“Serious problems” exist with the administration by the Environmental Protection Agency (Region 9) and its delegated agent, the state Department of Health, of the grant of federal money for the construction of Hilo’s new sewer system. That’s the conclusion of an Early Warning Report released September 27 by the EPA’s Office of the Inspector General for the Western Region. The problems it identified can be placed generally in two categories: cost of the new facility (the county will probably not be able to afford to install all the sewer lines it promised to as a condition of receiving the federal award); and capacity (the planned 5 million-gallons-a-day sewage treatment plant outstrips any demand likely to develop in the Hilo area for the life of the new facilities).
The two categories are not unrelated. Cost of the sewage treatment plant is a function of capacity. As a rule of thumb, the larger the plant’s capacity (measured in terms of volume of sewage it can treat in a day, expressed as million gallons per day, or mgd), the greater the cost. A corollary to that concerns the cost of the support facilities: the larger the capacity, the more sewer lines, pumping stations, and the like will be needed to deliver the volume of sewage required to justify plant capacity. And the more support facilities required, the greater the total cost of the overall sewer system will be.
A Plant that Fills the Bill
According to the Early Warning Report, “The 5 mgd Hilo facility will … be sufficient to sewer the entire population of the South Hilo district, even though parts of the district are not in the proposed service area. In addition, some portions of the service area will not be sewered because the lot sizes were adequate to allow the use of cesspools.
“The facility plan estimated the 1990 flow to be about 5 mgd on the basis of a projected population of 46,000… However, we noted that the average flows into the existing wastewater treatment plant were about 2.3 mgd, and that, according to County personnel, the additional flows from customers to be serviced by future interceptor and collection systems were estimated at 1.0 mgd. This represented a total flow of only 3.3 mgd, or 66 percent of the planned 5 mgd capacity.”
Why would the County of Hawai`i want (and the Department of Health condone) a treatment and collection system based on a plant too big for Hilo’s needs, especially when building it out will make it impossible for the County to float bonds for any purpose other than sewers for years to come?
An honest mistake?
It was not a mistake at all. Design of the plant’s size appears to have had nothing whatsoever to do with anticipated need, according to a document attached to a letter sent February 25, 1988, from then-Big Island Mayor Dante Carpenter to Director of Health John Lewin.
In the letter, Carpenter was asking the state to give the County an advance of federal funds to cover the design phase of the new Hilo plant. To justify the specific amount requested ($1 million), Carpenter referred to the attachment, which appears to have been prepared by Barrett Consulting Group. That attachment, “Calculation of FY89 Design Allowance,” states that the size of the construction project was determined, not on the basis of projected need, but was designed to be “large enough to qualify for all projected FY89 EPA construction grant funds.” Footnote 1 to this one-page tabulation states: “Direct construction costs are computed by calculating backward from funds available.”
The Clean Wallet Act
If all the County had wanted was compliance with clean-water requirements, and with the least distress to the taxpayer and payer of sewage-system user fees, it probably would have explored alternative means of sewage treatment — methods, such as constructed wetlands, that generally are less capital- and labor-intensive than traditional treatment plants. At the very least, it would have brought the planned treatment plant’s size more in line with realistic demand projections and would have developed a timetable for sewer line construction (and forced hook-ups) to minimize Hilo’s ghastly problem of contamination of water (coastal, ground, and surface) by cesspool seepage.
None of these courses was pursued. When citizens suggested alternative treatment methods, the letters and accompanying information were passed on to the consultant the County had hired to design the plant (whose fee was a function of total plant construction costs). No record of any further discussion of these proposals can be found in the files. (The original letters and attachments are also absent from County files, as well as any record of who might have sent them.)
On the matter of the timing of the sewer line construction, the Early Warning Report notes that the August 1989 Audit Report by the EPA Inspector General for the Western Region “recommended that future grants for wastewater treatment facilities in the County be delayed until construction had begun on the required collection systems.” That was to reduce the chance that Hilo would end up, as it did 25 years ago, with an oversized, under-utilized sewage treatment plant. The existing plant, capable of handling 7 mgd, has “never operated at more than 56 percent of its design capacity, despite the intentional inflow from a nearby river to assist in moving solids through the treatment process,” the Early Warning Report noted.
But, that report goes on to say, grant conditions that the EPA and DOH imposed on the County — just weeks after the 1989 Audit Report was issued, and while its recommendations should have still been very fresh in the minds of DOH and EPA officials — are virtually toothless when it comes to forcing the County to build the connection lines. Condition No. 11 requires the County to build a complete wastewater system proposed in the Facility Plan (including collector lines), regardless of whether federal funds are available to assist, and sets forth a timetable for construction of five collection systems.
