BOARD OF WATER SUPPLY
COUNTY OF MAUI
BUDGET WORKSHOP


Tuesday, May 21, 2002
2:00 p.m.
Volume I

Kahului Shopping Center
Kaahumanu Avenue
Kahului, Maui, Hawaii

Reported by:  Katherine Eismann, RDR, CRR, CSR #439

APPEARANCES
CHAIRPERSON:               PETER RICE
Vice Chairman:             MICHAEL NOBRIGA
Board Members:             KENT HIRANAGA
	                   GINNY PARSONS
                           JONATHAN STARR
                           MICHAEL VICTORINO

Acting Corp Counsel:       RICHARD MINITOYA
Director:                  DAVID CRADDICK
Deputy Director:           GEORGE TENGAN
Board Secretary:           FRAN NAGO
Engineering:               HERBERT KOGASAKA
Staff:                     ELLEN KRAFTSOW
                           HOLLY PERDIDO

(Tuesday, May 21, 2002, 2:03 p.m.)

CHAIRMAN PRICE:  Call to order our Budget
Workshop.  I'd like to acknowledge board members present, for
the record, Kent Hiranaga, Ginny Parsons, Jonathan Starr, Mike
Victorino, myself, Corp Counsel.
 Director David Craddick, would you introduce
members of the staff that are present?

MR. CRADDICK:  Deputy Director George Tengan, the
division heads, first of all, Holly Perdido, field operations,
Bobby Vida, engineering, Herb Kogasaka, treatment plant, Paul
Seitz, plant operations, Bryce Fukuyama, and Ellen Kraftsow
for planning and engineering, also I have Wendy Taomoto.  For
the treatment plant, we have Walt Hager.  And for personnel,
we have Cindy Grassa.  And the board secretary, Fran.  And
also, from support services, for the field operations, Mike
Cabral.

CHAIRMAN PRICE:  Okay.  For the board members
present, you all know that Mike Quinn has resigned.  We did
try.  We really wanted to keep him.  We tried to keep him, but
he was bound and determined to leave and laugh at us from the
outside.
 So, Mike had a lot to do with preparing the
budget, and he worked with Holly closely.  And you know Holly
from prior meetings, and I think she's got a pretty good grasp
of most of what was done and what was -- what concepts were
used in the preparation.
 Before we get into it, is there any public
testimony at this time?  Anyone?  Yes, sir.  Why don't you
come up and sit next to Fran there.  Give us your name.

MR. VARNS:  Do I need a mike here?

CHAIRMAN PRICE:  Grab David's mike right there.

MR. VARNS:  Okay.  Thank you.  Yes, my name is
Nathan Varns.  I am coordinator with Tri-Isle Resource
Conservation and Development Council.  And I am here --
actually, Jack Peterson, coordinator with the Maui Invasive
Species Committee was going to speak, but he hasn't shown up
yet, so I will try to pinch hit for him.
 This is in regard to fund for the miconia control
effort during the next year.  We want to first state how much
we appreciate what the Water Board has done in the past,
especially last year's contribution of $200,000 to the miconia
control effort and request that you look favorably upon
further funding for this effort.
 I wanted to let you know, briefly, that we have
quite a few partners in this, state, federal, and county, and
private.  They include the National Park Service, the U.S.
Fish & Wildlife Service, the National Fish & Wildlife
Foundation, the Forest Service, the University of Hawaii, the
Hawaii Community Foundation and the Nature Conservancy, along
with RC & D.
 We have a report ready for the first quarter,
which we will get to you soon, showing what the current status
of the miconia control effort is and how we expect it to
proceed from now on.
 One thing I wanted to state today, is that it is a
very extensive problem.  But, in the past year, we have the
best information -- have gained the best information on the
extent of it through the GIS recognizance -- helicopter
recognizance.  So, we know much better where the outbreaks are
and where we need to concentrate our efforts.
 And a lot of the time has gone into the helicopter
recognizance for this.  But, it's a very big problem.  We have
about 18 full-time crew people now including the emergency
environmental work force people, who have been in the effort,
and plus our Hana crew, who have been working on the core area
in Hana.  So, I guess this morning we spoke also to the County
Counsel.
 What I would like to emphasize is that it is going
to be a long-term battle.  And eradication may be, you know,
an ultimate goal at some point.  But, at this point, we really
want to get a handle on controlling it.  And we think we have
got a good handle on it now because of the gain -- the better
knowledge that we have of the extent of the infestation.
 So, I would be happy to entertain any questions
about the effort.  And, like I said, we will supply you with a
quarterly report on the most recent progress.

CHAIRMAN PRICE:  Any questions of Nathan? Mr. Starr.

MR. STARR:  Yeah, are you getting any funding from
that Emergency Work Force Program?

MR. VARNS:  Yeah, I am not -- I am not up to speed
on the specifics of this, but we have, I think, somewhere
between seven and ten of those workers that have been working
on that effort.  So, they are still in the system.  They are
working mostly in the core area in Hana.

CHAIRMAN PRICE:  Any other questions?  Thanks, Nathan.

MR. VARNS:  Thank you.

CHAIRMAN PRICE:  Okay.  All right.  As we go
through this Budget Workshop, let's do this section by
section.  So, we are going to start with the income section.
If you look at the big packet that you got, it's page three.
It says Fiscal Year 2003, Operating Budget Receipts.
And Mr. Craddick.

MR. CRADDICK:  Could we give a little overview
first before we go into the detail of it?

CHAIRMAN PRICE:  Sure.

MR. CRADDICK:  Okay.  Thank you.  Okay.  I'd like
to provide a little overview of the budgeting process here.
 And basically, before you, you have two budgets,
an operating budget and a capital improvement budget.  The
capital improvement budget is comprised of two parts, system
expansion and system replacement.
 And there are, in addition to system expansion,
which is the water system development fee, some portions of
fees that are no longer in existence, namely, the source fee
and the storage.  And that's the Central Maui source fee.
That fund is restricted only to Central Maui source projects.
And the storage fund, which is restricted to storage projects
system-wide.
 There are some monies remaining, a couple of bond
issues, and then there is a developer fund.  That particular
fund is something that the people paid into for a specific
project, and until that project is done, that money remains in
that fund.
 And the numbers that you see before you are
basically estimates project -- estimates from last year's
projection or other information that we have available to us.
 And I will turn it over to Holly here for the
operations portion of the budget.  Thank you.

MS. PERDIDO:  Okay.  One of the primary goals that
we had, when we first started our budget process, was to
really look through all our expense accounts, and try to
reduce the costs, and come up with an estimate that we thought
was our best guess estimate for the next fiscal year.
 As a result, our fiscal year projected expenses
are going to be about 4.3 percent less than the current year's
fiscal year's budget.  Do you want -- what I will try to do
is -- I am kind of summarizing the two variance analysis that
you received.  One was April 25th.  The other was at a later
date, which I don't have a date on it.  I think Mike handed it
out at the last board meeting.
 He projected water sales actually comprise about
96 -- 94 to 96 percent of our total operating revenue.  What
we did, is we looked at the water consumption at the time, and
the first nine months of water consumption, for this fiscal
year, is decreased by one percent compared to the prior fiscal
year.
 Currently, and I just ran it again, and the sales
are still way down.  And they would be down from what we are
projecting for this fiscal year also.  I think one of the main
problems, as we all know, is the significantly higher level of
rainfall that we have had this past fiscal year.
 We projected sales to be 28.4 million for next
year.  One of the reasons, our water rates, we will not be
having an increase this year, whereas the last five years, we
have had about a five percent increase, per year, that we have
been able to utilize or has been each year.
 One of the increases that we do see is our new
services, but it's not very significant.  And the majority --
it's about 300,000 that we estimate annually that we will have
for new services.
 One of the other items, that was brought to our
attention, was interest income.  The interest income is
projected to be about 900,000, and it is short of what our
fiscal year ending will be.  I spoke to Wayne Fujita, who is
in the Finance Department.  He's the treasurer downstairs.
And he said the rate of return right now is about 2.3 to
2.5 percent.
 So, what we did, is we projected, based on a
900,000 -- well, what -- our cash balance is about 28 million,
earning a 3 percent return.  2.3 to three percent return and
estimating 900, but it's a lower estimate.
 Payroll, I guess we can get into payroll as we
come to it.

CHAIRMAN PRICE:  Okay.  Why don't we just stay
with the revenue side, now that you have gone over -- why
don't you go over that, each section first, and then we will
discuss it.
 So, at this point, any questions from board
members on the income side?  Mr. Starr.

MR. STARR:  Yeah, as far as the interest income,
what is the balance that you are looking -- you are looking at
in terms of invested, and what is the investment policy that
we have been following?  Is that tied to the county or is that
our own policy?

MS. PERDIDO:  The investment -- our investments
are tied directly with the county.  They have control of
investing our funds.  Basically, I have a current balance.  I
think our balance is -- I looked them up before I came over,
and they are about 28 million right now.
 Now, that's less with the encumbrances and the
accounts payable.  So, we are looking at about -- we were
estimating 28 million.  Now, you can realize, the balances
change daily.  You know, these are estimates that we might
have done two months ago, but you know how they always change
and are always -- the whole budget is actually always changing
as you know.  So, we actually have no control over the
investments.

CHAIRMAN PRICE:  Kent.

MR. HIRANAGA:  I wanted clarification.  What does
"we will not realize the effect of the increase in water rates
which has been about five percent annually over the past five
years."

MS. PERDIDO:  I will let Dave answer that question.

MR. CRADDICK:  Kent, is your mike turned on?  Your
mike?  It's in the middle there up at the top.

MS. PERDIDO:  Basically, the last five years we
have had a rate increase, and we were getting approximately
about a five percent increase in each year.  So, our rates now
will not be -- well, we will have to go back out for a rate
increase in the future.

MR. HIRANAGA:  Could you also explain this
paragraph of interest income?  The first paragraph of interest
income?

MS. PERDIDO:  Which one was it?  Was it the second
copy or the first copy you are looking at?

MR. HIRANAGA:  I don't know.  They are not numbered.

MS. PERDIDO:  That Mike did.  Okay.  Basically, if
you look at our budget, interest income.  We projected, for
this fiscal year, $1.1 million, or that was our budget for
fiscal year 2002.
 Our estimate, at this point of time, which was --
I think February this balance is.  It was coming out about
900,000.  That's what we were estimating with the annualized
amount.  We are projecting that interest for next fiscal year
will fall about the same amount, 900,000.
 And then I was telling you about the cash balance
portfolio that is with the county.  That's about the
2.3 percent is all we get on our investments currently.  And
basically, like I was saying, about 28.7 million is what our
cash balance estimate was when we projected the interest income.
 Now, all the interest income doesn't -- like two
accounts do not go to here, interest income, and those are the
restricted accounts, the DBCP -- not DBCP.  I am sorry.  The
'98 bond fund money goes directly into the '98 bond fund and
the water system development fee stays with its own account,
not with the general operating account.

CHAIRMAN PRICE:  Okay.  So --

MR. HIRANAGA:  Thank you.

CHAIRMAN PRICE:  Kent, do you have anything else?

MR. HIRANAGA:  Thank you, no.

CHAIRMAN PRICE:  I want to get this clear.  So, we
are talking about our experience in sales -- in water sales is
down about one percent.  Right?

MS. PERDIDO:  Consumption.

CHAIRMAN PRICE:  But what we are saying, when we
are budgeting for next year, is that we are going to be
roughly no change.

MS. PERDIDO:  (Nods head.)

CHAIRMAN PRICE:  You are budgeting 28.4.  You are
projecting -- well, it's the slightly more, actually, than
your projected estimate, but it's virtually at this year's
budget.  So, we are saying the one percent is basically
negligible in terms of reduction in sales, and we are going to
pick that up.  Right?
 I want to be clear what our -- I mean, our budget
is just -- is what it costs to execute a certain plan, and
this plan is that we are going to have water sales continue to
be at this level or more.

(Board member Michael Nobriga entered the hearing room.)

CHAIRMAN PRICE:  Right?

MR. CRADDICK:  That's correct.

CHAIRMAN PRICE:  I want to understand that concept.
We are just in the beginning.

MR. NOBRIGA:  Yeah, I thought so.  You guys change everything.

CHAIRMAN PRICE:  For board members, I don't want
to go through this budget and say here is the budget.  We like
the numbers.  We don't like it.  That's not the purpose of the
budget.  The budget is what it costs to execute a plan.
 And if you don't have a plan, we don't agree on
what the plan is, then this budget is meaningless.  So, in
terms of the revenue, what I want us to have an understanding
is that our sales is going to continue next year at this
year's level or more.
 So, to the extent that we may have savings from
conservation or savings from the fact that people are just not
in need of more of our water because of the rainfall, we are
going to have sales that equal at least this year.  It's our
goal, right?

MR. CRADDICK:  If there is not more rainfall than
there was this year, or you don't get heavy reduction in usage
because of some other reason.

CHAIRMAN PRICE:  Mr. Starr.

MR. STARR:  I mean, I think that's really a number
that we don't know, because it depends, you know, as we found
out on rainfall.  However, we know that our user base is
increasing, so the natural trend would be for it to increase.
 And where, when we went -- went from a very, very
dry year to a wet year, I think we already took the hit of
that decrease.  I don't think if it gets -- continues wet,
it's going to keep decreasing.  But I think the trend is going
to tend to be upward.  Upward, and if it does get dry again,
it will be very upward.

CHAIRMAN PRICE:  So, everybody is happy with this number.

MR. STARR:  Yeah, it's a conservative number, I think.

CHAIRMAN PRICE:  Conservative.  Other numbers, I
think, are small numbers.  You know, the fire protection
number is up substantially over fiscal 2001 actual.

MR. STARR:  What is that?

MS. PERDIDO:  The fire protection is for private
and public fire protection.  We get an amount from the county
for the public fire protection, for the hydrants and stuff, a
set charge, and the private is an annual fee that we charge
the private consumers who have fire lines.  And then if they
have consumption on those fire lines, we have an amount that
they are charged on that, for the consumption for the fire
lines.

CHAIRMAN PRICE:  So, the large increase means
what?  The increase in $400,000 over the 2001 actual of 210 is
almost double.

MR. STARR:  Was that negotiated?

MR. CRADDICK:  I am going to make the assumption
that we are doing a better job of reading the fire line meters
and actually billing for the consumption, because the billing
rate is 35 times the normal rate for any usage on the fire
line that is not directly related to a fire.

CHAIRMAN PRICE:  Okay.  I am not arguing with you.
Okay.  Interest income?  The budget proposes that we use the
same number as the estimated actual for this year.  No reason
to think it's going to be any different?
 But what you have got to use, Holly, is the
average daily balance.  You can't look at today's balance.
They got to be able to give you an average dally balance.

