Tide Turning for Molokai Water

Molokai Properties Limited fails in attempt to abandon water responsibilities.

By Jennifer Smith

State and county lawmakers are frantically trying to pick up the pieces after Molokai Properties Limited (MPL) announced it would abandon company-wide water and sewer operations by the end of August. The news has left 1,200 west Molokai customers worried about the possibility of losing water.

“The immediate worry is that it’s hard to get by without water. If they cutoff water, the (government) would have to declare a state of emergency,” said west end resident Gerry Anderson. “It would be an absolute disaster.”

But the Hawaii Public Utilities Commission (PUC) released a statement on Thursday ordering MPL not to abandon its water utility services on Molokai.

Shutting Down

In a May 30 letter to the PUC, MPL President and CEO Peter Nicholas informed the commission of the company’s inability to continue operating its subsidiary utility companies – Molokai Public Utilities, Inc., Wai`ola o Molokai, and Mosco, Inc. (collectively, Utilities) due to financial burdens.

A few days later Nicholas sent a letter to Mayor Charmaine Tavares, stating, “a public entity of either the county or the state,” would be the most appropriate entity to provide water services to the people of Molokai.

Mayor Tavares and several other county and state representatives are questioning the legality of the company’s decision to abandon its public service obligations.

"It is a dangerous practice for local government to step in and take over operations of a private business when it decides to abandon its customers," Mayor Tavares said in a press release. “To expect the taxpayers of Maui County to absorb the costs and liabilities of each privately developed system that is allowed to fall into disrepair would be irresponsible.”

“I cannot imagine that any company would deliberately harm the public health and well-being of those who utilize these utilities,” Mayor Tavares said in a letter to the Ranch, explaining that, “the legal and moral ramifications of such an action are hard to quantify.”

By Order of the PUC

The PUC and the Consumer Advocacy division of the Department of Commerce and Consumer Affairs, intervened last Thursday, clarifying MPL’s obligations to continue service “until another public or private entity can be found to operate the water and wastewater systems. The Utilities must continue to operate to ensure the health and safety of their customers.”

The PUC is asking MPL to provide a plan for the continued operation of services beyond August, including a detailed transition plan describing what would be necessary for a third party to assume responsibility of the systems.

The Commission threatened “investigatory action” and “penalties as authorized by law” should MPL not comply by June 12.

The PUC is also asking MPL to substantiate claims of financial hardships. MPL alleges that all three utility companies were in the red. However, financial reports show while MPL provided nearly $1 million to cover water utility losses in 2007, its waste management company, Mosco, showed a net profit.

State vs. County

Public disagreements have heated up between the Governor’s office and Maui County over who will be responsible for taking over MPL’s utility services.

All parties involved agree that the first priority is to ensure uninterrupted service for Molokai residents; however, where the funding, man power, and responsibility for such an undertaking lies is up for debate.

“It’s not about policies, and it’s not about personalities, it’s about the residents,” Council Member Danny Mateo said. “We need to continue to take a look at the long term picture.”

Mayor Tavares, Council Member Mateo, Senator J. Kalani English, and Representative Mele Carroll wrote letters asking for the Governor’s support in protecting the welfare of Molokai residents, and in holding MPL accountable as the operator of the water systems.

“We will not allow citizens to be deprived of essential services,” said Barry Fukunaga, the Governor’s Chief of Staff. However, he added that the Governor’s office is concerned about the county’s approach, saying that a request for assistance at this point is premature.

“The county needs to see whether or not they can take over these systems,” Fukunaga said, explaining that services such as water, fire, and police departments typically are in the jurisdiction of the county. “They are in a better position than the state is (to take over).”

Fukunaga said the Governor’s office will continue working with the county, and looking into the legality of MPL’s decision to abandon utility services. The Governor has also inquired with the Attorney General’s office, and looked for feedback from several agencies including the Department of Health, Department of Agriculture, and Hawaiian Homelands.

Fukunaga said there is only preliminary information and with the potential for lengthy legal review, the immediate necessity is what will happen at the end of August.

“Time is running short and we strongly encourage the county to start addressing this issue with expediency,” Fukunaga said. “If they determine that it is an emergency situation, and provide the information to substantiate that, then the state would stand forward if warranted.”

The PUC recognized that the County of Maui, as an existing provider of water and wastewater services on Molokai, appeared to be the most viable alternative provider, but the county is saying that in the immediate future it is ill-equipped to take over.

“It is not premature to go to the governor and ask for assistance,” said Mahina Martin, the mayor’s community relations and communications director. “Molokai residents are concerned and so are we.”

Options

The mayor and other county and state representatives say a few months is not enough time to do an assessment. “We were hoping that the company could reconsider to expand that time,” Martin said, explaining that an extension of the proposed August turnover would allow a continuation of services while the county and state explore more options.

County officials have cited subsidization of the Superferry, and the search for business alternatives when Aloha Air Cargo stopped operations as incidences where the state has stepped in to help private business. County officials say a state subsidy could provide incentives for potential investors to take over the Utilities.

Accountability

Council Member Mateo submitted a draft resolution on Friday seeking the authority to hire private council to represent the county in possible legal claims against MPL. He created the resolution to, “protect public health, avoid catastrophic environmental damage, and avoid substantial financial losses for Molokai residents and County taxpayers.”

The resolution explains that the private water and wastewater systems have not been maintained to county standards, and that the county does not have the resources to bring the systems up to standards and operate them.

"Molokai Properties has not filed for bankruptcy and is terminating these essential services despite retaining land holdings and possible future development plans," Council Member Mateo said.

“This is a major challenge for this community,” Council Member Mateo said, “but this community is resilient. Our community has the ability to bounce back.”