Wailuku water system, not lands, focus of potential county buy

Water department plans to analyze business costs

While the government’s anticipated purchase of Wailuku Water Co.’s system and lands continues to drag on, the county Department of Water Supply is moving forward on key reports that will help put price tags on the water business and infrastructure.

“There are a lot of integral parts to this,” county Managing Director Sandy Baz said during an Agriculture and Public Trust Committee meeting last week. “People have definite interest in this moving forward in whatever manner. We are moving forward in determining the value of the water system itself.” 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.

The county in the past had considered buying the company’s assets, including the water delivery system and the land, for $9.5 million.

Instead the county is now working on “bifurcating” the purchase and evaluating anticipated costs for the system alone, Baz said last week. The Department of Water Supply is in the process of procuring two new assessments by the end of the fiscal year.

One study will be a business analysis. If the county were buying the water delivery system as a “water delivery business, a water supplier,” it would have to look at contracts in place, income, expenses, assets and other valuations of a business, Baz said.

“From a county perspective, we are not necessarily in a business; we are not trying to make profits,” he said. “But from the aspect of us being a water utility, we need to understand the business operations, the costs and the revenue so we can make an informed decision on whether an acquisition is an important purchase from a business aspect.”

The second study will be an infrastructure analysis from a hydrology and engineering standpoint.

“It is operating right now,” Baz said. “It does deliver water to us; that is how 3.2 million gallons a day gets to our Central Maui system. But there are going to be upgrades required.”

Na Wai ‘Eha, a local nonprofit that advocates for protection of the four waterways, has said the system is “dilapidated.”

The water company, though, contends that the system is reliable and functional but likely needs improvements to bring it to a “21st century standard.”

During the meeting, council members asked about who would maintain the system and whether it would be the water department.

“That’s one of the discussion items,” Baz said. “We don’t feel that would be a long term, sustainable solution.”

He added that the system is larger than the department’s current capabilities.

Other members asked about the timeline for the possible acquisition.

“We’ve been waiting kinda long for this one,” Council Chairwoman Alice Lee said.

Baz said the two assessments are necessary to make an informed decision. While the business analysis will move quickly, the on-foot assessment of the infrastructure could take much longer.

“We are not ready to come to you and say, ‘approve this purchase’ yet,” he said. “There are a lot more details to work on.”

“Plus our legal team has 5 million other questions,” Baz added.

When it comes to the watershed lands, the state remains “very interested” in acquiring the area, which is more than 8,000 acres, according to Baz. He cautioned that it will be a “multiyear” process, as is the case with other state open space purchases, such as Lipoa Point.

State lawmakers last year planned to funnel state and federal money toward acquiring watershed lands, but funding stalled when the pandemic hit.

Baz said the county has been continuing discussions with the water company, state Department of Land and Natural Resources Division of Forestry and Wildlife, the state Commission on Water Resource Management and Na Wai ‘Eha.

Funds for the two assessments will come from the water department’s operating budget for fiscal year 2021. Cost of the studies have not yet been determined, Baz said after the meeting.