A recently enacted Hawaii law prompting the state to acquire an Oahu dam and reservoir has been described as a gift to the state, but the state also may be giving a gift to the property’s multibillion-dollar primary owner that has profited from local land sales in recent years.
Dole Food Co. Hawaii, a subsidiary of Ireland-based Dole plc, faces fines tied to deficiency notices involving the safety of the Wahiawa dam dating back to 2009. The company claims that it can’t afford to bring the high-hazard facility up to a state standard at an estimated cost of at least $20 million.
As part of its effort to have the state assume that liability, Dole Hawaii warned lawmakers and community members that not doing so would force the company to remove the dam and reservoir, which supplies water through ditches and tunnels to its own farm operations and 50 other farms employing more than 500 people.
“Without this bill, the system will be decommissioned,” Dan Nellis, Dole Hawaii general manager, said in written testimony on Senate Bill 833. “The decommissioning of this system would be catastrophic to agriculture and food production in Central Oahu.”
The dam also protects parts of Haleiwa and Waialua from flooding, and is a public recreation area with fishing in parts of the reservoir also known as Lake Wilson.
Gov. Josh Green signed the bill July 5 in the name of protecting a valuable resource for the local farm industry.
“We’re vulnerable,” Green said during a signing ceremony. “When we’re not food secure, it’s evident we have to infuse our industry with resources for water.”
The new law requires the governor to negotiate acquisition terms with Dole and another company that owns land under the dam’s spillway that it leases to Dole, which is responsible for the system.
SB 833 appropriates $5 million to acquire the spillway property from Sustainable Hawaii Inc. led by Howard R. Green, a retired local attorney who owns agricultural businesses and the North Shore Marketplace retail complex. The bill also appropriates $21 million for spillway repair and expansion that state regulators say is needed to protect human life.
Actual costs for the acquisition and improvement work remain to be determined.
In 2022, the state Department of Land and Natural Resources opposed a similar bill because of concerns over unknown and unfunded costs.
This year, DLNR, which has been pursuing fines against Dole and Sustainable Hawaii over safety of the 118-year-old earthen dam and concrete spillway categorized as being in poor condition, endorsed SB 833 but also expressed concern over reservoir land management costs.
The state Department of Agriculture, which also supported SB 833, estimates that operation and maintenance costs for the dam and spillway after safety improvements will be $1.5 million a year.
Nellis said in an interview that a state acquisition of the dam and reservoir, along with 30 miles of irrigation ditches and tunnels under easements, isn’t a bailout of Dole Hawaii or its parent.
Dole would be getting rid of a liability but the state would gain an asset that Nellis said has major public purposes: supplying other farms with water at good rates, flood control and recreation. With additional investment, he added, the system could be used to generate electricity and deliver potable water.
“The reservoir system is not junk,” he said. “It is a jewel of the agricultural economy of the North Shore and Central Oahu.”
DOLE HAWAII has been appealing for public support for the irrigation system deal in an effort that included creating Save O‘ahu Ag and starting a petition urging supporters, including employees and water customers, to enlist backing for the deal from the governor. The petition has attracted about 1,050 supporters.
At a North Shore Neighborhood Board presentation in November, Nellis said Dole is being forced by DLNR to improve the spillway to comply with an updated safety standard to handle a “hypothetical” flood, which DLNR calls a probable maximum flood, more than three times as big as the previous requirement. He also said a deficiency notice DLNR issued three years ago isn’t related to maintenance or neglect.
“The spillway … has served efficiently for well over 100 years through every storm that we’ve had,” he said at the meeting.
Nellis told the neighborhood board that Dole Hawaii spent about $1 million on a dam engineering study in 2022 but won’t be able to stay in business if forced to make the mandated improvements.
“Simply stated, that means that our farming operation cannot afford $25 million to upgrade the spillway to the new standard,” he said, suggesting that the jobs of roughly 200 Dole Hawaii employees were at risk along with other farms. “No water, no farming.”
Dole has tried to interest private buyers in the Wahiawa irrigation system and also offered the system as a gift to the state in return for free delivery of up to 6 million gallons of water daily.
