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HomeMy WebLinkAboutMIN AWESC 2017/01/24 (2016-2018)Committee on Agriculture, Water and Energy Sustainability 1" Session West Hawaii Civic Center 74-5044 Ane Keohokalole Highway, Building A Kailua-Kona, Hawaii January 24, 2017 CALL TO The regular meeting of the Committee on Agriculture, Water and Energy ORDER: Sustainability was called to order at 9:15 a.m., in the Council Chambers, Kona, by Mr. Herbert M. "Tim" Richards, III, Chair. ROLL CAT.T.- Present: Mr. Herbert M. "Tim" Richards, III, Chair Ms. Eileen O'Hara, Vice Chair Mr. Aaron S. Y. Chung, Member (via videoconference from Hilo; came in later) Ms. Maile Medeiros David, Member Ms. Karen Eoff, Member Mr. Dru Mamo Kanuha, Member Ms. Susan L. K. Lee Loy, Member (via videoconference from Hilo) Ms. Valerie T. Poindexter, Member Ms. Jennifer Ruggles, Member CHR. RICHARDS: As far as our agenda day, we have two communications, 60 and 63. 60 is a presentation concerning agriculture statewide by Jeff Melrose and 63 is a presentation by William Rolston concerning Hawaii Island Energy Program. STATEMENTS The Chair directed the Committee to proceed to the next order of business, FROM THE Statements from the Public on Agenda Items. PUBLIC ON AGENDA ITEMS: (There were none.) CHR. RICHARDS: Moving forward, we'll go right into the presentation by Mr. Melrose. Before I get started, I just want to say something. As for this committee, it's my intention to bring forward information to help all of us as we make decisions for our County going forward. It's my belief that to do that, we have to have come from an informed perspective and no better way to start that than with an education. I have worked with Mr. Melrose over the years and he has had some great presentations, his baseline studies first of Hawaii County and then of the State are remarkable. The one he wrote for the County of Hawaii back in 2012 won national awards for the information. AWESC-1 January 24, 2017 Excuse me a second, I'm being corrected. So anyway, it's my intention to educate the Council as we go forward and as I find things that I think we can use to help educate us, we'll go forward. That being said, Mr. Clerk, please read in Communication 60. COMMUNI- The Chair directed the Committee to proceed to the next order of business, CATIONS: Communications. Comm. 60: REQUESTS A PRESENTATION BY JEFFREY MELROSE, PROJECT MANAGER AND LAND USE CONSULTANT, REGARDING THE "2015 STATEWIDE AGRICULTURE LAND USE BASELINE," TO EXPLAIN WHERE HAWAII ISLAND FITS INTO THE STATE'S AGRICULTURAL EOUATION From Council Member Tim Richards, dated January 3, 2017 Motion to Close File: Mr. Kanuha moved to close file on Comm. 60. Seconded by Ms. Poindexter. CHR. RICHARDS: And at this point, Mr. Melrose, you are on. (Note: At this time, Project Manager Jeffrey Melrose came forward and gave a PowerPoint presentation to the members of the Committee. For viewing of the subject presentation, see the DVD copy of the meeting proceedings on file in the Clerk's Office. A copy of the PowerPoint presentation is made a part of the record, see Comm. 60.) CHR. RICHARDS: Thank you, Jeff I really appreciate that. I've listened to Mr. Melrose's presentation several times in several different venues and the amount of information that comes forth is huge. So that being said, questions from the Council. It's been brought to my attention that Councilman Chung is in the Hilo Council Chambers. Thank you, Aaron, for joining us. Questions? MS. LEE LOY: Chairman, I have a question. CHR. RICHARDS: Hang on, Councilwoman Lee Loy, I have one here. Councilwoman Ruggles. MS. RUGGLES: Thank you, Chair. Thank you, Jeff, that was a really great presentation. I just had a quick question about that program that you had mentioned, was farming—something for the farming man, I believe that they help build hoop houses on Hawaiian Homelands, is that true? MR. MELROSE: Yes. MS. RUGGLES: What was the name of that program? Page 2 AWESC-1 January 24, 2017 MR. MELROSE: It was called—they used Farming for the Working Man. MS. RUGGLES: Okay. MR. MELROSE: So it was really aimed at trying to give people who had other jobs an opportunity to make some money farming. So they helped them build the hoop houses on their properties. This is rare because one, they own the lands and two, they had somebody who was willing to help them grow they could grow tomatoes, some are growing tuberoses, some are doing different kinds of plants, but there has also been some real expansion. I talked to somebody the other day who said that they have done two and they're going to do two more houses and they thought they could make $100,000 between them and one other family who was helping them farm it. That's on the side, outside of their regular jobs. MS. RUGGLES: What's the history of the program? MR. MELROSE: It started with the wild farms and those were two—the Hodsons, they were both—she's a homesteader, he was a retired Policeman for the County. They got very successful in their tomato crop business, sending it to the Mainland. They built probably 40 or 50 hoop houses and they stopped and said, "We can spread this around to the other homesteaders." They are very active in the Homestead Association and they went out and got money, both from OHA (Office of Hawaiian Affairs) and Native American programs. The County funded them for three years, a small amount, and they trained 45 homesteaders I think the number was, and built a hoop house on each one of their properties and taught them how to use it. So they're still being used which is a rare thing. MS. RUGGLES: Thank you. CHR. RICHARDS: Councilwoman Lee Loy. MS. LEE LOY: Thank you, Chairman. Thank you, Mr. Melrose. I have just two questions. One, you mentioned earlier about different types of farming programs that were available, and it sort of split the agricultural community. Has that agricultural community come up with a definition for agriculture and what that looks like? MR. MELROSE: I'm not sure that it spends much time trying to define agriculture. I think that there are different types of agriculture, clearly. There are people who believe that agroforestry is part of that answer, that all farming should be organic or community based, small scale. And others who are trying to make a middle-class living off of their full-time labors and that's—so there's a variety of different kinds of them, but I'm not sure that we've sat down—that group has sat down and tried to talk about what is ag. I think it's kind of all fits under the broader envelope of agriculture. Page 3 AWESC-1 January 24, 2017 MS. LEE LOY: I guess as I think through this and some of the other suggestions you mentioned about revisiting our ag lands and our real property tax rates as it applies to ag and ag exemption, I keep looking for some of those definitions so we can look at those thresholds and how to kind of frame up those ag exemption pieces for our real property tax piece. MR. MELROSE: I see what you're saying. No, as it relates to the ag tax thing, that is a challenge. At what point is farming—do you have six or ten trees in your backyard that you pick periodically for tropical fruits or goats on land, ranching? That's what you're asking, where is that line, yeah? And I think there are some commercial definitions, certainly the federal definition is somewhere around $1,000 annually