State Rates Encourage Use of Waiahole Water

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When Kunia farmer Larry Jefts waters his watermelons, or Alec Sou irrigates his bok choy, the water they use from the Waiahole ditch costs 35 cents per thousand gallons for up to 4.61 million gallons a day. This is under terms of an agreement signed by the Kunia Water Cooperative, a consortium of most of the leeward farmers using ditch water, and the state Agribusiness Development Corporation (ADC), which has owned the ditch for the last two years.

When they use more than that, however, the rate they pay for each thousand gallons they use drops by more than half – to just 16 cents. This is because the agreement contains an “early build-out incentive” apparently intended to encourage farmers to put more leeward acreage into agricultural production.

The ADC determines at the end of each fiscal year just how much water the co-op farmers used above the base daily rate. In July, the agency’s staff reported that the co-op members exceeded the “incentive” water usage for the 1999-2000 fiscal year and, because of this, was owed a rebate of $23,000. This represents usage of about 330,000 gallons a day over the minimum, or about 10 million gallons a month.

In contrast, a sister state agency, the Department of Corrections, pays ADC 77 cents per thousand gallons, the rate charged to non-agricultural users that include the Waiawa Correctional Facility, Mililani Memorial Park, and the Mililani golf course.

Alfredo Lee, executive director of ADC, says there were two reasons for giving farmers incentive to use more water: One was to encourage diversified agriculture, and the other was to generate revenue. Lee wasn’t involved with the drafting of the agreement, but said that those who were told him that since the ditch was to pay for itself, “they knew that É if they could get more revenue, they’d retire the bond earlier.”

Altogether, for the last fiscal year, revenue from the ditch averaged about $55,250 a month, for an annual total of $663,000. Costs of maintenance and administration came to $505,000 for the year, leaving an excess of $158,000.

Lee said those costs do not include debt service for any of the capital improvements or for the $8.7 million cost of the ditch itself. Paying down the state bond to purchase the ditch won’t start until three years after the sale was completed in July 1999, he said, under an informal understanding that the ADC has with the state Department of Budget and Finance. Nor has the ADC begun to pay down a $1.2 million bond for major improvements to siphons in the ditch.

“We have to build up our account” before starting to pay on the interest and principal of the bonds, Lee said. “We’re not there yet.”

— Patricia Tummons

Volume 11, Number 5 November 2000

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