BOARD OF WATER SUPPLY COUNTY OF MAUI COMMITTEE OF THE WHOLE Taken at the HGEA Conference Room, David K. Trask, Jr. Office Building, Wailuku, Maui, Hawai`i, commencing at 9:00 a.m., on Thursday, August 12, 1999, pursuant to Notice. Taken by: Susan Carol Soderberg CSR 214 APPEARANCES: Members Present: Robert Takitani, Chairman Elmer Carvalho Clark Hashimoto Adolph Helm Howard Nakamura Michael Nobriga Peter Rice Jonathan Starr Orlando Tagorda Staff Present: David Craddick, Director George Tengan, Deputy Director Fran Nago, Secretary Gary Zakian, Corp Counsel Jacky Carroll, Admin Assistant Miles Fujinaka, Engineering Herb Chang, Engineering Others Present: Peter Stolle Steve Parker Warren Watanabe Harry Eagar Dick Mayer Haunani Lemn Ted Isaacson Tom Welch Don Fujimoto John Blumer-Buehl Chuck Gray TRANSCRIPT OF PROCEEDINGS August 12, 1999, 9:00 a.m. Committee of the Whole CHAIRMAN TAKITANI: I will call the Board of Water Supply, County of Maui, Committee of the Whole meeting to order. It's Thursday, August 12, 1999 at 12 9:30 a.m. We are meeting in the HGEA Conference Room, at the David K. Trask, Jr. Office Building, Room 207. In attendance we have board members Clark Hashimoto, Jonathan Starr, Mike Nobriga, Peter Rice, Howard Nakamura, Elmer Carvalho, Adolph Helm and myself, Bob Takitani. We have board members -- excuse me -- staff members Director David Craddick; Corporation Counsel Gary Zakian; Fiscal Officer Mike Quinn; Administrative Assistant Jacky Carroll; Deputy Director George Tengan; Engineering, Miles Fujinaka. In the audience we have got Harry Eagar, Warren Watanabe, Peter Stolle, and -- MS. NAGO: Steve Parker. CHAIRMAN TAKITANI: Steve Parker. Sorry, Steve. We have approval of minutes of May 13, 1999, and July 10, 1999, Committee of the Whole, and executive sessions from June 10. Any corrections to the minutes? MR. CARVALHO: Mr. Chairman. CHAIRMAN TAKITANI: Yes, sir. MR. CARVALHO: It's very difficult to speak because I wasn't a member of the Board at that time. But we received the minutes just a relatively short time ago. And I have no problem with respect to accepting the minutes. But rather than approving them, I think that the members of this Board -- I think we should give the members of this Board the opportunity to review and read them before the next Board meeting, take a look and get back. It would be very difficult for me to move that they be accepted and approved, these minutes, at this time. If there's no objection, I so move that we accept the minutes, and the Board members are entitled to review them for whatever changes or suggestions they may have at a subsequent meeting, say 30 days from now. MR. STARR: Second the motion. CHAIRMAN TAKITANI: Moved by Elmer Carvalho and seconded by Jonathan Starr that the minutes be approved. MR. CARVALHO: Accepted. MR. STARR: Accepted. CHAIRMAN TAKITANI: Accepted, pursuant to subsequent review no later than 30 days. Any discussion? MR. CARVALHO: Question. CHAIRMAN TAKITANI: All those in favor signify by saying "aye." VOICES: Aye. CHAIRMAN TAKITANI: Any opposed? (No response.) CHAIRMAN TAKITANI: The minutes are accepted. MR. CARVALHO: Great. CHAIRMAN TAKITANI: We will move to Roman Numeral IV, testimony from the public. Do we have any public testimony for any items not on the agenda? MS. NAGO: We have testimony from Mr. Stolle and from Mr. Warren Watanabe. CHAIRMAN TAKITANI: O.K. MR. STOLLE: I would like to give a short testimony on the agenda for today, No. VI under New Business, discussion and possible action on the -- regarding amendments to Section 3-1. The first proposed amendment was heard before the County Council here on July 16, 1999. That's Report 99-134, Committee Report. I have that with me if somebody wants to see it. May I quote from this report? "The Public Works & Water Committee recommends disapproval of the proposed rules so that the Board, with a full complement of members, could review it and make revisions. In so doing, the Committee would expect that the Board would establish provision that would verify its authority to issue meters, to hear appeals from applicants who have been denied services or the other -- (unintelligible) -- review." The Committee asks that the Board not only has the authority to establish policy and it also has the authority to make discretionary decisions. The proposed rules should direct that the Board clearly establish a system by which water meters are issued rather than leaving the establishment of the system to the Director (unintelligible). Our concern is that a new rule, revised amendment to Rules Section 3-1, Rules and Regulations, No. 3, is specific enough in its wording and carries provisions of control so that the situations like ours can be prevented in the future. We ask the Board to consider the following policies when amending the present regulations. No. 1, to clearly clarify the Board's authority to set guidelines, establish rules, review appeals and have the authority to make discretionary decisions. No. 2, set rules to enforce the use of the existing seniority list and to prevent random bypassing by issuing other new services. In other words, make the list a real tool to allow the fair issuance of meters and to reestablish the public's confidence in the system. No. 3, to allow an applicant to remain in his place on the seniority list for the closest lateral if he is not being offered a meter in the lateral requested. If there is any problems on the hearing, if somebody would like to have some more information, I brought the videotape of the hearing right here if anybody would like to review it. Thank you. CHAIRMAN TAKITANI: Any questions for Mr. Stolle? (No response.) CHAIRMAN TAKITANI: If not, thank you, Mr. Stolle. Warren. MR. HASHIMOTO: Mr. Chairman, do we have copies of Mr. Stolle's testimony? MS. NAGO: I will transcribe it and get it toyou in the handout of the written testimony. MR. HASHIMOTO: O.K. I thought he was reading it, but -- MS. NAGO: He is, but I don't think you -- you didn't make copies? MR. STOLLE: I can provide that if necessary. I don't have it with me today, so -- it's kind of scribbled, but I will do that for the next meeting. CHAIRMAN TAKITANI: Elmer. MR. CARVALHO: Point of information. As I recall, your presentation is with respect to Item No. 6 on the agenda. Do you wish to -- MR. STOLLE: Item No. 6, New Business. MR. CARVALHO: New business; is that correct? MR. STOLLE: That's correct. MR. CARVALHO: O.K. Thank you. CHAIRMAN TAKITANI: Good morning, Mr. Watanabe. MR. WATANABE: Good morning. My name is Warren Watanabe, and I am President of the Maui County Farm Bureau. And I would like to give some testimony regarding Director's Report 99-33, request approval of the Kulamalu request for the option to increase well production. Maui County Farm Bureau requests that the Committee of the Whole defer action on Director's Report 99-33 until consideration is given to addressing the existing water shortage situation. We question the intent of the increased well production in view of the current water situation. Existing water users, specifically those in agriculture, are in dire economic straits. The addition of new users on a deficient system seems unwise even with the addition of this new source. What is the priority of meeting the needs of existing users? While there is recognition that private funds are being utilized to develop this source and hence the developer should have a right to its use, the water and usage will be commingled within the existing system. Is there a guarantee that the existing situation will not be aggravated due to the increased usage? Expansion of a strained system, regardless of the source of water, seems to send the wrong message to the public about the situation of the Upcountry water situation. If supply were not an issue for existing users, we would not question this request. However, a critical situation does exist and decisions should be made accordingly. We urge a reconsideration and a rethinking the strategic plan for improving water availability on the Upcountry system. CHAIRMAN TAKITANI: Thank you, Warren. Any questions from the Board? (No response.) MR. CARVALHO: Mr. Chairman, point of order. Clarification. At the present time we are receiving testimony; is that correct? CHAIRMAN TAKITANI: Yes, sir. MR. CARVALHO: And does that preclude us from taking action on the recommendation contained in that communication? CHAIRMAN TAKITANI: Well, we have just been looking at the agenda and wanted to move to that now since we have most of the people, all the parties involved. MR. CARVALHO: So would a motion, Mr. Chairman, be in order on that subject matter at this time? CHAIRMAN TAKITANI: I would think it would not be -- it would be withheld until we come to that item. MR. CARVALHO: So just as long as there is assurance that we will take the appropriate action on that item today. CHAIRMAN TAKITANI: We will. MR. CARVALHO: O.K. CHAIRMAN TAKITANI: So we will take a five-minute break for our court reporter who has just arrived. (A short recess was taken.) CHAIRMAN TAKITANI: We will reconvene the Board of Water Supply regular meeting of the -- Committee of 11 the Whole meeting. Now, we will go to Item B, New Business. We will move down to Item 3 under New Business, Director's Report 99-31, request approval to extend the deadline for the completion of a new well in Ha'iku and a storage tank in Makawao/Kula. MR. STARR: Mr. Chairman, there wasn't anyone else that wished to testify? MS. NAGO: Mr. Mayer had wanted to testify on this subject matter. CHAIRMAN TAKITANI: He wanted to testify, so he may as well move it up and he can testify now on this subject. Mr. Mayer, you can feel free to testify. MR. MAYER: I am Dick Mayer from the Board of Kula Community Association, and I was past chair of the Upcountry Planning Committee. I mention that only because my testimony will be referring to those two things. Just this past Monday our community association had a discussion on water concerns. And a number of small landowners have come to us and said, you know, why are we being bypassed? Why are larger developers getting water before we do? Then we noticed this agenda, and we did not know -- we did not take any action. But I did talk to both the president and the vice president on this. And our concern is that action may be taken today that may preclude us from having the type of discussion that we would like to have. They thought and I thought that what we would like to ask you to do is ask that you table this request. And I am talking about, particularly about Mr. Dowling's request for the expansion of -- where is it? -- the new well of the waters in East Maui that would be utilized at his discretion, and allow for a public meeting or a public hearing Upcountry so that the general community up there will be made more knowledgable about what is happening and also perhaps be able to give you some input as to their feelings on this matter. And I mention also now the Upcountry plan which was passed after, I think, the agreement was written with Mr. Dowling, what now, if your actions are taken today, they should be in conformance with the plan, and that is that the plan itself designated waters for the Upcountry area, the two priority areas -- one was for farmers and second for Hawaiian Home Lands. The possibility under this agreement would be that Mr. Dowling would have the choice of placing that water at his discretion for any of his own development or some other development in the area. And there are a number of developers who would get hold of that individual water ahead of individual residents and farmers and ahead of the Hawaiian Home Lands. So I ask that you hold back on making a decision today, table it, have a meeting Upcountry so that -- in the evening so that the farmers, Hawaiian Home Lands and residents can get to that meeting. Thank you. CHAIRMAN TAKITANI: Jonathan? MR. STARR: I have a question, which is whether Mr. Mayer could suggest a possible venue for that meeting. MR. MAYER: The center of the Upcountry area is obviously Pukalani, Pukalani, Makawao, Kula. So it could be at Kekaulike High School, it could be at the Upcountry Tavares Community Center or in one of the elementary schools. The farmers in Kula, I know, are particularly concerned about this use of the water, so it may be Kula School would be appropriate. Any one of those locations as you see fit would probably be appropriate. But I think, most importantly, notification to those groups in particular, to Hawaiian Home Lands, to the Farm Bureau and other farm groups in particular, as well as any of the general residents for any announcement that you would make. CHAIRMAN TAKITANI: Mr. Mayer, could you specifically tell us which items you are asking for deferral on? MR. MAYER: I am sorry. CHAIRMAN TAKITANI: All of them? Or is it specifically 31 or 32? Which one is it? MR. MAYER: Particularly 33, 99-33. That's Item No. 5. CHAIRMAN TAKITANI: So that is the one that you are asking for? MR. MAYER: Yes, because we are handing over discretion on the part of the Water Board to an individual as to what would happen to these waters. And the result may be that they would be not in conformance with the Upcountry Plan, which you are bound to follow. MR. NAKAMURA: Mr. Chairman. CHAIRMAN TAKITANI: Howard. MR. NAKAMURA: One quick question, Dick. In your testimony you indicated that the plan gives priority to agricultural users and Hawaiian Homes. MR. MAYER: Correct. MR. NAKAMURA: However, at the same time you indicate a concern for existing services in the area, residential services. So in your mind, where do the existing residential services fit -- MR. MAYER: I think the -- MR. NAKAMURA: -- in the priority? THE REPORTER: Wait until he is finished, please. MR. MAYER: If the plan is governing, it would go to the farmers and to Hawaiian Home Lands as top priority. At the next level the concern was expressed by a number of residents of the Upcountry area that they were on a list for a very long period of time and have been waiting. And this action that you might take if you approve this would step over all those people who have been waiting in line for water. So that would be probably the third priority on the list. MR. NAKAMURA: Thank you. MR. CARVALHO: Mr. Chairman. CHAIRMAN TAKITANI: Elmer. MR. CARVALHO: Mr. Mayer, is it your understanding and mine -- it's mine -- that the Water,Board is mandated to implement the General Plan and mandated to implement the community development plans? MR. MAYER: Exactly. MR. CARVALHO: Thank you. CHAIRMAN TAKITANI: Any other questions for Mr. Mayer? (No response.) CHAIRMAN TAKITANI: Mr. Mayer, is it also your intent to testify on Section 3-1 which talks about first-come, first served and the priority and issuance of meters? MR. MAYER: I didn't know what 3-1 -- I haven't read it, so I am not prepared to testify on it. I think it -- CHAIRMAN TAKITANI: That would seem to be more pertinent as far as your constituency and their place on the list. MR. MAYER: Well, I think the answer is the same as what Mr. Carvalho just intimated, that you have to follow the community plan and what its guidelines are for any region, not just the Kula area, but for any area, what is the priority of the use of water. CHAIRMAN TAKITANI: Thank you. MR. MAYER: Thank you very much. CHAIRMAN TAKITANI: So on Director's Report 99-31, is there testimony that Kulamalu would like to offer? MR. FUJIMOTO: Mr. Chairman, members of the Board, Don Fujimoto for Kulamalu. And this is Tom Welch, our attorney. And also we have our engineering consultant, Ivan. MR. WELCH: Mr. Chairman, Tom Welch representing the applicant. We are essentially requesting an extension of time under the March 21, 1996, agreement for the 36-month deadline for completion of the -- and dedication of the well that Kulamalu has developed and also