Who gets water
board’s money?

Harris says rebate the $75.6
million to customers; the board
wants it for repairs

By Gordon Y.K. Pang
Star-Bulletin

What to do with $75.6 million? Mayor Jeremy Harris has one idea, and the Honolulu Board of Water Supply has another.

The money, held by the Board of Water Supply, is excess that must be rebated to its 155,000 customers, amounting to $484 each, Harris and Corporation Counsel David Arakawa say.

But the Board of Water Supply and an independent attorney say the money is a cash balance necessary to cover improvements to the city's aging water system.

The board votes on its 1999 operating budget May 28, with the $75.6 million carryover a key issue.

Harris and Arakawa point to the City Charter that states the board cannot have a reserve fund in excess of 15 percent of gross revenues during a given year, which is about $100 million.

Board of Water Supply staff says the carryover is not a reserve fund.

"The charter is fairly clear on the amount of money they are allowed to stockpile," Harris said.

He also wants the board to reduce its rates "to ensure that the board does not generate such excess in the future."

Arakawa not only supports the mayor's position that the $75.6 million carryover is excessive, but recommends that the Finance Department "conduct an operational audit" of the water board.

Acting Water Manager Brooks Yuen said the board is slated to undergo a number of major capital projects in the next few years.

The upcoming budget forecasts only a $28 million carryover at the end of the year as more money is expended on the projects, he said.

Among the projects is the islandwide rehabilitation of existing transmission mains.

Yuen said a study now being prepared will put a better fix on the cost of the job. Initial estimates show it will cost more than $100 million to rehabilitate less than half the island, he said.

The board will need an extra $10 million to $50 million to comply with the federal Safe Water Drinking Act, Yuen said.

The board, which normally consults Arakawa's office on legal matters, has hired a private law firm to look into the mayor's assertions.

Yuen said Arakawa "cannot fairly represent two entities" and that the charter allows for the board to hire outside legal counsel.

Bill Tam, one the board's attorneys, said "it's pretty clear there are no violations."

He added, "It's clear the corporation counsel has not read the law correctly."

Board member Eddie Flores Jr. said:

"We have a budget to work on.

"But we don't want to violate the charter."