The Honolulu Board of Water Supply approved lucrative one-time bonuses for the agency's top two executives in December 2004, part of $555,763 in incentives paid to them and 47 other employees.

The bonuses were paid as part of an 18-month pilot program that has been suspended because of financial reasons, the agency said. However, the bonuses could be paid out again to some employees, it said. The board is a semi-autonomous city agency.

Documents indicate that the board authorized the top bonuses — $63,000 to then-manager and chief engineer Clifford Jamile and $54,000 to deputy manager Donna Kiyosaki — "based on an evaluation of their meeting performance goals as reviewed and approved by the Chairman of the Board."

At the time they received their bonuses, city records indicate Jamile earned $126,000 a year, and Kiyosaki $120,000.

Jamile and Kiyosaki did not respond to three telephone messages left for each seeking comment on the bonuses.

Information about the awards given to Jamile and Kiyosaki was posted several days ago on the board's Web site — in the section accessible only to workers — by BWS officials responding to questions from employees, according to Clifford Lum, current Board of Water Supply chief engineer.

The former chairman of the Board of Water Supply, businessman Eddie Flores Jr., said the bonuses are a smart business strategy to reward good work.

Flores said he supported the bonuses as a way to get and keep skilled and experienced executives in the vital city jobs.

"It's pretty difficult to attract qualified people," Flores said Friday from San Diego when asked about the incentive program. "Those guys worked very hard; they deserve it. We're running a multimillion-dollar operation."

However, records released to The Advertiser show that only four of the 11 top employees are still with the agency.

Disclosure of the bonuses comes just two months after the BWS approved a five-year rate increase that will have O'ahu residents and businesses paying about 50 percent more for water by 2010. The first rate increase will take effect on Oct. 1.

MAYOR PUZZLED

News of the bonuses surprised some city officials.

Mayor Mufi Hannemann said he was puzzled that the agency could give out bonuses when other city agencies can not.

"My personal preference is if bonuses are going to be paid out, it shouldn't be exclusively for one department," he said.

The board governs the semi-autonomous city agency, but Hannemann said, "they're still city employees in my view."

Lum said the bonus issue came up as part of a continuing employee communication program. He said the question was answered in 12 to 13 pages of information posted for interagency access.

He said the state's Uniform Information Practices Act allows only the salary ranges — not specific amounts — to be disclosed about civil servants, so only a total lump sum amount was released for their combined bonuses.

Lum said information about the other salaries was released to The Advertiser because the top two are appointed positions and the officers are contracted employees, not civil service positions.

City Human Resources Director Kenneth Nakamatsu said he knows of no other bonuses given to city directors or deputies in any other departments.

Lum said there were actually two pilot projects — one for officers or managers and another for employees in field operations — that allowed the bonuses to be given for outstanding work beginning in 2003. He said the programs were an attempt at civil-service reform.

The performance goals reached by the two bosses included technology enhancements, keeping revenue stable and adopting "a strategic plan to become a world-class organization."

OUT OF BOARD REVENUES

In addition to the top two bosses, nine management officers received bonuses ranging from $12,500 to $46,004 for reaching performance goals. They included the top financial staff, an attorney, human resources officials, information technology and communications officers, who received a total of $267,504.

The civil service incentive program provided 38 employees with a total of $171,259.

The bonuses were paid out of BWS revenues — which comes from the rates paid by customers rather than the city's general treasury — and were part of the board's budget.

Lum said he believes the bonuses were reasonable and ranged around 20 percent of the salary of the workers. He also said employees still deserve bonuses but right now "we're not in a financial position where we can afford it."

A policy signed in 2005 by Kiyosaki, who was then leading the agency, deleted the provision that allowed the top two executives to be eligible for bonuses. But other officers and frontline employees could again see bonuses if the program is reactivated. There are no plans now to do so, Lum said.

However, board manager Lum said he reviewed the agency's fiscal condition and asked officers to defer any bonus payments. He said they all voluntarily agreed.

Lum said Jamile retired at the end of 2004 but remained on the payroll on contract through part of last year to help with the transition to a new boss. Lum said Kiyosaki will leave the city at the end of this month to take a job in the private sector.

He said the purpose of the incentive plan was to establish an executive level of leadership to achieve strategic business goals.

Lum said he thinks it's unfair to link the rising water rates to the bonuses.

"That was clearly not the reason for the rate increases," he said.

He pointed to rising operating costs for fuel, asphalt, employee salaries and other expenses linked to the $110 million-a-year BWS operation.

The first year of the rate increase is 13 percent.

Flores said during the eight years he served on the board and the entire time Jamile was chief engineer, "there was no rate increase." Flores said Jamile's and Kiyosaki's management skills enabled the board to hold off increasing water rates to Honolulu consumers. "We kept the line," he said.

LINK TO WATER RATES

Hannemann said he was glad to hear from Lum that there would be no new requests for restarting the bonus program this year.

"You can't be asking for a water rate increase and have bonuses going into effect at the same time," Hannemann said.

Honolulu City Councilman Charles Djou said he found the size of the bonuses "a little disconcerting" and was surprised that there was no public discussion of the matter. "That is a very large bonus. It's larger than what I get paid as a Honolulu City Councilman in any one given year," Djou said.

Djou said he knows it's difficult to keep good people working in lower-paying government jobs. "I don't disagree with the policy of bonuses but that does strike me as a little rich," he said.

Councilman Gary Okino said he was surprised to learn about the bonuses more than a year after they were given.

"I didn't know they could give bonuses," Okino said. "I don't know if that's wise in a public utility."

Reach Robbie Dingeman at rdingeman@honoluluadvertiser.com.