BOARD OF WATER SUPPLY
COUNTY OF MAUI
BUDGET WORKSHOP


Thursday, May 30, 2002
9:00 a.m.
Volume II

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
                         JONATHAN STARR
                         MICHAEL VICTORINO
                         CLARK HASHIMOTO
Corp Counsel:            EDWARD KUSHI
Director:                DAVID CRADDICK
Deputy Director:         GEORGE TENGAN
Board Secretary:         FRAN NAGO
Engineering:             HERBERT KOGASAKA
Staff:                   ELLEN KRAFTSOW
                         HOLLY PERDIDO

(Thursday, May 30, 2002, 9:11 a.m.)

CHAIRMAN RICE:  All right.  Let's go.  I am going
to reconvene -- is that the correct term -- following our
meeting on the Budget Workshop.
 It's May 30th.  We are in Kahului Shopping Center.
Present is Clark Hashimoto, Mike Victorino, Mike Nobriga,
Jonathan Starr, and myself.
 Director David Craddick, staff, and Corp Counsel,
and Ed Kushi, Junior, who is set to walk in any second.  We
left off with discussion of CIP projects, I believe.
So, Mr. Craddick.

MR. CRADDICK:  Okay.  In your package there, we
have the little overview of the proposed budget outlining
$32 million in projects.  And it should be noted that
20 million is included in this projection for possible land
and office space acquisition to be funded by a bond issue.
 This provision -- excluding this provision, the
budget outlines 12.2 million in projects.  The budget proposal
projects one million being transferred from the operating
revenue fund for CIP projects.
 And depending on the board's decision regarding
proposed bond issue, an additional one to two million could be
available for CIP projects.
 The majority of the CIP represents projects that
are carryovers from fiscal year '02.  The budget reflects a
continuing emphasis on pipeline replacement with 4.8 million
targeted in this category.  About 2.3 million is allocated to
projects related to the distribution of withdrawals to the Iao
aquifer.
 And there's two items that are not in that
presentation.  One was handed out at the earlier part of the
Budget Workshop, where the Keanae well, which is 200,000,
Kupaa well, a little over 900,000, the Kula waterline,
700,000, Wailuku Town waterline 50,000, and Mill Street
waterline 33,000, for a total of 1.9 million that was supposed
to have gone out in this year's -- this fiscal year.
 And those projects, I believe, engineering is
saying now they will not get them out this year.  So, those
projects did not show up as funds available in this budget.
So, by adding this 1.9 million in projects to the
12.2 million, there will be funds for that, because there will
be additional carryover from this year.
 The other item is the East Maui Development Plan
pipeline project.  The job was bid in 1994, and some amount of
money will have to be allocated for escalation of that
contract.  And that's all.
So, I will turn it over to Ellen.

CHAIRMAN RICE:  Mr. Starr.

MR. STARR:  One thing that sticks out, in my mind,
is having this 20 million-dollar bond issue handled as just a
regular part of the CIP.  And I think it kind of skews the
whole -- the whole thing.  And this was something that may or
may not happen, may or may not happen this year.  I mean, it's
a significant number.
 My feeling is that it shouldn't be in the regular
CIP budget, but it should be handled some other way.  And then
if it happens, you know, the money is coming from a bond, it's
not coming from the fund.  So, I would prefer to see it
developed in a different manner, you know, not in the regular
CIP budget.

CHAIRMAN RICE:  Is it technically in the CIP
budget?  Don't the monies for a potential bond issue really
just show up as debt in the debt service which would be the
operating debt service?

MR. CRADDICK:  That's correct.  And it does show up there.

CHAIRMAN RICE:  Right.  So, there's actually no
money, as I -- as we went through the first section, Jonathan,
I believe when we got to the debt service on the operating
budget, we had added basically $2 million in debt service.
 There is no cash being budgeted for either of
those projects, I don't think.  And I don't think I see them
here.  The bond issue is listed as a bond issue, but that's
not -- if I am correct, that's not cash that we are providing.

MS. KRAFTSOW:  It is something that gets -- the
stuff that we bill to purchase with is stuff that would be
part of our capital improvements.  So, the way the CIP program
is set up, you can sort things out by source of funds.  So,
those two items would be held separately as bond issue items.
 So even though they show up in the CIP, they
wouldn't show up in the total for any other source of funds
right now.

CHAIRMAN RICE:  I see what you are saying.  Why
did they have to show up here?

MR. CRADDICK:  Are you questioning whether they
are capital improvements?

CHAIRMAN RICE:  No, I am just wondering.  It's
not -- it's these funny accounting things.  It's not cash that
we are allocating from our CIP budget.  I think that's
Mr. Starr's point.  If someone was to read this wrong, they'd
say, "God, why are you taking $20 million out of your capital
improvement budget?"  You are not.

MR. STARR:  I see the -- you know, as Mr. Craddick
expressed, we have the 32 million-dollar capital improvement
budget this year.  And I -- I think, realistically, we have a
12 million-dollar capital improvement budget with, you know, a
special project that may occur, you know, that will be bonded
separately.

CHAIRMAN RICE:  Yeah.  Yes, Mr. Craddick.

MR. CRADDICK:  In 1998, the CIP was prepared with
the assumption that there would be a 12 million-dollar bond
issuance.  We ended up only issuing $10 million in bonds that
year, but the pipeline projects did get listed.  It just
showed that they were funded out of the bond proceeds.  So --

CHAIRMAN RICE:  Well, yeah.  I think once the
transaction occurs, then there is an entry for that asset.
There is no question.
Mr. Nobriga.

MR. NOBRIGA:  I would like to suggest that we go
through the presentation that has been prepared, and then we
come back to discussion concerning the budget.  Because there
are -- there is one amendment that is being requested, and
there is also this matter of the bond issue, that I think we
can take care of very easily with an amendment.

CHAIRMAN RICE:  Okay.  Good suggestion.  Go ahead.

MR. CRADDICK:  Well, wait one second, Ellen.  The
things that we talked about at the last meeting, whether you
wanted to -- the membrane items were a repair and maintenance
item or a capital improvement.  And the -- we have a handout
on that from the treatment plant, and I will pass that out
here while Ellen is giving her presentation.  It's about
$120,000.
 And the other item that we talked about was
whether we were going to do anything with USGS on the drilling
rig program.  And from the sounds of things, they don't have
matching funds, so we would be looking at closer to eight or
$900,000, versus the 450 that is normally put in.
 And then one item, while we were going over the
equipment items, there was one chlorine containment item that
is $75,000 that would also have to be added into this.
So, Ellen.

MR. NOBRIGA:  Excuse me, Mr. Chairman.

CHAIRMAN RICE:  Yes.

MR. NOBRIGA:  So, for the record, you are
requesting amendment to the portion of the budget that we
reviewed at the previous part of this recessed meeting?

MR. CRADDICK:  Other than the amendment you wanted
to take the membranes out of the -- the operating portion of
the budget.

MR. NOBRIGA:  You start and stopped there, so I
get confused what you are saying sometimes.  Go ahead.

CHAIRMAN RICE:  Those things you listed,
Mr. Craddick, would be amendments to the CIP budget, I
believe.

MR. CRADDICK:  Yes.

MR. VICTORINO:  You drink too much of this tea,
Mad River Tea.

MS. KRAFTSOW:  So, Dave asked me, before we go
into the discussion of the Capital Improvement Budget itself,
to just give you a brief explanation of how the Capital
Improvement Program is put together, because there seems to be
some need for that.
 So, the initial development of the Capital
Improvement Program occurred in about 1994, and it's been
undergoing steady revisions since then all with in-house
staff.
 I am going to go over a little bit how that
program was developed, and then I will give you some visuals
that will help to explain that further, a description of how
projects were selected and prioritized, and describe some of
the continuing improvements we are making to the ongoing
Capital Improvement Program, and then we will get to this
year's CIP.
 The initial preparation began with -- we didn't
have GIS at the time, but it began with identification of
substandard areas and particularly substandard pipelines based
on review of fire protections maps, their size, then material
and age, whether or not we were getting frequent breaks or
complaints, and also we actually hand-colored zoning and
community plan designation onto fire protection maps, so that
we could see to help prioritize where lines were undersized
for the designations.
 We also did an inventory.  Obviously, I didn't get
everything.  You just see the treatment plants weren't in
there.  At the time, we were still building the treatment
plants actually.  They never did get added yet though.  But we
did inventory pumps, and tanks, and reviewed the staff at what
schedule they typically need to be replaced.
 So, there was an inventory element.  Then we
looked at capacities by system, and, in some cases, where we
could, even by subhistory, reviewed the existing capacities.
And we ran some forecasts on our consumption.
 We also looked at the planning department's
forecast, and we compared those to what we knew about our
capacities and plant projects to see what additional storage.
And, so, those needed to be scheduled.
 We looked at existing area and regional plans.
There were regional plans for Upcountry.  There were regional
plans for Lahaina, and looked at the capital and maintenance
suggestions in those plans.
 Finally, all of this was discussed and reviewed,
particularly with the engineers, but also with the operators,
and we got public testimony.  We do get -- every, every
request for capital improvement that comes in results in, at
the very least, an unscheduled project review of what this
project would look like.
 Then, to compile all this and analyze it for
preparation of the plan, there was an initial cost and
expenditure analysis, which basically consisted of first a
review of historical data on expenditures.  At the time, what
did we think we actually could do in a year, and what did we
think we would need to do to get the priority budgets done in
that timeframe.  And then there were anticipated costs.  Some
of those were regional plans, hired design costs.  Some of
them were able to be updated based on recent project costs.
 We discussed with Herb and other engineers and
came up with cost calculation factors by which I calculated
the cost of virtually every project in the program, which is
reviewed and updated annually except for where there are
specific engineered estimates.
 Then we -- aside from the inventory, we began the
mapping inventory for the GIS of all the pipes and systems.
Every single time you see a map of our system, every one of
those pipes was entered independently.  Anytime you see any
data attached to those pipes, colored by age or diameter, all
of that information had to be entered, too.  This takes years
to do.
 We also -- again, I guess this is sort of a
repetitive thing.  We looked at community plan designations
and so on versus small lines.  Compiled all this into
data-based tables.  Right now there are about six main master
tables for the CIP plan which are linked together with a
process called referential integrity.  And through a series of
inquiries and reports, you can generate information.
 And we began the effort, which is going to tie
this capital improvement program to the graphical
representation, so that we can show it to you initially using
that stuff.
 Okay.  Now, this is a slide you have seen before
in pretty much every year's CIP information hearing on how
projects are chosen, but I am going to go into it again,
because I am going to show you and describe what that means.
 Okay.  So, first, we looked at regular
requirements and resource protection.  That would be things
like getting out of the Iao aquifer or building treatment
plants.
 Inventory and replacement histories, that would be
how many pumps do we have, where are they, how old they, when
do they need to be replaced, those kind of things, breaks,
flow, pressure problems.  We have a break report that comes in
every year.
 Reliability and considerations in system status,
this is like -- ties into both breaks and also what's this --
what's the material of this pipe, how old is it, et cetera.
 System trends, that's the demand forecasts and
growth versus needs.  Community plans, zoning consistency,
board priorities, and community input, sometimes there are
projects that come up just based on a lot of public desire.
 I won't go into the regulatory requirements and
resource protection.  I think you are all familiar with how
that can dictate a capital project priority.
 The inventory and replacement history, this is
just a sample set of data about our pumps.  In some cases, we
didn't have necessarily the best data about when it was
replaced or installed, but we put together as much as we
could, and we are continuously updating that.
 System breaks, this is a partial plot.  It just
shows some -- the most frequent Upcountry and Central Maui
breaks, but those went into replacing -- making a priority.
You can see the gold dots there are the breaks.

CHAIRMAN RICE:  Ellen, excuse me.  Backup to that
one slide, please.  Could you just explain the colors or is
there just one color?