“We found that the grant condition was incomplete,” the Early Warning Report states, “since only five of the nine proposed collection systems [listed in the Facilities Plan] were listed. This omission was significant because two of the excluded collection systems represented more than half of the flow of the proposed treatment system… Further, it was unclear whether the construction dates were applicable to the construction bid request date, the start of construction date, or the construction completion date… The dates were further confused with the … statement that ‘Dates may be adjusted upon completion of the expansion and financial plan.'”
Hens to Foxes: Send Help
At this point, a digression into the history of the new Hilo sewage treatment plant might help. In late 1987, the County of Hawai`i was hurting. It had evidently bungled a $2.8 million construction grant application to extend its ocean outfall. Soon after that, its application for a waiver of federal clean-water standards was denied, meaning that by July 1, 1988, the County would risk fines of up to $25,000 a day if effluent from its Hilo plant did not meet secondary treatment standards. Achieving those standards would have been difficult even if the plant, designed for primary treatment, had been in tip-top shape. As it was, the plant was suffering from 23 years of inadequate maintenance, underutilization (plants do not function well if routinely operated at a fraction of their capacity) and intrusion of salt water. At times, it was achieving what one inspector called a “negative removal efficiency” — meaning that what was pumped out of the plant was more contaminated than what went in.
Hilo needed a new treatment plant badly and quickly to comply with the July 1988 deadline. And to qualify for the last round of federal grant money for sewer construction, it had to get its plans for a new plant developed and approved with unusual haste.
The County of Hawai`i was and remains understaffed and its Department of Public Works customarily relies on consultants to plan and supervise large construction projects, such as this one. On November 12, 1987, Harold Sugiyama, director of wastewater for the County, informed then-Chief Engineer Hugh Ono of a tentative division of labor among consultants and contractors: M&E Pacific would do update the Hilo Facilities Plan; Okahara & Associates would do the Action Plan, with Barrett Consulting Group to be retained as a subconsultant to Okahara. At the same time, Sugiyama suggested the hiring of a management team to supervise overall project design work.
Six days later, at a meeting in the Conference Room of M&E’s Honolulu office, Sugiyama, Ono, and representatives of M&E Pacific and BCG “set forth the project’s organizational guidelines” and defined “the respective roles of the county and consultants.” The report of that meeting shows that the project team was instructed by Ono to “concentrate on the treatment facilities portion of the project now” (the part for which federal money was going to be available) “and defer consideration of the collection system improvements.” (It is important to stress this assignment of lower priority to sewage collection, occurring as it did against a 25-year history of the existing plant operating at roughly a third of its design capacity. At the time of this discussion, the Hilo plant had about 900 hook-ups.)
The consultants worked frantically for the next year and a half, designing a system that, the Department of Health promised, would enable the County to receive all the EPA funds ($9 million) remaining to be spent in the state. In October 1989, the grant was officially offered to the County, with the County Council accepting it, special conditions and all, November 7, 1989.
Buy Now, Pay Never
Even with the insufficiencies noted in the Early Warning Report, those conditions pose a challenge to the County. Take, for example, the County’s efforts to satisfy the requirement that it submit by October 31, 1990, an “expansion and financing plan for construction of the complete waste treatment system described in the Facilities Plan.”
The Facilities Plan calls for construction of nine new sewer lines, but it is unclear what Condition No. 11 requires. A letter from John Ong of the EPA to Hugh Ono dated September 21, 1989, written a month after release of the 1989 Audit Report, is ambiguous on this point: “The grant condition schedule has been limited to those five projects needed for 5.0 mgd operation by the year 2010” — although, as the Early Warning Report notes, the 5 mgd goal will not be met if just those projects are built. “In order to more completely address year 2010 needs, we are requiring that the expansion and financial plan include all nine sewer projects” — even though four of those nine are omitted from the construction schedule. “Although the County certified in its grant application that it can afford the entire project, the expansion and financial plan is needed because the facility plan does not address funding sources for these sewer projects.”
The County retained Sutro & Co., a San Francisco-based firm, to prepare the financial and expansion plan, which is part of a larger report bearing the title “County of Hawaii Infrastucture Financing Analysis and Plan.” The report was also intended to serve as a similar financing plan for the new sewer system being built on the Kona side, with a treatment plant at Kealakehe.
