HomeMy WebLinkAbout2010-07-27 Water Board MinutesMINUTES
DEPARTMENT OF WATER SUPPLY
COUNTY OF HAWAII
WATER BOARD MEETING
July 27, 2010
Department of Water Supply. Operations Center Conference Room, Hilo
MEMBERS PRESENT: Mr. Dwayne Mukai, Chairperson
Mr. Robert Meierdiercks, Vice - Chairperson
Mr. George Harai
Mr. David Greenwell
Mr. Kenneth Kaneshiro
Mr. Bryan Lindsey
Mr. Delan Perry
Mr. Joe Reynolds
Mr. Art Taniguchi
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
Ms. Molly Lugo, Deputy Corporation Counsel
Ms. Morag Miranda
Ms. Colleen Schrandt, Legislative Auditor (arrived 10:17 a.m.)
Mr. Karl Rad, Office of the Legislative Auditor (arrived 10:17 a.m.)
Mr. Lane Shibata, Office of the Legislative Auditor (arrived 10:17 a.m.)
Grant Nakagawa, KPMG
Mr. Chris English, Hawaii Cattlemen's Council
Mr. Scott Spence, Hawaii Cattlemen's Association
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. Kanam Aton, Public Information and Education Specialist
Ms. Julie Myhre, Energy Management Analyst
Mr. Keith Okamoto, Engineering Division
Mr. Larry Beck, Engineering Division
Ms. Cris Hudman, Customer Service Supervisor (arrived 10:10 a.m.)
Ms. Marianne Panoff, Accountant IV (arrived 11:45 a.m.)
Ms. Anne Higaki, Account Clerk (arrived 11:45 a.m.)
Ms. Colleen Nakamura, Senior Account Clerk (arrived 11:45 a.m.)
Ms. Susan Okamoto, Clerk II (arrived 11:45 a.m.)
CALL TO ORDER - Chairperson Mukai called the Meeting to order at 10:00 a.m.
Page 1 of 61 Water Board Minutes 7 -27 -10 js
STATEMENTS FROM THE PUBLIC:
None.
ACTION TO MOVE AGENDA ITEMS:
Chairperson Mukai, in order to accommodate the people in attendance today, asked to move Item 9(H),
PROPOSED NEW WATER RATE SCHEDULE, to follow Item 5, PRESENTATION OF AUDITED
FINANCIAL STATEMENTS — JUNE 30, 2009.
APPROVAL OF MINUTES:
Chairperson Mukai entertained a Motion to approve both the Minutes of the Public Hearing on the
Power Cost Charge on June 15, 2010 and the Minutes of the regular Water Board meeting on
June 15, 2010.
ACTION: Mr. Reynolds moved to approve; seconded by Mr. Kaneshiro. Motion carried unanimously
by voice vote.
APPROVAL OF ADDENDUM AND /OR SUPPLEMENTAL AGENDA:
Chairperson Mukai entertained a Motion to approve the Supplemental Agenda Item 8(A), JOB NO.
2007 -919, CONSTRUCTION OF EARTHQUAKE DAMAGED TANK REPAIRS, COUNTY OF
HAWAII, STATE OF HAWAII, FEMA- 1644- DR -HI, FIPS NO. 00 1 -UVKJ8-00, GROUP 44 (S.
KOHALA, HAMAKUA).
ACTION: Mr. Harai moved to approve; seconded by Mr. Taniguchi. Motion carried unanimously by
voice vote.
PRESENTATION OF AUDITED FINANCIAL STATEMENTS — JUNE 30,2009:
Copies of the Department's Audited Financial Statements for the fiscal year ended June 30, 2009 were
distributed to Board members. Mr. Grant Nakagawa, representing KPMG, the Department's
independent auditors from Honolulu, answered questions that Board members had regarding the report.
Mr. Nakagawa reported that based on the audit, DWS received a clean opinion; everything in the
financial statements looked good. During the course of the audit, there was one allowance for doubtful
accounts, allotted for $1.3 million, which the auditors agreed was reasonable based upon the numbers
that they saw and the support that DWS had. While the audit found a few misstatements, none of them
were deemed material to the financial statements as a whole. However, per the auditors' requirements,
a listing was included on the back of the SAS -114 letter, KPMG's required communication to the
Water Board. There were no disagreements or difficulties with DWS during the course of the audit.
Mr. Taniguchi asked what happened about possibly looking into DWS's cash handling procedures, a
topic raised by the Board last year. He also asked what the procedure for the next audit will be
Mr. Nakagawa said that KPMG will not be auditing DWS next year. He noted that last year, he had a
discussion with then - Chairperson Riley Smith about possibly looking into DWS's cash handling
procedures, but nothing happened. KPMG would have been open to doing such additional work for
DWS, he said.
Mr. Taniguchi asked how long it would take to get a quote back.
Mr. Nakagawa said it would not take long to come up with a quote, as long as the Board knows what it
wants to do.
Page 2 of 61 Water Board Minutes 7 -27 -10 js
At this point, Ms. Garson noted that the Board is not the contracting agency with the auditor. Instead,
the Legislative Auditor's office is handling the contracting for the next audit period, per the County
Charter. The Board would have to go through the Legislative Auditor (and the rest of the County)
regarding how the audit gets done or any supplements to the contract, she said.
The Manager said that the Board could also do a separate contract, over and beyond what the County
does.
Ms. Garson confirmed this, adding that the Board would need to do its own procurement process for
such work.
Mr. Reynolds asked about the entry under "Management Discussion and Analysis, Other Information,"
on Page 3 of the Financial Statements. The entry shows that capital assets exceeded liabilities by
$220.2 million, which represents a $5.1 million increase. He asked what the capital assets include.
Mr. Nakagawa said it includes all of the assets owned by the Department, including building
equipment, vehicles, etc. It does not include investments.
Mr. Reynolds asked what the $25.1 million under "Unrestricted" (on Page 7) meant.
Mr. Nakagawa said it basically is the net difference between assets and liabilities, and is basically
money not tied to any kind of debt. It is basically DWS's net equity that is not tied to any debt.
Mr. Reynolds asked if it meant that DWS had no debt.
Mr. Nakagawa said that DWS has debt, but it has the ability to pay the debt off.
(Mr. Nakagawa left the meeting at 10:12 a.m.)
MISCELLANEOUS
H. PROPOSED NEW WATER RATE SCHEDULE:
Discussion on proposed water rate schedule and testimony provided at public hearing earlier on
July 27, 2010, at 9:30 a.m., and action to adopt new water rate schedule.
Pursuant to Chapter 54, Part III, Hawaii Revised Statutes, the Public Hearing today was held for the
purpose of hearing views and comments of all persons interested in the following proposals for
increases in the water rate schedules to be applied by the Department of Water Supply, County of
Hawaii, for all districts.
The Water Board had solicited public input on four proposed rate structures for general use and
agriculture use rates.
• OPTION "A" reflects graduated levels of annual rate increases for agriculture customers so
that by July 1, 2014; agriculture customers are paying their "cost of service."
• OPTION `B" makes no change to the current agriculture rate over a 5 year period. In order to
generate sufficient revenues for the Department, the 3rd and 4f' block rates for general use
customers are greater than in Option A.
• "CATTLEMEN'S OPTION" reflects a change in rate structure for agriculture customers from
1 consumption rate to 3 block rates. The first 2 blocks are the same as the first 2 blocks for
general use customers in Options "A" and `B." The 3rd block increases the current $0.85
agriculture rate by 2 cents on an annual basis.
• "MODIFIED CATTLEMEN'S OPTION" is similar to the "CATTLEMEN'S OPTION" except
that annual 3rd block rate increases correspond to the system -wide percentage rate increase.
Page 3 of 61 Water Board Minutes 7 -27 -10 js
At its last meeting on June 15, 2010, the Water Board adopted Option B, which became effective July
1, 2010.
OPTION A: PROPOSED GENERAL USE RATES (per 1,000 gallons)
In addition to standby and power cost charges, a consumption charge will be applied to all general use
customers.
OPTION A: PROPOSED AGRICULTURAL USE RATES (per 1,000 gallons)
In addition to standby and power cost charges, a consumption charge will be applied to all agricultural
use customers.
Effective Effective Effective Effective Effective
Option A July 1, 2010 July 1, 2011 July 1, 2012 July 1, 2013 July 1, 2014
Option A - All $0.92 $1.07 $1.21 $1.42 $1.69
Usage
OPTION B: GENERAL USE RATES (per 1,000 gallons) CURRENTLY IN EFFECT
In addition to standby and power cost charges, a consumption charge will be applied to all general use
customers.
Effective
Effective
Effective
Effective
Effective
Option A
July 1, 2010
July 1, 2011
July 1, 2012
July 1, 2013
July 1, 2014
1St Block
$0.81
$0.86
$0.86
$0.87
$0.87
2nd Block
$1.67
$1.68
$1.68
$1.69
$1.69
3rd Block
$2.87
$2.88
$2.88
$2.89
$2.89
4th Block
$3.77
$3.78
$3.78
$3.79
$3.79
OPTION A: PROPOSED AGRICULTURAL USE RATES (per 1,000 gallons)
In addition to standby and power cost charges, a consumption charge will be applied to all agricultural
use customers.
Effective Effective Effective Effective Effective
Option A July 1, 2010 July 1, 2011 July 1, 2012 July 1, 2013 July 1, 2014
Option A - All $0.92 $1.07 $1.21 $1.42 $1.69
Usage
OPTION B: GENERAL USE RATES (per 1,000 gallons) CURRENTLY IN EFFECT
In addition to standby and power cost charges, a consumption charge will be applied to all general use
customers.
OPTION B: AGRICULTURAL USE RATES (per 1,000 gallons) CURRENTLY IN EFFECT
In addition to standby and power cost charges, a consumption charge will be applied to all agricultural
use customers.
Effective Effective Effective Effective Effective
Option B July 1, 2010 July 1, 2011 July 1, 2012 July 1, 2013 July 1, 2014
Option B - All $0.85 $0.85 $0.85 $0.85 $0.85
Usage
CATTLEMEN'S OPTION: PROPOSED GENERAL USE RATES (per 1,000 gallons)
In addition to standby and power cost charges, a consumption charge will be applied to all general use
customers.
Cattlemen's
Effective
Effective
Effective
Effective
Effective
Option B
July 1, 2010
July 1, 2011
July 1, 2012
July 1, 2013
July 1, 2014
1St Block
$0.81
$0.86
$0.86
$0.87
$0.87
2nd Block
$1.67
$1.68
$1.68
$1.69
$1.69
3rd Block
$2.93
$3.01
$3.01
$3.02
$3.02
4th Block
$3.89
$3.99
$3.99
$4.00
$4.00
OPTION B: AGRICULTURAL USE RATES (per 1,000 gallons) CURRENTLY IN EFFECT
In addition to standby and power cost charges, a consumption charge will be applied to all agricultural
use customers.
Effective Effective Effective Effective Effective
Option B July 1, 2010 July 1, 2011 July 1, 2012 July 1, 2013 July 1, 2014
Option B - All $0.85 $0.85 $0.85 $0.85 $0.85
Usage
CATTLEMEN'S OPTION: PROPOSED GENERAL USE RATES (per 1,000 gallons)
In addition to standby and power cost charges, a consumption charge will be applied to all general use
customers.
Cattlemen's
Effective
Effective
Effective
Effective
Effective
Option
July 1, 2010
July 1, 2011
July 1, 2012
July 1, 2013
July 1, 2014
1St Block
$0.81
$0.86
$0.86
$0.87
$0.87
2nd Block
$1.67
$1.68
$1.68
$1.69
$1.69
Page 4 of 61 Water Board Minutes 7 -27 -10 js
3rd Block $2.87 $2.88 $2.88 $2.89 $2.89
4th Block $3.77 $3.78 $3.78 $3.79 $3.79
CATTLEMEN'S OPTION: PROPOSED AGRICULTURAL USE RATES (per 1,000 gallons)
In addition to standby and power cost charges, a consumption charge will be applied to all agricultural
use customers
Cattlemen's
Effective
Effective
Effective
Effective
Option
July 1, 2010
July 1, 2011
July 1, 2012
July 1, 2013
Effective
Option
July 1, 2010
July 1, 2011
July 1, 2012
July 1, 2013
July 1, 2014
1St Block
$0.81
$0.86
$0.86
$0.87
$0.87
2nd Block
$1.67
$1.68
$1.68
$1.69
$1.69
3rd Block
$0.87
$0.89
$0.91
$0.93
$0.95
MODIFIED CATTLEMEN'S OPTION: PROPOSED GENERAL USE RATES
(per 1,000 gallons)
In addition to standby and power cost charges, a consumption charge will be applied to all agricultural
use customers.
Modified
Cattlemen's
Effective
Effective
Effective
Effective
Effective
Option
July 1, 2010
July 1, 2011
July 1, 2012
July 1, 2013
July 1, 2014
1St Block
$0.81
$0.86
$0.86
$0.87
$0.87
2nd Block
$1.67
$1.68
$1.68
$1.69
$1.69
3rd Block
$2.87
$2.88
$2.88
$2.89
$2.89
4th Block
$3.77
$3.78
$3.78
$3.79
$3.79
MODIFIED CATTLEMEN'S OPTION: PROPOSED AGRICULTURAL USE RATES
(per 1,000 gallons)
In addition to standby and power cost charges, a consumption charge will be applied to all agricultural
use customers.
Modified
Cattlemen's
Effective
Effective
Effective
Effective
Effective
Option
July 1, 2010
July 1, 2011
July 1, 2012
July 1, 2013
July 1, 2014
1St Block
$0.81
$0.86
$0.86
$0.87
$0.87
2nd Block
$1.67
$1.68
$1.68
$1.69
$1.69
3rd Block
$0.94
$0.98
$0.98
$0.99
$0.99
ALL PROPOSALS: GENERAL USE BLOCK THRESHOLDS (gallons
per month)
Meter
Size
(inches)
1St Block
2nd Block
3rd
Block
4tn Block
5/8"
5,000
5,001
- 15,000
15,001
- 40,000
>
40,000
F
5,000
5,001
- 100,000
100,001
- 300,000
>
300,000
1' /2"
5,000
5,001
- 400,000
400,001
- 1,000,000
>
1,000,000
2"
5,000
5,001
- 900,000
900,001
- 2,000,000
>
2,000,000
3"
5,000
5,001
- 2,000,000
2,000,001
- 5,000,000
>
5,000,000
4"
5,000
5,001
- 4,700,000
4,700,001
- 10,000,000
>
10,000,000
6"
5,000
5,001
- 10,000,000
10,000,001
- 25,000,000
>
25,000,000
8"
5,000
5,001
- 20,000,000
20,000,001
- 50,000,000
>
50,000,000
Page 5 of 61
Water Board Minutes 7 -27 -10 js
10" 5,000 5,001 - 40,000,000 40,000,001 - 100,000,000 > 100,000,000
12" 5,000 5,001 - 60,000,000 60,000,001 - 150,000,000 > 150,000,000
CATTLEMEN'S & MODIFIED CATTLEMEN'S OPTIONS: AGRICULTURE RATE BLOCK
THRESHOLDS Gallons per month)
Meter Size 1St Block 2nd Block 3rd Block
All Sizes 5,000 5,001 - 15,000 > 15,000
ALL PROPOSALS: AGRICULTURAL USE
In order to qualify for agricultural rates, applicants shall file annually with the Department, a written
application and furnish upon request, satisfactory proof (as determined by the Department), of
engagement in agriculture, stock raising or dairy farming on a commercial basis, and that water used in
addition to the above is limited to one dwelling. The Department reserves the right to limit or restrict
water flow to agricultural users in the event of water shortage or in the event water service to domestic
users is disrupted or lowered because of agricultural water use. Applicants shall install backflow
preventers which shall be inspected and approved by the Department before water service is granted.
Agricultural rates are not applicable to canneries, mills or markets or other establishments engaged in
the conversion or treatment or packaging of agricultural products.
MOTION: Mr. Taniguchi moved to accept the Modified Cattlemen's Option; seconded by
Mr. Meierdiercks.
The Manager spoke in favor of the Motion because under the Modified Cattlemen's Option, the
agricultural (ag) rates will sustain the same 5.6 percent rate of increase as DWS's general use
customers. This would be fair and equitable. He noted that he believed that the State of Hawaii
should be subsidizing ag users, but that was not likely to happen anytime soon.
Mr. Kaneshiro said that some of Mr. Goya's ideas, expressed during the Public Hearing on water rates
earlier today, were pretty good. He noted in particular the initiatives on DWS promoting hydroelectric
power and public education, as well as reducing costs. Mr. Kaneshiro also noted Mr. Goya's proposed
5 -cent surcharge for public education and other purposes. To introduce such a surcharge, DWS would
need to inform the public about what the money would be used for. He was confident that the public
would be willing to pay the surcharge if it was made clear that the money was targeted for specific
purposes, and would not just go into the general fund where it could be used for anything.
Chairperson Mukai said that Mr. Kaneshiro's comments were well taken, but the only options that the
Board can vote on today are what the Board has before it. The Board may choose to consider Mr.
Goya's proposal at a later date, he added. Regarding the approval of water rates, the Board can only
vote on what has been circulated for the Public Hearing.
Mr. Kaneshiro said that was fine; the Board needs to think about things like this down the road.
The Manager said that it would be ill- advised and detrimental to the Department to consider any other
option at this time, because it is already two months into the new fiscal year. He urged the Board to
approve something that is on the table today. Regarding Mr. Kaneshiro's concerns, the Manager said
DWS has a hydro - generator program, with 300 generators on -line that are making money. He noted
the best scenario is the Kahalu`u Shaft whereby DWS uses all of the energy that it generates. DWS
also has a hydro - generator on Hinalam Street, whose energy is being sold back to HELCO, albeit at a
reduced rate. DWS's hydro - generator at the Waimea Water Treatment Plant runs the entire plant.
DWS has an Energy Management Specialist, who is tasked with looking at different areas where DWS
can include more hydro - generators. Regarding public education, DWS hired a Public Education and
Information Specialist about two and a half years ago. Ms. Aton goes throughout the island educating
Page 6 of 61 Water Board Minutes 7 -27 -10 js
students and the public. Whenever DWS is asked to speak at a community meeting, Ms. Aton comes
along so that she learns all of the knowledge that the Manager has, in the hope that eventually Ms.
Aton can do what the Manager has been doing in terms of speaking at community meetings. In
summary, DWS has a strong alternative energy and public education program.
Mr. Kaneshiro said this was very good.
Ms. Garson said that before the Board votes on the Main Motion, an effective date for the new rates is
needed. She said that Mr. Sumada had just told her that the Department could implement a rate change
effective August 1. She said that adding an effective date would be a friendly Amendment.
Chairperson Mukai asked if there was an Amendment to the Main Motion.
AMENDMENT TO THE MAIN MOTION: Mr. Taniguchi amended his Motion to have an effective
date of August 1, 2010; seconded by Mr. Meierdiercks. Amendment to the Main Motion carried
unanimously by voice vote.
Mr. Perry noted that right now, the Department is at Option B, which the Board approved last month.
He asked for a comparison of the impacts to the Budget from the Modified Cattlemen's Option versus
Option B.
The Manager said that basically there was no difference because the two rate structures were
established by the Department's rate consultant to generate the same income.
Mr. Reynolds noted that the amounts for the effective years are quite different. There is no fourth
block in the Cattlemen's Option, while there is a fourth block in the Modified Cattlemen's Option, he
said. Mr. Reynolds said the Modified Cattlemen's Option seems a little excessive, compared with the
straight Cattlemen's Option.
The Manager said he liked both the Cattlemen's Option and the Modified Cattlemen's Option because
they maintain the first and second blocks for everybody, which is basically the same amount of water
that people need to live anyway. These first and second blocks apply to ag users, too. It is when the
usage exceeds the second block that the subsidized rate kicks in. The theory is that beyond the second
block, most of the water would be used for ag purposes, and therefore the ag user should get the
subsidy.
Mr. Reynolds noted that on the bottom of page 8 of the Agenda, where the Modified Cattlemen's
Option is, Blocks 3 and 4 are quite a bit higher than the Block 3 in the Cattlemen's Option. He asked if
the reason for Block 4 is that there are not that many people using that much water.
The Manager said no, this block rate schedule was developed many years ago as a punitive way to
promote conservation. The idea was, the more you use, the more you pay.
Mr. Reynolds asked how many people would get into this fourth block.
