HomeMy WebLinkAbout2010-03-23 Water Board MinutesMINUTES
DEPARTMENT OF WATER SUPPLY
COUNTY OF HAWAII
WATER BOARD MEETING
March 23, 2010
Department of Water Supply, Operations Center, Conference Room, Hilo
MEMBERS PRESENT: Mr. Dwayne Mukai, Chairperson
Mr. Robert Meierdiercks, Vice - Chairperson
Mr. Bryan Lindsey
Mr. Joe Reynolds
Mr. Riley Smith
Mr. Milton Pavao, Manager, Department of Water Supply
(ex- officio member)
ABSENT: Ms. Bobby Jean Leithead -Todd, Director, Planning Department (ex-
officio member)
Mr. Warren Lee, Director, Department of Public Works (ex- officio
member)
OTHERS PRESENT: Ms. Kathy Garson, Assistant Corporation Counsel
Mr. Bob Springer, National Renewable Energy Laboratory
Mr. Will Rolston, County Energy Coordinator
Ms. Nancy Cook Lauer, West Hawaii Today
Department of Water Supply Staff
Mr. Quirino Antonio, Jr., Deputy Manager
Mr. Kurt Inaba, Engineering Division Head
Mr. Daryl Ikeda, Chief of Operations
Mr. Rick Sumada, Waterworks Controller
Ms. Candace Pua, Assistant Waterworks Controller
Ms. Julie Myhre, Energy Management Analyst
Mr. Keith Okamoto, Engineering Division
Mr. Larry Beck, Engineering Division
Ms. Kanani Aton, Public Information and Education Specialist
Mr. Keith Okamoto, Engineering Division
Ms. Crestita Hudman, Customer Service Supervisor
CALL TO ORDER - Chairperson Mukai called the Meeting to order at 10:00 a.m.
STATEMENTS FROM THE PUBLIC:
Mr. Thomas Goya, former Chairperson of the Water Board, testified regarding the Water Rate
Study proposals.
(The following is Mr. Goya's verbatim testimony.)
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"Thanks for your time, Mr. Chairman. Glad to see friendly faces, as a former member of the
Board. I thoroughly understand the responsibilities of being a member and representing your
various districts and the community at large. My purpose here this morning is to ask that
additional information be provided to the Board from the Department and its consultants, so
they can thoroughly review the rate request and explore the various scenarios concerning the
uncertainty with our economic future and growth projections the next five, ten years. The
other concern I have is with using bond money. As I stated when I was a member of the
Board, it's all right to borrow money, but it needs to be repaid, so it means future rate
increases. I said the same thing as a Board member with each new employee that was hired.
So I'd like for each of you as Board members to consider that it's your fiduciary responsibility
to make sure that the rate request is reasonable and responsible. Again, I thank you for your
time, and I appreciate the effort that you make in giving full consideration to my request.
Thank you. Thank you, Milton.
Chairperson Mukai thanked Mr. Goya.
APPROVAL OF MINUTES:
Chairperson Mukai entertained a Motion to approve the Minutes of the February 23, 2010,
Water Board meeting.
MOTION: Mr. Meierdiercks moved to approve; seconded by Mr. Reynolds.
Ms. Garson interjected to ask if the Chairperson first wanted to make sure that the Board had
received copies of the written testimony provided by members of the community.
Chairperson Mukai confirmed that the Board all got their copies of the five testimonies
submitted regarding the Water Rate Study, listed on the Agenda as Item 7(G).
ACTION: Motion carried unanimously by voice vote.
APPROVAL OF SUPPLEMENTAL AGENDA AND ACTION TO MOVE AGENDA ITEMS:
None.
SOUTH HILO:
A. JOB NO. 2009 -960, PANA`EWA WELL NO. 2 REPAIR:
Bid opening was on March 11, 2010, at 2:00 p.m., and the following are the bid results.
Bidder
Bid Amount
Water Resources International, Inc.
$78,798.28
Derrick's Well Drilling & Pump Service, LLC
$97,896.93
Be lik Drilling & Pump Service, Inc
$110,022.00
Project Scope: This project generally consists of the replacement of the existing deep well
pump, column pipe, line shafts and appurtenances.
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Project Cost:
1) Low Bidder (Water Resources International, Inc.) $78,798.28
2) Construction Contingency (10 %) $ 7,879.83
Total Construction Cost: $86,678.11
Funding for this project will be from DWS's CIP budget under Deepwell Pump Replacement.
The contractor will have 360 calendar days to complete this project.
RECOMMENDATION: It is recommended that the Board award the contract for JOB
NO. 2009 -960, PANA`EWA WELL NO. 2 REPAIR, to the lowest responsible bidder, Water
Resources International, Inc., for their bid amount of $78,798.28, plus $7,879.83 in
construction contingency for a total contract amount of $86,678.11. It is further recommended
that either the Chairperson or the Vice - Chairperson be authorized to sign the contract, subject
to review as to form and legality of the contract by Corporation Counsel.
MOTION: Mr. Smith moved to approve; seconded by Mr. Meierdiercks.
The Manager noted that the well is located about three miles south of Hilo at the 205 -feet
elevation, adding that this is not very deep. The project is part of an ongoing program to
repair and replace problematic pumps. The pump serves the southeast part of Hilo, in
conjunction with the pump at Carvalho Park, which serves the other half of Hilo.
Mr. Smith compared this Item with a similar one, Item 6(A), which he said should have the
same kind of wording. Item 5(A) involves a deep well pump in Pana`ewa, and Item 6(A)
involves a submersible pump in Pahala, he noted. He asked for clarification why the
Pana`ewa project calls for 360 days yet costs only $78,000 ($78,798.28, plus 10%
contingency), while the Pahala project calls for 240 days and yet costs much more.
Mr. Young clarified that the Pana` ewa project involves a large pump (14 inches), with most of
its parts needing to be custom - manufactured. A large pump such as this takes a longer time to
manufacture, he said.
The Manager said that the Pahala well is four times deeper than the one in Pana` ewa, which
makes a big difference in terms of cost.
Mr. Smith said he wanted to make sure that DWS allows enough time to complete a project so
that it is fair to all bidders.
ACTION: Motion carried unanimously by voice vote.
KA`TT-
A. JOB NO. 2009 -959, PAHALA WELL #1 REPAIR:
Bid opening was on March 11, 2010, at 2:30 p.m., and the following are the bid results.
Bidder
Amount
Be lik Drilling and Pumping Service
$162,143.00
Derrick's Well Drilling and Pump Service
$136,223.31
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Project Scope: This project generally consists of the removal and replacement of the existing
deep well submersible motor, pump, power cable, column pipe and appurtenances.
Project Cost:
1) Low Bidder (Derrick's Well Drilling & Pump Services, LLC) $136,223.31
2) Construction Contingency (10 %) 13,622.33
Total Construction Cost: $149,845.64
Funding for this project will be from DWS's CIP Budget under Deepwell Pump Replacement.
The contractor will have 240 calendar days to complete this project.
RECOMMENDATION: It is recommended that the Board award the contract for
JOB NO. 2009 -959, PAHALA WELL #1 REPAIR, to the lowest responsible bidder,
Derrick's Well Drilling & Pump Services, LLC, for their bid amount of $136,223.31, plus
$13,622.33 in construction contingency, for a total contract amount of $149,845.64. It is
further recommended that either the Chairperson or the Vice - Chairperson be authorized to
sign the contract, subject to review as to form and legality by Corporation Counsel.
The Manager asked that this Item be deferred to the next Board meeting.
MOTION: Mr. Meierdiercks so moved; seconded by Mr. Reynolds.
The Manager said that there were some unresolved issues, adding that the Board would be
fully apprised of the issues at the next Board meeting.
Mr. Reynolds asked if there was a conflict with some other contractor.
The Manager said no, it was a procurement issue that the Department is investigating.
ACTION: Motion carried unanimously by voice vote.
MISCELLANEOUS:
A. DEPARTMENT OF WATER SUPPLY PROPOSED OPERATIONS AND CAPITAL
IMPROVEMENT BUDGETS FOR FISCAL YEAR 2011:
Fiscal Year 2011 Operating and C.I.P. Budgets for approval. A Public Hearing was held to
receive testimony on the Department's proposed budgets for FY2011 on March 23, 2010 at
9:30 a.m., before the Board meeting.
Chairperson Mukai noted that no one testified at the Public Hearing.
Mr. Smith asked if this was an action item.
Ms. Garson said this Item will be on next month's Agenda, when the Board would give its
final approval. Today's meeting is an opportunity to make any amendments or adjustments to
the Budgets, she said.
Mr. Smith said that board member Mr. Art Taniguchi, who was unable to attend today's
meeting, asked Mr. Smith to read an email of recommendations at today's meeting.
(The verbatim text ofMr. Taniguchi's email follows.)
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"I reviewed the budget and would like you to address the following:
Power Cost: Monthly income (February) $1.169 million
Expense $1.403 million
Deficit ($234,000)
I would recommend increasing the power charge since we did the public hearing already. We
need to ensure that we keep ahead of the game on this.
