WEDNESDAY, NOVEMBER 22, 2017 - Water · 3. Manager’s Report No. 18–82 - Discussion and Possible Action on Water Plan 2020 Prioritization Methodology and Strategic Implementation

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NOTE: If you need an ASL Interpreter, materials in an alternate format, or other auxiliary aid support, please contact Edie at 245-5406 or email: [email protected] at least seven (7) calendar days before the meeting.

BOARD OF WATER SUPPLY of the COUNTY OF KAUA‘I

REGULAR MEETING Second Floor, Kaua‘i County Department of Water

4398 Pua Loke Street, Līhu‘e, Kaua‘i, Hawai‘i 96766

WEDNESDAY, NOVEMBER 22, 2017

Or soon thereafter A. CALL TO ORDER B. ROLL CALL C. ACCEPTANCE OF AGENDA D. MEETING MINUTES Review and approval of: Regular Board Meeting – October 27, 2017 Review and approval of: Executive Session – October 27, 2017

E. CORRESPONDENCE/ANNOUNCEMENTS

F. BOARD COMMITTEE REPORTS G. OLD BUSINESS

1. Manager’s Report No. 18-72 – Discussion and Possible Action on the Denial of Mr. Dennis Esaki’s request to Waive the Department of Water’s requirement’s for Subdivision S-2017-12, Jack Phillips, TMK: 2-3-7:01, 02 & 03, Kalāheo, Kaua'i, Hawai'i

H. CONSENT CALENDAR

1. Manager’s Report No. 18 – 75 - Discussion and Possible Action on the Amendment to Grant of Easement for Offsite Roadway Improvements for Hokulei Village: Phase I and Phase II, Lihue, Kaua'i, Affecting the Following Landowner:

a. Hokulei Village, LLC affecting TMK(s): (4) 3-3-003:046 (por.)

8:00 a.m.

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mailto:[email protected]

BOARD OF WATER SUPPLY REGULAR MEETING

November 22, 2017

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NOTE: If you need an ASL Interpreter, materials in an alternate format, or other auxiliary aid support, please contact Edie at 245-5406 or email [email protected] at least seven (7) calendars days before the meeting.

H. CONSENT CALENDAR (cont’d) 2. Manager’s Report No. 18 – 76 - Discussion and Possible Action on the Conveyance of Water Facility from D. R. Horton, Schuler Homes, LLC., for the Hooluana at Kohea Loa (S-2006-24) Offsite Plans Project, TMK: (4) 3-7-003:020, Hanamaulu, Kaua'i, Hawai'i 3. Manager’s Report No. 18 – 77 - Discussion and Possible Action on the Conveyance of Water Facility from D.R. Horton, Schuler Homes, LLC., for the Hooluana at Kohea Loa (S- 2006-24) Onsite Plans Project, TMK: (4) 3-7-003:020, Hanamaulu, Kaua'i, Hawai'i

4. Manager’s Report No. 18 – 78 - Discussion and Possible Action on the Grant of Easement for Hooluana at Kohea Loa Kalepa Tank Control Valve Replacement, Hanamaulu, Lihue, Kauai, Affecting the Following Landowner:

a. Grove Farm Company, Incorporated affecting TMK(s): (4) 3-8-002:001 5. Manager’s Report No. 18-79 – Discussion and Possible Action on the Grant of Easement for the Construction Plans for Guardian Storage Facility Kalapaki, Līhu'e, Kaua'i, Hawai'i Affecting the Following Landowner: a. Island Self Storage, LLC dba Guardian Self Storage affecting TMK: (4) 3-2-005:009

I. NEW BUSINESS

1. Manager’s Report No. 18–80 – Discussion and Receipt of the Department of Water’s Draft Audit Financial Statements and Independent Auditor’s Report by Accuity, Inc. for FY 2016-2017

2. Manager’s Report No. 18–81 – Discussion and Possible Action to Begin the Construction Procurement Solicitation for Job No. 18-1, Abandon Hanamā'ulu Well No. 1 and Hanamā'ulu Well No. 2 in the amount of $200,000.00 3. Manager’s Report No. 18–82 - Discussion and Possible Action on Water Plan 2020 Prioritization Methodology and Strategic Implementation

4. Election of Officers for 2018 5. Legal Document 18-01 - Discussion and Possible Action on the Waiver of Subdivision Requirements Agreement for Subdivision Application S-2017-12, Jack Phillips et al., TMK: 2-3-7: 01, 02 & 03, Kalāheo, Kaua'i, Hawai'i

J. STAFF REPORTS MONTHLY

1. Discussion and Receipt of the Kaua‘i County Water Department’s Statement of Revenues and Expenditures a. October Monthly Summary Budget

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November 22, 2017

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J. STAFF REPORTS (cont’d) 2. Discussion and Receipt of the Report by the Public Relations Specialist on Public Relations Activities 3. Discussion and Receipt of the Chief of Operation’s Summary Report on Operational Activities

4. Discussion and Receipt of the Manager and Chief Engineer’s Monthly Update Regarding Activities of Note of the DOW

a. Report of the BAB pay down as of October 2017 K. EXECUTIVE SESSION

Pursuant to H.R.S. §92-7(a), the Board may, when deemed necessary, hold an executive session

on any agenda item without written public notice if the executive session was not anticipated in

advance. Any such executive session shall be held pursuant to H.R.S. §92-4 and shall be limited

to those items described in H.R.S. §92-5(a).

1. Pursuant to Hawaiì Revised Statutes §92-4 and §92-5 (a)(4), the purpose of this Executive Session is for the Board to consult with the Board’s attorney on questions and issues pertaining to the Board’s powers, duties, privileges, immunities, and liabilities as they may relate to Legal Document 18-01 Waiver of Subdivision Requirements Agreement for Subdivision Application S-2017-12, Jack Phillips et al., TMK: 2-3-7: 01, 02 & 03, Kalāheo, Kaua'i, Hawai'i

2. Pursuant to Hawaiì Revised Statutes §92-4 and §92-5 (a) (2) and (4), the purpose of this Executive Session is for the Board to evaluate the performance of the Manager and Chief Engineer, where consideration of matters affecting privacy will be involved; provided that if the individual concerned requests an open meeting, an open meeting shall be held, and to consult with its attorney on issues pertaining to the Board’s powers, duties, privileges, immunities, and/or liabilities as they may relate to this agenda item a. Annual Evaluation of the Department of Water’s Manager and Chief Engineer from December 18, 2016 to December 17, 2017 3. Pursuant to Hawaiì Revised Statutes §92-4 and §92-5 (a)(4), the purpose of this Executive Session is for the Board to consult with the Board’s attorney on questions and issues pertaining to the Board’s powers, duties, privileges, immunities, and liabilities as they may relate to contractual agreements concerning the Waiahi Surface Water Treatment Plant, the potential construction of the Kapaia Cane Haul Road 18 inch Main project, and required disclosures, including but not limited those required under Chapters 6E, 171, and 343, Hawaii Revised Statutes and Ka Paakai o Ka Aina v. Land Use Commission, 94 Haw. 31 (2000) as relates to those projects.

L. TOPICS FOR NEXT WATER BOARD MEETING (December 2017)

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November 22, 2017

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M. TOPICS FOR FUTURE WATER BOARD MEETINGS 1. Discussion and Possible Action on Proposed Board Policy for Delegating Routine Actions from the Water Board to the Department of Water’s Manager and Chief Engineer regarding Right of Entry

2. Workshop presentation regarding the Long Range Plan of the Department of Water’s former Administration Building 3. Discussion and Possible Action on Utility Agreement No. 2257 between the State of Hawai‘i Department of Transportation and the Board of Water Supply, County of Kaua‘i for the upcoming Hanapēpē River Bridge, Kaumuali‘i Highway, Route 50, HI STP SR50 (1) Project, Hanapēpē, Kaua‘i Hawai‘i Water System Improvements

4. Discussion and Possible Action on the Department of Water’s Standard Operations Procedures as it relates to the Board of Water’s Rules and Regulation 5. Department of Water Employees of the Year 6. Discussion and Possible Action on Water Plan 2020 Priority Accomplishments and Goals as it correlates to the General Plan

N. UPCOMING EVENTS 1. Lights on Rice Street Parade (Friday, December 1, 2017) 2. Annual Meeting (Friday, December 8, 2017)

3. AWWA, HWWA, HWEA Joint Conference, Honolulu, HI (February 6 – 8, 2018)

4. AWWA Conference, Las Vegas, Nevada (June 11 – 14, 2018)

5. Make a Splash, Project Wet (September 20, 2018)

6. HWWA & HRWA Conference, Kaua'i, HI (November 7 – 9, 2018)

O. NEXT WATER BOARD MEETING

1. Friday, December 22, 2017, 10:00 a.m. 2. Friday, January 28, 2018, 10:00 a.m. 3. Friday, February 23, 2018, 10:00 a.m. 4. Friday, March 23, 2018, 10:00 a.m.

P. ADJOURNMENT

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Regular Meeting: Friday, October 27, 2017- Page 1 of 14

MEETING MINUTES BOARD OF WATER SUPPLY

Friday, October 27, 2017

The Board of Water Supply, County of Kaua‘i, met in regular meeting at the Board Conference Room in Līhu'e on Friday, October 27, 2017. Chair Sherman Shiraishi called the meeting to order at 10:04 a.m. The following Board members were present:

BOARD: Mr. Sherman Shiraishi, Chair Ms. Laurie Ho Mr. Lyle Tabata Mr. Thomas Canute Mr. Michael Dahilig Ms. Beth Tokioka Mr. Lawrence Dill Quorum was achieved with 7 members present as acknowledged by Chair Shiraishi.

STAFF: Mr. Kirk Saiki Ms. Marites Yano Mr. Valentino Reyna Ms. Sandi Nadatani-Mendez Mr. Eddie Doi Mr. Keith Aoki Mr. Michael Hinazumi Ms. Jonell Kaohelaulii Mr. Dustin Moises Ms. Christine Erorita Deputy County Attorney Mahealani Krafft

GUEST(s) County Attorney Mauna Kea Trask Mr. Hall Parrott, Private Citizen Mr. Dennis Esaki, Esaki Surveying & Mapping Mrs. Margaret Phillips, Phillips Living Trust Ms. Ida Gatsova, Private Citizen Mr. Milan Kocak, Private Citizen Ms. Petra Grussensos. Private Citizen Mr. Fred Atkins, Private Citizen

C. ACCEPTANCE OF AGENDA Mr. Dill moved to rearrange the Agenda to move up New Business Item I, No. 1 Resolution No. 18-02; New Business Item I, No. 2 Manager’s Report 18-74 and Old Business, Item G, No. 2 Manager’s Report No. 18-72; seconded by Ms. Ho; with no objections, motion carried with 7 ayes.

I. NEW BUSINESS 1. Resolution No. 18-02 – Discussion and Adoption of Resolution No. 18-02, Mahalo

Department of Water Participants 2017 Make a Splash Water Festival

Mr. Canute moved to approve and adopt Resolution No. 18-02 – Discussion and Adoption of Resolution No. 18-02, Mahalo Department of Water Participants 2017 Make a Splash Water Festival; seconded by Ms. Ho; with no objections, motion carried with 7 ayes.

2. Manager’s Report No. 18-74 - Discussion and Possible Action on the Manager’s Response to Mrs. Irene Morgan, dated September 21, 2017 regarding Facilities Reserve Charge for a Proposed Additional Dwelling Unit on TMK: 2-3-14:021, Alelo Road, Kalāheo, Kaua'i, Hawai'i

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Chair Shiraishi disclosed he had done work for Mrs. Irene Morgan in the past. BACKGROUND: Manager Saiki recommended that the Board deny Mrs. Irene Morgan’s request regarding Facilities Reserve Charge (FRC) for a Proposed Additional Dwelling Unit. DISCUSSION: Ms. Tokioka questioned the timing of Mrs. Morgan’s FRC refund dated August 22, 2016. The year of the refund was done in 2013 (not 2016). Mr. Canute asked if Mrs. Morgan’s property was an affordable home or warehouse garage?

Mrs. Irene Morgan, Private Citizen provided her testimony.

Mrs. Morgan explained why she wrote her letter and left the money in for a long time for her project. She started the project in 2006 but in 2013, (not mentioned in the letter), two County employees came to her home and told her son that her permit was no longer valid. Since her permit was no longer valid, she decided to use the money and also received her money back. Currently Mrs. Morgan is doing a warehouse garage project but realized the FRC was raised. Mrs. Morgan requested the Board to grandfather the FRC on the project she started. She takes full responsibility and if the Board denies her request, she accepts what the Board decides. The warehouse garage was going to be turned into an Additional Dwelling Unit rental. The Board took action by way of the Manager’s denial then there was an appeal to the Manager’s denial. This request failed for lack of a motion.

G. OLD BUSINESS 2. Manager’s Report No. 18-72 (Update) – Discussion and Possible Action on the Denial of Mr. Dennis Esaki’s request to Waive the Department of Water’s requirement’s for Subdivision S- 2017-12, Jack Phillips, TMK: 2-3-7: 01, 02 & 03, Kalāheo, Kaua'i, Hawai'i BACKGROUND: Manager Saiki and the Department re-evaluated Mr. Esaki’s request to waive the requirements for Subdivision S-2017-12 and came to the same conclusion and recommended the denied of the waiver.

DISCUSSION: The Manager did consider conditions but the Department consistently follows the rules of determining subdivisions and water requests. The Department is waiting for the Certificate of Completion (COC) from the previous work done on the subdivision. If the COC was done, it would not affect the Manager’s recommendation. The additional pipeline was required due to the change in design standards for fire flow. Ms. Tokioka mentioned to Manager Saiki that there were items missing in the Pro and Cons regarding litigation which was not considered in Option 1 and Option 2. She stated that potential liability should be considered when making this decision. Chair Shiraishi asked the Department if a boundary adjustment considered a subdivision? If there is no change in density or no additional development, and if the fire flow was inadequate, would the Department impose the new standard fire flow for a mere boundary adjustment?

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Chief of Water Resources and Planning Mr. Doi answered if a boundary adjustment came through the process, it would have to be consolidated and subdivided to be considered a subdivision. The Department follows the rules but based on the Standards of Procedure (SOP) or policy on a boundary adjustment, if you don’t increase the density or if you do not add square footage, the requirements could be waived with language on the plan. Example: if an owner needed to move the line 2 feet because of a fence, there is some leeway. If it is an established subdivision and a request is for a boundary adjustment, then the Department would check to see if it was applicable to the SOP or policy. Chair Shiraishi asked if one was not adding to it at that time, but they could do a boundary adjustment and approval without fire flow requirements, then come in for a renovation then the Department would be out of the picture. Mr. Doi mentioned if there was one lot divided into three lots that is one situation. If there were three lots and the boundary is moved two feet this would be a different situation.

Mr. Dahilig requested for any public testimony and then to immediately go into Executive Session.

Mrs. Margaret Phillips, Phillips Living Trust provided her testimony.

Mr. and Mrs. Phillips are co-trustees of two different owned trusts of lots 2 & 3 subdivision. Mr. Fred Atkins is the owner of lot 1. Extensive testimony presentations were summarized from County Attorney Mauna Kea Trask, Mr. Atkins, Mr. Dennis Esaki and Mrs. Phillips in the September 22nd minutes, as well as the record of her testimony and the binder of supporting documents that was distributed to the Board.

Mrs. Phillips pointed out the Manager’s Report on Pros and Cons for waiving the requirement for the additional 1,300 feet of 8 inch pipe. There were no arguments in favor of the waiver. She provided three Pros for granting Mr. Esaki’s request: 1) Consistency and reliance – is important for the Department of Water (DOW) to honor its previous decision which the owners relied on and installed the required 1,000 feet of 8 inch pipe. The DOW’s rules changed several years later after the owners installed the infrastructure improvements required at great expense 15 years ago, 2) Fairness – This was not a conventional application for a new virgin subdivision. Legal recognition is given to three parcels of land that were treated as a true subdivision by all County agencies since 2000 (17 years). The owners did all that was required and the Department never questioned the fact that this was a three lot subdivision, and 3) Peacemaking & risk avoidance – Owners are in agreement 100% of the testimony County Attorney Trask gave at the September Board meeting. Mrs. Phillips said it is better to resolve this issue between the owners within the Board than escalating this matter to the court. This would result in the County and owner’s expense; the risk consequence would be unfavorable. If the outcome was unfavorable for the County, it could create precedence. A settlement was entered with the County which required that the Ihu Road properties be ratified as a legal subdivision.

The key language from the settlement agreement could guide the Board on this matter: “This subdivision application is for the express purpose of settling a dispute between the parties by formalizing an existing de facto subdivision that was already approved by the Department. The County will, to the extent allowable by law, exercise its appropriate discretion and waive the need to comply with any of said requirements that are not already completed or in place, or that are not possible to complete within an expedited timeframe of this subdivision application.”

Mrs. Phillips addressed issues that were mentioned in this meeting. Manager Saiki mentioned the Department never received the COC from the previous work done. She did not know the COC was missing and was willing to sign it. The owners entered into a conveyance of the water supply on the 1,000 feet, 8 inch pipe, conveyed it to the DOW, granted easements, meters were installed for 15 years and are paying the bills.

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In reference to the boundary adjustment by Chair Shiraishi, Mrs. Phillips mentioned the settlement agreement recognized the de facto subdivision does not change any boundaries. It reclassifies two ditches owned by A&B Properties and easements granted to A&B Properties. Land configurations are the same with the same density requirements and the land has not shifted with no actual boundary adjustment involved. On behalf of the owners, Mrs. Phillips asked the Board to grant the waiver by Mr. Esaki. Chair Shiraishi inquired if the three lots are fully developed? How many dwellings can be built on the three lots? Mrs. Phillips said the infrastructure is in and is waiting for the results of this process to build the common entry way. The building plans are almost ready (Lots 2 & 3), the water and KIUC utility easements are, access easements and CPR.

Number of Lots: Lot 1 – supports 2 dwellings (owned by Mr. Atkins & Mr. McCready) Lot 2 – supports 4 dwellings (approx.10 ½ acres) Lot 3 – supports 2 dwellings (approx. 5.6 acres) Total dwellings & water meters = 8

Number of dwellings: Lot 1 – 1 dwelling exists since 2009 (occupied by Mr. Atkins) Lot 2 – No dwellings to date; in 2001 4 shade sheds were constructed; prerequisite for a CPR and built with Building Permits. Lot 3 – No dwellings to date

County Attorney Mauna Kea Trask on behalf of the Kaua'i County Planning Department provided his testimony.

County Attorney Trask provided the Board the Planning Department’s position. The Planning Department maintains its request for the Board to go against the Manager’s determination to not require any further requirements under the permit. Consistency was mentioned earlier and the Department should be acknowledged for trying to reach consistency which the Planning Department is trying to do. The rules changed on Kaua'i many times. The Planning Department’s concern are issues between what is land, what are parcels, what are lots, and what are units.

The Momohara’s owned land that had two ditch right of ways which divided the land into three sections. In 1991, the Planning Department determined the three sections were separate lots. The Momohara’s relied on this and then the lots entered the market then went to three different parties, two different trusts with the same principles and two individuals, Mr. Atkins and Mr. McCready. Those lots were CPR’d into units which exist and approved by the Department Public Works (DPW), Planning Department and DOW with appropriate access, utility, easements and water were required and provided. Because the County no longer acknowledging the existing de facto subdivisions, the lots no longer existed according to a certain part of the law, however the units still exist under the law, the easements exists, and the water lines are in. The Planning Department’s position is not to be adversarial with the DOW and is trying to be consistent and how to determine and deal with all the de facto subdivisions that were granted and acknowledged by the County’s agencies from the mid 1980’s to 2011.

In a recent civil suit resolution in the Supreme Court Intermediate Court of Appeals ordered this dispute to go to mediation. The mediation resulted in a submittal of a subdivision application. If all the units have been built, it would have been fine. At the time of the permits, the rules of the DOW in 2004 only asked for conveyance.

Because of this, change was by the County and not to the property and dealing with the group of de facto subdivision properties going forward. The Planning Department does not know of an alternative. County

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Attorney Trask said aside from acknowledging pro forma applications and what already exists, the DOW, Planning Department and DPW will have to deal with hundreds of lots that no longer are recognized as subdivisions. He asked how does this affect the Juris prudence and the lay of the land on Kaua'i? The best way to resolve this is a meticulous procedure that is currently being done now before the Board in a consistent manner that affects people. The Planning Department agrees that public safety is very important which is the DOW’s position. As of January 2016, the DOW, Planning Department and DPW all thought this was a subdivision in existence. The DOW thought the water lines were okay. Because a past problem is trying to be rectified, and the rules changes in 2007/2008. The DOW is now requiring another $1.5M of improvements, which is difficult for his client to proceed on this matter. Mr. Dill understood that a subdivision got preliminary approval and certain conditions, including the DOW applying these conditions that are required for increased water improvements. County Attorney Trask explained that a Subdivision Committee voted unanimously approved as submitted. The applicants, the Phillips, Mr. Atkins and Mr. McCready submitted their approved CPR that showed the parcels as lots and have been taxed as separate lots since the 1990’s. There were no more requirements which was a function of the subdivision ordinance that required the 360 that went to DPW. DPW requested drainage setting and other issues. County Attorney Trask explained the history on DPW who agreed to waive those requirements which is what the applicants are trying to explain to the DOW pertaining to those requirements. The application recognized what everyone already thought existed and what Planning Department determined (separate TMKs, separate taxes, and separate units). Mr. Dill asked what would the density be? Mr. Dahilig said no more than 5 acres. County Attorney Trask asked if there are no subdivisions, how is there a CPR? Mr. Canute added the CPR has to follow the address. Civil Engineer Mr. Aoki commented the CPR can cross multiple lot boundaries and does not have to be confined to one lot; units can be two different lots. Mr. Canute said if there are two CPR’s on one subdivided lot, there is common interest between the properties within the CPR. Each CPR could have its own TMK and the boundaries are defined by the CPR. CPR units no longer have TMK’s but they have the same TMK with a number at the end to identify units. Mr. Dahilig commented that CPR’s can cross boundaries but this is unique and does not apply on this matter. County Attorney Trask said this is the direct opposite because there are CPR’s within lots that do not exist. He sees how the lateral lines take effect; three lots are vertically next to each other and the lateral is divided up. What happens when you get rid of the vertical, it did not make sense.. Mr. Canute said legally these are defined as site condominiums. The legal definition of finance of the project, the financial institution, Bureau of Conveyance records, and mortgages defines them by the TMK and meets and bounds within the confines of the bigger property which County Attorney Trask agreed. The Planning Department is concerned about the fact pattern which affects marketability. If this goes to litigation, there is the concern of going against the title company. County Attorney Trask said the best way to deal with this is they exist and it is a safe case. This same situation may come before the Planning Department, DPW and the DOW and may require more when doing the right thing in the future. If this goes to court, because $3.9M to $5M was invested, the development, title insurance rendered will involve Title Guaranty and Old Republic. If the court said, under the fact pattern and recognized, it would change the face of everything on Kaua'i and possibly the State. The Planning Department will lose its ability to better handle this as a case-by-case basis regarding the reliability.

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Ms. Tokioka asked about the settlement that was reached between the Planning Department and R3BST, how would that apply here? County Attorney Trask explained the plaintiff, R3BST, LLC in the settlement filed February 2010 a circuit court case in the Fifth Circuit regarding the development rights associated with real property, conveyed under a land patent grant. The law suit centered around the interpretation and construction of the grant on the fee ownership of three right of ways (15 foot ditch right of way, a stream right of way, and a railroad right of way). This was bisected and created six sections. In August 2011, the Intermediate Court of Appeals and the Fifth Circuit determined there was no de facto subdivisions on Kaua’i which went against the previous rule in the Fifth Circuit. On August 2011, the Intermediate Court of Appeals committed the appeal to the Appellate Conference Program on Judge Nakatani and Joseph Keiffer, Esq., an appointed immediate mediator. The parties went to Honolulu on four different times and reached an agreement to settle a law suit and all of the claims which included plaintiff S. Smith, proposed subdivision application map pursuant to the Planning Commission and to run it through the process.

At 10:48 a.m., Mr. Tabata exited the meeting. At 10:50 a.m., Mr. Tabata re-entered the meeting.

The court said it was owned by one person and had not been conveyed yet. The difference in this case was it had been conveyed. These facts that concerns the Department. In that case, the Circuit Court said there was no real money, but now it is owned by three different people. (Choose your plaintiff with a good fact pattern; bad facts make bad law.) Ms. Tokioka asked if there was an immediate settlement between the Department the R3BST? County Attorney Trask said there was no settlement because there was no case. When the agreement was reached, it was in contemplation of avoiding litigation but was looking for a claim of $3.9M to $5M.

Mr. Fred Atkins, Private Citizen provided his testimony.

Mr. Atkins clarified that his property purchase was a lot (6 acres) and not a CPR. After he and his partner purchased the lot, they were going to split it and get it CPR’d. They thought it was separate from Lots 2 & 3. Prior to purchasing the lot, Mr. Atkins knew the Momohara’s and was part owner of 27 acres that abutted the Momohara’s property and at that time, it was one large parcel. After many years, a realtor showed Mr. Atkins a piece of property that he purchased it. This went back after research when the parcel was divided. Correspondence from the Planning Director showed that it became a separate lot. The Planning Director said it was an unintended subdivision because of the old ditch rise. Mr. Esaki did the CPR work which was approved and went through the State and approved by the County. In the document, if the owner was going to build a farm shed or dwelling he needed to get the permission of the other party. After the property was CPR’d and went to the Building Division, his partner signed off and got the plans approved, built the home and lived in his home for seven years. His partner went in to submit plans that he designed for the property and to put it up for sale to give the new owner an option. At that time, he was told to get signatures from six entities from Lot 2 and 3, but said he had his own parcel. This is how he got involved with this situation that started about 15 months ago. Mr. Atkins learned a lot from the Planning Department’s views and that there is a hard line on the ditch. A lot of money has been put in to clearing the land and has gotten the underground utility. His partner has been in escrow 15 months ago and reduced the price of the property for the buyers. Mr. Atkins thought this process would be done before last Christmas. Many meetings were spent with County Attorney Trask to prevent this from being a law suit and also went before the Planning Commission Board which came up with an agreement that needed to go to the departments. He thought the agreement could not impose any new things because this happen many years

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ago, plus the water is in. An upgrade was supposed to put in and to pay the FRC depending on the number of meters the County gives that there would be water. If someone wants to put a line in, they pay more and it helps to upgrade the system from the water fees. When Mr. Atkins came to the DOW, he was told to double what they already did, it was not what he agreed upon. Every other department has signed off and he thought the signatures were all done. Mr. Atkins does not know where he stands as an individual lot. In the agreement with the Planning Department, the plans would be recognized to be able to sell the lot but Mr. Atkins was not sure if DOW decides to impose this. There was a previous question to sue Title Guaranty but they represent him. Title Guaranty studied the ditch which goes back to the 1800’s. He does not want to go into ligation and it would be a difficult for him as he sits on the Hawai'i Tourism Board and could not be in a law suit against the County representing Kaua'i and Hawai'i at the same time. Based the fact if six other people have to sign off after he built his home would be grounds for litigation. His former partner owns the no. 2 unit on Mr. Atkins lot and if he loses his sale and it drags on, his former partner would feel damaged.

Mr. Dennis Esaki, Esaki Surveying & Mapping, provided his testimony.

Mr. Esaki provided corrections on the September 29th Regular Board minutes: 1) Spelling of Ellen vs. Fujimoto and 2) Spelling of R3BST (not R3 Best), 3) County Attorney Trask clarified what was in the minutes that the second lot was CPR’d into 4 units (not 4 lots), 4) and the language: “It behooves the County to not unsubdivide them,” 5) last sentence: They paid proportional share refund to Kakela Makai. Chair Shiraishi will point out the corrections to the Commission Support Clerk on the minutes. Mr. Esaki clarified Chair Shiraishi’s comment on the boundary adjustment. There are provisions in the Kaneshiro Ordinance that allowed for certain improvements that may not be imposed but may not pertain to this case if they don’t increase density. Regarding the case where the right of way do not create lots, Mr. Esaki said when the County or State creates a right of way, lots are created (i.e., lots were created on both sides on the Kōloa By-Pass Road). Those lots should be entitled to all the rights like regular lots. Mr. Esaki added the CPR process includes the County’s review, input and checked on the approved density. The CPR was approved which goes through the State. He stands by his request in opposition to the staff’s recommendation. Mr. Dahilig moved to go into Executive Session at 11:02 a.m. and to only include the Deputy County Attorney Krafft in the meeting to be present for resources; seconded by Mr. Tabata; with no objections, motion was unanimous.

K. EXECUTIVE SESSION

Pursuant to H.R.S. §92-7(a), the Board may, when deemed necessary, hold an executive session on any agenda item without written public notice if the executive session was not anticipated in advance. Any such executive session shall be held pursuant to H.R.S. §92-4 and shall be limited to those items described in H.R.S. §92-5(a) relating to Item G No. 2.

Manager’s Report No. 18-72 (Update) – Discussion and Possible Action on the Denial of Mr. Dennis Esaki’s request to Waive the Department of Water’s requirement’s for Subdivision S-2017-12, Jack Phillips, TMK: 2-3-7: 01, 02 & 03, Kalāheo, Kaua'i, Hawai'i

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Mr. Dahilig moved to reconvene the Regular Board Meeting at 11:57 a.m.; seconded by Mr. Tabata; with no objections; motion was Unanimous. J. STAFF REPORTS MONTHLY 1. Discussion and Receipt of the Kaua‘i County Water Department’s Statement of Revenues and Expenditures

a. September Monthly Summary Budget

BACKGROUND: Waterworks Controller Ms. Yano mentioned the Water Rate Study was prematurely scheduled for November 7th but would be rescheduled with Finance Chair Dill’s approval. DISCUSSION: Mr. Dill referred to page 85 and asked for an update on the Capital Budget $9.2M and Actuals of $10,080,000. Ms. Yano said Actuals paid was $346,960. Page 95 - Appropriations; encumbered $4.65M in capital projects. Page 94 is in addition to payments made in Year-to-Date which is 50% of the Budget. Mr. Dill asked if the Department would catch up by the end of the year to get projects out? Ms. Yano said she would have to check with the engineers. Construction Manager Mr. Moises said the $4.65M from for Kōloa Well 16A broke ground last week. There will be expenses the next couple of months. The Hanapēpē pipeline will go out for construction early 2018, next is Kapa‘a Haul Cane Road pipeline. Kapa‘a Drill and Test will be encumbered by June 30th. Mr. Dill asked if the Budget numbers are encumbered or expenses on the Actual side? Mr. Moises said $4.65M are encumbrances and $247,000 are expenses to the contract. Ms. Yano commented that the Budget is $9.2M in encumbrances and expenses (encumbered first, then payments made). Mr. Moises agreed the projects are encumbered 100% up front then it gets expended as the projects goes along (i.e., if projects are $4M, the budget should reflect $4M as well). Mr. Dill would like to see what the budget expenses are and not the budget encumbrances (compare budget expenses to actual expenses and budget payouts to actual payouts and never put the $9.2M in actual checks cut to contracts). He indicated this is not a correct comparison. Ms. Yano said the actual expenses are the actual pay outs (on the actual side, not budget side). Mr. Moises added the fiscal program doesn’t calculate based on the Notice To Proceed (NTP) that is put on his budget. If there was $10M of NTP in March 2018, nine months after July 1st, the budget calculates each month for the nine months in the program. Mr. Dill said this is misleading.

Ms. Yano commented that the way the budget is presented is what the Department expects to spend in the fiscal year which shows as the budget and actual comparison. The encumbrance does not indicate what the Department is going to spend but that is the amount that will be spent. This will eventually be on the fiscal program. Mr. Dill asked Ms. Yano and Mr. Moises to meet to discuss where Mr. Dill wants to go with this. Information Tech Specialist Ms. Nadatani added when the budget was done, it was separated into two different periods and changes can be made manually. Mr. Tabata commented when the budget is put together, estimate the burn rate, how much will be spent every month in actual disbursements and payments to be compared with the budget encumbrance but report actual expenses. Ms. Yano said this is similar when doing the debt service. Mr. Dill tied this into the next section which is correct as reported “Revenues: Variance = “Actual” less “Budget”; Positive indicates Higher Performance than Expected.

Board received – 7 members

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Chair Shiraishi noted that all of the Staff’s Monthly Reports will be received which was reminded by Mr. Dahilig; no motion is needed. 1. Discussion and Receipt of the Report by the Public Relations Specialist on Public Relations Activities

BACKGROUND: Information Specialist Ms. Kaohelaulii highlighted the following: Public Relations has been working with schools on their robotics program theme of “Hydro Dynamics” with a focus on water conservation. Each school has their other robotics team and goals. Public Relations has been working with Kapa‘a Elementary School and Hanalei Elementary School. Construction Management, Water Quality, Water Resources & Planning Divisions and Manager Saiki have assisted Kapa‘a Elementary School in their research. Ms. Kaohelaulii thanked them for giving their time for their presentations. In discussions with Hanalei Elementary School, students learn about water conservation plan for the Department. She entertained this positive campaign project from start to finish. This would be student lead project and Ms. Kaohelaulii would consult with the students on their design, the student message and advertising opportunity. Public Relations will continue to focus on strategic positive public relations in the community.


1. Discussion and Receipt of the Chief of Operation’s Summary Report on Operational Activities

DISCUSSION: Chief of Operations Mr. Reyna informed the Board on Operations for September. Chair Shiraishi referred to Distribution (3rd bullet point). Mr. Reyna said for the month of September, the field crew replaced 0 feet of 3” PVC distribution line on Lokokai Road. Extra time was not available for the crew on this project.


4. Discussion and Receipt of the Manager and Chief Engineer’s Monthly Update Regarding Activities of Note of the DOW

BACKGROUND: Manager Saiki highlighted the following: 1. Personnel Matters – Hired: Computer Systems Support Technician I Waterworks Inspector I 2. Detection of polychlorinated biphenyl (PCB) was in the power tank during a consultant sampling. DOW is working with Department of Health (DOH) on the sampling protocol to resolve this matter. Currently the tank is off line. Previous testing did not show PCB going into the distribution system. Since there was repair on the tank, when the consultants went to check the line and sample, PCB was detected. Water sampling was done at the top and at the distribution side. Two tests were done (screening test and confirmation test). PCB was not found at the top only on the distribution side. In the screening test, PCB showed up but not on the confirmation test. Further testing is being done on this isolated tank and the public is not affected.


