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HomeMy WebLinkAbout2004-05-25 Water Board MinutesMEMBERS PRESENT: MINUTES DEPARTMENT OF WATER SUPPLY COUNTY OF HAWAII WATER BOARD MEETING May 25, 2004 ROYAL KONA RESORT - DISCOVERY ROOM Mr. Earl T. Nakashima, Chairman Mr. Thomas Goya Mr. Loren Heck Ms. Sandra Scarr Mr. Leonard Tanaka Mr. George Wilkins Mr. Milton D. Pavao, Manager (ex- officio member) Mr. Bruce McClure, Director, Department of Public Works (ex- officio member) ABSENT: Mr. Ivan Mochida, Vice - Chairman Ms. Pamela Hons, Water Board Member Mr. Christopher J. Yuen, Planning Director (ex- officio member) OTHERS PRESENT: Ms. Diane Noda, Deputy Corporation Counsel Mr. Sherman Hee Ms. Chris Bruneau Mr. Ed Bruneau Mr. Don Nitsche Mr. Rory Flynn, Legislative Auditor's Office Mr. Curtis Tyler, Council Member Mr. Glenn Santos, Business Insurance Services Mr. Mark Rodrigues, Business Insurance Services Mr. Gary Shiraki, Business Insurance Services Mr. Dave Jochim, R. W. Beck, Inc. Mr. Tom Cutting, R. W. Beck, Inc. Department of Water Supply Staff: Mr. Quirino Antonio, Deputy Manager Mr. Glenn Ahuna, Engineering Division Head Mr. Lawrence Beck, Engineering Division Mr. Dennis Lee, Chief of Operations Mr. Richard Tsunoda, Waterworks Controller Mr. Richard Sumada, Assistant Waterworks Controller Mr. Robert Ravenscraft, Kona District Office Mr. Daryl Ikeda, Operations Division (2:45 p.m.) CALL TO ORDER: Chairman Nakashima called the meeting to order at 10:08 a.m. Page 1 of 29 5- 25- 04min.doc STATEMENTS FROM THE PUBLIC: 1. Mr. J. Curtis Tyler III: Mr. Tyler represents District 8 of the Hawaii County Council, in which the Kona Coastview/Wonderview project is located. He thanked the Board Members for meeting in Kona on a regular basis and also for their willingness to serve the County of Hawaii - -in particular, this Item I on the Agenda today. As the Board knows, he has been very involved, along with his staff, Mr. Rory Flynn, the Department of Water Supply, Ms. Katherine Garson, and the County's bond counsel, in trying to bring this project to fruition as soon as possible and thanked the efforts of the Board and the Department of Water Supply's management and staff on behalf of his constituents. He spoke in support of Resolution 04 -02 authorizing a loan in the amount of $600,000.00 from the County of Hawaii, Department of Water Supply, to the County of Hawaii to be used by the County as an advance for the Kona Coastview and Wonderview improvements through the Water Improvement District Process and to be evidenced by a general obligation bond to be paid back in five years with the interest rate not less than 3% and no more than 4.5 %. As the Board is probably aware, when the bids came in on this project, the low bid was approximately $1.52 million over what was anticipated. Given the status of construction in West Hawaii, it probably did not surprise many people, although he was sure the residents of Coastview/ Wonderview will obviously have something to say about it when the opportunity comes to them. Nevertheless, thanks to the work of Mr. Flynn and the Department of Water Supply, they were able to secure approximately $920,000.00 from the United States Department of Agriculture (USDA), Rural Development, in additional loan funding; and there remains approximately $600,000.00 to cover the amount of the bid. In light of seeing this project brought to fruition, he hoped the Board gives this Resolution serious consideration and a favorable vote. In addition to the assistance of the residents in those subdivisions and public health and safety, this project has been envisioned by himself and others who have worked so hard on it, to be a model for the rest of the County. This is the first like this ever to take place, and there are many other communities throughout this County where water systems are either absent or in need of upgrading. The Improvement District Process has been in the Hawaii County Code for a long time but has been underutilized; but in this case, thanks to Mr. Flynn and his work with bond counsel, they were able to update the Hawaii County Code to make this process more consistent, fair, and move along in an efficient manner, whereas before, they had some "old- fashioned" ways of doing things. He reiterated his hopes that the Board regards this as part of a very important mechanism that is available to all the citizens in need of improved water service. He thanked the Board for its consideration. Ms. Scarr asked Mr. Tyler if he had any comments on another Agenda Item, the draft new rule on acceptance of existing private water systems, because there are a number of them in his district. Mr. Tyler replied that he had not had a chance to review it yet, but would and perhaps speak to the matter when it comes up. 2. Ms. Chris Bruneau: Ms. Bruneau stated that she had a number of her questions answered by Mr. Heck and the Manager so some of what she had has already been answered. One of her questions was on the South Kona to Ka`u Water Master Plan and what part of the process it is in. She questioned if it has been Page 2 of 29 5- 25- 04min.doc decided what route the water will be taken; or, if not, she had an area she would like explored. The other thing was the subdivision she lives in has water that they had brought from the road - -each person, individually. This is not working out very well because of leaks. She wondered about the possibility of digging their own well and what process they need to go through to get that. Also, the Manager had mentioned the Rural Community Association Corporation and she wanted to get that information from either him or from Mr. Heck. She added that this problem would not even exist if the County had not allowed substandard subdivisions to come about. There has to be some kind of assistance or someone to go to that they can work through, as mentioned by Mr. Heck, some kind of public relations person who is a go- between with groups and the water department. With that in mind, hopefully, she can get some information. 3. Mr. Don Nitsche: Mr. Nitsche referenced his letter from OVCDC sent to the Water Board after its meeting of April 27, 2004, in Ocean View. He was disappointed because the engineer he had been talking to had read an article in the Hawai'i Tribune - Herald, which did not mention what their association had proposed at the meeting. It mentioned Mr. Nitsche's name and a few things, but nothing at all on their ideas. He thinks that when the engineer read the article, he thought that what OVCDC was doing was not being considered. Mr. Nitsche, therefore, wrote his letter (dated May 6, 2004) to reinstate their plan and make sure he got through and how important they think it is that OVCDC's plan for Ocean View is to bring water up to South Point Road and move a loading area to relieve half the problem of having water delivered. They would then be happy to work on coming down the highway with a lot of other ideas. But to do it within a reasonable length of time, they feel this is the only plan that will work because to go back uphill, where the original plan was to drill the well, it needs a test well first, go through the procedure, and then the money would probably have to come from the Legislature again. That is another year away to even get that started. They feel that the plan the Water Board should seriously consider is the Wai`6hinu Well they are planning to drill, put it at the top of its list, and bring a waterline up to the tank at South Point Road. They feel it makes sense and is a reasonable request. He added that they are quite discouraged with the lack of feedback from the Mayor's Office about additional funds they would need to check with various property owners along the right -of -way from South Point to Ocean View. They have checked with some of them and do not think there will be any problem with the welcoming of a waterline. They also need funds to hire an engineer to do a design in order to get a fairly close actual cost, whereas at the present, they have various prices as to what it will cost. They are convinced it will be more like $400,000.00 a mile and not what was originally thought - -$1 million a mile. They could also go after funds through federal sources, etc., to bring the waterline down the highway. He realized they have belabored the Board with these plans for a long time, but they feel it is time to get going on it and would appreciate it if the Department of Water Supply would go ahead with the plan in Wai`6hinu, enlarge the size of the well so it would incorporate the needs of Ocean View for the near future, and, eventually, put more wells in. That would be the first step in tying the water system to Ho`okena. Mr. Wilkins stated he was troubled that OVCDC's letters seem to pay little or no attention to the existing test well at the intersection of South Point Road and Volcano Highway, especially since that test well found water perched over 400 feet above sea level. He would think that would make an ideal area to drill a production well at the place where you would want the water hookup and water that has gotten to be pure because it is so high above sea level. Page 3 of 29 5- 25- 04min.doc Mr. Nitsche agreed that there is very adequate and good water at that junction; but since the Department was going to be putting a well in Wai`6hinu anyway, they thought that made more sense. Maybe putting a well in at the South Point Road/Highway 11 junction would be a better idea, but it would need input from the Department. He referenced reports from both test wells that the one in Wai`6hinu was more abundant; however, the one in South Point was abundant as well. He concluded that these two options would be something perhaps the Manager could comment on. Chairman Nakashima asked that questions be reserved for when the Agenda Item 6(A) comes up -- South Kona to Ka`u Water Master Plan Follow -up. APPROVAL OF MINUTES: ACTION: Ms. Scarr moved for approval of the Minutes of the April 27, 2004, Water Board Meeting and the April 28, 2004, Special Water Board Meeting with special commendation to the Secretary for getting out very accurate, excellent, and wonderful Minutes; seconded by Mr. Wilkins and carried unanimously by voice vote. APPROVAL OF ADDENDUM AND SUPPLEMENTAL AGENDA: ACTION: Mr. Tanaka moved to add Addendum Item 4(C) Job No. 98 -721 (extension of contract time) to the Agenda; seconded by Ms. Scarr and carried unanimously by roll call vote (Ayes: 6 - Ms. Scarr; Messrs. Goya, Heck, Tanaka, Wilkins, and Chairman Nakashima; Nays: 0; Absent: 2 - Ms. Hons and Mr. Mochida). ACTION: Mr. Tanaka moved to add the Supplemental Agenda for Item 7(E) Water Treatment Proposal No. 2004 -03; seconded by Ms. Scarr and carried unanimously by voice vote. SOUTH HILO: A. RISK MANAGEMENT — GENERAL LIABILITY COVERAGE: The Department's insurance agents, Business Insurance Services, presented a $1,000,000.00 Public Liability and Public Official Liability insurance policy from Genesis Indemnity Insurance Company for the Board's consideration. Each coverage comes with a $150,000.00 retained limit or deductible that the Department is responsible for. The annual premium, including taxes, for this portion of the policy is $123,103.68, adjustable at $21.28 per $1,000.00 of payroll. In addition, a condition of the policy requires that a "Third Party Administrator' be retained by the Department to administer liability claims under $150,000.00. Specialty Risk Services has been identified as this administrator who has an annual administration fee of $1,500.00, plus per claim fees of between $575.00 to $725.00 for general liability claims and between $370.00 to $690.00 for automobile liability claims. The Manager recommended that the Board approve and procure the Liability insurance policy prepared by the Department's insurance agents, Business Insurance Services and that either the Chairman or the Vice - Chairman be authorized to sign the documents, subject to approval of our Corporation Counsel. Page 4 of 29 5- 25- 04min.doc MOTION: Ms. Scarr moved for approval of the Manager's recommendation; seconded by Mr. Heck. After questions for clarity from the Board to Mr. Shiraki of Business Insurance Services, Inc., noting that it seems like low coverage for a lot of money, the Board asked for more options. It was noted that the Department has a very good liability record, and it was felt that the deductible could be increased with a corresponding decrease in premium. Mr. Wilkins did not like the fact that the Board was left with one option. He would feel more comfortable being offered a choice of two or three different levels of deductibles and premiums. He suggested voting on this in principle and "massaging" the premium somewhat. It was suggested that the Board conditionally accept the offer on the table on a temporary basis until other coverage levels and deductibles could be provided. Ms. Scarr added that she would like to see a scale of both higher deductibles, keeping the same level of coverage, and a layer of what it would cost to get higher coverage. She added that the Board also needs to see records of the Department's losses for the last 10 years. Mr. Hee suggested that the Board accept this proposal, subject to changes, because this rate will not hold indefinitely (may lose the offer by the next Water Board Meeting). AMENDMENT TO MOTION: Mr. Wilkins moved to amend the Motion that the Board conditionally accept what is being offered now, with the understanding that Mr. Hee will work with Business Insurance Services, Inc., on more options and that a more exact form will be adopted at the next Water Board Meeting; seconded by Mr. Tanaka. Ms. Scarr questioned the implications of accepting this proposal, even on a temporary basis, and felt that the Department may be locked into a contract on which the Board may not discuss options. Mr. Wilkins asked about a one -month binder but was cautioned by Mr. Shiraki against 30 days and added that a binder would be more like three months. Mr. Wilkins asked for advice from Mr. Hee. Mr. Hee and Mr. Rodrigues agreed that the purpose of the amendment is that the Board wants to purchase an insurance policy but also wishes to explore ways of getting the additional coverage for the same or less money. The Board will be buying what is on the table and adjusting it appropriately, per Mr. Hee's recommendations. ACTION: A vote was taken on the Motion, as amended. Motion was carried by 5 ayes: Messrs. Goya, Heck, Tanaka, Wilkins, and Chairman Nakashima; 0 Nays; 2 absent. Ms. Scarr abstained, stating that she did not understand the action that was being taken. Mr. Curtis Tyler asked if the Board allows people to speak on any Agenda item while there is a Motion on the floor. It is important because what was just decided upon was a significant thing. (Ms. Scarr agreed.) For future items, he felt the public should have an opportunity to speak. Chairman Nakashima noted that Mr. Tyler's suggestion would be kept in mind. Page 5 of 29 5- 25- 04min.doc B. INDEMNITY AND CONSENT TO LICENSE AGREEMENT (OLA`A SPRING SOURCE): Yamada & Sons, Inc., has executed a license agreement with the Hawaii Conference Foundation to use the Ola`a Spring Source water that has been disconnected from our water system. DWS has replaced this source with a deepwell and still has the ability to reconnect to the spring source under emergency conditions and with the consent of the Department of Health. The source will be used by Yamada & Sons, Inc., for dust control purposes during the construction of the Saddle Road Re- alignment project. The Manager recommended that the Board approve the Indemnity and Consent to the License Agreement between Yamada & Sons, Inc., and the Hawaii Conference Foundation subject to the approval of the Corporation Counsel and that either the Chairman or the Vice - Chairman be authorized to sign the document. MOTION: Mr. Tanaka moved for approval of the Manager's recommendation; seconded by Ms. Scarr. Councilman Tyler mentioned the Hawai'i County Council's recently appropriated $30,000.00 to conduct a study to provide water from the Olaa Spring for fire protection only, brought on at the request of Councilman Michael Tulang, representing Kaumana City. Since that project would be possibly utilizing this water, he asked if this would in any way compromise that. The Manager stated that the Department is aware of the project, and this will not affect it. There will be sufficient water, and this pipeline is 16 inches. Ms. Scarr questioned if the Department is charging for the use of the waterline. The Manager stated that discussions with Yamada & Sons, Inc., did not include consideration for payment to the Department of Water Supply. The Department wants to be a good neighbor to the Federal Government and State of Hawaii, Department of Transportation, Highways Division, to finish up the Saddle Road realignment project. There is an agreement that if there were ever a problem with the Saddle Road Well, the Department of Water Supply may use this spring and pipeline as a backup, with special permission from the Department of Health. Discussion followed on the wear and tear on the pipeline. The Deputy Manager had pointed out a condition in the Agreement whereby Yamada & Sons, Inc., will pay for any damage to it. Mr. Heck liked the attitude of the Department of Water Supply, but was a little uncomfortable with not even considering charging anything for the use of the pipeline. Mr. Lee commented that the pipeline is not in use by the Department and is only reserved for an emergency event. When a pipeline is not in use, it deteriorates; therefore, by having Yamada & Sons, Inc., use the pipe, it is a benefit by having water in the line. Secondly, if the Department does charge for the use of the pipeline, then it becomes responsible for maintenance of it. ACTION: A vote was taken on the Motion. Motion was carried unanimously by voice vote. Page 6 of 29 5- 25- 04min.doc C. JOB NO. 98 -721, KAWAILANI NEW 1.0 MG CONCRETE TANK & REMOVAL OF EXISTING 0.5 MG STEEL TANK: The Board considered a request for contract time extension from Jas. W. Glover, Ltd., of 60 calendar days on this project. This would be the fourth time extension to the contract. Engineering staff has reviewed the request and finds that the 60 calendar days are justified. The Manager recommended that the Board grant this extension of contract time of 60 calendar days to Jas. W. Glover, Ltd., for JOB NO. 98 -721, KAWAILANI NEW 1.0 MG CONCRETE TANK & REMOVAL OF EXISTING 0.5 MG STEEL TANK. If approved, the contract completion date will be extended from May 31, 2004, to July 30, 2004. MOTION: Ms. Scarr moved for approval of the Manager's recommendation; seconded by Mr. Wilkins. Discussion followed regarding the specifications, why they changed, and who absorbs the extra cost. Staff explained that because the tank was leaking, the repairs needed were in conflict with products specified for the seal. The problem with new tanks leaking is not unique and is happening throughout the island. Investigations have been ongoing to find out if the problem is the concrete, the type of additive in the concrete, etc. With respect to the extra cost, the contractor absorbs it. In response to Ms. Scarr's question if the Manager feels confident the contractor will complete the project in this time period, the Manager replied that he is not. He added that he has learned through the years that you can never second -guess a construction project because you have no idea of what can go wrong. ACTION: A vote was taken on the Motion. Motion was carried unanimously by voice vote. NORTH KONA: A. RELEASE OF INDEMNITY AGREEEMENT - SCHULER HOMES: As a condition of the Board accepting a waterline easement over Tax Map Key 7 -5- 017:028 & 029 from Schuler Homes, an Indemnity Agreement, dated March 2004, was required of the latter in favor of the Board. Section 2 of the Agreement stipulated that the Agreement was valid only until such time as the water unit allocation litigation between Westpro Development, Inc., and Schuler Homes was resolved. As of March 17, 2004, such litigation has been resolved; the term of the Indemnity Agreement thereby satisfying Section 2. The Manager recommended that the Board approve this Release of Indemnity Agreement, subject to the approval of the Corporation Counsel and that either the Chairman or the Vice - Chairman be authorized to sign the document. ACTION: Ms. Scarr moved for approval of the Manager's recommendation; seconded by Mr. Tanaka and carried unanimously by voice vote. Page 7 of 29 5- 25- 04min.doc