Loading...
HomeMy WebLinkAbout2005-01-26 Water Board MinutesMINUTES DEPARTMENT OF WATER SUPPLY COUNTY OF HAWAII SPECIAL WATER BOARD MEETING January 26, 2005 DWS HILO OPERATIONS CENTER CONFERENCE ROOM MEMBERS PRESENT: Mr. Loren Heck, Vice - Chairman Mr. Thomas Goya Mr. Bernard Konanui Ms. Sandra Scarr Mr. George Wilkins Mr. Milton D. Pavao, Manager (ex- officio member) ABSENT: Mr. Ivan Mochida, Chairman Mr. Earl T. Nakashima, Water Board Member Ms. Pamela Hons, Water Board Member Mr. Bruce McClure, Director, Department of Public Works (ex- officio member) Mr. Christopher Yuen, Director, Planning Department (ex- officio member) OTHERS PRESENT: Ms. Amy Self, Deputy Corporation Counsel Mr. Richard Cuthbert, R. W. Beck, Inc. Mr. Art Griffith, R. W. Beck, Inc. Mr. Don Nitsche Mr. Gerald Holloman Department of Water Supply Staff: Mr. Quirino Antonio, Jr., Deputy Manager Mr. Glenn Ahuna, Engineering Division Head Mr. Richard Tsunoda, Waterworks Controller Mr. Lawrence Beck, Engineering Division CALL TO ORDER - Vice - Chairman Heck called the meeting to order at 9:40 a.m. The meeting began later than originally scheduled due to the lack of a quorum. STATEMENTS FROM THE PUBLIC 1. Mr. Don Nitsche: VICE - CHAIRMAN HECK: Good morning Mr. Nitsche. Page 1 of 28 1- 26- 05SpecMtgMinutes.doc D. NITSCHE: Good morning Mr. Heck. Beautiful weather this morning. Well I guess you guys all had a report on how our meeting went with the Governor and the Legislature and the Senate? VICE - CHAIRMAN HECK: We had a short report. If you have something to add to that, we'd be very interested. D. NITSCHE: We felt very good about it. We feel that we have a good chance of this going through the -, uh, funding going through the Legislature at this time; and the Governor has assured us that she will be onboard, supportive. So we feel good about it. We think we're gonna get the funding to go ahead and finance the project to put the water source in Ocean View finally. Thank you. So anyway, I just had that to report; and the only other thing I would like to mention is I'm sure you are all aware, and I think Milton here agrees, that we've been having a tremendous problem with the test well operation. They seem to be forever not working, for some unsubstantiated reason. It's very frustrating for us to be out there, and we know this is such a critical thing to have is to know what's down below and where to put the location of the well in Ocean View. But hopefully, if we keep thinking that every week we're gonna get going, so hopefully that's going to work. I don't know what else to add, other than that we're still out there patiently waiting; and we're very happy with the results, and we feel that we're making great headway with -, and a good understanding between the Department of Water Supply and our Ocean View community. We feel that things are moving along. The only thing left to be decided on is when this - -not if - -but when the funding comes through from the State, who will oversee the construction of the well. And who will manage the operation of the water supply there, like the metering, and the billing, and taking care of it. In the past, when it went through before, in '98, when we had the funding, which didn't go through because the governor didn't go along with it, the OVDC was gonna oversee the construction of the well. We had a project manager hired, we had bid documents, and were ready to go. We are happy to do that, but it will probably make more sense if the Department of Water Supply does it. And the same thing for operating the system- - once it gets going there, it would probably make more sense for the Department of Water Supply to operate it, and bring it into your system. So that's kind of what we're waiting to see how that happens at this time. And that's about all I have to say at this point. VICE - CHAIRMAN HECK: George? G. WILKINS: Don, could you give a quick review of the kind of problems the USGS has been having in its drilling? Are they repetitive problems or do they run the whole spectrum? D. NITSCHE: In my opinion, I've been a small contractor all my life, and expedited and managed and kept things going; and that is their big problem. They don't have -, they have two men on the crew and when the driller's not there, nothing's happening. I mean, he's a nice guy and he's probably a good driller; but I don't believe he's the right man to manage it. They are just not - -well to give you an example, when they finally came, after the big delay in coming, and started, they came down and they were all ready to drill, all set up - -well where do we get water? I had my own water truck; I went down and got them a load of water immediately. And before I got back for a second load of water, they were out of diesel; and they had just brought their equipment through Hilo. And they ran out diesel, and then, well, what do we do? So I says, well, you call Hawaii Page 2 of 28 1- 26- 05SpecMtgMinutes.doc Petroleum to bring you out a big storage tank and they'll keep it full for you. Well, that was another delay of three or four days. So I mean, this has been -, that's a prime example, and -, G. WILKINS: So it's (inaudible ) rather than mechanical breakdowns. D. NITSCHE: It's -, a lot of it, I believe, is the -, and I talked to Gordon Tribble about this until they get sick of hearing from me, of course; and they were, at one point, going to get more help - -a third man on the crew, which they normally have three men on a crew. But I don't know why they don't have that third man so when the key man is not there -, and he'll be running for parts and running for this -, I volunteered to be their gofer man; and I'd go get parts for them, I got filters one time, and I make sure they've got water, and I try and do the best I can with them, but they need one more man on the crew that can operate the machine, in my opinion. But they're nice guys, and I think they're trying; but they need one more man that's a good organizer. And planning ahead. VICE - CHAIRMAN HECK: So, Don, you mentioned that you feel good about the six million dollars that the Bill is based on? D. NITSCHE: To be frank about it -, VICE - CHAIRMAN HECK: I'm just wondering why you feel good about it - -why you think this is going to -, it's all a guess. D. NITSCHE: Okay, we've had a number of the senators and legislators come through Ocean View -- Herkes and Kokubun brought some through not long ago to see what's going on there; and every time we get people that come through, they're quite surprised. And they all -, I had a good feeling that they understood how badly we needed water there and how we're being held at a standstill on a lot of things going on because we don't have a source of water. So I feel very good. Even Say, the speaker of the House, was part of the group; and he invited us, when we came to Honolulu for the meeting with the Governor, and we went in and talked to him again; and I just -, everyone I've talked to, I have a really good feeling that they're going to support us this time around. VICE - CHAIRMAN HECK: Okay. Have you talked to the Mayor directly about this? D. NITSCHE: I haven't -, I only talked to Andy Levin - -the Mayor sent Andy Levin over at the meeting in Honolulu; and I just understand that he's very supportive of basically the same plan that OVCDC is coming up with. The only thing -, and I don't want to rock the boat -, I think that we could get by -, I hope going for six million isn't going to stop it. I feel that it can be done for less than that, but that's my own opinion. There's a lot of -, maybe Milton can fill us in more on the overall cost, but -. VICE - CHAIRMAN HECK: Well this subject is on the Agenda, Item C, so if you could possibly stay in case we have any questions of you at that time, I would appreciate it. D. NITSCHE: I would be more than willing to be available to answer any questions on through your meeting. Page 3 of 28 1- 26- 05SpecMtgMinutes.doc VICE - CHAIRMAN HECK: Okay, thank you very much. APPROVAL OF ADDENDUM AND /OR SUPPLEMENTAL AGENDA - None MISCELLANEOUS ACTION TO MOVE AGENDA ITEMS UP: Ms. Scarr moved that the Board take first Items B, C, and D, and then get to Item A if there is time; seconded by Mr. Wilkins and carried unanimously by voice vote. B) RESULTS OF R.W. BECK PRESENTATION: Vice - Chairman Heck noted that this item seems to tie in with Items C and D. He asked if there was any discussion and/or action. Ms. Scarr stated that one item that might be for action was the addition of the Personnel Needs Assessment in R. W. Beck, Inc.'s (Beck), contract. She asked for the Manager's input on that. The Manager stated that the extra item, "Personnel Needs Assessment," would be very valuable for the Department. It will look, not only at engineering, but at the whole Department, and see where it may be short on personnel. Ms. Scarr stated that what was identified yesterday were two aspects to the Department's future- -one is the financing of what the Board aspires to do and the other is the personnel who can manage those projects. As seen in the past couple of years, the Department has more money than it is able to let projects out and oversee them to get them completed. She thought this assessment would be a very valuable thing for the Board to look at and would be useful, at least to her, to know how many people the Department has in engineering, are they filled, and if there is a need to create new positions. All of those things are a great concern to her. The Manager noted that the majority of the time is spent on regulatory work. He mentioned the bulk of the mail from the Planning Department coming in for review and response, as well as other agencies. That alone takes 95% of the time. He is amazed that Mr. Ahuna and his staff has put out as much in projects that they have done because just the regulatory stuff is overwhelming. Another problem the Department faces is office space, which is slowly running out. He mentioned the tenants in the main office building - -one being Merrill Lynch, which was supposed to have moved out, but their