MS. PERDIDO:  And that's what we based it on.

CHAIRMAN PRICE:  That's what you based it on when you did that?

MS. PERDIDO:  Yeah.

CHAIRMAN PRICE:  So everybody is happy with that. Mr. Starr.

MR. STARR:  Yeah, that's based on keeping a
28 million-dollar average balance or so.  You know, I guess if
we -- at three percent, that's about what it works out to.
 Is there -- you know, I see that we are paying a
lot of debt service, you know, whether it's five million or
seven or eight million.  Is there a reason to keep so much
cash balance and pay -- when we are paying much higher -- much
higher interest on our debt than we are receiving as interest
on our savings?

CHAIRMAN PRICE:  Cash.

MR. STARR:  Yes.

MR. CRADDICK:  Okay.  We have a number of CIP
projects that are ready to go fairly quickly.  To have that,
we are going to have to have the money to pay that.  We are
not going to be able to issue a bond later on down the road in
order to say that we have the money for that.  We have to have
the money at the time the contract is let out.
 Now, that money is all not going to get spent on
the first day of the contract.  It gets paid -- spread out
over the year.  And this particular number, using that amount
of cash balance, is probably -- well, it's certainly not as
conservative as we are estimating our revenues to be.  So, but
even if you take that number, and you cut it in half, it's not
really -- you know, 400,000, I don't believe, is a significant
number.  That was the estimate that -- that they made on what
the interest would be, because you have got a couple of
factors there.  What is the interest and what is the cash
balance?
 And it's probably just not as conservative as the
revenues were estimated to be at.  Probably, you know, maybe
should be a little bit lower, because I know our cash balances
probably will drop a little bit quicker than they did in the
last year.  Because I know that there are a number of projects
that are ready to go out in the first month or two of the new
year, and this is for construction not design funds.

CHAIRMAN PRICE:  I think we should take -- I think
Mr. Starr's question deserves a little more study, and we
ought to take another look at it just to make sure we are
making the right -- just make a note, Holly.  And we will shut
off our cellphones.
 Holly, let's make a note to review those, that
calculation, to make sure that's the right fiscal policy.
Okay?
 Anything else on the income receipt section?
 Okay.  Let's move into payroll, my most favorite
subject.  And I want to note, I talked to Holly about this
already.  Last year, when we approved the budget, we approved
it with the condition that the unhired -- what do we call it?
 The vacancies would be created via another line
item in the budget, so that we could monitor the actual
payroll for those people on the payroll versus those who are
in the vacancy category.  And we have not, that I have seen,
done that.
 And my question to all of you would be that in my
limited few years here, we have had X number of vacancies.
And while you may have hired one person, we had another
person's job become vacant.  So, what happens is that 27 or so
positions continue to be vacant.  And I understand that if we
don't budget for them, we can't solicit for them and try to
fill them.  But, in this analysis, we say we are going to hire
them all this year, and I don't know if that's realistic or
not.  That's just -- I don't know.

MR. CRADDICK:  Are you asking a question?

CHAIRMAN PRICE:  Yeah, the recommendation is to
budget for all these, and then this schedule kind of tells me
that they are all going to be hired in 2003, and that flies in
the face of reality for the last two years.
 Why do you guys think that all these 27 vacancies
are going to be hired this year?

MS. PERDIDO:  Peter, have you got the new schedule?

MS. NAGO:  There was a schedule passed out to
everyone at the beginning of the meeting.

MR. CRADDICK:  That is what he was just holding up, I thought.

CHAIRMAN PRICE:  No, I was holding up the one I
got in the prior meeting.

MR. STARR:  This one?

MS. NAGO:  Yes.

MR. HIRANAGA:  I have a question.

CHAIRMAN PRICE:  Yes, Kent.

MR. HIRANAGA:  Looking at the printout that you
provided us today, I note that the engineering program manager
retired in December of '98.  Your note says currently filled
via temporary assignment.
 Does that mean that a permanent employee has been
assigned to this position temporarily, and, if so, how
temporary is it?  How long has he been assigned for?

MR. CRADDICK:  For approximately four years.

MR. HIRANAGA:  So --

MR. CRADDICK:  This will be three-and-a-half
years.  At the end of this year will be four years.

MR. HIRANAGA:  So, he's been temporarily assigned
there for four years?  Why is it temporary?

MR. CRADDICK:  All I can say is that the person
that is temporarily assigned does not want the position
full-time.

MR. HIRANAGA:  So, wouldn't it appear then that
you should find the person that wants the position?

MR. CRADDICK:  Yes, we are trying to do that.

MR. HIRANAGA:  And, so, the person that currently
fills this position, on a temporary assignment, do you
consider his position vacant also?

MR. CRADDICK:  Well, there is another person
temporarily filling in that position, but then the final
bottom position is vacant.

MR. HIRANAGA:  And what position is that?

MR. CRADDICK:  I believe it's engineering IV, CE IV.

MR. HIRANAGA:  Do you have someone that may accept
that position?

MR. CRADDICK:  Well, we couldn't fill it, if the
other two are going to backup, if we fill the top spot.

MR. HIRANAGA:  I am confused then.  This civil
engineering IV position you have Takeno, transfer PW.  What
does that mean?

MR. CRADDICK:  Well, we had somebody in the
position, and they left and went to work for Public Works.
And we got another list of people, and that person is going to
start July 1.

MR. HIRANAGA:  So, there is another civil
engineering IV position that is vacant?

MR. CRADDICK:  Yes.

MR. HIRANAGA:  So, where is that one listed?

MR. CRADDICK:  What was your question?

MR. HIRANAGA:  Why is it not listed as being vacant?

MR. CRADDICK:  It is vacant.

MR. HIRANAGA:  Well, you said there is another
one.  You said the engineering program manager's position is
filled by temporary assignment, and someone is temporarily
filling his position.

MR. CRADDICK:  We had -- another one left about a
week and a half ago, and I think, as of the time that this was
done, I guess -- I don't know.  It says May 21, but I guess
it's not on here.
 Okay.  I am sorry.  It is on here.  It's the civil
engineer III.  And, so, what we would have to do is reallocate
that to a IV at the time they backup.

MR. HIRANAGA:  I guess it would be helpful for me
if you provided us a list of all the engineering positions in
the engineering department and who actually fills each
position currently.

MS. PERDIDO:  It's in last year's budget
currently, in the back of there.

MR. HIRANAGA:  What page is that?

MS. GRASA:  If you look in the back, you have
table four.

CHAIRMAN PRICE:  Three, engineering.  So, this new
schedule, it should be titled funded vacancies by division.
This one.

MS. GRASA:  Right.

CHAIRMAN PRICE:  And this is a comparison to last
year in May, is that what it is?

MS. GRASA:  On the left-hand side is last year's.

CHAIRMAN PRICE:  So, actually, now we have more
funded vacancies than last year, according to your schedule.

MS. GRASA:  I didn't count them out, but --

CHAIRMAN PRICE:  I am looking at the dollar
amount.  I am sure the --

MS. GRASA:  Yes.

CHAIRMAN PRICE:  I am sure the difference is not
in raises.  They would like that to be their raises, but --

MS. GRASA:  There is some.  Mike's position, our
fiscal officer, that's in there.  It wasn't in there last
year, and that's a big chunk.  We also funded the -- in the
director's office, the training officer position.  There's
some funding in there, and that went unfunded last year.

CHAIRMAN PRICE:  Okay.  So, I guess my point --
well, while Kent's working on this chart, I will take over for
a minute.
 My point is that I would like to see us have the
funded vacancies as a separate line item, because that way, we
can compare actual payroll costs to budget, which I think is
important, and we can also monitor how quickly we fill those
vacant positions or not.
 Okay.  I am not suggesting that we don't budget
for them, because then you wouldn't be able to go after
filling those positions, as I understand the rules.  But, just
lumping them in there is not -- it's kind of misleading.
 Okay.  And we can look at the benefits associated
with those also.  And what we did two years ago, instead of
budgeting for that whole 27 or however many positions they
were, we said, realistically, how quickly are we going to hire
those people?  So, if you know it's, you know, May 21, and you
haven't started to solicit for that position yet, and after
you go through the process, it's really going to be October,
then there is no sense putting in full pay.
 We should adjust it based on when we really think
we would like to have them on board.  So, that's the other
thing that should be included in that funded vacancies line
item.
Mr. Starr.

MR. STARR:  I agree with you.  I think that what
happens, when we do it this way, is it creates a slush fund,
so that when we look later on and see what the discrepancy
between budget and actual is, that there's not much
difference.  But, meanwhile, we budgeted all these vacant
positions.  There's actually a lot of increase over what
should have been budgeted.

CHAIRMAN PRICE:  You are right, but that -- by
putting them in the budget presupposes that we need those
positions.

MR. STARR:  Yeah.

CHAIRMAN PRICE:  So, your question is -- and that
may be an entirely different discussion.  Is everybody on this
funded vacancies list needed by your division chiefs?  Yes?
You nod your heads yes.

MR. CRADDICK:  That's correct.  That's correct.

MR. STARR:  Most of them.

CHAIRMAN PRICE:  Because that's the theory.
Otherwise, you are right.  We wouldn't put that money in the
budget.

MR. CRADDICK:  If you look on page four, there is
a line item down there at the bottom for board adjustment.
So, how you want to handle that is up to you.

CHAIRMAN PRICE:  Page four what?

MR. CRADDICK:  Page four of the budget.

CHAIRMAN PRICE:  For an adjustment.  No, I want funded vacancies.

MR. CRADDICK:  Well, we can change that name down
at the bottom.

CHAIRMAN PRICE:  Just put in there funded
vacancies, and then the total is total.  And actual payroll --
when we do our financials, actual payroll equals actual
payroll.  And then under funded vacancies, if no one is hired
in the next month, there is a zero, and there is a budget
there, right?

MR. CRADDICK:  Right.

CHAIRMAN PRICE:  And as Jonathan says, at year
end, if for some reason we don't hire any of those funded
vacancies, there is going to be a positive variance to the
tune of that entire month.

MR. CRADDICK:  That's right.

CHAIRMAN PRICE:  That's what I would like to see.

MR. STARR:  Yeah, looking at last year or this
year, we budgeted 7.285 million, and we estimate that we are
going to spend 6.689 on payroll.  And obviously, that's what's
taking place.  There's a minus nine percent variance.  But
it's not a real -- it's not real.

CHAIRMAN PRICE:  No.

MR. STARR:  Because it was never a real
expectation that all those positions would get filled for the
entire year.

CHAIRMAN PRICE:  We did make -- we did make
assumptions last year that some of those positions would be
filled throughout the coming year.  And you still need to do
that.  You need to get with the division heads and what's
realistic is realistic.
 But then, you know, the other thing, for the
division heads, is if we have had the same job opening for
three years now, and we are not able to fill it, we need to
talk about why.  Because, again, we are going on the
assumption you need that help.  You are doing without.
 But if after three years, we haven't filled that
position, what's the reason?  I mean, I don't know, but we
ought to -- that's something we need to address also.

MR. STARR:  While we are talking about the payroll
issue, I am looking at -- I wish all of these things had some
kind of coded-color numbers or something.  But, it's on the
front sheet, the operating budget summary.  And, you know, we
are looking at --

MR. CRADDICK:  What page number?

MR. STARR:  There is no page number.

CHAIRMAN PRICE:  It's the cover page on this one
with the one financial with the two-page memo behind it.

MR. CRADDICK:  I got it.

MR. STARR:  And looking at the payroll item, I
mean, we are seeing a 17 percent increase from what we are
estimated to spend this year to what we are budgeting to spend
next year.

CHAIRMAN PRICE:  Part of that is the unfilled vacancies.

MR. STARR:  Yeah, I mean if it's not, I would
certainly have a problem with that 17 percent increase one.

CHAIRMAN PRICE:  And that's a very good point.
See, by lumping them in there, we don't know what the real
increase in the payroll is.  If you take them out, and you put
them on a line right under payroll, and you put payroll,
unfilled vacancies, then we can look at the real increase that
is going to happen in payroll.
 I mean, we can compare apples to apples.  So,
that's another reason why you should do that.

MR. CRADDICK:  There's -- in that 17 percent,
there was increases for both HGEA, UPW.  And one thing that is
not in here, that is the only way the division heads will get
an increase this year, is through a bonus program that the
county has not yet completed.  But when they complete that,
that will be an issue that we will have to bring up to the
board at that time.  And that's not funded in here at all yet.

CHAIRMAN PRICE:  Okay.  So, you might enlighten
the board members by telling them what bargaining unit
increases represent in this.

MR. CRADDICK:  The UPW was five percent.

MS. GRASA:  Three percent, and in the upcoming,
in July, HGA goes up 5 percent, and that represents probably
like 70 percent of our staff.  And then we got UPW with the
increase, and I think it's three percent.  I am not sure, in
July, and then they have another increase in January, which we
are kind of undecided.  It's like two or three percent.

CHAIRMAN PRICE:  Those bargaining unit people who
are HGA are getting five percent in July.  Those bargaining
unit people who are UPW are getting three and --

MS. GRASA:  Two.

CHAIRMAN PRICE:  -- two.  Okay.  That's payroll
increase.  And what about benefits?

MS. GRASA:  No, those don't.

CHAIRMAN PRICE:  No change in benefits?

MS. GRASA:  No change in benefits.

MR. STARR:  I understand that there was an
increase that was in lieu of a get-back on vacation time.  Who
was that with?

MS. GRASA:  Well, new hires that were hired after
or on July 1, 2001, instead of getting 21 days vacation and 21
days sick leave, they only have 12 days of sick leave -- or
ten days of vacation and 12 days of sick leave.

MR. STARR:  But there was a --

MS. GRASA:  But nobody had to give anything back.

MR. STARR:  But they got a very large increase in
that year to make up for that.

MS. GRASA:  No, they didn't get anything.

MR. STARR:  No?

CHAIRMAN PRICE:  Okay.  So --

MR. CRADDICK:  I will tell you one thing from that
is we are having a lot harder time recruiting now because of
that.  Because now I guess you find the true reason people are
coming to work for the county.  So --

CHAIRMAN PRICE:  Is what?  That you got 400 days
of vacation a year or something?