MS. KRAFTSOW:  The black lines are the TMK parcels
around the island.  Probably it makes it too busy.  I probably
should have turned that off, but it helps some people locate
themselves.
 The blue lines are just our pipelines, and the
gold lines are the breaks.  And like I said, I prepared this
visual.  I only plotted the ones for -- pardon me -- for
Central Maui and Upcountry, the most frequent breaks.

MR. NOBRIGA:  Can we access this map on the internet?

MS. KRAFTSOW:  No, but that could probably be
arranged.  That would be up to the board and the director.
Right now, it's not set up that you can.  I can't even put the
whole arc view and Capital Improvement Program on this laptop,
so I am just showing you the power point on it.

MR. NOBRIGA:  Once it would be on the internet,
would we have zoom in capabilities?

MS. KRAFTSOW:  There are securities issue with
what you post on the internet, so that would be a separate
discussion.  I don't currently have the programming capability
to do web and arc programming together.  I would love to
learn, but it could be done.
 You know, I know people who can do it.  I could
arrange for a contract to do it, but then there are securities
issues that need to be dealt with, too.

MR. NOBRIGA:  Never mind.

MS. KRAFTSOW:  Okay.  Breaks, flow, pressure
problems, and optimization.  This is just a close-up of what I
showed you before.  These are the breaks, and it's really too
bad that it's -- I guess I picked an unfortunate color.
 This is showing pipelines by diameter, and it's
showing also -- the CIP is in the light lavender, and you are
not really seeing the light lavender as well as I hoped up.
But, it shows up beautifully on my computer monitor.  But this
is a close-up showing you how a break would tie into a CIP.
 This is another tool that we will be bringing in
to help us with the CIP.  We do not yet have this data in the
hydraulic model at a level and linked adequately that we can
use them for design of the CIP or even -- or even, really,
prioritization yet.  We need to still calibrate those
models -- the model.  I mean, still get the scale more
directly to --

MR. NOBRIGA:  All these yellows, these all are
breaks?  These yellows?  These are all breaks, these yellows?

MS. KRAFTSOW:  No, actually, this plot is -- on
the left is a run, a sample run from our model that is
plotting pressures.  And the legend that you see there -- the
red is below 20 PSI, and the orange is below 40, and the
yellow is below 60.  Basically, you would look at the red
areas.  For extremely high pressures you might also look at
the -- whatever color I made that -- olive or brown.

MR. HASHIMOTO:  Ellen, could you just reproduce
that and instead of these smaller sizes --

MR. NOBRIGA:  It's over there.

MR. HASHIMOTO:  If you have it on a full-size page
in color, you would be able to see it, right?

MS. KRAFTSOW:  Yeah, I can print you out --

MR. VICTORINO:  A full size, please.

MS. KRAFTSOW:  Yeah, I can do that.  This is just
to show you sort of what's coming, and where some of the work
is going to update the CIP and continue to improve it.
 Reliability and systems status, one of the things
that would go into that is how old is the pipe?  If it's
really, really old, there is a chance it's going to be less
reliable.  It's hard to see, except that even from where you
are sitting, you can see if it's red, it's going to be old.
 If you think of a rainbow, Roy G. Biv.  I made all
of these slides for you, so if you look at any one of the
slides, whatever is red is a problem.  Okay.  So, whenever you
are seeing red, you know it's probably a problem.
 Diameter, same thing, the really small ones would
be red.  I do close-ups of these later, so this is just --
this is the kind of thing.  And you will also see -- well, you
don't see it very well, but wherever there is brown, it's
listed as unknown.  That means either we haven't entered it
yet.  Often with age, though, what it really means is that
it's really old, and there weren't as-builts.
 So, another interesting thing you can see here is
the kind of maroony color around Kahului, that's all AC pipe.
Here is an example.  This is a CIP project that we did in the
past Alanui and Halama Streets, and this is by age.  And you
see how those -- the line going across one of them is red and
the other two lines are brown.  That is because it's a real
old project, so when we zoom in, you see what's old.
 So, here is an example of age.  And if you look at
this, this is the same thing.  This is the age plot.  The
brown is probably really, really old, and that's our CIP
overlays.  So, you can see pretty much all the brown, except
where there might be a lavender that we might not even want to
replace.  The one at the bottom there, where there is a
yellow -- actually, it's at the top left, but it's downhill.
 So, this is an example of how CIP ties into the
age of the pipe as what's prioritized.  This is a diameter
example.  You see all those red lines in Wailuku?  There is a
CIP on it.  You can see where the colors disappear, if you
can't see the colors clearly.  Can you see what's happening
there between these two?
 Mike is saying no.  Peter is saying yes.

MR. VICTORINO:  I see it come and go, come and go,
but like I say, we need binoculars or better eyes.

MR. NOBRIGA:  Or bigger screen.

MS. KRAFTSOW:  Yeah, I am sorry.  Anyway, where
the colors disappear, those are CIP projects.

CHAIRMAN RICE:  That are ongoing or proposed?

MS. KRAFTSOW:  I actually don't have every single
project in our CIP database plotted.  We started with the
within five years ones.  So, they are not -- whether they
actually all get done within five years, they were at one
point scheduled.  Actually, there might be some unscheduled
projects.  But the current ones I made bright purple, so you
will see those, but not on this slide, unfortunately.
 Diameter, this is the diameter example.  You see
the age and diameter is almost the same area.  This is the
same slide from Upcountry where we had an unknown age, and
look at the diameter.  It's like less than four inches,
probably two inches.  Everything less than four inches was
red.  So, that is an example with diameter.
 Now, this is type of materials, and the reason
that I put this up is almost all of this is unknown, but there
is a red line there, which is transite, which is a really old
asbestos pipe, and that's included in the CIP.  That is an
example from Kaunakakai.
 This is a Kahului example where all the -- another
AC pipe is, not as old.  And you can see that so far, I only
highlighted that top right corner where the colors disappear.
That is because if you keep going, this is that same area by
age.  And if you look at the age, the red area is what got the
CIP.  So, when you overlie the CIP, with the age and material,
the older concrete pipe got scheduled first.
 And this is an example of system trends.  This is
an old regression, but it is not as old as 1994.  And there is
one newer one plotted within there, too.  These are different
projections of the Central Maui system demand.  Some came from
the constrained forecast and unconstrained forecast from the
planning department.  Some were regressions that we did on our
consumption.
 And that last, at the bottom of the legend, there
is one that was running with cleaned up -- eight years of
really, really cleaned up data for our demand forecast project
that is ongoing, which follows almost exactly in the middle of
all the other forecasts.
 This is a small sample set.  This is
oversimplifying a little bit.  You can at least see, if we
presume that demand is -- in Central Maui, is going to be,
say, 31 MGD in 2020, just in Central Maui, then we would need
48 -- actually, this is -- depending how you run the
standards, we might not need 48 million gallons of pump
capacity.  We might need more than that, but this is a
conservative estimate of what we need in storage, about 47 and
a half million.
 So, that is how -- you know, I need to schedule a
storage project out here, whether or not I know where it's
going to be sited exactly, or where it's going to be sized.  I
can calculate that much storage, for that district, and put it
into the program, and this is done.
 This is a community plan --

MR. CRADDICK:  Ellen, can you backup to that one
and tell them how much of the source we currently have?

MS. KRAFTSOW:  How much what?

MR. CRADDICK:  Of the source we currently have?

MS. KRAFTSOW:  You know, I have it somewhere.  I
think our source capacity is under 45 million for Central.

MR. CRADDICK:  This is what we currently have, if
this is Central Maui.  Is this Central Maui or is this total?

MS. KRAFTSOW:  This is what would be required by a
low estimate of the standard using just max date plus with the
fire --

MR. CRADDICK:  For the whole system?

MS. KRAFTSOW:  Yeah, so, actually by using the
two-thirds of two-thirds, we would need even more than this.
But when I was running these numbers out, when it got to 2020,
it got even higher.  But I do have our installed pumpage
capacity somewhere.  I think it's 43, 44?

MR. CRADDICK:  No.  Forty-one in Central Maui.

MS. KRAFTSOW:  Forty-one.  Okay.  Anyway, so, this
is one way.  And then this is looking at diameter and
community plan.  So, the red is a small diameter.  This is the
planning mill area project.  That became a CIP.  That's
actually done already.  Some of these haven't been updated.
 There are some additional ones.  You can see down
there, especially the purple line at the bottom, which, if you
look at it, it doesn't look substandard necessarily by this
map.  But when you look at it with the community plan, that is
a commercial area.  So, that line becomes substandard, that
bright purple line down there.
 This is -- I should say this is not the official
community plan map.  We have never gotten a single final
community plan zoning map out of the county, and it's been a
big frustration for doing our plans.  So, this is something
that I actually contracted with somebody to enter a draft that
we could use while we were doing the water resource plan for
Lahaina.
 And this is hand-colored in with Adobe Photo Shop
based on the hand-colored maps.  Which I left one lying on the
table last week, but I don't know where that went.  This is an
example of how the Lower Kula line got prioritized.  All the
way it is still zoned agriculture which is blue.  I think this
is blue.  And the other was purple, commercial.  So, that was
a line that was very substandard for the designation of -- the
community plan designation in that area.  And, so, that is how
it got into the capital project.
 So, continuing, some improvements.  We need to
continue to update and improve our inventories, as the key for
last week, and facility databases.  That is also ongoing for
some of our other efforts.  Continuing gathering and entering
of data.  And geo-referencing of that data means making it so
that it can be mapped and plotted with our database.
 Reconciling the ID's, the asset model that we have
got, we gave them the data from the hydraulic model, and we
asked them to use the same ID's.  And they used the same ID's,
but somehow they must have transposed something incorrectly or
something, but the ID's don't match.  And we have tried
several ways to make them match, and they don't.  And sooner
or later, we will have to go in, and it will take a good
person month, at least, to figure it out and make it work.
 We need to improve the links between our GIS
model, CIP and GIS.  All of these things, as they grow, will
help.  I mean, it sounds like gobbledygook, but it's not.
It's something that we use.
 And to maintain and update our relational data
links, that is a job in itself, just to make all these things
all work together and point to the same lines.  To improve the
visual outputs, because I know guys like to see charts and
graphs and all that stuff.  This doesn't automatically
generate that.  We have to go in and do it.
 Once we get the cost of prioritization functions
completed, by updating the inventory, getting all that stuff
above done, then we want to work on functionality for future
design, which would mean getting that model that we have
calibrated, and getting the ability to load that into the
hydraulic model, and look at future system pressures and
future system flows in sizing tanks and stuff.  That is long
term.
 And this is going to the -- the current community
plan.  The red dots are this year's proposals.  This is
showing it broken down by how those dots are in the community
plan district.  As you can see here, our community plan
districts and our systems are different districts, right?  We
have to plan for our system needs.
 Some of our systems cross community plans, so this
is -- I colored our systems in different colors, and overlaid
them with the community plan, so you can see how that relates.
 And now this is a breakdown of this year's budget.
And, Jonathan, in relation to your thing, I -- in this -- this
report, right, the database currently will break it up by
source of fund, by year, by district, by any number of things.
Okay.
 For the purpose of this presentation, though, I
took the bond projects and separated it.  Partly, because I
think Corp Counsel didn't want the costs of some of that --
some of those projects discussed independently.  But, if you
want to look at the 12-point, whatever, that we are budgeting
this year, projects that affect all districts are about
990,000.  Projects that affect Central Maui primarily are
3.9 million.  Projects that affect Hana primarily are about
50,000.  Right now, Lahaina, 815,000.  Molokai, 1.35 million,
Upcountry, 5.077 million.
 And then the bond projects, which we will say will
affect all systems.  So, really, you can make the all category
be 20.99.  And then for improvement and expansion, also this
was to get the bond out of there.
 Improvement slash replacement projects, out of the
existing 12 -- that's not counting the data that Herb just
added -- was improvement, about 6 million 5.932, and expansion
about 6.25, and the bond 20.  And I should say that if we get
approval, the additional 1.908 million that was just requested
of you would add another 200,000 to Hana, and another
1.008 million to Central Maui, and 700,000 to Upcountry.