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a. Report of the BAB pay down as of September 2017


QUARTERLY (July – September 2017) 1. Discussion and Receipt of the DOW’s Quarterly Project Status Update a. Construction Management Division Status BACKGROUND: Highlights are as follows: 1. Construction Management Officer Mr. Moises continues to work with Civil Engineer Mr. Aoki on design reviews for construction. 2. Hanapēpē pipeline is next for construction. 3. Construction contracts were closed out which included the new DOW building and Kōloa Well D. 4. Kōloa Well 16A & 16B site improvements started this month. 5. Project Management software is currently being designed; implementation mid-2018.

Board received – 7 members b. Engineering Division Design Status

BACKGROUND: Highlights are as follows: 1. Civil Engineer Mr. Aoki is expecting to approval on the Hanapēpē water line projects this quarter. 2. HE-10 Hanapēpē Road project on the county side - ready to approve the tracings; specs are being reviewed. 3. HE-1 (State) - completing design; working on the right of entries. 4. Hanalei water line improvements – completing design soon; waiting for approval of submitted plans and response is expected the end of this year. 5. Initiated a contract with consultant for the Kapa‘a Homesteads tank project to design a drainage plan. The design will take care of the drainage from the tank and for the proposed Kapa‘a Homesteads Well No. 4. Received initial plans for the drainage; design will be done on time.


c. Water Resources & Planning Division Status

DISCUSSION: Chair Shiraishi referred to page 318 on the Water Restriction Policy and asked what does it mean Administration Approved under Comments? Chief of Water Resources & Planning Mr. Doi replied it was on how the restriction got approved or implemented. Mr. Doi thanked the Planning Department’s personnel for working with the Department to implement the new rules. It was hard to determine the conversion of single family and multifamily dwellings. Chair Shiraishi asked why did Poipu get 300 restrictions per lot? Mr. Doi indicated the Department was in a catch up mode with Po'ipū and built a million gallon tank that was brought up to capacity. At that time, one developer should not come in and take 600 units for all of the capacity (Hyatt Resort was not affected). Board received – 7 members Mr. Dahilig moved to reconvene the Executive Session at 12:20 p.m.; seconded by Mr. Tabata; with no objections, motion was unanimous.

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K. EXECUTIVE SESSION (Reconvened) Pursuant to H.R.S. §92-7(a), the Board may, when deemed necessary, hold an executive session on any agenda item without written public notice if the executive session was not anticipated in advance. Any such executive session shall be held pursuant to H.R.S. §92-4 and shall be limited to those items described in H.R.S. §92-5(a).

Item G, No. 2 - Manager’s Report No. 18-72 (Update) – Discussion and Possible Action on the Denial of Mr. Dennis Esaki’s request to Waive the Department of Water’s requirement’s for Subdivision S- 2017-12, Jack Phillips, TMK: 2-3-7: 01, 02 & 03, Kalāheo, Kaua'i, Hawai'i At 12:23 p.m., Chair Shiraishi reconvened the Regular Board Meeting. DISCUSSION: Chair Shiraishi entertained a motion to defer Manager’s Report No. 18-72 to the November meeting to enable the Board to draft a non-development agreement and an indemnification waiver and duty to defend agreement and to take action on this matter.

Mrs. Margaret Phillips, Phillips Living Trust provided her testimony. Mrs. Phillips requested the Board to grant a subject approval on two conditions that were discussed with DCA Krafft during recess. The owners would feel better than waiting for the final vote until the draft agreement is completed and to move forward. The owners have been 15 months into this process and would like to end it in a positive way. Mr. Dahilig commented that discussions in Executive Session that lead the Board to this conclusion. The pending draft agreement(s) are the basis to that analysis and discussion. He wanted to defer this item to let the matter take its course and to get to a potential meeting of the minds once all have seen the draft agreement(s). Mr. Dahilig moved to defer Manager’s Report No. 18-72 to the November meeting to draft a non-development agreement and an indemnification waiver and duty to defend agreement; seconded by Mr. Tabata.

Mr. Fred Atkins, Private Citizen provided his testimony. Mr. Atkins concern is that the November or December meeting will not have a quorum, then the matter is deferred another month or two. Chair Shiraishi said it is expected there would be a super majority to vote. Chair Shiraishi asked the Board if they wanted to amend the motion to do a “conditional approval” in favor of the deferral or to vote “no” if not in favor of a deferral. Mr. Dahilig moved to go back into Executive Session at 12:29 p.m.; seconded by Mr. Canute; with no objections, motion was unanimous. At 12:30 p.m., Chair Shiraishi reconvened the Regular Board meeting. Mr. Dahilig moved to defer Manager’s Report No. 18-72 to the November meeting to draft a non-development agreement and an indemnification waiver and duty to defend agreement; seconded by Mr. Tabata; with no objections, motion was unanimous.

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Chair Shiraishi said the Board hopes to have an agreement ready for approval by the November Board meeting. It is expected that there will be a super majority present for quorum. Mr. Tabata moved to amend the November 22nd meeting time to 8:00 a.m. for quorum; seconded by Ms. Ho; with no objections; motion carried with 7 ayes. D. MEETING MINUTES Review and approval of: Regular Board Meeting – September 29, 2017 Mr. Dahilig approved as amended the Regular Board Meeting minutes – September 29, 2017; seconded by Mr. Dill; with no objections; motion carried with 7 ayes. Audit Committee Meeting – October 2, 2017 Mr. Dahilig approved the Audit Committee minutes – October 2, 2017; seconded by Mr. Dill; with no objections; motion carried with 7 ayes. Review and approval of: Executive Session – September 29, 2017 Mr. Dahilig approved the Executive Session minutes – October 2, 2017; seconded by Mr. Dill; with no objections; motion carried with 7 ayes. E. CORRESPONDENCE/ANNOUNCEMENTS

None. F. BOARD COMMITTEE REPORTS None. G. OLD BUSINESS (cont’d)

1. Manager’s Report No. 18-65 (Update) - Discussion and Possible Action on Part 2 Rules and Regulation for Water Service Connection to address Landlord and/or Property Managers and Tenant issues

a. Section I – Definitions b. Section III – Conservation Measures and Interruption of Water Supply c. Section IV – Elevation Agreement, Pressure Controls d. Section V – Application for Water Service and Service Connection DISCUSSION: Mr. Dill was ready to vote in favor on Manager’s Report No. 18-65 unless there was an issue to go into the Rules Committee. Mr. Dahilig indicated there needs to be more discussion with the Rules Committee regarding the increase of the tenant’s deposit from $90.00 to $170.00. Mr. Dahilig moved to refer Manager’s Report No. 18-65 to Rules Committee; seconded by Ms. Ho; with no objections, motion carried with 7 ayes.

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L. TOPICS FOR NEXT WATER BOARD MEETING (November 2017) 1. Discussion and Receipt of the Department of Water’s Draft Audit by Accuity, Inc. for FY 2016-2017 2. Executive Session: Annual Evaluation of the Department of Water’s Manager and Chief Engineer from December 18, 2016 to December 17, 2017 3. Executive Session: Manager’s Report No. 18-72 (Update) – Discussion and Possible Action on the Denial of Mr. Dennis Esaki’s request to Waive the Department of Water’s requirement’s for Subdivision S- 2017-12, Jack Phillips, TMK: 2-3-7: 01, 02 & 03, Kalāheo, Kaua'i, Hawai'i 4. Executive Session: Pursuant to Hawaiì Revised Statutes §92-4 and §92-5 (a)(4), the purpose of this Executive Session is for the Board to consult with the Board’s attorney on questions and issues pertaining to the Board’s powers, duties, privileges, immunities, and liabilities as they may relate to contractual agreements concerning the Waiahi Surface Water Treatment Plant, the potential construction of the Kapaia Cane Haul Road 18’ Main project, and required disclosures, including but not limited those required under Chapters 6E, 171, and 343, Hawaii Revised Statutes and Ka Paakai o Ka Aina v. Land Use Commission, 94 Haw. 31 (2000) as relates to those projects. 5. Formalize the Procurement Specialist Position (Suggested by MD)

M. TOPICS FOR FUTURE WATER BOARD MEETINGS 1. Discussion and Possible Action on Proposed Board Policy for Delegating Routine Actions from the Water Board to the Department of Water’s Manager and Chief Engineer regarding Right of Entry

2. Workshop presentation regarding the Long Range Plan of the Department of Water’s former Administration Building 3. Discussion and Possible Action on Utility Agreement No. 2257 between the State of Hawai‘i Department of Transportation and the Board of Water Supply, County of Kaua‘i for the upcoming Hanapēpē River Bridge, Kaumuali‘i Highway, Route 50, HI STP SR50 (1) Project, Hanapēpē, Kaua‘i Hawai‘i Water System Improvements

4. Discussion and Possible Action on the Department of Water’s Standard Operations Procedures as it relates to the Board of Water’s Rules and Regulation 5. Department of Water Employees of the Year 6. Discussion and Possible Action on Water Plan 2020 Priority Accomplishments and Goals as it correlates to the General Plan

N. UPCOMING EVENTS 1. Lights on Rice Street Parade (Friday, December 1, 2017) 2. Annual Meeting (Friday, December 8, 2017)

3. AWWA Conference (Las Vegas, Nevada, June 11 – 14, 2018)

4. Make a Splash, Project Wet (September 20, 2018)

O. NEXT WATER BOARD MEETING 1. Wednesday, November 22, 2017, 8:00 a.m. (Note: Time Change) 2. Friday, December 22, 2017, 10:00 a.m. I. NEW BUSINESS (cont’d)

3. Board Meeting Dates for 2018

The Board unanimously approved the 2018 Meeting Dates.

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4. Election of Officers for 2018

Mr. Tabata moved to defer the Election of Officers for 2018 to the November Board meeting; seconded by Mr. Canute; with no objections; motion carried with 7 ayes. Mr. Dahilig moved to go into Executive Session at 12:41 p.m. and to Adjourn after Executive Session; seconded by Ms. Tokioka; with no objections; motion was unanimous.

K. EXECUTIVE SESSION (cont’d)

2. Pursuant to Hawaiì Revised Statutes §92-4 and §92-5 (a) (2) and (4), the purpose of this Executive Session is for the Board to evaluate the performance of the Manager and Chief Engineer, where consideration of matters affecting privacy will be involved; provided that if the individual concerned requests an open meeting, an open meeting shall be held, and to consult with its attorney on issues pertaining to the Board’s powers, duties, privileges, immunities, and/or liabilities as they may relate to this agenda item

a. Annual Evaluation of the Department of Water’s Manager and Chief Engineer from December 18, 2016 to December 17, 2017

Chair Shiraishi requested to continue Executive Session Item K2 on the November agenda.

At 1:28 p.m., the Executive Session reconvened for Executive Session Item K.3.

3. Pursuant to Hawaiì Revised Statutes §92-4 and §92-5 (a)(4), the purpose of this Executive Session is for the Board to consult with the Board’s attorney on questions and issues pertaining to the Board’s powers, duties, privileges, immunities, and liabilities as they may relate to contractual agreements concerning the Waiahi Surface Water Treatment Plant, the potential construction of the Kapaia Cane Haul Road 18’ Main project, and required disclosures, including but not limited those required under Chapters 6E, 171, and 343, Hawaii Revised Statutes and Ka Paakai o Ka Aina v. Land Use Commission, 94 Haw. 31 (2000) as relates to those projects.

Mr. Dahilig moved to defer Executive Session Item No. 3 to the November Board meeting; seconded by Ms. Ho; with no objections, motion carried with 7 ayes.

P. ADJOURNMENT Mr. Dahilig adjourned the meeting after Executive Session at 2:28 p.m.; seconded by Ms. Ho; with no objections, motion was unanimous. Respectfully submitted, Approved, Edith Ignacio Neumiller Beth Tokioka Commission Support Clerk Secretary – Board of Water Supply

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4398 Pua Loke Street Līhu'e, HI 96766 Phone: 808‐245‐5400 Fax: 808‐245‐5813 Operations Fax: 808‐245‐5402

DEPARTMENT OF WATER County of Kaua‘i

“Water has no Substitute – Conserve It!”

MANAGER’S REPORT No. 18-72 November 22, 2017 (September 29, 2017, October 27, 2017)

Re: Discussion and Possible Action on the Denial of Mr. Dennis Esaki’s request to Waive the Department of Water’s requirement for Subdivision S-2017-12, Jack Phillips, TMK: 2- 3-7: 001, 02 & 03, Kalāheo, Kaua'i Hawai'i RECOMMENDATION: After re-evaluation, the Department is still recommending that the Board deny Mr. Dennis Esaki’s request to Waive Department of Water’s requirement’s for Subdivision S-2017-12, Jack Phillips, TMK: 2-3-7: 001, 02 & 03, Kalāheo, Kaua'i Hawai'i. FUNDING: N/A. BACKGROUND: The proposed subdivision is located in Kalāheo at the end of Ihu Road (see attached Exhibit 1). The Department of Water’s subdivision conditions includes but are not limited to upgrading the existing 3-inch waterline to an 8-inch waterline approximately 1,300 feet in length along Puu Road to provide adequate domestic and fire flow demands for the proposed subdivision (See attached Exhibit 2 for Departments subdivision report for S-2017-12). Mr. Dennis Esaki is requesting that the Board of Water Supply, County of Kauai waive the 1,300 feet of waterline as shown in the Department of Water’s Subdivision report for S-2017-12. The Department of Water is unable to waive the 8-inch mainline extension required for Subdivision S-2017-12. These improvements are necessary to provide adequate domestic and fire flow demands of the proposed subdivisions defined in the Department’s Rules & Regulations and Water System Standards. Regarding the first half of first sentence shown in the last paragraph of Mr. Dennis Esaki’s letter (attached) addressed to Mr. Kirk Saiki, Manager and Chief Engineer and the Board of Water Supply, dated September 20, 2017, it stated “We feel that the DOW requirement to install 1,300 feet waterline in order to build a dwelling is unreasonable.” The DOW’s requirement to install a 1,300 feet 8-inch waterline for subdivision S-2017-12 is required to provide adequate domestic and fire flow demands of the proposed subdivision. In accordance with the DOW’s Rules and Regulations, the Department of Water reviews subdivision applications submitted by the Planning Director to determine if the Department has sufficient water system developed for domestic and fire flow demands. The Department also reviews the subdivision application to determine if it satisfies other applicable conditions in accordance with but not limited to the Department’s Rules and Regulation and Water System Standards (i.e. Facilities Reserve Charges, minimum pressures, meter location(s), etc.).

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Manager’s Report No. 18-72 November 22, 2017 Page 2 of 3

The Department will inform the Planning Director in writing of its approval, requirements for approval, or its disapproval of a subdivision application upon completing its review. Shown below are applicable definitions and conditions from the Department’s Rules and Regulations PART 3, ESTABLISHING STANDARDS FOR SUBDIVSION WATER SYSTEM (see attached Exhibit 3 for Part 3, Establishing Standards for Subdivision Water System): SECTION 1 - DEFINITIONS The word “SUBDIVISION” shall mean improved or unimproved land or lands divided or proposed to be divided into two or more lots, parcels, sites, or other divisions of land for the purpose, whether immediate or future, of sale, lease, rental, transfer of title to or interest in, any or all of such parcels, and shall include re-subdivision, and when appropriate to the context shall related to the process of subdividing of the land or territory subdivided. SECTION II - AVAILABILITY OF WATER AND APPROVAL OF SUBDIVISION MAP 1. Extensions from and connections to the public water system will be approved by the Department where pressure conditions permit, provided the following have been met: a. The Department has a sufficient water system developed for domestic use and, if required by the Department, a sufficient water system for fire protection. b. The additional service on the existing system will not be detrimental to people already being served in that area. In order to determine if the additional service will be detrimental to present consumers, the Department may require the subdivider to estimate the amount of water to be consumed by the subdivision water system. c. The subdivision water system complies with these rules and regulations, and is designed and constructed in compliance with (1) all applicable statutes, ordinances, rules, and regulations of the State of Hawai‘i and the County of Kaua‘i, and (2) the 2002 Water System Standards (“Standards”) developed by Hawai‘i’s four county departments of water, as amended by the Department’s 2005 Amendments (“2005 Amendments”) to the Standards. The Standards and the 2005 Amendments are hereby incorporated by reference into the Department’s rules. The Manager and Chief Engineer may, for good cause shown, permit departure from the Standards or 2005 Amendments, or both. d. The facilities reserve charge for the subdivision has been paid, or a bond posted in lieu thereof, as provided under Section XIII of this Part. Shown below are applicable conditions from the 2008 AMENDMENTS to the 2002 Water System Standards (see Exhibit 4 for 2008 AMENDMENTS): Table 100-19 “FIRE FLOW REQUIREMENTS”: Table 100-19 is hereby deleted for the 2002 Standards and replaced in its entirety with Table 100-19A as shown in the attached 2008 Amendments. Table 100-19A identifies fire flow quantity, duration and fire hydrant spacing for Agricultural land use as 250 gallons per minute, one hour duration and 500 feet hydrant spacing.

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OPTIONS: Option 1: Approve Department of Water’s Recommendation and Deny Mr. Dennis Esaki’s request to Waive the Department of Water’s requirements for proposed subdivision S-2017-12. Pros: 1. The subdivider would be required to satisfy the Department of Water’s condition to install approximately 1,300 feet of 8-inch water line. 2. The Rules and Regulations and Water System Standards regarding the provision to provide adequate domestic and fire flow demands for a proposed subdivision would be satisfied. Cons: None. Option 2: Deny the Department of Water’s recommendation and Approve Mr. Dennis Esaki’s request to Waive the Department of Water’s requirements for proposed subdivision S-2017-12. Pros: None. Cons: Subdivider would NOT need to satisfy Department of Water’s condition to install approximately 1.300 feet of 8-inch water line. Respectfully submitted,

Edward Doi, P.E. Chief of Water Resources & Planning CONCURRED:

Kirk Saiki, P.E. Manager and Chief Engineer ED/ein Attachment(s): Exhibit1 Proposed subdivision in Kalāheo at the end of Ihu Road Exhibit 2 Subdivision Report dated 9-13-17 Exhibit 3 Rules & Regulations, Part 3, Establishing Standards for Subdivision Water System Exhibit 4 County of Kaua'i, Department of Water 2008 Amendments Correspondence from Mr. Dennis Esaki, Esaki Surveying & Mapping, Inc. regarding Subdivision S-2017-12 TMK (4) 2-3-07:1,2,3, Kahaleo, Kaua'i, Owners: Jack Phillips, et al, dated 9-20-17 Mgrrp/November 2017/18-72/Discussion and Possible Action on the Denial of Mr. Dennis Esaki’s request to Waive the Department of Water’s requirement for Subdivision S-2017-12, Jack Phillips, TMK: 2-3-7: 01, 02 & 03, Kalāheo, Kaua'i, Hawai'i (9-27-17, 10-27-17, 11-22-17):ein

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MANAGERS REPORT No. 18-75 November 22, 2017 Re: Discussion and Possible Action on the Amendment to Grant of Easement for Offsite Roadway Improvements for Hokulei Village: Phase I and Phase II, Lihue, Kaua'i, Affecting the Following Landowner:

a. Hokulei Village, LLC affecting TMK(s): (4) 3-3-003:046 (por.)

RECOMMENDATION: It is recommended that the Board approve the amended Grant of Easement document; whereby, the above landowners, grant to the Board of Water Supply, County of Kaua'i, easement “W-1” on, over and under that certain parcel of land located TMK: 3-3-003:046 (por.) as specified above in Lihue, Kaua'i, Hawai'i, for the following work:

1. This easement is granted for the reading of water meters and for the construction, installation, re-installation, maintenance, repair, and removal of potable water pipelines and related meters, valves, and other associated waterworks facility improvements and appurtenances (collectively the “waterworks facility improvements and appurtenances”) within the easement area. For the proper operation of its water system, the GRANTEE is further allowed, with or without vehicles or equipment and as the Grantee deems necessary for the proper operation of its water system, the right of ingress and egress at any time to, from, and through existing driveways and roadways within the easement area, as the same may exist from time to time, and to the areas immediately surrounding the waterworks facility improvements and appurtenances which are reasonably necessary in accordance with sound engineering and construction standards for construction, installation, re-installation, maintenance, repair and removal of all or any portion of the waterworks facility improvements and appurtenances. In exercising its easement rights, however, GRANTEE shall not unreasonably interfere with GRANTOR’s development, use and enjoyment of the property, including but not limited to, unreasonably interfering with the construction or use of any vertical improvements and structures (including, but not limited to, buildings) within the easement area. GRANTOR understands and agrees that GRANTEE’S construction, installation, re-installation, maintenance, repair and removal at any time of all or any portion of the waterworks facility improvements and appurtenances within the easement area shall not constitute unreasonable interference with GRANTOR’s development, use and enjoyment of the property.

Further, the GRANTEE (DOW) shall indemnify and save the GRANTOR (Hokulei Village, LLC) harmless from and against all damage to the GRANTOR’s property and all liability for injury to or the death of persons when such damage, injury, or death is caused by the negligence of the GRANTEE, its officers, agents and employees while using the easement area; except the GRANTEE shall not be liable for any claims, suits, demands, actions, judgments, losses, damages, costs, expenses, and liabilities whatsoever including but not limited to, flood damage and damage to vertical improvements or their foundations, or both, or damage to parking improvements arising out of or relating to broken or leaking waterworks facility improvements and appurtenances owned by GRANTEE within the Project;

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FUNDING: N/A. BACKGROUND: Owner installed new facilities which included 12” waterline with fire hydrants, air release valve, cleanout, domestic water lateral and appurtenances. The facilities are on private property which requires an easement in favor of DOW. An easement was initially approved and recorded in April 2015, however, it has been found that the original easement did not provide DOW the standard area necessary for maintenance. This amended easement provides the appropriate area. OPTIONS: Option 1: Approve as recommended. Pro: DOW will have the necessary easement area for maintenance. Con: None as it was designed and planned this way. Option 2: Not approving easement. Pro: None at this point. Con: DOW will not have the necessary easement area for maintenance. Respectfully submitted,

Dustin Moises, P.E. Chief of Construction Management CONCURRED:

Kirk Saiki, P.E. Manager and Chief Engineer DM:ein Attachments: Amendment to Grant of Easement, TMK: (4) 3-3-003:046 (por.) and maps Mgrrp/November 2017/18-75/Discussion and Possible Action on the Amendment to Grant of Easement for Offsite Roadway Improvements for Hokulei Village: Phase I and Phase II, Lihue, Kaua'i, Affecting the Following Landowner: a. Hokulei Village, LLC affecting TMK(s): (4) 3-3-003:046 (por.) (11-22-17):ein

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MANAGER’S REPORT No. 18-76 November 22, 2017 Re: Discussion and Possible Action on the Conveyance of Water Facility from D.R. Horton,

Schuler Homes, LLC., for the Hooluana at Kohea Loa (S-2006-24) Offsite Plans Project, TMK: (4) 3-7-003:020, Hanamā'ulu, Kaua'i, Hawai'i

RECOMMENDATION: It is recommended that the Conveyance of Water Facility document be approved; whereby D.R Horton, Schuler Homes, LLC transfers unto the Board of Water Supply, County of Kauai, all of its right, title and interest to the following items, in place complete:

2650 LF 12-Inch CL 52 Ductile Iron Pipe, in place complete

7 EA 12-Inch Cast Iron (CI) Gate Valves with CI Valve Boxes and Covers

2 EA 1-Inch Copper Air Relief Valve Assembly, in place complete

3 EA 4-inch clean out, in place complete

1 EA 1-Inch Single Service Lateral for 5/8-Inch Water Meter, in place complete

4 EA Fire Hydrant Assembly and Appurtenances

4 EA 6-Inch Cast Iron (CI) Gate Valves with CI Valve Boxes and Covers, in place complete in accordance with the as-built construction drawings for HOÒLUANA AT KOHEA LOA (S-2006-24) OFFSITE PLANS, prepared by Kodani & Associates Engineers, LLC., Kōloa, Kaua'i, Hawai'i.

FUNDING: N/A. BACKGROUND: Owner installed a new 12-inch ductile iron waterline, ARV, gate valves, single service lateral, fire hydrants, and appurtenances as noted above. Board Policy 24 requires a Manager’s Report for conveyances exceeding $500,000. This project Conveyance of Water Facility amount totals $724,400.00. OPTIONS:

Option 1: Approve as recommended. Pro: Project can be completed as designed and constructed.

Con: None as it was designed and planned this way. Option 2: Not approving conveyance. Pro: None at this point.

Con: Project won’t be completed as designed and constructed. Certificate of completion will be delayed.

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Respectfully submitted,


Kirk Saiki, P.E. Manager and Chief Engineer DM/ein Attachment: Conveyance of Water Facility from D.R. Schuler Homes, LLC, for the Hoòluana at Kohea Loa (Offsite Plans), TMK: (4) 3-7-

003:020 Hanamaulu, Lihue, Kaua'i, Hawai'i Mgrrp/November 2017/18-76/Discussion and Possible Action on the Conveyance of Water Facility from D.R. Horton, Schuler Homes, LLC., for the Hooluana at Kohea Loa (S-2006-24) Offsite Plans Project, TMK: (4) 3-7-003:020, Hanamaulu, Kaua'i, Hawai'i (11-22-17):ein

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4398 Pua Loke Street Līhu'e, HI 96766 Phone: 808-245-5400 Fax: 808-245-5813 Operations Fax: 808-245-5402



MANAGER’S REPORT No. 18-77 November 22, 2017 Re: Discussion and Possible Action on the Conveyance of Water Facility from D.R. Horton,

Schuler Homes, LLC., for the Hooluana at Kohea Loa (S-2006-24) Onsite Plans Project, TMK: (4) 3-7-003:020, Hanamā'ulu, Kaua'i, Hawai'i

RECOMMENDATION: It is recommended that the Conveyance of Water Facility document be approved; whereby D.R Horton, Schuler Homes, LLC transfers unto the Board of Water Supply, County of Kaua'i, all of its right, title and interest to the following items, in place complete:







5 EA 1-Inch Copper Air Relief Valve Assembly, in place complete

1 EA Koraleen water sampling station, in place complete

6 EA 2.5-Inch clean, in place complete

1 EA 4-inch clean out, in place complete

11 EA 1-Inch Single Service Lateral for 5/8-Inch Water Meter, in place complete

26 EA 1-1/2-Inch Double Service Lateral for 5/8-Inch Water Meter, in place complete

20 EA 2-Inch Triple Service Lateral for 5/8-Inch Water Meter, in place complete

7 EA 2-1/2-Inch Quadruple Service Lateral for 5/8-Inch Water Meter, in place complete

17 EA Fire Hydrant Assembly and Appurtenances

17 EA 6-Inch Cast Iron (CI) Gate Valves with CI Valve Boxes and Covers for Fire Hydrant, in place complete in accordance with the as-built construction drawings for HOÒLUANA AT KOHEA LOA (S-2006-24) ONSITE PLANS, prepared by Kodani & Associates Engineers, LLC., Kōloa, Kaua'i, Hawai'i.

FUNDING: N/A.

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BACKGROUND: Owner installed the new waterline facilities and appurtenances as noted above. Board Policy 24 requires a Manager’s Report for conveyances exceeding $500,000. This project Conveyance of Water Facility amount totals $1,143,508.00. OPTIONS:

Option 1: Approve as recommended. Pro: Project can be completed as designed and constructed.

Con: None as it was designed and planned this way. Option 2: Not approving conveyance. Pro: None at this point.

Con: Project won’t be completed as designed and constructed. Certificate of Completion will be delayed. Respectfully submitted,


Kirk Saiki, P.E. Manager and Chief Engineer DM/ein Attachment: Conveyance of Water Facility from D.R. Schuler Homes, LLC, for the Hoòluana at Kohea Loa (Onsite Plans), TMK: (4) 3-7-

003:020 Hanamaulu, Līhu'e, Kaua'i, Hawai'i Mgrrp/November 2017/18-77/Discussion and Possible Action on the Conveyance of Water Facility from D.R. Horton, Schuler Homes, LLC., for the Hooluana at Kohea Loa (S-2006-24) Onsite Plans Project, TMK: (4) 3-7-003:020, Hanamaulu, Kaua'i, Hawai'i (11-22-17):ein

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MANAGER’S REPORT 18-78 November 22, 2017 Re: Discussion and Possible Action on the Grant of Easement for Hooluana at Kohea Loa Kalepa

Tank Control Valve Replacement, Hanamā'ulu, Līhu'e, Kaua'i, Affecting the Following Landowner: a. Grove Farm Company, Incorporated affecting TMK(s): (4) 3-8-002:001

RECOMMENDATION: It is recommended that the Board approve the Grant of Easement document; whereby, the above landowners, grant to the Board of Water Supply, County of Kauai, easement “WF-1” on, over and under that certain parcel of land located TMK: 3-8-002:001 as specified above in Hanamā'ulu, Līhu'e, Kaua'i, Hawai'i, for the following work:

1. This easement is granted for the reading of water meters and for the construction, installation, re-installation, maintenance, repair, and removal of potable water pipelines and related meters, valves, and other associated waterworks facility improvements and appurtenances.

Further, the GRANTEE shall indemnify and save the GRANTOR harmless from and against all damage to the GRANTOR’s property and all liability for injury to or the death of persons when such damage, injury, or death is caused by the negligence of the GRANTEE, its officers, agents and employees while using the easement area; FUNDING: N/A. BACKGROUND: As part of the Hooluana at Kohea Loa Subdivision (S-2006-24) requirements, owner replaced the existing Kalepa Tank Control Valve. The new Kalepa Tank Control Valve facilities are on private property which requires an easement in favor of DOW. OPTIONS: Option 1: Approve as recommended. Pro: Project can be completed as designed. New control valve replacement will be installed. Con: None as it was designed and planned this way. Option 1: Not approving easement. Pro: None at this point. Con: Project won’t be completed as designed. New control valve replacement will remain uninstalled.

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Kirk Saiki, P.E. Manager and Chief Engineer DM/JB/ein Attachment(s): Grant of Easement, TMK: (4) 3-8-002:001 and map Mgrrp/November 2017/18-78/Discussion and Possible Action on the Grant of Easement for Hooluana at Kohea Loa Kalepa Tank Control Valve Replacement, Hanamaulu, Līhu'e, Kaua'i, Affecting the Following Landowner: a. Grove Farm Company, Incorporated affecting TMK(s): (4) 3-8-002:001 (11-22-17):ein

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MANAGERS REPORT NO. 18-79 November 22, 2017 Re: DiscussionandPossibleActionon theGrantofEasement for theConstructionPlans for GuardianStorage Facility Kalapakī, Līhu'e, Kaua'i, Hawai'i Affecting the Following Landowner: a.IslandSelfStorage,LLCdbaGuardianSelfStorageaffectingTMK:(4)3‐2‐005:009 RECOMMENDATION: It is recommended that the Board approve the Grant of Easement document; whereby, the above landowners, grant to the Board of Water Supply, County of Kauai, easement “W-1” on, over and under that certain parcel of land located TMK: 3-2-005:009 as specified above in Nāwiliwili, Līhu'e, Kaua'i, Hawai'i, for the following work:

1. Reading of water meters and for the construction, installation, reinstallation, maintenance, repair, and removal of potable water pipelines and related meters, valves, and other associated waterworks facility improvements and appurtenances.

Further, the GRANTEE shall indemnify and save the GRANTOR harmless from and against all damage to the GRANTOR’s property and all liability for injury to or the death of persons when such damage, injury, or death is caused by the negligence of the GRANTEE, its officers, agents and employees while using the easement area. FUNDING: N/A. BACKGROUND: As part of the Construction Plans for Guardian Storage Facility Kalapaki project, the above owner installed an 8” RPDA. The RPDA facilities are on private property which requires an easement in favor of DOW. OPTIONS: Option 1: Approve as recommended. Pro: Project can be completed as designed. New 8” Reduced Pressure Detector Assembly (RPDA) will be completed. Con: None as it was designed and planned this way. Option2: Not approving easement. Pro: None at this point. Con: Project won’t be completed as designed. RPDA will need to be redesigned and reconstructed.

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Kirk Saiki, P.E. Manager and Chief Engineer DM/JB:ein Attachment: Grant of Easement, TMK: (4) 3-2-005:009 and map Mgrrp/November 2017/18-79/Discussion and Possible Action on the Grant of Easement for the Construction Plans for Guardian Storage Facility Kalapakī, Līhu'e, Kaua'i, Hawai'i Affecting the Following Landowner: a) Island Self Storage, LLC dba Guardian Self Storage affecting TMK: (4) 3-2-005:009 (11-22-17):ein

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MANAGER’S REPORT No. 18-80

November 22, 2017 Re: Discussion and Receipt of the Department of Water’s Draft Audit Financial Statements and Independent Auditor’s Report by Accuity, Inc. for FY 2016-2017 RECOMMENDATION: It is recommended that the Board receive for discussion and necessary action the DOW’s draft Financial Statements as of June 30, 2017 and 2016 together with the Independent Auditor’s Report. BACKGROUND: The Auditor, Accuity LLP, has completed the audit of the DOW’s financial accounting system, operational procedures, reporting and internal controls, including review of the DOW’s information technology operations, for fiscal year (FY) ending June 30, 2017. The results of the audit will be discussed by the Auditor and a draft copy of the Financial Statements as of June 30, 2017 and 2016 together with the Independent Auditor’s Report are hereby submitted for your review, discussion and necessary action. The Board’s acceptance of the Financial Statements as of June 30, 2017 & 2016 and the Independent Auditor’s Report is crucial to meeting the County of Kauai’s (COK) deadline in finalizing the Comprehensive Annual Financial Report (CAFR) draft for the County Council’s agenda on the first week of December. As DOW is a component unit of the County, the DOW’s financial statements are integrated in the County’s annual CAFR. OPTIONS: Option 1: Board to receive, accept the DOW’s Financial Statements (FS) as of June 30,

2017 & 2016 with the accompanying Independent Auditor’s Report Pros: DOW can transmit timely the audited F/S to the County Finance Director, County of Kauai. Cons: None. Option 2: Defer discussion. Pro: The Board can have additional time to discuss additional questions that they may

have regarding the results of the audit. Con: If deferred, the delay will impact the county’s deadline in meeting the council

meeting schedule during the first week of December, 2017.

