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County Of Maui Sues Molokai Properties

Monday, September 1st, 2008

County to seek pledge of commitment and cost reimbursement.

By Catherine Cluett

Last Friday the County of Maui filed suit against Molokai Properties, Ltd. (MPL) to insure that “the company continues to meet its obligations to operate and maintain its water and wastewater systems in West Molokai.” Margery Bronster, a lawyer with the Hololulu based firm Bronster Hochibatain, announced the suit in a press release on the same day.

Word from the Ranch
On August 14, the Public Utilities Commission (PUC) approved water utility rate increases requested by the MPL that will go into effect on Sept. 1. These rates were increased from the PUC rates by as much as 178%. Before the rate approval, MPL had issued a statement of intention to terminate water utility services on August 31.

Last Thursday, the day before the suit was filed, MPL director Peter Nicholas confirmed that MPL has agreed to continue services past August 31. There was no indication of long-term commitment, however.

“How long the temporary rate increase will be sufficient for the utilities to be able to continue to operate depends on future fuel, power and labor cost increases,” Nicholas stated in a letter to Carl Caliboso, chairman of the Public Utilities Commission (PUC).

While no lasting or reliable solution has yet been proposed for operation of MPL’s water systems, Governor Linda Lingle remained positive. “The temporary rate increases will allow Moloka‘i Properties to continue to provide water service until another entity can take over the operation.”

Mahina Martin, Communications Director for the County, confirmed last Saturday that the county’s emergency response plan was completed to meet the Department of Health (DOH) deadline, and will go into effect should MPL cease water utilities. Until then, emergency measures will remain on hold.

Commitment Sought
In a phone interview with Bronster, she explained that the goal of the suit is two-fold. The first concerns the contractual agreements entered into with the County of Maui. “When Molokai Ranch and its predecessors sought to develop the property, it agreed to build, operate and maintain water and wastewater systems in West Molokai,” reads the complaint filed by the county.

Thirty-one contracts have been uncovered, some dating as far back as 1978, that bind MPL to continue operating these utilities, among other agreements, according to the county’s complaint against MPL. If they terminate water services on August 31 as they had previously informed the county, they would be breaking legal and binding contracts.

Reimbursement Requested
The second goal of the suit is to “ask the MPL to pay for costs and expenses the county has incurred to prepare for this emergency situation,” says Bronster.
Martin confirms that the prospect of Molokai residents left without water is a great concern to the county, and that the office has put other issues on hold to give precedence to the situation. The county has a budget of $1,260,000 to cover emergency operations for ninety days, and has spent a tremendous amount of time planning for the possible outcomes due to the Ranch’s lack of communication, according to Martin.

Communication on the part of the Ranch is another frustration of the county, according to Bronster. “The Ranch has been less than forthcoming in answering the question as to what their plans are,” she says. “We’ve asked repeatedly that they comply with the orders, and we have not gotten a response.”

Accountability
“By filing suit, the County is going to hold Molokai Properties, Ltd. accountable. Molokai Properties, Ltd. cannot hide behind its subsidiaries and affiliates in an effort to avoid its clear obligations,” Bronster stated in a press conference.

MPL has been called the “alter ego” of its subsidiary water utility companies, Molokai Public Utilities, Inc. (MPU) and Wai`ola o Molokai, Inc. (Wai`ola), and the wastewater utility Mosco, Inc. MPL shares such assets as employees, funds, office spaces and supervisors with these companies. Although the county is suing the parent company MPL and each of its subsidiaries separately, it plans to hold MPL in sole responsibility because the water agreements with the county were entered into with MPL directly.

Background
MPL owns 70, 000 acres of land on Molokai, and a termination of water utilities controlled by MPL would result in a loss of water utilities to as many as 1,200 users.

A Call to Take Back Ranch Lands

Thursday, August 28th, 2008

Community meeting takes the first step for eminent domain.

From left to right: Alton Arakaki, Mahina Martin, Danny Mateo, Steve Morgan, Mahealani Davis, and DeGray Vanderbilt.

A Show of Support

Of the many who attended the meeting, a vast majority expressed overwhelming support for the plan by a show of hands.

Walter Ritte, homesteader and one of the night’s organizers, stressed that the community coming out and supporting eminent domain was an important first step. He said the purpose of gathering the community together was to educate and fight back.

“These state agencies do not work; they have failed us,” he said. “They have abandoned us because they have been threatened by big business, and they have put the burden on us.”

Concern was raised, however, over getting the whole county of Maui behind an issue that only affects Molokai.

In response, Martin reiterated what has become a catchphrase for the county – that if the Ranch is allowed to walk away, it will set a bad precedent for other private companies providing essential services, which is something that should be a concern for all.

To questions about who will control the Ranch lands if acquired, Davis stressed that starting eminent domain proceedings are just a way to force the Ranch to the table, and open the door to discussing options.

Residents also flocked to sign two petitions circulating that night.

While one urged the county to begin eminent domain proceedings, the second called the rate increases approved by the PUC “arbitrary and unjustified,” and petitioned the PUC to order the two water utilities to continue operating if its customers cannot pay the higher water bills, and to fine the utilities the maximum amount for any violation of the law, including non-compliance.

Vanderbilt acknowledged the difficulty facing West End residents with the significantly higher water rates. The recommendation to “pay what you can,” was given, while stressing that not paying at all will result in a termination of water service.

Next Steps

In order to initiate eminent domain proceedings, the Maui County Council will have to introduce a resolution that would require five votes to pass. Mateo said the resolution would have to be deferred to the council’s Policy Committee, which he chairs.

Molokai residents, however, are urged to become active in the process. A meeting was held at Kulana O`iwi this week Wednesday to discuss the details and questions surrounding the issues of eminent domain and the increased water rates in the West End.

Residents were able to ask questions about either of these issues, including the status of funds pledged earlier this year to the MCSC in support of purchasing the Ranch lands