MR. CRADDICK:  Well, not 400, but I guess more
than you get in the private sector, and especially in the
engineering.  They are bringing that up.  Engineering recruits
that we try to get in actually bring that up, and --

CHAIRMAN PRICE:  Well, that's why I think we have
to have a dialog with the division chiefs.  If we have got --
again, we are operating under the premise that you need these
positions.  We have kept them in there.
 And if we are still not able to hire for that
position, whatever you think the reason is, we ought to have a
discussion and make an adjustment.  Okay?  Or else we have a
discussion and say I really don't need it, blah, blah, blah,
whatever.  I would rather see this.
 But, let's have that discussion.  And the other
discussion, I mean, if the division chiefs aren't bargaining
unit employees, and you are telling me that their increase in
pay is dependent upon a bonus system that is county?

MR. CRADDICK:  Not in place at this time.

CHAIRMAN PRICE:  And why are they under -- why is
their increase dependent upon some county program versus our
budget?

MR. CRADDICK:  That's the way the state set it up.
You have to have a program set up.  I have told the employees
that ours is going to be based on their ability to reduce
energy costs in each of their divisions.  And each of them has
submitted something to me.
 But until we get the county guidelines, we can't
fit what they are supposed to do into those guidelines to get
measurable criteria for the -- to base the bonus on.  And the
bonus can be up to five percent of their base pay.

CHAIRMAN PRICE:  Kent, I want to go back to you.

MR. HIRANAGA:  Looking at this organizational
chart, on page three of the 2002 fiscal budget, you are saying
that the engineering program manager is currently filled via
temporary assignment for the past four years, and that the
individual that is filling this position, what is his
permanent position?  Official position?

MR. CRADDICK:  The land agent engineering, special
studies engineer, engineer VII, CE VII, or VI, rather.  I take
that back.

MR. HIRANAGA:  That's a civil engineering VI?

MR. CRADDICK:  Yes.

MR. HIRANAGA:  And who is filling his position temporarily?

MR. CRADDICK:  Wendy, civil engineer IV.

MR. HIRANAGA:  Under land agent?

MS. GRASA:  Yes.

MR. HIRANAGA:  And who is filling her position temporarily?

MR. CRADDICK:  No one.

MR. HIRANAGA:  That CE IV is vacant?

MR. CRADDICK:  Yes, yes.

MR. HIRANAGA:  And is that the CE IV that is on this sheet here?

MR. CRADDICK:  No.  That position is not being
shown vacant, because we can't fill it.  We don't show the
position as vacant if we can't fill it.

MR. HIRANAGA:  So, the actual vacancy is the program director?

MR. CRADDICK:  Yes.  That's what's shown as  vacant.

CHAIRMAN PRICE:  So, that means you want to take it off the chart?

MR. CRADDICK:  No.

MR. HIRANAGA:  That's a different CE position?

MR. CRADDICK:  That's correct.

MR. HIRANAGA:  That's in which district?  The CE
position you are showing vacant?

MR. CRADDICK:  There's in district one that is
vacant.  Actually, two that are vacant there, two positions at
CE III and the CE IV.

MR. HIRANAGA:  And the engineer support tech,
under what department?

MR. CRADDICK:  Okay.  That is under land use
computer control, engineering support tech, and that one also
is just within the last month.

MR. HIRANAGA:  So, this position of engineering
program manager has been temporarily filled for four years by
an individual that does not want the permanent assignment?

MR. CRADDICK:  Yes.

MR. HIRANAGA:  It would appear to me that we
really need to focus on policing this, filling the position
permanent.  This appears to be a top position in the division.

MR. CRADDICK:  Yes, it was a board item last year,
and the board chose not to do that, because I had requested up
to 15,000-dollars to help recruit, and they felt that that was
too much money.
 But, you know, we didn't intend to spend that
much.  We just needed that much in the event it cost -- the
worst possible case.  But the names that I am getting, I want
people that have a proven track record for the job, not ones
that are coming in and experimenting for the job.
 And in order to get ones with a proven track
record, they are probably already working.  They are not
unemployed looking for a job.  We are talking with one here in
the state.  I, myself, don't know whether we will find one in
the state.
 We do not advertise outside the state, because of
the employment requirements, but we can advertise for people
who would be interested in the position and would be willing
to move here, if a position opened up, but we have to be able
to find those people first.

MR. HIRANAGA:  Do you feel the funding level is
competitive for that position?

MR. CRADDICK:  Well, let's put it this way.  If
that -- it's not enough to entice any of our current employees
to take the position, let's put it that way, because it is so
close to the CE VIs.

MR. HIRANAGA:  Well, personally, I feel if you
feel that the current funding is not attractive enough to
enlist a qualified individual, personally you should approach
the board for a --

MR. CRADDICK:  You can't do anything about it.
There is nothing you can do about it.  It's set by the
position ranking EM-7.  It's a civil service position.

MR. HIRANAGA:  Couldn't you have the position
rewritten and try to have it rejustified?  Right?

MR. CRADDICK:  That's actually what I am going to
try and do, so that you don't have to be an engineer to take
the position.  Because I believe there's probably qualified
people in the military that probably would be willing to take
the position, that kind of haven't had to get their license in
order to manage that.

MR. HIRANAGA:  So, one of your objectives is to
redescribe the position, so that the pay fits the
responsibilities, so that you will be able to fill this
position in the future?

MR. CRADDICK:  Yes.

MR. HIRANAGA:  Thank you.

CHAIRMAN PRICE:  And I'd like to make sure
everybody understands.  Last year, when we talked about using
the recruiter, the problem was the recruiter wanted to be paid
up front.

MR. CRADDICK:  No.

CHAIRMAN PRICE:  Yes, and the traditional
recruiter gets paid as a percentage of the salary of the
person you hire, so, you don't pay anything up front.  You --
you engage the recruiter, they send you candidates, and if you
never hire them, you pay nothing.

MR. CRADDICK:  They weren't paid up front.  It
was -- it would be by a contract, and there would be hourly
charges for things.  The maximum was 15,000.  They weren't --
they didn't get 15,000, win, lose, or draw, no matter how much
time they spent on it.

CHAIRMAN PRICE:  Mr. Victorino, did you have your
hand up before?

MR. VICTORINO:  No.

CHAIRMAN PRICE:  Anything more on payroll?  Okay.
Let's move on to the next category, materials and supplies.
Is that a sigh of relief over there guys?  You are going to
create a separate line.

MS. PERDIDO:  Yes.

MR. CRADDICK:  Yes, with that, with that
900,000-dollar amount?

CHAIRMAN PRICE:  Pardon?

MR. CRADDICK:  With that 900,000-dollar amount there?

CHAIRMAN PRICE:  No, whatever -- yeah, whatever
the amount of unfilled vacancies is and then benefits.

MR. CRADDICK:  Okay.  Yes, there's changes almost daily.

CHAIRMAN PRICE:  How can it change daily?

MR. CRADDICK:  Well, like I said, we have got
people coming to work July 1.  This number is going to change.

CHAIRMAN PRICE:  All right.  Well, those people
are considered hired.  If they have been offered a job, and
they have accepted it, and they are going to come to work on
July 1, they are in the ranks of hired people.  They are not
unfilled vacancies.

MR. CRADDICK:  I also know that we got the
pipefitter helper list yesterday?  Yesterday.  And those -- a
number of those may be filled also.

CHAIRMAN PRICE:  This isn't black or white.  If
you remember, we have been doing this for two years.  We have
been making estimates of when they are going to come on board.
So, if we have got a list, and we figure they are going to
come on board by July, we put them in the ranks of the hired.
If we figure they are going to come on board later, we adjust
it accordingly.

MR. CRADDICK:  Okay.

CHAIRMAN PRICE:  Okay.  So, if we say that a third
of these people are going to come on by December, when we get
our December financial in January, we are going to see that
those people were indeed hired, and we are going to be happy.
That's another reason why we monitor it like that.

MR. CRADDICK:  Okay.  This --

CHAIRMAN PRICE:  And vice-versa, if budget
positions fall out, we are going to see a positive variance in
the main salary line, and we are going to ask the question,
and you are going to tell us so and so resigned, so and so
retired, so and so did this.

MR. CRADDICK:  So, you want a recommendation from
us of what number to put on that line?

CHAIRMAN PRICE:  That's what we have always asked.
We have used your working with your division heads to estimate
that.

MR. CRADDICK:  Okay.  Thank you.

CHAIRMAN PRICE:  Mr. Starr.

MR. STARR:  Yes, I just want to applaud the
direction the chair is going, and say that I definitely will
not be satisfied to see a 17 percent increase in payroll, when
our water sales are down 1 percent.  I expect to see it in
more like a -- perhaps a six percent, which is more than the
raises that -- that people have been getting.  So, the way to
do that is to look at the -- what positions are going to be
filled and for how long.

CHAIRMAN PRICE:  Yeah, you know what, Holly?  That
raises a good point.  When we do a budget, we ought to be
thinking about -- I mean, and I know it's not something we can
hold everyone's feet to the fire on, but you have got a
bargaining agreement now.  How many years is it?

MR. CRADDICK:  Two.

CHAIRMAN PRICE:  Two?

MS. PERDIDO:  This is the last year.

MR. CRADDICK:  Last year of the two year.

MS. PERDIDO:  2003.

CHAIRMAN PRICE:  So, next year, the talks are
going to start on both UPW and HGA?

MR. CRADDICK:  Already going.

CHAIRMAN PRICE:  Already going.  Okay.  Materials and supplies.

MR. HIRANAGA:  Mr. Chairman, a quick question.

CHAIRMAN PRICE:  Yes.

MR. HIRANAGA:  When an individual is temporarily
assigned, is he paid the pay of that position he's temporarily
filling?

MR. CRADDICK:  No.

MS. GRASA:  He gets the difference at the higher
level position.

MS. PERDIDO:  He gets the difference at the higher
level position.

MR. HIRANAGA:  Thank you.

MS. PERDIDO:  Could I do a point of clarification?
You know, on the budget, Jonathan was saying he doesn't want
to see a 17 percent on this line.  So, if I do like we were
saying on the payroll sheet, I will have still a 17 percent,
but there will be a separate line on the bottom.  Do you want
it like on a separate line on here?

CHAIRMAN PRICE:  I want it on a separate line though.

MS. PERDIDO:  On the front page?

CHAIRMAN PRICE:  Yes.

MS. PERDIDO:  Okay.

CHAIRMAN PRICE:  You know, the reason I am saying
that is because we have gone through this for two years now,
and the number just remains relatively the same.  And that may
end up being the case, and it may not be the same positions
that are unfilled for years.
 If it is, we should have that discussion.  If it's
not, then we know, at least, from our own purposes, that there
always is so many positions in transition, which means we
ought to be addressing that, the employment characteristics of
the Water Department anyway.  Right?
 So, I'd like, you know, if we account for it in a
certain way, so that we can find out what is the issue, then
we can try and make some decisions about how we go forward,
again, assuming we need all those guys' positions filled.  I
shouldn't say guys.  No gender bias.
 Okay.  Materials and supplies?  Holly, you want to
start off by giving us a preamble to that section or someone?
Whoever is appropriate.

MR. CRADDICK:  Holly.

CHAIRMAN PRICE:  George, thank you.

MS. PERDIDO:  Okay.  The projected -- we were
projecting a 5 percent decrease over last year's budget for
materials and supplies.
 One point we did increase was we put in a
60,000-dollar line item, if you look at the bottom, on page
five, for membrane replacement.  And if you need more further
clarification on that, Paul can explain that, which you might
want to hear, for the treatment plants.

CHAIRMAN PRICE:  Okay.  We will hear from Paul
when you are done.  Just go through the whole section and we
will talk to Paul.

MS. PERDIDO:  Some of the primary expense
categories that were decreased were chemicals, stores
inventory, equipment replacement parts, and the road patching
materials.
 And basically, we looked at our numbers and what
the budget was last year, what our annualized figures were,
and came out with a realistic number that we thought this year
we will end up on what we will project.  And we had the
division heads looking it over and coming up with these
numbers.
 I can talk on the stores inventory, water meter
inventory.  Basically, we figured out what we would need, and
every year we budget for the warehouse.  And we came up with,
well, this year we need -- we thought we would come up with a
little bit less.  So, that's why the decrease there.  Is there
any other explanations you want?

CHAIRMAN PRICE:  Paul, did you want to say something?

MS. NAGO:  This is Paul Seitz.

MR. SEITZ:  Yes, good afternoon.  For those of you
who don't know, we currently have four microfiltration plants,
the Olinda facility, the Kamole facility, the Lahaina
facility, and the Iao facility.  They are membrane plants.
The membranes have a definite life to them.  They are
warrantied for five years.
 We have been operating -- the oldest facility is
the Lahaina plant, which is slightly over five years old.  We
have had to replace the membranes in one of the machines out
there this year.  It does cost approximately $60,000 per
machine to do it.
 So, what we figured we need to do, at this point,
is as the machines are getting older, we start -- we are going
to need to create a fund as to when we change these things
out.  It's a little unclear as to exactly when we are going to
have to do it.  It will depend on each plant.  But, there is a
liability there that we need to get a fund set up.
 So, what we figured would be prudent, would be to
start a replacement fund of $60,000 a year.  If we don't use
it, then we will have to carry that fund forward.  Because, as
you go out further in time, your risk is obviously going to
get greater and greater as the machines get older.  And that's
the basis of that fund.

CHAIRMAN PRICE:  Yes.  Go ahead, Mike.

MR. VICTORINO:  I understand you have certain life
expectancies on these machines, right?  And yet you are
telling me that you are not sure exactly when you are going
to -- if you put it in 1995, five years is 2000, right?  So,
you are telling me sometimes they last maybe 2001, 2002.  It
is not a definite five years?

MR. SEITZ:  Correct.  This is a relatively new
technology.  And, so, what -- the membranes are warranted for
five years.  The existing plants, that are located throughout
the world -- the oldest one is at a diamond mine in Northern
Australia, and that one is still running.
 When they are going to fail is dependent upon a
lot of conditions, how often we backwash them, what the raw
water quality is, what the pretreatment chemicals are.  So,
there's not a definite lifespan.
 I can't tell you that, in 2005, I am going to have
to change six machines.  If the machines don't need to be
changed, I am obviously not going to change them.  But, again,
there is a risk factor that as they get older and older, the
probability is going to be greater that they will fail at some
point in time, and they will need to be changed.

MR. VICTORINO:  So, you are saying that it's very
possible that in one year, four machines may all go down at
the same time simultaneously.

MR. SEITZ:  It is very possible that that could
happen.  That's correct.

MR. VICTORINO:  So, what you are planning to do is
put 60,000, which I understand is the figure for one machine.
You carry it over for one machine.  But if we hit that year
where you may be down in income, down in expenditures, and
four machines give in, now you are talking $240,000, and
walking in and saying now we got to do this now because of a
liability.
 I don't think that is very good planning either.
I think what you should be doing is planning it out.  If I
know five years is my warranty, and six, seven, eight going to
come, maybe having it for two, like 120.  So, if you get
zapped in a year where you have to do three or four, you are
not wiped out completely.  So, that's what I see.  I don't
like this just carry forward, and that's it, you know.