for the completion of the storage-tank facilities that the agreement calls for to be developed jointly between Kulamalu and the Board. This is the second request for extension. The first one extended it from March 21, 1999, to December 31, 1999. And we are coming in a little early for the extension request just to make sure that we are going to meet and not run into a problem at the end of the year. The reason for the request is merely to accommodate the delays in processing and engineering governmental approvals and development contingencies that have come up during the rather lengthy course of development of this well. We have posted a bond in the amount of $1.8 million to the Board as security for the completion. And the agreement itself does say that the -- does contemplate that the 36-month deadline in the agreement may be extended by agreement between the Board and Kulamalu. MR. FUJIMOTO: Mr. Chairman, if I may add, one of the requirements in the construction of the water tank was that we were to go out to bid. And that process has been completed, and bids were just opened on Tuesday day of this week. We anticipate about an eight-month construction period to complete the tank. And that would extend beyond our December 31, 1999, deadline. MR. WELCH: I would like to just amplify on that with one additional point, Mr. Chairman. As part of the construction contingencies that I alluded to generally, there has been sort of a history of give and take on this project to meet changing needs and so forth that have come up. And one example is that when we submitted our request to tie into the system, the Upcountry system, as required by the agreement, as contemplated by the agreement, it was determined that there was a substantial amount of water source and availability that was perhaps beyond that amount that was contemplated originally. So in order to accommodate that, it was determined that if the Department or the Board needed additional facilities such as an additional tank up above to improve the system in general, that -- so we have, as part of our work, obtained at no cost to the County and no cost to the Board an initial tank site for the County easement for transmission lines and so forth. So that is just an example of the way the Department and Kulamalu have been working together to sort of work out the problems. And it's taken more time than the original 36-month period that was contemplated. And I can say from experience that that often happens in these kinds of development situations. CHAIRMAN TAKITANI: Jonathan. MR. STARR: I have some questions relating to this scheduling process. And I understand -- I just want to clarify what the present situation is. And to my understanding there is an agreement between Kulamalu and the Department allowing the Board to utilize this well on a -- up until it's turned over and that a smaller capacity temporary pump has been installed at the developer's expense. Is there any written agreement to this effect? CHAIRMAN TAKITANI: David. MR. CRADDICK: I don't believe there is anything with Kulamalu. It's with the Bishop Estate. Bishop Estate, I believe, paid for putting their pump in. MR. STARR: Bishop Estate? MR. CRADDICK: Their school is ready to open here in a couple of weeks. And, for whatever reason, they didn't get their meter put in before the drought restrictions. And I asked if they could do this; they said they would do it. And we said we would haul water up there in exchange for that, so -- until such time as they could get a meter. MR. FUJIMOTO: Let me add to that. But, as Director Starr has indicated, there is a temporary pump in. And I guess it's at the discretion of the Water Department to utilize the pump. MR. STARR: What we are discussing, I would like to ask what the status of that is. I believe there's no electricity there, and I don't know what improvements are necessary. So I guess from the Director, what -- MR. CRADDICK: It's just putting in a generator there and running it. That's all. MR. STARR: I know several weeks ago we were told that it would be a matter of days before that would be adding to the system. What needs to happen? And when will it happen for that to add to the system? And how is it going to add to the system? Is there a pipeline? MR. CRADDICK: We wouldn't add anything to the system unless A&B said they wanted the water because any water that we take out of it would go into the ditch and then it would have to be treated again. So we are not going to run that unless A&B -- unless we got down to where we were sub -- in the teens, you know, sub-20-million-gallon range and we had to make a decision to shut down the mill or make further cutbacks on our customers. That would be the time it would run. MR. STARR: So I was wrong in believing that this was going to help alleviate the problems we are having during this drought period? MR. CRADDICK: It certainly does help alleviate the drought problem. If we get down into the sub -- into the teens and we have to make a decision between shutting down the mill or making further cutbacks to our customers, if we can run that and get additional water, that's a -- I mean, a half million gallons a day is a lot of water. MR. STARR: Why don't we run it now and get additional water now when it's just really needed? MR. CRADDICK: We are meeting the demand right now. MR. CARVALHO: Mr. Chair. CHAIRMAN TAKITANI: Elmer. MR. CARVALHO: I am confused. Is there supposed to be a pump that has been installed to utilize the water that's been drilled for by Mr. Dowling? MR. CRADDICK: Right now the current agreement says that has to be done by Christmastime. MR. CARVALHO: Is there an agreement at the present time, a written agreement between the Department and Mr. Dowling's operation if there is a temporary, yeah, pumping facility going on, primarily to meet the needs of Kam School's opening paid for by Kam Schools as you indicated earlier? MR. CRADDICK: I don't believe there's any agreement between the Water Department and them. MR. CARVALHO: Is there an agreement, then, between the Water Department and Kam School? MR. CRADDICK: Yes. MR. CARVALHO: When was this, if I may, Mr. Chairman? When was this agreement entered into? MR. CRADDICK: I would estimate sometime last month or -- last month, I think. MR. CARVALHO: That is between the Department in terms of its operations? Or is it a decision that has implications with respect to public policy and with respect to utilization of water which is a public source and a public asset? If such is the case, Mr. Director and Mr. Chairman, if it is a policy question, it is a matter which the Board should have had access to and acted on and approved or disapproved, whatever the case may be. Procedurally, this bothers me a little bit, just procedurally. CHAIRMAN TAKITANI: David, you wanted to respond to that? MR. CRADDICK: Well, I don't know if it is or not. Getting water into the system is something we have to do as part of the drought emergency. MR. CARVALHO: Mr. Chairman, with all due respect to all parties concerned -- and I have great respect for your technical abilities. Make no mistake about that. I acknowledge this publicly. I don't think there is any other person more qualified than you are with respect to the technical elements. But what does bother me is that it seems to be some movement towards the end will justify any means. And that is not quite appropriate. By law we have certain responsibilities that we are supposed to carry out. We have a Chair and a Board. We have access to special meetings, whatever the case may be. And these matters do come within the purview, I believe, of the Board's policy-making authority, separate and distinct from the administration in the Department. I would like to suggest as strongly as I know how that we do extend the hand of cooperation across and that we move in this direction so we carry out our responsibilities collectively so these kinds of situations may never occur. MR. CRADDICK: I am just still unclear what you are talking about. MR. CARVALHO: You have an agreement with Bishop Estate which borders, in my estimation, on a policy decision dealing with a public asset, water. If such is the case, this is a policy decision rather than an administrative one, very directly put. MR. CRADDICK: O.K., but -- MR. CARVALHO: I think possibly we are verging on the borderline of what is proper and what is improper, what is legal, what is illegal. I don't want to talk about the substance, because that's not what I am agreeing or disagreeing on. It's the procedure, to see that we are correct in all things, if possible. MR. CRADDICK: And that is what I am focusing on, too, is the procedure. We have a well that is not ours at this time. We had somebody willing to put a pump in it at no cost to us. MR. CARVALHO: Legally, my friend. Legally. What prevents you from understanding this concept? It is a very simple one. We follow the rules and the laws and the regulations. MR. CRADDICK: That's right. MR. CARVALHO: There could be a thousand wells out there. Doesn't mean that automatically we can move in, do it any one or two or three or ten. We can do it at all times procedurally and legally correct. Is it too difficult to understand that concept? It's a very simple one. And that's all I am talking about, that it is procedurally correct and in hand. MR. CRADDICK: I guess what I am trying to get at is: What was procedurally incorrect? MR. CARVALHO: If it's a policy, it's the Board. MR. CRADDICK: What is the policy decision for somebody putting a free pump in a well to give us water? MR. CARVALHO: I cannot conceive of anyone being that dense. If a party wishes to make a donation or a contribution, what have you, whether it is to the Board of Water Supply or if they wish to give it to the County government or whatever the case may be, there is a procedural requirement to make everything all legal. And that's all I am talking about. Let us be procedurally correct. Because some -- somebody may want to give something does not automatically, ipso facto, result in it being accepted and approved as public policy and as public property. It's simple. MR. CRADDICK: But it's not public property. MR. CARVALHO: If you are doing water. If you say it's not public property, then the, question perhaps, Mr. Chairman, is even worse. You are getting into an agreement separate and distinct from the functioning of the Water Department. And I don't want to get into that. All I am saying is: Let us do things procedurally correct. If we err, let us err on the side of caution so we meet the needs of all parties concerned, you, me, and the next guy. CHAIRMAN TAKITANI: Jonathan. MR. STARR: I would like to receive -- let me put it in one word: palapala. I would like to see some paper on this. And if it doesn't exist, it should be created by the proper mechanism and the Board should be a party to that mechanism. MR. CARVALHO: Agreed. MR. STARR: I would like to go away from procedure and talk about the mechanics of this a little bit. I am, frankly, aghast that we are in a state of drought emergency and we are forcing our ratepayers into mandatory cutbacks and we have farmers who are not planting crops and the Director is saying that we don't need to add water to the system, that we are doing fine. There is a little credibility problem there. I, for one, want to understand -- MR. CRADDICK: Jonathan, I didn't say that. MR. STARR: -- how we can utilize a source to alleviate to the greatest extent possible the shortages we are having, at least on the lower level. MR. CRADDICK: Jonathan, I didn't say that, what you just said. MR. STARR: Then why are not -- why are we not using this if it's been made available to us? MR. CRADDICK: If we are meeting the demand -- by putting that water in the ditch, it does not give us any more water. MR. STARR: We are meeting the demand by forcing the citizens to suffer. We are not meeting the demand by, you know, numbers on a sheet of paper. CHAIRMAN TAKITANI: David, can you elaborate on the ditch system and the -- MR. CRADDICK: Well, the Wailoa Ditch -- I think you have -- I don't know if you have a copy of today's drought report there somewhere. MR. STARR: We have. MR. CRADDICK: It is running at 56.9 million. And it's gone from the 134 million down to 59. Storage has risen, I think, about -- a little over 1.3 million gallons there. O.K. What adding this extra source does, just like Maui Land & Pine, if you see Note No. 5 down there, it says "not including pumpage from Maui Land & Pine into Wailoa Ditch." O.K. If we put that half million gallons of water into this ditch, the amount of water that we can take out doesn't change any. Do you understand that? MR. STARR: Why not? MR. CRADDICK: Because our treatment plant treatment ability is fixed. So we can't take any more water out of the ditch than what we can take. Now, if you want to cut the drought restrictions back a little bit, that's certainly your prerogative to do that, whether we have this source of water online or not. MR. STARR: Will this source of water be able to keep us out of shortage if the ditch flow decreases? MR. CRADDICK: O.K. My understanding on the ditch flow is when we hit -- the mill says they need 11 million gallons a day. So you can see what we are taking out at Kamole, 1.9. So let's round that off to 2. So that means right now, today, if the ditch were running at 13 million, we could both survive under the current restrictions. Now, tomorrow that might be three -- we could run out of water at Pi'iholo. We could be taking four from there. In any case, the treatment plant can handle all of that. So whether we are putting that water in the ditch or not, we can still supply that amount of water. Now, what happens is if it comes to a point where A&B has to decide, well, the water we are taking and the water that they need, that either one of us has to cut back more or they have to shut down the mill in order to do it, that is a huge decision to be made. And if there is a half million gallons more to dump in that ditch that can be gotten out, that -- whatever length of time it takes to use up that half million gallons, it gives us that extra room. Now, a half million gallons out of, say, you know, if we round it off the five there, that's one tenth of the amount of water that is in that ditch if it's five and we are putting in an extra half million gallons. So that gives us one-tenth more water at that point than we currently have. But anything up to that point, putting it in the ditch is just water that we are giving to A&B. We don't get any more out of the ditch because our treatment plant capacity is fixed. MR. STARR: So am I correct in understanding that if the ditch drops to 11, you shut down the treatment plant? MR. CRADDICK: You know, I -- we have never come to that point, Jonathan. And whether it's -- there is a lot more ramifications than just shutting down the treatment plant. I mean, if we come to the point where the mill can't operate and they are supplying whatever it is, over 16 percent of the electricity into the grid by keeping that mill operational, if that power drops out of the grid, I don't know as Maui Electric can supply the full demand for the island. Our pumps take that amount of electricity to pump the water up the hill. So if something came to that point, that half million gallons would be extremely critical. And how -- exactly how we would do it, to keep the electricity going, you know, we would have to have a general, County-wide cutback in electricity and shut the mill down, you know. That's -- I couldn't say sitting here right now what the actual scenario would come in if we lost that electricity out of the grid. MR. STARR: I would like to ask Mr. Mayer. I think he's -- were you involved with all -- MR. MAYER: I don't know what you want to ask me. But I will