The Manager said that it depends on the size of the meter; it varies for different sizes of meter.
Mr. Reynolds asked if there were a lot of people who would get into the fourth block.
The Manager said just a few people would, those who use the water for filling swimming pools,
keeping their yards green, washing boats, etc. These would be luxury -type uses of water, he said.
Chairperson Mukai asked Ms. Shirota to read back the Motion as Amended.
Ms. Shirota said the Motion as Amended is to accept the Modified Cattlemen's Option, effective
August 1, 2010.
Page 7 of 61 Water Board Minutes 7 -27 -10 js
ACTION: Motion as amended passed unanimously by voice vote.
Sol TTH 1411 ,0.
A. MATERIAL BID NO. 2010 -07, FURNISHING AND DELIVERING DIGITAL MOBILE
RADIOS, DIGITAL PORTABLE RADIOS, P25 DIGITAL VHF REPEATERS AND
TELECOMMUNICATION TOWERS FOR THE DEPARTMENT OF WATER SUPPLY:
Bids for this project were received and opened on July 8, 2010; at 3:00 p.m. The contract period for all
Parts is from August 1, 2010, to June 30, 2011. All Parts are established price agreements for materials
on an "As- Needed Basis."
PART
NO.
DESCRIPTION
West Hawaii Electronics,
Inc.
Pacific Wireless
Communications, LLC
1
Digital Mobile Radios
$107,415.00
$129,113.60
2
Digital Portable Radios
No Bid
$156,677.78
3
P25 Digital VHF Repeaters
$71,495.00
$69,312.70
4
Telecommunications Towers
No Bid
$70,013.94
The Manager recommended that the Board award the contract for MATERIAL BID NO. 2010 -07,
FURNISHING AND DELIVERING DIGITAL MOBILE RADIOS, DIGITAL PORTABLE RADIOS,
P25 DIGITAL VHF REPEATERS AND TELECOMMUNICATION TOWERS FOR THE
DEPARTMENT OF WATER SUPPLY, on an as- needed basis, by Parts to the following for the
amounts shown above, and that either the Chairman or the Vice - Chairman be authorized to sign the
contract(s), subject to review as to form and legality of the contract(s) by Corporation Counsel.
Part 1— Digital Mobile Radios to West Hawaii Electronics, Inc.
Part 2 — Digital Portable Radios to Pacific Wireless Communications, LLC
Part 3 — P25 Digital VHF Repeaters to Pacific Wireless Communications, LLC
Part 4 — Telecommunication Towers to Pacific Wireless Communications, LLC
The contract period shall be from August 1, 2010, to June 30, 2011.
MOTION: Mr. Meierdiercks moved to approve; seconded by Mr. Harai.
The Manager noted there were only two bidders.
Mr. Harai asked how many radios were involved.
Mr. Ikeda said over 100 radios, but he did not have an exact number. The Department put a number
for the bidders to bid on for comparison purposes, just to establish a price. DWS chose the lowest
price of each item.
The Manager said the prices were effective through June 30, 2011. The Department has to update its
radio system to conform to the Police Department's new system. DWS uses the Police repeaters, he
added.
Mr. Ikeda said that DWS needs the radios to comply with new Federal Communications Commission
(FCC) regulations, whereby by 2013, DWS must change out all of its radios to the new system.
The Manager said that DWS will buy the radios as they need them, and DWS does not need to buy all
of the radios at one time.
Page 8 of 61 Water Board Minutes 7 -27 -10 js
Mr. Taniguchi suggested that in future, the Department might want to go in with the Police Department
in purchasing radios, in hopes of getting a better price.
The Manager said that was a good suggestion, and said that DWS could check with the Police
Department to see if DWS could piggyback with the Police's radio contract. He noted that the Police
frequencies are different from DWS's. He reiterated that this current contract is good for one year, and
these prices are good through June 30, 2011.
Mr. Ikeda said that DWS has budgeted a certain amount for the radios and will budget again next year.
DWS has a couple more years to make the changeover (by 2013.)
ACTION: Motion carried unanimously by voice vote.
Chairperson Mukai asked to next take up Item 9(B), LEGISLATIVE AUDITOR'S LIMITED SCOPE
PERFORMANCE AUDIT OF THE DEPARTMENT OF WATER SUPPLY'S INTERNAL
CONTROLS FOR CASH HANDLING AND FINANCIAL IT SYSTEMS.
MISCELLANEOUS:
B. LEGISLATIVE AUDITOR'S LIMITED SCOPE PERFORMANCE AUDIT OF THE
DEPARTMENT OF WATER SUPPLY'S INTERNAL CONTROLS FOR CASH HANDLING
AND FINANCIAL IT SYSTEMS:
Legislative Auditor Ms. Colleen Schrandt reported on the findings of the June 2010 Limited Scope
Performance Audit of the Department of Water Supply's Internal Controls for Cash Handling and
Financial IT Systems, followed by discussion.
Mr. Taniguchi said that prior to the external audit by KPMG and the Legislative Audit, the Board had
discussed possibly including a review of cash handling procedures into the external audit. He
explained that he had asked the KPMG auditor earlier today about the procedure for expanding the
scope of an audit.
Ms. Schrandt said that if the Board formally decided to expand the scope, the Board would send a
request to that effect to the Legislative Auditor.
Mr. Taniguchi he just wanted to know what the procedure was for future reference.
Chairperson Mukai commented that the Board's Ad Hoc Finance Committee reviewed the Legislative
Auditor's report.
Mr. Taniguchi asked Ms. Schrandt about a passage in her report that mentioned water bill payments
not being processed in a timely manner, and asked what she meant by "timely." He asked if "timely"
meant one day, two days, three days, or a week.
Ms. Schrandt said that on the issue of timeliness, deposits should be made daily. If the payments are
non -cash and there are controls in place to ensure that cash is physically safeguarded in the time period
before Finance deposits the money, daily deposits are not necessarily a requirement. However, if
significant amounts of cash are taken in daily and the safeguarding control are not as strong as they
could be, it is more important that deposits are made daily, she said.
Mr. Taniguchi asked about cash payments that are deposited in the bank but not logged into the system
until tomorrow and yet backdated to today.
Ms. Schrandt said that there are instances, not necessarily in DWS, where that is the process. She said
that there are reasons that that process could be made to work, but it depends on the safeguards to make
sure that the Department goes back and reconciles what gets put into the bank to the actual date.
Page 9 of 61 Water Board Minutes 7 -27 -10 js
Mr. Taniguchi asked about the report's recommendation to scan incoming mail envelopes.
Ms. Schrandt said that was actually something that DWS had talked about or suggested to the auditors.
Ms. Schrandt said that she personally did not think it was a very good control mechanism because one
would not know what was inside the envelopes. The Department needs to make sure that the amount
or number tallies out of the depositary receipts. Scanning envelopes gives no independent control over
the amounts posted or deposited, she added. The important thing is to look at the whole picture and
decide whether adequate control is provided, she said.
Mr. Greenwell asked if there was a way of finding out where delinquent accounts come into the
picture, so that delinquent accounts do not get behind.
Ms. Schrandt said that was an entirely separate issue, not related to the actual timing of deposits or
safeguarding of cash.
Mr. Sumada noted that DWS has a credit and collections clerk on staff, whose main function is to look
at receivables and their age. The clerk looks at the whole list of delinquencies, and contacts customers
to set up payment plans. The alternative is to turn off the delinquent customer's water, if they do not
make payments.
Mr. Greenwell asked if DWS is losing revenue through the cracks due to delinquencies.
Ms. Garson noted that the Legislative Audit did not cover delinquencies; only cash handling and
DWS's Information Technology (IT) system were covered. She suggested that the question of
delinquencies be posed later in the meeting, during the Monthly Financial Statements segment.
Mr. Taniguchi asked about the report's comment that "batch processing is considered to be outdated."
He asked if batch processing was seen as a problem for DWS and whether it was a security issue.
Ms. Schrandt said it would depend on the scope of the audit. Looking at the ranking of findings,
Ms. Schrandt said that she did not think batch processing in and of itself was a finding. Instead, it was
part of the whole picture and the controls in place.
Mr. Taniguchi said he asked the question to get a feel for the magnitude of that particular issue, and
had wondered whether batch processing would come up as an issue in a future audit and whether it was
a high priority to address.
Ms. Schrandt noted that by itself, batch processing would not be a major issue. In any event,
Mr. Sumada and his staff are looking at a new system, and she counseled taking time to get the right
system rather than rush and wind up in a worse situation.
Chairperson Mukai said that the Ad Hoc Finance Committee went over the report's recommendations
with a fine tooth comb.
Ms. Schrandt noted that historically, governments have not necessarily focused on providing services
in the most efficient manner. The audit looks at the broader picture of DWS, not so much at
individuals in the organization, with the emphasis on the importance of having controls in place. She
noted that in any industry, the accounting and finance function is the one area that is shortest - staffed,
while carrying a huge responsibility. Part of the report's purpose was to point out to the Board that its
job is to ensure that DWS management has the resources they need to put the necessary controls in
place.
(Ms. Schrandt, Mr. Rad andMr. Shibata left meeting at 10:45 a.m.)
Page 10 of 61 Water Board Minutes 7 -27 -10 js
B. JOB NO. 2005 -862, WAIAKEA OFFICE PLAZA AIR CONDITIONING REPLACEMENT:
The contractor, Isemoto Contracting Co., Ltd., requires 62 calendar days from the date of approval
from the Water Board to perform additional work beyond the scope of work. The additional work is as
follows:
• Construct driveway and appurtenant concrete work around new building (30 calendar days);
• Ka`u Wing, Main Data Processing Room air conditioning retrofit (15 calendar days);
• Chain link fence enclosures at ACCU units and CRM (concrete rubble masonry) Wall (12
calendar days); and
• Remove selected rubber trees for driveway (5 calendar days).
Staff has reviewed this time extension request and finds that the 62 calendar days are justified. The
total time extension will be for 124 calendar days from the last contract time extension. This is the
fourth time extension request.
The Manager recommended that the Board grant Isemoto Contracting, Co., Ltd. this extension of
contract time of one hundred twenty -four (124) calendar days from May 26, 2010, to
September 27, 2010 for JOB NO. 2005 -862, WAIAKEA OFFICE PLAZA AIR CONDITIONING
REPLACEMENT.
MOTION: Mr. Meierdiercks moved to approve; seconded by Mr. Perry.
Mr. Reynolds asked for an explanation of the request for a time extension on top of the 62 days'
extension that the Board already approved.
The Manager noted that the extension request was retroactive to May 26, to ensure that it is done
legally and per contract. The time had expired while the contractor formulated his extension request.
The Manager noted that the State Judiciary moved out, and now DWS must provide an Americans with
Disability Act (ADA)- compliant access to the downstairs for future tenants. (The Judiciary was one
Page 11 of 61 Water Board Minutes 7 -27 -10 js
Days
Ext.
From (Date)
To (Date)
(Calendar)
Reason
1
5/28/2009
11/30/2009
186
Shipping and arrival times of new air handler
units
2
11/30/2009
3/31/2010
121
Shipping and arrival time schedule of critical air
conditioning system equipment, unforeseen
relocations of existing electrical and structural
facilities, unforeseen additional asbestos material
removal.
3
3/31/2010
5/26/2010
56
Waiting for arrival of vital air - conditioning
system equipment, and to balance the air
conditioning system after the equipment is
installed.
4
5/26/2010
9/27/2010
124
Construct driveway and appurtenant concrete
work around new building; retrofit data
processing room a /c; chain link fence around
ACCU units and build CRM Wall; and remove
selected rubber trees for driveway.
Total Days (including this
487
request)
The Manager recommended that the Board grant Isemoto Contracting, Co., Ltd. this extension of
contract time of one hundred twenty -four (124) calendar days from May 26, 2010, to
September 27, 2010 for JOB NO. 2005 -862, WAIAKEA OFFICE PLAZA AIR CONDITIONING
REPLACEMENT.
MOTION: Mr. Meierdiercks moved to approve; seconded by Mr. Perry.
Mr. Reynolds asked for an explanation of the request for a time extension on top of the 62 days'
extension that the Board already approved.
The Manager noted that the extension request was retroactive to May 26, to ensure that it is done
legally and per contract. The time had expired while the contractor formulated his extension request.
The Manager noted that the State Judiciary moved out, and now DWS must provide an Americans with
Disability Act (ADA)- compliant access to the downstairs for future tenants. (The Judiciary was one
Page 11 of 61 Water Board Minutes 7 -27 -10 js
big unit and so only one ADA access was needed, he explained. With new tenants, DWS cannot rely
on that single access.)
Mr. Reynolds said that all of the extensions make a joke out of how people do things in Hawaii. He
said that giving extensions and overruns encourage people to do a poor job of planning.
Mr. Inaba noted that the contractor had actually completed the air conditioning project a day before
schedule. Mr. Inaba noted that a driveway is to be installed in the back to provide vehicle access to the
building. Building a driveway was not included in the original scope of the project, he added. The
driveway was among the things DWS needs to do that were not in the original scope. DWS needs a
permit to install the driveway, he added. There was no driveway in the original design, but DWS
decided a driveway was also needed because without one, vehicles going to do maintenance were
tearing up DWS's yard. He acknowledged that the need for a driveway should have occurred to
someone from the beginning.
Mr. Reynolds asked how much the driveway would cost.
Mr. Inaba said the Department received a quote that was seen as a bit excessive, so DWS is doing it on
a force - account basis, while still remaining within the contingency which is 7.5 -10 percent.
ACTION: Motion carried unanimously by voice vote.
NTI 1. •
A. JOB NO. 2010 -963, LAUPAHOEHOE DEEP WELL NO. 2 REPAIR:
This project generally consists of the replacement of the existing line shaft pump, with a submersible
pump and motor, power cable, column pipe and appurtenances.
Bids for this project were opened on July 8, 2010, at 2:00 p.m., and following are the bid results:
Bidder
Bid Amount
Derrick's Well Drilling & Pump Services, LLC
$68,663.02
Be lik Drilling & Pump Service, Inc.
$87,423.00
Project Cost:
1) Low Bidder (Derrick's Well Drilling & Pump Services, LLC) $68,663.02
2) Construction Contingency (10 %) $ 6,866.30
Total Construction Cost: $75,529.32
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.
The Manager recommended that the Board award the contract for JOB NO. 2010 -963,
LAUPAHOEHOE DEEP WELL NO. 2 REPAIR, to the lowest responsible bidder,
Derrick's Well Drilling & Pump Services, LLC, for their bid amount of $68,663.02, plus $6,866.30 in
construction contingency, for a total contract amount of $75,529.32. He 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. Meierdiercks moved to approve; seconded by Mr. Harai.
The Manager explained that this is basically a routine well repair, and that any piece of equipment or
anything with moving parts is bound to break at some point.
Page 12 of 61 Water Board Minutes 7 -27 -10 js
Mr. Taniguchi asked if DWS has any language in a contract that pins the contractor down to a
completion date, or face a penalty. He asked if there is a penalty associated with coming back and
asking for a time extension.
The Manager said it depends on the justification for the delay. If it is a bona fide delay beyond the
contractor's control, DWS will grant the extension. If it is a delay caused by DWS because the
Department wants a different kind of work, DWS grants the extension. The General Requirements and
Covenants spells out when DWS can assess liquidated damages, which are supposed to be levied
because the Department does not have the use of the product it is paying for within the allotted time.
In DWS's case, it is difficult to determine liquidated damages when, for example, a well goes down
because DWS has other wells to cover the gap. Therefore, it is hard to prove damage. DWS uses a
table based on the value of the project, to determine liquidated damages. The table is published and
approved, and so DWS can follow it to assess liquidated damages.
Ms. Garson clarified that liquidated damages are technically not a penalty. Instead, liquidated damages
are an estimate, before a contracted is entered, of what damages DWS might suffer if the project is not
completed on time.
Mr. Taniguchi expressed the hope that DWS was not seen as a "deep pocket" that will grant a
contractor an extension for free, and meanwhile the contractor will finish someone else's project. He
worried that a losing bidder could complain that they would have bid lower if they knew DWS would
grant them extra days to do a project.
The Manager said that was why the engineers are training to review extension requests to make sure
the requests are not because the contractor failed to do what he was supposed to do. He said that
construction projects involving pumps, motors or electrical are bound to have problems.
Chairperson Mukai said that he wanted DWS to put bidders on notice that they must prove at the time
of bidding that they have talked to the supplier to ascertain that a pump is available and that once the
bid is awarded, that they have ordered the pump. He did not want to approve extensions if the
contractor fails to check with the supplier if a pump is available.
The Manager said that when the contractor made the extension request, DWS had asked them to show
when they ordered the pump. Sometimes it is not the contractor's fault. After a pump is built, it must
undergo a performance test, and if the pump does not meet efficiency requirements, it must be
scrapped and a new pump must be built. Delays like that are beyond a contractor's control, he said.
Chairperson Mukai said he just wanted to prove that they had done their due diligence.
The Manager assured the Board that the engineers do their utmost to make sure the process is done
legitimately and that extensions are granted only for a legitimate reason.
ACTION: Motion carried unanimously by voice vote.
SOUTH KOHALA/HAMAKUA:
A. JOB NO. 2007 -919, CONSTRUCTION OF EARTHQUAKE DAMAGED TANK REPAIRS,
COUNTY OF HAWAII, STATE OF HAWAII, FEMA- 1644- DR -HI, FIPS NO. 001- UVKJ8 -00,
GROUP #4 (S. KOHALA, HAMAKUA):
This project is the final group of repairs to tanks that were damaged in the October 15, 2006 Kiholo
Bay Earthquake. The project involves the repair and seismic retrofit of four (4) concrete water tanks
(one in the South Kohala district and three in the Hamakua district).
Page 13 of 61 Water Board Minutes 7 -27 -10 js
Bids were received and opened for this project on July 22, 2010, at 2:00 p.m., and the following are the
bid results:
Bidder Amount
Isemoto Contracting Co., Ltd. $798,479.00
Project Scope: This project involves the repair and seismic retrofit of four (4) reinforced concrete
water tanks (one in South Kohala district, three in Hamakua district) that were damaged in the October
15, 2006 Kiholo Bay Earthquake.
Project Cost:
1) Low Bidder (Isemoto Contracting Co., Ltd.) $ 798,479.00
2) Construction Contingency (10 %) 79,847.90
Total Construction Cost: 878326.90
Funding for this project will initially be from DWS CIP budget; however, DWS will be pursuing
reimbursement from the Federal Emergency Management Agency (FEMA) for up to 75% of the actual
construction costs. The Engineering estimate was $600,000.00 (without contingency). Due to
FEMA's deadline for completion of all earthquake repairs, the contractor must finish all work no later
than October 10, 2010.
The Manager recommended that the Board award the contract for JOB NO. 2007 -919,
CONSTRUCTION OF EARTHQUAKE DAMAGED TANK REPAIRS, COUNTY OF HAWAII,
STATE OF HAWAII, FEMA- 1664- DR -HI, FIPS NO. 00 1 -UVKJ8-00, GROUP 44 (S. KOHALA /
HAMAKUA) to the lowest responsible bidder, Isemoto Contracting Co., Ltd., for their bid amount of
$798,479.00, plus $79,847.90 for construction contingency for a total contract amount of $878,326.90,
and that either the Chairperson or the Vice - Chairperson be authorized to sign the contract, subject to
review as to form and legality by Corporation Counsel.
MOTION: Mr. Kaneshiro moved to approve; seconded by Mr. Meierdiercks.
Mr. Kane shiro asked if there was an Engineer's Estimate for the project, and asked if so, whether the
bid was reasonable and close to the estimate.
Mr. Inaba said the bid was high, but as with previous contracts for similar work, the Engineer's
Estimate was a bit low versus the bids DWS was receiving. The work required in this contract was
more complicated than a typical construction project because it involves existing tanks that are in
service. The job requires coordination and in some cases, shutting down the existing tanks while
providing temporary tanks, and figuring out on -site piping, etc. The work is more complicated than
what is shown on the plan, as far as what is being constructed and repaired, he said.
The Manager noted that the Engineer's Estimate was $600,000.00
Ms. Garson said that under procurement law, if there is only one bid, the Department and the Chief
Procurement Officer (i.e., the Manager) must determine that the bid is reasonable. In this case, DWS
has deemed that this bid is reasonable.
Mr. Reynolds asked why there was only one bid.
