well the regular meeting of the water resources committee please come to order today is july first twenty fifteen and it's approximately five minutes after nine in the morning first of all i'd like to introduce get to the floor i also would like to ask everyone who had might have a cell phone if you would please remember to put it on the senate mode if you're in the chamber and all who might see it and we don't have any music fiscal officer good morning and in the back there we have her chang our star engineer thank you for being here we really appreciate all of you being here to help us this morning and also i have my committee staff i have kimberly well my legislative analyst and clear readable all of the committee secretary welcome to everybody and members thank you very much for the nine o'clock moment me and my meetings was difficult but what a members who public testimony this morning will be limited to the item on our agenda today folks if you wish to testify please sign up at the desk located in the eighth floor lobbying or in one of the district offices listed on the agenda testimony will be limited to three minutes in upon request a minute to conclude at three minutes the light will turn yellow and four minutes to light will blink read if you're talking at the four minute mark i will kindly ask you to stop in appreciate your cooperation when testifying please state your name and if you are representing anyone besides yourself we have established connections to the district offices and to be fair we will do you have anyone wishing to testify and there is no one here waiting to the fore thank you very much staff do we have anybody in the chamber that would like to testify yes madam chair we have one test fire rosemary robins several years ago i was curious it seemed to me that some of the stuff that i was observing and maybe i wasn't getting the whole picture would have been helped by an auditor so i went to the  they are the one that establishes the salary the salary commission i guess and when i got the outline at the meeting they were capacities and then salaries for these folks are all pretty much appointed by the administration and everything was filled in with the exception of the auditor and i knew that we had voted about that in the election and so i asked do you do we have an auditor and simultaneously i heard yes and no and there was no money attached to that so i asked and the deal was yes we did have one and i said ok so i took my pencil so kind of feel and what that person is getting for a  seller well it hasn't been established yet and come to find out they had put out a salary that was less than what the denominators were for the other one so i thought ok so i sat and listened and indeed we now have the audit is report that still has this morning's item and it also gives financial statements for it for twenty thirteen and twenty fourteen for the water department so in already now a day longer than halfway through twenty fifteen but it any rate i did get ahold of that i read those materials couple of things that and i also testified on this on the third of june last month but i went through those items and just to point out some of the things that are really scary in that it does identify that it's up to the administration to set that to begin with and then the council to respond to that and do the legislative production on that but something that really stressed me was that there was a need for the county to change what it had listed as assets when it was floating bonds to other capacities so apparently we looked better than we really were at that time and volumes of numbers going through here but i compliment the person for having made out this response and have done a good job seems to me  his report i'm concerned because as as the question had come up back on the third of where is the development plan what water it's required in the county chapter and then yesterday when i opened my mail i had a communication from the water department this looked achingly familiar and it says that and the first quarter of twenty fourteen i understand it says right here in here they're required to do sampling for samples every quarter so that sixteen a year when you go through that and this letter came along and said done it that they took the zero in the first quarter twenty fourteen and indeed found contaminants of chai hello methane's and hello to see ticket acids those are the same findings that we had with the upcountry oversight committee on the contaminated water in the early two thousand and we're being notified in f y twenty sixteen that  problem with those from two thousand and fourteen who's doing the oversight where is the plan that we can read so that some people who have the opportunity to have worked on those things in the past can bring forward  has been brought about we still know we're having wastewater problems but i have some good news to end up with this air moves mountains to complete that particular project this person graduated from u mass come loudy degrees and civil and environmental engineering there are the kinds of backgrounds that we need the environmental and deals and ph this morning  for announced that if you could please can surely you know that we're going to have only the second state in the country and environmental court thank you very much you bet members any need for clarification of the testimony chair thank you very much good let me check one more time with the district offices to make sure that no one has shown up and that we've missed them on office don are you is anyone there now waiting to part thank you very much ladies i appreciate it since there is no one in the gallery you are in the district offices that would like to testify members without object chair would like to close public testimony for today no object so ordered thank you very much let us proceed members we have one item we have two items on our agenda today and our first item is granting of a non exclusive perpetual resolution entitled authorizing the granting of a non exclusive perpetual easement on the county of maui real property situated electric company ltd for electrical the purpose of this resolution is to grant and