HomeMy WebLinkAboutVarious Purposes
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ONF: CHA3E MANHAT1AN OLAZA
NEW YORK. NY 10005
\NW'h.""AWK:NS.COM
April 19, 2007
The Town Board of
the Town of Southold,
in the County of Suffolk, New York
Ladies and Gentlemen:
We have examlned a record of proceedings relating to the authorization, sale and
issuance of$14,650,000 Public Improvement Serial Bonds-2007 (the "Bonds"), of the Town of
Southold (the "Town"), in the County of Suffolk, New York.
The Bonds are 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 bor:d
resolutions duly adopted by the Town Board on their respective dates, authorizing the issuance
of :;crial bonds of the Town to finance various purposes in and for the Town and the Certificate
of Determination executed by the Supervisor as of March 27, 2007, determining the terms, form
and details of issuance of said $14,650,000 serial bonds and providing for their public sale,
The Bonds are dated April 15, 2007, mature on April 15 in the principal amounts
in each of the following years, and bear interest at the respective rates per annum payable
October 15, 2007 and semiannually thereafter on April 15 and October 15 in each year until
maturity, as set forth below:
Year of Principal Interest Year of Principal Interest
,Maturity Amount Rate ~aturit)' b.m.ount Rate
2008 $700,000 4,00% 2020 $675,000 4,25%
2009 725,000 4-1/8 2021 675,000 4,25
2010 575,000 4-1/8 2022 675,000 4,25
2011 575,000 4,25 2023 725,000 4.25
2012 600,000 4,25 2024 725,000 4,25
2013 625,000 4,25 2025 725,000 4,25
2014 625,000 4,25 2026 550,000 4,25
2015 625,000 4,25 2027 550,000 4,25
2016 625,000 4.25 2028 550,000 4,25
2017 675,000 4,25 2029 550,000 4.25
20]8 675,000 4,25 2030 550,0()() 4,25
2019 675,000 4,25
The Bonds maturing on or before April 15, 2017 will not be subject to redemption
prior to maturity. The Bonds maturing on or after April 15, 2018 will be subject to redemption
prior to maturity, at the option of the Town, on April 15, 2017 and thereafter, on any date, in
whole or in part, at par, and subject to notice and other condition.s as stated in the Bonds.
The Bonds are issued only in fully registered form without interest coupons, in the
name of Cede & Co., as registered owner and nominee for The Depository Trust Company, an
automated depository for securities and clearinghouse for securities transactions which will
maintain a book-entry system for recording the ownership interests in the Bonds. Only one Bond
will be initially issued for each maturity in the aggregate principal amount of such maturity.
Purchases of ownership interests in the Bonds will be made in book-entry form in denominations
of $5,000 or any integral multiple thereof
In our opinion, said Bonds are valid and legally binding general obligations of the
Town for which the Town has validly pledged its faith and credit and, unless paid from other
sources, all the taxable real property within the Town is subject to the levy of ad valorem real
estate taxes to pay the Bonds and interest thereon without limitation of rate or amount. The
enforceability of rights or remedies with respect to such Bonds 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 Bonds in order that
interest on the Bonds be and remain excludable from gross income under Section 103 of the
Code. The Supervisor of the Town, 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 Bonds 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 Bonds, 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
Bonds is excluded from gross income for federal income tax purposes pursuant to Section 103 of
the Code, and (ii) interest on the Bonds is not treated as a preference item in calculating the
alternative minimum tax imposed on individuals and corporations under the Code; such interest,
however, is included in the adjusted current earnings of certain corporations for purposes of
calculating the alternative minimum tax imposed 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 others in connection with the Bonds, 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 Bonds 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 Bonds. We render our opinion under existing statutes and
court decisions as of the issue date, and we assume no obligation to update our opinion after the
issue date to reflect any future action, fact or circumstance, or change in law or interpretation, or
otherwise 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 Bonds, or on the exemption from state and local tax law of interest
on the Bonds.
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 Bonds, and we express no opinion with respect to
any such financial or other information or the accuracy or sufficiency thereof
We have examined the executed first numbered Bond of said issue and, in our
opinion, the form of said Bond and its execution are regular and proper
Very tru~~~~.1 . n Il
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ONE CHASE MANHATTAN PLAZA
NEW YORK, NY 10005
'I'NI'N.HAWKIN$.COM
April 19, 2007
Ambac Assurance Corporation
One State Street Plaza
New York, New York 10004
Dear Ladies & Gentlemen:
We are bond counsel to the Town of Southold, in the County of Suffolk, New
York (the "Town"), and are rendering today our final approving opinion with respect to the
Town's $14,650,000 Public Improvement Serial Bonds-2007, dated April 15, 2007. We deliver
to you herewith a copy of our approving opinion and advise you that you may rely on such
opinion as if it were addressed to you.
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REGISTERED
NO. R-l
UNITED STATES OF AMERICA
STATE OF NEW YORK
COUNTY OF SUFFOLK
TOWN OF SOUTHOLD
PUBLIC IMPROVEMENT SERIAL BOND-2007
MATURITY DATE
INTEREST
RATE
DATE OF ORIGI
ISSUE
CUSIP
NUMBER
April 15, 2008
4.00%
844572 JA6
REGISTERED OWNER: CEDE& CO.
PRINCIPAL SUM: SEVEN HUNDRED ~
The TOWN OF S~' ~ the County of Suffolk, a municipal corporation
of the State of New York, hereb ~tselfindebted and for value received promises
to pay to the REGISTERED n d above, or registered assigns, on the MATURITY
DATE (stated above), the IP M (stated above) upon presentation and surrender of
this bond at the office of Clerk, Town of Southold, Town Hall, 53095 Main Road,
Southold, New Y ore. sc ent (herein cal led ".FiSCal Agent"), or any successor thereto, and
to pay interest on s sum from April 15, 2007 or from the most recent interest
payment date to which' t t has been paid at the INTEREST RATE (stated above), payable
October 15, 2007 and semIannually thereafter on April 15 and October 15 in each year until
maturity. Interest hereon shall be payable by wire transfer or clearinghouse funds by the Town
or its agent on each interest payment date to the registered owner hereof at his address as it
appears on the registration books of the Town maintained by the Fiscal Agent or at such other
address as may be furnished in writing by such registered owner to the Fiscal Agent as of the
close of business on the last day of the month preceding each interest payment date. The
principal of and interest on this bond are payable in any coin or currency of the United States of
America which, at the date of payment, is legal tender for the payment of public and private
debts; provided, however, that interest on this fully registered bond shall be paid by wire transfer
or clearinghouse funds as set forth above.
REFERENCE IS MADE TO THE FURTHER PROVISIONS OF THIS BOND
SET FORTH HEREIN.
UNITED STATES OF AMERICA
STATE OF NEW YORK
COUNTY OF SUFFOLK
TOWN OF SOUTHOLD
PUBLIC IMPROVEMENT SERIAL BOND-2007
MATURITY DATE
INTEREST
RATE
DATE OF ORIG
ISS
CUSIP
NUMBER
April 15, 2009
4-118%
844572 JB4
REGISTERED OWNER: CEDE & CO.
PRINCIPAL SUM: SEVEN HUNDRED ~ - VE THOUSAND DOLLARS
The TOWN OF S .~ ; the County of Suffolk, a municipal corporation
of the State of New York, hereb c ~tselfindebted and for value received promises
to pay to the REGISTERED n d above, or registered assigns, on the MATURITY
DATE (stated above), the. I M (stated above) upon presentation and surrender of
this bond at the office of Clerk, Town of Southold, TownHall, 53095 Main Road,
Southold, New Y oresc ent (herein called "Fiscal Agent"),. or any s.uccesso. r thereto, and
to pay interest on s sum from April 15, 2007 or from the most recent interest
payment date to which. t st has been paid at the INTEREST RATE (stated above), payable
October 15, 2007 and semiannually thereafter on April 15 and October 15 in each year until
maturity. Interest hereon shall be payable by wire transfer or clearinghouse funds by the Town
or its agent on each interest payment date to the registered owner hereof at his address as it
appears on the registration books of the Town maintained by the Fiscal Agent or at such other
address as may be furnished in writing by such registered owner to the Fiscal Agent as of the
close of business on the lastday of the month preceding each interest payment date. The
principal of and interest on this bond are payable in any coin or currency of the United States of
America which, at the date of payment, is legal tender for the payment of public and private
debts; provided, however, that interest on this fully registered bond shall be paid by wire transfer
or clearinghouse funds as set forth above.
REFERENCE IS MADE TO THE FURTHER PROVISIONS OF THIS BOND
SET FORTH HEREIN.
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UNITED STATES OF AMERICA
STATE OF NEW YORK
COUNTY OF SUFFOLK
TOWN OF SOUTHOLD
PUBLIC IMPROVEMENT SERIAL BOND-2007
MATURITY DATE
INTEREST
RATE
DATE OF ORIG AL
ISSUE
CUSIP
NUMBER
April 15, 2011
4.25%.
844572 JDO
REGISTERED OWNER: CEDE & CO.
PRINCIPAL SUM: FIVE HUNDRED S~- VE THOUSAND DOLLARS
The TOWN OF S -CD: the County of Suffolk, a municipal corporation
of the State of New York, hereb c ~tself indebted and for value received promises
to pay to the REGISTERED 0 ed above, or registered assigns, on the MATURITY
DATE (stated above), the. . (stated above) upon presentation and surrender of
this bond at the office 0 . rk, Town of South old, Town Hall, 53095 Main Road, .
to pay interest on s 'p sum from April 15, 2007 or from the most recent interest
payment date to whi int st has been paid at the INTEREST RATE (stated above), payable
October.J5, 2007 and lannually thereafter on April 15 and October 15 in each year until
maturity. Interest hereon shall be payable by wire transfer or clearinghouse funds by the Town
or its agent on each interest payment date to the registered owner hereof at his address as it .
appears on the registration books of the Town maintained by the Fiscal Agent or at such other
address as may be furnished in writing by such registered owner to the Fiscal Agent as of the
close of business on the last day of the month preceding each interest payment date. The
principal of and interest on this bond are payable in any coin or currency of the United States of.
America which, at the date of payment, is legal tender for the payment of public and private
debts; provided, however, that interest on this fully registered bond shall be paid by wire transfer
or clearinghouse funds as set forth above.
REFERENCE IS MADE TO THE FURTIlER PROVISIONS OF THIS BOND
SET FORTH HEREIN.
_.."'.....__._'c.".._.",.
UNITED STATES OF AMERICA
STATE OF NEW YORK
COUNTY OF SUFFOLK
TOWN OF SOUTHOLD
PUBLIC IMPROVEMENT SERIAL BOND-2007
MATURITY DATE
INTEREST
RATE
DATE OF ORIG
ISSUE
CUSIP
NUMBER
844572 JE8
April 15, .2012
4.25%
REGISTERED OWNER: CEDE & CO.
PRINCIPAL SUM: SIX HUNDRED TH~
~D,: the County of Suffolk, a municipal corporation
of the State of New York, hereb ~~tselfindebted and for value received promises
to pay to the REGISTERED 0 n d above, or registered assigns, on the MATURITY
DATE (stated above), th~e. . (stated above) upon presentation and surrender of
this bond at the office of T C rk, Town of South old, Town Hall, 53095 Main Road,
Southold, New Yor IS agent (herein called "Fiscal Agent"), or any successor thereto, and
tQ pay interest on h . . . sum from April 15, 2007 or from the most recent interest
payment date to whi mte t has been paid at the INTEREST RATE (stated above), payable
October 15, 2007 and annually thereafter on April 15 and October 15 in each year until
maturity. Interest hereon shall be payable by wire transfer or clearinghouse funds by the Town
or its agent on each interest payment date to the registered owner hereof at his address as it
appears on the registration books of the Town maintained by the Fiscal Agent or at such other
address as may be furnished in writing by such registered owner to the Fiscal Agent as of the
close of business on the last day of the month preceding each interest payment date. The
principal of and interest on this bond are payable in any coin or currency of the United States of
America which, at the date of payment, is legal tender for the payment of public and private
debts; provided,however, that interest on this fully registered bond shall be paid by wire transfer
or clearinghouse funds as set forth above.
REFERENCE IS MADE TO THE FURTHER PROVISIONS OF THIS BOND
SET FORTH HEREIN.
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REGISTERED
NO. R-6
REGISTERED
$625,000
UNITED STATES OF AMERICA
STATE OF NEW YORK
COUNTY OF SUFFOLK
TOWN OF SOUTHOLD
PUBLIC IMPROVEMENT SERIAL BOND-2007
MATURITY DATE
INTEREST
RATE
DATE OF ORIGI
ISSUE
CUSIP
NUMBER
April 15, 2013
4.25%
844572 JF5
REGISTERED OWNER: CEDE & CO.
PRINCIPAL SUM: SIX HUNDRED
The TOWN OF S T LD, the County of Suffolk, a municipal corporation
to pay to the REGISTERED n d above, or registered assigns, on the MATURITY
DATE (stated above), the (stated above) upon presentation and surrender of
this bond at the office of Clerk, Town of Southold, Town Hall, 53095 Main Road,
Southold, New Y orss gent (herein called "Fiscal Agent''), or any successor thereto, and
to pay interest on s sum from April 15, 2007 or from the most recent interest
payment date to whic .nt st has been paid at the INTEREST RATE (stated above), payable
October 15,2007 and semIannually thereafter on April 15 and October 15 in each year until
maturity. Interest hereon shall be payable by wire transfer or clearinghouse funds by the Town
or its agent on each interest payment date to the registered owner hereof at his address as it
appears on the registration books of the Town maintained by the Fiscal Agent or at such other
address as may be furnished in writing by such registered owner to the Fiscal Agent as of the
close of business on the last day of the month preceding each interest payment date. The
principal of and interest on this bond are payable in any coin or currency of the United States of
America which, at the date of payment, is legal tender for the payment of public and private
debts; provided, however, that interest on this fully registered bond shall be paid by wire transfer
or clearinghouse funds as set forth above.
REFERENCE IS MADE TO THE FURTHER PROVISIONS OF THIS BOND
SET FORTH HEREIN.
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REGISTERED
NO. R-7
UNITED STATES OF AMERICA
STATE OF NEW YORK
COUNTY OF SUFFOLK
TOWN OF SOUTHOLD
PUBLIC IMPROVEMENT SERIAL BOND-2007
MATURITY DATE
INTEREST
RATE
DATE OF ORIGI
ISS
CUSIP
NUMBER
844572 JG3
April 15, 2014
4.25%
REGISTERED OWNER: CEDE & CO.
PRINCIPAL SUM: SIX HUNDREDr~ THOUSAND DOLLARS
The TOWN OF ~ the County of Suffolk, a municipal corporation
oftheSfute of New York, hereb ow dges itself indebted and for value received promises
to pay to the REGISTERE ed above, or registered assigns, on the MATURITY
DATE (stated above), th IP SUM (stated above) upon presentation and surrender of
this bond at the offif2e wn Clerk, Town of Southold, Town Hall, 53095 Main Road,
Southo.ld, New Yor . I ent (herein c~led "Fiscal Agent"), or any success~rthereto, and
to pay mterest on suc al sum from Apn115, 2007 or from the most recent mterest .
payment date to which rest has been paid at the INTEREST RATE (stated above), payable .
October 15, 2007 and semiannually thereafter on April 15 and October 15 in eaclryear until
maturity. Interest hereon shall be payable by wire transfer or clearinghouse funds by the Town
or its agent on each interest payment date to the registered owner hereof at his address as it
appears on the registration books of the Town maintained by the Fiscal Agent or at such other
address as may be furnished in writing by such registered owner to the Fiscal Agent as of the
close of business on the last day of the. month preceding each interest payment date. The
principal of and interest on this bond are payable in any coin or currency of the United States of
America which, at the date of payment, is legal tender for the payment of public and private
debts; provided, however, that interest on this fully registered bond shall be paid by wire transfer
or clearinghouse funds as set forth above.
REFERENCE IS MADE TO THE FURTHER PROVISIONS OF THIS BOND
SET FORTH HEREIN.
REGISTERED
NO. R-8
REGISTERED
$625,000
UMTED STATES OF AMERICA
STATE OF NEW YORK
COUNTY OF SUFFOLK
TOWN OF SOUTHOLD
PUBLIC IMPROVEMENT SERIAL BOND-2007
April 15, 2015
4.25%
CUSIP
NUMBER
844572 JHl
.MATURlTY DATE
INTEREST
RATE
REGISTERED OWNER: CEDE & CO.
PRINCIPAL SUM: SIX HUNDRED r~ THOUSAND DOLLARS
The TOWN OF T ~ the County of Suffolk, a municipal corporation
of the State of New York, herel, ciw dges itself indebted and for value received promises
to pay to the REGISTERE ed above, or registered assigns, on the MATURITY
DATE (stated above), th IP SUM (stated above) upon presentation and surrender of
this bond at the Offi~ wn Clerk, Town of Southold, Town Hall, 53095 Main Road,
Southold, New Yor. ent (herein called "Fiscal Agent"), or any succe. ssor thereto, and
to pay interest on suc prin al sum from April 15, 2007 or from the most recent interest
payment date to which est has been paid at the INTEREST RATE (stated above), payable
October 15,2007 and semiannually thereafter on April 15 and October 15 in each year until
maturity. Interest hereon shall be payable by wire transfer or clearinghouse funds by the Town
or its agent on each interest payment date to the registered owner hereof at his address as it
appears on the registration books of the Town maintained by the Fiscal Agent or at such other
address as may be furnished in writing by such registered owner to the Fiscal Agent as of the
close of business on the last day of the month preceding each interest payment date. The
principal of and interest on this bond are payable in any coin or currency of the United States of
America which, at the date of payment, is legal tender for the payment of public and private
debts; provided, however, that interest on this fully registered bond shall be paid by wire transfer
or clearinghouse funds as set forth above.
REFERENCE IS MADE TO THE FURTHER PROVISIONS OF THIS BOND
SET FORTH HEREIN.
REGISTERED
NO. R-9
UNITED STATES OF AMERICA
STATE OF NEW YORK
COUNTY OF SUFFOLK
TOWN OF SOUTHOLD
PUBLIC IMPROVEMENT SERIAL BOND-2007
MATURITY DATE
INTEREST
RATE
CUSIP
NUMBER
April 15, 2016
4.25%
844572 JJ7
REGISTERED OWNER: CEDE & CO.
PRINCIPAL SUM: SIXHUNDREDr~
The TOWN OF ~ the County of Suffolk, a municipal corporation
of the State of New York, hereS ow ges itself indebted and for value received promises
to pay to the REGISTERE ed above, or registered assigns, on the MA TURlTY
DATE (stated above), th IPA SUM (stated above) upon presentation and surrender of
this bond at the offi~e wn Clerk, Town of Southold, Town Hall, 53095 Main Road,
Southold, New Yo ent (herein called "Fiscal Agent''), or any succe. ssor thereto, and
to pay interest on suc ri aI sum from April 15,2007 or from the most recent interest .
.payment date to which rest has been paid at the INTEREST RATE (stated above), payable
October 15, 2007 and semiannually thereafter on April 15 and October 15 in each year until
maturity. Interest hereon shall be payable by wire transfer or clearinghouse funds by the Town
or its agent on each interest payment date to the registered owner hereof at his address as it
appears on the registration books of the Town maintained by the Fiscal Agent or at such other
address as may be furnished in writing by such registered owner to the Fiscal Agent as of the
close of business on the last day of the month preceding each interest payment date. The
principal of and interest on this bond are payable in any coin Or currency of the United States of
America which, at the date of payment, is legal tender for the payment of public and private
debts; provided, however, that interest on this fully registered bond shall be paid by wire transfer
or clearinghouse funds as set forth above.
REFERENCE IS MADE TO THE FURTHER PROVISIONS OF THIS BOND
SET FORTH HEREIN.
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REGISTERED
NO. R-12
UNITED STATES OF AMERICA
STATE OF NEW YORK
COUNTY OF SUFFOLK
TOWN OF SOUTHOLD
PUBLIC IMPROVEMENT SERIAL BOND-2007
. MATURITY DATE
INTEREST
RATE
April 15, 2019
4.25%
CUSIP
NUMBER
844572 JMO
REGISTERED OWNER: CEDE & CO.X~
PRINCIPAL SUM: SIX HUNDRE~~- VE THOUSAND DOLLARS
The TOWN OF U ~n the County of Suffolk, a municipal cOiporation
of the State of New York, h 0 . dges itself indebted and for value received promises
to pay to the REGISTE 0 ed above, or registered assigns, on the MATURITY
DATE (stated above), the CIP, SUM (stated above) upon presentation and surrender of
this. bond at the Offi~" 0 the wn Clerk, Town of South old, Town Hall, 53095 Main Road, -
Southold, New Yo gent (herein called "Fiscal Agent"), or any successor the. reto,. an d
to pay interest on such . pal sum from April 15 , 2007 or from the most recent interest .
payment date to which mterest has been paid at the INTEREST RATE (stated above), payable
October 15,2007 and semiannually thereafter on April 15 and October 15 in each year until
maturity. Interest hereon shall be payable by wire transfer or clearinghouse funds by the town'
or its agent on each interest payment date to the registered owner hereof at his address as it
appears on the registration books of the Town maintained, by the Fiscal Agent mat such other
address as may be furnished in writing by such registered owner to the Fiscal Agent as of the .
close of business on the last day of the month preceding each interest payment date. The
principal of and interest on this bond are payable in any coin or currency of the United States of
America which, at the date of payment, is legal tender for the payment of public and private
debts; provided, however, that interest on this fully registered bond shall be paid'by wire transfer
or clearinghouse funds as set forth above.
REFERENCE IS MADE TO THE FURTHER PROVISIONS OF THIS BOND
SET FORTH HEREIN.
REGISTERED
NO. R-15
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UNITED STATES OF AMERICA
STATE OF NEW YORK
COUNTY OF SUFFOLK
TOWN OF SOUTHOLD
~
PUBLIC IMPROVEMENT SERIAL BOND-2007
. MATURITY DATE
INTEREST
RATE
April 15, 2022
4.25% .
CUSIP
NUMBER
844572JQl
REGISTERED OWNER: CEDE & CO.
PRIj'I'CIP AL SUM: SIX HUNDRED
VE THOUSAND DOLLARS
The TOWN OF the County of Suffolk, a municipal cOfporation
of the State of New York, here dges itself indebted and for value received promises
to pay to the REGlSTE ed above, or registered assigns, on the MATURITY
DATE (stated above),th IP SUM (stated above) upon presentation and surrender of
this bond at the offi. tIi owri Clerk, Town of Southold, Town Hall, 53095 Main Road,
Southold, New Yo ent (herein called "Fiscal Agent"); or any successor thereto, and
to pay interest on suc pal sum from April 15, 2007 or from the most recent interest
payment date to whicn erest has been paid at the INTEREST RATE (stated above), payable
October 15, 2007 and semiannually thereafter on April 15 and October 15 in each year until
maturity. Interest hereon shall be payable by wire transfer or clearinghouse funds by the Town
or its agent on each interest payment date to the registered owner hereof athis address as it
appears on the registration books of the Town maintained by the Fiscal Agent or at such other
address as may be furnished. in writing by such registered owner to the Fiscal Agent as of the
close of business on the last day of the month preceding each interest payment date. The
principal o.f and interest on this bond are payable in any coin or currency of the United States of
America which, at the date of payment, is legal tender for the payment of public and private
debts; provided, however, that interest on this fully registered bond shall be paid by wire transfer
or clearinghouse funds as set forth above.
REFERENCE IS MADE TO THE FURTHER PROVISIONS OF THIS BOND
SET FORTH HEREIN.
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REGISTERED
NO. R-19
UNITED STATES OF AMERICA
STATE OF NEW YORK
COUNTY OF SUFFOLK
TOWN OF SOUTHOLD
PUBLIC IMPROVEMENT SERIAL BOND-2007
. MATURITY DATE
INTEREST
RATE
CUSIP
NUMBER
April 15, 2026
4.25% .
844572 JU2
REGISTERED OWNER:
PRI.NCIPAL SUM: FIVE HUNDRE
The TOWN OF. ill the County of Suffolk, a municipal cOIporation
of the State of New York, here dges itself indebted and for value received promises
to pay to the REGlSlERE; . ed above, or registered assigns, on the MATURITY
DAlE (stated above), th IP SUM (stated above) upon presentation and surrender of
this bond at the offi th oWIi Clerk, Town of Southold, Town Hall, 53095 Main Road,
Southold, New Yo ent (herein called "Fiscal Agent"), or any successor thereto, and
to pay interest on su pal sum from April 15, 2007 or from the most recent interest
payment date to whicn rest has been paid at the INTEREST RAlE (stated above), payable
October 15, 2007 and semiannually thereafter on April 15 and October 15 in each year until
mahirity. Interest hereon shall be payable by wire transfer or clearinghouse funds by the Town
or its agent on each interest payment date to the registered owner hereof at his address as it
appears on the registration books of the Town maintained by the Fiscal Agent or at such other
address as may be furnished in writing by such registered owner to the Fiscal Agent as of the
close of business on the last day of the month preceding each interest payment date. The
principal of and interest on this bond are payable in any coin or currency of the United States of
America which, at the date of payment, is legal tender for the payment of public and private
debts; provided, however, that interest on this fully registered bond shall be paid by wire transfer
or clearinghouse funds as set forth above.
REFERENCE IS MADE TO THE FURTHER PROVISIONS OF THIS BOND
SET FORTH HEREIN.
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Town of South old, New York
Public Improvement Serial Bond-2007
This bond is one of an authorized issue, the aggregate principal amount of which
is $14,650,000, the bonds of which are of like tenor, except as to number, denomination, interest
rate and maturity, 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 (the "Law"), various bond
resolutions duly adopted by the Town Board on their respective dates, authorizing the issuance
of serial bonds of the Town to finance various purposes in and for the Town, and the Certificate
of Determination executed by the Supervisor as of March 27, 200; termining the terms, form
and details of issuance of said '$14,650,000 serial bonds (the" d providing for the
_ . public sale thereof (the "Certificate of Determination")~ .
. .. The Bonds are iss~able in the f?rm of b s WIthout coupons in
denommatlOns of $5,000, or any mtegral multIple the .
This Bond is transferable or e~ provided in the Certificate of
Determination, only upon the books of th 0 k for that purpose at the office of the Fiscal
Agent, by the registered owner hereof i erson y his attorney duly authorized in writing,
upon the surrender of this Bond tog th with a 'tten instrument of transfer or exchange
satisfactory to the Fiscal Agent. e e the registered owner or his attorney duiy
authorized in writing, and ther ne Bond or Bonds, in the same aggregate jJrincipal .
amount and of the same. ; issued to the transferee or the registered owner in
charges, If any, ther~e ed. .
The s turing on or before April 15, 2017 will not be subject to redemption
prior to maturity, The s maturing on or after April 15, 2018 will be subject to redemption
prior to maturity, at the option of the Town, on April 15, 2017 and thereafter on any date, in
whole or in part, and if in part, in any order of their maturity and in any amount within a maturity
(selected by lot within a maturity), at par, plus accrued interest to the date of redemption.
The Bonds shall be redeemable prior to maturity upon the giving of notice which
identifies the bonds to be redeemed, by mailing such notice to the registered holders thereof at
their respective addresses as shown upon the registration books of the Fiscal Agent at least 30
days prior to the dates set for any such redemption. If notice of redemption shall have been
given as aforesaid, the Bonds so called for redemption shall become due and payable at the
applicable redemption price on the redemption date designated in such notice, and interest on
such Bonds shall cease to accrue from and after such redemption date.
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Hawkins Delafield & Wood LLP
One Chase Manhattan Plaza
New York, New York 10005
The Town Board of
the Town of Southold,
in the County of Suffolk, New York
Interest Year of Principal Interest
Rate Maturity Amount Rate
2008 $700,000 4.00% 2020 $675,000 4.25%
2009 725,000 4-1/8 2021 675,000 4.25
2010 575,000 4-1/8 2022 675,000 4.25
2011 575,000 4.25 2023 725,000 4.25
2012 600,000 4.25 2024 725,000 4.25
2013 625,000 4.25 2025 725,000 4.25
2014 625,000 4.25 2026 550,000 4.25
2015 625,000 4.25 2027 550,000 4.25
2016 625,000 4.25 2028 550,000 4.25
2017 675,000 4.25 2029 550,000 4.25
2018 675,000 4.25 2030 550,000 4.25
2019 675,000 4.25
The Bonds maturing on or before April 15, 2017 will not be subject to redemption
prior to maturity. The Bonds maturing on or after April 15, 2018 will be subject to redemption
prior to maturity, at the option of the Town, on April 15, 2017 and thereafter, on any date, in
whole or in part, at par, and subject to notice and other conditions as stated in the Bonds.
The Bonds. are issued only in fully registered form without interest coupons, in the
name of Cede & Co., as registered owner and nominee for The Depository Trust Company, an
automated depository for securities and clearinghouse for securities transactioris which will
maintain a book-entry system for recording the ownership interests in the Bonds. Only one Bond
will be, initially issued for each maturity in the aggregate prinCipal amount of such maturity.
Purchases of ownership interests in the Bonds will be made in book-entry form in denominations
of $5,000 or any integral multiple thereof.
In our opinion, said Bonds are valid and legally bin
. Town for which the Town has' validly pledged its faith and cr .
_sources, all the taxable real property within the Town is su ct
estate taxes to pay the Bonds and interest thereon Witho . tlo
'.enforceability of rights or remedies .with respect to s s
insolvency or other laws affecting creditors' rights or
general obligations of the
ess paid from other
e of ad vworem real
f rate or amount. The
be limited by bankruptcy,
eretofore or hereafter enacted.
The Internal Revenue Code o~ ended (the "Code''), establishes certain
requirements that must be met subseque . . ss ce and delivery of the Bonds in order that
interest on the Bonds be and remain.' cluda e om gross income under Section 103 of the
Code. The Supervisor of the To i ecu' g the Arbitrage and Use of Proceeds Cllrtificate,
has certified to the effect that 0 mply with the provisions and procedures set forth
therein and that it will do and acts and things necessary or desirable to assure that
interest paid on the Bond' I '. m gross income under Section 103 of the Code. We
have examined such . e an Use of Proceeds Certificate of the Town' delivered
provisions and pro' d which such requirements can be met.
. In our lOn, under existing statutes and court decisions, (i) interest on the
Bonds is excluded from gross income for federal income tax purposes pursuant to Section 103 of
the Code, and (ii) interest on the Bonds is not treated as a preference item in calculating the
alternative minimum tax imposed. on individuals and corporations under the Code; such interest,
however, is included in the adjusted current earnings of certain corporations for purposes of
calculating the alternative minimum tax imposed 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 others in connection with the Bonds, 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 Bonds is exempt
from personal income taxes of New York State and its political subdivisions, including The City
of New York.
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7 THE DEPOSITORY TRUST COMPANY
5 5 Water Street
New York, New York 10041
Attention:
Phone:
Telecopy:
Underwriting Packaging Department
(212) 558-8520
(212) 344-1533
SUBJECT TO COUNT
AND EXAMINATION
SAFEKEEPING AGREEMENT
Ref: (Description of issue, number of certificates, number of CUSIPs assigned to issue and $ value of securities)
Town of Soutbold, in tbe County of Suffolk, New York
$14,650,000 Public Improvement Serial Bonds-2007, dated April 15, 2007, maturing April 15, 2008-2030
CUSIP #
844572 JA6-JY4 (TWENTY-THREE CERTIFICATES)
$ VALUE $14,650,000
The Depository Trust Company (DTC) acknowledges receipt from Hawkins Delafield & Wood LLP (the trustee, transfer agent, underwriter
or other agent of tbe issuer, hereafter referred to as tbe "Agent") of possession, custody and control of tbe above securities for safekeeping.
DTC is autborized to hold tbese securities in safekeeping until DTC is instructed by telephone or in writing by one of the below designated
representatives of the Agent eitber to: (1) deliver tbe securities by book-entry to the DTC account of tbe lead underwriter (or to tbe DTC
account of its clearing agent) or (2) return tbe said securities to tbe Agent.
In tbe event DTC is instructed to return said securities, DTC shall return tbe securities to tbe Agent as soon as practicable,
but, in any event, no later !ban tbe DTC business day following tbe day such instruction is received.
DTC shall hold tbe Agent, its officers and employees, hannless from any liability, loss, damage, and reasonable expense of
any kind in connection witb any loss, damage, tbeft or destruction of any kind of said securities while tbey are in tbe possession, custody or
control of DTC, its officers or employees or in tbe event securities are released from tbe control of DTC witbout tbe specific approval of tbe
Agent pursuant to this Safekeeping Agreement.
mE AGENT
The Depository Trust Company
By:
By:
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Title:
Title:
SUPERVISOR
Date:
Date:
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(212) 855-3752 (212) 855-3753
(212) 855-3755 (212) 855-3754
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SUPERVISOR'S CERTIFICATE OF A WARD
I, SCOTT A. RUSSELL, Supervisor of the Town of Southold, in the County of
Suffolk, New York (the "Town"), HEREBY CERTIFY AND REPORT AS FOLLOWS:
I. On April 10, 2007, at 11 :00 0' clock A.M. (Prevailing Time), bids were
received at the offices of Munistat Services, Inc., 12 Roosevelt Avenue, Port Jefferson Station,
New York.
2. At that time and place, six (6) sealed bids were received for the purchase of
$14,650,000 Public Improvement Serial Bonds-2007 of the Town (the "Bonds") pursuant to the
Notice of Sale of said Bonds heretofore duly published in conformity with the requirements of
the Certificate of Determination executed by the Supervisor as of March 27, 2007, and said bids
were thereupon opened and publicly read.
3. The sealed bids so opened and publicly read were each in legally acceptable
form and were each accompanied by the check required by said Notice of Sale and constituted
signed proposals to purchase all of the Bonds.
4. Forthwith upon receiving, opening, reading and considering said sealed bids, I
caused to be publicly announced that Roosevelt & Cross, Inc., and Associates, New York,
New York was the successful bidder to whom the bonds are to be awarded, at the purchase price
of $14,650,000.00 together with interest at the rates to be borne by the Bonds from the date of
the Bonds to the date of payment of the purchase price, said bid of said successful bidder being
the best bid received under the terms of the Notice of Sale therefor and providing the lowest net
interest cost over the life ofthe Bonds, computed as follows:
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Gross Interest ..... ..... .... ... .............. ............... ... ...... ........
Less Premium Bid Over Par.........................................
Net Interest Cost. ......... ..... .............. ........... ... ... .............
Net Interest Rate....... ......... ...........................................
$7,358,468.75
0.00
$7,358,468.75
4.2467%
5. As designated by the aforementioned successful bidder, said Bonds shall bear
interest from their date in each year until maturity at the respective rates per annum stated in the
following table:
Bonds maturing in the year 2008, at 4.00%;
Bonds maturing in the years 2009 and 2010, at 4-1/8%; and
Bonds maturing in each of the years 2011 to 2030, inclusive, at 4.25%,
such rates of interest being the rates necessary for the Town to sell said Bonds.
6. I thereupon returned to said other bidders the Good Faith Check (as defined in
the Notice of Sale of the Town dated March 27, 2007) received, if any, with their aforesaid
sealed bids.
7. Said Bonds will be delivered to the said successful bidder hereinabove referred
to upon receipt of payment in accordance with the provisions of the Notice of Sale.
IN WITNESS WHEREOF, I have hereunto set my hand as of the IOth day of
April'2007'/~~
Supervisor
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TOWN CLERK'S CERTIFICATE
I, ELIZABETH A. NEVILLE, Town Clerk of the Town of Southold, in the
County of Suffolk, New York, HEREBY CERTIFY that I have compared the foregoing
Certificate of Award of the Supervisor and the same is a true and complete copy of said
Certificate filed with the Town Board on or before April 19, 2007.
I FURTHER CERTIFY that no resolution electing to reassume any of the powers
or duties delegated to the Supervisor by the resolutions cited in the Certificate of Determination
referred to in said Certificate of Award, has been adopted by said Town Board.
IN WITNESS WHEREOF, I have hereunto set my hand and affixed the
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corporate seal of said Town, this 10 day of
April, 2007.
(SEAL)
D,i~AdIO rt-"jA~
Town Cler
.
UNDERTAKING TO PROVIDE CONTINUING DISCLOSURE
Section 1. Definitions
"Annual Information" shall mean the information specified in Section 3 hereof.
"GAAP" shall mean generally accepted accounting principles as in effect from
time to time in the United States.
"Holder" shall mean any registered owner of the Securities and any beneficial
owner of Securities within the meaning of Rule l3d-3 under the Securities Exchange Act of
1934.
"Issuer" shall mean the Town of Southold, in the County of Suffolk, a municipal
corporation of the State of New York.
"MSRB" shall mean the Municipal Securities Rulemaking Board established in
accordance with the provisions of Section l5B(b )(1) of the Securities Exchange Act of 1934.
"NRMSIR" shall mean each nationally recognized municipal securities
information repository within the meaning of Rule 15c2-12.
"Rule l5c2-12" shall mean Rule 15c2-12 under the Securities Exchange Act of
1934, as amended through the date of this Undertaking, including any official interpretations
thereof.
"Securities" shall mean the Issuer's $14,650,000 Public Improvement Serial
Bonds-2007, dated April 15, 2007, maturing in various principal amounts on April 15 in each of
the years 2008 to 2030, inclusive, and delivered on the date hereof.
"State Information Depository" shall mean the New York State Information
Depository, if and when created.
Section 2. Obligation to Provide Continuing Disclosure. (a) The Issuer hereby
undertakes, for the benefit of Holders of the Securities, to provide or cause to be provided either
directly or through Munistat Services, Inc., 12 Roosevelt Avenue, Port Jefferson Station, New
York 11776:
(i) to each NRMSIR and to the State Information Depository, no later than
180 days after the end of each fiscal year, the Annual Information relating to such fiscal year,
together with audited financial statements of the Issuer for such fiscal year if audited financial
statements are then available; provided, however, that if audited financial statements are not then
available, unaudited financial statements shall be provided with the Annual Information, and
audited financial statements, if any, shall be delivered to each NRMSIR and to the State
Information Depository within thirty (30) days after they become available and in no event later
than 360 days after the end of each fiscal year; and
(ii) to (a) each NRMSIR, or to the MSRB, and to (b) the State Information
Depository, in a timely manner, notice of any of the following events with respect to the
Securities, if material:
(I) principal and interest payment delinquencies;
(2) non-payment related defaults;
(3) unscheduled draws on debt service reserves reflecting financial
difficulties;
(4) unscheduled draws on credit enhancements reflecting financial
difficulties;
(5) substitution of credit or liquidity providers, or their failure to
perform;
(6) adverse tax opinions or events affecting the tax-exempt status of the
Securities;
(7) modifications to rights of Securities holders;
(8) bond calls;
(9) defeasances;
(10) release, substitution, or sale of property securing repayment of the
Securities; and
(II) rating changes.
(iii) to (a) each NRMSIR, or to the MSRB, and to (b) the State Information
Depository, in a timely manner, notice of a failure to provide by the date set forth in Section
2(a)(i) hereof any Annual Information required by Section 3 hereof.
(b) Nothing herein shall be deemed to prevent the Issuer from disseminating any
other information in addition to that required hereby in the manner set forth herein or in any
other manner. If the Issuer disseminates any such additional information, the Issuer shall have
no obligation to update such information or include it in any future materials disseminated
hereunder.
(c) Nothing herein shall be deemed to prevent the Issuer from providing notice of
the occurrence of certain other events, in addition to those listed above, if the Issuer determines
that any such other event is material with respect to the Securities; but the Issuer does not
undertake to commit to provide any such notice of the occurrence of any material event except
those events listed above.
Section 3. Annual Information. (a) The required Annual Information shall consist
of the financial information and operating data for the preceding fiscal year, in a form generally
consistent with the information contained or cross-referenced in the Issuer's final official
statement relating to the Securities under the headings: "The Town," "Economic and
Demographic Information," "Indebtedness ofthe Town,"" Finances of the Town," "Real
Property Tax Information," and "Litigation," and in Appendix A.
(b) All or any portion of the Annual Information may be incorporated in the
Annual Information by cross reference to any other documents which have been filed with (i) the
NRMSIRs and the State Information Depository, or (ii) the Securities and Exchange
Commission. If such a document is a final official statement, it also must be available from the
MSRB.
(c) Annual Information for any fiscal year containing any modified operating
data or financial information (as contemplated by Section 7(e) hereof) for such fiscal year shall
explain, in narrative form, the reasons for such modification and the effect of such modification
on the Annual Information being provided for such fiscal year. If a change in accounting
principles is included in any such modification, such Annual Information shall present a
comparison between the financial statements or information prepared on the basis of the
modified accounting principles and those prepared on the basis of the former accounting
principles.
Section 4. Financial Statements. The Issuer's annual financial statements for
each fiscal year shall be prepared in accordance with GAAP as in effect from time to time. Such
financial statements shall be audited by an independent accounting firm.
Section 5. Remedies. If the Issuer shall fail to comply with any provision of this
Undertaking, then any Holder of Securities may enforce, for the equal benefit and protection of
all Holders similarly situated, by mandamus or other suit or proceeding at law or in equity, this
Undertaking against the Issuer and any of the officers, agents and employees of the Issuer, and
may compel the Issuer or any such officers, agents or employees to perform and carry out their
duties under this Undertaking; provided that the sole and exclusive remedy for breach of this
Undertaking shall be an action to compel specific performance ofthe obligations of the Issuer
hereunder and no person or entity shall be entitled to recover monetary damages hereunder under
any circumstances. Failure to comply with any provision of this Undertaking shall not constitute
an event of default on the Securities.
Section 6. Parties in Interest. This Undertaking is executed and delivered solely
for the benefit of the Holders. No other person shall have any right to enforce the provisions
hereof or any other rights hereunder.
Section 7. Amendments. Without the consent of any holders of Securities, the
Issuer at any time and from time to time may enter into any amendments or changes to this
Undertaking for any of the following purposes:
(a) to comply with or conform to any changes in Rule 15c2-12 (whether required
or optional);
(b) to add a dissemination agent for the information required to be provided
hereby and to make any necessary or desirable provisions with respect thereto;
(c) to evidence the succession of another person to the Issuer and the assumption
of any such successor of the duties of the Issuer hereunder;
(d) to add to the duties of the Issuer for the benefit of the Holders, or to surrender
any right or power herein conferred upon the Issuer;
(e) to modify the contents, presentation and format of the Annual Information
from time to time to conform to changes in accounting or disclosure principles or practices and
legal requirements followed by or applicable to the Issuer or to reflect changes in the identity,
nature or status of the Issuer or in the business, structure or operations of the 'Issuer or any
mergers, consolidations, acquisitions or dispositions made by or affecting any such person;
provided that any such modifications shall comply with the requirements of Rule 15c2-12 or
Rule 15c2-12 as in effect at the time of such modification; or
(f) to cure any ambiguity, to correct or supplement any provision hereof which
may be inconsistent with any other provision hereof, or to make any other provisions with
respect to matters or questions arising under this Undertaking which, in each case, comply with
Rule 15c2-12 or Rule 15c2-12 as in effect at the time of such amendment or change; provided
that no such action pursuant to this Section 7 shall adversely affect the interests of the Holders in
any material respect. In making such determination, the Issuer shall rely upon an opinion of
nationally recognized bond counsel.
Section 8. Termination. This Undertaking shall remain in full force and effect
until such time as all principal, redemption premiums, if any, and interest on the Securities shall
have been paid in full or the Securities shall have otherwise been paid or legally defeased
pursuant to the their terms. Upon any such legal defeasance, the Issuer shall provide notice of
such defeasance to each NRMSIR or the MSRB, and the State Information Depository. Such
notice shall state whether the Securities have been defeased to maturity or to redemption and the
timing of such maturity or redemption.
Section 9. Undertaking to Constitute Written Agreement or Contract. This
Undertaking shall constitute the written agreement or contract for the benefit of Holders of
Securities, as contemplated under Rule 15c2-l2.
Section 10. Governing Law. This Undertaking shall be governed by the laws of
the State of New York determined without regard to principles of conflict of law.
IN WITNESS WHEREOF, the undersigned has duly authorized, executed and
delivered this Undertaking as of April 19, 2007.
