HomeMy WebLinkAbout2021-03-23 Water Board Meeting MinutesMINUTES
DEPARTMENT OF WATER SUPPLY
COUNTY OF HAWAII
WATER BOARD MEETING
March 23, 2021
Via WebEx/Host Location: Department of Water Supply, 345 Kekuanao`a Street, Suite 20, Hilo, HI
MEMBERS PRESENT VIA WEBEX: Mr. William Boswell, Jr., Chairperson
Mr. Eric Scicchitano, Vice -Chairperson
Mr. David De Luz, Jr.
Mr. Steven Hirakami
Ms. Judy Howard
Ms. Julie Hugo
Mr. Benjamin Ney (10:09 a.m.)
Mr. Kenneth Sugai
Mr. Keith K. Okamoto, Manager -Chief Engineer, Department of Water
Supply (ex -officio member)
OTHERS PRESENT VIA WEBEX: Ms. Diana Mellon -Lacey, Deputy Corporation Counsel
Department of Water Supply Staff
Mr. Kawika Uyehara, Deputy
Ms. Candace Gray, Waterworks Controller
Mr. Kurt Inaba, Engineering Division Head
Ms. Judith Hayducsko, Chief of Operations
Mr. Clyde Young, Operations Division
Mr. Eric Takamoto, Operations Division
Mr. Warren Ching, Energy Management Analyst
1) CALL TO ORDER — 10:00 a.m. (A roll call was taken for Water Board Members in attendance —
Present: Mr. De Luz, Mr. Hirakami, Ms. Howard, Ms. Hugo, Mr. Scicchitano, Mr. Sugai, and
Chairperson Boswell. Mr. Ney was connected but had audio/visual problems.)
2) STATEMENTS FROM THE PUBLIC - None
3) APPROVAL OF MINUTES:
ACTION: Mr. Scicchitano moved for approval of the Minutes of the February 23, 2021, Water Board
Meeting; seconded by Ms. Hugo and carried by roll call vote (Ayes: 6 - Mr. Hirakami, Ms. Howard,
Ms. Hugo, Mr. Scicchitano, Mr. Sugai, and Chairperson Boswell; Abstention: 1 - Mr. De Luz;
Mr. Ney had audio/visual problems.)
4) APPROVAL OF ADDENDUM AND/OR SUPPLEMENTAL AGENDA - none
Page 1 of 15 March 23, 2021, Water Board Minutes
5) POWER COST CHARGE:
Departmental power costs from all power sources increased since the last Power Cost Charge rate was
determined. The Department proposes to increase the Power Cost Charge from $1.71 to $1.85 per
thousand gallons as a result of this increase. Power cost charges over the past two years were as follows:
Effective
PCC
December 1, 2020
$1.71
August 1, 2020
$2.01
February 1, 2020
$1.90
October 1, 2019
$2.00
June 1, 2019
$1.96
February 1, 2019
$1.89
Before the Power Cost Charge is changed, a Public Hearing should be scheduled to accept public
testimony.
The Manager -Chief Engineer recommended that the Board approve holding a Public Hearing on
April 27, 2021, at 9:45 a.m., to receive testimony on increasing the Power Cost Charge from $1.71 to
$1.85, effective May 1, 2021.
ACTION: Mr. Sugai moved for approval of the recommendation; seconded by Ms. Howard and carried
by roll call vote - Ayes: 7 (Mr. De Luz, Mr. Hirakami, Ms. Howard, Ms. Hugo, Mr. Scicchitano,
Mr. Sugai, and Chairperson Boswell; Mr. Ney was connected but had audio/visual problems.)
6) DEPARTMENT OF WATER SUPPLY PROPOSED OPERATING AND 5 -YEAR
CAPITAL IMPROVEMENT PROJECTS (C.I.P.) BUDGETS FOR FISCAL YEAR 2022:
The Department's Fiscal Year 2022 Operating Budget, totaling $54,913,800, and 5 -Year C.I.P. Budget for
Fiscal Year 2022-2026, totaling $145,700,000, have been distributed for the Board's review. A public
hearing was held prior to this meeting to accept testimony. The Board may change either Budget or adopt
them as presented over two readings.
The Manager -Chief Engineer recommended that the Board approve the Department's Fiscal Year 2022
Operating and C.I.P. Budgets on this first of two readings.
MOTION: Mr. Sugai moved for approval of the recommendation; seconded by Ms. Howard.
Mr. Hirakami mentioned not seeing well repairs on the 5 -year capital improvement budget.
The Manager -Chief Engineer explained that monies for well repairs are set aside and shown in each year,
lumped together under the "Islandwide (IW)" category under "Agreements, Repair and Maintenance."
Mr. De Luz mentioned that there are projects shown for expansion in each fiscal year, such as the 2023
Lalamilo 10 -Million Gallon Reservoir, the 2024 North Kona Mid -Elevation Well, Phase 2, and the 2026
Waimea Water Treatment Plant 5.0 -Million Gallon Reservoir. When people ask what is being done to
expand the current system rather than just maintaining it, these would be good examples of the
Department's strategic plan.