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Marites Yano Waterworks Controller CONCURRED:

Kirk Saiki, P.E. Manager and Chief Engineer MY/ein Attachment(s): Department of Water, County of Water June 30, 2017 Audit Results Presentation to the Board 11-22-17, by Accuity LLP Financial Statements as of June 30, 2017 and 2016, by Accuity LLP Mgrrp/November 2017/18-80/Discussion and Receipt of the Department of Water’s Draft Audit Financial Statements and Independent Auditor’s Report by Accuity, Inc. for FY 2016-2017 (11-22-17):ein

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Department of WaterCounty of Kauai

June 30, 2017 Audit Results

Presentation to the BoardNovember 22, 2017

Presented by:Donn Nakamura

Matthew Oda

Quality. Integrity. Insight.

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Page(s)

Scope of Services....................…………………………………………..............1

Financial Statement Highlights…………………………………………..............2

Required Communications…………………………….………………............3–8

Adjusting Journal Entries.................................................................................9

Reclassifying Journal Entries....................................................................10-11

2018 Audit Plan..............................................................................................12

Table of Contents

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• Provide an opinion on the fair presentation of the Department of Water’s (“DOW”) financial statements.

• Consider DOW’s internal control over financial reporting in relation to our audit of the financial statements.

• Perform tests of the DOW’s compliance with certain provisions of laws, regulations, contracts and grant agreements in relation to the financial statements.

1

Scope of Services

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• Net position increased $4.4 million in fiscal 2017 to $191.0 million compared to the $10.7 million increase in fiscal 2016. The smaller increase in the current year was primarily due to a $3.4 million decrease in contributions and a $2.3 million increase in operating expenses, primarily related to an increase in salaries, wages, and related employee benefits, when compared to fiscal year 2016.

• Current assets at June 30, 2017 of $18.5 million exceeded total current liabilities by $8.5 million.

• Net capital assets decreased by $3.4 million due to annual depreciation expense less the change in assets placed into service and construction work in progress.

• Net pension liability was $16.9 million as of June 30, 2017. A $5.6 million adjustment to net pension liability was recorded to properly reflect GASB Statement No. 68.

• Equity interest in pooled investments increased by $10.7 million. This increase was due to the investment purchases offset by investment sales and maturities.

• Bonds payable decreased by $2.9 million due to current payments and no new additions.

• SRF loans payable decreased by $1.9 million due to current payments and no new additions.

2

Financial Statement Highlights

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• AU-C Section 260 – The Auditor’s Communication With Those Charged with Governance. These required communications are addressed in the following pages. Our procedures and scope require communication of various matters to the individuals responsible consistent with our planned audit strategy.

• As a result of our audit procedures performed relating to the financial statements for the year ended June 30, 2017, there are no matters which came to our attention that would require further communication or action by management other than those discussed in the following pages.

Required Communications

3

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Required Communications Application to DOW

Auditor’s responsibility under Generally Accepted Auditing Standards. The auditor should communicate the level of responsibility assumed for fraud and illegal acts, whether the financial statements are free of material misstatement and whether management’s assessment of the effectiveness of the entity’s internal control over financial reporting is fairly stated.

Our primary responsibility as the Department of Water’s (“DOW”) independent auditor is to evaluate and report on the fairness of the DOW’s financial statements prepared in accordance with generally accepted accounting principles (“GAAP”). Based upon the results of our audit, which was performed in accordance with U.S. generally accepted auditing standards and Government Auditing Standards, we are prepared to issue an unmodified opinion on the DOW’s financial statements.

Overview of the planned scope of the audit. The overview of the planned scope and timing of the audit should be communicated to those charged with governance.

This was communicated in our Contract No. 638 dated June 23, 2017.

Significant accounting policies, including critical accounting policies and the auditor’s judgment about the quality of accounting principles. The entity’s initial selection of and changes in significant accounting policies or their application; methods used to account for significant unusual transactions; and effect of significant policies in controversial or emerging areas for which there is a lack of authoritative guidance or consensus should be communicated to those charged with governance.

There were no newly adopted Governmental Accounting Standards Board (“GASB”) Statements in fiscal year 2017.

We want to make the Board and management aware of GASB No. 75, Accounting and Financial Reporting for Postemployment Benefits Other Than Pensions, an Amendment to GASB Statement No. 45, which is effective in fiscal year 2018.


4

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Management judgments and accounting estimates. Those charged with governance should be informed about the process used by management in formulating sensitive accounting estimates and about the auditor’s conclusions regarding the reasonableness of those estimates.

The more difficult and subjective judgments and estimates were:

• Allowance for uncollectible receivables.• Revenue recognized related to unbilled accounts• Depreciation and useful lives of capital assets.• Calculation of net pension benefits, other postemployment benefits

and workers’ compensation liabilities.

Management’s estimates were evaluated and appeared to be reasonable.

Audit adjustments. All significant financial statement adjustments arising from the audit or proposed during the audit and any uncorrected misstatements that were determined to be immaterial by management individually and in the aggregate should be communicated to those charged with governance.

There were three adjusting journal entries and five reclassifying journal entries for fiscal 2017. All of these journal entries were recorded by management in the audited financial statements and are shown on pages 9 through 11.

There were no uncorrected misstatements above our de minimis noted in the current year.


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Potential effect on the financial statements of any significant risks and exposures. Those charged with governance should be aware of major risks and exposures facing the entity and how they are disclosed.

No major risks or exposures noted.

Material uncertainties related to events and conditions, specifically going concern issues. Any doubt regarding the entity’s ability to continue as a going concern and any other material uncertainties should be communicated.

No issues related to the DOW’s ability to continue as agoing concern or other material uncertainties were noted.

Other information in documents containing audited financial information. Those charged with governance should be informed of the auditor’s responsibility for information in a document containing audited financial statements, as well as of any procedures performed and the results.

We are unaware of any documents that will be submitted containing the audited financial statements.

Disagreements with management. Disagreements with management, whether or not satisfactorily resolved, about matters that could be significant to the entity’s financial statements or the auditor’s report should be communicated.

No such matters noted.

Consultation with other accountants. When the auditor is awarethat management has consulted with other accountants about significant accounting or auditing matters, the auditor’s view about theconsultation subject should be communicated to those charged with governance.

We know of no such consultations made by management.


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Major issues discussed with management prior to retention.Any major accounting, auditing or reporting issues discussed with management in connection with our initial or recurring retention should be communicated.

There were none.

Difficulties encountered in performing the audit. Serious difficulties encountered in dealing with management that related tothe performance of the audit are required to be brought to the attention of those charged with governance.

There were no serious difficulties encountered in performing the audit.

Internal control deficiencies. Those charged with governance should be informed of any significant deficiencies or material weaknesses in the design or operation of internal control that came to the auditor’s attention during the audit.

We noted several IT control deficiencies in the areas of IT governance, logical security, change management, and IT operations that collectively resulted in an overall significant deficiency, which is reported in the schedule of finding attached to the audited financial statements.

Fraud and illegal acts. Fraud or illegal acts involving senior management, or those responsible for internal controls, or causing a material misstatement of the financial statements where the auditor determines there is evidence that such fraud may exist should be communicated. Any illegal acts coming to the auditor’s attention involving senior management and any other illegal acts, unless clearly inconsequential.

We are not aware of any fraud or illegal acts.


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Other material written communications.

• Management representation letter.

• Schedule of findings

• Engagement letter.

• Management representation letter is available upon request.

• Refer to financial statements

• Contract is available upon request.

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9

Adjusting Journal EntriesDescription Debit Credit

Adjusting Journal Entries JE # 1(To properly reflect the pension liability related amounts to the GASB 68 allocation schedules)

Deferred outflows on net pension liability 3,400,597

Deferred inflows on net pension liability 948,606

Pension expense 1,261,928

Net pension liability 5,611,131

5,611,131 5,611,131

Adjusting Journal Entries JE # 2(To properly reflect the prior year contributions as a pension expense in FY17)

Pension expense 910,625

Deferred outflows on net pension liability 910,625

910,625 910,625

Adjusting Journal Entries JE # 3(To properly reflect contributions subsequent to the measurement date as deferred outflows in FY17)

Deferred outflows on net pension liability 937,609

Pension expense 937,609

937,609 937,609

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10

Reclassifying Journal EntriesDescription Debit Credit

Reclassifying Journal Entries JE # 101(To reclassify the noncurrent portion of the vacation/comp time accrual at 6/30/2017)

Accrued vacation and compensatory pay 839,900

Accrued vacation and compensatory pay, net of current portion 839,900

839,900 839,900

Reclassifying Journal Entries JE # 102(To reclassify the accrued interest payable balance from Restricted for capital activity to unrestricted net position balance at 6/30/2016)

Unrestricted net position 1,556,786

Restricted for capital activity 1,556,786

1,556,786 1,556,786

Reclassifying Journal Entries JE # 103(To reclassify the Bulk Water Purchase balance from Transmission and Distribution to Source of Supply in FY16)

Source of supply operating expense 718,889

Transmission and distribution operating expense 718,889

718,889 718,889

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11

Reclassifying Journal Entries

Description Debit Credit

Reclassifying Journal Entries JE # 104(To reclass the Koloa Well D CIP/Cap Interest balance into the Utility Plant as it was placed in service prior to FY17 year-end)

Utility plant in service 612,384

Construction work in progress 612,384

612,384 612,384

Reclassifying Journal Entries JE # 105(To reclassify the deferred outflows related to the difference between projected and actual earnings on pension plan investment to deferred inflows for net presentation at 6/30/2016)

Deferred inflows of resources 531,684

Deferred outflows of resources 531,684

531,684 531,684

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Discussion with management to understand any key risks or areas of focus for current year

May 2018

Planning July 2018

Year-end financial statement fieldwork August – September 2018

Draft report to management Mid-October 2018

Issue final report

October 31, 2018 if pension allocation and OPEB valuation (implementation of GASB Statement No. 75) audits are completed by ERS and EUTF auditors in a timely manner

12

Audit Plan for June 30, 2018 – Timeline

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© 2016 Accuity LLP. This publication is protected under the copyright laws of the United States and other countries as an unpublished work. All rights reserved.

First Hawaiian Center999 Bishop Street, Suite 1900 • Honolulu, Hawaii 96813

Phone: (808) 531‐3400 • Fax: (808) 531‐3433www.accuityllp.com

© 2017 Accuity LLP. This publication is protected under the copyright laws of the United States and other countries as an unpublished work. All rights reserved.

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Department of Water County of Kauai Financial Statements June 30, 2017 and 2016

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Department of Water County of Kauai Index

Page(s)

Report of Independent Auditors

Management’s Discussion and Analysis June 30, 2017 ........................................................................................................................................... 4–8

Basic Financial Statements

Statements of Net Position June 30, 2017 and 2016 ......................................................................................................................... 9–10

Statements of Revenues, Expenses and Changes in Net Position Years Ended June 30, 2017 and 2016 ....................................................................................................... 11

Statements of Cash Flows Years Ended June 30, 2017 and 2016 .................................................................................................. 12-13

Notes to Financial Statements June 30, 2017 and 2016 ....................................................................................................................... 14–41

Required Supplementary Information

Schedule of the Department’s Proportionate Share of the Net Pension Liability Last Ten Fiscal Years ................................................................................................................................. 42

Schedule of the Department’s Contributions Last Ten Fiscal Years ................................................................................................................................. 43

Schedule of Funding Progress for the Hawaii Employer-Union Health Benefits Trust Fund ..................... 44

Supplementary Information

Schedule I – Supplemental Schedule of Utility Plant in Service Year Ended June 30, 2017 ......................................................................................................................... 45

Schedule II – Supplemental Schedule of Selective Account Classifications Five Years Ended June 30, 2017 ................................................................................................................ 46

Report of Independent Auditors on Internal Control Over Financial Reporting and on Compliance and Other Matters Based on an Audit of Financial Statements Performed in Accordance with Government Auditing Standards

Financial Statement Finding

Section I – Financial Statement Finding ................................................................................................ 49-51

Section II – Federal Award Findings and Questioned Costs ...................................................................... 52

Corrective Action Plan

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Report of Independent Auditors

To the Board of Water Supply Department of Water, County of Kauai

Report on the Financial Statements

We have audited the accompanying financial statements of the Department of Water (the “Department”), a component unit of the County of Kauai (the “County”), as of and for the year ended June 30, 2017, and the related notes to the financial statements, which collectively comprise the Department’s basic financial statements as listed in the table of contents.

Management’s Responsibility for the Financial Statements

Management is responsible for the preparation and fair presentation of these financial statements in accordance with accounting principles generally accepted in the United States of America; this includes the design, implementation and maintenance of internal control relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error.

Auditors’ Responsibility

Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with auditing standards generally accepted in the United States of America and the standards applicable to financial audits contained in Government Auditing Standards,issued by the Comptroller General of the United States. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditors’ judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditors consider internal control relevant to the entity’s preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity’s internal control. Accordingly, we express no such opinion. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management, as well as evaluating the overall presentation of the financial statements.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.

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Opinion

In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of the Department as of June 30, 2017, and the respective changes in its financial position and its cash flows for the year then ended in accordance with accounting principles generally accepted in the United States of America.

Prior Period Financial Statements

The financial statements of the Department as of June 30, 2016 were audited by other auditors whose report dated November 23, 2016, expressed an unmodified opinion on those statements.

Other Matters

Required Supplementary Information Accounting principles generally accepted in the United States of America require that the management’s discussion and analysis on pages 4 through 8 and schedule of the Department’s proportionate share of the net pension liability, schedule of Department’s contributions and schedule of funding progress for the Hawaii Employer-Union Health Benefits Trust Fund on pages 42, 43 and 44, respectively, be presented to supplement the basic financial statements. Such information, although not a part of the basic financial statements, is required by the Governmental Accounting Standards Board who considers it to be an essential part of financial reporting for placing the basic financial statements in an appropriate operational, economic or historical context. We have applied certain limited procedures to the required supplementary information in accordance with auditing standards generally accepted in the United States of America, which consisted of inquiries of management about the methods of preparing the information and comparing the information for consistency with management’s responses to our inquiries, the basic financial statements, and other knowledge we obtained during our audit of the basic financial statements. We do not express an opinion or provide any assurance on the information because the limited procedures do not provide us with sufficient evidence to express an opinion or provide any assurance.

Other Information Our audit was conducted for the purpose of forming an opinion on the financial statements that collectively comprise the Department’s basic financial statements. The accompanying Supplemental Schedules I and II are presented for purposes of additional analysis and are not a required part of the basic financial statements.

The accompanying Supplemental Schedules I and II are the responsibility of management and were derived from and relate directly to the underlying accounting and other records used to prepare the basic financial statements. Such information has been subjected to the auditing procedures applied in the audits of the basic financial statements and certain additional procedures, including comparing and reconciling such information directly to the underlying accounting and other records used to prepare the basic financial statements or to the basic financial statements themselves, and other additional procedures in accordance with auditing standards generally accepted in the United States of America. In our opinion, the accompanying supplemental information in Schedules I and II is fairly stated, in all material respects, in relation to the basic financial statements as a whole.

Emphasis of Matter As discussed in Note 2, the financial statements of the Department are intended to present the financial position, the changes in financial position, and cash flows of only that portion of the governmental activities, the business-type activities, each major fund, and the aggregate remaining fund information of the County that is attributable to the transactions of the Department. They do not purport to, and do not, present fairly the financial position of the County as of June 30, 2017, the changes in its financial position, or its cash flows for the year then ended in accordance with accounting principles generally accepted in the United States of America. Our opinion is not modified with respect to this matter.

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Other Reporting Required by Government Auditing Standards

In accordance with Government Auditing Standards, we have also issued our report dated November 22, 2017 on our consideration of the Department’s internal control over financial reporting and on our tests of its compliance with certain provisions of laws, regulations, contracts, grant agreements and other matters. The purpose of that report is to describe the scope of our testing of internal control over financial reporting and compliance and the results of that testing, and not to provide an opinion on internal control over financial reporting or on compliance. That report is an integral part of an audit performed in accordance with Government Auditing Standards in considering the Department’s internal control over financial reporting and compliance.

Honolulu, Hawaii November 22, 2017

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Management’s Discussion and Analysis

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Department of Water County of Kauai Management’s Discussion and Analysis June 30, 2017

4

The Department of Water, County of Kauai (the “Department”) is a semiautonomous agency consisting of a Board of Water Supply, Manager and Chief Engineer, and support staff. The Board of Water Supply is responsible for the management, control and operation of the County of Kauai’s water system. This discussion and analysis is designed to assist the reader in focusing on the significant financial issues and activities and to identify any significant changes in financial position. We encourage readers to consider the information presented here in conjunction with the financial statements.

Financial Highlights

Total assets and deferred outflows at fiscal year-end (“FY”) June 30, 2017 were $297.1 million (“M”) and exceeded liabilities and deferred inflows by $191.0M.

Total net position at June 30, 2017 had a positive net change of $4.4M. The current year’s income before contributions of $1.8M and capital contributions of $2.6M brought in a combined $4.4M increase in net position.

Total cash and investments at June 30, 2017 were $68.5M, an increase of $2.7M from June 30, 2016.

The Department’s liquidity ratio is 1.8 at June 30, 2017 and 3.3 at June 30, 2016.

The debt to equity ratio, including capital leases, is 44% at June 30, 2017 and 48% at June 30, 2016.

Operating revenues for FY 2017 were $30.9M, a slight decrease of $774 thousand (“K”) from FY 2016. Water rates in FY 2017 were the same as FY 2016. The decrease in operating revenues was attributed to the overall decrease in water consumption combined with the “lower usage-lower tier” rate factor.

Operating expenses for the current year totaled $25.9M, an increase of $2.3M as compared to the prior year. Details of this decrease are further explained on pages 6 and 7.

Long-term debt at June 30, 2017 was $82.2M, a decrease of $4.8M from June 30, 2016. The decrease is from principal payments made for both the State Revolving Fund (“SRF”) loans and Build America Bonds.

Overview of the Financial Statements

The financial statements are presented using the economic resources measurement focus and accrual basis of accounting, whereby revenues and expenses are recognized in the period earned or incurred. The financial statements are designed to provide readers with a broad overview of the Department’s finances in a manner similar to a private-sector business.

The basic financial statements include a statement of net position, a statement of revenues, expenses and changes in net position, a statement of cash flows, and notes to basic financial statements. The statement of net position presents all of the Department’s assets and deferred outflows of resources (“deferred outflows”), liabilities and deferred inflows of resources (“deferred inflows”), and net position and provides information on the nature of its resources and obligations. The statement of revenues, expenses and changes in net position presents the results of operations and the resulting change in net position for the year. The statement of cash flows presents changes in cash resulting from operating activities, capital and related financing activities, and investing activities.

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The notes to the basic financial statements provide required disclosures and additional information that is essential to a full understanding of the data provided in the basic financial statements. In addition to the basic financial statements and accompanying notes, this report also presents certain supplementary information on utility plant in service and selective account classifications.

Financial Analysis

Statements of Net Position – Condensed

June 30, 2017, 2016 and 2015

FY 17 162017 2016 2015 % Change

AssetsCurrent and other assets 18,482,725$ 34,167,182$ 31,218,775$ (46%)Net capital assets 217,059,494 220,462,421 214,879,203 (2%)Other noncurrent assets 55,146,715 36,150,668 36,726,474 53%

Deferred outflows of resources 6,382,072 2,439,088 982,655 162%

Total assets and deferred outflows 297,071,006$ 293,219,359$ 283,807,107$ 1%

LiabilitiesCurrent liabilities 10,030,581$ 10,281,862$ 9,785,182$ (2%)Long-term debt, net 77,396,363 82,290,036 85,170,882 (6%)Other long-term liabilities 18,288,117 13,322,300 11,869,099 37%

Deferred inflows of resources 338,104 755,026 1,147,956 (55%)

Total liabilities and deferred inflows 106,053,165$ 106,649,224$ 107,973,119$ (1%)

Net positionNet investment in capital assets 148,854,813$ 147,807,716$ 145,575,072$ 1%Restricted 539,799 1,864,457 - (71%)Unrestricted 41,623,229 36,897,962 30,358,916 13%

Total net position 191,017,841$ 186,570,135$ 175,933,988$ 2%

Statements of Revenues, Expenses and Changes in Net Position – Condensed

Years Ended June 30, 2017, 2016 and 2015

FY 17 162017 2016 2015 % Change

Operating revenues 30,916,260$ 31,690,693$ 31,886,120$ (2%)Operating expenses 25,897,784 23,603,123 23,532,247 10%

Income from operations 5,018,476 8,087,570 8,353,873 (38%)

Nonoperating expenses (3,238,418) (3,404,704) (3,787,516) (5%)Capital contributions 2,667,648 6,053,281 4,932,911 (56%)

Change in net position 4,447,706$ 10,736,147$ 9,499,268$ (59%)

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The Department’s financial condition remains positive at year-end. As described earlier, net position is the reported difference between assets and deferred outflows and liabilities and deferred inflows which over time, may serve as a useful indicator of the Department’s overall financial position. Total assets and deferred outflows at year-end for the Department was $297.1M which exceeded liabilities and deferred inflows of $106.1M by $191.0M (net position). Total net position had a net change of $4.4M.

Total cash and investments (including restricted funds) increased by $2.7M from $65.8M at June 30, 2016 to $68.5M at June 30, 2017.

The Department’s liquidity ratio (current assets divided by current liabilities) was 1.8 at June 30, 2017 and 3.3 at June 30, 2016.

The Department finances part of its capital improvement and rehabilitation program through long-term bond issues and State Revolving Fund loans. The debt to equity ratio, including capital leases, at June 30, 2017, 2016 and 2015 was 44%, 48% and 52%, respectively.

The debt service coverage, including capital leases, for FY 2017 is 1.7 which is above the Department’s debt service coverage target of 1.5.

The change in net position for FY 2017 was $4.4M and is basically a result of the current year’s operations and capital contributions. Key elements of this increase are as follows:

Income from operations for FY 2017 was $5.0M and nonoperating expenses was $3.2M resulting in income before contributions of $1.8M. Total capital contributions were $2.6M bringing in a total of $4.4M change in net position for FY 2017.

Total operating expenses increased by $2.3M or 9.7% higher from $23.6M in FY 2016 to $25.9M in FY 2017.

Salaries, wages and related employee benefits increased by $1.6M; $1.3M was from the increase in pension liability related to the Governmental Accounting Standards Board (“GASB”) Statement No. 68 employer reporting allocation and $600K was a result of implementing salary increases, step movements and within range progressions in accordance with the different bargaining union agreements and county executive orders for all County employees including Excluded Managerial (“EM”) groups and Appointees.

Other variances in the major components of operating expenses are explained below:

Administrative and general expenses increased by $903K. This 12.9% increase from previous fiscal year is attributed mainly from the following:

o Salaries, wages and related employee benefits increased by $579K. o Information Technology (“IT”) cost increased by $389K due to the associated cost of

implementing a new billing system, Customer Care & Billing System (“CC&B”). o An offset to these two major increases was a decrease in liability insurance and other

settlements by $93K.

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Power and pumping expenses increased by $117K. This 4.1% increase from previous fiscal year is attributed to the following:

o Salaries, wages and related employee benefits increased by $78K. o Utility services increased by $94K. This was due to a slight increase in the unit price per

kilowatt hour (“KWH”) usage of electricity. o An offset was a decrease in operating supplies of $66K.

Transmission and distribution (“TandD”) expenses increased by $571K. This 16.5% increase is mainly attributed to the following:

o Salaries, wages and related employee benefits increased by $544K. o Repairs and maintenance increased by $52K. This was due to non-water system repairs

such as road repairs, vehicles and heavy equipment repairs and maintenance. o Rentals & leases increased by $34K. This was due to the failure of major equipment (the

excavator), which was out for three months. o Offset by a net decrease in operating supplies and inventory stock purchases of $78K.

Source of supply expenses increased by $159K. This 12% increase from previous fiscal year is attributed mainly to the following:

o Salaries, wages and related employee benefits increased by $148K. o Repairs and maintenance decreased by $184K. In FY 2016, the refurbishment of Lawai

Well No. 1 was completed. In addition, an outside service was also procured to cut tall trees surrounding the water wells and pumps.

o Bulk Water purchase increased by $290K due to a unit increase of $0.09 per 1,000 gallons combined with a 50 million gallon increase in purchased water.

o Offset by a decrease in operating supplies by $95K.

Customer accounting and collection expenses increased by $173K. This 16.4% increase from previous fiscal year is attributed mainly to the following:

o Salaries and related employee benefits increased by $123K. o Uncollectible expenses written off increased by $97K. Per Department Board Policy #11,

$117K of delinquent accounts, over six years, were written off from accounts receivable in FY 2017.

o Billing costs decreased by $47K due to the switch in Oracle CC&B hosted solution from Honolulu Board of Water Supply (“HBWS”) to the Department-owned CC&B and software, HBWS fees for their support services ended as of December 31, 2016.

Purification expenses decreased by $3K. This 0.3% decrease from the previous fiscal year is attributed mainly to the following:

o Salaries & related employee benefits increased by $84K. o Professional services decreased by $64K. Water Quality contracts outside services for their

water quality testing every two years, hence the decrease in the professional services expense.

o Operating supplies decreased by $24K.

Capital contributions, which are included in nonoperating income, amounted to $2.7M for FY 2017, a decrease of $3.4M or 55.9% as compared to last year’s $6.1M in capital contributions.

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Capital Assets and Debt Administration

Capital assets are made up of property, plant and equipment. As of June 30, 2017, the Department had net capital assets of $217M. Utility plant in service additions completed in FY 2017 amounted to $15.7M. Major capital asset additions included:

New Administration Building General Plant $12,302,994

Servers General Plant 286,372

New Vehicles General Plant 204,084

CC&B Billing Software Intangible Assets – Software 541,163

Grove Far, Inc. – Pipeline Utility Plant 559,191

Kauai Habitat for Humanity – Pipeline

Utility Plant 143,425

Koloa Well C – Improvements Utility Plant 129,060

New 8” WL along Halewili Road (Kaumualii highway to Haku Hale street)

Utility Plant 813,726

Long-term debt obligations outstanding as of June 30, 2017 amounted to $82.2M which consisted of $59.6M in public improvement bonds and $22.2M in SRF loans. The Department made a total of $4.7M in principal payments for both the SRF. There was no new debt or borrowing activity for FY 2017. More detailed information about the Department’s long-term debt is provided in Note 6 of the notes to the basic financial statements.

Current Known Facts, Decisions or Conditions

As of this date, management is not aware of any known facts, decisions or conditions that are expected to have a significant effect on financial position or results of operations of the Department.

Requests for Information:

This financial report is designed to provide a general overview of the Department’s finances as of June 30, 2017. Questions concerning any information provided in this report or requests for additional information should be addressed to the Manager & Chief Engineer, Department of Water, County of Kauai at 4398 Pua Loke St., Lihue, Kauai, Hawaii 96766.

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Basic Financial Statements

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Department of Water County of Kauai Statements of Net Position June 30, 2017 and 2016

The accompanying notes are an integral part of these financial statements.

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2017 2016

Assets and Deferred Outflows of ResourcesCurrent assets

Cash 6,362,826$ 15,018,200$Equity interest in pooled investments 7,154,576 14,813,303Receivables

Accounts, net of allowance for doubtful accounts of approximately $278,000 and $267,000 in 2017 and 2016, respectively 1,507,738 1,636,024Unbilled accounts 1,525,416 1,428,699Grants and subsidies 584,944 274,540Accrued interest 144,635 72,778

Total receivables 3,762,733 3,412,041

Materials and supplies 1,097,060 889,994Prepaid expenses 105,530 33,644

Total current assets 18,482,725 34,167,182

Restricted assetsFacility reserve charge funds

Cash 373,175 1,690,199Accounts receivable and other 109,088 112,065

Total facility reserve charge funds 482,263 1,802,264

Bond fundsCash 2,354,946 411,306Equity interest in pooled investments 12,907,649 15,859,558Accrued interest 57,536 62,193

Total bond funds 15,320,131 16,333,057

Total restricted assets 15,802,394 18,135,321

Equity interest in pooled investments, noncurrent 39,344,321 18,015,347

Utility plantIn service 332,813,883 317,154,723Accumulated depreciation (120,359,826) (113,429,734)

Total utility plant 212,454,057 203,724,989

Construction work in progress 4,605,437 16,737,432

Net capital assets 217,059,494 220,462,421

Total assets 290,688,934 290,780,271

Deferred outflows of resourcesDeferred loss on refunding 33,630 49,911Deferred outflows on net pension liability 6,348,442 2,389,177

Total deferred outflows of resources 6,382,072 2,439,088

Total assets and deferred outflows of resources 297,071,006$ 293,219,359$

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Department of Water County of Kauai Statements of Net Position June 30, 2017 and 2016


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2017 2016

Liabilities, Deferred Inflows of Resources, and Net PositionCurrent liabilities

Current portion of long-term debt 4,835,459$ 4,717,296$Current portion of capital lease obligation 742,000 699,000Accounts payable and accrued liabilities 2,844,191 3,260,806Contracts payable, including retainages 579,744 543,172Accrued vacation and compensatory pay 491,755 506,000Customer deposits 537,432 555,588

Total current liabilities 10,030,581 10,281,862

Long-term debt, net of current portion and unamortized premiums 77,396,363 82,290,036Net pension liability 16,921,133 11,310,002Capital lease obligation, net of current portion 527,084 1,269,148Accrued vacation and compensatory pay, net of current portion 839,900 743,150

Total liabilities 105,715,061 105,894,198

Deferred inflows of resourcesDeferred inflows on net pension liability 338,104 755,026

Total deferred inflows of resources 338,104 755,026

Commitments and contingencies

Net positionNet investment in capital assets 148,854,813 147,807,716Restricted for capital activity 539,799 1,864,457Unrestricted 41,623,229 36,897,962

Total net position 191,017,841$ 186,570,135$

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Department of Water County of Kauai Statements of Revenues, Expenses and Changes in Net Position Years Ended June 30, 2017 and 2016


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2017 2016

Operating revenuesWater sales 28,445,297$ 29,228,016$Other water revenue

Public fire protection service 2,133,294 2,122,038Other 337,669 340,639

Total operating revenues 30,916,260 31,690,693

Operating expensesDepreciation and amortization 7,440,452 7,065,427Administrative and general 7,873,972 6,971,382Transmission and distribution 4,043,097 3,472,079Power and pumping 2,949,414 2,832,361Customer accounting and collection 1,231,299 1,058,112Purification 872,638 875,568Source of supply 1,486,912 1,328,194

Total operating expenses 25,897,784 23,603,123

Income from operations 5,018,476 8,087,570

Nonoperating income (expenses)Investment income 183,120 311,633Interest expense, net of amounts capitalized (3,440,092) (3,716,337)Gain on disposal of assets 18,554 -

Total nonoperating expenses (3,238,418) (3,404,704)

Income before contributions 1,780,058 4,682,866

Contributions 2,667,648 6,053,281

Change in net position 4,447,706 10,736,147

Net positionBeginning of year 186,570,135 175,833,988

End of year 191,017,841$ 186,570,135$

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Department of Water County of Kauai Statements of Cash Flows Years Ended June 30, 2017 and 2016


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2017 2016

Cash flows from operating activitiesCash received from customers 28,476,866$ 29,743,624$Cash payments to suppliers for goods and services (12,182,257) (11,012,020)Cash payments to employees for services (5,738,803) (5,302,384)Other cash receipts 2,489,517 2,462,677

Net cash provided by operating activities 13,045,323 15,891,897

Cash flows from capital and related financing activitiesAcquisition and construction of capital assets (2,537,828) (9,737,925)Proceeds from revolving fund loan - 1,994,203Principal paid on revolving fund loan (1,917,297) (1,910,889)Principal paid on public improvement bond maturities (2,800,000) (2,655,000)Principal paid on capital lease obligation (699,064) (668,225)Interest paid on long-term debt (3,773,638) (4,103,281)Proceeds from Build America Bond interest subsidies 785,874 913,372Net proceeds from FRC Program 348,145 1,882,234Proceeds from state government capital grants 122,145 1,261,300

Net cash used in capital and related financing activities (10,471,663) (13,024,211)

Cash flows from investing activitiesPurchases of investments (45,856,673) (56,974,786)Sales and maturities of investments 34,614,257 51,579,965Interest on investments 639,998 521,358

Net cash used in investing activities (10,602,418) (4,873,463)

Net decrease in cash (including restricted cash) (8,028,758) (2,005,777)

CashBeginning of year 17,119,705 19,125,482

End of year (including $2,728,121 and $2,101,505 in restricted cash at June 30, 2017 and 2016, respectively) 9,090,947$ 17,119,705$

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Department of Water County of Kauai Statements of Cash Flows Years Ended June 30, 2017 and 2016


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2017 2016

Reconciliation of cash flows from operating activitiesIncome from operations 5,018,476$ 8,087,570$Depreciation and amortization expense 7,440,452 7,065,427Gain on sale of assets 18,554 -Bad debt expense 123,326 26,549Decrease (increase) in assets and deferred outflows of resources

Accounts receivable, net 4,960 454,549Unbilled accounts and other receivables (96,717) 34,510Materials and supplies (207,066) 21,564Prepaid expenses and other assets (71,886) 33,101Deferred outflows of resources (3,959,265) (1,060,148)

Increase (decrease) in liabilities and deferred inflows of resourcesAccounts payable and accrued liabilities (484,069) (184,126)Accrued vacation and compensatory pay 82,505 174,295Net pension liability 5,611,131 1,047,759Deferred inflows of resources (416,922) 138,754Customer deposits (18,156) 52,093

Net cash provided by operating activities 13,045,323$ 15,891,897$

Supplemental Disclosure of Noncash Capital and Related Financing Activities The Department received approximately $1,104,000 and $2,233,000 for the years ended June 30, 2017 and 2016, respectively, in contributions of property, plant and equipment from governmental agencies, developers and customers which are recorded as contributions at estimated fair value at the date of donation.

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Department of Water County of Kauai Notes to Financial Statements June 30, 2017 and 2016

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1. Background

On May 10, 1960, by authority of Act 20, Session Laws of Hawaii 1960, the Board of Water Supply (the “Board”) of the County of Kauai, Hawaii (the “County”) was created. The County transferred to the Board the operation and management of the water transmission and distribution systems. Under Act 20, the Board has the power to make and alter rules and regulations relating to the management, control, operation, preservation and protection of the waterworks. The rules and regulations adopted by the Board have the force and effect of law.