B:OWNOFS~k~
Supervisor and Chief Fiscal Officer
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CLOSING CERTIFICATES
RELATING TO THE BONDS OF THE
TOWN OF SOUTHOLD, IN
THE COUNTY OF SUFFOLK, NEW YORK
**
**
**
OFFICERS' CERTIFICATE AS TO SIGNATURES AND LITIGATION
WE, the undersigned officers of the Town of Southold, in the County of Suffolk,
a municipal corporation of the State of New York and herein referred to as the "Issuer",
HEREBY CERTIFY that on or before the date hereof, each of the Issuer's $14,650,000 Public
Improvement Serial Bonds-2007 (the "Bonds"), dated April 15, 2007, and more fully described
in Schedule X attached hereto and hereby made a part hereof, were duly and completely
executed in the name and on behalf of the Issuer by the manual signatures of the undersigned
officers of the Issuer, each of whom did and does hereby adopt such respective signatures, and
the impressing thereon of the official seal of the Issuer, and that on the date hereof, we are the
duly chosen, qualified and acting officers of the Issuer holding the respective offices indicated by
the official titles set opposite our several signatures hereto, for terms expiring on the respective
dates set opposite such titles.
WE FURTHER CERTIFY that the seal which is impressed upon this certificate
has been impressed upon each of the Bonds and is the legally adopted, proper and only official
corporate seal of the Issuer.
WE FURTHER CERTIFY that no litigation of any nature is now pending or
threatened restraining or enjoining the issuance or delivery of said Bonds or the levy or
collection of any taxes to pay the interest on or principal of said Bonds, or in any manner
questioning the authority or proceedings for the issuance of said Bonds or the levy or collection
of said taxes, or relating to said Bonds or affecting the validity thereof or the levy or collection of
said taxes, that neither the corporate existence or boundaries of the Issuer nor the title of any of
the present officers thereof to their respective offices is being contested, that no authority or
proceedings for the issuance of said Bonds has or have been repealed, revoked or rescinded, and
that no Bonds of the Issuer have been heretofore issued under or pursuant to such proceedings.
IN WITNESS WHEREOF, we have hereunto set our hands and said corporate
seal has hereunto been affixed as of the 19th day of
April, 2007.
S~ATURE
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OFFICIAL TITLE
TERM OF OFFICE
EXPIRES
Supervisor
December 31, 2007
Town Clerk
December 31, 2007
(SEAL)
ATTORNEY'S CERTIFICATE
I, Patricia Finnegan, HEREBY CERTIFY that I am a licensed attorney at law of
the State of New York, having offices at 53095 Main Road, Southold, New York, and am the
duly chosen, qualified and acting Town Attorney of the Issuer hereinafter named, that I am
familiar with the acts and proceedings heretofore had and or taken by said Issuer or by its
officers relative to the authorization, sale and issuance of $14,650,000 Public Improvement
Serial Bonds-2007, of the Town of South old, in the County of Suffolk, a municipal corporation
of the State of New York, and herein referred to as the "Issuer", all as described and set forth in
Schedule X annexed hereto and by this reference made a part hereof; that no litigation of any
nature is now pending or threatened restraining or enjoining the issuance or delivery of said
Bonds or the levy or collection of any taxes to pay the interest on or principal of said Bonds, or
in any manner questioning the authority or proceedings for the issuance of said Bonds or for the
levy or collection of said taxes, or relating to said Bonds or affecting the validity thereof or the
levy or collection of said taxes; that neither the corporate existence or boundaries of the Issuer
nor the title of any of the present officers thereof to their respective offices is being contested;
and that no authority or proceedings for the issuance of said Bonds has or have been repealed,
revoked or rescinded.
I HEREBY FURTHER CERTIFY that there is no controversy or litigation of any
nature now pending or threatened by or against the Issuer, wherein an adverse judgment or ruling
could have a material adverse impact on the financial condition of the Issuer or adversely affect
the power of the Issuer to levy, collect or enforce the collection oftaxes or other revenues for the
payment of the Bonds, which has not been disclosed in the Official Statement relating to the
Bonds.
IN WITNESS WHEREOF, I have hereunto set my hand as of the 19th day of
April, 2007.
CERTIFICATE OF DELIVERY AND PAYMENT
I, SCOTT A. RUSSELL, the duIy elected, qualified and acting Supervisor ofthe
Issuer hereinafter named, HEREBY CERTIFY that on the 19th day of April, 2007, I delivered or
caused to be delivered to Roosevelt & Cross, Inc., and Associates, New York, New York, the
purchaser thereof, $14,650,000 aggregate principal amount of Public Improvement Serial Bonds-
2007 (the "Bonds") of the Town of South old, in the County of Suffolk, a municipal corporation
of the State of New York and herein referred to as the "Issuer", each duly and completely
executed by or on behalf of the Issuer and all as described and set forth in Schedule X annexed
hereto and by this reference made a part hereof, and that at or before the time of such delivery of
said Bonds, I received from said purchaser the following amounts:
Received prior to such delivery .....................................................$
Received at time of such delivery ..................................................$
Total amount received..................... .................... ..... ..... .... ....... ......$
293,000.00
14.363.880.54
14,656,880.54
being full payment for said Bonds in accordance with the contract of sale thereof, computed as
follows:
Contract Price... .... ......... ........... ...... .... ....... .... ..... .... ..... ..... .... ......... ...$14,650,000.00
Interest on said Bonds accrued to the date of delivery ...................... 6.880.54
Total .... ........... .... .......... .................. ...... .... .... ..... .... ..... ..... .... ... ... ... ...$14,656,880.54
I FURTHER CERTIFY that at the time of such delivery of said Bonds, a written
opinion was rendered by the law firm of Hawkins Delafield & Wood LLP, dated as of the date of
such delivery, as to the validity of said Bonds, said opinion (except as to omission of the date of
such delivery) having been printed on each of said Bonds.
IN WITNESS WHEREOF, I have hereunto set my hand as of the 19th day of
April, 2007.
,~~ ,.-V/
Supervisor
SCHEDULE X
Bonds of the TOWN OF SOUTHOLD, NEW YORK, substantially in form, and
offered for sale and sold, as provided by the Certificate of Determination executed by the
Supervisor as of March 27, 2007 and to be delivered thereunder in the aggregate principal
amount of$14,650,000.
Number ofIssues:
1
Amount and Title:
$14,650,000 Public Improvement Serial Bonds-
2007
Dated:
April 15, 2007
Denominations,
Numbers and Letters:
In the form of registered Bonds without coupons in
denominations of $5,000 or integral multiples
thereof, registered in the name of Cede & Co., as
nominee of The Depository Trust Company, New
York, New York, numbered separately and
consecutively upward with the letter "R" prefixed
thereto.
Place of Payment of
Principal and Interest:
The office ofthe Town Clerk, Town of Southold,
Town Hall, 53095 Main Road, Southold, New York
(the "Fiscal Agent"). Interest payable by wire
transfer or in clearinghouse funds by the Town or
its agent on each interest payment date to the person
in whose name the bond is registered at the address
shown on the registration book maintained by the
Fiscal Agent as of the close of business on the last
day of the month preceding each such interest
payment date.
Maturities, Interest
Rates and Pavment Dates:
Mature on April 15 in the principal amounts in each
of the following years and bear interest at the
respective rates per annum, payable October 15,
2007 and semiannually thereafter on April 15 and
October 15 in each year until maturity, as set forth
below:
Year of Principal Interest Year of Principal Interest
Maturitv Amount Rate Maturitv Amount Rate
2008 $700,000 4.00% 2020 $675,000 4.25%
2009 725,000 4-118 2021 675,000 4.25
2010 575,000 4-118 2022 675,000 4.25
2011 575,000 4.25 2023 725,000 4.25
2012 600,000 4.25 2024 725,000 4.25
2013 625,000 4.25 2025 725,000 4.25
2014 625,000 4.25 2026 550,000 4.25
2015 625,000 4.25 2027 550,000 4.25
2016 625,000 4.25 2028 550,000 4.25
2017 675,000 4.25 2029 550,000 4.25
2018 675,000 4.25 2030 550,000 4.25
2019 675,000 4.25
The Bonds maturing on or before April 15, 2017 will not be subject to redemption
prior to maturity. The Bonds maturing on or after April 15, 2018 will be subject to redemption
prior to maturity, at the option of the Town, on April 15, 2017 and thereafter on any date, in
whole or in part, and if in part, in any order of their maturity and in any amount within a maturity
(selected by lot within a maturity), at par, plus accrued interest to the date of redemption.
The Bonds shall be redeemable prior to maturity upon the giving of notice which
identifies the bonds to be redeemed, by mailing such notice to the registered holders thereof at
their respective addresses as shown upon the registration books of the Fiscal Agent at least 30
days prior to the dates set for any such redemption. If notice of redemption shall have been
given as aforesaid, the Bonds so called for redemption shall become due and payable at the
applicable redemption price on the redemption date designated in such notice, and interest on
such Bonds shall cease to accrue from and after such redemption date.
ARBITRAGE AND USE OF PROCEEDS CERTIFICATE
I, SCOTT A. RUSSELL, Supervisor of the Town of Southold (the "Issuer"), in
the County of Suffolk, New York, HEREBY CERTIFY with respect to the Issuer's $14,650,000
aggregate principal amount Public Improvement Serial Bonds-2007 (the "Bonds"), dated April
15,2007 and issued on April 19, 2007, as follows:
Unless the context clearly requires otherwise, all capitalized terms not otherwise
defined herein shall have the meanings set forth in Exhibit A attached hereto or in the
Resolution, the Code or the Regulations (each as defined in Exhibit A):
ARTICLE I
General
1.1. Authoritv of Signatorv. I am an officer of the Issuer charged with the
responsibility for the execution, delivery, and issuance of the Bonds and am acting for and on
behalf of the Issuer in signing this Arbitrage and Use of Proceeds Certificate (the
"Certificate").
1.2. Description of Bonds. The Issuer represents that the Bonds are sold at the
aggregate Issue Price and are further described as set forth on the cover of the Official
Statement.
1.3. Purpose of Certificate. This Certificate is made for the purpose of
establishing evidence of the expectations of the Issuer as of the date hereof as to future events
regarding the amount and use of proceeds of the Bonds. It is intended and may be relied upon
for purposes of Sections 103 and 141 through 150 of the Internal Revenue Code of 1986, as
amended (the "Code"), and as a certification described in Section 1.148-2(b )(2) of the
Treasury Regulations. This Certificate is executed and delivered as part of the record of
proceedings in counection with the issuance of the Bonds. The provisions of this Certificate
constitute a contractual obligation of the Issuer in consideration for the purchase of and
payment for the Bonds by the purchaser(s) thereof.
1.4. No Hedge Bonds. The Issuer reasonably expects that 85% of the
Spendable Proceeds of the Bonds will be expended for governmental purposes within 3 years
of the date hereof. In addition, not more than 50% of the proceeds of the Bonds are being
invested in investments not acquired to carry out the governmental purposes of the issue at a
guaranteed yield for 4 years or more.
1.5. Reasonable Expectations. This Certificate sets forth the facts, estimates
and circumstances now in existence which form the basis for the Issuer's expectation that the
proceeds of the Bonds will not be used in a manner that would cause the Bonds to be arbitrage
bonds under Section 148 of the Code or private activity bonds under Sections 103 and 141 of
~~~._..~.........._,--..-....-_.
the Code. To the best of my knowledge and belief, such expectation is reasonable and there
are no other facts, estimates or circumstances that would materially change that expectation.
1.6. Composite Issue. Except for the Issuer's $579,000 Bond Anticipation
Note-2007, which sold on April 11, 2007, no other tax-exempt governmental obligations have
been sold fewer than 15 days prior to, or will be sold fewer than 15 days after, the sale date of
the Bonds, pursuant to the same plan of financing which are expected to be paid from
substantially the same source of funds as the Bonds.
1.7. Registration. The Bonds will be issued in registered form.
1.8. No Federal Guarantee. The Issuer represents and covenants that, except
for the gross proceeds of the Bonds which are: (a) invested during the temporary period
referred to in Article III, (b) held in any refunding escrow or (c) invested in obligations of the
United States Treasury or in obligations issued pursuant to Section 21B(d)(3) of the Federal
Home Loan Bank Act, as amended by Section 511(a) of the Financial Institutions Reform,
Recovery and Enforcement Act of 1989, or any successor provision to Section 21B(d)(3) of
the Federal Home Loan Bank Act, as amended:
(i) No portion of the payment of principal or interest with respect to the
Bonds is or will be guaranteed directly or indirectly by the United States
or any agency or instrumentality thereof (herein "federally guaranteed");
and
(ii) No portion of the gross proceeds of the Bonds in excess of five percent of
such gross proceeds is or will be (A) used in making loans the payment of
principal or interest with respect to which is to be federally guaranteed, or
(B) invested directly or indirectly in federally insured deposits or
accounts.
1.9. Tax Representation. The Issuer expects to be able to and will comply
with all the procedures and provisions set forth herein, and will do and perform all acts and
things necessary and desirable within its reasonable control in order to assure that interest paid
on the Bonds shall be excluded from gross income of the owners thereof for the purpose of
federal income taxation.
1.10 Noncompliance. The Issuer shall perform each of the obligations
undertaken by it in this Certificate unless, in the written opinion of Bond Counsel,
noncompliance therewith will not cause interest on the Bonds to be included in gross income
for purposes of Federal income taxation.
1.11 Reliance bv Bond Counsel. The representations of the Issuer expressed
in this Certificate may be relied upon by Bond Counsel in connection with the rendering of
any opinion with respect to the Bonds.
1.12 IRS Form 8038-G. The Issuer shall file IRS Form 8038-G, set forth as
part of the record of proceedings for the Bonds, by the 15th day of the second month after the
calendar quarter in which the Bonds are issued.
ARTICLE II
Use of Project and Proceeds
2.1. Authorization. The Bonds are authorized to be issued pursuant to
applicable provisions of the laws of the State of New York and various bond resolutions duly
adopted by the Town Board on their respective dates (the "Resolutions"), as referred to in the
Certificate of Determination relating to the Bonds, executed by the Supervisor as of March 27,
2007 (the "Certificate").
2.2. Purpose ofIssue. The proceeds from the sale of the Bonds will be used to
finance various capital improvements in and for the Town (the "Projects" or the "Project"), as
further described in the Resolutions. For purposes of this Article II the term "proceeds" means
the net amount (after payment of all costs and expenses associated with issuing the Bonds)
received by the Issuer from the sale of the Bonds excluding accrued interest.
2.3. Use of Proceeds. A portion of the proceeds of the Bonds, in the amount of
$4,515,000, together with $1,895,000 in available funds (the "Current Refunding Bonds") will
be used to redeem outstanding bond anticipation notes (the "Prior Issue"). The balance of the
proceeds of the Bonds in the amount of $10,135,000 (the "New Money Bonds") will provide
original financing for various capital improvements in and for the Town.
2.4. Ownership/Lease/Sale. The Projects will be owned by the Issuer and will
not be leased to any person who is not a state or local govermnental unit. . It will not be sold or
otherwise disposed of, in whole or in part, except for incidental sales of surplus items the
proceeds of which will not constitute net operating profits or net capital profits to the Issuer,
prior to the maturity date of the Bonds.
2.5. Private Loans. Not more than the lesser of 5 percent or $5,000,000 of the
proceeds of the Bonds will be used directly or indirectly to make loans to persons other than a
govermnental unit.
2.6. Private Use. The aggregate amount of proceeds of the Bonds used directly
or indirectly in a trade or business carried on by a person other than a state or local
governmental unit ("Private Use"), will not exceed 10% of such proceeds in the event that
more than 10% of the principal or 10% of the interest due on the Bonds during the term
thereof is, under the terms of the Bonds or any underlying arrangement, directly or indirectly,
secured by any interest in property used or to be used for a Private Use or in payments in
respect of property used or to be used for a Private Use or is to be derived from payments,
whether or not to the Issuer, in respect of property or borrowed money used or to be used for a
Private Use.
2.7. UnrelatedlRelated Disproportionate Use. None of the proceeds of the
Bonds will be used directly or indirectly in the trade or business of a person other than a
governmental unit that is unrelated or related and disproportionate to the governmental use of
the property being financed, including any private loan financing described in Section 2.5
which meets this test. E or purposes of this Certificate, proceeds of the Bonds are allocable to
an unrelated Private Use if such use is neither directly nor operationally related to a
governmental use and proceeds of the Bonds are allocable to a disproportionate related Private
Use to the extent that the proceeds of the Bonds which are to be used to finance property used
by a nongovernmental person in a trade or business which is related to the governmental use
of the property referred to in Section 2.6 above, exceeds the proceeds of the Bonds which are
to be used for the governmental use to which such Private Use relates.
2.8. Private Use Defined. For purposes of Section 2.6 and 2.7, unless
otherwise provided in this Certificate, a Private Use consists of any contract or other
arrangement including, without limitation, leases, management contracts, guarantee contracts,
take or pay contracts, or put or pay contracts, which provides for a use of the Project by a
person or persons who are not State or local governments on a basis different than the general
public. However, the Issuer may enter into a safe-harbor management contract which meets
the requirements of Rev. Proc. 97-13.
(i) If the Issuer leases any portion of the facilities to an organization that is
qualified under Code section 501(c)(3) or to any other entity which is not
a State or a local governmental unit, it will abide by the limitations set
forth in this Article II. If the Issuer enters into management contracts with
respect to any areas included in the facilities to be financed or refinanced
with the proceeds of the Bonds, including, without limitation, service
areas, if any, it will follow the guidelines set forth in this Article II.
2.9. Reimbursement. Gross proceeds used to reimburse the Issuer for amounts
expended in anticipation of the issuance of the Bonds are considered expended on the date of
the reimbursement allocation made in accordance with Treas. Reg. g 1.150-2, if prior to or
within 60 days after the date of such expenditure (except for certain preliminary expenditures
described in Treas. Reg. gI.l50-2(f)(2)), a declaration of intent to reimburse such expenditure
is made and the reimbursement allocation is made within 18 months of the later of the placed
in service date of the Project or the date of the expenditure (but in no event more than three
years after the original expenditure was paid). The expenditures to be reimbursed are capital
expenditures as defined in Treas. Reg. Section 1.I50-1(b). No reimbursement proceeds will
be used for purposes that would prevent the allocation from being treated as an expenditure
pursuant to Treas. Reg. Section 1.150-2 or prior law as applicable.
ARTICLE III
Arbitrage
3.1. Temporary Period-Refunding. With respect to the proceeds ofthe Current
Refunding Bonds allocable to the Prior Issue:
(a) All of the proceeds of the Prior Issue have been expended, or any such
proceeds which have not been expended as of the date hereof, shall become transferred proceeds
of this issue. Such transferred proceeds may be invested without restriction as to yield until three
years after the date of original issuance of the Prior Issue. If any transferred proceeds remain
unexpended after three years after the date of original issuance of the Prior Issue, such proceeds
will be invested at a yield not in excess of the yield on the Bonds.
(b) The proceeds of the Current Refunding Bonds will be used to refund the
Prior Issue within 90 days of the date hereof, and may be invested during such time without
restriction as to yield.
3.2. Temporary Period-New Monev. With respect to the New Money Bonds:
(a) The Issuer has entered into or will enter into within six months from the
date of this certificate, binding commitment( s) for the acquisition, construction or
accomplishment of the Projects cited in Section 2.2 hereof, and the amount of such
commitment(s) with respect to such Projects will or do exceed the amount equal to 5% of
$10,135,000, being the aggregate amount of obligations currently being issued for such Projects.
(b) Such Projects have been completed, or, if such Projects have not been
completed, work on the acquisition, construction or accomplishment of such Projects will
proceed or is proceeding with due diligence to completion.
(c) It is reasonably expected that at least 85 percent of the net sale proceeds of
such New Money Bonds will be expended within three years from the date of this Certificate.
No more than 50 percent of the proceeds of the Bonds will be invested in nonpurpose
investments with a term of four years or more.
3.3. No Excess Proceeds. The total proceeds of sale of all bond anticipation
notes issued to date for the Project do not exceed the total cost of the Projects.
3.4. Source of Repavrnent Funds. The Bonds will be paid from taxes and the
proceeds of other obligations of the Issuer.
3.5. Debt Service Fund. The taxes used to pay principal and interest on the
Bonds, whether or not deposited in a debt service fund, will be expended within 13 months of
the date of deposit in such fund, or the date of their accumulation, in the payment of debt
service on the Bonds. Any amounts received from the investment of such deposit or
accumulation will be expended within one year of receipt. The debt service fund, if any, will
be used to achieve a proper matching of revenues and debt service and will be depleted at least
annually except for a reasonable carryover amount which will not exceed the greater of the
earnings on such fund for the immediately preceding year or one-twelfth of the debt service on
the Bonds.
3.6. Sinking Funds. Except for the debt service fund described herein the
Issuer has not created or established, and does not expect to create or establish, any sinking
fund or other similar fund which the Issuer reasonably expects to use to pay principal or
interest on the Note.
3.7. Universal Cap. On each Valuation Date, the Issuer shall value the
Universal Cap and the Nonpurpose Investments allocable to the Bonds thereunder.
Nonpurpose Investments in a bona fide debt service fund such as the Bona Fide Debt Service
Fund do not reduce the aggregate value of Nonpurpose Investments that may be allocated to
the Bonds under the Universal Cap. Nonpurpose Investments cease to be allocated to the
Bonds to the extent such Nonpurpose Investments have been expended for the goverrunental
purpose of the issue, or to the extent the value thereof exceeds the value permitted to be
allocated to the issue under the Universal Cap. To the extent Nonpurpose Investments cease
to be allocated to an issue and the value of the Universal Cap exceeds the value of the
remaining Nonpurpose Investment allocated to such issue, other Nonpurpose Investments may
become allocated to the issue, provided that such Nonpurpose Investments are not already
properly allocated to another issue and provided that such allocation does not cause the value
of Nonpurpose Investments allocated to the Bonds to exceed the Universal Cap.
Generally, if Gross Proceeds ofthe Bonds invested in Nonpurpose Investments
exceed the Universal Cap on a Valuation Date, such Nonpurpose Investments cease to be
allocated to the Bonds in the following order:
(a) amounts allocable to Replacement Proceeds,
(b) amounts allocable to Transferred Proceeds,
(c) amounts allocable to Sale Proceeds and Investment Proceeds of the Bonds.
Where a Nonpurpose Investment ceases to be allocated to the Bonds, such
Nonpurpose Investment is susceptible ofre-allocation under the Universal Cap calculated with
respect to another bond issue. A Nonpurpose Investment which is reallocated to another bond
issue may be valued under the same valuation method pursuant to which it was valued for
purposes of applying the Universal Cap with respect to the Bonds.
Notwithstanding anything herein to the contrary, the failure to perform the
determination of Nonpurpose Investments allocable to the Bonds as ofa Valuation Date shall not
be considered a violation of this provision if the value of Nonpurpose Investments allocated to
the Bonds did not exceed the value of the Bonds outstanding on such date.
ARTICLE IV
Rebate
4.1. Rebate Compliance. The Issuer understands that the continued non-
inclusion of interest on the Bonds for purposes of federal income taxation depends, in part,
upon compliance with the arbitrage limitations imposed by Section 148 of the Code, including
the rebate requirements described in Section 4.2 hereof with respect to the Bonds.
4.2. Rebate Requirement for the Bonds. Section 148(1) of the Code requires
the payment to the United States of the excess of the amount earned on the investment of
Gross Proceeds in Nonpurpose Investments over the amount that would have been earned had
the amount so invested been invested at a rate equal to the Yield on the Bonds, together with
any income attributable to such excess. Except as provided below, all Gross Proceeds of the
Bonds are subject to this requirement. In order to meet the rebate requirement of the Code the
Issuer must take the following actions:
(a) Record ofInvestments. The Issuer will record the date ofreceipt, amount
and source of any Gross Proceeds, e.g., proceeds from the sale of the Bonds, loan
repayments, investment earnings. For each Nonpurpose Investment acquired with or
allocated to Gross Proceeds of the Issue, the Issuer will record the purchase date or
allocation date of such investment, its purchase price (excluding any broker or dealer's
commission or discount), or, if not acquired directly with Gross Proceeds, its Value on
the date the Nonpurpose Investment is allocated to Gross Proceeds, accrued interest due
on its purchase date or allocation date, its face amount, its coupon rate, its Yield, the
frequency of its interest payment, its disposition price (excluding any broker or dealer's
commission or discount), the accrued interest due on its disposition date and its
disposition date. In addition, the Issuer will record the date and amount of all
expenditures of Bond proceeds, including expenditures for rebate, other than
expenditures to acquire investments.
(b) Computation of Rebate Amount. Subject to the special rules set forth in
paragraphs (c), (d), (e) and (1) of this Section, the Issuer will determine the Rebate
Amount on each Computation Date. The Rebate Amount as of any Computation Date is
the excess of the Future Value of all receipts with respect to Nonpurpose Investments
over the Future Value of all payments with respect to the purchase of Nonpurpose
Investments or the allocation of such investments to the proceeds of the Bonds,
determined as of each Computation Date. To the extent amounts received from
investments are reinvested, these amounts may be netted against each other and not taken
into account in the Computation of Rebate Amount. The Issuer shall determine the
nonpurpose receipts and nonpurpose payments as described below.
(i) Receipts. Receipts with respect to Nonpurpose Investments include (i)
actual receipts, amounts actually or constructively received with respect to
an investment, reduced by Qualified Administrative Expenses (ii)
disposition receipts, the Fair Market Value of investments deemed to be
sold on the date the investment ceases to be allocated to the issue, (except
that Present Value may be substituted for Fair Market Value with respect
to fixed yield investments, investments required to be yield restricted, and
investments transferring by virtue of the universal cap or transferred
proceeds rules) and (iii) Computation Date receipts, the Market Value
(Present Value, in the case of guaranteed investment contracts and fixed
rate investments) of all Nonpurpose Investments allocated to the issue at
the close of business on a Computation Date; and (iv) rebate receipts, any
recovery of an overpayment of rebate.
(ii)
Payments. Payments with respect to Nonpurpose Investments include (i)
direct payments, the amount of Gross Proceeds of the issue directly used
to purchase the investment, including Qualified Administrative Costs (ii)
constructive payments, the Value of an investment allocated to (but not
directly purchased with) Gross Proceeds on the date so allocated; (iii)
Nonpurpose Investments allocated to an issue at the end of the preceding
Computation Period, at the value of the investments at the beginning of
the computation period; (iv) rebate payments, payments of rebate amounts
when due and yield reduction payments on Nonpurpose Investments and
(v) the Computation Date Credit.
(c) Exception for Gross Proceeds Entirelv Spent Within Six Months.
Notwithstanding anything in this Section 4.2 to the contrary, if all of the Gross Proceeds
of the Bonds (other than amounts on deposit in the Debt Service Fund or a reserve fund),
including investment earnings received with respect to all Funds and Accounts
comprising such issue except the Debt Service Fund, have been expended for the
governmental purpose of the issue within six months after the date of issue, then the only
Nonpurpose Investments to be taken into account in the calculation of the Rebate
Amount with respect to the Non-Construction Bonds are Nonpurpose Investments
acquired with or allocated to Gross Proceeds held in the Reserve Fund, and to any gross
proceeds arising after such six months which were not reasonably anticipated as of the
date of issuance. The existence of sinking fund or pledged fund proceeds or the
expectation that such proceeds will arise within six months of the issue date will make
the six-month expenditure exception to rebate inapplicable. For purposes of this
exception, Gross Proceeds used to pay principal of bonds are not treated as expended on
the governmental purpose of the issue.
(d) Exception for Gross Proceeds Entirelv Spent Within Eighteen Months.
Notwithstanding anything in this Section 4.2 to the contrary, if all of the Gross Proceeds
of the Bonds (other than amounts on deposit in the Debt Service Fund or a reserve fund),
including investment earnings received with respect to all Funds and Accounts
comprising such issue except the Debt Service Fund, have been expended for the
governmental purpose of the issue in accordance with the following schedule after the
date of issue: 15% within 6 months, 60% within 12 months and 100% within 18 months,
then the only Nonpurpose Investments to be taken into account in the calculation of the
Rebate Amount with respect to the Non-Construction Bonds are Nonpurpose Investments
acquired with or allocated to Gross Proceeds held in the Reserve Fund, and to any gross
proceeds arising after such eighteen months which were not reasonably anticipated as of
the date of issuance. The existence of sinking fund or pledged fund proceeds or the
expectation that such proceeds will arise within eighteen months of the issue date will
make the eighteen-month expenditure exception to rebate inapplicable. For purposes of
this exception, Gross Proceeds used to pay principal of bonds are not treated as expended
on the governmental purpose of the issue. However, an issue does not fail to satisfy the
spending requirement for the third spending period referenced above in this paragraph as
a result of a reasonable retainage, as defined in Treas. Reg. 1.148-7( d)(2), if the
reasonable retainage is allocated to expenditures within 30 months of the date of issue.
(e) Exception for Gross Proceeds Entirelv Spent Within Twentv-Four
Months. Notwithstanding anything in this Section 4.2 to the contrary, for Construction
Bonds, if all of the Gross Proceeds of the Bonds (other than amounts on deposit in the
Debt Service Fund or a reserve fund), including investment earnings received with
respect to all funds and accounts comprising such issue except the Debt Service Fund,
have been expended for the governmental purpose of the issue in accordance with the
following schedule after the date of issue: 10% within 6 months, 45% within 12 months,
75% within 18 months and 100% within 24 months, then the only Nonpurpose
Investments to be taken into account in the calculation of the Rebate Amount with respect
to the Non-Construction Bonds are Nonpurpose Investments acquired with or allocated to
Gross Proceeds held in the Reserve Fund, and to any gross proceeds arising after such
twenty-four months which were not reasonably anticipated as of the date of issuance.
The existence of sinking fund or pledged fund proceeds or the expectation that such
proceeds will arise within twenty-four months of the issue date will make the twenty-four
expenditure exception to rebate inapplicable. For purposes of this exception, Gross
Proceeds used to pay principal of bonds are not treated as expended on the governmental
purpose of the issue. However, an issue does not fail to satisfy the spending requirement
for the third spending period referenced above in this paragraph as a result of a
reasonable retainage, as defined in Treas. Reg. 1. 148-7( d)(2), if the reasonable retainage
is allocated to expenditures within 30 months of the date of issue.
(t) $100.000 Debt Service Fund Gross Earnings Exception. Notwithstanding
anything in this Section 4.2 to the contrary, if the gross earnings from the investments
held in a debt service fund for the Bond Year in question, are less than $100,000 then any
amount earned on such debt service fund shall not be taken into account in determining
the Rebate Amount. In this regard, the $100,000 earnings limitation is deemed satisfied
if the annual debt service on the issue does not exceed $2,500,000. For purposes of this
paragraph (t), the term "gross earnings" means the aggregate amount earned on the
Nonpurpose Investment in which the Gross Proceeds deposited to the debt service fund
are invested, including amounts earned on such amounts if allocated to the debt service
fund.
(g) Debt Service Fund Exception. If the average maturity of the Bonds is at
least 5 years and the rates of interest do not vary during the term of the issue, then any
amount earned on a debt service fund (other than amounts representing accrued interest
or capitalized interest) shall not be taken into account in determining the Rebate Amount.
4.3. Payment to United States. (a) Unless the Bonds are redeemed prior to such
time, the Issuer will pay to the United States, not later than 60 days after each Installment
Computation Date, an amount which, when added to previous rebate payments made with
respect to the Bonds, is equal to not less than 90 percent of the Rebate Amount, less the
Computation Date Credit. The Issuer will pay to the United States, not later than 60 days after
the Bonds are fully paid or redeemed, 100 percent of the Rebate Amount, less the
Computation Date Credit. If the final rebate payment is made within 60 days after the Final
Computation Date, interest on the Rebate Amount will be deemed to accrue at the
underpayment rate under Section 6201 of the Code, beginning on the date the Rebate Amount
is due and ending on the date 10 days before it is paid.
(b) The Issuer will mail each payment to the Internal Revenue Service Center,
Philadelphia, Pennsylvania 19255. Each payment shall be accompanied by the copy of the Form
8038-T and the Form 8038-G or 8038-GC filed with respect to the Bond issue and a statement
identifying the issuer and the issue, including the CUSIP number for the Bond with the latest
maturity for which there is a CUSIP number.
4.4. Recordkeeping. In connection with rebate requirement the Issuer will
maintain the following records:
(a) The Issuer will retain records of the determinations made pursuant to
Section 4.2 until six years after the retirement of the last obligation of the issue.
(b) The Issuer will record all amounts paid to the United States pursuant to
Section 4.3.
4.5. Fair Market Value. The Issuer will not acquire Nonpurpose Investments
at other than an arm's length, Fair Market Value price unless regulations addressing imputed
receipts have been promulgated by the Treasury.
(SEAL)
IN WITNESS WHEREOF, I have hereunto set my hand and affixed the
corporate seal of the Town of South old as ofthe
19fu <hY"~7.
~~~.u/
Supervisor
Exhibit A
Definitions
(This exhibit includes definitions of certain terms which may not be used III the Issuer's
Arbitrage and Use of Proceeds Certificate)
"Available Construction Proceeds" means the Issue Price of the Construction
Bonds (i) plus earnings on the Issue Price and on amounts in any reserve fund not funded from
bond proceeds, and earnings on such earnings and (ii) less the amount of the Issue Price
representing a reasonably required reserve or replacement fund and costs of issuance funded with
proceeds received from the sale of the Bonds. For purposes of this definition earnings include
earnings on any tax-exempt bond. If only a portion of the Bonds constitute Construction Bonds,
a pro-rata portion of the above-described amount will constitute available construction proceeds.
Pre-issuance accrued interest and earnings thereon may be disregarded.
"Bona Fide Debt Service Fund" means a fund, which may include proceeds of
an issue, that is used primarily to achieve a proper matching of revenues with principal and
interest payments within each Bond Year and is depleted at least once each Bond Year except for
a reasonable carryover amount (not in excess of the earnings on the fund for the immediately
preceding Bond Year or one-twelfth of the principal and interest payments on the issue for the
immediately preceding Bond Year).
"Bond Counsel" means any nationally recognized attorney or firm of attorneys,
knowledgeable in the requirements of the Code, and the Regulations, and retained by the Issuer.
"Bond Year" means each one-year period (or shorter period) from the date of
issue that ends at the close of business on the day in the calendar year selected by the Issuer
which day is no later than the last day within one year of the issue date of the Bonds.
"Bonds" means the $14,650,000 Public Improvement Serial Bonds-2007.
"Capital Project" means all capital expenditures, plus related working capital
expenditures to which the de minimis rule under Treas. Reg. Section 1.148-6( d)(3)(ii)(A)
applies, that carry out the governmental purposes of an issue.
"Code" means the Internal Revenue Code of 1986, as amended.
"Computation Date" means any Installment Computation Date or the Final
Computation Date.
"Computation Date Credit" means, for any issue of obligations, an amount
equal to the Future Value of $1 ,000 for each Bond Year during which there are gross proceeds of
the Bonds on a Computation Date other than the Final Computation Date, and $1,000 on the
Final Computation Date.
"Computation Period" means the period beginning on the day following a
Computation Date (or in the case of the first period, the date of issuance of the Bonds) and
ending on the next succeeding Computation Date.
"Construction Bonds" means an issue in which all of the bonds are either (i)
Governmental Bonds; (ii) Qualified 501(c)(3) bonds or (iii) Private Activity Bonds to finance
property owned by a governmental unit or a 501(c)(3) organization, if at least 75 percent of the
available construction proceeds of the issue are to be used, or are expected to be used for
expenditures for construction, reconstruction and rehabilitation of property which is owned by a
governmental entity or a 501(c)(3) organization.
"Construction Expenditures" means capital expenditures (as defined in Treas.
Reg. 91.150-1) (i.e., amounts used for construction, reconstruction or rehabilitation of buildings
or other inherently permanent structures, including items that are structural components of such
buildings or structures, and architectural and engineering fees, site survey fees, legal expenses,
insurance premiums and development fees to the extent such fees and expenses directly relate to
other construction costs).
"Controlled Group" means a group of entities controlled directly or indirectly
by the same entity or group of entities. In general, "direct control" exists while a controlling
entity possesses either of the following rights or powers and such rights or powers are
discretionary and non-ministerial: The right or power (i) both to approve and to remove without
cause a controlling portion of the governing body of the controlled entity, or (ii) to require the
use of funds or assets of the controlled entity for any purpose of the controlling entity. If one
entity (the "Controlling Entity") directly controls another (the "Controlled Entity"), then the
Controlling Entity indirectly controls any entity controlled directly or indirectly by such
Controlled Entity. However, an entity is not a Controlled Entity if it possesses substantial taxing,
eminent domain and police powers.
"Extraordinary Working Capital Item" means expenditures for extraordinary,
nonrecurring items that are not customarily payable from current revenues, such as casualty
losses or extraordinary legal judgments in amounts in excess of reasonable insurance coverage.
"Fair Market Value" of an Investment shall have the following meanings:
(a) In General. Except as elsewhere specifically stated below, the Fair Market
Value of an Investment is the price at which a willing buyer would purchase the Investment from
a willing seller in a bona fide, arm's -length transaction.
(b) United States Treasury Obligation. The Fair Market Value ofa United States
Treasury Obligation that is purchased directly from the United States Treasury is its purchase
pnce.
(c) Certificate of Deposit. The Fair Market Value of a certificate of deposit with a
fixed interest rate, a fixed payment schedule, and a substantial penalty for early withdrawal is its
purchase price provided, the yield on the certificate of deposit is not less than (i) the yield on
reasonably comparable direct obligations of the United States and (ii) the highest yield published
by the provider and currently available from the provider on reasonably comparable certificates
of deposit offered to the public.
(d) Guaranteed Investment Contracts. The Fair Market Value of a guaranteed
investment contract is its purchase price, provided (i) the Issuer makes a bona fide solicitation for
such contract and receives at least three bona fide bids from providers with no material interest in
the issue; (ii) the Issuer purchases the highest-yielding guaranteed investment contract for which
a qualifying bid is made (determined net of broker's fees); (iii) the yield on such contract
(determined net of broker's fees) is not less than the yield then available from the provider on
reasonably comparable investment contracts, if any, offered to other persons from a source of
funds other than gross proceeds of tax-exempt bonds; (iv) the determination ofthe terms of a
guaranteed investment contract takes into account as a significant factor the Issuer's reasonably
expected drawdown schedule for amounts to be invested, exclusive of float and reserves, (v) the
terms of the contract, including collateral security requirements are reasonable, and (vi) the
obligor certifies the administrative costs it is paying to third parties in connection with the
contract. To the extent that a broker's commission does not exceed the lesser of reasonable
amount based on what would be charged for the same or comparable investment acquired with a
source of funds other than gross proceeds of tax-exempt bonds to the present value of annual
payments equal to .05 percent of the amount expected to be invested per year, it may be taken
into account in determining yield, with the effect that it will increase the payments for, or
decrease the receipts from, Investments.
"Final Computation Date" means the day the last Bond that is part of the Bonds
is discharged.
"Future Value" or "FV" of a payment or receipt means the amount, determined
by using the economic accrual method (the method of computing yield based on the
compounding of interest at the end of each compounding period), equal to the value of such
payment or receipt at the time it is paid.or received (or treated as paid or received), plus interest
assumed to be earned and compounded over the period at a rate equal to the yield on the issue,
using the same compounding interval and financial conventions used to compute yield.
"Governmental Bonds" means bonds which are not Private Activity Bonds.
"Gross Proceeds" means Sale Proceeds, Transferred Proceeds, Investment
Proceeds and Replacement Proceeds.
"Issue Price" when used in connection with an issue of publicly offered
obligations (determined separately for obligations included in the issue that are not substantially
identical) is the first price at which at least ten percent of each maturity of each series of the
obligations are sold to the public. Bond house, brokers, or similar persons or organizations
acting in the capacity of underwriters or wholesalers are not included in the definition of
"public" for purposes ofthe preceding sentence. If the obligations are privately placed, the Issue
Price is the price paid for them by the first buyer. The Issue Price of obligations that are publicly
offered in a bona fide public offering is determined on the basis of actual facts and reasonable
circumstances existing on the sale date unadjusted for subsequent occurrences.
"Installment Computation Date" means the last day of the fifth Bond Year and
the last day of each succeeding fifth Bond Year (until and excluding the Final Computation
Date) and, if the Issuer so elects, the last day of any Bond Year.
"Investment" means (i) any security (within the meaning of Section 165(g)(2)(A)
or (B), (ii) any obligation (other than tax-exempt obligations which are not "specified private
activity bonds" within the meaning of Section 57(a)(5)(C) of the Code), (iii) any annuity contract
within the meaning of Section 72 of the Code, (iv) any residential real property for family units
not located within the jurisdiction of the Issuer and which is not required to implement a court-
ordered or approved housing desegregation plan or (v) any investment-type property that is held
as a passive vehicle for the production of income, including any prepayment for property or
services if a principal purpose of prepayment is to receive an investment return from the time the
prepayment is made until the time payment would otherwise have been made.
"Investment Proceeds" means any amounts actually or constructively received
from investing proceeds of the Bonds.
"Issuer" means the Town of Southold, New York.
"Multipurpose Issue" means an issue the proceeds of which are used for two or
more separate purposes determined in accordance with Section I. I 48-9(h) of the Regulations.
"Net Sale Proceeds" means sale proceeds less the portion of those sale proceeds
invested in a reasonably required reserve or replacement fund or as part of a minor portion.
"Nonpurpose Investment" means any Investment in which Gross Proceeds are
invested and which is not acquired to carry out the governmental purpose of the issue.
"Official Statement" means the Official Statement of the Issuer relating to the
Bonds.
"Person" means any individual, corporation, partnership, joint venture,
association, joint stock company, trust, unincorporated organization or government or any
agency or political subdivision thereof.
"Plain Par Bond" means a qualified tender bond or a bond that (i) is issued with
original issue discount equal to not more than 2 percent of the stated redemption price at maturity
plus the amount of origiIl;al issue premium attributable exclusively to underwriters'
compensation, (ii) is issued for a price that does not include Pre-Issuance Accrued Interest,
(iii) bears interest from the issue date at a single stated fixed rate or is a variable rate obligation
under Section 1275 of the Code, in either case, that pays interest unconditionally payable at least
annually, and (iv) has a lowest stated redemption price not less than its outstanding stated
principal amount.
"Plain Par Investment" means an investment that is an obligation that (i) is
issued with original issue discount (or if acquired on a date other than the issue date, acquired
with market discount or premium) equal to not more than 2 percent of the stated redemption
price at maturity, (ii) is issued for a price that does not include Pre-Issuance Accrued Interest,
(iii) bears interest from the issue date at a single stated fixed rate or is a variable rate obligation
under Section 1275 of the Code that pays interest unconditionally payable at least armually, and
(iv) has a lowest stated redemption price not less than its outstanding stated principal amount.
"Present Value" or "PV" means the amount determined by using the following
formula:
PV= FV
n
(l+i)
where i equals the discount rate divided by the number of compounding intervals in a year and n
equals the sum of (i) the number of whole compounding intervals for the period beginning on the
date as of which Present Value is computed and ending on the date the amount is to be received
or paid or on a Computation Date and (ii) a fraction the numerator of which is the length of any
short compounding interval during such period and the denominator of which is the length of a
whole compounding interval.
"Private Activity Bonds" means bonds which meet the definition contained in
Section 141(a) of the Code and that are not "qualified bonds" as defined in Section 141(e) of the
Code.
"Project" means the projects referred to in the Resolutions, which is being
financed by the Bonds.
"Qualified SOI(c)(3) Bonds" means bonds which meet the definition contained
in Section 145 ofthe Code.
"Qualified Administrative Costs" mean:
(a) In General. All reasonable, direct administrative costs, other than carrying
costs, such as separately stated brokerage or selling commissions, but not legal and
accounting fees, record keeping, custody, and similar costs. General overhead costs and
similar indirect costs of the Issuer such as employee salaries and office expenses and
costs associated with computing the Rebate Amount are not qualified administrative
costs. In general, administrative costs are not reasonable unless they are comparable to
administrative costs that would be charged for the same investment or a reasonably
comparable investment if acquired with a source of funds other than gross proceeds of
tax-exempt bonds.
