Auditor says costs of water authority proposal ‘unknown’

Proposal to create separate Housing Department most expensive at $2M more a year

Maui County's auditor said it's unclear how much it would cost the county to create community water authorities -- a proposal on the November ballot that's generated plenty of public support but also raised questions over what it would take for the county to operate the extensive East Maui water system.

Auditor Lance Taguchi released an evaluation Tuesday of the estimated annual costs of the 13 charter amendments, including two alternatives, that will appear on the ballot.

The most costly charter amendment, according to Taguchi, is the proposal to split the county Department of Housing and Human Concerns into a separate Housing Department dedicated solely to affordable housing. Taguchi estimated that this would create an additional $2 million in annual costs.

Creating a Department of 'Oiwi Resources and having the county operate as a bilingual government would be the second-most costly proposal at $400,000 more annually.

"This evaluation is not an audit and purposely does not include conclusions and explanatory language within Exhibit 1 in order to avoid any perception that my Office is advocating for or against any of the proposed charter amendments," Taguchi wrote in letters to the mayor and council members. "That format -- while less than ideal -- is intended to avoid the loss of public trust, the possible violation of campaign finance laws and the use of government funds to advocate for or against a ballot initiative."

Most of the charter amendments that will appear on the ballot were proposed by the Maui Charter Commission. The rest were proposed by the Maui County Council.

The charter amendment that calls for the creation of Maui County Community Water Authorities and an East Maui Regional Community Board is the only one listed with an "unknown" cost in the report.

The water authorities with regional community boards would manage water collection and delivery systems acquired by the authorities, including state license areas in East Maui. They would also pursue long-term water lease agreements with the state like the one that East Maui Irrigation Co. -- owned jointly by Alexander & Baldwin and Mahi Pono -- is currently applying for.

The proposal aims to create more local control over water use and has been widely supported amid decades of water battles between small farmers and large plantation operations. But others have reservations about whether the county can take on the task.

"From the very beginning, I expressed my concerns about not having a handle on the financial feasibility of this particular proposal and that we should do a feasibility study first," Maui County Council Chairperson Alice Lee said Tuesday afternoon.

Concerns about costs also impact her opinion of other charter amendments.

"My position on a lot of the amendments are some of them are very well intentioned, however, I believe we need to, in this climate of inflation and possible recession, we need to prioritize our proposals and to see whether we can afford some of them now," she said. "Perhaps we can defer some of them. ... I doubt very much that we have the resources and capacity to pursue all of these proposals."

The Office of the County Auditor was unable to determine a cost for the water authority amendment because costs "would range a great deal depending on what we call yet-to-be-determined factors," Taguchi said.

That includes government restrictions that the county would have to follow in terms of in-stream flow standards; legal entanglements like contested cases and past agreements that call for studies and specific requirements in order to source water from East Maui; practical constraints and hiring needs if the county were to take over the East Maui system; and cultural needs that the county would have to address if it oversaw East Maui water operations.

"With all of these things that has yet to be determined, I found it very difficult to provide an estimate that I really could feel comfortable with, cause it could range greatly," Taguchi explained. "Therefore I believe it's unknown. I don't feel that it's responsible for me to just come out with a number for that."

Council Member Shane Sinenci, who proposed the amendment, said that the water authority would have a dedicated revolving fund as well as grant writers to seek funding to pay for management and operations.

"So it's not going to be kind of a burden on the taxpayers to pay for it. It will be self-funded by the rates that the water authority proposes," Sinenci said.

With the county's billion-dollar budget and extra revenues, now is the time to think about upgrading the island's aging water delivery system, he added.

"Communities like ours all over the country are starting to upgrade all of their systems using federal grants, and I think with the Biden administration providing a lot of the infrastructure funds, for me it's timely," Sinenci said. "I think the cost of not doing anything now while these funds are available is huge. I think if we don't act upon it, the ramifications can be even more expensive."

When asked if the county should do a study first, Sinenci reasoned that they didn't want to put in all the effort if the voters didn't support the water authorities. If voters approve the proposal, he said the county would have time to do studies before moving forward.

BREAKING DOWN THE COSTS

For other charter amendments, Taguchi said his office reviewed the minutes of the Charter Commission's meetings to understand their vision for each of the proposals.

"What I tried to do was in our calculations or our estimates, we used actual county expenditures of similar positions and departments, so it includes additional positions and the fringes (benefits) and the overhead that would accompany those positions," he said. "We also did include operations and equipment, and we based those upon similar departments or divisions."

The office looked at the current Housing and Human Concerns Department, for example, expecting that the new Housing Department would be smaller but with some of the same staffing and operational needs. The estimates didn't take into account new positions if they already existed.

Of the $2 million additional annual estimate for the Housing Department, 89 percent of that cost would come from salaries, overhead and fringe benefits, and 11 percent for operations and equipment, Taguchi said.

Of the $400,000 in expected annual costs for the Department of 'Oiwi Resources, 86 percent would be salaries, fringe benefits and overhead, while 14 percent would be operations and equipment. Taguchi said they made comparisons based on the new Department of Agriculture.

Eight of the other proposals are expected to cost less than $100,000 annually, while four are estimated to cost less than $25,000 annually.

"The general guideline was whether or not there would be additional people," he said. "We utilized $100,000 if there was one person or two people that would have to be hired. ... If we thought that it didn't require hiring another person and it could be handled by existing staff, then we left it at $25,000 or less."

Taguchi said some people will disagree with his calculations, but emphasized that "I'm not trying to advocate for the passage or defeat of any amendment, and I'm doing the best job I can based on actual county numbers to give you an idea of how much it will cost."

Grant Chun, who chaired the Maui Charter Commission, said that aside from the first two proposals to create new departments, "the rest don't seem to be huge drivers of cost."

"I think it's a good thing that the auditor went ahead and made this review," Chun said. "It's discretionary on his part, and I think it's a valuable service to the county and the electorate that he did do this. Kind of noteworthy is that one of the charter amendments would actually require that this occur in the future."

When asked if he thought the $2 million Housing Department proposal and other amendments were worth the cost, Chun said that's up to the voters to decide.

"At the end of the day, I think it's a valid question for the voters to digest and act upon," Chun said. "I don't feel qualified to make a value judgment as far as whether that's appropriate or not."

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