KA`U: A. SOUTH KONA — KA`U WATER MASTER PLAN FOLLOW -UP: The Board discussed a letter of May 6, 2004, from Mr. Don Nitsche, Chairman, OVCDC; but first, the Manager commented on the fact that Mr. Andrew Levin approached Townscape, Inc. ( Townscape), after the Water Board's meeting last month in Ocean View and asked them if they could include, in the plan, bringing water from Wai`6hinu to South Point as a potential fill station. His understanding is that the civil consultant has done that, and that particular option will be available in the draft plan. This is what Mr. Nitsche had been referring to. Also, staff met with Rural Community Assistance Corporation (RCAC), a federally funded, non - profit organization that specializes in assisting rural communities with exactly the type of situation as Ocean View. They were very anxious about working with the community to assist in moving things forward. He had given Mr. Heck their business cards to give to people in Ocean View to have them meet with their representatives. He has also asked RCAC to make a short presentation at a future Board meeting (July or August) on what is available in assistance to communities. Ms. Scarr stated that if Townscape is being asked to add something to their plan, why not ask them if they have considered a well at South Point in the higher -level perched water area to provide a filling station for Ocean View, as requested by people from Ocean View. As Mr. Wilkins had stated previously, the Board was surprised when USGS presented their map of test wells showing such high -level water at South Point Road. It looked like a good opportunity to explore as a feasible part of a plan to supply South Kona to Ka`u with water. The Manager made a note of it and will ask Townscape if they will include it. Mr. Heck mentioned that he had spoken with Townscape and was aware that the final draft of the plan is expected in two weeks, so hopefully, this would be an opportune time to do that. They did say they would include more analysis of the South Point access to Ocean View. Mr. Wilkins applauded the Manager for responding so quickly to the output of last month's meeting. Backing up what Ms. Scarr mentioned, there are so many positive aspects to further investigation of the well at the intersection of South Point Road and Volcano Highway. One is the fact that the water level is 436 feet above sea level, and also that the geology is well known as a result of excavating that well, and that the ground surface of that well is essentially the surface where Volcano Highway passes Ocean View Estates. Whether the well is drilled as a truck collection point or used to support a pipeline running roughly parallel to the highway to Ocean View, it is a very positive asset. He was troubled that the USGS has not been following up with investigation into what they have at that point. Mr. Heck was concerned about the C.I.P. project in place for this region and it seemed like there may have been parallel thinking between Mr. Dennis Lee and the Manager. He noted this after reviewing the Minutes of the April 27, 2004, meeting. He referenced Page 10 in the April Minutes regarding the replacement of the surface water with a well in Wai`6hinu, "the decision was that the Department needed to also replace the pipeline. The project called for not only well development, but also called for the replacement of a transmission line from Wai`6hinu to South Point." Ms. Scarr was asking about the C.I.P., and this was Phase 11, so it is not on the C.I.P. list as far as transmission is concerned. Mr. Lee had stated, "One of the concerns was that they needed to have Page 8 of 29 5- 25- 04min.doc a water point established - -one large enough to take care of at least three vehicles at a time. In the plan, they included a sufficient or adequate water point such that it could handle the demand for water hauling." However, he noted that on Page 11, the Manager made a statement that seemed to contradict that, "The Manager commented that this area [Ocean View] needs to look for a source of its own [water] because the Wai`ohinu well was made specifically to accommodate that area because of the loss of source water under EPA mandates. While there will be some surplus water, the quantity will not be enough to serve Ocean View." Mr. Heck's question was, say there were a Phase II and the water is brought to South Point that way, would there be enough water for Ocean View or not, under the current plan and in the budget. The Manager replied he did not think so, and that is because when the initial well was contemplated, the intent was to provide adequate water to replace the two sources that might eventually be lost -- Mountain House and Haao Springs. That well would have to take care of what those springs are now supplying. There is always the possibility that when the well is drilled, the pump test determines what the safe capacity is. As Mr. Nitsche said, it is possible to oversize it to provide added capacity; however, to take that water to South Point would be expensive. The rough draft from Mr. Bruce Kawamura indicates approximately $3 million dollars but does not include additional pumping from the Wai`ohinu reservoir to the Discovery Harbour tank reservoir, just off the highway. Mr. Heck noted that the Manager used the word "replace" and asked if it would be an upgrade. The Manager replied that it is an upgrade because it will be designed to provide for future growth in that area. Mr. Heck's concern was whether it is perched water in South Point or whether it is the plan the Department has now, and half of it is on the C.I.P. list, the conclusion should be that there is ample water for truckers to load up there. There is a lot of work to be done, and it would seem remiss if it were not included - -the draw of a lot of water from Na`alehu and that area from Ocean View. He would like to see a detailed plan comparing that perched water to an upgraded plan of Phase A and B to possibly approve putting that on the C.I.P. list. Although it was mentioned it would be expensive, he would like to see the details. The Manager reiterated the fact that a lot of things will not be discovered until the well is drilled and tested, therefore making it hard to do a cost analysis. Ms. Scarr had questions on estimating the demand in that area. In previous thinking on replacing the water source in Wai`ohinu, it was thought to include a small increase to allow for development in that specific area. However, as you start to think more broadly about the area between Wai`ohinu and Ocean View, including South Point and in between, there was some disturbing testimony at last month's meeting. She referred to Page 12 of the Minutes, Ms. Marge Elwell's testimony, in which she mentioned not seeing anything from the Office of Hawaiian Affairs [meaning Department of Hawaiian Home Lands]. She had mentioned plans of 400 homes coming in to Discovery Harbour and had numbers on the growth in the area. Ms. Scarr asked what the Department of Hawaiian Home Lands intends to do with all that land they own and if the Department is going to suddenly be surprised by the demand for water in that area. Page 9 of 29 5- 25- 04min.doc The Manager did not think this Department would be surprised because the Department of Hawaiian Home Lands has been in contact with DWS regarding their lands. The infrastructure at South Point right now cannot support subdivisions. The Department has, therefore, been allowing only one unit per lot. The Department of Hawaiian Home Lands has always expressed their desire to get more than that. Ms. Scarr asked if they can help pay for it. The Manager replied that is an option, and Ms. Scarr asked that this Department talk to them. The Manager continued that the DWS has not looked at replacing the nine miles of 4 -inch transit line from the South Point intersection down to the bottom area. As for the other lots Ms. Elwell spoke about, the DWS is aware that the Department of Hawaiian Home Lands bought some lots in Discovery Harbour; but that will be cranked into the overall calculations when the Wai`ohinu well is done because they are existing subdivisions that the Department has to take care of. Discovery Harbour is currently being served by Haao Springs and Mountain House, so they have to be accounted for, plus areas that are suspected to subdivide or, example, if Green Sands Subdivision goes through an Improvement District process and has a water system installed. They will all to be accounted for in the final tally when deciding how big that well should be. Ms. Scarr asked if the Department has to replace the transmission line between Wai`ohinu and Discovery Harbour to accommodate all these additional users. The Manager replied there is an existing transmission line designed to take the entire capacity to Discovery Harbour. Mr. Heck asked if that includes Green Sands Subdivision and various ones that might expand in that area. The Manager replied it does not. Discovery Harbour's system was designed to adequately serve the 800+ lots, through the Improvement District process. Ms. Scarr stated that, in its planning, the Department needs to get beyond just replacing existing infrastructure with similar infrastructure, knowing that this area is expanding dramatically. There is a need to think big in what to plan for in the next 20 years. The Manager explained that when the Department plans for pump size, it looks at land use and provides as much as possible for addition to the existing amount serviced. However, there is also the limitation of the well capacity, which is determined by a pump test. Mr. Lee clarified, for Ms. Scarr, that the transmission line for replacement is from Haao Springs, in Wai`ohinu, down to South Point. It has nothing to do with Discovery Harbour, although it may take that route. For Mr. Heck's concern on the water point in Wai`ohinu, what he had expressed as a proposal is not contradictory to the Manager's statements but is more complimentary. Two issues that will determine the water point are 1) yield of the new Wai`ohinu well (to be done at the exploratory stage of drilling) and 2) the project by the Mayor of about $1 million for water spigots across the island (about six water points). This is federal money that Senator Inouye had