MR. STARR:  While we have that --

CHAIRMAN RICE:  Go ahead, Jonathan.

MR. STARR:  Is it possible to relate those numbers
to consumers, you know, to ratepayers?

MS. KRAFTSOW:  I am not sure I understand the question.

CHAIRMAN RICE:  Go back one slide.  If you put the
number of consumers --

MS. KRAFTSOW:  On your system?

CHAIRMAN RICE:  -- that we service, on the right
hand next to that column.

MR. STARR:  That is something I would like to see.
I know I can't ask you to do that today, but I think we
should --

MS. KRAFTSOW:  So, like the number of meters in each system?

MR. STARR:  I would like to know what we are
spending per meter per district.

MS. KRAFTSOW:  I actually might have that here somewhere.

CHAIRMAN RICE:  You don't have to do it right now.
It's just a good idea.

MS. KRAFTSOW:  On this slide, I was determined to
make this slide, but I see it's going to be useless, because
you won't be able to read it.  But I am just going to -- hang
on.
 I am going to go to where at least I can read it
to you and tell you what it is.  This is a comparison of the
asset model that Brown & Caldwell did with the CIP program.  I
don't think that the board -- forgive me for saying so, but my
impress has been that the board has never really understood
what the differences are, and what the differences in their
functionality are, and how they can and should eventually tie
together, but what work goes in the tying them together.
 So, I prepared this slide that describes these
differences.  And I can't even read it on the screen.  It's so
small.  So, I was expecting this to be bigger, but I do have
it here.  The asset model, the --

CHAIRMAN RICE:  I don't know that you are going to
benefit us by reading it at this point.  I think you should
print it out and distribute it to everybody to read and we can
discuss it.

MS. KRAFTSOW:  Okay.  Then, that's it for the
slide presentation.  So, that was just to explain to you how
the CIP was put together.

CHAIRMAN RICE:  Well, I think some of that is very
good stuff, and my question to you would be if you haven't
updated it in five years, then how do we get accurate
information as to what needs to be replaced?

MS. KRAFTSOW:  No, we update it every year, but
some of the data -- you know, every year is still going on.
Okay.  The total --

CHAIRMAN RICE:  You made the statement that it's not updated.

MS. KRAFTSOW:  Right.  Okay.  All of the plotting
and entering of data that we have, for the first effort, was
the GIS.  We entered schematically all the pipelines.  Then
for the hydraulic model, we have students going through the
as-builts, and we tried to enter the ages, and diameters, and
materials.  Okay.
 There was some built-in error to that.  So, right
now, for like Lahaina, I am almost complete.  It took a
student a year now just to do Lahaina.  But really updated
information on -- from the as-builts for Lahaina.  And
checking all the sizes, and also all the -- adding data for
things like hydrants, and data that wasn't in the initial
gathering.
 But, every year, we update what were the breaks?
What were the projects that are needed?  What are the
forecasts, et cetera?  But I don't necessarily have all of
that perfectly updated and plotted to show you, in the GIS
system, because I don't even need the GIS system to do this.
I just need the GIS system to show it to you.
 One day, I will be able to make it run from the
GIS, so that I will just like pull up a map, and I will know
where my priorities are.  Already, I can pull up a map, and
know where there might be priorities, then I need to do a
double check to my database to make sure the data are
consistent.
 But every year, things are going on.  Also, that
total that -- that Brown & Caldwell model, the total number of
projects inventory in there, that none of which are
geographicable, none of which can I plot of where they are
based on the data in there, unfortunately.  That's like almost
3,000 projects.
 So far, our entire CIP still only has about 1130
or 40 projects.  So, you know, it's a process of getting
everything in and getting everything properly categorized and
all that.  But the system is already working.  It's already
good enough that, every year, I can come up with a short list
of, say, two or three times what we want to spend and
prioritize down from there.

CHAIRMAN RICE:  So, if we said we want to look at
Upcountry -- we want to look at those pipelines that are
undersized and old, and we want to look at those that have
been completed, and those that are yet to complete, you can
show it?  I don't necessarily mean a graphic, but you can give
us that data?

MS. KRAFTSOW:  Yeah, I have this sort of abbreviated version.

CHAIRMAN RICE:  I don't need to see it right this
second.  I am just asking you that if we said we want to know
by section, Central, Upcountry, Lahaina, whatever, West Maui.
We want to see what was the need, what has been done or is in
the process, and what needs to be done, so then the board can
get comfortable with where we are going, you can give them
that?

MS. KRAFTSOW:  Right.

CHAIRMAN RICE:  But that doesn't have to be a
graphic picture either.

MS. KRAFTSOW:  Uh-huh, uh-huh.  Yes, with some --
I mean, it's not like instant like that, but I go in, and I do
some manipulation, and I play around with it, and then I can
come up with a list, yes.

CHAIRMAN RICE:  But you needed to do that in order
to do this presentation, though.  You should have already done
that then.

MS. KRAFTSOW:  No, this presentation is just --

CHAIRMAN RICE:  No, I don't mean the visual maps.
I mean this budget.  This budget is based on --

MS. KRAFTSOW:  Right.  I can give you a list of
all Upcountry projects that are currently in the database, and
where those ones that have numbers assigned from fiscal,
that's a good sign that they have already been budgeted or
done.
 We don't have this -- one of the goals is to have
this tie into the fiscal spend down and eventually have every
single system asset tied to this, which was also the idea of
planning the asset replacement model, which is where it was
frustrating.  Because I was already trying to do it.  Yes, the
replacement model is good.  It's faster, but it is not project
specific.
 This is project specific, but it's a lot slower to
put together and run.  I can give you a list of all Upcountry
projects.  In fact, I have, in the past, given the board a
list of all Upcountry projects in the CIP.
 To look at status of each project and what's done,
some of it is in there under the remarks section.  It was
budgeted this year, and it was done this year, or it still
needs more, or this or that.  Some of it is probably not
entirely updated.  Most of it should be in there.  Most of it
that was done.

CHAIRMAN RICE:  Don't you agree that you have to
go through the process of looking at what needs to be done,
what is done, what is in process, before you can then tell us
what you think needs to be done in the new year?

MS. KRAFTSOW:  Right, we do.

CHAIRMAN RICE:  Okay.

MS. KRAFTSOW:  That was the broad thing of what
needed to be done broadly.  You can see --

CHAIRMAN RICE:  Not broadly.  Not broadly.  Not
broadly.  Specifically.

MS. KRAFTSOW:  Well, I think that's semantics.  I
mean, that was a list.  When you look at that visual of
Upcountry, okay, you can look at it on the wall there.  You
look at where all the red lines are.  Those all need to be
done.
 That is updated as of the best that we had as
of -- for some systems, '96.  For some '98.  In the map, in
the computer, it's a little more updated.  And in the
computer, it will say this project was done this year.  I can
look it up by do I have a project for this street?  Yes.
Okay.  When I look it up in the remarks, does it say it was
done or not done?  Does it have an assigned budgeted number?
 The short answer to your question is, yes, Peter,
I can give that to you.  I don't know exactly what it is --

CHAIRMAN RICE:  But you can't -- this board can't
make a decision to approve a project unless we know there is a
logical progression to what should be done.  Yeah, we can look
at a map and say all these red lines need to be done.  We
can't do them all this year.

MS. KRAFTSOW:  Right.

CHAIRMAN RICE:  Right?  Some of them have been
done.  Some of are them are in progress.  Right?

MS. KRAFTSOW:  Right.

CHAIRMAN RICE:  Then the next logical question is
which ones do we do next?  Right?

MS. KRAFTSOW:  Right.

CHAIRMAN RICE:  And based on your data, that says
older, the size, et cetera, right, we choose these next ones.

MS. KRAFTSOW:  Okay.  I think I understand your
question now.  The initial list -- to even make it into the
scheduled list, it had to be one of those higher priority
projects or be based on demand forecasts or whatever.  To even
get on the list, it went through a certain prioritization.
 Because we don't have everything entered, we don't
have the complete inventory entered and scheduled, right?  So,
to even get into the initial schedule, it had some priority.
 Then each year, what's coming up is we know what
the demand trends are this year.  We know where the breaks are
this year.  We know the pumps don't always break down on
schedule.  We know how they are performing, because we are
talking to the district engineers.  We know where there are
complaints, every complaint that's been had.
 And based on discussions in-house, any one of
these -- any one of those you saw in there would be a really
valid project period.  Period.  And how you prioritize it
sometimes is just like which wheel is squeaking the worst.
 And we just don't have the money to do everything
we need to do.  And also, you want to break it down so that
every system gets some money.  You want to break it down so
this is a more commercial area, so this is a higher priority
than this area.  Only five people are going to be served.
 And that goes into the mix every year when we
select our projects.  Then there is also the issue of, well,
these projects are already halfway designed, so we should be
scheduling them.  These ones will take longer to finish to get
ready.  So, there is also some lead time that engineering
needs before we can even bring a project to you to schedule.

CHAIRMAN RICE:  But what I am hearing is all that
mix is in your head.  It's talking to the department heads and
everybody.  And, I mean, because what if somebody comes into
this meeting, and says, I want to know why I am up in
Upcountry, and this street over here is getting a pipe
replacement and mine is not.

MS. KRAFTSOW:  Uh-huh.

CHAIRMAN RICE:  We should be able to have some reasonable explanation.

MS. KRAFTSOW:  You are talking about a criteria
matrix, and we have looked at some.  AWWDOF has a premade one
that we can use and plug in numbers and do cost benefit.  But
I looked at it, and I looked at it with a couple of our
consultants, in fact.  And I thought it was just nonsense,
because it's really beautiful how it does it and everything,
but the benefit/cost ratios aren't really meaningful, which
you can check with a consultant about it.
 You know, it looks good, and you can invent a
reason.  But the real reason is, if you have two four-inch
lines, okay, and they are both in an ag zoned area, and they
both have roughly 20 or 30 meters on them, there really is no
legitimate purpose why you would have to do one before the
other, except that you can only do one at a time.
 And you say, yes, we are doing this one this year,
and, by the way, we are going to do yours, too.  Maybe one is
breaking more.  Then you have a real reason, or maybe one is
giving you more operational problems, then you have a real
reason.
 But that changes.  That is not something I can
give you and keep computerized, not unless you want to give us
a lot more staff.  You know, all of this is being done with
four people.  This, and every resource protection, and every
conservation, and every GIS, and ever hydraulic model, and
every discretionary review, and every plan, water plan
meeting, and water resource protection meeting, all of that is
with four people, you know.
 This is a very good, logical system for how to
come up with a list of projects, and it's been working for us.
But it's not going to help you distinguish between two
agricultural lines each with four inches, you know.

CHAIRMAN RICE:  Maybe the answer to that question
is neither of the two agricultural lines should be done.  But,
I think, yes, there has to be -- there can't be -- the answer
to the question, as to which lines should be done, what
projects should be done, cannot be because Ellen decided it.
It has to be --

MS. KRAFTSOW:  It's never just Ellen, ever.

CHAIRMAN RICE:  It has to be some logical matrix to it.

MS. KRAFTSOW:  Right.  And the matrix is, as I
have just shown you, the age, the diameter, the material, the
number of breaks, the --

CHAIRMAN RICE:  Okay.  But we get into some
subjective decision making.  We have had a few projects come
before us -- how many projects this year did we not approve,
because they were presented, and they were presented in an
area where there wasn't very many consumers.  And the cost
benefit, for the number of consumers, didn't seem to make
sense.  That kind of a presentation makes us wonder about what
priorities are being set for what projects.

MS. KRAFTSOW:  Well, there are a few things to say
about that.  One is there's a point you can look at number of
meters, and if you saw some of those also have tax map keys
under them.  That will tell you pretty quick how many
customers are going to be on that line directly.
 But sometimes a line is higher upstream, and it
has more effect on more customers than it would seem, just
because it affects things down the line.  While there may not
be customers right on that statement that's being repaired.
So, that is a philosophical question.