(b) Regulated Investment Companies and External Commingled Funds. For
publicly offered regulated investment companies (as defined in section 67(c) (2) (B)) and
commingled funds in which the Issuer and any Controlled Entity do not own more than
10 percent of the beneficial interest in the fund, Qualified Administrative Costs are all
reasonable administrative costs, without regard to the limitation on indirect costs
described in the preceding paragraph.
(c) GICs. For a guaranteed investment contract, a broker's commission paid
on behalf of either an issuer or the provider is a Qualified Administrative Cost to the
extent that it does not exceed the lesser of reasonable amount based on what would be
charged for the same or comparable investment acquired with a source of funds other
than gross proceeds of tax-exempt bonds to the present value of annual payments equal to
five one-hundredths of one percent (0.05%) of the amount reasonably expected to be
invested per year.
(d) Puroose Investments. Qualified Administrative Costs include costs or
expenses paid, directly or indirectly, to purchase, carry, sell, or retire the investment;
costs of issuing, carrying, or repaying the issue, and any underwriters' discount, which
are paid by the conduit borrower, even if such payments merely reimburse the Issuer, but
only to the extent the present value of those payments does not exceed the present value
of the reasonable administrative costs paid by the Issuer using the yield on the Bonds as
the discount rate.
( e) Program Investments. Qualified Administrative Costs include only costs
of issuing, carrying, or repaying the issue, and any underwriters' discount, subject to the
limitation contained in the preceding paragraph.
"Qualified Guarantee" means, with respect to a bond, an unconditional transfer,
in any form, of substantially all of the credit risk for all or part of the payments, such as
payments for principal and interest, redemption prices or tender prices, on the guaranteed bonds.
The guarantor must not expect to make any payments other than those pursuant to a direct-pay
letter of credit or similar arrangement for which the guarantor will be immediately reimbursed.
Reasonable procedural or administrative requirements or, in the case of a guarantee against
failure to remarket a qualified tender bond, commercially reasonable limitations based on credit
risk, will not cause the guarantee to be conditional. The guarantor may not be a co-obligor, nor
may the obligor and any related parties combined use more than 10 percent of proceeds of the
guaranteed portion of the bonds. The guarantee fee must not exceed a reasonable arm's-length
charge solely for the transfer of the credit risk. A guarantee will not be qualified unless, as of the
date the guarantee is obtained, the issuer reasonably expects that the present value of all fees for
the guarantee will be less than the present value of the expected interest savings on the issue as a
result of the guarantee. For this purpose, present value is computed using the yield on the issue,
determined with regard to the guarantee fees, as the discount rate.
"Qualified Hedge" means, with respect to the Bonds, a contract between the
Issuer, and any unrelated party which is entered into primarily to reduce the Issuer's risk of
interest rate changes with respect to the Bonds that meets the requirements of Regulation
Section 1.148-4(h). The contract may be an interest rate swap, an interest rate cap, a futures
contract, a forward contract, an option or may take another form. A contract will not be a
Qualified Hedge if it contains any significant investment element (i.e., an expected return).
"Rebate Amount" means with respect to the Bonds, the amount computed as
described in Section 4.2( c).
"Regulations" means the Income Tax Regulations promulgated under Section
148 ofthe Code by the Department of the Treasury from time to time including the Regulations
published on June 18, 1993 in the Federal Register, as they may be amended from time to time.
"Replacement Proceeds" means amounts with a sufficiently direct nexus to the
Bonds or Project to conclude that such amounts would have been used for the Project if the
proceeds of the Bonds were not so used to the extent held by or derived from the Issuer or a
controlled entity ofthe Issuer, including: sinking funds, pledged funds (including negative
pledges), certain other amounts if the term of the issue is longer than necessary for the
governmental purposes of the issue, and a bond-funded working capital reserve unless the issue
qualifies for the TRAN deemed 6-month expenditure exception or the under $5,000,000 small
issuer exception.
"Resolutions" means the bond resolutions of the Issuer, as referred to in
paragraph 2.1 hereof.
"Restricted Working Capital Expenditures" means working capital
expenditures subject to the Gross-Proceeds-spent-Iast rule in Treas. Reg. Section 1.148-6( d)(3)(i)
that are ineligible for any exception to that rule.
"Sale Proceeds" means any amounts actually or constructively received from the
sale of an issue, including amounts used to pay underwriters' discount or compensation, accrued
interest other than Pre-Issuance Accrued Interest, or derived from the sale of a right associated
with a bond as further described in Treas. Reg. Section 1.148-4(b)(4).
"SLG" means a U.S. Treasury Book Entry Security, State and Local Government
Series.
"Spendable Proceeds" means sale proceeds, less the portion of those sale
proceeds invested in a reasonably required reserve or replacement fund under section 148( d) of
the Code and as part of a minor portion under section 148( e) of the Code.
"Transferred Proceeds" means unexpended original or investment proceeds of a
refunded issue which transfer and become proceeds ofthe refunding issue when proceeds of the
refunding issue are applied to pay principal of the refunded issue.
"Treasury" means the United States Department of Treasury.
_.".."-_..~...,,_.^...
"Universal Cap" means the maximum value of Nonpurpose Investments which
may be allocated to the Bonds and is determined by reference to the Value of all outstanding
Bonds of the issue. Nonpurpose Investments shall be taken into account as Nonpurpose Receipts
at their Value on a Valuation Date.
"Valuation Date" means the date on which the value of the Universal Cap and
the Nonpurpose Investments allocable to the Bonds thereunder are determined. With respect to
new money issues, the first Valuation Date shall be the second year armiversary date of the date
of issuance of the Bonds; thereafter, the first day of each Bond Year shall constitute a Valuation
Date. With respect to a refunding issue, each date on which proceeds of the refunded issue
would become transferred proceeds of the refunding issue, e.g. each date on which principal of
the refunded issue is paid with proceeds of the refunding bonds, shall constitute a Valuation
Date. In addition, the first date of each Bond Year shall also be a Valuation Date.
"Value" means, in the case of a Bond, the Value of a Bond and in the case of an
Investment, the Value of an Investment.
"Value of a Bond" means, in the case of a Plain Par Bond, its outstanding stated
principal amount, plus accrued unpaid interest or in the case of a Plain Par Bond actually
redeemed, or treated as redeemed, its stated redemption price on the redemption date plus
accrued unpaid interest. In the case of a boud other than a Plain Par Bond, the value on a date of
such a bond is its Present Value on that date, using the yield on the issue of which the bonds are
a part as the discount factor. In determining the Present Value of a variable rate bond, the initial
interest rate on the bond established by the index or other rate setting mechanism is used to
determine the interest payments on that bond.
"Value of an Investment" means, as of any date, unless the Investment is
required invested as a restricted yield, for any Investment, Fair Market Value as of that date; for
any fixed rate investment, Present Value on that date; and for any Plain Par Investment, the
outstanding stated principal amount, plus accrued unpaid interest, as of that date. Yield
restricted investments must be valued at Present Value, amounts allocated or that cease to be
allocated to an issue must be allocated at Fair Market Value, except in cases in which such
Nonpurpose Investments are allocated as a result of the Universal Cap or Transferred Proceeds
rules in which case they may be valued at Present Value, and amounts allocated to Transferred
Proceeds may not be valued in excess of the value used for arbitrage restrictions applicable to the
Refunded Issue.
"Working Capital Expenditure" means any cost of a type that does not
constitute a Capital Expenditure.
"Yield" means, as of any Computation Date, that discount rate that, when used in
computing the Present Value of (i) all unconditionally payable payments of principal and interest
of or on the bonds included in such fixed yield issue, (ii) all unconditionally payable fees for
Qualified Guarantees and Qualified Hedges on such bonds and (iii) all fees expected to be paid
for Qualified Guarantees and Qualified Hedges, produces an amount equal to the sum of the
Present Value of the aggregate Issue Prices of the bonds comprising the issue (determined using
the same discount rate used to determine the Present Value of payments for principal, interest
and Qualified Hedges and Qualified Guarantees). The Yield is computed as of the issue date of
the fixed yield issue by treating each bond included in the issue that is either subject to
mandatory or contingent early redemption or to certain optional redemption provisions as being
redeemed on its expected early redemption date for an amount equal to its Value on that date. If
a fixed yield bond (i) is subject to optional redemptions within 5 years of its issue date and the
Yield not taking into account the optional redemption is more than 1/8 of I % above its Yield
assuming the early redemption, (ii) is issued at an Issue Price that exceeds the stated redemption
price at maturity by more than 1/4 of I % multiplied by the product of the stated redemption price
to maturity and the number of complete years to the first optional redemption date for the bond,
or (iii) bears interest at increasing interest rates, the Yield on the issue including such fixed yield
bond is computed by treating the fixed yield bond as redeemed at its stated redemption price on
the optional redemption date that produces the lowest Yield on the issue. No adjustment will be
made on any Computation Date to the Yield on a fixed yield issue as computed on its issue date
unless redemption rights are subsequently transferred to a third party or termination payments
are received with respect to Qualified Hedges. The Yield on a fixed yield bond is calculated in
the same manner as Yield on a fixed yield issue.
.
CERTIFICATE OF THE SUPERVISOR WITH RESPECT TO
THE OFFICIAL STATEMENT OF THE TOWN OF
SOUTHOLD, NEW YORK, DATED APRIL 10, 2007,
DISTRIBUTED IN CONNECTION WITH THE SALE OF THE
$14,650,000 PUBLIC IMPROVEMENT SERIAL BONDS-2007
I, SCOTT A. RUSSELL, Supervisor of the Town of South old, in the County of
Suffolk, New York (the "Town"), HEREBY CERTIFY that as of April 10, 2007, the date ofthe
Official Statement of the Town prepared and distributed in connection with the sale of the
$14,650,000 Public Improvement Serial Bonds-2007 (the "Bonds"), and at all times subsequent
thereto, up to and including the date of the delivery of the Bonds on April 19, 2007, the attached
Official Statement did not and does not contain any untrue statement of a material fact or omit to
state a material fact necessary to make the statements therein, in the light of the circumstances
under which they were made, not misleading.
Insofar as any statements made in said Official Statement involve matters of
opinion, estimates or statements as to matters not contained in or derived from the official
records of the Town, whether or not expressly stated, they are set forth as such and not as
representations of fact by the Town, and no representation is made that any of the estimates or
anticipated events will be realized. The said Official Statement is not to be construed as a
contract or agreement with the beneficial owners of the Bonds.
I HEREBY FURTHER CERTIFY that there has been no adverse material change
in the financial condition of the Town since the date of said Official Statement to the time of the
delivery of the Bonds on April 19, 2007.
(SEAL)
IN WITNESS WHEREOF, I have hereunto set my hand and affixed the
corporate seal of the Town as of the 19th day of
April, 2007. /
~a,d~
Supervisor
NEW ISSUE - SERIAL BONDS RATING: MOODY'S INVESTORS SERVICE - Aaa*
See "Bond Rating", herein
. .In the oRinion of Hawkins Delafiel(i & Wood LLP,Bond Co.uns~lto the Town under existin!!. statutes and court decis~' ns a~d ~suming
continuing compliance WIth c~rtam tax cf1rtificatlOns descnbed h~rem7 (i) interest on the Bonds is exCluded'1J:m KrOSS income or federal income
lax Purp9ses pu,:sua'!f to Sec/101J 103 a/the lnte.rnal f?~enue Co.de of 986, ps q,,!ended (thi! "Code"), andTi( interest on the onOs is not treated
gs p prejfrffJce Item J!1 calculating the al~ernatlve mlfl.lmum tax lYfJposed on mdlVldua~ and corporafions un er the Code; sue interest, however
. IS mclua~a In the a4Jus.ted qurrent eflr!1mgs of certam corporations for purJ)oses.o . calculating the alternative minimum tax imJ1,osed on such
qorporatlOns. 1ft. aaditlOlJ, In the Op)fpOn o( lJo7d COl!~l#l to t!te Town, under !!X'SIJ1Jg statutes, interest on the Bonds is exemp(from personal
mcome taxes oJ New York State and Its pontlca subdlVlSlOns, mcludmg The City oJ /'Vew York. See "Tax Matters" herein.
The Bonds will NOT be designated by the Town as "qualified tax-exempt obligations" pursuant to the provision of Section 265 ofthe
Code.
$14,650,000
TOWN OF SOUTHOLD
SUFFOLK COUNTY, NEW YORK
(the "Town")
PUBLIC IMPROVEMENT SERIAL BONDS - 2007
[BOOK-ENTRY-ONL Y BONDS)
Dated: April 15, 2007 Principal Dne: April 15, 2008-2030, inc1nsive
Interest Due: October 15,2007 and semi-annually thereafter
BOND MATURITY SCHEDULE
Amount Maturitv Rate Yield Amount Maturitv Rate Yield Amount Maturitv Rate Yield
$700,000 2008 4.00% 3.42% $625,000 2016 4.25% 3.82% $ 725,000 2024 4.25% 4.23%
725,000 2009 4-'/8 3.45 675,000 2017 4.25 3.87 725,000 2025 4.25 4.25
575,000 2010 4-'/8 3.50 675,000 2018 4.25 3.95 550,000 2026 4.25 4.26
575,000 2011 4.25 3.52 675,000 20\9 4.25 4.00 550,000 2027 4.25 4.28
600,000 2012 4.25 3.57 675,000 2020 4.25 4.05 550,000 2028 4.25 4.29
625,000 2013 4.25 3.62 675,000 2021 4.25 4.10 550,000 2029 4.25 4.30
625,000 2014 4.25 3.70 . 675,000 2022 4.25 4.\5 550,000 2030 4.25 4.3\
625,000 2015 4.25 3.77 725,000 2023 4.25 4.20
"The payment of the principal of and interest on the Bonds when due will be insured by a financial guaranty insurance
policy to be issued by Ambac Assurance Corporation simultaneously with the delivery of the Bonds.
Ambac
Security and Sources of Pqyment: The Bonds will constitute general obligations of the Town and will contain a pledge of
its faith and credit for the punctual payment of the principal of and inTerest on the Bonds, and all the taxable real property WIthin
the Town will be subject to the levy 01 ad valorem taxes, without limitation as to rate or amount, for such purpose.
Prior Redemption: The Bonds maturing on April 15, 2018 and thereafter are subiect to redemption, at the option of the
TownAprior to maturIty in whole or in part, on any date on or after April 15, 2017 in accordance with the tenns described herein.
See "uptional Redemption" under "The Bonds," herein.
Form and Denomination: The Bonds will be issued as registered bond~, and, when issued, will be registered in the name
of Cede & Co. as nominee of The Depository Trust Company ("DTC"), New I ork, New York, which will act as the Securities
Depository for the Bonds. Individual purchases of the Bonds may be made only in book-entry fonn in denominations of$5,000 or
inte~al multiples thereof. Bondholders will not receive certificates representing their ownership interest in the Bonds purchased.
See Book-Entry-Only System" under "The Bonds," herein.
Payment: Payment of the principal of and interest on the Bonds to the Beneficial Owners of the Bonds will be made by DTC
Participants and indIrect Participants in accordance with standing instructions and custom~ practices, as is now the case with
muniCIpal securities held for tlie accounts of customers in bearer fonn or registered in "street name." Payment will be the
responsibility of the DTC Particillant or Indirect Participant and not ofDTC or the Town, suhject to any statutory and regulatory
requirements as may be in effect from time to time. See "Book-Entry-Only System" under "The Bonds," herein.
Hawkins Delafield & W Qod LLP has not participated in the preparation of thi~ Official Statement, nor verified
the accuracy, completeness or fairness otthe intormation contained lierein, and, accordingly, expresses no opmion with
respect thereto,
The Bonds are offered subject to thefinal approvingop'inion of Hawkins Delafield & Wood LIP, New York, New York, Bond
Counsel, and certain other conditions. It is eXJ!ected that aelivery of the Bonds In book-entry form will be made through the
facilities ofDTC on or about April 19,2007 in New York, New York.
This revised cover, dated April I 0,2007, supplements the Official Statement ofthe Town dated March 27, 2007, relating
to the obligations described therein and herein inclUding certain infonnation omitted from such Official Statement in accordance
with SecUrIties and Exchange Commission Rule \5c2-\2l the "Rule"), and shall constitute the Town's final Official Statement within
the meaning of the Rule. other than as set forth on this revised cover page, the tab!e.of contents the.section entitled "Bond R~til).g"
and the addition of "Appendix C - The Bond Insurer"! there have been no other revIsIons to the OffiCIal Statement. For a descnptlon
of the Town's agreement to provide continuing disc osure as described in the Rule, see "Disclosure Undertaking" herein.
ROOSEVELT & CROSS, INC. AND ASSOCIATES
TOWN OF SOUTHOLD
SUFFOLK COUNTY, NEW YORK
Town Hall
53095 Main Road
Southold, NY 11971
Telephone: (631) 765-4333
Fax: (631) 765-1366
TOWN BOARD
Scott A. Russell, Supervisor
William P. Edwards
Louisa P. Evans
Albert J. Krupski, Jr.
Daniel C. Ross
Thomas H. Wickham
Elizabeth A. Neville, Town Clerk
Peter W. Harris, Superintendent of Highways
John A. Cushman II, Town Comptroller
Patricia A. Firmegan, Esq., Town Attorney
George Sullivan, Receiver of Taxes
. . .
BOND COUNSEL
Hawkins Delafield & Wood LLP
New York, New York
. . .
FINANCIAL ADVISOR
MUNISTAT SERVICES, INC.
Municipal Finance Advisory Service
12 Roosevelt Avenue
Port Jefferson Station, N.Y. 11776
(631) 331-8888
E-mail: info@munistat.com
Website: http://www.munistat.com
No dealer, broker, salesman or other person has been authorized by the Town to give any information or to make
any representations, other than those contained in this Official Statement and if given or made, such other information
or representations must not be relied upon as having been authorized by the Town. This Official Statement does not
constitute an offer to sell or the solicitation of an offer to buy, nor shall there be any sale ofthe Bonds by any person in
any jurisdiction in which it is unlawful for such person to make such offer, solicitation or sale. The information set forth
herein has been obtained by the Town from sources which are believed to be reliable but it is not guaranteed as to
accuracy or completeness. The information and expressions of opinion herein are subject to change WIthout notice and
neither the delivery of this Official Statement nor any sale made l1ereunder shall, under any circumstances, create any
implication that there has been no change in the affairs of the Town since the date hereof.
TABLE OF CONTENTS
Page
THE BONDS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. I
Description of the Bonds. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. I
Optional Redemption. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. I
Book-entry-only System .................................................................. I
~~~~~.................................................................3
Security and Source of Payment ............................................................ 3
RemedIes Upon Default. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. 3
THE TOWN ............................................................................... 4
General Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. 4
Government. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. 4
Employees .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. 5
ECONOMIC AND DEMOGRAPHIC INFORMATION. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. 5
Population Characteristics . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. 5
Median Income of Families . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. 5
Unemployment Rate Statistics . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. 6
Selected Listing of Larger Employers ........................................................ 6
INDEBTEDNESS OF THE TOWN ............................................................ 6
Constitutional Requirements ............................................................... 6
Statutory Procedure. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. 7
Computation of Debt Limit and Calculation of Net Debt Contracting Margin ......................... 8
Trend of Town Indebtedness. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. 8
Details of,Short- Te.rm Indebtedness Chitstanding ............................................... 9
Debt Service Requrrements - Outstandmg Bonas ............................................... 9
Calculation of Estimated Overlapping and Underlying Indebtedness ................................ 9
Authorized But Unissued Items . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. 10
Capital Program. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. 10
Landfill Closure and Postclosure Care Costs. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. 10
FINANCES OF THE TOWN ................................................................ II
Financial Statements and Accounting Procedures ..... . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. II
Fund Structure and Accounts ......................................................... II
Basis of Accounting ................................................................ 11
Investment Policy ....,............................,.................................... II
Budgetary Procedures ..,............................,................................... 12
FinancialOperations .................................................................... 12
Revenues. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . - . . . . . . .' 12
Real Property Taxes ................................................................ 12
~M.........................................................................U
Expenditures .......................................................................... 13
Pension Systems ....................................................................... 13
ContributIOns to the Retirement Systems ..................................................... 13
Other Post Employment Benefits. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. 14
REAL PROPERTY TAX INFORMATION .................................................... 14
Real Property Taxes. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. 14
Tax Levy and Collection Record . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. IS
Tax Collection Procedure ................................................................ 15
Tax Rates. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. 15
Large Taxable Properties. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. IS
LITIGATION. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. 16
BONDHOLDER RISKS AND MARKET FACTORS AFFECTING FINANCINGS
OF THE STATE AND MUNICIPALITIES OF THE STATE ...................................... 16
TABLE OF CONTENTS
(Continued)
Page
TAX MATTERS........................................................................... 17
Opinion of Bond Counsel ................................................................ 17
Certain Ongoing Federal Tax Requirements and Covenants. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. 17
Certain Collateral Federal Tax Consequences . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. 17
Original Issue Discount.................................................................. 17
Bond Premium ......................................................................... 18
Backup Withholding .................................................................... 18
Legislation............................................................................ 18
DOCUMENTS ACCOMPANYING DELIVERY OF THE BONDS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . " 18
Absence of Litigation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. 18
Legal Matters.......................................................................... 19
Closing Certificates ..................................................................... 19
DISCLOSURE UNDERTAKING............................................................. 19
BOND RATING. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. 20
FINANCIAL ADVISOR .................................................................... 20
ADDITIONAL INFORMATION. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. 20
APPENDIX A:
APPENDIX B:
APPENDIX C:
Financial Information
Audited Financial Statements For the Fiscal Year Ended December 31, 2005
Insurance on the Bonds
II
OFFICIAL STATEMENT
$14,650,000
TOWN OF SOUTHOLD
SUFFOLK COUNTY, NEW YORK
PUBLIC IMPROVEMENT SERIAL BONDS - 2007
[BOOK-ENTRY-ONLY BONDS]
This Official Statement presents certain information relatin~ to the Town of Southold, in the County of
Suffolk, in the State of New York (the "Town," "County" and "State,' respectively) in connection with the safe of
$14,650,000 Public Improvement Serial Bonds - 2007 (the "Bonds").
All quotations from and summaries and explanations of provisions of the Constitution and laws of the State
and acts and proceedings of the Town contained herein do not purport to be complete and are qualified in their
entirety by reference to the official compilations thereof and all references to the Bonds and the proceedings of the
Town relating thereto are qualified in their entirety by reference to the definitive form of the Bonds and such
proceedings.
THE BONDS
Description ofthe Bonds
The Bonds will be dated April 15, 2007 and will mature on April 15, in each of the years 2008 to 2030,
inclusive, in the principal amounts as set forth on the cover page hereof.
The Bonds will be issued in fully registered form and when issued will be registered in the name of Cede &
Co. as nominee of The Depository Trust Company ("DTC"), New York, New York. DTC will act as Securities
Depository for the Bonds. Individual purchases of the Bonds may be made in book-entry form only, in denominations
of $5,000 or integral multiples thereof. Purchasers will not receive certificates representing their interest in the
Bonds.
Interest on the Bonds will be I?ayable October 15,2007, and semi-annually thereafter on April 15 and October
15, in each year until maturity. PrinCipal and interest will be paid by the Town to DTC, which will in turn remit such
principal and interest to its Participants, for subsequent distribution to the Beneficial Owners of the Bonds, as
described herein. The Bonds may be transferred in the manner described on the Bonds and as referenced in certain
proceedings of the Town referred to therein.
The Record Date of the Bonds will be the last business day of the month preceding each interest payment
date.
Optional Redemption
The Bonds maturing on or before April 15, 2017 will not be subject to redemption prior to maturity. The
Bonds maturing on or after April 15,2018 will be subjectto redemption prior to maturity, at the option of the Town,
on April 15,2017 and thereafter on any date, in whole or in part, and ifm part, in any order of their maturity and in
any am~unt within a maturity (selected by lot within a maturity), at par, plus accrued interest to the date of
redemptiOn.
The Bonds shall be redeemable prior to maturity upon the giving of notice which identifies the Bonds to be
redeemed, by mailing such notice to the registered holders thereof at their respective addresses as shown upon the
registration books of the Fiscal Agent at least 30 days prior to the date set for any such redemption. If notice of
redemption shall have been given as aforesaid, the Bonds so called for redemption shall become due and payable at
the applicable redemption price on the redemption date designated in such notice, and interest on such Bonds shall
cease to accrue from and after such redemption date.
Book-entry-only System
DTC will act as securities depository for the Bonds (the "Bonds"). The Bonds will be issued as fully-
registered Bonds registered in the name of Cede & Co. (DTC's partnership nominee) or such other name as may be
requested by an authorized representative of DTC. One fully-registered Bond certificate will be issued for each
maturity of the Bonds, each in the aggregate principal amount of such maturity, and will be deposited with DTC.
I
DTC, the world's largest depository, is a limited-purpose trust company organized under the New York
Banking Law, a "banking organization" within the meaning of the New York Banking Law, a member of the Federal
Reserve System, a "clearing corporation" within the meaning of the New York Umform Commercial Code, and a
"clearing agency" registered pursuant to the provisions of Section 17 A ofthe Securities Exchange Act of 1934. DTC
holds and prOVides asset servicing for over 2 million issues of U.S. and non-U.S. equi!r issues, corporate and
municipal debt issues, and money market instruments from over 85 countries that DTC s partici{lants ("Direct
Participants") deposit with DTC. DTC also facilitates the post-trade settlement among Direct Participants of sales
and other securities transactions in deposited securities, through electronic computerized book-entry transfers and
pledges between Direct Participants' accounts. This eliminates the need for physical movement of securities
certificates. Direct Participants include both U.S. and non-U.s. securities brokers and dealers, banks, trust companies,
clearing corporations, and certain other organizations. DTC is a wholly-owned subsidiary of The Depository Trust
& Clearing Corporation ("DTCC"). DTCC, in turn, is owned by a number of Direct Participants of DTC and
Members of the National Securities Clearing Corporation, Government Securities Clearing Corporation, MBS
Clearing Corporation, and Emerging Markets Clearing Corporation, (NSCC, GSCC, MBSCC, and EMCC, also
subsidiaries ofDTCC), as well as by the New York Stock Exchange, Inc., the American Stock Exchange LLC, and
the National Association of Securities Dealers, Inc. Access to the DTC system is also available to others such as both
U.S. and non-U.S. securities brokers and dealers, banks, trust companies, and clearing corporations that clearthrou~
or maintain a custodial relationship with a Direct Participant, either directly or indirectly ("Indirect Participants' ).
DTC has Standard & Poor's highest rating: AAA. The DTC Rules applicable to its Participants are on file with the
Securities and Exchange Commission. More information about DTC can be found at www.dtcc.com.
Purchases of Bonds under the DTC system must be made by or through Direct Participants, which will
receive a credit for the Bonds on DTC's records. The ownership interest of each actual purchaser of each Bond
("Beneficial Owner")is in turn to be recorded on the Direct and Indirect Participants' records. Beneficial Owners will
not receive written confirmation from DTC of their purchase. Beneficial Owners are, however, expected to receive
written confirmations providing details of the transaction, as well as periodic statements of their holdings, from the
Direct or Indirect Participant through which the Beneficial Owner entered into the transaction. Transfers of ownership
interests in the Bonds are to be accomplished by entries made on the books of Direct and Indirect Participants acting
on behalf of Beneficial Owners. Beneficial Owners will not receive certificates representing their ownership interests
in Bonds, except in the event that use of the book-entry system for the Bonds is discontinued.
To facilitate subseguent transfers, all Bonds deposited by Direct Participants with DTC are registered in the
name of DTC's partnership nominee, Cede & Co., or such other name as may be requested by an authorized
representative of DTC. The deposit of Bonds with DTC and their registration in the name of Cede & Co. or such
other DTC nominee do not effect any change in beneficial ownership. DTC has no knowledge ofthe actual Beneficial
Owners of the Bonds; DTC's records reflect only the identity of the Direct Participants to whose accounts such Bonds
are credited, which mayor may not be the Beneficial Owners. The Direct and Indirect Participants will remain
responsible for keeping account of their holdings on behalf of their customers.
Conveyance of notices and other communications by DTC to Direct Participants, by Direct Participants to
Indirect PartiCipants, and by Direct Participants and Indirect Participants to BenefiCial Owners will be governed by
arrangements among them, subject to any statutory or regulatory requirements as may be in effect from time to time.
Redemption notices shall be sent to DTC. If less than all of the Bonds within an issue are being redeemed,
DTC's practice is to determine by lot the amount of the interest of each Direct Participant in such issue to be
redeemed.
Payments on the Bonds will be made to Cede & Co., or such other nominee as may be requested by an
authorized representative ofDTC. DTC's practice is to credit Direct Participants' accounts upon DTC's receipt of
funds and corresponding detail information from the Town, on the payable date in accordance with their respective
holdings shown on DTC's records. Payments by Participants to Beneficial Owners will be governed by standing
instructions and customarr, practices, as is the case with flonds held for the accounts of customers in bearer form or
registered in "street name, , and will be the responsibility of such Participant and not ofDTC nor its nominee, or the
Town, subject to any statutory or regulatory requirements as may be in effect from time to time. Payments to Cede
& Co. (or such other nominee as may be requested by an authOrized representative ofDTC) is the responsibility of
the Town, disbursement of such {layments to Direct Participants will be the responsibiliry ofDTC, and disbursement
of such payments to the BenefiCial Owners will be the responsibility of Direct and IndIrect Participants.
DTC may discontinue providing its services as depository with respect to the Bonds at any time by giving
reasonable notice to the Town. Under such circumstances, in the event that a successor depository is not obtained,
Bond certificates are required to be printed and delivered.
The Town may decide to discontinue use of the sy'stem of book-entry transfers through DTC (or a successor
securities depository). In that event, Bond certificates will be printed and delivered.
The information in this section concerning DTC and DTC's book-en!!)' system has been obtained from
sources that the Town believes to be reliable, but the Town takes no responsibihty for the accuracy thereof.
2
-
THE TOWN WILL NOT HAVE ANY RESPONSIBILITY OR OBUGA TION TO PARTICIPANTS, TO
INDIRECT PARTICIPANTS OR TO ANY BENEFICIAL OWNER WITH RESPECT TO (1) THE ACCURACY
OF ANY RECORDS MAINTAINED BY DTC, ANY PARTICIPANT, OR ANY INDIRECt PARTICIPANT; (II)
THE PAYMENTS BYDTC OR ANY PARTICIPANT OR INDIRECT PARTICIPANT OF ANY AMOUNT WItH
RESPECT TO THE PRINCIPAL OF, OR PREMIUM, IF ANY, OR INTEREST ON THE BONDS; (III) ANY
NOTICE WHICH IS PERMITTED OR REQUIRED TO BE GNEN TO BONDHOLDERS; (N) THE SELECTION
BY DTC OR ANY PARTICIPANT OR INDIRECT PARTICIPANT OF ANY PERSON TO RECENE PAYMENT
IN THE EVENT OF A PARTIAL REDEMPTION OF THE BONDS; OR (V) ANY CONSENTGNEN OR OTHER
ACTION TAKEN BY DTC AS BONDOWNER.
Source: The Depository Trust Company
Authorization and Purpose
The Bonds are being issued pursuant to the Constitution and statutes of the State of New York, including
among others, the Town Law and the Local Finance Law, and various bond resolutions duly adopted by the Town
Board on their respective dates, authorizing the issuance of serial bonds for various capital projects of the Town.
Such projects, and their respective amounts of Bonds to be issued for each, are as follows:
Date of
Voter
Aooroval
Date
Authorized
08-26-03
08-28-01
08-23-99
09-01-98
03-13-01 &
11-19-02
09-07-04
11-16-04
02-27-07
02-27-07
11-04-03
11-06-01
11-02-99
11-03-98
N.A.
N.A.
N.A.
N.A.
N.A.
Amount to
Puroose
Open Space Preservation
Open Space Preservation
Open Space Preservation
Open Space Preservation
...........................
............. ... ...........
...........................
...........................
be Issued
$ 4,000,000
2,000,000
2,000,000
1,987,900
1,200,000
315,000
3,000,000
95,000
52.100
~ 14.650.000
A portion of the proceeds of the Bonds, together with available funds in the amount of$I,895,000, will be
used to redeem outstanding bond anticipation notes in the amount of$6,410,000; the balance of the proceeds of the
Bonds will provide original funds for the above referenced projects.
For further information regarding bond authorizations of the Town for capital purposes and other matters
relating thereto see "Indebtedness of the Town".
Security and Source of Payment
Each Bond when duly issued and paid for will constitute a contract between the Town and the holder thereof.
The Bonds will be general obligations of the Town and will contain a pledge ofthe faith and credit of the
Town for the payment of the principal thereof and the interest thereon. For the payment of such principal and
interest, the Town has the power and statutory authorization to levy ad valorem taxes on all taxable real property in
the Town without limitation as to rate or amount.
Under the Constitution of the State, the Town is reCJ!!ired to pledge its faith and credit for the payment of the
principal of and interest on the Bonds, and the State is speCifically precluded from restricting the power of the Town
to levy taxes on real estate therefor.
Solid Waste Management District - Land Acquisition ....
Payment of Settled Claim ..........................
Solid Waste Management District - Transfer Station .....
Acquisition of Excavator ................ . . . . . . . . . . .
Acquisition of Tractor-Mower .., .. .. . . .. . . . . . .. .. . . .
Total .................................
Remedies Upon Default
Under current law, provision is made for contract creditors (including the Bondholders) of the Town to
enforce payments upon such contracts, if necessary, through court action, although the present statute limits interest
on the amount adjudged due to creditors to nine per centum per annum from the date due to the date of payment. As
!l gen~ral rule,. property and fU!lds of a municipal corpo.ration .serving the public w~lf~~ and interest have no~ been
JudiCially subjected to execution or attachment to satisfy a judgment, although JudiCial mandates to offiCials to
appropriate and pay judgments out of current funds or the proceeds of a tax levy have been issued.
3
Remedies for enforcement of payment are not expressly included in the Town's contract with holders of its
bonds and notes, although any permanent repeal by statute or constitUtional amendment of a Bondholder's remedial
rightto judicial enforcement of the contract should, in the opinion of Bond Counsel, be held unconstitutional.
The State has consented that any municipality in the State roay file a petition with any United States district
court or court of bankruptcy under any !?"ovision of the laws of the United States, now or hereafter in effect for the
composition or adjustment of municipal mdebtedness. Subjectto such consent, underthe United States Constitution,
Congress has jurisdiction over such matters and has enacted amendments to the existing federal bankruptcy statute,
generally to the effect and with the purpose of affording municipal corporations, under certain circumstances, with
easier access to judicially approved adjustment of debts, mcludingjudicial control over identifiable and unidentifiable
creditors.
In recent times, certain events and legislation affecting remedies on default have resulted in litigation. While
courts of final jurisdiction have upheld and sustained the rights of bondholders, such courts might hold that future
events including financial crises as they may occur in the State and in municipalities of the State require the exercise
by the State of Its emergency police powers to assure the continuation of essential services.
No principal or interest payments on Town indebtedness are past due. The Town has never defaulted in the
payment of the pnncipal of and interest on any indebtedness.
THE TOWN
There follows in this Statement a brief description of the Town, together with certain infonnation concerning
its economy and governmental organization, its indebtedness, current ml\jor revenue sources and expenditures and
general and specific funds.
General Information
The Town, with a land area of54.5 square miles, is located in eastern Suffolk County on the north fork of
LongIsland. Settlementtook place in 1640. The Village of Green port is located wholly within the Town. The Town
also mcludes the area of Fishers Island which is located approximately twelve miles east of the mainland. Fishers
Island is accessible only by water or air with ferry service operating between the Island and New London,
Connecticut.
. .. The Town is primarily amral resort area with substantial shopping facilities availableutGreenport, at various
· shopping centers within.the Town; andat Riverhead just tathe west. Some commercialsel'VIDesare available within
the Town in the hamlets of Southold, Cutchogue and Mattituck.
Agriculture has been a majorindustry in the Town since its origins. In recent years, farm crops are gradually
evolving from basic production to nurse~ crops including shrubs, sod, potted plants and other ornamentals. A
substanttal portion orthese products are shipped by ferry across Long Island Sound for distribution throughout New
England. A number of vineyards have been estabhshed and wine-making is an important industry. Fishing and fish
processing are now growing industries due to improved transportation facilities. The Town is also a major summer
resort area, utilizing bays, !DIets and Long Island and Block Island Sounds.
The main highways in the Town are New York State Route 25 and North Road. Rail transportation is
provided by the Long Island Rail Road with stations at Mattituck, Southold and Greenport. Ferry service is also
available between Onent Point, east of Green port, and New London, Connecticut as well as from Greenport to Shelter
Island.
Electric service is provided by the Long Island Power Authority; gas service is provided by Keyspan Energy
Corporation. Fire protection is the responsibihty of volunteer fire and fire protection districts. The Town provides
its own police protection. In the Village of Green port, electric service and fire protection are provided by the Village.
Government
Six independently governed school districts are located wholly orrartially within the Town, which rely on
their own taxing powers granted by the State to raise revenues. The schoo districts use the Town's assessment roll
as their basis for taxation of property located within the Town.
Subjecttothe provisions of the State Constitution, the Town operates pursuantto the Town Law, the General
Municipal Law, the Local Finance Law, other laws generally applicable to the Town, and any special laws generally
applicable to the Town. Under such la",;,s, there is no authority for the Town to ~ave a ~harter, but pursuant to !he
Town Law and other laws generally apphcable to home rule, the Town may from time to time adopt local laws which
do not conflict with existing laws as enacted by the State.
4
The legislative power of the Town is vested in the Town Board which consists oftive members, elected for
a term of four years, ano the Supervisor, who is the chief executive officer of the Town, elected for a term of two
years; effective with the term commencing January 1,2008, the term of office of the Supervisor will be four years.
Such terms are staggered such that two or three councilmen are elected every two years. All the Town Board
members are elected at large and there is no limitation to the number of terms each may serve.
Employees
The Town provides services through approximately 217 full-time and 59 part-time employees, some ofwhom
are represented by organized labor.
The following table presents the number of employees' represented by organized labor, name of union and
contract expiration dates.
Name of Union
Civil Service Employees Assoc. .......................
Police Benevolent Assoc. ... . . . . . . . . . . . . . . . . . . . . . . . .
Approximate
Membershio
Date Contract
Exoires
163
48
12-31-07
12-31-09
ECONOMIC AND DEMOGRAPHIC INFORMATION
Population Characteristics
The Town has had a population trend, as compared to the County and the State, as indicated below:
Year
Town of
Southold
1970 .....................................
1980 .....................................
I~O .....................................
2000 .....................................
2005 .....................................
16,804
19,172
19,836
20,599
23,344
Source: U.S. Bureau of the Census, Long Island Power Authority.
Median Income of Families
Town
County
State
1980
$21,013
24,194
20,180
Source: U.S. Department of Commerce, Bureau of the Census.
1990
$43,082
53,247
39,741
Suffolk
County
1,127,030
1,284,231
1,321,977
1,419,369
1,483,396
New York
State
18,241,391
17,557,288
17,990,455
18,976,457
19,254,630
2000
$61,108
72,112
51,691
Per Caoita Monev Income
1990 2000
Town
County
State
1980
$8,258
7,576
7,496
$19,037
18,481
16,501
Source: U.S. Department ofConunerce, Bureau of the Census.
5
$ 27,619
26,577
23,389
Unemployment Rate Statistics
Unemployment statistics are not available for the Town as such. The smallest area for which such statistics
are available (wliich includes the Town) is the County of Suffolk. The information set forth below with respect to
such County is included for information purposes only. It should not be implied from the inclusion of such (lata in
this Statement that the Town is necessarily representative of the County or vice versa.
Annual Averages:
2002
2003
2004
2005
2006
Source: Department of Labor, State of New York
Suffolk
County
New York
State
4.3%
4.3
4.5
4.2
3.9
5.9%
6.2
5.9
5.0
4.5
Selected Listing of Larger Employers
Name
East~rn Long Island Hospital . . . . . . . . . . . . . . . . . . . . . . .
Mattttuck-Cutchogue UFSD .......................
Plum Island ADC . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Town of South old ...............................
Southold UFSD .................................
San Simeon by the Sound .........................
Peconic Landmg . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Greenport UFSD ................................
~
Hospital
Public School
U.S. Govt. Facility
Local Government
Public School
Nursing Home
Life Care Community
Public School
Approx. No.
of Emolovees
376
330
290
276
194
165
160
137
INDEBTEDNESS OF THE TOWN
Constitutional Requirements
The New York State Constitution limits the power of the Town (and othermunicil?alities and school districts
of the State) to issue obligations and to contract indebtedness. Such constitutional limitatIOns include the following,
in summary form, as generally applicable to the Town and the Bonds:
. Purpose and Pledge. The Town. shall n?t give or loan any. mone):' or 'p'roperty to or in aid ot any individual,
or prIvat~ corporatIOn or prIvate undertakmg or give or loan Its creditto or maid of any of the foregomg or any public
corporatIOn.
The Town may contract indebtedness only for a Town purpose and shall pledge its faith and credit for the
payment of principal of and interest thereon.
Payment and Maturity. Except for certain short-term indebtedness contracted in anticipation of taxes or
to be paid within three fiscal year periods, indebtedness shall be paid in annual installments commencing no later than
two years after the date such indebtedness shall have been contracted and ending no later than the expiration of the
period of probable usefulness of the object or purpose determined by statute; no installment may be more than fifty
per centum in excess of the smallest pnor installment, unless the Town has authorized the issuance of indebtedness
having substantially level or declining armual debt service. The Town is required to provide an annual appropriation
for the payment of interest due during the year on its indebtedness and for the amounts required in such year for
payment of principal on its serial bonds, bond anticipation notes and capital notes.
Debt Limit. The Town has the power to contract indebtedness for any Town purpose so long as the principal
amount thereof shall not exceed seven per centum of the average full valuation of taxable real estate of the Town and
subject to certain enumerated exclUSIOns and deductions such as water and certain sewer facilities and cash or
appropriations for current debt service. The Constitutional method for determining full valuation consists of dividing
the total assessed valuation of taxable real estate for a specified assessment roll by the fmal equalization ratio
established for such assessment roll by the State Board of Real Property Services (the "State Board"). The State
Legislature is required to prescribe the marmer by which such ratio shan be determmed. Average fun valuation is
determined by taking the sum of the full valuations of such last completed assessment roll and the four preceding
assessment rolls and dividing such sum by five.
6
-~---~.,....",--
There is no constitutional limitation on the amount that may be raised by the Town by tax on real estate in
any fiscal year to pay interest and principal on all indebtedness.
General. The Town is further subject to constitutional limitation by the general constitutionally imposed
duty of the State Legislature to restrictthe power of taxation, assessment, borrowing money, contracting indebtedness
and loaning the credit of the Town so as to prevent abuses in taxation and assessments and 10 contracting
indebtedness; however, as has been noted under "Security and Source of Payment" the State Legislature is prohibited
by a specific constitutional provision from restricting the power of the Town to levy taxes on real estate for the
payment of interest on or pr10cipal of indebtedness theretofore contracted.
Statutory Procedure
In general, the State Legislature has authorized the !,ower and procedure for the Town to borrow and incur
indebtedness by the enactment of the Local Finance Law subject, of course, to the constitutional provisions set forth
above. The power to spend money, however, generally derives from other law, including the Town Law and General
Municipal Law of the State.
Pursuantto the Local Finance Law, the Town authorizes the incurrence ofindebtedness, including bonds and
bond anticipation notes issued in anticipation of such bonds, by the adoption of a resolution, approved by at least two-
thirds of the members of the Town Board, the finance board of the Town. Certain of such resolutions may be subject
to permissive referendum, or may be submitted to the Town voters at the discretion of the Town Board; 10 this latter
scenario, only a three-fifths vote of the Town Board is required.
The Local Finance Law also provides a twenty-day statute of limitations after publication of a bond
resolution, which in effect, estops thereafter legal challenges to the validity of obligations authorized by such bond
resolution except for alleged constitutional violations. The Town has complied with such procedure with respect to
the Bonds.