gotten, through the Mayor's request. The monies are here already, and they are doing the necessary Page 10 of 29 5- 25- 04min.doc groundwork to establish the sites. One of the sites is in Ka`u; and that is the second issue - -where it will be. This Department had some input, and its initial plan was to put it in Wai`ohinu Park. Chairman Nakashima invited Mr. Nitsche to address his questions to the Board. Mr. Nitsche stated that a very important thing has been badly neglected, going on 14 months - -and that is the test well that was to go in at Ocean View. He cannot believe all the excuses he keeps getting from the USGS. Every time he speaks with them, he gets "two more weeks; two more weeks" and this has been going on for eight months. He thinks it is important to know right now what the test well will reveal to Ocean View. It boggles his mind what happened to that project. He stated he is about ready to go to U.S. Representative Ed Case or somebody and have an investigation made into the USGS. That test well should have been completed a long time ago, and it would have allowed for a more intelligent decision on what to do for water for Ocean View. He stressed that it needs to be investigated. The Manager shared Mr. Nitsche's concern about the tardiness of the test well but would not go as far as investigating them. Chairman Nakashima asked Mr. Bruneau if he wished to add to this. Mr. Bruneau had a question on the route being taken - -if it services Discovery Harbour. The Manager answered that Discovery Harbour is already serviced and has a County accepted water system for which the Department maintains and operates. There are two tanks, several pressure reducing valves, and miles of pipeline in Discovery Harbour. Mr. Bruneau asked if it goes down Kamaoa Road. The Manager replied that the pipeline goes from Haao Springs, down the road to the steel tank at the curve in the road. From there, it is pumped up to another concrete tank just off the highway, further up, and there is a waterline that goes cross country, hits Kamaoa Road, goes toward Discovery Harbour, and serves the area. Mr. Bruneau stated that he lives in Green Sands Subdivision and had a thought that if this line ever had to be improved, you could come across, down Ka`alualu Road, across to Mark Twain, and come up to Wakea (Avenue). It would service three subdivisions for the future by going only two miles. The Manager stated that, unfortunately, the line for Discovery Harbour already exists and does not go near Green Sands Subdivision. Mr. Heck asked how Green Sands Subdivision receives its water. The Manager replied that meters are placed on Highway 11; and from there, they string lines to their property. (Mr. Bruneau added that it is 1'/4 mile from the highway to the subdivision, and they supply their own private line from there.) Page 11 of 29 5- 25- 04min.doc Mr. Tanaka gave a report from the Finance Subcommittee regarding the South Kona to Ka`u Water Master Plan. They talked about the possibility of going back to the Legislature for funding for Ocean View. He had a chance to speak briefly with Senator Kokubun last week and mentioned the Board's last meeting, the plan that is available, and asked him if he would be receptive to looking at introducing a Bill at the Legislature again for funding. He made no commitment, but he was interested. Mr. Tanaka asked for direction from the Board that at least the Finance Subcommittee, and whoever else is interested, meet with Senator Kokubun within the next week or two, provide him with an updated copy of the plan, and discuss possibilities of going forward. He checked with Corporation Counsel and Mr. Hee about any parameters that the Board needs to be aware of as a few of its members meets with Senator Kokubun. Ms. Noda stated that if there were more than two members of the Board present, then it would be considered a meeting and must be properly noticed. Mr. Tanaka suggested two Board Members meet with Senator Kokubun; and if it seems like he is receptive, perhaps Senator Kokubun could come before the entire Board, and perhaps have someone from Townscape come and give him, and possibly Representative Herkes, the full presentation over again. (Chairman Nakashima agreed with this suggestion.) Mr. Heck mentioned the fact that a large part of last month's meeting dealt with CFD's (Community Facility District), and there were three different subdivisions represented at that meeting. His concern is that there are so many resources (people) to call upon for advice; but wondered how consistent the response would be. Townscape has been suggesting that people approach this Department; but he would like to see a public relations person in the future, with the responsibility of CFD. He or she could collate various people, know what is going on in the different communities, and have responsibility for following up. He wondered if it would be appropriate to have the Department come up with a job description for a public relations person for the next Water Board Meeting and include income, whether it be in -house or contracted. The Manager mentioned that this afternoon's session with R. W. Beck, Inc., will cover that issue. It fits in line with Mr. Heck's request because the Department will need someone like that to carry the strategic and business plans forward. Mr. Wilkins mentioned an organization where they appoint a member of staff and call that person an Ombudsman. He proposed that this Department name the position an Ombudsman rather than Public Relations. Mr. Tanaka wondered if the Board could ask Mr. Flynn, through Councilman Tyler, to be a resource (having been through the experience of the Kona Coastview/Wonderview project) in assisting this proposed new public relations position with other communities. The Manager stated that Mr. Flynn has been invaluable to the Department in that whole process. Mr. Flynn, a Program Fiscal Review Auditor for the Legislative Auditor's Office for the Hawaii County Council, stated he would be glad to help in his capacity in that office. He reviewed that much was learned during the course of the Kona Coastview/Wonderview Improvement District Process. That learning experience of winning public trust and consent, through the forthright presentation of information, is probably the best in definition of public relations. It is often the Page 12 of 29 5- 25- 04min.doc Council that initiates things like Improvement Districts, and it forces them to become an instrument of public relations because it provides the forum for presentation of these projects and taking them through public hearings. He felt it is a good direction to consider that type of position for the Department of Water Supply. Mr. Heck mentioned the theme that kept coming up at last month's meeting, and that was that the various communities want to help, specifically, as mentioned in Mr. Nitsche's letter, in planning and engineering, perhaps with the aid of money leftover from the plan completed by Townscape. Mr. Nitsche indicates that the OVCDC has people available that are capable of overseeing and coordinating experts and professionals in this field and would be happy to work with the Department of Water Supply and the County in any way of assistance. His question of Mr. Nitsche was if his request in this letter was to have the Mayor's Office turn over that $250,000.00 to the OVCDC to manage. Mr. Nitsche replied that when the original plan from the Legislature came out in 1998, they thought OVCDC was capable to go ahead and put the well in themselves. The money was going to come through the County. They would like to do as originally planned - -hire engineers, project managers, or whatever is necessary, and could probably do it quicker. They are not asking for the money to be turned over to them, but rather, that the County control it. However, they need a commitment from the Mayor and the Department of Water Supply that they will work with OVCDC. He added that they seem to be going around in circles. He reiterated earlier comments about the test well in Ocean View because it should be part of the equation that is looked at right now. They have spent a lot of their own time and money up to this point, but they do not have the funds to get an engineering study done to get going. He commented that they are not very happy with the Townscape plan. There is nothing new in the plan, from their perspective. It sort of gathers it all together but does not cover what OVCDC wanted to do. They had discussed their ideas with Townscape all along, but the plan does not include them. Mr. Heck commented that he understands they want to get involved more and get off the circular path. As he understands it, the purse strings are in the control of the Mayor. He was not sure what it is that Mr. Nitsche is asking of the Board. Mr. Nitsche clarified that they do not expect the money to be just turned over to them. However, they are discouraged that the Mayor has not wanted to work with them at all. He commented that when the Mayor first came in office, he was all "gung -ho," but that they cannot seem to get his attention anymore. They have no idea of what his thinking is. The Manager cautioned that the remaining $250,000.00 is under the control of the Mayor but is also restricted by the Legislative language; and there are only certain things that can be done with it. Mr. Nitsche commented that his understanding was that it was for a study for water from Na`alehu to Ho`okena. Ms. Scarr asked that this be declared out of order. This is not business before the Water Board; and for the last ten minutes, discussion has revolved around the Mayor's Office, which is nothing this Board can control. Page 13 of 29 5- 25- 04min.doc Chairman Nakashima asked Mr. Nitsche to take this matter up with the Mayor's Office. Mr. Nitsche concluded that they appreciate the openness of the Water Board and the Department of Water Supply, and they intend to contact the Mayor's Office. MISCELLANEOUS: A. DEDICATION OF WATER SYSTEMS: The Department received the following documents for action by the Water Board. The water systems have been constructed in accordance with the Department's standards and are in acceptable condition for dedication. 