CHAIRMAN RICE:  But that is the case with the
projects we didn't approve this year.

MS. KRAFTSOW:  Right.  The RPM, the asset model
that you had Brown & Caldwell prepare, they prioritized
expenditures based on age -- strictly age as an inventory
replacement, which is valid to do, except that the system
doesn't always respond exactly according to how old it is.
You know, different pipes and different flows change.  There
was a question?

MR. VICTORINO:  Well, I am sitting here, and if I
was just -- and I'm John Q. Public.  I haven't understood
anything you said to this point.  Because if you have a
priority system, then I should be able to look at it and know
what that priority system is.  Whatever it is, pipes, size,
age.  I don't care.
 Specifically, putting -- put in formats that I
understand why I make a decision.  That is number one.
 Number two, whether it's subjective or not,
subjective is always part of an equation, because it comes to
a point where you have got to make that decision at the end.
However, all I have had heard is Peter asked you this
question, and you are giving the rationale for those
questions, but I am not hearing an answer.
 I am saying, is there an exact format or some real
formula that you can say, here, Mike, this is how we do it.
This is how we come to this point.

MS. KRAFTSOW:  Okay.  And my answer to that is I
thought I had shown it to you.  I mean, basically, we look at
the age of pipe, the diameter of pipe, the material that the
pipe is made of, whether the pipe is adequate for the current
use and zoning of the land, the community plan designation,
what have you, the breaks on the pipe, the complaints on the
pipe, operational problems with the pipe.
 And right now, we are only talking about pipes.
But for pumps, it would be the same thing.  It would be how
old is it, when was it last replaced, how is it performing.
And in each case, for each -- and with pipes, I would have to
add also how far along is it in design, in engineering?  Is it
ready to go?  Is it a project that's actually ready to go is
also one of the issues that comes up.

CHAIRMAN RICE:  Yes, Mr. Starr.

MR. STARR:  You know, I think it's good that we
have this kind of scientific, GIS-driven system.  But, you
know, in the past, the projects that -- talking specifically
about the Hana project, and the Makena project, and, you know,
a few others that we have seen, that when we questioned them,
you know, why they were there, we got a response from David
that, oh, those were board-driven by a previous board member
or politically driven.
 So, the real -- you know, the thing that's on my
mind is, you know, here is this nice, scientific system, but
how much stuff is getting kind of stuffed in, on the top of
the pile, because someone makes some noise?
 And that's something that I don't really like to
see happen unless there's real justification for it.

MS. KRAFTSOW:  Well, to be perfectly blunt --

MR. CRADDICK:  There are no projects this year
that I know of that are like that.  And the last one that was
done like that was the one in Haiku, the Puu Maile triangle.
That was the last one that was done like that.  That was a
million-dollar project.

MR. STARR:  Thank you.  That answered my question
with that.  A couple of other issues.  You mentioned that the
water treatment plants are not in there.  And also, I don't
see any, you know, the reservoirs and other high-ticket items.

MS. KRAFTSOW:  Wait.  No.  I mentioned that in
1994, the water treatment plants were still being built.  I
have many, many, many, water treatment plant upgrade projects
in there.  I did not have the filter replacements.  That was a
bad oversight.
 Okay.  I have not sat down with Paul and gone over
every major capital element that might need to be replaced
yet.  I haven't gotten there yet.  Needs to happen.  It
certainly will happen.  But that's not accurate to say the
water treatment plants are not in there.

MR. STARR:  I thought that is what you said.  And
reservoirs and other high-ticket items as well.  What confuses
me -- you know, maybe I am just a little bit dense.  But I
could use a little help in understanding the difference
between capital improvement projects and capital replacement
projects.
 And we have -- you know, as I understand, capital
replacement is the same thing that, in real estate, you call
it a sinking fund, where you have -- you put aside money for
specific items, and then you spend it out, you know, every
year.
 And some years you may collect a little more than
you spent.  Some years you may spend a little less.  And we
definitely have a capital replacement fund.  And now we
have -- but we have capital improvement fund doing items that,
as far as I am concerned, are sinking fund or maintenance
items.

MS. KRAFTSOW:  We have -- the Capital Improvement
Program includes both expansion and what I call improvement
projects.  I call them improvement, because they may -- may
not be just exactly replacements.  It might be that they need
a bigger line in that area, but it's not necessarily always to
expand a customer base, unless it's to accommodate a customer
base that's outgrown its line.
 So, the idea would be if there are expansion
projects, they are projects that will accommodate new
customers, new source, growth.  If they are improvement
projects, they are projects that will replace and maintain our
existing system inventory.
 The asset replacement model addresses the existing
system facilities.  It does not address expansion facilities.
The Capital Improvement Program includes both, expansion and
replacement projects.

MR. STARR:  So, in other words, say we have a
waterline that's running out, you know, somewhere on the end
of the system, and it's right now a four-inch line.  And if
you go and replace it with another four-inch line, because
it's busting, then it becomes capital replacement.  But if you
replace it with an eight-inch line, then it becomes capital
improvement, or is part of it still capital replacement and
part of it capital improvement?
 And if we are going from the four-inch line to an
eight-inch line, so we can serve new consumers, shouldn't that
actually be coming out of the -- yeah, the water system
development fund?

MS. KRAFTSOW:  We do breakdown funding.

MR. STARR:  Can you have a project that might be a
component of all three of those?

CHAIRMAN RICE:  Yes.

MR. CRADDICK:  If we were doing a transmission
line that did have existing customers on it that was actually
being replaced, then you would have co-funding in that line.
For distribution projects, we have no source of funding for
distribution lines at all other than -- other than the
replacement funds.
 So, you are right, Jonathan.  We do pay for
mainline replacements or mainline upsizing out of our
replacement fund, and that's in the rules.
 Whether -- I will agree with you and debate
whether that should be going on and taking that money that
service only expansion needs, but we have no other source of
funding for it.  So, until we do, that's what the rules allow,
and that's what we do.  But I -- but I debate whether that's
correct myself.
 And one other issue, too, that Ellen brought up
here, on the board-driven projects, as you know, we have
Ulupalakua in there.  I don't consider that a board-driven
project, because that has been number one on the line problems
that we have had for about the past six years.  So, that is
being driven by something other than the board.
 It's just that it's so bad and been so neglected,
that now the board is being pestered by customers out in the
system.  But I, myself, don't consider that a board -- you
know, from some criteria that you were talking about like
Kanoa and Makena.

MS. KRAFTSOW:  The reason I mentioned that to
David was because Ulupalakua goes exactly back to Peter's
question about why are you spend all that money when there are
very few customers?
 And what it comes down to is, eventually, you have
to replace the entire system.  So, sooner or later, even if it
has a few customers, the line has got to go.
 So, from that perspective, that is true.  But the
reason why it was somewhat board-driven, in the scheduling, is
because there are, as you know, many, many, many substandard
lines.  And typically, when we design an order of these
projects, we try to go from upstream to downstream.  Right?
 So, we would have normally been doing, you know,
the line between Alae tank and Waiohuli tank and then between
Kamole tank and then from Kamole tank onward.  And we would
have been moving upstream to downstream.
 So, to be doing it in this order seemed to be
somewhat board-driven or public complaint-driven, but that is
another one of the factors that goes in.  Which is also why,
you know, Peter, I get that what you want is to see a matrix
where everything is ranked based on the data we have for age.
And, yes, we can go there eventually.  Even now we can do a
fairly decent job.  Not perfect.
 Okay.  I don't know, though, that that is ever
going to be the true way that it's -- that it's set every
year, because every year there are different breakage
problems.  Every year --

CHAIRMAN RICE:  I am not talking about exceptions.
The two things, what was brought up.  If we had a logical
sequence of pipe replacement, that was based on all the
criteria that you have listed, and we could present that to
the public, one of the things we would probably have a minimum
of is requests coming in here for things to be done out of
order, specialties, because the justification for that
sequence would be things that are legitimate and logical.

MS. KRAFTSOW:  Well, we do --

CHAIRMAN RICE:  Everybody would understand that.
Okay.  But we don't have that.  We may have it in your mind.
We don't have it in our minds.  And, certainly, it's not in
the public's mind, so what happens is it's hard to explain --

MS. KRAFTSOW:  We do have it in our computer.

CHAIRMAN RICE:  Excuse me.  Excuse me.

MS. KRAFTSOW:  We do.

CHAIRMAN RICE:  What we are looking for is
something that everybody can grasp, whether it's a picture, or
whether it's a list, that can justify what we are approving.
And you can tell, from the comments today, that no one has it
in their mind.
 And they are not saying that it's not justified.
It's just that we don't understand it.  And those kinds of
special requests, problems that come up are because nobody
does.

MS. KRAFTSOW:  Right.

CHAIRMAN RICE:  The other thing is it relates --
any sinking fund gets into the same question that Jonathan
raised.  And I don't think he's raising it to be contrary.
It's just an interesting point of discussion.  Whenever you
have a fund, if you have a four-inch line, and when you get to
replacing it, it's an eight-inch line, how do you characterize
the expenditure?
 But, if the four-inch line is undersized, for
example, for fire flow, then shouldn't our study, when
replacement comes, provide for it to be an eight-inch, then
you wouldn't have a funding issue.

MS. KRAFTSOW:  The Capital Improvement Program
does already assume that everything will be increased, and
especially relative to if it's under six inches.  Everything
is at least -- pretty much at least eight inches, in some
cases, six inches, where there are duplicate lines or
whatever.  That is already designed in there for the projects
that are already entered.
 Now, the asset replacement model also has a set of
assumptions.  They did it based on age, and they issued exact
replacement, except where a line was under eight inches, was
it?  So, that was also built to do that.
 What the asset model was not built to do was a
case like that where I showed you in Lahaina where there is an
existing eight-inch line, but it's a commercial district, and
an eight-inch line is not adequate for a commercial district.
 Now, to overlay that and show the matrix for any
community in the plan designation zoning that you want, one of
the first things we need is those overlays from the county for
their community designation and zoning.  As it is, it's been
by hand, and we have identified it where we saw the problem
visually.
 But, I don't have that mapped for anywhere other
than Lahaina, where I contacted somebody to use an interim
layer, and one of the level overmaps, which a lot of focus was
Upcounty, but they are outdated now.  But, you know, I can
come up with the matrix.  I just don't know that it will be a
legitimate way to -- it will be -- that matrix is already
under consideration.
 I mean, the pieces of that matrix -- the priority
elements, within that matrix, are already how we put the CIP
together.  Okay.  To show somebody a list and say this is
project number one, and this is project number 253, I would
question the validity of doing that.  I mean, you know.

CHAIRMAN RICE:  Why?

MS. KRAFTSOW:  That's the problem.  I mean, to say
here are a thousand projects, and here is how we want to
schedule them in five years, that's one thing.

MR. NOBRIGA:  Frustrating.

CHAIRMAN RICE:  Kent.

MR. HIRANAGA:  Now, to get back to Mike's question
and Peter's question, is there a list of desired pipe
replacement projects, prioritized by need, and you can say,
look.  There is a list of, say, 300.  We can do 25 this year
and prioritize number one, two, three, four.  So we know that
this year, you will accomplish number one, because that's your
number one priority.  Is there a list?
 You can modify this list once a year, for whatever
reasons -- factors that come into play, so that next year,
number 50 is all of a sudden number 17.  But is there a list
that you are saying we are going to commit to complete these
projects this year?  This is number one, this is number two,
and we would like to see that list before we approve the CIP
project.

MS. KRAFTSOW:  Right.  And what I am trying to say
to you is there is a list of CIP projects, and it is a
scheduled list.  Okay.

MR. HIRANAGA:  That you prioritize by meeting with department heads.

