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Home My WebLink AboutFishers Island Ferry District 3,000,000NEW ISSUE - SERIAL BONDS RATING: MOODY'S I1NVESTORS SERVICE -Aaa* See "Bond Rating", herein In the opinion of Hawkins Delafield & Wood LLP, Bond ~ou~el to the Town, under existin, g s, ta, tu?es and court decisjons~ an, d ~6uming continuing compliance with certain tax covenants described heretn, (,i}~ inter,,e, st on the Bonds is exctuaeajrom gross incomejor r eaerat tncome tax purposes pursuant to Section 103 of the Code, as amended (the Code ), and (ii) interest on the Bonds is not related as a prefe, rence item in calculating the alternative minimum tax imt~osed on individuals and curt>orations under the Code; such interest, however, is included in the ad]asted current earnings ~f certain c~r~raIi~ns~r purp~ses ~f ca~cu~a~inJ~ the a~ternative minimum tax imp~sed ~n such c~r~rati~ns. In addition, in the opinion bf Bond Cour. tselLunde~' extsting statutes, inter, est ,o,n the Bonds !s, ,exem~ot fr~m ~ersfna~,t~n,com, e taxes ofN, e~., Yo~rk State and its political subdivistons, inclu,,ding The Ctty of N~w York. See atto Tax M. qtter~s .neretn. The aonas wta oe aestgnatea oy t~te t own as "qualified tax-exempt obligations pursuant to the provisions ofSectton 265 oJ tl~e coae. $3,000,000 TOWN OF SOUTHOLD SUFFOLK COUNTY, NEW YORK (the "Town") FISHERS ISLAND FERRY DISTRICT SERIAL BONDS - 2005 IBOOK-ENTRY-ONLY BONDS] Dated: March 1, 2005 Principal Due: September 1, 2005-2021, inclusive Interest Due: September 1, 2005 and semi-annually thereafter BOND MATURITY SCHEDULE Amount Maturity Rate Yield Amount Maturity Rate Yield Amount Maturity Rate Yield $150,000 2005 3.75% 2.10% $175,000 2011 3.75% 3.10% $200,000 2017 3.75% 3.75% 150,000 2006 3.75 2.25 175,000 2012 3.75 3.25 200,000 2018 3.75 3.85 150,000 2007 3.75 2.45 175,000 2013 3.75 3.35 200,000 2019 3.80 3.90 150,000 2008 3.75 2.65 175,000 2014 3.75 3.45 200,000 2020 3.80 3.95 150,000 2009 3.75 2.80 175,000 2015 3.75 3.55 200,000 2021 4.00 4.00 175,000 2010 3.75 2.90 200,000 2016 3.75 3.65 *The scheduled payment of principal of and i, nt, erest on~ th.e__B.o_nd_s_w~.he_..n.d~ue..wi~ll~.bg_g?.ay.~an~te..e.d~un~er ap insur,a, nc..%n~olicy, to be issued concurrently wtth the defivery of the Bonus oy FINANL;IAL hiEL:U RI 1 Y A~5:SUK/MN~P~ IINL. [zee/xppenmx c t~ona Insurance", herein. Also see AppendixD "Bond Rating", herein.) Security and$ources ofP.ayment: The~ B. onds. w!ll c, on?tim, t.e general ob. lig~ion,s of th, e .T.o.,wn.and,w, ill contain a pledge, 9f its faith and.credit for. the punctual pament otthe prtnclpm. 9~ an?.ln.terqst on ~e t~onas, uno a~l Ce tuaXc~l[ reoa~eP, ropeny w imm the Town wall be subject to the levy o~f ad valorem taxes, without umltatxon as to rate or amount, ~or su p rp . Prior Redemption: The Bonds maturing on September 1, 2015 and thereafter are subject to redemption at the option of the Town prior to maturit~ in whole or in part, at par, on any date on or at, er September 1,'2014 in accordance with tile terms descr bed herein. See "Optional Redemption" under "The Bonds," herein. Form and Denomination: The Bonds will be issued as registered bonds and, when issued, will be registered in the name of Cede & Co. as nominee of The Depository Trust Company ("DTC"),. New York, New York, which will act as the Securities Depository for the Bonds. Individual purchases of the Bonds may be made only in book-entry form in denominations of $5,000 or inteexal 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 th.e Bun. ds to the Bane~cial Owners ofth.e Bonds .will be re. adc by DT.~ Participants and.I.ndirect Participants in accordance with s.tanaing instructions a~.cl cus,to.m .a~. practmes, ,,as ~ now the .e,,aS,eeWt~~ municipal securities held for the accounts of custo.m.ers m bearer form or reststereu m s.~'eet name. t'aymem,wm o, responsibility of the DTC Participant or. Indirec. t Partmlp~t ag, d not of~D ,TC~or me .Tow~,, s.ub~_e?t..to a~, y.s, tatut, ory anu regulatory requirements as may be in effect ti'om t~me to time. See BooK-Entry-only ~ystem unuer ~ne t~onus, herein. The Bonds are offered subject to the final approving op. inion of H~cykins Delafield & [Yood LLP, New York, New York, Bond Counsel, and certain olher conditions. It is expected that ~teliver~. of the Bonds tn book-entry form will be made through the facilities of DTC on or about March 8, 2005 in New York, New Yo~'k. The attached Official Statement of the Town, dated February. 10 2005 together .... with this coverpage dated February 23, ~q~Ann~ndixC~re~ardine~B~ndInsurance')andA~endmD(rev~sn~these~tl~nentlt~ed BondRatlng ),constitute the, Town's fina[Official Statement within the meaning of Secunt les and E~xch. ange .C. ommlsslon Rule, 15 c.2,-.12 (the,.Ru3e),. As p?v~d _. b said Rule, info.rmatlon' omitted' from., said Official Statement. is set Iorth on this cover page aha.sam. ^ppenalceS only, ann except ~oYr such mformat,on~, no other rems,on.s to t. he Officml Stat~m...ent, have b.e.en, ma,de.. ,F, qr a d. escrlptlon of the Town s agreement to provide continuing disclosure as described in the Rule, see ~,lSClOsure unuerta~mg hereto. ROOSEVELT & CROSS, INC. AND ASSOCIATES APPENDIX C BOND INSURANCE Bond Insurance Policy Concurrently with the issuance of the Bonds, Financial Security Assurance Inc. ("Financial Security") will issue its Municipal Bond Insurance Policy for the Bonds (the "Policy"). The Policy guarantees the scheduled payment of principal of and interest on the Bonds when due as set forth in the form of the Policy included as an exhibit to this Official Statement. The Policy is not covered by any insurance security or guaranty fund established under New York, California, Connecticut or Florida insurance law. Financial Security Assurance Inc. Financial Security is a New York domiciled financial guaranty insurance company and a wholly owned subsidiary of Financial Security Assurance Holdings Ltd. ("Holdings"). Holdings is an indirect subsidiary of Dexia, S.A., a publicly held Belgian corporation, and of Dexia Credit Local, a direct wholly-owned subsidiary of Dexia, S.A. Dexia, S.A., through its bank subsidiaries, is primarily engaged in the business of public finance, banking and asset management in France, Belgium and other European countries. No shareholder of Holdings or Financial Security is liable for the obligations of Financial Security. At September 30, 2004 Financial Security's total policyholders' surplus and contingency reserves were approximately $2,255,933,000 and its total unearned premium reserve was approximately $1,561,771,000 in accordance with statutory accounting practices. At September 30, 2004, Financial Security's total shareholder's equity was approximately $2,612,989,000 and its total net unearned premium reserve was approximately $1,286,985,000 in accordance with generally accepted accoanting principles. The financial statements included as exhibits to the annual and quarterly reports filed by Holdings with the Securities and Exchange Commission are hereby incorporated herein by reference. Also incorporated herein by reference are any such financial statements so filed from the date of this Official Statement until the termination of the offering of the Bonds. Copies of materials incorporated by reference will be provided upon request to Financial Security Assurance Inc.: 350 Park Avenue, New York, New York 10022, Attention: Communications Department (telephone (212) 826-0100). The Policy does not protect investors against changes in market value of the Bonds, which market value may be impaired as a result of changes in prevailing interest rates, changes in applicable ratings or other causes. Financial Security makes no representation regarding the Bonds or the advisability of investing in the Bonds. Financial Security makes no representation regarding the Official Statement, nor has it participated in the preparation thereof, except that Financial Security has provided to the Issuer the information presented under this caption for inclusion in the Official Statement. Page2 w revved. IH~URANC~ SECURITY FUND FI~(:~M. SECURITY AS~UPd~CE INC~. ~ r, aaNY (r,,4~9 APPENDIX D Rating Moody's Investors Service, Inc., will assign its municipal bond rating of "Aaa" to the Bonds with the understanding that upon delivery of such Bonds, a policy insuring the payment when due of the principal of and interest on such Bonds will be issued by Financial Security Assurance Inc. Such ratings reflect only the view of such rating agency, and any desired explanation of the significance of such ratings should be obtained from such rating agency. Generally, a rating agency bases its rating on the information and materials furnished it and on investigation, studies and assumptions by the rating agency. There is no assurance that a particular rating will apply for any given period of time or that it will not be lowered or withdrawn entirely if, in the judgment of the agency originally establishing the rating, circumstances so warrant. The underwriter has undertaken no responsibility to bring to the attention of the holders of the Bonds any proposed revision or withdrawal. Any downward revision or withdrawal of such ratings could have an adverse effect on the market price of the Bonds. Such ratings should not be taken as a