1. GRANT OF EASEMENT (For Water Meter Purposes) Grantors: Rex Honl and Lori Ann Honl TMK: (3) 7 -6 -006: Portion 013 2. GRANT OF EASEMENT For Access and Water Pipeline Purposes Happy Homes Subdivision Grantor: Kea'au Maintenance Association TMK: (3) 1 -7 -017: Portions 123, 124 and 146 3. GRANT OF EASEMENT AND BILL OF SALE Makana Aloha Plantation Subdivision E.W.O. NO.: 2003 -032 Grantor: Iokepa Makai, LLC TMK: (3) 7 -5 -016: 086 & 087 Lots: 16 Zoning: A -la Facilities Charge: $71,500.00; CAF: $6,500.00 Final Inspection Date: 03/15/2004 Water System Cost: $127,550.00 4. GRANT OF EASEMENT AND BILL OF SALE Kawena Street Subdivision E.W.O. NO.: 2004 -047 Grantor: CL &D Five, LLC TMK: (3) 7 -5 -010: 087 Lots: 15 Zoning: RS -20 Facilities Charge: $77,000.00; CAF $7,000.00 Final Inspection Date: 03/15/04 Water System Cost: $100,800.00 Page 14 of 29 5- 25- 04min.doc The Manager recommended that the Water Board accept these documents subject to the approval of the Corporation Counsel and that either the Chairman or the Vice - Chairman be authorized to sign the documents. ACTION: Mr. Tanaka moved for approval of the Manager's recommendation; seconded by Mr. Wilkins and carried unanimously by voice vote. B. MAINTENANCE BID NO. 2004 -06, MAINTENANCE OF RESERVOIR SITES AND PUMP STATIONS SITES IN THE DISTRICTS OF PUNA, NORTH AND SOUTH HILO, NORTH AND SOUTH KONA, AND NORTH KOHALA FOR THE DEPARTMENT OF WATER SUPPLY: Bids were opened on May 13, 2004, and the results were enumerated in the Agenda. The listed prices are the total contract amount for a two -year period from July 1, 2004, to June 30, 2006. For Part G, North Kohala, no bids were received. Therefore, the Department will obtain quotes for these sites in the best interest of the Department. The Manager recommended that the Board award the contracts to the following bidders for MAINTENANCE BID NO. 2004 -06, MAINTENANCE OF RESERVOIR SITES AND PUMP STATIONS SITES IN THE DISTRICTS OF PUNA, NORTH AND SOUTH HILO, NORTH AND SOUTH KONA, AND NORTH KOHALA FOR THE DEPARTMENT OF WATER SUPPLY, for the period July 1, 2004, to June 30, 2006, and that either the Chairman or the Vice - Chairman be authorized to sign the documents, subject to approval of our Corporation Counsel: Bidder Part Amount CL Services A $79,200.00 WWW Lawn and House Maintenance B $86,400.00 Tom's Tree Trimming and Maintenance Services C $60,000.00 T. Kobayashi Yard Maintenance D $64,080.00 Frank Mizoshiri E $45,756.00 Frank Mizoshiri F $34,320.00 TWO -YEAR TOTAL: $369,756.00 MOTION: Mr. Heck moved for approval of the Manager's recommendation; seconded by Mr. Tanaka. Ms. Scarr noted that the lack of competitive bids is pathetic. It is always so mysterious and asked how it can be that you receive only one bid per section, with the exception of North Kona. This also happens with vehicle, supplies, and maintenance contracts. The Manager commented that, traditionally, in these types of maintenance bids, this is the way it has been for the last several years. There are certain people in these districts that do this type of work, and they bid. Mr. Wilkins stated that just because it is customary, does not mean it is right or even legal on the part of the bidder. It looks like a managed market here. It strains chance far beyond the point of creditability. Page 15 of 29 5- 25- 04min.doc The Manager commented that the Department has no control over the bidders, but does its best to encourage bidding. Mr. Hee felt that it is a phenomenon of the procurement process, which requires you to take the lowest bid. In times when the contractors are busy, they would rather negotiate a bid with someone else. ACTION: A vote was taken on the Motion. Motion was carried unanimously by voice vote. C. RENEWAL OF CONTRACT FOR MAINTENANCE AGREEMENT — SOUTH KOHALA, HAMAKUA, AND LAUPAHOEHOE SITES (BRANTLEY CENTER, INQ: Brantley Center, Inc., presently has a Maintenance Agreement for site maintenance for the Department's South Kohala, Hamakua, and Laupahoehoe tank and pump sites. They are requesting to renew the Agreement for two years from July 1, 2004, to June 30, 2006. The new rates would be as follows: Hamakua - $2,262.00 /month Laupahoehoe - $639.00 /month South Kohala - $2,944.00 /month The Department has the right to award the contract to Brantley Center, Inc., without advertising or calling for bids, according to Subsection 10313- 10 10 of the Hawaii Public Procurement Code. Brantley Center, Inc., has submitted the necessary documents to meet the requirement as a qualified rehabilitation facility. The Manager recommended that the Board award the contract for the MAINTENANCE AGREEMENT — SOUTH KOHALA, HAMAKUA, AND LAUPAHOEHOE SITES, to Brantley Center, Inc., for a period of two years from July 1, 2004, to June 30, 2006, at the rates as follows, and that either the Chairman or the Vice - Chairman be authorized to sign the documents, subject to approval of our Corporation Counsel: South Kohala Sites ($2,944.00 /month x 2 years) $70,656.00 Hamakua Sites ($2,262.00 /month x 2 years) 54,288.00 Laupahoehoe Sites ($639.00 /month x 2 years) 15,336.00 TWO -YEAR TOTAL: $140,280.00 ACTION: Mr. Heck moved for approval of the Manager's recommendation; seconded by Mr. Tanaka and carried unanimously by voice vote. D. MATERIAL BID NO. 2004 -05, FURNISHING AND DELIVERING WATER METERS, BRASS GOODS, FIRE HYDRANTS, VALVES, CHLORINATORS, PUMPS, PIPES, FITTINGS, SCADA, MOTORS, AND MISCELLANEOUS ITEMS FOR THE DEPARTMENT OF WATER SUPPLY STOCK: Page 16 of 29 5- 25- 04min.doc Bids were opened on May 13, 2004; and the results were enumerated in the Agenda. The contract period for all Parts is one year, from July 1, 2004, to June 30, 2005. All Parts are to establish price agreements for materials on an "As- Needed Basis." The apparent low bidders, as shown on the bid summary sheet did not necessarily receive the staff's recommendation because it did not meet the specifications as required in the bid documents. The Manager recommended that the Board award the contracts to the following bidders for MATERIAL BID NO. 2004 -05, FURNISHING AND DELIVERING WATER METERS, BRASS GOODS, FIRE HYDRANTS, VALVES, CHLORINATORS, PUMPS, PIPES, FITTINGS, SCADA, AND MISCELLANEOUS ITEMS FOR THE DEPARTMENT OF WATER SUPPLY STOCK, on an as- needed basis, as listed below, and that either the Chairman or the Vice - Chairman be authorized to sign the documents, subject to approval of our Corporation Counsel. The contract period shall be from July 1, 2004, to June 30, 2005. The Secretary noted corrections to be made to the Agenda as presented. Changes are to Part XIX - bidder name shall be A. P. Water Supply, Inc., dba HIW- Hawaii; Parts XXXII and XLVII - clarify bidder's name to read A. P. Water Supply, Inc., dba HIW- Hawaii; and Part XLI - change the description to "Motors." PART NO. DESCRIPTION BIDDER AMOUNT I DUCTILE IRON PIPES Ferguson Enterprises, Inc. $167,567.80 II DUCTILE IRON FITTINGS Ferguson Enterprises, Inc. $318,140.48 III COPPER PIPES Ferguson Enterprises, Inc. $72,638.16 IV COPPER FITTINGS Ferguson Enterprises, Inc. $32,166.47 V GALVANIZED PIPES Ferguson Enterprises, Inc. $49,642.40 VI GALVANIZED FITTINGS Ferguson Enterprises, Inc. $67,272.32 VII BRASS FITTINGS Ferguson Enterprises, Inc. $28,651.89 VIII 5/8" WATER METERS Hersey Meters Company $40,680.00 IX 1" —2" WATER METERS Badger Meter, Inc. $9,540.00 X METER BOXES AND COVERS Ferguson Enterprises, Inc. $40,080.00 XI COMPOUND WATER METERS Ferguson Enterprises, Inc. $8,530.05 XII TURBINE METERS AND STRAINERS Badger Meter, Inc. $8,893.58 XIII DETECTOR CHECK METERS Ferguson Enterprises, Inc. $5,436.57 XIV FIRE SERVICE METERS Ferguson Enterprises, Inc. $26,463.03 XV FIRE HYDRANTS AND EXTENSION KITS Ferguson Enterprises, Inc. $28,043.02 XVI AMERICAN DARLING FIRE HYDRANT EXTENSION KIT Ferguson Enterprises, Inc. $3,361.80 XVII KENNEDY SAFETOP FIRE HYDRANT EXTENSION KIT Ferguson Enterprises, Inc. $5,879.60 XVIII M & H FIRE HYDRANT EXTENSION KIT Ferguson Enterprises, Inc. $10,047.85 XIX NUTS, BOLTS, AND THREADED RODS A.P. Water Supply, Inc., dba HIW- Hawaii $16,162.04 XX I BALL VALVES Ferguson Enterprises, Inc. $21,360.00 XXI BALL VALVE, PACK JOINT X METER COUPLING Ferguson Enterprises, Inc. $14,480.10 XXII CORPORATION AND CURB STOPS Ferguson Enterprises, Inc. $36,866.86 XXIII STRAIGHT METER COUPLINGS Ferguson Enterprises, Inc. $10,679.70 XXIV LOK -PAK METER COUPLING Ferguson Enterprises, Inc. $3,182.64 XXV PACK JOINT COUPLING Ferguson Enterprises, Inc. $11,137.20 XXVI TRANSITION COUPLINGS Ferguson Enterprises, Inc. $4,332.72 XXVII FULL CIRCLE CLAMPS Ferguson Enterprises, Inc. $12,614.22 XXVIII HOSE BIBBS Ferguson Enterprises, Inc. $371.46 XXIX INVERTED MARKING PAINT Ferguson Enterprises, Inc. $5,171.00 Page 17 of 29 5- 25- 04min.doc XXX GATE VALVES — 3" AND LARGER Ferguson Enterprises, Inc. $78,947.43 XXXI GATE VALVES — 2� /z" AND SMALLER Ferguson Enterprises, Inc. $6,658.11 PART NO. DESCRIPTION BIDDER AMOUNT XXXII BUTTERFLY VALVES A.P. Water Supply, Inc., dba HIW- Hawaii $121,210.00 XXXIII CHECKERED STEEL PLATES Ferguson Enterprises, Inc. $20,066.50 XXXIV MECHANICAL SEALS (1" - 3'h" SIZE) Arakaki Mechanical LLC $187,493.00 XXXV PUMP SEALS Na Bid XXXVI TABLET CHLORINATORS Phoenix V LLC dba BEI Hawaii $4,323.55 XXXVII CHLORINE. RESIDUAL. ANALYZER Na Bid XXXVIII TRANSIT -TIME FLOW METERS Hawaii Engineering Services $413,150.90 XXXIX HORIZONTAL END SUCTION PUMPS Arakaki Mechanical LLC $96,310.00 XL SURGE ARRESTORS G. E. Supply Hawaii, Inc. $24,891.00 XLI MOTORS G. E. Supply Hawaii, Inc. $371,671.00 XLII BOOSTER AND DEEPWELL PUMP CONTROL BALL VALVES Ferguson Enterprises, Inc. $355,196.70 XLIII POWER MONITORING EQUIPMENT No Bid LIV SCADA SYSTEM No Bid XLV SUBMERSIBLE MOTORS Beylik Drilling, Inc. $4,101,050.00 XLVI VARIABLE FREQUENCY DRIVES Ferguson Enterprises, Inc. $4,040,383.88 XLVII AUTOMATIC CONTROL VALVES A.P. Water Supply, Inc., dba HIW- Hawaii $445,081.20 XLVIII CENTRILIFT VARIABLE SPEED DRIVE PARTS Beylik Drilling, Inc. $16,076.00 XLIX CHLORINATORS Phoenix V LLC dba BEI Hawaii $8,504.70 L ANTI - CAVITATION VALVE Ferguson Enterprises, Inc. $263,571.42 LI COMMUNICATIONS HARDWARE Ferguson Enterprises, Inc. $18,150.97 LII LOW HORSEPOWER VFD Ferguson Enterprises, Inc. $10,725.00 LIII SOLID STATE REDUCED VOLTAGE SOFT STARTER - LOW VOLTAGE Ferguson Enterprises, Inc. $203,009.63 LIV SOLID STATE REDUCED VOLTAGE SOFT STARTER - MEDIUM VOLTAGE Ferguson Enterprises, Inc. $84,151.25 