The Manager -Chief Engineer thanked Mr. De Luz for acknowledging that and added that the Department
is developing some talking points behind some of the CIP projects and addressing capacity expansion.
Page 2 of 15 March 23, 2021, Water Board Minutes
Mr. Hirakami noticed very little capital improvement projects in Puna and asked what the future plans are
for expanding water availability in Districts 4 and 5.
The Manager -Chief Engineer replied that the challenge with subdivisions in Districts 4 and 5 is they are
very large and not in compliance with the current subdivision code, not having standard roadways for
utilities. The challenge is how to expand into those areas in an equitable and financially responsible
manner. Most of the Department's revenue comes from its customers, and the bulk of it covers operations
and maintenance (O&M) expenses and some is set aside some for capital improvement projects. Capital
investment cannot be recouped on consumption alone. In these areas, other mechanisms need to be
utilized, such as with the Improvement District process where a combination of federal grants and loans
are used to make a project financially feasible. With regard to the money coming from the Kilauea
eruption disaster, the Department is coordinating with the County and the community on potential
projects, but none are firm yet. The Board will be updated as this moves along and when projects come
from those efforts. The Department is also working on another well near Kamehameha Schools to help
build redundancy and capacity in the overall Puna District. Another effort is the interconnection between
Kea`au and Pahoa through the Hawaiian Homes subdivision. The connection is there, but there is a
challenge with friction loss moving water that distance. Engineering and Operations divisions are
currently evaluating it and installing some flow meters.
Mr. Hirakami thanked the Manager -Chief Engineer for that information. He mentioned a Rule 13 by
Hawaii Electric Light Company (HELCO) where they created a plan under which a subdivision that had
no electricity could participate in putting infrastructure in. They would put down two-thirds of the cost
and have it amortized over 20 years at 7% interest, which was added to their HELCO bill. He wondered if
a similar thing could be done with water, which would improve their property value the same way the
electricity did.
The Manager -Chief Engineer replied that he would be happy to have it looked into, if there are any other
available options other than the Improvement District process, which is similar and is applied to the real
property tax as a form of repayment.
ACTION: There being no further discussion, a roll call vote was taken on the Motion to pass the budgets
in this first of two readings. Motion was carried by seven ayes - Mr. De Luz, Mr. Hirakami, Ms. Howard,
Ms. Hugo, Mr. Sciechitano, Mr. Sugai, and Chairperson Boswell. Mr. Ney was connected but had
audio/visual problems.
7) SOUTH HILO:
A. JOB NO. 2021-1161, PI`IHONUA #3 BOOSTER A REPAIR:
This project consists of furnishing all labor, materials, tools and equipment necessary to remove the
existing booster pump, motor, discharge head and all appurtenant materials; discharge piping work;
and complete an efficiency test; in accordance with the specifications.
Bids for this project were opened on March 11, 2021, at 2:00 p.m., and the following are the bid
results:
Bidder
Bid Amount
Derrick's Well Drilling & Pump Services, LLC
144,460.00
Water Resources International, Inc.
155,500.00
Page 3 of 15 March 23, 2021, Water Board Minutes
Project Costs:
1) Low Bidder (Derrick's Well Drilling & Pump Services, LLC) $144,460.00
2) Contingencies (-10.0%) $ 14,440.00
Total Cost: 5158,900.00
Funding for this project will be from DWS' Energy CIP. The contractor will have 240 calendar days
to complete this project. The Engineering estimate for this project was $160,000.00.
The Manager -Chief Engineer recommended that the Board award the contract for
JOB NO. 2021-1161, PI`THONUA 43 BOOSTER A REPAIR, to the lowest responsible bidder,
Derrick's Well Drilling & Pump Services, LLC, for their bid amount of $144,460.00, plus $14,440.00
for contingencies, for a total contract amount of $158,900.00. 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 by Corporation Counsel.
MOTION: Mr. De Luz moved for approval of the recommendation; seconded by Ms. Howard.
The Manager -Chief Engineer stated that although this is a booster repair project, it is also associated
with energy efficiency, which is why the Energy CIP funds are being utilized. The original
installation was 1975.
ACTION: Motion was carried by roll call vote - Ayes: 7 (Mr. De Luz, Mr. Hirakami, Ms. Howard,
Ms. Hugo, Mr. Scicchitano, Mr. Sugai, and Chairperson Boswell; Mr. Ney was connected but had
audio/visual problems.)