recommendation to buy or hold the Bonds. OFFICIAL STATEMENT DATED FEBRUARY 10, 2005 NEW ISSUE - SERIAL BONDS RATING: MOODY'S INVESTORS SERVICE - In the opinion of Hawkins Delafield & Wood £LP, Bond Counsel to the Town, under existin£ statutes and court decisions and assuming continuing compliance with certain tax covenants described herein, (i) in?rest on the Bonds3s excluded from ~ross income or Federal tncome tax purposes pursuant to Section 103 of the Code, as amended t'the Code "~ a prefer ence item in calculatt)tg the alternative mt)~imum-tax imposed on indiv idu'als and -co--rp'o'r ~t"i;ffs'/u *nr~te~ t~te °cno~e,~ s~uCcnh?nttSerne°stt,~oatweevea~r is included in the ad/usted current earnings~ of certain corporations for purt~oses of calculaHn~ the alternative minimum tax imoosed on suc/t corporation& lnaddition, inthe opinion~fffondCounse[, under extstingstatutes, interest ont~e Bonds is exemp, tfromloersondl income taxes of ~e~, Yo,r,k St.,ate~and its ~,,oliti,c.a~l s. ubdiviMons, inc..lud(ng T,,he City ~f New York. See also "Tax Matters herein. The Bonds ~ill be aes~gnatea oy tne t own as quatqtecl tax-exempt obhgattons pursuant to the provisions of Section 265 of the Code. $3,000,000 TOWN OF SOUTHOLD SUFFOLK COUNTY, NEW YORK (the "Town") Dated: March 1, 2005 FISHERS ISLAND FERRY DISTRICT SERIAL BONDS - 2005 ]BOOK-ENTRY-ONLY BONDS] Principal Due: September 1, 2005-2021, inclusive Interest Due: September 1, 2005 and semi-annually thereafter BOND MATURITY SCHEDULE Amount MaturiW Amount Maturity Amount Maturity $150,000 2005 $175,000 201l $200,000 2017 150,000 2006 175,000 2012 200,000 2018 150,000 2007 175,000 2013 200,000 2019 150,000 2008 175,000 2014 200,000 2020 150,000 2009 175,000 2015 200,000 2021 175.000 2010 200,000 2016 Security andSources of Payment:, The Bonds will constitute general obligations of the Town and will contain a pledge of its faith and credit for the punctual pa) ment of the pr ncipal of and interest on the Bonds and all the taxable real property within the Town will be subject to the levy of ad valorem taxes, without lim tat on as to rate or amount, for such purpose. Prior Redemption: The Bonds maturing on September 1, 2015 and thereafter are subiect to redemption, at the option of the Town, prior to maturity in whole or in part, at oar, on anv date on or after Scntember 1 ~ ' ,-~,~a~ ' described herein. See "Optional Redemption" unddr "The B~nds," herein. ~ , ~014 in a ...... ncc w~th the terms Form and Denomination: The Bonds will be issued as registered bonds, and, when issued, will be registered in the name of Cede & Co. as nominee of The Depository Trust Company ("DTC"), New York, New York, which will act as the Securities Depositor}, for the Bonds. Individual purchases of the Bonds may be made only in book-entry form in denominations of $5,000 or ,ntegrm mult!p, les thereof. Bondholder, s will not receive certificates representing their ownershil~ 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 custo,m_ary practice,s, as is now the ,cas.e, with mun!,ci~.al se?,ritie~s~h~eld for t. he accounts, of customers in bearer form or registered in 'street name. Payment ~vill ne toe responsmmty ot toe rotc Partm~pant or Indirect Participant ,a, nd not of DTC or the To.w.n, subj,e, ct to any sta,~tory and regulatory requirements as may be in effect from time to time. See Book-Entry-Only System' under The Bonds, herein. Sealed bids for the Bonds will be received at I l:00 A.M. (Prevailing Time) on February 23, 2005, in accordance with the Official Notice of Sale dated February 10, 2005. The Bonds are offered subject to the final approving opinion of Hawkins Delafield & Wood LLP, New York, New York, Bond Counsel, and certain other conditions. [t is expec!ed-that delivery of the Bonds in book-entry form will be made through the facilities of DTC on or about March 8, 2005 in Ne~ York, New York. IHIS OFFICIAL STATEMENT IS IN A FORM "DEEMED FINAL" BY THE TOWN FOR THE PURPOSE OF SECURITIES AND EXCHANGE COMMISSION RULE 15c2-12 (THE "RULE"). FOR A DESCRIPTION OF THE TOWN'S AGREEMENT TO PROVIDE CONTINUING DISCLOSURE FOR THE BONDS, AS DESCRIBED IN THE RULE, SEE "DISCLOSURE UNDERTAKING" HEREIN. TOWN OF SOUTHOLD SUFFOLK COUNTY, NEW YORK Town Hall 53095 Main Road Southold, NY 11971 Telephone: (63 I) 765-4333 Fax: (631) 765-1366 TOWN BOARD Joshua Y. Horton, Supervisor William P. Edwards Justice Louisa P. Evans John M. Romanelli 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 Finnegan, Esq. Town Attorney George Su van, Receiver of Taxes ' BOND COUNSEL Hawkins Delafield & Wood LLP New York, New York FINANCIAL ADVISOR MUNISTAT SERVICES, INC. Municipal Finance Advisor3., Service 12 Roosevelt Avenue Port Jefferson Station, N.Y. 11776 (631 ) 331-8888 8420 Main Street Williamsville, NY 14221 t716) 632-3051 E-mail: info@munistat.com ~ Website: hnp://www.m unistar.cora 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 tel ed upon as having been authorized by the Town. This Official Statement does not constitute an offer to se or the solicitation of an offer to buy nor shall there be any sale of the 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 ha~ 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 an5' sale made hereunder shall under any circumstances~ create any implication that there has been uo change in the affairs of the Towu since the date hereof. TABLE OF CONTENTS Page THE BONDS ............................................................................... Description of the Bonds .................................................................. I Optional Redemption ..................................................................... I Book-entD'-only System ................................................................. Authorization and Purpose ................................................................ 3 Security and Source of Payment ............................................................ Remedies Upon Default ................................................................... THE TOWN ............................................................................... 4 General Information ...................................................................... 4 4 Government ............................................................................ Emplo~,ees ............................................................................ 4 ECONOMIC AND DEMOGRAPHIC INFORMATION ........................................... 5 Population Characteristics ................................................................. 5 1Median Income o f Families ................................................................ Unemployment Rate Statistics .............................................................. Selected Listing of Larger Employers ........................................................ 6 INDEBTEDNESS OF THE TOWN ............................................................ 6 Constitutional Requirements ............................................................... 6 6 Start top,' Procedure ...................................................................... Compute. lion of Debt Limit and Calculation of Net Debt Contracting Marg n ......................... '7 Trend of Town Indebtedness .............................................................. 8 Details of Short-Term Indebtedness Outstanding .............................................. 8 Debt Service Requirements - Outstanding Bonds ............................................... Calculation of Estimated Over apping and Underlying Indebtedness ............................... 9 Authorized But Unissued Items ............................................................. 9 Capital Program ......................................................................... 9 Landfill Closure and Postclosure Care Costs .................................................. 10 DISCUSSION OF FINANCIAL MATTERS .................................................... 10 Financial Stutements and Accounting Procedures .............................................. Fund Structure and Accounts ......................................................... 10 Basis of Accounting ................................................................ l0 Investment Policy . ..................................................................... II Budgetary Procedures ................................................................... I I Financial Operatinns .................................................................... Revenues ............................................................................. Real Property Taxes ................................... 12 State Aid ......................................................................... 12 Expenditures .......................................................................... 12 Pension Systems ...................................................................... Contributions to the Retirement S.', stems ..................................................... 13 REAL PROPERTY TAX INFORMATION .................................................. ~3 13 Real Property Taxes ................................................................. 13 Tax Levy and Collection Record ................................ 13 Tax Collection Procedure .................................... 