For the Parts where no bids were received, staff shall obtain quotations in the best interest of the Department. MOTION: Mr. Goya moved for approval of the Manager's recommendation, as corrected; seconded by Mr. Heck. Ms. Scarr asked if competitive bids were received. Looking at the big- ticket items such as Parts 45 and 46, Submersible Motors and Variable Frequency Drives, prices are in the millions. She would feel more comfortable knowing that the Department received more than one bid. (Mr. Lee noted that one bid was received for each of these two parts.) Ms. Scarr asked if staff is comfortable with these bids. The Manager assured the Board that if the bids were not reasonable, they would not be presented here and would be inquired upon with the provider. Bids are looked at carefully to ensure they are within "ballpark" numbers. Mr. Wilkins stated that he would feel more comfortable with two or three pages of justification written by a member of staff on what is behind the bidding. If the analyses have been carried out, it should be possible to put it on paper and make it available to the Board. Page 18 of 29 5- 25- 04min.doc The Manager stated that the next time the Department has bids like this, it could have the engineer that reviews it present at the meeting to answer questions. Mr. Wilkins felt that would be a start. Mr. Lee thought that what the Board is looking for is a statement by staff saying that what is submitted and proposed to be accepted is reasonable - -for instance, what the Department expects the price to be; and what the price came in as. That is information that can be provided. Mr. Wilkins believed they have a longer -term goal; and that is to ensure, in the future, there is true competition. Mr. Lee stressed that the Department is bound by procurement procedures. There is nothing more that can be done. You cannot force anyone to submit bids. Mr. Wilkins mentioned expanding the bidding frontiers. Mr. Lee replied that has been tried and does not get better results. In response to Mr. Tanaka's question if there was a particular reason why no bids were received on the SCADA system and the Power Monitoring Equipment, and if there were anything strange about it, the Manager replied there is no apparent reason. However, these bids are held for one year; therefore, some people may not want to hold their price for a whole year. What the Department does, when the equipment is needed, is request for three quotations. Mr. Lee added that some bidders may not want to commit themselves for a year, based on other commitments, and would rather be on call. ACTION: A vote was taken on the Motion. Motion was carried unanimously by voice vote. E. WATER TREATMENT PROPOSAL NO. 2004 -03, FURNISHING AND DELIVERING POLYMERS TO WAIMEA WATER TREATMENT PLANT: Bids were opened on May 20, 2004; and the results were enumerated in the Supplemental Agenda. The Manager recommended that the Board award the contract for WATER TREATMENT PROPOSAL NO. 2004 -03, FURNISHING AND DELIVERING POLYMERS TO WAIMEA WATER TREATMENT PLANT, to Pural Water Specialty Co., Inc., for the bid price of $194,754.37 plus $65,245.63 in contingency for a total contract price of $260,000.00 and that either the Chairman or the Vice - Chairman be authorized to sign the documents, subject to approval of Corporation Counsel. The contract period is from July 1, 2004, to June 30, 2006. ACTION: Ms. Scarr moved for approval of the Manager's recommendation; seconded by Mr. Heck and carried unanimously by voice vote. F. PROPOSED AMENDMENT TO RULES AND REGULATIONS: Page 19 of 29 5- 25- 04min.doc Draft New Rule, Section 4 -13, Acceptance of Existing Private Water Systems, was attached to the Agenda for discussion, and /or action. Ms. Scarr stated that the Board has two responsibilities here - -one is to ensure the Department does not get "lemons" in systems that will cost it a lot of money to repair; but another public responsibility is to try and bring these systems into its hold in order to protect their individual members who are now not protected against, for example, catastrophic leaks. She mentioned that she showed this draft new rule to a civil engineer member of her subdivision; and he thought they were fair, demanding, and that it might cost a subdivision somewhere between $10,000 to $15,000 to comply with the requirements. MOTION: Ms. Scarr moved that the Board approve the Draft New Rule, Section 4 -13, Acceptance of Existing Private Water Systems, noting that it has to go out to public hearing; seconded by Mr. Wilkins. Councilman Tyler commented on the draft new rule, upon request of Ms. Scarr. His comments were as follows (with staff's reply in italics): • He noted that the rule begins by saying what the Department will not accept; and perhaps that should be secondary as opposed to what it is trying to do. As long as it is understood what it is the Department shall not accept. He did not know why it says will not accept - -it should be shall. Mr. Ahuna accepted a change in the first sentence, "The Board shall not accept dedication... " In Number (2)(a)3. - He did not know why this is in bold, "Critical elements are those items that are necessary for the health, safety and welfare of the public as well as those elements that are required by law." He did not understand why you would have standards, rules, and regulations for critical elements that are not part of law. If it were for the public health, safety, and welfare, he would assume it is part of the Department's law; therefore, it is somewhat redundant. The Manager stated that "critical element" is more to enforce that idea more than anything else. It is realized that these are required by law. In Number (2)(b)2. - "The DWS shall inspect the improvements in accordance with the approved plans..." He would hope it would also mean DWS requirements because plans may not be to the DWS' specifications, rules, etc. He hoped it would not only be based on plans and that it be consistent with the requirements of the Department. The Manager stated the Department would sign the plans; therefore, they would be in accordance with Standards. Number (2)(c)2.a) - He mentioned that a one -year warranty seems to be rather short for a water system that is supposed to last for many decades, but perhaps that is a standard operating procedure. Number (2)(c)2.c) - It also states, "maintenance service contract." He assumes this is for the previous service on this line. The Manager explained that the one-year warranty is standard with any system accepted by the Department, including new systems by developers. With regard to the "maintenance service contract records, " the Department would want to see the records to make sure everything is okay. Page 20 of 29 5- 25- 04min.doc Number (2)(c)2.d) - He mentioned where it references electronic file, it is important to specify what type of electronic file you wish because it may not be compatible with your system. The Manager stated that electronic file would have to be to DWS' specification. The reason it is not specified is due to software changes. Ms. Scarr recommended adding "electronic file compatible with Department systems or acceptable to the Department. " Ms. Scarr asked about references to various legal documents and was provided with information on them, and also that samples are available at the Department. Discussion followed on elevation agreements, which would not necessarily apply to every subdivision. It is in the case where water pressure is low due to the elevation of the property. Ms. Scarr felt that the clause, "not limited to," suggests there are others that might be brought in. Suggestions followed from staff such as changing the wording to "as required by the Department" or "which may include." Mr. Hee had comments that he will fax to the Department. Mr. Wilkins asked that this rule be approved in principle, subject to another submission. It was clarified that it has to go to public hearing, and the refined rule will be presented at that time. ACTION: A vote was taken on the Motion. Motion was carried unanimously by voice vote. G. DRINKING WATER REVOLVING LOAN FUND — SUPPLEMENTAL LOAN AGREEMENT NO. 1 FOR SADDLE ROAD WELL "A ": The Manager recommended that the Board accept these documents, and that either the Chairman or the Vice - Chairman be authorized to sign the documents, subject to approval of Corporation Counsel. ACTION: Mr. Heck moved for approval of the Manager's recommendation; seconded by Mr. Wilkins and carried unanimously by voice vote. H. PROFESSIONAL SERVICES AGREEMENT: Professional Services Agreement contracts for the following Department of Water Supply projects are currently being processed. However, the projects are not listed on the Department's current 5 -year Capital Improvement Projects list. 1) Job No. 2004 -839, Keopu - Puuhonua Production Well and 0.50 MG Reservoir Consultant: Tom Nance Water Resource Engineering Fee: $246,581.00 The Manager recommended that the Board award the consultant contract Job No. 2004 -839 to Tom Nance Water Resource Engineering for $246,581.00, and that either the Chairman or the Vice - Chairman be authorized to sign the documents, subject to approval of Corporation Counsel. ACTION: Mr. Goya moved for approval of the Manager's recommendation; seconded by Mr. Heck and carried unanimously by voice vote. Page 21 of 29 5- 25- 04min.doc I. RESOLUTION 04 -02: RESOLUTION AUTHORIZING A LOAN IN THE AMOUNT OF $600,000.00 FROM THE COUNTY OF HAWAII, DEPARTMENT OF WATER SUPPLY, TO THE COUNTY OF HAWAII TO BE USED BY THE COUNTY OF HAWAII AS AN ADVANCE TO THE KONA COASTVIEW AND KONA WONDERVIEW IMPROVEMENT DISTRICT, AND EVIDENCED BY A GENERAL OBLIGATION BOND TO BE PAID BACK IN FIVE (5) YEARS: Because the bid for the Improvement District project was higher than the estimated amount, there is a shortage of loan funds to complete the Kona Coastview/Wonder View Water System Improvements. As the County of Hawaii is the only entity which can advance funds and be paid back through the Improvement District, the Department has proposed to loan $600,000.00 to the County of Hawaii in exchange for a General Obligation Bond with a term of five (5) years and with an interest rate of no less than 3% and no more than 4.5 %. The Manager recommended that the Board adopt the