As of January 2, 1969, under a new charter for the County, the policy-making responsibility for the water system was retained by the Board. The Board, however, is specifically stated to be an executive department of the County government. To the extent that they were not in conflict with the provisions of the charter, laws governing the County water supply which were in existence at the time of the enactment of the charter continued in effect. The water system is now being operated as the Department of Water, County of Kauai (the “Department”), a self-supporting component unit (enterprise fund) of the County, which renders water services throughout the island.

The Department is responsible for establishing rates for services based upon current operating costs and expected future capital and operating revenue requirements. The rates determined by the Department are subject to approval by the Board. Effective July 1, 2014, the Board raised water rates an average of 10%, the service charge rates an average of 11%, and the agricultural service charge rates an average of 11%.

2. Summary of Significant Accounting Policies

Financial Statement Presentation The Department is a component unit of the County (the primary government). The accompanying financial statements present only the activities of the Department and do not include other organizations, activities and functions of the County.

Basis of Accounting The accompanying financial statements are presented using the economic resources measurement focus and the accrual basis of accounting, whereby revenues and expenses are recognized in the period earned or incurred.

The Department distinguishes operating revenues and expenses from nonoperating items. Operating revenues and expenses generally result from providing services in connection with the Department’s principal ongoing water operations. The principal operating revenues are from charges for water usage, while operating expenses include cost of services, administrative expenses and depreciation on capital assets. All revenues and expenses not meeting this definition are reported as nonoperating revenues and expenses.

Cash The Department’s cash includes cash on hand, demand deposits and short-term investments with original maturities of three months or less from the date of acquisition.

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Investments The Department has stated its investments at fair value, except for non-negotiable certificates of deposit which are recorded at amortized cost. Changes in the fair value of investments are recognized in investment income in the accompanying statements of revenues, expenses and changes in net position. The net decrease in the fair value of investments for the years ended June 30, 2017 and 2016 approximated $524,000 and $227,000, respectively.

Management Estimates The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Significant items subject to such estimates and assumptions include revenue recognized related to unbilled accounts, accrued liability for workers’ compensation claims and judgments, accrued liability for post-retirement health care benefits, and net pension liability. Actual results could differ from those estimates.

Utility Plant in Service (“UPIS”) and Depreciation In July 2007, a detailed report on the inventory and valuation of water utility properties of the Board was prepared by consultants. The estimated original cost of $161,833,581 and the accumulated depreciation of $59,014,249 were recorded. Additions to the utility plant since the date of the valuation are stated at cost and include contributions by government agencies, private developers and customers at their fair value at the date of contribution.

The utility plant is depreciated using the straight-line basis by applying composite rates based on the useful lives below. The composite rates are applied to beginning plant balances including contributions in aid of construction to calculate depreciation expense for the year.

The estimated useful lives of the various individual and group assets are as follows:

Motor vehicles 7 – 10 yearsEquipment and machinery 5 – 20 yearsBuildings and improvements 40 – 50 yearsTransmission and distribution equipment 18 – 63 years

Normal maintenance and repairs are charged to operations as incurred. All expenditures for major additions, betterments and replacements for the utility plant are capitalized, and expenditures for the general plant greater than $5,000 are capitalized. The Department capitalizes certain indirect costs related to construction work orders based upon actual construction direct labor hours.

Capitalization of Interest Interest costs have been capitalized, in accordance with accounting principles generally accepted in the United States of America, based on an average of expended costs through the end of the year. Capitalized interest in 2017 and 2016 was approximately $401,000 and $332,000, respectively.

Material and Supplies Materials and supplies are stated at lower of average cost (which approximates the first-in, first-out method) or market. The cost of materials and supplies is recorded as an expense when consumed rather than when purchased.

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Deferred Outflows and Inflows of Resources Deferred outflows of resources represent consumptions of net position that apply to future periods and will not be recognized as an outflow of resources (expenses) until then. Deferred charges on refunding bonds resulting from the difference between the carrying value of debt and its reacquisition price are reported as deferred outflows of resources. This amount is deferred and amortized over the shorter of the life of the refunded or refunding debt on a basis that approximates the effective-interest method.

Under Governmental Accounting Standards Board (“GASB”) Statement No. 68, differences between expected and actual experience and changes in assumptions are recognized in pension expense using a systematic and rational method over a closed period equal to the average of the expected remaining service lives of all employees that are provided with pensions through the pension plan (active and inactive employees) determined as of the beginning of the measurement period.

Additionally, differences between projected and actual earnings on pension plan investments are recognized in pension expense using a systematic and rational method over a closed five-year period. Contributions to the pension plan from the employer subsequent to the measurement date of the net pension liability and before the end of the reporting period are reported as deferred outflows of resources.

Revenue Recognition The Department recognizes revenue on the accrual method of accounting as services are rendered. Revenue recognized for services rendered but not billed is reflected as unbilled accounts receivable in the accompanying statements of net position.

Risk Management The Department is exposed to various risks of loss from: (1) torts, (2) theft of, damage to and destruction of assets, (3) employee injuries and illnesses, (4) natural disasters, (5) employee health, dental and accident benefits, and (6) miscellaneous others. Commercial insurance coverage is purchased for claims arising from such matters. Settled claims in excess of this commercial coverage were not significant in any of the three preceding years. The Department is self-insured for workers’ compensation claims and judgments.

Contributions For the years ended June 30, 2017 and 2016, the following transactions represent voluntary non-exchange transactions, recorded at fair value and are included as nonoperating income in the statements of revenues, expenses and changes in net position:

2017 2016

Contributions of property, plant and equipment, and grant money from governmental agencies, developers and customers 1,434,462$ 3,262,910$Build America Bond interest subsidies 885,041 908,137Facility reserve charge fees 348,145 1,882,234

2,667,648$ 6,053,281$

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At June 30, 2017 and 2016, the Department recorded approximately $364,000 and $374,000, respectively, of accrued interest subsidies in grants and subsidies receivable in the accompanying statements of net position.

Facilities Reserve Charge (“FRC”) Under the authority provided to the Board mentioned in Note 1, the Department assesses a fee to commercial and residential developers based upon the number and size of water meters installed at respective projects. These fees are restricted to fund the capital improvements of the water supply system and recorded as contributions in the statements of revenues, expenses and changes in net position.

Net Position Net position comprises the various accumulated net earnings from operating and nonoperating revenues, expenses and contributions in aid of construction. Net position is classified in the following three components: net investment in capital assets; restricted for capital activity; and unrestricted net position. Net investment in capital assets consists of capital assets, net of accumulated depreciation and reduced by outstanding debt that is attributable to the acquisition, construction or improvement of those assets. Debt related to unspent proceeds or other restricted cash and investments at year-end are not included in the calculation of net investment in capital assets. Restricted for capital activity consists of net position for which constraints are placed thereon by external parties, such as lenders, grantors, contributors, laws, regulations and enabling legislation, including self-imposed legal mandates. Unrestricted consists of all other net position not included in the above categories.

Pensions For purposes of measuring the net pension liability, deferred outflows of resources and deferred inflows of resources related to pensions, and pension expense, information about the fiduciary net position of the Employees’ Retirement System of the State of Hawaii (“ERS”) and additions to/deductions from ERS’s fiduciary net position have been determined on the same basis as they are reported by ERS. For this purpose, benefit payments (including refunds of employee contributions) are recognized when due and payable in accordance with the benefit terms. Plan investments are reported at fair value.

New Accounting Pronouncements

GASB Statement No. 75 In June 2015, the GASB issued Statement No. 75, Accounting and Financial Reporting for Postemployment Benefits Other Than Pensions. The Statement replaces GASB Statement No. 45, Accounting and Financial Reporting by Employers for Postemployment Benefits Other Than Pensions, as amended. The Statement will require governments to report a liability on the face of the financial statements for the other postemployment benefits that they provide. The requirements of this Statement are effective for reporting periods beginning after June 15, 2017. The Department has not yet determined the effect this Statement will have on its financial statements.

GASB Statement No. 77 In August 2015, the GASB issued Statement No. 77, Tax Abatement Disclosures. The Statement requires governments that enter into tax abatement agreements to disclose information about the nature and magnitude of the tax abatements. The requirements of this Statement are effective for reporting periods beginning after December 15, 2015. This Statement did not have a material effect on the Department’s financial statements.

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GASB Statement No. 78 In December 2015, the GASB issued Statement No. 78, Pensions Provided through Certain Multiple-Employer Defined Benefit Pension Plans. The Statement amends the scope and applicability of GASB Statement No. 68, to exclude pensions provided to employees of state or local governmental employers through a cost-sharing multiple-employer defined benefit pension that meet certain requirements. The requirements of this Statement are effective for reporting periods beginning after December 15, 2015. This Statement did not have a material effect on the Department’s financial statements.

GASB Statement No. 79 In December 2015, the GASB issued Statement No. 79, Certain External Investment Pools and Pool Participants. The Statement addresses how certain state and local government external investment pools – and participants in those pools – may measure and report their investments and was effective for the Department for the year ended June 30, 2017. This Statement did not have a material effect on the Department’s financial statements.

GASB Statement No. 80 In January 2016, the GASB issued Statement No. 80, Blending Requirements for Certain Component Units. This Statement amends the blending requirements in GASB Statement No. 14 for the financial statement presentation of component units of all state and local governments. The requirements of this Statement are effective for reporting periods beginning after June 15, 2016. This Statement did not have a material effect on the Department’s financial statements.

GASB Statement No. 81 In March 2016, the GASB issued Statement No. 81, Irrevocable Split-Interest Agreements. The objective of this Statement is to improve accounting and financial reporting for irrevocable split-interest agreements by providing recognition and measurement guidance for situations in which a government is a beneficiary of the agreement. The requirements of this Statement are effective for reporting periods beginning after December 15, 2016. The Department has not yet determined the effect this Statement will have on its financial statements.

GASB Statement No. 83 In November 2016, the GASB issued Statement No. 83, Certain Asset Retirement Obligations.The objective of this Statement is to provide financial statement users with information about asset retirement obligations that were not addressed in GASB standards by establishing uniform accounting and financial reporting requirements for these obligations. The requirements of this Statement are effective for reporting periods beginning after June 15, 2018. The Department has not yet determined the effect this Statement will have on its financial statements.

GASB Statement No. 84 In January 2017, the GASB issued Statement No. 84, Fiduciary Activities. This Statement establishes criteria for identifying fiduciary activities of all state and local governments. The focus of the criteria generally is on (1) whether a government is controlling the assets of the fiduciary activity and (2) the beneficiaries with whom a fiduciary relationship exists. Separate criteria are included to identify fiduciary component units and postemployment benefit arrangements that are fiduciary activities. This Statement is effective for periods beginning after December 15, 2018. This Statement is not expected to have a material effect on the Department’s financial statements.

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GASB Statement No. 85 In March 2017, the GASB issued Statement No. 85, Omnibus 2017. This Statement addresses a variety of topics including issues related to blending component units, goodwill, fair value measurement and application, and postemployment benefits (pensions and other postemployment benefits). This Statement is effective for periods beginning after June 15, 2017. The Department has not yet determined the effect this Statement will have on its financial statements.

GASB Statement No. 86 In May 2017, the GASB issued Statement No. 86, Certain Debt Extinguishment Issues. This Statement improves consistency in accounting and financial reporting for in-substance defeasance of debt by providing guidance for transactions in which cash and other monetary assets acquired with only existing resources – resources other than the proceeds of refunding debt – are placed in an irrevocable trust for the sole purpose of extinguishing debt. This Statement also improves accounting and financial reporting for prepaid insurance on debt that is extinguished and notes to financial statements for debt that is defeased in substance. This Statement is effective for periods beginning after June 15, 2017. The Department has not yet determined the effect this Statement will have on its financial statements.

GASB Statement No. 87 In June 2017, the GASB issued Statement No. 87, Leases. This Statement increases the usefulness of governments’ financial statements by requiring recognition of certain lease assets and liabilities for leases that previously were classified as operating leases and recognized as inflows of resources or outflows of resources based on the payment provisions of the contract. This Statement is effective for periods beginning after December 15, 2019. The Department has not yet determined the effect this Statement will have on its financial statements.

Reclassifications Certain amounts in the 2016 financial statements have been reclassified to conform to the 2017 presentation. Such reclassifications had no effect on the total net position or change in net position as previously reported.

3. Deposits

The Department’s deposits consist of cash on hand, cash held at financial institutions and cash held at the County of Kauai.

At June 30, 2017 and 2016, the carrying value of the Department’s cash deposits amounted to approximately $9,091,000 and $17,120,000, respectively, of which approximately $3,480,000 and $7,131,000, respectively, were held by the County in the County’s name. The bank balances at June 30, 2017 and 2016 amounted to approximately $9,389,000 and $18,466,000, respectively. The County Director of Finance has arranged for all of the Department’s deposits at June 30, 2017 and 2016 to be collateralized with securities held by the pledging financial institution in the County’s name.

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4. Investments

The Department’s investments are controlled by the Director of Finance of the County of Kauai and are generally invested in money market mutual funds, certificates of deposit, repurchase agreements, government treasury obligations and agencies (i.e., Federal Home Loan Bank notes and bonds, Federal Home Loan Mortgage Corporation bonds, and Federal National Mortgage Association notes and bonds) with federally insured financial institutions and mutual funds. The Department's investment vehicles are consistent with the investment guidelines contained in the Hawaii Revised Statutes (“HRS”).

The Department participates in an investment pool with the County. The Department’s portion of this pool is displayed on the statements of net position as equity interest in pooled investments.

The Department categorizes its fair value measurements within the fair value hierarchy established by generally accepted accounting principles. The hierarchy is based on the valuation inputs used to measure the fair value of the asset. Level 1 inputs are quoted prices in active markets for identical assets; Level 2 inputs are significant other observable inputs; and Level 3 inputs are significant unobservable inputs.

The following table presents the fair value of the Department’s investments by level of input at June 30, 2017 and 2016:

SignificantQuoted Prices Other Significant

in Active Observable UnobservableReported Markets Inputs Inputs

Value (Level 1) (Level 2) (Level 3)

2017

Investments by fair value levelU.S. treasury obligations 975,980$ 975,980$ -$ -$ U.S. government agencies 41,079,386 - 41,079,386 -Repurchase agreements 3,300,000 - 3,300,000 -Money market mutual funds 540,584 540,584 - -

Total investments by fair value level 45,895,950 1,516,564$ 1,131,117$ -$

Investments measured at amortized costCertificates of deposit 13,510,596

Total equity interestin pooled investments 59,406,546$

Fair Value Measurements Using

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SignificantQuoted Prices Other Significant

in Active Observable UnobservableReported Markets Inputs Inputs

Value (Level 1) (Level 2) (Level 3)

2016

Investments by fair value levelU.S. government agencies 32,849,711$ -$ 32,849,711$ -$ Repurchase agreements 3,500,000 - 3,500,000 -Money market mutual funds 3,027,497 3,027,497 - -

Total investments by fair value level 39,377,208 3,027,497$ 36,349,711$ -$

Investments measured at amortized costCertificates of deposit 9,311,000


Fair Value Measurements Using

The following table represents the Department’s investments by maturity as of June 30, 2017 and 2016:

Reported Maturity (in years)Value 0–1 1–5

2017U.S. treasury obligations 975,980$ -$ 975,980$ U.S. government agencies 41,079,386 17,831,318 23,248,068Repurchase agreements 3,300,000 2,300,000 1,000,000Certificates of deposit 13,510,596 7,080,596 6,430,000

58,865,962 27,211,914$ 31,654,048$

Money market mutual funds 540,584


Reported Maturity (in years)Value 0–1 1–5

2016U.S. government agencies 32,849,711$ 10,411,116$ 22,438,595$ Repurchase agreements 3,500,000 3,500,000 -Certificates of deposit 9,311,000 6,348,000 2,963,000

45,660,711 20,259,116$ 25,401,595$

Money market mutual funds 3,027,497


Interest Rate Risk – State law limits the Department’s investment portfolio to maturities of less than five years. The Department does not have a formal investment policy that further limits investment maturities.

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Credit Risk – State law limits investments to the top rating issued by nationally recognized statistical rating organizations (“NRSROs”). The Department has no investment policy that would further limit its investment choices. As of June 30, 2017, with the exception of the Department’s investment in certain fixed income and money market funds which was not rated, all of the Department’s investments were rated AA or greater.

Custodial Credit Risk – For an investment, custodial credit risk is the risk that, in the event of the failure of the counterparty, the Department will not be able to recover the value of its investments or collateral securities that are in the possession of an outside party.

Concentration of Credit Risk – The Department places no limit on the amount which may be invested in any one issuer. As of June 30, 2017, more than 5% of the Department’s investments are held in the following: Federal Farm Credit Bank (30%), Freddie Mac (18%), First Hawaiian Bank (17%), Fannie Mae (11%), Federal Home Loan Bank (8%) and Bank of Hawaii (6%).

5. Capital Assets

Capital asset activity during 2017 and 2016 was as follows:

Balance Reductions/ BalanceJune 30, 2016 Additions Transfers June 30, 2017

Capital assets not being depreciatedLand and land rights 1,307,422$ -$ -$ 1,307,422$ Construction in progress 16,737,432 3,160,895 (15,292,890) 4,605,437

Total capital assets not being depreciated 18,044,854 3,160,895 (15,292,890) 5,912,859

Capital assets being depreciatedUtility plant 296,979,899 1,270,827 1,951,836 300,202,562General plant 10,634,526 204,084 11,691,250 22,529,860Capital leases 7,415,346 - - 7,415,346Intangible assets 817,530 - 541,163 1,358,693

Total capital assets being depreciated 315,847,301 1,474,911 14,184,249 331,506,461

Less: Accumulated depreciation and amortizationUtility plant (100,695,863) (6,010,953) 34,143 (106,672,673)General plant (6,247,187) (787,435) 495,137 (6,539,485)Capital leases (5,789,582) (548,922) - (6,338,504)Intangible assets (697,102) (112,062) - (809,164)

Total accumulated depreciation and amortization (113,429,734) (7,459,372) 529,280 (120,359,826)

Total capital assets, net 220,462,421$ (2,823,566)$ (579,361)$ 217,059,494$

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Balance Reductions/ BalanceJune 30, 2015 Additions Transfers June 30, 2016

Capital assets not being depreciatedLand and land rights 1,307,422$ -$ -$ 1,307,422$ Construction in progress 7,979,721 9,711,158 (953,447) 16,737,432

Total capital assets not being depreciated 9,287,143 9,711,158 (953,447) 18,044,854

Capital assets not being depreciatedUtility plant 293,730,274 3,393,230 (143,605) 296,979,899General plant 10,151,924 519,515 (36,913) 10,634,526Capital leases 7,395,226 20,120 - 7,415,346Intangible assets 817,530 - - 817,530

Total capital assets being depreciated 312,094,954 3,932,865 (180,518) 315,847,301

Less: Accumulated depreciation and amortizationUtility plant (94,784,612) (5,957,549) 46,298 (100,695,863)General plant (5,825,652) (458,448) 36,913 (6,247,187)Capital leases (5,235,990) (553,592) - (5,789,582)Intangible assets (656,640) (40,462) - (697,102)

Total accumulated depreciation and amortization (106,502,894) (7,010,051) 83,211 (113,429,734)

Total capital assets, net 214,879,203$ 6,633,972$ (1,050,754)$ 220,462,421$

In 2017 and 2016, no impairment losses were identified by the Department.

6. Long-Term Liabilities

Bonds Payable The full faith and credit of the County is pledged for the payment of the Department's bond obligations. The County has the power and is obligated to levy ad valorem taxes, without limitation as to rate or amount, on all real property subject to taxation by the County.

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As of June 30, 2017 and 2016, bonds payable consisted of the following:

2017 2016

Public Improvement Bonds – County Series 2012A, last installment 2029. Maturing serially from August 1, 2016. Interest rate – 3.00% to 5.00%. Date issued – July 10, 2012. Original amount – $2,745,000. 2,600,000$ 2,745,000$

Public Improvement Bonds – County Series 2011A, last installment 2025. Maturing serially from August 1, 2012. Interest rate – 2.00% to 5.00%. Date issued – July 7, 2011. Original amount – $5,125,000. 3,325,000 3,635,000

Build America Bonds – County Series 2010A, last installment 2033. Maturing serially from August 1, 2013. Interest rate – 1.96% to 5.76%. Date issued – March 24, 2010. Original amount – $60,000,000. 52,210,000 54,240,000

Public Improvement Bonds – County Series 2005A, last installment 2021. Maturing serially from August 1, 2008. Interest rate – 3.25% to 5.00%. Date issued – February 1, 2006. Original amount – $3,165,000. 1,435,000 1,750,000

59,570,000 62,370,000

Premium on bond issuance 498,156 556,369

60,068,156$ 62,926,369$

The approximate annual debt service requirements to maturity as of June 30, 2017 are as follows:

Principal Interest TotalYears ending June 30,2018 2,910,000$ 2,959,000$ 5,869,000$ 2019 2,950,000 2,844,000 5,794,0002020 3,075,000 2,717,000 5,792,0002021 3,210,000 2,581,000 5,791,0002022 3,260,000 2,440,000 5,700,0002023–2027 17,075,000 9,823,000 26,898,0002028–2032 19,630,000 5,005,000 24,635,0002033 7,460,000 387,000 7,847,000

59,570,000$ 28,756,000$ 88,326,000$

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Loans Payable As of June 30, 2017 and 2016, the loans payable consisted of the following:

2017 2016

State Revolving Fund (“SRF”) Loan – Stable 1.0 MG Tank, last installment 2029. Interest rate – 0.26%. Semi-annual loan fee rate – 1.625%. Date issued – March 15, 2009. Original amount $7,274,998. 4,616,314$ 4,994,631$

SRF Loan – Poipu Road 16-Inch Main Replacement, last installment 2027. Interest rate – 0.16%. Semi-annual loan fee rate – 1.625%. Date issued – January 15, 2007. Original amount – $5,158,886. 2,670,414 2,935,131

SRF Loan – Wailua Houselots Main Replacement, last installment 2033. Interest rate – 0.5%. Semi-annual loan fee rate – 0.5%. Date issued – April 15, 2013. Original amount – $4,463,084. 3,105,653 3,291,680

SRF Loan – Kaumualii Highway 12-Inch Main Replacement, last installment 2029. Interest rate – 0.32%. Semi-annual loan fee rate – 1.625%. Date issued – August 15, 2009. Original amount – $3,989,537. 2,593,431 2,796,471

SRF Loan – Kapilimao 0.5 MG Tank, last installment 2030. Interest rate – 0.42%. Semi-annual loan fee rate – 1.625%. Date issued – January 15, 2010. Original amount – $3,793,779. 2,609,805 2,804,718

SRF Loan – Lihue Baseyard Improvements for the Department of Water, last installment 2034. Interest rate – 0.5%. Semi-annual loan fee rate – 0.5%. Date issued – December 15, 2014. Original amount – $4,000,000. 1,796,540 1,894,663

Subtotal 17,392,157 18,717,294

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Subtotal carried forward 17,392,157$ 18,717,294$

SRF Loan – Waha, Wawae & Niho Roads Main Replacement, last installment 2029. Interest rate – 0.32%. Semi-annual loan fee rate – 1.625%. Date issued – August 15, 2009. Original amount – $1,936,018. 1,263,422 1,362,327

SRF Loan – 16-Inch Waterline Replacement along Kuhio Highway, Leho Drive to North Papaloa Road, last installment 2026. Interest rate – 0.16%. Semi-annual loan fee rate – 1.625%. Date issued – August 15, 2005. Original amount – $2,305,093. 1,101,113 1,222,492

SRF Loan – Rehabilitate Lihue Steel Tanks 1 & 2, last installment 2025. Interest rate – 0.46%. Semi-annual loan fee rate – 1.625%. Date issued – January 15, 2005. Original amount – $1,243,017. 540,811 606,981

SRF Loan – Damage Repairs to Kokolau Tunnel, last installment 2021. Interest rate – 1.37%. Semi-annual loan fee rate – 1.625%. Date issued – July 15, 2001. Original amount – $1,663,201. 425,696 516,781

SRF Loan – Replace Pipeline at Hanapepe River Crossing and Control of Slope; Failure at Hanapepe Well No. 3, last installment 2023. Interest rate – 0.99%. Semi-annual loan fee rate – 1.625%. Date issued – July 15, 2003. Original amount – $1,243,976. 441,306 506,723

SRF Loan – Ornellas 0.2 MG Tank, last installment 2025. Interest rate – 0.58%. Semi-annual loan fee rate – 1.625%. Date issued – January 15, 2005. Original amount – $809,398. 348,480 390,932

SRF Loan – Kekaha Well, last installment 2022. Interest rate – 1.01%. Semi-annual loan fee rate – 1.625%. Date issued – April 15, 2002. Original amount – $862,883. 252,799 301,850

SRF Loan – Rehabilitation of 27-Inch Steel Pipeline – Hanapepe – Eleele Water System, last installment 2023. Interest rate – 0.99%. Semi-annual loan fee rate – 1.625%. Date issued – July 15, 2003. Original amount – $691,134. 245,974 282,429

SRF Loan – Wailua Homesteads Well No. 3, last installment 2024. Interest rate – 0.54%. Semi-annual loan fee rate – 1.625%. Date issued – March 15, 2004. Original amount – $397,737. 151,908 173,154

22,163,666$ 24,080,963$

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The approximate annual debt service requirements to maturity as of June 30, 2017 are as follows:

Principal Interest TotalYears ending June 30,2018 1,925,000$ 680,000$ 2,605,000$ 2019 1,934,000 616,000 2,550,0002020 1,942,000 551,000 2,493,0002021 1,951,000 486,000 2,437,0002022 1,910,000 421,000 2,331,0002023–2027 8,343,000 1,235,000 9,578,0002028–2032 3,693,000 213,000 3,906,0002033–2034 466,000 8,000 474,000

22,164,000$ 4,210,000$ 26,374,000$

Capital Lease Obligation On February 19, 2004, the Department entered into a Water Treatment and Delivery Agreement (“Agreement”) with an unrelated third party developer. The Agreement requires the developer to build, operate and maintain a surface water treatment plant (“SWTP”) with a capacity of 3.0 million gallons per day (“MGD”). The Department is required to purchase, at a minimum, 2.0 MGD and also to provide the developer a credit towards its facility reserve charge. The term of the Agreement is 15 years and the Agreement also provides the Department with the option of accepting the dedication of the SWTP at no cost after the reimbursement date, as defined. The Department commenced water purchases on January 1, 2006. This arrangement has been recorded as a capital lease in the accompanying basic financial statements.

The capital lease obligation is amortized at an implicit rate of approximately 6.0%. The utility plant related to the SWTP facility approximated $7,181,000 as of June 30, 2017 and 2016. The accumulated depreciation related to the SWTP facility approximated $6,136,000 and $5,603,000 as of June 30, 2017 and 2016, respectively.

The approximate annual requirements to amortize all capital lease obligations as of June 30, 2017 are approximately as follows:

Principal Interest TotalYears ending June 30,2018 742,000$ 56,000$ 798,000$ 2019 522,000 13,000 535,0002020 5,000 - 5,000

1,269,000$ 69,000$ 1,338,000$

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Changes in Long-term Liabilities Long-term liability activity for the years ended June 30, 2017 and 2016 was as follows:

AmountsBalance Balance Due Within

June 30, 2016 Additions Reductions June 30, 2017 One Year

General obligation bonds payable 62,370,000$ -$ 2,800,000$ 59,570,000$ 2,910,000$ Deferred costs – Premiums on bond issuance 556,369 - 58,213 498,156 -

Total bonds payable 62,926,369 - 2,858,213 60,068,156 2,910,000

Loans payable 24,080,963 - 1,917,297 22,163,666 1,925,459

Total long-term debt 87,007,332 - 4,775,510 82,231,822 4,835,459

Net pension liability 11,310,002 5,611,131 - 16,921,133 -Compensated absences 1,249,150 530,652 448,147 1,331,655 491,755Capital lease obligation 1,968,148 - 699,064 1,269,084 742,000

101,534,632$ 6,141,783$ 5,922,721$ 101,753,694$ 6,069,214$

AmountsBalance Balance Due Within

June 30, 2015 Additions Reductions June 30, 2016 One Year

General obligation bonds payable 65,025,000$ -$ 2,655,000$ 62,370,000$ 2,800,000$ Deferred costs – Premiums on bond issuance 614,583 - 58,214 556,369 -

Total bonds payable 65,639,583 - 2,713,214 62,926,369 2,800,000

Loans payable 23,997,649 1,994,203 1,910,889 24,080,963 1,917,296

Total long-term debt 89,637,232 1,994,203 4,624,103 87,007,332 4,717,296

Net pension liability 9,317,991 1,992,011 - 11,310,002 -Compensated absences 1,074,855 669,652 495,357 1,249,150 506,000Capital lease obligation 2,616,253 20,120 668,225 1,968,148 699,000

102,646,331$ 4,675,986$ 5,787,685$ 101,534,632$ 5,922,296$

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7. Net Position

At June 30, 2017 and 2016, net position consisted of the following:

2017 2016

Net investment in capital assetsCapital assets, net 217,059,494$ 220,462,421$Less: Long-term debt, net (82,231,822) (87,007,332)Less: Capital lease obligation (1,269,084) (1,968,148)Add: Unspent debt proceeds 15,262,595 16,270,864Add: Deferred outflows – deferred refunding costs 33,630 49,911

148,854,813 147,807,716

Restricted for capital activity, debt service and reserved fundsFRC net position 482,263 1,802,264Restricted cash – Bond funds 2,354,946 411,306Restricted investments – Bond funds 12,907,649 15,859,558Restricted accrued interest – Bond funds 57,536 62,193Less: Unspent debt proceeds (15,262,595) (16,270,864)

539,799 1,864,457

Unrestricted 41,623,229 36,897,962

Total net position 191,017,841$ 186,570,135$

As of June 30, 2017 and 2016, FRC net position consisted of the following:

2017 2016

FRC assets restricted for utility plant constructionCash 373,175$ 1,690,199$Accounts receivable 109,088 112,065

482,263 1,802,264

FRC net position 482,263$ 1,802,264$

For the years ended June 30, 2017 and 2016, FRC change in net position consisted of the following:

2017 2016

Contributions 613,656$ 2,154,675$Transfers out (1,933,657) (1,232,397)

Change in net position (1,320,001) 922,278

FRC net positionBeginning of year 1,802,264 879,986

End of year 482,263$ 1,802,264$

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8. Employees’ Retirement System

Description of Plan All eligible employees of the State of Hawaii (the “State”) and counties are provided with pensions through a cost-sharing multiple-employer defined benefit pension plan administered by the ERS. Benefit terms, eligibility and contribution requirements are established by HRS Chapter 88 and can be amended through legislation. The ERS issues a publicly available financial report that can be obtained at ERS’s website at http://ers.ehawaii.gov/.

Benefits Provided The ERS provides retirement, disability and death benefits that are covered by the provisions of the noncontributory, contributory and hybrid retirement membership classes. The three classes provide a monthly retirement allowance equal to the benefit multiplier (generally 1.25% or 2%) multiplied by the average final compensation multiplied by years of credited service. The benefit multiplier decreased by 0.25% for new hybrid and contributory plan members hired after June 30, 2012. Average final compensation is an average of the highest salaries during any three years of credited service, excluding any salary paid in lieu of vacation for employees hired January 1, 1971 or later and the average of the highest salaries during any five years of credited service including any salary paid in lieu of vacation for employees hired prior to January 1, 1971. For members hired after June 30, 2012, average final compensation is an average of the highest salaries during any five years of credited service excluding any salary paid in lieu of vacation.

For members hired before July 1, 2012, the original retirement allowance is increased by 2.5% each July 1 following the calendar year of retirement. This cumulative benefit is not compounded and increases each year by 2.5% of the original retirement allowance without a ceiling (2.5% of the original retirement allowance the first year, 5.0% the second year, 7.5% the third year, etc.). For members hired after June 30, 2012, the post-retirement annuity increase was decreased to 1.5% per year.

Retirement benefits for certain groups, such as police officers, firefighters, some investigators, sewer workers, judges and elected officials, vary from general employees.

Noncontributory Class

Retirement Benefits General employees’ retirement benefits are determined as 1.25% of average final compensation multiplied by the years of credited service. Employees with ten years of credited service are eligible to retire at age 62. Employees with 30 years of credited service are eligible to retire at age 55.

Disability Benefits Members are eligible for service-related disability benefits regardless of length of service and receive a lifetime pension of 35% of their average final compensation. Ten years of credited service is required for ordinary disability. Ordinary disability benefits are determined in the same manner as retirement benefits but are payable immediately, without an actuarial reduction, and at a minimum of 12.5% of average final compensation.

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Death Benefits For service-connected deaths, the surviving spouse/reciprocal beneficiary receives a monthly benefit of 30% of the average final compensation until remarriage or re-entry into a new reciprocal beneficiary relationship. Additional benefits are payable to surviving dependent children up to age 18. If there is no spouse/reciprocal beneficiary or dependent children, no benefit is payable.

Ten years of credited service is required for ordinary death benefits. For ordinary death benefits, the surviving spouse/reciprocal beneficiary (until remarriage/reentry into a new reciprocal beneficiary relationship) and dependent children (up to age 18) receive a benefit equal to a percentage of member’s accrued maximum allowance unreduced for age or, if the member was eligible for retirement at the time of death, the surviving spouse/reciprocal beneficiary receives 100% joint and survivor lifetime pension.

Contributory Class for Employees Hired prior to July 1, 2012

Retirement Benefits General employees’ retirement benefits are determined as 2% of average final compensation multiplied by the years of credited service. General employees with five years of credited service are eligible to retire at age 55.

Disability Benefits Members are eligible for service-related disability benefits regardless of length of service and receive a one-time payment of the member’s contributions and accrued interest plus a lifetime pension of 50% of their average final compensation. Ten years of credited service is required for ordinary disability. Ordinary disability benefits are determined as 1.75% of average final compensation multiplied by the years of credited service but are payable immediately, without an actuarial reduction, and at a minimum of 30% of average final compensation.

