Water system acquisition still priority for county
Agreement possible to buy Wailuku Water Co. assets by next year
While details of the county’s anticipated acquisition of Wailuku Water Co.’s system remain fluid, an official said Thursday that an agreement may be reached by next year.
“There’s a lot still in flux,” Maui County Managing Director Sandy Baz told The Maui News on Thursday afternoon. “But we should be able to send something to the council early next year.”
Baz said the acquisition is still a priority for the county. However, details of its purchase price, the condition of the system, and repair and maintenance needs must be hammered out.
State lawmakers earlier this year planned to funnel state and federal money to purchase watershed lands and bolster the county’s water delivery system purchase, but funding stalled when the pandemic ripped through the state’s economy.
Citing financial losses, Wailuku Water Co. has sought for nearly two decades to sell its water delivery system, along with nearly 9,000 acres of Na Wai ‘Eha watershed land in the West Maui Mountains.
Na Wai ‘Eha, or the “Four Great Waters” of Wailuku and Waihee rivers and Waikapu and Waiehu streams, provides about 70 percent of county drinking water to Maui residents, along with allocations for private landowners, companies and kuleana users.
In 2016, the county considered purchasing the company’s assets, including the ditch system and lands, for $9.5 million, but the council’s Budget and Finance Committee deferred it. At the time, the county was paying the company $250,000 for 3 million gallons of water a year.
A 2018 appraisal recently published by the County of Maui Board of Water Supply puts the price tag at $11.1 million. The agreed-upon price, however, is $9.5 million for the lands, the easements and the entire operating system, according to Wailuku Water Co. President Avery Chumbley.
The county’s possible acquisition of Wailuku Water Co.’s water delivery system has been the topic of presentations by Chumbley as well as Hokuao Pellegrino, president of Hui o Na Wai ‘Eha, which advocates for protection of the four Wailuku waterways, and county officials during recent board meetings.
Pellegrino said during October’s meeting that he is concerned the county did an appraisal without including a general on-site survey of the distribution system, adding that the system is “beyond dilapidated.” Some streams lack mauka-to-makai connectivity, and the system is not conducive for future diversified agricultural models, he added.
He also said a lot of money will be needed for improvements.
Chumbley said during November’s meeting that the system is reliable and functional.
He said the county Department of Water Supply is paying for water from the Iao Waikapu Ditch and an additional amount through the Iao tunnel. The amount over a five-month period was $266,000. For that amount, the county would recover its initial investment of $9.5 million in about 14 years.
If the county doesn’t purchase the system, the state Public Utilities Commission will determine the rates, and the rate charged would be subject to operating expenses, capital investments and a 7 to 10 percent rate of return profit for the operating company, which would mean the county will be paying a lot more than it is now, Chumbley added.
Addressing the maintenance of the system, Chumbley
said valuation of repair is determined by how the system is used and what changes would be made. Currently repairs and replacements are done on an as-needed basis.
He reiterated that the system is functional and reliable, however, it likely needs improvements to bring it to a “21st century standard.”
Baz said in the November meeting that the current cost to maintain the system is unknown. However, operating costs for the Department of Water Supply are borne by the customers of the system, according to the Maui County Charter.
He said discussions have continued with the state on its potential purchase of the watershed and forest reserve area.
The county’s possible acquisition starts with informal discussions, and if there’s an interest, then a letter of offer is written to the owner, according to Baz. Once the council gives approval that it’s interested in the purchase, then a physical assessment of the property is done.
The next phase is to go back to the council to get authorization; the mayor can’t execute a purchase and sale agreement without council approval.
Board Chairwoman Shay Chan Hodges said during Thursday’s meeting that she is looking for ways to support local leaders as part of the next step in the process.
“We’ve had several meetings where we’ve had really great presentations... I feel like we have a lot of information that can be good for us to convey to the County Council,” she said.