attached Resolution No. 04 -02, and that either the Chairman or the Vice - Chairman be authorized to sign the loan documents, subject to approval of our Corporation Counsel. MOTION: Mr. Goya moved for approval of the Manager's recommendation; seconded by Mr. Heck. Mr. Flynn reiterated earlier discussion regarding the bid price from Isemoto Contracting Company, Ltd. Additional $1.5 million in financing was needed; and $900,000.00 in loan authority was secured from USDA Rural Development, leading to the $600,000.00 balance being acted on today. Meetings were held on the steps that need to betaken to bring the project to fruition. Corporation Counsel was asked to look at the implications of this bid being considerably higher than the project cost that was cited to the Kona Coastview/Wonderview residents at a public hearing two years ago. It was, therefore, recommended that the project be taken back to the community for its consent. He provided a schedule of the Improvement District process for this project, as follows: June 16 - Council Resolution of determination with respect to project cost and call for public hearing. Triggers deadline for newspaper publication of notice of that public meeting and also a certified mail -out to each assessed homeowner by the Legislative Auditor's Office. July 9 — public meeting Kona Coastview/Wonderview subdivisions August 18 — second reading of Council Resolution August 19 to September 9 — three -week timeframe for loan closing September 10 —Notice to Proceed Because of the timeframe, the contractor was asked and agreed to hold their bid price. Mr. Flynn concluded that he felt this has gone well because everyone has put themselves in the shoes of the homeowner. This is one of the most successfully packaged and considerate measures that has ever been undertaken by the County. Ms. Scarr indicated the need to convey to the residents, at the public hearing, the further benefits to this project, other than just potable water. There are other issues such as fire protection, and also their homeowners insurance should decrease as a result of it. Page 22 of 29 5- 25- 04min.doc ACTION: A vote was taken on the Motion to adopt Resolution No. 04 -02. Motion was carried unanimously by roll call (Ayes: 6 - Ms. Scarr; Messrs. Goya, Heck, Tanaka, Wilkins, and Chairman Nakashima; Nays: 0; Absent: 2 - Ms. Hons and Mr. Mochida.) J. MONTHLY PROGRESS REPORT: Ms. Scarr noted 2002 projects on the books and asked if that were common. (The Manager replied it is.) She also asked about the Waimea Water Treatment Plant Sludge Removal project, slated for $5 million. The Manager explained that the $5 million is not applicable because it was considered for drying beds for the sludge. Technology has changed, and the Department is looking at other methods, which should cost less. Chairman Nakashima asked about the yield on the Honokaa Exploratory Well (below expectations) and how it affects the shortage. The Manager replied that the formation in the ground was found to be much tighter than thought and not as permeable. The next step would be to put in a lower gpm pump, and also to provide in the next 5 -year C.I.P., an exploratory well at Ahualoa where the USGS found high -level water. Noting the 2005 C.I.P. projects that was mailed to the Board, Mr. Tanaka questioned if the seven projects listed in January alone is a realistic projection: Piihonua - Kukuau - $3.6 million Puakea - $355 thousand Kuakini Highway 16" Waterline - $1.8 million Hina Lani Street Reservoir Transmission - $3.2 million Palani Road Transmission - $4.4 million Keopu - Puuhonua Production Well & Reservoir - $2.5 million Kona Baseyard Beautification - $231 thousand The Manager stated that staff could take a look at that. The reason they were placed in January is all of the projects are currently under design. He agreed with Mr. Tanaka's speculation that it would flood the market, and you may not get the best bid prices. It was noted that this listing, totaling $31 million, was scaled back to a more realistic goal. It will be sent to the Board. This was more of a "wish list." K. REVIEW OF MONTHLY FINANCIAL STATEMENTS: Mr. Wilkins noted a decrease of cash on hand. Mr. Sumada explained that it was due to the billings still two weeks behind, and also the result of many construction projects currently on the books. LUNCH BREAK: The Board recessed for lunch at 1:00 p.m. and reconvened 2:30 p.m. Chairman Nakashima announced he was unable to stay for the entire meeting and entertained a Motion that Ms. Scarr be elected Chairman Pro -Tem. Page 23 of 29 5- 25- 04min.doc ACTION: Mr. Tanaka so moved; seconded by Mr. Heck and carried unanimously by voice vote. L. DEPARTMENT OF WATER SUPPLY PROPOSED OPERATING AND CAPITAL IMPROVEMENT BUDGETS FOR FISCAL YEAR 2004 -2005: Budgets were mailed on May 14, 2004. For review and discussion. Some Board Members indicated they needed more time to review the Budgets; and in the interest of time, Ms. Scarr recommended that their questions be deferred until the next meeting. Mr. Tsunoda pointed out that the unit power cost has gone up 2¢ so he would like to adopt a 2¢ hike in the power cost from .99¢ per 1,000 gallons to $1.01. He took the liberty of factoring that into the $32.2 million. Mr. Heck requested C.I.P. priorities for this coming year, if there could be a brief description of what the project is, and also why it is a priority this year. The Manager replied it could be done by the next meeting. M. REFERRAL FOR EXECUTIVE SESSION: Deferred. N. MANAGER'S REPORT: 1. Kona Coastview/Wonderview status — taken up earlier. 2. USGS Drilling Program — the Manager had no status to report. Ms. Scarr asked that a report on the program be made for the next meeting. 3. Water Quality - notice published in newspapers this past Friday and Sunday and will be provided as a bill stuffer for applicable customers. Notice was also mailed to the medical centers in Kona. 4. Hawaii Island Journal - following last month's meeting, there was a large article on the situation in Kona. Chairman Nakashima left the meeting at 2:50 p.m. O. CHAIRMAN'S REPORT: None. P. STRATEGIC BUSINESS PLANNING SESSION: 1. The Department of Water Supply Draft Strategic Plan 2004 - 2009 was presented to the Board during a special meeting on April 28, 2004. The Board had several comments and requested several revisions to the draft document. The updated Draft Strategic Plan was reviewed with the Board to verify that their April 28 comments and revisions have been satisfactorily addressed. 2. The draft Department of Water Supply Business Plan 2004 - 2005 was presented to the Board. This is a companion document to the Department of Water Supply Strategic Plan. The draft Business Plan identified specific activities, including budgets and schedules, that need to be Page 24 of 29 5- 25- 04min.doc accomplished over the next year to successfully begin implementation of strategies outlined in the draft Strategic Plan. Topics included: • Several organizational changes, including additional staff positions, have been identified. These changes will be necessary to accomplish new work areas identified in the draft Strategic Plan. • Discussion of specific activities or tactics necessary to accomplish strategies identified in the draft Strategic Plan. Information included draft budgets and timelines as well as identification of individuals responsible for accomplishing each tactic. 3. Input from the Board was welcomed regarding the above topics, and R. W. Beck, Inc., sought endorsement of progress made to date. Input was as follows: • Questions were asked about establishing a baseline. Mr. Jochim explained that staff has to set up the baseline; creating a starting point. Reports will be made on KPI's progress quarterly. The Board will see three or four each month, as the KPI's are staggered. • Mr. Heck noted the listed values of each champion in dollar amount and wondered why they would take on all that additional responsibility. The Manager stated that the reason is that staff wants to be better than they are now—to improve themselves as well as the Department. In response to Mr. Heck's question of how much time is involved, the Manager replied that although the Department will have two positions coming on board, which will help with this (the Public Relations position and the strategic business plan manager, the other thing the Department will need to do is look at its priorities —what can be done first; reprioritize when things are done and what is done to keep up with the strategic plan. In response to Mr. Heck's question if that means the lesser priorities of the champions will have to be distributed out, the Manager replied in the affirmative. The Deputy Manager added that the champions would not necessarily be doing all the work. They will be getting help from others in the Department. • Ms. Scarr asked if there is enough in this first year to address the Board's goal - -to address the water needs of the County. She felt this plan only addresses serving the Department's customers more. This appears to be a very "internal" document that does not address many public concerns. Mr. Cutting explained that these two documents are about 80% accurate and are subject to refinement. As you move forward, they will become better. One example is the lack of baseline information. Next year, staff will push the plans forward by a year, and their understanding of them will have increased and overcome some of the errors. He asked that the Board be patient in this process. To answer Ms. Scarr's question, he explained that the tactics that the Department has undertaken in the first year of the business plan would move the Department in the direction of solving the five issues. They may not all be solved in the first year because the five issues cover a five -year period. Staff has to accomplish their tactics in a timely way and within budget. • In response to Mr. Cutting's question if the Board had any suggestions relative to what was presented, Mr. Heck stated that he likes the format; but the details are so comprehensive, it would be asking a lot to get his comments today. He is just now getting a handle on what was distributed last month. He wondered how much could be changed by the Board's input on last month's strategic plan since it