J.Kalani English

Molokai utilities set for shutdown

Company, state, county spar over who must provide basic services

The Maui News
Thursday, June 5, 2008

By EDWIN TANJI, City Editor

WAILUKU — Mayor Charmaine Tavares protested what she said are misstatements by a governor's representative and insisted that Maui County is not in a position to take over utility systems that Molokai Properties Ltd. says it will cease to operate in August.

In a statement released Wednesday, she was joined by Council Member Danny Mateo of Molokai, state Rep. Mele Carroll and Sen. J. Kalani English in appealing to Gov. Linda Lingle to intervene to prevent the company from shutting down water and wastewater systems for residents of Kaluakoi and Maunaloa.

Lingle Chief of Staff Barry Fukunaga said he did not know if the state had authority to require a private business to continue to operate when it says it cannot afford to do so.

He said the governor is waiting for Tavares to provide information and recommendations on addressing the situation, noting that water and wastewater systems normally are the responsibility of the counties.

"Previously, the governor called a meeting with the mayor, the council member and legislators. It was clear at the time that Molokai Properties intended to discontinue the services. The question to the county and mayor was what would be your intention for addressing the situation," he said.

Tavares said she met with the governor and her staff on April 30 when she was made aware of the move by Molokai Properties to close down its utility units operating the water and wastewater systems, affecting 1,200 households in west Molokai.

Molokai Properties shut down all of its business operations on Molokai as of April 5, including the Molokai Ranch, visitor facilities and tours.

In an initial report to the state Public Utilities Commission in March and in subsequent letters, Molokai Properties said it would cease funding the operations of the two utility companies providing water and wastewater services to the west Molokai communities.

In a May 30 letter, Molokai Properties Chief Executive Officer Peter Nicholas said the company will cease to support the utility operations in August.

"Unless some public or private entity is located to take over the operations of these three companies by the end of August, there will probably be an unavoidable termination of services to those customers," Nicholas said.

By that time, Tavares had written to the governor to urge the state intervene with the company as a follow-up to the April meeting.

"It was at that meeting that I made a commitment to have our staff look into the situation and assess the condition of the systems," Tavares said. "I committed to at least look at it and get information about what was involved.

"Somehow that was turned around to the county committing to take over the system."

In a statement issued by the county Wednesday, the Mayor's Office said State Planning Director Abbey Mayer, who heads a governor's task force on the ranch shutdown, has made assertions that the county would take over the sewer and water systems.

The statements are inaccurate and misinformed, the Mayor's Office said.

"I knew we couldn't take over the system," Tavares told The Maui News on Wednesday. "Just to get the personnel in place would be an immense cost, and we don't know what it would take to bring the systems up to standards. We have to protect the county's taxpayers, so they don't get stuck with the cost of bringing a system up to standards."

She said the governor made no commitments for the state to assist the county.

"We didn't get to that phase. The comment she made at the time was that Abbey Mayer would be the contact and the point person for this program," Tavares said.

But she said Mayer and Molokai Properties began to issue statements to the effect that the county would take over the company's utility systems.

"I don't know what meeting he was at, unless I'm not speaking clearly enough," Tavares said.

Fukunaga said he was not aware of any statements by Mayer claiming that county had agreed to take over the Molokai Properties systems. But he said the governor is still waiting for the county to provide an assessment on the condition of the wastewater and water systems, and he said the state does not know that the systems are substandard.

"The county would be doing the evaluation, so they can make a meaningful determination of how to go about addressing the situation," he said.

Tavares said the county has taken over water and wastewater systems from private developments, but she said that occurs when the developer has installed systems that meet all county and federal Environmental Protection Administration standards.

"It's not uncommon," she said. "Remember with the Ulumalu Ranch Estates, the county agreed to take over the water system. But that took years, and it took a lot of effort that included county CDBG (federal Community Development Block Grant) funding that the group of private owners had to apply for.

"The system owner had to pick up the costs of bringing the system up to standards before the county could consider taking it over," she said.

Lingle had been a Maui County Council member and mayor over the years that the Ulumalu water system was upgraded, and Fukunaga acknowledged that the governor is familiar with the county's position on acceptance of private utility systems.

"We're talking about the basic services that the county provides on the island. Whether they can assume the services of the system, what is the condition of the system, what the ratepayers of the county should be looking at, those are the things the county must determine," he said.

"We left the meeting with the understanding that the mayor would do an evaluation on costs of operating and maintaining the systems. We haven't received anything from the county on that," he said.

The county statement issued Wednesday, along with letters from Mateo, English and Carroll to the governor, asked for assurance "that you will not allow Molokai Ranch to walk away from its responsibilities."

"Molokai Ranch has an obligation to provide these services or to find a private operator to continue operations on its behalf," Tavares said in her May 27 letter.

Using similar language in a May 30 letter, English added, "but the community needs the assurances of the state that these responsibilities will be met."

Mateo questioned how Molokai Properties can claim to be unable to afford to meet its obligations to the homeowners who have purchased properties from the ranch or its predecessors.

"If the company was filing for bankruptcy, that's another thing. But they're not. They are holding on to all of the land, all their assets and they're saying they can't afford to meet their obligations," he said.

If the county were offered the ranch lands, the value of the assets might justify the costs of upgrading the utility systems for the residents, Mateo said.

"That's not an option that we're being offered," he said. "Honestly, at this point, we are not in a position to assume those responsibilities. I would hope they would be able to find someone else to be the operator."

Molokai Properties did not respond to requests for comment.

Tavares said her staff was able to make an initial evaluation of the wastewater system, but the water system is more complex, in part because it utilizes an unpermitted connection to the state Department of Agriculture's Molokai Irrigation System. Molokai Properties last year was advised that an environmental assessment at a minimum would be required for the use to continue and was told that the use was barred until the environmental impact is determined.

Despite the opinion that the connection is illegal, the Department of Agriculture has continued to allow the private company to use the system to provide water to west Molokai.

Fukunaga said the governor is aware of the issue but said the transmission issue — which could require developing a separate transmission line across west Molokai — did not apply to the issue of the cost of operating the Molokai Properties' water system.

"The county has the option of determining how to best address the issues," he said.

• Edwin Tanji can be reached at citydesk@mauinews.com.

Original article URL: http://www.mauinews.com/page/content.detail/id/504585.html

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