1~' Tax Rates ................................................................ 14 Large Taxable Properties ................................................................. TABLE OF CONTENTS (Continued) Page LITIGATION ............................................................................ 14 BONDHOLDER RISKS AND MARKET FACTORS AFFECTING FINANCINGS OF THE STATE AND MUNICIPALITIES OF THE STATE ................................ 15 TAX MATTERS ........................................................................... 15 Opinion of Bond Counsel ................................................................ 15 Certain Ongoing Federal Tax Requirements and Covenants ...................................... 16 Certain Collateral Federal Tax Consequences ................................................. 16 Legislation ............................................................................ 16 DOCUMENTS ACCOMPANYING DELIVERY OF THE BONDS ................................. 16 Absence of Litigation .................................................................... 16 Legal Matters .......................................................................... 16 Closing Certificates .................................................................... 17 DISCLOSURE UNDERTAKING ............................................................. 17 BOND RATING ........................................................................... 18 FINANCIAL ADVISOR ................................................................... 18 ADDITIONAL INFORMATION ............................................................. 18 APPENDIX A: APPENDIX B: Financial Information Audited Financial State~nents For the Fiscal ",'ear Ended December 3 I, 2003 OFFICIAL STATEMENT TOWN OF SOUTHOLD SUFFOLK COUNTY, NEW YORK $3,000,000 FISHERS ISLAND FERRY DISTRICT SERIAL BONDS - 2005 [BOOK-ENTRY-ONLY BONDS] This Official Statement and tle appendices hereto presents certa, in, inform,a, tion ,r, elatin$, to the Town of Southold, in the Count3' of Suffolk, in the State of New York (the "Town,' ' County and S. tate, r.e. spectively) in connection with the sale of $3,000,000 Fishers Island FerD' District Serial Bonds - 2005 (the Bonds ) of the Town. ,All quotat ons from and summar es and explanations of provisions of the Constitution and laws oftl~e Stale and acts and proceedings of the To~n co lta ned herein do not purport to be complete and are qualified m their entirety by reference to the official compilations ther,eof and all references to the Bonds and the proceedings of the Town relating thereto are qualified in their entiret) by reference to the defiuitive form of tile Bonds and snch proceedings. THE BONDS Description of the Bonds The Bonds will be dated March 1, 2005 and will mature on September 1, in each of the years 2005 to 202 l, inclusive, in the principal amounts as set forth on the cover page. The Bonds will be issued in fu y reg stered form a~d when issued will be registered in the name of Cede & Co. as nominee of The Depositor3.' Trust Company ("DTC"), New York, Nexv York. DTC will act as S~cur!ties Depos tory for the Bonds. lndiv dual purchases of the Bonds ma5' be made in book-entry form only, in denomtnattons of $5,000'or integral multiples thereof. Purchasers will not receive cert ficates rep[-esent ng the r nterest n tile Bonds. Interest on the Bonds will be payable September 1, 2005, and semiTannuall~ thereafter on March l and September 1 in each year until maturity. Principal and interest will be paid b5 the To,a n to DTC, which will in turn remit such principal and interest to its Participants, for subsequent distribution to the Beneficial Ow ners of the Bonds, as described herein. The Bonds ma:>' be transferred in the manner described on the Bonds and as refereuced in certain proceedings of the Town referred to therein. The Record Date of the Bonds will be tile fifteenth day of the month preceding each interest payment date. Optional Redemption The Bonds maturing on or before September 1, 2014 will not be subject t9 redemption. .p, rior t.o matt~ri~, f,he Bonds maturing on or after September 1 2015 xvill be subject ~o redemption prtor to maturti), at tile option ortne Tov, n ol September l 2014 and thereafter on an5' date, in xxhole or in part, and if in part, in any order of their maturity and tn any amount within a maturity (selected by lot within a maturity), at par, plus accrued interest to the date of redemption. The Bonds sha be redeemable prior to maturity upon thegiving of notice which identifies the Bonds to be redeemed by mailing such notice to the registered holders thereof at their respective addresses as sho~vn upon the re~ stration books of the Fiscal Agent at least 30 dayspr or to the date set for any such redemption. If notice of re'tempt on shal have been given as aforesaid, the Bonds so called for redemption shall become due and payable at the applicable redemption price ou the redemption date designated in snch notice, and interest on such Bonds shall cease to accrue from and after such redemption date. Book-entry-only System DTC w act as securities depository for the Bonds (the "Bonds"). The Bonds will be issued as fully- reg stered Bonds registered n the name of Cede & Co. (DTC's partnership nominee) or such other name as may be requested by an aufl~orized representative of DTC. One fully-registered Bond certificate will be issued for ~ach maturity of the Bonds, each in the aggregate principal amount of such issue, and will be deposited with DTC. DTC. the world's largest dep,o, sitor¥, is a mited-purpose trus! company organized under the Ne~ York Banking Law, a "banking organization witffin the mean ng of the New'~ ork Banki . ' .... ,.Reserv. e System, a "c ear ng corporation" w th n the meanin of the New York ni~Lax~ a memb.e.? ot.thc .Fe. dc~a,I cleanng agenc ."'re stered ursuant to the ovi i ~ ~ U.n.lform Corn nerc~al _k ode. ,md a I ,~' g P.. p s. op~ o.fSectlon 1 7A of the Securmes Exc lanoe Ac ot 19~4 DTC old~ ~nd, p, rgx~des asset servicing for over 2 mllhon ssues of U S a~d non U S eo. r~ ?.5 .... i nlanlclpal aebt ~ssues and mo lev market instruments from over 85 COLIn ' - '~ , ',' · -- . Pattie,pants") d?postt xv,tb DTC. ]DTC also facdttates tile post-trade settlen~t~Satmhoall~D~e~t~aa~.~t~c?~annt~s(o~i~ and other securmes transact OhS in &nos ted securities throu,,h ,~.-~-: .... · ~ - · P ~ .c. enmcates, tJ rectvarticinants nc udebothll S a d ion U S sec~ritiesbr~'-~ -%'~ , , 7 ........ clearing corporations, anc~ certain other organizations DFC is a x~holly-o~ned snbsidiar,, of The DeDos to '~ 'I 'ust & Clearing Corporation ("DTCC"). DTCC. ill turn, is owned b ' a'number of Direc ' '-' .: ' ' ' ~ Members of the Nat,onal Secunt,es Clearing Corporation, Government Securities Cle~rainn~x(P'~)~,~tti[o)~(M~ Cleanng Corporation. and Emerg lg Markets Clearing CorporatJou 'NSCC GS£C MBSCC a~{d t-kiLt ~1, snbsidiaries of DICC) as ~ell asby the New York Stock Exchange I lc., the Amsric,~n Stock I xcbaaae I I ('. a the Nat o iai Association of Securities Dca ers, nc. Access to the DFC s~ stem s a so available to others'~uch a., b, U.S. and non-U.S, securities brokers and dca ers, banks, trust com~aniesjand clearin~ corporations that clear th ~t al or maintain a custodial relationship ~ith a Direct Participant. either directly or ind[~'ectly ("Indirect Participant~~ DTC }las Standard & Poor's highest rat ng ~AA. The DTC Rales applicalJIe to its Participant5 are on file xx ith the Securities and Exchange Commission. More information about DTC can be foond at www.dtcc.com. Purchases of Bonds under the DTC system must be made by or throngh Direct Pmticipant~. xxhich x~ ill receixe a credit for the Bonds on DTC's records The ow lershi~ in(crest of each actual purchaser of each Bond C'Benet~cial Ox~ ner")is m turn to be recorded on the Direct and lndlrect Participants' records. Bcueficial ()x~ nets x~ ill not receive written confirmat on from DTC of the r purchase. Beneficia Ox~ners are hox~evcr, expected to r'cccix c written confirmations providing details oftbe transaction, as ~xell as periodic statements of their h(~ldines. Imm Direct or Indirect Participant through x~ hich t e Beneficial O~ner entered into tile transaction. D anst~2 ', ~Sh ~xx ncrshit~ interests in tbe Bonds are to be accomD s led bY entries nlade on the boc ks nf Direct and hldilect Particillams actmu onbehalfofBeneficialOx~ne.s BeneGcialOxxnerswi lotreceivecertificatesrepresentin~ot c ro~xnc~shit~intcrcst~ in Bonds. except in tile event that use of the book-entry system tbr the Bonds is discontinued. Conveyance of notices and other communications b~?TC o D rect Participants, b5 Dh'ecL Partici~a 1 ~ t ludirect Partici'pants, and b'~ Direct Participants aud hldirect'[ articipants to Beneficial Ox~ n~ers ~ ill be o,~ e~rned b,, arrangements among them,'sabject to any statutm3, or regulatm3, requirements as may be in effect fi'om ~me to tim~: Redemption notices shall be sent to DTC. lfless than all of the Bonds x~ithin an issue are being redeemed. DTC's practice is to determine b', lot the mnonnt of thc interest of each Direct Participant iu such issue h~ bc redeemed. Payments on the Bonds will be made to Cede & Co. or such other m ninee as nax be requested a,:t.,tl}orize,d representa,Live t}f D~q. pTC'~ prastice is to credit Direct Pan