HomeMy WebLinkAbout2020-05-26 Water Board Meeting MinutesMINUTES
DEPARTMENT OF WATER SUPPLY
COUNTY OF HAWAII
WATER BOARD MEETING
May 26, 2020
Via WebEx/Host Location: Department of Water Supply, 345 Kekuana6`a Street, Suite 20, Hilo, HI
MEMBERS PRESENT VIA WEBEX: Mr. Eric Scicchitano, Vice -Chairperson
Mr. David De Luz, Jr.
Mr. Nestorio Domingo
Ms. Judy Howard
Ms. Julie Hugo
Mr. Zendo Kern
Mr. Benjamin Ney
Mr. Kenneth Sugai
Mr. Keith K. Okamoto, Manager -Chief Engineer, Department of Water
Supply (ex -officio member) — at meeting venue
Absent due to technical issues: Mr. William Boswell, Jr., Chairperson
OTHERS PRESENT VIA WEBEX: Ms. Diana Mellon -Lacey, Deputy Corporation Counsel
Ms. Ann Hajnosz, Harris & Associates
Department of Water Supply Staff
Mr. Kawika Uyehara, Deputy
Mr. Richard Sumada, Waterworks Controller
Mr. Warren Ching, Energy Management Analyst
Mr. Kurt Inaba, Engineering Division Head
Ms. Judith Hayducsko, Chief of Operations (Temporary Assignment)
Mr. Clyde Young, Operations Division
Mr. Eric Takamoto, Operations Division
1) CALL TO ORDER - Vice -Chairperson Scicchitano called the meeting to order at 10:02 a.m.
2) STATEMENTS FROM THE PUBLIC - None
3) APPROVAL OF MINUTES
ACTION: Mr. Kern moved for approval of the Minutes of the April 28, 2020, Water Board Meeting;
seconded by Mr. Ney and carried unanimously by voice vote.
4) APPROVAL OF ADDENDUM AND/OR SUPPLEMENTAL AGENDA - none
Page 1 of 23 May 26, 2020, Water Board Minutes
5) WATER RATES, FISCAL YEAR 2021-2025, JOB NO. 2019-08:
A copy of the water rate schedule prepared for newspaper advertising was provided to the Board. Water
Rate Study consultant, Harris & Associates, has recommended water rates for the 5 -year period Fiscal Year
2021 to 2025 for the Board's review. Their recommendation includes a 6.5% rate increase each year over
five (5) years.
The Manager -Chief Engineer recommended that the Board approve holding public hearings in Kona and
Hilo on consecutive days, when it is safe to do so, to obtain input on the 5 -year water rates recommended by
Harris & Associates.
MOTION: Mr. Kern moved for approval of the recommendation; seconded by Ms. Howard.
The Manager -Chief Engineer stated that this topic was up for discussion by the Board.
Ms. Howard thought that the fact that this recommendation comes with no timeframe, not knowing when
the emergency declarations will be withdrawn, it seems like an opportunity, rather than going forward with
the rates, as proposed, to reconsider whether they are actually in the best interests of the community at this
point. Her particular concern was with the first block of 5,000 gallons, which she would like to see left at its
current rate with the difference made up with the subsequent block. She also had concerns about the
agriculture rate because while she knows some commercial agricultural producers who do live on their
lands, she did not think it is a common situation for commercial agricultural producers, at least not for
ranchers. Ranchers usually have pasture leases all over, and she would rather they have a lower rate
because it is in the community's best interests to have more locally -produced food. At this point, it is in our
community interests to make life affordable for its lowest income citizens, thus the first 5,000 gallons
remaining at its current rate.
The Manager -Chief Engineer understood where Ms. Howard's comments were coming from and the
hardships facing the community. The Department is trying to balance that; therefore, the thinking was to
hold public hearings and receive input from the public, after which, the Board can weigh in again before the
rates are finalized. The Department is also considering updating the Facility Charge (FC) and anticipates
that evaluation to be done within the next couple of months, by August or September, and have a
recommendation for the proposed amounts for the Board. At that point, it would make sense to do both the
water rates and FC concurrently at the public hearings with an anticipated effective date of January 1, 2021.
Regarding the first block, that is already at a discounted rate that not many people fall into because hardly
anyone uses that little water. Most everyone pays into the second block rate, which is what the rates are set
up for. When you are in the third and fourth block rates, you are exceeding the capacity of the meter. The
rate structure is set up for conservation or effective use of water. He asked Ms. Hajnosz to provide her
input.
Ms. Hajnosz stated that the Manager -Chief Engineer had summed it up perfectly with reference to how the
rates are set, especially with regard to the first block. It is priced at a lower rate to give people that lifeline
where the first 5,000 gallons are what is needed from a public health standpoint. As you go up to the
second, third, and fourth blocks, it starts to reflect your family and community values and are to discourage
wasteful water use. What makes it difficult is that the general use includes all of the single-family
residential, plus commercial use. That is one thing, in the future, that may be looked at, which is separating
out the single-family customers and putting them on a separate rate schedule. Then you could more
effectively address those specific concerns about affordability when you have just a single-family customer
class versus a combined customer class. Also, when thinking about low income customers, people tend to
think low income results in lower water usage, but that is usually not the case. The lower income customers
tend to be in apartments, are multi -family, with a higher number of people in their families, and their water
Page 2 of 23 May 26, 2020, Water Board Minutes
usage tends to be on the higher side. Even if the first block were kept where it is, it would not help them
that much because they are in the second or third blocks.
The Manager -Chief Engineer touched bases on Ms. Howard's comments regarding the agricultural rates.
Those rates are subsidized because they are lower than the cost of service. The Board recognized years ago
to help assist the local agricultural community, which provides a benefit to the overall community. What
also needs to be factored in is the cost required to provide potable water needs.
Mr. Ney shared his experience as a plumbing contractor, where a lot of the higher usage in lower income
families comes from the fact that they do not have the financial means to fix leaks in the home when
necessary. He stated that he had a concern with the deferred payment grace period that has been extended to
people, and asked what the outlook was in terms of having proper revenue coming in to cover debt service
and the need to have a healthy revenue stream to run the organization.
Ms. Howard stated that although she does not practice bankruptcy law, as an attorney, she is seeing things
come across her desk every day about the anticipated explosion in bankruptcy cases and thinks the
Department and the Board needs to do everything possible to prevent as many bankruptcies as possible. It
would be both a financial loss to the Department and devastating to the community. She appreciates the fact
that there was an effort to help those in the lowest income categories and agricultural producers and urged
the continuation of those rates; and in the case of the agricultural producers, to keep the second block low as
well.
Mr. Kern asked if the accounts had ever been separated out by residential and commercial use in the past
and if there is a reason why the rates are just done in blocks.
The Manager -Chief Engineer replied that the rates have never been separated into residential and
commercial and asked Ms. Hajnosz to provide some input on the national standards around utilities and how
they are considered.
Ms. Hajnosz explained that, all counties in Hawaii, except Honolulu, have had their rates set by meter size
for many years. That might have been a function of the billing systems and how they were set up back then.
Oahu has it done by single-family and residential and commercial; Maui moved to that model a few years
ago; and Kauai and the Big Island are still on the meter size. It is a surrogate for the customer classes. She
has discussed this with DWS staff, but this year was tough because the Department just had its billing
system updated, and it is not a good time to look at separating out single-family residential from
commercial. It will be something to consider during the next rate study, once the billing system is working
fine. It might be good to start setting up for collecting that information so by the time the next rate study
comes around, the Department will have at least three full years of where it stands with the residential
accounts separated out from commercial accounts. The current rate structure is the typical residential rate
block structure. It is not typical for the commercial customers. Commercial customers are typically on a
uniform rate because the difference between a mom and pop store and everyone else is huge in terms of
water usage. It is not typical to have inverted rate blocks for commercial customers. You want to get them
on a uniform block. She would say yes to Mr. Kern's question that, in the future, you definitely want to be
moving toward residential and commercial rates.
