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Water company seeks sale of 4,500 acres of watershed land

Deal would not include the Waikapu ditch or any water delivery systems

Avery Chumbley

WAILUKU — Eight years of growing losses have prompted Wailuku Water Co. to ask the state Public Utilities Commission for permission to sell about 4,500 acres of its land in the West Maui Mountains.

The commission long ago suspended any asset sales while stream-flow standards in a contested case hearing were being worked out. On Friday, the company filed a request with the commission asking it to lift the suspension.

“Nine years have passed,” Wailuku Water Co. President Avery Chumbley said Tuesday. “We are quite frankly in a financial situation where we can no longer continue to sustain the losses

that we have for the last eight years in a row. And we have an opportunity to sell some of the underlying land.”

The company wants to sell about 4,500 acres for $3.4 million to Ting Ranch LLC, a Hawaii limited liability company managed by Duane Ting, according to the docket. The property would include a 3,425-acre parcel mauka of the King Kamehameha Golf Club and about 1,100 acres just above the first parcel.

The sale only involves the land and would not include the Waikapu ditch or any other water delivery systems in place. Those would remain with Wailuku Water Co. That way, Ting Ranch doesn’t need to apply to the commission to become a regulated company.

“It makes (the sale) a fairly cleaner request,” Chumbley said.

Wailuku Water owns about 13,170 acres of West Maui watershed lands. Although it is a private company, the PUC has deemed it “a quasi-public utility because we’re delivering (water) to more than one person,” Chumbley said.

In 2007, the company filed for a certificate of necessity from the PUC, allowing it to provide nonpotable water through its ditch distribution system and establish rates for delivering the water.

However, the PUC decided to suspend the company’s docket in 2008 while the Commission on Water Resource Management finalized in-stream flow standards, determined potential users and issued permits as part of a contested case hearing on surface water use permits.

“The PUC felt that until that decision was made, it would be premature to issue a certificate of necessity,” Chumbley said.

As part of the suspension, the company could not take new customers, raise its rates or sell its assets, he explained. Wailuku Water has lost increasingly more money since then.

Company revenues recently took a hit with the closure of Hawaiian Commercial & Sugar Co. and storm damage in Iao Valley. The end of HC&S operations resulted in about a 35 percent decrease in revenues in 2016, “the single largest loss of revenue” for the company, Chumbley said. After flooding in Iao last September, “the county was not using water at the same level they had in the past,” meaning a loss of more revenue. In 2016, the company lost $459,900, according to the docket.

Sorting out the case hearing has taken time, given that there are more than 110 users and applicants for water, including the Maui County, which is asking to increase its intake from the Iao-Waikapu ditch from 1.5 million gallons a day to 3.2 million. The hearing ended last September, but the case was reopened so stream-flow standards could be re-evaluated in light of the closure of HC&S, and that impact on parent company Alexander & Baldwin’s need for water.

If Wailuku Water is allowed to sell the land to Ting Ranch, it would “be able to continue to operate for a while, but it won’t solve the problem in perpetuity,” Chumbley said.

Meanwhile, the suspension also blocks the county’s proposed purchase of 8,764 acres of Wailuku Water’s land, including its water infrastructure, for about $9.5 million. If the county goes through with the purchase, it also will operate the water distribution system on the land that Ting Ranch wants to buy.

But if neither of the purchases happen, “there’s a high probability that Wailuku Water Co. will not survive,” Chumbley said.

Wailuku Water delivers water to more than 45 users. It also provides water to the Department of Water Supply, which treats it so it can be consumed as public drinking water.

Regardless of whether the county or Wailuku Water operates the system in the future, users will still need to pay a fee for delivery of the water, “unless their water comes directly off of the stream to their property, which is pretty rare,” Chumbley said.

The company’s request only asks for the suspension to be lifted so the sales can be made; it will not allow the company to raise its rates or add any customers. He added that it could take two months or longer before the matter could get a hearing because the PUC will have to wait to see if parties involved in the contested case hearing file objections.

* Colleen Uechi can be reached at cuechi@mauinews.com.