MS. KRAFTSOW:  That we prioritize, yes.  But every
year, since it was made, one, or two, or three, or four
different things happen which combine, that every year I can
need some things, which is either we didn't have the money to
do everything we thought we needed to do, or there were more
community-driven or board-driven projects in the past, or
there was -- there were projects that took longer than
expected for land, arguments, or whatever, so projects get
pushed back.
 So then what you end up with is having a big chunk
every year, and that needs to be smoothed out again at the end
of each budget period.  But there is a list.  Has been a list
that is five years scheduled.  Twenty years worth of projects,
only five of which are scheduled.  That's been in existence
and continuously updated since 1994.

MR. HIRANAGA:  Can we see that list?

MS. KRAFTSOW:  You can see that list.  I have it here.

MR. HIRANAGA:  Can you print us a hard copy of that list?

MS. KRAFTSOW:  Yes, but understand that the
updates that needed to be done this year, we are updating the
forecast as I showed you.  So, I don't have like all the next
set of tanks for 2010 and stuff like that in there right now.

MR. HIRANAGA:  I don't care about that.

MS. KRAFTSOW:  Yes, there is a list, and it's
organized by anticipated year of expenditure for five years,
and the rest is unscheduled.

MR. HIRANAGA:  Prioritized by what the department feels is important?

MS. KRAFTSOW:  We have meetings about every
quarter.  This year it was more.  Some years it's less.  Where
we go over, okay, this is what we have scheduled.  What can we
do?  Is it logical to do these projects together?  You know,
just for working in that area once or logical to do these
projects not together.
 And we set up what we think we can do for five
years.  Those are long meetings.  We had one meeting that just
kept continuing.  It was 24 hours of meetings with engineering
alone, and then there were another few hours with the
operational divisions.  So --

MR. HIRANAGA:  So, you go --

MS. KRAFTSOW:  Yeah, we go into here is the list,
what needs to be added, what pumps aren't on it yet?  You
know, when did this break down?  Did we actually --

MR. HIRANAGA:  Are you going to provide --

MS. NAGO:  He's saying can you provide the list is
what Kent is asking you.

MS. KRAFTSOW:  You just want a printout of all the
projects in the database?

MR. HIRANAGA:  Prioritized by the department.

MS. KRAFTSOW:  I don't have one, two, three, four,
five, six, seven.  I have 2003, 2004, 2005.

MR. HIRANAGA:  That's fine.  So, everything you
have in 2003, you are committed to complete to the best of
your ability.  There are factors that occur, during the year,
that will prevent you, and you will provide explanations, but
you are committed to complete those things that are scheduled
for 2003.

MS. KRAFTSOW:  Right.  Typically, what we do is we
finalize a year's budget, and right after the -- this year's
budget is finalized, and we know what the board's committed to
this year, we go in, and we have a set of meetings where we
update the five-year schedule.
 We -- we reevaluate it as a group together.  And
then upon that reevaluation, we track it, and then we start to
reevaluate again.  We are getting ready for the next year.
So, what you would be getting now -- unless you wanted to wait
until after those meetings -- okay.  It would be -- I can't
say that we would be committed to that exact schedule, but it
would be a schedule.  You would see, like I said, a hump in
one of the years where everything got shoved back to 2004, you
know.

MR. HIRANAGA:  How many pages are we talking about?

MS. KRAFTSOW:  I think the whole printout is about
what, 45 pages?  Yeah.

MR. HIRANAGA:  Why don't we start with 2003.

MS. KRAFTSOW:  2003.

CHAIRMAN RICE:  Five years.

MS. KRAFTSOW:  You have 2003 in front of you.

MR. HIRANAGA:  Prioritized.

MS. KRAFTSOW:  You want to take the 2003 projects,
within that group, and go one, two, three, four, five?

MR. HIRANAGA:  Right.  You did that in order to
get -- decide which ones got to 2003 and which ones are in
2004.

MS. KRAFTSOW:  Uh-huh.

MR. HIRANAGA:  You rank them, right?

MS. KRAFTSOW:  Yeah.

MR. HIRANAGA:  I would like to see the ranking for 2003.

MS. KRAFTSOW:  I don't have anything like that in
my computer.  This is based on discussions and stuff, but I
guess we could give you a ranking within each category.

MR. HIRANAGA:  What I am trying to avoid is
getting 45 pages of garbage.  So, I want to see one year, and
if it's something that can be absorbed in the last year, I
don't want to be inundated with a 45-page report, and say, you
know, I can't understand it.

MS. KRAFTSOW:  Uh-huh.

MR. HIRANAGA:  That is why I am asking for one
year.  And when can we get that?

MR. CRADDICK:  What are you talking about, pipelines?

MR. HIRANAGA:  Yes.

MR. CRADDICK:  There's only ten of them in here.

CHAIRMAN RICE:  What we are talking about is an
understanding of how projects are selected.  And Ellen just
said to Kent that she has a list that's five years.  Okay.
It's the five year list, 45 pages.

MS. KRAFTSOW:  No, I think the five-year list
would probably be -- do you want just pipelines?

MR. HIRANAGA:  We will start with that.

MS. KRAFTSOW:  No, it probably wouldn't be 45 pages then.

MR. VICTORINO:  Ellen, you know, I come from a
system with the Board of Education, and they had complete
matrix for the entire state, prioritized, of all -- this is --
hear me out.  Okay?
 I am not knocking what you are doing.  I am just
trying to help you.  Okay.  And this matrix had priority one
through 750, schools, buildings, whatever had to be done,
prioritized.  Okay.  And there was rationale behind it.
 Now, those changed from year to year depending on
situations, which you said earlier that happens in this
situation.  I think all of us are asking -- am I correct in
saying this?  Number one, is how do you get those priorities?
And you kind of explained that, okay.
 Number two, once you get those priorities, how do
you rank them one, two, three, four?  That doesn't necessarily
mean that one is going to be done before four.  For whatever
reason, sometimes these things change.
 But once the matrix is done, and you give it to
us, and we say yes, or no to it, or whatever, right, and least
then the public knows.  And I think I agree with Peter.  They
won't be coming in for special dispensation every time they
want something, because we have a criteria.  That criteria has
been set.  We have a matrix, the priority of what needs to be
done in each given year.
 That is all we are asking, so that we understand
how you determine these priorities.  And once these priorities
are set, how do you rank them?  Whether you meet with
engineering for 24 hours, whomever you meet with, that is
fine.  That tells us how you got them.
 I guess we are asking -- and I heard the same
thing from pretty much everybody, just different form.  Is we
like to have specifics, the way you prioritize and how you
rank those priorities.
 And if you go one year, five year, ten years, it
doesn't make a difference.  But if you are going to do 2003,
and there are ten things here, then what is number one?  What
is number would two?  What is number three?  Because we like
to see if that is what you put as number one, then hopefully
number one gets done this year.
 Now, there are things that happen, circumstances
that may prohibit that from being completed.  The point is we
just want to have you help us understand what you are doing.
And again, a matrix, I think, is very important.  We need to
know what our priorities are and how they are set.

CHAIRMAN RICE:  Mr. Starr.

MR. STARR:  It's important to have priorities, but
I am more concerned with making sure that, in future years and
future decades, we have the money to be able to afford to do
it.
 Ellen, do you want to bother to listen to what I am saying?
 You say that, in a sense, what you are doing
parallels the Brown & Caldwell model, except yours is project
specific.  What I want to know from you is do you have a
number, in terms of dollars, of what we need to put aside
every year to be able to fund the sinking fund of replacement
projects?

MS. KRAFTSOW:  Okay.  There are parallels.  They
are not identical things.  Okay.  As far as what the Brown &
Caldwell model was designed to do, it was designed to say,
based on your existing system inventory, and assuming you are
replacing it by age, how much money will you need to transfer
in order to be able to maintain your inventory.
 The Capital Improvement Program was designed to
look at where are the priorities for inventory replacements or
additions, and how much will those cost.  And then how it was
designed in terms of scheduling was based on historical data
and based on project cost data.
We are looking at doing between 15 and 20 million
projects a year.  So, we already assume the amount we need to
spend, and then we look at the projects that need to be get
done.  Whereas what the model does is looks at the inventory
and then figures out the amount that you need to spend.
 It happens that the amount that I figured needed
to get done in replacement, for the CIP, even though I was
doing simple assumption, is actually quite close to what the
RPM says you need.  But that's because when you are in it and
you are working with it -- and as far as this list, it can be
created.  Okay.  I am not saying it can't be recreated.  We
have been building the tools slowly over the years in order to
create something like that.
 But I am going to say it again.  And, you know, I
feel, given all the things that we have to do, that making a
list where one project is actually number 200 and one is
number 223, this isn't -- it just isn't -- I mean, the
functionality of the CIP of a matrix is so that you can know
why does a project need to be done.  You can -- you can look
at these diagrams and see roughly what needs to be done, you
know.

CHAIRMAN RICE:  That is not true.  These people
are telling you that's not the case.

MS. KRAFTSOW:  I will do it, but --

CHAIRMAN RICE:  There is one --

MS. KRAFTSOW:  It doesn't make sense.

CHAIRMAN RICE:  It does make sense.  You are doing
something that is not functional.  It's functional for you,
but it is not functional for us.  And you are not able to
answer the logical questions from that model.
 If it was working, then you should be -- that
model that you have should be able to answer our question, and
it doesn't.  There needs to be -- you know, what we have done
in the past here may not be what's going to work going forward.
 I think Mr. Victorino made it very clear what is
expected, and I don't think that -- there is a model that does
that.  We do it in business all the time.  Yes, it's a lot of
work.  It's updated every year.  It requires someone to make
assumptions.
 We did all that with Brown & Caldwell.  You are
running a parallel model, which I am sure causes there to be
more work to be done, but it's not getting to us the
information we need.
 So, there is a problem.  We have to solve that
problem.  Either we have to get another model, we have to pick
one or the other, and it has to solve all the problems that we
need.

MS. KRAFTSOW:  It's not like one model or the
other.  The effort is going into making the two of them work
together.  They don't work together now.  It is a long
process, Peter.
 Okay.  That's not actually necessary for your
matrix priority order.  Okay.  The matrix priority or the
order is a matter of assigning a number, based on the age of
the pipe, and assigning a number, based on whatever, and
running a matrix like that, and coming out with one, two,
three, four, five.  But it's --

CHAIRMAN RICE:  But what?  What is wrong with that?

MS. KRAFTSOW:  Nothing.  I guess the frustration I
feel is like we are crossing signals.  I think that the real
stuff you want is to have a real logical way of figuring out
which projects need to get done and approximately when.  Okay.

CHAIRMAN RICE:  And all the list that
Mr. Victorino is asking for is printed off of that logical
model.  The answer is yes, that's what we want.

MS. KRAFTSOW:  Right.  And I think that you want a
logical way of getting this done, and I agree with that, and I
also think we do have a logical way of prioritizing these
projects.  But --

CHAIRMAN RICE:  We are waiting.

MS. KRAFTSOW:  -- the way that we have does not go
number 23, number 27, number 29.  And that's really all that
is missing that I can understand.  And to get to that is -- I
mean, we can do it.  We will do it.
 But it just -- it's a lot of effort for something
that seems like it's not delivering as much as it was to,
look, try to update what the ages are, try to update what the
diameter is, try to update what the break history is.  That
seems to me more the place to spend the effort.

CHAIRMAN RICE:  If you understand what Mike is
asking you for, which I think is what we all want, and the way
to accomplish that is by updating your model and then printing
it, so that it comes out in that form, that's the answer to
the question.  For you to take the model, go down and sit in a
database, and input everything in an order, one, two, three,
four, five, is not what we want.