MR. SEITZ:  I don't disagree with you.  All the
machines are not the same age and the running conditions on
each plant is, again, a little different.  So, there really is
no history that we can go back on this on from somebody else.

 MR. VICTORINO:  Right.

MR. SEITZ:  And basically, at this point, this is
what we felt that we could afford.  If the board would like to
fund more, I am obviously all for it.

CHAIRMAN PRICE:  Mr. Starr.

MR. STARR:  How many machines do we have, Paul?

MR. SEITZ:  We currently have 15 machines.

MR. STARR:  Okay.

MR. CRADDICK:  15, 90-module units.  Each one of
those modules, we had in the original contract price that
they -- when we originally bid these things out, they had to,
in there, give us the replacement module price at the price of
the module at that time, which was $650.
 So, if you take 650 times the 90, which is one
machine, that's where you come out.  It's actually 63,000, not
60,000, but that's how we came up with the 60,000-dollar
number.  And again, as we go out, more and more will have to
be set aside.

MR. STARR:  I remember hearing on one of the
Memcor U.S. Filter demonstrations that their projected
lifespan was about -- was ten years.  And if we were to use
that number of ten years, that would mean that -- and since we
are almost over the warranty period on all of them, we should
expect a failure rate or replacement rate of one-and-a-half
machines per year.
 So, my feeling is that that number ought to be
$90,000 and not $60,000.  That's using their -- Memcor's
number.

MR. CRADDICK:  That's an argument, yeah.

MR. STARR:  I think you were with me, Walt, when
we saw that.  So, I think that 60,000 should be raised to
90,000, and then we would be ready if one and a half average
were to fail as it's been projected by the manufacturer.

MR. SEITZ:  I am not going to disagree with that,
obviously.  But the point is, okay, what you have to
understand is -- and this is one of the things that we were
really wrestling with.  Okay.
 We are going to take the 60 or 90,000.  We will
say it's 90.  Okay.  So, next year there will be 180,000 in
there.  And then the next year after that, you know, again,
90, 90, 90.  So, it's going to build up.
 However, we are not going to be actually spending
the money unless a machine has to be changed out.  At some
point in time, we are going to have to be wrestling with the
fact that you may have a considerable amount of cash in there,
and you will have to recognize the fact that with that cash in
there, maybe in three or four years, maybe we haven't spent
anything.  Now you are going to have a really sizable amount
of cash in there, you know, and --

CHAIRMAN PRICE:  Right.

MR. SEITZ:  -- the recognition.

MR. STARR:  The other side though --

CHAIRMAN PRICE:  So, we understand that.
Obviously, what we are going to do, as you gain experience,
you are going to really find out what the average life is, and
you are going to adjust it down the road.  Right?  We
understand that.

MR. CRADDICK:  That's right.

CHAIRMAN PRICE:  The question is, this is an item
that should be in the reserve schedule.  This is not, in my
mind -- Ellen, is this in the schedule?

MS. KRAFTSOW:  Not this particular item, no.

CHAIRMAN PRICE:  This particular item should be
added to that schedule.  This is a five-year life to this
item.  It is $60,000 times 15, if I got you correctly --

MR. STARR:  Ten-year life.

CHAIRMAN PRICE:  Is it a ten-year life?

MR. SEITZ:  It's a five-year warranty.  The life is an arguable number.

CHAIRMAN PRICE:  Right.  So, we are going to --
through experience, we are going to come up with what the
actual is versus the projected.  But for now, it's ten-year
life.
 That's $945,000 that should be reserved for over
time based on when you installed them.  So, if you go and take
your installation schedule, right?  And you add ten years to
each one of those 15 components you are going to have, that's
the year I am going to need to have that amount of money.
That's what we should be reserving for, that amount of money.
If, in fact, they end up lasting 12 years, as an average, then
we go into the schedule, we change it to 12 years, and the
funding gets drawn out for a longer period of time.
 But it should not be in the operating budget, and
I am glad you brought that up.  You guys who are division
heads should be thinking about items like that, that have to
be replaced.  And we need to make sure they are in the
schedule.  Because they should be funded from that -- whatever
you want to call it -- sinking fund, depreciation fund,
replaceable fund, however you want to call it, but that is
where that should come from.
Yes, Mr. Craddick.

MR. CRADDICK:  What life would you say things
should have in order to go in there?  Because vehicles might
have a five-year life to them.  We don't put them in there.
There's lots -- you know, for us --

CHAIRMAN PRICE:  You have an equipment budget now.

MR. CRADDICK:  -- if it lasts less than ten years,
it basically doesn't get in that.  The only thing that we
have -- the lowest life thing that is in there is the meters.
That's ten years.  We depreciate those for ten years.
Anything less than that is not even on the schedule.

CHAIRMAN PRICE:  So, we raised a question that we
need to contemplate and come up with an answer to.

MR. VICTORINO:  I think, to address that, you are
absolutely right.  It should go in the reserve fund.  And
these items -- using a vehicle is really not a good chronology
versus something like this, where you are talking an
intangible situation, where we haven't gotten any real
tangible five year, ten years, seven years, 12 years,
whatever, right?
 That's why I agree with the chairman.  It should
go in the reserve fund.  We stick X amount of dollars in
there, and each year maybe put X amount of dollars in there,
knowing that, in so many years, they are going to be coming up
or whatever, and the money is there then.
 But it shouldn't be in the operating expenses,
because it is not an operating expense.  It is not something
you can count on every year.

CHAIRMAN PRICE:  The vehicles you have a budget.
You have a capital budget.

MR. VICTORINO:  Yeah.  No.

MR. CRADDICK:  It's under equipment.

CHAIRMAN PRICE:  Yeah.  Right.  I don't care what
you call it, but we budget for replacement of vehicles every
year.

MR. CRADDICK:  Right.  The other thing to it is
when you say -- you know, your exact argument is the argument
for doing it the way we are doing it, because we don't know.
That whole unit could go down instantaneously.  We had four of
them that went out within the first, what, two months of
putting them in, when they were originally put in.  We had
four of them go out.

MR. VICTORINO:  But they were under warranty.

MR. CRADDICK:  No, they weren't.

CHAIRMAN PRICE:  What is that five year?

MR. CRADDICK:  The reason why is because the
contractor used chlorinated water in pressure testing them,
and that ruined them, and it was part of a claim item in
completing the job, where how that got paid for was a part of
the settlement in the completing the job at Kamole weir.
 But the one that Paul replaced, typically, when
you replace them, you are going to replace the whole unit at
one time.  And not having the experience, I think until you
get the experience and find out that they will last ten
years -- we haven't had anything last ten years.
 And if you are going to say we are going to start
putting things on the list that have a less than ten year
life, that is a big policy change that probably needs more
discussion.  And I don't know if you want all that debate
right now during the budget.  But we feel, because of the
limited life of these things, we backwash it a lot more than
they do on the mainland.  We are backwashing.  Their estimated
life is based on one-hour backwash, and we are backwashing,
what, 20 minutes in some cases?

MR. SEITZ:  Yes.

MR. CRADDICK:  So, we don't expect to see ten year
lives on these things.

CHAIRMAN PRICE:  Well, first of all, I don't
believe -- I don't know, so I shouldn't say.  But I don't know
who established ten-year life basis for our schedule, but --

MR. STARR:  We are based on 15-year life here.
$60,000 a year would be 15 years.

MR. VICTORINO:  Yeah, see, I mean --

MR. STARR:  I think it should be more.

MR. VICTORINO:  I think, David -- Mr. Craddick, I
think we are all trying to go in the same direction, but just
maybe in a different method.  But the thing is, I agree with
these gentlemen.  We should have it in reserve.  We should
have a larger than 60,000-dollar amount in there.  And as it's
not being used, it carries forth, and we have the same amount
next year.
 Because if you get whacked in year three from now,
and four machines go down, you will have much of the money in
there.  And at least then you are not taking an operating hit
at that point.  I think that is what we are saying.

CHAIRMAN PRICE:  Wait a second.  This discussion
is a little bit incongruous with the decision we just made
about the things we were expensing and capitalizing, right?

MR. CRADDICK:  Right.

CHAIRMAN PRICE:  Traditionally, if you capitalize
an item, it goes in the reserve schedule.

MR. CRADDICK:  That's correct.

CHAIRMAN PRICE:  Okay.  I don't believe this board --

MR. CRADDICK:  Except I don't believe office
furniture and things like that go into that schedule that have
a less than ten-year life.

CHAIRMAN PRICE:  Well, we may make that decision,
but what I am saying is I don't remember this board making a
decision that items with a useful life of ten years or more
were all that went into that schedule.

MR. CRADDICK:  No, they haven't.

CHAIRMAN PRICE:  Okay.  So, I think that we -- it
is incumbent, on this group, to make a decision.  If you think
that the useful life is less, maybe that's true.  Whatever the
right useful life estimate is, we use it.  But it still may go
in the reserve schedule.
 The dollar amount is also relevant.  We may have
an item that costs a thousand bucks that's a ten-year life,
but that doesn't go in the reserve schedule.  But I think when
we are talking about a 60,000-dollar replacement item, in my
mind, if it's seven, eight, nine or ten, it belongs in the
reserve schedule.
Mr. Starr.

MR. STARR:  Not to beat a dead horse, all these
units are between four and six years old, and it's probably
likely that in about two to three years now, they are all
going to go within a year or two.  And I will be off the
board, so it won't be my problem, but Mike and Ginny will
still be here, and they would like to have money put aside for
it.

MR. VICTORINO:  That is what I mean.  Talk
long-term planning.  I mean, you know, conceptually, we will
be putting $60,000 for one year, and next year three machines
go out, we are in -- we are over a barrel.  I think we are all
talking the same thing, but maybe now we got to figure which
way we see it happening.

CHAIRMAN PRICE:  You don't have to worry about
what goes down when money is in the reserve.

MR. CRADDICK:  One thing I should say.  If a
machine goes, they are all going to go.  Half of them aren't
going to go.  So, it should either be 60 or 120, not 90.

CHAIRMAN PRICE:  That should go in the reserve --
the depreciation schedule.  I think we have decided that, so
they go out of the budget.  They go into the schedule.  If
they go down tomorrow, Paul calls up, and we go order them,
and we take them out of whatever fund we are creating for this
reserve.  That's it.

MR. SEITZ:  So, the question comes down to what
number do we want to use?

CHAIRMAN PRICE:  Well, okay.  We are going to ask
you to make a list of when they were all installed, and, based
on your experience, what -- how long you think they are going
to live and when they are theoretically going to need to be
replaced.  And just send it to us, and we will review it and
put it on the schedule.

MR. VICTORINO:  And, Paul, one thing I will ask of
you.  Be conservative.  Be very conservative, because you do
not have any track record.  And I would rather be on a
conservative basis than being too liberal and then find out,
down the road, we are really getting whacked every which way.

MR. SEITZ:  In my mind, I have a number of about
seven, seven-and-a-half years, in my mind, is about where I
sit.  And I know what some companies on the mainland do, with
this issue, is they will figure -- they will -- if they have
15 units, they will fund their fund to a cap that if they have
to replace half of them, that they will have that fund there.
Because the likelihood that you have to do all the machines,
at all the plants, in the same year, is fairly remote.  You
know, so, I know that's --

CHAIRMAN PRICE:  Talk with Mr. Craddick and make
sure you guys get your stories straight about how they are all
going to go down on not go down.

MR. SEITZ:  The plants are in different places
under different operating conditions.

MR. CRADDICK:  What I am talking about is each
module of 90 was manufactured at some time.  Now, whether it's
being used or not being used could affect its useful life.
 Like, for instance, let's take Iao.  We have used
that, what, maybe a year?  Well, if we ever use it again in
the next -- in the seven years, it may not work at all.  So,
we may have gotten one year of useful life out of it, and we
will still have to replace both of them.  Because they -- we
don't know if they are deteriorating worse not using them
or -- or they deteriorate more from using them.  You know, we
don't have any history on that either.  So --

CHAIRMAN PRICE:  Well, you are going to make a
schedule.  You are going to do it and give us your best
estimate.  Okay?  You are going to get it to the board.  We
are going to review it.
 And, obviously, if it's a new item without
experience, it's new in the industry, we are going to make
some assumptions.  And as Mr. Victorino says, we probably err
in the conservative side, in the liberal side.  And then you
have the funds available for that when you need it.  That's
the point, and it doesn't become an operating expense.
Thanks.  Thanks, Paul.

MR. SEITZ:  We can do that.

CHAIRMAN PRICE:  Now, any other questions from
board members on this section, materials and supplies?

MS. NAGO:  Peter, can we give her a couple minutes break.

CHAIRMAN PRICE:  Let's take a quick break.

(Recess, 3:21 p.m.  Resumed 3:31 p.m.)

CHAIRMAN PRICE:  Moving on, Mr. Victorino has the
floor.  Materials and supplies.

MR. VICTORINO:  Yeah, the only item I wanted to be
sure that, as we have discussed, this $60,000 will be removed,
membrane replacement.

CHAIRMAN PRICE:  It's my understanding, yes.

MR. VICTORINO:  So, that will be removed, right?

MR. CRADDICK:  Yes.

MS. GRASA:  And added to the capital budget, right?

CHAIRMAN PRICE:  That's correct.  Any other
variances in -- the diesel fuel went down.  I am only looking
at last year's budget.  I don't know what actual is, but --
last year, in our budget, we budgeted 171,000 for diesel fuel.
What's that -- what is your projected year-end on that, Holly?

MR. CRADDICK:  The Kamole well number one was
running, with a diesel engine, 24 hours a day, 365 days a year
the previous year, and it's now on the Maui Electric system.
We are no longer -- and then also, because of the drought, we
had Hamakuapoko running a number of months last year.  That
was all diesel, and it hasn't been running and may not run
this next year.  So, we are saving quite a bit on that.

CHAIRMAN PRICE:  And we split out the stores
inventory expense to -- or did we?  Yeah, we did between water
meters and stores inventory versus stores inventory last year,
huh?

MS. PERDIDO:  Yeah, what we did is we broke out
the water meters and the stores inventory.  This is one of
those funny -- the item stores, which if you look under pool
accounting, are an asset as an inventory.  Whereas on this
budget, it's -- we are to pick these up as expending the money
for the meters, but they go into inventory, and then when they
are put into service or put into a work in progress at year
end, we put them into there.  They are transferred over to the
inventory or to the asset.  Does that make sense?

CHAIRMAN PRICE:  So, you are budgeting for the
cash to purchase them.