Investments:
The explanation is that we were transferring to the cash account to reduce fees; however, our
balances in investments have declined significantly. It's a combination of the interest rate
environment and the fact that we have not `reserved' for capital projects over the past few
years. I think we need to really look at a viable budget, not a `bare bones' one and make sure
that the assumptions are real. Since we probably will have to raise rates, we need to raise
them to sufficiently cover any additional projects we may have to do in the future."
(End of text regarding the Budget in Mr. Taniguchi 's email.)
B. REPORT OF AD HOC FINANCE COMMITTEE:
The Water Board's Ad Hoc Finance Committee Chairperson, Mr. Art Taniguchi, has been
investigating the three focus areas (DWS's policies on credit card use, cash control and vehicle
take -home) which encompass the scope of the Committee's work.
Mr. Taniguchi, who was scheduled to report on the committee's review of DWS's vehicle
take -home policy, was unable to attend today's meeting.
Mr. Reynolds asked about the current policy, and how many vehicles are involved and who
has the take -home vehicles.
The Manager said that the staff members who have take -home vehicles include himself, the
deputy manager, division heads, district heads, and other staff who are first responders such as
electricians. He estimated that there were between 11 -15 take -home vehicles in the
Department.
Mr. Reynolds asked what the concern was, and asked whether the concern was liability.
The Manager said no, it stemmed from when the County first entered the economic downturn,
and Council member Mr. Dominic Yagong voiced concerns about wastefulness involved in
taking home cars. In the Department's case, the take -home vehicles are used by first
responders or staff on standby to handle emergencies or to report to trouble spots.
Mr. Reynolds asked whether an analysis had been done on what it costs to take vehicles home
versus driving one's own car.
Ms. Garson explained that that was why the Board set up the Ad Hoc Committee to investigate
the current policy. She said that the Board was awaiting the report on the policy by
Mr. Taniguchi and his committee.
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Mr. Reynolds said it would make sense to look into the policy now when everyone is
concerned about the economy, especially if there would be a huge savings involved.
However, he expressed doubts in the event that the analysis showed very little or no savings.
The Manager said that the thing that one could not put a price on is response, such as in the
event of an earthquake or tsunami. Certain DWS staff are charged with responding to Civil
Defense.
Mr. Reynolds asked whether the take -home vehicles are equipped with radios and other
equipment that DWS needs to respond.
The Manager confirmed that the vehicles all have radios. He noted that responding in
emergencies does not occur often, but responding to customer emergencies is a major
consideration. When a customer is without water, there is a need for DWS to respond as soon
as possible. It makes a big difference, and so sometimes the cost is outweighed by the
convenience to the customer, he said.
C. ENERGY MANAGEMENT ANALYST UPDATE ON LALAMILO WINDFARM:
Ms. Myhre covered the following areas:
• Lalamilo Update
a. Progress on clean -up;
b. Communications with Department of Land and Natural Resources (DLNR) and
Public Utilities Commission (PUC) regarding the lease;
c. Report by County Energy Coordinator Will Rolston and Bob Springer of
National Renewable Energy Laboratory (NREL), on project development and
partnerships regarding Lalamilo site;
d. Discussion on possible renewal of the lease.
Mr. Beck displayed a map of the Lalamilo windfarm site on the screen.
Ms. Myhre noted that the windfarm was built in 1984, but is no longer in use. DWS has a
power purchase agreement with HELCO, and DWS's lease with DLNR expires in December
2010. DWS asked HELCO in writing, via two letters, to clean up the site by December 1,
2010. DWS received a response from HELCO dated March 19, 2010. The gist of the letter is,
based on the estimates of what it would take to clean up the site, "adequate funds are allocated
and enough time is available to complete the restoration work by DWS's desired date of
December 1, 2010." Ms. Myhre said yesterday she asked Mr. Willard Dill, the person at the
site, how the cleanup was going. The Environmental Assessment visit was completed and a
report is being written, she said. As expected, the inspector did not find any contamination.
The contractors are coming on site this Thursday to give bids on taking down the towers and
cleaning up the site, she said. The contract is expected to be awarded in early April, and the
cleanup is expected to be completed in early November, according to a first -hand account
from Mr. Dill.
Mr. Reynolds asked what kind of coordination there was between the cleanup group and
DLNR, as to exactly what restoring the site means. He also asked about the possibility of oil
seepage into the ground.
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Ms. Myhre said regarding the oil, there was one site where there had been a wash -down
structure, and HELCO had that site cleaned up at the time a leak was discovered. Although
each one of the wind generators contains 1 '/2 gallons of oil, DWS is not anticipating any
contamination from them. DWS will find out for sure when the Phase 1 Environmental Site
Assessment comes out. Meanwhile, HELCO is required to clean up the site to federal and
state standards. Turning to item b), regarding communications with DLNR and the PUC, Ms.
Myhre said she and Mr. Rolston had met with Mr. Kevin Moore, DLNR's Hawaii Island
manager, on March 11. The three discussed their concerns with the site. Ms. Myhre told Mr.
Moore about HELCO's requirement to take down all but two of the towers and keep the shop
and the office building on the site. She noted that DLNR does not want to assume any liability
of infrastructure left on a site once the lease expires. Ms. Myhre said that she and Mr. Rolston
discussed with Mr. Moore the possibility of extending the existing lease or establishing a new
lease of the site. Ms. Myhre, Mr. Rolston and Mr. Springer are going to continue the
discussions with DLNR this afternoon that will include the status of the site clean -up. Turning
to communications with the PUC, Ms. Myhre said that she and Mr. Rolston had a conversation
with Ms. Ka`iulani Shinsato, a PUC attorney, on March 8. Ms. Myhre and Mr. Rolston
explored how the PUC would look at a project on the Lalamilo site that would be used to
power part of the wells on the site, and how the PUC would look at the project. What Ms.
Myhre and Rolston learned is that the PUC does not regulate DWS, and the PUC would only
get involved if the project requires a power purchase agreement whereby power is being sold
to HELCO. The PUC would then review the project for the power quality, to ensure that the
power quality meets HELCO standards. PUC would also be involved in approving any Power
Purchase Agreement. DWS, according to the Department's contract with HELCO, has
ownership of the power poles and power lines at the site. If DWS generates electricity on site,
and runs the power down the power lines owned by DWS to the Department's wells, the PUC
would not be involved, Ms. Shinsato told Ms. Myhre and Mr. Rolston. However, once power
gets sent to the HELCO grid, then the PUC gets involved.
Mr. Meierdiercks asked how much power DWS can use in the Lalamilo well area.
Ms. Myhre said it would be 10,000 megawatt -hours a year.
Mr. Rolston put it at 2.4 megawatts peak.
Mr. Smith noted that Mr. Jose Dizon of HELCO had sent him, for advance review, a copy of
the March 19, 2010 letter that was sent to the Manager. Mr. Smith asked whether the
consultant that HELCO hired for the Phase One Environmental Site Assessment (ESA) has
professional liability insurance, and suggested that DWS get a copy of the professional
liability insurance policy, in case the consultant fouls up. The letter into which Mr. Dizon
copied Mr. Smith says that a preliminary analysis of the site was done on March 15, 2010.
The actual results are not yet available. However, the cursory review on March 15 did not find
anything significant. The Phase One ESA may show some significant issues to mitigate, but
HELCO President Mr. Jay Ignacio's letter to the Manager says that HELCO will take
responsibility to clean the site up by December 1, 2010. Regarding the meeting with DLNR's
Mr. Moore, Mr. Smith said that Ms. Myhre should get DLNR to put into writing that DLNR
has no problem with leaving two of the towers and the building at the windfarm site.
Regarding the HELCO grid interconnect, Mr. Smith said that there is no way that DWS can
design and construct an alternative energy system that could generate enough power to
completely energize all of the equipment that DWS owns at the site — replacing HELCO. He
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said that DWS will have to have a grid interconnect with HELCO, and the PUC will be
involved.
Mr. Rolston agreed that there will be an interconnect agreement with HELCO, but the PUC
does not get involved with the interconnect agreement, which would be between HELCO and
DWS. If DWS were sending power back to the grid to be consumed by consumers, the PUC
would review and approve the Power Purchase Agreement.
Mr. Smith said that DWS should find out whether DWS can transfer higher that the 50-
kilowatt limit allowed under the state's net metering law.
Ms. Myhre said that DWS is not at that point yet.
Mr. Smith said that DWS should get an answer in writing as to whether DWS can transfer
higher that the 50- kilowatt limit allowed under the state's net metering law.
Mr. Rolston promised that he and Ms. Myhre would get an answer in writing and convey it to
the Board.
At this point Ms. Myhre introduced Mr. Springer of NREL, who has been working with DWS
since November 2009 on the Hawaii Clean Energy Initiative.