is a very low threshold. USDA (United States Department of Agriculture) has a very low number for what is a farm and I think it's based on gross income, so I think the Council could wrestle with that a little bit. They have some guides for how to deal with that at the real property tax. How many sheep and how many goats is enough to make it worthwhile? But all of that could be looked at more closely I think. The other thing is that those, particularly in ranching, probably 90 percent of all of the tax benefits are in ranching, in terms of acres and that's a—those folks could be more—they also maintain open space, they keep trees down. If you don't have land that is managed, what you end up with is albizia trees in some places or guinea grass and fire load in others. So finding some way to acknowledge the role of land stewardship and land management may be part of that conversation as well. You asked a tough question and I don't have a simple answer for it. MS. LEE LOY: Thanks. Well that's what this was intended to do, start the conversation. My final question is I didn't see any piece related to agricultural theft, how much our farmers are losing through theft? And I mention that because I heard that from a number of farmers in my district who do a lot of anthuriums. But I was wondering if you had any data on that and how much our farmers are losing because you mentioned a phenomenal number about the generation of income at almost $28,000,000. But I was wondering what piece they're losing. MR. MELROSE: Just to clarify, the $28,000,000 was the difference between the County's revenue for what they would get if they just charged based on real estate value and what they charge based on agricultural use value, that's the $28,000,000. But your question about ag theft, this is a major issue and if you just sit with the Shipman's a little while and listen to their stories, I mean the horrific stories of repeated ripoffs from $8,000 to $10,000 to $15,000 in a night of equipment and some crop. There's a lot of crop that gets taken so the department Page 4 AWESC-1 January 24, 2017 The Prosecuting Attorney has done a good job I think. They have gotten a couple of investigators now on a short-term basis to be doing some of the investigation. It's a little hard for the police to be doing that and then at the same time have a traffic accident or some kind of a more violent crime and have to be focusing on that side of it. But there is, I think now two investigators in the prosecutor's office focused specifically on enforcing—capturing and enforcing ag theft. How that's going, I haven't spoken to Roth recently, but I think it's partly funded by the Department of Agriculture as a support funding to get that under way. You know it's funny, I was on Kauai the other day with small farmers anda bunch of small farmers on Kauai and in their area they had a whole bunch of farms and then they had a lot of wood laid out and stuff I looked at it I go, "How come that's still here, how come nobody stole it?" They said that we don't "That's not a problem we have." This is Kilauea farmers but it was a beautiful body of timber and stuff that would've been gone in an instant if it was in the Puna district, but on Kauai, it didn't go away. People weren't—they were respectful of it which I thought was amazing. MS. LEE LOY: Do we have a number though as far as loss revenues? Do you have any of that information? MR. MELROSE: I don't have it, but I think we can find it and I think it's definitely worth a number to move around. So I do think that there is a number and I would—Mitch Roth probably has a number to start with anyway because they have had to find one in order to justify the funding for it. MS. LEE LOY: Okay. Thank you. CHR. RICHARDS: Are there any other questions for Mr. Melrose? MR. CHUNG: Mr. Chairman? CHR. RICHARDS: Where are we? MR. CHUNG: Mr. Chairman? CHR. RICHARDS: Aaron, go ahead. MR. CHUNG: Thank you. I don't really have any questions, but just two acknowledgements really. I thought what was presented to us by Mr. Melrose was very educational, fascinating at times, and he is obviously a great resource that many of us have reached out to over these past couple of years. And I also wanted to thank you, Mr. Chairman, for bringing this forward because it really is a good starting point, and I think that's what you intended to accomplish today. So thank you very much, I think this was terrific. Page 5 AWESC-1 January 24, 2017 CHR. RICHARDS: Thank you, Councilman Chung. Are there any other questions? Councilwoman Eof£ MS. EOFF: Thank you. I wanted to thank you also, Jeff I've seen the report from 2015 and—but the slides here and the comparisons are really revealing. But I especially like this, I don't know what you would call this one slide, the "Shifting Ag Production Formats," which shows us kind of pros and cons and where we're going, comparing industrial ag to rural ag. And I think that's something we should really keep in mind and focused on as we look to where we are going on this island. I think this island has a lot of potential for diversified ag and I hope that's the direction we do go. I think it's better for the environment, better for the future, and I believe that we'll see more and more if we can figure out how to encourage MR. MELROSE: I think it isyou're right, we're kind of laid out for it, Puna's laid out for it, the diversification of ownership that's happening on the Hamakua, South Hilo coast, it kind of leads right into that. The challenge is what is economic? How do you become economic? At what point do you move from being a gardener in a community, kind of a sharing basis? In rural Hawaii, it's always been, "I have avocados, and this guy has fish," and we exchange. That's just the beauty of living here, that's why I think we all live here, that's why we choose to be here. But how do we do it economically? MS. EOFF: Right. MR. MELROSE: I've been involved for the last three or four months in the farm to school program in North Kohala, which is in its third week of a brand new menu with learning to really cook again in the kitchens and trying to figure out how to bring more local food into that. The problem is there's not very much elasticity in the production and where there are folks—they haven't really grown up to the level of being able to be food safety certified or to deliver on a regular basis a regular product. Those are the things that make—if you want to be feeding our institutions and our bigger groups, you got to have that kind of stability and so—that and even the commercial guys are kind of scrunching down, we're seeing fewer of them as they age. There's nobody stepping up to the—so it is a challenge and I do think that rural nature is part of what we want to see fed, and the question is how do you do it and keep it economical? MS. EOFF: Right. MR. MELROSE: There are a lot of immigrant farmers out there that are doing this and we never see that money, it all goes into the farmers' markets and there's no—it's hard to track, hard to know what we're doing. But that's a big part of the puzzle. Page 6 AWESC-1 January 24, 2017 MS. EOFF: Well I hope you'll continue to help us look for ways we can be economically encouraged to continue and diversify. MR. MELROSE: Thank you. Yes, I think I'll be around for that. CHR. RICHARDS: Any other questions? Okay. Councilwoman