MS. KRAFTSOW:  No, this -- what -- to do what I
think you are asking for -- let me just describe how I think I
would have to do it.  Okay.
 Every pipe that got into the CIP list is not a
model.  It's a program.  It's not a model.  The RPM is a
model.  This is not a model.  Every project that got into that
database got into that database based on the criteria that I
showed you.
 Okay.  Where I put specific justification, things
like the diameter is substandard or whatever, was in the
remarks.  In order to create a matrix like, what you are
saying, I need to go to the tables that we have in GIS, where
I have the pipe diameter.  And for each segment, I have to
compare that to the pipe name, and then I have to assign a
value based on diameter.  And then I have to do the same again
for the material, and then I have to do the same again for the
age, and then I have to do the same again for the number of
breaks.
 So, you are taking 1140 some projects, and you are
taking entry of data.  Not randomly.  Not me going one, two,
three, four, five.  But to get the matrix in the way that you
want it, it's going to be a big effort to do it like that.  I
can print you what we have scheduled for five years.  It's
going to be almost as good.

MR. HIRANAGA:  If you limit the parameters to the
next three years, so she doesn't have to do the entire 1100
list.  We don't care about 500 or number 700.  We want to
know, say, in the next three years.  So, just do -- prioritize
the list for what you anticipate to be done in the next three
years.  Would that shorten the length of your workload?

MR. NOBRIGA:  Just pipe, huh?  We just want pipe.
We don't want ponds.  We don't want reservoirs.

MS. KRAFTSOW:  That's fine.  The truth is what you
are asking for is something that has been coming anyway.  It's
just that it hasn't been a priority relative to the other
aspects of building this program.
 But, when you prioritize within three years, you
are still not answering why you are doing it in three years
instead of four, right?  So --

CHAIRMAN RICE:  She said if you just do three
years, you are not answering the question.  Why you are not
doing it four, five?  You are not -- you know what?  I think
we have a real basic problem here.  Let's take a break.

(Recess 10:30 a.m.  Resumed 10:41 a.m.)

CHAIRMAN RICE:  Mr. Hiranaga requests that the
list -- we want five years, three through --

MR. HIRANAGA:  I would be willing to go four
years, because I only have four years left on my term.

MR. VICTORINO:  I have five.

CHAIRMAN RICE:  I think all of us would like to
see five.  We don't want to see anything past five years.

MR. STARR:  The union was built on five years plans.

MS. KRAFTSOW:  You just want five years of
pipeline, not with the matrix?

MS. NAGO:  Ellen, just drop it.

CHAIRMAN RICE:  We want to make sure we get it.
We want to get it by Monday.

MR. HIRANAGA:  We want five years, five years
replacement ranked by priority.  And ask her when can she
deliver it.  Ask David when can he deliver it.

MR. VICTORINO:  Yeah, when can you deliver it?

MR. CRADDICK:  When do you want it by?  I heard somebody say Monday?

CHAIRMAN RICE:  If we have it, it's a matter of
printing it.  If we don't have it, then it's a matter of doing
whatever we need to do to print it.

MS. KRAFTSOW:  Do you want five years ranked by
how we have it scheduled for five years, and that's the
priority, or do you want five years one, two, three, four,
five, six to 700?

MR. CRADDICK:  Peter, just let me say I believe I
understand what you want.  We are just down to getting the
time of when you need it.  I believe we can get it before the
public hearing next week, which is Thursday?

MS. NAGO:  13th, two weeks from now.

MR. VICTORINO:  Next Thursday.

CHAIRMAN RICE:  We are going to have a meeting
next week on the 12th.  Right?

MR. CRADDICK:  Right.

CHAIRMAN RICE:  Two weeks from the 12th.  We would
like to have it before that meeting which is before the public
hearing.

MR. CRADDICK:  We will do our best to get it done by that time.

CHAIRMAN RICE:  We are going to move forward.
That was -- the establishing of the priorities has been our
discussion.  The funding, as brought up by Mr. Starr, is
another discussion that we have to have.

MR. HIRANAGA:  The 7th, a week from today.

CHAIRMAN RICE:  Can we have that list a week from
today, the 7th?

MR. CRADDICK:  We will do our best to get it or
you will know why we can't get it.

CHAIRMAN RICE:  Mr. Starr.

MR. STARR:  Yeah, some of our current board
members haven't had the opportunity to see the Brown &
Caldwell model, and I'd like to refresh myself with it.  And I
especially hope that we can get to operate it.
 You know, that was -- at the time, when I got to
really appreciate it, was when I got to sit down with it and
actually plug in different interest rates, and time frames,
and see how it changed.
 And I hope that we can create a venue from maybe
a -- you know, some kind of slightly less formal workshop,
where we can actually sit down and play with the Brown &
Caldwell model.  And I think that Mike and Ginny will get to
appreciate it.  It's a neat tool we have.

CHAIRMAN RICE:  I agree.  I will schedule that.

MS. KRAFTSOW:  It's there.

CHAIRMAN RICE:  Okay.

MR. STARR:  Can we get a little presentation on
what it is right now?  I see it's up there on the screen, and
let's say that segues into our workshop at another day.  What
is this, Ellen?

MS. KRAFTSOW:  This is the Brown & Caldwell model.
What it is, is it's a series of nested spreadsheets.  What he
did is he made a series of nested spreadsheets that attach by
macros, basically, is how it works.  And, so, he has a list of
all the pipes.  And then you can enter -- or of all the
replacement by different categories.  And then you can enter
what your assumptions are about how much money you are going
to transfer into replacement fund, whether you are going to
issue bonds or other cash flows that might come in.
 And based on that cash flow, he has all the
projects scheduled.  We will process the projects and say what
your deficit or surplus is in funding and how much you need to
spend.

MR. CRADDICK:  Try this.  Okay.  This is exactly
what it says.  Replacement planning and asset valuation model.
And this is to get the money.  This graph here is time and
money.  And by changing these variables, this graph will
change.  So, we can change the length of the study.  We can go
up to 100 years.
 And right now, the data that is in this model is
all of our system.  We have made assumptions for how long it
will last, things like that.  You can make an estimate of the
future escalation costs.  We have in here what our current
fund balance is.  What earnings we get on our cash balances
and the borrowing rate.  All of those things can be changed.
 We also have over here the annual amount that we
can transfer from our operating budget.  If we are going to
issue bonds -- what happens is if you issue bonds, you will be
able to smooth out these humps in here.
 If there's any other sources of funds, such as if
we change our rule.  That issue of how do you do distribution
line replacement when we have no funding for it, if, in the
future, we get a rule that allows us to do pro rata funding of
those types of things, that might be something that we can put
in here or even maybe in here, some kind of surcharge on the
rate for certain people to do lines.
 And those are basically the variables anyways.
And that's what Jonathan is talking about, if you will excuse
the term, playing with.  But, basically, you are massaging or
manipulating these variables to get a curve out here that,
hopefully, has a minimum cost increase in rates in order to
systematically replace the water system.
 Now, the issue, as I understand it here today,
that once this is done, and you know your dollar value, it
doesn't spit out a listing of projects in priority one, two,
three, four.  Okay.  This is what you have to do this year.
 The reason why it doesn't do that is because the
estimates for items that we have, in the database, we have
made assumptions.  Like, for instance, a ductile iron pipe we
put in there -- I think the life is 75 years.  I don't know
the number that we put in for asbestos pipe.  But asbestos
pipe, in Kahului, Wailuku, except for the gasket, probably
will last a very long time.
 Upcountry, where you have got aggressive water,
and it eats the lime out of the pipe, the asbestos concrete
pipe will not last long.  So, those types of things probably
need some work in the database, and that is what I think Ellen
was trying to explain to you will take a very long time.
 But I believe what Board Member Hiranaga is asking
about is doable, and we certainly can do that.  But that's
basically what the model does, is there is a number of
variables in there that you can move around and change, and it
will give you a dollar value.  The total amount of pipeline in
there is about 750 miles of pipeline.

CHAIRMAN RICE:  Yes, Mr. Hiranaga.

MR. CRADDICK:  And they are in segments.  It can
be as small as a few hundred feet.

MR. HIRANAGA:  Just for my understanding, what
it's telling us is that for the next 20 years, based on those
assumptions, what's your estimated replacement costs that
needs to be funded?  Is that correct?

MR. CRADDICK:  Brown simulation.

MS. KRAFTSOW:  I think I already ran this one.  I
think it will be in the report.

MR. NOBRIGA:  Cool.

MR. CRADDICK:  Okay.  I guess the simulation you
are getting is that chart down there at the bottom.  And how
do you blow that up.

MS. KRAFTSOW:  Here.  You want to see this?

MR. CRADDICK:  There you go.  So, you see, with
the variables that are in there now and the amount that we
have set aside, it's going to take about $10 million a year if
we want to go out 20 years, before it finally nose dives.

MR. HIRANAGA:  So, that shows you the anticipated
cost for replacement?

MR. CRADDICK:  That's the balance.  That's the
end-of-year fund balance.

MS. KRAFTSOW:  This simulation assumes certain
things, like here.  That's the project.

MR. HIRANAGA:  Can we backup, and can you answer
my question?  What does that chart tell us?  I don't care
where it came from.

MS. KRAFTSOW:  That chart assumes that in each
year, assuming you move that much money into your capital
improvement fund, whether you -- wherever you move it from.
Assuming you put $8 million a year going to 2016, and then
9 million, and it goes on -- assuming you put that assumed
amount into your capital project, and also assuming that you
float a couple bonds -- a 10 million-dollar bond and then a
couple of 5 million-dollar bonds, et cetera -- this was just a
test scenario.  That assuming you do that, these are the
balances in your replacement fund.  Okay.
 Assuming you started -- I think it said 4 million
or whatever it said you started at, and you transfer that much
money in, and you replace the projects according to their
schedule.

MR. HIRANAGA:  When you say balance in the
replacement fund, that mean monies available for use in that
year?

MS. KRAFTSOW:  Basically, yeah, yeah.

MR. HIRANAGA:  Based upon the inventory data you inputted?

MS. KRAFTSOW:  Right, assuming you were replacing
your inventory at the pace that it suggests that you should.

MR. HIRANAGA:  Thank you.

CHAIRMAN RICE:  Mr. Starr.

MR. STARR:  If my memory serves me, I don't know,
but when we did the runs with the Brown & Caldwell people, the
best -- kind of the lowest scenario we could get, to keep it
from tanking within 20 years -- tanking means, you know,
dropping down and going negative within 20 years -- was to
contribute somewhere between seven and $8 million a year,
starting last year.
 We didn't contribute that last year.  And, so, we
ended up putting a footnote, on our financials, that said we
know we should be contributing this, but we don't have it, so
we didn't.  So, we have that from last year.  So, we are
already behind.  That's why I think it's climbed from seven to
eight to ten.  So, we are behind.
 Now, I have a real concern, in our budget this
year, that we are only being shown to contribute one million
instead of, you know, that eight, or ten, or whatever it
should be, which means we are going to get that much further
behind.
 So, we are basically not funding our replacement
fund.  And this is something that I -- you know, I have spoken
with the Chair, and I know that he's been working on some
ideas on how we can deal with it.  But, you know, I think
that, you know, all of us have been in business and know that
if you don't have a reserve fund, a sinking fund, that's
properly funded -- you know, maybe we will get off the board
without the thing tanking.  But, in the long run, it's sad
news.
 So, this is a great tool for us to be able to see
what we need to fund, but it won't do us any good unless we
actually find a way to fund it the way this tool tells us to
do it.

CHAIRMAN RICE:  Yeah.  For your information,
obviously, we are in a cash basis.  Right?  And, so, the only
reason that -- I mean, this budget is only -- is derived to
come out to zero.  So, if, in order to come out to zero, this
could have been 2 million, it would have been 2 million.
 And the problem with a cash system is that it
recognizes no liabilities.  So, you will see, when you look at
the audit of the Water Board, the actual -- the auditor
actually converts to an accrual system, and they rec -- that's
the way to recognize liabilities.
 Okay.  So, I have been trying to figure out how we
can do that.  There might be an appropriation method.  I have
been talking to the county, and I still need to continue to
talk to them as to how we might do it.  We create a fund for
replacement.

MR. CRADDICK:  Peter, who are you talking about?

MS. NAGO:  The county.