B. PETITION FOR DECLARATORY RULING: PETITIONER - ZAK SHIMOSE
(OWNER OF TAX MAP KEY 2-5-045:026):
The Department received a Petition for Declaratory Ruling alleging that DWS dug ditches across the
petitioner's property from DWS' reservoir lot (Tax Map Key 2-5-045:012). In 1973, the land owner
and developer, Foremost Hawaii Associates (Developer), as part of required improvements for the
Kaumana Estates (Gentry Homes) Subdivision, dedicated the reservoir lot along with the
improvements already in place by way of a Dedication Deed. The Developer's construction plans
approved in 1972 with the tank site plans approved in 1973 show the improvements of the tank site
which includes both ditches as described by the petitioner. At that time, the Developer owned the
large parcel of which the reservoir lot was created as well as the Kaumana Estates (Gentry Homes)
Subdivision parcel(s).
The petitioner's lot, Tax Map Key 2-5-045:026, was granted final subdivision approval in 2016 by
Subdivision No. 09-000903 which was owned and developed by Coramaca Farms, LLC.
In accordance with Section 92-5 HRS, the Board may wish to hold an executive session to consult
with the Board's attorney on questions relating to the Board's powers, duties, privileges, immunities
and liabilities related to a declaratory ruling.
Mr. De Luz asked if it would be appropriate to request entertaining a Motion to enter Executive
Session on this matter.
Chairperson Boswell suggested moving into the next Agenda Item C.
Page 4 of 15 March 23, 2021, Water Board Minutes
C. EXECUTIVE SESSION:
The Board anticipates convening an executive meeting to consult with the Board's attorney on
questions and issues pertaining to the Board's powers, duties, privileges, immunities, and liabilities
pursuant to Hawaii Revised Statutes (HRS) Section 92-5(a)(4). A two-thirds vote of the members
present, pursuant to HRS Section 92-4, is necessary to hold an executive meeting, provided that the
affirmative vote constitutes a majority of the Board.
MOTION: Mr. De Luz moved that the Board enter Executive Session, pursuant to
HRS Section 92-5(a)(4); seconded by Ms. Hugo.
The Manager -Chief Engineer asked if Mr. Kurt Inaba could attend due to his knowledge of the subject
matter. (Chairperson Boswell asked for roll call vote to move into Executive Session, noting that
Mr. Inaba would be in the session.)
ACTION: Motion to enter Executive Session was carried by roll call vote - Ayes: 7 (Mr. De Luz,
Mr. Hirakami, Ms. Howard, Ms. Hugo, Mr. Scicchitano, Mr. Sugai, and Chairperson Boswell;
Mr. Ney was connected but had audio/visual problems.)
(Executive Session began at 10:27 a.m. and ended at 10:46 a.m.)
Chairperson Boswell called the meeting back to order at 10:48 a.m.
(Note: Mr. Ney was present, having resolved audio/visual problems.)
ACTION: Mr. De Luz moved that, in the matter of the Petition for Declaratory Ruling, Petitioner:
Zak Shimose, the Board is declining to rule on a Declaratory Ruling; seconded by Ms. Howard and
carried unanimously by roll call vote (Ayes - 8: Mss. Howard and Hugo, Messrs. De Luz, Hirakami,
Ney, Scicchitano, Sugai, and Chairperson Boswell).
8) HAMAKUA:
A. MATERIAL BID NO. 2020-17, FURNISHING AND DELIVERING REPLACEMENT
0.035 MG STEEL RESERVOIR:
This project consists of furnishing all labor, materials, tools and equipment necessary to furnish and
deliver a 35,000 -gallon corrugated steel reservoir and all related appurtenances; in accordance with
the specifications.
Bids for this project were opened on March 11, 2021, at 1:30 p.m., and no bids were received. Staff
will seek alternative procurement per HAR §3-122-35 to procure the required equipment. No action
was required by the Board.
9) SOUTH KOHALA:
A. JOB NO. 2020-1160, PARKER #2 DEEPWELL REPAIR:
This project consists of furnishing all labor, materials, tools and equipment necessary to remove the
existing pumping assembly; furnish and install new pump, motor, power cable, column assembly, and
all appurtenant materials; electrical work; complete an efficiency test; and refurbish the existing
equipment for spare inventory; in accordance with the specifications.
Page 5 of 15 March 23, 2021, Water Board Minutes
Bids for this project were opened on March 11, 2021, at 2:30 p.m., and the following are the bid
results:
Bidder
Bid Amount
Beylik Drilling & Purnp Service, Inc.
$783,000.00*
Derrick's Well Drilling & Pump Services, LLC
$811,000.00
Water Resources International, Inc.
$834,655.00*
* Per General Requirements and Covenants, Section 3. 1, the Department exercised its right to waive the defects
in bidder's bid in the best interest of the Department. Bidders were permitted to amend non -conforming bid
amounts accordingly to render adjusted total amounts.
Project Costs:
1) Low Bidder (Beylik Drilling & Pump Service, Inc.) $783,000.00
2) Contingencies (-10%) $ 78,000.00
Total Cost: X861,000.00
Funding for this project will be from DWS' CIP Budget under Deepwell Pump Replacement. The
contractor will have 300 calendar days to complete the well repair with the Contractor's furnished
equipment and refurbished the existing pump and motor set for the Department's future use. The
Engineering estimate for this project was $700,000.00.