Mr. Kern thanked Ms. Hajnosz for that explanation and stated that it would be helpful for the Board to
understand the complexity of doing that, because it should be able to be split out based on zoning and use.
It probably sounds simpler than it is, but it would be nice to better understand and move toward that. He
thought the timing is interesting because with the COVID-19 situation, there is time to think about some of
these things and discuss them before going to the public hearings. He believed the consensus is that it
should be good for everybody, residential and commercial.
Page 3 of 23 May 26, 2020, Water Board Minutes
Ms. Howard asked Ms. Hajnosz how important it is to have several years of data before going into
separating out commercial from residential use.
Ms. Hajnosz replied that having three years of solid data would show patterns and anomalies and then you
could normalize them. Separating out single-family use should not be difficult, but multi -family would be
harder because of condominiums or apartments on four- or six-inch master meters, and you have to know
how many units are in that complex. That information may be harder to get because it is not typically held
by water utilities. Definitely, a majority of the customers are single-family residential. You could decide
whether or not you want duplexes in there, but single-family would be the first big cut and you could do a
pretty good job of getting a rate study put together with that. They would need to talk to finance customer
care staff to understand how their new billing system is working. They might have to produce some
different reports than they currently do, which could take some time to develop; but once that is done, you
could have the data being collected so by the time the next water rate study comes around, you would have a
nice stream of data that would help set those rates in a defensible fashion.
Mr. Sugai asked if there might be a need to look at current data, with the new normal of less consumption
and the economic hardships that the COVID-19 situation is causing, rather than previous data which might
not be relevant to the next five years.
Ms. Hajnosz replied that was a great question. It is hard to see what is in the future. Their revenue
projections are pretty conservative and are flatlining that growth even now to the degree that there are dips,
but they certainly did not see the dips in the hotels coming, which is going to be a major thing to look at to
see how fast those customers are going to come back online. What they can do is make sure they are being
conservative enough and being mindful of that slow ramp -up back for the hotels. Consumption is one thing,
but as mentioned by Mr. Ney, there will be delinquencies from people not able to pay their bills, and that
needs to be looked at closer to see if it is going from what it was, .6% or .8 % of revenue, to 1% or 1'/2% of
revenue.
Vice -Chairperson Scicchitano thanked everyone for this good discussion. It is causing him to think more on
what is happening now. His comment for everyone was whether the Department/Board should move
forward with the public hearings or if what is happening now is going to impact if a 6.5% rate increase is
implemented, when is it effective.
The Manager -Chief Engineer thanked everyone for their comments. As Ms. Hajnosz said, it is difficult
right now because there is no crystal ball for the future. What is known is that overhead is not going to go
down. The cost of personnel, materials, and equipment keeps going up. One thing to consider is the value
of the product the Department provides. He felt it is still one of the best deals, compared to other utilities,
and was not sure that would be the one that would push someone over their limit. He was glad to have the
Board help make these calls because they are out there in the community with different professions and
perspectives. What the Department can do is offer the best information it has. As Ms. Hajnosz mentioned,
it may take working with Finance in an effort to get some kind of breakdown for analysis, but at some point,
a decision needs to be made on what is known now in order to move forward. He proposed to keep this item
on the agenda for discussion and invited the Board to provide feedback, at least on the 6.5% increase and on
the public hearings.
Ms. Howard stated that she knew of a rancher who had a lot of breaks in their line after the 2006 earthquake
and could not find them. The water bill was so high, it almost put them under; and for some people, it is a
make or break situation.
Page 4 of 23 May 26, 2020, Water Board Minutes
Mr. De Luz asked if the Department's policy gives flexibility to work with customers in either a payment
plan or adjustments during extraordinary circumstances like this pandemic and natural disasters. He also
asked if the 6.5% increase is bifurcated, meaning that it is not only allocated on the water rate, but that there
are other elements within that rate.
The Manager -Chief Engineer replied that the Department does have within its means the ability to allow
customers a couple of payment options. If there is a leak on their side, the leak adjustment provision allows
them to pay half the overage from their normal bill, which is allowed once every three years. The other
option is a payment plan. The Department makes every effort to have customers be able to pay their bills, at
least a portion of it, and not have to chase them with collections. As a side note, the Department is tracking
delinquencies; and even though it is not assessing late payment penalties, it is keeping track of them and
does see an increase, which Mr. Sumada can cover during his Financial Report. He asked Ms. Hajnosz to
explain the breakdown of the 6.5%.
Ms. Hajnosz stated that the 6.5% increase is on both the consumption charge and the standby charge. The
power cost charge, which is separate, is going up 5%. The energy CIP cost is not going to increase.
Mr. Ney stated that one thing to keep in mind with this 6.5% increase is that an average water bill for a
family is about $100.00 a month, so you are talking about a $7.00 to $8.00 difference a month. He did not
think that was going to be the straw that breaks the camel's back and thought people are going to have to be
a little more conservative. He did not think it is going to throw people into further financial distress.
Perhaps the larger users of water, like ranchers, might be more affected by it; but he thought it should be
kept in perspective.
The Manager -Chief Engineer stated that was a good point. He asked Ms. Hajnosz if she had current
numbers on what the average residential bill might be.
Ms. Hajnosz replied that they found it is about 8,500 gallons per month; therefore, and the average
bi-monthly bill is just under $100.00, so it would go up about $6.00 or $7.00.
Mr. Ney thought that was doable.
Mr. Sugai stated that his biggest concern is if the Department is staying solid during this period of falling
consumption and expenses remaining the same or increasing. Everyone has their financial issues but aside
from that, his concern was to remain good stewards of the business of water.
The Manager -Chief Engineer stated that the Board will see some of the impacts during Mr. Sumada's
Financial Report later on; and, as Ms. Hajnosz reported, consumption is expected to stay flat and may
actually trend negative over the next several months to a year. These are all things to consider.
Mr. Kern asked how the hotel industry decline is going to affect the Department, with speculation that it
may not come back to normal until 2023, which is anybody's guess.
Mr. Sumada provided some numbers for April and May. Consumption recorded in the monthly accounts,
which encompass large hotels and businesses, Department of Education, and Department of Parks and
Recreation. A decline of 26% was seen in April and 19% for May. There are about 1,000 of these accounts,
whose meters are read every month. He expects that downward trend to continue until they get up to full
capacity.
Vice -Chairperson Scicchitano stated that it might be helpful to see on a chart, over time, what was projected
and what actually happened.
Page 5 of 23 May 26, 2020, Water Board Minutes
Mr. Kern agreed and that there needs to be some modeling for what has been happening over the past three
months and going into 2021 to make sure the Department survives intact and to be good stewards of all of
the residents of the island. He was sure the Department was already on it, but he looked forward to seeing
those numbers.
The Manager -Chief Engineer recommended a possible motion to ask Harris & Associates to re-evaluate the
rates based on the current situation and the best information nationally and locally, after hearing the Board's
concerns today. It may be prudent for the Department to consider a revision to the scope of the contract to
factor in the current status due to COVID-19. If these rates were taken to public hearing without having
done an assessment, it may not go over very well. These rates were the result of work done prior to the
current situation, and it may not be the best way to move forward.
Mr. Kern concurred that, if possible, it would be great to have three different models of something changing
quickly, something changing mid-term, and something taking longer.
Mr. Ney asked if the Department is also looking at grant and stimulus money trickling down from federal
through state to county levels, because there is a lot subsidy going around to keep industry and essential
services going, and water is on the top of that list. He also thought this has to be looked at as possibly being
protracted because if the hotel industry does not get going, you might see a lot of foreclosures and people
moving out if the economy does not recover.
Mr. Sugai had the same thought that unlike the federal government, the state and county cannot print
money, and where there any trickle down money for municipalities for essential services like water.