Each bond resolution usually authorizes the construction, acquisition or installation of the object or purpose
to be financed, sets forth the plan of financing and s!,ecifies the maximum maturity of the bonds subject to the legal
(Constitution, Local Finance Law and case law) restrictions relating to the period of probable usefulness with respect
thereto.
Each bond resolution also authorizes the issuance of bond anticipation notes prior to the sale of serial bonds.
Statutory law in New York permits notes to be renewed each year, provided annual principal reductions are made
and provided that such renewals generally do not extend five years beyond the original date of borrowing. However,
notes issued in anticipation of the sale of serial bonds for assessable Improvements are not subject to such five year
limit and may be renewed subject to annual principal reductions for the entire period of probable usefulness of the
purpose for which such notes were originally Issued. (See "Payment an(J Maturity" under "Constitutional
Requirements," and "Details of Short-Term Indebtedness Outstanding. ")
In general, the Local Finance Law contains similar provisions providing the Town with power to issue
general obhgation revenue and tax anticipation notes and general obligatIOn budget and capital notes.
The following tables set forth the computation of debt limit and the calculation oftotal net indebtedness
ofthe Town in accordance with the constitutional requirements hereinabove described.
The following pages set forth certain details with respect to the indebtedness of the Town.
7
Computation of Debt Limit and Calculation of Net Debt Contracting Margin
(As of March 27, 2007)
Fiscal Year
Ending
December 31 :
Assessed
Valuation
State
Equalization
Rate
2003
2004
2005
2006
2007
$ 98,928,528
101,872,561
104,228,885
105,502,965
106,950,027
1.71%
1.49
1.25
1.13
1.04
Total Five Year Full Valuation ................................................
Average Five Year Full Valuation .............................................
Debt Limit - 7% of Average Full Valuation ......................................
Inclusions:
OU~:~~~;i;~s .....................................................
Other . . . .. . . .. . .. .. . . . . .. . .. . .. . . .. .. . . . . .. . .. . .. . .. .. . .. . .. .. ..
Sub-Total
...........................................................
Bond Anticipation Notes ....................................................
Total Inclusions ........................................................
Exclusions:
Cash on !:l~d for Debt (Grant Proceeds) .....................................
AppropnatIons .........................................................
Total Exclusions ........................................................
Total Net Indebtedness Before Issuing the Bonds .................................
The Bonds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Less: BANs to be paid from bond proceeds ......................................
Net Effect ofIssuing Bonds ..................................................
Total Net Indebtedness After Issuing the Bonds ..................................
Net Debt Contracting Margin After Issuing the Bonds .............................
Percent of Debt Limit Exhausted. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Full
Valuation
$ 5,785,294,035
6,837,084,630
8,338,310,800
9,336,545,575
10.283.656.442
$40,580,891,482
8,116,178,296
568,132,480
$10,775,000
-0-
10.775.000
8.244.000
19.019.000
1,504,689
1.003.311
$ 2.508.000
15.511.000
14,650,000
4.515.000
10.135.000
25.646.000
$542.486.480
4.51%
Trend of Town Indebtedness
The following table represents the outstanding indebtedness ofthe Town at the end of the last five preceding
fiscal years.
Fiscal Year Ending December 31 :
2002 2003 2004 2005 2006
Debt Outstanding End of Year: $7,615,000 $6,950,000 $6,515,000
Bonds .................. $12,299,098 $ 11,349,098
Bond Anticipation Notes ... 11.020.709 14.768.302 12.625.600 11.720.000 8.244.000
Total Outstanding Debt ........ $18.635.709 $21.718.302 $19.140.600 $24.019.098 $19.593.098
8
Details of Short- Tenn Indebtedness Outstanding
Bond Anticioation Notes
Maturity Puroose
Amount
04-20-07
06-08-07
08-24-07
09-07-07
Various Purposes ..........................................
Fishers Island Ferry District. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Fishers Island Refuse and Garbage District . . . . . . . . . . . . . . . .
Various Purposes ..........................................
$6,619,000'
1,625,000
560,000
1.110.000
Total ................................................ $ 8.244.000
a. To be funded from the proceeds of the Bonds and from available funds of the Town.
Debt Service Requirements - Outstanding Bonds
Fiscal Year
Endin~
Decem er 31: Princioal Interest Total
2007 ....................... $ 979,098 $376,468 $1,355,566
2008 . . . . . . . . . . . . . . . . . . . . . . . 995,000 345,309 1,340,309
2009 ....................... 1,025,000 312,348 1,337,348
2010 ....................... 1,000,000 277,957 1,277,957
2011 ....................... 1,025,000 242,982 1,267,982
2012 ....................... 940,000 209,413 1,149,413
2013 ....................... 800,000 180,382 980,3 82
2014 . . . . . . . . . . . . . . . . . . . . . . . 815,000 153,083 968,083
2015 ....................... 810,000 124,535 934,535
2016 ....................... 735,000 98,164 833,164
2017 ....................... 745,000 72,318 817,318
2018 . . . . . . . . . . . . . . . . . . . . . . . 760,000 45,712 805,712
2019 ....................... 320,000 26,020 346,020
2020 ....................... 200,000 15,600 215,600
2021 . . . . . . . . . . . . . . . . . . . . . . . 200.000 8.000 208.000
Totals ................... $11.349.098 $2.488.291 $13.837.389
a Does not included refunded bonds.
Calculation of Estimated Overlapping and Underlying Indebtedness
A'tclicable A']&licable
Overlapping Date of Percenta~e otal et
Units' Reoort Aoolicab e Indebtedness Indebtedness
County of Suffolk ..................... 12-11-06 3.71% $36,425,459 $30,380,486
V illage of Greenport ................... 03-10-06 100.00 13,583,997 12,564,797
School Districts:
Fishers Island ............. 06-30-06 100.00 455,000 455,000
Greenport ................. 06-30-06 100.00 270,000 270,000
Mattituck-Cutchogue ....... 06-30-06 98.49 29,113,644 25,328,870
New Suffolk Common ...... 06-30-06 100.00 - -
OysrerPonds .............. 06-30-06 100.00 150,000 150,000
Soutbold ................. 06-30-06 100.00 10,795,000 10,795,000
Fire Districts:
Cutchogue. . . . . . . . . . . . . . . . . 12-31-05 100.00
East Marion ............... 12-31-03 100.00 410,683 410,683
Fishers Island .............. 12-31-05 100.00
Mattituck ................. 12-31-05 100.00
Orient................... . 12-31-05 100.00 25,000 25,000
Southold .................. 12-31-05 100.00 1.600.000 1.600.000
$ 97.693.283 $ 86.204.151
a. Does not include refunded bonds.
Sources: Annual Financial Reports on file with the Office of the State Comptroller, or more recently published Official
Statements.
9
Authorized But U uissued Items
The following Bonds are authorized but unissued:
Date
Authorized
Puroose
09-01-98
08-23-99
08-28-0 I
02-25-03
08-26-03
08-16-05
11-21-06
02-27-07
02-27-07
02-27-07
02-27-07
Acquisition of Rights in Land-Open Space Preservation. . . . . . . . . . . . . . .
Acquisition of Rights in Land-Open Space Preservation ..............
Acquisition of Rights in Land-Open Space Preservation ..............
Mattituck Inlet Shore Erosion Study ..............................
Acquisition of Rights in Land-Open Space Preservation. . . . . . . . . . . . . . .
Construction of New Town Animal Shelter. . . . . . . . . . . . . . . . . . . . . . . . .
Improvements to Peconic Recreation Center . . . . . . . . . . . . . . . . . . . . . . . .
Acquisition of Air Vacuum Drain Cleaner .........................
Acquisition of Rights in Land-Open Space Preservation. . . . . . . . . . . . . . .
Acquisition of Excavator .......................................
Acquisition of Tractor-Mower . .. . ... . .. .. . .. .... .. .. .. . . .. .. .. . .
Total
a. To be funded in whole or in part from the proceeds of the Bonds.
Amount
$ 2,000,000.
2,000,000.
2,000,000.
82,750
4,000,000.
2,600,000
200,000
278,000
22,500,000
100,00.
60.000.
$35.820.750
Capital Program
The Town annually adopts a Capital Budget. Projects may be funded by State and Federal aid, reserves,
proceeds of obligations, property taxes or a combination thereof. A summary of the Capital Budget for 2007 is set
forth below:
Deoartment
General Town . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Highway Dept ....................................
Solid Waste District ...............................
Wastewater Disposal District .......................
Total.......................................... .
Sources
Appropriations ...................................
Grants . .. . .. . .. .. . .. . . .. . .. . . .. . . .. . .. .. .. . ..
Town Debt . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total
2007
$3,327,428
788,000
465,000
$ 4.580.428
$ 313,261
684, I 67
3.583.000
$ 4.580.428
Landfill Closure and Postclosure Care Costs
The Town owns a landfill on a site in the unincorporated area of Cutchogue, commonly known as the
Cutchogue Landfill. The Town ceased accepting waste at its Cutchogue Landfill as of October 8, 1993. Placement
of the final cover, referred to as car.ping, on the landfill was completed in November 2003. In addition to placement
of the final cover on the landfil , state and federal regulations presently require the Town to perform certain
maintenance and monitoring functions at the site for up to thirty years. The Town has and will continue to comply
with said requirements. The ongoing post closure costs are esttmated to be between $20,000 and $25,000 per year
from 2007 t1irough 2009. The Town paid $23,920 for such costs in 2006 and will continue to pay these costs in the
future.
Actual costs associated with the capping totaled $7,681,720. Financing for closure activities has been
provided in part through a grant from the New York State Department of Environmental Conservation in the amount
of$2,000,000. The balance was provided through a State subsidized loan received in July, 2004 from the New York
State Environmental Facilities Corporation. Costs associated with postclosure care will be covered by charges to
future users of the collection facility and site and future tax revenue.
10
.~--"'----"'-
FINANCES OF THE TOWN
Financial Statements and Accounting Procedures
The Town maintains its financial records in accordance with the Uniform System of Accounts fOf Towns
prescribed by the State Comptroller. The financial records of the Town are audited by mdependent accountants. The
last such audit made availafile for public inspection covers the fiscal year ended December 31, 2005. In addition,
the financial affairs of the Town are subject to periodic compliance review by the Office of the State Comptroller
to ascertain whether the Town has complied with the requirements of various State and Federal statutes.
In June, 1999, the Governmental Accounting Standards Board ("GASB") issued Statement 34, "Basic
Financial Statements and Management's Discussions and Analysis for State and Local Governments". This
Statement established new finanCIal reporting requirements for state and local governments throughout the United
States. It will required new information and restructuring of much of the information that governments have
presented in the past. Comparability with reports issued in all prior years will be affected. GASB required the Town
to in:'plement thIS standard for the fiscal year ending December 31, 2003 and the Town has complied with such
reqUIrements.
Fund Structure and Accounts
The Town utilizes fund accounting to record and report its various service activities. A fund represents both
a legal and an accounting entity which segregates the transactions of specific programs in accordance with special
regulations, restrictions or limItations.
There are three basic fund types: (I) governmental funds that are used to account for basic services and
capital projects; (2) proprietary funds that account for operations of a commercial nature; and, (3) fiduciary funds
that account for assets held in a trustee capacity. Account groups, which do not represent funds, are used to record
fixed assets and long-term obligations that are not accounted for in a specific fund.
The Town presently maintains the following governmental funds: General Fund, Highway Fund and Special
Districts Funds, and the Capital Projects Fund. Fiduciary funds consist of a Trust and Agency Fund. There are no
proprietary funds. Account groups are maintained for fixed assets and long-term debt.
Basis of Accounting
The Town's governmental funds are accounted for on a modified accrual basis of accounting. Under the
modified accrual baSIS, revenues are recognized when they become susceptible to accrual- that is, when they become
"measurable" and "available" to finance expenditures to the current period. Revenues are susceptible to accrual
include real property taxes, intergovernmental revenues (State and Federal aid) and operating transfers.
Expenditures are generally recognized under the modified accrual basis of accounting, that is when the
related fund liability is incurred. An exception to this general rule is unmatured interest on general long-term debt
which is recognized when due.
Investment Policy
Pursuant to State law, including Sections 10 and II of the General Municipal Law (the "GML "), the Town
is generally permitted to deposit moneys in banks or trust companies located and authorized to do business in the
State. All such deposits, including special time deposit accounts and certificates of deposit, in excess of the amount
insured under the Federal DepositInsurance Act, are required to be secured in accordance with the provisions of and
subject to the limitations of Section 10 of the GML.
The Town may also temporarily invest moneys in: (I) obligations of the United States of America; (2)
obligations guaranteed by agencies ofthe United States of America where the payment of principal and interest are
guaranteed by the United States of America; (3) obligations of the State of New York; (4) with the approval of the
New York State Comptroller, in tax anticipation notes or revenue anticipation notes issued by any municipality,
school district, or district corporation, other than those notes issued by the Town, itself; (5) certificates of
participation issued in connection with installment purchase agreements entered into by political subdivisions ofthe
State pursuantto Section I 09-b(lO) of the GML; (6) obligations of a New York public benefit corporation which are
made lawful investments for municipalities pursuant to the enabling statute of such public benefit corporation; or (7)
in the case of moneys held in certaID reserve funds established by the Town pursuant to law, in obligations of the
Town.
All of the foregoing investments are required to be payable or redeemable at the option of the owner within
such times as the proceeds will be needed to meet expenditures for purposes for which t1ie moneys were provided
and, in the case of obligations purc~a~ed with the proceeds of bonds or notes, shall b~ payable .or re~eem.a1ile in any
event, at the option of the owner, wlthlD two years of the date of purchase. Unless registered or IDscrtbed ID the name
11
ofthe Town, such instrUments and investments must be purchased through, delivered to and held in custody of a bank
or trust company in the State pursuant to a written custodial agreement as provided by Section 10 of the GML.
The Town Board has adopted an investment policy and such policy conforms with allplicable laws ofthe
State governing the dellosit and investment of public moneys. All deposits and investments of the Town are made
in accordance with such policy.
Budgetary Procedures
The head of each administrative unit of the Town is reguired to file detailed estimates of revenues (other than
real property taxes) and expenditures for the next fiscal year WIth the budget officer (Supervisor) on or before August
IS"'. Estimates for each fire district situated within the Town must also be filed with t1ie budget officer by this date.
After reviewing these estimates, the budget officer prepares a tentative budget which includes his recommendations.
A budget message explaining the main features of the budget is also prepared at this time. The tentative budget is
filed wIth the Town Clerk not later than the 30th of September. Subsequently, the Town Clerk presents the tentative
budget to the Town Board at the regular or special hearing which must be held on or before October 5th. The Town
Board reviews the tentative budget and makes such changes as it deems necessary and that are not inconsistent with
the provisions of the law. Following this review process, the tentative budget and such modifications, if any, as
approved by the Board become the preliminary buaget. A public hearing, notice of which must be duly published
in the Town's official newspaper, on the preliminary budget is generally required to be held on the Thursday
immediately following the general election. At such hearing, any person may express his opinion concerning the
preliminary budget; however, there is no requirement or provIsion iliat the prehminary budget or any portion thereof
be voted on by members of the public. After the public hearing, the Town Board may further change and revise the
llreliminary budget. The Town Board, by resolutIOn, adopts the preliminary budget as submitted or amended no later
than November 20th, at which time, the preliminary budget becomes the annual budget of the Town for the ensuing
fiscal year. Budgetary control during the year is the responsibility of the Supervisor who is assisted in this area by
the Town Comptroller. However, any changes or moaifications to the annual budget including the transfer of
appropriations among line items must be approved by resolution of the Town Board.
Budget Summaries forthe 2006 and 2007 fiscal years may be found in Appendix A.
Financial Operations
The Supervisor functions as the chief fiscal officer as provided in Section 2.ofthe Local Finance Law; in this
role;th.e Supervisor is responsible' for the Town's accounting and fmancial rep'ortinga~vities. In additio!1, ~e
SOJlel'Vlsor IS also the Town's budget,'~fficer and must ther!,fore prepare the annu~tentatMobudget fo~ subml~slOn
to the Town Board. Porsuantto,gectlOD 30 of the Local Fmance Law, the Supervtserhas'been authonzed to Issue
or renew certain specific types of notes. As required by law, the Supervisor mu~ execut$ mauthorizing certificate
which than becomes a matter of public record.
The Town Board, as a whole, serves as the finance board of the Town and is responsible for authorizing, by
resolution, all material financial transactions such as operating and capital budgets and bonded debt.
Town finances are operated primarily through the General and Special Revenue Funds. The General Fund
receives most of its revenue from rear property tax and State aid. Current operating expenditures are I?aid from these
funds subject to available appropriatIOns. The Town also has refuse, sewer and wastewater distrIcts, which are
accounted for within separate funds. The primary sources of income for these districts comes from special
assessments levied against district properties at the same time real estate taxes are levied. Capital projects and
equipment purchases are accounted for m special capital projects funds. The Town observes a calendar year (January
I through December 31) for operating and reporting purposes.
Revenues
The Town receives most ofits revenues from a real property tax on all non-exempt property situated within
the Town and from State Aid. A summary of such revenues for the five most recently completed fiscal years may
be found in Appendix A.
Real Property Taxes
See "Real Property Tax Information", herein.
State Aid
The Town is dependent upon financial assistance from the State which comes primarily in the form of a state
appropriation for State Aid to municipalities for operating purposes. There is no assurance, however, that the State
appropriation for State Aid to municipalities will continue, either pursuant to existing formulas or in any form
wliatsoever and, in any event, if appropriated and apportioned to the Town, payment can lie made only if such monies
are available therefore. The State IS not constitutionally obliged to maintain or continue such aid. See Appendix A.
12
Expenditures
The malar categories of expenditure for the Town are General Government Support, Public Safety,
Transportation, EconomIc Assistance and Opportunity Home and Community Services, Culture and Recreation
Employee Benefits and Debt Service. A summary or'the expenditures for the five most recently completed fiscal
years may be found in Appendix A.
Pension Systems
Substantiallx. all employees of the Town are members of the New York State and Local Employees'
Retirement System ("ERS") or the New York State and Local Police and Fire Retirement System ("PFRS"). (Both
Systems are referred to together hereinafter as the "Retirement Systems" where appropriate.) The Retirement
Systems are cost-sharing multiple public employer retirement systems. The obligation of employers and employees
to contribute and the benefits to employees are governed by the New York State Retirement System and Social
Security Law (the "Retirement System Law"). The Retirement Systems offer a wide range of plans and benefits
which are related to years of service and final average salary vesting of retirement benefits, death and disability
benefits and optional methods of benefit pa.Y.IDents. All benefits generally vest after five years of credited service.
The Retirement System Law generally proVIdes that all participating employers in each retIrement system are jointly
and severally liable for any unfunded investtnents. Such amounts are collected through annual billings to all
participating employers. Generally, all employees, except certain part-time employees, participate in the Retirement
Systems. The Retirement Systems are non-contrioutory with respect to memtiers hired prior to July 27, 1976. All
employees who became members on or after July 27, 1976 must contribute 3% of their gross annual salary towards
the cost of their retirement program. Chapter 86 of the Laws of 2000 eliminated the 3% for Tier 3 and Tier 4
members with 10 years of service credit.
Due to unfavorable capital market returns over recent years and negative returns in each of the past three
years, the State Comptroller lias sent notice to every school district and municipality in New York State that he
believes that the retirement contributions will continue to increase in subsequent years.
With regard to the Retirement Systems, a pension reform bill was signed by the Governor into Law as
Chapter 49 of the Laws of2003. Chapter 49 changed the cycle of billing to match budget cycles of the Town. Under
the previous method, the Town was unsure of how much it would have to pay to the system until after its budget was
implemented. Under the new system the contribution for a given fiscal year will be based on the value of the pension
fund on the prior April I instead of the following April I so that the Town will be able to more accurately include
the cost oftlie contrIbution into its budget. Chapter 49 requires the Town to make a minimum contribution of 4.5%
of payrol.1 every year, including years in which the investtnent performance of the fund would make a lower
-contributIOn possible.
On July 20, 2004 the New York State Legislature passed a bill amendingthe General Municipal Law, Local
Finance Law and the Retirement and Social SecurIty Law. On July 30, 2004, the Governor signed the new retirement
system legislation into Law as Chapter 260 of the Laws of2004.The bill gIves the employer the option to move the
annual payment date for contributions from December 15th to February I~, effective December 15,2004. It increases,
from five to ten years, the maximum amortization period of the portIOn of employer contributions that exceeds 7%
of payroll for the 2004-2005 fiscal year of the Retirement System (April I - March 31). It also allows employers to
issue bonds to finance their 2005-2006 and 2006-2007 fiscal year contributions in excess of 9.5% and 10.5%~
respectively. This amortization may be made with the Retirement System or the Town could issue a maximum or
lO-year general obligation bonds, tlie interest on which would be set at prevailing bond market rates on the date of
sale and would be taxable for feaeral income tax purposes.
For the payment due December 15,2007, it is estimated that the contribution will be approximately 11.5%
of payroll.
The Town paid its retirement obligation in full on December 15, 2006 and has included its total obligation
for the 2006 fiscal year in its current budget. The Town does not plan to amortize its retirement system obligations.
While the Town is aware of the potential negative impact on its budget and will take the appropriate steps
to budget accordingly for the increase, there can be no assurance that its financial position will not be negatively
impacted as a result of the potential increase in such contributions.
Contributions to the Retirement Systems
Fiscal Year
Ending
December 31 :
Amount
of
Contribution
2002 .......................................
2003 .......................................
2004 .......................................
2005 .......................................
2006 ......................................
2007 (Budget) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$ 164,287
684,617
1,670, I 02
2,085,137
1,837,992
1,827,000
13
Other Post Employment Benefits
It should also be noted that the Town provides post-retirement healthcare benefits to various categories of
former employees. These costs may be expected to rise substantially in the future. There is now an accounting rule
that will reqUIre governmental entIties, such as the Town, to account for post-retirement healthcare benefits as it
accounts for vested pension benefits. GASB Statement No. 45 ("GASB 45") of the Governmental Accounting
Standards Board ("GASB"), described below, requires such accounting. Although GASB 45 encourages earlier
adoption, implementation is required by the following dates, based on the size of government measured by annual
revenue:
Annual Revenue
Effective for Fiscal Year Ending After:
December 15, 2006
December] 5, 2007
December ]5, 2008
Greater than $ I 00 million
Between $]0 million and $]00 million
Less than $ 10 million
School Districts and Boards of Cooperative Education Services, unlike other municipal units of government
in the State, have been prohibited from reducing retiree health benefits or increasing health care contributions
received or paid by retirees below the level of benefits or contributions afforded to or required from active employees
since the implementation of Chapter 729 of the Laws of ]994. This protection from unilateral reduction of benefits
has been extended annually and continued through May 15, 2006 pursuant to Chapter ] 6 of the Laws of 2006.
Legislative attempts to provide similar protection to retirees of other local units of government in the State have not
succeeded as oftliis date. Nevertheless, many such retirees of all varieties of municipal units in the State do presently
receive such benefits.
GASB 45 and OPEB. OPEB refers to "other post-employment benefits," meaning other than pension
benefits, disability benefits and OPEB consist primarily of health care benefits, and may include other benefits such
as disability benefits and life insurance. Until now, these benefits have generally been administered on a pay-as-you-
go basis and have not been reported as a liability on governmental financial statements.
GASB 45 will require municipalities and school districts to account for OPEB liabilities much like they
already account for p'ension liabilities, ~enerally adopting the actuarial methodologies used for pensions, with
adjustments for the different characteristIcs of OPEB and the fact that most municipahties and schoo] districts have
not set aside any funds against this liability. Unlike GASB 27, which covers accounting for pensions, GASB 45 does
not require municipalities or school distrIcts to report a net OPEB obligation at the start.
Under GASB 45, based on actuarial valuation, an annual required contribution ("ARC") will be determined
for each municipality or school district. The ARC is the sum of (a) the normal cost for the year (the p,resent value
of future benefits being earned by current employees) plus (b) amortization of the unfunded accrued liabIlity (benefits
already earned by current and former employees but not yet provided for), using an amortization period of not more
than 30 years. ]f a municipality or school district contributes an amount less tlian the ARC, a net OPEB obligation
will result, which is required to be recorded as a liability on its financial statements.
GASB 45 does not require that the unfunded liability actually be amortized nor that it be advance funded,
only that the municipality or scnool district account for its unfunded accrued liability and compliance in meeting its
ARC. The Town expects to be in compliance with the requirements ofGASB 45 by or before the applicable effective
date.
Actuarial valuation will be required every 2 years for OPEB plans with more than 200 members, every 3
years if there are less than 200 members.
REAL PROPERTY TAX INFORMATION
Real Property Taxes
The Town derives a significant portion of its annual revenue through a direct real property tax.
The followinll table presents the total tax levy, by purpose, with adjustments and collection performance for
each of the last five fiscal years.
14
Tax Levy and Collection Record
Fiscal Year Endin~ December 31 :
2004 200 2006
Total Tax Levy. . . . . . . . . . . . . . . .
Amount Collected .............
Returned to County
Amount ....................
Percentage ..................
Uncollected at End of Year
of Levy ...................
2003
$74,603,829
72,211,402
2,392.427
3.20%
$89,495,573
83,356,976
2,138,597
2.39%
$89,934,663
86,628,595
3, I 06,068
3.45%
$79,909,681
77,595,985
2,313,696
2.90%
None
None
None
None
a, As of February 6, 2007
2007
$97,216,091
54,175,000"
43,041,091"
44.27%"
NA
Tax Collection Procedure
Property taxes for the Town are collected by the Town tax receiver. Such taxes are due and payable in equal
installments on December I and May 10, but may be paid without penalty by January 10 and May 31, respectively.
The penalty added to delinquent taxes is one-twelfth the rate of interest determined by the State Commissioner of
Taxation and Finance. The rate is determined each year by July 15 based on the one-year constant maturity yield
index for United States Treasury securities for the quarter-year ending on the immediately preceding June 30. The
rate is effective for a twelve month period commencing August I each year and in no event will be less than ten per
centum per annum.
The Town receives its full levy before the end of its fiscal year. Uncollected amounts are not segregated by
the Town tax receiver, and any deficiency in tax collection is the County's liability.
Tax Rates
(Per $100 Assessed Valuation)
Fiscal Year Endin~ December 31:
2003 2004 005 2006 2007
General - Townwide ................
General - Outside Village ............
Highway .. .. .. .. .. .. .. .. .. .. ..
$133.38
3.10
36.59
$136.65
4.53
31.12
$139.73
5.43
38.37
$140.37
4.90
40.68
Large Taxable Propeljes
2007 Assessment Roll
Name
Peconic Landing at Southold .......................
qLCO, LIPA, Marketspan, Keyspan .................
Village of Greenport-Power Plant. . . . . .. .... . ....... .
Fishers Island Dev. Corp. ..........................
Robins Island Holding LLC . . . . . . . . . . . . . . . . . . . . . . . . .
Alan Cardinale ..................................
Damianos,Herodotus............................. .
New York Telephone .............................
Levin Family Limited Partnership . . . . . . . . . . . . . . . . . . . .
Anderson, Bradley & Francesca .....................
Norris, Susan ...................... '. . . . . . . . . . . . . .
Laurel Links & Country Club .......................
Kimogenor Pt Co. ................................
DriftWood Cove .................................
~
Commercial
Utility
Utili
Resi%ntial Development
Private Lands
Sl)opping Center
Vmeyard
Utility
Motel & Restaurant
Farmland & Private Lands
Various Properties
Country Club
Co-Op
Co-Op
a, Assessment Roll established in 2006 for levy and collection of taxes during 2007 Fiscal Year.
b. Represents approximately 5.57% of the total taxable assessed valuation of the Town for 2007.
15
$151.02
3.99
39.63
Assessed
Valuation
$ 1,707,704
1,558,702
585,000
362,000
330,500
285,500
234,000
233,985
148,950
113,800
111,800
96,300
94,600
90.000
$5.952.841 b
LITIGATION
The Town of South old is subject to a number oflawsuits in the ordinary conduct of its affairs. For the most
part, any pptential adverse decisions in such suits, either individually or in the aggregate, are not likely to have a
material adverse effect on the Town.
There are certain matters worthy of special mention:
Stanton. at al. v. Town of Southold - This is an action in inverse condemnation and nuisance by fo!1Y-lwo
property owners, allegmg property damage in the form of erosion caused by a Town-owned jetty. The Town is
engaged in studies to delermme the issues surrounding the alleged erosion, its causes, and possible solutions.
Although this case was fIrst filed in ]997, discovery has not been completed. The issues in this case are complex
and win require extensive expert testimony. The nature and extent of damages, if any, are unknown at this point.
Insurance coverage may be available for potentialliabili!y for alleged compensatory damages. The Town has denied
any wrongdoing and intends vigorously to defend any fUrther prosecution of this action.
uad Ente rises et al. v. Town of Southold - This action arises from the Town Board of the Town of
Southol sa ege re sa to approve a c ange 0 zone app.lication filed bY'plaintiffs, which soug!It substantially to
increase the zomng density of a parcel ofland owned by a developer plaintIff: Plaintiffs assert claims under the Fair
Housing Act, Americans with Disabilities Act, State and Town Law, alleginz housillg discrimination azainst senior 1-
handicapped and disabled residents who are also named as "Jane Doe" plaintiffs. Plaintiffs seek declaratOlY relier
gr:anting their desired zoning, as well as compensatory and punitive damages of$5 million each! respectively, for each
of the six federal causes of action. Insurance coverage may be available for potentia liability for alleged
compensatory damages. Fact and expert discovery is proceeding. The Town has demed all wrongdoing and intends
vigorously to contest these claims.
Notices of Claim - Four noteworthy Noticc;s ofC]aim have been filed ~gainst the T~wn rel~ting!~ police
matters. Joree of the matters relate back to events In 2003 or 2004/ none of which have yet npened Into"lItIgatlOn.
In the fIrst claim, claimant, Jason Weber, alleged that he sufferea physical injll!"Y, emotional injury, and loss of
earnings by virtue of the aiIeged excessive force used by Town police officers in tlieir arrest of claimant. Claimant
has sUDsequently been convicted of driving while intoxicated, an underlying crime leading to the arrest at issue.
Claimant demanded $20 million, but has not served the Town with any lawsuit. In the second claim, the same
claimant demanded $2 million as a result of a traffic stop whereby claimant was ticketed for driving with a susp.ended
license. In that instance, claimant alleged emotional injuries and loss of employment due to aile zed false
imprisonment, and violation of his civil rimrts. Claimant has not served the Town with any lawsuit relatIng to this
matter. In the third claim, claimant Mark iJraziller demanded $5 million for alleged physical and emotional Injuries
and civil rights violations arising out of a traffic stop. Claimant has not served The Town with any lawsuit relating
to this matter. Insurance coverage may be available In these matters for potential liability for alleged compensatory
damages. The Town denies any wrongdoing in these matters, and intenlis vigorously to contest these c]alms in the
event that lawsuits are instituteii arising out of these allegations. The statute of limitations for state law claims has
run on each of these matters; the Fedenil statute of limitations has run on the first and third claims; and as of yet the
Town has not been served with notice of any filed lawsuit.
In the fourth Notice of Claim, Kenneth MacAlpin demands $5 million in damages for p.hysical, emotional
and civil rights injuries related to an alleged incident, Ilelieved to be an arrest by Town police officers "on or about
February 21,2007 and prior arrests." The Town is not aware of any details of this purported claim, and intends
vigorously to contest it both prior to and after the institution of a lawsuit, if any is ever filed and served.
BONDHOLDER RISKS AND MARKET FACTORS AFFECTING FINANCINGS
OF THE STATE AND MUNICIPALITIES OF THE STATE
There are certain potential risks associated with an investment in the Bonds and investors should be
thoroughly familiar with thiS Official Statement, including its appendices, in order to make an informed investment
decision. Investors should consider, in particular, the following factors:
The Town's credit rating could be affected by circumstances beyond the Town's control. Economic
conditions such as the rate of unemployment and inflation, termination of commercia] operations by c01JlSlrate
taxpayers and employers, as well as natural catastrophes, could adversely affect the assessed valuation of Town
property and its allility to maintain fund balances ana other statistical indices commensurate with its current credit
rating. Accordingly, a decline in the Town's credit rating could adversely affect the market value of the Bonds.
In addition, if and when a holder of any of the Bonds should elect to sell a Bond prior to its maturity, there
can be no assurance that a market shall have been established, maintained and be in existence for the purchase and
sale of any Bonds. The price or principal value of the Bonds is dependent on the prevailing level of Interest rates.
If interest rates should increase, the price of a bond or note may decline causing the bond or noteholder to potentially
incur a capital loss if such bond or note is sold prior to its maturity.
The financial condition of the Town as well as the market for the Bonds could be affected by a variety of
factors, some of which are beyond the Town's control. There can be no assurance that adverse events in the State,
including, for example, the seeking by. a municipality of remedies pursuant to the Federal Bankru.ptcy Act or
otherwise, will not occur which might affect the market price of and the market for the Bonds. If a significant default
or other financial crisis should occur in the affairs of the State or any of its agencies or political subdivisions thereby
further impairing the acceptability of obligations issued by borrowers withm the State, both the ability of the Town
16
to arrange for additional borrowings and tbe market for and market value of outstanding debt obligations, including
tbe Bonds, could be adversely affected.
Future amendments to applicable statutes affecting tbe treatment of interest paid on municipal bonds
including tbe Bonds, for income taxation purposes could have an adverse effect on tbe market value oftbe Bonds (see
"Tax Matters" herein).
TAX MATTERS
Opinion of Bond Counsel
In tbe opinion of Hawkins Delafield & Wood LLP, Bond Counsel to tbe Town, under existinE statutes and
court decisions and assuming continuinlt compliance witb certain tax covenants described herein, (i) Interest on the
Bonds is excluded from gross income lor Federal income tax purposes pursuant to Section 103 of tbe Internal
Revenue Code of 1986, as amended (tbe "Code"), and (ii) interest on tbe Bonds is not treated as a preference item
in calculating tbe alternative minimum tax imposed on Inoividuals and corporations under tbe Code; such interest,
however, is Included in tbe adjusted current earnings of certain corporations for purposes of calculating tbe
alternative minimum tax imposed on such corporations. In rendering its opinion, Bond Counsel has relied on certain
representations, certifications of fact, and statements of reasonable expectations made by tbe Town in connection
With tbe Bonds, and Bond Counsel has assumed compliance by tbe Town witb certain ongoing covenants to comply
witb applicable requirements of tbe Code to assure t1te exclusIOn of interest on the Bonds from gross income unoer
Section 103 of tbe Code.
In additiollJ)n the opinion of Bond Counsel to tbe Town, under existing statutes, interest on the Bonds is
exempt from New york State and New York City personal income taxes.
Bond Counsel expresses no opinion regarding any otber Federal or state tax consequences with respect to
the Bonds. Bond Counsel renders its opinion under existing statutes and court decisions as of the issue date, and
assumes no obligation to update its opimon after the issue date to reflect any future action, fact or circumstance, or
chan~ in law or interpretation, or otherwise. Bond Counsel expresses no opinion on tbe effect of any actIOn
hereafter taken or not taken in reliance upon an opinion of otber counsel on the exclusion from gross income for
Federal income tax purposes of interest on tbe Bonds, or under state and local tax law.
Certain Ongoing Federal Tax Requirements and Covenants
The Code establishes certain ongoing requirements tbat must be met subsequent to the issuance and delivery
of the Bonds in order tbat interest on tbe 130nas be and remain excluded from gross Income under Section 103 of the
Code. These requirements include, but are not limited to, requirements relating to use and expenditure of gross
proceeds of tbe Bonds, yield and otber restrictions on investments of gross proceeds, and the arbitrage rebate
requirement tbat certain excess earnings on gross_proceeds be rebated to fbe Federal government. Noncompliance
wifb such requirements may cause interest on tbe Bonds to become included in gross income for Federal income tax
I'.llrposes retroactive to tbeir issue date, irrespective oftbe date on which such noncompliance occurs or is discovered.
The Town has covenanted to comply witb certain applicable requirements of the Code to assure tbe exclusion of
interest on the Bonds from gross income under SectIOn 103 of the Code.
Certain CoIlateral Federal Tax Consequences
The foIlowing is a brief discussion of certain collateral Federal income tax matters with respect to tbe Bonds.
It does not purport to address all aspects of Federal taxation tbat may be relevant to a particular owner of a Bond.
Prospective investors, particularly those who may be subject to special rule~ are advised to consult tbeir own tax
advisors regarding the Federal tax consequences of owning and disposing or the Bonds.
Pros[lective owners of tbe Bonds should be aware tbat the ownership of such obligations may result in
coIlateral Feoeral income tax consequences to various categories of persons, such as cO!llorations (including S
cO!llorations and foreign corporations), financial institutions, property and casualty and life insurance compames
indIvidual reci[lients of Social Security and railroad retirement benefits, individuals otberwise eligible fortbe earned
income tax creoit, and taxpayers deemed to have incurred or continued Indebtedness to purchase or carry obligations
tbe interest on which is excluded from gross income for Federal income tax [lurposes. Interest on the Bonds may be
taken into account in determining tbe tax liability of foreign corporations subject to the branch profits tax imposed
by Section 884 of the Code.
Original Issue Discount
"Original issue discount" ("OlD") is tbe excess oftbe sum of all amounts payable at tbe stated maturity of
a Bond (excluding certain "qualified stated interest" that is unconditionally payable at least annually at prescribed
rates) over tbe issue frice oCtbat maturity. In general, the "issue price" of a maturity means the first price at which
a substantial amoun of tbe Bonds of that maturity was sold (excluding sales to bond houses, brokers, or similar
persons acting in tbe capacity as underwriters, placement agents, or wholesalers). In general, the issue pnce for each
maturity of Bonds is expected to be tbe initIal public otlering price set fortn on the cover page of the Official
Statement. Bond Counsel further is of the opinion that, for any Bonds having OLD (a "Discount 13ond"), OlD that
17
has accrued and is properly allocable to the owners of the Discount Bonds under Section 1288 of the Code is
excludable from gross mcome for Federal income tax purposes to the same extent as other interest on the Bonds.
In general, under Section 1288 of the Code, OID on a Discount Bond accrues under a constant yield method,
based on periodic compounding of interest over prescribed accrual periods using a compounding rate determined by
reference to the yield on that Discount Bond. An owner's adjusted basis in a Discount Bond is increased by accruen
OID for purposes of determining gain or loss on sale, exchange, or other disposition of such Bond. Accrued OID may
be taken into account as an increase in the amount of tax-exempt income received or deemed to have been receiven
for purposes of ~etermining various other tax consequences or owning a Discount Bond even though there will not
be a correspondmg cash payment.
Owners of Discount Bonds should consult their own tax advisors with respect to the treatment of original
issue discount for Federal income tax purposes, including various special rules relating thereto, and the state and local
tax consequences of acquiring, holding, and aisposing of Discount Bonds.
Bond Premium
In genera,!, if an owner acquires a Bond for a purchase price (excluding accrued interest) or otherwise at a
tax basis tliat renects a premium over the sum of all amounls payable on the Bond after the acquisition date
(excluding certain "qualified stated interest" that is unconditionally payable at least annually at prescribed rates). that
premium constitutes "bond premium" on that Bond (a "Premium Bond"). In general, under Section 171 ofthe Code.
an owner of a Premium Bond must amortize the bond premium over the remaming term ofthe Premium Bond, basea
on the owner's yield over the remaining term of the Premium Bond determined based on constant yield principles
(in certain cases involving a Premium Bond callable prior to its stated maturity date, the amortization period and Yield
may be required to be determined on the basis of an earlier call date that results in the lowest yield on such bond).
An owner of a Premium Bond must amortize the bond premium by offsetting the qualified stated interest allocable
to each interest accrual period under the owner's regular method of accounting against the bond premium allocable
to that period. In the case of a tax-exempt Premium Bond, if the bond premium allocable to an accrual period exceeds
the qualified stated interest allocable to that accrual period, the excess is a nondeductible loss. Under certain
circumstances the owner of a Premium Bond may realize a taxable gain upon disposition of the Premium Bond even
thouclJ it is sold or redeemed for an amount less than or equal to tlie owner's onginal acquisition cost. Owners of
any Premium Bonds should consult their own tax advisors regarding the treatment of bond premium for Federal
income tax pU!'Poses, including various special rules relating thereto, and state and local fax consequences, in
connection witli the acquisition, ownership, amortization of bond premIUm on, sale, exchange, or other disposition
of Premium Bonds.
Backup Withholding
Under the Code, interest on tax-exempt obligations paid after March 31, 2007, includinginterest on the Bonds, is
subject to "backup withholding" if the recipient of the interest does not complete a Form W-9 Request for Taxpayer
Identification Number and Certification, or otherwise provide to the payor (i.e., the financial inslitution paying the
interest on behalf of the Town a taxpayer identification number). "Backup Withholding" means that tlie payor is
required to deduct and withhold a tax from the interest payment, calculated in the manner set forth in the Cone.
In general, it is expected that owners purchasing the Bonds through a brokerage account will have executed
a Form W-9 in connection with the establishinent of such account so that no backup withholding will occur. The
backup withholding requirement does not affect the excludability of the interest on tlie Bonds from gross income for
federal income tax purposes. Any amounts withheld pursuant to backup withholding would be allowed as a refund
or a credit against tlie owner's federal income tax once the required information is furnished to the Internal Revenue
Service.
Legislation
Legislation affecting municipal bonds is regularly under consideration by the United States Congress. There
can be no assurance that legislation enacted or proposed after the date of issuance of the Bonds will not have an
adverse effect on the tax-exempt status or market pnce of the Bonds.
DOCUMENTSACCOMP~GDELnffiRYOFTHEBONDS
Absence of Litigation
Ullon delivery of the Bonds the Town shall furnish a certificate of the Town Attorney, dated the date of
delivery of the Bonds, to the effect that there is no controversy or litigation of any nature pendmg or threatened to
restrain or enjoin the issuance;., sale, execution or deliv~ry of !he Bonns, or in any way contesting or affectjng the
validity of the Bonds or any or the proceedmgs taken wltli respect to the Issuance and sale thereof or the apphcatlOn
of moneys to the payn:1ent of the Bonds, and fUrther stating tha! there is no controversy or litiEation of any nature now
pending or threatened by or against the Town wherein an adverse judgment or ruling couldltave a material adverse
Impact on the financial conditIOn of the Town or adversely affect the power of the Town to levy collect and enforce
the collection of taxes or other revenues for the payment of the Bonds, which has not been disclosed in this Official
Statement.
18
Legal Matters
Legal matters incident to the authorization issuance and sale of the Bonds will be subject to the final
aJlproying opinion of Hawkinspelafield & Wood LLp, Bond Counsel: Such opinion. will be available at the time
oTdehvery of the Bonds and Will be to the effect that the Bonds are vahd and legally bmdmg general obligations of
the Town for which the Town has validly pledged its faith and credit and, unless paid from other sources all the
taxable real property within the Town is subject to the levy of ad valorem real estate taxes to pay the Bonds and
interest thereon witliout limitation of rate or amount. Said opinion shall also contain further statements to the effect
that (a) the enforceability of rigqts or remedies with respect to such Bonds may be limited by bankruJltcy, insolvency
or other laws affecting creditors' rights or remedies heretofore or hereafter enacted, and (b) said law lirm has not been
requested to examine or review and has 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 re ative to the Town which have been or may be furnished or disclosed to
purchas~rs of the Bonds, and expresses no opinion with respectto such financial or other information, or the accuracy
or suffiCiency thereof.
Closing Certificates
Upon the delivery,ofthe Bonds, the Purchaser will be furnished with the following items: (i) a Certificate
of the Supervisor to the en-ect that as of the date of this Official Statement and at all times subsequent thereto, up to
and including the time of delivery of the Bonds, this Official Statement did not and does not contain any untrue
statement of a material fact or omit to state a material fact necessary to make the statements herein, in the light of
the circumstances under which they were made, not misleading, and further stating that there has been no adverse
material change in the financial condition of the Town since the date of this Official Statement up to and including
the time of delivery of the Bonds, and having attached thereto a copy of this Official Statement; (ii) a Certificate
signed ~y the Supervisor evidencing payment for the Bonds; (iii) a Signature Certificate evidencing the due execution
of the Bonds, including statements tliat (a) no litigation of any nature is pending or threatened, restraining or
enjoining the Issuance and delivery of the Bonds or the levy and collection of taxes to pay the principal of and interest
thereon, nor in any manner questIOning the proceedings and authority under which tlie Bonds were authorized or
affecting the validity of the Bonds thereunder, (b) neither the corporate existence or boundaries of the Town nor the
title of any of the officers thereof to their respective offices is being contested, and (c) no authority or proceedings
for the issuance of the Bonds have been repealed, revoked or rescinded; and (iv) an Arbitrage andDse of Proceeds
Certificate executed by the Supervisor, as described under "Tax Matters".