Mr. Springer explained that NREL is the only Department of Energy laboratory whose
primary focus is renewable energy research. In recent years, there has been heightened
interest in deployment of renewable energy resources. Mr. Springer's division is technology -
neutral, i.e., it does not have a primary focus on any one type of renewable energy source (sun,
wind, biomass, etc.) and instead takes an integrated approach. The Project Development and
Finance Group that Mr. Springer belongs to is focused on project development and getting a
project off the ground, along with the options for financing projects. What NREL has done in
cooperation with DWS is a preliminary feasibility study of matching the resources available at
the Lalamilo site with the pumping demand there. NREL took a model of that, and studied
how much wind power could be put on site to match with the pumping demand, without
overburdening the system with renewables. Instead the aim is to have a good, reliable and
manageable system. NREL has done a first -round engineering analysis. Through the Hawaii
Clean Energy Initiative, the U.S. Department of Energy is heavily involved in the State of
Hawaii, he said. Mr. Springer said that Hawaii is cutting edge on renewable energy. NREL
will provide the Board with more concrete findings, through Ms. Myhre.
Mr. Rolston said that at the end of the day, there will be significant energy savings and
efficiencies in DWS's water systems, which could be translated into reductions in water rates.
Mr. Smith said that HEI recently testified to the Legislature about saturation on the different
islands' grids, and that alternative energy systems were overtaxing the grid. Due to their
unstable nature (with wind variations and cloud cover, etc.), alternative energy systems affect
HEI's ability to allow more alternative energy sources to come on line to connect to the grid,
thus forestalling Hawai`i's independence from fossil fuels. He suggested that NREL testify to
the PUC and the Legislature, and help find solutions to the saturation of the grid. Changing
the subject, Mr. Smith asked Mr. Springer's assessment of how much power could be
generated at a site as small as Lalamilo. He asked how many acres the site had.
Ms. Myhre said it was 78 acres.
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Water Board Minutes 3 -23 -10 js
Mr. Smith asked how many megawatts DWS could generate at a 78 -acre site.
Mr. Rolston said that a few years ago, General Electric and HEI determined that the Lalamilo
site could generate 22 megawatts of wind energy.
Mr. Smith said that when he was employed by Parker Ranch, a joint venture was being
considered with Shell Wind Energy, who wanted a 4,000 -acre site to generate 30 megawatts
on the other side of the rock wall adjacent to the Lalamilo wells. Due to turbulence created by
the wind turbines, Shell had three rows of turbines, with six or seven turbines per row, spaced
about 2,000 feet apart from each other. He noted the windfarm in Hawi, near Upolu Airport,
which has 16 wind turbines spaced 1,000 feet apart from each other. He doubted that on a 78-
acre site that any more that one megawatt or a half - megawatt could be generated. He thought
that on such a small site, DWS might be limited by the turbulence created by one wind turbine
on the one closest to it.
Mr. Springer touched on HEI's testimony regarding saturation of the grid and questions of
reliability with alternative energy systems. He said that the most recent activity on that front
was a suggestion to form a working group, in which NREL would participate, to examine from
an engineering basis how a balance could be found to deploy more alternative energy systems,
without affecting reliability. How Hawaii handles this issue will be looked to by states on the
Mainland, he said. Mr. Springer said he had met with Mr. Dizon at HELCO to discuss these
issues, and HELCO is acutely aware of the issues. Mr. Springer may be at the PUC on May 6
to discuss some of these issues. Regarding the Lalamilo site, he agreed that Shell was right
not to stack the wind turbines too close to each other. He said he was familiar with the study
on the Lalamilo site that Mr. Rolston referred to, and confirmed that the number that the study
cited, regarding the ability to generate 22 megawatts of wind energy at the site, was correct.
What NREL is looking at is using a different profile of wind turbine than the large turbines
that can generate upwards of 2.4 megawatts each. Instead, NREL is considering smaller wind
turbines along the lines of 400 kilowatts, known as "community -scale turbines," which are not
as tall, not as large and which do not create as much of a disruption. On the Lalamilo site, the
idea was to have four to six of these units as a starting point. He said these would seem to be
very reasonable, and would match up with the demand that DWS has at the site, along with the
cost and the type of location. That is where NREL has gotten to in terms of laying out a site
plan. NREL has several wind groups that have been involved in deployment for decades, who
could provide the technical expertise to ensure that DWS goes in the right direction.
Mr. Smith suggested that DWS try to get a cooperative agreement with rancher Freddy Rice,
whose 1,000 acres of leased state land is adjacent to the Lalamilo wells, where the turbines
could be in place while the livestock grazes below. He also suggested going to DLNR and
asking for more land, rather than take the same 78 -acre site it has now.
Mr. Rolston noted that Act 22 involves the aggregation of agricultural lands to do just what
Mr. Smith is suggesting.
Chairperson Mukai asked what amount of energy is needed to run the Lalamilo wells.
Mr. Rolston said the idea is usually to design to hit peak, but the design that NREL is talking
about is 50 percent of peak to start with. Peak in this case is 2.4 megawatts.
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Mr. Springer confirmed that NREL was looking at 50 percent of annual usage.
Mr. Rolston said that if there was a good grid interconnection, NREL is estimating about 2
megawatts of wind would provide 50 percent of the annual kilowatt -hours for the Lalamilo
facility.
Mr. Springer said this would translate into six to eight towers — a very small footprint.
Chairperson Mukai thanked Mr. Springer and Mr. Rolston for speaking with the Board. He
then asked Ms. Myhre to put the Department's green initiatives on the Agenda every month
from now on.
Ms. Myhre asked if the Chairperson wanted a written report, or a standing Agenda item.
Chairperson Mukai said he preferred a standing Agenda item.
Mr. Smith said there should also be a written fact sheet as well, so that the Board has the facts
at its fingertips.
Ms. Myhre confirmed that she would do a fact sheet as well.
D. MONTHLY PROGRESS REPORT:
No discussion.
E. REVIEW OF MONTHLY FINANCIAL STATEMENTS:
Chairperson Mukai asked about vacant positions listed on the Financial Statement; he was not
clear whether the positions listed were actually vacant or funded.
Mr. Sumada confirmed that currently there are only a couple of positions that are vacant: the
Waimea Treatment Plant Electrician- Mechanic and Kona Groundskeeper positions.
The Manager noted there were also vacant positions that DWS has completely deleted.
Regarding upcoming furloughs beginning July 1, Mr. Smith confirmed that DWS was going
along with the bargaining units in furloughing employees.
The Manager said that DWS division heads had met twice so far to work on a furlough plan, at
the request of the County Department of Human Resources. Human Resources wanted to
know if DWS was making any exceptions to the furloughs. The Mayor intends to have all
County facilities closed at the same time, the Manager said. DWS does have exceptions which
it is sending to Human Resources. The exceptions include staff at DWS's Microlab,
inspectors, people who do standby services, staff at the Waimea Treatment Plant and DWS's
information technology (I.T.) staff. While DWS is concurring with the County's general
furlough plan, there are a number of exceptions that DWS must make in order to continue
serving the public, the Manager said.
Mr. Smith said he envisaged work piling up at DWS as furloughs are introduced, in the same
way that work is already piling up in the state courts and Bureau of Conveyances, etc. Mr.
Smith said he thought DWS was handling things correctly, and needed to ensure that DWS
provides the bare minimum of service, while at the same time showing the impact of
decreased levels of service and deferred maintenance due to the furloughs.
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The Manager said the plan on furlough days is to provide emergency services as always, while
not providing everyday services.
Chairperson Mukai asked whether DWS's I.T. staff could see how the County's Data Systems
people are handling the furloughs.
The Manager explained that DWS's I.T. people have to come in to do periodic updates and
maintenance, which cannot be done while the staff is using the computer system. The I.T.
people do these tasks during off - hours, so during the furlough days they may have to come in
and do maintenance. He noted that DWS's I.T. operations are completely separate from the
County's Data Systems — it is a completely separate system.
Mr. Smith suggested that the Manager add something to his Manager's Report every month
that shows the impact that furloughs have on DWS.
Chairperson Mukai agreed that this would be a good thing to do, once the furloughs have
started.
Mr. Smith suggested that what the Manager could do now is to document what steps DWS is
implementing ahead of the furloughs, and suggested that Ms. Garson review the line item that
will be included in his Manager's Report.
The Manager noted that the Board should consider the fact that all of DWS's existing
construction contracts pose a major area of concern vis a vis the furloughs. DWS can write
provisions into the contract specifications after July 1, stipulating that crews only work four
days a week. In current contracts, DWS cannot stop the contractors from working, so
inspectors will need to be rotated to the various projects to make sure the projects are being
handled correctly. Currently, DWS assigns one inspector per project, but with the furloughs,
DWS may have to rotate or change the method of providing inspections.
Mr. Smith suggested that inspectors be designated as essential workers, exempt from the
furloughs. He cited the project in Ahualoa, where a reservoir is under construction. If DWS
cannot inspect the work due to the furloughs, some 20 workers up there will be unable to work
as well, he said.
The Manager said that the contractor would not stand for that.
Chairperson Mukai agreed that inspectors should be deemed essential.
The Manager said in the absence of details on the furlough plan, he was not sure whether
essential workers would be a component of the furlough plan. He said he doubted it, but DWS
needs to check.
