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Cost of Getting a Water Meter on Kauai Soon to Increase – Q and A

The Facilities Reserve Charge (FRC) for EACH water meter is expected to go from the current charge of $4,600 to $18,000+ within the next few months. If you know of anyone who is considering additional development for their property or might need a water meter from the Kauai Department of Water (KDOW) now is the time to install it.  

The FAQs and answers below were taken from a KDOW handout provided during a recent seminar done by the KDOW at a Kauai Board of Realtors function. I hope this helps. Aloha -CJ

Frequently Asked Questions About the KDOW Facilities Reserve Charge

Q: What is a Facilities Reserve Charge (FRC)?
A: This is a fee paid by new water users or existing users who need additional water. The charge is designed to cover the Kaua’i Department of Water’s cost of adding new capacity. It is used to pay for new water sources, storage, and transmission pipelines, which meet the requirements of new demand.

Q: Why is the charge going up?
A: An increase is proposed to meet the increasing cost of providing services. It has been nearly 10 years since the current rate was set, and actual costs are far greater than the current FRC level. Among proposals under consideration, after a new FRC is set, is to link annual increase to an inflation index, so large periodic increases can be avoided.

Q: Is an FRC something other utilities charge?
A: Yes. Almost all water utilities collect such a fee from new users. In other jurisdictions, it can go by other names, like Water Capacity Reserve Charge, Water Connection Fee, or Capital Facility Charge.

Q: Has the charge been thoroughly studied?
A: Department consultant SAIC, using standards developed by the American Water Works Association, reviewed the current projects needed to provide additional capacity. After conducting a range of studies, along with consultation with the community and the Water Department, the consultants are now proposing a rate of $18,000 for a standard residential 5/8-inch meter. (For larger meters, the fee is increased proportionally.)

Q: How did SAIC conduct its study?
A: SAIC conducted a Needs Assessment Study, and updated the Water Department’s FRC methodologies, calculations and schedules. It determined the actual cost of new source, storage and transmission facilities, and calculated what percentage of each is required to meet demands for growth (which would be financed through the FRC). They followed Hawaii State law regarding what basis Impact Fees in HRS 46-144 must follow.

Q: Did the study follow a plan?
A: The FRC proposal was developed under the guidance of the Department’s long-term planning document, Water Plan 2020. The portions of Water Plan 2020 that deal with system expansion continue to be used as the technical basis for the new FRC calculations.

Q: Has the community been consulted?
A: In early 2011, the Department of Water held focus group sessions with both residential and commercial customers. The Department has met with community groups, has conducted other outreach and has posted on its website progress reports on all Water Plan 2020 projects.

In earlier discussions, a preliminary $22,000 FRC figure was being considered. Focus group members said they felt that number seemed excessive, but were willing to reserve judgment if they felt the department was proceeding with transparency, equitability and efficiency. They favored the Department’s policy that the new users of water should pay their fair share rather than everyone facing increased water rates for new capacity.

Q: Does the fee deter economic growth?
A: The Department’s view is that setting this fee at a realistic figure is pro-planning. In focus groups, some members of the community said they feared a high fee would function as an anti-growth policy. But the opposite has been occurring. Growth in some areas has been blocked because the Department does not have the financial ability to pay for increased capacity that new development requires.

Q: Can’t conservation reduce the need for expensive system upgrades?
A: The Department operates a series of public programs that promote conservation. Water use island-wide has indeed dropped in recent years. This has not made up for the deficit that existed at the time consumption dropped. In areas with demand for new development, conservation has not created enough of a reduction to permit the development of new residential and business units.

Q: What will happen to customers who long ago paid lower FRCs but who have never installed their meters?
A: Customers with uninstalled meters require the Department to reserve capacity, while no revenue is collected to cover the cost of maintaining that capacity. Meanwhile, other potential new customers are denied access to the water system. The Board of Water Supply is considering encouraging customers to either install meters now, or if they defer installation, that they be required to pay the difference between the FRC they paid and the FRC that is currently in place.

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Carol Andrews, REALTOR BROKER (B), SFR, ABR

October 11, 2012

Thank you CJ- Excellent information to pass on and very much appreciated!

Carol Andrews, REALTOR BROKER (B), SFR, ABR

October 11, 2012

Thank you CJ- Excellent information to pass on and very much appreciated!

Kellen Ponce

October 11, 2012

An informative post CJ, this really highlights the value and importance of infrastructure and those properties that already have them, Thanks.

Kellen Ponce

October 11, 2012

An informative post CJ, this really highlights the value and importance of infrastructure and those properties that already have them, Thanks.

Katie Minkus, R(BIC)

October 11, 2012

WOW. That’s quite an increase!!!!

Katie Minkus, R(BIC)

October 11, 2012

WOW. That’s quite an increase!!!!

CJ

October 11, 2012

Bottom line is that improving, maintaining and adding to the existing infrastructure is expensive and I think KDOW is doing their part to make sure Kauai’s future water system is going to be more than adequate to provide water service to everyone. They are building five new 1M gallon water tanks which cost $5M-$7M each and also improving additional infrastructure along the way. I bet this will surprise most of you to know that KDOW is NOT funded by the State or County and they rely solely on developer/owner contributions by way of FRC to fund these projects and future projects like the proposed Kahili Well that will be the most progressive state of the art drilled well in the State of Hawaii and will produce enough water to service the entire island for many years to come.

CJ

October 11, 2012

Bottom line is that improving, maintaining and adding to the existing infrastructure is expensive and I think KDOW is doing their part to make sure Kauai’s future water system is going to be more than adequate to provide water service to everyone. They are building five new 1M gallon water tanks which cost $5M-$7M each and also improving additional infrastructure along the way. I bet this will surprise most of you to know that KDOW is NOT funded by the State or County and they rely solely on developer/owner contributions by way of FRC to fund these projects and future projects like the proposed Kahili Well that will be the most progressive state of the art drilled well in the State of Hawaii and will produce enough water to service the entire island for many years to come.

Shaylyn Kimura

October 12, 2012

Thanks CJ, this is great information as agents to pass along to prospective buyers.

Shaylyn Kimura

October 12, 2012

Thanks CJ, this is great information as agents to pass along to prospective buyers.

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