non exclusive easement of approximately two point zero eight three acres for electrical zero nine six mr meyer if you could please explain a little about the request before us i'd appreciate that very much thank you madam chair we have the director of engineering program here to answer any detailed questions i can say to you that there is a bit of a misconception or a mistake in the material this is not an east but two point zero eight three acres the entire land area of our partial were tagged as loper trackers located up by layers the two acre parcel the actual easement that will be granted non exclusive easement that will be granted to mico is about two thousand square feet and it is shown on the map in the material which is provided to you so that's a little bit misleading this is a customary use but whenever we have tanks and pumps and that sort of thing has to run their electric lines onto our property or i don't want it to be after the meeting and we say well we didn't clarify exactly what we're doing madam chair while he's looking for that yes mr i just know that in the resolution it says that the county owns the property that is approximately two point eight three acres square feet so in my opinion the on the reservoir as well as the spent is a sufficient ok thank you very much members any further questions along that line being provided in order to be called provide service to us it's on our property is that correct that's correct so it seems logical that we wouldn't ask for praise or all the other  things that go along with that thank you much or thank you mr any further questions if anything else you want to discuss if not the chair would like to make a recommendation or immigration chairs recommendation is that the committee with seven with seven eyes and no nos so motion carries thank you very much members and think you know what a department member's the second item on our agenda today  is is the item to for today is our independent auditors report w r two the committee is in receipt of county communication fifteen sixty nine from the county auditor transmuting the department of water supplies financial statements and the supplementary information with independent auditors report for fiscal years ended june thirty twenty fourteen and twenty thirteen staff has handed out an excerpt of the minutes from that meeting for you reference it's kind of i think packet did you have here probably more than a dozen pages this morning we're going to hear from the department they plan to utilize this information so if mr meyer or whoever is staff person you would like to delegate that is to would please take over give us your name and p referred to above percent fairly in all material respects financial position of the department as of june thirtieth two thousand and fourteen and the changes in financial position and its cash flows for the year then ended in accordance with accounting principles generally accepted in the united states of america close quote needless to say we're pleased with the clean opinion there's no comments no material weaknesses cited in the report and we continue to work towards increased timeliness and efficiency if the committee has any questions regarding the u s financial statements as presented this morning for the fiscal year twenty fourteen we'll be happy to try to answer them if research on our parts for resources thank you members any questions the purpose of my bringing this up today is this is an item sitting in my master agenda and we did go through this extensively during the budget but in order to find it i had to schedule it before you today so if anybody has reviewed minutes and come up with any additional questions or anything you'd like clarified we have the resources with us today but if you don't that's  so anybody mr white thank you madam chair but i'm i'm comfortable with with the audit findings and i think all of us recognize that the department of water  has a very very good financial team and so i'm i'm appreciative of their bringing it up but i have no discomfort with anything that they're doing so  notes that stuck out at me was number ten which falls on there on a crude sickleave and there's a substantial amount of money in there and it's very concerning with what we're going through  nor such a large sum sits out there to be taking care taking care of at a later date i know the department and you're not the only the pharma shawn i didn't mean to just focus on and i don't know if you know again if there's anything we can do but i think it's something to be aware of and that's the only reason i bring the subject matter up others were not quite as but that one in particular stood out and so i don't know madam chair i just thought i'd bring it just for the record and maybe at a later date we can sit down and back and have a discussion but i think that's all basically all done by our collective bargaining so it's not something we can just change if we wanted too but again the song the department somewhere in the pub somewhere that it's there and that we have to take care of at a later date and try to set aside as much as possible that's important so that's all i have to say mounted thank you and thank you very much mr victory for raising that you know we could discuss this at length because there are a number of things like that including  frequently brings up the issue of unbooked which is a liability also a huge liability and we don't book it so it's some point we might have to pay these things let me ask staff if they have anything the the amount may seem high but it's certainly within the contractual amount and within limits otherwise it wouldn't be sickly it would be without pay so it's part of the contract it's something we continually try and take a look at and we certainly are diligent when her contract sick leave goes over the time allotted we get doctor's notes and that sort of thing and our administr issues maybe at a later date you know we need to sit down and talk about it this committee but maybe another committee the discussion on on what we need to do as far as collective bargaining is concerned thank you you know i think that might be a good issue for your committe sure if it's