The Manager -Chief Engineer recommended that the Board award the contract for
JOB NO. 2020-1160, PARKER #2 DEEPWELL REPAIR, to the lowest responsible bidder,
Beylik Drilling & Pump Service, Inc., for their bid amount of $783,000.00, plus $78,000.00 for
contingencies, for a total contract amount of $861,000.00. 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 by Corporation Counsel.
MOTION: Mr. Sugai moved for approval of the recommendation; seconded by Mr. Ney.
The Manager -Chief Engineer stated that, for the sake of transparency, and for the Board's
information, there was a bid protest on this because, as Chief Procurement Officer, he made the
decision, under the General Requirements and Covenants section to waive defects, to award the
project to a lower bidder because it is in the best interests of the Department and its customers. The
plan is to deny the protest. Upon discussions with Corporation Counsel and the Department's
Contracts Branch, it was decided to move forward with this award because the repair of this well is
needed as soon as possible.
Mr. Hirakami asked if the bidders know the engineering estimate when the Request for Proposals goes
out.
The Manager -Chief Engineer replied they do.
ACTION: Motion was carried unanimously by roll call vote: Ayes - 8 (Mss. Howard and Hugo,
Messrs. De Luz, Hirakami, Ney, Scicchitano, Sugai, and Chairperson Boswell).
Page 6 of 15 March 23, 2021, Water Board Minutes
10)
NORTH KONA:
A. JOB NO. 2020-1133, KAHALU`U B DEEPWELL REPAIR — REQUEST FOR TIME
EXTENSION:
The contractor, Derrick's Well Drilling & Pump Services, LLC, is requesting a contract time
extension of 15 calendar days due to unforeseen delays caused by severe winter weather at the
manufacturer's facility on the mainland. 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 15 calendar days justified. Note: There are no additional costs
associated with this time extension.
1st time extension — 95 calendar days (due to unforeseen well casing conditions and oil lubrication
conversion work) approved at the 2/23/2021 Water Board Meeting
2nd time extension — 15 calendar days
The Manager -Chief Engineer recommended that the Board approve a contract time extension of
15 calendar days to Derrick's Well Drilling & Pump Services, LLC, for JOB NO. 2020-1133,
KAHALU`U B DEEPWELL REPAIR. If approved, the contract completion date will be revised
from March 9, 2021, to March 24, 2 02 1.
MOTION: Ms. Howard moved for approval of the recommendation; seconded by Mr. Sugai.
The Manager -Chief Engineer stated that this delay is due to the winter storm in Texas. The project
will probably not be done by March 24 and may go into the April timeframe. Like any typical
contract, the contractor will be subject to liquidated damages set forth in the contract and the
Department's General Requirements and Covenants. He asked if there were any questions.
Mr. Ney asked if there has ever been an instance where the Department would want the contractor to
have supporting documents from the manufacturer to verify it is their delay and not that of the
contractor's schedule.
The Manager -Chief Engineer replied that the Department always requires the contractor to justify
their request. They are asked for evidence to show it is not due to their actions or inactions. The
documentation for this particular item was included with the Agenda.
Mr. Ney recalled instances where there has not been backup on such an item.
The Manager -Chief Engineer replied that the Department would not bring it before the Board if there
is no justification.
Mr. Hirakami asked if the contractor is going to come back with another extension request, after
knowing the deadline for completion is tomorrow but it may not be finished until April, or would the
Department hold firm. He recalled last month's meeting when the Board was considering a 95 -day
time extension which would have expired two weeks after that meeting.
The Manager -Chief Engineer asked Mr. Ching to confirm that the material is on island.
Mr. Ching replied that was correct. In order for the contractor to ask for a time extension, there would
have to be justification that it was something beyond their control.
Page 7 of 15 March 23, 2021, Water Board Minutes
The Manager -Chief Engineer stated that it would have to be something that cannot be predicted, such
as weather events, where the contractor cannot safely perform the work. You can never say never, but
the contractor will be held accountable for justifiable reasons before bringing it to the Board. Nothing
is rubber-stamped.
Mr. Hirakami asked if the Board will be apprised of whether the project is completed and no
liquidated damages were required.
The Manager -Chief Engineer replied that an update would be provided at the next Water Board
meeting under the Manager -Chief Engineer's Report on the North Kona wells.
ACTION: Motion was carried unanimously by roll call vote: Ayes - 8 (Mss. Howard and Hugo,
Messrs. De Luz, Hirakami, Ney, Scicchitano, Sugai, and Chairperson Boswell).
11) 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: Moaniala Holdings, LLC (Hilo Hillside Estates, Phases 2 and 3)
Subdivision Nos. 11-000016 and 16-000026
Tax Map Keys: (3) 2-4-082:128-134 and (3) 2-4-082:155-157
Facilities Charge: $357,500.00 and $110,000.00 Date Paid: 01/17/2020
Final Inspection Date: 11/22/2019 and 12/11/2019
Water System Cost: $587,115.51 and $180,741.64
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.