Ms. Garson said DWS is supposed to come up with essential workers, and noted that the
furlough plan was still a work in progress. She said the Department of Public Works is
undoubtedly facing the same kinds of issues that DWS faces.
Mr. Smith noted that during the strike in 1994 when Hawaii Government Employees
Association (HGEA) employees, the County was doing a federally- funded project involving
traffic improvements at the corner of Kekdanao`a and Manono Streets. The project had a
fixed deadline, so Corporation Counsel approved hiring outside consultants to do the
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inspections so that the federally- funded jobs could continue. Mr. Smith said it was
unacceptable that having one inspector on furlough could sideline 20 or 30 construction
workers. Projects like Ahualoa are funded by stimulus money, which is helping the local
economy. DWS must look at alternatives, and the contractor on a project may have to bite the
bullet and pay for the inspectors to come in on overtime to do the inspections, he said.
The Manager said he did not think the furloughs were conducive to spurring an economic
recovery.
Mr. Smith said that if it does not work to get the inspectors exempted from furloughs as
essential workers, DWS should give the contractors the option to pay for the additional
inspection costs.
Mr. Ikeda said that as he understood it, the inspectors can go to work on a furlough Friday, but
they have to take another furlough day off, they cannot just work the full 40 -hour week.
The Manager said that was the reason he was talking about rotating the inspectors on different
days so that all of DWS's projects can be covered. The alternative is to work with the
contractor to get him to do things on a furlough day that do not require inspection.
Mr. Inaba confirmed what Mr. Ikeda said: DWS workers will only get paid for 32 hours a
week during furloughs, i.e., they will be furloughed two days a month.
Mr. Lindsey, noting the Department's semi - autonomous status, asked what bearing the DWS
employee furloughs would have on the County's budget.
Ms. Garson said the furloughs were being imposed because DWS employees belong to the
same bargaining units as the County employees.
Mr. Lindsey confirmed that it was a union issue, and not a matter of helping offset the
County's financial deficits.
The Manager agreed that DWS's actions do not factor in to the County's financial issues; what
is involved is that all of DWS's belong to the same bargaining units as County workers.
F. POWER COST CHARGE:
A Public Hearing was held to receive testimony on the Power Cost Adjustment on March 23,
2010 at 9:45 a.m., before the Board meeting.
The Department recommended increasing the Power Cost Charge from $1.68 to $1.77, based
on February 2010 calculations of the Power Cost Charge.
MOTION: Mr. Meierdiercks moved to increase the Power Cost Charge from $1.68 to $1.77,
based on February 2010 calculations of the Power Cost Charge; seconded by Mr. Smith.
Mr. Meierdiercks said that in light of power cost increases across the board, the Board might
again hold a Public Hearing on the Power Cost Charge two months from now (in May). He
said that the Board ought to make a determination now to hold a Public Hearing two months
from now, whether or not the Board will actually increase the Power Cost Charge. He asked if
the Item could be put on the next Agenda.
Page 12 of 30 Water Board Minutes 3 -23 -10 js
The Manager said the main issue was timing.
Mr. Meierdiercks said the Board wants to keep on top of rising power costs, and the Board is
still catching up now. Therefore, he suggested that the Board authorizes DWS to have that
Public Hearing, whether the power cost is up or down.
The Manager said it would be very helpful if the Board gave DWS the authority to publish the
Notice of Public Hearing, based on the Department's determination of the severity of the
increase or decrease. DWS would just go ahead and plan to hold the Public Hearing, and
bring it back to the Board for final approval. The Board has the final say, he noted.
Chaiperson Mukai asked what the time frame was for cancelling a Public Hearing, in the event
that a Notice of Public Hearing is published but in the meantime the Board determines that it
does not need to hold a Public Hearing.
Mr. Meierdiercks said the Board could have a Public Hearing, but the Board could decide not
to raise or lower the Power Cost Charge, but by having the Notice of Public Hearing in place,
the Board could be ahead of the curve. The Board is still behind the curve as it stands now,
and the Board wants to be up as close as it can, he said.
The Manager noted that there was one month when the Board could not hold a Public Hearing.
Mr. Meierdiercks said that was correct, so if the Board gives DWS authorization to publish a
Notice of Public Hearing, the Board still has the final vote on whether to change the Power
Cost Charge. This would mean that the Board would give DWS the authority, rather than
having the Board have to make that determination all of the time.
The Manager said this would give DWS a lot more flexibility.
Mr. Smith said he thought the Board had already given DWS the authority to go ahead, as long
as there was a five cent - threshhold up or down.
The Manager said no, although it was discussed, there was never a Motion to give DWS the
authority. He assured the Board that if the Board gives DWS the authority, DWS will make
sure that the Public Hearing is warranted.
Chairperson Mukai said that the discussion had strayed from the original Motion.
Mr. Meierdiercks acknowledged this, but said that the Board was just trying to take care of the
issue of changing rates going forward, because it is affecting DWS now and will be affecting
DWS in the future. The Board wants to take care of things ahead of time. He suggested
dealing with the original Motion, and deal with the authority issue in a second Motion.
Chairperson Smith said he liked it that way; he preferred to vote on the original Motion first,
and then bring up another Motion. It would be cleaner that way, he added.
Ms. Garson suggested that for the April meeting, that a Resolution could be drafted to delegate
authority to DWS on publishing the Notice of Public Hearing.
Chairperson said that was a good suggestion.
Page 13 of 30 Water Board Minutes 3 -23 -10 js
Mr. Meierdiercks said okay, by giving the authorization to DWS, the Board would not have to
do everything, and DWS would be allowed to do what it is supposed to do.
ACTION: Motion to increase the Power Cost Charge from $1.68 to $1.77 carried
unanimously, by voice vote.
G. WATER RATE STUDY:
Consultant RW Beck provided a Power Point presentation on the general and agriculture use
water rates update for Board approval. Approved water rates will be presented at Public
Hearings in Hilo on Tuesday, May 4, 2010, at 6:00 p.m. at the Aupuni Center, and in Kona on
Wednesday, May 5, 2010, at 6:00 p.m. at King Kamehameha's Kona Beach Hotel.
The Manager offered to answer any questions the Board had regarding the information in the
Power Point presentation.
Mr. Reynolds noted an email from Mr. Alan Gottlieb of the Hawaii Cattlemen's Council, Inc.
with the subject line: "URGENT!! Testimony in Opposition to Agenda Item 7.G (Deletion of
AG Subsidy Rate)." Mr. Reynolds said he did not see wording in the Agenda Item itself
regarding any subsidy; it did not match up.
Mr. Meierdiercks explained that the subsidy rate is for the Agricultural Use Rate; what DWS
has been doing is having agricultural users pay a lower rate than DWS's regular customers.
The agricultural users have not been meeting their cost of the supply of water, and what this
proposal from RW Beck is doing is to bring the agricultural users, within a five -year span, up
to the same rate as all of DWS's other customers, he said.
The Board had earlier received copies of five testimonies from people in opposition to raising
the agricultural use rate (also known as the "ag rate').
Mr. Reynolds noted that all five testimonies called for the ag rates to be kept as -is.
Mr. Smith said he would like to make a Motion, noting that the Agenda Item directs the Board
to "General use and agricultural use water rates update from RW Beck for approval." Mr.
Smith said that in discussions with Ms. Garson, what the Department is looking for is the
Board's comments on what RW Beck proposed, which was included in the Power Point
presentation, and also an attachment, a five -page Water Board, County of Hawaii Notice of
Public Hearings, which the Secretary had sent to the Board. That Notice of Public Hearings
was the intent of what would go out to the May 4 (and May 5) Public Hearings on the water
rates.
MOTION: Mr. Smith moved to amend this Notice of Public Hearing information, and amend
the proposed Agricultural Use Rates to maintain them at the subsidized rate of 85 cents per
1,000 gallons, irrespective of usage, as it exists within the current rate structure that the
Department has. Mr. Lindsey seconded.
Mr. Smith stated that he is employed by Lanihau Properties. He said that he consulted with
Ms. Garson. Mr. Smith said his employer also owns Palani Ranch. He said that he wanted to
disclose that there might be the perception of a conflict of interest. However, Mr. Smith said
he consulted Ms. Garson and Chairperson Mukai about this. The feeling was that because
Mr. Smith does not have a controlling or principal interest in Palani Ranch, that there is no
Page 14 of 30 Water Board Minutes 3 -23 -10 js
conflict on Mr. Smith's ability to discuss this Item or participate in any vote, Mr. Smith said.
He noted that newspaper articles appeared in Saturday's edition of West Hawaii Today and
the Hawaii Tribune - Herald, which quoted Mr. Smith as saying at the December 2009 Board
meeting that agricultural users should pay the same rates as other Water Supply customers.
Since the articles appeared, Mr. Smith received a lot of feedback, including phone calls and
emails, including many from the same people who emailed the Manager earlier this week.