MS. PERDIDO:  That's right.  We have to budget.
And right now, since we have to -- and in this also is some
construction meters -- construction meters that we use -- that
are read by radio wave, too, for --

CHAIRMAN PRICE:  Were these all in that one
number, stores inventory?

MS. PERDIDO:  Well, before, remember, we had the
meter replacement program.

CHAIRMAN PRICE:  Yes.

MS. PERDIDO:  And that's what we had the inventory
for them use, so they were in that -- what was our budget
before?  5 million, the meter replacement program?  So, that's
where all the meters were purchased originally.
 And then last year and this year, we installed
most of those meters, so we are going to have to start
buying -- purchasing meters again.

CHAIRMAN PRICE:  Why are we purchasing meters
again?  I mean, this is just to replace ones that are worn
out?

MS. PERDIDO:  And new services, and also the
construction meters, we are getting new construction meters
that we -- that are put in and taken out as jobs get used.

CHAIRMAN PRICE:  So, I mean, maybe this is an
ignorant question, but I am going to ask it anyway.  We charge
a meter fee, and the cost of the actual meter can't be that
much, right, because some of this meter fee, water system
development fee, goes towards source, and transmission, and
all that stuff.

MR. CRADDICK:  In addition to the water system
development fee, you also pay an installation charge for the
meter.  And if you don't have a lateral off the line, you also
have to pay for that lateral to be put in.
 But in most subdivisions, the lateral is put in by
the subdivider, so all that has to happen is you put in a
meter, and that charge is $150 installation charge for the
meter.  And that's assuming you already have the lateral
there.  And that's the charge just for the 5/8th-inch meter.
It escalates up for the larger meter sizes.

CHAIRMAN PRICE:  Okay.

MR. CRADDICK:  And that is approximately what the
meter does cost us, is that $150.
 What are you doing, scratching your head wondering
where does the income go from that?

CHAIRMAN PRICE:  You are getting smarter.  Where
does the 150,000?

MS. PERDIDO:  The 150?

CHAIRMAN PRICE:  The $150.  I am sorry.

MS. PERDIDO:  That is in your jobbing and your --

MR. VICTORINO:  Shopping?

MS. PERDIDO:  Jobbing.

CHAIRMAN PRICE:  And the labor is in the labor
side.  But how much labor to install a meter?

MR. FUKUYAMA:  One man.

CHAIRMAN PRICE:  One man all day?

MR. CRADDICK:  Most of that is driving time.

MS. PERDIDO:  It depends.

MR. STARR:  You can see them do it in four minutes
at the convention.

MR. FUKUYAMA:  Yeah, but they got a brand new tap though.

MR. VICTORINO:  That was tapping.  That wasn't
installing.  Little different.

MR. FUKUYAMA:  Sure.

MR. VICTORINO:  Okay.  I just wanted to clarify,
because I don't want to get it wrong.

CHAIRMAN PRICE:  So, this doesn't have anything to
do with the decision that we made in terms of capitalizing
items or does it?  Is that why you broke it out versus having
it lumped in?
 Oh, so it wasn't lumped in before?  So, it came
out of that meter replacement, is what you are telling me.  I
am getting smart here.  So, that means that in the last year,
our stores inventory expense was $557,000.  If I compare
apples to apples, it dropped to 320 this year if the meters
were new.
 I thought they just broke them out, and you made
two line items out of one, because the total was relatively
close.  But, in fact, if they are not -- if the meter is new,
then you reduced your stores inventory by $220,000 --
$237,000, right?  Sorry to bore you guys with this manini
stuff.

MS. PERDIDO:  We reduced it by 37,000 from last year, 37,000.

CHAIRMAN PRICE:  My question was, last year,
stores inventory was one line item and was $557,000.  There
were no meters in there.

MS. PERDIDO:  There was some meters in that, also.

CHAIRMAN PRICE:  Oh, there was?

MS. PERDIDO:  Yeah, because what -- we separated
it out, basically, for accounting.  It would be easier, and we
have just converted all of the meters over to the cast system
that we are tracking all the meters.  We are trying to get
that all reconciled and tracking that way.  So, we wanted to
do a separate line item for the meters and the stores
inventory.  That's why if you look --

CHAIRMAN PRICE:  That's what it looked like, but
when you said earlier, you said that was funded from that
other --

MS. PERDIDO:  That was previous.  If you look two
years ago, the stores, it was less.  Yeah.

CHAIRMAN PRICE:  Okay.  All right.  Anything else
on materials and supplies from the board?  Road patching
materials, that's gone up a little bit.
 Let's move on.  Next is services.  Holly, anything
you want to say?

MS. PERDIDO:  Okay.  Basically, in services, we
are budgeting two percent less than last fiscal year's budget,
but like about four percent over 2002 year estimate.
Electricity is about 80 percent of this category.
 A few of the big items on that was, as Dave said,
we -- two wells, two Kanoa wells and, I think, Maluhia well
also -- is that right, Bryce?  For the electricity, we added
onto it.

MR. FUKUYAMA:  We are going to add two more new
ones, Kupaa and Maluhia.

MS. PERDIDO:  So, three more wells then, is that
right, are being added on?

MR. STARR:  Excuse me.

CHAIRMAN PRICE:  Yes, Mr. Starr.

MR. STARR:  Maluhia well, it's not going to be
operational for next year.

MR. FUKUYAMA:  You can add on Waiakoa Road.
Remember that one you went up to Waiakoa?  You wanted to have
it done when we did that field trip?

MR. STARR:  Are you talking about -- yeah, up
above -- I hope that one --

MR. FUKUYAMA:  That might be installed, too.

MR. STARR:  Maluhia is more than a year out, right?

MR. FUKUYAMA:  Yeah, definitely.

CHAIRMAN PRICE:  Go ahead.

MS. PERDIDO:  Okay.  Okay.  Basically, the other
category would be professional services, and you have a
breakdown of the professional services on the following page.
And then if there's any questions --

MS. GRASA:  Holly, is this a good time to raise
the issue about the USGS project?

CHAIRMAN PRICE:  Pardon?  What was that?

MR. CRADDICK:  Just wait.  Wait.

CHAIRMAN PRICE:  And the major difference between
the professional services line item last year and this year is
the 300 some thousand dollar water usage development plan fee.

MS. PERDIDO:  Correct.

CHAIRMAN PRICE:  I mean, I am just looking at big
numbers.  And the other big number is the increase in
electricity.

MS. PERDIDO:  Electricity.  Study for electricity.
Actually, we got a price to do the study for using HC&S
electricity at Kamole weir and the Hamakuapoko well sites.
That cost is $100,000 also.  And I didn't -- I think I told
the board, at one time, that that might be around 30 or
$40,000.  We found out that's 100,000.
 This one here was to do an alternate energy source
study to see what the feasibility would be of using ocean
thermal energy conversion.  Because next year, the Energy
Policy Act will come into place where energy is deregulated,
and anybody that has electricity can put it into the system,
pay the wheeling rate, and get it out at the other end.
 So, basically, if we can switch over to something
like that, then our energy costs would be fixed for the next
50 years out in the future.  So, I felt it was prudent that we
do some kind of a study on there.
 Honolulu has done one.  They are -- seem to be
justifying it on the basis of getting extra water.  I am not
certain we can justify it on that basis, but I believe it does
have some ability to use the cool water for air-conditioning
in addition to power production.
 So, anyway, I just feel it's prudent for us to
also investigate that.  But if we do the other one, using HC&S
for Kamole weir and Hamakuapoko, that would be another
hundred thousand in addition to this, if you want to do both
of them.

CHAIRMAN PRICE:  Okay.  Let's take them one at a
time here.  The first is this energy conservation study, which
I think is a good idea.

MR. CRADDICK:  Alternate energy, alternate energy.

CHAIRMAN PRICE:  But I would like to be sure we
cover all of them.  Really, I guess, I would like to see it be
an energy use study, so that we looked at all sources of
alternative energy, and we look at all of our operations.  I
mean, if they are only going to focus on one particular thing.

MR. CRADDICK:  No, no.  The one study was
particular just to HC&S.  We have a local --

CHAIRMAN PRICE:  Forget the HC&S thing for a
minute.  Stay with the first study.  We will get to HC&S in a
second.  The first study is an alternative energy study, is
that right?

MR. CRADDICK:  Yes.

CHAIRMAN PRICE:  And it will look at all kinds of
alternative energy and make a recommendation based on our
specific needs.

MR. CRADDICK:  Yes.

CHAIRMAN PRICE:  Mr. Starr.

MR. STARR:  Yeah, I'd like to see us look at
utilizing some of the proven technology, such as wind or
photovoltaic.  But O-tech, no one has ever produced energy
using O-tech.  I think that, you know, to limit our study to a
technology that has never succeeded or been used by anyone
before, and the pilot demonstration project for it, on the Big
Island, has been shut down, I think that's really kind of
reaching.  You know, whereas, you know, if we look at wind, I
think maybe -- there may be some viability there.

CHAIRMAN PRICE:  That's why I said I think we want
to make sure, if we do an energy study, we look at all
alternative energy sources, and somebody makes a
recommendation as to what works for us.
 And I think that's the prudent thing to do.  If
you look at this electricity number, and you look at where it
was a few years ago, it's a huge increase.

MR. STARR:  Yeah.  And, I mean, a lot of our -- a
lot of our pumping, and so on, does not need to be done 24
hours, you know, a day, or we could have -- you know, replace
it with other power.  But, you know, I think it's a place
where wind energy could be very well applied, and that's cheap
energy.

CHAIRMAN PRICE:  Okay.  Now, what's with the HC&S?

MR. CRADDICK:  Well, the quote we got for that was
also $100,000.  And if we are going to expand this other
study, it may cost more than that also.

CHAIRMAN PRICE:  Okay.  But HC&S, the hundred
thousand dollars you are referring to is for a study or for a
conversion?

MR. CRADDICK:  It's to identify all the costs
associated with converting over to HC&S power for Kamole weir
and the Hamakuapoko wells.

CHAIRMAN PRICE:  And we have a proposal from
someone to do that study?

MR. CRADDICK:  Yes, and I think it was actually a
little over 100,000, wasn't it?

MR. CRADDICK:  118,000.

CHAIRMAN PRICE:  Who was it from?

MR. CRADDICK:  HCM.

CHAIRMAN PRICE:  You just got a ballpark from them
so you could budget it?

MR. CRADDICK:  Yes.

CHAIRMAN PRICE:  But we would do the whole deal?

MR. CRADDICK:  Yes.

CHAIRMAN PRICE:  There's -- to me, there is a
bunch of electricity savings right there.

MR. STARR:  It sounds like a lot of money to study
the feasibility of switching our power providers.  I am
wondering -- you know, I think it's good for us to look at
power costs, but to a noncompetitive bid contract of $100,000,
to study that, it really sounds like a -- sounds a little fishy?

CHAIRMAN PRICE:  Ginny.

MS. PARSONS:  Wouldn't these companies like
Seimen's, photovoltaic come out and give you an estimate
without a cost anyway?

MR. CRADDICK:  I don't think you want a sales-type of presentation.

MS. PARSONS:  I mean, they can give a report, and
then you can go deeper at that point.  But they can recommend
for you what -- these guys are knowledgeable in what panels
do, and what the energy is per panel, and if it's feasible.
And I would imagine wind is the same way.  Windmills are the
same way.

MR. CRADDICK:  Most of the work on these studies
are involved with the time of use, and how much you are using,
because of the peak loading on the system, and whether the
system can handle it.  That's where most of the work goes into
this.
 Just doing a study whether wind power is available
or solar power is available and what it will cost you is a
very -- or even this HC&S project, whether the power is -- can
be used is a very minor part of the study.
 On this HC&S one, we will go from approximately 12
or 14 cents per kilowatt-hour to four cents per kilowatt-hour,
and it's a huge savings in electricity.  Just putting in the
equipment will be over a million dollars, putting in the
equipment.  And I am not going to recommend, to this board, to
do something like that, without an extremely thorough study
and what the ramifications are on the treatment plant.
 Because at the time that happens, we will be off
Maui Electric's system.  So, we will have no alternative to
power if that doesn't work for us.  So, we have to know that
it will work before we can propose it to the board.
 But, on the same token, I believe that because of
the huge power savings -- we spend over a million dollars a
year at Kamole weir -- just about or near that amount.  I
think it's about 30 some thousand dollars month.  Plus, if
we -- if we are in a drought situation, that jumps up to about
90 to $100,000 a month for power.

CHAIRMAN PRICE:  Just so everybody understands,
that's why I asked to separate the two discussions.  First
discussion was about general alternative energy use.  The
second discussion is about specifically putting the specs
together.

MR. CRADDICK:  Very detailed work.

CHAIRMAN PRICE:  To verify whether we should do
the -- take advantage of the HC&S power.  So, that's why I
think there's two different things there.
Kent.

MR. CRADDICK:  And it's extremely detailed work on
HC&S, whereas the other one is more conceptual.

CHAIRMAN PRICE:  Kent.

MR. HIRANAGA:  I guess one concern of converting to HC&S power is --

MR. CRADDICK:  How long will it last?

MR. HIRANAGA:  -- how long a commitment they will
make to the department that they will be in the power
business?

MR. CRADDICK:  Right.  Now we have, in our MOU, a
25-year commitment minus about a year and a half.

MR. HIRANAGA:  So, HC&S is agreeable to a 25-year
commitment, or that's your requirement in order to --

MR. CRADDICK:  We already have an agreement with
them for 25 years minus about a year and a half.

CHAIRMAN PRICE:  All right.  So, we are talking
about two separate studies here.  I kind of agree with
Mr. Starr.  It seems $118,000 to do the calculations as to the
viability of the changeover is awfully --

MR. CRADDICK:  No, it's not to calculate the
viability of it.  It's the detail work of what poles you need
to put in.  Basically, HC&S is giving us a price of $900,000
to convert over.  Perhaps we can do that a lot cheaper
ourselves.

CHAIRMAN PRICE:  So, what we are not doing then,
now we are doing the engineering of doing it.

MR. CRADDICK:  Not -- I don't believe we are doing
design work with that money.  Are we?  We are not doing any
design work with that?

MR. KOGASAKA:  I don't think so, no.

CHAIRMAN PRICE:  If you are telling me they are
figuring out the number of poles we need, they are definitely
doing design work.

MR. CRADDICK:  No.

CHAIRMAN PRICE:  We don't want to duplicate work.
We don't want to pay them $100,000, and then pay them another
hundred thousand to do the same thing they have already done.

MR. CRADDICK:  No, they are not doing design work
at that point.

CHAIRMAN PRICE:  I guess we need some
specifications.  I am all for putting some money the budget
for it.  I need to know what we are contracting for.