MOTION: Ms. Howard moved for approval of the recommendation; seconded by Mr. Sugai.
Mr. De Luz asked if the delay in getting this easement and bill of sale is due to the developer. It has
been eighteen months since the final inspection date.
Mr. Inaba replied that the developer took the land out of land court in order to help their gating of the
public roads, which caused the delay. It is now in the regular system. They waited to dedicate the
system to the Department after that was complete.
ACTION: Motion was carried unanimously by roll call vote: Ayes - 8 (Mss. Howard and Hugo,
Messrs. De Luz, Hirakami, Ney, Scicchitano, Sugai, and Chairperson Boswell).
Page 8 of 15 March 23, 2021, Water Board Minutes
B. VEHICLE BID NO. 2020-04, FURNISHING AND DELIVERING VEHICLES TO THE
DEPARTMENT OF WATER SUPPLY:
Bids were opened on February 11, 2021, at 1:30 p.m.; and following are the bid results (for Part E):
Inter Pacific Motors, Inc., dba IK Motors Inc. dba
Orchid Isle Auto Center Kamaaina Motors
Part `B" ONE (1) ONLY FULL-SIZE CREW CAB PICK-UP DUALLY CHASSIS, WITH
SERVICE BODY, MINI -CRANE AND 4 -WHEEL DRIVE
Total Delivery Price: $112,115.00 No Bid
Delivery Time (Calendar Days) 310
This portion of the bid was deferred on the February agenda.
The Manager -Chief Engineer recommended that the Board award VEHICLE BID NO. 2020-04,
FURNISHING AND DELIVERING VEHICLES TO THE DEPARTMENT OF WATER SUPPLY, to
Inter Pacific Motors, Inc., dba Orchid Isle Auto Center, for Part E, at a total cost of S 112,115.00,
and that either the Chairperson or the Vice -Chairperson be authorized to sign the contract subject to
approval of the contract as to form and legality by Corporation Counsel.
MOTION: Mr. Ney moved for approval of the recommendation; seconded by Mr. Scicchitano.
The Manager -Chief Engineer stated that this was deferred at the last meeting to allow staff more time
to evaluate the bid amount. It has since been determined that the bid amount is fair and reasonable and
is presented to the Board for recommendation of award.
Mr. Ney stated that he was concerned about the delivery time, taking almost a year to have the vehicle
delivered. It seems like a long time to get the vehicle here.
Mr. De Luz provided some insight and also disclosed that his business has a Chevrolet line that would
have been able to bid; however, there is a reason why the manufacturer cannot guarantee production at
this time. He had waited six months for their 250 model before being told it could not be guaranteed it
would be built. One of the challenges with manufacturers is the computer chips needed for the
engines, which are in short supply. He was quite surprised that this bid offer is only 310 days and has a
feeling that Kitagawa did the same thing and were not able to guarantee supply. He suspects this may
come back later for a time extension because it is something beyond their control. For additional
information, the heavy-duty vehicles are in short supply and manufacturing is at full tilt. There is
pent-up demand to the latter part of this year, and inventory is extremely erratic and short. It may be a
two-year situation, especially for special -order vehicles.
Mr. Ney appreciated the insight.
ACTION: Motion was carried unanimously by roll call vote: Ayes - 8 (Mss. Howard and Hugo,
Messrs. De Luz, Hirakami, Ney, Scicchitano, Sugai, and Chairperson Boswell).
Page 9 of 15 March 23, 2021, Water Board Minutes
C. MATERIAL BID NO. 2020-15, FURNISHING AND DELIVERING SPARE DEEPWELL
PUMP AND MOTOR SETS FOR HAWI #2 DEEPWELL, PARKER #3 DEEPWELL, AND
KEOPU #1 DEEPWELL FOR THE DEPARTMENT OF WATER SUPPLY:
Bids were received and opened on March 10, 2021, at 2:30 p.m., and the following are the bid results:
SECTION
DESCRIPTION
Beylik Drilling & Pump
Service Inc.
Derrick's Well Drilling
& Pump Services LLC
I
HAWI 42 DEEPWELL
$314,000.00
$185,680.47
2
PARKER 43 DEEPWELL
$519,000.00
$537,319.53
3
KEOPU #1 DEEPWELL
Non -Responsive
No Bid
The estimated cost for the pump and motor set and refurbished motor, respectively, were as follows:
• Hawi 92 Deepwell: $160,000.00
• Parker #3 Deepwell: $475,000.00
• Ke6pu #1 Deepwell: $310,000.00
The Manager -Chief Engineer recommended that the Board award the contract for MATERIAL BID
NO. 2020-15, FURNISHING AND DELIVERING SPARE DEEPWELL PUMP AND MOTOR
SETS FOR HAWI #2 DEEPWELL, PARKER #3 DEEPWELL, AND KEOPC #1 DEEPWELL FOR
THE DEPARTMENT OF WATER SUPPLY, by Sections to the following bidders for the amounts
shown above, and that either the Chairperson of the Vice -Chairperson be authorized to sign the
contract(s), subject to review as to form and legality of the contract(s) by Corporation Counsel:
Section 1— Hawi #2 Deepwell to Derrick's Well Drilling & Pump Services, LLC
Section 2 — Parker #3 Deepwell to Beylik Drilling & Pump Service, Inc.
