County to assist Molokai residents

WAILUKU - Maui County will be able to provide financial assistance to Molokai residents who cannot afford large utility rate hikes approved this week by the state, Mayor Charmaine Tavares said on Friday.

Tavares said she has instructed her staff to formulate a plan and be on Molokai within the next couple weeks so those who qualify can apply for the aid. It is especially important to help the people of Molokai, Tavares said, an island already struggling with layoffs and spiraling fuel and utility costs.

Tavares said details still need to be worked out on exactly what the county can provide in the way of financial assistance to the utilities' 1,200 customers and for how long. The money will likely come from the state, a nonprofit and the county Department of Housing and Human Services, she said.

Also on Friday, Tavares was among the Maui County officials asking whether Molokai Properties Ltd. will comply with orders from two state agencies to continue to operate its three utilities.

On Thursday, both the PUC and Department of Health commanded the company to keep its sewage and water treatment plants operating for at least six months.

"The real question is will they accept the orders, and will they obey the orders," said county spokeswoman Mahina Martin. "The ball is now with them and the state."

When asked by telephone Friday what MPL intends to do, company General Manager Daniel Orodenker declined to make any comment.

To assist MPL, which says it lost $1.2 million in two years running the utilities, the PUC raised Molokai Public Utilities rates from $3.18 per 1,000 gallons to $6.04 per 1,000 gallons. Waiola O Molokai Inc. rates will go from $1.85 per 1,000 gallons to $5.15 per 1,000 gallons. The PUC did not increase Mosco wastewater rates, saying the utility had not shown it was operating with a deficit.

The PUC also said that if a buyer or another operator isn't found in six months, the utilities must submit applications for general rate increases to finance continued utility operations.

But the commission in the past also recognized that a temporary rate increase is only a short-term solution, and it cannot compel the utilities to operate in perpetuity. MPL was going to turn off its systems Aug. 31 if no operator was willing to take them over.

But the PUC interceded and advised MPL that it cannot shut down - and create a public health risk - or it would face potential civil and criminal penalties. The PUC can fine the company $25,000 a day, and the Department of Health has the power to issue fines as well.

"We hope that the company, including its larger and wealthier parent company in Hong Kong (GuocoLeisure Ltd.), will do what's right and comply so that water and sewer services will continue without interruption," Tavares said. "Should the company refuse to obey the orders, we anticipate that the state will enforce them vigorously on behalf of its citizens."

The county also is still awaiting an additional findings of fact and conclusions of law from Hearings Officer Thomas Rack on a Department of Health order issued on July 21 that the county should prepare to take over the MPL utilities in 90 days.

Tavares objected that the state has no authority to require the county to take over a private business and the county filed a motion opposing the July 21 order. After four days of hearings, Rack on Aug. 7 issued a order for the county to prepare an emergency plan for providing necessary services if Molokai Properties shuts down the water and wastewater operations.

County Corporation Counsel Brian Moto on Friday said he expects Rack's findings and conclusions will deal with the order for a county takeover, with his initial emergency order suggesting Rack will not uphold the July 21 mandate signed by Deputy Health Director Laurence Lau.

Gov. Linda Lingle has insisted that the county ultimately has the primary responsibility to operate and maintain the Molokai Properties utilities and should take them over.

"I'm still puzzled why she said that, but glad to see her own agencies take the lead now based on the law," Martin said.

Tavares has said that the utilities are in poor shape and a forced county takeover of a private entity would set a bad precedent.

MPL has contended that the utilities are well maintained and in perfect working order.

MPL's problems appear to stem from a series of setbacks last year, including a failure to win state Land Use Commission approval of an environmental impact statement to allow the company to move forward with a plan to develop 600 acres near Laau Point into 200 lots for high-end homes. The company's Community-Based Master Land Use Plan for Molokai Ranch proposed to turn over 26,200 acres to a community land trust with another 24,000 acres placed under preservation easements that would block urban developments.

The company also is struggling with issues affecting its access to water.

In January, a Hawaii Supreme Court ruling required it to refile for permits to take water from its main source, Well 17. Last fall, an attorney general's opinion held that an environmental assessment is required for MPL's use of the Molokai Irrigation System to transport water from Kualapuu to the west end.

"The people who live, gather and do business on the west side of Molokai will now have to pay a sudden and dramatic increase in water and wastewater rates as a result of the mismanagement of the utilities," Tavares said.

Martin said that the company's failures are obvious.

MPL should have secured rate increases years ago when it knew it was losing money, she said. Then, it neglected to find solutions to its water rights issues, despite widespread knowledge about them. Now the company is putting its liabilities on the taxpayers while holding onto all its assets, roughly one-third of the island's land, she said.

"Something is not right with Molokai Properties and has not been right for some time," Martin said.

* Chris Hamilton can be reached at chamilton@mauinews.com.