The feedback also came from many of the farmers in Lalamilo, including former Water Board
member Raymond Kawamata, Earl Yamamoto, Roger Hirako and Leslie Hall. He noted that
Lalamilo is on the State of Hawaii ag water system, and many of the Lalamilo farmers also
have farms located in other areas of Waimea that rely on Department of Agriculture water.
The people who gave feedback stressed to Mr. Smith that the ranching industry and the
farming business are highly energy- dependent; they need to irrigate their crops and depend on
electrical power pumping for their water. Everything that the farmers do is energy- dependent,
and like the ranching operations, additional cost burdens in these tough economic times will
put them one step closer to going out of business. Mr. Smith said that his constituents in the
South Kohala district are saying that having them pay the full burden of the cost of water that
they use, although it would be intuitively fair, would put an undue burden on them. Doing so
would put the State of Hawaii further away from food sustainability and the state's ability to
provide locally -grown crops and locally- raised beef to the customers of Hawaii, Mr. Smith
said. The bottom line is that Mr. Smith has reconsidered the statements he made at the Board
meeting in December when RW Beck's representative was present, and now he is in support
of maintaining the ag rates the way they are.
The Manager said that he would like to speak against this. He believed that the rates should be
the same, that is, the rates should be as proposed by RW Beck. He added that the ag rates
should eventually be phased out. The Manager said that he recognizes the importance of
agriculture in the State of Hawaii, but he did not think that the Department of Water Supply
should be subsidizing the agricultural users. If everybody believes that the agricultural
industry is so important, why does HELCO not subsidize the agricultural industry, or for that
matter the gas stations or people who sell fuel to the agricultural users, he asked. He asked
why the Department of Agriculture does not subsidize the farmers on their water use, and pay
DWS the difference in water costs? The Department's customer base does not comprise the
entire island, and so why should DWS's customers subsidize one particular industry, he
wondered. No matter how important it is, agriculture is just one segment of the total economy.
Taking the logic further, the Manager asked why DWS is not subsidizing the gas stations or
supermarkets — they are important, too. He did not believe it was fair to 97 percent of DWS's
customers to subsidize three percent of DWS's customers, i.e., the agricultural users.
Chairperson Mukai noted that it would be DWS's consumers, rather that the Department of
Water Supply, who are doing the subsidizing.
The Manager agreed, and asked why DWS's consumers should subsidize agriculture. He
believed that somebody beyond DWS and its consumers should be subsidizing the farmers.
Mr. Reynolds clarified that the current ag rate is 85 cents per 1,000 gallons, and that the
proposed ag rate for this coming fiscal year is 92 cents per 1,000 gallons.
The Manager said that the proposal includes eventually phasing out the ag subsidy.
Page 15 of 30 Water Board Minutes 3 -23 -10 js
Mr. Reynolds said that he agreed that a line had to be drawn somewhere. He recalled going
through deliberations regarding real property tax rates while he was a Council member. At
that time, a lot of non -ag people were upset about the inequity between the property tax rate
for agricultural land versus residential and other property classes. He believed that the
Manager was viewing the current issue as a necessary increase, and not as something that will
create a profit.
The Manager reiterated that the Department of Agriculture should subsidize the farmers. He
noted that ag users pay something like 38 cents a gallon or thereabouts for water from
Department of Agriculture irrigation systems in Waimea and elsewhere in the state. If the
Department of Agriculture is so concerned with agriculture, they should step up to the plate
and subsidize farmers on County water systems, paying the difference between DWS's rates
and the rates that the Department of Agriculture charges the farmers in Waimea. He said that
the Department of Agriculture is not doing anything to help the farmers, except the farmers
near their Department of Agriculture water systems. If anyone should be talked to, it is the
Department of Agriculture, not DWS. DWS is not the proper agency to be subsidizing the
farmers, he said.
Mr. Smith said he agreed 100 percent with the Manager. He noted how the ditch that provided
water to the state's system at Lalamilo got blocked after the 2006 earthquake. He noted that
DWS employees like Norris Gonsalves and others pitched in to fix the ditch. Sandra
Kunimoto of the Department of Agriculture could have turned on the well at the 60- million
gallon reservoir at the end of White Road (in Waimea), but she said she did not have the
money in her budget to pump the water. She dropped the ball, and she does not care about the
farmers, Mr. Smith said. He suggested deferring the ag rate increase for now, possibly
working with Department of Agriculture to get them to protect the farmers, and then DWS
would introduce an rate increase in a couple of years. Mr. Smith said in these tough economic
times, he wanted to acknowledge the challenges that the farmers are going through. He cited
hard - working Waimea strawberry farmer Louis Rincon, whose five children help out on the
farm before and after going to school at Hawaii Preparatory Academy.
Chairperson Mukai said that he agreed that he believed everyone should be on an even keel,
and nobody should be subsidizing. However, in these tough economic times, he was inclined
to agree with Mr. Smith, and was in favor of postponing an ag rate increase for a year or two,
until the financial situation improves, or for spreading out the phase -in from five years to
seven years.
The Manager said no time is a good time for a rate increase. He believed there will always be
a reason not to raise rates, but the Board has to bite the bullet. DWS's customers should not
be subsidizing people. He wondered why DWS did not subsidize the fishing industry, giving
fishermen a break on the water they use to clean their boats. The Manager said that maybe the
farmers will be spurred to get the Department of Agriculture to do something to help them,
whereas right now the Department of Agriculture is not doing anything. In the meantime,
DWS's customers are paying the cost of service to the farmers, and it is not fair.
Chairperson Mukai asked what the other counties are doing on ag rates.
Mr. Sumada noted that there is a comparison of water bills for ag users in the other counties on
page 10 of the RW Beck Power Point presentation.
Page 16 of 30 Water Board Minutes 3 -23 -10 js
Mr. Smith asked Ms. Garson whether whatever the Board decides today is feedback that goes
back to RW Beck, who then prepare their presentation that would be used at the Public
Hearings in May.
Ms. Garson said she did not think that RW Beck would necessarily do a presentation at the
Public Hearings.
Mr. Smith asked if the Power Point presentation in hand was it.
Ms. Garson said that her impression had been that the Water Board was just going to decide
what the rates were, but then, the Board would not be able to decide on the rates until after the
Public Hearings. The progression was that the Board goes to Public Hearings, gets input from
the public, and then the Water Board has a discussion with RW Beck taking into account the
public input. Then the Water Board makes a decision on the rates, she said. She said that if,
right now the Board is talking about a change to the Water Rate Study, or leaving ag rates the
way they are, it is contrary to the direction that the Board gave to RW Beck back in December.
Ms. Garson said she believed that changes the whole Water Rate Study; that means that RW
Beck will have to go back and redo the study. If that is the direction to RW Beck, then that is
the direction, Ms. Garson said. If the Board wants different alternatives for RW Beck to come
up with, despite their having presented the current proposal based on the Board's previous
direction, then RW Beck will need to redo the study or else the numbers will be off. The
Board cannot just change just the part involving ag rates, without changing something
somewhere else in the study, she said.
Mr. Meierdiercks agreed that the numbers have to balance.
Ms. Garson said that she believed the Motion was to amend the ag rates in the study, to keep
them at 85 cents. However, to do so affects the whole study, so maybe the Motion is more of
a direction to give some parameters to RW Beck to come back with various alternatives.
Chairperson Mukai thanked Ms. Garson for the clarification. He said that all that the Board is
doing is talking about the guidelines that the Board wants to give to RW Beck. Last month,
the Board told RW Beck to do one projection of phasing in the ag rate to bring it up to snuff
with the residential rate.
The Manager said he also believed that the wording in the Item, "approved," meant that the
Board would be okay with the proposal, because the Board needs to approve whatever goes
out to the Public Hearing.
Mr. Meierdiercks clarified that the Board is not doing a final approval of the proposal today;
the approval is just for purposes of the Public Hearing, and then after that, the Board can
amend, change, etc., and give the changes back to RW Beck, perhaps taking out the ag rate
increases and adding it to everybody else's increases to balance it out. He noted that he is in
the construction industry, which currently is doing very poorly, as are other industries. And
yet, the people doing construction and other industries are having to deal with rate increases.
He noted that a Council member recently contacted him regarding the County water spigots,
which are subsidized and whose cost is taken care of by the County.
Page 17 of 30 Water Board Minutes 3 -23 -10 js
The Manager said the County water spigots are not being subsidized by DWS; the County is
subsidizing the spigots for the general welfare of the people. DWS does not collect real
property taxes, unlike the County, and does not give out free water.
Chairperson Mukai said that all the Board is doing is talking about parameters which
RW Beck is going to use to do the water rate study.
Mr. Meierdiercks said RW Beck has already done the water rate study.
Ms. Garson said now the Board is talking about parameters; RW Beck has already done the
study, going with the previous direction that the Board gave RW Beck to come up with rates.
However, what Mr. Smith is saying is that he wants to go back and ask RW Beck to have
another look at the rates.
Chairperson Mukai wondered how difficult it would be for RW Beck to do another option
without an ag increase. After all, the data is all in their computer, he added.
Mr. Sumada said it was hard to say whether it would be difficult.