O'Hara and then Councilwoman David. MS. O'HARA: Hi Jeff, thank you for the presentation. I have viewed it before and it's a great presentation. As we don't know what KSBE (Kamehameha Schools Bishop Estate) will be doing with the tree farms that they have on the Hamakua coast, are you able to tell me whether or not we have—will they be removing stumpage when they harvest? Do we know this and that's part of the land lease I would imagine? MR. MELROSE: I can't speak for them. I know that there was a time in which they were killing coppice but for a short time. For a while, they were managing coppice thinking they would be able to use it again and then—this is not Kamehameha, this is the lessee. Because the lessee had a requirement to remove trees and so exactly how that played out, I'm not sure. I think the trees still will and do have value as they stand, the question is on the lands that have been harvested, what will happen to the stumpage and I'm not sure exactly how they're going to work that out. That's—maybe Val has had better briefing on that topic. MS. O'HARA: Okay. And I did have another question about the training program that you mentioned for the DHHL (Department of Hawaiian Home Lands) and Pu`ukapu. I have spoken to people who have participated in that and they really gained a lot of knowledge. Were there collaborators in that program other than DHHL, County, and Native American funding, but did the University collaborate? CTAHR (College of Tropical Agriculture and Human Resources)? Was there any other collaboration on that project? MR. MELROSE: Yes, I think it was really done out of the momentum of Mike Hodson and his wife pushing hard to get that going. To the degree they reached out, I'm not sure. I do know that they were also looking at a whole variety of things, growing sunflowers for sunflower oil, couple of other things in which they did have other—Pacific Biodiesel for instance was up there working with them for a time. But they did—they took pretty much their own head about it and they draw on the University, but the University has a hard time getting up there and doing those kinds of programs. CTAHR, you know they do have an extension agent, but that wasn't the person who was going to really catalyze this conversation, and they had a group who could catalyze it. MS. O'HARA: Okay. I was just wondering about replicating the program elsewhere since it's been so successful there. Page 7 AWESC-1 January 24, 2017 MR. MELROSE: It's a tough one because those folks already own their property. MS. O'HARA: Right. MR. MELROSE: The Kohala Center has two programs. They're just starting to sponsor the Go Farm Program which is a statewide initiative out of the University of Hawaii, out of CTAHR. And then they've been running their own program on a small spot just south on Haina Road, below Honoka`a. And that primarily served a lot of the small farmers on the Hamakua coast who bought land and never farmed before. They wanted to know how to be a little bit more effective so they were taking these kinds of classes. Go Farm is going to be a three-year project in which you actually progressively move up into having your own farm or having an area that you farm and trying to get you all the way through the process of production, as opposed to giving you a couple of looks at how to tie up an irrigation system or fertilizers, one night talks, kind of thing. MS. O'HARA: Thanks, Jeff. One last question, are there options to expand the slaughterhouse in Pa`auilo since it's not keeping up with the growth of the cattle industry? I know it's State owned but could that be a consideration and did we ever get the rendering plant funded? MR. MELROSE: The County did take money from the State four or five years ago toI don't know if it was intended to expand the footprint, but it certainly expanded the chill capacity and put in the rendering plant. The rendering plant, to my knowledge, is not up and running currently, and that's an important piece of the puzzle. The DeLuz family is in its own challenged moment with the primaries passing away and the kids trying to figure out what to do with it, but they hold the primary lease. And I think the cattle industry has kind of thrashed around but do we go and create a real state of the art brand new something, somewhere, or do we continue to work with it? And right now, you got to work with what you got so that's what I see happening. Perhaps Council Member Richards has a better handle on that than I do. MS. O'HARA: Thank you, Jeff. CHR. RICHARDS: Thank you, Councilwoman, O'Hara. Councilwoman David. MS. DAVID: Mahalo, Chair. Good morning, Mr. Melrose and I really want to just say thank you for all the reasons that my fellow Council Members had said. This was a very informative report because of the comparisons that you made so we can see it clearly. But I just had one question, it kind of interests me about the slaughter facility and the fact that we don't have any slaughter—full facility to take care of that. When our ranchers have to send their cattle out to be processed, Page 8 AWESC-1 January 24, 2017 what would it take to get a facility, a slaughter facility, either on this island or is there one on Oahu? MR. MELROSE: That's a good question. There is and has been for some time a slaughter facility out at Barber's Point, which was—is that Kaho`ao Meat before? There was one that was not being well-run, it's primarily been doing pork, shipping in hot—for the hot market, for the fresh market with a little bit of cattle from Oahu. But it looks like the Kunoa Ranch, Kunoa Cattle Company from Kauai has invested in that as a place to be able to bring cattle to harvest, and I know Parker Ranch has looked at that and others. Moving full-sized cattle is different than moving smaller wean offs but that's the way we used to do it. I mean that was a long time where we were sending cattle there and then putting in a feed lot and harvesting them there. Then there's the processing facility, Wong's and a couple of others there that can take the primal cuts and turn it into local cuts as well. So I think that's one piece of it. Kualoa Ranch has been working with Parker Ranch to—with the idea of moving some of the Paniolo animals, Paniolo Cattle Company animals in that direction. And until recently, there wasn't a really strong investor or operator at that facility, but I think Kunoa's going to invest in making that happen. Is that fair, Tim? MS. DAVID: Thank you. I just ask that question because I'm just wondering from the mid -fifties and sixties, there was Kona Meat Market that ranchers would take their cattle to and the demise of that was the result of the inability to keep up with production. MR. MELROSE: There were places like Miko Meats and others that—part of it is regulatory, part of it is just the design of the facilities. Some of it is—then there were fewer animals to harvest and now they're going to come back, so Maui Cattle Company's looking at they just had the DeCoite Slaughterhouse in Makawao and that's a private operation and so they're looking at whether or not they need to take this step and invest in their own processing operation. But if we're going to meet the demand for local grass fed beef, that's probably one of the biggest throttles right there, that and the uncertainty of weather and grass growth and those kinds of