DISCLOSURE UNDERTAKING
This Official Statement is in a form "deemed final" by the Town for the pUl'Jloses of Securities and Exchange
Commission Rule l5c2-l2. At the time of the delivery of the Bonds, the Town will provide an executed copy of Its
"Undertaking to Provide Continuing Disclosure" (the "Undertaking"). Said Undertaking will constitute a written
agreement or contract of the Town for the benefit of holders of and owners of beneficiar interests in the Bonds, to
provide, or cause to be provided:
(I) during any succeeding fiscal year of the Town in which the Bonds are outstanding.!o (a) each nationally
recognized municipal securities information repository ("NRMSIR") and (b) the New york State Information
Depository, if created, ("SID"), (i) certain annual financial information, in a form generally consistent with
the information contamed or cross-referenced in this Official Statement under theneadings: "The Town"j
"Economic and Demogra/;'hic Information","Indebtedness of the Town", "Finances of the Town", "Rea
Property Tax information, and "Litigation"; and in Appendix A, on or pnor to the 1 80th day following the
end of each fiscal year, including (ii) the audited financial statement, if any, for the preceeding fiscal year
of the Town, unless such audited financial statement, if any, shall not then be available in which case the
unaudited financial statement shall be provided and an audited financial statement shall be delivered to each
NRMSIR and to the SID within 30 days after it becomes available and in no event later than 360 days after
the end of each fiscal year;
(2) to (a) each NRMSIR, or to the Municipal Securities Rulemaking Board ("MSRB"), and to (b) the SID, timely
notice of the occurrence of any of the following events with respect to the Bonds, if material:
(i) principal and interest paY!l1ent delinquencies: (ii) non-payment related defaults; (iii) unscheduled draws
on debt service reserves reflecting financial difficulties; (iv) unscheduled draws on credit enhancements
reflecting financial difficulties; (V) substitution of credit or lIquidity providers, or their failure to per(orm;
(vi) adverse tax opinions or events affecting the tax-exempt status ofllie Bonds; (vii) modifications to ng!its
of Bondholders; (viii) bond calls; (ix) defeasances; (x) release, substitution, or sale of property secunng
repayment of the Bonds; and (xi) rating changes.
The Town may provide notice of the occurrence of certain other events, in addition to those listed above, if
it determines that any such other event is material with respect to the Bonds; but the Town does not undertake to
commit to provide any such notice of the occurrence of any material event except those events listed above; and
(3) to (a) each NRMS~ or to the MSRB, and to (b) the SID, in a timely manner, notice ofa failure to provide
the annual financial mformation by the date specified.
19
The Town's Undertaking shall remain in full force and effect until such time as the principal of redemption
premiums, if any, and interest on the Bonds shall have been paid in full. The sole and exclusive remedy for breach
or default under the Undertakin~ is an action to compel specific performance of the undertakings of the Town, and
no person or entity, including a liolder of the Bonds, shall be entitled to recover monetary damages thereunder under
any circumstances. Any failure by the Town to comply with the Undertaking will not constitute a default with respect
to the Bonds.
The Town reserves the right to amend or modifY the Undertaking under certain circumstances set forth
therein provided that any such amendment or modification will be done in a manner consistent with Rule 15c2-12
as then In effect.
The Town is in compliance with all previous undertakings made pursuant to Rule 15c2-12.
BOND RATING
Moody's Investors Service, Inc., will assign their municipal bond rating of "Aaa" respectively, to this issue
of Bonds with the understanding that up'on delivery of the Bonds, a policy insuring the payment when due of the
principal of and interest on the Ifonds Will be issued by Ambac Assurance CorporatIon. Such rating reflect only the
views of such rating ~gencYi and any desired explanatIon of the si~ificance of such rating should 6e obtained from
such rating agency. Genera Iy, a ratingagency Bases its ratings on the information and materials furnished it and on
investigatIOn, studies and assumptionsby the rating agency. There is no assurance that a particular ratin~ will apply
for any given period of time or that it will not be lowered or withdrawn entirely if, in the judgment orthe agency
originaIry establishing the rating, circumstances so warrant. The underwriter lias undertaken no responsibility to
bring to the attention of the holders of the Bonds any proposed revision or withdrawal. Any downward revision or
withorawal of such rating, or either of them, could have an adverse effect on the market pnce of the Bonds. Such
rating should not be taken as a recommendation to buy or hold the Bonds.
FINANCIAL ADVISOR
Munistat Services, Inc. has assisted the Town as financial advisor in certain matters with respect to the sale
and issuance of the Bonds.
ADDITIONAL INFORMATION
Additional information may be obtained upon request from the office of the Town Comptroller, Town of
Southold, Town Hall, P.O.B. 1179, Southold, New York I 1971, telephone number 631/765-4333, or from the office
of Munistat Services, Inc., 12 Roosevelt Avenue, Port Jefferson ~tation, New York 11776, telephone number
631/331-8888 and website: http://www.munistat.com.
Any statements in this Official Statement involving matters of opinion or estimates, whether or not expressly
so stated, are intended as such and not as representations of fact. No representation is made that any of such
statements will be realized. This Official Statement is not to be construed as a contract or agreement between the
Town and the original purchasers or holders of any of the Bonds.
This Official Statement is submitted only in connection with the sale of the Bonds by the Town and may not
be reproduced or used in whole or in part for any other purpose.
TOWN OF SOUTHOLD, NEW YORK
By: sls
SCOTT A. RUSSELL
Town Supervisor and Chief Fiscal Officer
March 27, 2007
20
APPENDIX A
FINANCIAL INFORMATION
Balance Sheet
General Fnnd
Fiscal Year Ending December 31:
2003 2004 2005
ASSETS
Cash and Investments $ 8,436,782 $ 10,081,581 $ 9,292,437
Cash - Restricted 0 0 0
Taxes Receivable 0 0 0
Accounts Receivable 1,168 85,426 24,533
Due From Other Funds 15,107 320,243 176,390
Due From Trust Funds 342,253 73 68
State and Federal Aid Receivables 13,195 56,357 81,849
Due From Other Governments 112,471 1,537,312 1,867,136
Supply Inventory 1,296 1,487 1,204
Prepaid Expenses 69,865 526,857 498,344
Deposit 10,000 2,219 0
Total Assets $ 9,002,137 $ 12,611,555 $ 11,941,961
LIABILITIES AND FUND EQUITY
Accounts Payable $ 792,860 $ 1,052,240 $ 627,049
Due to Other Funds 426,211 1,625,700 1,888,241
Due to Other Governments 0 388,944 393,570
Due to Trust Funds 595 4,248 7,044
Due to Compnent Units 0 0 0
Deferred Revenues 2,463,059 2,900,729 3,018,595
Total Liabilities 3,682,725 5,971,861 5,934,499
Fund Balances ~ Reserved:
Insurance claims 1,033,085 1,234,066 1,105,879
Encumbrances 71,342 4,009
Supply Inventory 1,296 1,487 1,204
Prepaid Expenses 69,865 526,857 498,344
Fund Balances - Unreserved:
Designated - Ensuing Year's Budget 2,008,000 1,978,987 2,657,200
Undesignated 2,207,166 2,826,955 1,740,826
Total Fund Equity 5,319,412 6,639,694 6,007,462
Total Liabilities and Fund Equity $ 9,002,137 $ 12,611,555 $ 11,941,961
Sources: Audited Financial Reports of the Town
Table itself NOT audited.
A-I
Statement of Revenues, Expenditures and Changes in Fund Balance
General Fund Town Wide
Fiscal Year Ending December 31 ;
2llQl 2.QQ2 lQQl 2004 2M
Revenues:
Real Property Taxes $ 10,965,967 $ 12,237,940 $ 13,247,572 $ 13,962,268 $ 14,608,674
Other Real Property Tax Items 55,069 85,244 51,31 ] 65,720 68,807
Non-Property Tax Items 508,130 401,035 401,035 4]5,071 415,07]
Departmental Income 312,033 431,743 315,289 344,217 345,956
Intergovernmental Charges 26],646 214,738 202,917 296,050 252,558
Use of Money & Property 448,483 246,707 201,702 254,142 489,796
Licenses & Permits 198,949 210,863 188,480 214,461 249,] 78
Fines & Forfeitures 97,609 102,032 107,084 107,315 140,192
Sale of Property & Compo for Loss 76,471 135,345 56,893 405,077 93,290
Miscellaneous Local Sources 109,026 115,619 133,346 128,027 432,269
State Aid 1,465,312 1,698,069 2,225,40 I 2,974,027 2,637,870
Federal Aid 239,649 132,527 146,574 160,337 174,348
~.._-
14,738,344 16,011,862 17,277,604 19,326,712 19,908,009
--~
Expenditures:
General Government Support 3,170,906 3,561,142 3,751,469 4,395,571 4,641,568
Public Safety 5,755,775 5,806,827 6,033,207 6,254,365 7,177,]45
Public Health 33,288 33,288 32,988 33,288 33,288
Transportation 335,583 34],671 398,358 401,866 446,877
Economic Assistance & Opportunity 802,249 730,553 833,50 I 931,566 901,139
Culture & Recreation 356,570 350,121 317,769 304,071 354,768
Home & Community Services 501,790 315,764 228,578 341,764 315,273
Employee Benefits 2,742,583 3,616,745 2,617,783 4,868,116 5,857,963
Debt Service Principal & Interest 1,402,074 1,550,447 1,007,318 2, I 04,202 1,560,055
Total Expenditures 15,100,818 16,306,558 15,220,971 19,634,809 21,288,076
Excess (Deficiency) of Revenues Over
Expenditures (362,474) (294,696) ~056,633 (308,097) (1,380,067)
Operating Transfers In 1,650,724 1,780,257 1,392,850 2,932,574 2,642,859
Operating Transfers Out (],072,732) (1,021,931.2 (1,910,781) (1,304,]95) (1,895,023)
Total Other Financing Sources (Uses) 577,992 758,326 (517,931) 1,628,379 747,836
~.-
Excess (Deficiency) of Revenues and Other
Sources Over Expenditures and Other Uses 215,518 463,630 1,538,702 1,320,282 (632,231)
Fund Balance Beginning of Year 3,101,561 3,317,080 3,780,710 5,319,412 6,639,694
.-----
Fund Balance End of Year $ 3,317,079 $ 3,780,710 $ 5,319,412 $ 6,639,694 $ 6,007,463
~--
Sources; Audited Financial Reports of the Town
Table itself NOT audited.
A-2
Statement of Revennes, Expenditures and Fund Balance
Highway Fnnd
Fiscal Year Ended December 31:
200] 2002 2003 2004 2005
Revenues:
Real Property Taxes $ 3,165,059 $ 3,428,570 $ 3,5]3,902 $ 3,520,332 $ 3,805,032
Other Real Property Tax Items 6,028 II ,885 6,428 3,679 9,046
Non-Property Tax items 396 3,098 0 0
Intergovernmental Charges ] ]6,82] 0 ] 5,573 0 0
Use of Money & Property 79,827 34,626 ]8,520 23,884 77,817
Licenses & Permits 5,887 10,35] 8,23 ] 4,937 11,126
Sale of Property & Compo for Loss 9,593 0 4,033 2,960 2,796
Miscellaneous Local Sources ],416 25,937 0 16 155,054
Interfund Revenues 8,517 4,852 0 0 0
State Aid 223,305 0 458,686 228,337 188,147
Federal Aid 0 0 67,699 0 0
3,6]6,849 3,519,3] 9 4,093,072 3,784,145 4,249,018
Expenditures:
Transportation 3,076,012 2,550,776 2,733,5] 8 2,638,]2] 2,913,768
Employee Benefits 28] ,070 340,172 976,406 415,102 500,343
Debt Service 97,594 88,544 ]5,]28 22,219 178,371
Total Expenditures 3,454,676 2,979,492 3,725,052 3,075,442 3,592,482
Excess (Deficiency) of Revenues Over
Expenditures ]62,173 539,827 368,020 708,703 656,536
Residual Equity Transfer
Operating Transfers In 0 0 0 0 0
Operating Transfers Out (380,965) (433,271) (60,000) (690,390) (520,085)
Total Other Financing Sources (Uses) (380,965) (433,27]) (60,000) (690,390) (520,085)
Excess (Deficiency) of Revenues and Other
Sources Over Expenditures and Other Uses (2] 8,792) 106,556 308,020 ]8,3]3 136,45 ]
Fund Balance Beginning of Year 706,300 487,508 594,064 902,084 920,397
----
Fund Balance End of Year $ 487,508 $ 594,064 $ 902,084 $ 920,397 $ ] ,056,848
Sources: Audited Financial Reports of the Town
Table itself NOT audited.
A-3
Statement of Revenues, Expenditures and Changes in Fund Balance
Non-Major Governmental Funds (I)
Fiscal Year Ending December 31:
2001 2002 2003 ~ 2QQi
Revenues:
Real Property Taxes $ 1,584,261 $ 1,465,060 $ 2,197,525 $ 2,506,945 $ 2,381,335
Other Real Property Tax Items 1,037 1,495 874 3,105 2,516
Non-Property Tax Items 97,680 110,225 117,449 336,139 213,786
Departmental Income 2,125,493 2,931,896 2,339,227 2,517,584 2,504,880
Intergovernmental Charges 18,444 1,400 1,614 1,013 1,013
Use of Money & Property 88,750 35,650 18,147 21,365 64,092
Licenses & Permits 139,615 139,295 139,620 199,849 165,965
Fines and Forfeitures 0 0 49,000 0 0
Sale ofproperty & Compo for Loss 76,928 29,772 44,450 76,069 109,137
Miscellaneous Local Sources 13,462 11,423 230 5,025 153,591
lnterfund Revenues 2,274 0 0 0 0
State Aid 102,353 72,935 161,393 72,651 75,374
Federal Aid 210,644 119,380 111,299 166,368 224,136
4,460,941 4,918,531 5,180,828 5,906,113 5,895,825
Expenditures:
General Government Support 42,052 42,783 134,969 92,514 99,895
Public Safety 786,251 875,307 749,904 739,198 807,474
Public Health 5,924 6,161 6,408 6,664 6,864
Home & Community Services 0 0 3,230,201 3,225,586 3,102,639
Culture and Reccreation 2,872,654 2,973,763 0 0 0
Employee Benefits 188,543 226,380 874,049 371,038 444,858
Debt Service 314,869 624,315 117,562 88,803 671,720
Total Expenditures 4,210,293 4,748,709 5,113,093 4,523,803 5,133,450
Excess (Deficiency) of Revenues Over
Expenditures 250,648 169,822 67,735 1,382,310 ~62,37~_
Operating Transfers In 0 0 0 0 0
Operating Transfers Out (491,624) (375,055) (483,500) (1,081,441) (504,720)
Total Other Financing Sources (Uses) (491,624) (375,055) ____(483,500) (1,081,441) _ (504,220)
Excess (Deficiency) of Revenues and Other
Sources Over Expenditures and Other Uses (240,976) _J205,233) (415,765) 300,869 257,655
Fund Balance Beginning of Year 1,707,548 1,466,572 1,261,339 845,574 1,146,444
Fund Balance End of Year $ 1,466,572 $ 1,261,339 $ 845,574 $ 1,146,443 $ 1,404,099
~--
(I) Includes the following funds: General Fund Part Town, Special Grant Fund, East-West Fire Protection Fund, Southold Wastewater
District, Fishers Island Sewer District and Solid Waste Management District.
Sources: Audited Financial Reports of the Town
Table itself NOT audited.
A-4
BUDGET SUMMARY
Fiscal Year Ending December 31, 2006
Appropriations Less: Less;
and Provisions Estimated Unexpended Amount to be
Fund for Other Uses Revenues Balance Raised bv Tax
General $ 22,209,] 99 $ 4,679,263 $ 2,657,200 $ ]4,872,736
General.Outside Village 1,795,416 958,174 344,246 492,996
Highway-Townwide 0 100 16,000 (16,100)
Highway-Outside Village 4,769,679 318,332 339,900 4,111,447
Community Development 159,000 159,000 0 0
Risk Retention Fund 1,055,000 1,055,000 0 0
Community Preservation Fund 4,606,000 4,606,000 0 0
Employees Health Plan 2,411,400 2,036,400 375,000 0
Total-Town $ 37,005,694 $ 13,812,269 $ 3,732,346 $ 19,461,079
East-West Fire Protection District 464,393 2,000 4,350 458,043
Fishers Island Ferry District 2,389,000 1,989,000 0 400,000
Solid Waste Management District 4,031,733 2,096,200 168,000 1,767,533
Southold Wastewater District 111,790 14,000 75,000 22,790
Fishers Island Sewer District 20,000 17,700 2,300 0
F.L Refuse & Garbage District 563,500 0 0 563,500
Orient Mosquito District 76,285 0 0 76,285
Subtotal-Special Districts $ 7,656,701 $ 4,118,900 $ 249,650 $ 3,288,151
Orient-East Marion Park District 27,655 37 0 27,6]8
Southold Park District 315,000 0 0 315,000
Cutchogue-New Suffolk Park Dist. 141,000 0 0 141,000
Manituck Park District 504,910 _18,800 60,000 426, II 0
Subtota.I-Park Districts $ 988,565 $ 18,837 $ 60,000 $ 909,728
Fishers Island Fire District 343,300 3,300 0 340,000
Orient Fire District 356,540 2,000 0 354,540
East Marion Fire District 427,342 8,640 0 418,702
Southold Fire District 1,358,392 21,000 0 1,337,392
Cutchogue Fire District 1,413,000 1,400 0 1,411,600
Mattituck Fire District 1,818,]35 0 0 1,818,135
Subtotal-Fire Districts $ 5,716,709 $ 36,340 $ 0 $ 5,680,369
Total-All Districts 14,361,975 4,174,077 309,650 __ 9,878,248
Grand Total $ 51,367.669 $ 17,986,346 $ 4.041.996 $ 29.339.327
Source: Annual Budget of the Town.
A-5
BUDGET SUMMARY
Fiscal Year Ending December 31, 2007
Appropriations Less: Less:
and Provisions Estimated Unexpended Amount to be
Fund for Other Uses Revenues Balance Raised bv Tax
General $ 22,951, I 02 $ 4,810,191 $ 1,935,000 $ 16,205,911
General-Outside Village 1,869,139 1,002,600 459,000 407,539
Highway-Townwide 0 600 16,900 (17,500)
Highway-Outside Village 4,938,330 406,635 486,500 4,045,195
Community Development 136,000 136,000 0 0
Risk Retention Fund 1,015,000 1,015,000 0 0
Community Preservation Fund 10,697,328 5,350,000 5,347,328 0
Employees Health Plan 2,662,000 2,412,000 250,000 0
T otal~ Town $ 44,268,899 $ 15,133,026 $ 8,494,728 $ 20,641,145
East-West Fire Protection District 509,828 4,600 6,228 499,000
Fishers Island Ferry District 3,038,000 2,448,000 0 590,000
Solid Waste Management District 4,058,562 2,151,500 0 1,907,062
Southold Wastewater District 128,316 10,020 100,000 18,296
Fishers Island Sewer District 20,000 17,700 2,300 0
F.1. Refuse & Garbage District 512,300 0 0 512,300
Orient Mosquito District 82,235 0 0 82,235
Subtotal-Special Districts $ 8,349,241 $ 4,631,820 $ 108,528 $ 3,608,893
Orient-East Marion Park District 30,695 0 0 30,695
Southold Park District 315,000 0 0 315,000
Cutchogue-New Suffolk Park Dist. 145,000 0 0 145,000
Mattituck Park District 540,027 22,500 50,000 467,527
Subtotal-Park Districts $ 1,030,722 $ 22,500 $ 50,000 $ 958,222
Fishers Island Fire District 357,300 3,300 0 354,000
Orient Fire District 40 I ,040 2,000 0 399,040
East Marion Fire District 490,600 12,200 0 478,400
Southold Fire District 1,512,875 33,540 0 1,479,335
Cutchogue Fire District 1,412,500 1,400 0 1,411,100
Mattituck Fire District 1,857,967 0 0 1,857,967
Subtotal-Fire Districts $ 6,032,282 $ 52,440 $ 0 $ 5,979,842
Total-All Districts 15,412,245 4,706,760 158,528 10,546,957
Grand Total $ 59,681, 144 $ 19,839,786 $ 8,653,256 $ 3\,188,102
Source: Annual Budget of the Town.
A-6
,.~"___"~_,~.,_,_~.w-,,"_~_""'. '"
TOWN OF SOUTHOLD
APPENDIX B
AUDITED FINANCIAL STATEMENTS
FOR THE FISCAL YEAR ENDED DECEMBER 31, 2005
I FINANCIAL SECTION I
Independent Auditors' Report.... ............... .............. .... ....... .......... .......... .... ....... ...... .............. .................... . 1-2
REQUIRED SUPPLEMENTARY INFORMATION
Management's Discussion and Analysis..................... ... ............ ........................ ........ .............. 3-11
I BASIC FINANCIAL STATEMENTS I
Government-Wide Financial Statements
Statement of Net Assets........ .......... ........ .............................. ..... ..... .......... ............. .......... ...................... 12
Statement of Activ~ies ............................................................................................................................ 13
Fund Financial Statements
Govemmental Fund Rnancial Statements
Balance Sheet and Reconciliation of the Governmental Funds Balance Sheet to
The Statement of Net Assets............ ......... ....................................................... ............. 14-15
Statement of Revenues, Expenditures, and Changes in Fund Balances and
Reconciliation of the Govemmental Funds Statement of Revenues. Expend~ures,
And Changes in Fund Balances to the Statement of Activities.................. ................. ............ 16-17
Fiduciary Fund Rnancial Statements
Statement of Rduciary Net Assets...... ...... ............... ............... ......... ...... .................................. 18
Notes to Financial Statements .................................................................................................................. 19-33
REQUIRED SUPPLEMENTARY INFORMATION OTHER THAN MANGEMENT DISCUSSION AND ANALYSIS
Schedule of Revenues, Expenditures and Changes in Fund Balances - Budget and Actual
General Fund ... ................................. ....................................................... ............ ...... J4
Highway Fund... ......... ............ ...... ......... ...... .......... ..... ...... ............... ............ ................ 35
OTHER SUPPLEMENTARY INFORMATION
COMBINING FUND STATEMENTS:
Non-major Governmental Funds
Combining Balance Sheet...... .................. ............................... ....................... ......... ...... J6
Combining Statement of Revenues, Expend~res, and Changes in Fund Balances................... 37
DISCRETELY PRESENTED COMPONENT UNITS
Discretely Presented Component Units:
Combining Statement of Net Assets ...................................................................................................... J8
Combining Statement of Activities.......................................................................................................... 39
FINANCIAL
SECTION
" ..~-----_..,'~.~,,-....~,---
Our audit was conducted for the purpose of forming an opinion on the financial statements that
collectively comprise the Town of Southold, New York's basic financial statements. The combining and
individual fund financial statements are presented for purposes of additional analysis and are not a
required part of the basic financial statements. The combining and individual fund financial statements
has been subjected to the auditing procedures applied in the audit of the basic financial statements of the
Town of Southold, New York, and, in our opinion, is fairly presented in all material respects in relation to
the basic financial statements taken as a whole.
In accordance with Govemmenf Auditing Standards, we have also issued a report dated June 8, 2006 on
our !:Qnsideration of the Town of Southold, New York internal control over financial reporting and our
tests of its compliance with certain provisions of laws, regulations, contracts and grants.
Our audit was performed for the purpose of fonning an opinion on the general-purpose financial
statements, taken as a whole. The accompanying schedule of expenditures of federal awards is
presented for purposes of additional analysis as required by U.S. Office Management and Budget
Circular A-133, Audits of States, Local Governments, and Non-Profit Organizations, and is not a required
part of the general purpose financial statements of the Town of Southold, New York. Such information
has been subjected to the auditing procedures applied in the audit of the general purpose financial
statements and, in our opinion, is fairly stated, in all material respects, in relation to the general purpose
financial statements taken as a whole.
~ Y.;s.:'~, ? L/' 4.;-1- r. c.
Hauppauge, New York
June 8, 2006
-2-
REQUIRED SUPPLEMENTARY INFORMATION
Management's Discussion and Analysis
TOWN OF SOUTHOLD
MANAGEMENT'S DISCUSSION AND ANALYSIS
December 31,2005
The following is a discussion and analysis of the Town of Southold's financial performance, providing an overview
of the Town's financial activities for the year ended December 31,2005. Use this section In conjunction with the
Town's basic financial statements.
USING THIS ANNUAL REPORT
This annual report consists of a series of financial statements. The Statement of Net Assets and the
Statement of Activities provide Information about the activities of the Town as a whole and present a longer-
tenn view of the Town's finances. For govemmental activities. these statements tell how these services were
financed in the short term as well as what remains for future spending. Fund financial statements also report
the Town's operations in more detail than the government-wide statements by providing infonnation about the
Town's most significant funds. The remaining statements provide financial Infonnation about activities for
which the Town acts solely as a trustee agent for the benefit of those outside of the government.
ReportinQ the Town as a Whole
The Statement of Net Assets and the Statement of Activities
One of the most Important questions asked about the Town's finances is, "Is the Town as a whole better off or
worse off as a result of the year's activities?" The Statement of Net Assets and the Statement of Activities
report information about the Town as a whole and about its activities in a way that helps answer this question.
These statements include all assets and liabilities using the accrual basis of accounting, which is similar to the
accounting used by most private-sector companies. The Statement of Activities Is significantly different than a
typical Statement of Revenues, Expenses. and Changes in Fund Balance. You will notice that expenses are
listed in the first column with revenues from that particular program reported to the right. The result is a net
(axpense)/revenue. The reason for this kind of fonnat is to highlight the relative financial burden of each of the
functions on the Town's taxpayers. It also identifies how much each function draws from the general revenues
or if it Is self-financing through fees and grants. All of the current year's revenues and expenses are taken into
account regardless of when cash Is received or paid.
These two statements report the Town's net assets and their respective changes. You can think of the Town's
net assets-the difference between assets and Iiabilities-as one way to measure the Town's financial health,
or financial position. Over time, increases or decreases in the Town's net assets are one Indicator of whether
its financial health Is improving or deteriorating. You will need to consider other non-financial factors, however,
such as changes In the Town's property tax base and the condition of the Town's buildings, roads, drainage
and other assets to assess the overall health of the Town.
In the Statement of Net Assets and the Statement of Activities, we divide the Town into two kinds of activities:
. Governmental activities - The Town's basic services are reported here, including: general government
support; public safety; public health; transportation; economic assistance and opportunity; culture and
recreation and home and community services. Property taxes, sales taxes, franchise fees, fines, and
state and federal grants finance these activities. The Town also charges fees to customers to help It
cover the cost of certain services it provides.
. Component units - The Town Includes 7 separate legal entities In its report (one ferry district, one
sanitation district, one mosquito district and four park districts). Although legally separate, these
"component units" are important because the Town is financially accountable for them. Complete
financial statements of the individual component units can be obtained from their respective
administrative offices (Note A).
TOWN OF SOUTHOLD
MANAGEMENT'S DISCUSSION AND ANALYSIS
December 31, 2005
ReDortina the Town's Most Sianlflcant Funds
Fund Financial Statements
The fund financial statements provide detailed information about the most significant funds-not the Town as a
whole. Some funds are required to be established by State law and by bond covenants. However, the Town
establishes many other funds to help it control and manage sources of funding and spending related to specific
activities.
The Town's basic services are reported in governmental funds, which focus on how money flows into and out
of those funds and the balances left at year-end that are available for spending. These funds are reported
using an accounting method called modified accrual accounting, which measures cash and all other financial
assets that can readily be converted to cash. The governmental fund statements provide a detailed short-term
view of the Town's general govemment operations and the basic services it provides. Govemmental fund
information helps you determine whether there are more or fewer financial resources that can be spent in the
near future to finance the Town's programs. We describe the relationship (or differences) between
govemmental activities (reported in the Statement of Net Assets and the Statement of Activities) and
govemmental funds in a reconciliation that follows these fund financial statements.
The Town as Trustee
Reoortlna the Town's FlduclalV Resoonsibilities
All of the Town's fiduciary activities are reported in a separate Statement of Fiduciary Net Assets. We exclude
these activities from the Town's other financial statements because the Town cannot use these assets to
finance its operations. The Town is responsible for ensuring that the assets reported In these funds are used
for their intended purposes.
FINANCIAL ANALYSIS OF THE TOWN AS A WHOLE
Our analysis below focuses on the net assets and changes in net assets of the Town's govemmental activities.
Condensed Statement of Net Assets
Govemmental Activities
as of December 31,2005 and 2004
Assets
Current and other assets
Capital assets
Total assets
Liabilities
Other Iiabiltties
Long-term liabilities
T otalliabilities
Net assets
Invested In capital assets,
net of related debt
Unrestricted
Total net assets
2005 2004
$ 26,265,665 $ 25,448,645
90,294,079 81,374,480
116,559,744 106,823,125
16,289,370 14,665,546
14,916,051 15,732,844
31,205,421 30,398,390
81,044,981
4,309,342
$ 85,354,323 $
71,352,951
5,071,784
76,424,735
-4-
TOWN OF SOUTHOLD
MANAGEMENTS DISCUSSION AND ANALYSIS
December 31, 2005
FINANCIAL ANALYSIS OF THE TOWN AS A WHOLE (continued)
Total assets in the Towns as of December 31, 2005 were $116.5 million, an increase of $9.7 million. Total
liabilities as of December 31, 2005 were $31 million, an increase of approximately $1 million. This results in a
net asset balance of $85.3 million, an Increase of $8.9 million. Of the Town's net asset balance $81 million
were invested in capital assets, net of related debt; while $4.3 million was unrestricted.
Changes In Net Assets
Govemmental Activities
for the years ended December 31, 2005 and 2004
2005 2004
Program Revenues
Charges for services $ 10,723,666 $ 9,556,554
Operating grants and contributions 859,484 790,169
Capital grants and contributions 3,502,247 915,998
Total Program Revenues 15,085,417 11 ,262,721
General Revenues
Real property taxes 20,795,041 19,989,545
Other real property tax items 80,369 72,504
Non-property tax items 628,857 751,210
Interest earnings 766,413 264,223
State aid - unrestricted 2,527,110 2,867,169
Other 709,352 228,738
Total General Revenues 25,507,142 24,173,389
Total Revenues 40,592,559 35,436,110
Program Expenses
General government support 6,621,408 7,274,110
Public safety 11,342,991 9,899,209
Public health 43,559 42,551
Transportation 6,627,876 6,297,105
Economic assistance and opportunity 1,208,467 1 ,225,690
Culture and recreation 356,167 447,119
Home and community services 4,961,051 2,052,178
Interest on debt 501 ,452 460,838
Total Expenses 31,662,971 27,698,800
Increase in Net Assets $ 8,929,588 $ 7,737,310
,._,."-_........'""~.._,..._..~-,.
. .-".
TOWN OF SOUTHOLD
MANAGEMENT'S DISCUSSION AND ANALYSIS
December 31, 2005
FINANCIAL ANALYSIS OF THE TOWN AS A WHOLE (continued)
Net Cost of Services
Governmental Activities
for the year ended December 31, 2005
General government support
Public safety
Public heatth
Transportation
Economic assistance and opportunity
Culture and recreation
Home ana community services
Interest on debt
Total Cost
of Services
$ 6,621,408
11,342,991
43,559
6,627,876
1,208,467
356,167
4,961,051
501,452
$ 31,662,971
,. ____,',..~~".~...~.,..,~"..."o._,.,.._....m~
Net Cost
of Services
$ 6,265,526
1 0,588, 154
33,574
6,426,952
833,388
168,136
(8,239,628)
501,452
$ 16,577,554
The cost of all governmental activities this year was $31.6 million. The net cost of these services, however,
after subsidized by program revenues including charges for services and program grants, was $16.5 million.
The Town's change in net assets after general revenues of $25.5 million was an increase of $8.9 million.
Net Cost of Services
Governmental Activities
for the year ended December 31, 2005
General government support
Pu blic safety
Public heaith
Transportation
Economic assistance and opportunity
Culture and recreation
Home and community services
Interest on debt
"
Total Cost
of Services
$ 6,621,408
11,342,991
43,559
6,627,876
1 ,208.467
356,167
4,961,051
501,452
$ 31,662,971
Program
Revenues
$ 355,882
754,837
9,985
200,924
375,079
188,031
13,200,679
$ 15,085,417
TOWN OF SOUTHOLD
MANAGEMENT'S DISCUSSION AND ANALYSIS
December 31,2005
FINANCIAL ANALYSIS OF THE TOWN AS A WHOLE (continued)
$14,000,000
$12,000,000
$10,000,000
$8.000,000
$8.000.000
$4,000,000
$2,000,000
"""""""
_and
-
2%
Olher
-
........
0lI
Expenses and Program Revenue.
Governmental Activities
$-
. Expenses
. Program Revenues
-
_m....
-
Publca8lety PubJIche8tth TRlnapoIt8tIon EconamIc
...-...
and
--
_on
-
~
_and
--
S%
Real
-
-
52'llo
Slale sOl -
CuI... ....
....-...
Homo and
..........
--
Revenue by Source
Governmental AclIvitles
For the year ended December 31, 2005
Real property !aXes
Stale aid - unrestricted
Charges for services
Other generall8llllllUes
Operating grants and conlrlbutions
Capital grants and contributions
$20,795,041
2,527,110
10,723,686
2,184,991
659,484
3,502,247
$ 40,592,559
TOWN OF SOUTHOLD
MANAGEMENTS DISCUSSION AND ANAlYSIS
December 31, 2005
FINANCIAL ANALYSIS OF THE TOWN AS A WHOLE (continued)
THE TOWN'S FUNDS
The general fund balance has decreased by approximately $600,000 due primarily to actual expenditures in
excess of revenues. Although there was a decrease In fund balance, this decrease was less than amounts
budgeted.
The following schedule presents a summary of the governmental fund - (general, special revenue, and capital
projects) revenues and expenditures for the year ended December 31, 2005, and the amount of change and
percentage of total in relation to the prior year.
Increase %
2005 2004 (Decrease) Change
REVENUES
Real property taxes $ 20,795,041 $ 19,989,545 $ 805,496 3.9%
Other real property tax items 80,369 72,504 7,865 9.8%
Non-property tax items 628,857 751,210 (122,353) -19.5%
Departmental income 2,850,836 2,861,801 (10,965) -0.4%
Intergovernmental charges 7,453,845 6,342,748 1,111,097 14.9%
Use of money and property 906,664 407,338 499,326 55.1%
Licenses and pennits 426,269 419,247 7,022 1.6%
Fines and forfeitures 140,192 107,315 32,877 23.5%
Sale of property and compensation for loss 205,223 484,106 (278,883) -135.9%
Miscellaneous local sources 1,292,371 294,522 997,849 77.2%
State aid 3,946,391 3,825,015 121,376 3.1%
Federal aid 1,909,023 326,705 1,562,318 82.9%
Total Governmental Fund Revenues $ 40,635,081 $ 35,882,056 $ 4,753,025 11.7%
EXPENDITURES
General government support $ 4,741.463 $ 4,488,085 $ 253,378 5.3%
Public safety 7,984,619 6,993,563 991,056 12.4%
Public health 40,152 39,952 200 0.5%
Transportation 3,360,645 3,039,987 320,658 9.5%
Economic assistance and opportunity 901,139 931,566 (30,427) -3.4%
Culture and recreation 3,457,407 3,567,350 (109,943) -3.2%
Home and community services 315,273 304,071 11 ,202 3.6%
Employee benefits 6,803,164 5,654,256 1,148,908 16.9%
Capital 12,788,366 8,756,057 4,032,309 31.5%
Debt service principal and interest 2.439,675 2,215,224 224.451 9.2%
Total Governmental Fund Expenditures $ 42,831,903 $ 35,990,111 $ 6,841 ,792 16.0%
GENERAL FUND BUDGETARY HIGHLIGHTS
Over the course of the year the Town Board revises the budget as needed so that expenditures do not exceed
appropriations. In all Town funds, various transfers between appropriations were approved for this purpose.
TOWN OF SOUTHOLD
MANAGEMENTS DISCUSSION AND ANALYSIS
December 31,2005
CAPITAL ASSET AND DEBT ADMINISTRATION
CaDital Assets
As of December 31, 2005 the Town had $90.3 million in net capital assets Including land, buildings,
Improvements, machinery and equipment, and Infrastructure. The Town's component units had $8 million In
net capital assets Including land, buildings, Improvements, machinery and equipment, and sewer mains.
Capital Assets at December 31,
Primary Qovemment 2005 2004
Land $ 47,772,278 $ 37,795,087
Construction in progress 1,608,081 398,912
Buildings 4,574,513 4,569,296
Improvements other than buildings 13.498,954 13,469,136
Machinery and equipment 9,522,815 8,686,593
Infrastructure 70,038,525 69,334,187
Totalcapttalassets 147,015,166 134,253,211
Less accumulated depreciation 56,721,087 52,878,731
Primary government - Total net capttal assets $ 90,294,079 $ 81.374,480
Comoonent untts
Land $ 2,213,759 $ 2,213,759
Buildings 3,540,111 3,416,944
Improvements other than buildings 2,575,589 2,575,589
Machinery and equipment 3,200,728 3,170,695
Infrastructure 2,138,386 2,121,386
Totalcapttalassets 13.668,573 13.498,373
Less accumulated depreciation 5.639,830 5,236,652
Component untts - Total net capital assets $ 8,028,743 $ 8,261,721
.Q.
TOWN OF SOUTHOLD
MANAGEMENT'S DISCUSSION AND ANAlYSIS
December 31, 2005
CAPITAL ASSET AND DEBT ADMINISTRATION (continued)
Capital Assets (continued)
The capital program is a long range financing guide and not a definitive plan. Each appropriation must be
authorized by Town Board resolution before being undertaken. Each may be financed by issuance of general
obligation bonds, which, at times, are preceded by issuance of bond anticipation notes for various periods of
time depending on the probable usefulness of the purpose of expenditure. The following sets forth a summary
of the Town's capital program.
(Dollars In thousands):
Eauipment
General Fund
Highway Fund
Special Districts
$
2006
345,900
2,500
20.000
368.400
Total Equipment
$
Improvements
Total Improvements
$ 440,130
800.000
$ 1.240.130
$ 1 608 530
General Fund
Special Districts
Total Program
Additionallnfonnation on the Town's capital assets can be found in Note C.3 to the financial statements.
Debt Administration
The Town of Southold's credit rating from Moody's Investors Services was upgraded to A 1 from A2 in
February 2005.
Debt Umit - The Town has the power to contract indebtedness for any Town purpose so long as the principal
amount thereof, subject to certain limited exceptions, shall not exceed seven percent of the allllrage full
valuation of taxable real estate of the Town, and subject to certain enumerated exclusions and deductions
such as water and certain sewer facilities and cash or appropriations for current debt service.
The constitutional method for detennining full valuation is calculated by taking the assessed valuation of
taxable real estate as shown upon the latest completed assessment roll and dividing the same by the
equalization rate as determined by the State Board of Equalization and Assessment. The Stale Legislature is
required to prescribe the manner by which such ratio shall be detennined. Average full valuation is
detennined by taking the sum of the full valuation of the last completed assessment roll and the four preceding
assessment rolls and dividing such sum by five. Percentage of debt contracting power exhausted at December
31, 2005 was 2.16%.
At. December 31, 2005, the Town had approximately $9.2 million in long tenn general obligation bonds
outstanding, of which $9 million was for general Town purposes. Also outstanding at year-end were bond
anticipation notes in the amount of $8.8 million of which $6 million was for general Town purposes.
Additional infonnation on the Town's debt activity can be found in Note C.4 to the financial statements.
-10-
TOWN OF SOUTHOLD
MANAGEMENT'S DISCUSSION AND ANALYSIS
December 31,2005
ECONOMIC FACTORS AND NEXT YEAR'S BUDGETS AND RATES
Prooertv Tax
The Town has adopted a budget for the 2006 fiscal year which factors in inflation and other adjustments to
revenues and expenditures as well as prior year positive and negative fund balances. The 2006 budget
includes an overall increase in real property tax revenues from the prior year of approximately 3.9% for the
general Town governmental activities.
State AId and Local Assistance
The Town receives financial assistance from New York State and from Suffolk County. During 2005, financial
assistance Included state aid consisting of mortgage tax of $2.5 million, consolidated highway aid of $188
thousand, and community preservation aid of approximately $1 million. State aid per capita was $75.3
thouSElnd and County local government assistance was $211.7 thousand. Additionally, if the State should not
adopt Its budget In a timely manner, municipalities and school districts In the Stete, including the Town, may
be affected by a delay In the payment of state aid. The State is not constitutionally obligated to maintain or
continue state aid to the Town. The Town's 2006 budget included similar amounts for this financial assistance.
Retirement SYStem
The New York State Employees Retirement System, having suffered some adverse effects of the weak stock
market conditions, was expected to require payments in excess of amounts the Stale had originally anticipated
for the year ended 2005. When establishing the 2005 budget, the Town had anticipated these excess
payments. However, due to a change In the billing cycie, the State was able to hold the contribution rates to
those the State had originally anticipated. The Town subsequentiy re-appropriated the budgeted but
unexpended excess payment In the 2005 budget. The State's new billing cycie will require a minimum
contribution rate of 4.5%. Employer contribution for subsequent years will be based on the Russell 3000
performance as of April 1 of the preceding two years.
In 2003 the Town of Southold adopted the New York State Early Retirement Incentive Program as authorized
by Chapter 69 of the Laws of 2002. The option to retire early ran through December 31,2002. The eligibility
. varied based on tier, age and years of service, but all options required that the employees be at least fifty (50)
years of age and being vested In the New York State Retirement System. As part of its contractual
agreements with the unions, the Town of Southold also offers fully paid health insurance benefits (but not
welfare benefits) for the retiree and their present spouse until death of the retiree.
CONTACTING THE TOWN'S FINANCIAL MANAGEMENT
This financial report is designed to provide our citizens, taxpayers, customers, and creditors with a general
overview of the Town's finances and to show the Town's accountability for the money It receives. If you have
questions about this report or need additional financial Information, contact the Town of Southold, Office of the
Town Comptroller, Southold, New York.
.. .-_.--- -.-.'-~'._~--"'~"" .,.,
BASIC FINANCIAL
STATEMENTS
TOWN OF SOUTHOLD
GOVERNMENT-WIDE FINANCIAL STATEMENTS
STATEMENT OF NET ASSETS
December 31, 2005
Primary
Governmental Component
Activities Units
ASSETS
Current Assets:
Cash and investments $ 20,968,117 $ 1,250,827
Accounts receivable, net of allowances 236,215 3,561
Due from fiduciary funds 68
Due from other governments 2,631,939
Due from primary government 949,145
State and federal aid receivables 1,127,523 48,767
Prepaid charges 1,130,599 45,140
Inventory of material and supplies 1,204
T alai Current Assets 26,095,665 2,297,440
Non-Current Assets:
Deferred charges, net of accumulated amortization 170,000
Non-depreciable capnal assets 49,380,359 15,284,596
Depreciable capital assets, net of depreciation 40,913,720 5,918,714
Total Non-Current Assets 90,464,079 21,203,310
Total Assets 116,559,744 23,500,750
LIABIUTIES
Current Liabilities:
Accounts payable and accrued liabilities 1,344.864 442,802
Accrued interest payable 227,617 63,941
Bond anticipation notes payable 8,875,000 2,845,000
Due to other governments 393,570 2,271
Due to fiduciary funds 7,044
Unearned revenue 4,402,014 392,414
Other liabilities
Non-current Iiabllnies due within one year
General obligation bonds payable 755,000 195,000
Due to Employees Retirement System 45,189
Claims and judgments payable 220,000
Estimated liability for landfill dosure
and postclosure care costs 19,072
Total Current Liabilities 16,289,370 3,941,428
Non-Current Liabilities:
General obligation bonds payable 8,494,098 2,855,000
Due to Employees Retirement System 48,804
Compensated absences 5,779,826
Estimated liability for landf~1 closure
and postdosure care costs 593,323
Total Non-Current Liabilities 14,916,051 2,855,000
Total Liabilities 31,205,421 6,796,428
NET ASSETS
Investment in capital assets, net of related debt 81,044,981 14,093,268
Unrestricted 4,309,342 2,611,054
Total Net Assets $ 85,354,323 $ 16,704,322
See notes to the financial statements
-12-
FuncUonlProgram
PRIMARY GOVERNMENT
Govemment ActIvItles:
General government support
Public safety
Public haalth
Transportation
Economic assistance and opportunity
Cuilureancl recreation
Horne and commllllty services
Interest on debt
Total Primary Govemment-
COMPOHENTUNITS
General government support
Public heallh
Transportation
Culture end recreation
Home and community servIces
Interest on debt
Total Component Units
See notes to the tlnanclal slatements.