a a liability because once the employee leaves they don't get paid for that sick leave however they do get time credited for their sick leave so i'm not sure what the the dollar balances is it better to have to pay them for their sick leave or allow them to accrue that as part of their retirement benefits so that would be the interesting thing to look at if i'm not sure if it's budget and finance or mr victory knows right it is it is time that they are credited with but that means they leave their job and they get paid for the entire amount of sick leave that's a bit crude so to say that that doesn't cost the same thing is just not quite accurate might actually get passionate about certain things and one of them is money ok this is a note and it does say an accrued sick leave their chief shows how much is in you know how much is owed the two employees but it's only owed if they take their if they do not take the sick leave and they leave the county they lose it unless they retire and then it will be credited to years of service so that's why it's it's not in our financials it's an accrued the other comment on just thank you for the minutes that you had supplied and i was browsing through some of mr r sobeys comments and he does seem to have some recommendations for the department it's not totally clean and hate everything's hunky dory i mean i know you folks are doing the best job you can but just flipping the page i right away see a couple and one of them is in regards to reconciliation of was one thing they had noted and found as a material weakness and another was a recommendation about the formal process to review and confirm access rights to your different systems i guess you folks do not  have formal policies and procedures to root for user access and what have you passwords so i'm not sure if department can if you don't mind comment on these two you know suggestions or recommendations by auditor in the minutes of march thirtieth that chair had passed out to us so it's in that the first recommendation is in the first part  committee minutes relating to the county's overall i believe it's called the single lot it relates to a reclassification from one asset account to another the comment doesn't say there's a lack of control or any question about practices in terms of controlling capital projects let me say that first and foremost  we when we undertake capital projects within the water department those are subject to a bid good and evaluation award process per the county rules and regulations and that's very tightly controlled the bids are reviewed by three people before they're awarded when a project is underway and bunny is actually paid to a contractor we have inspectors and a project engineer assigned to each job and they review the work in place the material stored etc every time there is a draw a request or a payment request that payment request once it's approved by the inspectors and the engineer in charge then goes to the fiscal department it's reviewed and  signed off on by two people at least two people in the fiscal department after that it goes to either direct or myself for said review and signature so they're at a minimum five probably as many as seven people who sign off and they d request in connection with any capital projects so the proprietary that the propriety the fishers sufficiency and the correctness of those requests are adequately reviewed if there's a loan involved it may go department of finance or to safe drinking water branch as well if it's a mess around loan only then is the dispersement made against a construction project this question really really it's book t construction and progress or work in progress account which is the asset account you book things to while they are under construction this refers to the gap rules the generally accepted accounting principles rules which say that once an asset is put into service and the tank is filled with water pump is actually pumping water a water line is full of water and living waters your customers it should be according to gap taken out of construction and progress or work and progress in moved into the actual asset account it should be reclast the amount of the cost of that net cost of that should be moved from for example work in progress to the tanker work in progress to the line  c many times when our construction projects are underway there are sort of tag and items that aren't completed by the contractor and the engineer is not ready to sign off on complete transfer because the project isn't complete or maybe as built drawings they're ready warranties on the equipment that haven't been delivered there may be operation as a maintenance manuals associated with certain equipment there may be paint specifications that haven't been delivered a completed and that may take a number of months after the asset is put into service and as a result the engineers in the inspectors doing their job are reluctant to sign off and close the capital project because there are still things that need to be done to protect the people to protect the department and to hold the contractor to do its job so that's the reason that sometimes this reclassification candle lag the asset the actually being put into service and that puts that's a challenge because you've got the engineer on one hand doing their job making sure that things are done correctly and you've got the accounting folks in our fiscal group that are charged with the auditor's of following gap and actually reclassifying the assets on a timely basis when they're put in service we have developed and there was a lag there was a number that right now to rectify that situation so that we are more correctly following gap but also accounting for the kind of control you really need in place over construction projects sorry for going on a little bit but it's a little bit of a detailed kind of thing and i want to make it clear this is not a lapse in control it's not a lack of accountability it's just the opposite it's good control but we're putting in place a system that will also reflect that  projects and it's been a challenge and we will continue to get it done and hopefully this if not this audit for sure by next audit