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HomeMy WebLinkAbout2011 f . �dw /�� � ONE CHASE MANHATTAN PLAZA NEW YORK,NY 10005 September 1,2011 WWW HAWKINS.COM The Town Board of the Town of Southold, in the County of Suffolk,New York Ladies and Gentlemen: We have examined a record of proceedings relating to the authorization, sale and issuance of the $1,135,000 Bond Anticipation Note for Various Purposes-2011 (the "Note") of the Town of Southold, in the County of Suffolk, a municipal corporation of the State of New York. The Note is dated September 1, 2011, matures August 31, 2012, is payable to JPMorgan Chase Bank, N.A., as registered owner, is a single note in the denomination of$1,135,000, is numbered 7R-1, bears interest at the rate of seventy-four hundredths of one per centum (0.74%) per annum and is issued pursuant to the provisions of the Local Finance Law, constituting Chapter 33-a of the Consolidated Laws of the State of New York, various bond resolutions, adopted by the Town Board on their respective dates, authorizing the issuance of serial bonds for various purposes in said Town and the Certificate of Determination executed by the Supervisor on September 1,2011. Said bond anticipation note is a temporary obligation issued in anticipation of the sale of permanent serial bonds. On June 24, 2011, the Governor signed into law Chapter 97 of the Laws of 2011, imposing a limitation upon the Town's power to increase its annual tax levy above a certain specified amount. In our opinion, the Note is a valid and legally binding general obligation of the Town for which the Town has validly pledged its faith and credit for the payment thereof. The Note is payable from annual budgetary appropriations to pay the principal of and interest thereon, including ad valorem real estate taxes which may be levied on all the taxable real property within the Town. Prior to the enactment of Chapter 97 of the Laws of 2011, all the taxable real property within the Town had been subject to the levy of ad valorem taxes to pay the bonds and notes and interest thereon without limitation as to rate or amount; however,the power of the Town to levy unlimited real estate taxes on all the real property in the Town may or may not be subject to the statutory limitations imposed by Chapter 97 of the Laws of 2011, depending upon the interpretation of such statute by a court of competent jurisdiction in the event of a legal challenge. The enforceability of rights or remedies with respect to the Note may be limited by bankruptcy, insolvency or other laws affecting creditors' rights or remedies heretofore or hereafter enacted. The Internal Revenue Code of 1986, as amended(the "Code"), establishes certain requirements that must be met subsequent to the issuance and delivery of the Note in order that 1022364.1033923 CLD _4 interest on the Note be and remain excludable from gross income under Section 103 of the Code. The Supervisor, in executing the Arbitrage and Use of Proceeds Certificate, has certified to the effect that the Town will comply with the provisions and procedures set forth therein and that it will do and perform all acts and things necessary or desirable to assure that interest paid on the - Note is excludable from gross income under Section 103 of the Code. We have examined such Arbitrage and Use of Proceeds Certificate of the Town delivered concurrently with the delivery of the Note, and in our opinion, such certificate contains provisions and procedures under which such requirements can be met. In our opinion, under existing statutes and court decisions, (i) interest on the Note is excluded from gross income for federal income tax purposes pursuant to Section 103 of the Code, and (ii)interest on the Note is not treated as a preference item in calculating the alternative minimum tax imposed on individuals and corporations under the Code; however, such interest is included in the adjusted current earnings of certain corporations for purposes of calculating the alternative minimum tax on such corporations. In rendering the opinion in this paragraph, we have (i) relied on the representations, certifications of fact, and statements of reasonable expectations made by the Town in the Arbitrage and Use of Proceeds Certificate and other documents in connection with the Note, and (ii) assumed compliance by the Town with certain provisions and procedures set forth in the Arbitrage and Use of Proceeds Certificate relating to compliance with applicable requirements of the Code to assure the exclusion of interest on the Bonds from gross income under Section 103 of the Code. Further, in our opinion, under existing statutes, interest on the Note is exempt from personal income taxes of New York State and its political subdivisions, including The City of New York. Except as stated above, we express no opinion regarding any other federal or state tax consequences with respect to the Note. We render our opinion under existing statutes and court decisions as of the issue date, and we assume no obligation to update, revise or supplement our opinion to reflect any action hereafter taken or not taken, or any facts or circumstances that may hereafter come to our attention, or changes in law or interpretations thereof that may hereafter occur, or for any other reason. We express no opinion on the effect of any action hereafter taken or not taken in reliance upon an opinion of other counsel on the exclusion from gross income for federal income tax purposes of interest on the Note, or under state and local tax law. Other than such record of proceedings, we have not been requested to examine or review and have not examined or reviewed the accuracy or sufficiency of the Official Statement, or any additional proceedings, reports, correspondence, financial statements or other documents, containing financial or other information relative to the Town which have been or may hereafter be furnished or disclosed to purchasers of said Note, and we express no opinion with respect to any such financial or other information or the accuracy or sufficiency thereof. 1022364.1033923 CLD �i t The form of said Note is prescribed by Schedule B, 2 of the Local Finance Law of the State of New York,but we have not examined the executed Note. Very truly yours, Py w 1022364.1033923 CLD