see if I can answer it. MR. STARR: What if the electricity from the mill is -- isn't that rated intermittent? MR. MAYER: That's firm power. MR. STARR: That's firm power? CHAIRMAN TAKITANI: David, can we get back to Director's Report 99-31? What is the Department's recommendation on that item? MR. CRADDICK: Well, on 31 -- the other issues of increasing the well and the deadline for -- or for extending the deadline, I feel those two are not critical issues. Like they said, they have come in now, this early ahead of these so there's time to act on those two. I think in the Board's discretion they probably could defer that, have some kind of a public workshop on the matter. As far as the tank one goes, I believe we have just got the bids for the tank yesterday or sometime certainly within the last week. We have got the bids on the tank. They are saying they want to increase their percentage of what they are going to pay for the tank. So I think that's one that the Board could quite easily decide on here now. There's credit issues in there. So I don't know if the Board feels comfortable enough with that that they want to deal with that. But that's one that, again, if we are going to maintain the percentage that we have, then the tank size would have to be increased if they need more storage. CHAIRMAN TAKITANI: Do you want to go back to 99-31, then, Peter? MR. RICE: No, I am on 99-33. MR. STARR: I frankly feel that we should grant the approval to extend the deadline because there's no sense in penalizing the applicant for going through the proper procedures which has caused the delay. So I would like to move that we approve Director's Report 99-31. CHAIRMAN TAKITANI: Moved by Jonathan to approve Director's Report 99-31. MR. NAKAMURA: Second. CHAIRMAN TAKITANI: Seconded by Howard Nakamura. MR. CARVALHO: Discussion? CHAIRMAN TAKITANI: Discussion? Elmer. MR. CARVALHO: Mr. Chairman, I wish to speak against the motion. It is an impossibility to separate this from the main agreement that had been agreed to a year or more ago, in 1996 or thereabouts. If it were merely just this alone, without any connection to the basic agreement from prior years, I wouldn't have much of a problem. But when I view the proposal in the light of the provisions of the agreement, which deals with credits, which deals with also uses of water, which deals with potential agreements for land developments within the project areas of Ha'iku and Upcountry, I have very grave reservations. I have very grave reservations with respect to the basic agreement in a number of areas. And I believe I mentioned some of these to the Director in prior discussions. I have reservations with respect to the fact that it appears that the agreement is in perpetuity, and that is against public policy. As I recall -- and it's quite a few years ago -- court actions dealing with the extension of agreements in perpetuity, that those were basically illegal because they prostituted the concept of good public policy. Secondly, as I also recall very vaguely and the reading of the agreement, above a certain -- up to a certain level of water produced and/or stored, it is given 100 percent -- 100 percent -- to the developer, not just the developer but the developer as well as his partners, his assignees or what have you in the entire area, which means if one isn't careful, we are setting up the mechanism for a monopoly for land use, land utilization and subdivisions. Now, it is also my understanding that, according to the agreement -- and I wish to be corrected on this because I hope I am wrong, but I think I am right -- is that the agreement says, in effect, that the produce of the water from these wells and whatever additions are guaranteed to the developer and his assignees or whatever the case may be and that the County is obligated to meet that guarantee from any of its sources -- not just from this well, from any of it sources. And if we extend this concept to its ultimate conclusion, I am afraid that this could mean also the usurpation of water in the Upcountry water development agreement. So we cannot looked at any single portion or any single proposal that is coming before this Board when it is only part of the total agreement. I do not know how many of us have had the opportunity to read the agreement in its entirety. And I think there's room for great concern and clarification. And I would like to think that the developers themselves, upon reflection, would consider correcting and spelling out the relationships with water and its utilization. And perhaps this can be a mechanism that can be used in the consideration of the totality as to what should be taking place by law of the Charter of the County of Maui to implement the general plan, to implement the community development plans. I think this proposal, as part of the total agreement -- and we cannot separate it from the -- as part of that total agreement. It runs directly in the face of the requirements of the Charter and the Upcountry development plans. And if we are not approaching this with great care, we are doing gross injustice to the agricultural pursuits of Upcountry. And just as an aside, Mr. Chair, when we are making reference -- when I am making reference to "agriculture" Upcountry, I am also including sugar production, pineapple production, with all of its implications, with all of its implications with respect to the extension of and modification and corrections, airport, its potential demands for additional water for export crops, et cetera. And we cannot run away from that. And we should not run away from that. And the suggestion that came to us earlier -- not dealing with this particular communication, but with another communication that deals with the overall -- I think it has great merit with respect to the request of the Farm Bureau. So let us take another good look at this. Let us take a good look at our total resources, and let's take a look at all of the implications. I have no problem, Mr. Chairman, I have no problem with respect to the Pukalani subdivision and its implications. But I do have serious problems with respect to the utilization of water for any and all other subdivisions coming under the ownership or the partnership or the assignations of the present developer or others in the years ahead. This can be a drain. And I think we need to address this. And if we are going to address this question of extensions -- and we can do this with speed, Mr. Chairman. If we do it with speed, then perhaps it would alleviate some of these things. And we can do it with speed to meet the requests of the Farm Bureau for meetings in the area, of Mr. Mayer of meetings in the area, and then I think we are doing what we are supposed to be doing and we are not asking for problems that we are going to dread, that we have proceeded, perhaps innocently, too, become a participant in. MR. STARR: Mr. Chair, as the maker of the motion, I would like to request from Mr. Carvalho what his recommended action would be. MR. CARVALHO: Well, Mr. Chairman, if I may speak, what we should have done yesterday and the day before. I think set a time limit of two weeks or a month, yeah, at the outmost to address these questions. And we are not going to work with manipulators sitting in the corner with spiders that I made reference to earlier in other areas. We know what the problems are. We know, I believe, what the assurances are and what the guarantees are. And we want to meet the needs of the developer, what have you. But we want to do it in a fair manner that is protecting this entire community in the years gone by and the years in the future. I suggest, if it doesn't bother you, Mr. Starr, that we defer action for a period of not more than 30 days. MR. STARR: Mr. Chair, with the approval of the maker, pending the approval of the second of the motion, I would like to withdraw my motion. CHAIRMAN TAKITANI: Jonathan Starr has requested that he be allowed to withdraw his motion. Second? Howard. MR. NAKAMURA: Well, I don't know what the procedure is, Mr. Chairman. I don't disagree with anything that Mr. Carvalho has said. I hear some really very legitimate issues having to do particularly with Items 32 and 33. And whether or not you can separate 31, I guess, is a matter of opinion. I have a little bit of a concern that a new Board goes in and says, in effect, that an agreement that was reached by an old Board is inappropriate and should not be honored if the parties are participating in good faith to implement the agreement. I have no problem with closely scrutinizing requests for modifications and for options. And in particular I refer to 32 and 33. But I do have a concern that, as I said, a party that is proceeding in good faith is not going to be provided with the opportunity to proceed in accordance with that agreement. And so if it's the feeling of the Board that -- majority feeling of the Board that deferral is appropriate for all three items, you know, I guess I am in a minority. But I do -- you know, I would agree to the deferment on 32 and 33. But I don't know see why we should hold up 31, very honestly. So if I am being asked to withdraw my second, I would say I will not. And I don't know what that means procedurally. MR. ZAKIAN: Could we have a short recess? CHAIRMAN TAKITANI: Yes. We are going to take a ten-minute recess to 10:34. (A short recess was taken.) CHAIRMAN TAKITANI: Call to order. MR. NAKAMURA: Mr. Chairman. CHAIRMAN TAKITANI: Howard. MR. NAKAMURA: Mr. Chairman, since the agreement does run to the end of the year and we have several more meetings prior to that, I will withdraw my second. However, I still do have a concern as I indicated conceptually with, you know, redoing the agreements that are being complied with by the parties. MR. CRADDICK: Bob. CHAIRMAN TAKITANI: David. MR. CRADDICK: We have -- I think we are going to have to schedule a special meeting, I believe it was the 25th -- Gary? -- on the Central Maui Source Joint Venture. MR. ZAKIAN: That was my request, yes. That's up to the Board actually to do it. MR. CRADDICK: So I believe between now and that time we could get some kind of a public informational meeting Upcountry to get some additional input for the Board if the Board could wade through the -- over the original agreement, you know, to get to where they -- it was understood and be able to wrap this thing up, hopefully within 30 days. The one concern that I have on the tank is the Board's participation there is really King Kekaulike School. There's no fire protection or very minimal fire protection for that school and Kamehameha School in the interim until this tank gets built. And again, you know, 30 days I don't think is going to matter much in the overall scope of things. But if we can try and wrap this up in that time, I believe we will be able to move forward -- MR. CARVALHO: Mr. Chair, I have no problem with the timetable of the 25th as long as we have an agreement that we will start working this afternoon or tomorrow to resolve any and all questions and to clarify, yeah, in our own minds exactly what we are doing. I understand and appreciate the problems with King Kekaulike. It also is not my intent or desire to see an agreement totally cast aside because there are legal ramifications potentially. But at the same time, any of you that rapes a basic resource to the benefit of a developer 15, 20 years down the road, I think it should be looked at extremely carefully and especially as we are making reference to the water needs of the Upcountry people, the farmers and the ranchers. And may I repeat again what I said earlier so there will be no misrepresentation at all: I include in my definition sugar cane and pineapple. They need to be strengthened; that is stressed again and again. But this vast resource that we have should be properly utilized. Let us leave that as our legacy. MR. RICE: Mr. Chair. CHAIRMAN TAKITANI: Peter. MR. RICE: I think we need to move quickly on this issue, and I would recommend that you appoint somebody from the Board to work with staff and the petitioner to come up with some agreement that is acceptable. CHAIRMAN TAKITANI: Jonathan, would you be available to work with them to try to piece together the details? MR. STARR: Only on the condition that we find a mechanism to take it out to the public and publicize that very well and that whatever I am able to work with, come up with with staff, comes back to this Board with enough time for the Board to give it full consideration. CHAIRMAN TAKITANI: David, when might we be able to schedule a meeting Upcountry? MR. CRADDICK: From what I can gather here, Jonathan is talking about getting an agreement before listening to what the public is going to say, and -- MR. STARR: No. MR. CRADDICK: O.K. You are talking about getting some information from the public first. O.K. I guess that depends on the Board. If the Board is going to have more than one Board member attend, then it's going to have to be a noticed meeting rather than if it's just for the staff to collect information. So what is the Board's pleasure there? Do they want a noticed meeting? MR. STARR: Yeah. My feeling is it should be a Board meeting up there. And the main agenda item on this meeting should be to collect information, input and information on this as well as perhaps a few other Upcountry water issues that people want to testify to that, on those issues as well. We should allow that. MR. CRADDICK: So it would probably be sometime the week of the 22nd to the 28th that we could have a meeting like that. CHAIRMAN TAKITANI: 23rd or 24th would probably be good days, before the 25th. MR. CRADDICK: The 24th is probably good for staff, better for staff. MR. STARR: My only concern is that if we meet on the 24th, there's not going to be much time to develop anything for the 25th. CHAIRMAN TAKITANI: Well, the 25th is Central Maui Source Joint Venture. MR. STARR: Yeah, but we are talking about having that as an agenda item as well. CHAIRMAN TAKITANI: Fran. MR. STARR: I guess we could have it as a discussion on the 25th. MR. ZAKIAN: Mr. Chairman, if I may make a suggestion, as Jonathan suggested, you could always put it on your agenda for the 25th. If you feel you need more time, you can always move it up to your next regularly scheduled Board meeting. So it's up to you, but that is always an option that the Board has. MR. WELCH: Well, Mr. Chairman, at this point, if I could just step in and mention a couple of things, it might be relevant to the discussion. We certainly appreciate the concerns expressed and the need for public participation and the need for sound public policy being implemented in anything as important as development of the water sources. However, I would like to point out that the agreement that we have before us is an agreement that was negotiated in detail and very ably by the Water Department and its legal counsel over a period of many months. It was entered into over three years ago. The agreement -- the policy regarding is the agreement was debated before the Board at several meetings. Concerns were raised and discussed and public input was taken. And at that time it was understood, and I think it's still the case, that the policy of this Board, as expressed in its rules, is to encourage the use of private funds to improve the County's water system, this Board's water system, which is all through the rules -- it's in the subdivision rules; it's in the water system development fee, Title 8. And it has, as a policy, probably been very good for the County in terms of keeping -- putting this Board in a position to encourage upgrading and improvement in the County system without significant expenditure of public funds. It's been a good policy. And this agreement implements that policy. And it is consistent with the rules and -- including