By NANCY COOK LAUER
After reassurance from the county Finance Department that its borrowing of short-term promissory notes actually saved taxpayers money, the Ethics Board on Wednesday dismissed a complaint that the county bond transactions weren’t above-board.
Dan Cole, who filed the complaint, provided documents showing the county borrowed $10 million in bond anticipation notes on March 2, 2011, at 1.22 percent interest from Bank of Hawaii. The money was then transferred into a certificate of deposit at First Hawaiian Bank, where it earned 0.125 percent interest. That cost taxpayers $66,000, Cole said.
But Finance Director Nancy Crawford said the use of bond anticipation notes saves money because the county can borrow smaller, more manageable chunks instead of floating an entire multimillion-dollar bond and letting the money sit idle for the years it takes to complete a county project.
The short-term notes fill in the gaps, she said, although sometimes they’re not needed the minute they’re borrowed.
“As in any business, you have to have a cash reserve on hand to do business,” Crawford said.
Cole also questioned the timing of one of the notes three months before the County Council authorized a repeatedly postponed $56 million bond issue. But Crawford, in an interview after the Ethics Board meeting, said the bond anticipation notes aren’t tied to a specific bond issue, but are backed by the full faith and credit of the county.
She and county Treasurer Mike Okumoto said that several of the bond issuances authorized by the County Council since 2007 have not yet been issued, providing a future revenue stream to pay back the short-term notes.
The county’s 2010-11 comprehensive annual financial report, the latest available, notes that $130.1 million of the $265.1 million in council-authorized general obligation bonds have not yet been issued.
Cole was disappointed the Ethics Board decided not to hold a formal hearing on the matter, so the county could more thoroughly justify its actions in an open forum. He characterized the borrowing activity as “money laundering,” and said he’d continue pursuing his complaint in other venues.
In another action, the board dismissed a complaint that Mayor Billy Kenoi’s Executive Assistant Bobby Command did not treat a Ka‘u resident in a fair and impartial manner.
Jerry Warren of Naalehu characterized Command as a friend who has been helpful to him in the past, but he said Command gave him the runaround when he sought help with what he saw as excess fees charged bus riders for shopping bags and skateboards.
“Bobby Command did nothing to help,” Warren said. “He is a bureaucrat in the worst sense of the word.”
After questioning both Warren and Command, the board decided that there was no breach of the county ethics code requiring fair treatment of all residents.
“You’re still trying to communicate and it doesn’t work out, and I don’t think that’s unfair treatment,” said board member Arne Henricks.
Email Nancy Cook Lauer at email@example.com.