the two thousand and sixteen will be looking up better but it  has been a challenge and we are working to get it completed and yes thank you very much because one of the things that was highlighted in his comments to was that they were i guess things considered construction in progress and he said it should have been expensed as repairs and maintenance so i mean you say you have seven people that sign off on these things and yet something like that was a really that's a big you know construction repair maintenance and we just had this discussion yesterday in mr obama's committee and it you know it's means weighed two different things so i appreciate chair that department is aware and is looking into this and improving the system that we have so i mean by no means really you know seen there being horrible about  understand it's a lot to take care of and it does also state a lot of agencies have to coordinate here department of finance yourselves and everything so it's i appreciate them that understanding and being aware so thank you very much but i did and i can have other people ask but i have that other thing in regards to formal policies and procedures for users and passwords as an access senor information in your system  yeah so this comment was regarding this billing system that we use and we actually are in the can a while who are honolulu board of water supply is in control of the passwords in everything we do submit them to that and i know maybe of five months ago we did change all our passwords so we're kind of it's beyond our control but we will make sure there is documentation how they go password control we've made those you know to our auditors they're much known to them as a matter of fact the password was just changed yesterday for all of our users on the c c and b system but that is really minor compared to the other problems we have thank you and sorry chair for i can ask one more please go read ahead this is a regards to our actual booklet the audit on page twelve item no one item five and it's year you know it's only done it seventy two thousand mean those are big chunks of money that we are due so how do we go about collecting or where are we with this hopefully the number hasn't gone up thank you very much again i don't want to sound like a broken record but we did have the introduction of this and conversion to the c c and b system with a little board we had a number of bills that were estimated  d it wasn't that our meter readers didn't generate the data necessary to prepare correct bills it's that little board was able to process that process those data and get the bills out correctly and on time as a result we did have some disputes they were nothing compared with how little boards how little boards at one point had over forty five percent of the bills on estimated basis and it was a big problem so we had a minor problem and that shows up as as disputed bills or  s passed to receivables one of the issues i'd like to bring up is that most municipal water companies have the ability to create tax liam's for unpaid amounts in the property tax bills and as a result  the municipal municipal utilities do not have any unpaid work past to amounts they don't have any bad debts that's a quick and easy way to make sure that your water bills that are passed to get paid is if you if you can create early and as you can with property taxes and other issues in the actual property itself and it would ease our problems in terms of collection in situations where there's a firm foreclosure in particular it's an allowance for doubtful accounts or setting up an allowance you know for us in the future if we have accounts that have to be written we do have a very low percentage of bad debts we do many we have collectors we have we lock meters you know we do lots of things to try to collect the debt but this is like i said it's an allowance a set up that we can for a few you know things that are on collected that if we have to write it out so it isn't an actual liability it's it's an allowance just in case you have it correct ok easy chair i wanted to add that we think that relatively speaking our revenue for twenty four thousand and water sales was in excess of fifty four million dollars and so the allowance of two hundred twenty four you know first of all you know we've got to complement the water department because they do a fairly good job you know if you look at this report in totality of very good report it also reminds us all that mr taylor in the department does need the money to start moving and getting their own billing system we have long been dependent on oil and i understand when we first started for the expenses that we were doing as an individual to versus joining dam was a big savings but those times have changed and so we need to have control i think this is one of the big challenges we face is we have all these questions which in some people that were getting bills that were almost identical to what they got then and then three months later we're getting five in six thousand dollar bills remember watched yeah it chilled that right and that we were very fortunate we were pretty much a new internet we got a few but not like and you're right it was almost forty seven percent of all the bills were in dispute at one point in the bottled water supply in honolulu so  this is why i'm just putting the got that out there that we need to change we need to move and if we want to keep the hamstring in and tie their hands then leave it would you know i'm all for the change let's do it in and do it as expediently and as quickly as possible thank you thank you mr vick for the reminder that we're trying to get our own systems that we are no longer vulnerable by depending on a lawful i don't like that i'm sorry is our agenda for today we've completed chair would like to thank you very much for your work today i would like to thank the water department for being here today with their resources to help us you know to do our work today i'd like to you for being with us and my staff and without further ado department thank you very much and congratulations we can move on to the next other report right which is going to be even better than this one