the overall process. So, I think it would be
a good idea.
BOARDMEMBER PYLE: So then my second comment is
hopefully that Board, at its meeting today, will consider who
those members might be, so that we can move forward very
quickly. Thank you.
MR. CUTHBERT: That's a good idea.
MR. STURTZ: I notice there's been discussion
today --
BOARDMEMBER PYLE: Sit down.
MR. STURTZ: Ron Sturtz from the Stakeholders
Committee. I notice there's been discussion today of the
Board and the legislative branch of the government or County
Council. There's been no discussion of our executive branch,
the Mayor's Office, which is very actively involved in
negotiations for existing water supply.
And I just want to encourage this process to
include all branches of the government, including the
executive branch. Perhaps there is a bridge so the
information can flow from the executive branch, to the
Council, to the Board, to the Water Department.
There seems to be a lack of communication going on
right now, and I would like to encourage you to include the
executive branch in your analysis.
DIRECTOR TENGAN: We have a representative here
from the Mayor's Office, David Ching. He's an executive
assistant in the Mayor's Office. And I and the Department
itself works very closely with the Mayor on water issues, and
we try to resolve them together. So, we have constant
communication with the Mayor's Office through the Department.
MR. STURTZ: Thank you.
MR. CUTHBERT: Any additional questions at all?
Appreciate your time, and we will look forward to working with
you on this project. Thank you.
CHAIRMAN HIRANAGA: Thank you.
DIRECTOR TENGAN: For those members of the
Stakeholders Committee, I had hoped to put a schedule together
soon, and I will be contacting you and sending you an e-mail
or some form of written communication as to the schedule for
future meetings.
I need to work with the consultants, who kind of
determine when information will be coming back to us that we
can share with the Stakeholders Committee. So, I will be
working on that and be contacting you shortly.
CHAIRMAN HIRANAGA: I'd like to -- you know,
because of the recent Charter Amendment, I'd like to request
the Corporation Counsel provide us a formal written opinion as
to the roles of the Board of Water Supply to Council and the
Mayor's Office as it relates to this rate increase review.
Specifically, you know, if the Board recommends
certain rate increases, does the Council have the ability to
either accept or deny or modify? That needs to be clarified.
BOARDMEMBER PARSONS: They always have.
CHAIRMAN HIRANAGA: Because of the recent Charter
changes.
BOARDMEMBER PARSONS: But they stated that
already.
CHAIRMAN HIRANAGA: Thank you for your comment.
Are you suggesting I not make this request?
BOARDMEMBER PARSONS: Yeah, because I think it's
already been stated. You are putting extra work on them. I
mean, it's been stated. They came in here, and they told us
exactly what -- we went through the rules and regs of what
they expected from us, and they have always had -- it has
never changed. They have always had the ability to -- to
overrule --
BOARDMEMBER PYLE: Rates.
BOARDMEMBER PARSONS: -- rates, and that has not
changed.
CHAIRMAN HIRANAGA: Okay. Thank you for your
opinion. I appreciate it.
BOARDMEMBER PARSONS: Read the minutes. Read the
minutes.
CHAIRMAN HIRANAGA: The other thing is, I would
like to suggest, in my opinion -- we can put this up for
discussion -- is I would like to recommend one of the Board
Members, whose term is expiring, to be placed upon the ad hoc
or the Stakeholders Committee.
Because they have been on the Board for almost
five years and have the historical knowledge as to why the
Board has been working in whatever direction it has been. So,
that would be my recommendation as far as who to suggest to be
on this Stakeholders.
BOARDMEMBER PYLE: Can there be two? Let's have
two.
CHAIRMAN HIRANAGA: Well, let's discuss it.
BOARDMEMBER PYLE: That was my comment. My
discussion. Can we have two?
CHAIRMAN HIRANAGA: I don't know. Can we?
BOARDMEMBER PYLE: Why not?
CHAIRMAN HIRANAGA: How many stakeholders total,
members?
DIRECTOR TENGAN: I think we have about a dozen,
but it wouldn't be a problem to have two Board Members on it.
If you have more than two on the committee, then the meetings
would have to be noticed and all that according to the Sunset
law. So, if you keep it at two, my understanding is that, you
know, it wouldn't be a problem with regard to Sunset law.
BOARDMEMBER PYLE: Are you suggesting anyone in
particular?
CHAIRMAN HIRANAGA: No.
BOARDMEMBER PYLE: Okay.
CHAIRMAN HIRANAGA: Do you have a suggestion or do
you wish to volunteer?
BOARDMEMBER PYLE: No, I don't wish to volunteer,
because I will be gone from the island considerably in the
next four months, and I know that I would not be available.
CHAIRMAN HIRANAGA: Let's open it up to who wishes
to volunteer first.
BOARDMEMBER PYLE: Okay. Let's have volunteers
first.
BOARDMEMBER VICTORINO: I will volunteer. I have
no problem.
CHAIRMAN HIRANAGA: Mike.
BOARDMEMBER OKAMURA: I would like to see the
schedule first if possible, meeting schedule. Do you have --
DIRECTOR TENGAN: Right now, I am thinking about
maybe about a week before the Board meetings, so that any --
BOARDMEMBER OKAMURA: Thursday.
DIRECTOR TENGAN: -- any discussions that takes
place in the committee can be passed on to the Board at its
next meeting.
CHAIRMAN HIRANAGA: Monthly meetings?
DIRECTOR TENGAN: What's that?
CHAIRMAN HIRANAGA: You are looking at a monthly
meeting?