CHAIRMAN RICE:  And you actually appropriate
monies.  Okay.  So, you have to have the money to appropriate.
That's the problem with that system.

MR. VICTORINO:  Well, Mr. Chair, I state any kind
of model you are using, if you are not using the model
properly, then you best not be using it.  I mean, if you are
telling me you are supposed to be sticking 8 million or
whatever, 10 million or whatever, and you are sticking one
million, that model is doomed to fail.
 And whether I am on the board ten years from now,
or a hundred years from now, whoever comes at the end is going
to be the one that needs it.  And I agree with Jonathan.
Let's make sure the model is there and being used properly or
don't use it.

CHAIRMAN RICE:  Well, the model will tell us what
we have to put it away.  So, the model works fine.  It's what
we can put away that's the problem.

MR. VICTORINO:  Well, then we should be using what
we can put away.

CHAIRMAN RICE:  That's what Jonathan is saying.
If we put in our actuals, you will see what will happen.

MR. STARR:  The problem, and it's a real problem,
is that we are not venturing into the area of deficit
financing.  In other words, where we don't have the money, at
our present rates, to be able to put the money aside, but we
have to be able to put it aside.
 So, I think that what we have to do is kind of
bite the bullet and say, okay, we are going into a deficit.
And I think we have got to go hand in hand to our ratepayers
and say we need an increase in -- you know, I am not talking
about our meter increase, but we need an increase in our water
rates that will cover this.  And we are going in the hole this
year to the tune of whatever it is, 7-, $8 million.
 We are going to have a deficit, and we have got to
get enough of a rate increase to cover that so that, in future
years, the system doesn't tank.

 MR. VICTORINO:  This is all going hand in hand
with the priority list.  Knowing what needs to be replaced all
plays hand in hand.  So, I think we all came down to the same
end conclusion.  That we need to make sure that priority list
matches up with the funding list and enough appropriation is
put.
 I think all this plays together.  So, again, thank
you for the information.  At least I have a better
understanding, but I still think we need a priority list.  I
don't care how we come down to it.

MS. KRAFTSOW:  I agree.  I guess the problem is
that the list -- the original list, CIP book, which was a
priority, didn't have number one through 15.  But it had year,
by year, by year.  Okay.
 It assumed that we would be able to do -- complete
15 to 20 million projects a year, between 15 and 20 million,
and that would be about half replacement projects.  So, from
seven to 10 million in replacement projects per year.
 And again and again, we had neither the money or
something would hold up a project.  So, there is a big hump of
unspent money that isn't spread out the way it should be now.

MR. VICTORINO:  I got a better picture now.  Okay?

CHAIRMAN RICE:  What I'd like to suggest is that
as we move forward to approve the budget, which we are not
doing today, but we are just having a workshop and a public
hearing, is that we continue with our recent policy of
approving lump sum amounts into the capital improvement, and
then they come in, and they are approved one by one,
especially until we have a chance to digest it.

MR. VICTORINO:  That's fine.

CHAIRMAN RICE:  And I will continue to work on how
we deal with the accounting information.

MR. STARR:  I know that's a legal question,
because I believe the government is not under GASB.  It's not
supposed to have a deficit budget.  So, it depends on how we
do this.  How we got to do.

CHAIRMAN RICE:  Mr. Nobriga.

MR. NOBRIGA:  Can we recommend to the full board
that we amend the current CIP budget, from the 12.2 million to
include the 1.9 million carryover, the CIP actual budget of
14.1 million, and that we amend the budget on the 20 million
bond, for land acquisition and building expense, amend that to
$20.

MR. VICTORINO:  $20?

MR. STARR:  Yeah.

CHAIRMAN RICE:  Mr. Nobriga has an idea.

MR. CRADDICK:  So, the bond is $20 or the debt
service is $20?

MR. NOBRIGA:  The debt service will reflect $20.

MR. CRADDICK:  So, the bond would be about ten times that.

MR. NOBRIGA:  Those are budgetary requirements.
You want to show something to acquire a building for the Board
of Water Supply, but we don't know if we need the $20 million
or what bond.  So, in essence, fund that $2.  If we just
funded $2 for it to appear on that thing.

MR. STARR:  I agree we can increase it when we need it.

CHAIRMAN RICE:  Mr. Nobriga's theory is to have it
included, at some level, and when you get to the actual deal,
you increase it.

MR. CRADDICK:  And, also, there is the issue of
the East Maui Pipeline.  How do you want to handle that?  You
can do it the same way, put $20 in there.

CHAIRMAN RICE:  Well, there was four additional
items, the drill rig, the filters -- the filters should be in
the program.  The chlorine issue, Mr. Craddick, and the East
Maui pipeline, plus the carryover from last year.
 I mean, we are just looking at a proposed budget.
We are not -- you know, we are not -- we are just saying,
okay, add it into the final before we look at it for approval.

MR. CRADDICK:  Well, yeah.  But what I am getting
is that you want this done before the public hearing.

CHAIRMAN RICE:  Yeah, yeah.

MR. CRADDICK:  Is that what I am hearing?

CHAIRMAN RICE:  So, we are sending it out with
these things in it.

MR. CRADDICK:  Okay.

CHAIRMAN RICE:  So, we can get testimony, if there
is any, and then we would be ready to approve it.

MR. STARR:  Was that a motion that needed a second on?

MR. NOBRIGA:  I don't know if I need to.  I don't
know if I can make motions at these meetings.

MR. CRADDICK:  I am asking about East Maui.  How
do you want to handle that?  Do we do it a similar way, put
$100 in there?

MR. STARR:  I think the East Maui is a real
project.  The other ones are a possible,
maybe-some-day-kind-of project.  East Maui is a pipeline
project that we need to do, and we have an approximate idea of
how much it's going to cost.
 And if we have a pump added before we do it, then
half of Hana is going to be without water for weeks.  So, to
me, I think we should treat that as a real project, and, you
know, keep it in the -- keep it in the budget.

CHAIRMAN RICE:  Okay.  Mr. Craddick, anybody
object to that?  I think that's probably appropriate.

MR. CRADDICK:  So, you want to talk about real
numbers on that one?

CHAIRMAN RICE:  Okay.

MR. CRADDICK:  Okay.  Currently, we have about
$4 million encumbered of state funds on that.  It was
encumbered in 1994.  It will lapse this December if the job
does not move forward.  There obviously is going to be a cost
acceleration from 1994 until the job starts, and it wouldn't
start obviously until the end of this year.  So, we are adding
one more year into that cost escalation.
 So, the realistic amount would be what the
escalation would be between 1993 and now.  And we know, from
the CIP, where we had the CIP indexer in there -- we know,
from 1993 till now, it's been about 3 percent per year.  If
you take 3 percent per year, three times eight is 24 percent
total.  So, 24 percent of four million dollars is what?  A
million.

MR. STARR:  A million.

CHAIRMAN RICE:  Mr. Nobriga.

MR. NOBRIGA:  Excuse me.  Before we can proceed
with that project, would we not have to finalize a
supplemental EIS?

MR. CRADDICK:  You will.

MR. NOBRIGA:  And because a supplemental EIS is
not even near completion to a point that the board can accept
the supplemental EIS, what would be the proposed completion
time of the supplemental EIS?  And if that time -- estimated
time would take us outside of fiscal 2003, then it wouldn't
make sense for us to have this on the budget for 2003.

MR. CRADDICK:  We are looking at getting that
finished by November of this year.

CHAIRMAN RICE:  Mr. Starr.

MR. STARR:  You know, my own belief -- and I know
this is a scenario where I locked horns before -- is that for
us to complete the EIS is going to require, you know,
basically, a negotiation of sitting down with the other side
and reaching an understanding on developing future water.
 And I think we all realize that it's critical to
get water on line for Central and South Maui ASAP.  My own
belief -- and I haven't talked to anyone about this -- is that
if we were to sit and talk story with the other side, mainly
the Hamakuapoko wells, they might be willing to let that out
of the lawsuit.
 And if that were the case, then we could proceed
with this, and get those on line, and have enough water for a
year or two for Central and South Maui out of those wells.
 So, I think there might be a way through it, but,
you know, under -- in another venue, we will have to talk
about how we can -- we can do it.  But I am hoping that a way
can be found to get that done quickly.  Otherwise, it's going
to be dry times ahead.

CHAIRMAN RICE:  Mr. Craddick.

MR. CRADDICK:  I guess we had been willing to do
that back in 1994, the EIS never would have been contested.
But I know there are some on the board that have very big
concerns about putting in a three-lane highway, and that is
the reason why this project basically has gotten held up,
because the pipeline that is being put in is a 36-inch
pipeline.
 Obviously, you don't need that size of pipeline
for a million and a half gallons a day of water.  So, that's
the real issue there.  And that has probably always been the
issue, is the size of the pipeline, realistically.

CHAIRMAN RICE:  Okay.  I don't want to get off on
a discussion of that at this point.  But, the relevant part is
should we put some money in the budget for the pipeline?  How
much?  And that's, I think -- remembering it is only a budget
allocation.  If we -- something happens, and we don't go
through, we don't go through with it.  So, is it a million
dollars?

MR. VICTORINO:  I think we should, yeah.

MR. CRADDICK:  We have reason to believe that the
contractor would want more, but that's a reasonable budgetary
number.

CHAIRMAN RICE:  At least for now, and then we can
amend it if we have to.

MR. CRADDICK:  And if what you have done -- what
you say, as far as the bond goes, that releases another what,
$2 million, Holly, that we have set aside in debt service,
that could be -- actually, now you get back to this funding
issue of even though we have $2 million more that we could
transfer over to the pipeline replacement project, obviously,
this is not a pipeline replacement, system expansion.  So, it
would have to come under the development fee somehow.
 So, we will have to look at that and make the
recommendation to you on how we can handle that.  Even if we
do have to maybe do a borrowing resolution during the year,
where the development people can borrow that money for a short
period of time, that may be what we have to do.  But the money
is there if you do what has been suggested.

CHAIRMAN RICE:  Okay.  Everybody seems to be in
agreement on that.  We should move forward to put the budget
together with all that.
Yes, Mr. Starr.

MR. STARR:  Yeah, I want to get back to what I
thought David was talking about, and I apologize for my
misspeaking before.  But, I was surprised to see that the Hana
project, to tie together the two wells in the system, is
not -- is not in here at all.

MR. CRADDICK:  It's under design right now, and we
don't expect the design would be finished in this fiscal year.
That's why it's not in there.

MR. STARR:  Where is the design money?

MR. CRADDICK:  It's already done this year, right, Herb?

MR. KOGASAKA:  Yes.

MR. CRADDICK:  It's already going.

MR. STARR:  So, we are moving as fast as we can on that?

MR. CRADDICK:  Yes.

MR. STARR:  I accept that.

CHAIRMAN RICE:  So, gentlemen, that's where we are
going.  Any objection to that?  Okay.  Any other questions on
the budget CIP before we adjourn this workshop?

MR. NOBRIGA:  Yes.  In reviewing this map, you
list the projects by number.  You have a lot of projects has
design or construction.  But in the case of project 01-13,
01-38, 02-11 --

MR. CRADDICK:  What page number are you on?

MR. NOBRIGA:  Page five, six and seven.  It has
distribute and install pump.  It says design construction,
acquisition.

MS. KRAFTSOW:  On page five, Waikapu well, that's
development of the well.  So, that would -- that would assume
that the design is done already.  And you are putting the
well -- it would be like a construction.

MR. NOBRIGA:  Okay.

MS. KRAFTSOW:  On page six, that's an exploratory
drilling, so you are not really designing or constructing.
You are doing a drilling project.

MR. NOBRIGA:  Based on getting the drilling rig from USGS?

MS. KRAFTSOW:  No, no.

MR. CRADDICK:  This is our own.  This is a well
that -- if the exploratory information turned out correct, we
would expect to produce it.

MR. NOBRIGA:  Okay.

MS. KRAFTSOW:  And then on page seven --

MR. NOBRIGA:  Design, construction, or acquisition?