deal fell through for a new office space. They are starting over again in their efforts to find office space. He mentioned they are on a month -to -month lease in the meantime. If they move out, and it is thought to be by August or September, the Department will have extra office space available. The State Judiciary rents on a yearly basis; and when their new building is completed (expected in two years), the Department will have all of the downstairs. Page 4 of 28 1- 26- 05SpecMtgMinutes.doc In response to Ms. Scarr's comment that the Department, as a landlord, could terminate the lease, the Manager stated that the Personnel Needs Assessment will take awhile anyway. The need to create positions, if any, would take longer than Merrill Lynch is going to be there. Ms. Scarr asked if that is something the Board could take action on today. The Manager replied he did not think the Board needs to take action because it would need to take action when the Department comes to the Board for additional funding. Right now, the contract is certified for "X" amount of funds. If the Department accepts the change orders that Beck is proposing, it would have to come back to the Board for additional funds to recertify the contract. At that time, the Board can make a decision. Mr. Wilkins thought the Department might like a vote of support from the Board before moving forward. He asked if the Department would want a statement of support. The Manager stated he thought the Board had already given its support, based on previous discussion. The Board reiterated its support to the Department's attempts to respond to these new needs. The Manager stated that he had asked Mr. Cuthbert to provide a breakdown of costs and a list of tasks; and based on that, the Department will come back to the Board for additional funds. Vice - Chairman Heck asked for clarification that Beck's study they had presented yesterday is based on the Department's level of staffing being the same. The Manager stated that when Beck's staff came to work with DWS staff, they did not get responses as fast as they wanted because DWS' staff was busy. They realized, at that point, that maybe the staffing was not enough. He asked Mr. Cuthbert to explain further. Mr. Cuthbert mentioned the fact that there has been a boom in development on this island in the last year to year and a half. That is something that cannot be predicted. It puts the Department in a rather awkward situation where it does not want to be holding up developers. This review time has been taking up most of the Department's Water Resources and Planning Branch's time. It is slowing down their time in providing the information, requested from Beck, that is needed for the Water Master Plan. They are also looking for outsourcing opportunities for things that come periodically as a good option. He mentioned that their contract change order, expected in a week or so, will address specifics on the Personnel Needs Assessment. The Manager recalled when he and the Deputy Manager were back in the Engineering staff about 25 years ago, the Department used to design about 75% of the projects that went out, "in- house." Today, you are lucky if 10% is done in -house because of the regulatory work and laws that have changed. Outsourcing for the Department is now a major thing, as far as projects are concerned, because of time constraints. Page 5 of 28 1- 26- 05SpecMtgMinutes.doc Mr. Wilkins asked, in view of Beck's recommendations for the future, if they see any problem in responding to increased requests from the DWS. Mr. Cuthbert replied that there are certain limitations from not being a local firm; but they have found ways, such as in the fire -flow testing that was added to their contract, they are using a local engineering firm to do the work. Also, just to be compliant with Hawaii law, it takes awhile to get things done. Ms. Scarr asked if the G.I.S. mapping of the Department's existing water systems is complete. In particular, she wondered about the County's G.I.S. system for their information on zoning, permitting, and land use classification. Mr. Cuthbert replied that "complete" would mean going all the way down to the bottom in terms of going out to each of the services; and that part is not. What is done is the backbone, or major transmission, storage, facilities, and distribution. Mr. Griffith added that it is being done system by system, and almost all of the systems are done. They are still waiting to get the final systems data entered, compiled, and delivered to them. As far as the County's system, the DWS has the layers with respect to tax map keys, zoning, and land use. What the DWS has been doing is entering the water system facilities. He confirmed to Ms. Scarr that it would be compatible for planning purposes. Mr. Cuthbert stated that it is a labor- intensive process to get it done accurately because there were drawings put out that were associated with something that was supposed to have happened; and in any type of construction project, what actually gets done is not always the same and does not get included in the map. The Manager added that it is the Department's intent to meet with the County's data processing manager because it is felt that the Department's G.I.S. positions may not be adequate. The Department has two people in G.I.S.; but because of the ever - evolving computer society, those two people spend a lot of their time fixing staff computers. The Deputy Manager addressed Ms. Scarr's mention of outsourcing the computer problems. There are certain functions that can be outsourced; however, it is not enough. They are looking at creating positions "in- house" because it seems like they are needed 100% of the time. The Manager reviewed the plans for reorganizing the section and having one person in charge of three components of the computer system: G.I.S., software development and repairs, and the financial system. That will allow everyone to do their own job more efficiently. Vice - Chairman Heck asked who is looking into this priority as far as staffing and reorganization and what the timeframe is. Page 6 of 28 1- 26- 05SpecMtgMinutes.doc The Manager replied that after staff meets with the County's data processing manager, he will come back to the Board and ask for creation of positions. He hopes to have it ready in three to four months. Ms. Scarr hoped that everyone would be open to the idea that instead of a managerial position, you may need more "Indians" and divide these tasks. The Manager explained that the person heading the section may not need to have the expertise, technically, in each area, but needs to know computers in general so they can direct everyone else. Someone has to be responsible. C) WATER SERVICE EXPANSION: Vice - Chairman Heck asked about something in Beck's Progress Report: Analysis of Service Areas Extensions. On the last page, he asked if Beck could elaborate on Item No. 4 - "If DWS can't serve all areas, can a policy for priority areas be established/determined ?" Mr. Griffith replied that what he envisioned was if committing DWS funds to service area expansion is something that the Board chooses to do, providing direction to staff on how much, he thought would be useful so that staff is able to respond to the Board's direction. One way to do that is to create a policy of conditions under which the Board wants to contribute or a way to identify where those opportunities are. It seems that going islandwide may not be financially sustainable, so in absence of that alternative, what is it the Board would like to see. The Manager liked one of Mr. Griffith's examples given yesterday, and that was going by density. Should we limit our expansion to one -acre lots and less because you get the biggest bang for your buck. An example Mr. Griffith gave is if the increment is too big, we are just spending too much per household. Ms. Scarr stated that if we limit our conversation to source, transmission, and storage, then acreage is less important than talking about the population density. The Manager stated that acreage is still important because that cost has to be divided by the total number of lots; and if you have a few lots, then the cost becomes really high. Mr. Wilkins stated that usually, the determination of whether or not to extend service is based on population; and that population may be on 1 -acre lots if they are CPR's, they may be on 3 -acre minimum ag lots, or they may be on 20- or 30 -acre lots. He did not think people would respond well if they are told their density is too low and their lots are too large, and that they cannot be served unless they subdivide. Mr. Griffith stated that perhaps it is important for the Board to look at its goals. Is the goal a water system that contains a source, storage, and transmission just to provide a spigot so that other people can come and get their water, or perhaps another goal is the whole distribution and service connection for the entire water system. If the goal is the latter, and the Board Page 7 of 28 1- 26- 05SpecMtgMinutes.doc commits to funding the source and storage, the question is how the rest of the system gets put together. Once the project is started, the question is if there is enough viability to finish it. Ms. Scarr gave an example she likes to think about, and that is Kona Paradise subdivision, because it is pretty isolated from the end of the Department's waterlines -- perhaps halfway between Waiohinu and Hookena. She added that it is a growing subdivision and on the dry side of the island where catchment is not really an option, and they are having to haul water. It would have to be tested, but she felt the community probably would be motivated to do an improvement or a facilities district to get water distribution. To get them a source, this Department could do the economics of what it would cost for a well and storage. Mr. Cuthbert stated that it could be done, but the question is how long it would take to fill the lots. A lot of these areas only have 10% of the lots built out, for example. That would have