MR. STARR:  It's not like a liaison-type of thing.

MR. CRADDICK:  Herb, anything you can say to
enlighten us?  You made the contact to VCM.  What did you tell
them exactly that you wanted?

MR. KOGASAKA:  We had some preliminary prices from
HC&S.  One to run power up to the big well and then another
one on to Kamole.  Kamole was -- I believe it was about
$900,000.  That's for line change and bringing a line over to
the site.  We don't know what kind of reliability we are faced
with.  This is a huge energy load on their system, and we
really don't know how that affects HC&S as well as how much
reliability we would be getting on this.
 There is a lot of unknown issues that we could
have some expert look at it, because I felt a little bit
inadequate about trying to make an assessment based on the
information that I had.
 So, I was asking them, you know, what kind of
study -- you know, what kind of study?  We need to have them
come up with a recommendation or some direction as to what we
would be getting as a result of us converting over.
 One of the things is that we cannot have
100 percent reliability, for one, yeah, because of -- we don't
really necessarily need it on that basis, but we would need a
certain amount of -- a certain amount of reliability anyway.
We have generators over there that will carry us over for a
certain amount of period of time.

CHAIRMAN PRICE:  So --

MR. KOGASAKA:  We are not sure of what -- what we are looking for.

CHAIRMAN PRICE:  Right, based on what you just
told me, then their 118 is ballpark.  You just -- I appreciate
the fact that you can't make all those decisions, but I didn't
hear anything that would lend me to believe the 118,000 was
based on any specific scope of work.

MR. CRADDICK:  No, it's very detailed scope of
work.  Extremely detailed.

CHAIRMAN PRICE:  Then I think we need to see that.
Do we have a scope of work already?

MR. CRADDICK:  We have a proposal from them.

CHAIRMAN PRICE:  Okay.  Then we ought to see it.

MR. CRADDICK:  To me, Peter, we are not awarding
any contract right now.  We are just budgeting.

CHAIRMAN PRICE:  I understand that, David, but we
have seen -- but for a study to do something that seems fairly
obvious, and if you don't, if you just take $900,000 --

MR. CRADDICK:  Sorry for the laughing, but it is not.  It is not.

CHAIRMAN PRICE:  If you don't think it's fairly
obvious, why are you recommending it?

MR. CRADDICK:  Yeah, we wouldn't be recommending
it.  If it was fairly obvious, we wouldn't be asking for this
study.

CHAIRMAN PRICE:  What exactly makes it not so fairly obvious?

MR. CRADDICK:  There's all kinds of things.

CHAIRMAN PRICE:  Give me something.  I want
something specific.

MR. CRADDICK:  And the load demand has to be
looked at very carefully in accordance with HC&S's ability to
meet that demand.  Because, as Herb said, we don't have the
generating capacity to take the full load up there.  So, if we
aren't going to be able to operate fully during a drought, we
can't do this.  We can't take any chances with it.
 $100,000 is very cheap to make sure we don't have
any mistakes.  And we are not willing to bring something to
the board on our own guesswork that it might work.

CHAIRMAN PRICE:  I appreciate that.

MR. KOGASAKA:  I want to clarify is that HC&S was
mainly bringing power to Hamakuapoko, and although we did
discuss about the power requirement at Kamole, which is
tremendous -- tremendously greater, they gave us their
estimate for -- you know, I am talking about HC&S bringing
power to Hamakuapoko wells and for the two pumps that are
there.  And I wonder how much more it would take to get Kamole
on line.  I think all the money, the 250-horsepower --
1250-horsepower motor at the wells, and the Kamole pumps are,
you know, like 2500.

MR. CRADDICK:  Well, the other thing, too, is that
HC&S's power comes in at 12,000 volts.  Maui Electric's power
comes in at 12,000 volts.  The whole transformer system has to
be changed.  Our motors, up at Kamole, run at -- what is it,
4180?
 4160 volts.  So, all of those things need to be
looked at.  And, you know, I am an engineer, a civil engineer.
This is a price that came in from a credible engineer.  There
is no reason to believe that it's padding the price.  We will
get more than one estimate before it's actually done.
 So, what we are talking about is a budget right
now.  You will have all the time you need to look at the scope
of work or whatever you want to later on in the future.  We
are just talking about the budget right now.  That's all.

CHAIRMAN PRICE:  Mr. Starr.

MR. STARR:  Yeah, I would like to see the
proposal, and I certainly would want to see competitive bids
on doing this when the time comes.  But, you know, if we
are -- you know, if we are serious about proceeding, and my
preference would be to -- we would become a customer of HC&S
then, and it would seem like it would be something that we
could ask HC&S for them to give us a full proposal of running
the lines, and also, just as important, is maintaining the
lines on a year-by-year basis.
 And also, they would give us the degree of
firmness of their power.  You know, when you make a power
contract, one of the elements is, you know, what percentile of
availability you are going to have, and how much notice you
are going to get if it's going to get turned off and so on.
 So, I would like to see the -- a proposal to this
effect from HC&S.  In other words, what they are willing to
provide us, rather than us going and having to try to engineer
their system.  It would seem like if HC&S is the contractor
that we are buying power, and we are also talking about
possibly buying the installation from, then it becomes
incumbent on them to provide us the data we need.
 And if we are going to save, as has been
intimated, maybe $700,000 a year, you know, their figure of a
million bucks to install it, that doesn't shock me.  I have no
problem with it.  And I would prefer them to be the
contractor, since it's running across their land, and we can
have them maintain it as well.
 So, I think, you know, that's something the board
should look at.  And something about this one -- putting aside
a hundred and some odd thousand for this one contractor study
kind of feels weird to me, so I think we should look at it.

CHAIRMAN PRICE:  Yes, Mr. Craddick.

MR. CRADDICK:  That's who we started off with is
HC&S.  They said they weren't capable of doing it.  That is
why we had to go outside.  They were only willing to do the
work for Hamakuapoko, which is, I think, only 460 volts
there.  Bryce still there?

MR. KOGASAKA:  Yes.

MR. CRADDICK:  460 volts, very low voltage.  And
that is all they were willing to help us with.  High voltage,
you have to understand, is a whole new ball game.

MR. HIRANAGA:  Mr. Chair.

CHAIRMAN PRICE:  Yes, Kent.

MR. HIRANAGA:  Just to get an understanding,
basically, the department wanted to explore the possibility of
alternate energy source, and you requested HC&S to give you
the estimate on what their cost of a study would be, is that
correct?

MR. CRADDICK:  Not alternate energy for the HC&S.

MR. HIRANAGA:  Conversion.

MR. CRADDICK:  Yes.

MR. HIRANAGA:  HC&S conversion, and this estimate
they provided you, they did not charge you for this estimate?

MR. CRADDICK:  No.

MR. HIRANAGA:  There was no fee to create this estimate?

MR. CRADDICK:  No.

MR. HIRANAGA:  It's a budget proposal.  It's a
best guess.  If we are going to proceed down the road, we are
going to get hard proposals on it.  So, I don't know why we
are spending so much time on this.

CHAIRMAN PRICE:  Because we have to add another
number.  The number in the budget to you is for the
alternative energy study.  We would need to add some number
for the HC&S conversion.

MR. HIRANAGA:  But that would not be in the 2003
fiscal year budget.

MR. CRADDICK:  Yes.

CHAIRMAN PRICE:  We are talking about doing it in
the next fiscal year.

MR. HIRANAGA:  You are going to have the study
done and make a decision for the conversion.

MR. CRADDICK:  I don't know if you would make a
conversion, but you would have the study in your hand.

MR. HIRANAGA:  I don't think we need to be
concerned about the cost of the conversion, but the study is
column --

MR. CRADDICK:  We are not concerning ourselves
with the cost of the conversion.  We are only concerning
ourselves with the cost of the study right now.

MR. HIRANAGA:  Right, budget proposal 100,000.

CHAIRMAN PRICE:  No, there is another on top of
that was the point.  There were two different proposals.
Number one is the alternative energy study.  That is in the
budget for a hundred.  What was left out of the budget was the
study for converting Hamakuapoko and Kamole to the HC&S
system.

MR. HIRANAGA:  You want to amend the budget?

MR. CRADDICK:  Yes, yes.

CHAIRMAN PRICE:  And if we understand that we are
going to review the proposals and get competitive bids, then
we will put the hundred in for that, because we are taking 60
out of the other side.  Okay?

MR. HIRANAGA:  Question.

CHAIRMAN PRICE:  We saved 60.  We only spend 40 more.

MR. HIRANAGA:  Would the alternate energy study
not also encompass the feasibility of the HC&S conversion?

MR. CRADDICK:  No.

MR. HIRANAGA:  Why not?

MR. CRADDICK:  It wouldn't.  It wouldn't.

MR. HIRANAGA:  Maybe it should be.

MR. CRADDICK:  You could, but then the price would
jump up to over a couple hundred thousand dollars for it,
because now instead of looking at three pump stations, you are
now looking at about 30 of them.

CHAIRMAN PRICE:  We need to throw a number in the
budget, so we throw another hundred in the budget, and we will
get the specs done and the scope of work done, and we can send
it out for bid and see which way to go.  Huh?  Agreed?  No?

MR. HIRANAGA:  I don't care.

MR. NOBRIGA:  If the informal bid was 120,000, we
wouldn't have enough budgeted at a hundred thousand.

MS. PARSONS:  You mean for everything?

CHAIRMAN PRICE:  You want to put another hundred
20 instead of a hundred?

MR. NOBRIGA:  Was the question by Commissioner
Hiranaga meant to amend alternative energy source study from
100,000 to the next possible range?  Was that where you were
headed with your questioning?

MR. HIRANAGA:  I don't know where I was headed.

MR. NOBRIGA:  Okay.  Good.  Just checking.
 I move that we amend the professional services
budget by adding HC&S energy study for Kamole and Hana Kuapoko
wells under the office of the director for $120,000.

MR. VICTORINO:  Second.

CHAIRMAN PRICE:  Okay.  I don't know that we need
a motion.  We are just reviewing the budget.

MR. VICTORINO:  Since he made a motion, I seconded it.

CHAIRMAN PRICE:  But is there any discussion on
that motion?  Okay.  All in favor say aye.  Opposed say nay.

MR. NOBRIGA:  Mike, easier to do a motion.

CHAIRMAN PRICE:  We didn't need a motion to take --

MR. NOBRIGA:  Easier to do it that way.

CHAIRMAN PRICE:  Mr. Starr.

MR. STARR:  I have another item which I think
would be going into the same area here.  And that is I would
like to look at putting some money aside for potential
numerical water model through USGS, which would, you know, be
using federal matching funds, say, over a three-year period.
Am I in the right place to do this?

CHAIRMAN PRICE:  Yes.

MR. STARR:  I know we are not going to have a
presentation on this program until next week, you know, but I
know we are sitting here now, and I think that -- I guess now
would be the time to deal with it.
 I know that the number that had been thrown out
previously by them was that it would -- they would be looking
at a three-year project, with a total cost of 600,000.  That
would mean 200,000 a year, of which half of it could probably
be gotten through federal matching funds.
 So, in other words, that would mean our end would
be, say, $100,000 to go into this.  And if there's support
from the other members, I'd like to see it potentially put in
there, at least up until we get the presentation next week
from USGS, and then have a chance to decide if we want to move
forward.

MR. CRADDICK:  We would have no objection to that,
but we would -- understanding that the Water Commission would
also participate in that, if we went that route.  And they
didn't get their funding this year for it.  That's why we
didn't put it in there.

MR. STARR:  I understand that, but that's why I'd
like to see us go ahead with federal matching, which I think
we can probably get 50/50.  So --

CHAIRMAN PRICE:  I think that's a good idea, actually.

MR. STARR:  Do you want a motion or just --

CHAIRMAN PRICE:  I don't know.

MR. STARR:  How do you want to do it then?

CHAIRMAN PRICE:  Motion is easier, and it's clearer.

MR. STARR:  Move that we put $100,000 into the
budget to be matched with federal money for numerical model.

MR. VICTORINO:  Under what?

CHAIRMAN PRICE:  Professional services.

MR. STARR:  Yeah, professional services, contracting USGS.

MR. VICTORINO:  Under planning?

CHAIRMAN PRICE:  Yeah, planning is good.

MR. VICTORINO:  Okay.  Second.  Just wanted to know exactly.

MR. CRADDICK:  What did you call it, just
planning?  Are you putting it under planning?

CHAIRMAN PRICE:  Under planning.

MR. VICTORINO:  Under planning.

MR. CRADDICK:  And if you are going to jump to
planning, the -- there is a couple of items there also that
need to be looked at.  One is if we are going to participate
with USGS.

MR. NOBRIGA:  We are not talking about that right
now.  We have got another numerical model in.

MS. PARSONS:  Peter, do we want to be that
specific where the money is going to go?

CHAIRMAN PRICE:  We got to put it in somewhere.

MS. PARSONS:  Do you want to be specific where it
goes for the model?  Maybe just leave it open, because there
may be some other alternatives to USGS.

CHAIRMAN PRICE:  Just call it modeling.

MS. PARSONS:  Yeah, let's just call it modeling.
If you say USGS, then we are stuck with that, and you might
find something else.  You might see something else you want to
use.

CHAIRMAN PRICE:  Sure, sure.  I think we are all
open to whatever works.  Okay.  Any other comments?  All in
favor say aye?  Opposed say nay.  Motion is carried.  There we
go.
 Okay.  You said there is some other things you
want us to consider, David.

MR. CRADDICK:  Yeah, one thing, we got some
information from the Water Commission that they would like us
to up that stream monitoring to 50,000 this year, and I
believe 30 next, but I think they would also be willing to
take 30 this year and 50 next.  The main thing is that we get
$80,000 in there.
 And the other item is the drilling rig program.
We won't know until October whether the USGS gets its share of
funding for that program.  If they do get its share of
funding, they will -- the Big Island is scheduled to get the
rig somewhere June or July of this year.  And they have enough
money to go until December, meaning the rig would be available
to come back here January, February'ish.
 If we don't budget any money, we won't be able to
do anything with it.  If we do budget something, the high
probability it won't get used, because if USGS gets their
funding, then the Big Island will want to keep it a year,
which would take us to the following year, July.

CHAIRMAN PRICE:  Okay.  But you are telling us
that you think that it will be available in January?

MR. CRADDICK:  A possibility, if USGS doesn't fund it.

CHAIRMAN PRICE:  How much money are we talking about?