assignability of water credits. The rule permits it. What I am saying is, you know, that the agreement can always be debated. The policy behind it can always be debated. The operation of the agreement has always been subject to a lot of give and take between the Department and the Board on the one hand and the developer on the other. The agreement so far has worked pretty well. The developer took a big risk -- in reliance on the agreement, the developer took a big risk, millions of dollars of risk, to develop this well. And it could have ended up with -- it could have come up dry. Fortunately, it came up with a source of very good water, in excess of 2 million gallons a day. We don't know what -- how good this source is. All we know is that it -- so far has tested pretty well up to 2 million gallons a day. The gamble with private funds was taken -- was made and was successful. We have run into concerns along the way where we didn't think of everything in this agreement. For example, the well was so productive that you wouldn't be able to just put it into the Upcountry system as the agreement contemplates because the Upcountry system -- the capacity and the condition of the Upcountry system in that area is not able to accept water in that amount and to deal with that. How did we deal with that? We worked on a lot of different alternatives over many months. And finally we agreed that we would provide, at our own expense, additional facilities to improve -- further improve the country system Upcountry in the form of a tank site and so forth. The assignability of credits to other subdivisions was a matter that we have discussed right from the beginning and negotiated and debated. And it was discussed before the Board. The agreement itself doesn't necessarily permit free assignability of credits. What the agreement says is that -- and I will just read from it -- "the amount of storage credits and source credits that will be applicable to any proposed development will be determined on consultation with and will be approved by the Director based on, A, the estimated average daily use of water by the developer in gallons and, B, the Department's normal standards and practices for estimating and allocating the water use." This is Section C-1, end of the first paragraph on Page 10 of the agreement. This was put in there as a recognition that Department and the Board need to be involved in implementing its policies and requirements for the benefit of the County system as part of the assignment process. And these standards are hard -- it's hard to argue that the standards are not reasonable on both sides. We believe they are reasonable, and the Board believed that they were reasonable when they approved this. I guess my point here, not to stretch this out -- is that we are happy to continue discussing this agreement and working together with the Board and the Department, as we have always done, to make it work. We think the agreement had been a success not only from the developer's standpoint but from the County's standpoint. And if we are going to review the basic policy underlying the entering into the agreement and debate it again, I would hope that it would be in the context of discussing further developments in the future or further agreements in the future as opposed to modifying something that has already been in place, replied upon and implemented, substantially implemented. Second minor point, not too minor from our standpoint, is on the subject of time extensions. We are asking for -- one of the extensions is for the construction of the tank Mr. Craddick alluded to the need for in the system for Kekaulike. We have got bids; we are about to start with, you know, signing contracts. And there's just a practical need to go forward as quickly as possible with the business of producing this. This tank is a joint effort and is going to benefit the Board because you have elected to have -- to expand the capacity of the tank to serve the County's needs. So really it's a County or Board concern to get the tank built. And I think with the bids -- with the requirements of contracting and so forth, it's kind of important to move forward on that. And may I suggest that -- respectfully, that the question of the deadlines perhaps could be decided independently from the other issues. But the deadlines have real and immediate and practical concerns both for us and for the Board. Thank you. MR. CARVALHO: Mr. Chairman. CHAIRMAN TAKITANI: Elmer. MR. CARVALHO: One question. What precisely do you mean with respect to the deadlines and the established deadlines? Deadlines for what? To accomplish what and when? MR. WELCH: The agreement now calls for the completion and dedication of the storage tank above King Kekaulike School by December 31. And the other deadline is the agreement -- in the well portion of the agreement, it says that we will complete and dedicate the well by December 31, 1999. Now, there's been a lot of reasons why it's been delayed, and we can go over those. But those are the only things that we are asking for with regard to time limits. The bond that has been provided for the well will extend well beyond that date. I think it's -- MR. CARVALHO: Mr. Chairman, question. CHAIRMAN TAKITANI: Elmer. MR. CARVALHO: What is the deadline with respect to entering into a contract with a successful bidder? MR. WELCH: We don't have a specific deadline unless it's in the bid documents. MR. FUJIMOTO: It's 60 days from the bid opening date, and they were opened August 10. MR. CARVALHO: Sixty days. When was, Mr. Chairman -- excuse me, Mr. Chair, when were the bids opened? MR. FUJIMOTO: August 10. MR. CARVALHO: August 10. MR. FUJIMOTO: Yes. MR. CARVALHO: So you have until October 10. CHAIRMAN TAKITANI: October 10. MR. CARVALHO: To award or not to award. MR. FUJIMOTO: Correct. MR. CARVALHO: So, Mr. Chairman, what violence would it do you to have a final determination made by August 25th or 26th or thereabouts? -- leaving you 30, 40 days to accept the contract, assuming now that there will be an agreement reached by all parties concerned to accomplish what we all collectively wanted to do? What violence would it do to you if it still gave you 50 days, yeah, remaining to grant that contract? MR. WELCH: Well, certainly no violence is being done. We certainly would agree to that, that there is no violence. Our -- and I don't want to beat this to death, because I appreciate the ability to resolve this within the next two weeks. But there's a lot of things that have to be done, including the finalization, the review and finalization of the normal agreement between the Board and the developer for the joint development of the tank required by the rule. The agreement is, I think, on Gary's desk and David's desk. And there is quite a lot of process that goes on to get that all nailed down and reviewed. And we just are concerned about the usual delays; that's all. It's not just the bid opening, but it's -- MR. CARVALHO: Mr. Chairman, hopefully by this very brief encounter in a friendly manner that we have had today, we should have some bearing on your acceptance that times are not the same. And the normal types of delays that one may have been exposed to in the past will not be meet with the acceptance or the approval of this Board. This is an action, I believe -- an action- oriented Board. And we do want to resolve whatever questions we have so that we can become in a position to respond appropriately to our constituents, to the public, that we have done a good job. And if we did have a question, we felt free to raise them. And our questions were being met, yeah, in a very cooperative manner. MR. WELCH: We do appreciate that very much. Thank you. CHAIRMAN TAKITANI: I think one point, Tom, is if you could look maybe seriously at the general terms and conditions, allocation and use of credits, the assignability, Schedule G, I think it would go a long step forward if we were able to substitute the Board instead of the Director in those instances. You have seen the action-oriented Board that we have. And I think if we were allowed to participate with you in this respect, in particular in that respect, I think it would allow us to be able to resolve some these things quickly. MR. WELCH: I guess we are getting maybe ahead of ourselves in talking about changing the agreement. But let me suggest that I think you -- the Board is in control of it, anyway. The Director is the -- the Director has the right to approve, but the Board can direct the Director. And he certainly wouldn't oppose -- if the Director brought it to the Board and the Board required the Director to bring the standards to the Board and discuss the matter before the Board, he would let the Board vote it up or down. I think you already have that authority, I believe, directly. CHAIRMAN TAKITANI: Thank you. MR. CARVALHO: So, Mr. Chair, where are we? CHAIRMAN TAKITANI: We are -- I guess we need to take action to probably defer those three items on 99-31, -32 and -33. MR. CARVALHO: To the 25th; no later. MR. STARR: Can I have a request that the meeting on the 25th be an afternoon meeting so that I have an opportunity in the morning to try to create some kind of staff recommendation after the meeting on the 24th? CHAIRMAN TAKITANI: Is that a problem with -- MR. ZAKIAN: Mr. Chair, Mr. -- the reason for the meeting on the 25th, as was suggested, is so that Doug MacDougal could meet with the Board, as you have requested, regarding the Source Joint Venture mediation. He will be here, I think, the day before, and he should be available pretty much the whole day. So I think he could be here at the Board's pleasure. MR. CRADDICK: I have no problem with that. CHAIRMAN TAKITANI: So we will schedule that for the afternoon. MR. NOBRIGA: Mr. Chairman, I move that we defer Director's Communication 99-31, 99-32 and 99-32 to August 25th. CHAIRMAN TAKITANI: It's been moved by Mike Nobriga that we defer Items 99-31, 99-32 and 99-33 to a special meeting on August 25th. MR. HASHIMOTO: Second. CHAIRMAN TAKITANI: Seconded by Clark Hashimoto. All those in favor signify by saying "aye." VOICES: Aye. CHAIRMAN TAKITANI: Opposed "nay"? (No response.) CHAIRMAN TAKITANI: The ayes have it. We will defer those items to August 25th. MR. CRADDICK: I don't know if we need a motion on this, but it's my understanding we are going to have a public informational meeting prior to that time. And I guess we need to settle on a time here. The earliest we can possibly do it, if we file the agenda today, is the 18th. That is the earliest possible. MR. NOBRIGA: Mr. Chairman, I move that the Chairman create a public informational meeting and let us know within some flower laws and stuff like that. (Laughter.) MR. NOBRIGA: Oh, Sunshine Laws. CHAIRMAN TAKITANI: It's been moved by Mike Nobriga that the Chairman be allowed to research and schedule a meeting Upcountry within the confines of the Sunshine Laws. MR. CARVALHO: Second. CHAIRMAN TAKITANI: Seconded by Elmer. MR. STARR: For discussion, I would just like to be sure that the meeting is well publicized. It's not good enough to just give it legal notice, but we want to make the public aware that this is taking place. CHAIRMAN TAKITANI: I am sure Mr. Mayer will do all that he can to get it well publicized. MR. MAYER: Well, that's not my responsibility. MR. STARR: Well, Mr. Eagar will help, I am sure. CHAIRMAN TAKITANI: All those in favor signify by saying "aye." VOICES: Aye. CHAIRMAN TAKITANI: Opposed "nay". (No response.) CHAIRMAN TAKITANI: The ayes have it. The Chair will try to schedule a meeting as best we can to try to get as many members of the public informed and able to participate with the Board in an Upcountry meeting. We will now move back to our regular agenda. MR. ZAKIAN: Mr. Chair, just to very clear, the motion that was made about deferring 31, 32 and 33, that's only a recommendation to the full Board for Tuesday. CHAIRMAN TAKITANI: Yes. MR. CARVALHO: What is that again? MR. ZAKIAN: The motion that was made to defer Director's Report No. 99-31, 99-32 and -33, that was passed and is only a recommendation to the full Board Tuesday for final action. MR. STARR: I have a -- MR. CARVALHO: Question. This is a Committee of the Whole meeting. MR. ZAKIAN: Right. MR. CARVALHO: And I think I would like to speak. I think I speak for the Board, that there will be no running away from Tuesday. The vote will hold. CHAIRMAN TAKITANI: But we want to be procedurally correct. MR. CARVALHO: You are right; you got it. MR. STARR: I would like just a clarification of the procedure. Why is it that the Board cannot act at a Committee of the Whole meeting? CHAIRMAN TAKITANI: Counsel. MR. ZAKIAN: It's simply by virtue of the notice that is published. It's put out as a committee meeting. That means that it's technically not a Board meeting; it's the Committee of the Whole, which means the whole body is here. But at an official Board meeting only can the Board officially take action. It's only at a Board meeting. MR. STARR: Is that by charter? Or is that by bylaws or something? MR. ZAKIAN: By bylaws, by Sunshine Laws. Only the Board, the body itself, can take action. CHAIRMAN TAKITANI: So we will move on to Roman Numeral V, A, Old Business, Item 4, Communication 99-3, request from attorney Thomas Welch on behalf of Hanahuli-Gray Subdivision for a deferral of the subdivision requirements, TMK 1-5-7:4 and a portion of 001. MR. STARR: Mr. Chair. CHAIRMAN TAKITANI: Yes, Jonathan. MR. STARR: Maybe the members of the audience who wish to testify -- are we going to allow them to testify on this matter? CHAIRMAN TAKITANI: Yes. We will take testimony on this item, Communication 99-3. Mr. Blumer-Buehl, do you wish to testify? MR. BLUMER-BUEHL: Thank you. Good morning, Chairman Takitani, and members of the Water Board. I last testified on this matter with written testimony on May 12, 1999. My testimony was in support of your staff's recommendation for denial. Now, there was two additional issues that were brought up at that meeting that I would like to thank the Board for deferral until those matters were looked into. The first one I brought up, and that is -- I raised the issue that I believe that there was an unmet water bond obligation from 1959 by the Hanahuli Association. And Mr. Takitani and the rest of the Board said, O.K., let's find out if that is true. So then I sent a letter dated May 29 to Miles Fujinaka, your Hana District engineer. And Miles did find the water bond. There is an unmet water bond going all the way back to 1959 by the Hanahuli Association. And I felt -- I mean, I am sympathetic to Mr. Gray's request, but I felt that perhaps it was the -- Hanahuli still has an unmet water bond obligation that would influence this particular situation. And I also brought up the point that even though that bond has never been met, the County land -- the County has continued to issue building permits for lots which have never been -- had the obligation of the water bond met. The second issue that I brought -- that was brought up by Mr. Gray's attorney, Mr. Welch, was that there may be a -- the existing house may be straddling what are Lots 3 and 4. And Lot No. 4 was part of the proposed subdivision. It certainly appears that, in fact, the house is straddling Lots 3 and 4. If that is true, then I would say that this request is very premature and that the first thing that should be sought is a reconsolidation and subdivision to put the Grays' existing residence either on Lot No. 3 or No. 4. It wouldn't be that much of a boundary amendment, but I think it's -- the proposed subdivision would be, you know -- it would put -- the house would remain on -- straddling two lots even under the proposed subdivision. So that's an issue that was raised by Mr. Welch. And, in fact, I believe that that's probably the appropriate