2011-10-25 Water Board Minutes - Laserfiche WebLink

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Mr. Inaba said that the current reimbursement agreement is similar to the one between DWS and Kohanaiki last year on the design portion of the project. This is a design-build project; DWS agrees to a"not to exceed"amount, and the contractor and Kohanaiki gave DWS the funds to execute the change order, he said. Under the current reimbursement agreement, DWS will receive the funds and DWS will execute the change order with the contractor. This agreement is to do the construction portion of the project. Ms. Garson said she wanted to make clear that there was never a written agreement on the design contract. The current agreement encompasses the design portion because the parties never came to an agreement on the exact terms. Therefore,this agreement encompasses some of the design costs, and construction. She also clarified that the version of the agreement that the Board received is DWS's version. The developer, Kohanaiki, had some changes that they wanted to request the Board to make, she said. This morning,the Board received the developer's black-lined version of the agreement that the Board got from DWS. She suggested that the developer might want to explain why they wanted or needed the changes to the proposed agreement. Chairperson Mukai asked Mr. Lim,the attorney representing Kohanaiki,to summarize the differences between the DWS version and the changes he recommended. Mr. Lim said that he had made comments on the first version of the agreement, which Ms. Garson had provided to the Board. He said those comments were marked"Draft"on the top right hand of the page, and"Draft dated October 24"on the bottom. This is really a red-line of his proposed changes, Mr. Lim said. Mr. Lim gave the history of the agreement, which is part of the June 15, 1999 water agreement, whose three parties at this point in time are Hiluhilu Development on the Palamanui project, Kohanaiki Shores and the Water Board. The first amendment to the water agreement was dated January 11, 2007. The improvements at hand are all detailed in Exhibit A, Mr. Lim said. There are very detailed plans worked out over the past six to eight months, and this is probably the fourth iteration of the plans in terms of what will go into the Queen Ka`ahumanu Highway to service the project. Mr. Lim said he is pretty comfortable that this is the final design, and that is the reason for his proposed amendments. Turning to the proposed changes, Mr. Lim noted that in the DWS version, Kohanaiki must pay its share of the improvements, and if there are any changes to the improvements that are going to service Kohanaiki's project,then Kohanaiki will have to pay for everything. Mr. Lim said he does not have a problem with that concept; he only has a problem with the lack of control over the concept. Kohanaiki does not determine what is going to go into the highway, and Kohanaiki does not design the water system. However,these are all requirements that are required by DWS, he said. The big change that Kohanaiki is asking for is that once there are additional, unforeseen costs or changes, Kohanaiki will be responsible for paying the fair share pursuant to the mutual agreement of DWS and Kohanaiki. If there is a change later on, for whatever unforeseen reason, Kohanaiki wants to be able to at least have a negotiation over that change, for the purposes of this present design that is attached to the agreement, Mr. Lim said. He noted that that is a total of about$704,523.00 of the Kohanaiki share, which Kohanaiki is committed to pay within 30 days of the execution of the Memorandum of Agreement. That would allow DWS to have the certainty of the money in hand. Kohanaiki would then be able to tell DOT to accept Kohanaiki's change order for this work, and things can proceed, Mr. Lim said. He said he hoped that this is a reasonable change for the Water Board to accept. Mr. Taniguchi asked whether Kohanaiki was asking for the right to at least get an explanation if the amount exceeds the original $704,523.00 due to unforeseen circumstances, etc. He asked if Kohanaiki was also agreeing to pay its fair share. Mr. Lim confirmed this, saying that within 30 days after the determination of the fair share, Kohanaiki will pay that amount to DWS. He noted that Mr. Inaba had reported at a previous meeting that part of these infrastructure improvements with the highway are to enable DWS to adequately make its Page 3 of 21 10-25-11—Water Board Minutes js