The Manager -Chief Engineer stated those were great points and the Department is going after whatever is
available. It has partnered with other municipal water departments, Honolulu, Maui, and Kauai, to send a
letter to Congress requesting any assistance that may be available for water utilities. The Department is also
working with the County to try and tap into the $80 million CARES Act funding that the State received.
The Department may need additional personnel to help once its locations are opened up to the public.
Vice -Chairperson Scicchitano articulated that, based on the Manager -Chief Engineer's proposal, a motion
could be made to postpone the public hearings on the recommended 2021 to 2025 water rate increase of
6.5% until such time as the Department can work with Harris & Associates to revise the scope of the
contract based on the COVID-19 situation and the Board can review the findings.
MOTION: Mr. Sugai so moved; seconded by Mr. Kern.
Ms. Mellon -Lacey stated that another motion was on the floor and asked whether this was an amendment to
that first motion.
AMENDMENT TO MOTION: Mr. Kern moved to amend the previous motion using the language
explained by Vice -Chairperson Scicchitano; seconded by Mr. Sugai.
ACTION: Motion, as amended, was carried unanimously by voice vote.
Page 6 of 23 May 26, 2020, Water Board Minutes
6) SOUTH HILO:
A. JOB NO. 2005-875, PAPA`IKOU TRANSITE AND G.I. PIPELINE REPLACEMENT:
This project consists of replacing approximately three (3) miles of existing transite and galvanized
waterlines and service laterals for 267 customers in the Papa`ikou area.
Bids were opened on May 13, 2020, at 2:00 p.m., and following are the bid results:
Bidder
Adjusted Bid Amount*
Amount
Nan, Inc.
$6,451,993.64
$6,791,572.25
Goodfellow Bros. LLC
$7,658,366.10
$8,061,438.00
Jas. W. Glover, Ltd.
$7,678,600.00
$7,678,600.00
Isemoto Contracting Co., Ltd.
$10,516,684.30
$10,516,684.30
Ko a Engineering & Construction, Inc.
$7,077,769.80
$7,450,284.00
* Adjusted Bid Amount for evaluation purposes only.
Project Costs:
1) Low Bidder (Nan, Inc.) $6,791,571.25
2) Construction Contingency (9.3%) $633,428.75
Total Construction Cost: S7,425,000.00
Funding for this project will be from United States Department of Agriculture — Rural Utility Services
Loan and Grant. The contractor will have 365 calendar days to complete this project. The engineering
estimate for this project was $7,400,000.00.
The Manager -Chief Engineer recommended that the Board award the contract for JOB NO. 2005-875,
PAPA`IKOU TRANSITE AND G.I. PIPELINE REPLACEMENT, to the lowest responsible bidder,
Nan, Inc., for their bid amount of $6,791,571.25 plus $633,428.75 for contingencies, for a total contract
amount of $7,425,000.00. It is further recommended that either the Chairperson or the Vice -
Chairperson be authorized to sign the contract, subject to review as to form and legality of the contract
by Corporation Counsel.
MOTION: Mr. De Luz moved for approval of the recommendation; seconded by Mr. Ney.
The Manager -Chief Engineer apologized for a typographical error in the agenda. The actual bid amount
should be adjusted by $1.00, as noticed from the table, and the low bid amount should be $6,791,572.25,
instead of ... 571.25; and the construction contingency will be adjusted accordingly to reduce it by $1.00
to $633,427.75. The total construction cost remains the same at $7,425,000.00. One dollar was
adjusted up and down for each actual base contract amount and the contingency. This contract is for a
much-needed project in the Papa`ikou area. He asked Mr. Inaba to explain what it took to get it to this
point. This is loan and grant funds through the United States Department of Agriculture, and the grant
portion made this funding source attractive.
Mr. Inaba talked about the grant portion, which is about 40%. The Department will be getting about
$3,000,000.00 in grant money. It is a long-awaited project which was a high priority on the CIP list for
a while, and several attempts were made to get this out. This project will be able to be moved forward
should it be approved today.
Mr. Ney asked how much transite pipeline the Department is looking at replacing in the future because
this is the same pipe that had to be replaced in Kohala.
Page 7 of 23 May 26, 2020, Water Board Minutes
Mr. Inaba replied that was correct. These pipelines are all on the CIP list or master plan and are
prioritized on the amount of maintenance that Operations has to do on them, or basically dealing with
main breaks.
Ms. Howard asked what the adjusted bid amount is for on the Nan Inc. proposal.
Mr. Inaba explained the adjustment is a discounted price for evaluation purposes only and is a 5% credit
to the bidder for having an apprenticeship program. There is a preference given to bidders that have it.
In the end, the contract will be for the actual bid amount they submitted. The Manager -Chief Engineer
added it is provided by Hawaii State Statute. The Legislature determined some years back that they
wanted to provide preference to contractors that have an apprenticeship program.
Mr. Kern noticed it is big split between the low bid and the engineering estimate, close to a million, and
asked if the $7.4 million engineering estimate was without contingency.
Mr. Inaba replied that was correct.
Mr. Kern asked how comfortable staff was with that number. As a contractor, he gets concerned when
he sees numbers that are way off, especially when everybody is playing on the same field for wages, etc.
Mr. Inaba replied that the Department followed up with the contractor to make sure their number is solid
and they are comfortable with it. There were a number of Requests for Information during this bid
process to clarify the plans and specifications; and staff feels comfortable they will be able to do the
project within their budget.
Mr. Ney asked if the Department requires performance bonds for these projects in case the numbers
look a little shaky.
Mr. Inaba replied that a performance bond and a payment bond are required.
ACTION: Motion was carried unanimously by voice vote.
7) SOUTH KOHALA:
A. JOB NO. 2018-1085, PARKER #1 DEEPWELL REPAIR — REQUEST FOR TIME
EXTENSION:
The contractor, Beylik Drilling & Pump Service, Inc., is requesting a contract time extension of 30
calendar days. The delivery of the replacement equipment coupling took longer than expected. This
delay was beyond the control of the contractor.
Staff reviewed the request for the contract time extension and the accompanying supporting
documentation and finds the 30 calendar days justified.
Ist time extension — 61 calendar days (Due to replacement check valves) approved at the 6/25/19 Water
Board Meeting
2nd time extension — 92 calendar days (Due to replacement pump discharge case) approved at the
8/27/19 Water Board Meeting
3rd time extension — 62 calendar days (Due to fit -up issues with DWS supplied equipment) approved at
the 12/17/19 Water Board Meeting
4t' time extension — 90 calendar days (Due to replacement equipment coupling) approved at the 2/25/20
Water Board Meeting
Page 8 of 23 May 26, 2020, Water Board Minutes
Stn time extension — 30 calendar days
The Manager -Chief Engineer recommended that the Board approve a contract time extension of 30
calendar days to Beylik Drilling & Pump Service, Inc., for JOB NO. 2018-1085, PARKER #1
DEEPWELL REPAIR. If approved, the contract completion date will be revised from April 30, 2020,
to May 30, 2020.
ACTION: Mr. Kern moved for approval of the recommendation; seconded by Mr. Sugai. There being
no questions, motion was carried unanimously by voice vote.
B. JOB NO. 2019-1122, LALAMILO A DEEPWELL REPAIR — REQUEST FOR
ADDITIONAL FUNDS AND TIME EXTENSION:
The contractor, Derrick's Well Drilling & Pump Services, LLC, is requesting a contract change order
for the additional work in association with the purchase of a new Simflo pump and to change the size of
the sounding tubes. The existing Gicon pump could not be refurbished after reviewing the teardown
report. The description of additional work and associated fees are as follows:
ITEM
DESCRIPTION
AMOUNT
1.
New Simflo SM10H pump with surface shipping
$66,902.60
2
Teardown inspection of Gicon I ICLC-LL pump with
surface shipping
$8,152.90
3.
New V2" sounding tubes
$1,293.75
4.