way to go first is a reconsolidation and subdivision, which I would support, to put Mr. Gray's house on one lot. Now, the staff, in considering the fact that there's an unmet water bond from 1959, still recommended denial of the application. And I support the recommendation of your staff at this point. And I will be happy to also support Mr. Gray if he needs to do a consolidation and resubdivision to his house on one of the two lots that he does have before pursuing an additional subdivision. So thank you very much. CHAIRMAN TAKITANI: Any questions for Mr. Buehl? If not, thank you very much. MR. NAKAMURA: I just have one question. Are you saying that if the first part of the consolidation and resubdivision was accomplished that you are recommending, that you then are supporting the request that is before the Board at the present time? MR. BLUMER-BUEHL: No. I am sorry that I was unclear. That's not what I meant to say, if that's what I did say. There's -- the existing lots that the Gray family has on your map are Lots 3 and 4. And the Grays are proposing, as part of their existing subdivision, to create a Lot 10A. And according to Mr. Welch -- and I agree with this, his assessment -- the house is actually straddling two existing lots. So it does make sense to resolve that situation first. That is a part of the request that they have before you. But I do support the recommendation of the subdivision -- I mean, I think that I support the staff recommendation, which is denial of this. And I am just making it clear that I -- you know, there's another situation that is existing, and I think that needs to be resolved before this application would even be appropriate. And I would certainly support the Grays being able to resolve that situation. It's not unusual in Hana. I wouldn't say it's usual, but I can name a number of instances where in the old days people built across the boundary lines. For example, the Heavenly Hana Inn was built on two lots right on the middle boundary. So it's not something unusual. But it's something that in this case I think should be rectified first. MR. NAKAMURA: Thank you. MR. STARR: Mr. Chairman. CHAIRMAN TAKITANI: Jonathan. MR. STARR: You stated that the house currently straddles the boundary line of Lots 3 and 4. If the change in Parcel 4 takes effect, will it still straddle the border? Or will it then be within one of the two lots? MR. BLUMER-BUEHL: If the Board were to go ahead and grant the request, the house would still be straddling the two lots. MR. STARR: So this won't change the essential facts? MR. BLUMER-BUEHL: Right. So I was suggesting that that could be remedied first, you know, before they even come asking for this. But, you know, to simplify it, I agree with your staff's recommendation on what is before you today. I didn't mean to divert the subject somewhere else. CHAIRMAN TAKITANI: Thank you. MR. BLUMER-BUEHL: Thank you very much. CHAIRMAN TAKITANI: Tom and Mr. Gray, would you like to say anything in support of the project? MR. WELCH: Thank you, Mr. Chairman. As you know, I am Tom Welch. I am representing Chuck Gray, who is here also. Maybe, first, I can just recap quickly what it is we are asking for. This request is a consolidation and resubdivision which adds two acres to Mr. Gray's -- (Discussion off the record.) MR. WELCH: Excuse me -- 4 point something acres to Mr. Gray's lot, existing lot. It is a large, undeveloped lot now, and he is just adding more land. He has got the opportunity to acquire the land from his neighbor. This is not a request for service, water service. It is not a request for subdivision of a lot into multiple lots for sale. The total number of lots after this approval -- excuse me -- after this subdivision, consolidation and resubdivision is completed, does not change from what it was prior to the proposal. The only reason we are here is that the land that we are asking to add to this lot is part of a large, much larger parcel which -- with respect to which other neighbors have done the same thing earlier. That is, they have gone though the Department of Public Works and requested a consolidation and resubdivision of their land with the adjoining land to add land to their lots. But they didn't have to come before the Board. The reason they didn't was that the rules on subdivision say that you can do a consolidation and resubdivision provided that new developable lots are created without requiring any subdivision improvements, but you can only do it once. If you are going to do it again with the same lot, you have to -- that is a very different procedure. And we are coming in because now Mr. Gray hasn't done any consolidation and resubdivision before with respect to his lot, but the larger lot out of which the land we are getting was -- they went through this procedure. Because we are before you -- the subdivision rules of your Board say that it is a subdivision and developable and we have to provide the subdivision improvements to the water system of the County. And the staff's recommendation is consistent with that rule. The reason we are before you here is we are asking you for relief from those rules under the rule that says that the Board may depart from the rules if the public interest is protected. And we hope you would agree that in this case, because this is not a development and because our position really isn't much different from the neighbor's who had the same -- who had the benefit of that other one-time rule, that you would agree that the public interest is being protect. The staff, consistent with your regular requirements, has suggested that increasing the size of this lot should trigger doing several things. One, constructing a 4-inch waterline for approximately 11,000 feet along Hana Highway to the point of adequacy, which is -- well, that's over two miles; construction of a 50,000-gallon storage tank; construction of three fire hydrants along Hana Highway; construction of water service laterals for two lots; construction of approximately 4,000 feet of a 6-inch waterline from the nearest water source into the subdivision; hundreds and hundreds of thousands of dollars involved in that. And all we are doing is just adding some additional pasture to the existing lots. And so we are asking you to consider modifying it in this case. One quick, two quick things in response to Mr. Buehl's comments. The 1959 bond which is still in effect, I was going to ask Miles, if I can get his attention, what the -- I was going to ask Miles what the bond secures the performance of. Do your records show the improvements that the bond is securing? -- because I think those have been completed. MR. FUJINAKA: I don't know specifically, but has to do with the pipeline fronting the property and water services and I believe fire standpipes. MR. WELCH: I don't think we know precisely whether or not those requirements have in fact been fulfilled. If in fact the bond hasn't been released, it would probably indicate that they haven't been. But maybe they were overtaken by events. We just don't know the answer. Anyway, the second point Mr. Buehl brings up is that the house encroaches. And I think it's perhaps an correct characterization to say that the house straddles the line. I think that a portion of it -- a portion of the house does go over the line, but it's something like a corner of the house. But I think that is probably the result of somebody not paying attention to getting the house properly aligned when they built the house. But the house does have water service and does have a water meter. So you -- and I am not sure that the location of the house is necessarily a concern at this point. If there's encroachment of a portion or a setback violation or something along that line, that would be a Land Use & Codes thing to deal with. And we are hoping to just do a consolidation and resubdivision to make the boundary and the house compatible, and that would satisfy them -- this is complicated, but we still don't believe it is necessary to do all of these water system improvements. CHAIRMAN TAKITANI: Jonathan. MR. STARR: I have a question. I missed the previous meeting; I was out of state. And I am trying to understand from the minutes of that meeting. One of the points of concern that I have is that the initial presentation seemed to intimate that this was agricultural land. And since the lot that was being created was going to be less than five acres, under the current ag zoning ordinance there would be no ability to subdivide this parcel. Then I read further along in the minutes that there was some doubt as to whether it was really ag zoned or rural zoned. And so my question is: Is it ag? Is it rural? Or is it a combination? MR. WELCH: We corrected the record during the hearing last time as we realized that there was a statement that had been made earlier that was incorrect. The land that's being added to this lot is ag. Is that correct? MR. GRAY: (Person nods head up and down.) MR. WELCH: Where Mr. Gray's existing lot is rural. MR. STARR: So it will be subdividable, then, under the rural -- I understand that Hana is excluded from the current rural zoning ordinance but still is just -- as I understand it, it creates the ability to subdivide it, which was not very clearly stated. Is there a desire to subdivide the lot? MR. WELCH: No, there is not. And if there were, we would -- it would be a regular subdivision creating new lots, which then we would not have the temerity to come in before the Board under those circumstances and ask you to waive the requirements for subdivision. MR. STARR: You really would be willing to stipulate that this would not give you the ability to subdivide this lot? MR. WELCH: I think the law would certainly admit that. But the rules and the laws are -- say that, essentially. MR. STARR: Well, since there is no rural zoning ordinance in effect in East Maui, I think the rules are kind of unclear. So that's why I would like to see it clarified. MR. WELCH: Well, I thought it was real clear. I thought that yours was -- MR. CRADDICK: Rural. MR. WELCH: Interim? MR. GRAY: As is all of our rural stuff in Hana. MR. WELCH: State Land Use is involved in rural? MR. GRAY: Yes. MR. BLUMER-BUEHL: I think I can clarify that. It has a rural designation, and it is still in interim zoning. So I mean it has no -- it is designated to be rural, but the property is out there. And I am one of the immediate neighbors who do not have actual rural zoning. So in order for to us actually say that we have more than a designation, we would have to go through the zoning process and the advisory committee to the Planning Commission and County Council in order to get actual rural zoning. And just one point of clarification. The obligations of that 1959 water bond have not been met. And I can -- I thought that just digging out the bond would prove that. I have additional documents that would prove that beyond any doubt as far as what the -- what Hanahuli's obligations were. MR. STARR: I have a further question, which is: Would there be any willingness to do some amount of improvements to the system, perhaps to the extent of that old water bond, which doesn't look like it was a huge amount of work? MR. WELCH: I think the bond is $7,000, isn't it, Miles? MR. FUJINAKA: Yeah. MR. WELCH: Mr. Gray has indicated to me that if the improvements that are required are to the extent of $7,000, that would be worth it to him to consider for getting this Board to agree. MR. RICE: Mr. Chairman. CHAIRMAN TAKITANI: Peter. MR. RICE: Tom, I seem to have read in prior testimony that you indicated that this land was being purchased as a buffer. It's not going to be developed. It's a buffer to the neighbor for Mr. Gray's current home; is that correct? MR. WELCH: It's just an opportunity to buy more land and increase the size of his already. MR. RICE: Well, it could remain as a separate lot owned by Mr. Gray, couldn't it? MR. WELCH: Yes. MR. RICE: And you would have no requirements to do anything? MR. WELCH: Excuse me. In other words, Mr. Gray could keep his lot without -- MR. RICE: Well, if it's a buffer to the lot that he has got or to his home -- MR. WELCH: Yeah. He would be able to do or not able to do with the expanded lot just the same as with the existing lot. That is correct. It doesn't change anything. MR. STARR: I think that would create an additional developable lot, though. And under the consolidation and resubdivision, the intent is not to really create an additional developable lot. So that would cause -- it would cause it to go from being a consolidation and resubdivision into a straight subdivision. MR. RICE: Oh. MR. WELCH: We are not creating any additional lot. All we are doing is taking land from the neighbor and just pushing our boundary line out a little bit. We are not changing the number of lots. CHAIRMAN TAKITANI: Howard. MR. NAKAMURA: Tom, a couple of quick questions. No. 1, the -- Mr. Gray's residence is primarily on Lot 3? MR. WELCH: Yes. MR. NAKAMURA: And that encroaches slightly into Lot 4? MR. WELCH: Yes. MR. NAKAMURA: Lot 4 is what you intend to make larger by two acres? MR. WELCH: Enlarges two -- MR. GRAY: Four point seven acres, something like that. MR. NAKAMURA: Anyway, the lot that -- Lot 10A that you have proposed is presently vacant, and you have no plans to do anything on that lot? MR. WELCH: Correct. MR. NAKAMURA: And you are willing to agree to that, that there could be no further development until all of the improvements and requirements are met? MR. WELCH: Well, I think if we came in for water service for a new house or any new subdivision, we would have to come to the Board or the Department for review in terms of adequacy. And under your rules there is a normal procedure for saying, yes, it's adequate or, no, it's inadequate and we are requiring so and so from the consumer or the developer to upgrade as necessary. MR. NAKAMURA: And that large lot that, according to our Exhibit B, shows as being owned by Hanahuli Associates, Ltd., is that the entity that did the original subdivision? MR. WELCH: I think so. It's the successor in interest. It's Hanahuli Ranch, the same people. MR. NAKAMURA: So they are the people who have not fulfilled the requirements to the improvements? MR. WELCH: That is correct. MR. NAKAMURA: But the owners of the large lot are the -- MR. WELCH: Yes. MR. NAKAMURA: -- successors in interest to the large lot? MR. GRAY: Yes. MR. WELCH: Yeah. It's the same entity. (Discussion off the record.) MR. WELCH: Yeah, it is the same entity. MR. NAKAMURA: In effect, the same entity. MR. WELCH: Yeah. MR. NAKAMURA: And I guess my last question or comment is that there's a provision in the subdivision ordinance that provides for consolidation and resubdivision without improvement, but you can only do it once? MR. WELCH: That's correct. MR. NAKAMURA: In that case, would it not be more appropriate for you to seek a variance from the subdivision requirements to do this a second time rather than to come to the Board and get a waiver of the water requirements? -- because won't there be other requirements triggered by this action by other agencies? MR. WELCH: The answer to that is, yes, there are certainly other requirements for subdivision improvements by the Department of Public Works and Waste Management. They are discussing the possibility of a bridge widening lot some distance from this lot. I have been discussing that with them. I don't think that requesting a variance from the subdivision improvement requirements on the level of Land Use & Codes would affect the subdivision approval requirements before this Board. That's why you have your own variance procedure; and we are asking you for a variance. We are discussing the other requirements with the other agencies. MR. NAKAMURA: Thank you. CHAIRMAN TAKITANI: Mr. Buehl. MR. BLUMER-BUEHL: If I could, I would like to make a point of clarification on the bond. And when the County -- when the Hanahuli Association agreed to the bond agreement, it was to provide water to all of the lots of that subdivision that were not served by the ranch specifically. And at this point there are at least five or six of those lots that the Hanahuli Association never met the water bond obligation for to provide them with water. Now, when I brought this up, it was really in sympathy to Mr. Gray. I was bringing it up in the context of the Hanahuli Association should be paying part of these improvements, not necessarily just Mr. Gray. So there are actually another five or six lots that never got the improvements that were intended to be provided for by the $7,000 water bond. My point is that at this point I would consider all the lots that were supposed to be serviced, not just one, and the current cost. I mean, it's Hanahuli that put it off, not doing it. And, of course, the costs have risen since then. That's -- I think that's the risk they took. So thank you. CHAIRMAN TAKITANI: Jonathan. MR. STARR: I would like to make a motion, at least for discussion, that the Board recommend approval of the deferral of subdivision requirements contingent on a stipulation that any subdivision of this new lot be subject to the new development requirements and that the applicant pay into the system the original amount of the bond to be used for system improvements. CHAIRMAN TAKITANI: O.K. It's been moved by Jonathan Starr that Communication 99-03 be recommended for approval to the full Board with subdivision being subject to normal development requirements and also that the applicant be -- that the applicant pay the amount of the bond, which is approximately $7,000. MR. NOBRIGA: I will second that for discussion. CHAIRMAN TAKITANI: Seconded by Mike Nobriga. MR. CRADDICK:. The bond is already out there for $7,000. So having them put up another $7,000 for I am not sure exactly what -- that bond is already funded. So if you are going make some other bond requirement, if you will, it's going to have to be for some specific -- MR. STARR: I believe I said in an amount equal to the bond. MR. CRADDICK: Yeah. But what I am saying is that it has to be for something, not the amount. MR. STARR: It's for the system improvements in the Hana District. CHAIRMAN TAKITANI: Can we be more specific? MR. STARR: David, maybe you can suggest a way of doing it? MR. CRADDICK: Well, first of all, the $7,000 will not even put in half a hydrant today. So getting another $7,000 to complete one hydrant is useless. Now -- MR. STARR: It's -- $7,000 is a lot of money to me. MR. CRADDICK: Well, it's pretty useless as far as the system goes. And I don't know what the objective even is, you know, requiring something like that. And I would certainly say that it would be restricted to improvements on this portion of the system that serves the subdivision, not just used in the Hana District at random. As far as an amount, I mean, if you are just looking to collect a fee for waiving this, I don't know what kind of policy precedent you are setting there. It's not a very good one because it's just a random amount of $7,000 out of the sky to waive things. And the next person that comes along will say, hey, I want to give you $7,000 out of the sky to waive my stuff, too. And there is no, you know -- there is nothing on the record of any discussion of what this is for, what it is supposed to do or anything like that. And I think there would be some problems that we would have in the future if the Board approved something like that. CHAIRMAN TAKITANI: Tom. MR. WELCH: I think Gary -- I don't know whether or not it works this way, but I think Gary would agree with that analysis. But if I could make a suggestion, the simplest thing to do might be to just call the bond. You have got a -- presumably the file shows whatever the improvements are that are secured by the bond. And if they are not done, it's a simple procedure to just call the bond. You can do that; there is a mechanism for doing that. That probably should have been done decades ago. And we will work it out with Hanahuli, whatever reimbursements are necessary as far as part of our dealings with them on getting the land. That probably is procedurally, from your standpoint, the responsible thing to do. Not that we are not willing to give you that $7,000 worth of system improvements. MR. CARVALHO: Mr. Chairman, provided, however, that the County or the Board of Water Supply may be not held responsible for putting in all of the improvements after collecting the $7,000 on the bond. Would that be acceptable? MR. WELCH: I don't think legally we would have anything to say about that. MR. CRADDICK: We have put -- since that time we have put a 4-inch line from the end of the line out to the Koale booster that -- Do you know how much that cost to do that, Miles? MR. FUJINAKA: No. MR. CRADDICK: Certainly many, many, many times over $7,000. But exactly how we could collect on the bond without making the improvements that are required on the bond, I don't even know how legally we could do something like that. CHAIRMAN TAKITANI: (Person nods head up and down.) Jonathan. MR. STARR: Can we? And would it be useful for us to buy another fire hydrant out there perhaps with the bond and some added money kicked in and add another fire hydrant out there? Is that a useful act? MR. CRADDICK: Well, a fire hydrant off of a 4-inch line is kind of misleading to the Fire Department. When they come out there and they see a fire hydrant, they expect to see some water come out of it. It would be a little misleading to put something there and not have much come out of it. MR. RICE: Haven't we -- we are kind of dealing with one problem here. If we are going to make the improvement to that community, I mean, where are we going to put the fire hydrant? MR. CRADDICK: They have one every 500 feet along the road, and this encompasses many, many -- MR. RICE: Right. So we are going to call the bond, and you are going to put in one and you are going to service this small area versus dealing with the community problem. That just doesn't seem to make a lot of sense. If I was a neighbor there, I would say, well, now these people have this fire hydrant and whatever benefits can accrue because of that, but because I am 500 feet further down the road -- I mean, I am sympathetic to Mr. Gray's request, and I don't think it's fair that he would have to put up and make these improvements in the water system to the benefit of the neighbors. But then, on the other hand, we hear testimony from the neighbors who are opposing this. And I am not quite sure why. I mean there's not an intent to subdivide the property further. And so there is something missing here. Am I -- MR. WELCH: Just as a suggestion, I think if we were required to spend the hundreds of thousands of dollars to put all this stuff in, the neighbors, of course, would all benefit. MR. RICE: I know. But I mean, that's what I am saying. It's not fair for Mr. Gray to have to do that unless he intended to do some further subdivision, which would be a different story. I am missing something here. CHAIRMAN TAKITANI: David. MR. CRADDICK: Well, you have to keep in mind since the original bond was put up here, this would be the third subdivision of the property. There's already been one that somehow slipped by. And as every -- each one of these slipped by, there's less and less chance of ever getting things fixed up out there. MR. RICE: But that would be tend to be a policy decision is what we would have to make that would apply to everyone. I don't have a problem with that. But we are not sitting here talking about that. We are talking about Mr. Gray's application for deferral. MR. STARR: I would like to ask counsel if there is a mechanism for this Board to request some sort of a system improvement, some amount of system improvement in a case like this and not make it a total system improvement but pick a number that the Board feels is fair. MR. ZAKIAN: I think your last statement shows what the basic problem is, "Pick a number that the Board feels is fair." If the Board had in place an impact-fee type of rule that said for so much frontage on the street or X number of dollars, some type of measure like that, then it would certainly be appropriate. It would be quantifiable and measurable. And then it's really a matter of the Director imposing that fee. As it stands right now, I am not aware of anything that gives the Board the ability to impose a dollar fee by the Director on the applicant such as you were suggesting about the $7,000. MR. STARR: Is the Board able to accept a donation if an applicant offers it? MR. ZAKIAN: If an applicant, out of the pure goodness of their heart, without coercion or anything else from the Board just wants to voluntarily give the Board some money, I don't know that the Department could or should refuse it. But right now I am not seeing any legal principles that enables the Board to extract it for -- MR. STARR: Does the applicant, out of the sheer goodness of his heart, without any expectation, wish to make a contribution to the system? MR. GRAY: I don't see any benefit to it. MR. WELCH: I am not sure how the record will look the way it is at the moment, but I am not sure that we can backtrack. CHAIRMAN TAKITANI: Gary, do you want to bring us back here? MR. ZAKIAN: Sure. In your Committee of the Whole agenda that the Board members got, on Page No. 5, which is the handwritten numbers on the bottom-right side of the page dealing with this particular application, middle of the page, there is a paragraph that says "modification of requirements." If you read over that paragraph, that is the Board's rule. And that is what you need to abide by. In order to gets a modification of the subdivision requirements, the Board needs to find one of two things. If you are able to find either that the conditions pertaining to any subdivision are such that the public remains properly served with water and fire protection without full and strict compliance with the subdivision rules and regulations, you can grant the modification of the subdivision requirements. Alternatively, if you are able to determine that the subdivision site or layout is such that the public interest will be adequately protected without full and strict compliance with the rules, then you can grant a modification or waive of the subdivision requirements. So if you find either of those two things, then it's discretionary with you to go ahead and grant a waiver or modification. I understand what the applicant is asking is just for a deferral of the installation of the water system improvements pending future development if that should be in their plans. Now, if you determine that they meet one of these two criteria, then if it is discretionary with you, the extent to which you can waive or modify their requirements -- but all you are doing is waiving or modifying the requirements as set forth in the rules. You cannot really go beyond the rules that -- of what would be required. You can just modify or waive or defer the implementation of what the rules require. So that's kind of the parameters you need to be thinking about and working within. So there is a motion on the floor. But that is what you really need to debate and discuss. CHAIRMAN TAKITANI: Howard. MR. NAKAMURA: Mr. Chairman, I really don't see how the public interest is in any way going to be detrimentally impacted by this consolidation and resubdivision. And I don't think that the applicant ends any better off except he has got a little better piece of land, and he doesn't have any other rights that he doesn't have now and he doesn't add to those rights. But what really bothers me, though, is that it seems as though this Hanahuli Association has benefitted over the years by having people -- by deferring the improvements, posting a bond, not providing the or not following up on the improvements. Now that money is nowhere near what is needed and has been permitted over the years now for people to just kind of nibble away at their big holding, come back and say, O.K., we are going to sell you a couple acres and consolidate, and we are going to sell you a couple of acres and consolidate, you know, and everybody is, you know, adding to their property. And the public is -- doesn't get the benefit of the improvements. And it seems like Hanahuli has derived the benefit after all these years. And so I am wondering if, you know, Mr. Welch and Mr. Gray would be willing to participate with the County in, you know, pursing appropriate action against the developer and the entity that posted the bond to ensure that the -- whatever that action might be to ensure that the improvements are put in that should have been put in in 1959. But, again, I have no problem with this particular request. But I think that this is a way that the large property owner has just nibbled away at the requirements of the ordinance. CHAIRMAN TAKITANI: Tom. MR. WELCH: Well, as a landowner in the same position as Mr. Buehl and others, I think anything that would promote improving the service to that part of the community we would support energetically. So I think in answer to Howard's question we would certainly say yes. I am not sure what you meant by "support" or "action." I am not sure if we are willing to participate in a lawsuit against them exactly while we are buying land from them. But, on the other hand, we support the concept that we have been talking about all morning, including the other matter that I have participated in before the Board, which is the question of funding improvements to the County system with private dollars. I think it's a good policy, and it works. And Mr. Gray agrees, at least in principle, I guess one important legal point here: There is an overriding constitutional issue. I don't want to belabor this. But I do want to advise you on this. There is an overriding constitutional issue. Whenever a municipality is requiring, as a condition of approval of the requested action, requires improvements to public facilities -- this is the Dolan case, the Lucas case and others in the U.S. Supreme Court -- that rule is that a municipality cannot condition an approval of an action on a private expenditure to improve a public facility unless the improvements that are required bear a reasonable nexus -- that's a good word, "reasonable nexus" -- to the impact on the public facility of the approved -- of the action for which approval is being sought. Technically speaking -- and I don't mean to belabor this and get too technical, but if the Board said, no, we deny this request, and if Mr. Gray wanted to finance the litigation, it would be pretty easy to establish that these requirements -- and the impacts are really pretty minimal, adding some grass to the lot and changing ownership only. We are not trying to do this as a development proposal -- it is hard to say that it creates an impact that has any reasonable nexus between what we are doing here and the strain on public assets. So that kind of overrides this, what Gary said about the standards for approval. I just tell you that so that you can put it in perspective at this standpoint. MR. CRADDICK: I think, Tom -- and my estimate of what we are dealing with is not Mr. Gray. We are dealing with Hanahuli-Gray's commitment to fix this up and give service to those empty lots that are still not served. And in that context, you know, if they want to sell them land, it's them that have to do it, not him. So that's what we are talking about here. And if he wants to take on their obligation, that's all right, too, you know. We are not going to grumble about that. But it's Hanahuli-Gray's obligation or Hanahuli's obligation, not his. He is just stepping in