Maui mayor disputes audit claiming $35M waste-to-energy contract overrun

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.

Maui County Budget and Finance Committee Chair Riki Hokama said the county’s contract is projected to cost $1.7 million per year more than 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, which was performed by St. Charles, Ill.-based CB&I Environmental and Infrastructure Inc. for the Maui County Office of Council Services, shows the project actually will cost the county $835,000 per year over current operations. So the extra expense over 20 years now will total $16.7 million rather than a cost savings of $18.3 million that was projected when the contract was signed.

“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 to 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.