Chairperson Mukai agreed it would be hard to say, but as a layperson, it did not seem like it
would be that cumbersome for RW Beck to do. The Board wants the public to know how their
rates would be affected if there was an ag rate increase, or if there were not an ag rate increase,
he said. He added that it would be very critical to have that information in the Public
Hearings.
Mr. Smith said that one option would be that, assuming that this is approved, that Mr. Sumada
asks RW Beck to do another iteration, and move the Public Hearings scheduled for May 4 and
May 5 to the end of May or thereabouts. He sketched out a scenario where in the next two -
week period, RW Beck would modify their proposal and present it to the Water Board at the
April meeting. If the Water Board concurs at that time, the Public Hearings could be set for
the end of May. The Board will have had an opportunity to look at any revisions to the rates,
and then the Board can have the Public Hearings. Then, at the June Water Board meeting, if
the Board is all in agreement, the rates would be approved and then Mr. Sumada can
implement the rates as of July 1, 2010, Mr. Smith said.
The Manager said that the other scenario is because the study has already been done and since
the Public Hearings are already scheduled for May 4 and 5, the Board has the ultimate say.
The Board would go to the Public Hearings and listen to the testimony, and if at that point in
time the Board decides that something needs to be drastically changed, then RW Beck can be
notified of the changes.
Ms. Garson said that just to be clear, the only thing about that scenario is that the timetable
will be off, because the Board will lose all of April, with the hearings in May, when the Board
gets input from the public. After the Public Hearings, the Board would come back and send
RW Beck out again to redo the study. That was her only concern, Ms. Garson said.
The Manager said that no, at the Public Hearings, the Board listens to the testimony, and if the
testimony shows that changes to the rates are needed, then at that point, RW Beck can do the
rates and still be in time for the effective date on July 1.
Mr. Smith said the Board needs to vote on the amended rates.
Page 18 of 30 Water Board Minutes 3 -23 -10 js
The Manager said that the Board has to vote on what feedback the Board gets from the public
after the Public Hearings. That is the Board's role — to take into consideration all of the
testimony and make adjustments which the Board feels are in the best interests of the public.
Mr. Meierdiercks said that then, even once the Board makes those changes, the Board will still
have to go back to Public Hearings because it will be a change.
The Manager asked Ms. Garson if the Board would have to go back out to Public Hearings if
changes were made.
Ms. Garson said it depended on how drastic the amendments are.
Mr. Reynolds said he did not understand why this case is so different. His understanding was
that the Board goes to Public Hearings first, and the vote comes second. It would not be the
other way around, otherwise, there would be no sense having a Public Hearing if the Board
has already decided.
The Manager said he believed it was as he said earlier; the Board would be approving this to
go to Public Hearing, not approving the rates.
Mr. Reynolds said that all the Board has to do is approve the Public Hearing, and then give the
public the data.
The Manager said yes, the Board is not approving the final rates; the Board is just approving
the information packet from RW Beck.
Mr. Reynolds wondered why the Board was spending so much time on this, if the Board is not
approving anything.
Mr. Meierdiercks noted that the Motion is to freeze the ag rates.
Mr. Reynolds said okay, call for the question and vote on that.
Chairperson Mukai said okay, call for the question, and asked if there were any objections.
Mr. Smith said the point Ms. Garson made is that if the Board changes something on the
revenue side, if RW Beck is responsible for providing the Board with a balanced rate structure,
then something else has to change. If the Board takes away some revenue, either the Board
has to decrease some costs or increase revenue from another source. He said if the Board goes
to Public Hearing and the Board amends the proposal at that point, the study will be
unbalanced.
The Deputy Manager said that the Board did direct RW Beck to come up with these rates. He
thought that to call RW Beck back to redo the study would cost DWS additional monies. It
would be a change order to RW Beck, and would mean additional time. The Deputy Manager
noted that DWS's Fiscal Year 2011 Budget is based on the new rates that RW Beck came up
with, and it would pose a problem for Mr. Sumada, who would need to come up with another
balanced Budget. He thought that if there are delays, that the Department will not be able to
have new rates in place effective July 1. It might not be until August or September, he added.
Page 19 of 30 Water Board Minutes 3 -23 -10 js
Chairperson Mukai reiterated that if it is not too cumbersome or cost - prohibitive, RW Beck
can do the numbers where there is no ag rate increase, along with what other numbers it would
affect. In any case, the net result to the Department will be the same because revenues will be
protected no matter what. It is just a matter of who pays what, he said. As a consumer going
to the Public Hearings, he would want to know how much he is subsidizing the agricultural
people if the ag rates do not increase, and what the additional cost to the consumer would be.
That information would be critical in the decision - making process, the Chairperson said.
The Manager said the Chairperson was absolutely correct; the Budget will be the Budget no
matter what. The Chairperson was saying that it depends on the degree of the subsidy, i.e.,
how much it is going to cost the regular customer to give the ag folks the subsidy, he said.
The Manager said the Board should look not so much at the difference in cost; they should
look at the principle instead. The question is whether DWS and its customers are the people
who should provide the subsidy. In reality, the ag subsidy is very small in relation to the
Department's total Budget. It is more the principle than the money, he said.
Chairperson Mukai said that will come to the Public Hearing.
The Manager noted that at the Public Hearing, about 90 percent of the people there will be
farmers.
Chairperson Mukai said that is the process; it will all come up at the Public Hearing.
Mr. Meierdiercks called a point of order, saying that Mr. Reynolds had called for the question.
Chairperson Mukai said he understood, but there was still discussion.
Mr. Reynolds said that there can be no discussion after a call for the question.
Ms. Garson said okay, she needed to make sure she had the question correct. The Motion is to
keep the ag rates at 85 cents, at the existing rate, which would require RW Beck to redo the
study, she said.
Chairperson Mukai confirmed this. Regarding parliamentary procedure, he asked if a question
is called, before the Board actually does a vote, the Board needs to vote on the question.
Ms. Garson said the Board needs to vote on whether or not the Board wants to call for the
question.
Mr. Reynolds said the call for the question means that the Board is voting on whether to stop
the debate.
Chairperson Mukai confirmed that the Board needs to vote on the call for the question.
Mr. Reynolds said yes.
Chairperson Mukai said a call for the question has been raised, and asked for all in favor of
ending the debate to say Aye.
ACTION: The call for the question passed unanimously by voice vote.
Chairperson Mukai said that the discussion had thus ceased, and now the Board would be
voting on the original Motion. He asked the Secretary to read the original Motion.
Page 20 of 30 Water Board Minutes 3 -23 -10 js
The Secretary read: "To amend the Notice of Public Hearings information and amend the
proposed agricultural use rates to maintain them at the subsidized rate of 85 cents per 1,000
gallons, irrespective of usage, as shown in the current rate structure."
Ms. Garson said that with that Motion has to be a corresponding direction to RW Beck.
The Manager said it should also mention a subsequent increase in costs.
Chairperson Mukai took a voice vote, but there was at least one nay vote, so a roll call vote
was required.
ACTION: A roll call vote on the original Motion (listed above) was taken: Motion failed:
Ayes: 2 — Mr. Smith and Chairperson Mukai; Nays: 3 — Mr. Lindsey, Mr. Reynolds and
Mr. Meierdiercks.
Chairperson Mukai noted that the original Motion was defeated.
Mr. Smith asked if a majority of the nine Board members was needed, or a majority of the
members present.
Ms. Garson said a majority of the nine Board members was needed.
Mr. Smith said okay, then the Motion was defeated.
The Manager asked if somebody could explain what just happened.
Ms. Garson said nothing was done.
The Manager he was confused by the vote. He asked if it means that the rates stay the same as
proposed.
Mr. Reynolds said that the Board now needs a Motion to approve the proposal.
Mr. Meierdiercks said that the original Motion was to amend the rates, and that was defeated.
Therefore, the Board was now back to the main purpose.
Ms. Garson said yes, and she assumed that the issue now is that the Board is going to be
willing to go out to Public Hearing with the rates as proposed, hear the testimony about the
proposal, and then alterations can be made after that, at the following Water Board meeting.
Mr. Reynolds said yes, the Board needs a Motion to go with this proposal from RW Beck to
Public Hearing.
ACTION: Mr. Reynolds so moved; seconded by Mr. Meierdiercks. A voice vote was taken
with one nay, by Mr. Smith.
Mr. Meierdiercks noted that the Motion to take the proposal to Public Hearing hereby fails.
Mr. Reynolds agreed, saying that the Motion fails, because to pass it requires all five members
to vote Aye. This means that the Board cannot go to Public Hearing.
Ms. Garson said that basically, the Board has not decided what the Board is going to go to
Public Hearing for.
Page 21 of 30 Water Board Minutes 3 -23 -10 js
Mr. Reynolds disagreed, saying that the Motion was to take the proposal from RW Beck to the
Public Hearing.
Ms. Garson said no, and asked what the Board wanted to do.
Mr. Reynolds said the Board needs to decide whether it wants to go to Public Hearing with no
proposal — either the Board has a proposal or it does not.