-13-
TOWN OF SOUTHOLD
BALANCE SHEET
GOVERNMENTAL FUNDS
December 31, 2005
MAJOR FUNDS Non-Major
Capital Governmental
General Highway ProJects Funds Tolals
ASSETS
Cash and invesbnents $ 9,292,437 $ 1,022,924 $ 9,406,620 $ 1,246,136 $ 20,968,117
Accounts receivable, net of allowance 24,533 8,190 30,500 172,992 236,215
Due from other funds 176,390 828,984 251,100 733,039 1,989,513
Due from trust funds 68 68
Stale and federal aid receivable 81,849 43,424 1,002,250 1,127,523
Due from other governments 1,867,136 759,803 5,000 2,631,939
Supply invenlory 1,204 1,204
Prepaids 498,344 56,947 54,024 609,315
Tolal Assets $ 11,941,961 $ 1,980,469 $ 11,450,273 $ 2,211,191 $ 27,563,894
UABIUllES AND FUND BALANCES
L1ABILmES
Accounts payable $ 627,049 $ 72,436 $ 337,613 $ 227,184 $ 1,264,282
Retained percentages 80,580 80,580
Bond anticipation notes payable 8,875,000 8,875,000
Due to other funds 1,888,241 73,59lI 27,674 1,989,513
Due to trust funds 7,044 7,044
Due to other govemments 393,570 393,570
Deferred revenue 3,018,595 831,185 552,234 4,402,014
Total Liabilities 5,934,499 903,621 9,366,791 807,092 17,012,003
FUND BAlANCE
Fund Balances - reserved:
Encumbrances 4,009 4,009
Supply inventory 1,204 1,204
Prepaids 498,344 26,686 525,030
Insurance claims 1,105,879 1,105,879
Fund Balance - unreserved: 16,000 16,000
Designated - ensuing yea~s budget 2,857,200 339,900 348,596 3,345,696
Undeslgnaled 1,740,826 700,946 2,083,482 1,028,817 5,554,073
Total Fund Equity 6,007,462 1,056,848 2,083,482 1,404,099 10,551,891
Total Llabinties and Fund Equity $ 11,941,961 $ 1,960,469 $ 11,450,273 $ 2,211,191 $ 27,563,894
See noles to the financial statements.
,,-
TOWN OF SOUTHOLD
RECONCILIATION OF THE GOVERNMENTAL FUNDS BALANCE SHEET TO THE
STATEMENT OF NET ASSETS
December 31,2005
Total Fund Balances - Governmental Funds $ 10,551,891
Amounts reported for governmental activities in the
Statement of Net Assets are different because:
Capital assets less accumulated depreciation are
included in the Statement of Net Assets:
Capital assets - non-depreciable $49,380,359
CapRal assets - depreciable 97,634,807
Accumulated depreciation (56,721,087)
90,294,079
Other long-term assets are not available to pay for current-period
expendRures and, therefore, are deferred in the funds
Long-term liabilities applicable to the Town's
governmental activities are not due and payable
in the current period and accordingly are not
reported in the funds. However these liabilities
are included in the Statement of Net Assets:
General obligation bonds payable (9.249,098)
Due to Employees Retirement System (93,993)
Compensated absences (5,779,826)
Claims and jud9ments payable (220,000)
Estimated Iiabilfty for landfill closure
and postclosure care costs (612,395)
(15,955,312)
Prepaid items included in the Statement of Net Assets 521,282
Deferred charges Included in the Statement of Net Assets 170,000
Interest payable applicable to the Town's governmental
activities are not due and payable in the current period
and accordin91y are not reported in the funds. However
these liabilRies are included in the Statement of Net Assets. (227,617)
Net Assets of Governmental Activities $ 85,354,323
See notes to the financial statements.
.1S-
TOWN OF SOUTHOLD
STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BAlANCES
GOVERNMENTAL FUNDS
For the year ended December 31, 2005
MAJOR GOVERNMENTAL FUNDS Non-Major
Capital Governmental
General Highway Projects Funds Totals
REVENUES
Real property taxes $ 14,608,674 $3,605,032 $2,381,335 $ 20,795,041
other real property tax items 68,607 9,046 2,516 60,369
Non-property tax items 415,071 213,786 628,857
Departmental income 345,956 2,504,860 2,850,836
Intergovernmental charges 252,558 $ 7,200,274 1,013 7,453,845
Use 01 lOOney and property 489,796 77,817 274,959 64,092 906,664
Ucenses and permits 249,178 11,126 165,965 426,269
Fines and forfeitures 140,192 140,192
Sare 01 property and compensation for loss 93,290 2,796 109,137 205,223
Miscellaneous local sources 432,269 155,054 551,457 153,591 1,292,371
State aid 2,637,870 188,147 1,045,000 75,374 3,946,391
Federal aid 174,348 1,510,539 224,136 1,909,023
Total Revenues 19,908,009 4,249,018 10,582,229 5,895,825 40,635,081
EXPENDITURES
Current
General government support 4,641,568 99,895 4,741,463
Public safety 7,177,145 807,474 7,984,619
Public health 33.288 6,864 40,152
Transportation 446,877 2,913,768 3,360,645
Economic assistance and opportunity 901,139 901,139
Home and comlTMJnily services 354,768 3,102,639 3,457,407
Cununa and recreation 315,273 315,273
Employee benefits 5,857,963 500,343 444,858 6,603,164
Capital outiay 12,788,366 12,788,366
Principal and interest 1,560,055 178,371 29,529 671,720 2,439,675
Bond Issuance costs 70,075 70,075
Advanced refunding escrow 112,758 112,758
Total Expendnures 21,288,076 3,592,482 13,000,728 5,133,450 43,014,736
Excess (Deficiency) of Revenues Over
Expenditures (1,360,067) 656,536 (2,418,499) 762,375 (2,379,655)
Other Financing Sources (Uses)
Proceeds 01 refunding bonds 2,360,000 2,360,000
Payments to refunded bond escrow agents (2,210,000) (2,210,000)
Premium on special assessment debt 12,833 12,833
BANs redeemed from appropriations 1,065,095 1,065,095
Transfers In 2,642,859 276,969 2,919,828
Transfers out (1,895,023) (520,085) (504,720) (2,919,828)
Total other Financing Sources (Uses) 747,836 (520,085) 1,524,897 (504,720) 1,247,928
Excess (Deficiency) of Revenues and other
Sources Over Expenditures and Olher Uses (632,231 ) 136.451 (893,602) 257,655 (1,131,727)
Fund Bslance at Beginning olVear 6,639,693 920,397 2,977,084 1,146,444 11,683,618
Fund Balances at End of Vear $ 6,007,462 $1,056,848 $ 2,083,482 $1,404,099 $ 10,551,891
See notes to the financial statements.
-16-
TOWN OF SOUTHOLD
RECONCILIATION OF THE GOVERNMENTAL FUNDS STATEMENT OF REVENUES,
EXPENDITURES AND CHANGES IN FUND BALANCES TO THE STATEMENT OF ACTIVITIES
For the year ended December 31, 2005
Net Change in Fund Balance
$
(1,131,727)
Governmental funds report capital outlays as expenditures. However, in
the Statement of Activities the cost of those assets is allocated over their
estimated useful lives and reported as depreciation expense. The amount
by which capital outlay exceeds depreciation in the current period is:
Capital outlay
Depreciation expense
Loss on dispositions
$13,205,174
(4,082,748)
(202,828)
8,919,598
Some expenses reported In the Statement of Activities do not require
the use of current financial resources and therefore, are not reported as
expenditures in governmental funds:
Prepaid charges
Deferred charges
(53,286)
170,000
The issuance of long-tenn debt and increase In obligations under capital
leases provides current financial resources to governmental funds, while the
repayment of the principal of long term debt and capital leases consumes
the current financial resources of governmental funds.
Neither transaction has any effect on net assets.
Bonds issued
Repayment of bond principal
Due to Employees Retirement System
Compensated absences
Claims and judgments payable
Estlmated liability for landfill closure
and postclosure care costs
Accrued interest payable
(2,380,000)
3,162.431
41,841
(117,468)
378,630
18,872
(79,303)
Change in Net Assets of Governmental Activities
$
8,929,588
See notes to the financial statements.
-17-
TOWN OF SOUTHOLD
STATEMENT OF FIDUCIARY NET ASSETS
December 31, 2005
Fishers Island
Town Ferry District Totals
ASSETS
Cash and investments $ 14,898,809 $ 43,462 $14,942,271
Other receivables 17 40,638 40,655
Due from other funds 7,044 7,044
Total Assets $ 14,905,870 $ 84,100 $14,989,970
LIABILITIES
Due to other funds $ 68 $ 38,829 $ 38,897
Due to school districts 11,675,920 11,675,920
Due to component units 517,902 517,902
Due to other governments 1,664,259 1,664,259
Other liabilities 8,881 8,881
Deposits held 1,038,840 45,271 1,084,111
Total Liabilities $ 14,905,870 $ 84,100 $14,989,970
See notes to the financial statements.
-18-
TOWN OF SOUTHOlD
NOTES TO FINANCIAL STATEMENTS
December 31, 2005
A SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The Town of Southold (the "Town"), which was established in 1640, is governed by Town law and other
general laws of the State of New York and various local laws. The Town Board is the legislative body
responsible for overall operations. The Town Board consists of the Supervisor who is elected for a term
of two years and five council members who are elected for terms of four years. The Town Board aPlX>ints
the Town Attorney, Comptroller and the Commissioner of Public Works whose terms are fixed by Town
law. The Town Clerk, Receiver of Taxes, Superintendent of Highways, Justices and Town Trustees are
all elected and serve for four years, respectively. The Town provides a full range of municipal seNices,
including public safety, transportation, home and community services, public works and road
maintenance, recreation and parks, and general and administrative services.
The financial statements of the Town of Southold have been prepared In conformity with accounting
principles generaRy accepted in the United Stales of America (GAAP) as applied to governmental units.
The Governrnental Accounting Slandards Board (GASB) is the accepted slandard setting body for
establishing governmenlal accounting and financial reporting principles.
The rnore Significant of the governmenfs accounting policies are described below.
1. REPORTING ENTITY
The financlal reporting entity consists of: (a) the primary government, which is the TOINI1 of
Southold; (b) organizations for which the primary government is financially accountable; and (c)
other organizations for which the nature and significance of their relationship with the prirnary
governrnent are such that exclusion would cause the reporting entity's financial statemen1s to be
misleading or incomplete as set forth in GASB Statement No. 14.
The decision to include a potential component unit in the Town of Southold reporting entity is based
on several criterta set forth in GASS Statement No. 14 Including legal standing, dependency and
financial accountability. Based on the application of these criteria, the following is a summary of
certain entities considered in determining the Town of Soulhold's reporting entity.
Certain special districts of the Town of Southold provide sanitation, ferry, and park services to
residen1s and businesses within the districts. These special districts are organized under New
York Slate Town law and have separately elected boards. Special districts cannot issue bonded
debt without the approval and the backing of the full faith and credit of the Town. Tax levies of the
speclal districts are collected by the Town Receiver of Taxes. As a result of this fiscal dependency,
the Town Is financially accounlable for these special districts. Accordingly, these special districts
have been determined to be component units of the Town and are presented discretely i1 a
separate column in the combined financial statemen1s to emphasize that they are legally sepaate
from the primary government
2. BASIS OF PRESENTATION
The Town's basic financial statements include both government-wide (reporting the Town as a
whole) and fund financial statemen1s (reporting the Town's major funds).
Govemrnent-wlde Financial Statements
The government-wide financial staternen1s reports information on the Town as a whole, except
fiduciary activities, with separate columns for the primary governmental activities as wall as the
discretely presented component units.
In the government-wide Statement of Net Assets, the Town's governmental activities .are
presented on a consolidated basis and are reported on a full accrual, economic resource basis,
which recognizes all long-term assets and receivables as well as long-term debt and obligations.
The Town's net asse1s are reported In three parts-investments in capital asse1s, net of related
debt; restricted net asse1s; and unrestricted net assets.
- 19-
TOWN OF SOUTHOLD
NOTES TO FINANCIAL STATEMENTS
December 31 , 2005
A SUMMARY OF SIGNIFICANT ACCOUNTING POUCIES (continued)
2. BASIS OF PRESENTATION (continued)
The government-wide Statement of Activities reports both the gross and net cost of each of the
Town's functional categories (public safety, transportation, home and community services, etc.),
which are otherwise supported by general government revenues (property, sales and use taxes,
certain intergovernmental revenues, fines, permits and charges, etc.). The Statement of
Activities reduces gross expenses (including depreciation), by related prograrn revenues and
operating and capital grants, to produce the net cost of each program. Program revenues
include (a) charges for services and (b) operating and capital grants and contributions that are
directly associated with the function. Operating grants include operating-specific and
discretionary (either operating or capital) grants while the capital grants coIurnn reflects capital-
specific grants. The net costs (by function) are normally covered by general revenue (property,
taxes, intergovernmental revenues, interest income, ele). As a general rule the effect of
interfund activity has been eliminated In general purpose financial statements.
This government-wide focus is more on the sustainability of the Town as an entity and the
change In the Town's net assets resulting from the current year's activities.
Fund Financial Statements
The fund financial statements are similar to the financial statements presented in the previous
model. The new emphasis Is on the major funds in the fund financial statements;. Non-major funds
are summarized into a single column.
The accounts of the. Town are organized on the basis of funds; each "of which is considered a
separate accounting entity. The operations of each fund are accountedfor"with a separate set of
self-baJanclng accounts that comprise Its assets, liabilities, fund balances, revenues, and
expenditures, which are segregated for the purpose of canying on specific actfvities or attaining
certain objectfves In accordance with special regulations, restrictfons or Iimltalions. The various
funds are presented by type In the fund financial s1atements. Accordingly, the Town maintains the
following fund types:
Governmental Funds - Governmental funds are those through which most governmental
functfons are financed. The acquisition, use and balances of expendable financial resources and
the related liabilities are accounted for through governmental funds. The measurement focus of
the governmental funds is upon determination of financial position and changes in financial
position. Governmental funds are further classified as major and non-major funds.
The Town reports the following major govemmental funds:
General FUnd - Is the principal operatfng fund of the Town. This fund is used to account for all
financial resources except those required to be accounted for In other funds.
Hlohwav Funds - to maintain and operate highways.
Caoltal Prolects Fund - used to account for financial resources to be used for the acquisition or
constructfon of major capital facilities (other than those financed by special assessment funds
and trust funds).
-20 -
TOWN OF SOUTH OLD
NOTES TO FINANCIAL STATEMENTS
December 31, 2005
A. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
2. BASIS OF PRESENTATION (continued)
Fund Financial Statements (continued)
Add~ionaJIy, the Town reports the following non-majorfunds:
Special Revenue Funds - are used to account for the proceeds of specific revenue sources (other
than major capital projects) that are legally resbicled to expend~ures for specified purposes.
Special Revenue Funds indude the following:
General Fund Part Town - to provide general services outside the Village of Greenport.
Soedal Grant Fund - segregate and account for projects funded by Commun~
Development revenue.
Soeclal District Funds - to provide special services to areas that encompass less than the
whole town.
Fiduciary Funds - Fiduciary Funds are used to account for assets held by the Town in a trustee or
custodial capa~.
Agency Fund - is for money (and/or properly) received and held in the ~ of trustee,
custodian or agent
Discretely Presented Component Units
Certain special districts that have separately elected boards provide transportation, park, mosquito
control, and san~on services to residents and businesses w~in these districts, and follow
government fund accounting principles. These districts, which are accounted for as discretely
presented component units, are as follows:
The Fishers Island Ferry District, established in 1947
Orient Mosquito District, established in 1916
Fishers Island Garbage and Refuse District, established In 1952
Cutchogue-New Suffolk Park District, established in 1953
Orient-East Marion Park District, established in 1969
Southold Park District, established in 1907
Mattiluck Park District, established in 1941
Complete financial statements of these component units can be obtained from their respective
administrative offices:
Orient Mosquito District
145 Platt Road
Orient, NY 11957
Cutchogue-New Suffolk
Park District
P.O. Box311
Cutchogue, NY 11935
Southold Park District
P.O. Box 959
Southold, NY 11971
Fishers Island Ferry District
P.O. Box 1179
Southold, NY 11971
Fishers Island Garbage
& Refuse District
Fishers Island, NY 06390
Orient-East Marion
Park District
P.O. Box 12
Orient, NY 11957
Mattiluck Park District
P.O. Box 1413
Mattiluck, NY 11952
- 21 -
TOWN OF SOUTHOLD
NOTES TO FINANCIAL STATEMENTS
December 31,2005
A. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
3. BASIS OF ACCOUNTlNGIMEASUREMENT FOCUS
Measurement focus refers to what is being measured whereas the basis of accounting refers to
when revenues and expenditures are recognized In the accounts and reported in the financial
statements. Basis of accounting relates to the timing of the measurement made, regardless of the
measurement focus applied.
In the govemment-wide statements, governmental activities are presented using the economic
resources measurement focus and are presented using the accrual basis of accounting. Under the
accrual basis of accounting, revenues are recognized when earned and exPenses are recorded
when the liability is incurred or economic asset used. Revenues, expenses, gains, losses, assets,
and liabilities resulting from exchange and exchange-like transactions are recognized when the
exchange takes place.
In the funds statements, governmental funds use a current financial resources measurement focus
and are accounted for using the modified accrual basis of accounting. Under the modified accrual
basis of accounting, revenues are recognized when susceptible to accrual (mellSUrable and
available to finance curent operations). "Measurable" means the amount of the transaction can be
determined and "available" means coOeclible within the current period or soon enough thereafter to
pay liabilities of the current period. The Town considers all revenues available If they are collected
within 60 days after the year end. Revenues susoeptible to accrual indude Suffolk County local
assistance at year end on behalf of the Town, franchise fees, and charges for services,
intergovernmental revenues and operating transfers. Permits, fees, and other similar revenues are
not susoeptlble to accrual because generally they are not measurable until they are received In
cash. In those instances where expenditures are the prime factor in determining eligibility for state
and federal granls, revenues are recognized when the expenditure is Incurred. In the Capital
Projects Fund, long-term debt is recognized as revenue upon receipt of the proceeds.
Expenditures are recorded on the accrual basis except that (a) expenditures for prepaid expenses
are recognized when Incurred; (b) principal and Interest on indebtedness are recognized as
expenditures when due; (c) compensated absences, such as vacation and sick leave, which vest or
accumulate, are charged as expenditures when paid.
Encumbrance accounting, under which purchase orders, contracts and other commitments are
recorded for budgetary control purposes In. order to reserve that portion of the applicable
appropriation, is employed in the governmental funds. Appropriations for all governmental funds
except the capital projects fund lapse at year-end. However, encumbrances reserved against fund
balances are re-approprialed In the ensuing year. Encumbrances are reported as reservations of
fund balances since they do not consOlute expenditures or liabilities. Expenditures for such
commitments are recorded in the period In which the liability is Incurred.
4. ASSETS, LIABILITIES AND FUND EQUITY
RECEIVABLES
Receivables include amounts due from Federal, State, and other governments or entities for
services provided by the Town. Receivables are recorded and revenues recognized as earned or
as speclflc program expenditures are Incurred.
INVENTORY - MATERIALS AND SUPPLIES
Inventory In the general and special revenue funds is valued at cost Inventory In these funds is
accounted for under the consumption method.
TOWN OF SOUTHOLD
NOTES TO FINANCIAL STATEMENTS
December 31, 2005
A. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
4. ASSETS, LIABILITIES AND FUND EQUITY (continued)
CAPITAL ASSETS
Capital assets purchased or acquired with an original cost of $5,000 or more are reported at
historical cost or estimated historical cost Contributed assets are reported at fair market value
as of the date received. Additions, Improvements and other capital outiays that significantiy
extend the useful life of an asset are capitalized. Other costs incurred for repairs and
maintenance are expensed as Incurred. Depreciation on all assets is provided on the straight-
line basis over the following estimated useful lives:
Buildings
Improvements and other
Machinery and equipment
Infrastructure
10-40 years
20 years
5-10 years
20-30 years
Infrastructure assets, consisting of certain improvements other than buildings induding roads,
curbs, sidewalks, bridges, street lighting are capitalized along with other capital assets.
In the fund financial statements, capital assets are recorded as capital outlay expenditures In the
governmental fund upon acquisition.
DEFERRED REVENUElUNEARNED INCOME
Deferred revenues/unearned Income are those where asset recognition criteria have been met, but
which revenue recognition criteria have not been met. Such amounts indude collections In
advance, uneamed income and amounts that have been deemed to be "measurable" but not
"available" to finance current expenses pursuant to generally accepted accounting principles.
PREPAlDS
Prepalds record payments to venders that benefit future recording periods and are reported on the
consumption basis. Prepaids in the General and Special Revenue Funds represent insurance
. premiums paid for coverage that will benefit the subsequent period and for retirement benefits that
will benefit a future period.
LONG.TERM OBLIGATIONS
The liabilities for long-tenn obligations consisting of general obligation bonds, compensated
absences, due to employee retirement system, judgments, claims and liability for landfill closure
and post dosure costs are recognized in the govemment-wide financial statements.
In the fund statements, long-term obligations are not reported as liabilities. The debt proceeds
are reported as other financing sources and payment of principal and interest reported as
expenditures.
5. REVENUES AND EXPENDITURES
REAL PROPERTY TAX ASSESSMENT AND COLLECTION PROCEDURES
In Suffolk County, the assessment and lien of real property for taxation Is done by the County
Department of Assessment. Real property taxes become a lien on December 1 for both school and
general taxes. The Town's assessment rolls are used for the levy of real property taxes by the
Town and the School Districts, as well as by the County and by Special Districts of the County and
the Town.
-23-
TOWN OF SOUTHOLD
NOTES TO FINANCIAL STATEMENTS
December 31, 2005
A. SUMMARY OF SIGNIFICANT ACCOUNTING POUCIES (continued)
5. REVENUES AND EXPENDITURES (continued)
REAL PROPERTY TAX ASSESSMENT AND COLLECTION PROCEDURES (continued)
The Town of Southold Receiver of Taxes collects all real property taxes for the Town, Suffolk
County, Town Special Districts and School DIstricIs. These taxes are levied on December 1, and
are due in two installments, 50% on December 1 and 50% on May 10, payable without penalty to
January 10 and May 31, respectively. Penalties are imposed thereafter at the rate of one-twelfth of
the rate of interest determined by the State Commissioner of Taxation and Finance, after which
taxes are payable to the County Treasurer. The Town retains the total amount of Town, Highway
and Town Special Districts levies from the amount collected, and forwards the balance collected to
the County which assumes collection responsibility. The Town and Town's Special Districts
therefore realize annually the 100% collection of real property taxes.
School District properly taxes are also levied on December 1, and are also payable In two
installments. School property taxes are due in two Instailments, 50% on December 1 and 50% on
May 10 payable without penalty to January 10 and May 31, respectively. The County is also
responsible for uncollected school taxes.
INTERFUND TRANSACTIONS
Interfund transactions have been eliminated from the govemment-wide financial statements. In
the funds statements interfund transactions include:
a) Interfund Revenues
Interfund revenues, quasl-external transactions, in the general fund represent amounts
charged for services or facilities provided by the general fund. The amounts paid by the fund
receiving the benefit of the service or facilities are reflected as an expenditure of that fund.
b) Transfers
Transfers represent payments to the debt servIce, general fund and capital projects funds
from the other funds for their appropriate share of the debt service, general fund or capital
project costs.
COMPENSATED ABSENCES
The liability for vested or accumulated vacation or sick leave (compensated absences) is
recorded as current and noncurrent obligations in the govemment-wlde statements. The current
portion of this debt is estimated based on historical trends. In the fund financial statements only
the compensated absence liability payable from expendable available financial resources is
incurred.
The amount that is expected to be liquidated with expendable available financial resources is
reported as expendnures and a Debility in the funds statement in the respective fund that will pay il
6. EQUITY CLASSIFICA nONS
In the govemment-wide statements, equity Is classified as net assets and displayed In three
components:
a) Invested In capital assets,. net of related debt - consists of capital assets including
restricted capital assets, net of accumulated depreciation and reduced by the outstanding
balances of any bonds, notes, or other borrowings that are attributable to the acquisition,
construction, or improvement of those assets.
-24-
TOWN OF SOUTHOLD
NOTES TO FINANCIAL STATEMENTS
December 31,2005
A. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
6. EQUITY CLASSIFICATIONS (continued)
b) Resbicted net assets - consists of net assets with constraints placed on the use either by
(1) external groups such as creditors, grantors, conbibutors, or laws or regulations of other
governments; or (2) law through constitutional provisions or enabling legislation.
c) Unresbicted net assets - all other net assets that do not meet the definition of "resbicted"
or "invested in capital assets, net of related debt."
In the fund statements, governmental fund equity is classified as fund balance. Fund balance is
further classified as reserved and unreserved, with unreserved further split between designated
and undesignated. Portions of fund equity are segregated for future use and therefore not
available for future appropriation or expenditure. Amounls reserved for encumbrances, Inventory,
insurance daims and debt service represent portions of fund equity, which are required to be
segregated In accordance with slate law or GAAP. Designations of fund balances in governmental
funds Indicate the utilization of these resouroes in the subsequent year's budget or tentative plans
for future use.
B. STEWARDSHIP, COMPLIANCE AND ACCOUNTABILITY
1. BUDGETARY DATA
Budgels are adopted annually on a basis consistent with generally accepted accounting
principles. Appropriations authorized for the current year are increased by the amount of
encumbrances carried forward from the prior year.
Budgetary controls for special revenue funds are established in accordance with the applicable
grant agreement, which may cover a period other than the Town's fiscal year. Appropriate
budgetary adjustments have been made to reflect these grant agreements dUring the Town's
fiscal year.
The Town follows the procedures enumerated below in establishing the budgetary data reflected in
the financial statements:
a. No later than October 1, the Supervisor submits a tentative budget to the Town Board for
the fiscal year commencing the following fiscal year. The tentative budget Includes the
proposed means of financing for all funds.
b. After public hearings are conducted to obtain taxpayer comments, no later than November
20, the Town Board adopls the budget.
c. The Town Board must approve all modifications of the budget. However, the Supervisor Is
authorized to transfer certain budgeted amounts within departments.
In order to show the full legal level of budgetary compliance for the general and certain special
revenue funds, detailed IndMdual statements of revenues, expenaltures and changes In fund
balances - budget and actual, are presented in a separate budget report.
TOWN OF SOUTHOLD
NOTES TO FINANCIAL STATEMENTS
December 31, 2005
B. STEWARDSHIP, COMPLIANCE AND ACCOUNTABILITY (continued)
2. FUND BALANCES
DESIGNATION OFFUND BALANCE
Portions of the unreserved balances at December 31, 2005 were designated for the subsequent
year's operating budgets as follows:
Fund Balance
Unreserved and
Designated
Total for Subsequent Fund Balance
Fund Balance Year's Unreserved
Fund Unreserved Budget Undesignated
Non-Major Funds:
Town Outside Village $ 845,309 $ 370,932 $ 474,377
East West Fire Protection District 15,112 4,350 10,762
Southold Wastewater District 176,657 176,657
Fishers Island Sewer District 32,546 32,546
Solid Waste Management District 334,475 334,475
Total $ 1,404,099 $ 375,282 $ 1,028,817
C. DETAILED NOTES ON ALL FUNDS AND ACCOUNT GROUPS
1. CASH AND INVESTMENTS
Cash consists of funds deposited in demand accounts, time deposit accounts and certificates of
deposit with maturities of less than three months.
The Town's invesbnents are governed by a formal invesbnent policy. The Town's monies must be
deposited in FDIC-insured commercial banks or trust companies located within the state. The
Town is authorized to use demand accounts and certificates of deposit Permissible invesbnents
include obligations of the U.S. Treasury, U.S. Agencies and invesbnents made by the Cooperative
Uquid Asset Security System (CLASS).
CLASS is a cooperative Invesbnent plan consisting of U.S. Treasury Obligations and repurchase
agreements relating to treasury obligations. Invesbnents are stated at cost, which approximates
market value. CLASS was established as a cooperative Investment arrangement organized under
the CLASS Municipal Cooperation Agreement made pursuant to New York General Municipal Law,
Artide 3A and 5-G.
It is the Town's policy to require collateral held in the name of the Town for demand deposits,
money market deposits and certificates of deposit for all deposits not covered by federal deposit
insurance. Obligations that may be pledged as collateral are obligations of the United States and
its agencies and obligations of the State and its municipalities and school districts.
At December 31,2005 the cash in banks was approximately $37,160,000 and collateral held
against cash in banks was $60,410,000 consisting of FDIC insurance and/or securities held in
the name of the Town of Southold.
-26 -
TOWN OF SOUTH OLD
NOTES TO FINANCIAL STATEMENTS
December 31,2005
C. DETAILED NOTES ON ALL FUNDS AND ACCOUNT GROUPS (continued)
2. INTERFUND RECEIVABLES AND PAYABLES
Interfund receivables and payables for the primary government at December 31, 2005 were as
follows:
General Fund - Town wide
Highway Fund
Capital Projects Fund
Part Town
East-West Fire District
Southold Wastewater District
Fishers Island Sewer District
Solid Waste Management District
Amount
Receivable
$ 176,390 $
828,984
251,100
152,519
92,199
4,752
325
483.244
Amount
Pavable
1,888,241
73,598
6,974
20.700
$ 1989513 $ 1989513
Interfund receivable and payable balances for the primary government at December 31, 2005 are
expected to be paid currently.
3. CAPrrALASSETS
Primary govemment
Capital assets not being depreciated
Land
Construction in progress
Total capllaJ assets not being depreciated
Depreciable capllal assets
Buildings
Improvements other than buildings
Machinery and equipment
Infrastructure
Total depreciable capllal assets
Less accumulated depreciation
Buildings
Improvements other than buildings
Machinery and equipment
Infrastructure
Total accumulated depreciation $
Total net depreciable capllal assets
Total net capllalassets
Balance
1/1/05
$ 37,795,087 $
398,912
38,193,999
4,569,296
13,469,136
8,686,593
69,334,187
96,059,212
1,933.832
3,020,775
5,567,555
42,356,569
52,878,731
-27 -
Additions
Deletions
9,977,191 $
1,362,656
11,339,847
-0- $
153,467
153,487
5,217
29,818
1,125,955
704,338
1,865,328
289,733
289,733
$
134,698
521,309
714,211
2,712,530
4,082,748 $
240,392
240,392
Balance
12/31105
47,772,278
1,608,081
49,380,359
4,574,513
13,498,954
9,522,815
70,038,525
97,634,807
2,068,530
3,542,084
6,041,374
45,069,099
56,721,087
40,913,720
$ 90,294,079
TOWN OF SOUTHOlD
NOTES TO FINANCIAL STATEMENTS
December 31, 2005
C. DETAILED NOTES ON All FUNDS AND ACCOUNT GROUPS (continued)
3. CAPITAL ASSETS (continued)
Depreciation elCpense was charged to governmental functions as follows:
General government support
Public safety
Transportation
Economic assistance and opportunity
Culture and recreation
Home and community services
$ 231,471
179,200
2,923,649
36,230
61,206
650,992
$ 4,062,746
Balance Balance
Discretely presented component units 1/1/05 Additions Deletions 12/31/05
Capital assets not being depreciated
land $ 2,213,759 $ 2,213,759 .
Construction in progress 10,592,179 $ 2,596,828 $ 16,440 13,174,567
Total capital assets not being depreciated 12,805,938 2,596,628 16,440 15,388,326
Depreciable capital assets
Buildings 3,416,944 123,167 3,540,111
Improvements other than buildings 2,575,589 2,575,589
Machinery and equipment 3,170,695 30,033 3,200,728
Infrastructure 2,121,386 17,000 2,138,386
Total depreciable capital assets 11,284,614 170,200 11.454,814
less accumulated depreciation
Buildings 1,186,077 103,656 1,289,733
Improvements other than buildings 973,574 88,000 1,061;574
Machinery and equipment 2,003,454 129,203 2,132,657
Infrastructure 1,073,547 82,319 1,155,866
Total accumulated depreciation $ 5,236,652 $ 403,178 5,639,830
Total net depreciable capital assets 5,814,984
Total net capital assets $ 21,203,310
'>0
TOWN OF SOUTHOLD
NOTES TO FINANCIAL STATEMENTS
December 31, 2005
C. DETAILED NOTES ON ALL FUNDS AND ACCOUNT GROUPS (continued)
4. INDEBTEDNESS
SHORT TERM DEBT
Bond Anticipation Notes (BANs) - Bond anticipation notes (BANs) are used as a tempcllary
means of financing capital expendttures in the capital projects fund. State law requires that BANs
issued for capttal purposes be converted \0 long-term obligations within five years after the original
issue date. The notes or renewal thereof may not extend more than two years beyond the original
date of issue unless a portion Is redeemed within two years and within each 12 month period
thereafter. liabilities for BANs are generally accounted for In the capital projects fund. BANs are
expected to be paid from the proceeds of future bond issues after renewal of these notes. These
BANs bear interest at various rates from 2.64% to 3.06% and are due at various dates through
2006.
When BANs are not redeemed with the proceeds of bond issues, but instead paid from budgetary
appropriations, the principal amount paid is recorded as an expenditure in the operating fund and a
financing source is recorded in the capital projects fund.
These notes are summarized as follows:
Descriotion
Various Purposes
Various Purposes
New london Wharf
Fishers Island Garbage
Total
Amount
$ 7,175,000
1,700,000
1,725,000
1.120.000
S 11.720000
Interest
Rate
2.64%
3.05%
2.75%
3.06%
Of the $11,720,000 in bond anticipation notes, $8,875,000 relates to the primary government and
the remaining $2,845,000 relates to the component untts.
LONG TERM DEBT
Summary of changes in long-term debt transactions for the year ended December 31, 2005 is as
follows:
Non-current
Balance Balance IiabDities due Non-cummt
1/1105 Increases Reductions 12/31105 within one year lIabDitles
Primary Government
General obligation bonds $ 10,031,529 $ 2,390,000 $ 3,162,431 $ 9,249,098 $ 755,000 $ 8,494,098
Due 10 Employees Retirement Syste, 135,834 41,841 93,993 45,189 48,804
Compensaled absences 5,662,358 860,531 743,063 5,779,826 5,779,826
ClaIms and judgments 598,630 378,630 220,000 220,000
Estimated labllily for landfill closure
and post-dosure care costs 631,267 18,872 812,395 19,072 593,323
Component Unite:
General obligation bonds 272,569 3,000,000 222,569 3,050,000 195,000 2,855,000
TOWN OF SOUTH OLD
NOTES TO FINANCIAL STATEMENTS
December 31, 2005
C. DETAILED NOTES ON ALL FUNDS AND ACCOUNT GROUPS (continued)
4. INDEBTEDNESS (continued)
LONG TERM DEBT (continued)
General Obligation Bonds - The Town borrows money in order to acquire land or equipment or
construct buildings and improvements. This enables the cost of these capital assets to be bome by
the present and future taxpayers receiving the benefit of the capital assets. These Iong-tenn
liabilities, which are backed by the full faith and credit of the Town, bear interest at various rates
from 2.95% to 6.375% and have maturity dates in 2006 through 2021.
Future prindpal and interest payments to maturity for both the primary govemment and the
component units are as foUows:
Year Endina
2006
2007
2008
2009
2010
2011-2015
2016-2021
$
PrindDal
950,000
979,098
995,000
1,025,000
1,000,000
4,390,000
2.960.000
$
Interest
405,624
376,466
345,307
312,347
277,956
910,394
265.814
Totals 9; 12299 098 9; 2893908
Other long-tenn liabilities for claims and judgments, compensated absencas, retirement system
and the estimated liability for landfill closure and post closure costs are to be paid by the fund
that gave rise to the liability.
During the year ended 2005, the Town issued $2,380,000 in general obligation bonds with an
interest rate ranging fi"om 2.50% to 3.75% to advance refund $2,210,000 of outstanding 1993 and
1995 Serial bonds with Interest rates between 5.00% and 5.10%. The net proceeds of $2,392,833
include an original issue premium of $12,833 which were used in part to pay insurance,
undelWliting fees and administrative costs of $70,075 with the balance deposited In an irrevocable
trust with an escrow agent to provide for all future debt service payments on the various general
obligation bonds. As a result, these bonds are considered to be defeased and the liability for those
bonds has been removed fi"om the Town.
The Towns advance refunded the various general obligation bonds In order to reduce its total debt
service payments over the nexl10 years by $100,505 and to obtain an economic gain of $66,538
(difference between the present values of the debt service payments on the old and new debt).
5. RETIREMENT SYSTEM
Plan Descriotlon
The Town of Southold partidpates in the New York State and Local Employees' Retirement System
(ERS) and local Police and RreRetirement System (PFRS). This is a cost-sharing multiple-
employer retirement system. The System provides retirement benefits as well as death and
disability benefits.
Obligation of employers and employees to contribute and benefits to employees are governed by
the New York State Ratirement and Social Security Law (NYSRSSL). As set forth In the
NYSRSSL, the Comptroller of the State of New York (Comptroller) serves as sole trustee and
administrative head of the System. The Comptroller shall adopt and may amend rules and
regulations for the administration and transaction of the business of the System and for the custody
and control of their funds.
A publicly available aMual report containing finandal statements and required supplemental
infonnation for the Employees' Retirement System may be obtained by writing to the New York
State Retirement System, Governor Smith State Building, Albany, NY 12244.
- 30-
TOWN OF SOUTHOLD
NOTES TO FINANCIAL STATEMENTS
December 31, 2005
C. DETAILED NOTES ON ALL FUNDS AND ACCOUNT GROUPS (continued)
5. RETIREMENT SYSTEM (continued)
Fundino Policv
The System is nonconbibutory except for employees who joined the New York Stale and Local
Employees' Retirement System after July 27, 1976 and who have less than ten years of
membership and less than ten years of credited service with a retirement system under the
provisions of article fourteen or fifteen of the NYSRSSL, who contribute 3% of their salary. Prior to
October 1, 2000, all employees who joined the System after July 27, 1976 were required to
contribute 3% of their salary. Under the authority of the NYSRSSL, the Comptroller shall certify
annually the rates expressed as proportions of payroll of members, which shall be used In
computing the conbibutions required to be made by employers to the pension accumulation fund.
The Town is required to contribute at an actuarially determined rate. The actual contributions were
aqualto the actuarially required amounts and also include additional conbibutlons to fund various
early retirement incentives made available to the Town employees. The credits and miscellaneous
adjustments represent modification made by the ERS for prior year's conbibutions.
The required contributions, for the Primary govemment, for the aJrrent year and two preceding
years were:
2005
2004
2003
ERS
$ 1,068,200
$ 992,023
$ 443,861
$
$
$
PFRS
1,016,937
679,079
240.756
The Town's contribution to the system was 100% of the contributions requi'ed each year.
6. POST EMPLOYMENT BENEFITS
In addition to providing pension benefits, the Town provides health Insurance coverage and survivor
benefits for retired employees and their survivors. Substantially all of the Town's employees may
become eligible for these benefits if they reach normal retirement age while working for the TO'Ml.
Health care benefits are provided through either a self-funded plan whose premiums are based on
the benefits paid during the year or are provided in acconlance with New York State Health
Insurance Rules and Regulations (administered by the New York State Department of Civil Service)
through the New York State Empire Plan (the "Empire Plan") whose premiums are based on the
benefits paid throughout the State during the year.
The Town recognizes the cost of providing benefits by recording its share of insurance
premiums or the actual benefits paid as expenditure in the year paid. The Town's union
contracts and ordinances require that it provide Its eligible enrollees with benefit coverage under
either the self-funded plan or the Empire Plan. Under the provisions of the Empire Plan,
premiums are adjusted on a prospective basis for any losses experienced by the Empire Plan.
The Town has the option to terminate its participation In the Empire Plan at any time without
liability for its respective share of any previously incurred loss. During the 2005 year,
$3.014,128 was paid on behalf of 88 retirees and 207 active employees and is recorded as an
expenditure In the General Fund.
7. COMPENSATED ABSENCES
Town employees are granted vacation and sick leave and earn compensatory absences in
varying amounts. In the event of termination or upon retirement, an employee is entitled to
payment for accumulated vacation and sick leave and unused compensatory absences at
various rates subject to certain maximum limitations.
.,.
TOWN OF SOUTHOLD
NOTES TO FINANCIAL STATEMENTS
December 31, 2005
C. DETAILED NOTES ON ALL FUNDS AND ACCOUNT GROUPS (continued)
7. COMPENSATED ABSENCES (continued)
Estimated vacation, sick leave and compensatory absences accumulated by govemmental fund
type employees have been recorded in the statements of net assets. Payment of vacation time and
sick leave is dependent upon many faclors; therefore, timing of future payments is not readily
determinable. However, management believes that sufficient resources will be made available for
the payments of vacation, sick leave and compensatay absences when such payments become
due. As of December 31, 2005, the value of the accumulated vacation time and sick leave was
$5,779,826 for the primary govemment
D. COMMITMENTS AND CONTINGENCIES
Risk Management
The Town Is self-Insured for both medical Insurance and general liability Insurance. The amount of
medical claims outstanding at December 31, 2005 Is $200,131. This amount has been reserved
agaInst fund balance In the General Fund.
In common with other municipalities, the Town receives numerous notices of claims. Prior to 2005,
coverage for bodily injury and property damage was previously written on a primary non-self Insured
retention ("SIR") basis. Insurance market conditions and availability precluded the Town from obtaining
coverage in 2005 without an SIR. As a result, in 2005 the Town self-Insured for bodily injury and
property damage up to a maximum of $50,000 per claim. The $50,000 limitation was the minimum
retention amount available to the Town. Claims in excess of $50,000 are covered by excess liability
policies providing coverage for $10,000,000 per occurrence and in the aggregate. Although the
eventual outcome of these 2005 claims cannot presently be determined, the Town's third party
administrator has estimated unsettled claims at December 31, 2005 to be $94 thousand. These
amounts have been reserved against fund balance in the General Fund. The Town is of the opinion
that the ultimate settlement of the outstanding claims will not result in a material adverse effect on the
Town's financlal position.
Since 2005, there have been no Significant reductions in insurance coverage as compared to the prior
year; in addition there were no setuements on excess of insurance coverage over the last three years.
The Town Is also self-insured for unemployment benefits paid.
Landfill Closure and Post.closure Care Costs
Stale and federal laws and regulations require the Town to place a final cover on its landfill sites and to
perform certain maintenance and monitoring functions at the sites for thirty years after closure. The Town
ceased accepting waste at Its Cutchogue landfill as of October 8, 1993. The Town entered into a
stipulation of settlement with the New Yark State Department of Environmental Conservation In
October of 1994 In which all charges of operational violations at the Cutchogue landfill were dropped.
Under the stipulation, the Town agreed to close and place a final cover over the landfill and. to pay a
. civil penalty of $650,000 over seven years. Construction of the flnal cover commenced In the summer
of 2001 and was completed In the fall of 2003.
In addition to placement of the final cover on the landfill, state and federal regulations presently require
the Town to perform certain maintenance and monitoring functions at the site for up to thirty years.
