Maui Council weighs $6 million purchase of two private West Maui water systems

Maui County is moving toward a $6 million purchase of two privately owned West Maui water systems, a deal county officials say would bring public utility control to areas long served by private companies, with final approval subject to Maui County Council and Public Utilities Commission approval and closing not expected until April 2027.

The Water and Infrastructure Committee discussed Resolution 26-116 on Monday. If council members approve the deal, it would authorize the county’s Department of Water Supply to acquire water system assets from Launiupoko and Olowalu water companies for up to $6 million combined, not including closing costs. The resolution was introduced by Council Chair Alice Lee at the request of Mayor Richard Bissen.

The purchase would transfer wells, distribution pipelines, booster pumps, reservoirs and easements to county ownership. Because the proposed acquisition price exceeds $250,000, Council authorization is required under the Maui County Code, which governs County acquisitions of real property.

The Launiupoko and Olowalu water systems purchase is the second phase of a broader County effort to shift West Maui’s water systems into public ownership. In May, Bissen announced a separate memorandum of understanding with Maui Land & Pineapple Co. to acquire that company’s water infrastructure in West Maui — including the Honokōhau Ditch System and a long-term lease of the Puʻu Kukui Watershed — a larger, unrelated system whose price remained under negotiation at the time of the announcement.

County officials say the County’s goal is to raise public ownership of West Maui’s drinking water systems from 45% to 93%. Bissen’s administration has tied the effort to freeing up water capacity to support affordable housing development in West Maui, along with agriculture, emergency preparedness and Native Hawaiian cultural practices. The Council passed a resolution to develop a comprehensive recovery and resilience plan in the wake of the 2023 Maui wildfires, and one of the recommendations was to consolidate public and private water systems within island regions.

A deal priced well below appraised value

Deputy Director of Water Supply James “Kimo” Landgraf told the committee the Launiupoko system serves 402 active connections. In 2025, it produced nearly 276 million gallons of water. The County would pay $3.5 million for it, against an appraised value of $8,056,000.

The Olowalu system includes separate potable and non-potable components — 79 potable customers and 72 non-potable customers — and would cost the county $2.5 million, which is $518,000 above its $1,978,000 appraised value.

Council Member Kauanoe Batangan questioned the roughly $4.5 million gap favoring the County on Launiupoko and the roughly $500,000 premium the county would pay above appraised value for Olowalu.

Managing Director Josiah Nishita said the two systems were negotiated as a package deal.

“We’re looking at it in totality with the connection of systems,” Nishita said, noting the combined investment value of both systems is about $10 million — well above the $6 million purchase price.

The appraisal report offers additional detail behind that gap. NewGen’s analysis found the Launiupoko system carries about 60% “economic obsolescence” in its valuation, largely because its earnings have been capped under state-regulated rates. As a result, the system’s appraised value of $8,056,000 — based on its income-generating potential — is well below the $10.5 million it would cost to fully replace the system today.

Rate increases could follow for existing customers

The County projects annual revenue of about $2.56 million for the Launiupoko system under Department of Water Supply rates, against estimated annual operating costs of $879,664. For Olowalu, the county projects combined potable and non-potable revenue of $734,363 against operating costs of $671,554.

Council Member Tamara Paltin noted that both private companies have been operating at a loss under current rates set by the state Public Utilities Commission, while the County’s projections show a surplus — a gap driven largely by the county’s higher rates in upper usage tiers.

Council Member Keani Rawlins-Fernandez, participating by phone from Molokaʻi, asked whether the County’s revenue projections accounted for customers potentially reducing water use in response to those higher tiered rates. Landgraf acknowledged the projections did not factor in a possible drop in usage.

No pipe inspections conducted before sale

Independent appraisals and engineering evaluations of both systems were completed in June by NewGen Strategies and Solutions and Carollo Engineers, and found the systems to be well-maintained, according to Landgraf. However, no closed-circuit camera inspection of underground pipes was performed, because the lines remain in active use and inspection would carry contamination risk, Landgraf said.

Following closing, the County plans a six-month transition period with the current owners, estimated to cost $46,500 per month for Launiupoko and $53,600 per month for Olowalu, while the water department trains new staff. Five of 10 newly approved fiscal year 2027 positions at the department would be filled to support the acquisition, at an estimated cost of about $327,192 over 12 months, with full staffing expected by July 2027.

The County also budgeted an additional $904,000 in post-closing improvements for Olowalu — including reservoir fencing, relining of the Snake Reservoir and new SCADA system integration — and $150,000 for similar work at Launiupoko.

Future expansion limited by water permits

Lee asked about Launiupoko’s remaining water capacity, noting the system has a sustainable yield of 7 million gallons per day against current usage of about 700,000 gallons per day.

Rawlins-Fernandez cautioned against reading that gap as room for the County to expand water service.

“Sustainable yield doesn’t mean that we extract as much water until we get to sustainable yield. That’s not what that means,” she said. The community sought protection of water resources through the state Commission on Water Resource Management because of the “extractive use and abuse of the water. That’s the whole point. It doesn’t mean we use up all 7 million gallons per day.” She added that climate change and cultural uses of water need to be taken into account as well.

Deputy Corporation Counsel Caleb Rowe confirmed that state water commission approval is not required for the acquisition itself, but it would be required if the County later sought to expand water use beyond the sellers’ existing pumping permits. Under the current proposal, existing operations at both systems would continue under those permits.

Public testimony unanimously supportive

All public testimony was in favor of the acquisition. Greg Rylsky, a Lahaina resident, cited fire suppression needs and hopes for expanded water connectivity in the area.

“This is fantastic news,” Rylsky said. “West Maui has needed this, and that concludes my testimony.”

Paele Kiakona said the County’s purchase of the water systems would be reclaiming water as a public trust resource, noting that 77% of West Maui’s water systems remain privately owned. Maui County has said the acquisitions, if completed, would raise public ownership of the region’s combined drinking and irrigation water from 25% to 65%.

Jackie Keefe voiced support while raising concerns about long-term environmental stewardship and the premium the County would pay for Olowalu above its appraised value. James Langford suggested the County consider adding atmospheric water generation systems to supplement the acquired supply.

What’s next

Monday’s meeting was discussion-only, with no vote taken on adopting the resolution. Instead, Resolution 26-116 next goes before the Budget, Finance and Economic Development Committee, which has a follow-up meeting scheduled for Aug. 4.

Nishita said County staff would respond to written questions from council members before that meeting.

If approved by the full Council by the end of August, the resolution would move to the Public Utilities Commission for review, with commission approval expected around March 2027 and an escrow closing roughly 20 days later.

Committee Chair Tom Cook called the proposed water system acquisition “a really good deal for the community.”