Mr. Inaba said DWS thought there would be several more bids, and a number of contractors who were
qualified to bid picked up plans. In the end, there was only one bid, and it may be due to the fact that
the project is significantly more complicated than the typical construction project.
Page 14 of 61 Water Board Minutes 7 -27 -10 js
Mr. Reynolds asked if there were any questions presented to the other contractors who pulled the plans.
Mr. Inaba said that DWS held a pre -bid meeting, about which all plan holders are notified. Several
contractors who qualified attended, he said.
Mr. Reynolds asked whether any of the contractors indicated why they did not bid.
Mr. Inaba said no, at the pre -bid meeting the contractors sat and listened to the requirements.
Mr. Reynolds said he was not in favor of approving the Department's recommendation to award the
bid until the Board ascertains that this is really a legitimate bid.
Mr. Inaba said that a lot of contractors picked up plans and filed intents to bid. However, DWS can
only go so far in terms of forcing contractors' hands to submit a bid.
Mr. Reynolds asked if there was any kind of rush in awarding the bid.
Mr. Inaba said yes, there was a FEMA deadline on whatever work DWS can complete, and DWS plans
to request an extension. However, there is no guarantee and it is unlikely that DWS will get an
extension.
The Manager said the work is to be completed by October 10, 2010.
Mr. Taniguchi noted that FEMA is going to pay 75 percent of the cost, so DWS's share will be around
$200,000.00.
Mr. Inaba said that actually it will probably cost DWS a bit more than that. FEMA has what is called a
Project Worksheet, drawn up by a FEMA team that goes to the scene of a disaster. The team comes up
with the Project Worksheet and a scope of work that they approve. This project includes that, and
perhaps a bit more. FEMA's reimbursement is only based upon what their Project Worksheet includes.
Mr. Taniguchi asked if DWS is listing up to 75 percent.
The Manager said a 75 percent reimbursement would be the best case scenario.
Mr. Inaba said that 75 percent is the maximum that DWS could get, but DWS's scope of work here
exceeds that. DWS has asked FEMA to include some of the Department's changes to the scope of
work, but past experience shows that DWS often gets no response. Therefore, DWS cannot bank on
getting a set amount back. He noted that FEMA makes its own estimate, based on the contractor's
price of the scope of work that FEMA drew up. FEMA will reimburse DWS for 75 percent on the
contractor's price of FEMA's scope of work, he said. Usually, DWS's costs for its scope of work are a
lot higher than what FEMA estimates, because FEMA uses a national average. Everything costs a lot
more here in Hawaii, he added.
The Manager said another factor is that FEMA will not pay for any betterment. FEMA will not pay for
doing something better than the way it was before the disaster. FEMA will pay for mitigation -type
work if it is proven that what is done will prevent future damage.
Mr. Harai asked whether the FEMA deadline might have deterred would -be bidders.
Mr. Inaba said no, because DWS was not specifying that all of the work has to be completed by
October 10, 2010, because it is unrealistic.
Mr. Perry asked what things were added to the scope of work, and what specific work would FEMA
approve.
Page 15 of 61 Water Board Minutes 7 -27 -10 js
Mr. Inaba said it would be mitigation -type work, some of which may be reimbursed by FEMA. He
noted that FEMA will pay for repairs to restore things to how they were before the disaster. However,
if another disaster occurs and the same damages occur, FEMA will not pay for it again. If another
earthquake occurred and the same damage occurs to the tank, FEMA will not offer relief for that. He
explained that mitigation means to prevent damage from occurring in the future.
Mr. Perry asked what mitigation actually means.
Mr. Inaba gave the example of a quake- damaged tank. DWS is making it so that if another quake
occurs, the likelihood of the tank being damaged again is diminished. DWS is working to prevent any
damages in the event of a future earthquake.
Mr. Okamoto said that the old tanks that are being repaired were designed with a lower classification
on the Seismic Zone requirement, i.e., Seismic Zone 3. However, now all of DWS's new designs are
geared to a higher level of construction to withstand a higher magnitude of earthquake such as the one
that hit in 2006. The work now is to make the tanks more quake - proof, with structural component that
are beefed up versus the ones the tanks used to have. It makes no sense to fix the tanks to the lower
classification.
Mr. Kaneshiro spoke in favor of approving the award, because it is better to use the FEMA money that
DWS can get now, rather than wait and not get a reimbursement. He said he approved of building the
tanks to withstand a higher magnitude of quake, because there will be future earthquakes. If not, any
future damage to the tanks will be DWS's burden to pay for.
Mr. Lindsey said he approved of awarding the bid, and expressed confidence that DWS had exercised
due diligence regarding the contract.
Mr. Reynolds asked why, if the quake took place in 2006, the repairs have taken this long to be done.
The Manager said the need for repairs was recognized immediately, but it was a matter of time to get
the project out to bid. He noted that this is the fourth group of tanks that DWS has put out to bid.
Mr. Inaba said a total of 21 tanks needed to be repaired after the quake.
The Manager said that meant four different contracts.
Mr. Reynolds assumed that DWS undertook repairs of the most seriously damaged tanks first, and that
repairs to the tanks in question here were of lesser urgency.
The Manager said these repairs were important and needed to be done.
Mr. Inaba confirmed this, noting that the tanks are leaking.
Mr. Okamoto said that DWS had to set up temporary steel tanks which these tanks are being fixed.
The old tanks are drained and put out of service. DWS did not want to buy 21 temporary steel tanks,
and instead bought one pair of tanks that are smaller, he said. These tanks go back to FEMA when the
old tanks are fixed.
Mr. Lindsey asked what happens as far as the FEMA money in the event that the contractor does not
meet the October 10 deadline.
Mr. Inaba said DWS is requesting an extension. The October 10 deadline is not really a "drop dead"
date. The quicker DWS can get work going and the more that can be completed on the project, DWS
can actually file a request for reimbursement, he said.
Mr. Meierdiercks asked about the size of tank involved here.
Page 16 of 61 Water Board Minutes 7 -27 -10 js
Mr. Inaba said that actually there were four tanks to be repaired, of varying sizes at various sites. He
was aware that one tank was 100,000 gallons, another was 50,000 gallons, but he was not sure about
the other two tanks' sizes. He noted that the sites involved are tight, posing difficulties in doing work
there.
ACTION: Motion carried unanimously by voice vote.
B. JOB NO. 2004 -850, WAIMEA WATER TREATMENT PLANT SLUDGE DRYING BEDS:
The contractor, Goodfellow Bros., Inc., requests a 43 working -day time extension. This is due to
delays beyond the contractor's control related to installation of Hawaiian Telcom service.
Staff has reviewed the request and finds that the 43 working days are justified. The 43 working days
converts to 70 calendar days (including weekends, holidays and furlough days).
This is the fourth extension request.
Ext.
#
From (Date)
To (Date)
Days
(Calendar)
Reason
1
5/19/2009
3/4/2010
289
Process Building permit
2
3/5/2010
6/18/2010
107
Process Building permit
3
6/19/2010
8/5/2010
48
Additional work including: silt fencing,
parking, concrete jacketing, piping and
electrical
4
1 81612010
1 1011412010
70
Delays for Hawaiian Telcom service
Total Days (including this request)
514
The Manager recommended that the Board approve a contract time extension to Goodfellow Bros.,
Inc., of seventy (70) calendar days from August 6, 2010 to October 14, 2010, for JOB NO. 2004 -850,
WAIMEA WATER TREATMENT PLANT SLUDGE DRYING BEDS.
MOTION: Mr. Harai moved to approve; seconded by Mr. Meierdiercks.
Chairperson Mukai asked how a telephone service can delay a project.
Mr. Okamoto said that it is part of the contract that DWS has with the contractor. The physical
components of the structure are pretty much done, and what remains is telephone service so that DWS
can monitor the system remotely, i.e., via SCADA or alarms, etc. Without the phone service, the
contractor would not fulfill his entire contract.
The Manager said that often what delays a project's completion is one small piece not working. The
project in this case is functional, but DWS does not want to accept the project and use it because to do
so means that DWS will assume liability. DWS does not want to accept the project until everything is
done.
Mr. Lindsey asked who DWS is working with at Hawaiian Telcom.
Mr. Okamoto said his point of contact is Mr. Calvin Watanabe, who has been very good.
Mr. Watanabe does not control the field work orders, however. Mr. Okamoto said DWS had requested
service from Hawaiian Telcom a while back and had received an acknowledgment from a
Ms. Reyna Chong.
Mr. Lindsey said that barring any material delays, he would facilitate the service getting done.
ACTION: Motion carried unanimously by voice vote.
Page 17 of 61 Water Board Minutes 7 -27 -10 js
C. JOB NO. 2007 -043, CONSTRUCTION OF THE WAIKOLOA RESERVOIR NO. 2
EARTHQUAKE REPAIRS, COUNTY OF HAWAII, STATE OF HAWAII,
FEMA- 1644- DR -HI, FIPS NO. 001- UVKJ8 -00, PW NO. 638:
The contractor, Goodfellow Bros., Inc., has requested a 74 calendar -day time extension. This request
consists of additional time required to install geotextile fabric. The fabric installer had demobilized,
due to the need to test the material under similar conditions to the existing panels, to verify the required
geotextile thickness. The existing condition of the panels was a concern for the specialist that DWS's
consultant hired to inspect the installation of the hypalon liner. This geotextile fabric acts as a
protective padding under the waterproof hypalon liner. The specialist found that although the 16 oz.
material would be adequate, the hypalon will undergo heavy stress and in time experience some minor
failures. In the specialist's opinion, this would still be acceptable as far as leakage through the liner is
concerned. The consultant also performed the same test using a 32 oz. material and said that although
there may be some minor stress on the hypalon, they do not anticipate that the material would fail due
to these stresses. The consultant also concurred with the specialist that a second layer of 16 oz.
material would perform similar to that of the 32 oz. material. Therefore, it was agreed that DWS
would get a proposal from the installer that would be the most cost - effective, as well as the fastest to be
done, including delivery of the material.
It was determined that the second layer of 16 oz. material would be the most cost - effective as well as
the fastest to be done, since the material is already being manufactured and will be delivered to their
baseyard in Seattle by the end of July. Delivery date to the job site is slated for around the third week
of August.
The additional layer of the geotextile fabric, including the installation, will cost an additional
$137,305.73. The current available funds in the contingency are approximately $10,000.00. DWS
staff has reviewed the proposal and find it acceptable. Therefore, DWS is requesting that the Board
approve an additional $137,305.73 in contingency from the C.I.P. budget to allow the second layer of
geotextile material to be installed, for the reasons stated above.
Staff has reviewed the request and finds that the 74 calendar days are justified.
This is the sixth time extension request.
Page 18 of 61 Water Board Minutes 7 -27 -10 js
Days
Ext.
From (Date)
To (Date)
(Calendar)
Reason
1
11/9/2009
1/30/2010
82
Rainout days and Hypalon polymer supply
issues.
2
1/30/2010
2/25/2010
26
Additional cleanout installation work and
rainout days.
3
2/25/2010
5/9/2010
73
Additional work for Change Order Nos. 3,
4, and 5; and rainout days.
4
5/9/2010
6/4/2010
26
Additional work for Change Order Nos. 6
and 7; and rainout days.
5
6/4/2010
8/16/2010
73
Additional work for Change Order No. 9;
and rainout days.
6
811612010
1012912010
74
Additional work-for Change Proposal 10 for
the second layer of] 6 oz. geotextile
material.
Total Days (including this request)
354
Page 18 of 61 Water Board Minutes 7 -27 -10 js
The Manager recommended that the Board approve a contract time extension to Goodfellow Bros., Inc.
of seventy -four (74) calendar days from August 16, 2010 to October 29, 2010, and approve an
additional $137,305.73 in contingency for JOB NO. 2007 -043, CONSTRUCTION OF THE
WAIKOLOA RESERVOIR NO. 2 EARTHQUAKE REPAIRS.
MOTION: Mr. Perry moved to approve; seconded by Mr. Meierdiercks.
The Manager said this item involves an extension, plus more money. He explained that conceptually,
this type of reservoir involves basically a liner over dirt, and nobody can see under the liner or discern
what is going on. When initial assessments were made, a number of assumptions were made as to why
the reservoir was leaking. The supplier of the liner should have known ahead of time, but it transpired
that the texture of the lining is such that a single layer of cushion will be penetrated and DWS will lose
the warranty on the liner. The proposal now is to use two layers of cushion instead of one. The
supplier who furnished the product should have known; the contractor did his part, getting estimates, a
quote and a commitment. However, when the supplier came out to take a look, they said they would
not warrant this unless DWS puts in two layers of cushion.
Mr. Inaba confirmed this, and said that DWS was told that the Department could go with a single layer
but would end up with some failure, but that it would be "acceptable." From DWS's standpoint, some
leakage or tearing would not be acceptable, he said. DWS has an opportunity, now that the reservoir is
being drained, to make it such that DWS has the assurance that the liner will not fail.
Chairperson Mukai asked how somebody hired for installation was determining the use of the 32 -oz.
material.
Mr. Inaba said that the specialist that actually went out to the site to supervise the liner's installation
did not go out there as part of the design. The specialist looked at the site and said that the panel (made
of shotcrete) there was very different in profile from a concrete panel, as far as the panel's rough
surface. The specialist had assumed that it would be made of concrete. The specialist expressed
concern about the very angular, sharp aggregates used in the panel, and said that he feared that the
material would not work. The material was taken back to the Mainland for testing, with panels made
of wood and sharp cut steel to simulate the rough conditions at the site. It was found at that time that
while a 16 -oz. liner would not necessarily be torn, over time there would be some failure, but that the
leakage would be "acceptable." With a second layer, the specialist felt that while there might be some
stress, it would not be to the point of causing any failure in the future.
Mr. Harai asked how long the warranty was, and what was covered by the warranty.
Mr. Inaba said the warranty covered the performance of the product (i.e., tearing of the material). The
warranty has what is called "acceptable leakage- over," and the warranty is for 30 years. He noted that
in this case DWS is working with the supplier (i.e., the manufacturer) and the installer. DWS is not
sure who will warrant the actual installation, but DWS has a warranty as far as the material. If DWS
can prove that the material failed under normal conditions, the manufacturer would honor that
warranty. However, in many instances, DWS finds that the manufacturer will tell DWS to go after the
contractor who installed the material, claiming that the contractor did not install it properly. DWS is
trying to avoid such a situation.
The Manager said because there is a doubt regarding the use of a single layer given the rough
aggregate here, it would be foolish not to put in a second layer. DWS does not want to have to do the
job all over again, he added. Going back to Harai's question, he noted that the warranty would not
cover an earthquake. DWS in any event wants to make sure it gets the best possible product, with the
knowledge the Department has now.
Page 19 of 61 Water Board Minutes 7 -27 -10 js
Mr. Inaba explained that the specialist was hired after the bid to come out and supervise the
installation. Therefore, the specialist was not involved with the design. At the site, the specialist noted
that it was not a typical concrete panel; a concrete panel would be much smoother. The amount that
Mr. Inaba is asking for in terms of what is being quoted is a "not -to- exceed" amount because DWS is
still in negotiation. DWS is scrutinizing the submittal in terms of labor costs.
Mr. Perry said, he visited the site two weeks ago, and was surprised to see how rough the concrete
panel was. He thought that in light of what DWS knows now, it is good judgment to go with a second
layer.
ACTION: Motion carried unanimously by voice vote.
MISCELLANEOUS:
A. DEDICATION OF WATER SYSTEMS:
The Department has received the following documents for action by the Water Board. The water
systems have been constructed in accordance with the Department's standards, and are in acceptable
condition for dedication.
1. BILL OF SALE
Kohala Public Library
Seller: State of Hawaii, Department of Accounting and General Services
Tax Map Key: (3) 5 -4- 002:008
E.W.O. 2009 -065
Facilities Charge: $1,190.00 Date Paid: 5/06/2010
Final Inspection Date: 5/05/2010
Water System Cost: $85,500.00
2. LICENSE EASEMENT NO. 741
Subdivision Application No. 2005 -171
Villages of La`i`opua, Village 5
No. of Lots: 118 and 6 Road Lots Zoning: RS 7.5
Licensor: State of Hawaii, Department of Hawaiian Home Lands
Tax Map Key: (3) 7 -4- 021:006
E.W.O. 2010 -007
Facilities Charge: Not Applicable (Participated in the "Kealakehe Multi - Family Water System
Improvements ")
Final Inspection Date: TBA
Water System Cost: $ TBA
The Manager recommended that the Water Board accepts these documents subject to the approval of
the Corporation Counsel, and that either the Chairman or the Vice - Chairman be authorized to sign the
documents.
Mr. Meierdiercks asked whether final inspection of the second dedication item above was completed.
Mr. Inaba confirmed that final inspection was done, and would get the date for the Board.
ACTION: Mr. Meierdiercks moved to approve; seconded by Mr. Harai and carried unanimously by
voice vote.
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B. LEGISLATIVE AUDITOR'S LIMITED SCOPE PERFORMANCE AUDIT OF THE
DEPARTMENT OF WATER SUPPLY'S INTERNAL CONTROLS FOR CASH HANDLING
AND FINANCIAL IT SYSTEMS:
(This item was covered earlier in the meeting.)
C. 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. At this meeting, the Committee
discussed the following:
• Discussion /action on vehicle take -home policy.
• The Legislative Auditor's Report
Mr. Taniguchi reported that the Committee meeting was held on July 13, 2010, attended by Mr.
Lindsey, Chairperson Mukai, the Manager and Mr. Taniguchi.
On the vehicle take -home policy, the Committee received copies of the policies for the City and
County of Honolulu's water department and Maui's policy (which follows the County of Maui's
policy). Kauai's water department does not have a formal policy. The Manager shared a draft of his
proposed policy, and the Committee will incorporate it with the working draft policy that Mr. Lindsey
had done. The Committee will meet again with the Manager to finalize recommendations that will be
put before the Board.
On the Legislative Auditor's report, Mr. Sumada joined the Committee meeting for discussion. The
Committee went over the entire report. The good news is that many of the recommendations are
already being implemented or are in the process of being implemented. The recommendations on cash
handling are to be hammered out. Mr. Taniguchi noted that Ms. Schrandt had written that the
Department was too busy, but that cannot be an excuse. The Committee plans to help mitigate and
assist the Department, he said. Mr. Sumada is looking into several options as far as bill collections,
because DWS gets thousands of payments coming through, and the Department is still handling
payments manually. Mr. Sumada is going to get quotes, and the Committee will come up with more
details on the cash control side, Mr. Taniguchi said.
The Manager said that after the meeting, he and Mr. Sumada met separately. Mr. Sumada has come up
with four specific steps that he intends to take, and will be reporting back to the Board at the August
meeting.
Mr. Taniguchi said the Committee would also be meeting ahead of the next Board meeting.
The Manager said that the Department can let the Committee know what the four distinct steps are at
the Committee meeting.
D. ENERGY MANAGEMENT ANALYST UPDATE:
The following areas were covered:
• Ldlamilo Site Clean-up and DLNR Lease Application Status
• DWS's Green Initiatives
Regarding the site clean -up, Ms. Myhre said she spoke to Mr. Jose Dizon at HELCO, which has chosen
a vendor to take down the windmills and clean up the site. The vendor has been notified verbally, but
the contract is still in the works, she said. HELCO, which has taken over the clean -up from Hawaii
Electric Industries (HEI), expects the clean-up to start in mid - August. HELCO expects the cleanup to
be done by mid - November. Following that, HELCO will do an independent Environmental
Page 21 of 61 Water Board Minutes 7 -27 -10 js
Assessment (EA) to ascertain that the letter of the original EA was met. A punch list will be drawn up,
and the entire project is expected to be finished by the December 9, 2010, deadline.
On the DLNR lease, the application is ongoing. Ms. Myhre got comments from the National
Renewable Energy Laboratory yesterday, which is preparing a technical report on the model they did
for the new wind generators. Once that report arrives, Ms. Myhre can complete the application for the
new lease on the property.
On the Green Initiatives report for this month, there is a new item in which Ms. Myhre tracks the
Department's total energy use by month, compared to the same period last calendar year.
E. PROJECT FUNDING AND REIMBURSEMENT AGREEMENT (BETWEEN COUNTY OF
HAWAII AND DEPARTMENT OF WATER SUPPLY FOR REIMBURSEMENT OF
GENERAL OBLIGATION BONDS TO BE ISSUED BY THE COUNTY FOR THE BENEFIT
OF DWS:
The DWS requested that the County issue General Obligation Bonds to fund various DWS projects,
with DWS to reimburse the County for the same. The Project Funding and Reimbursement Agreement
sets forth the terms and conditions of that reimbursement.