MR. CRADDICK:  Good question.  If we also have to
fund the whole thing ourselves, it would depend what we wanted
to do.  My recommendation would be to get a monitor well for
North Waihee, somewhere in North Waihee, because we are
currently using that aquifer to about half its capacity and
have no knowledge of where the interface level and things are
out there.
 So, that would be my recommendation.  If we did
something like that, a deep monitor well, it would probably be
about 1500 feet deep, and it would be somewhere on the order
of probably $800,000.

CHAIRMAN PRICE:  Is that you are asking us to put
in the budget, $800,000?

MR. CRADDICK:  Well, what the other water
departments have been putting in is about $450,000.  And we
could do that level of funding, also, hoping USGS got their
money.  But if they got their money, we wouldn't get the rig.
So --

CHAIRMAN PRICE:  So, you are saying if USGS
doesn't get their money, and then the rig becomes available,
and we want to participate in this deep well, monitoring well,
we are going to have to put up 800,000-dollar or thereabouts?

MR. CRADDICK:  Well --

CHAIRMAN PRICE:  It doesn't sound to me like it's
a budgeting number.  It's an operating budget number.

MR. CRADDICK:  Can we recess for a minute?

CHAIRMAN PRICE:  Comments.  Yes, Mr. Starr.

MR. STARR:  Well, we are several monitoring wells
behind where we should be.  You know, there is North Waihee.
There is Montana Bay, and certainly the central area needs,
you know, I am told at least two more.  I assume that this
USGS rig is the most cost-effective mechanism for it.
 But, if we got it -- you know, if they finished
with it in December, I mean, watching the way it's been going,
my guess is that we won't be able to be spending much money
until next spring sometime.  So, you know, we wouldn't need to
have a full $800,000.  You know, probably the amount we could
actually spend, before the next July, would be, you know, a
couple of hundred thousand to get it going.  So, you know,
might make sense, if we can afford it, to put some money
there.

CHAIRMAN PRICE:  But my only question is, I mean,
we start drilling wells, is that coming out of our operating
budget or should it be coming out of our capital?

MR. STARR:  I think it should be coming out of capital or development.

CHAIRMAN PRICE:  Then we should have that
discussion when we get to capital then.  And I don't mean I am
not in favor of it.  I am just trying to put the money in the
right perspective here.

MR. STARR:  I agree.

MR. CRADDICK:  And what about that other one on
the stream monitoring?

CHAIRMAN PRICE:  I have no problem taking that to 50.

MR. STARR:  I was going to say 40, you know, to
show good faith, but we can go 50.

MR. CRADDICK:  At least 50.

CHAIRMAN PRICE:  Fifty.  That's what they asked
for, I think we ought to give it to them.

MR. STARR:  It's in our interest.

CHAIRMAN PRICE:  Yeah.  Ascension?  Agree?

MR. NOBRIGA:  No.  Ka Waiola.

CHAIRMAN PRICE:  Ka Waiola.

MR. NOBRIGA:  The budget no take into account any
of the streams, just puna wai, just groundwater?

MR. CRADDICK:  What are you talking about?

CHAIRMAN PRICE:  Ka Waiola, that's the Maui Tomorrow.

MR. NOBRIGA:  The scope of work is underground not overground.

MR. CRADDICK:  Seems to be working (referring to tape machine).

MR. NOBRIGA:  Because this is double dip, yeah?

MR. CRADDICK:  That would lapse at the end of this
year.  If we don't have that contract signed up by the end of
this year, that money that the board has appropriated this
year would lapse.  So, if you are looking at not getting that
contract signed up before the end of June, then we probably
should budget that.

CHAIRMAN PRICE:  Well --

MR. STARR:  I think they are separate items.  I
think one is to provide people who go out and, you know,
measure the streams with gauges, and the other one is to try
to put all the information together that people already have.

CHAIRMAN PRICE:  I say we put the 50 in.  If we
need to take some of it, we can take some of it.

MR. STARR:  I agree with the 50.  50 okay?

MR. NOBRIGA:  Yeah.

CHAIRMAN PRICE:  All right.

MR. VICTORINO:  So, we are in agreement at 50?

MR. NOBRIGA:  Yeah.

CHAIRMAN PRICE:  But that schedule we were just
looking at what was the professional services part of the
services budget.  And we discussed electricity already.  Is
there anything else you want to talk about in there?
Laboratory services is up.  Is that new, Paul?

MR. SEITZ:  No, that's not me.

CHAIRMAN PRICE:  No, Walt.

MR. CRADDICK:  Here is something called the -- I
shouldn't say something.  But the EPA phase, what they call
phase two and phase five samplings will be required.  And we
will have increased sampling for lead and copper required,
because we are still not meeting those requirements fully.
And that is what's causing the increase.

CHAIRMAN PRICE:  I just was curious.  It's not
that big an increase, just I think for everyone's
understanding.  Services, anything else?
 Other costs, we are going to move on to other
costs.  Other costs, we have in this -- in this section,
Holly -- let me jump ahead for you.  The three big numbers, in
my mind, were always the -- kind of two insurance damages
claims, Workers' Comp and rental.

MS. PERDIDO:  Yeah, just to point out, Workers'
Comp, we budget, you know, about 100,000.  It's not always
spent, but this year it looks like it will be.  Year-to-date
actuals are 56,000, and this is as of February.
 I know we have got some big charges from
downstairs, Finance, on the Workers' Comp.  We don't handle
the Workers' Comp.  It's handled through Mullen Company and
the Finance Department.  But it's our employees, the Workers'
Comp.  Does that make sense?
 The claims and settlements, judgments we budget
100,000.  As of February, it was like about 39,000.  That's
just for small claims that are put against the department
that, you know, go through corp counsel or the Mullens Company
which is the risk management downstairs.

CHAIRMAN PRICE:  For the board members' knowledge,
in the past, what we have done is looked at five years of
history in terms of claims.  We have taken five years and
totaled it, divided by five, and come with an average.
 The average is the hundred thousand, because we
had one year where we had a big claim.  So, we -- I mean, I
couldn't think of a better way to -- to estimate a number.
So, that's why we used that number.
 The only question I have, on Workers' Comp, is
that traditionally, you look at your Workers' Comp claim
experience, you identify the kinds of injuries you have, and
you create a program of education for your people.
 You know, if it's a lot of lifting claims, then
usually they can tell you what the predominance of Workers'
Comp claims are, and you put together some kind of a program.

MS. PERDIDO:  I know downstairs, it was way
behind.  We had problems with risk managers downstairs, and
they finally have someone in there, and now they have sent it
off to this John Mullens to try to clean it all up.
 So, we are kind of still paying these back things,
back charges, that finally are getting caught up, and,
hopefully, we can get a report from them.

CHAIRMAN PRICE:  Why don't you ask for a report
from them on the types of claims.  I mean, I am not looking to
point blame.  I just think it's information these guys,
division heads, could use.  Either -- you know, if it's coming
from their area, maybe it's not.  We don't know.

MR. CRADDICK:  No, it's because that medical stuff
is private information, and it is not disseminated out beyond
Cindy, myself, and yourself.

CHAIRMAN PRICE:  The type of claim, I am not
asking for any information about any individuals.

MR. CRADDICK:  Okay.

CHAIRMAN PRICE:  I am talking about type of claim.
Is it a lifting claim?  What is it?

MR. CRADDICK:  Yeah, yeah.

CHAIRMAN PRICE:  Carpal tunnel syndrome?  Is it
stress?  Is it lifting?  So we know where to focus education
with the employees.  That's what I am saying.

MR. CRADDICK:  We can do -- certainly do something
like that.  You see, the report that we get there from them.
So, I am sure we can get that information out of there.

CHAIRMAN PRICE:  It wasn't on there.  At least it
wasn't readily available off of that.

MS. PERDIDO:  One other big change was on the
rental of property.  If you notice, it decreased quite a bit.
This year the space rental here and not for the airport.  And
in the prior years, we budgeted about 82,000 for the airport.
It's never been charged to us.  So, we did not budget for it
this year.

CHAIRMAN PRICE:  Mr. Starr.

MR. STARR:  I have a little bit of concern there,
because I know that's in -- I don't know if it's in litigation
or what it is, but they had said we were going to have to pay
an enormous rent on the airport facility.  And I think we are
in kind of a lull before the storm.

CHAIRMAN PRICE:  I don't know.  I think I am
probably the reason it's out, because I am a proponent of --
it wasn't very clear.  It was a letter we -- and we responded
officially through either corp counsel or someone, and --

MR. CRADDICK:  Do you want me to give a little
background for our new board members here?  I think they don't
have any idea.

CHAIRMAN PRICE:  Quickly.  It's out of the budget.

MR. CRADDICK:  Okay.  Down in our baseyard, we
had -- I don't know how long the term of the lease was, but it
ended in 1995.  We got a letter, I think, in 1993, saying they
were going to start charging us from zero dollars per year to
about $85,000 per year.
  We objected to that, and they basically never
responded to our objection, and we have never paid it.  So,
from, say, 1995 on -- well, we do have another -- another
agreement with them just year to year, you know, that we keep
using it, subject to this charge being resolved.  And it's
just an unresolved issue.

MS. PARSONS:  Shouldn't we -- Peter, this is
probably more for Richard.  Shouldn't we be putting that money
in escrow?

CHAIRMAN PRICE:  I don't know that it's a
legitimate charge.  I think there is a question about the
legitimacy of the charge.  It's been five years, and they
haven't responded.  If they come to us and say we are going to
charge you for five years, I think we are going to respond.

MS. PARSONS:  Are they billing us for each year?

CHAIRMAN PRICE:  No, they are not billing us.
It's not like they are billing us, and we are refusing to pay.
They sent the letter years ago.  We sent an objection, and we
haven't heard from them.
 So, my question is why would you budget it?  In
the year after, maybe, yeah.  Maybe the next year.  But it's
now five or six -- it's seven years down the road.  I say take
it out.  If it becomes an issue, we fight them, and we pay.

MR. STARR:  Yeah.  I think I -- I agree.  I think
by putting it in our budget, we make ourselves more liable to
having to pay it if it becomes an issue.

MR. VICTORINO:  I think, Mr. Chair, if you put it
in your budget, it's an admission of you think it's alright.
I think it's better if we don't put it in the budget.  Leave
it out there.  Let it be settled some other way if it comes up.

CHAIRMAN PRICE:  Mr. Nobriga.

MR. NOBRIGA:  Mr. Chairman, which brings up
another matter.  At one time, didn't we want to look for a new
location for the entire department?  So you could move out of
the county building and have everybody together like one big
happy, happy family?  Shouldn't that be in the services
budget?

MR. CRADDICK:  It's in your capital improvements
budget.  There is a 20 million-dollar bond issue in there.

MR. NOBRIGA:  Sorry.

MS. PERDIDO:  One other thing I wanted to bring
up.  All the operators now, Bryce's and Bobby's, I think, have
to be certified.  So, the expense for continuing education on
that is also -- that is why some of the other expenses
increased.  And if you need more, you can talk to them on
that.

CHAIRMAN PRICE:  We want them to be educated.
Yes, Mr. Nobriga.

MR. NOBRIGA:  I notice with a $29.6 million
operating budget, our focus on rewards and safety is like
really manini.  I would really like to see safety, and
retirement, and service awards be kicked up at least another
$2,000.  And we would -- should get some better uniforms for
the boys and better safety program that works on rewarding
safe maneuver instead of punishing them for being bad boys.

CHAIRMAN PRICE:  Well, and I think that's why I
asked for the Workers' Comp histories, because if we could
find out that there is a particular trend, they can address it
in terms of safety and create incentives for that.

MR. NOBRIGA:  Why not call Dean and have a barbecue or something?

MR. CRADDICK:  May not even have to do that.

CHAIRMAN PRICE:  Okay.  Okay.  Anything else on that?  Mr. Hiranaga.

MR. HIRANAGA:  Just a question.  What is the plant
airfare, car rental at 21,000, and the per diem for travel
10,000?

MR. NOBRIGA:  Want to go buy doughnuts.

MS. PERDIDO:  One is the airfare to Molokai.
Various people, I think -- I am not sure how often.  Maybe
Bryce can expand on it.  But they have to fly over to Molokai
for the sampling, and that is what a large portion of the
airfare is for, as well as the operating certificate,
certifications.

MR. HIRANAGA:  Another question, why is the
director's budget for publications and subscriptions at
29,000?

MR. STARR:  That's all the X-rated magazines (laughter).

MR. CRADDICK:  We are -- it's called a
subscription, but it's our AWWA membership, which is, I
believe, somewhere on the order of $6,000, our AWWA Research
Foundation membership, which is about the same amount, and our
AWWA Benchmarking Group, which is about $10,000.  And those
are the bulk of the subscriptions in there.

MR. HIRANAGA:  You don't have a line item for dues
for professional organization?

MR. CRADDICK:  They don't call it that, and I
don't know why they don't call it that.  But, you could call
it, I suppose, whatever you wanted to call it if you wanted to
break it out of there.

MS. PERDIDO:  This is just the county's classification.

MR. CRADDICK:  Holly is saying that, in the IFES
program within the county, that is where those type of items
are handled, classification.  So, I don't know if it's some
accounting thing that went on way before me.  I think I
questioned it myself when I came.

CHAIRMAN PRICE:  But you can provide us with
subschedules that detail that, right?

MR. CRADDICK:  Yes, correct.

CHAIRMAN PRICE:  If you want, Kent.

MR. HIRANAGA:  No, I just was wondering what he
was reading for $2,000 a month.

MR. CRADDICK:  No, as far as I know, we don't pay
for any subscriptions.  Do we?  Does anybody pay for any
subscription?  I don't think so.

MS. PARSONS:  If there was a water magazine,
David, you would be subscribing to it, I am sure.

MR. CRADDICK:  No, it's free.  With the
membership, you get it free.

CHAIRMAN PRICE:  Other cost, anything else?

MR. CRADDICK:  I take that back.  Holly says the
Maui News, Star Bulletin advertising is in there.

CHAIRMAN PRICE:  Okay.  Debt service.  Okay.  The
debt service is calculated based on the -- all the actual
debt, right, Holly?

MS. PERDIDO:  Correct.

CHAIRMAN PRICE:  Except for now this year, there
is a provision, and it's a general provision, for capital
expenditures beyond the debt that we have.  And that's
potential land acquisition and/or office acquisition.
 And they are just taking a lump sum amount so that
something is budgeted.  It's not based on any particular --

MR. CRADDICK:  I think, in our minds, we have made
it based on some estimate, but because of the nature of the
negotiations, we don't want to tip our hand on what we are
thinking about.  So, we are putting it in there as, you know,
no specified amount for anything in particular, just
$20 million.
 And that we would expect would -- and out of that,
one million of it would be interest, one million principal.
And, well, I think that's all I better say.