has already moved forward; therefore, by next month's meeting, if there would still be time to make changes on the reports handed out today. Mr. Cutting replied that the truth is that these are always in draft form and are never stamped final. It is continuous. • Mr. Wilkins suggested the Board take this home, review it thoroughly, and perhaps email their input to R. W. Beck, Inc. Page 25 of 29 5- 25- 04min.doc 4. An interactive session was held with the Board to identify contributions the Board can make to successfully implement the draft Strategic and Business Plans, as follows: Mr. Cutting stated that his understanding is that the Board does not have any policies that would tell him what its strategic direction is. Ms. Scarr's mention of the County Charter was thought by Mr. Cutting to be overreaching. His thinking was "down deep" in the organization, what the Board's roles are -- something written down - -not just a common understanding between the Manager and the Board. He suggested if the Board had a set of policies along the line, it would allow the strategic plan to be moved forward earlier. He showed the Board a handbook, a governance model, from the Santa Clara Valley Water District. This can be found on their website at www.valleywater.or , from the home site, click on "Board," then click "policies." Something like this set of governance policies would be a good thing for this Board. Rather than go through many Board meetings on coming up with something, he suggested that staff draft a set for the Board's consideration at its June 22, 2004, meeting. Mr. Cutting went on to explain what is needed, for staff, are policies that allow staff to achieve its vision. Referring to the page before Page 1 of the Strategic Plan, the Vision Statement's first few words are, "The Department of Water Supply will be a recognized industry leader..." He indicated that is a whole lot, and he and Mr. Jochim have been hearing the same thing from staff along the way - -that is where they want to be. What that means is, example, Mr. Tsunoda, Mr. Sumada, and their staff prepared a process diagram of the annual budget. It includes all the steps that you need to go through. Before this exercise was conducted, there was no such diagram on paper. Mr. Tsunoda stated that this exercise gave them the chance to understand all the processes that go into a function like this. It gives you the big picture and not have things overlooked. Mr. Cutting stated that to be industry leaders, you have to have a process diagram for every major business function. During their meetings with staff, they created four of them. They take time to polish; and in this polishing, they become more efficient in their work. Mr. Cutting went on to the next part of the Vision Statement, and that is "...to be an employer of choice..." Staff wants to achieve a level of job satisfaction by increasing it 10% a year. The next part of the Vision Statement, "... satisfy the water needs of the County..." requires policies that lead the Department in that direction. He stressed that the first year of the plan has to be successful, and that is why he asked earlier for the Board's patience. He guaranteed that staff is enthusiastic about this plan but needs to develop benchmark information. In response to Mr. Cutting's question to the Manager of how these documents will change the way he and staff operate, the Manager replied it would change drastically. Staff will have to rethink the way it does things and reset priorities; however, these should give the Department direction that is consistent with what the Board wants and make the Department more efficient. In response to Mr. Cutting's question if the Manager thinks the Vision Statement can be achieved with these tools, the Manager replied in the affirmative. They guide the Department in the direction of the Vision Statement. Page 26 of 29 5- 25- 04min.doc Ms. Scarr gave an example if you were selling a product commercially and came up with a business plan that, in the first year, streamlines internal processes but does not address the public, advertising, or competition - -that is how she viewed the first year of this plan; and that was her concern. Her question is will events in the next year allow us to stay so focused on internal improvements. There should be demands from outside that have to be responded to. The Manager commented on Ms. Scarr's example. By focusing internally, the Department becomes more efficient and would be able to make more profit out of each product it sells, ultimately freeing up cash to do other things. He also stressed that the Department will not forego its normal duties because of this plan. Mr. Cutting added that the Santa Clara Water District had something like these documents. After 9/11, their documents were changed dramatically. Security suddenly became the buzzword. In other words, these documents can be adjusted to work with the changing environment and are designed to be proactive; not reactive. Next year about this time, when these documents are adjusted to move forward one year, if the Board's estimation is to solicit public input, that can be written into the document. He cautioned, however, to "watch what you bite off." The Manager asked Ms. Scarr what it was she expected to see in the documents. Ms. Scarr replied it was more of initiatives that the Department could take. We could have said we are going to go into a survey of all the substandard subdivisions on this island to see who can be helped to come forward with improvement development projects. That is nowhere in the documents. She saw it as not being focused on trying to solve problems in the community. The Manager stated that if that is something that the Board wants the Department to do, it only needs to direct the Department to do it, and the Department would carry it out. Mr. Jochim added that another thing to keep in mind is the Water Master Plan that is being prepared. That document will do a lot to identify infrastructure and facility needs out there that will align with this information here. Identify Next Steps in the Strategic and Business Planning process. • Drafting of Policies - before next meeting, staff will draft policies for presentation to the Board, with help from R. W. Beck, Inc. Upon Mr. Heck's question of a timeframe for the Board's input on that, Mr. Cutting recommended the Board take its time. From the time the Board receives it (June 22, 2004), the Board may take two or three months if needed. The Board has to be comfortable with it. • Strategic and Business Plans - Mr. Heck asked if changes could still be made to the strategic and business plans after the Board has had more time to review them. He added that this is a very comprehensive and excellent program and credited staff, but his input needs to done in a timely fashion that makes some sense. Mr. Cutting reviewed the plan to "launch" the champions July 1, 2004; therefore, they would need the Board's feedback on or before Page 27 of 29 5- 25- 04min.doc June 22 in order for them to incorporate them into the plans they hope to launch July 1. He cautioned that if one is changed too much, it throws a monkey wrench into the other because they go hand in hand. Suggestions can be emailed to the Manager and he will make sure it gets to R. W. Beck, Inc. But the decisions have to be made by the Board, as a whole, at its June meeting. Mr. Cutting felt that if there are any major changes, they be held as a major ticket item that gets accounted for at either the 6 -month anniversary, or one year down the road. Mr. Cutting concluded that input from all Board Members would be put into three categories: the simple fixes; the medium - length (meaning six -month anniversary); and then the one -year anniversary. Mr. Heck felt that was fair. Mr. Tanaka applauded R. W. Beck, Inc., and the Department's staff for putting this together. This is excellent step in moving forward. The result of this will bring forward the things the Board is trying to do, as far as specifics -- public relations - -the appearance that we are trying to do the best we can to serve the customers in Hawaii County. He also mentioned that the Board has input on every one of the tactics with each champion as they go along. He noted the tactic in personnel to provide training in line with their position descriptions. He was sure they have some part in public relations and customer service. The Board has a role to ensure they are carried out. The other tactic mentioned was in Finance -- dealing with creative financing. By working together as a team, the Department and Board can accomplish the goals. Mr. Goya mentioned his experience by going through this process with HELCO. He learned that personnel will recognize, over time, that the customer is more than external, but also the people in the various sections within the Department. The priorities will become obvious over time. Although they may not be comfortable with the tactics initially, they may become more comfortable as research is started. Results will probably come in two or three years. He concluded that the Board is in support of this effort by the Department. The Manager agreed with Mr. Goya's comment that we are all each other's customers and need to try to satisfy everyone around us and work together. Mr. Jochim thanked the Board for its input today and reminded them to email or send comments by the next meeting. ANNOUNCEMENTS: Upcoming Meetings: The Water Board will meet on June 22, 2004, in the Hilo Operations Center Conference Room, 889 Leilani Street, Hilo, Hawaii, as follows: 1. 9:30 a.m. - Public Hearing on the Department of Water Supply Proposed Operating and Capital Improvement Budgets for Fiscal Year 2004 -2005 2. 10:00 a.m. - Regular Water Board Meeting Page 28 of 29 5- 25- 04min.doc ADJOURNMENT ACTION: Mr. Tanaka moved for adjournment of the meeting; seconded by Mr. Heck and carried unanimously by voice vote. Meeting adjourned at 3:58 p.m. Secretary The Department of Water Supply is an Equal Opportunity provider and employer. To file a complaint of discrimination, write: USDA, Director, Office of Civil Rights, Room 326 -W, Whitten Building, 14a` and Independence Avenue, SW, Washington DC 20250 -9410. Or call (202) 720 -5964 (voice and TDD) Page 29 of 29 5- 25- 04min.doc