Section 3 — Keopu #1 Deepwell, no valid bids were received for this section. Staff will seek
alternative procurement per HAR §3-122-35 to procure the required equipment.
MOTION: Mr. Sugai moved for approval of the recommendation; seconded by Ms. Howard.
The Manager -Chief Engineer stated that these are spare pump and motor sets that will be retained in
the Department's inventory for use if need be. The intent is to try and get a unit warranty which is
why both pump and motor were specified on this go -around. There will still be a risk of losing
warranty if the unit sits too long. The Department will move forward with its pump and motor
replacement program.
Mr. Ney asked why there was no response for Section 3, the Keopu #1 Deepwell.
The Manager -Chief Engineer replied that the bidder submitted a bid on a substitution that was not
pre -approved. If the bidder wants to bid on something different from the bid specifications, they need
to prove it is equal or better.
ACTION: Motion was carried unanimously by roll call vote: Ayes - 8 (Mss. Howard and Hugo,
Messrs. De Luz, Hirakami, Ney, Scicchitano, Sugai, and Chairperson Boswell).
D. MONTHLY PROGRESS REPORT:
The Manager -Chief Engineer stated that the updated status of projects is shown in red on the
spreadsheet and asked if there were any questions.
Page 10 of 15 March 23, 2021, Water Board Minutes
Mr. Ney asked how the Hala`ula Well Development project is going.
Mr. Inaba replied that it is moving along and the wall forms are being worked on. Walls will be
poured in eight sections. He thought it may be good to show the Board a set of pictures when there is
a complete set.
Chairperson Boswell asked if it is a DN Tanks strand -wrapped tank.
Mr. Inaba replied that this one is not. An analysis was done prior to bid submittal, to see what is more
cost-effective for them.
Chairperson Boswell asked if that was because of a seismic zone difference.
Mr. Inaba replied that they do their analysis, together with a seismic analysis, and put together their
bid package in both ways to give the Department the best price. They want to make sure they remain
competitive.
E. REVIEW OF MONTHLY FINANCIAL STATEMENTS:
The Manager -Chief Engineer asked if there were any questions on the Financial Statements.
Mr. Hirakami asked about water sales and power charges under Operating Revenues (Page 4).
Ms. Gray and the Manager -Chief Engineer explained that there are several components to the water
bill. The Standby Charge is a monthly set fee, the consumption charge (shown as Water Sales), is
based on how much water used, and the Power Cost Charge and Energy CIP Charge, both are also
based on water usage. These four components make up a typical water bill. All are considered
revenue.
Mr. Ney asked if the Department ever looked at adjusting the standby charge by five or ten dollars as
a way to balance the budget or bring up revenue to cover shortfalls, other than water sales.
Ms. Gray replied that the standby charges were increased with this last rate increase as well as the
consumption charges. A monthly standby charge for a 5/8 -inch meter increased from $20.20 to
$22.83.
Mr. Ney added that his thinking was that rate increases look negative from a public perspective but
perhaps making small adjustments to the standby charge, rather than a rate increase might be
something to look at. The standby charge is a fixed value, but with the rate increase, it is dependent
upon consumption which has more variability in it.
The Manager -Chief Engineer stated that the changes are done via a water rate study and there are
mechanisms to determine how to separate what constitutes a standby charge and what should be built
into the rates. The Department plans to follow up with another water rate study and look at a further
breakdown of consumption rates into different categories to refine the process.
Mr. Hirakami asked about the Water Rate Study report by Harris & Associates. They included some
predictions on future water use, but the history was only 2006 and 2010. He asked why they did not
include 2020 water consumption. There is a table predicting what consumption is going to be years
from now, and it went back to consumption tables in the past but it did not have 2020 in it.
Page 11 of 15 March 23, 2021, Water Board Minutes
Ms. Gray assumed it would be the timing of when they started the rate study and the data they
obtained from the Department. She was not directly involved in that process but could check into it.
Mr. Hirakami noted that on Page 6-7, Table 6-3 - Projected Average Day Demand by Water System,
2006 Water Master Plan shows Fiscal Years 2005, 2010, and 2025. He wondered why there is such a
gap in the projected demand.
Ms. Mellon-Lacey thought it may be because 2020 was such an abhorrent year that data might have
skewed things.
Mr. Hirakami asked about Page 6, Table 6-1, where he was interested in the methodology by county,
looking at Kauai, Honolulu, and Maui; but the Hawaii column compares Hawaii wastewater which
has nothing to do with the Department of Water Supply. That is not how charges for water are
developed.