The Manager recommended that the Water Board approve Project Funding and Reimbursement
Agreement, and authorize the Manager to execute the agreement and any other related documents as
required, subject to the approval by Corporation Counsel.
MOTION: Mr. Meierdiercks moved to approve; seconded by Mr. Taniguchi.
Mr. Taniguchi asked Mr. Sumada if the Department factored the interest cost into the Budget.
Mr. Sumada confirmed this.
The Manager noted that DWS scaled down its requested amount, from the original $30 million, to
$15 million.
ACTION: Motion carried unanimously by voice vote.
F. MONTHLY PROGRESS REPORT:
Submission of Progress Report of Projects by the Department. Department personnel will be available
to respond to questions by the Board regarding the status /progress of any project.
Regarding a list of concerns the Board received from Mr. Fred Housel on behalf of the residents of
Tomi Tomi Drive, Mr. Reynolds said he had gotten an email which Mr. Beck also got about things that
the contractor had promised but failed to do. Mr. Reynolds said he would find out what the status was
and report back.
The Manager said Mr. Beck as the project engineer is in constant contact with the contractor, CTS
Earthmoving, Inc. CTS will tell Mr. Beck one thing and it does not happen.
Mr. Reynolds noted the letter Ms. Garson had included in the Board members' packets, which dealt
with the contractor's obligations. In the last paragraph are the words, "Therefore, should the contractor
not satisfactorily repair all the damage prior to the closing of the contract, DWS may undertake the
repairs and deduct any sums remaining." Mr. Reynolds said the problem with this is that the
anticipated closing of this contract is next year. However, CTS verbally promised the community that
the contractor would finish all the repairs of damages to the residents' property within six months.
Mr. Reynolds asked Ms. Garson is that verbal promise had any effect since it was not written into the
contract.
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Ms. Garson said no, DWS is stuck with the contract terms, and CTS has until the end of the contract to
complete all of that work. By making those verbal promises, CTS has a moral obligation, but failure to
honor the verbal promise does not constitute a breach of contract.
Mr. Reynolds said the verbal promise was made in front of several witnesses. Mr. Reynolds said he
was not likely to trust this contractor ever again. He said he believed that a man's word should be
adhered to. This is making it unnecessarily hard for the Manager, Mr. Beck and everybody else
involved. Mr. Reynolds said he told Mr. Housel that maybe the Department should look into a policy
to put something in writing to provide for situations like this, in the event that a contractor tears up
people's property. He thought the Board and the Department were a bit negligent not to write into the
contract something to the effect that in the event that the contractor damages people's property, that the
contractor would have to fix things within a reasonable amount of time, regardless of when the
contract's ending date is. There is a duty to protect people, because the average person does not
understand legal contracts, let alone read contracts. The Department should take some action to
prevent situations like the one on Tomi Tomi Drive in the future, he said.
The Manager said he agreed with Mr. Reynolds, and said that the contract does not address anything
about what needs to be happening here in a reasonable amount of time before the contract ends.
Technically, according to the contract, CTS does not have to do anything until the contract ends. Mr.
Reynolds's suggestion is a good one, but it is not clear how it can be legally put into a contract.
Mr. Reynolds said the contract should say when repairs to people's property should be made.
The Manager said words like "reasonable time" are relative, depending on the person. It is almost
impossible to be definite on what "reasonable time" means.
Mr. Reynolds said if CTS had come to him and wanted to tear his wall down to get their equipment
through, they either put it in writing and give a specific date — or it does not happen. The contractor
has no legal right to come in and tear up people's property.
Ms. Garson noted that she was in the process of revising DWS's General Terms and Conditions for
construction projects. She said she would see if she could put in a time period for making repairs to
people's property. She believed that six months would work as a time period for repairing damage to
private property. Ms. Garson said that she had made a note to herself to look at putting that into the
revised General Terms and Conditions.
On a separate topic, Mr. Reynolds said he had been invited to see the Palamanui development project
this Thursday, specifically regarding an unspecified water issue. He asked if he was in for a surprise,
and asked what the issue was.
Ms. Garson said the Palamanui project was not on the Agenda, and suggested that Mr. Reynolds speak
with the Department independently after the meeting.
Mr. Taniguchi asked who printed the list of concerns from Mr. Housel.
Chairperson Mukai said he had received the list from Mr. Housel the day before, and asked Ms. Shirota
to circulate the list to the Board.
Mr. Taniguchi asked whether the Board was in the middle of the situation between the Tomi Tomi
residents and the contractor.
The Manager said what scares him is that Mr. Housel and residents have had independent meetings
with the contractor without DWS's knowledge. The Department has attended many meetings
Page 23 of 61 Water Board Minutes 7 -27 -10 js
involving this project, but is in the dark about meetings that take place just between the contractor and
the residents.
Chairperson Mukai asked Mr. Beck if he had seen the list of concerns.
Mr. Beck said yes, many of the responses in red were his own.
Ms. Garson asked that the list of concerns be logged in as public testimony from Mr. Housel for this
Board meeting, since the entire Board has copies.
Chairperson Mukai asked if failure to keep verbal promises would be justification for the Board to bar
the contractor from bidding on future contracts.
The Manager said no.
Ms. Garson said probably not, but she said she could look at the requirements for debarring a
contractor from bidding on all future contracts. Debarring is a very harsh penalty, and Ms. Garson
doubted that failure to adhere to verbal promises would be cause to debar the contractor.
Chairperson Mukai said the Board could make it known that it is looking into the possibility of
debarring, so that the contractor takes notice and possibly heeds the warning.
Ms. Aton said she attended at least half of the meetings with the community. The verbal promise by
CTS was made in the context of a community meeting before construction got underway. Ms. Aton
said that along with the verbal promise, the contractor gave the caveat "barring any unforeseen
circumstances or situations we don't know might happen in the future." What popped up was the
Jernigan easement issue which held up access to where CTS wanted to work first. The easement issue
was not foreseen at the time that the promise was made. CTS did say six months with a caveat, Ms.
Aton said.
Mr. Reynolds said that what is making it look worse is that the unforeseeable thing is that CTS is off
on another job now. Meanwhile, CTS is not trying to take care of the items he promised.
Chairperson Mukai asked if the Department can do a response to these concerns.
Mr. Beck said he was trying to get some kind of concrete information from CTS as to when they will
be coming back on the job.
Ms. Garson asked if this could be put on next month's Agenda.
G. REVIEW OF MONTHLY FINANCIAL STATEMENTS:
Under the General & Administrative entry, Mr. Taniguchi noted that this increased by $1.9 million due
to payment to the Employer -Union Health Benefits Trust Funds (EUTF). He asked whether this was
budgeted for.
Mr. Sumada said he would check, but it was probably the medical premiums that the Department pays
monthly; he confirmed it was an amount budgeted for based on prior years' experience. The State of
Hawaii informs DWS of the amount, he said.
Mr. Taniguchi asked what CIAC stands for.
Mr. Sumada said that it is Contributions in Aid of Construction, which could be property, capital assets
or funds that DWS receives from developers or contractors. He gave the example of a reservoir that a
developer built and turned over to DWS. The Department in turn puts that asset on its books and it is
offset through this CIAC account.
Page 24 of 61 Water Board Minutes 7 -27 -10 js
Mr. Taniguchi asked about the $5.1 million under Other Non - Operating Revenues.
Mr. Sumada said that during the year, those contributions are recorded to equity. In June, Mr. Sumada
reclassifies it to revenue; it is an adjustment that the auditors recommended a while back. Therefore, in
June, Mr. Sumada reclassifies it, and looking from June to June, the number is comparable. However,
when one compares it with May, that number is not there because Mr. Sumada makes the adjustment in
June.
Mr. Taniguchi asked why the $5.1 million is not listed anywhere in the Statement of Revenues in the
Budget report.
Mr. Sumada said that it would not be on the Budget Report; the $5 million in CIAC is never going to
show up on the Budget. It is not something that DWS budgets for, he said. He confirmed that it shows
up on the year -end statement as revenue.
Mr. Taniguchi turned to the Miscellaneous Income entry of $74,000, which accounted for 25 percent of
the Budget, totaling $225,000 for the year. He asked if that was all HELCO Rider M credits.
Mr. Sumada confirmed that most of it was, and confirmed that DWS counts that as income.
Mr. Taniguchi asked how DWS gets that money.
Mr. Sumada said that it is an offset to the Department's power bills; it reduces DWS's power costs.
Mr. Taniguchi asked if this was factored into the Power Cost Charge.
Mr. Sumada confirmed that it was. The offset amount appears every month for those accounts that
have those Riders, he said.
Mr. Taniguchi asked where it shows up on the Budget.
Mr. Sumada said that it does not show up on the Budget; it is part of Power Purchases.
Mr. Taniguchi said that the Department did a good job this past year in monitoring power costs.
Mr. Sumada said the Department has just started breaking out the Rider M credits separately from the
HELCO bills.
Mr. Taniguchi asked if it was true income to DWS, or if it was just part of the Power Charge amount.
Mr. Sumada said it was debatable. DWS wanted to break it out separately so it was clear.
The Manager said it is not really a credit; it is what the Department saves.
Mr. Taniguchi said that it shows that DWS's bill from HELCO went down by $500,000.
Mr. Sumada said the Power Cost Charge is calculated based on what DWS's HELCO bill is, minus the
Rider M credits.
The Manager said that theoretically, DWS collects through the Power Cost to the consumers what the
Department pays to HELCO. Rather than viewing it as income, it is more like savings to the
Department.
Mr. Taniguchi said that is passed on to the consumer.
The Manager said that that was a good number to know, because it measures DWS's progress on
reducing its power costs from HELCO.
Page 25 of 61 Water Board Minutes 7 -27 -10 js
Mr. Taniguchi agreed that it was good to let the public know how the Department is working to cut
down the cost of water to the consumer.
H. PROPOSED NEW WATER RATE SCHEDULE:
(Covered earlier in the meeting.)
L AGRICULTURAL WATER POLICIES:
Chairperson Mukai entertained a Motion to defer this item to next month's Agenda, and that it be
considered early in the Agenda.
ACTION: Mr. Perry so moved; seconded by Mr. Lindsey. Motion carried unanimously by voice vote.
J. MANAGER'S REPORT:
Chairperson Mukai asked that the Employee of the Quarter item and the Recognition of Service
Retirement item be moved up. He asked that Item 13, CONTESTED CASE HEARING, (NOTICED
FOR 11:30 A.M.), follow.
5. Employee of the Quarter -- The Manager introduced Ms. Panoff, who in turn did the
introduction of the Employee of the Quarter, Ms. Higaki. She commended Ms. Higaki for stepping
up to help with the payroll in the unforeseen month -long absence of another employee. Ms.
Higaki, she said, went far beyond the call of duty. The Manager noted that public employees, and
hard - working DWS employees in particular, do not get the recognition they deserve.
6. Recognition of Service Retirement — Joy N. Kawakami, Customer Service Representative II
(Kona) — Ms. Hudman spoke on behalf of Ms. Kawakami, who is retiring on Friday after some 35
years of devoted service in Water Supply. Ms. Hudman noted that Ms. Kawakami has worked in
virtually every division of the Department. Mr. Meierdiercks said that last Friday, he stopped by
Kona baseyard to congratulate Ms. Kawakami on her retirement.
The Manager provided an update or status on the following:
1. Palam Road Transmission Waterline Project (covered earlier, during Monthly Progress Report)
2. Hawaiian Ocean View Estates Project (covered later in meeting)
3. Water Use and Development Plan Update (covered later in meeting)
4. Board member parking pass applications for County Buildings (covered later in meeting)
(Chairperson Mukai called a seven - minute recess at 12: 07 p. m. Meeting reconvened at 12:16 p. m.)
CONTESTED CASE HEARING (NOTICED FOR 11:30 A.M.):
A. WATER SERVICE ACCOUNT NUMBER 69036800 -11 (TMK 4 -4- 003:029):
The above Contested Case Hearing took place in accordance with Chapter 91 of the Hawaii Revised
Statutes and Rule 2 -5 of the Rules and Regulations of the Department of Water Supply.
The issues involved in the above - referenced hearing will be Mr. Kenneth F. Miranda and
Ms. Morag Miranda's appeal of the amounts shown due and owing on account 469036800 -11 and
consequently, the appeal of the shut -off notice dated February 8, 2010 for failure to pay said amount.
This hearing was set pursuant to Mr. and Ms. Miranda's request at the April 27, 2010 and June 15, 2010
Water Board meetings.
(The following proceedings are recorded verbatim.)
Page 26 of 61 Water Board Minutes 7 -27 -10 js
CHAIRPERSON MUKAL• Before going into the Contested Case Hearing, I'd first like to call upon
Corporation Counsel to keep us on the straight and narrow as to the parameters of this. Kathy?
MS. GARSON: Okay, just for the Board and the parties here, this is a Contested Case Hearing. What
it is is, it's going to be run kind of like a trial would be run. So what will happen is because this is Ms.
Miranda's case, she's going to have the opportunity to present her case first and then, this is Molly
Lugo. She's a Deputy Corporation Counsel who's representing the Department of Water Supply.
She'll have an opportunity to cross - examine Ms. Miranda, and as soon as Ms. Miranda is done
presenting her case, then Molly will present the Department of Water Supply's case. Ms. Miranda can
cross - examine any witnesses the Department of Water Supply puts on. After they're completely done
with their cases and all the evidence has been introduced, then the Board can deliberate. So you can
also, at the end, if you have questions of any witnesses while they're up there, if you think was not
asked, you can go ahead and ask those questions. And then, I'll help you through the deliberation
process, and then you'll come to a conclusion today as to what your decision will be. So I'm here to
answer any questions. We'll see if we can sort of facilitate the Contested Case Hearing.
CHAIRPERSON MUKAI: Ms. Lugo? No? Okay, we'll move on to our Contested Case Hearing. I
wanted to dispense with, again, the background, the dos and don'ts that were covered by Kathy
already. We'd like to just move on. Ms. Miranda, would you like to call any witnesses?
MS. MIRANDA: No, just myself.
MS. GARSON: Okay, so what Ms. Miranda will be doing is calling herself as...
CHAIRPERSON MUKAL A witness.
MS. GARSON: Yeah, she will be her first witness. So what we'll have you do is take an oath before
you start speaking. Okay?
MS. SNYDER: May I ask you to raise your right hand? Do you solemnly swear or affirm that the
testimony that you are about to give is the truth, the whole truth, and nothing but the truth?
MS. MIRANDA: I do.
CHAIRPERSON MUKAL Thank you.
MS. MIRANDA: I'm a little nervous.
MR. TANIGUCHI: Don't be nervous.
MS. MIRANDA: I have, thanks to your office, I have copies of all the documents; I have
communication documents that I've received or sent in regarding this issue with our water meter. So
I'm assuming that I'm submitting this as evidence. These are the letters, faxes and notices that have
been correspondence going back and forth for the last couple years regarding this issue. I also took
pictures yesterday and they're up there. What's in question, as you know, is we have been billed for
547,000 gallons of water. Our past history has shown that over the last few years that we've had this
meter that our largest bill was, prior to this, about 200 - something, when we did have a water break.
The location of the meter is the pasture adjacent to our old property; we lease it. This first picture
that's up there is the water meter itself The next picture that I took — it's crooked, but I wanted to
show the relationship of the meter to the trough, the only trough that feeds. And if you can see
between those two T- posts, the left T -post at the end of the grass is the edge of the water trough. Then
the next picture shows that similar view. Now, granted these were just taken yesterday and the leak
was almost three years ago, two and a half years ago, but nothing has changed. Actually, the next
picture would be better, of just the trough. We hardly use this trough because the mauka boundary is
on the Hdmdkua Ditch, which is accessible by our cattle. We run about seven to 50 head of roping
Page 27 of 61 Water Board Minutes 7 -27 -10 js
steers. This is the trough now, looking down toward Mamalahoa Highway. The pasture on the left is
the pasture we have our cattle in. The pasture on the right is actually DLNR land that we have
easement to, because our property on the farther right is land - locked. The bottom fence line that's
overgrown with grass is the access that your meter reader comes up to the meter, to read. Our
driveway is right there. So I'm just showing, to give you an idea of where this property is... I don't
know what I'm supposed to be doing.
MS. GARSON: You need to make sure that we have a clear record in this case. So what she's doing
is, she has physical copies of the photos that are being projected because we don't have nine copies for
each of the Board members. So what I'm going to do is, I'm going to... all of the physical copies are
on the projector. What I'm going to do is I'm going to mark these photographs with a number, so
when she's referring to a certain photo, she can say, she can, at least for the record, say "in reference to
Photo No. 1 or 10 ", that it'll be clear what she's referring to. The photograph that she was just
referring to, I'm going to mark as No. 1.
MS. MIRANDA: These were all the photos that we were just showing. This is that photo right there.
MS. GARSON: Okay, so I'm marking the photo that's up on the screen right now. That's going to be
Exhibit... and I'm just going to call it "A -I." Okay?
MS. MIRANDA: Okay.
MS. GARSON: Okay, so as you show a photograph up there, we'll go ahead and mark it with another
number, and you can explain what it is. Okay?
MS. MIRANDA: Okay, so this shows that if there was a water leak at our trough and it had rained.
And it's the middle of summer; that's what the grass looks like in summer. Kalopa is nice. Anyway,
that shows the direction; it's a hill that... where the water would have gone. Now, 500,000 gallons in
two months would've gone someplace down the hill. So that's why I'm showing you these pictures.
So the next photo, please? So again, that's just giving you... that's my neighbor's property, Hawaii
Johns. They boundary us. So that would be A -2.
MS. GARSON: And just for the record, I'm going to ask the Department's attorney if she has any
objections to us entering any of these photographs into evidence?
MS. LUGO: I have no objection. Just that, I believe the appellant said she took them yesterday, so
just so the record's clear that they weren't taken at the time that the bill in question took place.
MS. MIRANDA: They were just taken yesterday. Yeah, A -2. There. The next photo? So (it's) A -3.
Now you can see, at the end of the grass to the right is the gate that your meter reader would've come
up. And I don't remember what they call this section. It's a road where the trucks would go up and
down between the sugar cane fields when it was all still in sugar cane. But it's a DLNR road. Our
entrance to my personal house is at the bottom right, if you can see a little black kind of a post? That's
our black gate. We have neighbors below that. That's our entrance. We drive up and down it every
day. Because we have cattle in there, we check the water. The reason I showed you the water trough
at the level it is, that's about how we keep it. And we turn it on manually. It does not have a float
valve. Because we have the Ditch access, to the Ditch water. We're ranchers; we know that waters
leak, float valves break, and there's no reason for us to have it floating.
MS. LUGO: You can use the pointer.
MS. MIRANDA: How do I... ?
MR. BECK: Press the Hold button...
Page 28 of 61 Water Board Minutes 7 -27 -10 js
MS. MIRANDA: Sorry. Okay, so. Oh, sorry, it doesn't show on the screen.
MR. TANIGUCHI: Don't worry about the screen.
MS. MIRANDA: Is there a question? Do you guys see where I'm talking about? So I'm just giving
you a lay of the land. Okay, the next photo? So this is looking straight down the fence line of where
the water would've gone if it had gone anywhere. Okay, that's A -4. This would be A -5. Sorry, I
probably got carried away with my pictures. I wasn't sure what you needed to see to show you what I
was trying to get across. Okay, so this is the trough that feeds from that water meter. This would be
A -6?
MS. GARSON: Actually, it's A -5.
MS. MIRANDA: A -5. And actually, that's about how full it... or it's dry, because we don't need it
full because I mean, we don't have that many cattle in there. And we also use the DLNR property, and
we have 12 acres of our own, and they're roping cattle. And we rope all the time; my husband
competes nationally and so the cattle aren't always in there, so we don't need to have water in there.