things. But that's the principal throttle. MS. DAVID: Because I think when we speak of sustainability in all different areas, I think that is the key to keeping—to solving this problem as far as our beef products are concerned. So thank you for explaining that and that's a big MR. MELROSE: And just one other thing. The market, the Mainland market for slaughter—everything that comes off an animal has got value. Offal goes to dog food, feet goes to hooves, there's lots of ways to make money off of it. For us, those things are cost centers, not profit centers. So it costs money to take it to the Page 9 AWESC-1 January 24, 2017 dump, it costs money to dispose of them in one way or the other and that's where the pinch comes. MS. DAVID: Right, right. MR. MELROSE: So it's been easier as those mega facilities develop to do that. But the pricing is different now, so fewer and fewer guys are looking to send their cattle off at fifty cents, which it's been before but it's just never got as high as two dollars, which was driving the market for quite some time. MS. DAVID: Right, I understand that, and thank you for that. My last question is about the farming for the working man. That program, do you know if it was taken to other homesteads and other areas of the County? MR. MELROSE: It's certainly been shared with other homesteads. MS. DAVID: But it's probably driven by MR. MELROSE: It's a classic example. I've been to the Hawaiian Homestead Ag conversations on this topic and everybody kind of I mean farming is land and water, etc., but it's about people. And it's that collection of people in that circumstance and the quality of land, the availability of water, the drive and the personality of the Hodsons that made that work and so sometimes we think we can fix it by fixing things. MS. DAVID: It just depends on the individuals, the driver. MR. MELROSE: It just has a lot to do with that. MS. DAVID: Right, I see. Okay well thank you. I didn't realize this program existed, so thank you very much. MR. MELROSE: It's really fun. I think you'd enjoy going up and seeing it and the people that are involved in taking it on, the individual folks. There are some really cool stories of families that have gone and made investments. MS. DAVID: Especially in this day and age when people cannot farm the way they would like to. Even a weekend farmer because they have to work, and so if there's a means for them to do a little bit of both, I think we'd perpetuate the farming industry that way. MR. MELROSE: And I think you'll see more of these small hoop houses where you will have control. I mean in Hilo, you could not get into your fields all week this week. I mean it's been sopping wet. And so you just don't have the ability to manage and effectively control the things that you need to control. So hoop Page 10 AWESC-1 January 24, 2017 houses, greenhouses, those kinds of control agents are going to be increasingly important and you know, he built some pretty substantial ones but they were affordable. I think everybody had to pay a couple grand to participate and then they rose about 10 grand per to build the units as well. So they—everybody had some skin in the game but they were left behind with a hoop house that— MS. DAVID: Thank you very much. Alright. Aloha. CHR. RICHARDS: Councilman Kanuha. MR. KANUHA: Thank you, Mr. Chair and mahalo Jeff for the presentation, always love hearing from you. I know you've been coming to the Council for several years now, it's weighing all the information that you've been collecting so it's always—and mahalo, Mr. Chair for bringing this up. It is an excellent baseline of how we need to move forward with our plans in Hawaii County. The governor came out with his request basically to—how are you going to be more sustainable in the future, you know 100 percent sustainability? I forget what date he announced it but -2020? And so we really need to look how we're going to do that and the whole presentation, excellent information. What are the suggestions? How are we going to grow farmers? How are we going to do all of this? And that's why I appreciate this last section, what are we going to do to move forward? With this sustainability effort, growing more food, growing more farmers, having the ability to produce more, so I appreciate a lot of this stuff. It's really something that we do need to visit all the time because this is what—this is how we're going to support our future. One question I had though. In Honolulu, you brought up the use of water the reuse of water for Central Oahu from the R-1. In Kona, we're going to try to switch over from R-3 to R-1. It's a big endeavor, it costs a lot of money, most of the water is going to be used for landscaping purposes, but in Honolulu, they use a lot of that for, as you stated, ag use. MR. MELROSE: Just starting. MR. KANUHA: Okay. How much water are they using and—for that specific you don't have to have the numbers now, but is it a big chunk of that? MR. MELROSE: It's a couple of million gallons right now and the first of this is going to come out of Schofield's existing R-1 treatment plant, but it's up at the top of the hill and it flows down over a & b quality soils. Your R-1 water out here is going to go out on the lava land and if you can get it in the landscape, great. Actually for landscape, it doesn't have to be R-1, you know? R-1 is what it takes to get you to a food crop. And so you can use it on lettuce and the like. Whereas you couldn't R-2 you could—they used it on pineapple because it never Page 11 AWESC-1 January 24, 2017 touched the fruit, or an orchard because it doesn't get in contact with the fruit itself MR. KANUHA: There are a lot of different reasons for switching over here from R-3 to R-1. MR. MELROSE: Sure. True. Offshore water quality and other things. MR. KANUHA: Yeah. So I was just kind of curious to see how that process on Oahu worked and how well it was working. Obviously it's a good MR. MELROSE: Well it's moving along and it's going to be a challenge at Wilson Reservoir because that's kind of the backup dump for Wahiawa's water, and if they have a problem, they end up dumping poor water into that pile. I just want to make one observation and this is something that I say in a lot of talks that I have and that is, these goals about local food, I think when we say food, it's kind of code for vegetables. I think that's what we're thinking when we say local food. But the challenge for local vegetables is different than the challenge for local beef or pork or eggs or chickens. So the degree to which we can be specific about the kinds of food we're talking about would be much better at trying to solve the problem. The more we talk about food, it kind of makes me feel like blowing bubbles. We're just kind of talking about it, something that—but we don't know what it is. And the answer is really different for beef, and for—where is our pork business, where's our milk, what's the egg story? So if we want to move the bar, we have to articulate about the type of food we're talking about and I think we'll be better at ultimately solving it if we can get around the language challenge of calling it food and expecting it to beI think we're talking about vegetables when we say that for the most part. Anyway, it's like agriculture is not one thing it's many things, right? Different wording. Just an