Death Benefits For service-connected deaths, the designated beneficiary receives a lump sum payment of the member’s contributions and accrued interest plus a monthly benefit of 50% of the average final compensation until remarriage or re-entry into a new reciprocal beneficiary relationship. If there is no surviving spouse/reciprocal beneficiary, surviving children (up to age 18) or dependent parents are eligible for the monthly benefit. If there is no spouse/reciprocal beneficiary or dependent children/parents, the death benefit is payable to the designated beneficiary.

Ordinary death benefits are available to employees who were active at time of death with at least one year of service. Ordinary death benefits consist of a lump sum payment of the member’s contributions and accrued interest plus a percentage of the salary earned in the 12 months preceding death, or 50% Joint and Survivor lifetime pension if the member was not eligible for retirement at the time of death but was credited with at least ten years of service and designated one beneficiary, or 100% Joint and Survivor lifetime pension if the member was eligible for retirement at the time of death and designated one beneficiary.

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Contributory Class for Employees Hired After June 30, 2012

Retirement Benefits General employees’ retirement benefits are determined as 1.75% of average final compensation multiplied by the years of credited service. General employees with ten years of credited service are eligible to retire at age 60.

Disability Benefits Disability and death benefits for contributory class members hired after June 30, 2012 are generally the same as those for contributory class members hired June 30, 2012 and prior.

Hybrid Class for Employees Hired Prior to July 1, 2012

Retirement Benefits General employees’ retirement benefits are determined as 2% of average final compensation multiplied by the years of credited service. General employees with five years of credited service are eligible to retire at age 62. General employees with 30 years of credited service are eligible to retire at age 55.

Disability Benefits Members are eligible for service-related disability benefits regardless of length of service and receive a lifetime pension of 35% of their average final compensation plus refund of their contributions and accrued interest. Ten years of credited service is required for ordinary disability. Ordinary disability benefits are determined in the same manner as retirement benefits but are payable immediately, without an actuarial reduction, and at a minimum of 25% of average final compensation.

Death Benefits For service-connected deaths, the surviving spouse/reciprocal beneficiary receives a lump sum payment of the member’s contributions and accrued interest plus a monthly benefit of 50% of the average final compensation to the surviving spouse/reciprocal beneficiary until remarriage or re-entry into a new reciprocal beneficiary relationship. If there is no surviving spouse/reciprocal beneficiary, surviving children (up to age 18) or dependent parents are eligible for the monthly benefit. If there is no spouse/reciprocal beneficiary or dependent children/parents, the ordinary death benefit is payable to the designated beneficiary.

Ordinary death benefits are available to employees who were active at time of death with at least five years of service. Ordinary death benefits consist of a lump sum payment of the member’s contributions and accrued interest plus a percentage multiplied by 150%, or 50% Joint and Survivor lifetime pension if the member was not eligible for retirement at the time of death but was credited with at least ten years of service and designated one beneficiary, or 100% Joint and Survivor lifetime pension if the member was eligible for retirement at the time of death and designated one beneficiary.

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Hybrid Class for Employees Hired After June 30, 2012

Retirement Benefits General employees’ retirement benefits are determined as 1.75% of average final compensation multiplied by the years of credited service. General employees with ten years of credited service are eligible to retire at age 65. Employees with 30 years of credited service are eligible to retire at age 60. Sewer workers, water safety officers and EMTs may retire with 25 years of credited service at age 55.

Disability Benefits Provisions for disability and death benefits generally remain the same except for ordinary death benefits. Ordinary death benefits are available to employees who were active at time of death with at least ten years of service. Ordinary death benefits consist of a lump sum payment of the member’s contributions and accrued interest, or 50% Joint and Survivor lifetime pension if the member was not eligible for retirement at the time of death but was credited with at least ten years of service and designated one beneficiary, or 100% Joint and Survivor lifetime pension if the member was eligible for retirement at the time of death and designated one beneficiary or if less than ten years of service, return of member’s contributions and accrued interest.

Contributions Contributions are established by HRS Chapter 88 and may be amended through legislation. The employer rate is set by statute based on the recommendations of the ERS actuary resulting from an experience study conducted every five years. Since July 1, 2005, the employer contribution rate is a fixed percentage of compensation, including the normal cost plus amounts required to pay for the unfunded actuarial accrued liabilities. The Department’s required contributions for the years ended June 30, 2017 and 2016 were approximately $938,000 and $911,000, respectively. The contribution rate was 17.0% for the years ended June 30, 2017 and 2016.

The employer is required to make all contributions for members in the noncontributory plan.

For contributory class employees hired prior to July 1, 2012, general employees are required to contribute 7.8% of their salary.

Contributory class employees hired after June 30, 2012 are required to contribute 9.8% of their salary.

Hybrid members hired prior to July 1, 2012 are required to contribute 6.0% of their salary.

Hybrid members hired after June 30, 2012 are required to contribute 8.0% of their salary.

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Pension Liabilities, Pension Expense and Deferred Outflows of Resources and Deferred Inflows of Resources Related to Pensions At June 30, 2017 and 2016, the Department reported a liability of approximately $16,921,000 and $11,310,000, respectively, for its proportionate share of the net pension liability. The net pension liability was measured as of June 30, 2016 and 2015, respectively, and the total pension liability used to calculate the net pension liability was determined by an actuarial valuation as of that date.The Department’s proportion of the net pension liability was based on a projection of the Department’s long-term share of contributions to the pension plan relative to the projected contributions of all participants, actuarially determined. At June 30, 2016 and 2015, the Department’s proportion was 0.13%, which was an increase of approximately 0.01% from its proportionate share measured as of June 30, 2014.

The average of expected remaining service lives for the purposes of recognizing the applicable deferred outflows and inflows of resources established in the 2016 fiscal year is 5.7626 years.

There were no changes in other assumptions and inputs that affected the measurement of the total pension liability since the prior measurement date. There were no changes between the measurement date, June 30, 2016, and the reporting date, June 30, 2017, that are expected to have a significant effect on the proportionate share of the net pension liability.

For the year ended June 30, 2017 and 2016, the Department recognized pension expense of approximately $2,270,000 and $1,167,000, respectively.

At June 30, 2017 and 2016, the Department reported deferred outflows of resources and deferred inflows of resources related to pensions from the following sources:

Deferred DeferredOutflows of Inflows ofResources Resources

2017Difference between actual and expected experience 336,970$ 244,921$Net difference between projected and actual earnings on pension plan investments 1,035,158 -Changes of assumptions 3,178,244 -Changes in proportion and differences between employer contributions and proportionate share of contributions 860,461 93,183Department contributions subsequent to the measurement date 937,609 -

6,348,442$ 338,104$

Open for informationfrom the ERS CAFR

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2016Difference between actual and expected experience 105,932$ 316,504$Net difference between projected and actual earnings on pension plan investments - 385,934Changes of assumptions 266,978 -Changes in proportion and differences between employer contributions and proportionate share of contributions 1,105,642 52,588Department contributions subsequent to the measurement date 910,625 -

2,389,177$ 755,026$

$938,000 reported as deferred outflows of resources related to pensions at June 30, 2017 resulting from Department contributions subsequent to the measurement date will be recognized as a reduction of the net pension liability in the year ending June 30, 2018. Other amounts reported as deferred outflows of resources and deferred inflows of resources related to pensions will be recognized in pension expense as follows:

Years ending June 30,2018 1,055,036$2019 1,055,0362020 1,355,9002021 1,098,0962022 508,661

5,072,729$

Actuarial Assumptions The total pension liability in the June 30, 2016 and 2015 actuarial valuations were determined using the following actuarial assumptions, applied to all periods included in the measurement:

Inflation 3.00%Projected salary increases, including inflation 4.00% – 8.00%Investment rate of return, including inflation 7.00% and 7.65%, respectivelyPayroll growth 3.50%

The same rates were applied to all periods. There were no changes to ad hoc postemployment benefits including COLA. Post-retirement mortality rates are based on Client Specific Tables and the 1994 US Group Annuity Mortality Statistic Tables. Pre-retirement mortality rates are based on the RP-2000 tables. The actuarial assumptions used in the June 30, 2016 and 2015 valuations were based on the results of an actuarial experience study for the five-year period ended June 30, 2015. ERS updates their experience studies every five years.


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The discount rate used to measure the net pension liability at June 30, 2017 and 2016 was 7.00% and 7.65%, respectively. The projection of cash flows used to determine the discount rate assumed that plan member contributions were made at the current contribution rate and that employer contributions were made at statutorily required rates, actuarially determined. Based on those assumptions, the pension plan’s fiduciary net position was projected to be available to make all projected future benefit payments of current plan members. Therefore, the long-term expected rate of return on pension plan investments was applied to all periods of projected benefit payments to determine the total pension liability.

The following presents the Department’s proportionate share of the net pension liability as of June 30, 2016 calculated using the discount rate of 7.00%, as well as what the Department’s proportionate share of the net pension liability would be if it were calculated using a discount rate that is 1-percentage-point lower (6.00%) or 1-percentage-point higher (8.00%) than the current rate:

1% Current 1%Decrease Discount Rate Increase(6.00%) (7.00%) (8.00%)

Department’s proportionate share of the net pension liability 21,638,020$ 16,921,133$ 13,018,064$

The long-term expected rate of return on pension plan investments was determined using a “top down approach” of the Bespoke Client-Constrained Simulation-based Optimization Model (a statistical technique known as “re-sampling with replacement” that directly keys in on specific plan-level risk factors as stipulated by the ERS Board) in which best-estimate ranges of expected future real rates of return (expected returns, net of pension plan investment expense and inflation) are developed for each major asset class. These ranges are combined to produce the long-term expected rate of return by weighting the expected future real rates of return by the target asset allocation percentage and by adding expected inflation. The target allocation and best estimates of arithmetic real rates of return for each major asset class used in the actuarial valuation as of June 30, 2016 and 2015 valuations are summarized in the following table:

Long-Term Long-Term Expected Target Real Rate of Return

Asset Class Allocation 2016 2015

Domestic equity 30 % 0 % 8.5 %International equity 26 % 0 % 9.3 %Fixed income 20 % 0 % 3.1 %Real estate 7 % * 0 % 9.2 %Private equity 7 % * 0 % 11.9 %Real return 5 % * 0 % 6.7 %Covered calls 5 % * 0 % 7.7 %

100 %

* The real estate, private equity and real return targets will be the percentage actually invested up to 7%, 7% and 5%, respectively, of the total fund. Changes in the real estate, private equity and real return targets will be offset by an equal percentage change in the large cap domestic equity target.


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Pension Plan Fiduciary Net Position The pension plan’s fiduciary net position is determined on the same basis used by the pension plan. The ERS financial statements are prepared using the accrual basis of accounting under which expenses are recorded when the liability is incurred, and revenues are recorded in the accounting period in which they are earned and become measurable. Employer and member contributions are recognized in the period in which the contributions are due. Benefits and refunds are recognized when due and payable in accordance with the terms of the plan. Investment purchases and sales are recorded as of their trade date. Administrative expenses are financed exclusively with investment income.

There were no significant changes after the report measurement date. Detailed information about the pension plan’s fiduciary net position is available in the separately issued ERS financial report. ERS’s complete financial statements are available at http://www.ers.ehawaii.gov.

Payables to the Pension Plan As of June 30, 2017 and 2016, the Department had no payables to ERS.

9. Post-Retirement Health Care and Life Insurance Benefits

Plan Description The Department provides certain other postemployment benefits (“OPEB”) other than pensions to all qualified employees. Pursuant to Chapter 87A of the HRS, the Department contributes to the Hawaii Employer-Union Health Benefits Trust Fund (“EUTF”). The EUTF was established to provide a single delivery system of health benefits for state and county workers, retirees and their dependents. The EUTF currently provides medical, dental, vision and life insurance benefits. The EUTF issues an annual financial report that is available to the public. That report may be obtained by writing to the EUTF at 201 Merchant Street, Suite 1520, Honolulu, Hawaii 96813.

The eligibility requirements for retiree health benefits are as follows:

For employees hired before July 1, 1996, the Department pays the entire monthly health care premium for employees retiring with ten or more years of credited service, and 50% of the monthly premium for employees retiring with fewer than ten years of credited service.

For employees hired after June 30, 1996, and who retire with fewer than 10 years of service, the Department makes no contributions. For those retiring with at least 10 years but fewer than 15 years of service, the Department pays 50% of the retired employees’ monthly Medicare or non-Medicare premium. For those who retire with at least 15 years but fewer than 25 years of service, the Department pays 75% of the retired employees’ monthly Medicare or non-Medicare premium. For those retiring with over 25 years of service, the Department pays the entire health care premium.

Funding Policy For active employees, the employer’s contributions are based upon negotiated collective bargaining agreements. Employer contributions for employees not covered by collective bargaining agreements and for retirees are prescribed by the HRS.

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The Department is required to contribute the annual required contribution of the employer (“ARC”), an amount actuarially determined in accordance with the parameters of GASB Statement No. 45. The ARC represents a level of funding that, if paid on an ongoing basis, is projected to cover the normal cost each year and amortize any unfunded actuarial liabilities over 30 years. The current ARC rate for the Department is approximately 18% of annual covered payroll.

Annual OPEB Cost The following table shows the components of the Department’s annual OPEB cost for 2017 and 2016, the amount actually contributed to the plan, and changes in the Department’s net OPEB asset to EUTF:

2017 2016

Annual required contribution 968,000$ 914,000$Interest on net OPEB asset (2,000) (4,000)Adjustment to the ARC 2,000 3,000

Annual OPEB cost 968,000 913,000

Contributions made 968,000 883,000

Decrease in net OPEB asset - (30,000)

Net OPEB assetBeginning of year 23,000 53,000

End of year 23,000$ 23,000$

The Department’s annual OPEB cost, the percentage of annual OPEB cost contributed to the plan and the net OPEB obligation for 2017, 2016 and 2015 were approximately as follows:

Percentage of NetFiscal Year Annual Annual OPEB Cost OPEB

Ended June 30, OPEB Cost Contributed Asset

2015 883,000$ 100.2 % 53,000$2016 913,000 96.7 % 23,0002017 968,000 100.0 % 23,000

Funded Status and Funding Progress The funded status of the plan as of July 1, 2015, the effective date of the most recent biennial actuarial valuation, was as follows:

Actuarial accrued liability (“AAL”) 14,848,000$Assets 6,006,000

Unfunded AAL (“UAAL”) 8,842,000$

Covered payroll 5,052,000$

UAAL as a percentage of covered payroll 175 %

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Actuarial valuations of an ongoing plan involve estimates of the value of reported amounts and assumptions about the probability of occurrence of events far into the future. Examples include assumptions about future employment, mortality and healthcare cost trends. Amounts determined regarding the funded status of the plan and the ARC are subject to continual revision as actual results are compared with past expectations and new estimates are made about the future. The schedule of funding progress, presented as required supplementary information following the notes of the financial statements, presents multiyear trend information that shows whether the actuarial value of plan assets is increasing or decreasing over time relative to the actuarial accrued liabilities for benefits.

Actuarial Methods and Assumptions Projections of benefits for financial reporting purposes are based on the substantive plan (the plan as understood by the employer and plan members) and include the types of benefits provided at the time of each valuation and the historical pattern of sharing of benefit costs between the employer and plan members to that point. The actuarial methods and assumptions used include techniques that are designed to reduce the effects of short-term volatility in actuarial accrued liabilities and the actuarial value of assets, consistent with the long-term perspective of the calculations. Significant methods and assumptions from the Department’s actuarial valuation were as follows:

Valuation date

Actuarial cost method Entry age normal

Amortization method Level percentage of pay, closed

Amortization period 30 years

Actuarial assumptions

Investment rate of return 7.0%

Healthcare cost trend rate

Medical and prescription drug (“PPO”) Initial rate of 9.0%, declining toa rate of 5% after 8 years

Medical and prescription drug (“HMO”) Initial rate of 7.0%, declining toa rate of 5% after 8 years

Dental 4.0%

Vision 3.0%

Projected salary increases 3.5%

Inflation rate 3.0%

July 1, 2015

The number of participants as of July 1, 2015, the effective date of the most recent biennial OPEB valuation, follows. There have been no significant changes in the number of covered or the type of coverage since that date.

Active employees 83Retired employees 50Deferred vested employees 4

137

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10. Deferred Compensation Plan

The Department offers its employees, through the County, a deferred compensation plan established in accordance with Internal Revenue Code Section 457. The plan, available to all full-time Department employees, permits them to defer a portion of their salary until future years. The deferred compensation is not available to employees until termination, retirement, death or an unforeseeable emergency. The plan’s assets have been placed in trust accounts with the plan administrators for the exclusive benefit of participants and their beneficiaries and are not considered assets of the County or the Department.

In accordance with GASB Statement No. 32, Accounting and Financial Reporting Code Section 457 – Deferred Compensation Plans, the Department has excluded the plan assets from the financial statements. All such amounts are not subject to the claims of the Department or the County’s general creditors.

11. Commitments and Contingencies

Sick Leave Accumulated sick leave as of June 30, 2017 and 2016 was approximately $2,023,000 and $1,741,000, respectively. Sick leave accumulates at the rate of 14 hours for each month of service, as defined, without limit. Sick pay can be taken only in the event of illness and is not convertible to pay upon termination of employment. As a result, no liability for sick pay is recorded in the accompanying financial statements. However, a public employee who retires or leaves government service in good standing with sixty days or more of unused sick leave is entitled to additional service credit in the ERS.

Workers’ Compensation Insurance Prior to July 1, 2001, the Department was fully self-insured for workers’ compensation claims. Beginning July 1, 2001, the Department purchased insurance with a deductible of $550,000. Claims are reported to and managed by the County. The Department provides reserves for claims not covered by insurance that in the opinion of counsel will result in probable judgment against the Department. These reserves include an estimate of claims that have been incurred but not reported (“IBNR”). Claim liabilities, including IBNR, are based on the estimated ultimate cost of settling the claims. Claims liabilities are estimated by a case-by-case review of all claims and the application of historical experience to outstanding claims. As of June 30, 2017 and 2016, the workers’ compensation liability amounted to approximately $113,000 and $70,000, respectively, and is recorded in accounts payable and accrued liabilities in the accompanying statements of net position.

Safe Drinking Water Act The Department is subject to the requirements of the Safe Drinking Water Act (the “Act”) which is administered by the State of Hawaii Department of Health on behalf of the United States Environmental Protection Agency. Management indicated that the Department is in full compliance with the requirements of the Act and is not aware of any matters under the Act that materially affected or is currently affecting the Department’s customer service area.

Other Legal Matters The Department is party to various legal proceedings arising in the normal course of business. The outcome of individual matters is not predictable. However, management believes that the ultimate resolution of all such matters will not have a material adverse effect on the Department’s financial position or results of operations.

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Other Other commitments, primarily for utility plant construction, approximated $3,102,000 and $4,295,000 at June 30, 2017 and 2016, respectively.

12. Billing Service Contract

The Department entered a memorandum of agreement for water billing services with the Board of Water Supply, City and County of Honolulu, effective September 30, 2014 through June 30, 2024. The amounts charged approximated $200,000 and $247,000 in 2017 and 2016, respectively. The memorandum of agreement was terminated effective December 31, 2016.

Effective January 1, 2017, the Department entered into a memorandum of agreement with the Department of Water Supply, County of Maui, to split the cost of licenses for a shared Customer Care & Billing System.

13. Related Party Transactions

The Department charges the County for fire protection services (hydrant use) at agreed-to rates that approximate the cost for such services. The County provides certain services to the Department and charges the Department for these services at an amount equal to the charge for fire protection services. The amounts charged approximated $2,133,000 and $2,122,000 in 2017 and 2016, respectively.

At June 30, 2017 and 2016, amounts due to the County for reimbursement of payroll expenses were approximately $324,000 and $145,000, respectively.

Page 166

Required Supplementary Information

Page 167

Department of Water County of Kauai Schedule of the Department’s Proportionate Share of the Net Pension Liability Last Ten Fiscal Years*

42

2016 2015 2014 2013

Department’s proportion of the net pension liability 0.13% 0.13% 0.12% 0.12%

Department’s proportionate share of the net pension liability 16,921,133$ 11,310,002$ 9,317,991$ 10,322,299$

Department’s covered-employee payroll 5,110,000$ 4,836,000$ 4,645,000$ 4,385,000$

Department’s proportionate share of the net pension liability as a percentage of its covered payroll 331.14% 233.87% 200.60% 235.40%

Plan fiduciary net position as a percentage of the total pension liability 51.28% 62.42% 63.92% 57.96%

* This data is presented for years for which information is available.

Page 168

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Page 169

Department of Water County of Kauai Schedule of Funding Progress for the Hawaii Employer-Union Health Benefits Trust Fund

See accompanying independent auditors' report.

44

Actuarial UAAL as aActuarial Actuarial Accrued PercentageValuation Value of Liability Unfunded Funded Covered of Covered

Date Assets (“AAL”) AAL (“UAAL”) Ratio Payroll Payroll

7/1/2011 2,281,000 11,586,000 9,305,000 20% 4,368,000 213%

7/1/2013 3,864,000 12,607,000 8,743,000 31% 4,512,000 194%

7/1/2015 6,006,000 14,848,000 8,842,000 40% 5,052,000 175%

Page 170

Supplementary Information

Page 171

Department of Water County of Kauai Supplemental Schedule of Utility Plant in Service Year Ended June 30, 2017 Schedule I


45

June 30, 2016 Reductions/ June 30, 2017Balance Additions Transfers Balance

Cost basisLand and land rights

Source 837,879$ -$ -$ 837,879$Pumping 156 - - 156Water treatment 150 - - 150Transmission and distribution 469,237 - - 469,237

Total land and land rights 1,307,422 - - 1,307,422

Utility plantSource 9,298,875 - 627,101 9,925,976Pumping 45,839,528 - 114,344 45,953,872Water treatment 2,349,126 - - 2,349,126Transmission and distribution 239,492,370 1,270,827 1,210,391 241,973,588

Total utility plant capital assets 296,979,899 1,270,827 1,951,836 300,202,562

General plant 10,634,526 204,084 11,691,250 22,529,860

Capital leasesWater treatment 7,181,456 - - 7,181,456General 233,890 - - 233,890

Total capital leases assets 7,415,346 - - 7,415,346

Intangible assetsEasements 35,722 - - 35,722Software 781,808 - 541,163 1,322,971

Total intangible assets 817,530 - 541,163 1,358,693

317,154,723$ 1,474,911$ 14,184,249$ 332,813,883$

June 30, 2016 Reductions/ June 30, 2017Balance Additions Transfers Balance

Accumulated depreciationUtility plant

Source 5,149,368$ 202,160$ -$ 5,351,528$Pumping 24,458,036 1,663,032 - 26,121,068Water treatment 2,167,276 8,787 - 2,176,063Transmission and distribution 68,921,183 4,136,974 (34,143) 73,024,014

Total utility plant accumulated depreciation 100,695,863 6,010,953 (34,143) 106,672,673

General plant 6,247,187 787,435 (495,137) 6,539,485

Capital leasesWater treatment 5,603,035 532,663 - 6,135,698General 186,547 16,259 - 202,806

Total capital lease accumulated depreciation 5,789,582 548,922 - 6,338,504

Intangible assets 697,102 112,062 - 809,164

113,429,734$ 7,459,372$ (529,280)$ 120,359,826$

Page 172

Department of Water County of Kauai Supplemental Schedule of Selective Account Classifications Five Years Ended June 30, 2017 (All Dollars in Thousands) Schedule II


46

2017 2016 2015 2014* 2013(As restated) (As restated)

Statements of Net PositionUtility plant in service 332,814$ 317,155$ 313,402$ 308,468$ 293,790$

Net positionNet investment in capital assets 148,855$ 147,808$ 145,475$ 142,309$ 142,805$ Restricted for capital activity and debt service 540 1,864 - 173 1,078Unrestricted 41,623 36,898 30,359 33,419 28,793

191,018$ 186,570$ 175,834$ 175,901$ 172,676$

Statements of Revenues, Expenses and Changes in Net PositionResources

Water sales 28,445$ 29,228$ 29,616$ 26,429$ 25,838$ Other 2,471 2,463 2,270 2,055 2,126

30,916 31,691 31,886 28,484 27,964

Operating expensesDepreciation and amortization 7,440 7,065 7,315 7,324 6,937Administrative and general 7,874 6,971 6,468 6,732 4,963Transmission and distribution 4,043 3,472 3,145 4,132 3,748Power and pumping 2,949 2,832 3,505 3,909 3,614Accounting and collection 1,231 1,058 967 652 688All other 2,360 2,205 2,132 1,690 1,523

25,897 23,603 23,532 24,439 21,473

Non-operating expense (3,238) (3,405) (3,788) (3,659) (3,621)Contributions 2,667 6,053 4,933 2,840 3,483

4,448$ 10,736$ 9,499$ 3,226$ 6,353$

*Not adjusted for restatement

Page 173

Report of Independent Auditors on Internal Control Over Financial Reporting and on Compliance and

Other Matters Based on an Audit of Financial Statements Performed in Accordance with Government Auditing Standards

To the Board of Water Supply Department of Water, County of Kauai

We have audited, in accordance with the auditing standards generally accepted in the United States of America and the standards applicable to financial audits contained in Government Auditing Standards issued by the Comptroller General of the United States, the financial statements of the Department of Water, County of Kauai (the “Department”) as of and for the year ended June 30, 2017, and the related notes to the financial statements, which collectively comprise the Department’s basic financial statements, and have issued our report thereon dated November 22, 2017.

Internal Control Over Financial Reporting In planning and performing our audit of the financial statements, we considered the Department’s internal control over financial reporting (“internal control”) to determine the audit procedures that are appropriate in the circumstances for the purpose of expressing our opinions on the financial statements, but not for the purpose of expressing an opinion on the effectiveness of the Department’s internal control. Accordingly, we do not express an opinion on the effectiveness of the Department’s internal control.

A deficiency in internal control exists when the design or operation of a control does not allow management or employees, in the normal course of performing their assigned functions, to prevent, or detect and correct, misstatements on a timely basis. A material weakness is a deficiency, or a combination of deficiencies, in internal control such that there is a reasonable possibility that a material misstatement of the entity’s financial statements will not be prevented, or detected and corrected on a timely basis. A significant deficiency is a deficiency, or a combination of deficiencies, in internal control that is less severe than a material weakness, yet important enough to merit attention by those charged with governance.

Our consideration of internal control was for the limited purpose described in the first paragraph of this section and was not designed to identify all deficiencies in internal control that might be material weaknesses or significant deficiencies and therefore, material weaknesses or significant deficiencies may exist that were not identified. Given these limitations, during our audit we did not identify any deficiencies in internal control that we consider to be material weaknesses. We did identify certain deficiencies in internal control, described in the accompanying schedule of finding as Finding No. 2017-001 that we consider to be a significant deficiency.

Compliance and Other Matters As part of obtaining reasonable assurance about whether the Department's financial statements are free from material misstatement, we performed tests of its compliance with certain provisions of laws, regulations, contracts and grant agreements, noncompliance with which could have a direct and material effect on the determination of financial statement amounts. However, providing an opinion on compliance with those provisions was not an objective of our audit, and accordingly, we do not express such an opinion. The results of our tests disclosed no instances of noncompliance or other matters that are required to be reported under Government Auditing Standards.

Page 174

Department’s Response to Finding The Department’s response to the finding identified in our audit is described in the accompanying corrective action plan. The Department’s response was not subjected to the auditing procedures applied in the audit of the financial statements and, accordingly, we express no opinion on it.

Purpose of this Report The purpose of this report is solely to describe the scope of our testing of internal control and compliance and the results of that testing, and not to provide an opinion on the effectiveness of the entity’s internal control or on compliance. This report is an integral part of an audit performed in accordance with Government Auditing Standards in considering the entity’s internal control and compliance. Accordingly, this communication is not suitable for any other purpose.

Honolulu, Hawaii November 22, 2017

Page 175

FINANCIAL STATEMENT FINDING

Page 176

Department of Water County of Kauai Schedule of Finding Year Ended June 30, 2017

49

Section I - Financial Statement Finding

Finding No. 2017-001: IT General Control Deficiencies (Significant Deficiency)

Condition Information technology (“IT”) is a strategic element of the Department of Water’s (“DOW”) operations. Because of the high volume of transactions at DOW, the establishment of internal controls over processes incorporating IT is critical to its operations. As part of our financial statement audit for the year ended June 30, 2017, we performed an IT general controls review of the following systems operated by DOW:

Great Plains Oracle Utilities Customer Care and Billing

As DOW migrated to a new customer information system during the year ended June 30, 2017, we performed additional migration testing over:

Data Conversion Logical Security Interface Implementation Project Governance Reporting

Our review resulted in several IT control deficiencies in the areas of IT governance, logical security, change management and IT operations:

IT governance Lack of management steering committee to direct, review and approve IT plans and priorities.

Logical Security Formal security procedures are outdated and not consistently followed for new hires, transfers and

separated users. Weak password security. User access rights are not reviewed on a periodic basis to ensure access is limited to applicable

position functions. No review or approvals by functional users for user accounts.

Change management Lack of formal change management policies and procedures. Lack of segregation of duties for developers. Evidence of testing or approvals for system changes is not consistently retained.

IT operations System restoration testing is not performed. Unable to confirm if system backups are performed. Lack of monitoring controls to ensure completeness and accuracy of certain financial system

interfaces.

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Collectively, the number and related nature of the IT control deficiencies resulted in an overall significant deficiency.

Criteria

When IT is used to initiate, record, process and report on transactions included in the financial statements, the systems and related processes should include internal controls to prevent or detect potential misstatements.

Effect

Internal controls in the areas of IT governance, logical security, change management, IT operations and system migration address the following risks:

IT governance The control environment not appropriately supported by management sets a weak tone at the top, causing a lack of accountability with employees, without an IT risk management process in place to support financial reporting requirements.

Logical security Unauthorized access to financial systems could result in the loss of data, unauthorized or nonexistent transactions being made or transactions being inaccurately recorded.

Change management Unauthorized or untested changes promoted to the production environment could cause the financial systems to either process data differently than intended or unexpectedly compromise the integrity of the data maintained.

IT operations Programs and processes are not executed as planned and deviations from scheduled processing are not identified and investigated causing data integrity concerns, including the inability to correct or recover from data loss and/or corruption.

Cause and View of Responsible Officials

DOW’s IT policies and procedures do not include internal control procedures addressing the risks discussed above or such controls are not consistently followed.

Recommendations

We recommend that DOW perform the following:

IT governance Formally hold management steering committee meetings for IT on a periodic basis.

Logical Security Update security procedures to include all financial systems and ensure procedures are consistently

followed for new hires, transfers and separated users. Implement additional password security requirements in compliance with IT policies and procedures. Review user access rights on a periodic basis.

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Change management Implement formal change management procedures and ensure procedures are consistently followed. Implement proper segregation of duties for developers.

IT operations Ensure system restoration testing is performed. Ensure periodic backups are performed. Implement monitoring controls over interfaces for completeness and accuracy.

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52

Section II – Federal Award Findings and Questioned Costs

None noted.

Page 180

Page 181

CORRECTIVE ACTION PLAN

Page 182

DEPARTMENT OF WATER, COUNTY OF KAUAI CORRECTIVE ACTION PLAN

Section I – Financial Statement Finding

2017-001 – IT Controls Deficiencies (Significant Deficiency) (Page 4 )

This pertains only to Great Plains (GP) and Customer Care & Billing (CC&B)

Corrective Action Plan

Concur. The Department of Water address their respective IT control deficiencies in the areas of IT governance, logical security, and change management as follows:

IT governance

Finding: Lack of management steering committee to direct, review, and approve ITplans and prioritiesResponse: We have an IT Strategic Plan which was adopted in 2013 and wasapproved by our Water Board. For each IT project, we have a committee that reviewsall submittals and goes through a selection process.

Each month, we will provide a summary update to the Water Board at the BoardMeetings.

Person Responsible: Jeff Mendez

Anticipated Completion Date: On Going

Logical Security

Finding: Formal security procedures are outdated and not consistently followedfor new hires, transfers and separated users.Response: We have an Add/Remove Form that is not being utilized. We will beupdating our SOP 45 to ensure steps are being taken to remove terminated ortransferred users.


Anticipated Completion Date: December 31, 2017

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Finding: Weak password Security.Response: Great Plains – we will be turning on password complexity and forcing users to change their password every 90 days.

CC&B – Will issue new passwords every 90 days. We will use a password randomizer to auto generate a new unique password for each user. We havealready begun this procedure at of the end of September.

Person Responsible: Jeff Mendez (GP) / Sandi Nadatani (CC&B)

Anticipated Completion Date: CC&B Passwords Completed. GP Password December 31, 2017

Finding: User access rights are not reviewed on a periodic basis to ensureaccess is limited to applicable position functions.Response: We have begun the process of periodic reviews to ensure access is limited to the function of the position. A listing has been sent to the Controller to review permissions for each individual. This plan is to do this review annually.

A typical scenario for us is that someone in Accounting (Great Plains) will work Temporary Assignment and get additional access to modules for the TA work. When the TA is completed, we are not informed to change permissions to the previous state.

We have begun the process of periodic reviews and will be forwarding to theController a listing of permissions for review. For CC&B, access does not typically change over the course of the year. We will perform an Access Review annually to verify user access.

Person Responsible: Sandi Nadatani


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Finding: No review or approvals by functional users for user accounts.Response: When the department migrated from the HBWS hosted CC&B, the I.T. section reviewed and ensured that all users had the same functionality in our new environment. This was tested and confirmed.

There was no formal sign off from the Controller on access permissions.

Going forward, we have begun the process of periodic reviews and updating SOP 45 to track permission approvals for user accounts.


Anticipated Completion Date: October 31, 2017 for GP; November 31, 2017 for CC&B

Change management

Finding: Lack of formal change management policies and procedures.Response: We are working to update our SOP 45 to include a form to specifically show Add/Delete/Change for access to Great Plains and CC&B. The form will show more detail that includes which modules to add or remove for an individual.

The goal is to show a proper trail of the Controller/Accountant IV giving permissionsto have access to each module and hopefully maintain a segregation of duties for staff.



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Finding: Lack of segregation of duties for developers.Response: We have been taking over more of the daily duties, such as running batch jobs and monitoring these jobs. Until we get proper training, we would not feel comfortable moving changes made by our consultants in a test environment and pushing it into production.

We will research if this can be a viable possibility in the upcoming fiscal year.

We are actually looking into having the consultants doing everything for the department. They would be responsible for backups and modifications and running/monitoring nightly batch jobs.

We are a very small staff and would need someone dedicated full time to learn the system.