Okay, next photo? I'm sorry, so that's this one? Same thing, same photo shot again. This is located
up from my neighbor's. This would be A -7. This is looking up from my neighbor's, up that same
fence line. Okay. This is my neighbor's home, so this will be A -8. Just showing you, if the water had
leaked out, where it would've gone. This is directly below the trough and the meter, of where it
would've gone. Okay, the next photo. And just another look at the same place, a little bit more... I
believe, if that much water had come down the hill, they would've known. We're neighbors and they
would've told us. Okay, the next photo? I took this picture of their water meter, which is in the corner
of our property that we lease. This is A -10. Okay, next photo? Again, that's just spinning it. Okay,
this is the 100,000 gallon tank in Waimea. This would be A -11. I put, this is my daughter. She's three
years old. I put her in the picture to show a relationship. I'm sure you all know what 100,000 gallons
looks like, what 500,000 gallons looks like. We're being billed for 547,000 gallons. So five ofthose
tankfuls, plus, is what the Department of Water is saying we used in a two -month period. Okay, the
next photo? So I'm just verifying what the tank is, what the size of the tank is. This is A -12. Okay,
the next photo? And there's a picture of the same tank. I actually made...that's A -13. I actually made
five copies of that tank, just for me as a visual, to show you that's how much water the Department of
Water Supply is saying we used in that two -month time period. In a two -month time period. I don't
know...
MS. GARSON: I've marked it A -13. So you're saying five copies of A -13.
MS. MIRANDA: Yes, five of A -13 is what the Department of Water is saying we used in one billing
cycle; a two -month time period. So those are the physical evidence, I guess, that I have to present. In
the letters that you have in front of you, the one letter to me that I thought was important is the
letter... it's March 15, 2010, that I wrote to Mr. Pavao.
MS. GARSON: Okay, hold on. Okay, March 15.
MS. MIRANDA: So first of all, I don't believe we used that water. I don't believe the Department of
water is going to lose any money because the water was never used. I believe an error was made down
the line someplace. Something happened, and a mistake was made. I wrote this letter to Mr. Pavao in
March of this year. Several things that I stated in it... one is, we didn't use the water. Two, as I was
discussing it with a staff member that I had called to talk about a bill I received regarding this, they
said in investigating it that they had calibrated the meter after our first visit in 2009, early 2009. And
then they changed the meter shortly thereafter. And I was never notified of that; I was never notified
that they calibrated it. I was never notified that they changed the meter after they said the meter was
working properly. So I asked for... I wanted to know why it was changed; who ordered that? And I
never received any of that information.
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MS. GARSON: We're going to mark the March 15 letter as A -14. Do you have any objections to A-
14?
MS. LUGO: No objection.
MS. MIRANDA: So I see that basically... okay, should I just go through? Can I go through your list?
It's probably more organized than what mine is. Okay, so A -15 would be the notice from the
Department of Water Supply dated 4 -16 -2010 of shut -off. A -16 would be the fax that I sent to
Ms. Snyder on April 30. A -17 would be a letter that I wrote on January 14, 2008. A -18 would be a
notice I received in February 2010; a shut -off notice. A -19 is another fax I sent to Mr. Pavao, that I
sent on February 25, (20 10). A -20 was a letter I received from the Department of Water Supply
regarding our account, that they tested my meter and it was accurate and showed that it was working
properly, so I needed to pay for the water — 547,000 gallons of water. In that letter, by the way, it did
not say that they had changed my meter. Okay, that's all that I have.
MS. GARSON: Maybe before you ask questions of Ms. Miranda, you'll have an opportunity to cross -
examine witnesses.
CHAIRPERSON MUKAL Before you go into that, I'm just confused. Can we just do the numbers
on the letters; we're just talking around it. What letter is that? The February 14 letter, I know that's A-
14 to Milton. February 8, what number is that? That's to the Department from the Mirandas. What
number is February 8?
MS. GARSON: February 8 shut -off notice is A -18.
CHAIRPERSON MUKAL And the next from Department of Water is February 25?
MS. GARSON: A -19.
CHAIRPERSON MUKAL And then, March 2 is... ?
MS. GARSON: A -20.
CHAIRPERSON MUKAL And March 15 was A -15?
MS. GARSON: April 16 was the A -15. Apri130 is A -16.
CHAIRPERSON MUKAI: Okay.
MS. LUGO: Okay, Ms. Miranda, I just have a couple questions. After you received the bill in
question, do you recall meeting someone from the Department of Water Supply at the meter location
and having them re -check the reading?
MS. MIRANDA: Yes.
MS. LUGO: Okay, and do you recall being informed that you could have the meter tested and that
also that you should check and see if you have any leaks?
MS. MIRANDA: Yes.
MS. LUGO: And do you recall being informed that you could be present at the meter bench test in
Hilo?
MS. MIRANDA: No.
MS. LUGO: Okay, so you weren't present for the bench test?
Page 30 of 61 Water Board Minutes 7 -27 -10 js
MS. MIRANDA: No.
MS. LUGO: But were you informed of the results of the bench test?
MS. MIRANDA: Not until I received that letter from Mr. Pavao this year.
MS. LUGO: Okay. Did you check for any leaks?
MS. MIRANDA: Yes.
MS. LUGO: Does your trough have, basically, a float valve?
MS. MIRANDA: No.
MS. LUGO: Okay, do you or your husband go to the site every single day?
MS. MIRANDA: No, about every other day.
MS. LUGO: Okay. Would you agree that water flowing out of the trough at about a rate of 6 gallons
an hour would just seep into the ground?
MS. MIRANDA: No.
MS. LUGO: Have you made any payments on the delinquent bill to this date?
MS. MIRANDA: I pay... not on the 547(thousand gallons). I paid, I believe, $75 of that, what was
typical of what our regular monthly bills were prior to this large amount, and that was it. And I've
continued to pay the reg(ular). And after that bill, the amounts went back to what they were before,
and I just paid that amount. I have not paid any more than that, if that's what you're asking.
MS. LUGO: Okay, thank you. That's all the questions I have for Ms. Miranda.
MR. HARAL Okay, I would like to ask you, referring to your letter of March 15.
MS. MIRANDA: Yes.
MR. HARAL When you say that, in the third paragraph, you say that the Department of Water
employee... do you recall who that employee was?
MS. MIRANDA: I don't.
MR. HARAL Okay, that's number one, and when did he come, 2008 or... ?
MS. MIRANDA: I believe it was in October. It was the original bill.
MR. HARAL Of 2008?
MS. MIRANDA: Of 2008. I don't believe they came ... I can't remember, but I know that I received
notice of the amount in January of 2009. But I'm assuming that we would've met right after I got the
bill, because I called immediately. I mean, I saw the bill and called Waimea and said... And you
know, we have four or five different meters because we have pastures around, so we're fairly familiar
with the Waimea office people. They know us, you know, we're town people. And so they sent
somebody out right away after I called to come and look at the meter with me. I don't remember who
it was, and I don't remember the date.
MR. HARAL That was in 2009? February of 2009?
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MS. MIRANDA: Yeah, I believe it was 2009, but I can't remember.
MR. HARAL Because it says here your reading determined at that time it was discussed between you
and...
MS. MIRANDA: Yes, we discussed it, we walked the line. We looked at the meter. We walked the
line down to the trough. We looked at the area around, and she said that that's right. But we...
MR. HARAL But that was one year later.
MS. MIRANDA: No, no, it was just a few months later, right after the leak, or right after I received
the bill. Just a few months later. It seemed to be sufficient for her when she came up. And she
actually told me that she was only assigned to our meter recently, like within the last couple of months.
Somebody else was assigned to read our meter prior to that, and they were out on leave. And she came
in to read our meter because she didn't even know where it was, and came in our meter. And she
looked at it; we walked the line, looked at the trough, and that's why I said that.
CHAIRPERSON MUKAL Any other questions? I have a question. I can see, through the
photographs provided, I know there's a trough. Obviously, there's a faucet leading to the trough. Is
the faucet suspended above the trough? Or by the two... Where is the water going into the trough?
MS. MIRANDA: No, no, it's... You might be able to see it on the one that I showed just of the trough
itself. I think that's why I showed that. It's kind of above. Okay, so the faucet... This is ... behind that
grass; right there is where the faucet is. The bungee cord is what holds it up to keep it shut off. And
then, when we're ready to fill it, we just drop it down and push it down and it opens up.
CHAIRPERSON MUKAL What was that again? It's not for the faucet... ?
MS. MIRANDA: It's the remnants of a float valve, but we don't use it that way because we don't
want it to run continuously.
CHAIRPERSON MUKAL My other question would be, so when the water dispenses from that unit,
is there ... I mean, I'm just trying to see that... Can you see that the faucet is on? Can you see water
going into it? That's what I'm trying to see.
MS. MIRANDA: Yes, I guess I should have taken a photo of it.
CHAIRPERSON MUKAL So you say you go there every other day, and you go to the trough and
you're not seeing the water.
MS. MIRANDA: We go to the trough to fill it for the cattle.
CHAIRPERSON MUKAL Correct. But during your visits, you did not see the faucet running.
MS. MIRANDA: No. And if, for some reason, the cattle knocked the bungee cord off or it starts
running on its own or something happens, we'd see it because it's right... that's why I tried to show the
relationship of the trough to where everything is, that it's... our neighbors are right there. Our
driveway that we come in and out all day long is right there. So it's easily accessible. We check it
because of the cattle. If, for some reason, like it has ... like, I think there's a couple, in your documents,
it shows our water usage history. There are a couple places where the bill is more than what the typical
bills would be. Those would be the times that either there was a pipe break, or a pipe break that never
overflowed, but a pipe break. We don't have ... it never overflowed because we check it.
MR. REYNOLDS: A couple things that I'm concerned about. How long was it after this, whatever
happened, happened before you knew about it?
Page 32 of 61 Water Board Minutes 7 -27 -10 js
MS. MIRANDA: I did not receive an abnormal reading notice. My husband asked me that, after the
last meeting when I was putting things together. I don't ever remember getting that, and normally for
our past... and we have had water breaks in water lines, but we get a notice within a day of the reading
to say, "Go check ", or we get a call that says, "You guys need to go check your pasture because we had
an abnormal reading; your meter is high." And we'll go, and sure enough, there's a water break. I
didn't get one. My notice, to answer your question, I'm sorry, is that at the next billing period...
MR. REYNOLDS: So that would be what, 20, 30 days, something like that? Do you recall at that
time what the weather was like? Was it raining a lot? Was the earth in such a condition you wouldn't
notice water? Or more like the picture there?
MS. MIRANDA: More like the pictures. Our area gets rain, but we're called "the Banana District."
It's perfect weather. We get enough rain to be green, and enough sun to grow. And even ... we could
go back and check, we keep our rain gauge totals. And I could go back and find out what the weather
was during that time.
MR. REYNOLDS: Well, I was just listening to the calculations, or the statement that 6 gallons an
hour... ? If that's correct... is that correct? Because that didn't seem very much to me.
MANAGER: It's 6 gallons a minute.
MR. REYNOLDS: Oh, 6 gallons a minute. I thought I heard "an hour."
MR. OKAMOTO: Yeah, she said "an hour."
MS. LUGO: I said "an hour." I misstated, sorry.
MR. REYNOLDS: Yeah, I thought, well, that's really a slow leak. So what I was trying to get at was
how long it would take to use up 547,000 gallons at that rate, and it would be, I think, about four days.
MR. TANIGUCHI: For 60 days, it's like 9,700 gallons a day... would have to be. I mean, that's how
much usage you'd have for 60 days. 56 days was the billing period. That's a lot of water.
MANAGER: It translates into 6.7 gallons a minute.
MR. REYNOLDS: Yeah, it would have to... It seems to me, my point is you have to notice it
someplace. I mean, that much water would not seep into the ground without showing up someplace.
MS. MIRANDA: And that's why I showed those photos.
MR. REYNOLDS: And yet, nobody said anything to you about noticing any undue amount of water.
Thank you.
MR. GREENWELL: I think I've seen a few water troughs that have leaks in my time, and I don't
know what kind of ranchers the Mirandas are. But if they lost that much water, there would be a
swamp.
MS. GARSON: Okay, at this time, what we're doing is we're... Ms. Miranda is still under oath, and
basically we're allowing the Board members to ask any clarifying questions while she's still under
oath. Then she'll have an opportunity, if she has any other witnesses, to call them. And if not, then her
case is finished. And then, Ms. Lugo will present her case. And the Board can deliberate. So right
now, what we're on is questions for Ms. Miranda.
CHAIRPERSON MUKAI: So all we do is ask Ms. Miranda.
Page 33 of 61 Water Board Minutes 7 -27 -10 js
MS. GARSON: If there are any questions that you have remaining that have not been answered, of
Ms. Miranda.
CHAIRPERSON MUKAI: I have a question. How... it must have been a long day. I cannot
remember what happened yesterday. What's the foliage like? What was the foliage like; is it like that
always?
MS. MIRANDA: On the right side, where it's longer, because it's not necessarily our land. We use it;
we fenced obviously the bottom and the top. We have permission to use it. Under the term of "fire
control," which is the short side, my husband mows it when it gets like the other side, because the
guinea grass isn't the best grass for them. So that's what it looks like most of the year. And we're in
the middle of summer, and I took there yesterday.
MR. HARAL Where's the pipe located, in reference to the trough, and how far... ?
MS. MIRANDA: Okay, so if we can go back a little bit. Okay, so there's the meter; there's the meter;
there's the pipe.
MR. HARAL Oh, so the pipe is above ground.
MS. MIRANDA: Can you go back where the meter is? Yeah, right there. Okay, so this is
Photo... what you're looking at ... I guess, submit a new photo? I mean, you've seen it but, as an
official... ? So this is, I think, A -21 photo. So you see the meter there? I propped it up; the box is
propped up so you could see it. The pipe goes straight down to the trough, which is closest to the left
dark T -post. And that's it.
MR. HARAL And the pipe is... ?
MS. MIRANDA: It's above ground; it's all above ground. You can see it, we just laid it there. Also,
because that's not our property.
MR. PERRY: What is the distance from the meter to the trough? More or less?
MS. MIRANDA: From that wall to that wall, and maybe a little bit further.
MR. PERRY: 100 feet? Or less?
MS. MIRANDA: How long are these tables? Six feet?
MR. TANIGUCHI: Maybe six feet?
MR. PERRY: Fifty feet?
MR. REYNOLDS: Fifty, sixty feet.
CHAIRPERSON MUKAI: Any more questions for Ms. Miranda?
MS. MIRANDA: Sorry, I don't do numbers.
MR. PERRY: Just to get an idea of that area... so the pipe is running through this higher grass area?
And right below your trough, is there a gentle slope? It's hard to tell from the pictures. Is it flat or... a
gentle slope?
MS. MIRANDA: If you can look at ... I'm going to reference A -1. If you look at how the T -posts
slant down, it is a gentle slope but it's not flat by any means. Even though you're looking up, it gives
you a better idea.
Page 34 of 61 Water Board Minutes 7 -27 -10 js
MR. PERRY: What I'm getting at is, if water was leaking at 6 gallons per minute, it would either
pond if it was flat, or it would go in some direction if it was any slope.
MS. MIRANDA: I don't know what the angle is.
MR. PERRY: It's a pretty good slope.
MS. MIRANDA: If my elbow is at flat, it's about like that; I mean, it's a gentle slope that you go up.
But you know, it's definitely a slope.
MS. GARSON: I think it's maybe a 45- degree angle?
CHAIRPERSON MUKAL No, no.
MR. PERRY: I would say 30.
MS. MIRANDA: From that tree, you can see right below the branches is the Ditch line. It actually
goes to a very steep incline, so it's almost like that, where you'd have to have four -wheel drive to get
up the rest of the road. You couldn't drive a car.
MR. PERRY: And from the meter to the trough is the same slope, going the same direction?
MS. MIRANDA: No, it's going across...
MR. PERRY: So it's more like, level.
MS. MIRANDA: It's only a couple feet higher across than the trough itself, but still a down... But
from the meter to the trough is a very small difference in slope.
CHAIRPERSON MUKAI: Any more questions for Ms. Miranda?
MR. MEIERDIERCKS: Who signed for the meter in original issue?
MS. MIRANDA: I would assume it's my husband. He was previously married when he bought the
property.
MR. MEIERDIERCKS: So technically, he's responsible?
MS. MIRANDA: Yes.
CHAIRPERSON MUKAI: Any more questions? Hearing none...
MS. LUGO: I'd like to distribute to the Board the Exhibits I've prepared. And I also provided these
to the Appellant. So if there are no objections, I would like to submit them into evidence at this time.
CHAIRPERSON MUKAI: Any objections from the Board?
MS. GARSON: Actually, it's up to Ms. Miranda.
MS. MIRANDA: No, I don't have any objections.
MS. LUGO: Are you ready for me to proceed with the first witness? Okay, I'm going to call Cris
Hudman.
MS. SNYDER: Please raise your right hand. Do you solemnly swear that the testimony that you
about to give is the truth, the whole truth and nothing but the truth?
MS. HUDMAN: I do.
Page 35 of 61 Water Board Minutes 7 -27 -10 js
MS. LUGO: Can you please state your name for the record?
MS. HUDMAN: My name is Cris Hudman.
MS. LUGO: And where are you employed?
MS. HUDMAN: The Department of Water Supply.
MS. LUGO: And what is your position there?
MS. HUDMAN: I'm the Customer Service Supervisor.
MS. LUGO: And how long have you been in that position?
MS. HUDMAN: Approximately 12 years.
MS. LUGO: Can you briefly describe your duties?
MS. HUDMAN: I oversee the Customer Service Section, which is the front -line section of the
Department. It consists of cashiering, where bill payments are made, and collections for delinquent
accounts, meter reading. We create and maintain the customers' records and files, also provide
information for the public and resolve customer complaints and issues.
MS. LUGO: As part of your job, are you required to be familiar with the Rules and Regulations of the
Department?
MS. HUDMAN: Yes.
MS. LUGO: And you mentioned that you will sometimes get involved when a customer has a dispute
about a water bill?
MS. HUDMAN: Yes.
MS. LUGO: According to the Rules and Regulations of the Department, what are the options that the
customers have if they believe they have been overcharged on their bill?
MS. HUDMAN: Normally, when we first learn that the customer has a question about their bill, our
process is to have the meter re- checked for a correct reading. And then, the second option, or what we
would do is, if, in fact, there is a doubt of the reading, and where the water went and it's unexplainable,
we would suggest what we call a "meter test" to see or check the meter for its accuracy. We also
provide, if they did have a leakage, we would also provide what we call a leakage adjustment.
MS. LUGO: I'm going to ask you to refer to Exhibit I, which is Section 3 -10, the first page of the
Section 3 -10 of the Rules and Regulations. It's at the rule relating to leak adjustments, or an
adjustment based on faulty meters.
MS. HUDMAN: Yes.
MS. LUGO: Would there be any other basis for an adjustment to a bill?
MS. HUDMAN: If you look at Number 2, towards the end, after the "six months," it says: "unless it
can be proven that the error was due to some cause, the date which can be determined and established."
That's one type of adjustment that is allowable, whereby our repair field crew would go and repair
what we call an "outlet coupling leak." That leakage is normally in between the customer's valve and
the customer's supply line. So if that loosens up, what we normally do is send the field crew to repair
that. And that is recorded on a field work order. And when I get that field work order and I look at the
Page 36 of 61 Water Board Minutes 7 -27 -10 js
consumption versus what their average is, I make an adjustment. That's one type of adjustment that's
allowable.
MS. LUGO: Was there any field work order for that kind of repair in this situation?
MS. HUDMAN: In this case, there was a field work order only to have the meter changed.
MS. LUGO: Okay, so there's no indication that the situation was as you described?
MS. HUDMAN: No.
MS. LUGO: And then, would another basis for an adjustment be if there was a criminal act by a third
parry?
MS. HUDMAN: Okay, the other adjustment besides the criminal act by a third party would be if the
leakage was caused by earthquake, flooding, wind or act of nature.
MS. LUGO: All right, so based on this rule, other than a faulty meter, a water leak or a criminal act,
there are no other bases upon which an adjustment to a bill can be made, according to the Rules.
MS. HUDMAN: Yes, that's correct.
MS. LUGO: In late 2007 or early 2008, did you become aware that the Mirandas had a dispute over
certain charges on their water bill?
MS. HUDMAN: Yes.
MS. LUGO: Do you recall how this was brought to your attention?
MS. HUDMAN: Normally, the customer service rep that helps the customer finds that... they try to
resolve the issue with the customer. However, if they find that it's beyond their capacity of resolving
it, they just bring it to my attention verbally, just to let me know what was going on. But
Tanya Villanueva, who is at our Waimea office, she's a capable person who can resolve most issues...
In this case, she did inform me, and she recorded in what we call the "Account Comment" section of
our billing system.