observation. MR. KANUHA: Mahalo for your presentation. Thank you, Mr. Chair. CHR. RICHARDS: Thank you, Councilman Kanuha. Council Chair, Poindexter. MS. POINDEXTER: Thank you so much for all you do and continue to do for the future of ag. I just recently met with Lorie Farrel and talking about how do we update our ag plans? Because we have a Hamakua Agriculture Plan, Waipi`o is doing their strategic planning, they've had plans, and kind of updating that. So along the Hamakua coast since the demise of the sugar industry, I think we started working on ag plans, but how do we continue to update those plans and grow younger farmers? When you talked about Mr. Bowman, Max Bowman, and then we have Brandon Lee who's looking at his piggery. So different—young farmers coming up, Keahi Tajon and more towards the Hilo side, working on his farm and Page 12 AWESC-1 January 24, 2017 I think there's a good possibility of nurturing younger farmers through all the information. And it's very helpful because this type of information helps them look at what had happened before and how can they move forward? So thank you for your expertise and we continue—we look forward to continuing our relationship in building young farmers, growing young farmers. MR. MELROSE: Thank you and I want to just add Kyle Studer to that combination, conversation. Maile, that's in your district, right? And that's—and these are just two guys, Kyle and Max, they graduated out of the Hamakua Ag Coop and they proved their ability, their willingness, their hard work ethic, that kind of stuff And the world brought opportunities to them to continue to grow and so they are like little pieces of gold. You got to kind of hold them and love them and buy their stuff in order to make it work. But that's what it takes. It's about people like that. CHR. RICHARDS: Okay. Thank you. Are there any other questions? Hearing none—before—Jeff again on a personal note, thank you very much. As I listened to this conversation, it's brought up more ideas going forward and we'll have some further conversations later. I think updates so the Council understands the cattle industry would be a great thing. I think it's mindful that we remember the Big Island has 55 percent of the state's land mass and only about 12 percent of the population. We have lands, we have water sources that are available to us, and I think, we sitting here, have an opportunity to do the right things as far as public policy to allow agriculture to flourish. Not to mandate it, but to allow it, to help it flourish. So going forward, that's what we'll have and we'll talk story about the cattle industry. I think there are some things that would be helpful for people to understand. So with that, thank you again, Jeff, for your support. I will keep you on speed dial for a resource and I would like tocan I call for the vote? Vote on Comm. 60: The motion to close file on Comm. 60 was carried by the Filed following voice vote: Ayes: Committee Members Chung, David, Eoff, Kanuha, Lee Loy, O'Hara, Poindexter, Ruggles, and Chair Richards – 9. Noes: None. Absent: None. Excused: None. CHR. RICHARDS: Motion carries, we are closed. Now, moving forward, traditionally when I host a meeting, I break on or about the hour every hour. This was a great session, we did not take a break, we are going to take break and stand in recess for seven minutes. It is 10:40 a.m. right now, seven minutes, alright? So we stand in recess. Page 13 AWESC-1 Recess: Reconvene: Comm. 63: Motion to Close File January 24, 2017 At 10:40 a.m., the Chair called for a recess. The meeting reconvened at 10:49 a.m. CHR. RICHARDS: We are back in session. Clerk, please read in Communication 63. REQUESTS A PRESENTATION BY WILLIAM ROLSTON, ENERGY COORDINATOR WITH THE DEPARTMENT OF RESEARCH AND DEVELOPMENT, REGARDING HAWAII ISLAND'S ENERGY PROGRAM From Council Member Karen Eoff, dated December 9, 2016. Ms. Eoff moved to close file on Comm. 63. Seconded by Ms. David. CHR. RICHARDS: Mr. Rolston, thank you so much for being here and please impart some of your mana`o. (Note: At this time, Energy Coordinator William Rolston came forward and gave a PowerPoint presentation to the members of the Committee. For viewing of the subject presentation, see the DVD copy of the meeting proceedings on file in the Clerk's Office. A copy of the PowerPoint presentation is made a part of the record, see Comm. 63.) CHR. RICHARDS: Thank you, Mr. Rolston. Questions from the Council? Councilwoman Eoff MS. EOFF: I just wanted to thank you for all of your efforts. I think without you in the position you've been in for the last, I don't know exactly how many years, but MR. ROLSTON: Seven. MS. EOFF: Seven years? We wouldn't have moved this far ahead and it's reallyI think it's something to really feel a big accomplishment for us for our island to be on the cutting edge and to be making this kind of progress. I'm going to yield to my Council Members, but I just wanted to just talk about one thing quickly because I feel like, like you just said in the end, the natural energy lab, NELHA (Natural Energy Lab of Hawaii Authority), and the OTEC (Ocean Thermal Energy Conversion) facility is sort of like a mystery. I'm aware of it and I've been there many times and I'm intrigued by all what's going on, but I don't think island wide, it's that well known. And I'm hoping that with your interest in partnering and collaborating, that we can begin to collaborate more with the NELHA facility as we move forward. Page 14 AWESC-1 January 24, 2017 There's something, maybe it's not appropriate to say, but there is a piece of land next to it on the mauka side of the O`oma parcel that we purchased with our open space land, and I really visualize that parcel as becoming integrated into a renewable energy project. Whether the County can buy the parcel or maybe we could talk to NELHA, but I think expanding over there could provide projects that would be consistent with what else is happening there, the way West Hawaii Explorations Academy School, etc. I don't know it's just something I wanted to throw out there. I'll yield at this time, unless you want to answer that. MR. ROLSTON: Well, NELHA is certainly an area that no one has in the world, and it certainly is under rated like most people don't know about it and what can be done there. It surrounds an airport and it's allowed to wheel energy, it's unique in the State of Hawaii and that it's allowed to provide energy to the airport. The airport has 3,000 acres and NELHA has 870. It's a significant area to drive economic development because—my best analogy is it's kind of like our astronomy sector in that it just pushes the edge of what you can do in aquaculture energy. No one's doing what they're doing there so it's a real gift to the island. So anything the County can partner on there is just a win for the whole island, I agree completely. MS. EOFF: Thank you. Look forward to continue working with you. MR. ROLSTON: Great. Thank you. CHR. RICHARDS: Thank you Councilwoman, Eof£ Councilwoman O'Hara. MS. O'HARA: Thank you, Chair, and thank you Will for bringing this to us. I know we—it wasn't put together in the same order as you presented it so we were trying to follow the slides. MR. ROLSTON: I apologize. MS. O'HARA: That's okay, but great presentation, thank you so much. A couple clarifications, you said the County consumes seven percent