DIRECTOR TENGAN: Right, right.
BOARDMEMBER OKAMURA: But the times are flexible.
DIRECTOR TENGAN: It could be flexible, but I am
getting a request that if we have a set date, then it would be
easier to commit to the project.
CHAIRMAN HIRANAGA: Nonbusiness hours?
DIRECTOR TENGAN: I am looking at doing it at the
same time the Board would be -- the same kind of hours.
CHAIRMAN HIRANAGA: The committee is able to meet
during business hours, as far as personal -- these individuals
have made a commitment that they can come to these meetings
during the day?
DIRECTOR TENGAN: Most of them have, but there
have been a couple that asked for a schedule, so that they can
appointment an appropriate person to attend, because it would
be counterproductive to have, let's say, from one
organization, if somebody cannot come or can come to one
meeting, the subsequent meeting cannot come, so they would be
sending somebody else. That would be somewhat
counterproductive. So, we would like to come up with a
schedule whereby these people can commit to attending the
meetings.
CHAIRMAN HIRANAGA: Are you going to put a time
limit on these meetings?
DIRECTOR TENGAN: I am looking at two to three
hours.
CHAIRMAN HIRANAGA: Just so it doesn't --
sometimes it becomes counterproductive to meet too long. Good
to say we are going to meet between this time and that time.
DIRECTOR TENGAN: Right. Please understand that
the Department, from my point of view, would be acting more as
a facilitator for the meetings rather than, you know, running
the meeting.
CHAIRMAN HIRANAGA: Okay. So, we have one
volunteer.
BOARDMEMBER PARSONS: I was going to say one of
the things I think that's crucial to be looking at right now
is our agriculture properties and how they are changing. And
someone with ag knowledge would be quite helpful.
I know Mr. Watanabe is on there, but I think, from
the Board's perspective, maybe if everybody is in agreement,
ag is a very important issue.
CHAIRMAN HIRANAGA: Clark.
BOARDMEMBER HASHIMOTO: My term is up.
BOARDMEMBER VICTORINO: We are looking for one guy
whose term is coming over, so we would have two guys, one who
is still on the Board and one whose term is ending with the
agricultural background and like that.
BOARDMEMBER HASHIMOTO: I can do.
CHAIRMAN HIRANAGA: It's up to you to commit your
time.
BOARDMEMBER HASHIMOTO: How long is this going to
drag on?
BOARDMEMBER VICTORINO: All next year, I think.
BOARDMEMBER HASHIMOTO: Sure, I will do it.
DIRECTOR TENGAN: I think we need to get something
to the Council by the end of October, so that would be the
working period for the committee members.
BOARDMEMBER HASHIMOTO: I will volunteer.
CHAIRMAN HIRANAGA: So, Mike and Clark have
volunteered to become a part of the committee.
Okay. Thank you very much. If there's no further
discussion, we will move on to the next agenda item, which is
the status of Board recommendations to Departments -- to the
Department.
DIRECTOR TENGAN: Mr. Chairman, we do have a
report prepared for you. It starts out with page 29 is a
letter to you.
What we have done is we had -- Cathy went through
the -- all the minutes of the Board meetings. And when the
Board wanted -- whenever the Board wanted to provide some
instructions to the Department, she had that listed. And we
had the staff members went through all those and responded to
those items.
So, there is about, what? A little over two pages
of those. And if you have any questions, we will respond to
them.
CHAIRMAN HIRANAGA: I have a question. The
meeting dated June 26th, '03, regarding David and Leonora
Masters, I can't quite recall what the issue regarded, but the
Board moved to recommend to follow the Mayor's and Director's
decision to denied his requests. And status or conclusion,
the temporary meter was installed as directed by the Mayor's
Office. Could you expand on that, please?
DIRECTOR TENGAN: Yes, a permanent meter wasn't
installed at the premises. But upon further follow-up with
the Mayor's Office, Mr. Masters was able to convince the
Mayor's Office that we should at least put a temporary meter
in place, and that's what we have there now, a temporary
meter, which can be pulled out, you know, if it doesn't work
to have the water services in that area.
CHAIRMAN HIRANAGA: Could you just provide a brief
summary of what that request was all about?
DIRECTOR TENGAN: Well, as I recall, Mr. Masters,
his property is off of the Maui Country Estates Subdivision.
However, he was provided water service through the Maui Ranch
Estates water system. He was a customer of the Maui Ranch
Estates water system.
And through the Maui Ranch Estates water system,
he was given two or three meters. When we administered the
project, we were telling all those customers that they would
be entitled to only one water service. However, Mr. Masters,
in appealing -- appealing that through the Mayor's Office, was
able to convince the Mayor's Office that we should at least
provide a temporary meter in place of a second meter --
permitted meter to the property.
CHAIRMAN HIRANAGA: Did he have multiple dwelling
on his ag property?
DIRECTOR TENGAN: I believe there were two or
three dwellings on it, and that's why he needed another meter,
so that property could be adequately served.
CHAIRMAN HIRANAGA: Thank you. I'd like to make
this a regular request for the Board. Whenever we make
recommendations, that once a conclusion is determined, that we
find out what the Director's final decision was or is. Thank
you.
Next agenda item is the proposed fiscal year 2005
capital improvements project budget. I guess, for the new
members -- I guess, George, for the new members, maybe you
could provide an overview of the budgeting process.
DIRECTOR TENGAN: The budgeting process, for the
Department and the Board, has changed somewhat. In the past,
the Board was the final authority in approving the budget.
However, due to the C