Deduct cost to refurbish pump, Part B, Item 44
-$37,148.80
TOTAL
$39,200.45
Original Contract Amount: $375,000.00
Original Contingency amount: $37,500.00
1St Additional Contingency request: $1,700.45
Total Revised Contract Amount: $414,200.45
The contractor is also requesting a contract time extension of 77 calendar days. The Department
requested the contractor provide a new replacement pump. These delays were beyond the control of the
contractor.
Staff reviewed the request for the contract time extension and the accompanying supporting
documentation and finds the 77 calendar days justified.
1St time extension — 30 calendar days (Due to pump not able to be refurbished) approved at the
4/28/2020 Water Board Meeting
2" d time extension — 77 calendar days
The Manager -Chief Engineer recommended that the Board approve an increase in contingency of
$1,700.45 to Derrick's Well Drilling & Pump Services, LLC, for a total project cost of $414,200.45, and
approve a contract time extension of 77 calendar days for JOB NO. 2019-1122, LALAMILO A
DEEPWELL REPAIR. If approved, the contract completion date will be revised from May 30, 2020, to
August 15, 2020.
MOTION: Ms. Howard moved for approval of the recommendation; seconded by Ms. Hugo.
Page 9 of 23 May 26, 2020, Water Board Minutes
The Manager -Chief Engineer noted that this was the project where staff had given the Board a heads up
at last month's meeting that another time extension and possible price increase was forthcoming. This
request is for an additional $1,700.45, and the contractor's supporting documents have pictures showing
why the old pump could not be refurbished.
Mr. Ney recommended the Board go ahead and move this forward. The Department has reviewed the
documents thoroughly.
ACTION: Motion was carried unanimously by voice vote.
8) NORTH KOHALA:
A. JOB NO. 2019-1113, HAWI #2 BOOSTER B REPAIR — REQUEST FOR TIME EXTENSION:
The contractor, Derrick's Well Drilling & Pump Services, LLC, is requesting a contract time extension
of 133 calendar days. The motor for this project was significantly damaged while in transit to Hawaii.
The motor needs to be replaced with a factory new unit. These delays were beyond the control of the
contractor.
Staff reviewed the request for the contract time extension and the accompanying supporting
documentation and finds the 133 calendar days justified. Note: There are no additional costs associated
with this time extension.
1St time extension — 133 calendar days
The Manager -Chief Engineer recommended that the Board approve a contract time extension of 133
calendar days to Derrick's Well Drilling & Pump Services, LLC, for JOB NO. 2019-1113, HAWI #2
BOOSTER B REPAIR. If approved, the contract completion date will be revised from June 8, 2020, to
October 19, 2020.
ACTION: Ms. Howard moved for approval of the recommendation; seconded by Ms. Hugo. There
being no questions, motion was carried unanimously by voice vote.
9) NORTH KONA:
A. JOB NO. 2016-1043, WAI`AHA WATER SYSTEM IMPROVEMENTS - TRANSMISSION
REQUEST FOR TIME EXTENSION:
The contractor, Isemoto Contracting Co., Ltd., has completed the installation of the waterline and
appurtenances; however, due to the COVID-19 situation, they are waiting to schedule the tie-ins before
they finalize the chlorination. Upon completion of the tie-ins, they will do the final paving for the entire
project.
Staff is making this recommendation for a contract time extension of 30 days to allow the contractor to
complete the remaining work on the project. This would be the second time extension. Note: There are
no additional costs associated with this time extension.
1St time extension — 210 calendar days (Due to redesign of stream crossings) approved at the 12/17/19
Water Board Meeting
2nd time extension — 30 calendar days
Page 10 of 23 May 26, 2020, Water Board Minutes
The Manager -Chief Engineer recommended that the Board approve a contract time extension of 30
calendar days to Isemoto Contracting Co., Ltd., for JOB NO. 2016-1043, WAI`AHA WATER
SYSTEM IMPROVEMENTS - TRANSMISSION. If approved, the contract completion date will be
revised from May 28, 2020, to June 27, 2020.
MOTION: Mr. Sugai moved for approval of the recommendation; seconded by Ms. Howard.
The Manager -Chief Engineer noted that this is a staff -recommended time extension. During the
COVID-19 situation, the Department has been working with contractors to postpone and reschedule
tie-ins or other work that may have required water shut-off. This is in line with that.
Mr. Ney asked if the redesign was in-house or if it was redesigned by the contractor.
Mr. Inaba replied that the redesign had to go through the Department's consultant and was a result of
the Department of Public Works' review prior to issuing the permit to work within the right-of-way.
Ms. Howard asked why it was just for 30 days and why not for 60 days so it does not have to be taken
up next time.
Mr. Inaba replied that they should be able to substantially complete the work by the end of June,
weather permitting.
ACTION: Motion was carried unanimously by voice vote
B. JOB NO. 2013-989, KAHALU`U SHAFT INCLINED LIFT REPLACEMENT - REQUEST
FOR TIME EXTENSION:
The contractor, Jas. W. Glover, Ltd., is requesting a contract time extension of 60 calendar days due to
their subcontractor's (Heide & Cook, Ltd.) decision to not allow their employees to travel interisland at
this time. The certified personnel required to perform the necessary work on the cart is on Oahu.
Staff reviewed the request for the contract time extension and the accompanying supporting
documentation and finds that 60 calendar days is justified. This would be the fourth time extension.
Note: There are no additional costs associated with this time extension.
1st time extension — 90 calendar days (Due to repairs to the existing tracks) approved at the 12/18/18
Water Board Meeting
2nd time extension — 283 calendar days (Due to manufacturer delay in final design of cart and building
of a test stand/track as cost to repair tracks as designed not feasible) approved at the 4/23/19 Water
Board Meeting
3rd time extension — 117 calendar days (Due to gear box failure for cart and treatment of a section of the
track) approved at the 1/28/20 Water Board Meeting
4t' time extension — 60 calendar days
The Manager -Chief Engineer recommended that the Board approve a contract time extension of 60
calendar days to Jas. W. Glover, Ltd., for JOB NO. 2013-989, KAHALU`U SHAFT INCLINED LIFT
REPLACEMENT. If approved, the contract completion date will be revised from May 24, 2020, to
July 23, 2020.
ACTION: Ms. Howard moved for approval of the recommendation; seconded by Mr. Kern. There
being no questions, motion was carried unanimously by voice vote.
Page 11 of 23 May 26, 2020, Water Board Minutes
10) MISCELLANEOUS:
A. DEDICATION OF WATER SYSTEM:
The Department received the following document for action by the Water Board. The water system has
been constructed in accordance with the Department's standards and is in acceptable condition for
dedication.
Grant of Easement and Bill of Sale
Grantor: Kona Owner, LLC
"Niumalu Marketplace Shopping Center"
Subdivision No. N/A
Tax Map Key: (3) 7-5-004: 007
Facilities Charge: $447,790.00 Date Paid: 5/8/2020
Final Inspection Date: 5/8/2020
Water System Cost: $54,820.00
The Manager -Chief Engineer recommended that the Water Board accept this document subject to the
approval of the Corporation Counsel and that either the Chairperson or the Vice -Chairperson be
authorized to sign the document.
ACTION: Ms. Howard moved for approval of the recommendation; seconded by Mr. Sugai. There
being no questions, motion was carried unanimously by voice vote.
B. MATERIAL BID NO. 2020-03, FURNISH BASE COURSE, SAND, COLD MIX,
HOT MIX, AND NO. 3F ROCK TO THE DEPARTMENT OF WATER SUPPLY:
Bids were opened on May 14, 2020, at 2:00 p.m.; and following are the bid results:
Page 12 of 23 May 26, 2020, Water Board Minutes
WHC, Ltd.
Grace
Jas.W.
Puna Rock
dba West
Yamada and
Pacific LLC
Glover, Ltd.
Co., Ltd.
Hawaii
Sons, Inc.
