Audit disputes waste facility savings

A 20-year agreement signed by Maui Mayor Alan Arakawa for a waste-to-energy facility is projected to cost Maui County taxpayers $35 million more than expected, an audit released Wednesday revealed.

The facility was expected to produce cost savings of $18.3 million but instead it will result in extra expense to Maui County taxpayers of $16.7 million, or $835,000 per year over current operations, the audit found.

Maui County Budget and Finance Committee Chairman Riki Hokama said the county’s contract is projected to cost $1.7 million per year more than what was presented to the Maui County Council. The facility is designed to reduce the volume of waste in the Central Maui Landfill in Puunene by separating recycling materials in the landfill and producing renewable fuels from materials that cannot be recycled.

The audit was performed by St. Charles, Ill.-based CB&I Environmental and Infrastructure Inc. for the Maui County Office of Council Services.

“The analysis done by CB&I raises many concerns with the contract signed by the mayor,” Hokama said. “Instead of savings, the county may now see higher costs in the amount of $35 million over the 20-year life of the contract. Most important, I question the authority of the administration to sign off on such a project with large cost implications.”

Arakawa said in a statement that the audit’s findings are skewed.

“The anticipated net costs will not exceed the annual or additional costs,”Arakawa said. “In other words, the county will not be paying any more than if we were doing this waste-to-energy project ourselves. Landfills are not just holes in the ground. They need to be engineered to be environmentally sound, not to mention safe for public use as well as staffed by qualified workers. The county asks that the council ponder the true cost of landfills, and what space there is worth, as they take a look at this audit.”

When Arakawa signed the contract with Maui Recovery Facility LLC and Anaergia Services in January 2014, he said the annual savings to the county would be $916,500, compared with current landfill operations. The promised total savings over the life of the project was $18.3 million.

CB&I’s audit estimated cost reductions at the Central Maui Landfill would not be directly proportional to the reduction in landfill tonnage, as assumed in the Department of Environmental Management’s projected model.

“The auditor refused to use the county’s evaluation of how much landfill space is worth. … The county values each ‘hypothetical future landfill cell’ at $30 a ton, adjusted from $25.50 a ton for a reasonable rate of inflation. Instead, the auditor uses the value of $13.74 to $15.43 a ton to draw upon his conclusions,” Arakawa said.

The Office of Council Services, on behalf of the Maui County Council, commissioned this study to evaluate the Solid Waste Management Division after questions were raised during the fiscal year 2015 budget process. During the process, the division requested an additional six positions be created to help with regulatory compliance. Initially, the Council authorized two of the six requested positions, and the remaining four were approved the following year.

The audit concluded that the request the department made for more positions was justified.

Jeff Walsh, Pacific region development director at Anaergia, said the company was not involved in the audit.

“We continue to be supportive of our client and look forward to working with the county,” Walsh said.

Anaergia is negotiating a fuel supply deal with Maui Electric Co. to provide the utility with the biogas created at the facility.