to be a consideration. Even if the Board made a decision to serve the entire island, there would be a prioritization issue - -how do you decide who comes first - -do you decide by who approaches the Department first, or who has the highest density, or do you look at the dry side first. These are all considerations. The Manager added that the Board's decision will need to include how much money it is willing to spend per year to do these things because that will affect the rates. The question is how much the Board is willing to raise everyone else's rates to provide sources for people without water. The existing customers' concerns have to be taken into consideration also. They might ask why they are paying for someone else's water. Mr. Wilkins thought that some of the water deficient areas along the South Kona coast are good places to look at for examples. In Ocean View, you have a community, which has existed for about 40 years with no water. Their only hope is rain or lots of water hauling, and it is obviously not satisfactory. Other places, such as Hookena, you have one pipeline to serve a lot of people by way of a standpipe. People could survive with that as long as they could fill a tank with water and take it to their houses. He would be inclined to give them a lower priority and a much larger priority to the large population of Ocean View Estates, which has nothing. Over in the Puna area, the water is abundant under the ground; and in his mind, it should be the lowest priority of all. In response to the Manager's question of why he would put that area as the lowest, Mr. Wilkins replied that he has probably spoken with 40 or 50 homeowners in that area and gets an almost universal reply that they have a lot of water through catchment and do not need a water improvement district or the high cost of installing household delivery. So if they do not see it as a high priority for themselves, he is not likely to call it a high priority for the Department. Vice - Chairman Heck asked the Manager if he gets requests from the Puna area because he has never seen anyone from Puna come before the Board to make a statement. The Manager replied that there was a time, about six or seven years ago, when someone would always be here representing Hawaiian Paradise Park, Ainaloa, and Orchidland Estates. What kind of settled that was the large transmission line along Keaau -Pahoa Highway, and their primary concern was fire protection. But even though it rains a lot, people do not drink the Page 8 of 28 1- 26- 05SpecMtgMinutes.doc water because of the acid rain. They fill up at the standpipes along the highway. He felt that although they have the rain, their need is just as much as anywhere else. Vice - Chairman Heck asked what it entails now, since they have the waterline near them, along the Keaau -Pahoa Highway; and there is a fire station, so the basic needs are met. The Manager replied that they would need a well, storage, and distribution. Mr. Wilkins recalled the last time any people from Hawaiian Paradise Park came before the Board was when they were asking why they could not get lateral connections onto the main waterlines that run down the access roads. To him, it indicated those people thought they were on the last stages of getting hook -up to their houses and were trying get the DWS to agree to install pipelines along unpaved roads. The Manager clarified that this was only one small segment of that area where the County funded that waterline to place the fire station there. Ms. Scarr covered what she felt the criteria should be to use in establishing priority: 1) community acceptance, and 2) the density of the population, regardless of how they are distributed, for a source and storage. If they want to spend $40 million on a distribution system to get to their individual 3 -acre lot homes, that is their business. She felt that is all Ocean View is asking for is a start with a source and storage. They have gone to the Legislature for their own money, but the Board could identify some other communities where it could be asking if this is something they want. Then the Department could work on the plan of what it would take to get them water. Perhaps the Board should hold community meetings and find out who wants what, without promising anything. Mr. Wilkins used Kona Coastview/Wonderview subdivisions as one of the best examples of a community that was willing to pay for an Improvement District. Their willingness should put them way at the top of the priority list. If they are not willing, then they go to the bottom of the list. Vice - Chairman Heck acknowledged Mr. Nitsche, who asked to speak. Mr. Nitsche stated that in Ocean View, they applied for a PUD (Planned Unit Development) at one time; and it was quite successful, but they got into the area of the source of water. The people there rejected the plan because they were having to take the gamble that they might put an insufficient well in there. However, they were willing to go ahead with it if the water source had been proven. He suggested that if a system was set up for the different communities to have their meetings and then have a vote, you would get results of what they want. Mr. Wilkins thought that was a good idea. He mentioned the League of Women Voters, who has been counting votes for the Road Corporation both for Ocean View and the lower division for several years. His wife is one of the most active members of this program, and he would Page 9 of 28 1- 26- 05SpecMtgMinutes.doc be willing to ask if they would oversee the vote counting, if that is something of interest to Ocean View. In response to Ms. Scarr's question to the Manager if it would be feasible for the Board to go out to the communities and collect votes, the Manager suggested that before doing that- - because it will cost money and affect rates - -the Board should decide how much it is willing to raise rates and then work backwards. That will translate into a yearly expense. Vice - Chairman Heck stated that the Board would not even be able to do that community -by- community until it prioritizes the primary needs. It may be a two -phase process where the first meeting is just for gathering of information; and the Board would not have to be present at that first meeting. However, the second phase would be for the Board to be present and have a vote taken after the fact when priorities are set based on the first set of information, and how much money is available. The Manager reiterated his earlier comment that money is the key thing. Source, storage, and transmission (clarified as getting the water from the source to where it will be used - -not distribution to houses) can get very expensive. Mr. Wilkins stated that a standpipe could bring that transmission distance down to zero. The Manager clarified that he is assuming there will be a distribution system. Ms. Scarr stated that maybe distribution will not come for some years. In looking at the percentage of cost on Beck's chart, source, storage, and transmission is about 24 %, or $4,300.00 per lot, of the total estimated cost, which was $15,000.00 to $25,000.00 per lot in the Puna area. Mr. Griffith stated that it is also going to be very system specific, depending on how deep the well is, etc. Mr. Wilkins recalled recent arguments on where Ocean View should truck water from. By putting a standpipe near the Ocean View Community Center, it cuts the trucking distance in half, which is a major step forward. A distribution system would not have to be built for a number of years. Mr. Griffith gave a rough example - -if you were to raise rates $1.00 per month, per household, that would give you about $800,000.00 per year. Mr. Cuthbert stated that he liked Vice - Chairman Heck's idea a lot because it is sort of identifying some options without making promises, to see if it would help communities to have a standpipe, or if they want water to their houses, and which option they are willing to contribute money to. You find out how much interest there is by how many people attend the meeting. That would give the first piece of information on how much demand is out there. Page 10 of 28 1- 26- 05SpecMtgMinutes.doc Ms. Scarr pointed out that raising water rates is not the only way to finance this. There is the tax increment financing possibility, where if they have water, their lots will be worth a lot more; and the County will assess them more, but the additional taxes are going to come to the DWS as repayment on whatever loans it has to take out on their behalf. Mr. Wilkins envisioned the road going down Hookena as a beautiful example of incremental development of a water system. You start with a standpipe up at the top of Hookena. Next step was putting in a pipe going down to the beach park with a meter on it, where people could now haul from the bottom instead of the top of the hill. That would satisfy most of the perceived need at a relatively low cost. The day will come when million dollar houses go in at Hookena, and people will want to have water to their homes. In terms of what used to be there, you would have made enormous progress from a simple 11/2 -inch pipe going down the hill. Vice - Chairman Heck mentioned the $6 million - -if the assumption is made that it comes from the State for Ocean View. He was not sure exactly what that is for -- whether it is transmission all the way to the highway or what. It seems like it would be for a lot. In his mind, that would boost the priority in that area if there was a gap between getting water to the highway so it was accessible to that community; and $800,000.00 could undoubtedly finish that off nicely, assuming that amount would be available every year (based on Mr. Griffith's rough calculation of $1.00 /mo. water bill increase generating $800,000.00 /year). He asked if the Manager had any additional information on what the $6 million would be for. The Manager replied it was to drill a well, develop the well, put up a reservoir, and to take a pipeline down to the shopping center. Vice - Chairman Heck stated that he