Anticipated Completion Date: In Progress

Finding: Evidence of testing or approvals for system changes is not consistently retained.Response: We do not have a consistent trail of modifications. In the future, we will be retaining emails, taking screen shots of changes and the use of logs to show testing and/or approvals for system changes.


Anticipated Completion Date: June 30, 2017

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IT operations

Finding: System restoration testing is not performed.Response: Great Plains is backed up daily.

For Great Plains, in prior years and not the fiscal year in question, we perform backups prior to making changes, such as encumbrance rollovers. When the data did not show the expected results, we restore the database to its previous state.

This fiscal year, everything rolled over as expected and there was not a need to restore the database.

Going forward, to test system restoration, we will back up the test environment database every 6 months and make changes in the system. We will then restore the database and show that the changes are no longer reflected in the system.

For CC&B, the Department is taking steps to be trained to do backups/restore and going forward the department will schedule system restoration testing annually.

Person Responsible: Jeff Mendez (GP) / Sandi Nadatani (CC&B)


Finding: Unable to confirm if system backups are performed.Response: For Great Plains, we were able to confirm with you that backups are performed on a consistent basis.

For CC&B, The Department provided the SOC2 report that should show the information that you are requesting.


Anticipated Completion Date: June 30, 2017

Finding: Lack of monitoring controls to ensure completeness and accuracy of certain financial system interfaces.Response: A procedure will be put in place to show the interface between CC&B and the Meter Reading System will be accurately transferred. Periodically (or some time period) someone from Fiscal will verify the downloaded values for the days read contains the correct information. Upon uploading the routes to CC&B, staff will spot check and verify that the values in the upload file correspond to the values in the CC&B system.

Person Responsible: Waterworks Controller

Anticipated Completion Date: November 30, 2017

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MANAGER’S REPORT No. 18-81 November 22, 2017 Re: DiscussionandPossibleActiontoBegintheConstructionProcurementSolicitationforJob

No. 18‐1, AbandonHanamā'uluWellNo. 1 andHanamā'uluWell No. 2 in the amount of$200,000.00

RECOMMENDATION: It is recommended the Board approve a total of $200,000.00 in funding to be expended for the abandonment of Hanamaulu Well #1 and Hanamaulu Well #2. The $200,000.00 will enable the DOW to begin the construction procurement process for this project. FUNDING: Account: Water Utility (WU), WU-Ops-Source-Exe-FY18-H-Wells Account No. 10-40-30-501-003

Funds Requested for Abandonment of Hanamaulu Wells #1 & #2

Water Utility Fund Account no. 10-40-30-501-003 $200,000.00

Total Funds Requested $200,000.00

Funds for Abandonment of Hanamaulu Wells #1 & #2 $200,000.00 BACKGROUND: Hanamaulu Well #1 and #2 were drill and test projects done in the 1990’s. They are located on TMKs 3-8-003:001 and 3-8-002:002, respectively. Neither well produced enough flows to warrant the development into a production well, and currently aren’t in use. Both wells have been registered with the Commission on Water Resource Management (CWRM) as well numbers 0022-001 and 5923-009. The Department is working to wrap up a condemnation process which began in 2000. The Department is working with the land owner, Grove Farm, to complete the necessary exhibits and subdivision for the condemnation documents. In reviewing court documents, it was discovered the Hanamaulu control valve station site was not built in the proposed lot agreed upon in the condemnation documents. The current location of the control valve site is further north along Maalo Road and is approximately twice the land area of the originally proposed lot. During negotiations to relocate the control valve site, it was requested by Grove Farm for the Department to abandon the 2 non-productive wells drilled on their property. CWRM also states that all wells must be properly abandoned and permanently sealed to protect the ground-water resources of the Stat of Hawaiì from contamination and waste and to protect public health and safety, whenever:

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1. The well has served its purpose, or 2. The use of the well has been permanently discontinued, or 3. The well is not being properly maintained, or 4. The physical condition of the well is causing a waste of ground water or is impairing or threatens

to impair the quality of the ground-water resources, or 5. The well is in such a state of disrepair that its continued use is impractical or it is a hazard to

public health and safety. Additionally, Hanamaulu Well #1 is located near the proposed adolescent treatment center along Maalo Road. The current location of Hanamaulu Well #1 requires the adolescent treatment center to construct an aerobic septic system for its development. By abandoning Hanamaulu Well #1, the adolescent treatment center can be built without the requirement for an aerobic septic system. It is estimated that each well will cost approximately $100,000.00 to properly abandon following the Department of Land and Natural Resources, Commission on Water Resource Management, Hawaii Well Construction & Pump Installation Standards. Funding is proposed to be obtained from WU funds. OPTIONS: Option 1: Approve the funding to abandon Hanamaulu Well #1 & #2. Pro: Approving the funding will allow DOW to abandon Hanamaulu Wells #1 and #2,

complete the condemnation process, and lift the requirement for the adolescent treatment center to build an aerobic septic system.

Con: None. Option 2: Do not approve the funding to abandon Hanamaulu Well #1 & #2. Pro: None.

Con: Not abandoning the wells will delay negotiations with Grove Farm for the control valve site and may result in a lengthy court process. Wells may still be required to be abandoned in the future for non-use.

Respectfully submitted, Funding reviewed:

Keith Aoki, P.E. Valentino Reyna, Marites Yano Engineering Division Chief of Operations Waterworks Controller CONCURRED:

Kirk Saiki, P.E. Manager and Chief Engineer KA/ein Mgrrp/November 2017/18-81/Discussion and Possible Action to Begin the Construction Procurement Solicitation for Job No. 18-1, Abandon Hanamā'ulu Well No. 1 and Hanamā'ulu Well No. 2 in the amount of $200,000.00 (11-22-17):ein

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MANAGER’S REPORT No. 18-82 November 22, 2017 Re: Discussion and Possible on Water Plan 2020 Project Prioritization Methodology and

Strategic Implementation RECOMMENDATION: As requested by the Board, the following is a synopsis of the methodology of Water Plan 2020 utilized to formulate and update its strategic implementation plan to meet the needs of the Department and people of Kauai. FUNDING: N/A. BACKGROUND: The Department of Water (DOW) initiated and completed its long-range plan, Water Plan 2020, between mid-1999 and 2001 to formulate and solidify a vision to guide its planning and strategic implementation direction. Water Plan 2020 is a comprehensive plan that covers all of the water systems of the DOW, from Haena to Kekaha, addressing issues of its aging and deteriorating infrastructure, financial needs and roadmap to operating its water systems in a sustainable fashion to ensure reliability for Kauai’s communities into the future.

A culmination of planning efforts, spanning from the inception of the DOW in 1961 to the formulation of Water Plan 2020 were utilized, as appropriate, and incorporated into this long-range plan. These plans include:

Water System Standards, State of Hawaii, 1985 Water System Plan, R.M. Towill, 1999 A General Plan for Domestic Water/Island of Kauai, Division of Water and Land Development, Department of Land and Natural Resources, State of Hawaii, 1972 Kauai General Plan, County of Kauai, 2000

While land use policies are established and governed by the County of Kauai, in accordance with Kauai General Plan (2000), the DOW coordinates development efforts with the County and private developers seeking to connect to DOW operated water systems. Water Plan 2020 utilized population and land use projection developed as part of the Kauai General Plan (2000) as the basis for its water demand forecasting for supply, storage and fire protection needs. The demand projection provided island-wide water use through 2020 and 2050 and was a key component for identification of future capital improvement projects and the water long-range planning effort. The planning approach and methodology for Water Plan 2020 was guided by the existing water system policies and an analysis of the appropriate level of service to be provided by the water system operation to the people of Kauai.

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Water system polices are established by the Board of Water Supply and guide the development and financing of the water system infrastructure required to provide water service throughout the service area. DOW water system policies are described and documented in the Rules and Regulations, Department of Water, County of Kauai, (effective November 20, 1976 and as amended). Water system policies also include Board policies that are established from time to time by the Board. Additionally, administrative (engineering based) procedures of the Department, and the Water System Standards (1985 and as amended) guide the actions of the DOW.

Level of Service (LOS) standards incorporate both policy considerations as well as engineering standards and planning criteria to guide the Department in evaluation and development of new facilities and improvements to existing facilities. DOW planning and design standards are contained in the Water System Standards, State of Hawaii, adopted in 1985 and as amended. These standards provide specific engineering criteria for the planning and design for each of the major water suppliers on the islands of Kauai, Oahu, Maui and Hawaii. Prior to the establishment of these standards, the DOW planned and designed around the standards presented in A General Plan for Domestic Water/Island of Kauai, 1972, prepared by the State of Hawaii Department of Land and Natural Resources and The Standard Specifications For Waterworks Construction (1963 and as amended) and the requirements of the State Department of Health.

Due to the integral link between Water Plan 2020 and policy considerations of the Board of Water Supply, Board consultation and direction was coordinated at key milestones throughout the process. Additionally, in an effort to provide transparency as well as to ensure the plan encompassed the needs of the people of Kauai, an extensive public involvement process was implemented, consisting of several rounds of public meetings and community outreach. Four major tasks were identified in the development of Water Plan 2020:

System Documentation: Collect and analyze the water system planning, engineering and water quality data; identify service area characteristics, polices and level of service requirements, and the develop population projections, and the associated water demands for each water system. System Analysis: Evaluate the water system components, including the supply, storage and distribution systems. Review the system water quality conditions and future requirements and document the system operations and maintenance. Capital Improvement Program: Develop the capital improvement, rehabilitation, and replacement plan. Create a 20-year financial plan and a 5-year rate study that focuses on the implementation of Phase I of Water Plan 2020.

Identification of Capital Improvements required by the DOW water systems was a major focus of Water Plan 2020. Improvements were identified through the planning approach by consideration of level of service requirements and the source, storage and transmission evaluation criteria. While level of service considerations provided information about the current and future water system deficiencies, additional considerations to those improvements required to maintain the existing aging water system infrastructure became a significant factor. To address the water system infrastructure requirements for both new facilities and renovation and replacement of existing facilities, Water Plan 2020 defined an island-wide Capital Improvements Program, which entailed:

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Project Identification and Evaluation Project Prioritization within each Water System, and Island-Wide Improvement Program Prioritization and Scheduling

Identification of capital improvement projects began with the water system planning evaluation based on level of service for each water system’s source, storage and transmission current capacity and future capacity need. Additionally, input of the actual water system condition were obtained primarily from the DOW’s Operations Division, based on the following criteria:

Pipelines with frequent failures or leaking pipe joints Poor facility access due to flooding, erosion or deterioration of roadway conditions Safety Distribution mains traversing “cross county”

The transmission and distribution systems were evaluated using a hydraulic model to determine the current and future capacity to provide for peak hour and fire suppression flows and pressures. Based on these analyses, proposed system improvement alternatives were developed and compiled for each system. Additionally, the transmission and distribution networks were analyzed for the following conditions:

Pipelines installed prior to 1960 (40+ years of age) Galvanized steel pipes (most are old, in poor conditions and also have limited capacity) Polyvinyl Chloride (PVC) pipe installed prior to 1973 (most are small diameter and thin walled) Areas with dead-end mains Pipeline diameters below 6-inch

The resulting analysis identified additional proposed projects to be included in each of the water systems. The result of the project identification efforts was a list of needed projects for each water system. The list was evaluated to classify each project by category and determine how well the project would address the need for improvement within the water system, as well as to service as a basis for prioritization of projects. Additional classifications were developed to address certain funding restrictions for certain types of projects. The project evaluation consisted of developing:

Evaluation criteria for prioritizing the projects and the overall program Project type classifications:

o CIP: Capital Improvement Project o CRP: Capital Rehabilitation Project – in kind replacement o CRPL: Capital Replacement Project – replace with additional capacity

Prioritized project list by water system A prioritization process was developed to provide a methodology for establishing the DOW project priorities and a phased improvement implementation plan would be developed to provide the ability to fund and staff an improvement program. The approach used in Water Plan 2020 was a two-part process:

1. Prioritize the projects by water system 2. Develop an island-wide Implementation Program

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The overall Capital Improvement Program prioritization process defined and developed project prioritization criteria utilized from other similar water system CIP development. The major criteria used in prioritizing the proposed improvement project included:

Condition Assessment Public Health & Safety Level of Service

The prioritization process started from the un-prioritized list of projects that had been developed within each water system. The criteria above were defined and a numerical rating system was established to rank each project within its water system. As a result, a prioritized project list with numerical ratings was developed for each of the DOW water systems. In order to complete the island-wide capital improvement program it was necessary to convert these individual system lists into a comprehensive program to determine an overall project prioritization. To accomplish this programming, the DOW started with the scoring associated with each project based on the three prioritization criteria (Condition Assessment, Health and Safety and Level of Service). In addition to the overall scoring that each project received from the prioritization, there were additional Programming Criteria that were used to assign projects into phases of the 20-year program. Based on the prioritization scoring, projects were initially assigned to improvement phases in the following order:

Must do now: Rating 27 points + Phase 1 (2002 to 2006): Rating 22 to 26 points Phase 2 (2007 to 2011): Rating 18 to 21 points Phase 3 (2012 to 2021): Rating under 18 points

Programming criteria were also used in the overall CIP program development and are identified under the classifications of 1) Strategic Initiatives and 2) Financial and Funding Strategies. Strategic initiatives consisted of several considerations including:

Geographic distribution of projects around the island Addressing “must do projects” Complementary projects or projects that achieve other management priorities Reality check Schedule and project sequencing considerations.

Financial and Funding strategies generally pertained to project where supplemental funding is available, i.e. from state or federal grants, or projects where private sector funds may be available on a cost sharing basis, taking into consideration that many supplemental funds are time sensitive and are required to be expended within a specified time frame. An additional funding consideration was to complete the projects that were already approved and funded by the Department. Several iterations were done to balance projects across the CIP phasing for funding purposes with special attention given to projects that qualified in the “must do now” categories. DOW

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also included all improvement projects already funded in the first phase. By this process, the prioritized list of projects from each water system were integrated into an island-wide program. Two other considerations DOW used during the Program Prioritization process as the ability to fund the CIP in any given year and the potential rate impacts, and DOW’s staff capacity to manage multiple CIP projects. Both of these concerns impacted the final improvement program development and the pace at which the projects could be implemented. In 2007, nearing the onset to the halfway point of Water Plan 2020, the island-wide program was reviewed and updated to assess the DOW’s accomplishments, address any significant changes that may have an impact to the Water Plan 2020 implementation plan, include additional DOW infrastructure needs and provide an up-to-date project status. Utilizing the 2007 program list, the attached report describes the island-wide program project list update for all Water Plan 2020 projects to date. The attached report is described as follows: “Water Plan 2020 Plan – Project Evaluation Summary Report” includes all 260 Water Plan 2020 projects sorted first by “Strategic Initiative” (0, 0.5, 0.7, 1, 2, or 6) and secondly by “score”. The score is the raw number of points assigned to each project based on the Water Plan 2020 prioritization criteria. These criteria include:

Condition Assessment Public Health and Safety, and Level of Service

A category for “phase type” was created during the 2007 update to identify and classify the projects. The “phase type” refers to the project status and is labeled as follows:

0 = Complete Project 0.5 = Project Under Construction 0.7 = Project Under Design 1 = Phase 1 Project 2 = Phase 2 Project 3 = Phase 3 Project 4 = Shelved Project 5 = On-Hold Project 6 = Deleted Project

A detail description of these phase types are as follows: Phase 0 includes projects that are already completed and Phase 0.5 for projects that are under construction and not completed. Phase 0.7 include projects that are in the project design phase and is covered by a DOW design contract. Phase 1 includes projects to be completed in the first 5 year projection; Phase 2, the second 5 year projection and Phase 3, a projection to 20 years. Phase 4 includes completed design projects that have other contributing projects that are not anticipated to be complete in the Phase 1 or Phase 2 timeframe. Phase 5 includes projects which require additional resources not anticipated by the Department and Water Plan 2020; and Phase 6 includes projects that have been deleted or are no longer needed.

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Respectively submitted,

Edward Doi, P.E. Chief of Water Resources and Planning CONCURRED:

Kirk Saiki, P.E. Manager and Chief Engineer ED/ein Attachment: Water Plan 2020 Plan – Project Evaluation Summary Report Mgrrp/November 2017/18-82/Discussion and Possible on Water Plan 2020 Project Prioritization Methodology and Strategic Implementation (11-22-17):ein

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Water Plan 2020 Project Evaluation Summary Report

Project No. Water System Project TitleCondition

Assessment

Health

Safety

Service

Level

Total

Score

Strategic

Initiative

Fund

TypeProject Type Status/Phase Priority

KW-14 Kekaha-Waimea Waimea Canyon Drive 12" Main Replacement (1,860') 10 10 10 30 0 CRPL PIPELINE Completed

KW-15 Kekaha-Waimea Kaumualii Hwy 12", Huakai to Moana Road Main Replacement (1,950') 10 10 10 30 0 CRPL PIPELINE Completed

KW-25 Kekaha-Waimea Construct Kapilimao 196 Tank, 0.5MG 10 10 10 30 0 CIP OTHER Completed

KW-27 Kekaha-Waimea Kaumualii Hwy - Kekaha Rd to Huakai 12" D.I. Main Replacement 10 10 10 30 0 CRPL PIPELINE Completed

PLH-02 Puhi-Lihue-Hanamaulu Kokolau Tunnel to Mano St. 16" Main Replacement (14,630') 10 10 10 30 0 CRPL PIPELINE Completed

PLH-13 Puhi-Lihue-Hanamaulu Develop Puhi Well #5A, #5B and Puhi #1 re-pipe to 393' 10 10 10 30 0 CIP SOURCE Completed

WK-09 Wailua-Kapaa Construct Kapaa Homesteads 530 Tank, 0.5 MG 10 10 10 30 0 CIP STORAGE Completed

WK-21 Wailua-Kapaa Drill & Develop Wailua Homesteads Well #3 10 10 10 30 0 CIP SOURCE Completed

WK-28 Wailua-Kapaa Wailua Houselots 8" Main Replacement (11,004') 10 10 10 30 0 CRPL PIPELINE Completed

WK-42 Wailua-Kapaa Construct Stable 1.0MG Tank, 214' 10 10 10 30 0 CIP Completed

PLH-16 Puhi-Lihue-Hanamaulu Drill & Develop Hanamaulu Well #4, 150 gpm 10 9 9 28 0 CIP SOURCE Completed

PLH-14 Puhi-Lihue-Hanamaulu Develop Pukaki Well, 120 gpm 10 8 9 27 0 CIP SOURCE Completed

PLH-15 Puhi-Lihue-Hanamaulu Develop Hanamaulu Well #3, 160 gpm 10 8 9 27 0 CIP SOURCE Completed

HW-07 Haena-Wainiha Replace Wainiha Redwood Tank, 5,000 gal 10 10 5 25 0 CRP STORAGE Completed

KW-11 Kekaha-Waimea Kapilimao Valley Well Development 8 8 9 25 0 CIP SOURCE Completed

KW-12 Kekaha-Waimea Kekaha/Waimea Booster 8 8 9 25 0 CIP BOOSTER PUMP Completed

WK-12 Wailua-Kapaa Waipouli 6",8"Main Replacement (7,286'') 9 8 8 25 0 CRPL PIPELINE Completed

WK-14 Wailua-Kapaa Vivian Hghts./Kanaele Rd 8", 6"Main Replacement (13,678') & relocate PRV 9 7 9 25 0 CRP PIPELINE Completed

WK-30 Wailua-Kapaa Waipouli Rd. / Hauiki Rd. 6" Main Replacement (18,419') 9 8 8 25 0 CRPL PIPELINE Completed

WK-32 Wailua-Kapaa Kapaa Homesteads 6"Main Replacement (24,773'') 9 8 8 25 0 CRPL PIPELINE Completed

WK-36 Wailua-Kapaa Wailua, Kuamoo,Ohana,Anolani Rds., Lehika Ln. 6"Main Replacement (2,000') 9 8 8 25 0 CRPL PIPELINE Completed

WKK-14 Waipake-Kilauea-Kalihiwai Construct East Kilauea Booster Pump Station, 300 gpm 8 8 9 25 0 CIP BOOSTER PUMP Completed

K-07 Kalaheo Waha, Wawae, Niho Main Replacement (3,309') 9 7 8 24 0 CRPL PIPELINE Completed

PLH-09 Puhi-Lihue-Hanamaulu Lihue Town 6" & 8" Main Replacement (4,970') 9 7 8 24 0 CRPL PIPELINE Completed

K-10 Kalaheo 0.5 MG Kalaheo 908 Tank, Generator Storage 8 8 7 23 0 CIP STORAGE Completed

PLH-25 Puhi-Lihue-Hanamaulu Eiwa, Umi, Akahi, Elua & Hardy St. 8" Main Replacement (5,970') 10 8 5 23 0 CRPL PIPELINE Completed

PLH-30 Puhi-Lihue-Hanamaulu Nawiliwili-Niumalu & Kupolo 6, 8 & 12" Main Replacement (12,380') 9 7 7 23 0 CRPL PIPELINE Completed

WK-24 Wailua-Kapaa Develop Kapaa Homestead Well s Well #2, 500gpm & 8" DI (1,600') 10 7 6 23 0 CIP SOURCE Completed

HW-02 Haena-Wainiha Rehabilitate Wainiha Redwood Tank booster pumps 9 9 4 22 0 CRP BOOSTER PUMP Completed

KP-01 Koloa-Poipu Develop Koloa Well F 9 7 6 22 0 CIP SOURCE Completed

KP-06a Koloa-Poipu Lawai Road (Alania Road - Spouting Horn) 8" Main Replacement (2,800') 9 4 9 22 0 CRPL PIPELINE Completed

KP-07 Koloa-Poipu Poipu Road (Lawai Rd - Kiahuna Plant. Drv) Main Replacement (5,900') 9 7 6 22 0 CRPL PIPELINE Completed

K-08a Kalaheo Puu Road 12" Main (3,646') & 0.2 MG Tank 7 6 8 21 0 CIP STORAGE Completed

WKK-09 Waipake-Kilauea-Kalihiwai Kolo Road (Pukalani Place - Hookui Rd) Main Replacement (1,680') 5 9 7 21 0 CRPL PIPELINE Completed

KW-16 Kekaha-Waimea Waimea 6" Main Replacement (6,250') 10 7 3 20 0 CRPL PIPELINE Completed

KW-20 Kekaha-Waimea Waimea Well "A" Rehabilitation 10 10 0 20 0 CRP SOURCE Completed

LO-01 Lawai-Omao Lawai Well #2 mercury seal 10 10 0 20 0 CRP SOURCE Completed

PLH-11 Puhi-Lihue-Hanamaulu Rehabilitate Lihue Steel Tanks #1 & 2, 1.0 MG 10 10 0 20 0 CRP SOURCE Completed

WK-05 Wailua-Kapaa Kapaa Homesteads Well No. 1 ( Makaleha Well"A") ,mercury seals 10 10 0 20 0 CRP SOURCE Completed

WK-07 Wailua-Kapaa Rehabilitate Ornellas Tank, 0.2 MG 10 10 0 20 0 CRP STORAGE Completed

WKK-10 Waipake-Kilauea-Kalihiwai Construct Namahana 722 Tank, 0.1MG 8 5 7 20 0 CIP STORAGE Completed

WKK-18 Waipake-Kilauea-Kalihiwai Construct Puu Pane Tank, 0.1MG 8 5 7 20 0 CIP STORAGE Completed

H-10 Hanalei Maka Ridge Tank to Hanalei Town 12" Main Replacement (7,190') 5 8 6 19 0 CRPL PIPELINE Completed

HE-07 Hanapepe-Eleele Hanapepe Vy to Eleele Steel Tanks Rehab/Replace 27" Pipeline (1,175') 9 10 0 19 0 CRPL STORAGE Completed

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Assessment

Health

Safety

Service

Level

Total

Score

Strategic

Initiative

Fund


HE-10a Hanapepe-Eleele Uliuli Rd, Ulaula Rd 12" Main Replacement 19 0 CRPL PIPELINE Completed

KP-08 Koloa-Poipu Poipu Rd (Kiahuna Plant. Drv - Kuai Rd) 16" Main Replacement (3,200') 9 4 6 19 0 CRPL PIPELINE Completed

WK-22 Wailua-Kapaa Drill & Develop Kapaa Homesteads Well No. 3, 500 gpm, DLNR Project 10 6 3 19 0 CIP SOURCE Completed

A-11 Anahola Develop Anahola Well No. 3, 350 gpm 0 8 10 18 0 CIP SOURCE Completed

HE-06 Hanapepe-Eleele Hanapepe Stream Crossing 12" Main and slope control, 2 Design Phases 8 10 0 18 0 CRP PIPELINE Completed

KP-16 Koloa-Poipu Omao Tank - Poipu Road 12" Main Replacement (6,660') 8 7 3 18 0 CRPL PIPELINE Completed

KW-06 Kekaha-Waimea Rehabilitate Kekaha Shaft 12 10 8 0 18 0 CRP SOURCE Completed

A-04 Anahola Rehabilitate Anahola Tank , 0.15 MG 9 8 0 17 0 CRP STORAGE Completed

K-02 Kalaheo Rehabilitate Jelly Factory B.P. Sta. (3-250 gpm) 8 8 1 17 0 CRP BOOSTER PUMP Completed

KW-22a Kekaha-Waimea MCC, Chlorination Facilities, Waimea Well "A" 7 10 0 17 0 CRP SOURCE Completed

WK-15 Wailua-Kapaa Generator Storage - Kapaa Homesteads Well No. 1 7 10 0 17 0 CRP SOURCE Completed

H-03 Hanalei Rehabilitate Maka Ridge Tank, 225',0.25 MG [Concrete Tanks] 8 8 0 16 0 CRP STORAGE Completed

HE-08 Hanapepe-Eleele Refurbish Eleele Steel Tanks 8 8 0 16 0 CRP STORAGE Completed

KW-09a Kekaha-Waimea MCC, Chlorination Facilities, Kekaha Shaft #12 7 9 0 16 0 CRP SOURCE Completed

PLH-39a Puhi-Lihue-Hanamaulu Lihue Baseyard Complex Improvements - Phase I 7 7 2 16 0 CRP Completed

H-02 Hanalei MCC, Chlorination Facilities - Maka Ridge Well [Separate pumps & MCC, Rehab Chlorination Facilities] 5 10 0 15 0 CRP SOURCE Completed

HW-03 Haena-Wainiha Rehabilitate Haena Steel Tank 144' 9 6 0 15 0 CRP STORAGE Completed

KW-03 Kekaha-Waimea Elepaio Road (Aukuu - Kaumualii) 8" Main Replacement (970') 10 5 0 15 0 CRPL PIPELINE Completed

KW-09b Kekaha-Waimea MCC, Chlorination Facilities, Paua Valley Well 7 8 0 15 0 CRP SOURCE Completed

KW-09c Kekaha-Waimea MCC, Chlorination Facilities, Kekaha (Waipao) Well "B" 7 8 0 15 0 CRP SOURCE Completed

LO-13 Lawai-Omao Lawai/Kalaheo Water System Interconnection 8" Main Replacement (8,628') 5 10 0 15 0 CRPL PIPELINE Completed

WK-03 Wailua-Kapaa Kuhio Hwy. ( N. Leho Rd. - Papaloa Rd.Main Replacement (8,500') 10 5 0 15 0 CRPL PIPELINE Completed

PLH-19 Puhi-Lihue-Hanamaulu Barrier Removal - DOW Office and Lab buildings, ADA compliance 8 4 2 14 0 CRP OTHER Completed

H-01 Hanalei Maka Ridge Tank to Kuhio Hwy Road improvement 9 4 0 13 0 CRP OTHER Completed

KW-24 Kekaha-Waimea Permanent Generator and Housing Kapilimao Valley Well 0 10 0 10 0 CRP SOURCE Completed

PLH-17 Puhi-Lihue-Hanamaulu Lihue Baseyard Landscaping 10 0 0 10 0 CRP OTHER Completed

PLH-39b Puhi-Lihue-Hanamaulu Lihue Baseyard Complex Expansion 0 8 2 10 0 CIP Completed

PLH-31 Puhi-Lihue-Hanamaulu Altitude Valve Lihue Steel Tanks 1 & 2, KCC 393 Tank 0 8 0 8 0 CRP STORAGE Completed

KW-05 Kekaha-Waimea Hydro-cell Improvement, Kekaha (Waipao) Well "B" 0 7 0 7 0 CRP SOURCE Completed

K-11 Kalaheo Install MCC for Kalaheo Well No. 1 8 8 7 0 0 CRP SOURCE Completed

LO-04 Lawai-Omao Construct Omao 677 Tank , 0.5 MG 10 10 10 0 0 CIP STORAGE Completed

K-18 Kalaheo 8" Water Main Replacement Halewili Road 0 CRPL Completed

PLH-41 Puhi-Lihue-Hanamaulu Nawiliwili Rd - PRV, Booster Pump, 6" WL 0 CRP BOOSTER PUMP Completed

PLH-44b Puhi-Lihue-Hanamaulu Lihue Mill Bridge 24" Main (State DOT Project) 0 CIP Completed

WK-14b Wailua-Kapaa Vivian Hghts/Kanaele Rd 8", 6" Main Repl (11,325'), Ph II 0 CRP PIPELINE Completed

WK-32b Wailua-Kapaa Kapaa Homesteads 6"Main Replacement (24,773''), Phase II 0 CRPL PIPELINE Completed

WK-42b Wailua-Kapaa Construct Stable 1.0MG Tank, 214', Phase II Connecting Pipeline 0 CIP PIPELINE Completed

KP-09 Koloa-Poipu MCC, Chlorination Facilities, Koloa Well "16-A" & "E", & "16-B" Site and Bldg Improvements 9 9 0 18 0.5 CRP SOURCE Under Construction

WK-39 Wailua-Kapaa Drill and Develop Kapaa Homesteads Well No. 4, 500GPM 10 10 10 30 0.7 CIP In Design 3

WKK-02 Waipake-Kilauea-Kalihiwai Drill & Develop New Kilauea Well (No. 3 or No. 4), 700 gpm 10 10 10 30 0.7 CIP SOURCE In Design 8

WK-08 Wailua-Kapaa Construct Kapaa Homesteads 313 Tank, 1.0 MG 10 10 10 30 0.7 CIP STORAGE In Design 10

WK-23 Wailua-Kapaa Construct U.H. Exp. Station 605' Tank , 0.25 MG & 12" DI (2900') pipeline 10 10 10 30 0.7 CIP STORAGE In Design 12

WKK-15 Waipake-Kilauea-Kalihiwai Construct Kilauea 466 Tank, 1.0 MG 10 10 10 30 0.7 CIP STORAGE In Design 13

HW-12 Haena-Wainiha Drill & Dev. Wainiha/Haena Well 100 gpm 10 10 10 30 0.7 CIP SOURCE In Design 16

Page 197



Assessment

Health

Safety

Service

Level

Total

Score

Strategic

Initiative

Fund


M-02 Moloaa Construct Moloaa Tank, 100,000 Gallon Storage Tank 10 10 10 30 0.7 CIP STORAGE In Design

PLH-12 Puhi-Lihue-Hanamaulu Kilohana Wells A, B, F & I Permanent Generator 8 10 8 26 0.7 CRP SOURCE In Design

H-05 Hanalei Weke, Anae, Mahimahi and He'e Roads 6" and 8" Main Replacement (2,760') 8 8 7 23 0.7 CRPL PIPELINE In Design

K-01 Kalaheo Kalaheo 1111' & 1222' Water System Improvements (8" Main, Well, 0.5 MG Tank) 8 5 7 20 0.7 CIP OTHER In Design 6

K-05a Kalaheo Kalaheo New Tank, 0.5MG, 886' 0 10 10 20 0.7 CIP SOURCE In Design

PLH-27 Puhi-Lihue-Hanamaulu Kuhio Hwy (Hardy - Oxford ) 16" Main Replacement (1,680') 7 7 4 18 0.7 CRPL PIPELINE In Design 11

HW-11 Haena-Wainiha Construct 0.2 MG Storage Tank, 144' 0 10 8 18 0.7 CIP STORAGE In Design 17

PLH-35b Puhi-Lihue-Hanamaulu Kapaia Cane Haul Road 18" Main 0 6 10 16 0.7 CIP In Design 4

WKK-03 Waipake-Kilauea-Kalihiwai MCC, Chlorination Facilities - Kilauea Well #1 & #2 6 8 0 14 0.7 CRP SOURCE In Design 5

HE-01 Hanapepe-Eleele Reorganize Water System (See Description Below) 8 5 0 13 0.7 CIP OTHER In Design 2

M-01 Moloaa Koolau Road, Moloaa 6" Main & Water Meter & Backflow Device (1,500') 0 5 8 13 0.7 CIP PIPELINE In Design

Ani-01a Anini Anini and Kalihiwai Road 6" Main (9,156') 3 6 2 11 0.7 CRPL PIPELINE In Design

KW-07 Kekaha-Waimea Rehabilitate Paua Valley Tank #1, 0.5 MG Concrete 4 4 0 8 0.7 CRP STORAGE In Design 1

KP-05 Koloa-Poipu Construct Poipu 245 Tank, 1.0 MG 10 10 10 30 1 CIP STORAGE 1

M-03 Moloaa Acquire Source / Install Pump, Controls, and 12" Pipeline 10 10 10 30 1 CIP 1

H-08 Hanalei Drill & Dev Hanalei Well, 300 gpm 10 10 10 30 2 CIP SOURCE 2 9

WK-33 Wailua-Kapaa Kahuna Road 12' Main Replacement (9500') 10 10 10 30 2 CRPL PIPELINE 2

K-09 Kalaheo Kalaheo Town 6 ", 8" & 12" Main Replacement (8,530') 7 7 7 21 2 CRPL PIPELINE 2

WK-13 Wailua-Kapaa Kapaa Town 8"Main Replacement (3,487') 9 8 4 21 2 CRPL PIPELINE 2

KP-13 Koloa-Poipu Waikomo Road (Poipu Rd - Weliweli Rd) 8" Main Replacement (1,828') 8 5 7 20 2 CRPL PIPELINE 2

LO-12 Lawai-Omao Iwipoo 8" & Lauoho 6" Main Replacement (8,400') 6 7 6 19 2 CRPL PIPELINE 2