If the purpose of the grant condition was to let the EPA and DOH know the specific means by which the County would raise the money needed to complete the Hilo and Kona sewer projects, then the Sutro Report is inadequate, for it fails to do that. Furthermore, it fails to make any mention at all of three of the nine collector lines provided for in the Facilities Plan, and in that sense also does not satisfy the EPA grant condition.
On the other hand, the Sutro Report does show clearly just how strapped the County will be as a result of building the two new sewer systems.
“The Hilo and Kona wastewater projects,” it notes in the Introduction, “… will serve to exhaust realistic levels of general obligation [bonding] capacity for several years. It is important to stress that these programs only address one infrastructure system, the wastewater system, and then only the wastewater needs of a small percentage of the Island’s population.”
Later on, in the specific discussion of financing options for sewer systems, the Sutro Report states: The County “has identified over $44 million in possible wastewater projects over the next five years and an additional $220,000,000 over the next thirty years. … Funding all the needs through general obligation bonds would probably drive the Island’s rating below investment grade.” Prospects for funding through other means, however — revenue bonds, development fees, user charges — are considered and judged unlikely.
A chart included in the Sutro Report shows that the County’s debt service (payment of principal and interest) on $16 million worth of general obligation bonds for the Hilo facility will total $32 million through the year 2014. Debt service on $19 million in low-interest loans issued through the State Revolving Fund will come to $28.2 million through the year 2016.
Remember that none of these calculations include construction costs for the Hawaiian Homes sewer line (estimated to cost $8.4 million in the Sutro Report); the Kinoole Street sewer (omitted from the Sutro Report but estimated in the Environmental Impact Statement to cost $730,000), and the Honolii interceptor line ($490,000 in the EIS).
Will History Repeat Itself?
Perhaps the County is committed to building out the projects listed in its Facilities Plan. On the other hand, history is on the side of the skeptics. To quote from the 1989 Audit Report: “According to the Hilo 30 year Sewage Master Plan, published in August of 1962, the sewage flows for the existing Hilo facilities at that time were approximately 1.8 mgd. The Master Plan envisoned that a sewage collection and transport system would be constructed, and therefore concluded that the larger 7.0 mgd facility was necessary. However, the county failed to construct the collection system necessary to transport wastewater to the plant…. On the basis of past experience, and in view of the current population data for the Hilo area, we believe there is a question whether the new facility’s design capacity will be fully utilized.”
Indeed, some of the documents on file at the County Department of Works provide a discouraging indication that the County, the Department of Health and, not least, all the various participating consultants were from the very outset less than serious about building the full Hilo system described in the Facilities Plan.
For example, consider a discussion cited in minutes of a meeting held December 1, 1987, and attended by representatives of the DOH and consultants for the project. Dennis Tulang, head of the Wastewater Branch of the Department of Health, was asked about the federal rules “regarding the population and flow levels which are eligible for grant funding. Specifically, can the cesspool users be counted in the flow used for plant design?”
Tulang: “The cesspool discharges will count for eligibility determination, provided they fall within the planning area at the time of the application, and provided the facilities plan includes a program to hook them up.
“There is no absolute time limit by which cesspools must be converted to municipal collection. The time is a function of when auditors review the project… The audits typically do not occur until four or five years after construction.”
Being able to count the number of cesspool users was important, since that could justify to the EPA construction of a larger (more expensive) sewage treatment plant (paid for in large part by the EPA). Not being forced to hook them up — or at least being able to delay hook-ups — was also important, since the cost of doing that would have to be borne primarily by the County.
If this dialogue was reported correctly (it was written up by one of the consultants), then Tulang would seem to have been telling the consultants that the EPA and its delegated agent in Hawai`i (the Department of Health), would wink at any future failure to hook up the cesspool users whose discharges had been used to justify construction of the new plant. All that was required, he appears to have said, was that the Facilities Plan include a hook-up program.
Two years later (and after the 1989 Audit Report), Tulang was giving the same kind of advice to the County. Minutes of a September 18, 1989, meeting attended by DOH representatives, Harold Sugiyama of the County, and Scott Kvandal, vice president of Barrett Consulting Group. We quote from those minutes (prepared by BCG): “Sugiyama indicated that he did not know how the County was going to fund the collection system projects within the time frame [proposed in Special Condition No. 11]. Tulang indicated that the grant conditions had some flexibility with the addition of the ‘construction date would be adjusted according to the expansion and financing plan’ provision.”
Volume 1, Number 5 November 1990