MS. KRAFTSOW:  It looks like a construction project.

MR. NOBRIGA:  Design --

MS. KRAFTSOW:  It says description, construction
of a 4000 foot --

MR. CRADDICK:  Design, I don't know if it's
totally complete.  I don't know if we have approved the final
drawing.  We have submittal of the drawing.

MR. NOBRIGA:  You got some pages you got nothing,
and you got dash, and you got design.

MS. KRAFTSOW:  Yeah, what I need to do is make
that a separate field.

MR. NOBRIGA:  Okay.  Exploratory, dig a hole?

MR. CRADDICK:  Peter, can I bring up one other
thing that is extremely minor but needs to be brought up
nevertheless?
 Holly, the dollar amount on the EM.  Okay.
Holly -- why don't you pass that out, Holly, to everybody.
The operating portion of the budget has the corrections that
you talked about last time.
 One item that you didn't talk about is the exempt
management people.  And I told you that an item was not in
there for any pay increase for them, because of this new
program, under the state, whereby they get their increases via
a merit program, where they have to set up a program, where
they are meeting specific requirement, and that they get
either a bonus or a pay increase depending on whether meet
those goals that they have set up.
 And there was some money in there for rate
increases, but we need another $2,000 -- $2,016 to fully fund
that.  So, I know it's a real minor item, but just for your
own information.

MR. VICTORINO:  To put into the payroll?  Where
does that go?

MR. CRADDICK:  To tell you the truth, I haven't
really -- it would be in payroll, but how you itemize it, I
don't think I have thought enough about it just yet.

CHAIRMAN RICE:  Mr. Starr.

MR. STARR:  Yeah, one item that I don't see in
here, and it's something that we have heard the other -- on
Tuesday, as well as previously, from the Water Commission and
USGS and John Mink, is that we should be looking to optimize
our usage of the Iao water sources.
 And there are some projects that we should be
looking at.  I believe some of the wells are too deep and need
to be concreted to, what, a different depth.  There are some
pumps that should be downsized and so on.  You know, I don't
know if this is something we need a consultant on, or
something that, you know, we can begin to do in-house, but I
do feel that we should work on that to try to optimize the
usage.
 I know the Waikapu well is one thing that will
help, and I hope that that can get completed next year.  And
also shaft 33, there is a project.  What is the status of
those, Dave?

MR. CRADDICK:  The Waikapu well, is the contract
out on that one yet?  Not out yet.

MR. STARR:  That's for the pump?

MR. CRADDICK:  Right.

MR. STARR:  How about electric?

MR. CRADDICK:  What we have done is we have worked
with -- let's see.  What is it?  The Hawaii Land & Farming,
that was going to put a booster station in.  But they are
looking at now totally moving off of that site with their
booster, with a tank.  They need a tank for their own
development.
 And we told them, well, why don't you put the
booster next to that, so that their inability to give us a
certain timetable is not influencing us, and then we can move
forward.

MR. STARR:  I understand that.  We shouldn't wait for them.

MR. CRADDICK:  And that's why we got them out of
the picture now.  We are just going to go ahead on our own.
 As far as Shaft 33 goes, that's still an open item
there, until we get all the agreements to come to the board on
their storage requirements and things like that.  Those are
near ready to come to the board, but not in a form yet to come
to the board.

MR. STARR:  How about the adjusting the levels of
the wells and also adjusting the pump motor capacities?
That's something I have heard over and over again that we
should do.

MR. CRADDICK:  As far as Waiehu Heights, which is
the one that has been most talked about where one well is
deeper, we are just not using it anymore.  It's just there for
standby.  So, we don't have the high chlorics coming into the
system.
 As far as reducing capacity of pumps, we are going
to have to get replacement wells in first before we start
doing that.  One project that is not in here is putting
replacement -- or, well, to spread out the Central Maui joint
venture site.  And I am guessing, you know, that's not an
issue until the Central Maui joint venture matter gets
resolved.
 But, we do have a site set aside, which, if we
don't do something to take control of it, then it will be sold
along with the property that is sold from Wailuku
Agribusiness, even though they have given us the right to go
in and take that property, if we survey it.  And the joint
venture, I think, has paid for this site.

MR. STARR:  Can we proceed with that?  I know we
need another well there.

MR. CRADDICK:  Yeah.

CHAIRMAN RICE:  We are proposing a lump sum here.
We are not talking -- they have got to come back on the
individual projects.  So, I don't think we have to worry about
each individual project at this point.  Yeah.

MR. STARR:  I just want to see it moving forward.

CHAIRMAN RICE:  Kent.

MR. HIRANAGA:  I just wanted to get a better
understanding of this handout.  This one here.

MS. KRAFTSOW:  Uh-huh.  What about it?

MR. HIRANAGA:  So, just looking at SDWA Kamole water treatment.

MR. CRADDICK:  What page on the lower right-hand corner?

MR. HIRANAGA:  Three.  I guess this appears to be
a new project, because it wasn't in last year's CIP budget.

MR. CRADDICK:  Yes.

MR. HIRANAGA:  So, it says 300,000 for a
study/design/permit costs, two-and-a-half million construction
costs, and for this coming budget, you are proposing 200,000
up front.  Is that correct?

MR. CRADDICK:  For design.

MR. HIRANAGA:  I guess, when I look at something
like this, there is no time line for completion, if it's a
five-year project, a two-year project, so there's no way of
measuring progress.

MS. KRAFTSOW:  Right.  For tanks, it generally can
either be two to three years.  Sometimes, if it's small
project, sometimes you can -- and the land is not an issue,
you can design it in one year and build it the next year.
 For something more complex, sometimes there's a
couple years, because you need to deal with the easements, or
there may be some difficulty in the design.  Or, in this case
would be DOH approvals that would take maybe an extra phase to
go through permitting and stuff.
 
MR. HIRANAGA:  When I look at this budget, there
is no way of measuring how progress is being achieved.  I
mean, it's like time is not of the essence.  You just proceed
year by year.  Do what you can.
 If the board were to say certain issues of high
priority and the department is going to commit to have this
particular project up in two years, three years, or five years
or eight years, there is no way of measuring that type of
commitment.

MS. KRAFTSOW:  There was an older report format
that we got rid of, actually, because it was confusing people,
and also to make room for the funding breakdown, that would
say -- it would -- it had five years and then out years, which
is anything beyond five, basically.
 And it had expenditure amounts throughout that
period, but it didn't have a real date for time of completion.
I could add a field for that if you wanted.

MR. HIRANAGA:  I guess caucus with other board
members, I -- you know, if certain things are important to the
board, they should be placed on a higher priority, which means
more resources are being applied and commitment is made to
complete them -- complete the project versus having a
multitude of projects proceeding at whatever pace they
proceed.  You would want to select specific projects that need
to be accomplished within specific time frames.

MR. CRADDICK:  We can do something like that, and
try and get a time line in there that we would need to
complete the project, or that we think they should be
completed within.

MR. HIRANAGA:  But then you would also have to
provide percentages of completion.  And then if you feel you
are not able to achieve that time line, start to put in
explanations as to why.

MR. CRADDICK:  Percentage of completion, what do
you mean there?  Are you talking about a cash flow once the
job starts?

MR. HIRANAGA:  No, more like reasonableness of
achieving the target date.  You say you are going to finish a
certain project in five years.  You have been telling us, four
years into the project, that you have only accomplished
20 percent of the project.

MR. CRADDICK:  Yeah, updating the projects, we can
certainly come up with a method of doing that, and we would do
that.

MR. HIRANAGA:  So we can tell if you are on
schedule, or behind schedule, ahead of schedule.

MR. CRADDICK:  And I think we do try and do
something like that quarterly with the CIP.

MR. HIRANAGA:  Thank you.

CHAIRMAN RICE:  Clark.

MR. HASHIMOTO:  When you do these CIP projects,
any consideration taken on the movement of equipment?  Doing a
project in Kula and moving it to Lahaina, or is it -- is there
any consideration -- you know, the movement of equipment
sometimes is pretty cumbersome.  Is there any consideration?

MR. CRADDICK:  In a contract you mean?

MR. HASHIMOTO:  No, no.  I mean --

CHAIRMAN RICE:  For the scheduling?

MR. CRADDICK:  Very, very few of these do we do
ourselves, so there is no equipment scheduling issues even
involved in them.

MR. HASHIMOTO:  So, it's contracted out?

MR. CRADDICK:  Yeah, yeah.  Ninety-nine percent of
these are contracted out.

MR. HASHIMOTO:  Like when we went to that, I
guess, inspection tour in Hana, there was our equipment
though, wasn't it?

MR. CRADDICK:  Yeah, yeah.  And that whole job, I
don't believe, was $100,000.  And that was one of probably two
that we did during the year, the flume and that.

CHAIRMAN RICE:  Anything else?

MR. STARR:  Just --

CHAIRMAN RICE:  Mr. Starr.

MR. STARR:  What's our next step, Mr. Chair?

CHAIRMAN RICE:  Well, they are going to revise the
document as we talked today.  We have a public hearing on
June 13th, and then we will have it on the agenda for the
board meeting again.

MR. STARR:  Does it go to the board before it goes
to public hearing?  I mean, I wouldn't mind actually going
through the CIP project, if we are going to have it.

CHAIRMAN RICE:  Yeah, that's why I suggested, what
we did before, was that we approved just a lump sum.  And then
we had to get specific requests and approvals from CIP
projects.  And because we had the committee before, they
always went to Howard first, and then he brought them to the
board.  So, that was as opposed to just giving them.

MR. STARR:  So, in other words, we are not --

CHAIRMAN RICE:  Right.  That was the purpose of
doing that in the past, and I think that's why I suggested
that earlier.  I think that's the way we want to proceed.
And, also, because we didn't get the list yet that Ellen is
going to provide us, and there will probably be more feedback
at that point.

MR. STARR:  So, at some point, we will have
another workshop on this.

MR. CRADDICK:  Are you saying that you want to
look at this on the 12th when we have our regular board
meeting?  Okay.  No.

CHAIRMAN RICE:  And I think it also ties to Kent's
question about there's a whole bunch of projects in here, and
identifying priority models, and so on, that we can talk about
again when we get the list.

MS. KRAFTSOW:  That's just a sample of the -- a
couple of the databases, query for pipeline replacement lists.
So, I don't know if there are any questions on queries on
here.

CHAIRMAN RICE:  I can't see it.

MR. STARR:  Move to adjourn.

MR. NOBRIGA:  If I may, before we do that --

CHAIRMAN RICE:  Go ahead, Mr. Nobriga.

MR. NOBRIGA:  I understand our secretary will be
reassigning herself on June 1.  Although I am grossly not
prepared to recognize her, I would like to recognize her
accomplishments over these past -- shoot -- I don't know.  I
have been on the board for about three and a half.

MR. CRADDICK:  Is that a motion for a resolution
on the meeting of the 12th?

MR. NOBRIGA:  Yes, please.  And please invite
Miss Nago to our meeting, so we can fully recognize her for
her efforts over the past few years.
 Also, I would like to ask the Chairman if there is
any way he could appropriate lunch for us at the next meeting,
since we have all these long meetings, and --

CHAIRMAN RICE:  Are they the fault of the Chair?

MR. NOBRIGA:  I don't know whose fault it is.

CHAIRMAN RICE:  I will be happy to buy you guys lunch.

MR. NOBRIGA:  I think there is an appropriation in the budget.

CHAIRMAN RICE:  There is no such thing as a
Chairman's slush fund in a public agency.

MR. NOBRIGA:  At least a sandwich.

MR. STARR:  I just want to thank Fran.  I think
she's done a great job, and I really appreciate you.  Thank
you.

MS. NAGO:  Thanks.

CHAIRMAN RICE:  Thank you, Fran.  Okay.  That
being said --

MR. VICTORINO:  I second the motion.

CHAIRMAN RICE:  Adjourned.

(Recess, 11:28 a.m.)