of the energy produced on the HELCO (Hawaiian Electric Light Company) grid and five percent for water pumping. Is that all contained in that seven percent? MR. ROLSTON: So yeah, right. Five percent of the HELCO generation load you would say, is consumed by the Water Department. Water Department is the biggest customer and if you add another two percent, that represents the seven of total County. MS. O'HARA: And the Lalamilo generation is exclusively for water pumping? MR. ROLSTON: Correct. Only water pumping, so Page 15 AWESC-1 January 24, 2017 MS. O'HARA: And so that's the first project we've done which is kind of exclusive to the—use the energy specific to water pumping, is that correct? Or do we have other projects? MR. ROLSTON: There are other projects the County hasn't developed and there's another wind turbine that's just makai up there that is used for water pumping, but not as big as Lalamilo. MS. O'HARA: And that is undoubtedly more cost effective than using energy from the HELCO grid? MR. ROLSTON: Undoubtedly it is, and as oil prices go up, it gets even better. Yeah, in all aspects it is cheaper and a better use of the energy because it's right outside. MS. O'HARA: One other clarification, you mentioned that we are producing biodiesel on island and the plant in Kea`au can produce 5.5 million gallons. If there were disruptions that you spoke of, where the ports were damaged or whatever and we couldn't bring shipments in, that doesn't necessarily mean that we can produce that quantity of biodiesel because of the lack of feed stock. And that's where the agriculture tie-in is because we don't actually collect that much used cooking oil on this island. Most of the used cooking oil is being collected in the other counties and shipped to the Big Island for that production. And there's also some back shipping of brown grease from the Mainland that's going into that plant, so we would be restricted to what we could produce locally in terms of feedstock. So that's why again, it's very important to focus on the biofuel/ agricultural connection and getting energy crops that can produce the feedstock needed, so that we could be sustainable and self-sufficient in the case of any types of disruptions. MR. ROLSTON: Absolutely correct and it is the best plant in the world. We're lucky that we have someone who's really worked on it for thirty years so he knows how to do what you're saying, so we should encourage that plant to produce more and more. MS. O'HARA: I would agree with you on that. I ran into that gentleman just the other day and he expressed some concerns that the County is changing its purchasing process for those fuels. I know he was on his way to a meeting with the County when I spoke to him, so I just want be sure that we're continuing that purchase agreement for biodiesel at the County. MR. ROLSTON: Right. There were concerns from the people who use it, their machineries seem to be breaking down and we're currently in investigatory mode as to, was it the biodiesel that caused that or some other area? I believe R & D (Research and Development) is a supporter of this economic development play Page 16 AWESC-1 January 24, 2017 that also has indigenous fuel, so we're kind of in the middle of finding out what's really going on. MS. O'HARA: That's a good point because it has been purchased consistently for a number of years by all the other counties without negative impacts. My last question, Will, would be what would you provide as a single policy recommendation to the Council being that we are the largest energy consumer in the County? What would be an important policy that you think the Council should be considering that would bring our energy costs down even further and direct us more towards renewable energy use? MR. ROLSTON: Right. So other places in the United States—so for instance, if you were a large oil refinery or a large energy user in aluminum smelter somewhere else, you would enter into dockets where there was going to be $20 or $30 million increase from the utilities. So if the utility is asking for 10 percent increase in rates, and they're already making $400 million, that's $40 million. So an entity that stands to save, let's say $5 million by entering into a rate case, they would probably spend a $1 million because it's great leverage. We, or none of the counties has ever done that but the leverage in dockets is significant. So as a policy consideration, I don't know if we've either been lucky or tried really hard, but we've been successful on dockets and saving the $70 million. But it's not always going to be that way because the utility protects their number one customer, which is the PUC (Public Utilities Commission). And they do have significant resources to fight, so the leverage is there in policy and if we had a little bit more policy help or money, that is my recommendation. MS. O'HARA: Okay. Thank you. MR. ROLSTON: You're welcome. CHR. RICHARDS: Thank you, Councilwoman O'Hara. Any other questions from the Council? Councilwoman Ruggles. MS. RUGGLES: Thank you, Chair. Aloha. Thank you for the presentation. Please forgive me if this question is fairly obvious to the rest of you. I was wondering if you could inform me of the status of the windmill project in Ka`u. MR. ROLSTON: The windmill project in Ka`u? MS. RUGGLES: Yes. MR. ROLSTON: I know Ka`u has great winds, I'm not aware of a wind project that's in Ka`u. MS. RUGGLES: It's the—all the windmills off of South Point road. Page 17 AWESC-1 January 24, 2017 MR. ROLSTON: You're talking about the South Point wind project? Okay. So that project is 20 megawatts so that's our largest wind project, and that's called Tawhiri and that's the second best wind farm. So the north wind farm in Hawi, is probably a little bit better, but that's our second best. They could add 20 more megawatts so we'd be up to 40 megawatts there, and the power supply improvement plans that HECO (Hawai`i Electric Company) has just released, so HECO, MECO (Maui Electric Company), HELCO include that project and adding 20 megawatts to that particular project. But they also need a transmission upgrade so it'll be more expensive than just adding 20 megawatts and getting 15 cent per kilowatt hour. You'd have to add some transmission so it may come up to 20 or 25 cent per kilowatt hour, which is still good. We do have the best wind sites on land in the United States so we have class 7, which is the best. So putting wind at the south wind project, 20 more megawatts, 10 more megawatts at the north wind project, and 3 more megawatts at Lalamilo just is the, I don't want to say no brainer, but it's just the right thing for this island to be doing. So we should support that, if that answers your question. MS. RUGGLES: Yes, thank you. MR. ROLSTON: Thank you. CHR. RICHARDS: Thank you, Councilwoman. Any other questions? MS. LEE LOY: Chairman, I have a couple of questions. CHR. RICHARDS: Councilwoman Lee Loy, thank you. MS. LEE LOY: Aloha. I just had a couple of questions and I might have missed it during the presentation because it got cut out, but I was interested in that intergovernmental wheeling piece that's pending before the PUC. If there is any additional information on that? MR. ROLSTON: So that started in 2007 and it's unusual to have a docket open this long, so that's 10 years the docket's been open. The idea was that state