cipants' accounts t Oon DFC tunas mm corresponmp~,aetau ~nlormat o ~ ~roln the To~n. on payable date in accordance with Ibeir res )e6tixc pffsl~o~hs~ ~s~s records. Pay~e~ts by Pa(tin,pants to Be~eficial O,,ners ,x Il be goverued by sfad ~g ' v pracnces as s t~e case x~ t~ bonds held tor the accounts of customers in bearer re ist ' ~¢ ~, · · · . . . . rill t}l g ered[n street name, and~dlbetheresponsibd~'ofsuchPamc~pantandnotofDTCnoritsnomh~ee, orthe Town, subject to any statutory or regulatory requirements as may be m effect from time to time. Pax ~ncnts to Cede & Co. (or snch other nolnine~ as may be requested bx an authorized 'epresentatixe of DTC) is the rSspon4bilitx of the Town, disbursement of such payments to D rect Phrtic pa ~ts will be the responsibi D FID'FL and dislmrscn~cn of such payments to the Beneficial Owners xxill be the responsibili~' of Direct and lndu'eci Pa~[cipunts. TC may dtsconhnue providing ~ts sen'~ces as &pos torx with respect to the Bouds at anx ~imc bx ,,ix in,, [eas?abl~potice to the Tox~ n. Lruder such circnmstances in the ~xe t t at a ~t cces~( r de )o~it( ~ono cemtmates are required to be printed and delNered. - - t - ., The Town may decide to discontinue use of the s~ stem ofbook-entD traosfers through [)'1 ('lot a securities depositoD.). In that event, Bond ceffificates x~[ll be printed and delivered. The information in this section co lcemi ~g~DIC and DTC's book-entl) s~stem has been obtaiued from sources that the Town believes to be reliable, but tlc Town takes no responsibihty ~or the accuracy thereof. THE TOWN WILL NOT HAVE ANY RESPONSIBILITY OR OBLIGATION TO PARTICIPANTS, TO ~FDI.R~CT PA.R_T_IC_IPANTS OR TO ANY BENEFICIAL OWNER WITH RESPECT TO (I) THE ACCURACY ANY RECORDs MAINTAINED BY DTC, ANY PARTICIPANT, ORANY INDIRECT PARTICIPANT; (Il) THE PAYMENTS BY DTC OR ANY PARTICIPANT OR INDIRECT PARTICIPANT OF ANY AMOUNT WITH RESPECT TO THE PRI]SIClPAL OF, OR PREMIUM, IF ANY, OR INTEREST ON THE BONDS; (III) ANY ~N.O. ~TI._C~E ~W_H~. C H IS P_E_R~_ fiTTED OR REQUIRED TO BE GIVEN TO BONDHOLDERS; (IV) THE SELECTION BY DIC {DR ANY PAR'I ICIPANT OR INDIRECT PARTICIPANT OF ANY PERSON TO RECEIVE PAYMENT IN THE EVENT OF A PARTIAL REDEMPTION OF THE BONDS: OR (V) ANY CONSENT GIVEN OR OTH E R ACTION TAKEN BY DTC AS BONDOWNER. 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 a bond resolution duly adopted by the Town Boar~t on July 3 t, 2001, and amended on October 31,2003, to p__ay part of the cost of the construction ora new and expanded ~rry t?m~.al f9r the Fishers,Isl.and FerD, District (tl~e "District") on land heretofore acquired and now ownedby the /own tor L~stnctpurposes, ~mg the site of the extsting ferry terminal, in the City of New London Connecticut, including bulkheading, construction of a new ticketing and administration building, installation of utilities, parking area for vehicles and all other necessary facilities and appurtenances thereto. The proceeds of the Bonds willbe use~{ to redeem in full the outstanding bond anticipation notes matur ng March 9, 2005 and $25,000 of the bond anticipation notes maturing June 10, 2005, origmally issued to pay part of the cost of the above described project. For further information regardingbond author zations of the Town for capital purposes and other mal~ers relating thereto see "Indebtedness oftheTown". - - -- Security. and Source of Payment Each Bond when duly issued and paid for will constitute a contract between the Town and the ho[der thereof. The Bonds will be general obligations of the Town and will contain a p edge of the 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 eD' ad valorem taxes on all taxable real properS, in the Town without limitation as to rate or amount. Under the Constitution of the State, the Town is required to pledge its faith and credit for the payment of the principal of and interest on the Bonds. and the State is spec fically prec uded from restricting the power of the Town to le~y taxes on real estate therefor. ' Remedies Upon Default Under current law, provision is made for contract creditors (including the Bondholders) of the Toxin to enforce payments upon such contracts, if necessary, through court action, although the present statute limits interest on the amount adjuaged due to creditors to nine per centum per annum from the date due to the date of payment. As a general rule, property and funds ora municipal corporation serving the oublic we[fare and interest have not been judicially subjected to execution or attachment to satisfy a judgment although judicial mandates to offic a s to appropriate and pay judgments out of current funds or the proceeds of a tax levy. flare been issued. Remedies for enforcement of payment are not express[y included in the Town's contract with holders of its bonds and .n.o~es, although an.v l~ermanent repeal by statute or constitutional amendment of a Bondho dot's remedial right to juthcml enforcement otthe contract should, in the opinion of Bond Counsel, be held unconstitutional. The Sta,.t,e ha,s consented that any municipality in the State may file a petition with any United States district court or court ot oanKruptcy under any provision of the laws of the United States, now or hereafter in effect for the composition or adjustment of municipal indebtedness. Subject to such consent, under the 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 munic pal corporations, under certain circumstances, w th easier access toj udicially approved adjustment of debts, ~ncludingj udic~al control over identifiable and unidentifiable creditors. In recent times, certain events and legislation affecting remedies on default have resulted iu litigation. While courts of final jurisdiction have upheld and,sustained the rights of bond ~o ders, such courts might hold that fun re events including financial crises as. they ma5 occur in the State .and in municipalities, of the. State reqmre' the exercise by the State of its emergency pohce powers to assure the contmuatxon of essential services. No principal or interest payments on Town indebtedness are past due. The Town has never defaulted in the payment of the principal of and interest on any indebtedness. THE TOWN There follows in this Official Statement a brief description of the Town together with certain information concerning its economy and governmental organization, its indebtedness, current major revenne sources and expenditures and general and specific funds. General Information The Town, with a land area of 54.5 square miles is located in eastern Suffolk County on tile north fork of Long Island. Settlement took place in 1640. The Village of Greem>ort is located wholly within the Town. The Tow n also includes the area of Fishers Island which is located approxirhately' twelve miles ~ast of the mainland. Fishers Island is accessible only by water or air with ferry, servtce operating between the Island and New London. Connecticut. The Town isprimarily a rural resort area with substantial shopping facilities available at Greenoort at various shop_ping centers within the Town, and at Riverbead just to the west.' Sonde commerc iai services are a/,'ail~ble within the I own in the hamlets of Southold, Cutchogue and Mattituck. Agriculture has been a major industry in the Town since its origins. In recent years farm croos are eraduallv evolving from basic.production to nurse~' crops including shrubs, s3d, potted plafits and other o'rname~ntals. substantial portion ot these products are sffippedby ferry across Long Island Sound for distribution throughout New Englan4. A number of vineyards have been established and wine-making is an important indust~'. Fishing and fish processing are now grooving industries due to improved transportation facilities. The Town is also a major summer resort area, utilizing bays, inlets and Long lslandand Block Island Sounds. ' The main highways in the Town are New York State Route 25 and North Road. Rail trans~,ortation is provided by the Long Island Rail Road with stations at Mattituck, Southold and Greenport. Ferry ser~ ice is also available between Orient Point, east of Greenport. and New London, Connecticut as well as from Gre~nport 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 an~'hre protection districts. The Town provid~'s its own police protection. [n the Village of Greenport, electric service and fire protection are provided by the Village. Government Six independently' governed school districts are located v, holl¥ or partially within tile To,wn which rcl~ on their own taxing powers granted by the State to raise revenues. The school districts use the Toy, n s assessment roll as their basis for-taxation of property located within the Town. Subject to the provisions of the State Constitution, the Town operates pursuant to the J'own Law, the General Municipal Law, the Local Finance Law, other laws generally applicable to the Town7 and an) special lax~s generally applicable to the Town. Under such laws, there is no authority for the To~vn to ha,,e a charter, but pursuant to th,e, constitution and the Town Law' and other laxvs generally' applicable to home rnle, the Town may from time to time adopt local laws. The legislative power of the Town is vested in the Town Board, which consists of five members, elected tbr a term of four years, and the Supervisor, ~ho is the chief executive officer of the ,T, own, elected for a term oftx~o years. Such terms are staggered such that two or three councilmen are elected eyeD,, Oa'o ?'ears. Alt the Town Board members are elected at large and there is no limitation to the number of terms each ma5 serve. Employees The Town provides services through employees, some of whmn 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 Sen'ice Employees Assoc ........................ Police Benevolent Assoc ............................ I. Currently under negotiation. ~lpeProximate Date Contract mbership Expired 172 12-31-02 ~ 49 I _-~ I-0> ECONOMIC AND DEMOGRAPHIC INFORMATION Population Characteristics The Town has had a population trend, as compared to the County, as indicated below: Year Town County 1970 ..................................... 1980 ..................................... 1990 ..................................... 2000 ..................................... 2001 ..................................... 2002 ..................................... 2003 ..................................... 16,804 1,127.030 19,172 1,284,231 19,836 1,321,977 20,599 1,419,369 20,835 1,427,946 21,015 1,440,870 21,447 1,445,555 U.S. Bureau of the Census, Long Island Power Authority. Median Income of Families 1980 1990 2000 Town $21,013 $43,082 $61,108 County 24,194 53,247 72,112 StYe 20,180 39,74l 5L691 U.S. Department of Commerce. Bureau of the Census. Per Capita Money Income 1980 1990 2000 Town $8,258 $19,037 $ 27,619 Count), 7,576 18,48l 26,577 State 7,496 16,501 23,389 Source: U.S. Department of Commerce, Bureau of the Census. Unemployment Rate Statistics Unemployment statistics are not available for the Town. The smallest area for which such statistics are availa~b, le (which includes the Town) is the County of Suffolk. The information set forth below with respect to such Count) is included for information purposes only. It should not be implied from the inclusion of such data in this Statement that the Town is necessarily representative of the Count), or vice versa. Suffolk New York County State ArmualAverages: 1999 ............................ 2000 ............................ 2001 ............................ 2002 ............................ 2003 ............................ 2004 ............................. 3.6% 5.1% 3.2 4.6 3.4 4.7 4.3 5.9 4.3 6.2 4.5 5.9 Source: Department of Labor, State of New York Selected Listing of Larger Employers Name Mattituck-Cutchogue UFSD ....................... Eastern Long Island Hospital ...................... Towu of Southold ............................... San Simeon by the Sound ............... P um Is and ADC ................................ Southold UFSD Peconic Land ng ................................. Grcenport UFSD ....... ' . ' ................... Approx. No. Type of Employees Education 29(I Hospital 260 Municipalit) 254 Nursing Home t 93 Government / 87 Education 18 I Life Care Community 160 Education I I 0 INDEBTEDNESS OF THE TOWN Constitutional Requirements Thc New York State Constitutiou limits the power of the Town (and other municipalities a id school districts of the State) to issue obligations and to contract ndebtedncss. Such constitutiona m tat ohs nc ude thc follow m. in summa~, form, as generall3 applicable to the Tov, n and the Bonds: Purpose and Pledge. The Town shall not give or oan any honey or pronertv to or in aid ofanx indMduak or private corporation or private undertaking or give or loan ts credit to or'in aid o/'an(' of the foregoing 6r any public corporation. ' The Town may contract indebtedness onh.' for a Town purpose and shall pledge its thith and credit f'or the payment of principal of and interest thereon. ' Payment and Maturity. Except for certain short-term ndebtedness cont 'acted i ant cipation of taxes ot tobepaid~'ithinthreefiscalyearperiods indebtedness shall be paid in annual insta mentscommencingnolaterthan two years after the date such indebtedness shall have been contracted and ending no later than the expiration ol'the period of probable usefulness of the object or purpose determ ned by statute no mstalbnent ma),' be more than per centum in excess of the smallest prior installment, unless the To;vn has authorized the ssuauce of indebted having substantially level or declining annual debt service. The Town s requ red to provide an annual appropriation for the payment of interest due during the year on its indebtedness and for the amounts requ red in such year 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 theprincipal amount thereof shall not exceed seven per centum of the average full valuat o 1 of taxable real estate of the Tow n and subject to certain enumerated exclusions aad deductions such as water and certain sewer facilities and cash or ~a~)ePrOpriations for current debt service. The Constitutional method for determining fu va tation consists ofdividmu total assessed valuation of taxable real estate tbr a specified assessment roll by the fina equa zation rati~ established for such assessment roll by the State ~oard of Rea Properlb, Services (tile "State Board"). The State Legislature is requ. ired to prescribe the manner b3 which such ratio shall be determined. Average full valuatiou is determined by talcing the sum of the full ,v,a. lu~tions of such last completed assessment ro and the filur preceding assessment rolls and dividing such sum b3 fix e. 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 pa),' interest and principal on all indebtedness. General. The Town is further subj~e~t to constitutional limitation by the general constitutio ia ly reposed du~ of the State Legislature to restrict the pow er of taxation, assessment, borrowing money, contracting indebtedness anoloaning the credit of the Town so as to vrevent abuses in taxation an,d,.asses~ments and in contractine indebtedness; however, as has been noted under Security and Source of Payment the State Legislature is proh~bite3 by a specific constitutional provision from restricting the power of the Town to levy taxes on rea estate for the payment of interest on or principal of indebtedness theretofore contracted. Statutory. Procedure In general, the State Legislature has authorized !tie power and procedt re for tle ]own to borrow and incur indebtedness by the enactment of the Local Finance La~x subject, of course, to the constitutional provisions set forth above. The power to speud money however, generally derives from other aw. including the Toxx n [xm and General Mun c pal Law of the State. Pursuant to the Local Finance Law, the Town authorizes the incurrence of indebtedness, including bonds and bondanticipationnotesissuedinanticipationofsuchbonds bytheadoptionofaresolution, ap!oro~edbyatleasttwo-" thirds of the members of the Town Board the finance boar~ofthe Town. Certain of such resolutions may be subject to permissive referendum, or may be submitted to the Town voters at the d scretion of the Board of Trustees. The Local Finance Law also provides a twenty-day statu!e of limitations after publication of a bond resolution which in effect estops thereafter legal challenges to the '~alidity of obligations authorized by such bond reso tit on except for a eged const tut onal v olat ons. The estoppel procedure for the Bonds has been co(nplied with. Each bond resolution usually authorizes the construction, ac~luisition or installation of the object or purpose to be financed, sets forth the plan offfinancing and specifies the maximum maturity of the bonds subject to the leea (.Constitution, Local Finance Law and case law) restrictions relating to the period oYprobable use ftlln~ss with respect thereto. Each bond resolution also authorizes the issuance of bond anticipation notes prior to the issuance 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 more than 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 5,ear limit and may be renewed subject to ammal principal reductions for the entire period of probable usefulness of the purpose for xvhich such notes were originally issue~l. (See "Payment and Maturiv," under "Constitutional Requirements".) .... In general the Local Finance Law contains similar provisions providing the Town with vower to issue general obligation revenue and tax anticipation notes and general obligation budget and capital not&s. The following tables set forth the computation of debt limit and th~ calculation of total net indebtedness o£the Town in accordance with the constitutional requiremenls hereinabo,~e described. Computation of Debt Limit and Calculation of Net Debt Contracting lVlargin (As of February 10. 2005) Fiscal Year State Ending Assessed Ecl~alization Full Decem§er 31: Valuation Rate Valuation ~.>5. o $ 3,666,261,921 2001 ............................... $93,489,679 -~ - o/ 2002 ............................... 95,566,207 2.30 4,155,052,478 2003 ............................... 98,928,528 2.30 4,301~240,347 2004 ............................... 101,872 561 1.49 6,837~0841630 2005 ............................... 04,228,885 1.25 8,338~310~800 Total Five Year Full Valuation ................................................ $27,297,950A 76 Average Five Year Full Valuation ............................................. 5,459,590,035 Debt Limit - 7'/0 of Average Full Valuation ...................................... aS.~. 