Cost of Government Committee Presentation Cost of the Upcountry Meter Priority List to Maui County & Methods to Eliminate the List June 14, 2012 Richard H. Pohle PH.D.

Time Consuming, Exorbitant Exactions Reduce Revenue: One Example  Subdivide Crater Rd 3.5A, R-0.5 Parcel to 3 Parcels  1985 Requires: Hold Harmless Letter and 380 feet of 6” line  2010 Requires: 120,000 gallon water tank; 2400 feet, 8” line  1985 Parcel not subdivided: Dedicated to Agriculture  Real estate taxes over 25 years: ~ $300/yr = $7,500  Neighboring parcel ~ $1500/yr: x 3 x 25yr = $112,000  Cost to Government on this one parcel: > $100,000  Crater Road Water Infrastructure was not improved

Upcountry Water Meter Priority List Halts All Development  Kula moratorium was replaced by date based priority list  Applies to Upcountry only (discrimination is partly justified)  “On March 16, 1993, the upcountry water system was found to have insufficient water supply…” This is FALSE. New water sources are available but expensive  Land use (housing vs. farming) cannot be considered  List clogged by those not ready but holding a place in line  List has not advanced (from 2008 – 2011: up one place)  Why? Available new water sources are not developed

Meter Priority List Reduces County Revenue and Increases Human Costs  Loss of tax revenue from economic activity: $10 M/year within a decade. (Loss is cumulative)  Cost to investors in ongoing projects: $1 M/year for a project of 100 to 150 units  Loss of exaction fees for source development : $2 M/ 100 housing units not built  Cost if a deep drought occurs: $10M  Insurance costs: TBD (Rates depend on Fire Flow)  Frustration, bankruptcy, immorality, emigration: ???  Legal dangers: Priceless. Could bankrupt County

Meter Priority List Affects Property Use. After 20 years Without Remedy - A Taking? Meter awards, not zoning, are used to control Upcountry growth  Class Action Suit by those affected (unequal treatment)  Individual exaction fee unjustifiably high  Developers are treated unequally  Violates Hawaii State water policy (Rich vs. Poor)

Elimination of the List is Possible  Pookela and Piiholo South Wells together could satisfy the entire List of 1450 names, 2600 meters  Buy these or equivalent new water sources ASAP  Piihoho South Well (1.78Mg/d) has been offered for $2.6 M as is or $3.7 M turn key into Upcountry system  Flume repairs and reservoirs do not advance List  What if entire List went on line? ~25% usage increase and $16 M new revenue  County policy changes would mitigate the effects of List repeal

Council Policy Affects List Repeal  Clearly state that meters will be given when needed  Use rate structure to encourage conservation  Implement an escalating rate structure above a baseline  Allow Mayor to declare a drought and initiate drought rates  Implement exaction fees for source and infrastructure  Allow exaction fees to reflect usage & put in mortgage  Limit Fire Flow fees to be commensurate w/project  Charge Upcountry what it costs to pump water uphill  Stop subsidizing Upcountry water usage

Administration Policy Affects List Repeal  Use the DWS Waiver Power in MCC to eliminate obvious unreasonable hardships  Use realistic water usage estimates depending on meter use. People need ~20g/day/person.  Recognize that people use less water than farmer and that people can afford to pay their way but farms need subsidies  Allow those on the List to change their meter requests without jeopardizing their List position

Summary: Meter List Has a High Cost It Can and Should be Repealed Meter List has halted Upcountry economic and infrastructure development. 3 Ways to repeal it  Slow walk Upcountry. Develop A&B projects and Haiku wells for Central Maui water  Develop Upcountry without allowing private funding to supplement public project costs  Mayor and Council work together. Council sets policy & Mayor exercises his executive power Meter List may be one manifestation of the development vs. anti-development conflict