Concrete
District 1 (Hilo):
IA
3/4" Base Course
No bid
$ 18.75
$ 16.20
No bid
$ 23.60
cost per ton
1B
1 ''/2" Base Course
No bid
$ 17.71
$ 15.15
No bid
$ 23.05
(cost per ton)
1C
No 3F Rock (cost
No bid
$ 30.21
$ 18.00
No bid
$ 28.30
per ton
1D
44 Sand (cost per
No bid
$ 40.62
$ 39.40
No bid
$ 55.50
ton)
IE
Mortar Sand (cost
No bid
$ 64.58
No bid
No bid
No bid
per ton
1F
Cold Mix (cost
No bid
No bid
No bid
No bid
$ 149.80
per ton)
1G
Blended material
No bid
$ 51.04
$ 22.45
No bid
$ 58.90
(60 % 44 Sand &
40% 4 3F Rock
(cost per ton)
Page 12 of 23 May 26, 2020, Water Board Minutes
IH
Hot Mix (cost per
No bid
$ 142.00
No bid
No bid
$ 137.35
ton
District II (Waimea):
2A
3/4" Base Course
No bid
No bid
No bid
$16.75
No bid
(cost per ton)
2B
1 ''/2" Base Course
No bid
No bid
No bid
$15.15
No bid
(cost per ton)
2C
No 3F Rock (cost
No bid
No bid
No bid
$ 28.98
No bid
er ton)
2D
44 Sand (cost per
No bid
No bid
No bid
$ 32.74
No bid
ton)
2E
Mortar Sand (cost
No bid
No bid
No bid
$ 55.94
No bid
per ton
2F
Cold Mix (cost
No bid
No bid
No bid
No bid
No bid
per ton)
District III (Kona):
3A
3/4" Base Course
No bid
No bid
No bid
$ 24.41
No bid
cost per ton
3B
1 ''/2" Base Course
No bid
No bid
No bid
$ 22.50
No bid
(cost per ton)
3C
No 3F Rock (cost
No bid
No bid
No bid
$ 39.51
No bid
per ton
3D
44 Sand (cost per
No bid
No bid
No bid
$ 46.97
No bid
ton)
3E
Mortar Sand (cost
No bid
No bid
No bid
$ 67.63
No bid
per ton
3F
Cold Mix (cost
$ 157.55
No bid
No bid
No bid
No bid
per ton)
3G
Hot Mix (cost per
$ 163.55
No bid
No bid
No bid
No bid
ton)
The Manager -Chief Engineer recommended that the Board award the contract for MATERIAL BID
NO. 2020-03, FURNISH BASE COURSE, SAND, COLD MIX, HOT MIX, AND NO. 3F ROCK TO
THE DEPARTMENT OF WATER SUPPLY, by Parts to the following for the amounts shown above,
on an as needed basis, and that either the Chairperson or the Vice -Chairperson be authorized to sign
the contracts, subject to review as to form and legality of the contracts by Corporation Counsel. The
contract period shall be from July 1, 2020, to June 30, 2021. District I - Parts IA, 113, 1C, 1D, and 1G
to Puna Rock Co, Ltd; Part I to Jas. W. Glover, Ltd.; and Parts 1F and 1H to Yamada and Sons, Inc.;
District II - Parts 2A, 213, 2C, 2D, and 2E to West Hawaii Concrete LTD; District III - Parts 3A, 313,
3C, 3D, and 3E to WHC, Ltd. dba West Hawaii Concrete; Parts 3F and 3G to Grace Pacific LLC; For
Part 2F, which did not receive any bids, staff shall obtain quotations in the best interests of the
Department.
MOTION: Ms. Howard moved for approval of the recommendation; seconded by Mr. Ney.
Mr. Domingo noticed there is no definite quantity; only the rate for so many tons, but there is a
definite ending date. He asked if there should be a quantity involved.
The Manager -Chief Engineer replied that this is a typical material bid for materials on an as -needed
basis. There is no firm quantity for any of these materials. They are as needed for main breaks,
Page 13 of 23 May 26, 2020, Water Board Minutes
service lateral installations, etc. The bidders submit their bid, knowing there is no definite quantity
guaranteed to them. He asked Ms. Hayducsko if she had anything to add.
Ms. Hayducsko stated there are budgeted quantities, but they are not listed in the agenda. They are
included in the contract.
Mr. Ney asked if some of the materials are stockpiled to avoid incurring cost of delivery.
The Manager -Chief Engineer replied the certain amounts are stockpiled in bins at the baseyards so
there is no need to go out for delivery each time.
Ms. Hayducsko added that the costs are for picking up the material at all of the sites. There are many
off -hours repair jobs, and adequate stockpiles are kept at all of the baseyards.
ACTION: Motion was carried unanimously by voice vote.
C. WATER TREATMENT BID NO. 2020-07, FURNISHING LIQUID CHLORINE
(ON AN AS -NEEDED BASIS):
Bids were opened on May 14, 2020, at 2:30 p.m., and following are the bid results:
JCI Jones Chemicals, Inc.
Item 1 150 4 Cylinder each $433.00
Item 2 1200 4 Cylinder (each) $2,858.00
The Manager -Chief Engineer recommended that the Board award the contract for WATER
TREATMENT BID NO. 2020-07, FURNISHING LIQUID CHLORINE (ON AN AS -NEEDED
BASIS) to JCI Jones Chemicals, Inc., for Parts I and II at the unit prices listed above, for the period
from July 1, 2020, through June 30, 2022, and that either the Chairperson or the Vice -Chairperson be
authorized to sign the contract subject to review as to form and legality by Corporation Counsel.
MOTION: Ms. Howard moved for approval of the recommendation; seconded by Mr. Kern.
The Manager -Chief Engineer noted that this is what the Department uses at all of its drinking water
sources to disinfect, under the Safe Drinking Water Act requirements. Although there is only one
bidder, staff has evaluated the prices and feel they are fair and reasonable.
Vice -Chairperson Scicchitano asked for verification that the hashtag means pounds.
The Manager -Chief Engineer replied that was correct.
ACTION: Motion was carried unanimously by voice vote.
D. GASOLINE BID NO. 2020-05, FURNISHING AND DELIVERING GASOLINE
AND DIESEL TO THE DEPARTMENT OF WATER SUPPLY:
Bids were opened on May 14, 2020, at 3:00 p.m.; and following are the bid results in dollars per
gallon:
Page 14 of 23 May 26, 2020, Water Board Minutes
The Manager -Chief Engineer recommended that the Water Board award the contract for GASOLINE
BID NO. 2020-07, FURNISHING AND DELIVERING GASOLINE AND DIESEL TO THE
DEPARTMENT OF WATER SUPPLY, for Parts A-1, B1, B2 and C1 to Hawaii Petroleum, LLC, at
the bid prices listed above and that either the Chairperson or the Vice -Chairperson be authorized to
sign the contracts, subject to review as to form and legality of the contracts by Corporation Counsel.
The contract period shall be from July 1, 2020, to June 30, 2022.
MOTION: Ms. Howard moved for approval of the recommendation; seconded by Mr. Ney.
Mr. De Luz asked if this is net of the fuel tax for the County, not the federal.
The Manager -Chief Engineer replied that it is basically what the Department is going to pay the
company for gas.
Ms. Hayducsko added that it includes taxes and delivery.
Mr. De Luz was very curious to see if they can commit for two years when this is a commodity
product.
The Manager -Chief Engineer noted there are provisions in the contract should oil prices fluctuate.
Ms. Hayducsko added that the contract language will include escalation costs if freight or supplies
require.
Vice -Chairperson Scicchitano suggested, based on Mr. De Luz's question, that in future
recommendations, language be included so that it is clear.
Mr. De Luz asked if there is a provision in times of a disaster that the provider is required to store and
have access to a certain amount of fuel dedicated to DWS.