for them because he wants to buy in. MR. WELCH: I don't disagree with that. The original approval from which the bond was created -- the bond was created in connection with that subdivision of land, and it didn't indicate a reasonable requirement for public facilities. I don't disagree with that. But those were or were not done? And does the bond still cover it? I guess this approval, though, stands on its own two feet as to this particular piece of land. MR. CARVALHO: Mr. Chairman, it appears to me that the question before the Board is one of fairness. If the County, through its wisdom or lack of wisdom in the past, allowed certain portions of the subdivision to be sold or connected or whatever and did nothing to enforce the provisions of the bond, and now, when we have a request coming before us that does not on the surface constitute any demands on the public services, that we are expecting and requesting that the person petitioning this Board have to bear the full costs of providing improvements based primarily on the error or commission or omissions by the County, I think that's highly unfair. And somewhere along the line there should be a matter of equity. So, Mr. Chairman, if there are no further discussions, I would like to ask for the question, which is to approve. MR. STARR: And I think in the future it would be good if we create some mechanism for one party in a situation like this to help improve the system in a percentage that would be fair of the total costs -- but since we lack that at this time, I would to amend my motion before the question is called. With the permission of the second, I would like to withdraw the language in the motion that relates to the assessing of money. CHAIRMAN TAKITANI: So then your motion would just strictly be for approval of the Hanahuli- Gray subdivision for a deferral of subdivision requirements? MR. CRADDICK: Right. MR. STARR: Right. There was wording that if any further subdivision takes place, then it would be subject to all the normal conditions. MR. CARVALHO: Mr. Chairman, is that part of the motion? MR. STARR: That was part of the original motion. MR. CARVALHO: Then let me raise a technical question. I believe his motion covers two elements. I believe that we could delete those elements in the main motion, which is to approve, to be followed by a subsequent motion to cover whatever items you would like to have covered. MR. STARR: I am willing to do whatever -- well, go ahead, Gary. MR. ZAKIAN: Maybe, just so I can kind of help clarify things, what was it that you found duplicitous or -- CHAIRMAN TAKITANI: Well, the question of saying that in the future everybody else shall conform, yeah, with whatever subdivision requirements are in effect at that time. That has very little to do with anything, with the request before the body, which is the approval of this particular request. MR. STARR: Well, I understand what -- MR. CARVALHO: And we can handle that afterwards in a separate motion. MR. STARR: I disagree with that because I believe we are creating a lot that will be subdividable from one that is not currently subdividable. MR. CARVALHO: At that time, Mr. Chair, that matter will come before this distinguished Board and we will make a decision. MR. ZAKIAN: Well, actually, I don't believe it would. I don't believe the subdivision -- the subdividing itself would -- (Several people speaking at once.) MR. ZAKIAN: It certainly would require more improvements in the future, and that would be left to the staff to administer just as they come in for the various permits. MR. CARVALHO: Depending on the (unintelligible). MR. ZAKIAN: Right. MR. STARR: But that's not what the rules and regs state. We would not see it then, and that's what I am -- that's what I am trying to trigger. CHAIRMAN TAKITANI: David. MR. CRADDICK: The way how the motion is, it has the $7,000 in there. So if the motion is voted on and approved, the $7,000 is going to be there. So, I mean, you can have Fran read the motion if you want, but -- MS. NAGO: Do you want me to go ahead and read the original motion and then the Jonathan amendment? Would that help you folks? CHAIRMAN TAKITANI: Yes. MS. NAGO: That the Board recommend approval of the deferral of the subdivision requirements contingent upon a stipulation that any subdivision of the new lot be subject to the normal development requirements and that the applicant pay into the system the original amount of the bond to be used for system improvement. But then Jonathan went back and said, rather than the original amount, he wanted an amount equal to the original bond. MR. STARR: Well, O.K., within the limits -- MS. NAGO: But then there was an amendment, and you said, "I would to amend the motion and withdraw the language as to how it relates to the assessments." MR. STARR: Yes. MS. NAGO: And if there is any further subdivision, that it would be subject to all the normal conditions in effect at that time. MR. STARR: Yeah. I would be simply restating that, the stipulation which was in the original motion. So it does not need to be -- MS. NAGO: So then that doesn't need to be -- I would like to amend -- just take out that money part? MR. STARR: Yes. CHAIRMAN TAKITANI: Mr. Chairman, question. Is the motion to deny? Is that the pending motion? CHAIRMAN TAKITANI: No. MR. CARVALHO: It's to approve. MR. NAKAMURA: To approve deferral of the -- MR. CARVALHO: Deferral of -- CHAIRMAN TAKITANI: Deferral of the subdivision requirements. MS. NAGO: So the only thing that -- I am sorry. So the only thing that was taken out is the money part? It would still be subject if -- any part of the subdivision would be subject to the rules in effect at that time, the subdivision requirements in effect at that time if they should come back? CHAIRMAN TAKITANI: Mr. Chairman, a matter of clarification. The subdivisions or future subdivisions for this particular question rather then anything else from the group, you know, yeah, just this question. CHAIRMAN TAKITANI: This applicant. Have you got it? Can you restate this now finally? MS. NAGO: Sure. CHAIRMAN TAKITANI: The amended motion. MS. NAGO: Recommended approval of the deferral of the subdivision requirements -- then do I go on and say it? CHAIRMAN TAKITANI: Yes. MS. NAGO: -- contingent upon the stipulation that any subdivision of these new lots be subject to the normal development requirements. CHAIRMAN TAKITANI: Yes. MS. NAGO: Pau. MR. NAKAMURA: Question. CHAIRMAN TAKITANI: Now, the amendment. Moved and seconded by amendment, now to be properly stated that the request from the Attorney Thomas Welch on behalf of the Hanahuli-Gray subdivision for deferral of the subdivision requirements, further with the stipulation that it would be subject to further -- to the subdivision requirements in effect whenever they further apply. All those in favor signify by saying "aye." VOICES: Aye. CHAIRMAN TAKITANI: Opposed "nay"? (No response.) CHAIRMAN TAKITANI: The ayes have it. MR. NAKAMURA: Mr. Chairman, can I just make a comment before I start into this motion? CHAIRMAN TAKITANI: Sure. MR. NAKAMURA: I would like to ask that the corporation counsel and the staff and perhaps Mr. Welch, as one of our County's finest legal minds, would assist us in pursing the issue of the improvements relative to what Hanahuli Associates committed and whether or not there is a way in which those improvements can be implemented and perhaps financed by others besides the Department and the Board. CHAIRMAN TAKITANI: I think perhaps Mr. Hall would be very supportive of that also. So we will try to have that arranged as part of this afterwards. MR. WELCH: Thank you, Mr. Chairman. And we will certainly be happy to help in any efforts that you might suggest. And thanks to everybody for taking all this time on this. CHAIRMAN TAKITANI: We will take a short -- well, a ten-minute break. MR. STARR: Before we break, I want to go ahead ask if we are going to continue to a certain time today? Or what is our plan? CHAIRMAN TAKITANI: Well, we have now exceeded what we were supposed to. David, what time is the North Waihe'e 16 dedication? MS. NAGO: No, that's Tuesday. CHAIRMAN TAKITANI: Tuesday. O.K. MR. STARR: Are we going to have lunch? MS. NAGO: Yeah. Jonathan, I have ordered, and we will take a break whenever you folks decide to do so. It hasn't come yet, though. CHAIRMAN TAKITANI: So we will take a ten-minute break and come back. And hopefully we will have lunch around 12:30, then. (A short recess was taken.) CHAIRMAN TAKITANI: We will reconvene the Committee of the Whole meeting of the Board of Water Supply. And I would like to allow some testimony to be made before they have to leave. So Steve Parker, would you come forward? MR. PARKER: My name is Steve Parker, and I am a local resident of Kula. I am a real estate broker and have been on this island for almost 30 years. And I am an appraiser on this island for almost 30 years. And I am a property owner Upcountry, and I am on this list to obtain water meters at such time that there is adequate water available. The 3.1 rule that is -- the amendments to that rule that you would have a process in order to get a meter seems to me fair. I was denied a meter on Kimo Drive because I did not meet a rule requirement, and the rule requirement was that a system is inadequate if it falls below 40 psi. We did testing on Kimo -- and there's houses all around us there. We did tests on the system and found out that it fell below 40 psi over a two-week period 15 minutes of that time. So 7/100ths of a percent of the time the system fell below the 40 psi threshold, and then it was determined to be inadequate. So I have been waiting on this list since 1995 to get a meter, and I have been complying with all the rules and regulations. And I am on the list somewhere, not that high up, probably about 90 or 100 or whatever it is. But I would like to see something hard and fast in rules and regulations on how an individual out there can logically find himself a way to see where he is going to get or not get water. Water has a huge impact on value on property. I have done appraisals on the impact of water on property, and it's probably on the magnitude of 100 percent, i.e., a piece of property with water being worth $10,000, without water being worth $5,000. There's also -- when you start multiplying all the people that are waiting on this list to get water, by the magnitude of that impact on it, it's substantial. Thank you very much. CHAIRMAN TAKITANI: Steve, are you in favor of the first-come, first-served? Or what are you saying? MR. PARKER: I am in favor of the first-come, first-served concept, some rule in effect that shows how the people that have been on that list and have been relying on the list for the last four or five years should be able to get their meter when and if the water is adequate. CHAIRMAN TAKITANI: Jonathan. MR. STARR: I just would like a little clarification. Did you come to the top of the list and then were not able to get -- MR. PARKER: I haven't been contacted at all at this point. MR. STARR: Are you saying you are on the list because the pressure was below 40 psi, and that was why you were not given service? I am a little bit confused. MR. PARKER: Yes. I have a lot on Kimo Drive that -- and on Kimo Drive there's houses all around me. And they found that the system was inadequate based on this 40 psi, so I have been waiting on the list for that particular lot since 199. MR. HELM: Mr. Chair, is that a fact, Dave? Do you base inadequacy on that kind of testing? What is the procedure in that? How do you justify whether our system is inadequate? I know that the 40 psi threshold is a one of them. But the factors that he put in is, you know, the numbers -- I mean, how do you determine that? MR. CRADDICK: 40 psi is the number that we have in our rules. It's -- aside from that, there's also source adequacy. And that's why the list was established is source adequacy. MR. HELM: So it's not just a pressure issue? It's a source -- MR. CRADDICK: No. Yeah. MR. PARKER: Well, I came -- Mr. Chairman, I came before the Board back in the early 90's to ask them for relief of the 40 psi for a very short period of time that I felt -- that I felt (unintelligible). And I was denied. So if you fall -- if your system falls below 40 psi for a second, it's inadequate. MR. STARR: Was there source adequacy at that time? MR. CRADDICK: As far as the subdivision number, I -- what is your subdivision number? MR. PARKER: It wasn't on a subdivision; it was on an existing lost. It had been existing for 50 years. So it's -- there was no source or anything. The criteria for the denial was based on the 40 psi. And so I have been living with that, waiting for the system to be boosted up or for me to boost up the system or whatever. But I am on the list. And I would like to see some mechanism regarding this that you would follow as people came up the chain of command. MR. STARR: How would you suggest that the rule, as it was -- as it currently stands or was as it was presented to the Mayor be modified, if you feel it should be? MR. PARKER: On the 40 psi rule? No. MR. STARR: As far as the -- regarding the first-come, first-served and the issuance of meters goes. MR. PARKER: I am reading those -- your amendments here and -- to the 3.1, and which is on a first-come, first-served basis. And you if step up to the bat if you can put your system in and within a certain period of time, then you get your water meter. If you don't, you go to the bottom of the list or -- I think that is a fair way of doing it. I think that's the way that it was done in the past. MR. STARR: Do you have any suggestions for altering it? Or do you feel that as it was stated is the best? MR PARKER: I think stating it the way it is stated here is adequate. CHAIRMAN TAKITANI: Elmer. MR. CARVALHO: Mr. Chair, just as a matter of clarification, the amendments to Section 3-1, as contained therein and presented to us, are those the same amendments that have been sent to the Mayor, then to the Council, and then disapproved by the Council by a two-thirds vote? CHAIRMAN TAKITANI: I believe so. David? MR. CRADDICK: I don't know about the two-thirds vote, but it went to the Mayor. MR. CARVALHO: You know about the two-thirds vote. You were there and I was there. We were all there. So you know it was two-thirds. CHAIRMAN TAKITANI: But this is the same one; is that -- MR. CRADDICK: Yes. MR. CARVALHO: So the rule in effect is the previous rules that you had, yeah, before the disapproval of the -- MR. CRADDICK: Yes. MR. CARVALHO: O.K. That's all. MR. CRADDICK: That's correct. MR. STARR: I would like to -- a little bit of clarification on what the changes were in the revised rule that was defeated in the Council. MR. CRADDICK: It's in the packets. CHAIRMAN TAKITANI: It's underlined on Page 66. MR. STARR: Yeah. I am still not clear on what the changes were, though. MR. CRADDICK: Jonathan. CHAIRMAN TAKITANI: They are underlined on allof the -- and what's been added. MR. HASHIMOTO: These are additions, not amendments. CHAIRMAN TAKITANI: So it details very specifically the first-come, first-served procedure. The main thing it did is say that if a person was not able to perform, they fell back to the bottom of the list again. But it gave the Department a means of purging our list but not having anybody go out and prevent the rest of the people from getting their meters. Any other questions for Mr. Parker? (No response.) CHAIRMAN TAKITANI: Thank you, Steve. MR. PARKER: Thank you very much, Mr. Chairman, Board. CHAIRMAN TAKITANI: We will move on, then, to -- MR. CARVALHO: Before we move on to that, what is the Chair's recommendation with respect to 3-1, the rules that were disapproved by the Council? CHAIRMAN TAKITANI: We will come to that later on in the day, but -- MR. CARVALHO: O.K. CHAIRMAN TAKITANI: And then I