Council extends Kula water deal timeline, requests community meeting, compares financial analyses : Maui Now

After a community meeting in Pukalani on March 27, concerns arose about the timeframe for assessing a 30-year water purchase agreement for drilling one to four wells in Kula. The Chicago-based developer, Free Market Ventures, LLC (FMV), has since extended the timeline to allow the council more decision-making time.

Resolution 24-47 is now scheduled to go to the Water and Infrastructure Committee (WAI) on May 16, 2024, and return to the council for another reading on June 7, 2024.

Until then, the community will have time to review the County’s financial analysis and will have opportunities to engage in testimony regarding the proposed water agreement.

Follow-up community meeting

After some discussion at the council’s meeting on April 5, council member Yuki Lei Sugimura said she would help organize another follow-up community meeting on the proposed water well developments.

In a letter on Monday, the council formally requested the Department of Water Supply (DWS) Director John Stufflebean host an evening community meeting Upcountry the week of May 6, 2024.

Council member Keane Rawlins-Fernandez proposed the idea to council members last Friday, drawing from the passionate testimonies of community members. “What I think I heard in testimony was that the community didn’t appreciate not having the opportunity to be more involved in something as significant as this,” said Rawlins-Fernandez.

Rawlins-Fernandez said that another public forum held Upcountry would garner more community participation than a council meeting. “It’s hard for people to have to take off work to come to attend the meeting at 9 o’clock,” she said. “It’s better to have a meeting in the community, where they live – those that are directly impacted – after work in the evening time.”

Sugimura then stepped in and volunteered to coordinate another community meeting Upcountry.

“Hannibal Tavares Community Center was filled,” Sugimura said, reflecting on the last community meeting regarding resolution 24-47. “I’ve been getting emails and Chair [Tom] Cook has been getting a ton of emails from both sides, either for or against. Member Rawlins-Fernandez, we hear you, we hear the community, and I would gladly help you coordinate another community meeting Upcountry.”

County financial analysis

To show financial impacts of the potential water agreement, Sugimura also had requested a financial analysis be done by the County’s Department of Water Supply (DWS).

The DWS analysis was provided in a memo on April 1, arriving a few days after an independent analysis was conducted by Dick Mayer of the KCA and published on Maui Now.

In the updated report, DWS Director John Stufflebean addresses many of the concerns that were emphasized in Mayer’s independent analysis but does not compare things like alternative water sources or competitive bids.

The report covers three distinct purposes of the proposed wells, as well as numerous factors beyond simple cost to consider in making the policy decision, Water Supply Agreement (WSA) features and a comparison of the DWS financial analysis and the independent financial analysis.

Stufflebean outlined key points of the WSA that are beneficial to the County, wherein FMV bears the risk of well drilling, offering additional water without County risk. It also states that the County would retain full control over decisions and water allocation, with flexibility in meter charges and buyouts.

He then listed the three main purposes of the proposed well development, stating:

1. The proposed wells have potential to reduce or replace expenses of providing water from other existing sources, which involve pumping water uphill from ditches; whereas the proposed wells would be at a higher elevation.
   • The first well would benefit Lower Kula in this way, and that there would be time to build infrastructure to connect Upper Kula and Makawao Zones later.
2. The wells can provide a backup supply of water for domestic use and fire suppression, potentially saving the County devastating losses due to water shortages.
3. The water supplied in this use category would have very significant economic and social benefits, since people waiting decades on the meter list would be able to at long last get water service.

Stufflebean noted the needs of water Upcountry are becoming more time sensitive, highlighting an anticipated bump in demand to over triple the reliable supply Upcountry and citing specifically the Kēōkea Waiohuli (Hawaiian) Homestead, as it ramps up development.

The DWS analysis concludes with a comparison of cost analysis between the DWS analysis and the Mayer analysis. Overall, the DWS financial analysis dwarfs the independent analysis by Mayer.

“The primary difference in the two analyses is that Mr. Mayer’s analysis only considers the gross cost of the WSA,” stated Stufflebean in the report. “The County believes that the appropriate metric is, at a minimum, the net cost of the WSA, and, in reality, many factors beyond even that as discussed above.”

Specifically, the estimated water cost ($2.61 million) was the same for both analyses. The anticipated energy cost was more in Mayer’s analysis ($2 million) than the County’s ($1.9 million). The land cost calculation ($48,000) was the same for both analyses.

Conversely from Mayer, DWS treated the 50% meter fee outlined in the WSA and the cost of building shared infrastructure as a “pass through,” in other words assuming that building meters and infrastructure are a necessary cost to the DWS with or without the proposed deal with Free Market Ventures, LLC.

Likewise, the DWS states in the report that it would save money on administrative fees and save over $1.7 million by reducing or replacing costs from existing sources (referring to purpose No. 1).

Overall, the DWS analysis shows a total anticipated first year cost of $2.8 million compared to the $5.6 million project estimated in Dick Mayer’s independent analysis, the major difference being the way the DWS views its opportunity costs.

In terms of the county-wide fee impact, the DWS projected a fee increase of 3.08% to cover the net cost of the first well and expects “similar” fee impacts for the second and third well in order to distribute to the wider Upcountry water system.