Ms. Garson said that in order to have any rate adjustment, the Board needs to go to Public
Hearing before it changes the rates. The Board would say that the rates are going to go from
here to here, she said.
Mr. Meierdiercks said at this point, the Board has no proposal.
Mr. Reynolds agreed, saying right now, the Board has nothing to take to the Public Hearing.
Ms. Garson said that was exactly right.
Chairperson Mukai said then, there would be no Public Hearing.
Mr. Smith suggested that there could be another Motion that all five members could live with,
with which the Board could go to Public Hearing.
Ms. Garson agreed.
The Manager asked what was wrong with going to Public Hearing with what is here, listening
to the public, and making changes thereafter, whatever the Board decides on. He suggested
that the Board re -vote, and bring it up again.
Mr. Reynolds said it would be only okay if the person who voted against the Motion asked to
reconsider.
Chairperson Mukai suggested that maybe a new Motion could come from another member of
the Board.
Mr. Reynolds said it was not proper to keep making the same Motion till you get it right.
At this point, Mr. Meierdiercks called for a 10- minute recess.
(Meeting recessed at 11:53 a.m., and reconvened at 12: 04 p.m)
The Manager said that as an ex- officio member of the Board, he has a right to make a Motion,
although he does not have the right to vote.
Ms. Garson confirmed this.
Mr. Reynolds said that was not normally true, and asked where the Manager got the right to
make a Motion.
The Manager said he did have a right to make a Motion.
MOTION: The Manager moved that the Board go to a Public Hearing with the packet
provided to the Board by RW Beck, that shall be considered a tentative water rate increase,
Page 22 of 30 Water Board Minutes 3 -23 -10 js
and that the Board will listen to testimony and, upon completion of testimony, the Board will
make a decision on whether the Board wants to go with the tentative rate increase, or wants to
make changes to the proposal and then direct them to RW Beck to make changes.
The Manager said that way, the Board will keep with the schedule, keep things going and
possibly have the new rates effective July 1.
Chairperson Mukai asked if, first of all, the Manager is allowed to make the Motion.
Ms. Garson said yes, the Manager can do so.
Mr. Reynolds said he did not think so, and an ex- officio cannot make Motions. He said that
Robert's Rules of Order does not allow ex- officios to make Motions.
Ms. Garson consulted her copy of Robert's Rules of Order, and read a passage: "There is no
distinction between an ex- officio member and another Board member. The only qualification
is that (the ex- officio) cannot vote." Therefore, the Manager can make a Motion; he just
cannot vote. She said her problem was that the Manager's Motion was the same as the one
before.
The Manager said no, his Motion did not talk of an "approved" water rate increase; it is just a
tentative one.
Ms. Garson said that the Board would not have been approving the rate increase anyway; the
Board would be approving it to go to Public Hearing.
The Manager said he only changed the word "approved" to "tentative." The Board gets the
right to make changes.
Chairperson Mukai asked if it was the same Motion.
Ms. Garson said it was the same Motion.
Mr. Reynolds said no, it is not the same Motion, because Mr. Reynolds's Motion was to go
with this proposal approved by the Board, while the Manager's Motion is using the word
"tentative," which is not the same as "approved."
The Manager said the Board always has the right to make changes after hearing the testimony
at the Public Hearing.
Chairperson Mukai said that he would side with whatever Ms. Garson said. He asked what
Ms. Garson was stating; he could not read her mind.
Ms. Garson said that regardless of whether the Manager said "approved" or not, technically,
the Board would not be approving the rate. The Manager is trying to make a distinction that
the Board is just putting the proposal out there. She said it was a decision.
The Manager said he was trying to make a distinction that the Board members have not
approved the proposal; the Board does not agree with it; they do not approve. However, since
the Board has the proposal, it is taking it to Public Hearing, where the Board will listen to
public testimony. After that, the Board will make a decision.
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Mr. Reynolds said that the only other thing the Board can do is to table the matter, and that
means the Board does nothing until next month's Board meeting.
Chairperson Mukai noted that a Motion had been made. He asked if there was a second.
Mr. Meierdiercks seconded the Motion by the Manager.
Ms. Garson said she wanted a little more clarification, because she did not see the distinction.
The Manager said that the distinction is that the Board is not approving the rates as listed in
the proposal; the Board has agreed to take the proposal to Public Hearing to listen to what the
public has to say about it, and then the Board will make a decision based on the testimony.
The Board is not approving the proposal; the proposal is not going to Public Hearing with the
backing of the Board.
Chairperson Mukai said that was the same thing said in the first Motion.
The Manager said that in this case, the Board was not approving the proposal, and the Board is
not saying that it agrees with the proposal.
Ms. Garson said yes, but the agreement is really that the Board is going out to Public Hearing
with X, and that is still the same Motion; that the Board is going to Public Hearing with X, but
the Board cannot agree with what X is. Therefore, to Ms. Garson, it is the same Motion.
Mr. Reynolds said he had never been in a Public Hearing where the Board already voted
before the Public Hearing. In a sense, with this proposal, if the Board approves it in any way,
the question is why bother with the Public Hearing, he said. He said he believed the
Manager's Motion was correct in that the Board should be going into the Public Hearing with
nothing more than an informational sheet, saying to the public, "Here are some possibilities,
now tell us what you want." The Board should not be making up its mind to anything until the
Board hears from the public. Otherwise, there is no need for a Public Hearing.
Ms. Garson said this was right.
Chairperson Mukai asked if parliamentary procedure permitted him, the Chairperson, to make
a Motion.
Ms. Garson said technically, no.
Mr. Reynolds said that the Chairperson could entertain a Motion, and one of the Board could
make the Motion for him.
Chairperson Mukai said hopefully the Board will agree with him. He proceeded to say that the
Chair would entertain a Motion that the Board direct RW Beck to provide the Board with
numbers in the event that there is no increase in the ag rates.
Ms. Garson asked if the Chairperson was trying to amend the Manager's Motion. She
corrected herself, saying the Chairperson would actually be asking someone else on the Board
to make a Motion.
Chairperson Mukai started to say that he would entertain a Motion.
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Mr. Reynolds asked the Chairperson to hold it, because before that, there was a Motion on the
floor already. The Chairperson could not entertain another Motion until the Board disposes of
the Manager's Motion, unless the Chairperson wants to amend the Manager's Motion.
Chairperson Mukai said that was what he was trying to do. He said his comment was that the
Chair would like to entertain an amendment to the Motion, to direct RW Beck to provide the
Board with numbers that would show the numbers without an ag rate increase, to be available
at the time of the Public Hearing.
MOTION: Mr. Reynolds so moved; seconded by Mr. Smith.
Mr. Smith said that maybe as a refinement to what Mr. Reynolds just moved, there would be
one option, which is to have the rates proposed by RW Beck for the Public Hearing, and ask
RW Beck to provide an Option B, of keeping the ag rates the same, and show where else in the
revenue that it changes — to make up for the income DW S is not going to get from an ag rate
increase. In other words, he proposed going to Public Hearing with two proposed rate
structures. After listening to all of the people at the Public Hearing, the Board can take that
input and decide. Mr. Smith said that was what he was seconding, and he assumed that was
what Mr. Reynolds meant.
Mr. Reynolds said okay, now the Board needs to vote on the amendment to the main Motion.
Chairperson called a vote on the amendment to the main Motion.
ACTION: Amendment to the main Motion passed unanimously by voice vote.
Chairperson Mukai said now the Board was going back to the main Motion as amended,
which is to provide the information to RW Beck with the ag rates per the proposal, and also
request RW Beck to have numbers available at the Public Hearing without the ag rate increase.
The Deputy Manager said that the Board is redirecting RW Beck to redo the study, which will
require a change order.
Mr. Sumada said he was not sure.
The Deputy Manager said he was pretty sure that DWS does not have funds in the existing
contract with RW Beck to do a change order, which poses a problem.
The Manager said yes, the Department would have to come back to the Board to have the
Board authorize additional funds for the contract.
The Deputy Manager said that RW Beck will charge for the redoing the study.
The Manager said that can be done.
Chairperson Mukai said that the Motion that is on the floor is a request, so if RW Beck is
unable to provide the numbers, then they are unable to provide the numbers.
Mr. Reynolds said that is a separate issue; the Board needs to vote on the main Motion as
amended.
Chairperson Mukai called a vote on the main Motion as amended.
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ACTION: Main Motion as amended passed unanimously by voice vote.
MOTION: Mr. Meierdiercks moved to approve any additional funding that RW Beck will
request to redo the study; if RW Beck does require additional funding, he moved to approve
the funding. Mr. Smith seconded.
Chairperson Mukai asked Ms. Garson if the Board could approve additional funding without
setting a number amount.
The Manager said that the Board could set a percentage.
Mr. Reynolds agreed that the amount should be up to a certain amount; not just give RW Beck
a blank check.
Mr. Meierdiercks said that was why the Board needed to have something on the floor. He
asked what the contract amount was.
Mr. Sumada said $94,500.
Mr. Smith asked if a reasonable contingency would be $5,000 or $10,000, maybe capped at
$15,000.