would appreciate a review from DWS to figure out what would be an acceptable amount of money to set aside. He felt it is an investment but was not sure how much of a projection the Board could talk about. There is not going to be a CFD or anything else - -it is a sort of "cart before the horse" situation, so nobody is going to say they want water to their house. The question is how to come up with an acceptable level for the rest of the Department's customers. The Manager recommended that the Board come up with a percentage it would feel comfortable with justifying - -2 %, 3 %, or whatever it is, and translate it back into a sum. Mr. Wilkins commented that in his three years on the Board, he has been watching, what he calls "surplus" or uncommitted funds increasing. He was not sure how comfortable he would be talking to an audience of potential higher rate payers and telling them they need to be charged more to increase the Department's investment fund, which is already quite sizeable. He suggested some part of those excess funds be defined to become part of the "kitty" to be supplemented also with increased rates. The Manager stated that the excess funds come from the existing consumers. It would not be right to take money from existing consumers. Page 11 of 28 1- 26- 05SpecMtgMinutes.doc Mr. Cuthbert spoke from his experience with this Department when it put out its water rate study about five years ago and conducted a series of public meetings. One of the requirements was for the Board to go out to the public with its proposal. The Board can bring this around and say, example, it would raise an $80 water bill by $8 to pay for unserved areas. That would equate to a 10% increase. There is a comfort level to say you want to have water in more communities, and you think it is fair to charge a certain amount to the customers. The Board needs to be comfortable, in unity, in how much that would be. Mr. Wilkins commented that he regards the water consumer as a four - dimensional person. Part of that fourth dimension is the future -- people who do not exist today but will exist in the future. Ms. Scarr mentioned the $41 million in investments. It has been said that it is prepaid FC and the Department will have to honor them, but some may not want them back. That is capital, and perhaps the rates do not have to be increased to cover entirely new investments. The Manager stated that is something the Board would have to decide because it would require a change in philosophy - -if the Board is comfortable spending that money on areas not currently served. He added that the money is there, but a lot of it is committed. Ms. Scarr noted that it would be useful to know how much of it is NOT committed, and perhaps Mr. Tsunoda could help determine that. Mr. Tsunoda referenced a Detailed Listing of Funds that shows facilities charges and C.I.P. reserve amounts. This was found to be included in an internal working document called the Summary Schedule in Support of Statement of Fund Balances and Bank Cash. He had copies made for the Board Members. (Ms. Scarr indicated this is important for the Board to have.) Mr. Cuthbert stated that this is all capital that, one way or the other, could be used. It does come back to how much the Board wants existing customers to pay to provide the service. Mr. Griffith added that when Mr. Cuthbert presented his financial plan to the Board at yesterday's meeting, it was based on funding a C.I.P. expenditure of about $12- to $13- million a year. Part of the reason he was able to say there was no need for a rate increase until 2009 was because of the Department's current investments. If some of that were used to expand the water system, that is something the Board could choose to do; but it does have a financial impact. Vice - Chairman Heck recognized Mr. Nitsche, who wanted to make a comment. Mr. Nitsche referred to the question asked whether the $6 million was enough to put the system in for Ocean View. In his understanding, he believed it was more than adequate to put in the complete system to furnish them with water to the business area and to the water haulers from the standpipe. Page 12 of 28 1- 26- 05SpecMtgMinutes.doc Vice - Chairman Heck stated that the question of DWS managing this has come up, and he asked the Manager for his comments. The Manager stated that is a decision the Board would have to make because it would involve manpower. There are two things the Board would have to decide - -would the Department maintain and operate it; and if so, at what rate, because it is probably going to cost more than what the current rates are. The Department does not have personnel, such as electricians, out in Kau. Every time something would need to be done, they would have to come from Hilo. Ms. Scarr felt that the Board committed itself, in the long run, to trying to serve all of Hawaii County. That was covered in the Mission Statement and the strategic planning sessions. There was no timeframe committed to it, but that is the Board's goal. The next thing to do is assess what steps should be taken first. Ocean View's going to the Legislature for funds is outside of the Board's purview; but if they get the funds, the Board needs to make a decision as to the Department's involvement. But in the meantime, the Board should be thinking about the other unserved areas and how to assess customer acceptance, and then determine cost per service. Ideally, all of the Department's systems would be connected and serving the entire island, thus eliminating redundancy and inconvenience when wells go down. The question is where to start. The Manager stated that at the meeting with the Governor, the question was asked of him if the DWS would take over the system in Ocean View. He had indicated that was something he could not answer - -it was for the Board to determine. He had recommended that something be sent to the Board, in writing, so it could be put on the Agenda. Discussion followed on the Department's baseyard in Kau. The Manager indicated, if anything, it would need expansion of the baseyard if the Department were to take over an Ocean View system. Ms. Scarr directed the Board to the finance sheet provided by Mr. Tsunoda in which it indicates a C.I.P. reserve fund, a facilities charge fund, and a water commitment deposit fund. There are no specific commitments for those funds, and they add up to approximately $16 million. That is money in the bank. She proposed that the Department could potentially spend $10 million of that on serving unserved areas. The Manager indicated that the facilities charge fund (approximately $5 million) is geared toward future C.I.P. If you take that away, you need to make up the difference by raising rates. It is not actually free or excess money. In response to Ms. Scarr's question to Mr. Cuthbert if that money was budgeted into his projections for C.I.P., he responded it was assumed to be spent in the next five years. The same goes for the $9 million water commitment deposit fund when asked about it. He indicated that what was presented yesterday was based on the current projections so there needs to be 61/2% rate increase in four years. If $10 million were taken out of these funds, that 61/2% would go up. Page 13 of 28 1- 26- 05SpecMtgMinutes.doc Mr. Goya felt that this discussion has gone far enough without consideration of the Department's long -term budget. He thought the budget needs to be worked on first, as well as staffing needs and rate increase projections, before committing to customers that are not attached to the system. He agreed there are opportunities to work together with communities and felt the County should take the lead. There has to be a County priority, such as the need for other facilities -- example, Ocean View Estates - -to give them $6 million just to have water available, they must be looking down the road to government facilities such as schools, fire department, and commercial needs of a growing population. If this Department can work with the County and prioritize the needs for people who live in unimproved subdivisions, there may be opportunities to partner and look for additional outside sources of funding so it would not fall back on the DWS at a time when the critical need is to take care of its existing workload. The budgets that have been proposed have been at existing staffing levels. Like the Manager indicated earlier, the Department's priorities have changed because of compliance issues that additional staffing is needed for. There needs to be some separation on what the real growth is. Part of the historical growth has been to replace surface water sources. This all needs to be tied down before looking at opportunities to utilize unrestricted funds and additional incremental rate increases to serve those who are unserved at this time. In response to Vice - Chairman Heck's question of how long it will take to compile the information, Mr. Cuthbert replied they would be getting back to the Board in six to eight months with the beginning of that information, and it would probably be completed by this time next year. Ms. Scarr asked if Beck could work with some budget options; example, if the Board wants to do "X" amount of expansion in unserved areas, what the implications are by 1) borrowing the money, 2) using rates to fund it, 3) how much additional staff would be needed, and 4) how much baseyard expansion would be needed. Mr. Cuthbert stated that the centerpiece of the Board's policy he has been hearing is the commitment to provide source, storage, and transmission, but not the distribution. That would change the whole complexion of some of the things they were looking at because they were working on the basis of providing water to everybody. There are still a couple of tricky areas in talking about some of these places where roads are unpaved. The question is if the road has to be paved in order to be served, or if the Department would be willing to serve in an unpaved area and face the liability with its vehicles. This conversation with the Board will