MS. PARSONS:  Peter.

CHAIRMAN PRICE:  Yes, Ginny.

MS. PARSONS:  Mayor Apana said that we have a
million five that he's allotted for us, but it has to be used
before December this year.  Are you aware of that?

MR. CRADDICK:  Not to my knowledge.  I actually
asked him if it was in the budget, and the answer to that was,
no, it wasn't.

MS. PARSONS:  He just said last night he has a
million five but it has to be used by December.

MR. CRADDICK:  I will check into that.

MR. STARR:  I think he's referring to the money to
buy us out of the fifth floor.

CHAIRMAN PRICE:  Two things that may be.  One, we
did get -- now it's several years ago, I think, or is it a
year ago?  At least a year ago, we got a proposal from the
county to pay us a million five if we move out of the fifth
floor.  It changed.  There was an official proposal.

MS. PARSONS:  Well, let's go.

CHAIRMAN PRICE:  Well, it may be worth 2 million five.

MS. PARSONS:  To get rid of us?

CHAIRMAN PRICE:  And, well, besides that, where
were we going to go?  So, that's how we started the discussion
about where we would go, what type of facility we would need,
and all that.  So, that's the -- that may be the one million
five Jonathan referred to.

MS. PARSONS:  That sounded like that.

CHAIRMAN PRICE:  Or else he's referring to the
million.  He's got credit, huh?

MS. PARSONS:  He says it goes in December.

MR. CRADDICK:  I have never known the county to
budget anything for buying us out of the fifth floor, so I am
not sure.  I will have to check on that.

CHAIRMAN PRICE:  Or is it the credit he's talking
about?  No?

MR. CRADDICK:  Well, that wouldn't lapse, so --

MS. PARSONS:  This is monies.

THE COURT:  Well, we don't know.

MS. PARSONS:  Let's go find out, yeah?

CHAIRMAN PRICE:  Okay.  So, that's the only
difference in the debt service side of the budget.

MR. CRADDICK:  Yes.

CHAIRMAN PRICE:  Okay.  Moving on, I think I have
touched on everything, but the last page is the contribution
to the county's general fund, Holly, and then the equipment.
I am sorry.  Before we move into capital, before -- have we
got any questions?

MS. PERDIDO:  Yeah, basically, this is the
equipment that, through many meetings with the director and
the division heads, that he has brought the amount down to.

CHAIRMAN PRICE:  You are talking about the equipment side?

MS. PERDIDO:  Yeah, the equipment side and
basically the top side is pretty much set.  We can't negotiate
changes to overhead and all the other benefits.

MR. CRADDICK:  Could I bring up one other issue
here also?  I expect that we are going to be done with the
East Maui Supplemental EIS this next year.  I have no
illusions that we will not end up in court on that thing, and
we probably should budget something for an attorney on that.
 And my estimate would be probably in the hundred
thousand dollar range for that if we are serious about it.

MS. PARSONS:  Is that for outside counsel?

MR. CRADDICK:  Yes.

MS. PARSONS:  That's probably a good idea.

CHAIRMAN PRICE:  We have absolutely -- there is no
legal in here, because we have the stellar --

MR. CRADDICK:  I believe there is some legal.  I
think 20 -- yeah, the Waihee land purchase.  There is some in
there for legal, 20,000.

CHAIRMAN PRICE:  That is lumped in as a total.

MR. CRADDICK:  Yeah, yeah.  So, maybe instead of
having that amount there, maybe just put in 120,000 for
legal -- professional legal services.

MS. PARSONS:  The autonomous versus nonautonomous,
does it directly affect the budget in any way that we haven't
looked at, and should we budget more for legal if we have an
autonomous situation where we could --

MR. CRADDICK:  I -- I can't imagine whether it's
under the mayor or not under the mayor that would cause you to
hire outside counsel more or less.  I mean, that's a special
issue, and I don't know of any other issues coming up that
would require outside legal services in the next year.
 But, that one there, I expect -- well, I expect
that we will be challenged.  And this time here we are not
going to be able to lay back and just let it go.

MS. PARSONS:  We probably should budget more money than that.

CHAIRMAN PRICE:  Mr. Starr.

MR. STARR:  Yeah, if we are looking at a change in
facilities and possible land purchase, there is definitely
going to be a lot of due diligence and legal involved there.
So, I think we ought to put some money into a legal budget.
And, you know, whether it's East Maui or whether it's other
stuff, hopefully, we can get through that without --

MS. PARSONS:  And engineering, because if you buy
raw land rather than something -- or even something that's
there, and you take it apart, you are going to need
engineering.  So, we probably should have that budgeted as
well.

MR. STARR:  And that would be in with the construction costs.

CHAIRMAN PRICE:  Well, yeah.

MR. STARR:  How about $150,000 for legal, for
special projects legal?

CHAIRMAN PRICE:  All in agreement?  Okay.  Holly,
you heard that?

MS. PERDIDO:  So, I am taking out the Waihee land purchase?

CHAIRMAN PRICE:  No, no.  You are not taking out anything.

MS. PERDIDO:  I am just combining it to special?

CHAIRMAN PRICE:  You are going to create a line
item that says legal special projects.  You are going to put
it under professional services, and that's my recommendation,
unless there's some objection.

MS. PERDIDO:  So, I am adding 150,000 to the budget?

CHAIRMAN PRICE:  Yes, you are adding 150,000 to
the budget for legal special services under professional
services.

MR. CRADDICK:  Leaving Waihee alone.

CHAIRMAN PRICE:  Not touching Waihee, right.  Not touching your --

MR. CRADDICK:  Serious, real serious.  Okay.

CHAIRMAN PRICE:  Okay.  Equipment, we kind of
glossed over equipment, and there is a considerable reduction
in the equipment budget.  And I don't know how to say this
delicately, because it's a -- if we need equipment, David, we
need equipment.
 We don't want to squeeze our guys to the point
that we don't have what we need.  And no one said anything,
but I just looked at the 33 percent drop in equipment, and I
know -- so, if it's realistic, that's great.

MR. CRADDICK:  Are you waiting for all these guys
to say something?

CHAIRMAN PRICE:  They are not going to say a word.
I am speaking to you.

MR. CRADDICK:  No, no.  I believe it's realistic,
but I certainly don't ever tell them not to say anything, if
you want to talk to them.  I know one item that we would like
to get is --

MS. PARSONS:  No, you can't have the Expedition
this year.  I am sorry.

MR. CRADDICK:  What?

MS. PARSONS:  The Expedition, the Ford.

MR. CRADDICK:  No.  What we need to do is get our
tanks cleaned out.

CHAIRMAN PRICE:  No sailing to Honolulu either.

MR. CRADDICK:  You have got a number of ways of
doing that.  One, you take the tank out of service, two, you
put a person inside, or, three, you put a robot inside.  The
robot will be approximately $100,000, and no confined space
entry issues or anything like that.
 And I would like to get that.  I don't know if the
other guys would, but I would certainly like to get that.  I
don't know if I start into that sort of thing --

CHAIRMAN PRICE:  I am not sure there is unanimity
here on that item.

MR. CRADDICK:  Well, I can tell you right now that
is a large part of our lead and copper problem on the upper
system, because we are putting chloramines in at the Olinda
treatment plan, then we are adding free chlorine at Olinda
before we hit the first customer and otherwise wiping out the
benefits we get by putting the chloramine in the system.
 And we know the Omaopio tank, the bottom floor is
now a foot higher than it was when we built it.  But that
alone is a liability issue that is far more than the price of
that robot.

MS. PARSONS:  Do we want to --

CHAIRMAN PRICE:  Are you going to save in
chemicals by using them to clean those tanks?

MR. CRADDICK:  We will save in potential
violations.  In fact --

CHAIRMAN PRICE:  Potential violations aren't
budgeted.  Well, you guys have to tell us what you need.  All
I am saying is that I know we don't have a rate increase this
year, and I know that we -- and it is prudent for us to see if
we can tighten our belt in areas.
 But, we need to -- we need equipment, we need
equipment.  We don't want guys out there, you know.  So, you
guys -- maybe you guys can all get together, and bang each
other on the head, and come back to us if you think you need
something.  But I think that's -- sir.

MR. FUKUYAMA:  I have something.  On this list
right here, it is not listed under the chlorine containment
for my one ton cylinder.  I don't know where it went, but it's
$75,000.

MR. CRADDICK:  Actually, what we did is we thought
we were taking it out of here and putting it in the CIP, and
somehow it didn't end up on the CIP.  We are going to bring
that up when we bring up the CIP.

MS. KRAFTSOW:  It's not in this year's list, but,
I mean, it was in there.  It was in this year's list.

CHAIRMAN PRICE:  So, we need that.

MR. CRADDICK:  What it is, we have got -- at
Mokuhau, we have got a ton cylinder of chlorine there no more
than a hundred feet from the nearest house and very high risk
location.
 And OSHA does not recognize the scrubbers that we
have at the treatment plant.  So, we felt this
full-containment system, which is a lot less than a scrubber
that they do recognize as being some form of containment,
would be a way to go.

MR. STARR:  Is that like an outer tank or something?

MR. CRADDICK:  Yes.

CHAIRMAN PRICE:  And that's in capital, Ellen?

MS. KRAFTSOW:  Yeah, we cut it for some reason
from the printout for this year, but it's in that section.

MR. STARR:  It should be in capital.

CHAIRMAN PRICE:  Yeah, okay.  Anybody else want to speak?

MS. KRAFTSOW:  Can I just verify something?

CHAIRMAN PRICE:  Yes.

MS. KRAFTSOW:  So far, out of the operating budget
discussion, the changes I have to capital are 120 for membrane
filler replacement, the chlorine containment from Bryce, and
the hundred K for the robot?

CHAIRMAN PRICE:  We didn't get the robot yet.  You
are right up to that point.  No, let me backup.  The
membrane --

MR. VICTORINO:  I thought that was going to be based --

CHAIRMAN PRICE:  That is going to be based on a
schedule that Paul gives us.

MS. KRAFTSOW:  We are going to schedule that.

CHAIRMAN PRICE:  And the 75 for the chlorine
containment, yes.  And we didn't get into robots yet.  We say
no robots.

MR. NOBRIGA:  I don't know about no robots but --

CHAIRMAN PRICE:  Mr. Starr.

MR. STARR:  Yeah, you know, I would like to know
how many tanks can get cleaned for $100,000 under contract to
a pump and tank guy before we buy a robot.  But my question,
at this point, is I would like to know if we can set a time to
adjourn?
 I am just curious to know what our schedule is.  I
don't think we are going to get all the way through this
today.  I wish we could, but I don't think it's realistic.

CHAIRMAN PRICE:  I was trying to get through the
operating side and then talk about that.  Let's try and get
through the operating side.

MR. HIRANAGA:  On the robot, if the department
feels strongly enough, they should provide a justification.  I
hate to make an arbitrary decision without information.

MR. CRADDICK:  Yeah, we can do that.

CHAIRMAN PRICE:  And I agree.  That is why I
suggested that, you know, if we squeeze down the equipment,
then they all can get together, and slap each other around in
a room, and come back to us with a new equipment list we will
look at.  How about that?  Just leave it like that.

MR. NOBRIGA:  Shop Vac from Home Depot.

MR. CRADDICK:  It is basically a Shop Vac.

CHAIRMAN PRICE:  Now given that, we have gone over
the operating budget, we have made some changes.  Holly has
recorded all those changes.  You are going to get us a new
copy.  It's 20 minutes to 5:00.  I wanted to end no later than
5:00, because it gives everybody a chance to get upcountry,
grab a sandwich, whatever, for the 6:00 o'clock hearing.

MR. CRADDICK:  One other thing, also, I don't know
if you are going to recess this meeting for another day, but
if you could set the public hearing time it would be handy,
because we are going to have to be able to get that in the
newspaper.

CHAIRMAN PRICE:  Yeah, okay.  So, most of you have
responded to the e-mail about the 13th.  Some people are gone,
which is okay.  I will be there.  Adolph will be present in
Molokai.  Kent will be here.  So, Ginny is going to be here.
So, we are going to -- I think it's a public hearing on the
budget, and unless there is an objection, I am going to
schedule it for that day, June 13th.

MR. CRADDICK:  Okay.

CHAIRMAN PRICE:  No problem.  Okay.  Now we want to --

MR. NOBRIGA:  Can we do that at this session?
Really?  Because this is --

MR. CRADDICK:  This is a noticed full board meeting.

MR. NOBRIGA:  I thought it was noticed as a workshop.

MR. CRADDICK:  It is noticed as a workshop, but
it's a full board meeting.

MR. NOBRIGA:  Okay.  Fine.

CHAIRMAN PRICE:  Wait a minute.  Wait a minute.
The setting of a date for a hearing, does it need board action
or can it be done by the chair with the -- that's the
question.  Does it have to be done -- Mike brings up a good point.

MR. NOBRIGA:  I would defer to --

CHAIRMAN PRICE:  That is who I am kind of
deferring to.  He's looking.

MR. NOBRIGA:  I just don't like to read stuff
about it us in the paper that is negative.

MR. VICTORINO:  Yeah.

MR. NOBRIGA:  Although at least they spelled his
name right.  That is pretty good.

MR. MINITOYA:  I am reading, so you can blame me.
It does list it as a Budget Workshop, but an agenda item is
discussion slash possible action regarding fiscal year
2002-2003 operating and CIP budgets.  And, so, I guess it
appears that setting of the public hearing on the budget would
fall under item 4A.

CHAIRMAN PRICE:  Anyone have a problem with that?

MR. VICTORINO:  No.

MS. PARSONS:  Speak now or forever hold your peace.

CHAIRMAN PRICE:  So then --

MR. VICTORINO:  So, June 13th.  Let's have it.  We
can use a motion.  I move we have the meeting held -- budget
hearing, public hearing on June 13th.  What time?

MR. CRADDICK:  6:00.

MR. VICTORINO:  6:00, 6:00 p.m.

MR. NOBRIGA:  Second.

CHAIRMAN PRICE:  Moved and seconded.  Any
discussion?  All in favor say aye.  Opposed say nay.  Motion
is cared.  The meeting is set.
 We are going to recess this meeting to review the
CIP portion.  Mr. Starr.

MR. STARR:  Before we do it, could I just ask
one -- one question?

CHAIRMAN PRICE:  Sure.

MR. STARR:  You know, an item very dear to my
heart is this replacement fund transfer to capital.  Is
that -- I assume that we are going to take that item up at the
next session.  Am I correct?

CHAIRMAN PRICE:  Yes, absolutely.  And as you
know, I have been trying to do some research as to how we can
accomplish that.

MR. CRADDICK:  Peter, also, could I pass out one
thing he