The Manager -Chief Engineer replied that was not typical in the contracts. In those situations, the
Department will work with Civil Defense and the suppliers for allocation and priorities.
Mr. De Luz's hoped there would be some provision, such as HELCO has with their providers, to have
reserves on site; but it takes an emergency proclamation anyway, so it was just a thought.
ACTION: Motion was carried unanimously by voice vote.
Page 15 of 23 May 26, 2020, Water Board Minutes
Aloha Petroleum, Ltd., dba
Save -A-$ Club of Hawaii
Big Island Energy
Co. LLC
Hawaii Petroleum,
LLC
Part A Hilo Base and
1. Unleaded Gas $1.80 $1.59 $1.58
Part B Kona Base and
1. Unleaded Gas
$1.88
$1.70
$1.63
2. Low -Sulfur Diesel
No bid
No bid
$1.82
Part C Waimea
1. Unleaded Gas $1.83 $1.70 $1.63
The Manager -Chief Engineer recommended that the Water Board award the contract for GASOLINE
BID NO. 2020-07, FURNISHING AND DELIVERING GASOLINE AND DIESEL TO THE
DEPARTMENT OF WATER SUPPLY, for Parts A-1, B1, B2 and C1 to Hawaii Petroleum, LLC, at
the bid prices listed above and that either the Chairperson or the Vice -Chairperson be authorized to
sign the contracts, subject to review as to form and legality of the contracts by Corporation Counsel.
The contract period shall be from July 1, 2020, to June 30, 2022.
MOTION: Ms. Howard moved for approval of the recommendation; seconded by Mr. Ney.
Mr. De Luz asked if this is net of the fuel tax for the County, not the federal.
The Manager -Chief Engineer replied that it is basically what the Department is going to pay the
company for gas.
Ms. Hayducsko added that it includes taxes and delivery.
Mr. De Luz was very curious to see if they can commit for two years when this is a commodity
product.
The Manager -Chief Engineer noted there are provisions in the contract should oil prices fluctuate.
Ms. Hayducsko added that the contract language will include escalation costs if freight or supplies
require.
Vice -Chairperson Scicchitano suggested, based on Mr. De Luz's question, that in future
recommendations, language be included so that it is clear.
Mr. De Luz asked if there is a provision in times of a disaster that the provider is required to store and
have access to a certain amount of fuel dedicated to DWS.
The Manager -Chief Engineer replied that was not typical in the contracts. In those situations, the
Department will work with Civil Defense and the suppliers for allocation and priorities.
Mr. De Luz's hoped there would be some provision, such as HELCO has with their providers, to have
reserves on site; but it takes an emergency proclamation anyway, so it was just a thought.
ACTION: Motion was carried unanimously by voice vote.
Page 15 of 23 May 26, 2020, Water Board Minutes
E. RENEWAL OF CONTRACT FOR MAINTENANCE AGREEMENT - SOUTH
KOHALA, HAMA KUA, AND LAUPAHOEHOE SITES (BRANTLEY CENTER, INC.):
Brantley Center, Inc., presently has a Maintenance Agreement for site maintenance for the
Department's South Kohala, Hdmakua, and Laupahoehoe tank and pump sites. They are requesting to
renew the Agreement from July 1, 2020, to June 30, 2021. The rates would be as follows:
South Kohala - $4,392.35/month x 12 months (23 sites) — $52,708.20
Hdmakua - $2,944.16/month x 12 months (15 sites) = $35,329.92
Laupahoehoe - $738.48/month x 12 months (3 sites) = $8,861.76
Total: $96,899.88
The Department has the right to award the contract to Brantley Center, Inc., without advertising or
calling for bids, according to Subsection 103D-1010 of the Hawaii Public Procurement Code.
Brantley Center, Inc., has submitted the necessary documents to meet the requirements as a qualified
rehabilitation facility. There is no increase from their proposal for Fiscal Year 2019-2020. Brantley
Center's performance has been satisfactory, and the costs are reasonable. A total of 41 sites are
covered by this agreement.
The Manager -Chief Engineer recommended that the Board award the contract for the RENEWAL OF
CONTRACT FOR MAINTENANCE AGREEMENT — SOUTH KOHALA, HAMAKUA, AND
LAUPAHOEHOE SITES, to Brantley Center, Inc., for a period from July 1, 2020, to June 30, 2021,
at a total cost of $96,899.88, and that either the Chairperson or the Vice -Chairperson be authorized to
sign the documents, subject to approval by Corporation Counsel.
MOTION: Mr. Ney moved for approval of the recommendation; seconded by Ms. Howard.
Mr. Ney thought it was a reasonable cost if you take the aggregate amount and spread it amongst the
many different sites. He asked what type of maintenance they provide.
Ms. Hayducsko replied that they perform site maintenance on tank and well sites, which involves
mowing, weed whipping, cutting branches, and some sweeping of buildings, although minimal. Most
of the work is external groundskeeping.
The Manager -Chief Engineer added that the Department is able to utilize this type of contractor
because of their standing as a rehabilitation facility. If the Department were to discontinue this
service, some of the lawsuits that were filed related to the Konno decision would require that the
Department hire staff to provide this service, which has been found to be difficult. This keeps costs
down and minimizes overhead.
ACTION: Motion was carried unanimously by voice vote.
F. MAINTENANCE BID NO. 2020-02, REPAIR & MAINTENANCE OF EMERGENCY
STANDBY GENERATOR SETS, DEPARTMENT OF WATER SUPPLY:
This maintenance contract consists of furnishing all labor, materials, tools and equipment necessary to
inspect, maintain, repair, and test the Department of Water Supply's twelve (12) emergency back-up
generator sets for a two-year term, from July 1, 2020, to June 30, 2022.
This contract includes as -needed allowances for call -out repairs:
• Material allowance: $24,000.00
Page 16 of 23 May 26, 2020, Water Board Minutes
• Labor allowance: 32 regular hours and 32 emergency/overtime hours, at the Contractor's hourly
rate provided in its bid.
Bids were opened on May 14, 2020, at 1:30 p.m., and the following are the bid results:
Bidder Bid Amount(including Allowances
Power Generation Services, Inc. $112,168.84
Hawthorne Pacific Corp. $185,833.00
Project Costs:
Low Bidder (Power Generation Services, Inc.) $112,168.84
Funding for this project will be from DWS' Operations Budget.
The Manager -Chief Engineer recommended that the Board award the contract for MAINTENANCE
BID NO. 2020-02, REPAIR & MAINTENANCE OF EMERGENCY STANDBY GENERATOR
SETS, to the lowest responsible bidder, Power Generation Services, Inc., for a total contract amount
of $112,168.84. It is further recommended that either the Chairperson or the Vice -Chairperson be
authorized to sign the contract, subject to review as to form and legality by Corporation Counsel.
MOTION: Ms. Howard moved for approval of the recommendation; seconded by Mr. Sugai.
Ms. Howard did not think it included many hours if you have any serious generator problems. She
asked if the regular and emergency overtime hours were comparable from the two contractors who bid
and what they were. She could see having trouble with overtime.
Mr. Ching replied that it is 32 hours of regular maintenance for two staff members from their team, a
journeyman and a helper. The same goes for the emergency and overtime.
The Deputy asked Mr. Ching to elaborate on how the bid was set up and what is in the basic scope for
maintenance for the two years and what $24,000.00 call -out allowance is for.
Mr. Ching replied that there are two sections to this bid. One is for regular maintenance, which
includes some labor, and the second part is the repair portion which is for unforeseen circumstances
where repairs are required. The second section is what the hourly rate is going to be used for.
Vice -Chairperson Scicchitano stated that the concern was there are only four days of emergency time
built into the contract for two years. Perhaps a better question would be what past history was for
these maintenance contractors for emergencies and if they have ever exceeded the four days.