Accordingly, as of December 31, 2005 the Town has recorded a liability of $612,395 which represents the
provision to be made In future budgets for post-closure landfill costs. Actual costs may vary due to
inflation or deflation, changes In technology, or changes in regulations or applicable laws.
Actual costs associated with the placement of the final cover totaled $7,681,719. Financing for closure
activities was provided through a $2,000,000 grant from the New York State Department of
Environmental Conservation with the balance provided with a state subsidized loan through the New
York Stale Environmental Facilities Corporation. Costs associated with post closure care will be
covered by charges to future landfill users and future tax revenue.
- 32-
TOWN OF SOUTHOLD
NOTES TO FINANCIAL STATEMENTS
December31,2005
D. COMMrrMENTS AND CONTINGENCIES (continued)
Lease Commitments and Leased Assets
The Town leases property and equipment under operating leases. Total rental expend~ures on such
leases for the fiscal year ended December 31, 2005 were approximately $205,000. Future obligations
over the primary terms of the Town's leases as of December 31 , 2005 are as follows:
2006
2007
2008
2009 and thereafter
Total
$
115,9n
94,997
85,184
684.824
980 982
$
E. CONDENSED FINANCIAL STATEMENTS FOR THE DISCRETELY PRESENTED
COMPONENT UNrTS
The following represents condensed financial statements for the discretely presented component units as
of and for the year ended December 31, 2005:
Condensed S_ment of Net Assets:
Due from Capllal Assets 01I1er
Current Primary Net of Current Long-Term Net
District Assets Government Depreciation Liabilities u_ Assets
Fishers Island Feny $ 333,136 $ 119,344 $ 15,757,994 $ 2,439,520 $ 2,700,000 $ 11,070,954
Fishe.. Island Refuse and Garbage 640,862 631,328 3,026,171 1,235,336 3,063,025
Cutchogue-New Suffolk Park 125,725 28,382 124,218 28,382 249,946
Southo/d Park 21,550 63,406 648,159 65,677 667,438
Orient-East Marion Park 4,182 5,559 432,985 16,002 426,724
Mattltuck Park 190,451 85,771 1,204,103 141,156 155,000 1,164,169
Orient Mosqufto 32,386 15,355 9,680 15,355 42,066
$ 1,348,295 $ 949,145 $ 21,203,310 $ 3,941,428 $ 2,855,000 $ 16,704,322
Condenssd Slalement of _Illes:
PRlgram General Rev...... Net Assets
Properiy
District Expenses Revenue Net Expense Tax Oll1er Change 1/1J05 12131J05
Fishero IsloOO Feny $ 2,714,385 $ 1,864,374 $ 830,011 $ 400,000 $ 2,026,871 $ (1,598,880) $ 9,474,094 $ 11,070,954
Fish... IsIend Refuse & Garbage 489,808 47,644 441,962 599,400 36,698 (194,136) 2,868,889 3,063,025
Cutchogue-New Suffolk Perk 136,633 138,633 141,000 2,850 (5,217) 244,729 249,946
SoulhoIdPOIIl 350,088 350,088 315,000 34,090 998 688,436 667,438
OrIent.East Marion POIIl 29,000 29,000 24,900 62 4,038 430,762 426,724
MatIiIuck Park 304,002 304,002 405,930 11,025 (112,953) 1,071,218 1,184,169
Orient Mosqullo 60,371 60,371 74,650 401 (14,680) 27,386 42,086
$ 4,086,085 $ 1,932,018 $ 2,154,087 $ 1,960,880 $ 2,111,997 $ (1,918,810) $ 14,785,512 $ 16,704,322
REQUIRED SUPPLEMENTARY
INFORMATION OTHER THAN
MANAGEMENT DISCUSSION AND
ANALYSIS
TOWN OF SOUTHOLD
GENERAL FUND
SCHEDULE OF REVENUES, EXPENDITURES, AND CHANGES
IN FUND BALANCE - BUDGET AND ACTUAL
Year ended December 31, 2005
Original Final Variance
Budget Budget Actual Positive/(Negative )
REVENUES
Real property taxes $14,608,674 $ 14,608,674 $ 14,608,674
Other real property tax items 66,000 66,000 68,807 2,807
Non-property tax items 401,035 401,035 415,071 14,036
Departmental income 349,900 349,900 345,956 (3,944)
Intergovemmental charges 194,160. 269,823 252,558 (17,265)
Use of money and property 286,625 286,625 489,796 203,171
Licenses and permits 218,330 218,330 249,178 30,848
Rnes and forfeitures 112,000 112,000 140,192 28,192
Sale of property and compensation for loss 45,350 70,025 93,290 23,265
Miscellaneous local sources 86,646 113,654 432,269 318,615
State aid 2,348,264 2,483,083 2,637,870 154,787
Federal aid 270,000 270,000 174,348 (95,652)
Total Revenues 18,986,984 19,249,149 19,908,009 658,860
EXPENDITURES
General govemment support 5,545,742 5,764,043 4,641,568 1,122,475
Public safety 6,889,518 7,189,570 7,177,145 12,425
Public health 33,300 33,300 33,288 12
Transportation 420,500 466,131 446,877 19,254
Economic assistance and opportunity 993,400 982,510 901,139 81,371
Culture and recreation 388,870 398,370 354,768 43,602
Home and community services 299,101 316,755 315,273 1,482
Employee benefits 5,811,949 5,868,274 5,857,963 10,311
Debt service - principal and interest 1,773,100 1,577,799 1,560,055 17,744
Total Expenditures 22,155,480 22,596,752 21,288,076 1,308,676
Deficiency of Revenues
Over Expenditures (3,168,496) (3,347,603) (1,380,067) 1,967,536
Other Financing Sources (Uses)
Transfers in 5,488,341 5,559,682 2,642,859 (2,916,823)
Transfers out (2,319,845) (2,212,079) (1,895,023) 317,056
Total Other Financing Sources (Uses) 3,168,496 3,347,603 747,836 (2,599,767)
Excess (Deficiency) of Revenues and Other
Sources Over Expenditures and Other Uses (632,231 ) $ (632,231 )
Fund Balance at Beginning of Year 6,639,693
Fund Balance at End otVear $ 6,007,462
See notes to the financial statements.
-34-
TOWN OF SOUTHOLD
HIGHWAY FUND
SCHEDULE OF REVENUES, EXPENDITURES, AND CHANGES
IN FUND BALANCES - BUDGET AND ACTUAL
Year ended December 31,2005
Original Final Variance
REVENUES Budget Budget Actual Positivel(Negative)
Real Property Taxes $ 3,805,032 $ 3,805,032 $ 3,805,032
Other Real Property Tax Items 3,600 3,600 8.935 5,335
Non-Property Tax Items 111 111
Use of Money and Property 25,300 25,300 77,817 52,517
Licenses and Permits 5.000 5,000 11,126 6,126
Sale of Property and Compensation for Loss 1,000 1,000 2,796 1,796
Miscellaneous Local Sources 155,054 155,054
State Aid 223,700 223,700 188.147 (35,553)
Total Revenues 4,063,632 4,063,632 4,249,018 185,386
EXPENDITURES
Transportation 3,228,488 3,228,488 2,913,768 314,720
Employee Benefits 553,741 553.741 500,343 53,398
Debt Service - Principal and Interest 189.932 189,932 178,371 11,561
Total Expenditures 3,972,161 3,972,161 3,592.482 379,679
Excess of Revenues
Over Expenditures 91,471 91,471 656,536 565,065
Other Financing Uses (Sources)
Operating Transfers In 494,564 494,564 (494,564)
Transfers Out (586,035) (586.035) (520.085) 65,950
Total Other Financing Uses (91.471) (91,471 ) (520,085) (428,614)
Excess of Revenues Over
Expenditures and Other Uses 136.451 $ 136,451
Fund Balance at Beginning of Year 920,396
Fund Balance at End of Year $ 1,056,847
See notes to the financial statements.
_ ';lJ;_
OTHER SUPPLEMENTARY
INFORMATION
TOWN OF SOUTHOLD
COMBINING BAlANCE SHEET
NON-MAJOR GOVERNMENTAL FUNDS
December31, 2005
East-West Fire Southold fishers Solid Waste
General Fund Special Protection Wastewater lsjand Sewer Management
Part Town Grant District District District District Totals
ASSETS
Cash and Investments $ 740,370 $ 27,767 $ 176,492 $ 30,994 $ 270,513 $1,246,136
Accounts receivable, net of alk>wance 46,769 1,289 124,934 172,992
Due from other funds 152,519 92,199 4,752 325 483,244 733,039
Due from other govemments $ 5,000 5,000
State and Federal Receivables
Prepaid expenditures 26,686 27,338 54,024
Total Assets $ 968,344 $ 5.000 $ 119,968 $ 181,244 $ 32.608 $ 908,029 $2,211,191
LIABIUTlES AND FUND EQUITY
LIABILITIES
Aooounts payable $ 14,395 $ 5,000 $ 12,658 $ 62 $ 195,071 $ 227,184
Due to other funds 6,974 20,700 27,674
Deferred revenue 99,666 92,198 $ 4,587 355,783 552,234
Total Uabilitles 121,035 5,000 104,854 4,587 62 571,554 807,092
FUND EQUITY
Fund balance - reserved:
Prepaid expenses 26,686 26,666
fund balance - unreserved:
Designated ~ ensuing year's budget 344,246 4,350 348,596
Undesignated 474,3n 10,782 176,657 32,546 334,475 1,028,817
Total Fund Equity 645,309 15,112 176,857 32,548 334,475 1,404,099
Total Uabllilies and Fund Equity $ 966,344 $ 5,000 $ 119.966 $ 181,244 $ 32,608 $ 906,029 $2,211,191
-36-
TOWN OF SOUTHOLD
COMBINING STATEMENT OF REVENUES. EXPENDITURES AND CHANGES
IN FUND BALANCES - NON-MAJOR GOVERNMENTAL FUNDS
Year ended December 31, 2005
East-West Fire Southold Fishers Solid Waste
General Fund Special Protection Wastewater Island Sewer Management
Part Town Grant District District District District Totals
REVENUES
Real property taxes $ 538,n3 $ 413,058 $ 137,450 $ 1,814 $ 1,290,440 $ 2,381,335
Other real property tax items 1,220 290 97 2 907 2,516
Non property tax Items 213,788 213,786
Departmental Income 739,263 26,231 17,423 1,721,943 2,504,880
Intergovernmental charges 1,013 1,013
Use of money and property 28,321 2,689 6,666 1,190 25,226 64,092
Licenses and pennits 5,200 160,765 165,965
Sale of property and compensation for loss 6,556 100,581 109,137
Miscellaneous local sources 74,427 4,621 74,543 153,591
State aid 75,374 75,374
Federal aid $ 224,138 224,136
Total Revenues 1,684,940 224,136 416,037 175,065 20,229 3,375,416 5,895,825
EXPENDITURES
General government support 99,895 99,895
pubnc safety 393,192 414,282 807,474
Public hearth 6,864 6,864
Home and community services 563,269 224,755 1,846 29,598 2,283,171 3,102,639
Employee benefits 210,778 212 233,870 444,858
Debt service - principal and interest 5,385 2.475 663,860 871,720
Total Expenditures 1,279,381 224,755 414,282 4,533 29,598 3,180,901 5,133.450
Excess (Deficiency) of Revenues
Over expenditures 405,559 (819) 1,755 170,532 (9,369) 194,517 762,375
Other Financing Uses:
Operating transfers out (264,969) (239,751) (504,720l
Total Other FInancing Uses (264,969) (239,751) (504,720)
Excess (Deficiency) of Revenues
Over expenditures and Other Uses 140,590 (619) 1,755 170,532 (9,369) (45,234) 257,655
Fund Balance at Beginning ofVear 704,719 619 13,357 6,125 41,915 379,709 1,146,444
Fund Balances at End of Year $ 845,309 $ -Q.. $ 15,112 $ 178,657 $ 32,546 $ 334.475 $ 1,404,099
-37-
DISCRETELY PRESENTED COMPONENT UNITS
TOWN OF SOUTHOLD
DISCRETELY PRESENTED COMPONENT UNITS
COMBINING STATEMENT OF NET ASSETS
December 31, 2005
Fishers Island Cutchogue- Southold Orlent..east Maffituck Orient
Rshe.. RofU8e ond New Suffolk Parl< Marlon Park Perl< Mosquito
Island Ferry Galbage DI$trIcI ParitDlalrk:t Dlsbict DistJ1<:t Distrtct District
District (Unaudited) (Unaudited) (Unaudited) (Unaudited) (Unaudited) (Unaudited) Totals
ASSETS
Current Assets:
Cash and Investments $ 259,882 $ 617,409 $ 125,726 $ 21.550 $ 4.182 $ 169,690 $ 32.386 $ 1.250,827
Accounts receivable. net of allowance 3,561 3.561
Due from primary government 119.344 631.328 28.382 .63,406 5,559 85.771 15.355 949.145
State and federal f8Ceivables 46,767 48,767
PrepaId charges 24.487 19.892 761 45,140
Total Current Assets 452.480 1.272,190 154,110 64,956 9.741 276,222 47.741 2.297.440
Non-Current Assets:
Non-depreciable capital assets 11,203,523 2.442.737 101,198 588,647 432,985 515.306 15.284,596
DeprecIable capital 88sets. net of depreciation 4.554.471 563,434 23.020 59.312 688.797 9.680 5.918.714
Total Assets 16.210.474 4.298.361 278.328 733.115 442.726 1.480.325 57,421 23.500,750
LlABIUTlES
Current LlabiOtles:
Accounts payable and lICCnJed liabilities 421,634 1.910 10.443 8.815 442.802
Accrued Interest payable 62.371 1,570 63.941
Due to other governments 2,271 2,271
Other liabilities
Deferred revenue 80.515 113,426 28.382 63,_ 5.559 85,n1 15.355 392,414
Due to other funds
Bond antk::lpation notes payabkt 1,725,000 1,120,000 2.845.000
Non-current. IlablllUes due within one year
General obligation bond, payable 150,000 45.000 195.000
Total Current UablUtles 2.439.520 1.235.336 28.382 65.6n 16.002 141.156 15,355 3.941,428
Noncurrent Uablllties:
General obligation bonds payable 2,700,000 155,000 2.855,000
Total UablllUes 5,139.520 1235.336 28.382 65.6n 16.002 296.156 15.355 6.796.428
NET ASSETS
Investment in capital assets. net of related debt 11,182,994 1,906,171 1.004.103 14.093.268
Unrestricted (112.040) 1,156,854 249.946 667 .438 426.724 180.066 42.066 2,611.054
Total NetAssels $ 11.070,954 $ 3,063.025 $ 249.946 $ 687.438 $ 426.724 $ 1,184.169 $ 42.066 $ 18.704.322
-38-
TOWN OF SOUTliOLO
DISCRETELY PRESENTED COMPONENT UNITS
COMBINING STATEMENT OF ACTIVITIES
Yssrended December 31. 2005
Fishers Island Cutchogue-- Southold Orient-East Mallltuck Orient
Fishers Refuse and New Suffolk Pari< Marion Park Pari< Mosquito
Island Feny Garbage District Parl<Dlstrlct District District District District
District (Unaudited) (Unaudited) (Unaudited) (Unaudited) (Unaudited) (Unaudited) Totals
REVENUES
Program revenues $ 1,884,374 $ 47,844 $ 1,932,018
Real property taxes 400,000 599,400 $ 141,000 $ 315,000 $ 24,900 $ 405,930 $ 74,650 1.980.880
Other real property tax items 281 285 566
Miscellaneous revenue, other govemments 18,449 18,449
Interest and earnings 17,420 36,698 2,850 62 11,432 401 88,863
State Aid 684 684
Federal Aid 1,983,139 1.983,139
Other 6,898 34.090 (692) 40,296
Total Revenues 4,311,245 683,742 143,850 349.090 24,962 416.955 75,051 6,004,895
EXPENSES
General government support 80,610 80,610
Public health 60,371 60,371
Transportation 2,532,192 2,532,192
Culture and recreatlon 138,633 350,068 29.000 296,780 814,501
Home and community services 16.942 478,890 495,832
Interest 84,641 10,716 7,222 102,579
Total Expenses 2,714,385 489,608 138,633 350,Q88 29,000 304.002 60,371 4.066,085
Changes In Net Assets 1,596,860 194.136 5,217 (996) (4,038) 112,953 14.660 1,918,810
Net Assets at Beginning of Vear 9,474,094 2,868,889 244,729 688,438 430,762 1,071,218 27,386 14,785,512
Net Assets at End of Year $11,070,954 $ 3,083,025 $ 249.946 $ 667 .438 $ 426.724 $ 1,184.169 $ 42.066 $16.704.322
-39-
OTHER REPORTS
TOWN OF SOUTHOLD
SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS
December 31. 2005
FEDERAL GRANTOR/PASS
THROUGH GRANTORIPROGRAM TITLE
U.S. Deoartment of Health & Human Services
Passed throuah Suffolk County:
Nutrition Services Incentive Program
U.S Department of Health & Human Services
Passed throuah Suffolk Countv:
Nutrition
U..S. Deoartment of Homeland Security
Passed throuah the State of New Yark
Buffer Zone Protection Plan
U.S Department of Aariculture
Natural Resouce Conservation Service
Fann & Ranchland Protection Program
U.S Department of Housina and Urban Develooment
Passed throuah Suffolk Countv:
Community Development Block Grant
U.S Department of the Interior
Fish and Wildlife Service
Passed throullh the State of New Yark
Department of Environmental Conservation:
Coastal Wetlands Conservation Grant
-40-
FEDERAL
CFDA
NUMBER EXPENDITURES
93.053 $
21,174
93.045
103,174
97.078
so,ooo
10.913
510,539
14.218
224,136
15.614
1,000,000
$ 1,909,023
TOWN OF SOUTHOLD
NOTE TO SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS
December 31, 2005
Note A - Basis of Presentation
The accompanying schedule of expenditures of federal awards includes the federal grant activity of the Town
of Southold and is presented on the modified accrual basis of accounting. The information in this schedule is
presented in accordance with the requirements of OMB Circular A-133, Audits of States, Local Governments,
and Non-Profit Organizations. Therefore, some amounts presented in this schedule may differ from amounts
presented in, or used in the preparation of, the basic financial statements.
-41-
CERTIFIED PUBLIC ACCOUNTANTS. BUSINESS ADVISORS AND CONSULTANTS
25 Suffolk Court, Hauppauge, New .furk 11788
631.434.9500 . Fax 631.434.95/8
WWlv.Qvz.com
REPORT ON INTERNAL CONTROL OVER FINANCIAL
REPORTING AND ON COMPLIANCE AND OTHER MATTERS
BASED ON AN AUDIT OF FINANCIAL STATEMENTS PERFORMED
IN ACCORDANCE WITH GOVERNMENT AUDITING STANDARDS
. Town Board
Town of Southold
Southold, New York
We have audited the financial statements of the govemmental activities, each major fund, and the aggregate
remaining fund information of the Town of Southold, New York as of and for the year ended December 31,
2005, which collectively comprise the Town of Southold's basic financial statements, and have Issued our
report thereon dated June 8, 2006, which was qualified because the Town of Southold's discretely presented
component units with the exception of one, the Fishers Island Ferry District, were not audited as of the report
date. We conducted our audit in accordance with auditing standards generally accepted in the United Stales
of America and the standards applicable to financial audits contained in Government Auditing Standards,
issued by the Comptroller General of the United States.
Intemal Control Over Financial ReDortina
In planning and performing our audit, we considered the Town of Southold, New York's internal control over
financial reporting in order to determine our auditing procedures for the purpose of expressing our opinions on
the financial statements and not to provide assurance on the internal control over financial reporting. Our
consideration of the intemal control over financial reporting would not necessarily disclose all matters in the
internal conrol over financial reporting that might be material weaknesses. A material weakness is a condition
in which the design or operation of one or more of the Internal control components does not reduce to a
relatively low level the risk that misstatements in amounts that would be rnaterlal In relation to the financial
statements being audited may occur and not be detected within a timely period by employees In the normal
course of performing their assigned functions. We noted no matters involving the intetRaI control' over
financial reporting and Its operation that we consider to be material weaknesses.
ComDliance and Other Matters
As part of obtaining reasonable assurance about whether the Town of Southold's financial statemenls are free
of material misstatement, we performed tesls of its compliance with certain provisions of laws, regulations,
contracts, and granls, noncompliance with which could have a direct and material effect on the determination
of. financial statement arnounls. However, providing an opinion on compliance with those provislons was not
an obJecttve of our audit, and accordingly, we do not express such an opinion. The resulls of our tests
disclosed no Instances of noncompliance that are required to be reported under Government Auditing'
standards.
This report is intended solely for the information of the Town Board, management, others within the
organization, and federal awarding agencies and pass-through entities and is not intended to be and should
not be used by anyone other than those specified parties.
Ql.I,...U-, ~ ( z.. f Jv -r ~I f? (/
Hauppauge, New York
June 8, 2006
-42-
ALBRECHT, VIGGIANO, ZURECK Ii. COMPANY, P.C.
Wkl4..I1.4I.MDg"'OI'II!ICR~
-~" ..,~----~,---,-_.._,-~",
CERTIFIED PUBLIC ACCOUNTANTS. BUSINESS ADVISORS AND CONSULTANTS
25 Suffolk Court, Hauppauge, New York 11788
631.434.9500 . Fax 631.434.9518
'WW)V, Qvz.com
REPORT ON COMPLIANCE WITH REQUIREMENTS APPLICABLE TO
EACH MAJOR PROGRAM AND INTERNAL CONTROL OVER
COMPLIANCE IN ACCORDANCE WITH OMB CIRCULAR A-133
Town Board
Town of Southold
. Southold, New York
Compliance
We have audited the compliance of the Town of Southold, New York with types of compliance requirements
described In the U_ S. Office of Management and Budget (OMB) Circular A-133 Compliance Supplement that
are applicable to each of its major federal programs for the year ended December 31, 2005. The Town of
Soulhold's major federal programs are identified in the summary of auditor's results section of the
accompanying schedule of findings and questioned costs. Compliance with the requirements of laws,
regulaUons, contracts, and grants applicable to each of Its major federal programs Is the responsibility of the
Town of Southold. New York's management. Our responsibility is to express an opinion on the Town of
Southold, New York's compliance based on our audit.
We conducted our audit of compliance in accordance with auditing standards generally accepted In the United
States of America; the standards applicable to financial audits contained in Government Auditing standards,
issued by the Comptroller General of the United Slates; and OMB Circular A-l33, Audits of states. Local
Govemments, and Non-Profit Organizations. Those standards and OMB Circular A-133 require that we plan
and perform the audit to obtain reasonable assurance about whether noncompliance with the types of
compliance requirements referred to above that could have a direct and material effect on a major federal
program occurred. An audit includes examining, on a test basis, evidence about the Town of Southold, New
York's compliance with those requirements and performing such other procedures as we considered
necessary In the circumstances. We believe that our audit provides a reasonable basis for our opinion. Our
audit does not provide a legal determlnalion of the Town of Southold, New York's compliance with those
requlreme.nts.
In our opinion. the Town of Southold, New York complied, In all material respects. with the requirements
referred to above that are applicable to each of its major federal programs for the year ended December 31,
2005.
Internal Control Over Compliance
The management of the Town of Southold Is responsible for establishing and maintaining effective intemal
control over compliance with the requirements of laws, regulations, contracts, and grants applicable to federal
programs. In planning and performing our audit, we considered the Town of Southold's internal control over
compliance with requirements that could have a direct and material effect on a major federal program In order
to determine our auditing procedures for the purpose of expressing our opinion on compliance and to test and
report on the Internal control over compliance In accordance with OMB Circular A-l33.
Our consideration of the intemal control over compliance would not necessarily disclose all matters in the
internal control that might be a material weakness. A material weakness is a condition in which the design or
operation of one or more of the internal control components does not reduce to a relatively low level the risk of
noncompliance with applicable requirements of laws, regulations, contracts and grants that would be material
in relation to a major federal program being audited may occur and not be detected within a timely period by
employees in the normal course of performing the assigned functions. We noted no matters invoMng the
internal control over comprJance and its operation that we consider to be material weaknesses.
-43 -
ALBRECHT. VIooIANO. ZURECK l50 CoMIWIY, P.C.
. 1_. ...... OP' BKRINn:.MM11CNM.
This report is intended solely for the information of the Town Board, management, others within the
organization, and federal awarding agencies and pass-ihrough entities and is not intended to be and should
not be used by anyone other than those specified parties.
~I V~I ~. .1-- J- e-,." t".c;
Hauppauge, New York
June 8, 2006
-44-
TOWN OF SOUTHOLD
SCHEDULE OF FINDINGS AND QUESTIONED COSTS
Year ended Oecember31, 2005
SUMMARY OF AUDIT RESULTS
1. The auditor's report expresses a qualified opinion on the financial statements of the Town of Southold due
to the fact that six of the seven component units of the Town of Southold that were discretely presented
were not audited. The remaining component unit, the Fishers Island Ferry District, was audited by other
auditors.
2. No reportable conditions disclosed during the audit of the financial statements are reported in the
"REPORT ON COMPLIANCE AND ON INTERNAL CONTROL OVER FINANCIAL REPORTING BASED
ON AN AUDIT OF FINANCIAL STATEMENTS PERFORMED IN ACCORDANCE WITH GOVERNMENT
AUDITING STANDARDS~ None of the conditions are reported as a material weakness.
3. No instances of noncompliance material to the financial statements of the Town of Southold were
disclosed during the audit.
4. No reportable conditions disclosed during the audit of the major federal award programs are reported In
the "REPORT ON COMPLIANCE WITH REQUIREMENTS APPLICABLE TO EACH MAJOR PROGRAM
AND ON INTERNAL CONTROL OVER COMPLIANCE IN ACCORDANCE WITH OMS CIRCULAR A-
133". No material weaknesses were noted.
5. The auditor's report on compliance for the U.S. Department of the Interior- Fish and Wildlife Service
expresses an unqualified opinion; the report on the remaining programs are unqualified.
6. No audit findings relative to the major federal award programs for the Town of Southold are reported in
this schedule.
7. The Town of South old had two ''Type A" programs for the year ended December 31, 2005.
8. The program tested as a major program Includes:
CFDA Number
Name of Federal Proaram or Cluster
15.614
U.S. Department of the Interior
Fish and Wildlife Service
9. The threshold for distinguishing Types A and B programs was $500,000.
10. The Town of Southold was determined to be a low-risk auditee.
-45-
TOWN OF SOUTHOLD
SCHEDULE OF FINDINGS AND QUESTIONED COSTS
Year ended December 31,2005
FINDINGS-FINANCIAL STATEMENTS AUDIT
REPORTABLE CONDITIONS -
FINDINGS AND QUESTIONED COSTS- MAJOR FEDERAL
AWARD PROGRAMS AUDIT.
Questioned Cost
-46-
None
None
$
APPENDIX C
INSURANCE ON THE BONDS
AMBAC ASSURANCE
Payment Pursuant to Financial Guaranty Insurance Policy
Ambac Assurance Corporation ("Ambac Assurance") has made a commitment to issue a financial guaranty insurance
policy (the "Financial Guaranty Insurance Policy") relating to the Bonds effective as of the date of insurance of the
Bonds. Under the terms of the Financial Guaranty insurance Policy, Ambac Assurance will pay to The Bank of New
York, in New York, New York or any successor thereto (the "Insurance Trustee"), that portion of the principal of and
interest on the Bonds which shall become Due for Payment but shall be unpaid by reason ofNonpay,ment by the
Obligor (as such terms are defined in the Financial Guaranty Insurance Policy). Ambac Assurance will make such
payments to the Insurance Trustee on the later of the date on which such principal and/or interest becomes Due for
Payment or within one business day following the date on which Ambac Assurance shall have received notice of
Nonpayment from the TrusteelPaying Agent. The insurance will extend for the term of the Bonds and, once issued,
cannot be canceled by Ambac Assurance.
The Financial Guaranty Insurance Policy will insure payment only on stated maturity dates and on mandato!)' sinking
fund installment dates, in the case of pnncipal, and on stated dates for payment, in the case of interest. If the Bonds
become subject to mandato!)' redemption and insufficient funds are available for redemption of all outstanding
Bonds, Ambac Assurance will remain obligated to pay principal of and interest on outstanding Bonds on the
originally scheduled interest and principal !layment dates including mandato!)' sinking fund redemptIOn dates. In the
event of any acceleration of the principal of the Bonds, the insured payments will be made at such times and in such
amounts as would have been made had there not been an acceleration, except to the extent that Ambac Assurance
elects, in its sole discretion, to pay all or a portion of the accelerated principal and interest accrued thereon to the date
of acceleration (to the extent unpaid by the Obligor). Upon payment of all such accelerated principal and interest
accrued to the acceleration date, Ambac Assurance's obligations under the Financial Guaranty Insurance Policy shall
be fully discharged.
In the event the TrusteelPaying Agent has notice that any payment of principal of or interest on a Bond that has
become Due for Payment and that is made to a Bondholder by or on behalf of the Obligor has been deemed a
preferential transfer and theretofore recovered from its registered owner pursuant to the United States Bankruptcy
Code in accordance with a final, nonappealable order of a court of competent jurisdiction, such registered owner will
be entitled to payment from Ambac Assurance to the extent of such recove!)' if sufficient funds are not otherwise
available.
The Financial Guaranty Insurance Policy does not insure any risk other than Nonpayment, (as set fourth in the
Financial Guaranty Insurance Policy). Specifically, the Financial Guaranty Insurance Policy does not cover:
I. payment on acceleration, as a result of a call for redemption (other than mandato!)' sinking fund
redemption) or as a result of any other advancement of maturity.
2. payment of any redemption, prepayment or acceleration premium; and
3. nonpayment of principal or interest caused by the insolvency or negligence of any Trustee, Paying Agent
or Bond Registrar, if any.
If it becomes necessal)' to call upon the Financial Guaranty Insurance PolicY,l'ayment of principal requires surrender
of Bonds to the Insurance Trustee together with an appropriate instrument of assignment so as to permit ownership
of such Bonds to be registered in the name of Ambac Assurance to the extent of the payment under the Financial
Guaranty Insurance Policy. Payment of interest pursuant to the Financial Guaranty Insurance Policy requires proof
of Bondholder entitlement to interest payments and an appropriate assignment of the Bondholder's right to payment
to Ambac Assurance.
Upon payment of the insurance benefits, Ambac Assurance will become the owner of the Bond, appurtenant coupon,
if any, or riJdit to payment of principal or interest on such Bond and will be fully subrogated to the surrendering
Bondholder"s rights to payment.
The insurance provided by the Financial Guaranty Insurance Policy is not covered by the property/casualty insurance
security fund specified by the insurance laws of the State of New York.
AMBAC ASSURANCE CORPORATION
Ambac Assurance is a Wisconsin-domiciled stock insurance corporation regulated by the Office of the Commissioner
of Insurance of the State of Wisconsin, and is licensed to do business in 50 states, the District of Columbia, the
Territo!)' of Guam, the Commonwealth of Puerto Rico and the U.S. Virgin Islands, with admitted assets of
approximately $10,015,000,000 (unaudited) and statuto!)' capital of approximately $6,371,000,000 (unaudited) as
of December 3 I, 2006. Statuto!)' capital consists of Ambac Assurance's policyholders' surplus and statuto7-
contingency reserve. Standard & Poor's Ratings Services, a division of The McGraw-Hill Companies, Inc., Moody s
Investor Service and Fitch Ratings have each assigned a triple-A financial strength rating to Ambac Assurance.
Ambac Assurance has obtained a ruling from the Internal Revenue Service to the effect that the insuring of an
obligation by Ambac Assurance will not affect the treatment for federal income tax purposes of interest on such
obligation and that insurance proceeds representing maturing interest paid by Ambac Assurance under policy
provisions substantially identical to those contained in its Financial Guaranty Insurance Policy shall be treated for
federal income tax purposes in the same manner as if such payments were made by the Obligor of the Bonds.
Ambac Assurance makes no representation regarding the Bonds or the advisability of investing in the Bonds and
makes no representation regardmg, nor has it participated in the preparation of, the Official Statement otber than the
information supplied by Ambac Assurance and presented under the heading "Appendix C".
AVAILABLE INFORMATION
The parent company of Ambac Assurance, Ambac Financial Group, Inc. (the "Com~any"), is subject to the
informational requirements of the Securities Exchange Act of 1934, as amended (the 'Exchange Act"), and in
accordance therewith files reports, proxy statements and other information with the Securities and Exchan*e
Commission (the "SEC"). These reports, proxy statements and other information can be read and copied at the SEC s
public reference room at 100 F Street, N.E., Room 1580, Washington, D.C. 20549. Please call t1ie SEC at 1-800-
SEC-0330 for further information on the public reference room. The SEC maintains an internet site at
http://www.sec.gov that contains reports, proxy and information statements and other information regarding
companies that file electronically with the SEC, including the Company. These reports, proxy statements and other
information can also be read atthe offices ofthe New York Stock Exchange, Inc., at 20 Broad Street, New York, New
York 10005.
Copies of Ambac Assurance's financial statements prepared in accordance with statutory accounting standards are
available from Ambac Assurance. The address of Ari1bac Assurance's administrative offices and its telephone number
are One State Street Plaza, 19th Floor, New York, New York, 10004 and (212) 668-0340.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following document filed by the Company with the SEC (File No. 1-10777) is incorporated by reference in this
Official Statement:
The Company's Annual Report of Form 10-K for the fiscal year ended December 31, 2006 and filed on
March 1,2007.
All documents subsequently filed by the Company pursuant to the requirements of the Exchange Act after the date
of this Official Statement will be available for inspection in the same manner as described above in "AVAILABLE
INFORMATION".
Ambac
Ambac Assurance Corporation
One State Street Plaza, 15th Floor
New York, New York 10004
Telephone: (212) 668-0340
Financial Guaranty Insurance Policy
Obligor:
Policy Number:
Obligations:
Premium:
Ambac Assurance Corporation (Ambac), a Wtsconsin stock insurance cotpOration, in consideration of the pa; ent of the
premium and subject to the tel"lm of this Policy, hereby agrees to pay to The Bank of New York, as trustee, or its u essor (the
"Insurance Trustee"), for the benefit of the Holders, that portion of the prtncipal of and interest on the above-desert 0 igations
(the "Obligations") which shall become Due for Payment but shall be unpaid by reason of Nonpayment b e Obligo
Ambac will make such payments to the Insurance Trustee within one (1) business day following
Nonpayment. Upon a Holder's presentation and surrender to the Insurance Trustee of such un
uncanceled and in bearer fonn and free of any adverse claim, the Insurance Trustee will d
principal and interest which is then Due for Payment but is unpaid. Upon such disburse
the surrendered Obligations and/or coupons and shall be fully subrogated to all of Ho e
In cases where the Obligations are issued in registered form, the Insurance Trustee
presentation and surrender to the Insurance Trustee of the unpaid Obligation, u
with an instrument of assignment, in form satisfactory to Ambac and nsurance
Holder's duly authorized representative, so as to permit ownership of shaHan
nominee. The Insurance Trustee shall disburse interest to a er a
Insurance Trustee of proof that the claimant is the person entitle 0 he p
Insurance Trustee of an instrument of assignment, in form satlsfac 0 b
Holder or such Holder's duly authortzed representa t Am c
interest in respect of which the insurance disburs
payment on regtstered Obligations to the extent 0
In the event that a trustee or paying or t e
Obligation which has become Due fa nt an
preferential transfer and theretofo r vered f m t
a fInal, nonappealable order of a u of co juri ct on,
of such recovery if sufficle nds se aVa1lab e.
As used herein, the 0 er than (i) the Obligor or (11) any person whose obligations constitute the
underlying secur gattons who, at the time of Nonpayment, is the owner of an Obligation or of
a coupon relating ein, "Due for Payment", when referring to the principal of Obligations, is when
the sch tu mandat emption date for the application of a required sinking fund installment has been
reach not fer. any earlier date on which payment is due by reason of call for redemption (other than by appllcatlon
of r red sinking fu tallments), acceleration or other advancement of maturity; and, when refening to interest on the
Db g Hons e e h uled date for payment of interest has been reached. As used herein, "Nonpayment" means the failure
of tie ro d sufficient funds to the trustee or paying agent for payment in full of all principal of and interest
on the gations ch are Due for Payment. .
This Po c celable. The premium on this Policy Is not refundable for any reason, including payment of the Obligations
prior to m . This Policy does not insure against loss of any prepayment or other acceleration payment which at any time
may become due 10 respect of any Obligation, other than at the sole option of Ambac, nor against any rtsk other than Nonpayment.
In witness whereof, Ambac has caused this Policy to be affixed with a facsimile of its corporate seal and to be signed by its duly
authorized officers in facsimile to become effective as its original seal and signatures and binding upon Ambac by Virtue of the
countersignature of Its duly authorized representative.
01 er only upon
v claim, together
the Holder or such
i e name of Ambac or its
n y upon presentation to the
toe Obligation and delivery to the
nsurance Trustee, duly executed by the
under such Obligation to receive the
subrogated to all of the Holders' rtghts to
made.
noti that any payment of principal of or interest on an
t a Holder by or on behalf of the Obligor has been deemed a
t to the United States Bankruptcy Code In accordance with
Holder will be entitled to payment from Ambac to the extent
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President
........,.....
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Secretary
Effective Date:
Authortzed Representative
THE BANK OF NEW YORK acknowledges that It has agreed
to perform the duties of Insurance Trustee under this Policy.
Fonn No.: 2B-0012 (1/01)
Authorized Officer of Insurance Trustee
A-
Ambac
Ambac Assurance Corporation
One State Street Plaza,
New York, New York 10004
Telephone: (212) 668-0340
Endorsement
Policy lor:
Attached to and forming part of Policy No.:
The insurance provided by this Policy is not covered
fund specified by the insurance laws of the State N
ter, waive or extend any of the terms, conditions, provisions, agreements
other than as above stated.
) Ambac has caused this Endorsement to be affixed with a facsimile of its corporate seal and to
ized officers in facsimile to become effective as its original seal and signatures and binding
lC conntersignature of its duly authorized representative.
Ambac Assuraac:c Corporation
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President
Secretary
Authorized Representative
Form No.: 28-0004 G/97)
Ambac
Financial Guaranty Insurance Policy
Obligor:
TOWN OF SOUTHOLD
SUFFOLK COUNTY, NEW YORK
Ambac Assurance Corporation
One State Street Plaza, 15th Floor
New York, New York 10004
Telephone: (212) 668-0340
Policy Number: 26504BE
Obligations: $14,650,000 Public Impro~ement Serial Bonds - 2007,
dated April 15, 2007 and maturing on April 15 in the
years 2008 through 2030, both inclusive.
The Paying Agent is the Town of South old, Southold, New York.
Premium:
$31,000.00
Ambac Assurance Corporation (Ambac), a Wisconsin stock insurance corporation, in consideration of the payment of the
premium and subject to the terms of this Policy, hereby agrees co pay to The Bank of New York, as trustee, or its successor (the
"Insurance Trusteelt), for the benefit of the Holders, that portion of the principal of and interest on the above-described obligations
(the "Obligations") which shall become Due for Payment but shall be unpaid by reason of Nonpayment by the Obligor.
Ambac will make such payments to the Insurance Trustee within one (1) business day following written notification to Ambac of
Nonpayment. Upon a Holder's presentation and surrender to the Insurance Trustee of such unpaid Obligations or related coupons,
uncanceled and in bearer form and free of any adverse claim, the Insurance Trustee will disburse to the Holder the amount of
principal and interest which is then Due for Payment but is unpaid. Upon such disbursement, Ambac shall become the owner of
the surrendered Obligations and/or coupons and shall be fully subrogated to all of the Holder's rights to payment thereon.
In cases where the Obligations are issued in registered form, the Insurance Trustee shall disburse principal to a Holder only upon
presentation and surrender to the Insurance Trustee of the unpaid Obligation, uncanceled and free of any adverse claim, together
with an instrument of assignment, in form satisfactory to Ambac and the Insurance Trustee duly executed by the Holder or such
Holder's duly authorized representative, so as to permit ownership of such Obligation to be registered in the name of Ambac
or its nominee. The Insurance Trustee shall disburse interest to a Holder of a registered Obligation only upon presentation to
the Insurance Trustee of proof that the claimant is the person entitled to the payment of interest on the Obligation and delivery
to the Insurance Trustee of an instrument of assignment, in form satisfactory to Ambac and the Insurance Trustee, duly executed
by the Holder or such Holder's duly authorized representative, transferring to Ambac all rights under such Obligation to receive
the interest in respect of which the insurance disbursement was made. Ambac shall be subrogated to all of the Holders' rights
to payment on registered Obligations to the extent of any insurance disbursements so made.
In the event that a trustee or paying agent for the Obligations has notice that any payment of principal of or interest on an
Obligation which has become Due for Payment and which is made to a Holder by or on behalf of the Obligor has been deemed
a ~referential transfer and theretofore recovered from the Holder pursuant to the United States Bankruptcy Code in accordance
WIth a final, nonappealable order of a court of competent jurisdiction, such Holder will be entitled to payment from Ambac to
the extent of such recovery if sufficient funds are not otherwise available.
As used herein, the term "Holder" means any person other than (i) the Obligor or (ii) any person whose obligations constitute
the underlying security or source of payment for the Obligations who, at the time of Nonpayment, is the owner of an
Obligation or of a coupon relating to an Obligation. As used herein, "Due for Payment", when referring to the principal of
Obligations, is when the scheduled m~turity date or mandatory redemption date for the application of a required sinking fund
installment has been reached and does not refer to any earlier date on which payment is due by reason of call for redemption
(other than by application of required sinking fund installments), acceleration or other advancement of maturity; and, when
referring -to interest on the Obligations, is when the scheduled date for payment of interest has been reached. As used herein,
wNonrayment" means the failure of the Obligor to have provided sufficient funds to the trustee or paying agent for payment in
full 0 all principal of and interest on the Obligations which are Due for Payment.
This Policy is noncancelable. The premium on this Policy is not refundable for any reason, including payment of the Obligations
prior to maturity. This Policy does not insure against loss of any prepayment or other acceleration payment which at any time may
become due in respect of any Obligation. other than at the sole option of Ambac, nor against any risk other than Nonpayment.
In witness whereof, Ambac has caused this Policy to be affixed with a facsimile of its corporate seal and to be signed by its duly
authorized officers in facsimile to become effective as its original seal and signatures and binding upon Ambac by virtue of the
countersignature of its duly authorized representative.
f~! /?.L.
President
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Effective Date: April 19, 2007
THE BANK OF NEW YORK acknowledges that it has agreed
to perform the duties of Insurance Trustee under this Policy.
Form No.: 2B-0012 (1/01)
A-11118
~cruwa
Authonzed Officer of Insurance Trustee
Ambac
Ambac Assurance Corporation
One State Street Plaza, 15th Floor
New York, New York 10004
Telephone: (212) 668-0340
Endorsement
Policy for:
Attached ro and forming part of Policy No.:
TOWN OF SOUTHOLD
SUFFOLK COUNTY, NEW YORK
26504BE
Effective Date of Endorsement:
April 19, 2007
The insurance provided by this Policy is not covered by tbe property/casualty insurance security
fund specified by tbe insurance laws of tbe State of New York.
Nothing herein contained shall be held to vary, alter, waive or extend any of the terms, conditions, provisions, agreements
or limitations of the above mentioned Policy other than as above stated.
In Witness Whereof, Ambac has caused tWs Endorsement to be affIxed with a facsimile of its corporate seal and to
be signed by its duly authorized officers in facsimile to become effective as its original seal and signatures and binding
upon Ambac by virtue of the cotultersignature of its duly authorized representative.
Ambac Assurance Corporation
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secretary
Form No.: 28-0005 0/97)
CERTIFICATE OF BOND INSURER
In connection with the issuance of $14,650,000 in aggregate principal amount of
Town of Southold, Suffolk County, New York (the "Obligor"), Public Improvement Serial
Bonds - 2007, dated April 15, 2007 (the "Obligations"), Ambac Assurance Corporation
("Ambac") is issuing a Financial Guaranty Insurance Policy and Endorsement thereto (the
"Insurance Policy") guaranteeing the payment of principal and interest when due on the
Obligations, all as more fully set out in the Insurance Policy.