help them focus on other options to provide to the Board. Ms. Scarr provided the rationale that when you talk to people who live in improved areas, they say things like they paid a lot more for their lots because they had access to water and other utilities, and why should they spend their money to provide that kind of distribution system for people who pay very little for their lots. That argument can be nullified by clarifying that the improved lots had a source that was near them and they paid, as a customer, to help with the facilities charge for that service. The same would go for the unserved areas- -that the Department would be providing a source, storage, and transmission only and if they want a distribution system, they pay for it. Then you may get the general public buy -in to helping unserved areas. Page 14 of 28 1- 26- 05SpecMtgMinutes.doc Mr. Griffith stated that another question, or initiative, to consider is if you would you expect customers to pay a facilities charge to recover some of that money and how you could really do that so anyone could come and access it. The Manager stated that if you follow Ms. Scarr's logic that everybody should be treated the same, then they should pay facilities charge because those with improved lots do pay the facilities charge as part of the distribution system. Mr. Griffith added that the timing of facilities charge revenues perhaps would come after they choose to expand the distribution system to their houses. Ms. Scarr stated that the scenario in her head is that the Board go around to various communities that are unserved and find out who really is interested in having a water supply. The Board finds out if they are interested in just having a standpipe or if they want to have a distribution system. And, as Mr. Wilkins mentioned earlier, a high priority should be given to those communities that want to go in for a PUD (Planned Unit Development), CFD (Community Facilities District), or an Improvement District to get a distribution system. The Board should look very favorably on those communities because they will be paying the facilities charge in their distribution system, and the Department will get back some of its investment. Vice - Chairman Heck asked if Ms. Scarr was suggesting that the entire Board go from community to community and meet with them once or twice, in addition to its monthly meetings, or possibly form a committee. Ms. Scarr replied that she was thinking of a committee. Mr. Wilkins added that it could even be broken down to each Board Member, in their own district, singularly or with another member representing a side of the island with basically the same problems. Vice - Chairman Heck stated that proposing Motions today are going to be difficult, at best, with Members absent, and perhaps a committee be formed from this point to carry out some of the issues, bring them back to the Board for recommendations, as well as recommendations if the full Board should go out to the communities. The Board needs to get some things down for when the new Board Members come on board such as setting priorities and the cost factor. It is important for the new Board Members and for Chairman Mochida to be included in this decision making. There is also a need to have something specific to present to R. W. Beck, Inc., to see how feasible it is. Mr. Cuthbert suggested that the Board try to work on this in the next six months so that they will have that information at about same the time as when they go into the Water Master Plan C.I.P. prioritization. Page 15 of 28 1- 26- 05SpecMtgMinutes.doc Mr. Griffith, addressing Mr. Goya's earlier concern, added that if the community information is gathered up front, by the time they are through with the hydraulic models, Water Master Plan developing, and C.I.P. for the existing water systems, you could look at the priorities identified for the existing water systems, along with some customer data from unserved areas, and decide an appropriate level of commitment, given the Department's other needs. Vice - Chairman Heck asked if they were also suggesting agricultural needs. Mr. Griffith replied that one of the issues that came up in the Strategic Plan was if there are agricultural users of potable water that do not have to be using potable water. They have done a little bit of checking into that and could look into it further. Mr. Wilkins commented that this parallels with several examples of the Department's having to abandon surface or spring water sources because of EPA regulations, such as Waiohinu, Wood Valley, and Honomu. The question is if they should be considered as having a new use for agricultural water since the distribution system is in place. Mr. Cuthbert stated that from discussions with the Manager yesterday, part of the change order work would be to provide the additional services to do exactly that. Mr. Griffith added that the work is recognizing that distribution systems are expensive so perhaps things to focus on are the areas where the non - potable water structure is already in place, like the Lower Hamakua Ditch, which has had maintenance issues in the past; and there are DWS agricultural customers living near the Ditch but choose to use potable water instead. Mr. Wilkins commented on how far horizontal drilling technology has come, and is well established, where you could go back into the spring tunnel to the point beyond its entry point to the surface, drill hundreds of feet back, horizontally, and tap the water which has never come close to the surface. He felt it is a worthy question to discuss with the EPA representatives because he was sure their policy is based on drilling technology of 50 years ago. It may save on drilling very expensive, deep wells. Ms. Scarr thought it would be useful if the Board had representatives from unserved areas and try and identify those communities, what to discuss with them, and then develop an agenda for such a public meeting based on questions that need to be answered. The findings would then be provided at the Board Meetings. She thought that Beck could help the Board, and has already given some criteria to use in terms of decision making. The Board needs input on what communities want or what their vision is, without making any promises. She mentioned areas like Puna, Kau, South Kona, and North Hilo but assumed all of South Hilo is served. The Manager mentioned upper mauka areas in South Hilo are not served. Ms. Scarr mentioned South Kona that has upper mauka areas that could be served with booster pumps. Page 16 of 28 1- 26- 05SpecMtgMinutes.doc The Manager stated that the South Hilo areas he mentioned are established subdivisions. There are no established subdivisions in the area Ms. Scarr mentioned. Ms. Scarr stated that there are a lot of coffee farmers up there who might like to have water. She did not think they should be excluded from the information gathering. Mr. Goya spoke from his experience with the electric company that services a lot of unimproved subdivisions. The utility had a special subdivision permit provision in which, within the rate base, $1 million was provided to fund a portion of the improvements for sections of customers who were willing to participate in this program. One -third was paid by the ratepayers, one -third by the utility, and one -third by the customer. The customer has the option of paying, on an incremental basis, with a deposit, over a long period of time in which small amounts are collected on a monthly basis. But inevitably, the cost to manage the engineering, the administration, and the collection were not built into that. It is a very tedious and detailed process to collect that small amount of money per month over 25 years. You are dealing with lots changing hands, new people, and new contracts, which all have to be individually administered. Serving an individual is very difficult. Individual distribution systems with special assessments without the proper accounting or collection mechanisms or improvement in the Department's financial management system would not work. Ms. Scarr noted that the Department would not be doing that (individual distribution systems). Mr. Goya thought that looking at areas in which additional spigots could be provided, his recommendation is to work with the County because their elected officials represent the people that this Board could work with-- Councilmembers, Representatives, Senators, rural development groups, etc. This Board taking the bull by the horns may be a little too far out there and assuming a lot of responsibility. It may detract from the business of trying to help the DWS manage its current workload. Mr. Wilkins stated that what worries him is the 15 -year lag in getting a new County of Hawai `i General Plan. RECESS: The Board took a recess from 11:10 a.m. to 11:28 a.m. Ms. Scarr stated that what the Board is proposing is that each Board Member, in their own Council districts, go out to identify communities that are unserved in their district, and start there to make an assessment. It would be a good idea to contact their respective Council Members and get their help in meeting with the communities because they are very well connected. Also, develop a common set of topics that the Board wants information about. R. W. Beck, Inc., may help in this area, and she asked for their input Topics suggested by Ms. Scarr: • How many people are we talking to. • Density of the area (size lots). What uses do they make of potable water (may not only be household but may be industrial use, or agricultural use). Page 17 of 28 1- 26- 05SpecMtgMinutes.doc Topics suggested by Mr. Griffith: • Get the number of lots and the number of houses. • Try to get a handle on the rate of growth - -how many people are moving in. • Use of water is a good idea, as suggested by Ms. Scarr. • Whether or not they own or rent because property tax rates are different. • Get to the point of asking what types of water service or potable water options they think they could benefit from, such as 1) limiting potable water system