can give you my opinion then. But I wanted to allow Mr. Isaacson to come forth. So we will go to B, New Business, Item 1, Communication 99-5, request from Ted Isaacson on behalf of the Bailey Subdivision for approval and acceptance of a water system built to specifications to serve eight lots and replace the private water system. MR. ISAACSON: Good afternoon. Thank you for listening to me. I brought a sample of my coffee that I grow and process and roast. And I would give you this for the Board. I think you all could probably use a cup of coffee. But I will pass it around. I also made the label, and I supply fruit to Grandma's coffee house in my neighborhood. If I have a minute to update you on Bailey Subdivision, I realize that the timing of this is a little unfortunate, considering the 25-percent cutback situation that we are in. However, someone in our subdivision has been pursuing this matter and working on it, one way or another, for 15 years. And whatever decisions may be made today, we anticipate it taking six months or a year to -- if we were to end up with a meter. So I feel like it's something that we feel is something that we would like to pursue, at least for -- on a conversational level. Along the way in the last -- I have lived on this property for eight years. For about the first five of those years, we complained pretty aggressively about the variable 20- to 40-pound pressure in our subdivision. And eventually, about two years ago, the Board voted in favor of replacing our very old 2-1/2-inch galvanized line with a 2-inch Driscoll line, which was achieved about two years ago. We thank you for this. And it changed our pressure to about 100 pounds overnight. We asked for seven meters; we currently are sharing a 3/4-inch meter in our subdivision. We asked for seven additional meters 5/8-inch meters in '93, and we were rejected in August of '93. Three years ago the Board agreed to undertake an agreement with Bill and John Russell on Kealapu'u (phonetic) Road, which is the road that comes down to our subdivision. And at that time he was able to put in the six-inch, ductile-iron line running the length of his property. In addition, he put in a 55,000-gallon tank. And I think in return for that he will able to build a couple of dwellings on his parcel there. At that time I had observed that -- I thought this had been a change, represented a change in philosophy on the Board's part because previous to that anyone who wanted a meter was going to have to go the closest point of adequacy, which was approximately a mile and a half away from our subdivision. And it seemed that by virtue of the Russell subdivision -- and we are speaking about above the highway at Sun Yat Sen going up to the break tank and below the highway coming down to the Bailey subdivision. But I guess -- I thought or we interpreted that the Board may have decided to do this upgrading in chunks, in sections. And we were somewhat encouraged by your agreement with the Russells. Two years ago, as a result of problems and complaints with our -- in our 61-acre subdivision we have one parcel that is 25 acres, and it's a hui ownership. And they seem to have problems with each other, and we have problems with them as well. And it seems like that they represent that they have each other's approval in order to do construction there, which they do not. And they have eventually ended up with three dwellings on that property. But the turmoil over it initiated a visit by, I believe, some of the Board and staff to that property. And though they did obtain their third dwelling for that property, the observations that the newer houses in our subdivision were obviously not agricultural in nature -- when I moved in, four of the five properties were agricultural, and I have been paying GE tax for three of the properties for over ten years on our farm products. But after that visit our agricultural water rates were changed to residential water rates, after approximately 25 years of being agricultural water rates. And many of us have trees that are 20 years old. We have thousands of trees in the ground. I have about 500 on my property. At that point in time, this became an emergency situation for those of us that do have agricultural pursuits because our costs of our water increased approximately 300 percent and we lost any leniency that we might be afforded farmers in time of drought such as we are in now. And I undertook discussions initially with the Director and wondered if we reapplied for agricultural rates -- I submitted a packet that showed our four properties that have been paying GE tax, and I pleaded with the Water Department to reinstate our ag water rates. This is a letter that accompanied that request. And I made ten copies that I would like to leave you with a copy. But it describes the agricultural pursuits that we currently have underway on the -- in the subdivision and the burden that this places on someone -- I won't say specifically raising trees. We have other forms of ag being pursued on the property. But the impact on trees is a devastating impact, something that I imagine If you put 15 or 20 years into -- I have had about 30 trees die this year. It's nearly impossible to get enough water to these trees in this kind of condition. And in Ulupalakua, from what I understand, it's as dry as it's ever been. At that point in time, to -- we were denied to the ability to reinstate our ag rates. And the Director suggested that a more sound solution to this problem might be to actually try to solve this problem the right way, which obviously was pointing us in the direction of dealing with the point-of-adequacy issue. And following the -- and really undertaking this effort about two years ago and continuing with a series of meetings with the Director and the staff and basically taking the example of the Russell improvements and possibly thinking about that, we could do the necessary water improvements on Easy Street, which is the only street in our subdivision, and then -- that would be onsite, and then go offsite to -- extending up to the Russell improvements and then from above the Russell improvements up to across the highway as an offer on our part to extend the system and to advance the point of adequacy, which in fact is up another 3,200 feet to the break tank at the end of Thompson Road. The proposal that I submitted -- and, as you can see, the result of the package that was delivered by the staff concerning this -- was amended to include above the highway a 6-inch poly line. And as recent as last Thursday -- which I think you will see that the staff was recommending that we enlarge the size of the 200-gallon break tank at the end of Thompson Road, which is apparently a typo in the package that was sent to me indicating a 1,000-gallon tank, which was really through meetings through the staff and the Director and probably without having done enough research was -- indicated that we would improve the size of that to a 1,000-gallon tank and possibly even be offered a 1,000-gallon steel tank that was being stored in Iao Valley that I went to take a look at. Upon -- I guess upon further examination it was determined that in fact a 10,000-gallon tank was really what the Department was interested in. And the kind of tank that they wanted was -- could -- or the estimate was -- for the cost of the tank was $50,000 and possibly another $20,000 to $30,000 to -- for fixtures and associated costs of putting that tank on line. And so also, as far as easements above the highway, it was suggested -- or in the staff's recommendation to the Board it was suggested that we provide easements for everything except the section above the highway, the 3,200 feet. And, presumably, they would put the line in the same vicinity as the 2-inch Driscoll lines that currently service the -- all the properties, so I think 35 meters or so below the break tank, and that the Department offered to install -- if we paid for the 6-inch poly line, that the Department offered to install that line. So that pretty much brings us to where we are now, which I guess our seven people in our subdivision -- we have eight lots, but we share a 3/4-inch meter. And in our deeds we have agreed that when and if we received our 5/8-inch meters on our lots, the 3/4-inch meter would revert to the 25-acre parcel in our subdivision. And most of the rest of us are between two and five acres. So at this point, we -- I guess we are feeling the burden. And once now, we are totally -- the potential costs of these offsite improvements and I believe that the burden of that financial cost with the addition of this 10,000-gallon tank have possibly -- and I really don't know at this point, but it created a financial burden that it seems that the Bailey Subdivision may be responsible for these improvements going almost a mile and a half from our projects. So I really don't know whether or not the staff's recommendation is something that the Board is interested in addressing. But we have quite a bit of work into it to this point in time. And I think the fact of losing our agricultural rates has made three or four of us down there -- put us in a very difficult position. And I guess we are hoping that we could solve the problem the right way and could contribute to the point of adequacy. I think we would like not to feel the burden of the entire improvement on the seven of us. And so that's really why we are here. And I think that if this were achieved, then those of us that do qualify for ag water rates will be able to obtain them property by property. And that's it. Thank you. CHAIRMAN TAKITANI: Jonathan. MR. STARR: First of all, I would like some clarification from the staff whether the recommendation is for a 1,000-gallon pressure-break tank or for a 10,000-gallon. And the document at one point is asking for a 10,000 and then in the recommendations section on Page 11 -- or Page 4 asks for 1,000. MR. CHANG: (Unintelligible.) MR. STARR: 10,000? MR. CHANG: 10,000. CHAIRMAN TAKITANI: What about the pipe width? MR. STARR: So in other words, on Page 4 or Page 11 it should be 10,000, not 1,000; is that correct? MR. CHANG: Yes. On Page 4, Item 1, it should be 10,000. MR. CRADDICK: Bob. CHAIRMAN TAKITANI: David. MR. CRADDICK: If you look on Page 10 up there at the top, offsite improvements, it has a 10,000-gallon tank under A there. Then down below where the -- where it says seven improvements are -- see Exhibit F, offsite improvements, the 1,000-gallon pressure-break tank -- what had happened was in discussions with Ted we did say a thousand-gallon tank, because I did -- specifically, the tank he references up here at Kepaniwai, we have a thousand-gallon tank that we felt might be something that could be used. And I think after Herb went through it, we felt that in order to really recommend that to the Board, that should be a 10,000-gallon tank. But it was -- I don't know that it's really a typo, is what I am getting at. We did tell them a thousand gallons at the time. And on further reflection, you know, we found that really it's not going to properly serve everybody below there. And, anyways, if -- I will add that in. MR. STARR: So it needs to be 10,000 to work properly? MR. CRADDICK: Yes. CHAIRMAN TAKITANI: So, Ted, you have agreed to all these from Page 10, these four offsite improvements? MR. ISAACSON: What I felt like I could keep my group together with and what we offered was the -- as far as the break-tank goes, being offered this 1,000-gallon tank and then having to -- whatever, line it with fiberglas, move it, supply the fixtures, that changed -- we didn't agree to that. But that was reviewed and suggested that that's what we really needed. And so that is a point of contention, I would say. And the -- purchasing the 3,300 feet of 6-inch waterline, we had thought that possibly adding a third two-inch Driscoll line to the existing two 2-inch Driscoll lines that are laying on the ground -- we didn't have any idea what the other needs were along the way, but the -- let's say the counterproposal was for a 6-inch poly line, which we have agreed to the difference in price between the 2-inch and the 6-inch line. And, Number C, 700 and -- 750 feet from the highway down to the Russell improvement we did agree to. And the 650 feet from below the Russell improvement down to Easy Street we agreed to and the thousand feet of Easy Street and to provide the necessary easements, of which both the Russells have already done the engineering for much in Keokea and have already obtained some of the easements for that. But it was always something that we felt that when we crossed the highway that we are entering into a different neighborhood, different people, different circumstances. We never offered to provide easements for that. And, in the staff's recommendation, they have apparently excluded that 200 feet of that 3,000 feet. I am trying to find where that exception was in here. Do we know where that is on here, the exception to the 1B? Oh, yeah. It's in No. 2 at the bottom of Page 4. It says the owners of Bailey Partition shall be responsible for all costs of the design and construction, for the costs of the pipes and tanks, pipelines, easements for water system improvements with the exception described in Condition 1B, which is the 3,200 feet going above the highway. So I presume -- I didn't know what they meant by that, they would install that line and whether or not they felt they needed the easements or whether they were going to lay it on the ground like the existing Driscoll lays on the ground or not. But also the -- obviously the addition of this tank, which we had heard numbers from staff that ranged anywhere from 70 to 80 to 200 for the cost of that tank. And I think that put the seven of us in a position that we are way out of our financial capabilities of doing that. And I think fundamentally we all believe that the people above the highway, 3,200 feet of a variety of property owners with a variety of issues, possibly could be tackled by somebody else and that we might be able to do our section, our onsite and our offsite section, but that we would have limited responsibility above the highway. CHAIRMAN TAKITANI: David. MR. CRADDICK:. If we look on Page 17, it might give you a little clearer picture there of what the whole thing looks like. Up there at the very top of the page, kind of in the center there, you will see Kamaole Tank, which is the one that we have been talking about with Peter Stolle, in case anybody needs that for reference. The pressure-break tank that we are talking about is down kind of at the right end of Thompson Road where it intersects the line coming down, the waterline from that tank coming down tying into what I will call the Russell tank there, which says 55,000-gallon steel tank. And the improvements, skipping a section there, and then going down to the bottom where it says Bailey Partition or 6-inch line. And I think the requirement that we had in -- where was it there? I had told Mr. Isaacson -- see, what it is is they can get easements for everything below the highway, no problem. Above the highway we have a line in there that goes across the -- if you look down at the lower arrow where it says 3,200 feet, 6-inch waterline, there is kind of a road that doesn't really match up with the -- what I will call -- it looks like the edge of the property. That little triangle in there is actually owned by the State. And it -- and there's access and utility easements across that. And then below it there is access -- or access and utility easements for the -- I believe the lots that are on the right-hand side of where that lower arrow is there. There is a small little kind of a square and then kind of a bigger thing that looks likes Utah backwards off to the right of that arrow. And because