The Manager -Chief Engineer stated that they were valid questions. Staff could double check and
report back to the Board next month under the Financial Report.
Mr. De Luz stated that sometime in August or September, the Department will be updating the Board
on where things stand with current water rates that were approved and how it is trending. He stated
that he was concerned about the cash position which has improved this year and that it looks like in
interest earned, there was an anomaly for the last month because you basically have 75% of your
annual budget in February on interest earned. He asked for confirmation that this is due to the CD's
coming to term.
Ms. Gray replied that was correct.
Mr. De Luz mentioned that the other thing to help understand is the challenge in regard to the deferred
payments the Department has to pay into the pension and medical programs. Those payments are
reflected differently in the Audit Report as it relates to the Balance Sheet. It does not show up as a
contingency in the Balance Sheet. His concern is that, as with the water capacity and being able to
expand it, these are legacy costs that have to be figured in, and there may need to be a footnote to
represent that. Unfortunately, these things are not taken into consideration during collective
bargaining negotiations. The sad reality is that you may have a budget that looks balanced or in
surplus, but only from the perspective of operations. What he thinks he is seeing is that the cash
position for operations, not taking into consideration the legacy costs, is running about $1.5 million in
excess of expenses right now. You can only operate in the black if you have the cash. The Income
Statement has very little value if the Balance Sheet does not reflect your cash position. He apologized
that he missed last month's meeting and the Audit Report and needs to go more into it because it will
articulate what whose deferrals are. If he recalled correctly, it is done differently in regard to how it is
calculated. This goes back to where the public needs to appreciate, as well as the Department's team
members, that this rate reflection is not purely based on current operation needs. As the Department
moves into the reiteration of the rate study, maybe some of those footnotes can be articulated to show
the true cost of what it takes to operate day to day, what it takes to build and improve capacity, and
what the large legacy costs are in regard to pension and medical.
Mr. Ney asked if making the deferred payments for pension and medical is doable with the operating
budget. The State of Hawaii is doing the same thing where they are paying about half into their
pension fund and it seems like DWS is deferring the problem until later rather than addressing it now.
Ms. Gray stated that the annual required contribution is included in the Fiscal Year 2022 Budget.
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Mr. Ney wondered if something needed to be done differently because, as Mr. De Luz mentioned, you
can have things look good on paper, but the reality behind decisions on how to manage the finances
may require more tweaking to become logical.
Mr. De Luz clarified that he believed the Department of Water Supply is not deferring its
contributions and is continuing to make payments. It is unfortunate that changes are based on the
investment portfolio of the pension fund. It is a moving target, although the Audit attempts to put
some numbers into perspective. He believed the State deferred this year, as did the City and County
of Honolulu. The reality is without those funds coming in, it impacts the investment earnings of the
total pension fund. Putting that aside, it is his understanding that the Department has budgeted for and
is on track to make the necessary contributions, as calculated.
The Manager -Chief Engineer stated that was correct. During the Audit presentation last month, that
topic was discussed. It is a government accounting standard, which requires the Department to report
it in a certain way. It is an actuary, like a black box that the Department has no control over. The
auditors do not know how that amount is calculated. The numbers go in and some numbers go out
and are dictated to the Department as its liability and responsibility; and the Department pays them.
Mr. Ney asked who is investing this money on the Department's behalf.
The Manager -Chief Engineer replied that the State Employees Retirement System, a State agency,
does it and there is no other option than going through them. The other mechanism available to
employees is called Deferred Compensation, which is managed by a private entity; and that is where
the employee sets aside a certain amount for the private entity to invest in different ways.
F. MANAGER -CHIEF ENGINEER'S REPORT:
The Manager -Chief Engineer provided an update on the following:
North Kona Wells - the Deputy reported that, of the fourteen total wells, eight are online and six
are offline. The six offline are: Kahalu`u B which was discussed earlier - looking at an April 2021
completion after purging and chlorination. Kalaoa Well should be back online in rnid-June of this
year. There are some well controls, SCADA, and chlorination that need to be finished before they
can install the pump and motor. Palani Well completion looks like May of this year. The
substitution request was approved to ensure warranty on the pump and motor. As soon as it is
delivered to the island, the contractor will install it. Wai`aha Well continues to be on litigative
hold. Keahuolu Well was reported last month as having to have emergency procurement. Notice
to Proceed was issued mid-February and equipment is expected on island next week with
installation thereafter. The sixth one is Makalei Well. It is a privately -developed well, dedicated
to the Department. The developer is working with Engineering Division on revising the agreement
between this Department and their party. They will get bid prices thereafter. The Deputy gave
thanks to the Department's Operations Division and crews who continually evaluate the system
and ensure the customers' needs are being met.
Chairperson Boswell asked about Hina Lani Street, where about four miles up, a driller is currently
drilling a monitoring well. He asked if that was being done on the Department's tank site for the
State Commission on Water Resource Management.
