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Home My WebLink AboutCOM 0117.015 2018-2020 Testimony to Hawaii County'councifCOUPj Y HAWAII Finance Committee 7.1119 SPR 18 18 58. April 18, 2019 Special Meeting REGARDING DEM CIP BUDGET WITHOUT NAALEHU/PAHALA LCC CLOSURE PROJECTS Aloha Finance Committee Chair and Members, I would like to begin by thanking all of you for taking time this week to ask probing questions about the County agencies' needs and their outcome-based spending strategies. This open and honest, if lengthy, dialogue provides a modicum of transparency for those of us in the Hawaii Island community who—as you put it—are losing faith in County governance. • The main reason I personally have lost faith is because of County of Hawaii Department of Environmental Management (DEM) shenanigans in their feeble, but expensive, attempts to close the Ka'u large capacity cesspools, the so-called "LCCs". DEM's'latest failure to provide the public with transparency is evidenced by not including the EPA-mandated Naalehu and Pahala LCC Closure Projects in their 2019- 2020 CIP Budget. As I asked in my yet-unanswered email to Finance: Doesn't the EPA-mandated Ka'u LCC closure have to be in the budget to be funded? For the sake of all taxpayers who have no inkling of the money spent to date — and now are not being informed of upcoming expenditures— please get to the bottom of the Ka'u LCC closure fiasco by answering the community's call for a legislative audit for the time period from the 2007 FEA to present. Thank ! ', you for helping us. �� • � l Sandra Demoruelle Comm. No Ref. To: P S • F Ref. Date ASR 18 2019 Re: Questions about the 2019-2020 CIP Budget (proposed Bill 31) From: Naalehu Theatre (naalehutheatre@yahoo.com) To: budget@hawaiicounty.gov; kay.oshiro@hawaiicounty.gov; deanna.sako@hawaiicounty.gov Cc: maile.david@hawaiicounty.gov;tim.richards@hawaiicounty.gov; ashley.kierkiewicz@hawaiicounty.gov; aaron.chung@hawaiicounty.gov Date: Friday,April 12,2019 09:06 AM HST Aloha, I have yet to hear a response from you and would like this information sol can provide reasoned testimony next week on the CIP Budget. Sincerely, Sandra Demoruelle On Wednesday,April 3, 2019 03:25:32 PM HST, Naalehu Theatre<naalehutheatre@yahoo.com>wrote: Aloha, 1) As a taxpayer who is very attentive to the Ka'u LCC Closure Projects expanding price-tags, I was wondering why the Naalehu NWS (2018 DEM priority project#2 - attachment 2 below) and Pahala WWS (2018 DEM priority project#3) were not included in the 2019-2020 CIP Budget? As can be seen in my project tracking (attachment 1 below), these projects have been in the CIP Budget since 2005. Since both projects must (EPA June 2017 AOC mandate) be built in the next 2 -3 years, why would DEM exclude them? Also, per the January 2019 EGBR page 71, there are unexpended amounts in the 699.5698 accounts of$977,839; $400,000 and $42,150 [699.5698.12.000] so how can there be no accompanying CI Project in the 2019-2020 CIP Budget? 2) The amount of unexpended FED funds (totaling $1,419,989) are not the same as the amount of the EPA (FED) grant. The Federal Financial Report (attachment 3), filed by Dora Beck on 11/7/2011, shows the EPA Grant XP-96942401 (#0-7) with a total of$1,842,150 awarded and then $133,853 was paid 1/6/11 per attachment 4 - leaving a balance of$1,728,297 (not the $1,419,989 that is shown in your January 2019 EGBR page 71). Your current EGRB does not agree with the EPA reports of amounts awarded. 3) Is it possible that DEM is withholding the Ka'u WWS Projectsjbecause their project cost exceeds $80,000,000 in SRF loans and with the current $160,000,000CIP request, would put the legal debt margin at 15.46%? 4) Finally, I find the explanation of the "prudent debt service limit" in the Mayor's introduction to the 2019-20 CIP Budget based on 15% of"general expenditures" (based on the "Government Finance Officers Association" recommendation) is totally at odds with your explanation in the EGRB (Page 71) Table 10 Legal Debt Margin Information Note a. In Note a, the Legal Debit Margin is based on Hawaii statutes requiring the County debt margin be based on "net assessed value" of the RP assets. The property based 15% debt margin is totally different than the Mayor's expenditure- based "prudent debt service" 15 % limit. Thank you for answering my questions as the whole Ka'u LCC closure has extended for over 13 years and could be completed within two years if granted CIP funding. But DEM cannot receive funding if the CIP requests are not in the budget, can they? Sincerely, Sandra Demoruelle NAALEHU_PAHALA_LCC_TO_WWS.xlsx 10.7kB COH_Fin_2018-19_CI P_Budgetjpg '/Y\ 616.4kB COH_Fin_EPA_Grant_Report_2011 jpg '1Y\ 625.5kB COH_Fin_EPA_Grant_Request_2011 jpg N\ 670.2kB EVOLUTION OF THE NAALEHU-PAHALA LCC REPLACEMENT PROJECT [FEA 2007] TO [2012] NAALEHU WASTEWATER SYSTEM AND PAHALA WASTEWATER SYSTEM PROJECTS COH CIP FY PROJECT Reapp. PRIORITY CO$ STATE$ FED$ Prior$ TOTAL PROJ.COST PD/FIS 2019-2020 NONE NONE NONE NONE 2018-19 Naalehu WWS 5698.28 2 19,000,000 1,300,000 20,300,000 20,300,000 Pahala WWS Reapp.