could wheel to state and state to county and county to state. So they thought that they could start wheeling energy from either NELHA to the airport or County could take its 20 megawatts and wheel energy from the Lalamilo Wind Farm to our County facilities, just basically build out the Lalamilo Wind Farm to 10 megawatts. That's on hold because the utility really—not only is it not technically a good idea because using their transmission lines, they'd also have to create a toll, which would make the energy probably as expensive as what you're getting anyway. Page 18 AWESC-1 January 24, 2017 But it doesn't really make sense in the technical terms but it sounds good on paper that you can wheel energy around the island, but it takes a lot more technical support on the grid. So it would be a lot more expensive than people think. I think that the PUC would allow it from an entity like NELHAso a State entity like NELHA to a State/Federal entity like the airport in Kona because it's just so close. So that kind of wheeling, I think will occur, but I don't think long runs of wheeling, 20 miles, 100 miles will occur. But that docket remains open so we'll see what happens with that. MS. LEE LOY: One other question. I understand HELCO submitted their improvement plan and I was just wondering if the County has seen that from HELCO yet, and what kind of discussions were coming from the County regarding their improvement plan. MR. ROLSTON: Right. So they filed their Power Supply Improvement Plan on December 23rd. This is also known as their Integrative Resource Plan which has been going for five years. So there's been a couple tries, and this one going through, in the County's opinion, is the best one we've ever seen. So as I was discussing, 20 more megawatts maybe at the South Point, 10 more megawatts at the Hawi point, and maybe a few more megawatts in the middle at Lalamilo. We agree with their projects, we are probably going to weigh in heavy on the economics because if you look at the plans going into the future, the near-term plan to the long-term plan which is 30 years, it's essentially a doubling of electricity rates. So if you're at 40 cents today, or 30 cents, it's going to be 80 cents in 2045. So can people—can the island handle that economically? So our big questions are going to be around economics. They did get the projects right in our opinion, but the economics are really not there in our opinion. MS. LEE LOY: And my final question, I had the opportunity to sit on the Water Board so I understand how much energy is being used just to pump our water. Are there other places that the County could participate as far as reducing those types of costs for energy for our facility? I know we're lucky enough to have the West Hawaii facility self-sustaining, but what's the long-range plan for upgrading some of our infrastructure as it relates to energy for our other County facilities? MR. ROLSTON: Right. I think what we did smartly was do the list of projects right. So we did the LED Streetlamp Project, we did the West Hawaii Civic Center first because it was a new building, so let's get the renewable energy, the storage, and the transportation all in one place. That's a good first project. Your second best project would be a windfarm at your deepest water wells, your most energy -use wells. So we're doing the sequence right and then the LED Streetlamp Project goes around the island, that's your best energy -efficiency project. Page 19 AWESC-1 January 24, 2017 So now we're starting to look at the spots where we could really make a difference, and I think the next one up is the interior light retrofit project for all of our facilities because lights—you can retrofit the lights and the payback period would be as short as six months to a year in energy savings. So that's our next biggest project, is doing all the interior lights and even de -Tamping because we don't need as much light in some buildings as we currently have. MS. LEE LOY: Okay. Thank you. MR. ROLSTON: You're welcome. CHR. RICHARDS: Thank you, Councilwoman. Any other questions from the Council? MR. CHUNG: I have one, Mr. Chairman. CHR. RICHARDS: Councilman Chung. MR. CHUNG: Thank you very much. About three years ago, I was driving to Kona and I was listening to Hawaii Public Radio and Mr. Rolston was actually one of the persons being interviewed, and it was a very fascinating interview. So I told myself, "One of these days, I got to meet this guy." I never got around to doing it, so I'm glad that we had this opportunity to listen to him this morning. And I really want to thank both Ms. Eoff and you, Mr. Chairman, for bringing this forward because not unlike what I had said earlier with regard to the previous presentation, I think this really sets a good framework for us to understand situations going forward. So thank you very much. I had a few questions, and I really don't want anyone to read too much into my questions because it's really for the sake of gaining a better insight and to get more information. But Mr. Rolston, you said that at 50 percent renewable, we are the leaders in the State of Hawaii. Can you give us the respective numbers for the other islands? MR. ROLSTON: Yes. Maui is at 38 percent and most of it comes from their three wind farms, and Oahu is at 12 to 13 percent and that is because most of it comes from photovoltaic. So wind as you know, blows in the Hawaiian Islands about 60 percent of the time, photovoltaics work about 20 percent of the time and on our island, we're lucky to have firm renewable energy in geothermal and hydro so we get those 24/7. So our numbers are up because we have some firm renewable energies and as I was discussing, we also have room for more wind, like Maui has 70 megawatts of wind. There's no reason we couldn't have 70 megawatts of wind as well. MR. CHUNG: And Kauai? Page 20 AWESC-1 January 24, 2017 MR. ROLSTON: They are atI believe they are at 40 percent daytime because most of it is photovoltaic and their goal is to be 50 percent powered by photovoltaic in the daytime. So I don't have their annual number, I just know that their goal—and they're a little bit separate from the HECO companies that are HECO, MECO, HELLO, in that they're coop, but I believe their goal was to be 50 percent just by photovoltaics in 2020. That I'll have to fact check, I'm sorry about that. MR. CHUNG: No problem. What kind of numbers would we have if we took geothermal out of the question? MR. ROLSTON: 20 percent less at 30 percent renewable. MR. CHUNG: 30 percent renewable? Okay. So then we wouldn't be the leaders in the State anymore, right? MR. ROLSTON: No, we would not. MR. CHUNG: Okay. My last question is, or maybe last two questions depending on what your answer is, energy derived from a waste to energy plant, is that considered renewable? MR. ROLSTON: Yes, it currently has the definition of being renewable. MR. CHUNG: Okay. So if we did embark on a waste to energy plant here on the Big Island, what kind of impact would that have to our numbers? MR. ROLSTON: The most that I've seen we could pull off with all of our waste is six to eight megawatts. So if it is a firm, renewable energy, in other words it can run 24/7, you're basically adding three to four percent to that renewable number. So if we're using today's number, 53 to 54 percent at the peak, yeah? MR. CHUNG: Okay, so that's