The Manager said a cap of $15,000 would be safe. He suggested amending the Motion to say
"up to $15,000."
Mr. Meierdiercks amended the Motion to increase additional funding to up to 15 percent of the
original contract, noting that the cap would be around $14,000.
Chairperson Mukai confirmed that the amendment to the Motion is to cap it at 15 percent of
the original contract price. He asked if there was a second to the amendment to the Motion.
Mr. Reynolds seconded.
ACTION: Amendment to the Motion carried unanimously by voice vote.
Chairperson Mukai asked if there was any further discussion on the main Motion as amended.
ACTION: Main Motion as amended carried unanimously by voice vote.
H. MANAGER'S REPORT:
The Manager noted that DWS was meeting on Thursday with an alternative energy provider,
Genex, in light of the Lalamilo windfarm.
The Manager provided an update or status on the following:
a. Update on use agreement on KIC wells -- Last week, DWS met with two KIC board
members who agreed that it is mutually beneficial to have some kind of partnership on
the KIC wells. It was agreed that this is a good time to start talking about a
partnership so that DWS can look at funding proposals when times improve.
b. Palani Road Transmission Waterline Project -- Mr. Beck reported that work is
proceeding in the Jernigan easement. The foundations of the tanks are essentially
done, and the tank builder should be moving in toward the end of this month. There
had been problems with trespassing, but they have been addressed.
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c. Legislative Audit update — Mr. Sumada reported that the auditors have finished their
field work, and are doing a draft report which should be finished by May 1. He
assumed that DWS would be able to review and comment on the draft report before a
final report is done.
d. H.O.V.E. project update -- The plans have been in the DWS office for review. Actual
construction has not yet started. The contractor is planning to install pipeline, and the
project is going well. DWS has provided a lot of information to the Council member
who represents Ka`u.
The Manager asked Ms. Aton to report on the recent Water Education for Teachers (W.E.T.)
workshop held at the Hilo baseyard. Ms. Aton reported that the day -long workshop, held in
conjunction with Ms. Aton's counterpart at the Kauai Department of Water Supply, involved
some 15 teachers from around the Big Island. The teachers finished the day certified to teach
water education as part of the K -12 curriculum. The teachers were also certified as facilitators
for future workshops. Ms. Aton reported that the Department took part in a TV segment with
Mr. Rosey Rosenthal regarding DWS's projects in North Kona, explaining DWS's investment
in the North Kona water system over the past 15 years. Ms. Aton, Mr. Inaba and
Mr. Bob Ravenscraft of DWS in Kona appeared in one segment, and the Manager appeared in
another segment in an interview with Mr. Rosenthal. Ms. Aton noted that in her segment, the
amount of investment in the North Kona water system was erroneously given as $35 million,
but the correct figure is $45 million. Ms. Aton said she recently represented DWS at the
Kona - Kohala Chamber of Commerce's Business Expo.
Chairperson Mukai asked that copies of the DVD be made available to Board members.
Mr. Smith asked about the subject of professional design liability raised at the February Board
meeting.
The Manager said that since last month, DWS's engineers had looked into it.
Mr. Inaba said that regarding the Waimea Sludge item on last month's Agenda, the main
research that the engineers did was with the project consultant, RM Towill. The consultant
specified a product, which the contractor was to purchase. The manufacturer has their own
design that has to be stamped by their own structural engineer, in order to have someone
responsible for the design.
Mr. Okamoto clarified that consultant RM Towill is not covering the structure involved.
Parkson is the manufacturer, and they have their own structural engineer who stamps the
design.
Chairperson Mukai asked if that structural engineer is providing proof of liability insurance.
Mr. Okamoto said they had not requested it.
The Manager said that DWS should try to provide some legal language that requires it. He
noted that with any stamp, whether it is structural, architectural or civil, once someone stamps
it, that person is liable for the duration of the project. The danger is that at some point in time,
that entity or structural engineer might not be around. For that reason, DWS is going to do
what Mr. Smith suggested, and put in an amendment so that the general contractor is
responsible. This would take away the indemnity from DWS, he said.
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Mr. Smith said this was the proper course of action. He said that in the bid documents, DWS
addresses two issues:
1. The fabricator provides professional liability insurance covering their design
professional for any errors he makes;
2. DWS gets the general contractor to provide an indemnification clause so that if a
project runs into problems, DWS can just go to the general contractor to tell him to
solve the problem, (and not go after the general contractor's supplier, with whom DWS
has no contract).
I. CHAIRPERSON'S REPORT:
Chairperson Mukai suggested continuing to hold meetings in Hilo and Kona, and skip
Kamuela unless there is a specific reason to meet there.
Mr. Reynolds suggested holding Kona meetings at the Old Airport Pavilion.
Chairperson Mukai said that was a good point; other venues for Kona could be looked at. He
suggested having every third meeting in Kona.
Mr. Meierdiercks said he thought the meeting should be in Hilo, unless a specific issue related
to Kona calls for meeting in Kona.
Ms. Garson said that the Board was looking at where to hold the May 25 Board meeting.
The Secretary said that based on having every third meeting in Kona, Kona would be the
venue in May, August and November.
Ms. Aton suggested that meetings in Kamuela might be called for at some point.
Chairperson Mukai said he thought that because of the East -West divide, that the Board should
meet in Kona as well as Hilo, and he prefers to have the Kona meeting every third or fourth
meeting. He suggested meeting in Kona on May 25, again in Kona in August, etc. It can
always be changed, he said. He wanted to ensure that West Hawaii people have a venue in
Kona.
The Manager suggested holding a Water Board meeting in Ocean View, once the project there
is underway.
Before going to the Annoucements, Chairperson Mukai thanked outgoing Board member
Mr. Smith for his years of service on the Water Board. Today was Mr. Smith's last meeting as
a Board member.
ANNOUNCEMENTS:
1. Next Meeting:
The next meeting of the Water Board will be held on April 27, 2010, at 10:00 a.m. at the
Department of Water Supply, Operations Center Conference Room, 889 Leilani Street, Hilo.
2. Following Meeting:
The following meeting of the Water Board will be held on May 25, 2010, at 10:00 a.m. in
Kona, at a venue to be announced.
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The Manager noted that Public Hearings on the Water Rates would be held on May 4 in Hilo
and May 5 in Kona.
Mr. Reynolds suggested holding the Kona Public Hearing on the same day as the May Water
Board meeting, and suggested changing the meeting date to somewhere around May 15.
Mr. Smith noted that these Public Hearings are to be held at night.
Mr. Reynolds asked if there was any reason that the Board needed to hold the Public Hearings
on May 4 and May 5.
The Manager agreed that the Kona Public Hearing could coincide with the May Water Board
meeting.
Chairperson Mukai asked whether scheduling the Public Hearings around the May 25 Water
Board meeting would be a problem.
Mr. Smith noted that the Oahu water conference would be taking place around that date.
The Manager said that Mr. Okamoto made a good point that the Public Hearings need to take
place before the Water Board meeting.
Ms. Garson said that in that case, the Public Hearing would have to be on May 24, as opposed
to the same day as the Water Board meeting, May 25.
The Manager agreed, saying that the Board would want to have the input from the Public
Hearing to take to the Water Board meeting.
Mr. Reynolds said it would not matter unless the Board was going to vote on the water rates in
May. The Board could vote on the water rates at the June Water Board meeting instead, he
added.
Chairperson Mukai suggested that maybe the May 25 Water Board meeting could be in the
afternoon.
The Manager asked for time to research the matter.
Mr. Sumada noted that Ann Hajnosz, the RW Beck consultant who did the Water Rate Study,
was scheduled to come to the May 4 and May 5 Public Hearings.
Mr. Reynolds asked the Department to look into using the Old Airport Pavilion or Hale
Halawai for the Kona meeting.
STATEMENTS FROM THE PUBLIC:
None.
ADJOURNMENT:
Chairperson Mukai called for a Motion to adjourn. Mr. Reynolds so moved; seconded by
Mr. Lindsey, and approved unanimously by voice vote. The Meeting adjourned at 12:45 p.m.
Page 29 of 30 Water Board Minutes 3 -23 -10 js
Senior Clerk- Stenographer
Anyone who requires an auxiliary aid or service for effective communication or a modification of policies or procedures to
participate in this Water Board Meeting should contact Doreen Shirota, Secretary, at 961 -8050 as soon as possible, but no
later than five days before the scheduled meeting.
The Department of Water Supply is an Equal Opportunity provider and employer.
Notice to Lobbvists: If you are a lobbyist, you must register with the Hawai `i County Clerk within five days of becoming a
lobbyist. tArticle 15, Section 2- 91.3(b), Hawai `i County Code) A lobbyist means "any individual engaged for pay or other
consideration who spends more than five hours in any month or $275 in any six -month period for the purpose of attempting to
influence legislative or administrative action by communicating or urging others to communicate with public officials. "
tArticle 15, Section 2- 91.3(a) (6), Hawai `i County Code) Registration forms and expenditure report documents are available at
the Office of the County Clerk - Council, Hilo, Hawai `i.
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