MS. LUGO: Okay, I think you're referring to Exhibit 3. And you say that's the Account Comment
section of your billing system.
MS. HUDMAN: Of our billing system, yes. And if you look at where we first found out that she did
have a high consumption, which is dated October 26 (2007), Tanya mentioned that, one, they had the
meter re- checked for correct reading, which in that case, it was a correct reading, and then, that she was
going to issue out a High Reading Notice, which is our normal procedure to inform the customer that,
you know, they have excess usage. In this case, they did all that, and then, on November 15 (2007),
this was prior to the next billing, or their next billing, Mr. Miranda had called and spoken to Tanya.
And because she was aware of this situation, I guess, they conversed and talked about it, discussing the
terrain and where that meter is serving. And that she also mentioned that if there was an overflow, it
would go into the neighbor's yard.
MS. LUGO: Okay. Well, looking at the Account Comments, as a result of the conversation that
Tanya had with Mr. Miranda on the 15th (of November, 2007), was the meter reading re- checked a
second time?
MS. HUDMAN: Yes.
MS. LUGO: Okay, and then was a bench test ordered?
Page 37 of 61 Water Board Minutes 7 -27 -10 js
MS. HUDMAN: Yeah, at that time, when Mr. Miranda had mentioned that this was an unexplainable
water usage, the next step is to suggest that the meter be tested; which in this case, she did discuss with
Mr. Miranda.
MS. LUGO: Can you just briefly describe the procedure for testing a meter? Was it tested there at the
site or... ? What happens when a meter is... ?
MS. HUDMAN: We give the customer the option of whether they want to be present for the meter
testing or not. And if they don't, and they allow the Department to just do their part, we have the meter
removed from the site, and we replace it with a brand -new meter, just so that the customer will have
continuous service. Then the meter is brought in here to the Hilo office, where we have our meter
room mechanic run the different tests. Technically, I don't know what those tests involve ... and he
normally provides us with the results. In this case, any meter that's running 100 percent or under, we
consider that as a good meter. In fact, it's under - rating the consumption, although it's to the
customer's benefit, rather than the Department's benefit.
MS. LUGO: Okay, so the notes indicate that the meter underwent a bench test, so it was removed and
taken to Hilo. And due to the Account Comment notes here indicate ... I think it just said it indicated
that it was running properly.
MS. HUDMAN: Yes.
MS. LUGO: Based on the notes here. But when the meter was removed for testing, a new meter was
installed at that time, so that there would be continuous water.
MS. HUDMAN: Yes.
MS. LUGO: I'm just continuing to go through this chronologically. What happened after the
Mirandas were informed that the meter tested properly?
MS. HUDMAN: Okay, so on December 13, Tanya called Mr. Miranda and informed him of the meter
test result. And again, he mentioned that there is only one trough on the property.
MS. LUGO: Okay, what did he say regarding whether there were any leaks discovered?
MS. HUDMAN: He had no leaks. And he was offered... actually, if this consumption was as a result
of a leak, then he did have an option to apply for a leakage adjustment.
MS. LUGO: So Tanya informed him?
MS. HUDMAN: Yes.
MS. LUGO: Okay, so if a customer does have a leak, is it their full responsibility to detect that leak
and get it fixed?
MS. HUDMAN: Yes.
MS. LUGO: And can you just refer to Exhibit 2, Rule 3 -7. What does that say regarding the
customer's responsibility?
MS. HUDMAN: Okay, the Responsibility for Water Receiving Equipment: "The owner and
consumer shall at his own risk and expense furnish, install, and keep in good and safe condition all
equipment that may be required for receiving, controlling, applying and utilizing water, and the
Department shall not be responsible for any loss or damage caused by the improper installation of such
equipment, or negligence."
Page 38 of 61 Water Board Minutes 7 -27 -10 js
MS. LUGO: If there is a leak, what do the Rules say regarding how long the customer has to make the
necessary repairs and apply for an adjustment?
MS. HUDMAN: In the Rules, it doesn't specifically say when they should repair. However, which I
didn't finish...
MS. LUGO: If you look at the Rule in Section 3 -10, Subsection 3, the last paragraph, would that set a
timeline for when the customer has to fix the leak and apply for an adjustment?
MS. HUDMAN: Oh yeah, sorry. "In the case where the consumer has been given a notice of high
consumption, or has received their billing indicating high consumption, the consumer shall be given
thirty (30) days within which to make the necessary repairs and shall be given sixty (60) days within
which to apply for an adjustment of water bills."
MS. LUGO: But in this case, the meter tested accurate and the Mirandas said there were no leaks.
MS. HUDMAN: Yes.
MS. LUGO: And so what were they informed regarding the options available to them? Were there
any adjustments available at that point?
MS. HUDMAN: No adjustments were available... but we provide another option.
MS. LUGO: What is that?
MS. HUDMAN: Which is what we call... because the amount becomes due, we offered the customer
what we call a "payment arrangement," where they can make monthly installments towards the
balance.
MS. LUGO: Was any payment arrangement ever arrived at?
MS. HUDMAN: No.
MS. LUGO: Has the delinquent balance been paid down?
MS. HUDMAN: No.
MS. LUGO: And due to this non - payment, were the Mirandas informed that their water service would
be shut off?
MS. HUDMAN: Yes.
MS. LUGO: And was the discontinuation of water service consistent with the Rules and Regulations
at this point, due to their non - payment?
MS. HUDMAN: Yes.
MS. LUGO: And do you believe that the Rules and Regulations of the Department in governing bill
adjustments and discontinuance of water service have been applied to the Mirandas in the same way
that they would be applied to anyone else?
MS. HUDMAN: Yes.
MS. LUGO: Thank you. Those are all the questions I have of Ms. Hudman.
MS. GARSON: Now Ms. Miranda has the opportunity to cross - examine Ms. Hudman. Do you have
any questions?
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MS. MIRANDA: What she said was true.
CHAIRPERSON MUKAI: Counsel, can we ask questions now of the witness?
MS. LUGO: Sure.
CHAIRPERSON MUKAL I have a question. Why was the meter changed?
MS. HUDMAN: In order for us to test the meter, we need to take it out of the field and bring it in to
the meter room for testing. That's the only facilities we have to test the meter.
CHAIRPERSON MUKAL And where is the original meter?
MS. HUDMAN: The original meter? I'm not exactly sure because I was trying to get hold of the
meter mechanic. I believe that when I did my original research, it went out to service another... See,
what they do is, they do the testing, then they fix it and it's good to go because it's running now at 100
percent capacity.
CHAIRPERSON MUKAL Whenever there's a meter test... say, I have a problem with my meter,
you test the meter, you bring the meter up, put a new meter in, you do the meter test and now I have a
new meter at my property.
MS. HUDMAN: Yes.
CHAIRPERSON MUKAL That's normal procedure.
MS. HUDMAN: Yes.
MR. TANIGUCHI: I have a question, maybe not to you. Can we ask questions of somebody else?
MS. GARSON: No, it's Ms. Lugo's case to put on. She's still in the middle of her case.
MR. TANIGUCHI: Oh, I'm sorry.
MS. LUGO: I know you want to ask questions, too, but I'm going to call one more witness up.
MR. TANIGUCHI: Oh, you are?
MS. LUGO: I have one more witness, Mr. Daryl Ikeda.
MS. SNYDER: Please raise your right hand. Do you solemnly swear that the testimony that are about
to give will be the truth, the whole truth and nothing but the truth?
MR. IKEDA: I do.
MS. LUGO: Can you please state your name for the record?
MR. IKEDA: Daryl Ikeda.
MS. LUGO: And where are you employed?
MR. IKEDA: Department of Water Supply, at the Hilo Baseyard.
MS. LUGO: What is your position title?
MR. IKEDA: Chief of Operations.
MS. LUGO: And how long have you been in that position?
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MR. IKEDA: Maybe five years or so.
MS. LUGO: Do you have an engineering background?
MR. IKEDA: Yes.
MS. LUGO: I want to refer you to Exhibit 5. Can you identify what that is?
MR. IKEDA: This is the log that the Meter Room uses when they do their testing.
MS. LUGO: You don't actually conduct meter tests, personally?
MR. IKEDA: No.
MS. LUGO: But you would be the supervisor over the person who does these tests, and you're
familiar... ?
MR. IKEDA: I'm not the immediate supervisor, but overall supervisor.
MS. LUGO: And you're familiar with this log here?
MR. IKEDA: Yeah, kind of Sort of
MS. LUGO: If not this particular page, but for today, you're familiar that there is a log that reports the
meter... ?
MR. IKEDA: Yeah. Right. Yes.
MS. LUGO: Okay. There is an arrow pointing to Number 7. And so that's ... I guess, a meter number
and although the meter number doesn't have a customer name attached to it, if you refer to Exhibit 10,
which is the meter reading history for the customer, Kenneth Miranda, you see that same meter number
identified on Number 7 on the Meter Test History. You see that identified on that Exhibit 10, which is
the meter history for the Mirandas?
MR. IKEDA: Yes.
MS. LUGO: All right. Can you basically explain for the Board what this indicates about the results of
the meter test that was conducted?
MR. IKEDA: Exhibit 5, you mean? Yeah, this report says that the meter was brought into Hilo. We
have a test bench in our meter room where we put the meter on the bench and we run water through it
to test it. We run it at several different velocities, I guess, gallons per minute. There's three: one
gallon per minute, two gallons per minute and 15 gallons per minute. And it's a controlled test, so we
can see if the meter's reading accurately because we know how much water is going through, and the
time, so we can figure out what it should be. And based on that test, we consider 95 percent, between
95 and 100, to be accurate. And this test shows that for each gallon per minute that was running
through the meter, it's satisfactory. It's 95, 100 and 98.6. We consider it working correctly.
MS. LUGO: That percentage represents the amount of water that's actually flowing through, the
percentage of water flowing through what the meter is registering.
MR. IKEDA: Yeah.
MS. LUGO: Okay, so based on the meter test that was conducted, this meter was functioning
properly?
MR. IKEDA: Correct.
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MS. LUGO: In your experience, is it, would you say, rare for a meter to register much over 100
percent of the water that's flowing through?
MR. IKEDA: Generally, the meters, as they get older, they run slower. We hardly see them run
faster.
MS. LUGO: Okay. Can you refer to Exhibit 7? Is this the particular meter that was in place at the
Mirandas?
MR. IKEDA: Yeah, according to the chart, it says that it's a Hersey meter, No. 430. That's one of
the...
MS. LUGO: One of the 400 series?
MR. IKEDA: Yeah.
MS. LUGO: And this is the specification for that meter?
MR. IKEDA: Correct.
MS. LUGO: And if you look at the second page, what is, I guess, the maximum output capacity of
this particular meter, in gallons per minute?
MR. IKEDA: 25.
MS. LUGO: So if we establish some rough math, it's 547 gallons in question. That works out to
roughly 6.7 gallons per minute. That would be consistent with the output capacity of this particular
meter.
MR. IKEDA: Yes, it's well within the range.
MS. LUGO: Thank you. That's all the questions I have.
MR. REYNOLDS: I have a question.
MS. GARSON: Ms. Miranda has an opportunity to...
MR. REYNOLDS: Sorry.
MS. MIRANDA: No, it's okay.
MS. GARSON: Do you have any questions of Mr. Ikeda?
MS. MIRANDA: No.
CHAIRPERSON MUKAI: Okay, Mr. Reynolds?
MR. REYNOLDS: Yeah, on Exhibit 5, under the "Before Repairs" column, it shows... What are
those top numbers, the lower ones, 95, 100, 98.6 is percentage, right? What are the upper numbers?
MR. IKEDA: Just the reading that they get, to figure out the percentage.
MR. REYNOLDS: A reading. So, with one gallon per minute, the reading was 8921. What does that
mean? What does that signify: 8921?
MR. IKEDA: That's the reading of the meter.
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MR. REYNOLDS: But what does it mean? Does it mean ... is it talking about gallons or... ? I mean,
the meter reads at one gallon per minute, 8921?
MR. IKEDA: The starting reading is 8826, if you look at the column before.
MR. REYNOLDS: Okay, so the next one, at two gallons per minute, it goes to 9021, just up very
little.
MR. TANIGUCHI: Yeah, so, 100 gallons.
MR. REYNOLDS: And now at 15 gallons per minute, it looks to me like... I can't read that number.
Is that 6007?
MR. IKEDA: I think it should be 10, I would think.
MR. REYNOLDS: Oh, 10,000.
MR. IKEDA: Yeah, it should be...
MR. REYNOLDS: Yeah, I thought—, and that's what I couldn't understand, because it appears to me
that it looks like 6007.
MR. IKEDA: No, it should be 10.
MR. REYNOLDS: My eyes aren't as good as they used to be. And that would stand... That would
make sense, then, if it's going to be 15 times more than whatever that flow is with one gallon per
minute.
MR. TANIGUCHI: To the left, in that Reading column, what do those numbers signify? 8826 on top
and 1392 on the bottom?
MR. IKEDA: I'm not real sure. I would be guessing right now.
MR. TANIGUCHI: Yeah, I was just curious because the top and bottom numbers...
MR. IKEDA: Yeah, based on that, that's how they figure it out to get the percentage. That's probably
the "before" reading and the "after" reading.
MR. TANIGUCHI: So the number is not gallons, then, 8826?
MR. IKEDA: It's probably the reading on the meter, I would say ... I would guess. I don't want to...
I'm guessing, because I really didn't have a chance to talk to the meter mechanic before he left.
MR. TANIGUCHI: So it's not like it's a "before" and "after "? It is?
MANAGER: But it's not gallons.
MR. TANIGUCHI: It's not gallons? It's just a number on the meter... ?
MS. GARSON: We need to have another...
MR. IKEDA: Yeah, because I really didn't have a chance to talk to them so I'm not real sure.
MR. TANIGUCHI: Because I'm trying to look at all the numbers and all of them ... the bottom
number... well, some of them don't have a bottom number, yeah? But then, most of them, the bottom
number is lower. But if you look at the first one on the page, the bottom number is higher than the top
one. So I'm just kinda curious as to what those numbers represented.
Page 43 of 61 Water Board Minutes 7 -27 -10 js
MR. IKEDA: Yeah, actually...
MR. TANIGUCHI: I was thinking maybe "before" and "after ", at first, but then, you cannot go back,
yeah?
MR. IKEDA: Yeah, it doesn't make sense.
CHAIRPERSON MUKAI: Well, answer to the best of your ability, then.
MR. TANIGUCHI: Well, he don't know so...
MR. IKEDA: Yeah, I would be really guessing.
MR. REYNOLDS: Mr. Chairman, I have a concern here. It seems to me like we need the witness to
give us the actual information on these numbers. He says he's guessing.
MR. IKEDA: No, this is accurate.
CHAIRPERSON MUKAI: You only can question the witness based on the testimony provided. If
you want to provide other witnesses that have accurate information...
MS. GARSON: This is still Ms. Lugo's case to present. If she needs to call another witness, she can
call on another witness, and if she doesn't, then that's the end of the case. And Ms. Miranda can
provide her rebuttal.
CHAIRPERSON MUKAI: So are there any more questions from the Board directed to Mr. Ikeda?
MR. MEIERDIERCKS: I don't know much about the engineering, but what is... ? Is there a
pressure that you test here? Is there a pressure that you know what is at the meter at their residence? Is
it fairly similar?
MR. IKEDA: I really don't think it matters too much on the pressure. It's just the amount of water
that's passing through the meter — the amount of flow.
MR. MEIERDIERCKS: The pressure difference is not going to make that much difference, then?
MR. IKEDA: It shouldn't.
MR. LINDSEY: Mr. Ikeda, on the normal pipe size, that pipe is able to handle 25 gallons a minute?
MR. IKEDA: Oh, yeah.
CHAIRPERSON MUKAL Any more questions for Mr. Ikeda? No? Thank you very much.
MS. LUGO: Can I have one minute? I'm just going to call one more witness, since the Board had
questions about what these numbers mean. So I'm going to call Mr. Pavao.
MS. SNYDER: Please raise your right hand. Do you solemnly swear that the testimony you're about
to give will be the truth, the whole truth and nothing but the truth?
MANAGER: Yes.
MS. LUGO: Please state, for the record, your name and job title.
MANAGER: Milton Pavao, Manager.
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MS. LUGO: Okay, I just wanted to give you an opportunity to kind of clarify what those numbers on
this meter test history — that the Board was inquiring about — could you give a rough explanation of
what those represent?
MANAGER: Yeah, as far as what the numbers represent, it's definitely not gallons. These test
procedures are in accordance with American Water Works Association; it's an established test
procedure at established pressures, established rates. The units that you see on the reading is a unit...
What happens is, there's a huge tank, the water goes through that tank and through the meter. And
these are units in the tank, not necessarily any specific unit. But it's a unit used to measure, or to
determine, what the actual gallonage is, as compared to what the meter reads. You take that and do the
division. That's how you get the percentage. So it's a defined test as determined by American Water
Works Association. The test procedures, the test mechanism, the tanks are calibrated frequently so that
we conform to the American Water Works Association. So this is a bona fide test procedure with
actual percentage rates. And as mentioned, American Water Works Association gives a leeway to
determine if the meter is acceptable or not, and these all fall within the acceptable leeway. But it's an
interesting thing to see. As Board members, you should go take a look at it. I mean, no, seriously. It's
a scientific way of determining accuracy, and it's established by American Water Works Association.
MS. LUGO: And basically, water has to be flowing through the meter for the reading to be changing?
MANAGER: Correct. The way the meter is constructed, it has a flapper cavity, and as the water hits
it, the water nutates, and that spins the shaft and it spins the dials.
MS. LUGO: Based on the testimony earlier and in looking at the history of the Mirandas' account, the
547 (sic) gallons was quite an increase from their normal usage, but if that was due to a meter error, it
would have to be running... I can't do the math really fast but, I mean, like over a thousand percent fast
or something like that. Have you ever heard of anything like that?
MANAGER: No, as meters age, meters don't register more; they always register less. That's why it's
in our best interests to replace meters every so often. An old meter reads slow.
MS. LUGO: Thank you.
CHAIRPERSON MUKAI: Ms. Miranda?
MS. MIRANDA: No further questions.
MR. TANIGUCHI: So can you answer the question about the columns before then? So when the
meter reader goes out and reads the meter, they're not reading how many gallons; they're reading a
number on the meter?
MANAGER: You mean on the test bench, or out in the field?
MR. TANIGUCHI: No, no, out in the field.
MANAGER: In the field, it is measured in gallons. The meter itself ... the dial on the meter, the units
are gallons, so you're reading actual gallons. But what you're reading is a total reading, as compared
to the reading on the previous reading. So you do the subtraction.
MR. TANIGUCHI: I thought that's what we were looking at over here. So like, this sheet here is just
for testing, so these are all the meters that came in for tests?
MANAGER: This is only for testing. This has nothing to do with readings out in the field.
MR. TANIGUCHI: So when you go out in the field, you gotta look at, like in the Mirandas' case,
probably 547,000 higher than the previous reading, right?
Page 45 of 61 Water Board Minutes 7 -27 -10 js
MANAGER: Right. Yep, because you always take... see, when the meter readers go out, they always
have the figure of the reading that they had previously. So when they do the next reading, it's a
subtraction so they can determine. And the meter readers are trained, that when that difference is large,
they go back and read it because they know something is wrong. And that's how we, as a courtesy,
will let the people know that we suspect you have a leak; this is abnormal. Please check. The meter
readers know that instantly when they read the meter, because they always have the reading that was
previous.
MR. REYNOLDS: A couple things. In the "Size and Make," I notice it says "5/8 H ", as in "hotel."
MANAGER: Hersey.
MR. REYNOLDS: And then above, I see "5/8 B." What do these letters mean?
MANAGER: It's different types of meters. Like for example, the T -3 is a Trident meter. The H is a
Hersey meter. The B is probably a Badger meter. It's just a distinction of what kind of meters we're
dealing with. However, every meter on the 5/8 -inch size is subject to the same requirements as
AWWA requirements.
MR. REYNOLDS: So it would have the same flow and... ?
MANAGER: The same requirements, as far as accuracy is concerned.
MR. REYNOLDS: Okay, and there, that differential again, under the reading, that doesn't have
anything... does that bottom number, 8826 on top and 1392 on the bottom... ? What is that telling us?
MANAGER: I don't know. But that's the measurement of the tank. See, because water goes through
the tank before it goes through the meter...
MR. REYNOLDS: In the test place.