to a source, storage, with a common standpipe, 2) starting with source, storage, standpipe, but then expanding a distribution system, 3) the "full- meal - deal." • Get an idea of their willingness to pay (to do that, you need to provide them some costs for the facilities /water -- people respond differently if they see the tab). Mr. Nitsche stated that he liked the idea, but it would be quite a problem in Ocean View because they have about 300 miles of private roads that are all maintained by the community. They would love to have it done, but it means it would be a very big job. They did it one time before within their own community, and it was a big job; but it could be done. Mr. Griffith added that in the initial contact with the community, perhaps it could be left up to them to provide some of this information. If they are not willing to provide that information, maybe that is a sign they do not want a water system. Vice - Chairman Heck asked if the Manager had any observations as to the relationship between standpipes, truckers, and the community, and exactly how that works. Discussion followed on how standpipes operate. The Manager explained that they are designed to fill water haulers. There are about five different meters, and individuals come and apply with the Department. They do not pay facilities charge because it is a temporary situation. They pay a meter charge and a special amortized cost, which is calculated so that eventually, the money spent constructing is made back. For individual users, they go to a spigot that is paid for by the Civil Defense Department, with a 50 -gallon limit. The Department maintains and repairs the standpipes. It is already built into the rates as operations and maintenance. Debit cards were looked at by a consultant but were found to be a nightmare because of vandalism, as well as problems at the office with having a swipe machine to replenish the cards. In response to Ms. Scarr's question of what else would be needed to make an economic model, Mr. Griffith replied it would be useful in a site specific area, to know the tax value (do not need to get this information from the customers) for tax increment financing. It would also be good to have a better estimate of what these scenarios would do to property values. Ms. Scarr noted the County website would have the tax values, and what they need to do is collect tax map key information. Mr. Griffith suggested at least bringing a TMK map to meetings and leave meetings with a line on the map, encircling the properties. Also, if the Board is looking at any systems for fire -flow purposes, to come up with an economic analysis, one of its inputs would be Page 18 of 28 1- 26- 05SpecMtgMinutes.doc size of reservoir based on fire -flow requirements, knowing if there is commercial land use in the area, or any type of non - residential or multi - family use. Mr. Cuthbert noted that one of the benefits to having a water system is fire protection - -it brings lower insurance costs. The Manager added that in Hawaii, fire insurance does not drop simply by having a fire hydrant nearby. It is the distance from a fire station that is considered. Anything within five miles of a fire station gets better insurance rates. Mr. Griffith stated it would also be useful if a better understanding of the topography in the area could be obtained (not necessarily from the residents). Also, do some pre- planning estimates of what a source and storage would look like and where it would be located. Sometimes where a reservoir is located is part of community acceptance (they may not want it to be within their view). Ms. Scarr noted that some improvements the Board may think about are booster pumps to send water mauka. That may fall under this category. Some communities, such as Hualalai Farms, have paid for their own booster station; but most have not because they have not gotten together into any kind of Improvement District to get that done. That is another need that is out there. Mr. Griffith stated that he tended to lump booster pumps in with transmission. That is the whole idea of getting more topography information. Vice - Chairman Heck asked if the Board Members here have an understanding that there is an expectation now that if they have customers in their regions that are on catchment of any substantial number, that these criteria can or should be used to bring back information to the Board for potential action. This would be a system of reporting back to the Board in place of having a committee. He asked if there were any other suggestions of what the Board should be looking for. Mr. Cuthbert questioned what happens with the districts that are not represented here today. Vice - Chairman Heck noted that they would be brought in on this information by reviewing the Minutes of this meeting. He mentioned some possible actions the Board may be able to take in this subject matter. If or when the State funding happens ($6 million) for Ocean View, there is a need for the Board to determine if the Department is going to manage it or not. The State would like to know this information, as well as that community. Mr. Wilkins thought the Board could express a desire that this happen and ask the Department or R. W. Beck, Inc., to give the Board a report on how it would be done as well as any associated problems, and the Board could vote on that. (Ms. Scarr noted she would second that.) Vice - Chairman Heck asked for clarification of Mr. Wilkins' attempted Motion. Page 19 of 28 1- 26- 05SpecMtgMinutes.doc MOTION: Mr. Wilkins stated that those Water Board Members attending (today) express their support for the idea of the Department of Water Supply managing any new water services that are put into effect and that the Board ask the Department of Water Supply to report back to the Board at a convenient time (in 30 to 60 days) with aspects of how this would be carried out and any associated problems so that the Board could approve a final choice. Ms. Scarr did not think that Motion would work as stated. (Lack of second to Mr. Wilkins Motion.) Mr. Wilkins clarified the intent of his Motion as supporting the idea of the DWS managing these new source developments; but before finally approving such a management scheme, the Board would ask them to report back on associated techniques and problems so the Board could make approval in a more formal manner. (The Manager added that cost should be included.) Ms. Self asked if this Motion meant that the Board is just asking the Department to bring information to the next meeting for action at that time. Ms. Scarr and Vice - Chairman Heck replied that was not the intent. Mr. Wilkins clarified that the Board wanted to give the Department authority to study the issue and give results of their best thinking. Ms. Scarr did not agree with putting a time limit on this. She felt this is very "pie -in -the sky" as far as anticipating if this money is going to be realized from the State. When the time comes for whatever is allocated, that is the time the Board can decide. She felt that, in principle, the DWS should manage this; however, the Board should not be making any specific demands on the Department of Water Supply to do anything until it is known if this is even going to happen. Mr. Wilkins felt that whether the DWS does it or not, someone is going to use that study document. There needs to be some thinking up front. Vice - Chairman Heck added that another consideration is that the State is depending on, or wondering, who is going to manage it. He thought that in their proposal, they would want to know. MOTION IS NOT BEFORE THIS MEETING: Ms. Self indicated that there was no Motion on the floor, due to lack of second. (Vice- Chairman Heck invited a second, but none was made - -no Motion on the floor.) Vice - Chairman Heck recognized Mr. Nitsche. Mr. Nitsche stated that at the meeting in Honolulu, the only thing that was not understood was whether the DWS was going to manage the system or not. His understanding, from the Page 20 of 28 1- 26- 05SpecMtgMinutes.doc meeting, was that if funds become available, it could be as early as June 2005. That does not leave a lot of time, and he hoped the Board could make a decision based on when the money becomes available, that it will commit to this. NEW MOTION: Ms. Scarr moved that, in principle, the Department of Water Supply will manage any water system that is developed at Ocean View, depending on appropriate financial arrangements and appropriate personnel being available; seconded by Mr. Wilkins. Motion was read back by the Secretary for clarity. ACTION: A vote was taken on Ms. Scarr's Motion that, in principle, the Department of Water Supply will manage any water system that is developed at Ocean View, depending on appropriate financial arrangements and appropriate personnel being available. Mr. Wilkins had seconded that Motion. Motion was carried unanimously by voice vote. Per Ms. Self's recommendation to have the scope of each Board Member's investigation in the communities identified in these Minutes, Vice - Chairman Heck summarized that the scope is as per R. W. Beck, Inc.'s, recommendations, which he assumed would be on record. The specifics of how, he assumed, is that each Board member will go out into their community /district and consult with their constituents these particular criterion and come back to the Board within three months to report their findings. In response to Ms. Self's question if public notice would be made of these meetings, Vice - Chairman Heck replied that he would leave it up to the Board Members to arrange, since they know their communities. If it requires public notice, then that would be necessary. Ms. Scarr asked if Councilmembers have to give public notice of meetings they hold with their constituents. Ms. Self replied in the affirmative and that she would contact the Board Members individually with guidance on Sunshine Law requirements. RECESS: 12:01 p.m. to 12:07 p.m. D) C.I.P. BUDGET: Vice - Chairman Heck asked of there was any discussion regarding the