The reservoir, which holds about 3 billion gallons of water and is fed by two forks of Kaukonahua Stream and treated city wastewater, is capable of delivering up to 20 million gallons a day. In addition to its own use, Dole Hawaii delivers about 4 million gallons daily to other farm operators at what Nellis said is a break-even cost.
The system, according to Nellis, is the sole irrigation source for 9,000 acres of highly productive farmland, including much land owned by the state.
Dole Hawaii grows pineapple on about 2,700 acres as well as coffee on about 150 acres and cacao on about 80 acres.
Nellis said it’s a challenge for Dole Hawaii to stay viable even with the state taking over the irrigation system because Dole plc, which grew out of a pineapple company founded in Wahiawa in 1894, isn’t in the business of subsidizing its relatively small Hawaii operation.
“We have to make it on our own,” he said in an interview, adding that the warning about shutting down Dole Hawaii and decommissioning the irrigation system isn’t bluster or a threat. “It’s just economics.”
STILL, DOLE plc over the past decade has been profiting from selling Hawaii farmland removed from Dole Hawaii operations, including land once used by Waialua Sugar Co., the Dole entity that built the Wahiawa irrigation system.
In 2013, the company, then based in California and led by billionaire David Murdock, listed roughly 20,000 acres of Oahu land for sale at $200 million.
From late 2013 to early 2017, the company reported selling about 5,000 acres for $56.8 million, though financial gains on those sales were not disclosed.
More recently, Dole plc reported gains from Oahu land sales totaling $2.5 million in 2022 and $3.9 million in the first three months of 2023.
Meanwhile, during much of the same period, state regulators were trying to force Dole Hawaii to bring the Wahiawa dam into safety compliance.
Dole Hawaii’s parent company in recent financial reports has said its contingency to pay for dam improvements is probable and therefore the potential improvement expense is not recognized as a liability on its balance sheet.
According to DLNR, Wahiawa dam deficiencies were first identified in a 1978 U.S. Army Corps of Engineers dam safety report. DLNR Dam Safety Program officials ordered Dole Hawaii and Sustainable Hawaii in 2009 to remedy issues, and only some preparation work has been done.
DLNR has said the spillway’s structural integrity is uncertain and may potentially be compromised during a significant rain flow event.
In 2016, the agency restricted the reservoir’s water height limit to 65 feet, or 15 feet below the spillway’s crest.
In 2018, DLNR acquired a portable flood barrier to increase spillway height and dam capacity in case a then-approaching storm, Hurricane Lane, stalled over Oahu.
Other potential deficiencies with the dam were identified in a 2020 DLNR-commissioned engineering assessment. The agency sought to impose fines if Dole Hawaii failed to meet corrective action deadlines, including submitting a dam safety permit application by early 2021 and starting construction by early 2022.
DLNR’s board fined Dole Hawaii $20,000 in April 2021. But the company, which faced additional fines, obtained deadline extensions, including an application submission by November and construction possibly in 2025, as it also sought to have the state take over the irrigation system.
IN 2022, Dole Hawaii had only partial success persuading lawmakers and then-Gov. David Ige that the takeover should happen. The Legislature included $26 million in the 2022 state budget bill for the acquisition, but Ige used his line-item veto power to authorize only $3.5 million for analyzing such a transaction. Some of that money is sought by DLNR to assess conditions of the land surrounding the reservoir.
This year, Dole Hawaii conveyed its own deadline, saying the irrigation system’s decommissioning would result if SB 833 didn’t pass and become law.
Sen. Donovan Dela Cruz, who introduced the bill and has been a strong supporter of preserving agriculture for reasons including food security and preventing urban development on farmland, said it’s a good thing for the state to take over the irrigation system, regardless of what Dole Hawaii has said.
Dela Cruz (D, Mililani-Wahiawa-Whitmore Village) said he doesn’t regard Dole Hawaii’s push at the Legislature this year as a scare tactic. He believes the company won’t be around in Hawaii much longer.
If the transaction gets done, the Department of Agriculture would be tasked with making the dam improvements, after which the dam would be conveyed to the Agribusiness Development Corp., which would own and operate the ditch and tunnel system.
DLNR would still regulate the dam’s safety, and would expand recreational use of Lake Wilson, which it does now on a smaller scale under an agreement with Dole Hawaii.