WK-27 Wailua-Kapaa Kawaihau Rd (Ornellas Tk - Piliamoo Rd.) 12" Main Replacement (14,357') 7 7 5 19 2 CRPL PIPELINE 2

WK-25 Wailua-Kapaa Kuhio Hwy. ( N. Papaloa - Kawaihau Road) 16" and 12" Main Replacement (10,800') 7 8 3 18 2 CRPL PIPELINE 2 15

HE-11 Hanapepe-Eleele Lele Road to Salt Pond 6" Main Replacement (5,379') 8 5 4 17 2 CRPL PIPELINE 2

WK-10 Wailua-Kapaa Construct Wailua Homesteads 538 Tank, 1.0 MG 10 10 10 30 3 CIP OTHER 3 22

H-07 Hanalei New 0.150 MG Tank, Abandon Hanalei Tank 10 10 10 30 3 CIP STORAGE 3

HW-13 Haena-Wainiha Construct 0.1 MG Storage Tank, 217' 10 10 10 30 3 CIP STORAGE 3

PLH-38 Puhi-Lihue-Hanamaulu Construct Lihue New 1.0 MG Tank, 393' 10 10 10 30 3 CIP 3

WKK-19 Waipake-Kilauea-Kalihiwai Construct Kilauea 0.25MG Tank, 466' 10 10 10 30 3 CIP 3

LO-03 Lawai-Omao Construct Lawai (Andrade) Tank 825, 0.05 MG 7 10 10 27 3 CIP STORAGE 3

PLH-12a Puhi-Lihue-Hanamaulu Kilohana Wells A, B, F & I Rehab MCC, Chlorination Facilicites, Kilohana Wells 8 10 8 26 3 CRP SOURCE 3

A-02 Anahola Drill & Dev. Anahola Well 400gpm 8 8 9 25 3 CIP SOURCE 3

WKK-07 Waipake-Kilauea-Kalihiwai Kilauea Tanks 1 & 2 - Pukalani Place, 16"Main Replacement (8,050') 7 9 9 25 3 CRPL PIPELINE 3

WK-19 Wailua-Kapaa Puuopae/ Opaekaa/ Kalama/ Kipapa Rds. 8" Main Replacement (15,417') 8 7 9 24 3 CRPL PIPELINE 3

KP-14 Koloa-Poipu Koloa 6" & 12" Main Replacement (13,756') 8 8 7 23 3 CRP PIPELINE 3

KP-17 Koloa-Poipu Paanau Tank - Poipu Road 16" Main Replacement (1,150') 8 8 7 23 3 CRPL PIPELINE 3

LO-07 Lawai-Omao Drill & Develop Omao Well 8 8 7 23 3 CIP SOURCE 3

LO-08 Lawai-Omao Koloa Rd (Alaloke Pl. - Piko Rd) 8" Main Replacement (1,700') 7 6 9 22 3 CRPL PIPELINE 3 24

PLH-26 Puhi-Lihue-Hanamaulu Isenberg/Camp A 6 & 8" Main Replacement (12,240') 9 8 5 22 3 CRPL PIPELINE 3

WK-26a Wailua-Kapaa Kanepoonui Road 12' Main replacement (6,000') 8 7 7 22 3 CRPL PIPELINE 3

WK-31 Wailua-Kapaa Kamalu, Crossley Rds., Polani, Kiinani Pl. 8",6"Main Replacement (4,000') 10 6 6 22 3 CRPL PIPELINE 3

WK-41 Wailua-Kapaa Kawaihau Road 16" Main Replacement 4 8 10 22 3 CRPL PIPELINE 3

WKK-04 Waipake-Kilauea-Kalihiwai Kaohe Road / Kalihiwai Road 6"Main Replacement (4,510') & PRV 10 7 5 22 3 CRPL PIPELINE 3

WKK-08 Waipake-Kilauea-Kalihiwai Kilauea Road ( Pukalani Pl - FH X-76) Main Replacement (4,370') 5 8 9 22 3 CRPL PIPELINE 3

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Assessment

Health

Safety

Service

Level

Total

Score

Strategic

Initiative

Fund


A-05 Anahola North Anahola Area 6" Main Replacement (3,160') 6 8 7 21 3 CRPL PIPELINE 3

KP-22 Koloa-Poipu Wailaau Road 12" Main Replacement 7 7 7 21 3 CRPL 3

KW-17 Kekaha-Waimea Waimea Heights 6", 8", 12" Main Replacement (5,505') 10 5 6 21 3 CRPL PIPELINE 3

LO-11 Lawai-Omao Omao 6" Main Replacements (6,200') 6 7 8 21 3 CRPL PIPELINE 3

WK-29 Wailua-Kapaa Hauaala/ Keapana Roads 6"' Main Replacement (10,611') 7 8 6 21 3 CRPL PIPELINE 3

HW-08b Haena-Wainiha Wainiha Powerhouse Road 6" Main Replacement (5,930') 7 7 6 20 3 CRPL PIPELINE 3

K-08b Kalaheo Puu, Ai, Ihu Roads 6" Main Replacement (12,321') 7 6 7 20 3 CRPL PIPELINE 3

K-13 Kalaheo Puuwai, Poohiwi, Wawae Road 8" Main Replacement (5,500') 7 6 7 20 3 CRPL PIPELINE 3

K-14 Kalaheo Kalaheo Well No. 3 0 10 10 20 3 CIP SOURCE 3

KP-15 Koloa-Poipu Hooma & Pane Rd 6", Hoonani Rd 12" Main Replacement (5,098') 8 7 5 20 3 CRPL PIPELINE 3

KP-20 Koloa-Poipu Drill and Develop Koloa Well G 0 10 10 20 3 CIP 3

KW-26 Kekaha-Waimea Construct Waimea 196 Tank, 0.5MG 0 10 10 20 3 CIP STORAGE 3

WK-01 Wailua-Kapaa Rehabilitate Moelepe Tunnel & improve access road 10 10 0 20 3 CRP SOURCE 3

WK-37 Wailua-Kapaa Construct Upper Waipouli 0.25MG Tank, 686' 0 10 10 20 3 CIP 3

WK-40 Wailua-Kapaa Construct Upper Makaleha 0.25MG Tank, 575' 0 10 10 20 3 CIP 3

WK-20 Wailua-Kapaa Rehabilitate Puupilo Steel Tank, 0.125 MG 10 9 0 19 3 CRP STORAGE 3 19

LO-10 Lawai-Omao Lawai 6" & 8" Main Replacement (6,400') 5 7 7 19 3 CRPL PIPELINE 3 25

HE-10 Hanapepe-Eleele Hanapepe Town and Eleele Main Replacement 7 8 4 19 3 CRPL PIPELINE 3

KW-13b Kekaha-Waimea Kokee & Alae Rd 12" Main Replacement (4,150') 8 8 3 19 3 CRPL PIPELINE 3

PLH-08 Puhi-Lihue-Hanamaulu Nawiliwili Rd (Nokekula, Apapane, Eleki) 2 1/2" Main Replacement & Transfer Services , Nawiliwili Rd. (5,650') 8 7 4 19 3 CRPL PIPELINE 3

PLH-29 Puhi-Lihue-Hanamaulu Kuhio Hwy/Hanamaulu Rd. 12" Main Replacement (3,530') 9 7 3 19 3 CRPL PIPELINE 3

WK-16 Wailua-Kapaa MCC, Chlorination Facility Nonou Well 9-1A & 9-1B 9 10 0 19 3 CRP SOURCE 3

PLH-28 Puhi-Lihue-Hanamaulu Hanamaulu 6" Main Replacement (13,520') 9 6 3 18 3 CRPL PIPELINE 3 23

HW-01 Haena-Wainiha Improve access to Wainiha 217' Tank 9 9 0 18 3 CRP STORAGE 3

HW-09 Haena-Wainiha Alamihi, Alealea, Alamo'o Main Replacement (4,900') 5 7 6 18 3 CRPL PIPELINE 3

KW-01 Kekaha-Waimea Kekaha Road, Puueo Rd - Kaumualii Hwy 12" Main Replacement (4,490') 8 7 3 18 3 CRPL PIPELINE 3

LO-05a Lawai-Omao MCC, Chlorination Facilities, Lawai Wells No. 1 (22) & No. 2 8 10 0 18 3 CRP SOURCE 3

LO-09 Lawai-Omao Piko, Hailima, Koloa 12" Main Replacement (2,800') 5 6 7 18 3 CRPL PIPELINE 3

PLH-06 Puhi-Lihue-Hanamaulu MCC, Chlorination Facilities, Puhi Well 1 (KCC) 8 10 0 18 3 CRP SOURCE 3

PLH-07 Puhi-Lihue-Hanamaulu MCC, Chlorination Facilities, Puhi Wells 2 & 3 8 10 0 18 3 CRP SOURCE 3

PLH-10 Puhi-Lihue-Hanamaulu MCC, Chlorination Facilities, Lihue Grammer School Well 8 10 0 18 3 CRP SOURCE 3

PLH-20 Puhi-Lihue-Hanamaulu Puhi Rd.- Huleia Valley Rd. 6" Main Replacement (5,550') & 3 PRVs 10 4 4 18 3 CRPL PIPELINE 3

WKK-06 Waipake-Kilauea-Kalihiwai Kuhio Hwy. ( Pukalani Pl. - Kahiliholo Rd) Main Replacement (9,370') 5 6 7 18 3 CRPL PIPELINE 3

KP-21 Koloa-Poipu Makanui Road 6" Main Replacement 5 7 5 17 3 CRPL 3

KW-22b Kekaha-Waimea MCC, Chlorination Facilities, Waimea Well "2" 7 10 0 17 3 CRP SOURCE 3

LO-17 Lawai-Omao Akemama Road / Iii Road 8' Main Replacement 4 5 8 17 3 CRPL PIPELINE 3

LO-18 Lawai-Omao Kua Road 6" Main Replacement 4 5 8 17 3 CRPL PIPELINE 3

WK-15a Wailua-Kapaa Kapaa Homesteads Well No. 1 - MCC, Chlorination Facility 7 10 0 17 3 CRP SOURCE 3

WK-17 Wailua-Kapaa MCC, Chlorination Facility and Site Improvements Nonou Well 9-1C 7 10 0 17 3 CRP SOURCE 3

WK-18 Wailua-Kapaa MCC, Chlorination Facility Wailua Homestead Wells "A" & "B" 7 10 0 17 3 CRP SOURCE 3

WKK-17 Waipake-Kilauea-Kalihiwai Kuhio Hwy. (Pukalani Pl. - Kolo Road) New Main (4,790') 0 9 8 17 3 CIP PIPELINE 3

A-01 Anahola Anahola Road 8" Main Replacement(6,980') 4 7 5 16 3 CRPL PIPELINE 3

A-08 Anahola Kealia Road 12" Main Replacement (1,940') 7 7 2 16 3 CRPL PIPELINE 3

HW-04 Haena-Wainiha MCC, Chlorination Facilities, Haena Well 66 & Wainiha Well 67 & 2 6 10 0 16 3 CRP SOURCE 3

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Assessment

Health

Safety

Service

Level

Total

Score

Strategic

Initiative

Fund


K-06 Kalaheo Puuwai, Opu Roads 12" Main Replacement (3,320') 7 7 2 16 3 CRPL PIPELINE 3

KW-13a Kekaha-Waimea Elepaio Road (Aliae - Aukuu) 12" Main Replacement, Kala Road 8" Main (4,900') 6 7 3 16 3 CRPL PIPELINE 3

PLH-32 Puhi-Lihue-Hanamaulu Rice Street (Kauai Inn Tank - Paina Rd) 12" Main Replacement & PRV (4,850") 7 6 3 16 3 CRPL PIPELINE 3

PLH-35a Puhi-Lihue-Hanamaulu Kuhio Hwy 18" Main Replacement 4 2 10 16 3 CRPL 3

WK-06 Wailua-Kapaa Rehabilitate Makaleha Tank, 1.0 MG 10 6 0 16 3 CRP STORAGE 3

WK-11 Wailua-Kapaa Upper Wailua Houselots 6" Main Replacement (3,451') & booster pump 10 6 0 16 3 CRPL PIPELINE 3

WKK-01 Waipake-Kilauea-Kalihiwai Rehabilitate Kilauea Tanks #1 & #2, 0.25 MG 8 8 0 16 3 CRP STORAGE 3

WKK-16 Waipake-Kilauea-Kalihiwai Waipake, Namahana, Kalihiwai Booster Pump Stations -Install PRV 0 8 8 16 3 CRP BOOSTER PUMP 3

HE-03a Hanapepe-Eleele Hanapepe Town Well MCC, Chlorination Facilities 7 8 0 15 3 CRP SOURCE 3 18

WK-34 Wailua-Kapaa Kuamoo Road 8" Main Replacement (6,500') 8 5 2 15 3 CRPL PIPELINE 3 21

HE-03b Hanapepe-Eleele Hanapepe Well A MCC, Chlorination Facilities 7 8 0 15 3 CRP SOURCE 3

KP-11 Koloa-Poipu Poipu Tank (Mahaulepu)- Poipu By-pass Rd 18" Main (7,200') 0 8 7 15 3 CIP STORAGE 3

KW-23 Kekaha-Waimea Menehune Road 8" Main Replacement (9,340') 10 5 0 15 3 CRPL PIPELINE 3

LO-05b Lawai-Omao Permanent Generator and Housing, Lawai Tank, 677 0 10 5 15 3 CRP SOURCE 3

PLH-23 Puhi-Lihue-Hanamaulu Pua Loke 6" Main Replacement (8,640') 8 7 0 15 3 CRPL PIPELINE 3

WK-26 Wailua-Kapaa Moelepe Tu. - Wailua Hmstds,538 Tank 12" Main Replacement (12,726') 8 7 0 15 3 CRPL PIPELINE 3

HE-03c Hanapepe-Eleele Hanapepe Well B MCC, Chlorination Facilities 7 7 0 14 3 CRP SOURCE 3

K-04 Kalaheo Kalaheo Wells, Rehabilitate Chlorine Facilities (CHECK) 6 8 0 14 3 CRP SOURCE 3

KP-23 Koloa-Poipu Kapili Road New 12" Main 0 7 7 14 3 CIP 3

KW-04 Kekaha-Waimea Pre-lube Improvement Paua Valley Well 6 8 0 14 3 CRP SOURCE 3

KW-18 Kekaha-Waimea Rehabilitate Waimea Tank 1, 0.25 MG 8 6 0 14 3 CRP STORAGE 3

M-04 Moloaa Koolau Road / Moloaa Road 6" Main Replacement 2 5 7 14 3 CRPL 3

PLH-05 Puhi-Lihue-Hanamaulu Rehabilitate Kalepa Tank, 0.5 MG 7 7 0 14 3 CRP STORAGE 3

PLH-22 Puhi-Lihue-Hanamaulu Nawiliwili Rd. (Lihue Grammer School Well - Kukui Grove St) 12" Main Replacement (680') & 1 PRV 7 7 0 14 3 CRPL PIPELINE 3

WK-38 Wailua-Kapaa Rehabilitate Puu Pilo Booster Station 5 5 4 14 3 CRPL 3

HE-02 Hanapepe-Eleele Hanapepe Valley Main Replacement (1,500') and Main Abandonment (9,830') 8 5 0 13 3 CRPL PIPELINE 3

HE-04 Hanapepe-Eleele Rehabilitate Hanapepe Heights 0.5 MG Tank, 212' 5 8 0 13 3 CRP STORAGE 3

HE-09 Hanapepe-Eleele Lower Hanapepe Hgts 6" Main Replacement (7,190') 7 6 0 13 3 CRPL PIPELINE 3

KP-19 Koloa-Poipu Koloa Well C 18" Main Replacement 6 5 2 13 3 CRP 3

LO-14 Lawai-Omao Kaumualii Hwy 16" Main Replacement 5 5 3 13 3 CRPL PIPELINE 3

PLH-04 Puhi-Lihue-Hanamaulu Puhi Subd. / Leleiona St. 2-1/2" & 12" Main replacement (930') 6 7 0 13 3 CRPL PIPELINE 3

WK-04 Wailua-Kapaa Rehabilitate Nonou Tank, 2.0 MG 7 6 0 13 3 CRP STORAGE 3

A-09 Anahola Kuhio Hwy 8" Main (500') 0 7 5 12 3 CRPL PIPELINE 3

KW-02a Kekaha-Waimea East Kekaha 6" & 8" Main Replacement (9,580') 7 5 0 12 3 CRPL PIPELINE 3

KW-02b Kekaha-Waimea West Kekaha 6"& 8" Main Replacement 9,430') 7 5 0 12 3 CRPL PIPELINE 3

LO-16 Lawai-Omao East Koloa Road New 8" Mainline 0 5 7 12 3 CIP PIPELINE 3

PLH-21 Puhi-Lihue-Hanamaulu Haleko Rd. ( Rice St. - Kukui Grove St.) 16"Main Replacement (3,300') 7 5 0 12 3 CRPL PIPELINE 3

H-04 Hanalei Hanalei River 8" Main Replacement (1,670') 4 7 0 11 3 CRP PIPELINE 3

HW-10 Haena-Wainiha Kuhio Hwy 6" Main Replacement (4,530') 4 7 0 11 3 CRPL PIPELINE 3

A-06 Anahola Puuhale/Kikoo Loop 6" Main Replacement (2,260') 8 2 0 10 3 CRP PIPELINE 3

H-11 Hanalei Kuhio Hwy 6" Main Replacement (7,700') 2 4 4 10 3 CRPL 3

KP-12 Koloa-Poipu Rehabilitate Paanau Tank, 0.25 MG 8 2 0 10 3 CRP STORAGE 3

WKK-12 Waipake-Kilauea-Kalihiwai Kilauea Road (Iwalani lane - Kaupea Road) 6" Main replacement (5,720') 4 4 2 10 3 CRPL PIPELINE 3

HE-03d Hanapepe-Eleele Hanapepe Well #4 MCC, Rehab Chlorination Facilities,generator storage 1 8 0 9 3 CRP SOURCE 3

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Assessment

Health

Safety

Service

Level

Total

Score

Strategic

Initiative

Fund


HW-06 Haena-Wainiha Ala'Eke Road 6" Main Replacement (2,570') 2 3 4 9 3 CRPL PIPELINE 3

HW-08a Haena-Wainiha Wainiha 217' Tank to Wainiha Well 67 6" Main Replacement (4,880') 7 2 0 9 3 CRPL PIPELINE 3

LO-15 Lawai-Omao Construct Omao New Tank, 0.25MG, 677' 0 5 4 9 3 CIP STORAGE 3

WKK-13 Waipake-Kilauea-Kalihiwai Koolau Road (Kuhio Hwy. - FH X-122) 6' Main replacement (4,880') 1 4 4 9 3 CRPL PIPELINE 3

HW-14 Haena-Wainiha Construct Water Treatment - Wainiha Well 66 & 2 0 8 0 8 3 CRP SOURCE 3

KP-10 Koloa-Poipu MCC, Chlorination Facilities, Koloa Well "C" & "D" 5 3 0 8 3 CRP SOURCE 3

WKK-20 Waipake-Kilauea-Kalihiwai Kuhio Hwy 12" Main Replacement (Kolo Road to Koolau Road) (14,000') 1 3 4 8 3 CRPL 3

HE-12 Hanapepe-Eleele New PRV Station at Alii Road/Ahi Road Intersection 0 7 0 7 3 CIP PIPELINE 3

HE-13 Hanapepe-Eleele Demolish Eleele Tank, 97', 60,000 Gallon 0 7 0 7 3 CRP OTHER 3

PLH-24 Puhi-Lihue-Hanamaulu Rice Street (Haleko & Kapule Hwy) 16" Main Replacement (5,160') 2 2 3 7 3 CRPL PIPELINE 3

WK-43 Wailua-Kapaa Demolish Kondo Tank, 520' 0 7 0 7 3 CRP 3

WKK-11 Waipake-Kilauea-Kalihiwai Kapuna Rd (Waipake 562Tank - Kula School) Main Replacement (1,740) 1 4 1 6 3 CRPL PIPELINE 3

A-07 Anahola Manai/Kukuihale Road 8" Main (2,200') 0 4 1 5 3 CIP PIPELINE 3

PLH-34 Puhi-Lihue-Hanamaulu Kapule Hwy. (Kuhio Hwy - Ahukini Rd) 16" Main (8,750') 0 5 0 5 3 CIP PIPELINE 3

KP-03 Koloa-Poipu Construct Koloa 366 Tank, 0.5 MG 0 1 3 4 3 CIP STORAGE 3

KP-04 Koloa-Poipu Construct Koloa 366 Tank, 0.25 MG 0 1 3 4 3 CIP STORAGE 3

WKK-05 Waipake-Kilauea-Kalihiwai Rehabilitate Mainline Service Road (Kilauea Tanks - Kahiliholo Rd) (5,130') 1 2 0 3 3 CRP OTHER 3

A-10 Anahola Construct Anahola 0.25MG Tank, 288' 0 0 2 2 3 CIP 3

K-15 Kalaheo Kalaheo 12" Main Replacement 1 0 0 1 3 CRP PIPELINE 3

K-16 Kalaheo Abandon Kalaheo Well No. 24 1 0 0 1 3 CRP OTHER 3

H-09 Hanalei Paint 0.05 MG Hanalei Tank 0 0 0 0 3 CRP STORAGE 3

LO-19 Lawai-Omao Omao Microturbine 3 3

KW-28 Kekaha-Waimea Renovate Kekaha Shaft(5842-02) & 12" D.I. 10 10 10 30 4 CIP SOURCE Shelved

PLH-01a Puhi-Lihue-Hanamaulu Replace Grove Farm Tanks #1 & #2 8 4 0 12 4 CRP STORAGE Shelved

Ani-01b Anini Anini and Kalihiwai Road 6" Main (5300') 0 7 4 11 4 CIP PIPELINE Shelved

K-17 Kalaheo Construct Kalaheo Surface Water Treatment Facility, 0.5MGD 10 10 10 30 5 CIP On-Hold

PLH-42 Puhi-Lihue-Hanamaulu Construct Kokolau Tunnel WTP, 400gpm 10 10 10 30 5 CIP SOURCE On-Hold

WK-02 Wailua-Kapaa Rehabilitate Akulikuli Tunnel & prevent surface water infiltration 10 10 10 30 5 CRP SOURCE On-Hold

PLH-03 Puhi-Lihue-Hanamaulu Drill & Develop Horizontal wells 0 8 9 17 5 CIP SOURCE On-Hold

PLH-43 Puhi-Lihue-Hanamaulu DOW Buyout Dedication Option of Kapaia SWTP (3.0 MGD) 5 CIP SOURCE On-Hold

PLH-36 Puhi-Lihue-Hanamaulu Kapaia SWTP Expansion, 1.0MGD 10 10 10 30 6 CIP Deleted

PLH-37 Puhi-Lihue-Hanamaulu Deepen Kilohana Wells C, G, and F 10 8 10 28 6 CRP Deleted

K-12 Kalaheo Nursery 1111' Tank Booster Pump Station (2-200 gpm) 8 8 7 23 6 CRP BOOSTER PUMP Deleted

KP-02 Koloa-Poipu Rehabilitate Omao Tank, 0.2 MG 8 6 8 22 6 CRP STORAGE Deleted

PLH-40 Puhi-Lihue-Hanamaulu Install CO2 Removal System at Puhi Well No. 2 and 3 10 10 0 20 6 CRP SOURCE Deleted

Ani-02 Anini Renegotiate Water Purchase Agreement 6 5 8 19 6 CIP Deleted

A-03 Anahola Rehabilitate Chlorination Facilities, Anahola Well A & B 8 10 0 18 6 CRP SOURCE Deleted

WK-35 Wailua-Kapaa Develop Alinea Street HHA Artesian Well 0 8 9 17 6 CIP SOURCE Deleted

K-05 Kalaheo Rehabilitate Kukuiolono 0.2 MG tank 8 8 0 16 6 CRP STORAGE Deleted

KW-19 Kekaha-Waimea Relocate Waimea Heights Boosters 10 6 0 16 6 CRP BOOSTER PUMP Deleted

KP-18 Koloa-Poipu Preserve Ex. 12" Main (Waiohai Hotel Site) 7 7 0 14 6 CRPL PIPELINE Deleted

PLH-01b Puhi-Lihue-Hanamaulu Rehabilitate Grove Farm Tanks #1 & #2 8 4 0 12 6 CRP STORAGE Deleted

KW-21 Kekaha-Waimea Waimea Shaft #9, Water Treatment Plant 0 1 1 2 6 CRP SOURCE Deleted

Page 201


DEPARTMENT OF WATER County of Kaua'i


Board of Water Supply

2017 - Current Officers 2018 – Officers (effective: 1/1/18)

Chair : Sherman Shiraishi Chair: _________________

Vice-Chair: Laurie Ho Vice-Chair: __________________

Secretary: Beth Tokioka Secretary: __________________

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Fiscal report 10/2017

FISCAL REPORT: MONTHLY SUMMARY HIGHLIGHTS – OCTOBER, 2017

I. BUDGET SUMMARY VS. ACTUAL (see attached report for details)

YEAR TO DATE (YTD) BUDGET & ACTUAL EXPENSES SUMMARY – AS OF OCTOBER, 2017

BUDGET vs EXPENSED

∙ Operating Expenses $ 11,426,958.64 $7,974,350.87

∙ Debt Principal Payment 3,822,551.29 3,822,551.29

∙ Capital Projects 10,496,094.52 625,062.64

TOTAL $ 25,745,604.45 $ 12,421,964.80

REVENUES: VARIANCE = “ACTUAL” LESS “BUDGET”; POSITIVE INDICATES HIGHER PERFORMANCE THAN EXPECTED.

Total Revenue as of October, 2017 was 2% below projection.

o Water sales of $10.9 million (M) was $1.3M or 13% above projection.

o Other Water Revenue‐Receipts of $122 thousand (“K”) exceeded projection by $38.8K or 46%.

o Capital Contributions: Cash contributions including Federal & State Grants ‐ $320.5K.

o Investment Income & Net Increase in FV of Investments ‐ $120.6K

OPERATING EXPENSES: VARIANCE = BUDGET LESS ACTUAL EXPENSES; POSITIVE INDICATES LESS

SPENDING THAN PLANNED.

YTD Operating Expenses before depreciation and amortization was $8M. Total spending was $3.5M less than

planned or budgeted; a positive variance of 30%.

o Employee Related Expenses –$3M with a 16% positive variance.

o Contracts & Services – $2M with a 56% positive variance.

‐ Professional & Other Services, Insurance, Repairs and Maintenance for both water and non‐

water systems are the main items contributing to the 60% positive variance.

o Exceptional Expenses – None

o Fuel & Utilities – $1M; 5% negative variance.

o Bulk Water Purchase – $534K; 11% positive variance.

o Office & Operating Supplies – $216.8K, 40% positive variance.

o Training, Travel & Meeting Expenses – $23.9K.

o Debt Service – Interest Expense ‐ $1.2M.

o Depreciation & Amortization (non‐cash expenses) is $2.5M.

NET OPERATING INCOME:

Net Operating Income before depreciation and amortization ‐ $4.2M.

Net Operating Income after depreciation & amortization was $1.7M.

Page 246



Fiscal report 10/2017

NON‐OPERATING PROCEEDS & DISBURSEMENTS

SRF Loan Proceeds – None

FRC – Facility Reserve Charge ‐ Receipts of $233,850.00

YTD Debt Principal Payment is $3,822,551.29

CAPITAL PROJECTS BUDGET: YTD DISBURSEMENTS = $625,062.64

Capital Projects: Water Utility Fund ‐ $311.9K

Capital Projects: FRC Fund – $40.5K

Capital Projects: BAB Fund ‐ $272.6K

Capital Projects: SRF Loan Fund ‐ None

II. FY 2017 – 2018 ENCUMBERED FUNDS (SEE ATTACHED)

FY 2017 – 2018 Certification of Funds – $5,645,136.33

III. COMPARATIVE CHARTS:

METERED CONSUMPTION:

October, 2017 metered consumption –373.2 million gallons (mg); higher by 28.7 mg as compared from the

same month of FY 2017.

Year to Date (YTD) metered consumption as of 10/31/17 –1,537.1 mg; YTD increase of 122 mg as compared

from the same month of FY 2017.

IV. COMPARATIVE BALANCE SHEET:

* Statement of Net Positions as of October 31, 2017 & 2016. See attached.

V. OTHER FISCAL ONGOING ACTIVITIES/INITIATIVES:

Five (5) years Water Rate Study.

CC&B – Field Service Management – has been implemented.

Fiscal Yearend Audit – Board presentation by Accuity, LLC – 11/22/17


Marites Yano Waterworks Controller

Page 247

Page 248

Page 249

Page 250

Page 251

Page 252

Page 253

Page 254

FY 2017 - 2018 Certification of Funds Available

ACCOUNT # W/U BAB FRC TOTALS

7/1/2017 629 Utilitec, Inc. WU bill mail processing and mailing services 10-30-20-541-020 OE 200,000.00 200,000.00

7/6/2017 618 Prithibi As needed Technical Support & CC&B Oracle Upgrade. 10-02-10-540-010 OE 640,000.00 640,000.00

7/27/2017 642

Wong's Equipment And

Service, LLC

Solicitation GS 2017-4, Furnishing and Delivery of Noise

Leak Logger System 10-40-00-604-999 CO 35,489.77 35,489.77

8/3/2017 427 Belt Collins Hawaii, Ltd.

Amendment 9, Job. No. 02-14, Kapaa Homesteads

0.5MG Storage Tank & Kapahi 1.0 MG Storage Tank &

Connecting Pipelines, Wailua-Kapaa Water System 30-20-00-605-116 CO 160,149.00 160,149.00

8/3/2017 643 Valley Isle Motors, Ltd.

Solicitation GS 2017-2, Furnishing and Delivery of 3

vehicles 10-40-00-604-999 CO 275,065.80 275,065.80

8/3/2017 643 Valley Isle Motors, Ltd.

Solicitation GS 2017-2, Furnishing and Delivery of 2

vehicles 10-40-00-605-999 CO 120,090.78 120,090.78

8/11/2017 644

Unlimited Construction

Services, Inc.

Job no. 11-07, WP 2020, KP-09, MCC Chlorination

Facilities, Koloa Well 16A & 16B site building

improvements 30-21-00-604-107 CO 1,750,000.00 1,750,000.00

8/11/2017 644

Unlimited Construction

Services, Inc.

Job no. 11-07, WP 2020, KP-09, MCC Chlorination

Facilities, Koloa Well 16A & 16B site building

improvements 30-21-00-604-107 CO 2,005,000.00 2,005,000.00

9/18/2017 630

Derricks Well Drilling &

Pump Services, LLC CO #1, Job. # 17-05, Puhi Well 5A Repairs 10-40-50-560-000 OE 49,849.56 49,849.56

9/18/2017 645 R.M. Towill Corporation

Job. No. 17-11, WP 2020, No. WKK-2, Drill and Develop

New Kilauea Well No. 3, Kilauea, Kauai, HI 20-20-00-605-154 CO 300000 300,000.00

9/18/2017 645 R.M. Towill Corporation

Job. No. 17-11, WP 2020, No. WKK-2, Drill and Develop

New Kilauea Well No. 3, Kilauea, Kauai, HI 10-20-10-540-010 OE 70,000.00 70,000.00

11/7/2017 646 King Auto Center

GS 2018-1, Furnishing and delivery f one SUV 4-door 4

wheeel drive 10-21-00-604-999 CO 39,491.42 39,491.42

-

-

-

-

-

-

1,429,987.33 3,915,149.00 300,000.00 5,645,136.33

Page 255

III.

2016 2017 2018 Cum. Inc (Dec) % Inc. (Dec.)

