A proposed arrangement with a Chicago company to provide water for Kula in Upcountry Maui is raising concerns from residents who fear it would drive up their monthly bills and give control of the water to a private developer with no ties to Maui.

The 30-year water purchase agreement between Free Market Ventures, a Chicago real estate and investment firm, and the Maui Department of Water Supply is on the agenda for Friday’s Maui County Council meeting.

But council members said Thursday the matter likely will be tabled at the request of council member Tom Cook, Department of Water Supply director John Stufflebean and the Kula Community Association to give the community and the administration more time to study it.

Stufflebean led a presentation on the project at the March 7 meeting of the council’s Water and Infrastructure Committee. The committee voted 7-0 to pass it on to the full council.

But a number of residents say they only heard about the project just before a community meeting last week at the community center in Pukalani. At that meeting, more than two dozen people questioned Free Market Ventures president Jack Buck and his business partner Michael Smith after they gave an overview of the $100 million project, which is laid out in a 40-page proposal.

Buck, who did not return a call seeking comment for this story, said he entered into an agreement on Feb. 21 with property owner Von Tempsky FP to buy a 272-acre parcel known as Kula Ridge Mauka. The purchase will only go through if the county agrees to purchase water from a deep well that Free Market Ventures’ subcontractors would drill. It would be a “take-or-pay” agreement, meaning the county would be obligated to buy all the water the well produces for 30 years.

Once the well goes into production and the county is purchasing the water, Free Market Ventures would donate the 7-acre Kula Community Center and Tennis Court complex to the county, which it currently leases.

The company estimates the cost of the first well is between $10 million to $12 million, with a total estimated project cost of about $100 million. In addition to drilling one or more wells, Free Market Ventures would also build a microgrid to power the well pumps with solar energy.

Stufflebean said the company would incur the risk and expense of drilling new wells, rather than the county.

Stufflebean said in an interview that he supports the proposal because it would help solve some of Upcountry’s water shortage issues and assist with fire prevention. More than 1,400 households and other entities are currently waiting to be hooked up to county water and the additional water supply could shorten the so-called meter list.

At the March 27 community meeting, Stufflebean noted that Upcountry’s water supply practically ran dry in October and that confirmed for him the urgency of finding new water sources as quickly as possible, especially with increased drought conditions fueled by climate change.

Stufflebean said he began talking with Buck and Smith about a year ago after the company reached out.

Retired Maui College economics professor Dick Mayer, who gave a presentation at the March 27 meeting in Pukalani, calculates there will be increased costs for water consumers islandwide and that the costs the county will have to pay to the developers over a 30-year period are too steep to justify.

Mayer projects that the cost of water would rise to $12.87 per 1,000 gallons in the first year, increasing to $26 per 1,000 gallons by the end of the contract. Residential users currently pay anywhere from $2.13 to $8.12 per 1,000 gallons, depending on how much they use, according to Mayer.

But Stufflebean’s analysis says water rates countywide would increase by 3.1% if the Free Market Ventures deal goes through. That would include the costs for pumping, treating and purchasing the water, drilling wells, energy and maintenance costs, depreciation, planning and engineering, administration, and other expenses.

Council member Yuki Lei Sugimura, who organized last week’s community meeting, said in a phone interview she asked Stufflebean to provide a cost analysis so she can review his numbers and compare them to Mayer’s.

Stufflebean’s analysis is now being reviewed by the mayor’s office, he said Wednesday.

Shay Chan Hodges, a former chair of the Board of Water Supply, said the nine-member volunteer body appointed by the mayor to advise the county also held a meeting in March and received a presentation from Free Market Ventures. Most came away with concerns and unanswered questions about a range of things including cost increases, engineering and technical matters, and how the drilling might impact the aquifer, Chan Hodges said.

The Kula Community Association believes the public needs more time to examine the pros and cons, president Bobbie Patnode said in an interview.

In its written testimony to the council, the association, which represents some 800 people, said it could support the Free Market Ventures’ deal if the county auditor studies it and concludes that the arrangement would be in the public’s best interest.  

Several people who spoke at the community meeting said they resented the idea of a mainland company with no history on Maui buying water and selling it back to taxpayers.

“This is a company with no Maui ties that isn’t a water specialist and it shows up and says ‘let’s pump your water and sell it back to you,’” said Michelle Del Rosario, a real estate agent, who spoke at the meeting.

“None of it makes sense,” she said. “Our county has lost its mind.”

The lack of transparency around the deal erodes public trust, Del Rosario said.

Former council member Kelly King said Maui should be moving away from private ownership of water, not heading toward it. That’s why voters amended the county charter in the 2022 election to create community water boards to take back control of water from private, plantation-era systems.

Entering into a 30-year purchase agreement with a Chicago company to buy water is too risky, in King’s view.

“The danger is these private water systems can charge whatever they want. There’s the potential to raise rates willy-nilly,” King said.

The contract with Free Market Ventures locks in the rate structure for 30 years so the company cannot arbitrarily institute price hikes, Stufflebean said. He also said the county can buy out Free Market Ventures’ Kula operation “at any time based on a price set by a third party.”

Buck, the Free Market Ventures president, had said he needed the Maui County Council to approve the resolution at its Friday meeting so he can close the sale on the property by his deadline.

Buck is seeking an extension on the purchase contract with the seller, Stufflebean said.

Civil Beat’s coverage of Maui County is supported in part by a grant from the Nuestro Futuro Foundation.

Civil Beat’s community health coverage is supported by the Atherton Family Foundation, Swayne Family Fund of Hawaii Community Foundation, the Cooke Foundation and Papa Ola Lokahi.