Ambac
On behalf of Ambac, the undersigned hereby certifies that:
(i) the Insurance Policy is an unconditional and recourse obligation of Ambac
(enforceable by or on behalf of the holders of the Obligations) to pay the scheduled
payments of interest and principal on the Obligations in the event of a Nonpayment as
defined in the Insurance Policy;
(ii) the insurance premium of $31,000.00 was determined in arm's length
negotiations in accordance with our standard procedures, is required to be paid as a
condition to the issuance of the Insurance Policy and represents a reasonable charge for the
transfer of credit risk;
(iii) no portion of such premium represents a payment for any direct or indirect
services other than the transfer of credit risk, including costs of underwriting or remarketing
the Obligations or the cost of insurance for casualty of Obligation financed property;
(iv) we are not co-obligors on the Obligations and do not reasonably expect that
we will be called upon to make any payment under the Insurance Policy; and
(v) the Obligor is not entitled to a refund of any portion of the premium for the
Insurance Policy in the event that the Obligations are retired prior to their stated maturity.
IN WITNESS WHEREOF, Ambac Assurance Corporation has caused this
certificate to be executed in its name on this 19th day of April, 2007, by one of its officers
duly authorized as of such date.
AMBAC ASSURANCE CORPORATION
By: U ~ :JD?l/l..-~
Dwighcl<.Wi,
Vice President and
Assistant General Counsel
Ambac
Ambac Assurance Corporation
One State Street Plaza
New York, NY 10004
212.668.0340 Fax: 212.509.9190
A member of the Ambac Fittand4l Group, 1""
April 19, 2007
Town of Southold
Town Hall
53095 Route 25
Southold, NY 11971
Munistat Services, Inc.
12 Roosevelt Avenue
Port Jefferson Station, NY 11776
Roosevelt & Cross, Inc. and Associates
55 Broadway
New York, NY 10006
Hawkins Delafield & Wood LLP
One Chase Manhattan Plaza
New York, NY 10005
Ladies and Gentlemen:
This opinion has been requested of the undersigned, a Vice President and an Assistant
General Counsel of Ambac Assurance Corporation, a Wisconsin stock insurance
corporation ("Ambac Assurance"), in connection with the issuance by Ambac Assurance of
a certain Financial Guaranty Insurance Policy and Endorsement thereto, effective as of the
date hereof (the "Policy"), insuring $14,650,000 in aggregate principal amount of Town of
Southold, Suffolk County, New York (the "Obligor"), Public Improvement Serial Bonds -
2007, dated April 15, 2007 (the "Obligations").
In connection with my opinion herein, I have examined the Policy and such statutes,
documents and proceedings as I have considered necessary or appropriate under the
circumstances to render the following opinion, including, without limiting the generality of
the foregoing, certain statements contained in the Official Statement of the Obligor dated
March 27, 2007 relating to the Obligations (the "Official Statement") under the heading
"APPENDIX C - INSURANCE ON THE BONDS".
Based upon the foregoing and having regard to legal considerations I deem relevant, I am
of the opinion that:
I. Ambac Assurance is a stock insurance corporation duly organized and validly
existing under the laws of the State of Wisconsin and duly qualified to conduct an
insurance business in the State of New York.
2. Ambac Assurance has full corporate power and authority to execute and deliver the
Policy, and the Policy has been duly authorized, executed and delivered by Ambac
Assurance and constitutes a legal, valid and binding obligation of Ambac
Assurance enforceable in accordance with its terms, except to the extent that the
enforceability (but not the validity) of such obligation may be limited by any
applicable bankruptcy, insolvency, liquidation, rehabilitation or other similar law
or enactment now or hereafter enacted affecting the enforcement of creditors'
rights.
3. The execution and delivery by Ambac Assurance of the Policy will not, and the
consummation of the transactions contemplated thereby and the satisfaction of the
terms thereof will not, conflict with or result in a breach of any of the terms,
conditions or provisions of the Certificate of Authority, Articles of Incorporation or
By-Laws of Ambac Assurance, or any restriction contained in any contract,
agreement or instrument to which Ambac Assurance is a party or by which it is
bound or constitute a default under any of the foregoing.
4. Proceedings legally required for the issuance of the Policy have been taken by
Ambac Assurance and licenses, orders, consents or other authorizations or
approvals of any governmental boards or bodies legally required for the
enforceability of the Policy have been obtained; any proceedings not taken and any
licenses, authorizations or approvals not obtained are not material to the
enforceability of the Policy.
Ambac
5.
The statements contained in the Official Statement under the heading "APPENDIX
C - INSURANCE ON THE BONDS", insofar as such statements constitute
summaries of the matters referred to therein, accurately reflect and fairly present
the information purported to be shown and, insofar as such statements describe
Ambac Financial Group, Inc. (the "Company") and Ambac Assurance, fairly and
accurately describe the Company and Ambac Assurance.
6. The form of the Policy contained in the Official Statement under the heading
"APPENDIX C - INSURANCE ON THE BONDS" is a true and complete copy of
the form of the Policy.
The opinions expressed herein are solely for your benefit, and may not be relied upon by
any other person.
Very truly yours,
~ Itvvv-
Dwight K wa
Vice President and
Assistant General Counsel
Ikd
26504be
,"
w
Moody's Investors Service
99 Church Street
New York, NY
April 18, 2007
Ambac
One State Street Plaza
New York, NY 10004
To Whom It May Concern:
Moody's Investors Service has assigned the rating of Aaa (Ambac Insured - Policy No.
26504BE) to the $14,650,000.00, Town of Southold, Suffolk County, New York -
Public Improvement Serial Bonds-2007, dated April 15, 2007 which sold through
negotiation on April 10, 2007. The rating is based upon an insurance policy provided by
Ambac.
Should you have any questions regarding the above, please do noi hesitate to contact
Karen Malkowski at (201) 395-6370.
Sincerely yours,
~1'JT" J&;mJ,Jiil
'. ,
if ,
Joann Hempel
Vice President I Senior Credit
Officer
JH I PS
UNITED STATES OF ,&~IERICA
STATE OF NEW YORK
COUNTY OF SUFFOLK
TOWN OF SOUTHOLD
2066
BRIDGE;'IA~,IFT~N,
MOTE FOE %~OUS
The Town of Seathold, in ~ County of Suffolk, a mumcipal corporation al' the State of New York. hereby
it.~If indebted and for value received promises to pa}.' to the bearer at' this Note, or if it be regi~ered, to the
. the sum al'ONE igIILLION EIGHT HUNDRED SEVENTY THOUSAa~D DOLLARS ($1,870,000) on the
t~h day of September, 2003, t~gethes v, ith mterest thereon fi-om the date hereoi'at the rate o1:' one and thirty.-five hundredths
er couture (I.35%) I er annum, payable at maturity Both principal at'and mterest on this Note viii be prod in la',,.~bl money
at The Bridgehampton National Bank, Southold Office, Southold, Ney, York
At the request at'the holder, the To,,vn Clerk shall convert r~us Note rata a registered Note by regtstermg ttm the name
the holder in the books ol' the Town kept in the otSce o£ such Tov, u Clerk and endorsing a certificate of such registration
a~er which both princilml of and interest on this Not~ ~hall be payable only m the registered holder, [us legal
This Note -=hall than be trar~t'erable only upen presentation to such Town Clerk v~th a
:l such To'va Clerk shall thereupon registm' ~ Note in the name o£the trarm £eree un Ns kooks and shall
Such u'ansfer sN~ll be dated, and m~ned by the registes~ ko!der, or his legal
and it shall be duly acknowledged or proved, or in the alternative the signature thereto shall be cemfied ~ to its
· a bank or trust company located and aur. hortzad to do busmess in t[us State.
This Not,: is '..he only Note of an authorized combined :ene~ul ts~e. the ag~-egate principal amount ~:' ',,,N~c'q is
3~0.000.
INs Note is :~su~d pursuant te the provisions of the Local Fmanca La~.t. ccnsutatmg Chapter 33-a at' the Consolidated
o£the State o£New York, various bond resolutions adopted b'.. the Town Board on ~e~r re%t'~ecttve dates, authonzmg the
ssuance of ~.--r'ial ~crtds for various purposes, and the Certificate o£ Determma~-inn executed b? a~.e Supervisor ac September l 3,
This Note has been desi.m'mted b? the Tayto as a q~fied ~<-exernpt obhgadon pursuant to the provistans
~t' r~e Internal Revenue Code of 1986, as amended.
'Uae t'a~th and ;redit of such Tov, n of Southold are hereb}, uwe~ ccabl? pledged tbr ~e pancm~ pa)meat of ~.e pr',nc:pa3
and mterest on this Note accordmg to its terms.
[t is hereb? cemfied and recited that all conditions, acts :md ,aSmgs toque'ed by '..he Con~imtien and statutes of :he $1ate
=fNew York to exast, to have hapl~med and to have been performed precedent to and m the ~ssuance of llas Note. e:tist ltave
performed, and tint this Note, together wiu% all other indebtednes~ of such T~x~n ~f Soutkold. i~ ~;:t~an
pre~ibed by the Constitution and lav. s o(such State.
D~ WITNESS WI-I~REOF. the Town of Southold has caused this Note to be st~ed by zts Super;isor. and its
:orporate seal (or a facsimile thereo0 to be at, xed, impressed. ,.mpm'~ted. or other~ise reproduced hereon end arrested b': tls
Tayto Clerk :md :_hSs Note to be dated as o£ the 13m day of September. 2002.
(SEAL)
f~' n~, Super~,,tser --
REGISTRATION CERTI~CA~'E
It is h~reb?' cermied that the ~xtlun Note has ~:en re.mstered .~s £oilo~,s:
Date of Regis~'ation Name o£ Rcgt>'t~ed Hold~ [ Registered by
CERTIFICATE OF DETERMINATION BY THE SUPERVISOR
RELATIVE TO AUTHORIZATION, SALE, ISSUANCE, FORM AND
CONTENTS OF THE $1,870,000 BOND ANTICIPATION NOTE FOR
VARIOUS PURPOSES-2002 OF THE TOWN OF SOUTHOLD, NEW
YORK.
I, Joshua Y. Horton, Supervisor of the Town of Southold, New York (herein
called the "Town"), HEREBY CERTIFY that pursuant to the powers and duties delegated to me,
the chief fiscal officer of the Town, by the Town Board of the Town, pursuant to the bond
resolutions duly adopted and as referred to in paragraphs 1 to 9, inclusive, hereof, and subject to
the limitations prescribed in said bond resolutions, I have made the following determinations:
1. A bond anticipation note of the Town in the principal amount of $33,500
shall be issued to renew, in part, the $80,000 bond anticipation note dated September 14, 2001,
maturing September 13, 2002, and heretofore issued in anticipation of the sale of the serial bonds
authorized pursuant to the bond resolution entitled:
"Bond Resolution of the Town of Southold, New York, adopted July 7,
1998, authorizing the acquisition of the certain pierce or parcel of land
containing 13.85 acres, more or less, situate on the west side of Peconic
Lane, in the Town of Southold, at the estimated maximum cost of
$210,000, including preliminary costs and costs incidental thereto to the
financing thereof in the amount of $10,000, said land to be used for public
park purposes; appropriating $210,000 therefor and authorizing the
issuance of $210,000 serial bonds of said Town to finance said
appropriation,"
duly adopted by the Town Board on the date therein referred to, and the Certificate of
Determination executed by the Supervisor on September 14, 2001, the redemption of said
$80,000 bond anticipation note having been heretofore provided to the extent of $46,500 from a
source other than the proceeds of serial bonds.
2. A bond anticipation note of the Town in the principal amount of $30,000
shall be issued to renew, in part, the $64,000 bond anticipation note dated September 14, 2001,
maturing September 13, 2002, and heretofore issued in anticipation of the sale of the serial bonds
authorized pursuant to the bond resolution entitled:
"Bond Resolution of the Town of Southold, New York, adopted May 12,
1998, authorizing the acquisition and installation of a computer system for
use by the Police Department; stating the estimated maximum cost thereof
is $170,000; appropriating said amount therefor and authorizing the
issuance of $170,000 serial bonds of said Town to finance said
appropriation,"
404154.1 015832 CERT
duly adopted by the Town Board on the date therein referred to, and the Certificate of
Determination executed by the Supervisor on September 14, 2001, the redemption of said
$64,000 bond anticipation note having been heretofore provided to the extent of $34,000 from a
source other than the proceeds of serial bonds.
3. A bond anticipation note of the Town in the principal amount of $167,000
shall be issued to renew, in part, the $224,000 bond anticipation note dated September 14, 2001,
maturing September 13, 2002, and heretofore issued in anticipation of the sale of the serial bonds
authorized pursuant to the bond resolution entitled:
"Bond Resolution of the Town of Southold, New York, adopted April 11,
2000, authorizing the acquisition and installation of a computer system
network, including hardware, sol, ware and appurtenant equipment,
machinery, apparatus and furnishings, in Town offices~ stating the
estimated maximum cost thereof is $335,000~ appropriating said amount
therefor, including the appropriation of $50,000 current funds and
authorizing the issuance of $285,000 serial bonds of said Town to finance
the balance of said appropriation,"
duly adopted by the Town Board on the date therein referred to, and the Certificate of
Determination executed by the Supervisor on September 14, 2001, the redemption of said
$224,000 bond anticipation note having been heretofore provided to the extent of $57,000 from a
source other than the proceeds of serial bonds.
4. A bond anticipation note of the Town in the principal amount of$115,500
shall be issued to renew, in part, the $154,000 bond anticipation note dated September 14, 2001,
maturing September 13, 2002, and heretofore issued in anticipation of the sale of the serial bonds
authorized pursuant to the bond resolution entitled:
"Bond Resolution of the Town of Southold, New York, adopted February
29, 2000, appropriating the amount of $260,000 for the increase and
improvement of facilities of the Southold Solid Waste Management
District, in said Town, including the expenditure of $67,500 of available
Town funds to pay a part of said appropriation, and authorizing the
issuance of $192,500 serial bonds of said Town to finance the balance of
said appropriation,"
duly adopted by the Town Board on the date therein referred to, and the Certificate of
Determination executed by the Supervisor on September 14, 2001, the redemption of said
$154,000 bond anticipation note having been heretofore provided to the extent of $38,500 from a
source other than the proceeds of serial bonds~
5. A bond anticipation note of the Town in the principal amount of $68,000
shall be issued to renew, in part, the $90,000 bond anticipation note dated September 14, 200l,
maturing September 13, 2002, and heretofore issued in anticipation of the sale of the serial bonds
authorized pursuant to the bond resolution entitled:
404154.1 015832 CERT
"Bond Resolution of the Town of Southold, New York, adopted May 8,
2001, authorizing the purchase ora catamaran patrol vessel to be used by
the Marine Division of the Town Police Department, stating the estimated
maximum cost thereof is $90,000, appropriating said amount therefor and
authorizing the issuance of $90,000 serial bonds of said Town to finance
said appropriation,"
duly adopted by the Town Board on the date therein referred to, and the Certificate of
Determination executed by the Supervisor on September 14, 2001, the redemption of said
$90,000 bond anticipation note having been heretofore provided to the extent of $22,000 from a
source other than the proceeds of serial bonds.
6. A bond anticipation note of the Town in the principal amount of $224,000
shall be issued to renew, in part, the $280,000 bond anticipation note dated September 14, 2001,
maturing September 13, 2002, and heretofore issued in anticipation of the sale of the serial bonds
authorized pursuant to the bond resolution entitled:
"Bond Resolution of the Town of Southold, New York, adopted July 31,
2001, authorizing the second phase of the original improvement and
embellishment of the new public park and recreational area on the land
containing 13.85 acres, more or less, on the west side of Peconic Lane,
heretofore acquired and now owned by and situate in, said Town; stating
the estimated maximum cost thereof is $280,000, including preliminary
costs and costs incidental thereto and to the financing thereof;
appropriating said amount therefor and authorizing the issuance of
$280,000 serial bonds of said Town to finance said appropriation,"
duly adopted by the Town Board on the date therein referred to, and the Certificate of
Determination executed by the Supervisor on September 14, 2001, the redemption of said
$280,000 bond anticipation note having been heretofore provided to the extent of $56,000 from a
source other than the proceeds of serial bonds.
7. A bond anticipation note of the Town in the principal amount of $257,000
shall be issued to renew, in part, the $330,000 bond anticipation note dated September 14, 2001,
maturing September 13, 2002, and heretofore issued in anticipation of the sale of the serial bonds
authorized pursuant to the bond resolution entitled:
duly adopted
Determination
"Bond Resolution of the Town of Southold, New York, adopted July 31,
2001, appropriating $330,000 to defray costs and expenses of the Suffolk
County Water Authority associated with the extension of Authority water
mains into a portion of Cutchogue, in the Town, stating the estimated
maximum cost thereof is $330,000 and authorizing the issuance of
$330,000 serial bonds of said Town to finance said appropriation,"
by the Town Board on the date therein referred to, and the Certificate of
executed by the Supervisor on September 14, 2001, the redemption of said
404154.1015832 CERT
$330,000 bond anticipation note having been heretofore provided to the extent of $73,000 from a
source other than the proceeds of serial bonds.
8. A bond anticipation note of the Town in the principal amount of $550,000
shall be issued to renew, in part, the $575,000 bond anticipation note dated September 14, 2001,
maturing September 13, 2002, and heretofore issued in anticipation of the sale of the serial bonds
authorized pursuant to the bond resolution entitled:
"Bond Resolution of the Town of Southold, New York, adopted July 31,
2001, appropriating the amount of $8,000,000, including the amounts of
any grants that may be received from the United States and the State of
New York for the increase and improvement of the facilities of the Fishers
Island Ferry District, in said Town and authorizing the issuance of serial
bonds of said Town in the principal amount of not to exceed $4,800,000 to
finance that portion of said appropriation for which such grants are not
available,"
duly adopted by the Town Board on the date therein referred to, and the Certificate of
Determination executed by the Supervisor on September 14, 2001, the redemption of said
$575,000 bond anticipation note having been heretofore provided to the extent of $25,000 from a
source other than the proceeds of serial bonds.
9. A bond anticipation note of the Town in the principal amount of $425,000
shall be issued in anticipation of the sale of the serial bonds authorized pursuant to the bond
resolution entitled:
"Bond Resolution of the Town of Southold, New York adopted July 30,
2002, authorizing the construction of a new bridge on Peconic Bay
Boulevard to cross Brushes Creek, in said Town; stating the estimated
maximum cost thereof is $425,000; appropriating the said amount
therefor, including the appropriation of moneys expected to be received
from the State of New York to reimburse the Town; authorizing the
issuance of not to exceed $425,000 serial bonds of the Town to finance
said appropriation and stating the plan of financing includes the issuance
of said serial bonds, the application of said state moneys to reimburse the
Town and the levy and collection of taxes to pay principal of and interest
on said bonds,"
duly adopted by the Town Board on the date therein referred to.
10. Said $33,500 note, said $30,000 note, said $167,000 note, said $115,500
note, said $68,000 note, said $224,000 note, said $257,000 note, said $550,000 note and said
$425,000 note shall be combined for the purpose of sale into a single note issue in the aggregate
principal amount of $1,870.000 (hereinafter referred to as the "Note").
11.
The terms, form and details of said Note shall be as follows:
404154.1 015832 CERT
Amount and Title:
Dated:
Matures:
Number and
Denomination:
Interest Rate
per annum:
Form of Note:
$1,870,000 Bond Anticipation Note for Various Purposes-
2002
September 13, 2002
September 12, 2003
Number 4R-l, at $1,870,000
1.35%
Substantially in accordance with form prescribed by
Schedule B, 2 of the Local Finance Law of the State of
New York.
12. The amount of bond anticipation notes originally issued in anticipation of
the issuance of the serial bonds authorized pursuant to the bond resolutions referred to in
paragraphs l to 9, inclusive, hereof, including the Note, is, respectively,O) $210,000, (2)
$170,000, (3) $285,000, (4) $192,500, (5) $90,000, (6) $280,000, (7) $330,000, (8) $575,000 and
(9) 425,000 the amount of bond anticipation notes which will be outstanding after the issuance of
the Note, including said Note, will be, respectively, (1) $33,500, (2) $30,000, (3) $167,000, (4)
$115,500, (5) $68,000, (6) $224,000, (7) $257,000, (8) $550,000 and (9) $425,000.
13. The serial bonds authorized pursuant to the resolution referred to in
paragraphs 4 and 8 hereof, are for improvements which are assessable, and the serial bonds
authorized pursuant to the resolutions referred to in paragraphs 1, 2, 3, 5, 6, 7 and 9 hereof, are
for improvements which are non-assessable.
14 Pursuant to said powers and duties delegated to me, I DO HEREBY
AWARD AND SELL said Note to The Bridgehampton National Bank, Southold Office,
Southold, New York, for the purchase price of $1,870,000, plus accrued interest, if any, from the
date of said Note to the date of delivery thereof and payment therefor, and I FURTHER
DETERMINE that said Note shall be payable as to both principal and interest at The
Bridgehampton National Bank, Southold Office, Southold, New York, and shall bear interest at
the rate of one and thirty-five hundredths per centum (1.35%) per annum, payable at maturity.
15. Said Note shall be executed in the name of the Town by its Supervisor and
the corporate seal of the Town (or a facsimile thereof) shall be affixed, impressed imprinted or
otherwise reproduced thereon and attested by its Town Clerk.
I HEREBY FURTHER CERTIFY that the powers and duties delegated to me to
issue and sell the Note hereinabove referred to are in full force and effect and have not been
modified, amended or revoked.
IN WITNESS WHEREOF, I have hereunto set my
hand this~t 3th day of September, 2002.
Supervisor
404154.1015832 CERT
CLERK' S CERTIFICATE
I, Elizabeth A. Neville, Town Clerk of the Town of Southold, in the County of
Suffolk, New York, HEREBY CERIIFY that I have compared the foregoing copy of the
Certificate of Determination executed by the Supervisor and the same is a true and complete
copy of the Certificate filed with said Town in my office as Town Clerk on the 13th day of
September, 2002; and
I FURTHER CERTIFY that no resolution electing to reassume any of the powers
or duties mentioned in said Certificate and delegated to the Supervisor by the resolutions cited in
said Certificate and exercised by the Supervisor has been adopted by said Iown Board.
1N WITNESS WHEREOF,
I have hereunto set my hand and affixed the
corporate seal of said Town this 13th day of
September, 2002.
(SEAL)
404154.1 015832 CERT
ARBITRAGE AND USE OF PROCEEDS CERTIFICATE
I, Joshua Y. Horton, Supervisor of the Town of Southold, in the County of
Suffolk, New York (the "Issuer"), HEREBY CERTIFY and reasonably expect with respect to
the issuance of the Issuer's $1,870,000 Bond Anticipation Note for Various Purposes-2002,
being a combined issue of bond anticipation notes authorized in anticipation of the sale of serial
bonds pursuant to various bond resolutions (hereinafter referred to as the "Note" or "Notes"),
dated September 13, 2002, and maturing on September 12, 2003, as follows:
Unless the context dearly requires otherwise, all capitalized terms used but not
otherwise defined herein shall have the meanings set forth in Article II hereof or in the
Resolutions, the Code or the Regulations (each as defined below).
ARTICLE I
General
1.1. Authority of Signatory. I am an officer of the Issuer and in the absence of
the Supervisor, am charged with the responsibility for the execution, delivery, and issuance of
the Note and am acting for and on behalf of the Issuer in signing this certificate.
1.2. Purpose of Certificate. This certificate is made for the purpose of
establishing evidence of the expectations of the Issuer as of the date hereof as to future events
regarding the amount and use of proceeds of the Note. It is intended and may be relied upon for
purposes of Sections 103 and 148 of the Internal Kevenue Code of 1986, as amended (the
"Code"), and as a certification described in Section 1.148-2(b)(2) of the Treasury Regulations
(the "Regulations"). This certificate is executed and delivered as part of the record of
proceedings in connection with the issuance of the Note. The provisions of this certificate
constitute a contractual obligation of the Issuer in consideration for the purchase of and payment
for the Note by the purchaser(s) thereof.
1.3. Reasonable Expectations. This certificate sets forth the facts, estimates
and circumstances now in existence which form the basis for the Issuer's expectation that the
proceeds of the Note will not be used in a manner that would cause the Note to be an arbitrage
bond under Section 148 of the Code or a private activity bond under Sections 103 and 141 of the
Code. To the best of my knowledge and belief, such expectation is reasonable and there are no
other facts, estimates or circumstances that would materially change that expectation.
1.4. No Composite Issue No other governmental obligations have been sold
fewer than 15 days prior to, or will be sold fewer than 15 days after, the sale date of the Note,
pursuant to a common plan of financing which are expected to be paid from substantially the
same source of funds as the Note~
1.5 No Federal Guarantee. The Issuer represents and covenants that, except
for the gross proceeds of the Note which are: (a) invested during the temporary period referred to
404154.1 015832 CERT
in Article III, (b) held in any refunding escrow or (c) invested in obligations of the United States
Treasury or in obligations issued pursuant to Section 2lB(d)(3) of the Federal Home Loan Bank
Act, as amended by Section 511(a) of the Financial Institutions Reform, Recovery and
Enforcement Act of 1989, or any successor provision to Section 2lB(d)(3) of the Federal Home
Loan Bank Act, as amended:
(i)
No portion of the payment of principal or interest with respect to the Note
is or will be guaranteed directly or indirectly by the United States or any
agency or instrumentality thereof(herein "federally guaranteed"); and
(ii)
No portion of the gross proceeds of the Note in excess of five percent of
such gross proceeds is or will be (A) used in making loans the payment of
principal or interest with respect to which is to be federally guaranteed, or
(B) invested directly or indirectly in federally insured deposits or
accounts.
1.6. Tax Representation. The Issuer expects to be able to and will comply with
all the procedures and provisions set forth herein, and will do and perform all acts and things
necessary and desirable within its reasonable control in order to assure that interest paid on the
Note shall be excluded from gross income of the owners thereof for the purpose of federal
income taxation.
1.7. Additional Information. The Issuer will provide such other information as
may be required to assure the exclusion from gross income of interest on the Note for federal
income taxation purposes.
1.8. Non-Purpose Investments Not more than 50% of the proceeds of the
Note are being invested in investments not acquired to carry out the governmental purposes of
the issue at a guaranteed yield and having a term of 4 years or more.
1.9 [RS Information Reporting. The Issuer will make a timely filing of the
appropriate IRS Form 8038-G or 8038-GC.
ARTICLE II
Use of Project and Proceeds
2.1. Authorization. (a) The Note is authorized to be issued pursuant to applicable
provisions of the laws of the State of New York and various bond resolutions adopted by the
Town Board on their respective dates (the "Resolutions"), as referred to in the Certificate of
Determination executed by the Supervisor on September 13, 2002.
(b) For purposes of this Article II the term "proceeds" means the net amount
(after payment of all costs and expenses associated with issuing the Note) received by the Issuer
from the sale of the Note, excluding accrued interest.
404154.1 015832 CERT
2.2. Puroose of Issue. The Note is being issued to provide funds for various
purposes in and for the Town ("the Project"), as further described in the Resolutions.
2.3. Use of Proceeds. The proceeds of sale of the Note in the amount of
$1,445,000(the "Current Refunding Note") will be used, together with other available funds in
the amount of $440,000, to redeem prior issues of bond anticipation notes which mature on
September 13, 2002, in the aggregate principal amount of $1,885,00(the "Prior Issue"),
heretofore issued to finance the Project. The balance of the proceeds of sale of the Note in the
aggregate principal amount of $425,000 (the "New Money Note") will be used to provide
original financing for the Project.
2.4. Ownership/Lease/Sale. The Project will be owned by the Issuer or another
state or local governmental unit and will not be leased to any person who is not a state or local
governmental unit. It will not (except to the extent that any of the projects financed involve
grants) be sold or otherwise disposed of, in whole or in part, except for incidental sales of surplus
items the proceeds of which will not constitute net operating profits or net capital profits to the
Issuer, prior to the maturity date of the Note.
2.5. Private Loans. Not more than the lesser of 5 percent or $5,000,000 of the
proceeds of the Note will be used directly or indirectly to make loans to persons other than a
governmental unit.
2.6. Private Use. The aggregate amount of proceeds of the Note used directly or
indirectly in a trade or business carried on by a person other than a state or local governmental
unit ("Private Use"), will not exceed 10% of such proceeds in the event that more than 10% of
the principal or 10% of the interest due on the Note during the term thereof is, under the terms of
the Note or any underlying arrangement, directly or indirectly, secured by any interest in
property used or to be used for a Private Use or in payments in respect of property used or to be
used for a Private Use or is to be derived from payments, whether or not to the Issuer, in respect
of property or borrowed money used or to be used for a Private Use.
2.7. Unrelated/Related Disproportionate Use. No more than 5% of the proceeds
of the Note will be used directly or indirectly in the trade or business of a person other than a
governmental unit that is unrelated or related and disproportionate to the governmental use of the
property being financed, including any private loan financing described in Section 2.5 which
meets this test. For purposes of this Arbitrage and Use of Proceeds Certificate, proceeds of the
Note are allocable to an unrelated Private Use if such use is neither directly nor operationally
related to a governmental use and proceeds of the Note are allocable to a disproportionate related
Private Use to the extent that the proceeds of the Note which are to be used to finance property
used by a nongovernmental person in a trade or business which is related to the governmental
use of the property referred to in Section 26 above, exceeds the proceeds of the Note which are
to be used for the governmental use to which such Private Use relates.
2.8 Other Private Uses Defined. For purposes of Section 2.6 and 2.7, a Private
Use consists of any contract or other arrangement including, without limitation, leases,
404154.1 015832 CERT
management contracts, guarantee contracts, take or pay contracts, or put or pay contracts, which
provides for a use of the Projects by a person or persons who are not State or local governments
on a basis different than the general public. Any management, or operations contract or
agreement which provides for nongovernmental use will provide for reasonable compensation
which is in no part based on net profits and will satisfy the provisions of(a), (b) or (c) below:
(a) for contracts which provide compensation for each annual period based on a
periodic fixed fee, a capitation fee or combination thereof, (i) the contract has a term
(including renewal options) not exceeding five years; (ii) the issuer may terminate the
contract, without penalty, at the end of any three year period, and (iii) at least 50% of the
compensation paid is on a periodic, fixed fee basis;
(b) for contracts entered into or materially modified (other than pursuant to a
renewal option) after March 15, 1993, which provide compensation based on a per unit
fee or a combination per unit and periodic fixed fee, (i) the contract has a term (including
renewal options) not exceeding three years; (ii) the issuer may terminate such contract
(without penalty) at the end of the second year of the term, and (iii) the amount of the per
unit fee is specified in the contract or otherwise limited by the qualified user or a third
party;
(c) for contracts entered into or materially modified (other than pursuant to a
renewal option) after March 15, 1993, which provide compensation based on a
percentage of fees charged, (i) the contract has a term (including renewal options) not
exceeding two years, (ii) the issuer may terminate the contract (without penalty) at the
end of the first year, and (iii) the service provider primarily provides services to third
parties or the contract involves a facility during an initial start-up period;
(d) For purposes of this Section 2.8:
(i)
"capitation fee" means a fixed periodic amount paid under a management
contract or agreement for each person for whom the service provider
assumes the responsibility to provide all needed services for a specified
period, provided the quantity and type of services actually provided vary
substantially;
(ii)
"periodic fixed fee" means a stated dollar amount for services rendered
during a specified period of time (i.e. SXX per month) which amount may
automatically increase according to a specified, objective, external
standard; and
(iii)
"per unit fee" means a stated dollar amount for each unit of service
provided (i.e. SXX per medical procedure).
2.9. Pooled Loan Financings. To the extent the amount of proceeds of the Note
to be used to make loans to any borrowers (including loans referred to in Section 2.5 above and
loans to state or local governmental units) exceeds $5,000,000, at least 95% of the net proceeds
404154.1 015832 CERT
of the issue (as defined in Section 150 of the Code but without including proceeds used to
finance costs of issuance or capitalized interest) that are to be used to make loans, will have been
used within 3 years of the date hereof to make such loans. The payment of legal and
underwriting costs is not contingent and at least 95% of the reasonably expected legal and
underwriting costs associated with issuance will be paid within 180 days of the date hereo£
2.10. Output Facilities~ No more than 5% of the proceeds of the Note are to be
used with respect to any output facility (other than a facility for the furnishing of water). No
more than the lesser of $5,000,000 or 5% of the proceeds of the Note are to be used (directly or
indirectly) for the acquisition of a nongovernmental output facility.
ARTICLE IH
Arbitra,,e/Rebate Exemption
3.1. TemporargPeriod-Refunding. With respect to the proceeds ofthe sale ofthe
Current Refunding Note representing proceeds allocable to the Prior Issue:
(a) All of the proceeds of the Prior Issue have been expended, or any such
proceeds which have not been expended as of the date hereof, shall become transferred
proceeds of this issue. Such transferred proceeds may be invested without restriction as
to yield until three years after the date of original issuance of the Prior Issue. If any
transferred proceeds remain unexpended after three years after the date of original
issuance of the Prior Issue, such proceeds will be invested at a yield not in excess of the
yield on the Note.
(b) The proceeds of the Note will be used to refund the Prior Issue within 90
days of the date hereof, and may be invested during such time without restriction as to
yield.
3.2. Temporatw Period-New Money. With respect to the New Money Note:
(a) The Issuer has entered into or will enter into within six months from the
date of this certificate, binding commitment(s) for the acquisition, construction or
accomplishment of the Project cited in Section 2.2 hereof, and the amount of such
commitment(s) with respect to such Project will or do exceed the amount equal to 5% of
$425,000, being the aggregate amount of obligations currently issued for such Project.
(b) Such Project has been completed, or, if such Project has not been
completed, work on the acquisition, construction or accomplishment of such Project will
proceed or is proceeding with due diligence to completion.
(c) It is reasonably expected that at least 85 percent of the net sale proceeds of
such New Money Note will be expended within three years from the date of this
Certificate. No more than 50 percent of the proceeds of the Note will be invested in
nonpurpose investments with a term of four years or more.
404154. l 015832 CERT
3.3. Rebate. (a) Neither the Prior Issue nor the New Money Note was or is
subject to the rebate requirement imposed by Section 148 of the Code because, with respect to
each:
(i) the Issuer was or is a governmental unit with general taxing powers;
(ii)
the Prior Issue/New Money Note did not or does not constitute a "private
activity bond" as that term is defined in Section 141 of the Code;
(iii)
ninety-five percent or more of the net proceeds of the sale of the Prior
Issue/New Money Note was or is to be used for local governmental
activities of the Issuer; and
(iv)
the Issuer (including all agencies, instrumentalities and political
subdivisions of the Issuer) reasonably expected or expects that the
aggregate face amount of all tax-exempt bonds issued by the Issuer during
the calendar year in which the Prior Issue was issued and the current
calendar year would not or will not exceed $5,000,000. For purposes of
such determination, no tax-exempt obligation was or shall be taken into
account if it was or is a current refunding obligation issued in the calendar
year in which the Prior Issue/New Money Note (as applicable) was or is
being issued which does not exceed the outstanding (redeemed) principal
amount of the obligation to be refunded.
(b) The Current Refunding Note is not subject to the rebate requirement imposed
by Section 148 of the Code because all of the Gross Proceeds of such Current Refunding Note
will be expended to pay the Prior Issue within 90 days of the date hereof and will, therefore,
qualify for the six-month expenditure exception to rebate.
3.4. No Excess Proceeds. The total proceeds of sale of all bond anticipation
notes issued to date for the Project do not exceed the total cost of the Project.
3.5. Source of Repayment Funds. The Note will be paid from taxes and the
proceeds of other obligations of the Issuer issued to fund the Note.
3.6. Debt Service Fund. The taxes used to pay principal and interest on the Note,
whether or not deposited in a debt service fund, will be expended within 13 months of the date of
deposit in such fund, or the date of their accumulation, in the payment of debt service on the
Note. Any amounts received from the investment of such deposit or accumulation will be
expended within one year of receipt. The debt service fund, if any, will be used to achieve a
proper matching of revenues and debt service and will be depleted at least annually except for a
reasonable carryover amount which will not exceed the greater of the earnings on such fund for
the immediately preceding year or one-twelfth of the debt service on the Note.
3.7. Sinking Funds. Except for the debt service fund described herein the Issuer
has not created or established, and does not expect to create or establish, any sinking fund or
404154.1015832 CERT
other similar fund which the Issuer reasonably expects to use to pay principal or interest on the
Note.
ARTICLE IV
Bank Qualification
4.1. Designation. The Note is hereby designated as a "qualified tax-exempt
obligation" pursuant to the provisions of Section 265 of the Code.
(a) In making such designation it has been determined with respect to the
Current Refunding Note that:
(i) the Note currently refunds the Prior Issue;
(ii) the Prior Issue was designated as a "qualified tax-exempt obligation";
(iii) the aggregate face amount of the Note does not exceed $10,000,000;
(iv) the Prior Issue had a weighted average maturity of 3 years or less;
(v) the maturity date of the Note, as measured from the original date of
issuance of the notes issued pursuant to the Resolutions, in renewal of
which such Note is being issued, does not exceed 30 years; and
(vi) not more than $10,000,000 of obligations issued by the Issuer during the
calendar year in which the Prior Issue was issued were designated by the
Issuer as "qualified tax-exempt obligations."
(b) In making such designation it has been determined with respect to the
New Money Note that:
(i) the Issuer does not reasonably anticipate that the amount of"qualified tax-
exempt obligations" to be issued by the Issuer during the current calendar
year will exceed $10,000,000; and
(ii) the amount of "qualified tax-exempt obligations" issued by the Issuer
during the current calendar year does not as of this date, and including this
issue, exceed $10,000,000.
IN WlTNESS WHEREOF, [ have hereunto set my hand and affixed the
corporate seal of the Town of Southold this l 3th day
of SeptemJper, 200Z j
- Supervisor--
404154. I 015832 CERT
AFFIDAVIT AS TO NO CONFLICT OF INTEREST
STATE OF NEW YORK )
:SS:
COUNTY OF SUFFOLK )
Elizabeth A. Neville, being duly sworn upon her oath deposes and says:
1. I am the duly appointed, qualified and acting Town Clerk of the Town of
Southold, in the County of Suffolk, New York (herein and in Schedule A annexed hereto called
"Town");
2. That with respect to the contract of sale of the Note of the Town described
in the Certificate of Determination executed by the Supervisor on the 13t~ day of September,
2002, to the financial institution indicated in such Certificate, I have made a careful inquiry of
each officer and employee of the Town having the power or duty to (a) negotiate, prepare,
authorize or approve the contract or authorize or approve payment thereunder, (b) audit bills or
claims under the contract, or (c) appoint an officer or employee who has any of the powers or
duties set forth above, as to whether or not such officer or employee has an interest (as defined
pursuant to Article 18 of the General Municipal Law) in such contract;
3. That upon information and belief, as a result of such inquiry, no such
officer or employee has any such interest in said contract unless otherwise noted in Schedule A
annexed hereto and by this reference made a part hereof
Subscribed and sworn to before me
this 13th day qf September, 2002.
~y P~blic, Sta~e of New York
MEI.~NIE OOROStCI
NOTARY PUBLiC,State oi New~d(
No. 01004634870
~llllied in S~o~ ~ -
404154.1 015832 CERT
SCI-[EDULE A
1. , is a stockholder of the Purchaser owning or controlling, directly or
indirectly, less than five per centum (5%) of the outstanding stock thereof but no disclosure of
such interest by said officer is required pursuant to said Law.
2 , has an interest in the Purchaser solely by reason of employment as an
officer or employee thereof, but the remuneration of such employment will not be directly
affected as a result of said contract and the duties of such employment do not directly involve the
procurement, preparation or performance of any such part of such contract.
3. , has publicly disclosed the nature and extent of such interest in writing to
the governing board of the Town. Such written disclosure has been made a part of and set forth
in the official record of proceedings of the Town.
4041~4.1 015832 CERT
CERTIFICATES AS TO SIGNATURES, LITIGATION,
AND DELIVERY AND PAYIvIENT
WE, the undersigned officers of the Town of Southold, in the County of Suffolk,
a municipal corporation of the State of New York and herein referred to as the "Town",
HEREBY CERTIFY that on or before September 13, 2002, we officially signed and properly
executed by manual signatures the $l,870,000 Bond Anticipation Note for Various Purposes-
2002 (the "Note") of the Town, payable to bearer and otherwise described in Schedule A
annexed hereto and by this reference made a part hereof, and that at the time of such signing and
execution and on the date hereof we were and are the duly chosen, qualified and acting officers
of the Town authorized to execute said Note and holding the respective offices indicated by the
titles set opposite our signatures hereto for terms expiring on the respective dates set opposite
such titles.
WE FURTHER CERTIFY that no litigation of any nature is now pending or
threatened restraining or enjoining the issuance or delivery of said Note or the levy or collection
of any taxes to pay the interest on or principal of said Note, or in any manner questioning the
authority or proceedings for the issuance of said Note or for the levy or collection of said taxes,
or relating to said Note or affecting the validity thereof or the lew or collection of said taxes,
that neither the corporate existence or boundaries of the Town nor the title of any of the present
officers thereof to their respective offices is being contested, and that no authority or proceedings
for the issuance of said Note has or have been repealed, revoked or rescinded.
WE FURTHER CERTIFY that the seal which is impressed upon this certificate
has been affixed, impressed, imprinted or otherwise reproduced upon said Note and is the legally
adopted, proper and only official corporate seal of the Town.
And, I, Joshua Y. Horton, Supervisor, HEREBY FURIHER CERTIFY that on
September 13, 2002, I delivered, or caused to be delivered, said Note to The Bridgehampton
National Bank, Southold Office, Southold, New York, the purchaser thereof, and that at the time
of such delivery of said Note, I received from said purchaser the amount hereinbelow stated, in
full payment for said Note, computed as follows:
Pdce ............................................................................... $1,870,000
Imere~ on said Note accruedtothe
d~e ofsuch delivery ............................................................. -0-
Amount Received ............................................................... $1,870,000
404154.1 015832 CERT
IN WITNESS WHEREOF, we have hereunto set our hands and said corporate
seal has hereunto been affixed this 13th day of September, 2002.
Signature
Term of Office
Expires
December 31, 2003
December 31, 2005
Title
Supervisor
Town Clerk
(SEAL)
I HEREBY CERTIFY that the signatures of the officers of the above-named
Town, which appear above, are true and genuine and that I know said officers and know them to
hold khe respective offices set opposite their signatures. ~l~ ~d~h~p~ ~bmd ~nk
/ t/~ of ~ Sout~ld. hl¥ I 1971
~// (.~ture) ' (T~e) (Name of Bank)
404154. l 015832 CERT
ATTORNEY'S CERTII:ICATE
I, Gregory F. Yakaboski, HEREBY CERTIFY that I am a licensed attorney at law
of the State of New York, having offices at 53095 Main Road, Southold, New York, and I am the
duly chosen, qualified and acting Town Attorney of the Town of Southold, in the County of
Suffolk, a municipal corporation of the State of New York and herein referred to as the "Town",
that no litigation of any nature is now pending or threatened restraining or enjoining the issuance
or delivery of the Note of the Town, payable to bearer and otherwise described as set forth in
Schedule A annexed hereto and by this reference made a part hereof or the levy or collection of
any taxes to pay the interest on or principal of said Note, or in any manner questioning the
authority or proceedings for the issuance of said Note or for the levy or collection of said taxes,
or relating to said Note or affecting the validity thereof or the levy or collection of said taxes,
that neither the corporate existence or boundaries of the Town nor the title of any of the present
officers thereof to their respective offices is being contested, and that no authority or proceedings
for the issuance of said Note has or have been repealed, revoked or rescinded.
IN WITNESS WHEREOF, I have hereunto set my hand this 13th day of
September, 2002.
404154. I 015832 CERT
SCHEDULE A
Amount and Title:
Dated:
Matures:
Number and
Denomination:Number
Interest Rate
per annum:
$1,870,000 Bond Anticipation Note for
Various Purposes-2002
September 13, 2002
September 12, 2003
4R-l, at $1,870,000
1.35%
404154 1 015832 CERT