The Maui News: “Water company seeks sale of 4,500 acres of watershed land”

Water company seeks sale of 4,500 acres of watershed land

Deal would not include the Waikapu ditch or any water delivery systems

Avery Chumbley

WAILUKU — Eight years of growing losses have prompted Wailuku Water Co. to ask the state Public Utilities Commission for permission to sell about 4,500 acres of its land in the West Maui Mountains.

The commission long ago suspended any asset sales while stream-flow standards in a contested case hearing were being worked out. On Friday, the company filed a request with the commission asking it to lift the suspension.

“Nine years have passed,” Wailuku Water Co. President Avery Chumbley said Tuesday. “We are quite frankly in a financial situation where we can no longer continue to sustain the losses

that we have for the last eight years in a row. And we have an opportunity to sell some of the underlying land.”

The company wants to sell about 4,500 acres for $3.4 million to Ting Ranch LLC, a Hawaii limited liability company managed by Duane Ting, according to the docket. The property would include a 3,425-acre parcel mauka of the King Kamehameha Golf Club and about 1,100 acres just above the first parcel.

The sale only involves the land and would not include the Waikapu ditch or any other water delivery systems in place. Those would remain with Wailuku Water Co. That way, Ting Ranch doesn’t need to apply to the commission to become a regulated company.

“It makes (the sale) a fairly cleaner request,” Chumbley said.

Wailuku Water owns about 13,170 acres of West Maui watershed lands. Although it is a private company, the PUC has deemed it “a quasi-public utility because we’re delivering (water) to more than one person,” Chumbley said.

In 2007, the company filed for a certificate of necessity from the PUC, allowing it to provide nonpotable water through its ditch distribution system and establish rates for delivering the water.

However, the PUC decided to suspend the company’s docket in 2008 while the Commission on Water Resource Management finalized in-stream flow standards, determined potential users and issued permits as part of a contested case hearing on surface water use permits.

“The PUC felt that until that decision was made, it would be premature to issue a certificate of necessity,” Chumbley said.

As part of the suspension, the company could not take new customers, raise its rates or sell its assets, he explained. Wailuku Water has lost increasingly more money since then.

Company revenues recently took a hit with the closure of Hawaiian Commercial & Sugar Co. and storm damage in Iao Valley. The end of HC&S operations resulted in about a 35 percent decrease in revenues in 2016, “the single largest loss of revenue” for the company, Chumbley said. After flooding in Iao last September, “the county was not using water at the same level they had in the past,” meaning a loss of more revenue. In 2016, the company lost $459,900, according to the docket.

Sorting out the case hearing has taken time, given that there are more than 110 users and applicants for water, including the Maui County, which is asking to increase its intake from the Iao-Waikapu ditch from 1.5 million gallons a day to 3.2 million. The hearing ended last September, but the case was reopened so stream-flow standards could be re-evaluated in light of the closure of HC&S, and that impact on parent company Alexander & Baldwin’s need for water.

If Wailuku Water is allowed to sell the land to Ting Ranch, it would “be able to continue to operate for a while, but it won’t solve the problem in perpetuity,”Chumbley said.

Meanwhile, the suspension also blocks the county’s proposed purchase of 8,764 acres of Wailuku Water’s land, including its water infrastructure, for about $9.5 million. If the county goes through with the purchase, it also will operate the water distribution system on the land that Ting Ranch wants to buy.

But if neither of the purchases happen, “there’s a high probability that Wailuku Water Co. will not survive,” Chumbley said.

Wailuku Water delivers water to more than 45 users. It also provides water to the Department of Water Supply, which treats it so it can be consumed as public drinking water.

Regardless of whether the county or Wailuku Water operates the system in the future, users will still need to pay a fee for delivery of the water, “unless their water comes directly off of the stream to their property, which is pretty rare,”Chumbley said.

The company’s request only asks for the suspension to be lifted so the sales can be made; it will not allow the company to raise its rates or add any customers. He added that it could take two months or longer before the matter could get a hearing because the PUC will have to wait to see if parties involved in the contested case hearing file objections.

* Colleen Uechi can be reached at cuechi@mauinews.com.

The Maui News: “Mahalo and aloha to plantation life”

Mahalo and aloha to plantation life 

Former Puunene resident Stan Mukai (front) poses Friday next to a banner he had made as a “final farewell” to Hawaiian Commercial & Sugar Co., which ended its sugar operations last month. Standing behind him at the Alexander & Baldwin Sugar Museum in Puunene are former Puunene plantation camp residents, including some from Mukai’s camp, Spanish B. Mukai, 78, now an Oahu resident, said that the banner will be given to the museum to archive with other items from the mill’s closure.