MANAGER: In the test bench, yes.
MR. REYNOLDS: Because I notice, like above, there are a couple above, there's an 8218 and the
bottom number is 651, which is quite a bit of difference between that, and it doesn't... Of course, I
guess probably to none of us... it makes no sense.
MANAGER: Yeah, you cannot determine these units. Like I said, it's a tank. It's a tank full of water
that they get this specific reading, to determine the difference it goes through. So there's no units to
this; I'm sure there's a unit but it's not gallons or anything that we're familiar with.
CHAIRPERSON MUKAL Any more questions for Mr. Pavao? Actually, Milton, I have a question.
Is it possible for someone with some knowledge of water meters to go in there and tamper with the
meter?
MANAGER: Yeah, it is. Yeah. You can take a magnet and screw up a meter bad, because it's
magnetic. I mean, you can think of a lot of ways to tamper with a meter. And that's why we put
that... well... that nickel and lead sealed thing so that people can't tamper with the meter. So if we go
there and see that thing broken, then we know somebody tampered with it.
CHAIRPERSON MUKAI: So you're saying that someone with some knowledge could put a magnet
and actually tamper with the meter, and there would be no surface evidence of tampering?
MANAGER: Theoretically, you could take your meter and put it backwards for several days and
reduce your consumption. I'm serious; you can do that.
Page 46 of 61 Water Board Minutes 7 -27 -10 js
CHAIRPERSON MUKAL Are there any more questions for Mr. Pavao?
MR. MEIERDIERCKS: This one is, as a comparison, okay, we're looking at Number 7 as their
meter. As you look at Meter Number 9, down there with the gallon per minute test, two gallons per
minute test? That meter would technically fail?
MANAGER: Yeah, it's "zero, zero."
MR. MEIERDIERCKS: We're at Number 7, and at Number 9 Meter, just making a comparison.
Would this meter pass the test? And I'm looking at one that would fail the test.
MANAGER: Yeah, zero probably indicates there's no reading. Probably the internal mechanisms are
frozen, so that meter is worthless. We would probably throw that meter away.
MR. MEIERDIERCKS: Okay, that's what I'm trying to get at so, this meter passed, and that would
show that meter failing.
CHAIRPERSON MUKAL Any further questions for Mr. Pavao? No? I have a question for
Counsel. Can we recall a witness?
MS. GARSON: No. It's actually Ms. Miranda's burden to prove her case; it's Ms. Lugo's burden to
disprove Ms. Miranda's case. And you have to base your decision on what evidence was presented.
CHAIRPERSON MUKAI: Okay, thank you.
MS. LUGO: I have no further witnesses. Thank you.
MS. GARSON: So now, if Ms. Miranda wants to provide rebuttal, she can call herself up again, as a
witness, to rebut anything that was said previously. Or she can call another witness to rebut what Ms.
Lugo's witnesses said. Then that's it. You can testify again.
MS. MIRANDA: After they had discussion, do I have a chance to say something at the end, or is this
my last opportunity to speak?
MS. GARSON: You're going to testify. This would be your last opportunity to testify. It's possible
that they provide you time to do a closing statement, when you can summarize everything.
MS. MIRANDA: I just have a comment to make. I don't know, I guess it's testimony. I don't know.
MS. GARSON: Why don't you go ahead and call yourself as a witness again, and then testify?
MS. MIRANDA: Okay, I call myself as a witness again?
MS. GARSON: Just a reminder that you're still under oath.
MS. MIRANDA: Okay. I've had great service, and I appreciate, I feel very bad for the County that
we've had to go through all this expense, although I feel it's very important because we didn't use the
water. But I would ask the Board to keep in mind that maybe technically, there have been no errors,
because it seems that the Department has worked very hard to show they have followed procedure. I
would ask the Board to keep in mind to please ... that along the line, there may have been a human
error, that whether an incorrect amount was entered in, whether that amount that was entered in was a
compilation of my neighbor's or my district, I don't know. That possibly, beyond the technical, that
the meter has been checked, the line has been checked, due process has happened, there are the Rules
and Regulations that are in place. That someplace along the line, there has to be something that may
have happened. Now I would hate to think that anybody would have messed with our meter and run a
magnet over the top so that we would be charged an exorbitant amount. I think we're pretty good with
Page 47 of 61 Water Board Minutes 7 -27 -10 js
our neighbors, so I don't think that anybody dislikes us, at least to that degree. But just to keep in mind
that maybe along the line, somebody made a mistake, and something happened. Unfortunately, I can't
pinpoint what that mistake was, or where it came from. And I appreciate all the hard work of the
Department to try and... so that they have done their job well. And I hope I presented at least a doubt
in your mind that we actually used this water, and that the County did not lose money on this case,
because there was no water lost. Something happened, and I hope that we can figure it out. So that's
all I have to say.
CHAIRPERSON MUKAI: Ms. Lugo, any questions?
MS. LUGO: No questions.
CHAIRPERSON MUKAL Mr. Harai?
MR. HARAL You know, the first letter that you wrote on January 14, 2008? When was the first
response from the Department of Water to the letter? Was it the March 15, 2010 letter?
MS. MIRANDA: You mean, after that letter? So I sent a letter in January of 2008.
MR. HARAL When was the Department's response?
MS. MIRANDA: I don't think it was until February or March of this year. I called several times to
try and check on it, because I started to receive the shut -off notices, and my husband kept asking.
"What's going on? What's going on ?" So I believe the March 2010 was the first official letter that I
received.
CHAIRPERSON MUKAI: Any questions for Ms. Miranda? I have a question. To the best of your
knowledge, do you recall any use of power equipment on your property?
MS. MIRANDA: What do you mean?
CHAIRPERSON MUKAL Someone running a generator, ATVs?
MS. MIRANDA: Yeah, we have an ATV, and we have a Mule. My husband runs a fencing
company. We have five tractors, four trucks.
CHAIRPERSON MUKAI: How close, as far as you can recall, did any of these... ?
MS. MIRANDA: The ATV would be very close because we run our ATV from our house to check
the line, and to move the cattle in and out. The Mule — it's a Kawasaki Mule — you know, with like the
three - seater, whatever. So the Mule and the ATV regularly... That's what we use to go down the
road. Occasionally, our neighbor uses the road to go from his house up to Old Kalopa Road, which is
the road that's on top of us, above us. The generators and that would be at our house, which is four
acres away.
CHAIRPERSON MUKAI: So it's not adjacent to the property?
MS. MIRANDA: No.
MR. TANIGUCHI: I have a question. So you discovered that 547,000 gallons when you got your
bill, right? And so you got billed for that, right? My question is, the next month, or the next billing,
your bill was zero?
MS. MIRANDA: Yeah.
MR. TANIGUCHI: How come?
Page 48 of 61 Water Board Minutes 7 -27 -10 js
MS. MIRANDA: Because we didn't use the water.
MR. TANIGUCHI: At all?
MS. MIRANDA: No, that's what I mean. We don't use the water on a regular basis because we have
access to the Ditch. Our cattle... The Ditch is in such disarray that the cattle go in and out of the Ditch
to drink. So when it's flowing, we don't need the trough.
MR. TANIGUCHI: Oh, so this is just for cattle. It's not for your home or anything? You have a
different meter for your home?
MS. MIRANDA: Yeah, it's just for the cattle. Like at the time, I can't remember, but in the history
report from your Department, it said my husband said that we had a horse in there. That was all. And
then we bring roping cattle in to rope and take them out. Or else we put them around our home, which
we have 12 acres, and then, we put them back out there when the grass gets low. We kinda move
things around, so that was one of the things that made it, for us, such a surprise because there are many
billings that we don't use... We just pay the regular service fee to have a meter. We don't really use
the water. And then, looking at the history that was provided by the Department, you can see that there
are some ... I think there were 12 periods where it was higher than our typical. And that would've been
a broken water line, not more usage of cattle, because the usage has stayed the same. So that would've
been evidence of a broken line. I think it cost us $200 or something.
MR. LINDSEY: Do you know how deep that water line is buried?
MS. MIRANDA: It's not. It's on the surface, and I guess I should've taken a picture of it.
CHAIRPERSON MUKAL Any more questions of Ms. Miranda? None? Thank you very much.
MS. MIRANDA: Thank you.
CHAIRPERSON MUKAI: From what I gather, we're going to open deliberations?
MS. GARSON: And you don't want closing statements?
CHAIRPERSON MUKAL Oh, I'm sorry.
MS. GARSON: No, no, that's fine.
CHAIRPERSON MUKAI: I never played "Judge Judy" before so, sorry. Ms. Miranda, any closing
statements?
MS. MIRANDA: Just what I stated earlier that I'm hoping that I put some thought of doubt, that a
mistake, if it's not technically the meter, that a mistake has been made someplace. The meter... That a
mistake has been made someplace. And under oath, we did not use 500,000 gallons of water in that
time period.
MS. LUGO: I think that the evidence that was presented shows that upon discovering that there was
an unusually high water usage, the meter reading was checked, and actually re- checked twice, by the
meter readers in the Waimea office. The meter was then tested in accordance with established
procedures, and we have a record that the meter was running accurately. The Mirandas reported that
there were no leaks, so they didn't apply for a leak adjustment. There were no reports of a third -parry
criminal act. And absent any of those factors, there's simply no provision for an adjustment to the bill
in the Rules and Regulations. It's important that the Rules be applied equally to everybody, and
unfortunately in this situation, there's just no provision for any adjustment to the bill. And since the
Mirandas haven't paid in accordance with the Rules, the water at this point should be discontinued. So
Page 49 of 61 Water Board Minutes 7 -27 -10 js
I think that Ms. Miranda hasn't met the burden of showing that they would be entitled to an adjustment
to their bill, or to have their water service continued if they don't pay the delinquency.
CHAIRPERSON MUKAL Thank you. Okay, now we go into open deliberations. I'll just read
something from the HRS (manual ?) that applies. It says here "to prove something by preponderance of
the evidence means to prove that something is more likely so than not so. It means to prove by
evidence which in your opinion convinces you that something is more probably true than untrue." So
that's what we're working with. So we have open discussion now. Mr. Lindsey?
MR. LINDSEY: I appreciated the testimonies, and there are several things that I'd like to touch on.
First of all, just the fact that Mr. Pavao said that a magnet could manipulate that meter, shows that it's
not infallible. The other thing is that whatever... Could we go back to the picture where we see the
distance from the meter to the trough? If you guys hear that loud ticking, that's my heart, because I
have an artificial heart valve so... So that distance right there... Okay, I'm supposed to believe that
almost 20,000 gallons of water on a surface pipe is leaking out, okay? And the Mirandas check it
every other day, at least. No, I would have to believe that they don't check it at all. Well now, 20,000
gallons... I have a 15,000 - gallon tank at my house. I would think I would notice my water tank
leaking out in that short area, in the five acres that I have out there — I would notice it leaking out. And
then, I would... I was looking at the clock, and we were talking about 6 gallons per minute, so that
means every 10 seconds, a gallon is gone. I know that my water flow at my other house, provided by
the County... there's no way I'm getting one gallon out of that pipe in 10 seconds. You're asking me to
believe that more water is coming out of that pipe in 10 seconds. So that's... And lastly, I'm being
asked to believe that, you know, that Ms. Miranda is disingenuous. And I really have a hard time
believing that. So that's all I have to say about this.
MR. GREENWELL: As I was saying earlier, and I'm repeating myself, I think I've seen a few water
troughs leak in my time. And if there was that much water leaking from that water trough, and the
Mirandas didn't see it for two months, there's something definitely wrong someplace. Because that is
a lot of water. If you run a garden hose, you might get, depending on the pressure, you might get 8 to
10, 10 to 12, gallons a minute. And if they're getting 6 gallons a minute constantly running for 60
days, something is wrong someplace. Something. But the Water Department has their way of
checking the meter. They did their job. I really don't know what to believe. I really don't know.
Thank you.
CHAIRPERSON MUKAI: Anymore discussion?
MR. TANIGUCHI: I find it kind of hard to believe, you know, based on their usage and their history,
you know, that all of a sudden you're gonna jump to 547,000 gallons. It's just kinda, tome,
inconceivable. I'm not saying the Water Department's wrong, because obviously they tested it. I'm
not saying Ms. Miranda's lying. But somewhere along the line, something's just not right. I mean,
when you look at it, from the surface objective, common sense has to prevail. Something like this, I
mean, when you look at 9,000 gallons a day coming out of there, you're gonna know. I just think that
it's unimaginable that... it's just unimaginable it would go undetected.
CHAIRPERSON MUKAL Any other comment? Actually, the Chair is caught in a quandary
because, I agree, I find it kind of unfathomable that 500,000 gallons of water (inaudible). The
possibility that it may have been tampered with... I understand the County's position, but the question
we may have is remedy, because based on what the Rules allow us to do, we can only, if we feel that
it's... well, basically here, with regards to Adjustments to Bills, it says: "excessive bills caused by
leakages will be limited to one -half (1/2) of the consumer's excessive water bill, over and beyond the
previous 6 -month average." And beyond that, the Rules and Regs are very specific, saying that it must
be due to earthquakes, flooding, high wind, or acts of nature. I'm caught in a quandary. Ms. Miranda
has set up a great case. On remedies, our hands are tied, based on what I read here on what we can do.
Page 50 of 61 Water Board Minutes 7 -27 -10 js
Because it specifically says that "adjustments will be limited to one -half (1/2) of the excessive water
bill in the event of leakages," and it also states that the leakages must be repaired by the consumers.
MR. TANIGUCHI: What if there's no leakage?
MS. GARSON: Criminal act is also...
CHAIRPERSON MUKAI: Is there a criminal act here?
MS. GARSON: You can give adjustments over and above the one -half, if the cause of excessive use
was due to a criminal act. In those cases, it has to be documented by a police report. However, I'm
sure if you didn't realize the criminal act, you might not file a police report.
CHAIRPERSON MUKAI: For those of you on the Board, we did have a contested hearing case
before, I believe. The individual was from Puna side, if I remember correctly. And similarly, it was
large, not this large, excessive use of water. And we were in the same quandary, what we are permitted
to do.
MS. GARSON: So at this point, if anybody on the Board wants to make a Motion? You can debate or
vote on a Motion.
MR. TANIGUCHI: We can move to do anything, right?
MR. MEIERDIERCKS: Yeah.
MR. HARAL After a discussion.
MS. GARSON: Pardon?
MR. TANIGUCHI: We can make a Motion on whatever we want to make a Motion on, right?
MS. GARSON: Yes, but it has to be based on what is your decision on the case. You're going to
move to uphold the appeal? Grant Ms. Miranda's appeal?
MR. REYNOLDS: Well, what is the appeal?
MS. GARSON: She, basically... the reason that we're having the Contested Case is because of the
shut -off notice. And at this point, what you have to find is that she doesn't owe us a certain sum of
money.
MR. REYNOLDS: That's what I mean; is the appeal to not pay anything or to pay something?
MS. GARSON: She's just disputing the... what is the amount?
MS. MIRANDA: I'm just disputing the amount above our average water usage.
MR. REYNOLDS: Okay, so in a sense, you're saying you only want to pay the amount of your
average usage.
MS. MIRANDA: Yes.
MR. REYNOLDS: Okay, thank you.
MR. HARAI: Kathy, you know, Dwayne mentioned that from what he read, our hands are tied. But
actually, it's not. The Board can decide.
MS. GARSON: Right. Your decision cannot be random. It has to be based on the Rules, and it has to
be based on the testimony received. You cannot just make a decision based on emotion because you
Page 51 of 61 Water Board Minutes 7 -27 -10 js
feel sorry. You know, it has to be based on the Rules, not be arbitrary, not be capricious. Based on
some logic and the law.
CHAIRPERSON MUKAL So you're Corp Counsel... so...
MS. GARSON: So if you believe both sides, then the third option is that there must've been some
intervening act, right?
MR. TANIGUCHI: So can I... is it possible to make a Motion, like, for a settlement amount?
MS. GARSON: That's arbitrary, unless you want to give the parties 10 minutes to go outside and see
if they can discuss a settlement.
MR. TANIGUCHI: Yeah, like an average of their last year's bills, or whatever.
CHAIRPERSON MUKAL I have a question, Counsel. Did she answer your question, first?
MR. TANIGUCHI: I don't know; she didn't.
MS. GARSON: To propose some sort of a settlement from the Board, I would say, that would be
arbitrary. You need to make a decision. If you wanted to ask if the parties wanted to go outside for 10
minutes and see if they can resolve that matter, and then you are allowed to do that.
MR. TANIGUCHI: So to answer Mr. Reynolds's question, then, what was her appeal?
MS. GARSON: So it would be that her bill would be reduced to the amount of her average billing, I
would say, preferably a 6 -month average. A 6 -month average for that one billing cycle, and that she
would have to pay that amount and anything over that amount. So you're only looking at...
CHAIRPERSON MUKAL But wouldn't that be basically going beyond what we're permitted to do?
So we can do a decision like that? Because aren't we venturing into waters that are untravelled,
because it's specific as to what we can't do, what the Department can't do.
MS. GARSON: And I'm saying that under the third option, for reducing more than half the bill, is a
criminal act. So by doing that, you believe both sides; you have to say there is no other explanation.
MR. MEIERDIERCKS: Right.
MS. GARSON: There is no other explanation for this, if you believe both sides. Something must
have happened. Some intervening third party must have committed...
CHAIRPERSON MUKAI: But we need a police report and all of that stuff, right?
MR. REYNOLDS: That's what I believe. Something must ... you know, this doesn't make sense.
There had to be some intervening thing, rather, because if the meter was tested and the test was
accurate, none of us were there to see the test. I mean, so that's all up in the air, too. We don't know
for sure how well the testing was done.
MS. GARSON: And is it excusable that she did not file a police report?
MR. REYNOLDS: Well, she wouldn't have any reason to, if she didn't suspect any criminal activity.
MR. LINDSEY: Kathy, can we allow the two parties to go out for 10 minutes now and discuss this?
And then they come back with their proposal, that we can decide at that time what we want to do?
MS. GARSON: Well, if they come back with a settlement, they'll just say we came up with a
settlement, and you guys don't have to deliberate anymore.
Page 52 of 61 Water Board Minutes 7 -27 -10 js
CHAIRPERSON MUKAL But then again, no, however, we got to be sure that's what they want to
do.
MS. GARSON: Right, right. But it's consensual. Any settlement would be consensual on their part.
MANAGER: But Kathy, you cannot settle the Rules. The Rules are rules; you cannot make a
settlement on the Rules. And the Rules currently... the Rules are specific as to what you can and can't
do. And since the Board believes the Department, and it believes the Plaintiff, you're kind of caught in
a quandary. You don't know what to do, and I don't blame you. If I was you, I wouldn't know what to
do, too. One suggestion. My suggestion is that...
MS. GARSON: You're making it as an ex- officio member of the Board.
MANAGER: Yeah, and I have that right, right?
MS. GARSON: Yes.
MANAGER: Right. My suggestion is, if you believe us, you believe her, then, there has to be some
external thing that happened that we don't even know about, right? So the compromise is you gotta
compromise within the Rules. The Rules allow for payment plans. Just make a real low dollar a
month payment, and get it over with. And you're still within the Rules; because you can't forgive the
bill. That's against the Rules. You can't give her relief, because that's against the Rules. So what do
you have left? A compromise of what's in the Rules.
CHAIRPERSON MUKAL Just for clarification, for the newer Board members, in the past contested
hearing case, because Rules are rules, it was determined that water seepage... we both fixed it with the
50 percent because basically a Rule is a rule. We can't... it's just like law. So when you go beyond
that, it's...
MR. REYNOLDS: Well, I have a question. Where does it say these Rules apply to this Board? You
know, we're like the Appellate Court here. We don't have Rules. We make the Rules.
MS. GARSON: The Board is a part of the Department of Water Supply, and those are the Department
of Water Supply rules.
MR. REYNOLDS: But it doesn't say that in the Rules here. The part I'm reading doesn't have any
reference to what the Board may or may not do in a Contested Case Hearing. Where is that?
MS. GARSON: Chapter 91, Contested Case Hearings. And there are two parts in your Rules that say
you are to conduct it in accordance with Chapter 91 of the Hawaii Revised Statutes, which is a
Contested Case procedure.
MANAGER: You can change the Rules, but as of right now, a Rule is a rule. You can change it later
on, but it still applies now, in this case.
MR. REYNOLDS: This is HRS Rule?