Mr. Inaba replied that it is a State monitoring well on the Department of Water Supply's site.
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2) COVID-19 Update - The Manager -Chief Engineer was happy to report that for most of the
Department's employees who wanted to get vaccinated, they are probably on their second shot
already. He received his almost two weeks ago. It is voluntary, so it is hard to know how much of
the staff has chosen to get vaccinated. As vaccinations are becoming more prevalent, hopefully,
the Board can return to Chairperson Boswell's goal of getting the meetings back to in-person. He
looks forward to that. For now, the Department is following COVID-19 guidance and still seeing
customers by appointments only. There have not been any positive cases in the workplace due to
staff's diligence.
3) Legislative Matters - the Manager -Chief Engineer brought up Senate Bill 1122 and referenced the
proceedings on the Senate floor on March 9 which displayed some of the disheartening things that
some Legislators will do to gather support for the Bills that they are backing. There was one
Senator from Windward Oahu that made inaccurate statements and mischaracterized all of the
water departments and how they do things. That was disappointing to hear. He did mention that
the Senator from the Hamdkua District courageously stood in opposition to that Bill, along with
another Senator from Honolulu. There were 23 ayes and two noes; but of the 23 ayes, nine were
with reservations. All of the water utilities expressed their concerns to all Senators. This
Department and Board submitted testimony, and Mayor Roth submitted testimony in opposition.
The Bill has moved out of the Senate and now goes to the House. Fortunately, from
communications with our Representatives in the House, they understand our concerns. It was
scheduled for three committees with no hearing, and the deadline for filing for a triple referral was
last Thursday, the 18r''. We will still monitor it closely as there may be other mechanisms available
to keep it going. He has tried to reach out to the Department of Hawaiian Home Lands (DHHL)
Chairperson, William Aila, to try to be collaborative and work together as this type of legislation is
unnecessary and actually more hurtful than constructive. The Department wants to help DHHL get
their lessees on their property; but at the same time, the Department cannot afford to pay for
DHHL's responsibilities as far as infrastructure requirements, facilities charge payments, etc. The
link to the YouTube video of the March 9t' session and the approximate timing of Senate Bill 1122
will be forwarded to board members.
Mr. Ney hoped that this Bill goes no further, but it is disappointing there was so much reservation
when the vote was taken, and this could be a contentious issue in reintroduction of new legislation
in the future. This could come back later on in some form.
4) American Water Works Association (AWWA) Annual Conference and Exposition (ACE) National
Conference - the Manager -Chief Engineer announced that this conference will be June 13 to 16,
2021, but is only virtual this year. He was disappointed to see that the registration fee is still quite
expensive. Part of the benefit of sending people to these conferences is the face-to-face interaction
and networking opportunities, primarily for Board members, to meet other jurisdictions and see
how they do things in their area. The other thing of value is seeing exhibits and what kind of
technology is out there to provide reasonable solutions. He was not sure how that would work in a
virtual environment. He asked if the Board has any interest, to let him know. There may be some
budget for it, although it was drastically cut. He invited to the Board to let him know if they hear
of any other training opportunities that the Department can sign them up for.
G. CHAIRPERSON'S REPORT:
Chairperson Boswell stated that he would work harder on the technological advantages and
disadvantages to WebEx calls. Sometimes five minutes before the call is good to get his headset and
volume adjusted. He appreciated everyone's contributions today. There were a lot of good
conversations. Obviously the financial part is important to everyone. At times there is a lot to
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understand, and to take pot-shots at it is kind of hard. The rate study was a culmination of a lot of
work on the part of the Department and the Board. A lot was done and the Department is seeing the
benefits from it, and he looks forward to the next go -around with the consultant when they provide an
update on how the Department is doing. The economy on the west side of the island is booming. The
rental car companies are sold out, traffic is busy everywhere, grocery stores are full, construction
workers on properties ranges about 150 to 200 per day. There is tons of work going on and it is good
to see. It feels a little crowded; there are a lot of out-of-state license plates nowadays. He thanked
everyone for their contributions today.
12) ANNOUNCEMENTS:
1. Next Meeting: - April 27, 2021, 10:00 a.m., via Web Conferencing. The Manager -Chief Engineer
announced that the County has decided to move away from WebEx. They have a Zoom license now,
so hopefully it will be better. Mr. Ney asked if there was a way to log on before the meeting starts in
order to work out connectivity issues. The Deputy noted he will work with the Secretary and send out
reminders on when meetings will start.
13) ADJOURNMENT
ACTION: Mr. Ney moved to adjourn the meeting; seconded by Ms. Howard and carried unanimously
by roll call vote: Ayes: 8 - Mss. Howard and Hugo; Messrs. De Luz, Hirakami, Ney, Scicchitano,
Sugai, and Chairperson Boswell.
(Meeting adjourned at 11:58 a.m.)
Recording Secretary
Approved by Water Board
April 27, 2021
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