The Maui News / MELISSA TANJI photo

The Maui News: “A&B says land sale will make way for Target”

A&B says land sale will make way for Target

Alexander & Baldwin will close a $40 million, 24-acre Kahului land sale today to make way for the development of national retailer Target, A&B Chairman and Chief Executive Officer Stan Kuriyama said Thursday while announcing the company’s third-quarter operating and financial results.

The land sale amounts to $1.65 million an acre, he said, noting that it follows a September sale of 209 acres in Waikapu, at $25,000 an acre, to Maui County for its Central Maui regional park complex.

“Most of the proceeds from these two sales will also be reinvested in the acquisition of the Pearl Highlands Center,” Kuriyama said. The closing of the sale on Oahu was in September.

The Pearl Highlands Center purchase made A&B Hawaii’s second-largest owner of retail properties in the state, he said.

The largest is General Growth Properties, which owns Whalers Village in Kaanapali and Ala Moana Center on Oahu, among other properties.

In April, Property Development Centers, a wholly owned real estate subsidiary of Safeway Inc., announced it had reached a deal with A&B to purchase the property at the corner of Puunene Avenue and Hookele Street, near the Zippy’s restaurant.

PDC said it would, in turn, sell 12 acres to Target, which will serve as the center’s anchor retailer.

A&B’s real estate operations performed well in the third quarter, Kuriyama said, highlighting the company’s purchase of 27 properties in Kahala, one of Oahu’s “premier residential neighborhoods.”

Chris Benjamin, A&B president and chief operating officer, said that the company spent time “cleaning up and readying” the Kahala properties for sale. As of Thursday, four lots had sold, and the company was evaluating offers or had sales in various stages of contracting, he said.

On Maui in the third quarter, A&B sold six units at its 150-unit Kai Malu at Wailea project, with units going for $1 million to $1.4 million, Benjamin said. The company is seeking Maui County regulatory approval for a 70-unit condominium project in Wailea, and it has the ability to do another 75-unit development, if there’s enough market demand, he said.

Overall, A&B’s adjusted net income for the third quarter was $5.6 million, or 13 cents per share, compared with adjusted net income of $13.8 million, or 32 cents per share, in the same quarter in 2012, the company said.

“Our net income also reflects a $7 million decline in agribusiness operating profit compared with last year’s third quarter, which was anticipated and resulted from one less sugar voyage and lower sugar prices,” Kuriyama said.

A&B also completed on Oct. 1 the purchase of the Grace Pacific construction company, which earlier had been announced for a combination of stock and cash valued at $235 million.

“We expect (Grace) to be an important generator of earnings and cash for the company,” Kuriyama said in a conference call.

With its acquisition of Grace Pacific, A&B was “extending and enhancing our community building capabilities to encompass infrastructure work, for which a steady and growing need exists in Hawaii,” Kuriyama said in a written statement. “With Grace, we increase our ability to leverage Hawaii’s improving economy and real estate markets, and materially strengthen our financial profile and flexibility, while also enabling us to initiate a modest quarterly dividend.”

A&B’s agribusiness operating profit for the third quarter was $2.2 million, compared to $9.1 million last year, the company’s third-quarter report stated. The lower profits were “principally due to lower raw sugar margins resulting from one less sugar voyage and lower sugar prices in the third quarter of this year compared with last year.”

“Power and molasses sales margins were also lower in the quarter,” according to the report. The company expects to break even with its agribusiness segment in the second half of this year, generating a loss for the fourth quarter.

In the third quarter, Hawaiian Commercial & Sugar Co. produced 64,000 tons of sugar, down 18.2 percent from the 78,200 tons produced in the third quarter of 2012. The company’s tons of sugar sold fell 50.6 percent from 72,400 tons in 2012 to 35,800 tons this year.

For the first nine months of the year, the picture’s not as ugly. Tons of sugar produced were down slightly at 0.8 percent to 138,600 tons, while tons of sugar sold dropped 33.4 percent to 72,200.

Sugar prices increased modestly in the third quarter, Benjamin said.

A&B remained “hopeful” that sugar prices would continue their upward trend, he said.

* Brian Perry can be reached at bperry@mauinews.com.