on the high then? MR. ROLSTON: That is on the high, correct because at night time, our need for energy goes to half of what we need during our peak time. MR. CHUNG: Okay. Alright. Thank you very much. MR. ROLSTON: Thank you. CHR. RICHARDS: Thank you, Councilman. Any other questions? Okay seeing none, I have a few. MR. ROLSTON: Okay. Page 21 AWESC-1 January 24, 2017 CHR. RICHARDS: First of all, on the 50 percent Will, can you clarify that for us? 50 percent of renewable, because daytime versus night time—and so I assume all those numbers you gave us were comparing apples to apples at the same point in time. Is that a daytime production or was that a night time production, or is it a? MR. ROLSTON: That's actually an annual production. That's the way it's calculated, on an annual megawatt hour basis. CHR. RICHARDS: Okay. Thank you. Concerning the biodiesel, you talked about a source for Civil Defense. Are the vehicles, are they run all diesel vehicles or is that something that we're working towards? Because if we're going to use the biodiesel, we have to have vehicles that use it. MR. ROLSTON: Right. So the diesel vehicles that I was aware of as of December, we're using 20 percent biodiesel so not full renewable energy, like 20 percent biodiesel the other fossil diesel. And that was in the Department of Public Works, that was in the Fire Department, and that was in our Mass Transit. So currently, we're having issues on the maintenance with that so we're currently in talks about what is actually causing those failures. CHR. RICHARDS: So going forward, is that a direction because it was—and maybe I heard it wrong, but the idea was to have a Civil Defense fleet of vehicles that we could power ourselves if the need arose. Is that a fair statement? MR. ROLSTON: I think it just makes sense because—so there's no mandate to do that, but if we have a biodiesel plant that can do half of our diesel needs and we can store it for a period of time without degradation, then it could be used for backup generation, either at our water department or other places like emergency shelters. So it makes sense, and certainly if you talk to the developer of the plant, Dr. Bob King, you'll see that it compares better than fossil diesel. So we're currently in the investigatory phase to see if we're really having trouble due to his biodiesel and just from bringing in outside consultants and looking at his biodiesel, it looks like the best biodiesel in the world. CHR. RICHARDS: Okay. And my final question, what's the range of a hydrogen bus? MR. ROLSTON: It's about 300 miles. CHR. RICHARDS: Alright. Thank you. Any other questions from the Council? We got one here. Councilwoman. MS. O'HARA: If you don't mind, Chair. Page 22 AWESC-1 January 24, 2017 CHR. RICHARDS: By all means. MS. O'HARA: Thank you. And it's actually in response to the Chair's question. The 20 percent is done because that's what the vehicle warranties will allow for, and you can still use 100 percent of the biodiesel from that particular plant because of its high quality. But there are concerns that your vehicle warranty will not stand up if there are any problems and so that's probably part of the investigation that Will's referring to in terms of what we may be seeing in County vehicles that are using the B20 and what—if that's a result of the mix or if it's a result of other things. CHR. RICHARDS: Okay. Thank you. MR. ROLSTON: Correct. CHR. RICHARDS: Any other questions? Councilman Kanuha. MR. KANUHA: Thank you, Mr. Chair. Mahalo, Will, for the presentation. Real quickly, as the Energy Coordinator, are you basically the only one within the department working on our energy needs besides the heads of the department? Is it just you or do you have staff that? MR. ROLSTON: I have been fortunate to MR. HENRICKS: Mr. Rolston, you accidentally turned your mic off I think. MR. ROLSTON: So I've been fortunate to hire consultants for the bigger dockets like the merger. We hired ASU (Arizona State University) to help with the merger. There was a former Chair of the Arizona Public Commission that helped us testify against the merger. So for $90,000 I think we got our money's worth in that our testimonies prevailed. In the biofuels' area, I was able to hire a consultant out of Stanford for $45,000, very cheap and we were able to crash the `Aina Koa Pono Project in Ka`u. So in the dockets where there's a lot of money involved, we're able to find and leverage consultants. MR. KANUHA: Awesome, which is where I'm kind of going in the fact that because this is such an important part of Hawaii Island, our County, and moving forward with energy sustainability, in terms of budgetary what's going to be going on with our budget this upcoming several months, what more can we give you? Or what do you see us contributing within the budget, Research and Development, to make sure that you have enough to be part of all these dockets? You said you saved $70 million dollars last several years, what more can we do to help you in basically doing everything that you said you were doing. Page 23 AWESC-1 January 24, 2017 MR. ROLSTON: Right. So two areas—so dockets probably require—if you're in two major dockets, we're in a rate case now, that's probably going to require $100,000 to $200,000 to get a consultant. I have $90,000, maybe another $33,000 so $123,000, so I probably would require another $77,000. And thenI think on an ongoing basis, $200,000 isI don't need any more than that because I may be able to leverage the money. If there was a particular initiative, like NELHA is an area where we should be driving more and more research, and so at the max, I think a budget of $250,000 with some of that devoted towards energy research and development at NELHA. So I would think another $77,000 would help MR. KANUHA: And that's currently not within your proposed budget? MR. ROLSTON: I don't think so, I think it's $90,000 and $33,000. MR. KANUHA: Okay. We'll keep that into account when we go through— MR. ROLSTON: Thank you. MR. KANUHA: I know we're going to be talking to the directors when all of this comes forward before the Finance Committee, but mahalo for the information. MR. ROLSTON: Great, and I squeeze every consultant pretty low, so we've been fortunate. MR. KANUHA: Thank you. MR. ROLSTON: Thank you. CHR. RICHARDS: Thank you, Councilman. Any further questions? Hearing none, call for the vote on motion to close the file. Vote on Comm. 63: The motion to close file on Comm. 63 was carried by the Filed following voice vote: Ayes: Committee Members Chung, David, Eoff, Kanuha, Lee Loy, O'Hara, Poindexter, Ruggles, and Chair Richards – 9. Noes: None. Absent: None. Excused: None. CHR. RICHARDS: The file is closed. Okay with that, that brings us to the end of our Agriculture, Water and Energy Sustainability Committee. Page 24 AWESC-I January 24, 2017 ADJOURN There being no further business, at 11:43 a.m., Ms. Eoff moved to adjourn the ME.NT: meeting. Seconded by Ms. Poindexter and carried by the following voice vote: Ayes: Committee Members Chung, David, Eoff, Kanuha, Lee Loy, O'Hara, Poindexter, Ruggles, and Chair Richards— 9. Noes: None. Absent: None. Excused: None. CHR. RICHARDS: Unanimous acclamation, we are adjourned. Approved: 4� "f`� (� Teo 7 tot Mr. Herbert M.'"I im" Richards, III, Chair (Date) Agriculture, Water, and Energy Sustainability Committee HR/jm Page 25