Mr. Ching replied that the bid is based on previous years. The Department does not usually see
intense repairs being needed. Any major repairs, example, over $25,000.00, would be put out in a
repair bid rather than use this allowance. This is more for day-to-day repairs for things like sensor
replacements.
Mr. Kern stated that he was fine with the bid. There needs to be some flexibility when you are on-site
because you may see things that require larger servicing.
Mr. De Luz asked if the Department held a contract with this vendor in the past.
Mr. Ching replied that they had the past contract.
Page 17 of 23 May 26, 2020, Water Board Minutes
Mr. De Luz thought they would have a better understanding and working relationship with the
Department and he was comfortable with the bid.
ACTION: Motion was carried unanimously by voice vote.
G. MONTHLY PROGRESS REPORT:
The Manager -Chief Engineer noted that staff made an addition to the last page of the report, showing
completed projects by fiscal years.
Mr. Inaba also pointed some projects as follows:
Kalaniana`ole Avenue Reconstruction - last year, the Board approved moving ahead to install a
12 -inch waterline, participating with the Department of Transportation. It is about one mile of
12 -inch line. The DWS funds are capped at $880,000.00, and the project is ongoing at this time.
Wai`aha Well No. 2 Development, Phase 1 - staff has been communicating with the consultant and
should be setting a bid date soon. This is for a second well on the existing Wai`aha site.
North Kona Mid Level Deep Well Development, Phase 1 - staff received the okay from the private
landowner and the consultant is moving ahead with the preliminary engineering and Environmental
Assessment.
H. REVIEW OF MONTHLY FINANCIAL STATEMENTS:
The Manager -Chief Engineer asked Mr. Sumada to cover some of the consumption numbers on
Page 2 of the report.
Mr. Sumada stated that the overall consumption for the Department is down 6% from prior year. The
monthly accounts, which are the large commercial accounts, have seen quite a large decline in the last
couple of months, April and May, of 26% and 19%, respectively. If that trend continues through
June, revenues are anticipated to fall short of budget by about $2.8 million, which, this late in the
fiscal year, is almost impossible to try and recover from with any kind of expense reduction plan. It is
a deficit situation that will need to be made up in subsequent years. He did not look too deeply into
the Fiscal Year 2021 budget because a lot of those expense components such as salaries have not yet
been determined. Raises of 3% were budgeted for fiscal 2021, but whether that comes to pass is hard
to say at this time. Revenues are expected to fall short of budget, leaving the Department in a
negative cash flow position for the fiscal year, which is going to require the Department's reserves to
cover deficits.
Mr. Kern asked how the Department made out during the great recession (2008 through 2010). It
would be nice if there were some historical data that could be looked at for what can be done now
because lost revenue is worse than not making the money. It almost doubles, compounding in a way
where you have to make it up, plus more.
Mr. Sumada stated that the Department has run into situations where declines in consumption lead to
declines in revenue and the inability to generate contributions to CIP reserve. To resolve the situation,
past water rate studies have increased water rates. Past consumption has never declined as drastically
as now because large commercial accounts had never just shut down completely like they have.
Page 18 of 23 May 26, 2020, Water Board Minutes
The Manager -Chief Engineer added that back then, furlough Fridays went into effect, but that is
something the Department wants to avoid at all cost. Other measures taken were scrutinizing
overtime and expenses and delayed purchasing of new vehicles, etc., but that is only kicking the can
down the road because it eventually catches up. It all goes back to the water rate study and the
evaluation has to shift to this current situation, which is something that needs to be brought back to
the Board for further discussion.
Mr. Kern mentioned other factors such as the federal government printing money. If the Department
could get some assistance, it would help massively.
Mr. De Luz stated that he would like to understand how the Department will balance the budget. One
difficult thing he was concerned about was the Employees Retirement System (ERS) and the EUTF
(Employees Union Trust Fund). He would like to see some indication from them on what to expect
because this is almost worse than attempting to defer the CIP and equipment replacements. This may
lead to having no other choice but to have a massive rate increase only to be able to continue
supporting the services in place now. His other thought was, with all that is happening, there has to be
a huge amount of people who have a lot of years of service and are contemplating retirement.
Constitutionally and technically, this pension comes ahead of everything else. It is an obligation, a
liability, that that needs to be planned for and it is like the elephant in the room. This may blindside
the Department in the next couple of years. He did concur that this fiscal year is done and will have to
carry over. If the Department could share some information on how it plans to balance the budget, it
would help the Board have a clear understanding of the impacts.
Mr. Sugai asked how it is looking as far as delinquencies and people not being able to pay their bills.
Mr. Sumada reported on the amount of late payment charges that would have been assessed if the
Department had not deferred the assessments. Late charges are assessed weekly. On May 1, the late
charges that were not assessed totaled $550.00; on May 8, they were $970.00; and on May 15, they
were $2,000.00. The increase can be seen over the past three weeks, which is directly correlated to
the level of delinquencies. He also reported on delinquent letters sent weekly. On March 9, the
number of letters that would have been sent out covered about $100,000.00 in overdue balances and
on May 4, they would have covered about $180,000.00. There is no question that delinquencies are
increasing. They are not being pursued as would be normally, in light of current policy.
Mr. Ney mentioned people wanting more water from the Department or wanting a larger meter and
that it has been very hard to get the approval of the DWS. Maybe there is over -capacity or saturation
in some areas, but he wondered at what point would the Department look at allowing customers more
use of water or more accounts to balance this out because being frugal with spending within the
Department only goes so far. His concern with the bond markets is that when things get tight like
this, it might be harder to issue bonds; and everyone is competing for capital right now. The
Department may need to look at a full range of options in terms of hotels not filling up to capacity and
if businesses are going to shut down over a prolonged period of time.
Mr. Sumada deferred the question about allowed meters to Mr. Inaba for his Engineering input.
Mr. Inaba stated that if the Department starts granting additional water, the question is whether or not
the infrastructure will be ready for when the people starting using the water again.
Mr. Kern mentioned it being almost two years since the Kilauea eruption, and about the Economic
Disaster Relief Funds coming around soon. The CARES act seems to be moving faster. There may
be a way to be creative with funds coming in. It would be good to have an update at some point.
Page 19 of 23 May 26, 2020, Water Board Minutes
The Manager -Chief Engineer stated that he would put an item on the agenda for next month to update
the Board on FEMA funding and what the Department has so far to report after having attended
regularly scheduled meetings with the County Recovery Team.
Mr. Domingo was curious if the Department would get a share of the $80 million the County received
from the federal government.
The Manager -Chief Engineer replied that the Department is hoping to get reimbursed for things like
masks and sanitizing supplies and also an estimate for potential hiring of a third party to help the
Department manage entry to its office once it reopens to the public. The person would help ensure the
public wears face masks and sanitizes their hands before entry. There is no available Department staff
to manage that. He will update the Board on this once a response is received.
I. RESOLUTION NO. 20-01, TO EXPEDITE APPROVAL OF CRITICAL OPERATIONS
IN THE EVENT OF AN EMERGENCY PRECLUDING BOARD MEETINGS:
The Manager -Chief Engineer stated the Resolution was revised to address some of the comments and
concerns from the last meeting; however, since technology has helped, he did not see the Board being
unable to hold a meeting remotely unless there was some kind of major natural disaster that happened
right around its meeting time. He left it for the Board to discuss and decide whether they want to
suspend this Resolution or move forward with it.
Mr. Kern supported whatever the Department needs and trusts what is being done in its operations. He
was okay with moving forward with it.
Ms. Howard thought it might be a good idea to go ahead with the Resolution because of the unknowns
for the future. She did point out a typographical error in Paragraph Ic, where it says "grant finding
requests on contracts" and was sure it was meant to say "grand funding requests."
Ms. Diana Mellon -Lacey thanked Ms. Howard for pointing out the error.
