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and notes when authorized by the council; maintain records of county <br />indebtedness and have charge of the payment of interest and principal thereon.” <br /> <br />MR. BALSIS: Okay, but the question has to do with the—if I recall, there were <br />two facilities that were structured by the County of Hawai‘i. <br /> <br />MR. COLE: The facility of the sale of bonds was a traditional bond float. The <br />sale of bond anticipation notes, by its very definition, is a short-term sale in <br />anticipation of the sale of the bonds, and that was clearly defined in today’s <br />article in the Tribune-Herald by Nancy Crawford—Nancy-Cook Lauer. <br /> <br />MR. BALSIS: So the issue that you have is with the bond anticipation notes. <br /> <br />MR. COLE: The issue I have is the fact that the bond anticipation notes were <br />sold prior to the authorization. In other words, there were no bonds upon which <br />you could sell an anticipation note to. <br /> <br />MR. BALSIS: Was the facility or the—was the facility approved in terms of a <br />function that the County could go by? <br /> <br />MR. COLE: No. I just stated— <br /> <br />MR. BALSIS: --So what you’re saying is the County Council had absolutely no <br />knowledge of the bond anticipation notes prior to that issuance. <br /> <br />MR. COLE: My discussion with Dominic Yagong-- <br /> <br />MR. BALSIS: --I’m not talking about the specific transaction, but I’m talking <br />about the approval of the facility— <br /> <br />MR. COLE: In my discussion with Dominic Yagong, he did not know, he did not <br />know that Mayor Kenoi had sold $10 million of bond anticipation notes prior to <br />May the 4th, when the bond was approved for sale. In other words, what you’re <br />trying to do—I mean, I believe what you’re trying to do is say that in order to sell <br />a bond anticipation note, you are selling a note in anticipation of a sale of a bond <br />float, a general float. The anticipate note is used for basically arbitrage or for <br />short-term monies needed for a project. If there has been no bond authorized for <br />future sale, then the sale of a bond anticipation note upon an authorized bond <br />cannot be sold legally. In other words you have—if the County did not approve <br />the sale of the $56 million bond for the projects identified, then there would have <br />no bond upon which an anticipation note could be issued. In addition, the County <br />explicitly and pointedly stated that the monies for the bond of Bill 311, draft 3, <br />were identified specifically for the projects. Therefore, the mayor must identify <br />how, or what specific project, upon the authorization of the bond was used to <br />justify buying a $10 million time deposit bond—or time deposit note—from the <br />Bank of Hawai‘i. There is no authorization. It did not go to any approved use of <br />the money. So therefore, it would be illegal on multiple counts. And since the <br />