July 2,389,827$ 2,626,380$ 2,760,278$ 133,898$ 5.10%

August 5,285,956$ 5,097,118$ 5,480,992$ 383,873$ 7.53%

September 7,743,790$ 7,767,863$ 8,381,960$ 614,097$ 7.91%

October 10,076,762$ 10,231,048$ 11,028,260$ 797,213$ 7.79%

November 12,649,063$ 12,718,113$ (12,718,113)$ -100.00%

December 14,656,392$ 14,905,179$ (14,905,179)$ -100.00%

January 16,981,290$ 17,167,603$ (17,167,603)$ -100.00%

February 19,297,429$ 19,387,481$ (19,387,481)$ -100.00%

March 21,676,963$ 21,562,033$ (21,562,033)$ -100.00%

April 24,320,174$ 23,993,720$ (23,993,720)$ -100.00%

May 26,663,804$ 26,225,406$ (26,225,406)$ -100.00%

June 29,092,060$ 28,767,205$ (28,767,205)$ -100.00%

** AFS error in billing AJE 288,133

BILLED REVENUES COMPARATIVE REPORT

For Fiscal Years 2016, 2017 & 2018

$0 M

$2 M

$4 M

$6 M

$8 M

$10 M

$12 M

$14 M

$16 M

$18 M

$20 M

$22 M

$24 M

$26 M

$28 M

$30 M

$32 M

2016

2017

2018

BILLED REVENUES COMPARATIVE CHARTAs of October: FY 2016, 2017 & 2018

1. revenue comparison Page 256

FY 2016 FY 2017 FY 2018 Cum. Inc (Dec) % of Inc (Dec)July 2,877,122$ 2,036,499$ 2,385,872$ 349,373$ 17%

August 5,578,998$ 4,881,715$ 5,504,876$ 623,161$ 13%

September 8,342,249$ 7,182,779$ 8,155,772$ 972,993$ 14%

October 10,566,640$ 9,806,314$ 11,034,364$ 1,228,050$ 13%

November 12,935,656$ 12,190,276$ (12,190,276)$ -100%

December 15,243,144$ 14,510,720$ (14,510,720)$ -100%

January 17,306,718$ 16,654,692$ (16,654,692)$ -100%

February 19,659,624$ 18,823,674$ (18,823,674)$ -100%

March 22,198,390$ 21,192,407$ (21,192,407)$ -100%

April 24,345,414$ 23,243,462$ (23,243,462)$ -100%

May 26,778,010$ 25,924,897$ (25,924,897)$ -100%

June 29,203,668$ 28,436,387$ (28,436,387)$ -100%

CASH RECEIPTS (W/U) COMPARATIVE REPORT


$0 M

$2 M

$4 M

$6 M

$8 M

$10 M

$12 M

$14 M

$16 M

$18 M

$20 M

$22 M

$24 M

$26 M

$28 M

$30 M

$32 M

Cash Receipts Comparative ChartAs of October: FY 2016, 2017 & 2018

FY 2016

FY 2017

FY 2018

2. receipts Page 257

FY 2016 FY 2017 FY 2018 INC (DEC)

July 436,238 363,695 383,831 20,136

August 361,599 335,456 380,414 44,958

September 415,176 371,437 399,598 28,161

October 384,934 344,542 373,247 28,705

November 398,863 349,909 -349,909

December 305,276 304,246 -304,246

January 453,812 316,392 -316,392

February 366,974 314,462 -314,462

March 323,359 306,619 -306,619

April 334,995 348,781 -348,781

May 335,320 314,701 -314,701

June 388,313 355,055 -355,055

** AFS error in billing AJE 288,133 288,133

Adjustment

Note: refer to monthly summary highlights

METERED CONSUMPTION (000 GALLONS) MONTHLY COMPARATIVE CHART


(expressed in thousands)

0

100,000

200,000

300,000

400,000

500,000

600,000

FY 2016

FY 2018

FY 2017

MONTHLY CONSUMPTION COMPARATIVE CHARTAs of October, FY 2016, 2017 & 2018

3. 12 mo. consumption comp Page 258

FY 2016 FY 2017 FY 2018 CUM. INC (DEC)

July 400,235 363,695 383,831 20,136

August 792,065 699,151 764,245 65,094

September 1,119,690 1,070,588 1,163,843 93,255

October 1,434,146 1,415,130 1,537,090 121,960

November 1,784,988 1,765,039 -1,765,039

December 2,072,021 2,069,285 -2,069,285

January 2,394,442 2,385,677 -2,385,677

February 2,714,729 2,700,139 -2,700,139

March 3,041,325 3,006,758 -3,006,758

April 3,398,279 3,355,539 -3,355,539

May 3,722,903 3,670,240 -3,670,240

June 4,048,246 4,025,295 -4,025,295

** AFS error in billing AJE 288,133 288,133

Adjustment

YTD METERED CONSUMPTION (000 GALLONS) COMPARATIVE REPORT


(expressed in thousands)

0.000

0.500

1.000

1.500

2.000

2.500

3.000

3.500

4.000

4.500

Bill

ion

s

FY 2016

FY 2017

FY 2018

YTD WATER CONSUMPTION COMPARATIVE CHARTAs of October: FY 2016, 2017 & 2018

4. consumption (000 gallons) Page 259

Department of Water - County of Kauai

Statements of Net Position

October 31, 2017 and 2016

10/31/2017 (Unadjusted)

10/31/2016 (Adjusted)

Current AssetsCash 8,176,194.01 7,842,378.88

Equity interest in pooled investments 5,143,934.09 20,810,017.44

Receivables:

Accounts, net of allowance for doubtful accounts* 1,664,764.97 1,849,229.84

Due from other funds

Unbilled accounts 1,525,416.36 1,428,698.79

Grants and subsidies 169,693.08

Accrued interest 80,748.87 72,778.40

Total receivables 3,440,623.28 3,350,707.03

Materials and supplies 1,097,060.10 889,994.23

Prepaid expenses 69,980.35 45,614.00

Total current asset 17,927,791.83 32,938,711.58

Restricted Assets:Facility reserve charge funds:

Cash 702,796.06 1,970,195.93

Accounts receivable and other 72,725.60 -

Total facility reserve charge funds 775,521.66 1,970,195.93

Bond funds:

Cash 1,537,566.11 2,581,013.62

Investments 12,940,213.49 12,862,654.05

Accrued interest 57,536.45 62,192.65

Total bond funds 14,535,316.05 15,505,860.32

Total restricted assets 15,310,837.71 17,476,056.25

Equity Interest in Pooled Investment - Noncurrent 39,344,320.55 18,015,347.00

Utility Plant:In service 334,210,597.15 317,004,824.75

Accumulated depreciation (122,889,846.77) (115,355,095.75)

Total utility plant 211,320,750.38 201,649,729.00

Construction work in progress 3,843,714.26 17,619,634.39

Total property, plant and equipment 215,164,464.64 219,269,363.39

Total assets 287,747,414.73 287,699,478.22

Deferred Outflow of Resources 6,376,644.36 2,965,345.20

Total assets and deferred outflows of resources 294,124,059.09$ 290,664,823.42$

*Allowance for doubful accounts (276,856.60) (267,709.72)

Assets and Deferred Outflows

AS OF: YEAR TO DATE

Report Format Created by: S. NadataniPage 260

Department of Water - County of Kauai

Statements of Net Position

October 31, 2017 and 2016

10/31/2017

(Unadjusted)

10/31/2016

(Adjusted)

Current Liabilities:Accounts payable and accrued liabilities 2,001,174.37 1,601,524.32$

Contracts payable, including retainages 11,607.10 568,974.50

Due to/Due From Other Funds -

Customer overpayment 131,753.30 117,873.91

Customer deposits and advances 420,344.97 449,530.48

Current portion of long term debt 4,835,459.24 4,717,296.00

Current portion of capital lease obligation 742,464.86 699,064.33

Total current liabilities 8,142,803.84 8,154,263.54

Long-Term Debt 73,554,407.32 78,561,953.07

Capital Lease Obligation 526,618.76 1,269,083.41

OPEB & Retirement Benefits 17,312,468.35 11,687,583.10

Accrued Vacation and Compensatory Pay 1,329,045.62 1,245,154.43

Deferred Inflow of Assets 338,104.00 1,286,710.00

Total liabilities and deferred inflows: 101,203,447.89 102,204,747.55

Net Position:Water Utility Reserves 10,200,000.00 10,200,000.00

Restricted FRC 771,726.50 1,970,195.93

Restricted Build American Bonds 14,531,191.05 14,939,467.49

Invested in Capital Assets Net of Related Debt 136,060,335.58 135,335,534.19

Unrestricted 31,357,358.07 26,014,878.26

Total net position 192,920,611.20 188,460,075.87

Total liabilities, deferred inflows and net position: 294,124,059.09$ 290,664,823.42$

- -

Liabilities, Deferred Inflows and Net Position

Report Format Created by: S. NadataniPage 261



“Water has no Substitute – Conserve it!”

INFORMATION & EDUCATION SPECIALIST REPORT November 22, 2017

Public Notices and Announcements All news releases were also published on the Department’s Facebook and Twitter social media pages.

Koloa - Blessing held for Koloa Well 16 A, & B Site & Building Improvements Project o A news release was issued on Oct. 25, 2017 to notify the public of a blessing

ceremony that was held on Oct. 18, 2017 to commence the Koloa Well 16 A and 16 B Site and Building Improvements Project. The news release was published in The Garden Island on October 27, 2017

(Attached). As a courtesy to neighboring residents, a postcard notification was sent to

customers residing along Knudsen Road; a dirt road leading to the Koloa well 16 A and 16 B site, of the increase in vehicles that will be utilizing the road to transport construction equipment and crews to the site.

Lihue - Emergency water service shutdown and partial road closure o A news release was issued on Nov. 6, 2017 to notify the public of an emergency

water service shutdown for customers located on Lala Road on Nov. 6th from approximately 11 a.m. to 5 p.m. In addition, a partial road closure of Lala Road was in place during the shutdown while crews performed emergency repairs to a broken main line in the area.

o Additional updates were also provided on-air through radio announcements and posted to the Department’s social media sites.

o Jonell Kaohelaulii contacted Department of Education (DOE) officials to coordinate the emergency shutdown that affected Kauai High School’s water service. DOE announced its decision to close Kauai High School at approximately 11:30 a.m. on Nov. 6. Jonell maintained communications with DOE officials until emergency repairs were completed and a final update was provided. DOE confirmed that Kauai High School would resume classes on Nov. 7th.

o A final update was issued to notify the public that water service was restored and Lala Road was re-opened at approximately 2 p.m. on Nov. 6th. In addition, Jonell responded to media requests for updates by phone. An update was published in The Garden Island Newspaper on November 7,

2017 (Attached). Hanapepe – Emergency water service shutdown and partial road closure

o A public announcement was issued to radio media partners on Nov. 8, 2017 to notify the public of an emergency water service shutdown for customers located on Hanapepe Road, between Moi Road and Awawa Road from 10 a.m. to approximately 3 p.m. In addition, a section of Moi Road was closed; from Kaumuali‘i Highway to Hanapepe Road to conduct emergency repairs to the water main line.

o An update was issued to notify the public that water service was restored at approximately 12 p.m. The partial road closure of Moi Road would remain closed until approximately 3 p.m. or until all repairs to the main line is complete.

o A final update was issued to notify the public that emergency repairs were completed and that access to Moi Road from Kaumualii Highway was re-opened at 1 p.m. on Nov. 8th.

Page 262

Information & Education Specialist Report November 22, 2017 Page 2 of 3

Other Media Oct. 30, 2017 – The Department was featured in the Garden Island Newspaper article,

“Conservationists lauded” as part of the presentation for the 2017 Outstanding Conservationist Awards. (Attached)

Public Relations Program Conservation & Community Outreach

o Jonell Kaohelaulii is participating in the planning and research for an educational water display with the Garden Island Arts Council. The display will feature the Department’s role in water conservation, resource management and consumption of drinking water. The water display will be featured at the Lihue airport. Display dates to be determined.

o The Department provided water conservation items; such as workbooks, message magnets and other water-related items for the East and West Kauai Soil and Water Conservation Districts’ 2017 Art Contest.

Upcoming Community Outreach & Educational Events

November 20, 2017 – Water conservation presentation at Kula Aupuni Niihau A Kahelelani Aloha Charter School

November 29, 2017 – King Kaumualii Elementary School Career Day December 1, 2017 –Eleele Elementary School Career Day

Project WET Project WET Educator Workshop

o Jonell Kaohelaulii coordinated a two-day, Project WET Educator Workshop in partnership with Juanita Reyner-Colon of Hawaii Rural Water Association and Daniel Chang of the Department of Health - Safe Drinking Water Branch, at the 56th Annual HWWA and 2nd Annual HRWA Conference and Expo on Nov. 1-3, 2017 in Kona. The workshop provided training to a mixed group of educators and water professionals who participated in 8 Project WET activities that demonstrated lessons in watershed protection, source and non-source pollution, conservation, natural resource management and the importance of the water cycle. Jonell also presented the Department’s use of the Project WET curriculum to benefit public relations efforts for its community outreach and educational events.

Project WET Hawaii Network o Jonell Kaohelaulii currently manages the progress of the Project WET Hawaii

program and its facilitator network. This year’s updates have been positive and facilitators are being proactive with the curriculum. A Professional Development (PD) credit application has been submitted to the Department of Education (DOE) to seek PD credits for future Project WET Educator Workshops. If approved, registration and interest for Project WET Educator Workshops is expected to increase. Project WET Hawaii’s next goal is have a certified facilitator available on each island to meet the demands for additional workshops. Jonell has begun discussions with the Project WET Hawaii and USA networks to seek support for new facilitator training on the neighbor islands.

o Jonell has begun organizing information and research for Project WET Hawaii’s annual report.

Page 263

Information & Education Specialist Report November 22, 2017 Page 3 of 3

Miscellaneous The County’s Employee Council hosted its Spooktacular event on Oct. 20, 2017. The

Department of Water hosted a juice and water station at the event. Special thanks goes to Malia Reis, Edie Ignacio-Neumiller, Craig Shirai and Jonell Kaohelaulii for assisting with the setup, clean up, décor, serving and refilling of the water and juice services at the event.

Kirk Saiki, Edward Doi, Michael Hinazumi and Jonell Kaohelaulii attended County Council’s special planning committee meeting for the Kauai County General Plan on October 26, 2017.

The Department’s Fun Committee hosted a Halloween division décor and costume contest on Oct. 31, 2017.

The Department’s Annual Employee Meeting is scheduled for Dec. 8, 2017.


Jonell S.T. Kaohelaulii For Information & Education Specialist JSK: ein Attachments: “Blessing starts $3.5mil well project” – The Garden Island “Conservationist lauded” – The Garden Island “Kauai High closed early Monday”– The Garden Island Mgrrp/November 2017/Information & Education Specialist Report (11-22-17):ein

Page 264

Published in The Garden Island Newspaper on 10-27-17

Page 265

Published in The Garden Island on 10-30-17

Page 266

Published in The Garden Island on 11-07-17

Page 267



“Water has no Substitute – Conserve It!

Operations Division Report for the Month of October 2017

Personnel

Operations personnel attended the Driver Improvement Program classes offered by the County Department of Human Resources.

Source and Storage

Maintenance Workers continued cleaning of various remote facilities island-wide. Works included clearing of vegetation and drainage as well as repair and construction of structures and facilities.

Water Plant Operators performed routine inspection and maintenance at all sites including valve maintenance, piping repair and replacement, chlorination equipment maintenance, and mixing of sodium hypochlorite.

Electrical workers performed routine electrical maintenance at all sites including SCADA radio troubleshooting, electrical wiring for motor controls, lighting repair and replacement.

Operations personnel continue working with contractor and designer for the Kalepa valve replacement relative to the Kohea Loa development project. Faulty equipment part was replaced and the flow has now stabilized.

Distribution

Operations Division Field Section crews continue to perform live taps and routine leak repair of service laterals and mainlines. Field Section personnel responded to and completed thirty six (36) leak repair work orders.

Field Section personnel installed two (2) service laterals. In the month of September, field crew replaced 180 feet of 3” PVC distribution line on

Lokokai Road under work order C141516. As of October 2017, a total of 2,126 feet of old pipe has been replaced.

We received a total of 68 calls from customers reporting leaks on the mainline, service laterals, meters, meter boxes and fire hydrants including complaints of no water, complaints of low pressure, high pressure, calls requesting remote site/facility grounds and vegetation maintenance, calls for assistance in shutting off the water meter, calls reporting damaged meter box and cover, reports of leaking or damaged fire hydrants and report of white milky water. Work orders were generated and all calls resolved. Leak after the meter needs to be addressed by the customer.

Fleet, Inventory, Warehouse and Baseyard Area

For the month of October, a total of one hundred forty five (145) work orders were issued for Operations Division. Works included: electrical repairs and maintenance; automotive

Page 268

Operations Division Report November 22, 2017 Page 2 of 2

repairs and maintenance including power generator maintenance; water meter installation and replacement; service lateral installations; leak repairs; well, tank site and PRV maintenance; replace damaged meter boxes; repair defective meters; replace damaged or leaking hydrant; door-to-door customer notifications for tie-ins of new lines to existing lines as well as notifications regarding scheduled repairs; callouts due to customer complaints/reports; meter replacement requests; contractor’s requests for markings.

For the month of October 2017, twenty five (25) Hawaii One Call requests for markings were received. Also, twenty two (22) meters were installed, replaced and repaired.


Valentino P. Reyna Chief, Operations Division

VPR/ein

Attachments: Overtime Chart

Leak Report Chart Produced/Billed Chart

Mgrrp/November 2017/Operations Divison Report for the Month of October 2017 (11-22-17):ein

Page 269

County Of Kauai - DEPARTMENT OF WATER

Operations Division: Plant & Field

Total Hours for the Month

For the Period: January, 2015 to October, 2017

0

1,000

2,000

3,000

4,000

5,000

6,000

7,000

8,000

9,000

Regular Hours Worked Time Off (Leaves n Holiday) Overtime Hours TOTAL HOURS

Page 270

# of W/O's Job Reason Code Description

Work Orders by Job Reason Code for Selected Date Range09-Nov-2017

10/01/2016 10/31/2017to

LEAK-BOX 26 Meter Box Leak Repair

LEAK-CUST 2 Customer-Side Leak Repair

LEAK-MAIN 115 Mainline Leak Repair

LEAK-S/L 137 Service Lateral Leak Repair

26LEAK-BOX

2LEAK-CUST

115LEAK-MAIN

137LEAK-S/L

LEAK-BOX 9.3%LEAK-CUST 0.7%LEAK-MAIN 41.1%LEAK-S/L 48.9%

Total: 100.0%

Work Orders by Job Reason Code

0

2

4

6

8

10

12

14

16

10/2

016

11/2

016

12/2

016

1/20

17

2/20

17

3/20

17

4/20

17

5/20

17

6/20

17

7/20

17

8/20

17

9/20

17

10/2

017

LEAK-BOXLEAK-CUSTLEAK-MAINLEAK-S/L

Nu

mb

er

of

Leak R

ep

air

s

Number of Leak Repairs per Month

Page 271

Monthy Water Produced, Customer Meter Read and Waterloss Comparison For Calendar Year 2017

Jan-17 Feb-17 Mar-17 Apr-17 May-17 Jun-17 Jul-17 Aug-17 Sep-17 Oct-17 Nov-16 Dec-16 Total Year

Produced (Kgals.) 354,808 356,223 360,851 387,512 354,554 380,135 427,658 448,372 433,917 405,489 406,209 349,978 4,665,706

Customer Meter Read (Kgals.) 316,424 314,457 306,619 348,781 314,701 355,055 383,966 380,414 400,670 - 349,909 304,289 3,775,285

Waterloss (kgals.) 38,384 41,766 54,232 38,731 39,853 25,080 43,692 67,958 33,247 405,489 56,300 45,689 890,421

Waterloss (%) 10.8 11.7 15.0 10.0 11.2 6.6 10.2 15.2 7.7 100.0 13.9 13.1 19.1

Waterloss ($) 49,016 53,335 69,254 49,459 50,892 32,027 55,795 86,783 42,456 517,809 71,896 58,345 1,137,068

40

6,2

09

34

9,9

78

35

4,8

08

35

6,2

23

36

0,8

51

38

7,5

12

35

4,5

54

38

0,1

35

42

7,6

58

44

8,3

72

43

3,9

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MANAGER’S UPDATE November 22, 2017

Pursuant to Board Policy No. 3 CONTRACTS AWARDED/EXTENSION/AMENDMENTS: (1) FOURTH AMENDMENT TO PRITHIBI, LLC FOR CONTRACT NO. 618, SOLE SOURCE SS-2016-3 FOR THE ORACLE CUSTOMER CARE AND BILLING AND CLOUD SERVICE IMPLEMENTATION FOR THE TECHNICAL SUPPORT CONTRACT TIME EXTENSION OF 180 CALENDAR DAYS WITH NO ADDITIONAL FUNDING FUNDING: NO ADDITIONAL FUNDS REQUESTED Account No. 10-02-10-561-000 WU/IT/ADMIN/REPAIRS AND MAINTENANCE Account No. 10-02-10-540-010 WU/IT/ADMIN/PROFESSIONAL SERVICES Contract No. 618: Prithibi, LLC (NTP March 2016) $590,713.76

5% Contingency $29,536.00 Contract Total $590,713.76

First Amendment (NTP November 1, 2016) As-Needed Technical Support Services and ACH Enhancement $70,000.00 Second Amendment – March 29, 2017 (Phase II) $437,430.00 Third Amendment: Total contract compensation amount in amendment 2 stated $1,057,679.76 which is supposed to be $1,098,143.76 which has a difference of $40,464.00 (reporting for correction) $40,464.00 Technical Support (Account No. 10-02-10-561-000) (Time extension ending December 31, 2017) $30,000.00 Upgrade CC&B from V2.4.0.3.0 to V2.5.x.x.x.x (Account No. 10-02-10-540-010) $640,000.00

Fourth Amendment: 180 days’ time Extension pursuant to HAR§3‐122‐3 $0.00

Total Fourth Amendment $0.00

Contract Total to Date $1,808,607.76Total Certified Funds for Contract No. 618 $1,838,143.76

BACKGROUND: The DOW Oracle Customer Care & Billing (CC&B) system is currently hosted by Honolūlū Board of Water Supply (HBWS) through a Memorandum of Agreement (MOA) dated 10/1/2014. As presented,

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MANAGER’S UPDATE Re: Manager’s Update for October 2017 through November 2017 November 22, 2017 Page 2 of 8

discussed and approved by the Board on 10/23/14, the Department is pursuing its own CC&B independent from HBWS as allowed under Section 3.2 of the MOA “Right to Terminate the Agreement” for efficiency and permanence as either party has the right to terminate anytime with 180 days’ notice. To pursue this, the Department selected Prithibi, LLC through a Sole Source Procurement to fulfill the conversion and modification of existing Kauaʻi DOW data from HBWS because they were directly involved in the HBWS’ CC&B implementation. Their direct involvement of the HBWS’ CC&B project gives direct benefit to DOW because they are already familiar with the project that the department will be implementing. On October 3, 2016 the Department went Live with their own billing system (CC&B). On November 1, 2016 the Department executed the First Amendment for ACH Enablement and As-Needed Technical Support. The As-Needed Technical Support portion of the contract expires on June 30, 2017 this third amendment would extend the as-needed technical support portion till December 31, 2017. The third amendment will also correct the total compensation amount for Contract 618 Amendment 2. The total compensation amount of $1,057,679.76 was inadvertently misstated by $40,464.00 and the total compensation amount should have been stated as $1,098,143.76. The third amendment will also continue to allow compensation ($30,000) for daily monitoring of the nightly batch processes until IT staff can be properly trained to take on this responsibility. In addition, the third amendment will also incorporate the upgrade of CC&B from the current version of 2.4 to the most recent 2.5x version ($640,000.00). Currently the Department has a Professional Services posting, which expires on November 30, 2017, for Oracle Support As-Needed Technical Support. Pursuant to HAR § 3-122-3 the Department will extend the contract for 180 days which will give the Department time to review the submittals and contract out the As-Needed Technical Support. (2) FIFTH AMENDMENT TO OCEANIT LABORATORIES, INC. FOR CONTRACT NO. 543, JOB NO. 11-03, WP2020 MO-03 FOR THE LAND AND WELL ACQUISITION, Moloa'a AND WAIMEA, KAUA'I HAWAI'I WITH A CONTRACT TIME EXTENSION TO SEPTEMBER 30, 2018 WITH NO ADDITIONAL FUNDING FUNDING: NO ADDITIONAL FUNDS REQUESTED Account No. 30-20-00-605-158 BAB/Eng/Admin/Capital Outlay-Expansion/Capital Purchases Contract No. 543: Oceanit Laboratories, Inc. Executed August 23, 2011 $105,000.00 Contingency $0.00 First Amendment Executed April 20, 2012 $60,000.00 Second Amendment Executed June 27, 2014 $0.00 Third Amendment (contract time extension) Executed October 7, 2015 $0.00 Fourth Amendment (contract time extension) Executed October 28, 2016 $0.00

Total Funds Certified $165,000.00

Fifth Amendment:

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Modification to scope of work Contract Time Extension to September 30, 2018 $(3,722.00)

Total for Fifth Amendment $(3,722.00)

Total Funding Balance for Contract No. 543 $161,278.00 BACKGROUND: Project No. 11-03, WP2020 No. MO-03, Land and Well Acquisition, was created for the purposes of performing necessary engineering consultant services for land and well acquisition of several sites that have DOW equipment on them and/or have had projects involving DOW property in the past few years. One of the sites, Moloa‘a Well, included a feasibility report and easement routing analysis report to help DOW decide if they want to take over the well site from its current owner, who operates the existing well on a revocable permit with the State of Hawai‘i. As part of the Moloa‘a Well Feasibility Report, it was requested to expand the report to evaluate multiple scenarios of using the current water system for short term use by the DOW, based on what parts of the system could be conveyed to DOW. The DOW considers the Moloa‘a Well portion of the contract complete and does not intend to pursue the Moloa‘a well at this time. The remaining scope of work for the Moloaʻa Well site will be removed/modified and a credit to the DOW is included in the contract amendment. A separate site, Kekaha Booster Station, land acquisition will be changing due to negotiations with the land owner. After communicating with the land owner it was determined a grant of easement would be executed in lieu of performing a subdivision and obtaining the land in fee simple. Negotiation periods and unanticipated delays in other land acquisition sites caused the work to proceed at a pace slower than originally planned and resulting in the contract work extending beyond the contractual limit. It is the DOW staff’s opinion that Oceanit Laboratories, Inc. has made substantial/sufficient progress to the project. (3) THIRD AMENDMENT TO OKAHARA AND ASSOCIATES, INC. FOR CONTRACT NO. 557, FOR JOB NO. 11-07, WP2020 #KP-09, KŌLOA WELLS 16A AND 16B, SITE AND BUILDING IMPROVMENTS, MCC CHLORINATION FACILITIES FOR A CONTRACT TIME EXTENSION OF 180 CALENDAR DAYS WITH NO ADDITIONAL FUNDING FUNDING: NO ADDITIONAL FUNDS REQUESTED Account No. 10-20-00-604-138 WU/Eng Contract No. 557: Okahara and Associates, Inc. (Account No. 10-20-00-604-138 WU/Eng) NTP 9/18/2012: duration 270 calendar days, end date 6/15/2013 $181,447.00 10% Contingency $18,145.00 First Amendment to Contract 557: Executed 4/24/14 extending contract to 5/30/14. $0.00 Second Amendment to Contract 557: Executed 4/28/17 extending contract 180 Calendar Days $0.00

Total Funds Certified for Contract $199,592.00

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Third Amendment Addition of 180 Calendar Days for services during construction $0.00

Total for Third Amendment $0.00

Total Funding Balance for Contract No. 557 $199,592.00 BACKGROUND: The existing motor control center (MCC) and chlorination facilities at the Department’s Kōloa Wells “16-A”, “16B”, and “E” are in need of improvements which must be made to maintain reliable water service in the Kōloa-Po‘ipu water service area. This project will alleviate those issues through installation of a new well pump and control valve for Well 16B; discharge piping, disinfection system, new control building & MCC, new SCADA Systems for both Wells 16A & 16B, appurtenances for both wells including pressure transmitter, flow meter, chlorination system, chlorine analyzer, air compressor, metering & circulating pump, exhaust pump and new pavement. The project is entering the construction phase now. However, the design contract needs to be active to allow payment for Okahara and Associates, Inc. to review and respond to submittals made by the construction contractor. The Department is limited to a maximum of 180 calendar days per contract amendment; however the construction period is anticipated to take longer. Additional amendments to extend the contract are anticipated. (4) CONTRACT NO. 646, #GS-2018-1 AWARDED TO NIETHAMMER FAMILY LLC, DBA KING AUTO CENTER FOR THE FURNISHING AND DELIVERY OF ONE (1) SUV 4-DOOR 4-WHEEL DRIVE IN THE AMOUNT OF $39,491.92 FUNDING: Acct No. 10-21-00-604-999 WU/Const/Admin/Capital Outlay – R & R/Capital Purchases Funds Available for Acct No. 10-21-00-604-999 $45,000.00Contract No.646: Niethammer Family LLC, DBA King Auto Center $39,491.42

Total Funds Requested $39,491.42 ($39,491.42)

Total Funds Remaining $5,508.58 BACKGROUND: The subject bids were opened on October 4, 2017 and we received two (2) bids after initially receiving no responsible bidders after the first and second procurements earlier this year. The low bid for the vehicle was submitted by Niethammer Family LLC, DBA King Auto Center in the amount of $39,491.42. The SUV unit price of $39,491.42.00 is under budget of $45K. The second bid was submitted by Servco Pacific Inc. DBA Servco Auto Waipahu in the amount of $43,100.00. As noted, the budgeted amount for the vehicle was $45,000.00. The vehicles are specified to have common equipment besides the 4-wheel drive. The 4 wheel drive is necessary for CM Division staff to access remote areas during construction of our projects. For safety reasons, an amber light bar was

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added to the roof of the vehicle. This has been proven to be useful during construction of our projects when we are within the roadway, specifically at night. As stated during FY 17-18 budget process, the existing 2002 Ford Escape (CK 1759) vehicle has had many problems over the past few years but DOW mechanics have worked hard to maintain for DOW usage. The vehicle has been used daily since the hire of new inspector in June 2016 and problems continue. The vehicle has reached the 10 year milestone (14 years) and is over the 100,000 mile mark at 115,600 miles. The following problems exist with the vehicle: Rear window leaks and mold builds. The transmission has issues and it doesn’t go into drive in certain occasions so you have to play with the shift lever. The power steering looks to have a leak and fluid is added once a month. Engine oil leaks and fluids added once a month. Tires also will need to be replaced soon. This vehicle is used for carrying testing equipment and safety equipment when observing site construction. With the addition of new staff and the anticipated hiring of new staff, the vehicle will be necessary to adequately manage projects individually. The vehicle will be used to access various tank and well drilling sites that will have difficult access roads, thus 4-wheel drive capability will be required. DOW mechanics recommend replacement. Due to the above reasons, CK 1759 will be replaced at this time. WAIVER RELEASE & INDEMNITY APPLICATIONS:

Applicant TMK Location & Building permit Performance Bond Amount NONE

STAFF REPORTS - FY 16-17: PERSONNEL MATTERS November 9, 2017 RECRUITMENT AND POSITION ACTIONS Administration

1. Information and Education Specialist #2478. As of 11/9/2017, position description is being reviewed.

2. Procurement Specialist IV #2497. As of 11/9/2017, position description is being reviewed. 3. Senior Clerk #2479. As of 11/9/2017, completed interviews. Now working with the Department

of Human Resources (DHR) on filling the position. Construction Management Division

1. Civil Engineer III #2351. As of 11/9/2017, requested additional names from DHR. 2. Waterworks Inspector III #2355. On 10/26/2017, submitted classification review request for

approval. As of 11/9/2017, pending DHR’s review. Fiscal Division

1. Accountant II #2448. As of 11/9/2017, requested additional names from DHR.

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Operations Division

1. Pipefitter #2418. Conducted interviews on 11/8/2017. DOW to finalize selection. 2. Water Field Superintendent #2491. As of 11/9/2017, pending eligibles list. 3. Water Plants Superintendent #2490. As of 11/9/2017, pending eligibles list. 4. Water Plant Operator I #2414. As of 11/9/2017, pending eligibles list.

Recent Hires and Separations: None. Pursuant to Board Policy No. 24 CONVEYANCE OF WATER FACILITIES $2,321,010.00 11/22/2017 D.R. Horton-Schuler Homes, LLC TMK: 3-7-003:020 (onsite) Lihue $ 1,143,508.00 11/22/2017 D.R. Horton-Schuler Homes, LLC TMK: 3-7-003:020 (offsite) Lihue $ 724,400.00 11/22/2017 Island Self Storage, LLC TMK: 3-2-005:009 Lihue $ 17,140.00 11/22/2017 Grove Farm Company, Incorporated TMK: 3-8-002:001 Lihue $ 435,962.00

CUSTOMER CARE AND BILLING (CC&B) SYSTEM UPDATE: No update I.T. STRATEGIC PLAN UPDATE: No update AFFORDABLE HOUSING UPDATE: No significant activities. MANAGER’S GOALS UPDATE established July 28, 2017 for FY17-18

Goals/Objectives Success Measurements Desired Outcome Status Administration

Goal 1 Implement systems that will serve to reduce customer complaints.

1. Public inquiries requiring response.

Provide a response within 2 working days, if more detailed study is required supply an estimated timeline.

Meet expectations throughout the year. Division Heads will keep a record of public inquires and response time and submit it monthly to the Manager.

Goal 2 Ensure the health, safety and welfare of the Department employees and public. 1. Support the needs

of Department Divisions delivery of programs for

Insure adherence of the County wide safety program.

Actively participate on

No adverse activities throughout the year. Active DOW participation

Complaint letter received from HIOSH. Department responded to

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Goals/Objectives Success Measurements Desired Outcome Status health and safety for employees.

the County wide safety committee.

throughout the year. complaint, HIOSH closed complaint.

Goal 3 Improve Communications and Morale within the Department

Goal 4 Performance Audit

1. Assist the Board with the selection and procurement of an auditor and complete the audit.

Select and procure an Auditor by the end of the calendar year. Complete the performance audit by the end of the fiscal year.

The Board will have a performance audit that will allow the Department to make operational improvements.

Evaluating fiscal auditor’s contract to see if they can perform performance audit.

Operations Goal 1 Improve existing asset management program.

1. Assess existing asset management program.

Contract a consultant to assist the Department with the identification, acquisition and implementation of an asset management computer program that is compatible with DOW’s GIS application by the end of April 2018.

Asset management program will be in the progress of implementation.

Goal 2 Improve water system reliability and resiliency. 1. Improve hurricane

survivability of standby power generators.

Complete Preliminary Engineering Report and possibly complete design and begin construction by the end of June 2018.

Portable generators will be protected during hurricanes.

2. Improve pump motor control center reliability.

Continue and possibly complete design on replacing old MCCs by the end of June 2018.

Reliability of MCCs will be improved.

3. Assess existing preventative maintenance program.

Contract a consultant to evaluate and improve the current preventative maintenance program for the plant and distribution systems by the end of April 2018.

Development of an improved preventative maintenance plan.

Fiscal Goal 1 Ensure fiscal control and sustainability.

1. Use accounting program to develop annual budget.

Acquire and implement add-on program to Great Plains accounting software to assist with the budgeting process by the

Development of a more streamlined budgeting process.

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Goals/Objectives Success Measurements Desired Outcome Status end of January 2018.

2. Develop fair and reasonable water rates.

Complete current water rate study within the contracted time.

Department will have updated water service rates.

Engineering Goal 1 Oversee all engineering design work required for the Department.

1. Support the Engineering design needs of the other divisions.

Engineering Division shall lead and be responsible for all Department engineering design work.

Ensures quality control and standardization of projects.

Goal 2 Continue rehabilitation, replacement and expansion of water system 1. Timely

completion of projects.

Complete four (4) design projects before the end of June 2018.

Projects will be completed.

Construction Management Goal 1 Continue to improve construction management methods and expertise.

1. Upgrade project document management system.

Successfully implement construction document management program by the end of June 2018.

All construction projects will be using the electronic construction document management system.

Water Resources and Planning Goal 1 Implement a fair and reasonable method of determining system capacity and accounting for existing use.

1. Evaluate existing design flow standards.

Evaluate the need to modify the existing design flow standards. If modification is justified, begin the process of revising the Design Standards. Evaluation of design flow standards shall be completed by the end of February 2018.

Department will determine the validity of existing design flow standards.


Kirk Saiki, P.E. Manager and Chief Engineer Attachments: 2010 BAB Spend Down Report as of October 2017 KS/MJA Mgrrp/Manager’s Update (11-22-17):mja

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Documents

WEDNESDAY, NOVEMBER 22, 2017 - Water · 3. Manager’s Report No. 18–82 - Discussion and Possible Action on Water Plan 2020 Prioritization Methodology and Strategic Implementation