171,302 Inclusions: Outstanding Bonds: Generalq~urposes ..................................................... $10,474,098 Refunded Bonds ...................................................... Sub-Total ........................................................... ~ Bond Anticipation Notes .................................................... Total Inclusions ........................................................ 25,309,698 Exclusions: Cash on Hand for Debt (Refunded Bonds) .................................... 2,210,000 Appropriations ......................................................... 1,266,000 Total Exclusions ........................................................ $ 3~476~000 Total Net Indebtedness Before Issuing the Bonds ................................. 21,833.698 The Bonds 3,000,000 Less: BANs to be paid fi'om bond proceeds ...................................... 3,000~000 Net Effect of Issuing Bonds .................................................. Total Net Indebtedness After Issuing the Bonds .................................. 21,833,698 Net Debt Contracting Margin After Issuing the Bonds .............................. $360,337,604 Percent of Debt Limit Exhausted ............................................... 5.71% Trend of Town Indebtedness The £ollowing table represents the outstanding indebtedness of the Town at the end of the last fi*e preccdmg fiscal years. 200O Debt Outstanding End of Year: Bonds .................. $8,955.000 Bond Anticipation Notes ... 2.218,468 Fotal Outstandiag Debt ........ $ l I, 173,468 Bond Anticipation Notes Fiscal Year Ending December 31: 2001 2002 $ 8,260,000 $7.615,000 10,764,000 11,020,709 $19,024,000 $18,635,709 Details of Short-TermlndebtednessOutstanding Maturity Parpose 200~ 20t14 $6,950.000 $6.515.000 14,768,302 12,625.600 ~21,718,302 $19,140,600 03-09-05 04-22-05 06-10-05 06-10-05 08-26-05 09-09-05 Fishers Island Ferry District ................................. Various Capital Prbjects ................................. F shers Island Ferry District .................................. Fishers Island Ferry District ................................ Solid Waste Management District ............................ Var ous Capital Projects .................................... $2.97>.000:' 9.00(, 750.000~ 1.000.000 70.000 1,600 Total ................................................ $12,625,600 a. 1o be prod from the proceeds of the Bonds. b. 'Fo be paid from the proceed_-, of the Bond~, ($25,000~ and from the proceeds or'bond anticipation renewal notes Debt Service Requirements - Outstanding Bonds Fiscal Year Ending December 31: Principal Interest Fotal 2005 ....................... $1,025,000 $296.330 2006 ....................... 800,000 298,050 2007 ....................... 829,098 274,518 2008 ....................... 845,000 248,984 2009 ....................... 875,000 221,648 2010 ....................... 825~000 192.882 2011 ....................... 850,000 165,469 2012 ....................... 765,000 137,463 2013 ....................... 625,000 114,995 2014 ....................... 640,000 04,258 2015 ....................... 635,000 72,272 2016 ....................... 535,000 52,464 2017 ....................... 545,000 34,118 2018 ....................... 560,000 15,012 2019 ....................... 120,000 2,820 Tomls ................... $10,474,098 $2,221,283 $1,321.330 1.098.050 1.103,616 ~,093.984 1,096,648 1.017.882 1.015,469 O02.463 739.095 734.258 707,272 587.464 579.118 575.012 ~22,820 $12,695,381 a. Includes $2,380.000 Refunding Serial Bonds - 2005; does not included re[hnded bonds Calculation of Estimated Overlapping and Underlying Indebtedness Overlapping Date of Percentage Units Report Applicable Applicable Applicable Total Net Indebtedness indebtedness County of Suffolk ..................... 12-08-04 3.71% Village of Greenport ................... 05-21-04 100.00 School Districts: Fishers Island ............. 10-15-04 100.00 540,000 Greenport ................. 08-05-04 100.00 405,000 Mattituck-Cutchogue ....... 08-03-04 98.49 12,262,005 New Suffolk Common ...... 06-30-04 100.00 O3 ster Ponds .............. 06-30-04 100.00 200,000 Southold ................. 09-08-04 100.00 I 1,685.000 Fire Districts (Est.) ..................... 12-31-03 Var. 2,000,000 $32,920,980 $24,226,983 7,796,763 7,796,763 540,000 405,000 11.219,735 200,000 11,685.000 2,000,000 $67,809,748 $ 58,073,48l Annual Financial Reports on file with the Office of the State Comptroller. or more recentl5 published Official Statements. Authorized But Unissued Items The folloxving Bonds are authorized but unissued: Date Authorized Purpose Amount 09-01-98 08-23-99 08-23-99 08-30-01 08-28-01 02-25-03 08-26-03 09-07-04 11-16-04 Acquisition of Rights in Land-Open Space Preservation ............... $2,000,000 Acquisition of Rights in Land-Op,e,n Space Preservation .............. 2~000.000 Improvements to Town Waterwass ............................... 250,000 Pickett Landfill Closure ........................................ 987,765 Acquisition of Rights in Land-Open Space Preservation .............. 2,000,000 Mattituck lntet Shore Erosion Study . ............................. 82,750 Acquisition of Rights in Land-Open Space Preservation ............... 4,000,000 Payment of Settled Claim - NYSDEC ............................. 825,000 Southold Solid Waste Management District ........................ 3,250,600 Total ................................. $15,396,115 Capital Program The Town annua y adopts a Capital Budget Projects may be funded by State and Federal aid reserves proceeds ofobhgattons, property taxes or a combmatton thereof. A summary of the Capital Budget for ~005 is set forth below: ~ Department 2005 General Town .................................... $7,132~500 Highway Dep~ .................................... 350,000 SolidW~aste District ............................... 3,125,000 Total ........................................... $10,607,500 9 Landfill Closure and Postclosure Care Costs The Town owns a landfill on a site in the onincorporated area of' Cutchogue. commolv k~lowu as tl~c Cutchogue Landfill. The Town ceased accepting waste at its Cutcho~ue Landfill as of October 8. [9%. Placement of the final cover, referred to as capping on the landfill was complete) iii November 2003 In addition to placement of the final cover on the landfill, state and federal reeulations present ¥ reqnire the 'l'ox~n to pedbr I certa ~ maintenance and monitoring functions at the site for up t~ thirb/years. Thi: Town has a id w continue to comply with said requirements. The ongoing post closure costs are est'imated to be betxxeen $17.350 and $18 350 per xea'r from 2005 through 2008. The Town has paid and will continue to pa.,,' t lese costs. - - . ~:ctual costs associated with the cappiug totaled $7,681.720. Financing for closnrc actixities has been provided mpart through a grant from the New York State Departmeut ol' En~ iroumental Conservation in the amount of $2,000,000. The balance was provided through a State subsidized loan received in July 2004 from thc Ne~x York State Environmental Facilities Corporation. Costs associated with postclosnre care will be covered bx char,~cs to future users of the collection facilit_~ and site and flm~re tax revenue. - ~ ' DISCUSSION OF FINANCIAL MATTERS Financial Statements and Accounting Procedures rlle Town maintains its financial records iii accordance with tile Unifornl Ssstem of'.-\ccounts J>areScribed by tile State Comptroller. The financial records of the Toxx n are audited by'iudcpendent accotnltaul:,. Thc st such au)it made available for public inspection covers tile fiscal ,,'ear ended December 3 I. 21)03. In addition. the financial affairs of the Town are subject to periodic compliance r[view by the Office of the State to ascertaiu whether the Town has complied with the requirements ofxarious State and Federal statutes. In June. 1999, the Governmental Acconuting Standards Board ("GASB") issned Statement ~4. ':Basic Financial Statements and Management's DiscussJons and Analysis lbr State and Local Go~cmlneuts". Thi* Statement establishes new financml reporting requirements for st~te and local governments throughout thc I ~nited States. When implemented it will require new information and restructure much of the int'ormatiou t~lat gox emmeuts have presented in the past. Comparability with reports issued in all prior years will be affected. GASB requires thc Tow? to mp ement this standard for the fiscal 5'ea' end ng December 3 I. 2003. The Toxin is in compliance ~ith tile' requirements of GASB Statement 34. The Balance Sheets and Statelnents of Revenues. Expenditures and Chan~,es in Fund Balances preseutcd in Appendix A of this Statement are based ou the Annnal Financial Reports of the Tox~ n. The Town utilizes fund accountiug to record and report its various serx icc activities. ~. fund rcprc~cms both a legaI and all accounting entiD' which seizregatcs the transactions of specific prom'ams m accordance with qpccial regulations, restrictions or linutations. ~ ~ There are three basic fund t)pes: (1) governmental funds that are used to account for b~asic services and capital projects; (2) proprietary funds that account for operations of a commercial nature: and (,) fiduciarx tirade, that account for assets held in h trustee capacity. Account groups, which do not represent fimds, are