MS. GARSON: Yes.
MR. REYNOLDS: Does it say, again, does it refer to what this Board can do in these Contested Case
Hearings?
MS. GARSON: You need to make a decision...
MR. REYNOLDS: We don't have anything I can see here doesn't relate to that at all.
Page 53 of 61 Water Board Minutes 7 -27 -10 js
MS. GARSON: You need to make... a decision based upon the Rules applicable, which are the
Department of Water Supply Rules, and the facts as they stand. And your decision has to be in
accordance with the law, not be clearly erroneous in view of the reliable, proven and substantial
evidence, and you can't be arbitrary or capricious, or abuse your discretion.
MR. REYNOLDS: And that's vague, too. What is arbitrary or capricious?
CHAIRPERSON MUKAL I move that based on the...
MR. REYNOLDS: You can't move. You can ask to entertain a Motion.
CHAIRPERSON MUKAL The Chair would entertain a Motion to deny the appeal, and that a very
amicable payment plan be worked out between the Department of Water Supply and the Mirandas — a
very amicable payment plan.
MS. MIRANDA: We didn't use the water, so what do I do about that?
MS. GARSON: That's what you just presented. You presented your case, and now they're trying to
decide what to do with your testimony.
MS. MIRANDA: Okay.
CHAIRPERSON MUKAL I repeat what I just said. The Chair would entertain a Motion that we
deny the appeal, and that the Department of Water Supply and the Miranda family work out a very
amicable payment plan.
MR. REYNOLDS: I would make a Motion that we concur with the appeal, and make an amicable
settlement as to the amount of payment.
MR. TANIGUCHI: I second it. Now we discuss.
MR. REYNOLDS: Okay, let me say why I did that. I think to deny it doesn't make sense to me,
because it's saying we're denying it. Then on top of it, if we concur with the appeal, then the question
is, what is the payment to be? I don't know what it should be, but there should be some payment,
because there is normally some payment.
CHAIRPERSON MUKAL I'd like to speak against the Motion for the fact because that if you agree
with the appeal, you're going against the Rules and Regs of the Department of Water Supply.
MR. KANESHIRO: I would like some information for clarification from Corp Counsel on what was
meant by "concur with the appeal," as compared with, you know, you don't concur with the appeal.
MS. GARSON: You're agreeing that basically that Ms. Miranda wins, yeah.
MR. KANESHIRO: To concur, right?
MS. GARSON: Yes.
CHAIRPERSON MUKAL Just a point of information...
MR. TANIGUCHI: Yes, I have a question for Kathy.
CHAIRPERSON MUKAL Point of information, right?
MR. TANIGUCHI: Yes, so Kathy, basically, Ms. Miranda came to the Board because she couldn't
get relief per the Rules at the Water Department, okay? So she came to us. So why go through the
process, right? In having her present her case if we can't go along with... I'm just... whatever it is...
Page 54 of 61 Water Board Minutes 7 -27 -10 js
If we approve the appeal, and say I didn't spend an amount but I agree to pay what I normally pay, why
is the Board not able to vote on that, if you had the Hearing? Otherwise, it's silly for us...
MS. GARSON: Right, your application of the Rule can be different.
MR. TANIGUCHI: But that should've been presented to her ahead of time, yeah? Because then you
went through this whole process and then, you know, at the end, now you're saying you can't, because
of this, this and this. To me, it's kinda stacked against you if you don't know. A lay person wouldn't
know. I mean, if you were in her shoes and I came by myself in front of the Board, I wouldn't have
known that, and I wouldn't be happy about it... at the end, I'd say "Wait a minute now, I didn't know
this kinda stuff, I came and spent all this time in front of the Board, and they cannot even make a
decision to agree with me ?" Right? I mean, isn't there a... ?
MS. GARSON: I know. I think your interpretation of the Rules can be different, and that's the whole
point of the appeal. Your interpretation of the Rules as they apply to this situation is different from the
way the Administration applied the Rules to this situation. And that is what the Board is deciding.
MR. TANIGUCHI: So we can decide, right?
MS. GARSON: You can decide differently from what the Department did. Yeah. That's the whole
process. Right.
MANAGER: It has to comply with the Rules.
MS. GARSON: And this also says, "Special Adjustment over and above the one -half (1/2) of the
excessive water use over and above the previous 6 -month average use may be granted when the cause
of the leakage is due to criminal acts by third parties... "
MR. TANIGUCHI: See, but we got the mystery third parry; that's why.
CHAIRPERSON MUKAL I'd like to speak against the Motion. No, I'm for Ms. Miranda, and based
on the evidence, it's a really tough one. However, we have Rules that we need to follow. That's the
reason why I'd like to speak against the Motion, because we cannot approve the Motion based on what
we have to work with. So my suggestion was that we reject the appeal, and then the Department of
Water Supply makes a payment plan, like maybe $10 a year for whatever. But we have to work...
Well, unfortunately, not unfortunately, we are a country of law, a country of law. We can't be going
around changing laws midstream. That's the way how democracy...
MR. REYNOLDS: Mr. Chair? The way I look at it, it's analogous to the Supreme Court rules on
constitutional questions, and they interpret what it means, and if we're like an Appellate Court here
sitting here, whatever those Rules for this Water Department, the Administration is one thing, and I see
us as being another thing. And you know, that would be like saying to the Supreme Court, you can't
reinterpret one of the Amendments to the Constitution because that's what it says. And why be here if
we can't, you know, come up with a solution that we think was equitable, regardless of what some
written rule is, that affects the Department of Water Service? So that's just the way I look at it, I think.
CHAIRPERSON MUKAL Point of information?
MS. GARSON: Yes?
CHAIRPERSON MUKAL So can we act as an Appellate Court?
MS. GARSON: That's basically what you are.
CHAIRPERSON MUKAL Can we go ahead and change the Rules?
Page 55 of 61 Water Board Minutes 7 -27 -10 js
MR. TANIGUCHI: So we can vote on this ... we have a Motion, right?
MR. REYNOLDS: We have a Motion.
MS. GARSON: You're still applying the same Rules; you're not changing the law. It's still the same
Rules.
MR. TANIGUCHI: But aren't we voting on the appeal?
MS. GARSON: Yes.
MR. TANIGUCHI: Right. I mean ... so we have the right to do that, within the law?
MS. GARSON: Vote on the appeal? Yes.
MR. TANIGUCHI: To rule on it. Yes or no, right?
MS. GARSON: Yes.
MR. TANIGUCHI: Which is what Mr. Reynolds's Motion was.
MANAGER: Mr. Chair, I think the Board needs to see that whatever you do, it has to be consistent
with the Rules. You can change the Rules, but as of right now, these are the Rules as it is. You can
change it next meeting if you wanted to give proper notice. But the Rule is the rule today.
MR. REYNOLDS: But if we decide something different, that does change the rules.
MANAGER: No. You cannot defy the Rules. You as a Board member have no right to defy the
Rules unless you go into the proper procedure to change the Rules. That's why, I think, Mr. Mukai is
on the exact track. If you believe us, you believe her, and there was something external that happened
that we can't explain. You cannot forgive her because the Rules don't allow that, under the
circumstances that occurred. The only solution or alternative is if you believe what happened, and I
do, I trust her. I'm sure she's telling the truth, but I trust our people. I know we did the right things,
too. That's why I like Mr. Mukai's suggestion that hey, we don't know what to believe. We believe
you, we believe you. Something happened. We don't know what it was. Make some kind of
compromise that is consistent with the Rules, so you can do it. And that's a payment plan, a very
agreeable payment plan. Because then, you'll stay within the Rules.
CHAIRPERSON MUKAL I think we need a break here.
MR. KANESHIRO: Call for the question?
CHAIRPERSON MUKAL Okay, I'm overruled.
MR. REYNOLDS: Point of information here. That was my Motion, that concurs with her appeal and
works out some sort of payment plan. So that was what my Motion was. It was just, what is that
payment?
MS. GARSON: But actually, isn't it the opposite? You deny her appeal and work out a payment plan?
Or were you upholding her appeal? If you uphold her appeal, she doesn't owe.
CHAIRPERSON MUKAL George has a question. Sorry, it's a point of information.
MR. REYNOLDS: But if we deny the appeal, that means she gets nothing.
MANAGER: Then we make a payment plan.
Page 56 of 61 Water Board Minutes 7 -27 -10 js
MR. HARAL Kathy, you know, if we have to change the rules, we have to change the Rules, right?
Can we defer this case?
MS. GARSON: Well, you could, but you can't defer it and then change the Rules. The Rules are as
they exist now.
MR. HARAL Okay.
MR. TANIGUCHI: Okay, so one point of information to Kathy. You know, you're talking about
Rules. What if, as an example, her bill was one million dollars. Go with that philosophy, the burden
falls to her heirs to pay that one million dollars off even if you went a dollar a year? What you're
doing, in essence, okay, I'm just playing devil's advocate, you're doing in essence is saying you owe
the money anyway, no matter who was wrong. We're saying we don't know who's wrong. You're
still going to burden the person with the dollar amount, so if it's a million dollars, you're gonna stick to
the million dollars? That's not right.
MANAGER: That's what Rules are.
MR. TANIGUCHI: So that's where I think we have to use common sense. Okay, because you're not
doing... you know, she's coming in with something that is clearly unexplainable on both sides. Both
sides did their... I think, a good case, yeah? But to say that okay, you can't explain it so you still gotta
pay us the money, but we'll defer it over 100 years... They're still gonna have to pay it after the 100
years, so you're not really accomplishing anything than saying, "You're still wrong; you gonna owe us
the money." There should be another... a vehicle by which we can rule on something like this, because
it doesn't make sense.
CHAIRPERSON MUKAL I have a comment. I agree with you guys 100 percent. But
unfortunately, what we have today is what we have today. We can't go ahead and change it. In
future... But unfortunately, we have to work with what we got on the table.
MR. REYNOLDS: I still don't see where...
MANAGER: One alternative is to say, okay, we don't believe the bench tests, the meter was wrong,
the meter didn't read correct. Therefore, yeah, you are right. That's one way of doing it, and still be
within the Rules. But in that respect, you gotta say our test bench meter reader was all wrong, the
meter procedures were wrong, and therefore...
MR. REYNOLDS: We can't say that.
MR. TANIGUCHI: We can't, because it tested okay.
MANAGER: But you don't believe that. You could say the meter's...
MR. TANIGUCHI: No, we believe that.
MANAGER: See, that's the quandary. You believe two sides, so now you gotta find a compromise.
MR. REYNOLDS: Kathy, again, these Rules are for the Department of Water Service, right? And
we are not a part of... we are appointed by the Mayor. We're a separate body.
MS. GARSON: No, per the charter, the Board is a part of the Department of Water Supply.
MR. REYNOLDS: We're actually a part. So the Rules...
MS. GARSON: They are your Rules.
MR. REYNOLDS: So it says in the Rules that all the Rules apply to the Board? Or does it?
Page 57 of 61 Water Board Minutes 7 -27 -10 js
MS. GARSON: They do, and the Charter says that the Board is a part of the Department of Water
Supply. These are your Rules; you must apply these Rules. Okay?
MR. REYNOLDS: Okay.
MS. GARSON: Can I ask for a five- minute recess?
CHAIRPERSON MUKAL Very well taken.
MANAGER: The Rules say these Rules are for the Department of Water Supply. You are the
governors of the Water Supply. Therefore, they apply to you.
CHAIRPERSON MUKAL Okay, let's take a five- minute recess.
(Recess from 2:1 S p. m. to 2: 30 p. m.)
MS. GARSON: I'm going to have Doreen read back the Motion. Okay?
MS. DOREEN SHIROTA (Secretary): Mr. Reynolds moved that we concur with the appeal, and
make amicable settlement as to the amount of payment, seconded by Mr. Taniguchi.
MS. GARSON: Could I ask you to withdraw that Motion, because it's inconsistent? Upholding her
appeal will mean she doesn't owe the money.
MR. REYNOLDS: No, it wouldn't mean that, because she didn't ask for any specific amount.
MR. TANIGUCHI: She says she's willing to pay how much the average of what she's been paying.
MS. GARSON: Right, right, right. Oh, that's what it was. So the Motion is really that you uphold
her appeal, and she pays her average monthly billing for the last 6 months for that one billing period.
Is that correct?
MR. REYNOLDS: I didn't specify any amount. We need to amend the Motion. That's not what the
Motion says. But somebody can amend the Motion if they wish.
MS. GARSON: Okay, I think it's a little unclear as to what your Motion was.
MR. TANIGUCHI: Okay, can I amend the Motion?
MR. REYNOLDS: Yeah.
CHAIRPERSON MUKAI: You can amend the Motion.
MR. TANIGUCHI: Okay, what I'd like to do is amend the Motion to read that we'd like to uphold
the appeal, taking an amount of an average of the last 6 months, or 6 months' billing, charging her for
that amount because it's not determined that either side erred, but we feel it's due to a criminal act
that's unproven.
CHAIRPERSON MUKAI: Is there a second?
MR. LINDSEY: I second.
CHAIRPERSON MUKAI: Seconded by Mr. Lindsey. Okay.
MR. TANIGUCHI: Can I explain it? So basically, what we're saying is that both sides... we believe
both sides did their due diligence and presented their cases well, and that it had to be an outside
Page 58 of 61 Water Board Minutes 7 -27 -10 js
criminal act in interfering with the meter that's unproven, so in that particular instance, we uphold the
appeal and charge the client an average of what her normal 6 months' usage bill is.
CHAIRPERSON MUKAL Okay, any further discussion on the Amendment to the Motion?
MR. PERRY: It's more a question.
MS. GARSON: Did you have a second to that Amendment?
CHAIRPERSON MUKAI: Yeah. Mr. Lindsey.
MS. GARSON: Okay, sorry.
MR. PERRY: My question is, would this be consistent with the Rules of the Department?
MS. GARSON: Yes.
MR. PERRY: That Motion?
MANAGER: Mr. Chairman, I would like to speak in favor of the Motion, because it accomplishes
everything we're supposed to be doing. It's legal, it's according to the Rules and I think it's a fair
settlement.
CHAIRPERSON MUKAL Any further discussion? Hearing none, we're voting on the Amendment
to the Main Motion. Can you repeat the Amendment to the Motion, please?
MS. SHIROTA: The Motion is amended to read that the Board upholds the appeal, taking an amount,
average of 6 months' billing, charging that amount because it's not determined that either side was in
error but feel that it is due to a criminal act that is unproven.
ACTION.- Amendment to the Main Motion carried unanimously by voice vote.
CHAIRPERSON MUKAL Now we're back to the Main Motion as amended. Any further
discussion? Point of information, so we're okay with this Motion? Okay?
MR. MEIERDIERCKS: Call for the question.
CHAIRPERSON MUKAL All those in favor of the Motion as Amended, please signify by saying
Aye.
ACTION.- Motion as Amended carried unanimously, by voice vote.
CHAIRPERSON MUKAL Thank you very much.
MS. MIRANDA: What does that mean?
MR. TANIGUCHI: You owe us a million dollars.
CHAIRPERSON MUKAL Don't do that to her. What it is, your water's not going to be turned off.
MS. MIRANDA: Okay.
CHAIRPERSON MUKAL You're gonna work with the Department of Water Supply to figure out
what the average 6 months is and that's what it's gonna be. The decision was made based on the fact
that we believe it was by criminal intent, although that hasn't been proven, but we're basing our
decision that there must be some criminal element, because both cases were strong. So we've
concluded that there must have been some criminal action.
Page 59 of 61 Water Board Minutes 7 -27 -10 js
MS. MIRANDA: Thank you. I'm sorry you had to go to this expense.
MR. TANIGUCHI: We're sorry you had to go through all this.
CHAIRPERSON MUKAL This is the longest Department of Water Supply meeting on record.
MS. MIRANDA: And I appreciate... the Department has been very courteous to me in all these
dealings. It was not my intent that they're not doing their job. So I appreciate it.
CHAIRPERSON MUKAL Thank you very much.
MS. MIRANDA: Thank you, for everyone who helped me. I appreciate your help.
A. WATER SERVICE ACCOUNT NUMBER 69036800 -11 (TMK 4 -4- 003:029):
The above Contested Case Hearing took place in accordance with Chapter 91 of the Hawaii Revised
Statutes and Rule 2 -5 of the Rules and Regulations of the Department of Water Supply.
The issues involved in the above - referenced hearing will be Mr. Kenneth F. Miranda and
Ms. Morag Miranda's appeal of the amounts shown due and owing on account 469036800 -11 and
consequently, the appeal of the shut -off notice dated February 8, 2010 for failure to pay said amount.
This hearing was set pursuant to Mr. and Ms. Miranda's request at the April 27, 2010 and June 15, 2010
Water Board meetings.
(End of verbatim testimony.)
K. MANAGER'S REPORT:
The Manager provided an update or status on the following:
1. Palam Road Transmission Waterline Project (covered earlier)
2. Hawaiian Ocean View Estates Project — DWS has obtained the NPDES (National Pollutant
Discharge Elimination System) permit, and is getting the grading permit with approval from
the State Historical Preservation Society and the Department of Public Works.
Representative Bob Herkes has visited the Manager twice recently, and offered to help
disseminate information from the Department to the Ocean View community. According the
contractor, actual construction begins on August 9, 2010, involving pipeline and the well site.
3. Water Use and Development Plan Update — DWS, through its consultant, is going to County
Council on August 17, 2010 to seek a revision to the ordinance that mandates updates to this
plan every five years. DWS wants the updates to be event - driven, rather than year- driven.
Revisions to the plan depend on available funds, which are supposed to come from DLNR.
However, DLNR has never had enough funds, and for the past nine years, DWS has spent its
own funds for revisions. Being mandated to do revisions on a set timetable without sufficient
reason is a waste of time and money, so DWS is seeking a change to the ordinance.
4. Board member parking pass applications for County Buildings — Ms. Snyder is taking Board
members' applications for the passes, now that the County is charging for parking at the
office buildings at 25Aupum Street and 101 Pauahi Street.
5. Employee of the Quarter -- (covered earlier)
6. Recognition of Service Retirement — (covered earlier)
The Manager noted that the Hawaii Water Works Association is holding its annual conference
October 13 -15, 2010 in Poipu, Kauai. The Department's Budget this year allows for three Board
members to attend, and it is up to the Chairperson to decide which members may attend.
L. CHAIRPERSON'S REPORT:
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Chairperson Mukai thanked the Manager and Mr. Reynolds for bringing pastries, which helped tide
over everyone during this marathon Board meeting.
ANNOUNCEMENTS:
1. Next Meeting:
The next meeting of the Water Board will be held on August 24, 2010, at 10:00 a.m. at the Royal Kona
Resort, Resolution Room, 75 -5852 Ali`i Drive, Kailua -Kona, HI.
2. Following Meeting:
The following meeting of the Water Board will be held on September 28, 2010, at 10:00 a.m. at the
Department of Water Supply, Operations Center Conference Room, 889 Leilam Street, Hilo, HI.
STATEMENTS FROM THE PUBLIC:
None.
EXECUTIVE SESSION:
A. WATER BOARD OF THE COUNTY OF HAWAII V. WESLEY R. SEGAWA AND
ASSOCIATES, CIENO. 09 -1 -0319 (CIRCUIT COURT OF THE THIRD CIRCUIT, STATE OF
HAWAI`I):
The Board convened an Executive Session, closed to the public, regarding the foregoing matter, per
Hawaii Revised Statutes (HRS) Sections 92 -4 and 92 -5(4), for the purpose of consulting with the Water
Board's attorney on questions and issues pertaining to the Board's powers, duties, privileges,
immunities, and liabilities.
ACTION: Mr. Meierdiercks moved to go into Executive Session, seconded by Mr. Perry and carried
unanimously by voice vote.
(Board went into Executive Session at 2:40p. m., and concluded at 2:45P. m.)
ACTION: Mr. Meierdiercks moved to approve the recommendation by Corporation Counsel, seconded
by Mr. Reynolds and carried unanimously by voice vote.
ADJOURNMENT
Chairperson Mukai adjourned the meeting at 2:45 p.m.
Senior Clerk- Stenographer
Anyone who requires an auxiliary aid or service for effective communication or a modification ofpolicies 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 Lobbyists: If you are a lobbyist, you must register with the Hawai `i County Clerk within five days of becoming a lobbyist. (Article 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 ofattempting to influence legislative or administrative action by
communicating or urging others to communicate with public officials. " (Article 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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