Mr. De Luz stated that he supports what Ms. Howard indicated, noting what happened during the
missile crisis where telecommunications were overburdened. He believed this is one of the tools in the
toolbox that should be established. Hopefully it never has to be used, but it is like having life
insurance. He apologized that he had to leave the meeting at this time. (Mr. De Luz left at 12:15 p.m.)
Vice -Chairperson Scicchitano was also okay with it and thought that it should be kept, based on the
comments received today. He asked how a formal approval of it would be done.
Ms. Mellon -Lacey indicated that the Resolution would need approval, with the correction noted.
Mr. Kern made a point of order and asked if there had been a motion made prior to this, last month,
and if this would be a fresh Motion or a continuation from the original at last meeting.
Ms. Mellon -Lacey recalled that the Board had kind of stapled that motion to revise it based on the
comments that were made.
ACTION: Mr. Kern moved to adopt the Resolution in its current form with the typographical error
corrected; seconded by Mr. Sugai and carried by roll call vote: Ayes: 7 - Mr. Domingo, Ms. Howard,
Ms. Hugo, Mr. Kern, Mr. Ney, Mr. Sugai, and Vice -Chairperson Scicchitano; and 2 absent:
Mr. De Luz and Chairperson Boswell.
Page 20 of 23 May 26, 2020, Water Board Minutes
J. MANAGER -CHIEF ENGINEER'S REPORT:
The Manager -Chief Engineer provided an update on the following:
North Kona Wells - the Deputy provided an update on the North Kona wells. Six wells are
offline: Makalei, Keahuolu, Wai`aha, Palani, and Kahalu`u B and C. Based on current repair
schedules, it is reasonable to anticipate that Keahuolu and Kahalu`u C wells could be repaired
by the end of June. The next are Palam and Kahalu`u B, anticipating repairs complete by the
fall or end of this year. For Makalei Well, the developer's consultant submitted revised
drawings to Engineering Division and they are currently being reviewed. The developer still
has to submit a revised agreement for review and comment. For Wai`aha Well, the litigative
hold is still in effect; but the Department has a separate consultant contracted to evaluate the
well's capacity. The contractor reported that they are shipping the test pump to the Big Island
the end of May and once on island, they can start the process.
Mr. Domingo asked if having six wells offline is a crisis or if the Department was okay.
The Deputy replied that the Department is still okay and has been providing the typical water
demand to its customers in the community.
Mr. Domingo stated that it was a bit concerning for him, at this time.
2. COVID-19 Update - the Manager -Chief Engineer briefed the Board that the Department plans
to be back on pre-COVID-19 work schedules starting June 1. During the last couple of months,
some staff worked from home and some were on modified work schedules. The Department
was not operating at full capacity. The plan is to make sure everyone gets used to best
practices, such as physical distancing, using face masks, sanitizing hands, and disinfecting
shared areas before the public back is allowed back in. After this, the thought is to have the
public walk-ins by appointment only beginning in July. By that time, the Department will have
physical barriers up such as plexiglass. The goal is to see what traffic is required because with
email and online remote technology to conduct meetings, a lot of what needs to be resolved
with the public can probably be done remotely rather than in person. The overall goal is to
minimize risk everyone while living with COVID-19 but still get back to a good production
level. The thought is also to continue suspending water shut -offs and late assessments through
the month of June. This will be reported on to the Board at each meeting to keep the Board
informed and see if there are any concerns. Travel is also being suspended.
Mr. Kern mentioned that some people really want to pay their bills but are having a hard time,
and then you have the other people that are having hard times and cannot pay even though they
want to, but are silent. He wondered if there is a way to communicate that the Department will
work with them but not to the point where they are being served on a silver platter.
The Manager -Chief Engineer stated that although people are not being shut-off, delinquent
letters will probably still be sent.
Mr. Ney asked if people would have to pay a balloon payment at the end of all of this and if
they would have the money to pay for all of these months of water use. He asked if it would be
stretched out over a certain timeframe.
The Manager -Chief Engineer replied that the Department's Collections Clerk deals with
customers on a case-by-case basis. They may not be shut-off, but they are not being let off the
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hook either. The internal decision not to shut-off people or assess late fees was not advertised,
but efforts will be made to work with the customer. This will be continually monitored and
reported to the Board.
Department of Water Supply Energy Report - Mr. Ching reported that total power costs for the
first quarter of 2020 were a little under $4.4 million, which was down 2.2% from the same
quarter last year but up almost 2% from the previous quarter. The Department has 159 HELCO
accounts. HELCO's energy rate for the first quarter of 2020 was approximately 31 cents per
kilowatt hour, up almost 5% from the same quarter last year, compared to the previous quarter -
up about 4.5%. The demand rate for the first quarter of 2020 was $20.13 per kilowatt, up about
5.9% from the same quarter last year and 5.5% from the previous quarter. The power cost
charge is still $1.90 per 1,000 gallons, since February 2020. For energy redundancy and the
inventory of emergency generators, he went over backup power at the Department's disposal.
The Department is planning to do a transfer switch project at four well sites to make it quicker
to transfer over to emergency generators. FEMA funding has been approved for that project;
75% federal share and 25% DWS share.
Ms. Howard asked if the reason the Department is not going to install transfer switches at all of
the portable generator locations is because of funding constraints.
Mr. Ching replied that it was based on the FEMA hazard mitigation grant program in 2017.
The Department applied for the remainder of the well sites under the lava hazard mitigation
grant program, which should cover all of the sites. He also highlighted the solar photovoltaic
(PV) energy generation systems at the main office and baseyards. The Power Purchase
Agreement (PPA) is still in the design phase. There is a roofing aspect to the project, and the
plan is to recoat the roof with a 20 -year warranty to cover the PPA term. The expected
completion date is July 2021. The Department has not heard from the contractor if that
completion date is going to be extended, due to the COVID-19 situation, but it may be likely
because the roofing and PV portion of the project was suspended due to the stay at home order.
Greenpath Technologies has still yet to come forward with the results and the effect on the
completion date.
Vice -Chairperson Scicchitano asked about the recoating of the roofs and warranties and offered
his experience with this type of work during his employment with HPM.
Mr. Ching continued with the Aloha Kona Booster project, which is replacement of old,
inefficient infrastructure. The project is ongoing with an expected completion date by the end
of this year. The leak detection logger deployment is ongoing. Loggers have been deployed
and the Department is working on closing out the Hawaii Energy rebate application. There is
also a window film project for the Waiakea Office Plaza, which has a lot of windows, to put less
stress on the air conditioning system. Expected completion is September of this year.
Ms. Howard stated that she was very interested in the leak detection logger deployment, and
asked where she could learn more about it.
Mr. Ching stated that a company called Sewerin is the vendor and he could email more
information on it.
The Manager -Chief Engineer offered to arrange for Ms. Howard and any Board Member to go
out with staff and see how the units are deployed. Ms. Howard replied that she would be very
interested.
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Mr. Domingo asked if there was a plan to add more leak detection loggers to the initial 250.
Mr. Ching replied they are coming up with a plan for the coming fiscal year and will work with
Hawaii Energy.
Mr. Domingo thought it was very good to have that program.
K. CHAIRPERSON'S REPORT:
Vice -Chairperson Scicchitano asked if someone could reach out to Chairperson Boswell to resolve his
audio technical issues so he may participate in the meetings. He was able to send word that he could
hear and watch the meeting but was not able to audio in.
11) ANNOUNCEMENTS:
1. Next Regular Meeting:
June 23, 2020, at 10:00 a.m. Vice -Chairperson Scicchitano asked if, until further notice, the Board will
be meeting by this video conferencing method. The Manager -Chief Engineer replied yes.
2. Following Meeting:
July 28, 2020, at 10:00 a.m.
12) ADJOURNMENT
ACTION: Mr. Kern moved to adjourn the meeting; seconded by Ms. Hugo and carried unanimously by
voice vote. (Meeting adjourned at 12:44 p.m.)
Recording Secretary
APPROVED BY WATER BOARD
JUNE 23, 2020
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