[None listed] 3 700,000 14,500,000 3,051,000 20,751,000 20,751,000 2017-18 Pahala WWS 3 1,300,000.00 _ 2,933,000 4,233,000 4,233,000 Naalehu WWS 5698.30 10 1,000,000 4,798,000 11,513,000 11,513,000 2016-17 Naalehu WWS 5698.25 8 100,000 550,000 2,987,000 3,367,000 3,367,000 Pahala WWS 5698.27 9 645,000 252,000 897,000 897,000 2015-16 Naalehu WWS 5698.22 5 4,485,000 3,087,000 8,122,000 8,122,000 Pahala WWS 5698.23,5698.24 6 700,000 12,000,000 252,000 12,952,000 12,952,000 2014-15 Naalehu WWS 5698.19,5698.20 3 500,000 5,715,000 6,972,000 13,187,000 13,187,000 2013-14 Naalehu WWS 5698.16 6 100,000 13,053,000 13,153,000 13,153,000 Pahala WWS 5698.16 8 645,000 8,972,000 9,617,000 9,617,000 2012-13 Naalehu WWS 4 4,485,000 8,763,000 13,248,000 13,248,000 Pahala WWS 5698.15 5 4,481,000 8,219,000 1,303,000 14,003,000 14,003,000 2011-12 Naalehu/Pahala LCC Replace 5698.13,5698.14 4 500,000 5,715,000 12,317,000 18,532,000 18,532,000 2010-11 Naalehu/Pahala LCC 5698.10 4 984,000 17,548,000 18,532,000 18,532,000 2009-10 Naalehu/Pahala LCC Replace 5698.05,5698.08 4 8,219,000 10,313,000 18,532,000 18,532,000 2008-09 Naalehu/Pahala LCC Replace 5698.05 3 500,000 5,715,000 2008003-$43,000 10,335,000 18,532,000 18,532,000 2007-08 Naalehu/Pahaia LCC Replace 8 1,355,000 11,000,000 15,655,000 2006-07 Naalehu/Pahala LCC Replace 3 450,000 6,300,000 400,000 3,850,000 11,000,000 11,000,000 2005-06 Naalehu/Pahala LCC Replace 3 330,000 330,000 3,630,000 3,980,000 Naalehu Wastewater Treatment Plant Preliminary Engineering Report Section 7 inflationary factor to account for long-term changes in the value of money. The life-cycle costs are expressed as the Net Present Value(NPV). The NPV represents the amount of money that the County would need to set aside now in an interest-bearing account to cover all of the costs over the defined life-cycle. Table 7-4 provide a summary of the life-cycle cost evaluation. Additional detail can be found in Appendix B. ° Table 7-4.•Summaryaof Life CycleeCost Estimates Option Name Estimated Life-Cycle Cost 1 Aerated lagoons/constructed wetland/land application $50.3 million 2 R-1 treatment/land application $71.9 million 3 R-1 treatment/seasonal water recycling $72.7 million 4 R-1 treatment and storage for 100%water recycling $80.1 million 5 Maximum practical treatment $91.1 million As shown in the table, Option 1 incurs the lowest life-cycle costs,and the other options would all incur substantially higher costs over the 30-year life-cycle. The life-cycle cost estimates are shown graphically in Figure 7-10. The operating costs shown in the figure include benefits (i.e., cost reductions)from recycled water sales where applicable. 0 100 .... •— 90 J. __.._._H...._ .. 80 0 70 °'f a) u 50 ✓ . . .M. gi �. , N20 f/' re, ,1a a' a m � lo 0 .. 1 2 3 4 5 Option Capital Costs ®Operating Costs Figure 7-10. Life-Cycle Costs of Options As shown in the graph,the operating cost differential between Option 1 and the other options is the leading contributor to the lower life-cycle cost of Option 1. The major operating cost differences are discussed below. 7.3 Non-Economic Discussion The options are discussed on a non-economic basis below. tkeWlimoCaldWeit 7-9 Naalehu Wastewater Treatment Plant Preliminary Engineering Report Section 7 Wastewater Maximum Reuse Practical Treatment .„ Land Application Figure 7-9. Option 5 Schematic Diagram 7.2 Cost Comparisons Planning-level cost estimates were prepared for the five options,as described below. 7.2.1 Capital Costs Table 7-1 summarizes the capital costs associated with the options described above. Additional detail can be found in Appendix B. The capital costs shown in the table do not include costs associated witicollection system improvements or closure of the existing LCCs. Sewo,, nes ` Table 7-1. Summary of Lapital Capital Cost Estimates Option Name Estimated Capital Cost �AO 1 Aerated lagoons/constructed wetland land application $35.1 million 2 R_ltreatment/land application $45.0 million 0209n 3 R-1 treatment/seasonal water recycling $47.1 million 4 R-1 treatment and storage for 100%water recycling $54.4 million J 5 Maximum practical treatment $55.0 million Comparison of options 1 and 2 shows that providing R-1 treatment instead of the aerated lagoon and wetland natural treatment system will increase the capital cost by approximately$4.5 million. Option 3 shows that addition of water recycling to reuse approximately 46 percent of the annual flow would add an additional $2.1 million in capital costs. Option 4 shows that constructing a seasonal storage reservoir to recycle 100 percent of the flow would add an additional $7.3 million in capital costs. Comparison of options 3 and 5 shows that providing maximum practical treatment instead of normal R-1 treatment would add $7.9 million in capital costs. 7.2.2 Operation and Maintenance Costs Operation and maintenance (O&M)costs include labor,electricity, chemicals,spare parts,sludge management, and other costs required to operate and maintain the facility. Table 7-2 provides a 71"t3WiWeit. 7-7