C.I.P. Budget, and assumed these are plans, priorities, and ideas. The Manager commented for future reference, that the Board may have noticed in the last year or so, the Department has come to the Board for approval of projects that are not on the C.I.P. Budget; and that will continue. This happens because of things that occur; example, the Reed's Island project, because the County was going to do work in the area, and it would be foolish for the DWS not to have its work coincide with the other work by the County. Page 21 of 28 1- 26- 05SpecMtgMinutes.doc Ms. Scarr asked if the Manager were to put out $12.7 million of projects in 2005, how much more staff would be needed to do it. The reason is the goals have not been reached for the past several years in terms of the amount of projects put out. The Manager clarified that that amount of money in projects has been put out with the current staff. The reason it looks so good is because three or four of those projects were huge four- to five - million dollar projects. There is no doubt additional staff could be used to get things out. The thing that bothers him is the use of the Water Resources and Planning Branch staff to help with projects. That takes away from their primary mission, which is planning. There is a need for more engineers in the Construction Branch. He was sure the Water Resources and Planning Branch (Mr. Lawrence Beck's section) could also use one more engineer. In response to Ms. Scarr's question of staff that would be needed to put out 50% more projects, the Manager replied two more engineers in the Construction Branch and at least one more engineer in the Water Resources and Planning Branch. Mr. Goya commented that the "champions," as identified in the Strategic and Business Plans, have come to the Board with their presentations; and if staffing were a major concern, it should have been at the top of everyone's list. He did not hear that in any of their presentations. That was his point in yesterday's discussion on the creation of an Energy Engineer. He would like to hear, in the future, that when these plans are done, they include appropriate staffing to accomplish the goals. The Manager stated that he was not about to come to the Board and say the Department is understaffed, because to him, that is an excuse. But when an outside agency (R. W. Beck, Inc.) finds that the Department may be understaffed, that is why a Personnel Needs Assessment is so critical. Mr. Wilkins stated that sometimes it is difficult to anticipate how rapidly you are being overwhelmed by new work. One measure is how far you are falling behind in meeting milestones and the nature of the capabilities you are lacking to meet those milestones- -what kind of staff you need; and then you start separating them into how many people of various types. He would have a better understanding of the Department's problem if this kind of expert deficiency analysis were provided to the Board. He felt very positive about authorizing the hiring of more people, especially since the Department's reserve is built up and completion dates are getting farther into the future. However, it has to be on paper before he can appreciate it. Vice - Chairman Heck asked Mr. Lawrence Beck if he had something to add. Mr. Beck reported that any qualified engineer could probably handle between five and six projects, so that could be used as a gauge. However, finding qualified engineers is getting very difficult. The Department was lucky in its recent hiring of Mr. Finn McCall and Mr. Jason Killam. The other people who turned up for the interviews were far from being qualified. Page 22 of 28 1- 26- 05SpecMtgMinutes.doc Vice - Chairman Heck asked if going nationwide would help in this effort. Mr. Beck replied that money is a big issue. In his own case, he and his wife moved here from California and took a 33% cut in pay to come. Their incentive was they wanted to live here. The cost of living is also an issue. Discussion followed on Civil Service- -pay needs to be higher to entice more applicants; advertising for job openings to reach more people nationwide (more creative sources to get the word out). The Manager mentioned more efforts made by Civil Service in the past years. Ms. Scarr mentioned monster.com as being an online service where everyone goes to look for jobs. The Deputy Manager mentioned an earlier report by the Manager that he committed to joint funding for outside recruitment, along with the Department of Public Works and the Department of Environmental Management. This is a commitment on the Department's part to invite more applicants. The Civil Service Department has a limited budget; but perhaps with the DWS' assistance, they could advertise nationally. In reply to Mr. Wilkins' question if the Manager could place an advertisement in the AWWA journal as a Department, the Manager replied in the affirmative. Mr. Wilkins added that he empathized with the desire to hire local people; however, there is a whole universe of local people who no longer live in Hawaii because they could not get a job here. He would be very tempted to go to Los Angeles, Long Beach, the Bay Area, and Seattle and initiate contact with some of the Hawaiian chambers of commerce representing the thousands of people who have moved away from Hawaii because they had to. The Department may be really pleased at its success rate. Vice - Chairman Heck stated that sounds good but asked if it is possible. The Manager replied that all the Department could do is notify them of the openings because it has no control over the application process - -that is a Civil Service process. It is just the way the government is. Mr. Ahuna commented that personnel is not the only problem. The Manager had eluded to the fact that the Department is becoming short on office space. He does not have any more room to add personnel to his division. It was noted that the whole process of getting personnel takes months, and the Department may have that additional office space by then. The Manager stated there are ways of doing it, but cautioned against doing anything until the Personnel Needs Assessment is completed. Mr. Goya stated that along with the Personnel Needs Assessment, he would like to see some flexibility for the "what if' situations; example, what if the capital budget is increased by 15% for the next few years, what would it take to get that done. Take into account all financial, budget, and rate increase scenarios. He would like that flexibility in order to fully explore the options and meet the growing needs of the Department's existing customer base. Page 23 of 28 1- 26- 05SpecMtgMinutes.doc The Manager stated that the other thing slowing things down is State Highways. However, a letter was signed yesterday by Chairman Mochida inviting Mr. Haraga to attend one of the Board meetings. (Board requested it be provided with copies of that letter.) Vice - Chairman Heck asked if there was any further discussion on the C.I.P. Budget. Mr. Goya reiterated a follow -up on the R. W. Beck, Inc., report and their conclusions because DWS has relatively low outstanding debt and can use considerable debt financing to help fund C.I.P. needs. If the Department had the flexibility to carry out additional C.I.P. projects, how would it fit in with future plans and rate increases in which the Board would need to sell to its existing customers. The Manager commented on the Department's efforts to maximize its ability to borrow money from the State Revolving Fund. Their only condition is that the project somehow tie in with the EPA requirements. Interest rate is approximately 31/2 percent. Ms. Scarr's summarization was that although planning and routine business takes up so much time, we have a responsibility in our mission statement to meet all EPA requirements and also have responsibility to keep existing systems in good repair. But there is also a need for the third component and that is how to reach to the future, which is to serve Hawaii County's water needs. Those three components have to go together, and we should keep marching along on all of them. The Manager replied that is true, but if you were to prioritize that, EPA comes first, otherwise, the Department cannot operate. Regulatory stuff has to come second. Expansion is third. That is just the way it is. A) BOARD GOVERNANCE POLICIES: Vice - Chairman Heck noted the process of how the Board is going to review this draft document seems like a huge undertaking. He opened the topic up for discussion but did not think it would all be covered in the time remaining today and would probably need to be deferred and organized in such a way that the Department gets all the information from each Board Member as far as changes, since it does affect each Board Member. Ms. Scarr stated that, in principle, she did not have any suggestions to the policies; but in looking at Ms. Garson's memo, she objected to some of the language pertaining particularly to Manager limitations. There are a number of comments she makes about unnecessary language that refers to governance processes or policies contained elsewhere in the Rules and Regulations, Civil Service policy, the Manager's job description, etc. She guessed the Board should ask itself if it accepts Ms. Garson's changes or if R. W. Beck, Inc., had any comments on what Mr. Garson wrote. Mr. Cuthbert stated that he has not seen Ms. Garson's memo. Page 24 of 28 1- 26- 05SpecMtgMinutes.doc Ms. Scarr was surprised and thought it would be appropriate for them to see it because they are the ones who wrote the draft. This has been hanging around since August of 2004. The Deputy Manager stated it may have been an oversight on the Department's part since this was an undertaking by Mr. Dave Jochim and Tom Cutting of R. W. Beck, Inc. He added that Ms. Garson's comments could be forwarded to Mr. Jochim to see what their responses would be. Mr. Cuthbert understood that the process was to gather Corporation Counsel's comments and the Board's comments together and come up with a new copy for the Board to approve. At