Senator urging regulators to approve developer’s plan to buy town’s utilities

Pacific Business News - September 16, 2016
Duane Shimagawa

Hawaii lawmaker is urging state regulators to approve Texas-based developer Hunt Cos.’ plan to acquire the water and wastewater infrastructure in Kalaeloa in West Oahu, Pacific Business News has learned.

Hunt has a multimillion-dollar plan that includes building some 4,000 homes in the area over a 20-year period.

A Hawaii lawmaker is urging state regulators to approve Texas-based developer Hunt Cos.’ plan to acquire the water and wastewater infrastructure in Kalaeloa in West Oahu.

The company has formed Hunt Kalealoa Water LLC for the proposed purchase of Kalaeloa Water Co. LLC from Maui-based Pural Water Specialty Co. Inc., as first reported by PBN.

In December, the companies filed their acquisition application with the Hawaii Public Utilities Commission, noting that they hope the commission would make a decision on the sale by April 6, which it hasn’t yet.

“We are interested in acquiring utility and infrastructure systems as part of a broader corporate strategy,” Steve Colon, president of development for the Hawaii region for Hunt Cos., previously told PBN. “Obviously, this benefits us at Kalaeloa as it enables us to ensure we have adequate water and wastewater to develop out our master plan there.”

The water and wastewater systems provide these services to the former 3,723-acre Barbers Point Naval Air Station, which has been transformed into a redevelopment district now known as Kalaeloa.

There were 114 active water system services and 69 active wastewater services in Kalaeloa, as of federal fiscal year 2012.

State Sen. Mike Gabbard, D-Kapolei-Ewa, recently submitted a letter to Randy Iwase, chairman of the Hawaii Public Utilities Commission, regarding the issue.

“I’ve personally witnessed the challenges that this community faces in upgrading its infrastructure,” he wrote in the letter. “This is a monumental task that requires government to collaborate with the private sector, given our budgetary challenges. Since the closure of the Barbers Point Naval Air Station in 1999, the Navy has continued to own and operate the water system in Kalaeloa, but has made minimal improvements.”

There’s about 30 percent unaccounted water in the Kalaeloa water system, and given the importance of conserving water to meet the island’s future needs, this must change, according to Gabbard.

“I see [Hunt’s] proposal as a win-win that Hunt Kalaeloa Water is willing to step in to help resolve this serious situation,” he said, noting that the Board of Water Supply have declined taking over the water system in Kalaeloa. “I’m willing to assist in any way I can to help make the change in control a reality. I urge you to consider removing barriers that currently impede Hunt Kalaeloa Water from moving forward on its plans. Otherwise, the residents, government agencies and businesses that call Kalaeloa home will continue living with a substandard water system.”

The water services include three single-family residential services, 16 multifamily residential services, 66 nonresidential services and 29 irrigation/non-potable services, as well as 19 residential and 50 nonresidential wastewater services. These numbers are expected to rise.

Hunt said it is negotiating an operations and maintenance agreement with Pural in which the Maui firm would continue to manage and operate the area’s water and wastewater systems.

Additionally, the Texas developer said it would be providing Pural funding to operate and maintain these systems and make capital improvements.

Terms of the deal were not disclosed, although Hunt has allotted $450,000 for the acquisition.

More than 15 years after the Navy closed the Barbers Point Naval Air Station and turned the land over to the state, development of Kalaeloa has remained stagnant.

Insufficient infrastructure is a key roadblock standing in the way of the planned, major infusion of hundreds of millions of dollars in economic development and opportunities for the area such as new housing and businesses.