A company that has been working for years to develop a seawater air-conditioning system for downtown Honolulu still needs numerous permits before it can proceed.

Honolulu Seawater Air Conditioning told Civil Beat last week that it expects to break ground on the project that could cool up to 40 percent of Oahu’s urban core by the end of June

But state and federal agencies indicate the project still has a ways to go.

The company has yet to complete its federal environmental impact statement and still needs to obtain more than a half dozen permits. It’s unclear if environmental concerns, such as the possibility of monk seals and sea turtles getting sucked into an intake pipe, have been resolved. And a pipe that discharges large amounts of water into the ocean may have to be extended, adding considerable cost to the project.

Whether customers will end up saving money on the air conditioning, a long touted benefit of the systems, is also questionable, though Bill Mahlum, CEO of the company told Civil Beat that the majority of customers would save money beginning the first year of operation.

Permitting Challenges

The project is designed to draw cold seawater from several miles offshore, which will enter heat exchangers to cool buildings, before the water is deposited back into the ocean. The project has attracted strong support from the state, which is striving to convert to renewable energy sources.

But the project has had its problems.

When the air conditioning project was announced in 2004, the company said it was expected to be up and running in 2007. Cost estimates were about $140 million. But it failed to break ground and developers say financing dried up when the global financial crisis hit in 2008, further delaying the project.

The construction costs have since risen to $210 million, according to Mahlum.

But the project has also made significant headway. It’s state environmental impact statement was approved in 2009 and it has obtained 29 permits for the project. Mahlum said that construction contracts have already gone out to bid.

But federal and state agencies say the company still has to satisfy environmental concerns in order to obtain approval for its federal environmental impact statement and that project permits are still under review.

Last year, the Environmental Protection Agency gave the draft version of the federal EIS a low rating. Officials said that the project could significantly impact the environment and that the company hadn’t provided sufficient information.

Since then, James Munson, the lead reviewer of the project for the EPA, said that there had been much progress and expected the issues to be resolved within the next few months.

But it’s up to the U.S. Army Corps of Engineers to issue a final approval of the document. And the length of the seawater return pipe is still an issue. The pipe would extend into Mamala Bay near the airport.

“Federal resource agencies have expressed concern that the seawater return pipe should extend to a greater depth than the deepest alternative addressed in the federal Draft EIS. To address this concern, in the Final EIS, the Corps plans to evaluate an alternative with a deeper seawater return discharge point,” wrote Joseph Bonfiglio, a spokesman for the Army Corp of Engineers by email.

The agency denied a request by Civil Beat to speak directly with Peter Galloway, the corps official who is overseeing the EIS.

Bonfiglio said that the final environmental impact statement was expected to be published by late summer or fall and then a 45-day public comment period will follow. The corps would then make a final decision on whether to issue a Department of the Army permit for the project.

Joe Van Ryzin, vice president of Makai Ocean Engineering, which designed the piping, said that increasing the length of the pipe was unnecessary and that it could add significant cost to the project. He said there had been concerns that it could impact coral, but divers didn’t find coral at that depth.

Project delays are “a shame because it’s a perfect case where you are really trying to do something that is environmentally really, really good for the state,” he said.

There have also been a host of concerns from city agencies. In the past the city has said that the project could have impacts on traffic, including on major streets such as South King Street and Bishop Street and that piping could conflict with sewers, storm drains, water lines and communication lines.

City spokeswoman Louise Kim McCoy said by email that “preliminary plans indicate that Honolulu Seawater Air Conditioning is attempting to address potential impacts at major intersections and roadway segments.”

Mahlum said that much of the work would be done at night and that no roads would be completely closed.

Honolulu Department of Planning and Permitting also is supposed to issue permits for the project but Curtis Lum, a spokesman for the department, said the company has yet to submit permit applications.

But the company said all its applications have been filed. Lori Abe, a spokeswoman for the company, said Honolulu Seawater is working with contractors to file their applications for additional DPP permits that were required close to construction.

The company declined to say which permits it still needed to proceed, but did say there were seven.

According to the Hawaii Department of Health, the company also needs a wastewater discharge permit, which it is still reviewing. Gary Gill, deputy director of the health department, said that there had been concerns about sea life, such as monk seals and sea turtles, being sucked into the piping and that in the past the company had been resistant to putting a screen over the pipe.

The company did not respond directly to whether it had agreed to put a screen on the pipe.

Abe said by email that the company takes concerns about wildlife seriously and is working closely with appropriate agencies to avoid adverse impacts.

Customer Costs

With Hawaiian Electric Co.’s rates triple the national average, one of the biggest expenses for downtown building owners can be the cost of air conditioning.

Honolulu Seawater Air Conditioning has long advertised the project as providing customers with lower-cost stable rates and Mahlum told Civil Beat that the majority of customers would save money beginning the first year of operation.

Last year, Honolulu Seawater Air Conditioning pushed for legislation that would provide customers with exemptions from the general excise tax and state income taxes that signed up for the service.

In testimony to lawmakers, the company wrote: “Customers of the downtown Honolulu Seawater Air Conditioning, LLC project have expressed concern over the costs of converting to Seawater Air Conditioning, including the risk of higher costs in the initial years of operation.”

Asked about the testimony, Mahlum said that this was no longer a concern because of changes in project financing.

But one customer says that it is unclear whether there would be cost savings.

While Mahlum wouldn’t disclose who had signed contracts with Honolulu Seawater Air Conditioning, First Hawaiian Bank confirmed that it was a customer. And Brandt Farias, marketing director for the bank, said the bank had signed up for the air conditioning system to help the environment and didn’t know whether rates would be lower.

“Saving money on our utility bill would be nice but we will not be able to determine what if any money we will be saving until the project is operational,” wrote Farias by email.

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