this point, everything needs to be taken in; but it was being held, awaiting the Board's input. Vice - Chairman Heck expressed confusion with the clause, "thorough extensive outreach to determine community wishes" mentioned under "Governing Study." In order for him to comment on a number of areas where it refers to Board participation with their communities, he has a concern on conflict of interest - -at what point would he be crossing the line. He did not know what that point is exactly. They are now going to go out to their communities and speak with the people there, but there is an organization, the Ocean View Community Development Corporation, that he does not want to be involved in to a large degree because he does not want to be seen as having conflict of interest and wants to be able to vote. He asked if he were able to be an officer or president of this corporation; or if a State meeting were to come up regarding Ocean View, would he be able to attend it. At what point would he be threatening his vote. He was not clear on that. Ms. Self explained that if it is something that directly benefits his business, then there would be a conflict. Vice - Chairman Heck stated that water to Ocean View will benefit his business. So if he promotes water in any way or gets water to his farm in Ocean View, it would benefit him because he lives there. He added that his business is in growing flowers that do not need a whole lot of water, but the water would benefit him because he lives there and has this business. Ms. Self replied that she would check further; but if it, in any way, is going to benefit his company, she would say he may have to excuse himself from the vote. It is usually something that is directly benefiting your company (and not others - -added by Ms. Scarr.) Ms. Self agreed that if it benefits everyone, then it is not a conflict of interest. Mr. Goya stated that, personally, he would not become a member of the committee, just because of Mr. Heck's current position. But that is a personal choice because of the potential perception by others. Vice - Chairman Heck declared that he is not an officer of the committee, but he is the grants committee chairman. That seems to be fair to him. It affects everybody in that area. But up to this point, he has been calling Ms. Garson almost every time he needs advice and he needs to have some kind of idea of what he can and cannot do; and this is not only in the upcoming Page 25 of 28 1- 26- 05SpecMtgMinutes.doc decision by the Board today to have its members go out into the community to gather information, but also there will be a future time where there will be meetings at the Legislature as far as this Bill is concerned. He asked if he could testify before the State for Ocean View on the needs of the district where he lives and has a business. Ms. Self stated she would check and get back to him. Vice - Chairman Heck commented on Page 2 of 35, Number 2.3 refers to also 2.2 of Unity of Control (Page 13 of 35), 10.3, and in 6.1- -other areas in the policies. They all sort of go in and out of this subject; and he finds it confusing as to how to think about it. If you put them all together, it makes some sense; but individually, they do not. He did not know how to edit or determine if it is the correct wording or not. Section 2.2 was clarified to mean if Mr. Heck wanted to learn something about the Department, he would first have to go through the Manager. Regarding 10.3 on Page 10 of 35, "it is the policy of the Water Board that each Water Board Member attend such meetings, events, conferences, and training as each Water Board Member determines what would be best to enable them to serve the Department of Water Supply," he felt this seems open -ended as to meetings. His question was what meetings and where. He did not know where to draw the line. The Manager agreed it was too generic (vague). Ms. Scarr interpreted it as meaning Board Members should avail themselves of going to meetings that will enable or enhance their performance as a Board Member. The Deputy Manager added that it may also include the American Water Works Association conferences that are held yearly. It is a matter of contacting either the Manager or himself if Board Members are interested in attending something that is beneficial to themselves, as a Board Member, or the Department. Vice - Chairman Heck asked about Page 8 of 35, Number 8.1 - "Water Board committees will normally not have direct dealings with current staff operations." He felt that the word, "normally," gives an opening to different interpretations. He questioned whether it should be a yes or a no. He added that it is a good idea for everyone to go through these, jot down every idea, and give them to the Manager so they may be compiled. He asked if anyone else had questions today. Ms. Scarr stated that these governance policies were adopted from the Santa Clara water district. She would be satisfied if Ms. Garson's changes /concerns were made because they deal more with legal issues. Then it could be brought to the Board for approval. She added that she did not have any real questions on them. Mr. Wilkins commented that in Ms. Garson's letter, two or three times, it says something should be removed because it is covered by another regulation (normally Civil Service). He would rather see that section replaced with a statement that "behavior under these conditions is governed by (state the name and number of the regulation)." He did not want to have that section simply disappear and leave him wondering. Page 26 of 28 1- 26- 05SpecMtgMinutes.doc The Manager stated that you could also say, "or unless otherwise provided for." Mr. Wilkins still felt it should be left in. Ms. Scarr agreed to leaving it in and just include its reference, as Mr. Wilkins suggested. Vice - Chairman Heck pointed out where it states, "In order to protect the Water Board from sudden loss of Manager services, the Manager may have no fewer than one other executive familiar with Water Board Manager issues and processes." He asked if the Manager had at least one. (The Manager indicated the Deputy Manager.) There being no further questions, the Manager asked that Board Members turn in their comments by the February 22, 2005, Water Board Meeting. In the meantime, he will provide Ms. Garson's comments to R. W. Beck, Inc. When each Board Members' comments are received, they will be sent back to R. W. Beck, Inc. If they do not have any comments, please let the Department know. Ms. Scarr liked the governance policies because they empower the Water Board Members to learn a lot more about the water business, policies, and issues, and gives them a responsibility to be prepared for meetings and to participate. Mr. Wilkins asked if he could send his marked up copy to the Manager by way of the DWS' Kona Office. The Manager replied that would be fine. The Department has a courier system to and from the baseyard offices. Ms. Scarr asked the consultants when the Business Plan would be updated for next year. Mr. Cuthbert replied that the Department is now halfway through the first year. They had met with staff after yesterday's meeting to go over what is needed for the rest of the first year of the plan. Vice - Chairman Heck mentioned that it is hard to govern when you do not have a map on the wall. Discussion followed on the maps that are provided with the Agenda in reduced format, and the maps that used to be placed on the wall for reference. Mr. Wilkins suggested a map of the entire island where an applicant could walk to the wall and put his finger on a section of that map and say what area is being discussed. Ms. Scarr mentioned how Mr. Ahuna has been very helpful in providing water commitment data. That will be tied in with the TMK data that Ms. Barbara Scott and she are organizing with Data Processing in Kona. They should be ready for that data later and should have all the water commitment data done. If they had a map on the wall-- especially a TMK map - -would be the most helpful. She asked if it were possible to get a large TMK map or if there is such a thing as a master map that does not have Page 27 of 28 1- 26- 05SpecMtgMinutes.doc all the details on it. Mr. Wilkins suggested that the Department keep doing what it has been, but add a map on the wall. The Deputy Manager asked if Corporation Counsel could be asked to research whether or not those exhibits or maps on the wall become part of the Minutes that are prepared, and if they need to be saved, just in case someone asks what happened at a particular meeting. Vice - Chairman Heck felt that continuing with the smaller TMK maps (that have been attached to the Agenda) is fine; but just for general purposes, to get the Board honed in on an area, he did not think that had to be part of the Minutes. Ms. Self indicated that if anything is drawn or written on it to indicate what was discussed, then it would need to be saved. Mr. Wilkins indicated that he wanted to know where on the island a particular item is located, adjacent to what highway or what town. Pointing to a point on that map would give him the answer. For more information, he would go to the tax map provided by the Department. ANNOUNCEMENTS: Upcoming Meeting: Regular Water Board Meeting Date: February 22, 2005 (Tuesday) Time: 10:00 a.m. Place: Department of Water Supply, Hilo Operations Center Conference Room, 889 Leilani Street, Hilo, Hawaii 2. Ms. Self announced that Ms. Garson had asked that she inform the Board that Ms. Yvonne Izu, of the Commission on Water Resource Management, is available to attend the February Water Board Meeting. That will probably be added to the Agenda. STATEMENTS FROM THE PUBLIC - None. ADJOURNMENT ACTION: Mr. Goya moved for adjournment of the Special Water Board Meeting; seconded by Ms. Scarr and carried unanimously by voice vote. Meeting adjourned at 12:58 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, 14th and Independence Avenue, SW, Washington DC 20250 -9410. Or call (202) 720 -5964 (voice and TDD) Page 28 of 28 1- 26- 05SpecMtgMinutes.doc