used tcq record fixed assets and long-term obligations that are'not accounted for itl a specific fired. The Town presentlx maintains the folto~ing governmental fuads: General Fund To~a ~'itle. Special Revenue Funds (Town Outs'ide Village, Special Grant, Highway) Special Districts Fuuds. and the Capital Proiects Fuad F duc ar).' ftnds cons st ora Trt st and &gency F u id Acc(Sunt groups are maintained tbr fi xed assets and J'oug- term debt. The Town's ~,overmnental flmds are acconnted fbr on a modified accrual basis of accouuling. I [nder the modified accrual bas~, revenues are recognized when the5 become susceptible to accrual - that is. ~x ben thex become "measurable" and "available" to finance expeoditures to the cnrrent period. Rcxenues ute susceptible l[~ accrual include real properly taxes, intergovernmental reveuues (State and Federal aid) and operatiug transt'crs. Expenditures are generally recognized nnder tile modified accrual basis of acconntint,, that is when tile related fund liability is incurred. ~xcept~ons to this general rnle are unmattlred iulerest on general Iong-ternl debt xxhich is recognize) when dne. 10 Investment Policy · Pursuant .to State law, including Sections 10 and 11 of the General Municipal Law (the "GML"), the Town ts generally permitted to deposit moneys in banks and trust companies located and authorized to do business in the State. All such deEosits, including special time deposit accounts and certificates of deposits in excess ,o, fthe amount insured under the vederal Deposit Insurance Act, are required to be secured in accordance with the prox isions of and subject to the limitations of Section 10 of the GML. The Town may also temporarily invest moneys in (15 obligations of the United States of America (2) obligations guaranteed by agencies of the United .States of America where the payment of principal and interest are g_,uaranteed by the United States of America, (a) obligations of the State (4) with the approval of the State t~omptroller, in tax anticipation notes or revenue anticipation notes issued by any municipality, school district, or district corpgration, other than those notes issued by the Town; (5) certificates bf particfpati$n issue by political subdivisions of the State pursuant to Section 109-b-( 105 of the GML; (6) obligations of a public benefit corporation of the State which are made lawful investments for municipalities pursuant to the enabfing statute of such public benefit co(potation, or (7) in the case of moneys held in certain reserve funds established by the Town pursuant to law, in obligations of the Town. All of the foregoing instruments and 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 the moneys were ~rovided and, in the case of i ,n, struments and investment,s, purchased with the proceeds of bonds or notes shall be pax able or redeemable in any event, at the option of the owner, ~vithin two years of the date of purchase. Unless registered or inscribed ~n the name of the Town, such mstruments and investments must be purchased through, delivered to and held in custody ora bank or trust company in the State pursuant to a written custodial agreement as provided in Section 10 of the GML. The Town Board has adopted an investment policv and such policy conforms with applicable law's of the State governing the deposit and investment of public moue'vs. All deposits and investments of the Town are made in accordance w, ith such policy. Budgetary Procedures The head of each administrative unit of the Town is required 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 September 20th. Estimates for each fire district situated w~thin the Town must also be filed with the 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 prelimiuar7 budget· A public hearing, not,ce ofw'hich ~nust be dulvpublished in the Town's official newspaper, on the prelimmaD, budget is generally required to be held oo the Thur'sday immediately following the genera/election. At such hearing an)' person nra5' expr,e, ss his opinion concerning the preliminary I~udget; however, there is no requirement or provision that the preliminaD 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 preliminary budget. The Town Board. by resolution; adopts the preliminary budget'as submitted or amended no later than November 20th, at which time, }he preliminat3 budget becomes the annual budget of the Tow n ~br the ensuing fiscal year. Budgetary cootrol during the year is the responsibility of the Supervisor who is assisted iii this area by the Town Conrptrolle[-. However, an5, changes or modifications to the annual budget includin,, the transfer of appropriations among line items must be approved by resolution of the Town Board. - Budget Summaries for the 2004 and 2005 fiscal years may be found in Appendix A. Financial Operations The Town Supervisor functions as the chief fisca, I officer as provided in Section 2 of the Local Finance Law'; in this role, the Supervisor is responsible for the Towns accounting and financial reportlngactix?ies, which are delegated to and carried out by the Town Comptroller. In addition, the Supervisor is also theTown s budget officer and must therefore prepare the annual tentative budget for submissiou to the Town Board. Budgetary control during the year is the responsibility of the Town Comptroller. Pursuant to Section 30 of the Local Finance Law, the Supervisor has been authorized to issue or rene~x certain specific types of notes. As required by law, the Supervisor must execute an authorizing certificate which then 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, resolution, all material financial transactions such as operating and capital budgets and bonded debt. ii Town finances are operated primarily through the General and Highway Funds. All real property taxes and most of the other Town revenues are credited to these funds. Current operating expenditures are paid 'from these funds subject to available appropriations. The Town also has a wastewater district and a sewer district, which are accounted for within separate funds. The primary sources of income for these districts comes from s ecial assessments levied against district properties at the same time real estate taxes are lev led and from,user tees. ~Papital projects and equipment purchases are accounted for in the capital projects fund. The Town obser,,es a calendar year (January I through December 31 ) for operating and reporting purposes. ' Revenues The Town receives most of its revenues from a real property tax on all non-exempt propert~ situated within the Town and from State Aid. A summary of such revennes for thi: five most recently completed 'fiscal years ma~ be found in Appendix A. - Real Property Tc~tes See "Real Property Tax Information". herein. State Aid The To~vn is dependent upon financ al assistance from the State which comes primm il3' m the form of a state appropriation for State Aid to mun cipal t es for operat ng purposes. There is no assurance, howe,,er, that the State appropriation for State Aid to municipalities will continue either nursuant to existin lbrmt as or i . whatso.e,v,er, a.n,d, inoany event, ifappropriatedandapportionedtothel~own, paymentcan~gemadeon v fst~c~n~of~fen~ are avauame therefore. The State is not constitutionalb/obliged to maintain or continue such aid. ,See Appendix A. Expenditures The maior categories of expend ture for the Town are General Government Support. Public Safer,. Transportation, Economic Assistance and Opportunity. Culture and Recreation. Employee Benefits and Debt Scrv ici:. A summary of the expenditures tbr the five most recently completed fiscal years. ' Pension Systems . Substantially all employees of the Town are members.of the New York State aid L.o,,cal Employees' Retirement System ("ERS") or the New York State and Local Pohce and Fire Retirement System (PFRS"). (l~oth Systems are referred to together hereinafter as the "Retirement S,'stemo" ,,,a ...... ' Systems are cost-sharing multiple public employer retirement systems. The obligation of employers aud emploxees to contribute and the benefits to employees aregoverned by ihe New York State Ret rement Securi . - .... . S,,stem andS6cial ,. , .t.t.t.ty Lax,v (the Rettrement System Lag ). The Retirement Systems offer a w~de range of plans and benefits wnlcn are remtect to years of servme and final average salary, vesting of retirement benefits, death and disability benefits and optional methods of benefit payments. All benefits generally vest after tei years of credited ser'~ic~ The Rettre,m, en,t.S~/,ste~m Law generally p[ovldes thatallpartm~patingemployers n each retfrementsvstemareio nt v ann severany name ror an',' unfundeo~nvestments. Such amounts are collected throngh annu~l billings-to ail I~articipatingemplovers. G~nerally, all employees, except certain part-time emnlovees, pamc! ate in the Retirement e~go~};sT~oRl~eticfae~ee~eSmY~teer~Sonart~r~ne-~:~n,tri~bu, to,~'~ith respect .to me~e. rs'hiredprior Proa Jul,,' 27. I976. All my -/. ~v/o must contribute 3, o of their gr~o0sf annualsa,lan' towards the cost of their retirement program. Chapter 86 of the Laws of 2000 eliminated the 3 ..0 for Tie~ · ahd 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 oast three years, Comptroller Hevesi has sent notice to eve~, school district and municipality in Ne~ York State that I~eginnin with the 2003-0,4, fiscal year the employer contnbut on rate for the retirement systems may increase signihcantlf Comptroller He, esi has further stated that he believes that the retirement contributions willconthme to increase m subsequent years. With regard to the ERS, a pension reform bill has been shined by the Governor to Law as Chapter 49 of the Laws of 2003. Chapter 49 changes the cycle of billing to matc[i budget cycles of the Town. Under tile I~rex. ions method, the Town was unsure of how much it paid to the system unt al~er its budget was implemented. U'nder tile new system the contribotion for a g yen fiscal 5'ear w be based on the va ue ofth~ ~ension fund o ~ t ~e prior .April 1 instead of the following April so that the Town will be able to more accurately include t~e cost of the contribution into ils budget. Chapter 49 requires the Town to make a minimum contribut on of 4 5 70 of pa>ro I every year. including years in which the investment performance of the fund would make a lower contribution possiblc. F' O,n July 20'~2004 the New York State Legislature passed a bill ame~dingthe General [Vlu~ c pal Laxx, ~r~ance gaw and the Retirement and Social Security Law. On July 30 2004, tle Governor signed the ne~ ?Uremen,t system,.legislation into Law as Chapter 260 of the Laws of 2004. The bill moves the annual~a ....... /or contrinutions from December 15m to February 1~'. effective December 15, 2004. It increases, 12 2Y~)~)~,~0h~)?~icTlUv~ amo~!za~o~n, period, o..f th.e po~.ion.of em. ployer contributions that exceeds 7% of payroll for the - y ar orme Kenremem ~ys~em {.^prd I - March 31) It also allows employers to bond for their 2005~2006 and 2006-2007 fiscal )'ear contributions m excess of 9.5% and 10.5%, respecUve|y. This amortization may be made with the Retirement System or the Town could issue a maximum of 10-year general obligation bonds, the interest on which wou d be set at prevailing bond market rates on the date of sale and would be taxable for federal income tax purposes. _ ...L _?~e lraw requires thy Town to m~.a, ke ~a m!nimu,m, contribution of 4.5% ofpayro I every ear, including ,ears !,,.~vmc!~ me ~nvestment performance ottne reno woum make a lower contribution possible ~oer December, ~004 ~t ~s esUr~ated that thee ~ont~ribution will be 11% of payroll. The legislation further authorizes that the amount payment m excess ox 7¼ otpayroll will be allowed to be amortized over a period of five ,ears This amorti ' ma, be m ,' - . 5 · zanon 3,',. ade~ththeS!ate?~mptr~llerar!dtheT~wn~v~uldpay~%lnterest~nanyam~rtizedam~unts~rtheT~n coum ~ssue general obhgaUon bonds, the ~nterest on which would be taxable for federal income tax purposes. While the Tow~ 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 Amount Ending of December 31: Contribution 2001 $122,420 2002 ....................................... 2003 ....................................... 164,287 2004 ....................................... 684,617 2005 (i3'u'd'g~i ' i i i i i i i i i i i i i iiiiiiiiiiiii'i 1,670,102 · 1,880,447 REAL PROPERTY TAX INFORMATION Real Property Taxes The Town derives a significant portion of its annual revenue through a direct real property tax. The following table presents the total tax levy, by purpose, with adjustments and collection performance for each of the last five fiscal years. Tax Levy and Collection Record 2001 Total Tax Le~3, ........... $69,644,865 Amount Collected ............ 62,955,826 Returned to Count,,,: Amount ' 1,744,039 Percentage ................. 2.50% Unco ected at End of Year of Levy. ................... None Fiscal Year Ending December 31' 2002 2003 200~ $68,987,300 $74,603,829 65,3221637 72,2 l 1,402 3,664,663 2,392.427 5.31% 3.20% None None 2005 $79,909,681 $89,498,910 77,595,985 In Collection 2,313,696 NA 2.90°,/o NA None 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 onDecember 1 and May 10, but may be paid without penalty by January 10 and May 3l, 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 Treasur) securities for the quarter-year ending on the immediately preceding June 30. The rate is effective for a twelve month period commencing August I cacti year and in no event will be less than ten per centum per annum. The Town receives its fu I levy before the end of its fiscal year. Uncollected amounts are not segregated by tbe Town tax receiver, and any deficiency in tax collection is the County's liability. ' 13 Tax Rates (Per $100 Assessed Valuatio Fiscal Year Ending December 3 l: 2001 2002 2003 2004 2005 General- Towuwide ................ $116.88 $127.58 $133.38 $136.65 $139.73 General - Outside Village ............ 3. l 6 3.00 3. I 0 4.53 5.4 ~ Highway · ..................... 34.84 36.93 36.59 .~ l. 12 _,8.) Laree Taxable Properties 2605 Assessment I~.olla Name Peconic Landing at Southold ....................... LILCO LIPA lcflrarketspan, Kevspan ................. F shers Is and De,,,. Corp .... 7 ...................... New York Telephone ............................. Robins Island Holding LLC ......................... North Fork Bank ................................. ./klan Cardinale Herodotus Damianos .............................. Jack Levin ..................................... Susan Norris .................................... Kimo~enor Pt. Co Driftxx pod Cove .................................. North Fork Countr,, Club ........................... Marco Type Senior Communib/ Public Utility ' Residential Development Public Utility Est. Holdings Financial Inst. Shopping Center ~ in'?y, Motel & Restaurant Est./Horse Farm ?)-Op Country Chtb Estate ' Co-Op a. A~sessment Roll established in 2004 for lev). and collection of taxes during 2005 Fiscal Year b Represents approximately 5 96% of the total taxable assessed x aluation of the Town for 2005 Assessed Valuatiou $ 2,161,972 1,531.454 367,100 343,863 330.500 3 I 0,0 [ I 297, I00 234.0OO 172.850 111.800 94.600 90,000 86.900 81,800 $6,215,95()~ LITIGATION The Town is subject to a number of lawsuits in the ordinary conduct of its affairs. In the opinion of local counsel, for the most part, the adverse decisions in such suits either indix idually or in the aggregate are not likel~ to have a material adverse effect on the Town. ' There are several matters xvorthy of special mention. State a£New York v. Town o£Southold- This action alleges a violation of Article 12 of the Navigation law through an alleged unlawful discharge of gasoline and petroleum products at the Town's Hi~hxxay Department xard and seeks reimbursement of state incurred cleanup cost~. The State of New York and the Tox~'n haxe re~entlx ent~rred into a Stipulation of Settlement which provides for the discontinuation of this case and requires the Toxw[ to make payments to the State in the total amount of $8 l 8.63 I. I 0 in installments over two years. Stanton v. Towu o£Southold- This is an action in inverse condemnation and mfisance by fort)-two propertx oxxners, alleging property damage caused by erosion allegedly caused by a Town-owned jett3. Thc Toxin ha's engaged in stuc~ies to determine the issues surrounding the alleged eros[on, the causes, and I3ossible solutions. Desptte being filed tn 1997, no discover3 has taken place tn this case to date. It is uuclear whether the case xxill for~vard at this time. The nature and extent of damages, if any, are unknown at this point. The Town has denied a~v wrongdoing and would vigorously defend any further prosecution of this action. Ostroski v. Town o[SouthoM- This action arises from an arrest of plaintiff by Southold Tow n police officers. Pursuant to that arrest, plaintiffwas convicted on counts of harassment andcriminal'mischief. In this action, plaintiff alleges that the Town and the arresting officers injured plaintiffby means of excessive i-brce, physical assault, battery, false arrest, false imprisonment, abuse of process, malicious prosecution and denial of her civil and constitutionhl rights. Plaintiffseeks compensator3' and punitive damages totaling $3 million. Discover~ is complete and the case is ready for trial in the Unit'ed States District Court for the Eastern District of New x~ ork7 Insurance coverage ma~ be available for potential liabilin' for alleged compensatory damages. The Town has den led auv wmngdoin~ and hals and will continue to vigoroosly'contest these clanns. Notices of Claim - Three noteworthy Notices of Claim have been filed against the '['o~n relatiag to police matters, which have not).'et ripened into litigation. In the first claim, claimant alleges that hc su ff'ered physical inj urx. emotional injur3, and oss ofean rigs by v~rtue of the alleged excessive force used by ~l ox~n police officers in th(ir 14 arrest of claimant. Claimant demands $20 million· [n the second claim, the same claimant demands $2 million as a result of a traffic stop whereby claimant was ticketed for driving with a suspended license· In that instance, claimant alle~es emotiona injuries and loss of employment due to alleged false iinl~risonment, and v olation of his civil rights, m the third claim claimant demands $5 million for alleged physical find emotional injuries and civil rights violations arising out of a traffic stop. Insurance coverage may be available in these matters for otential liability for alleged compensatory damages. The Town denies any wrongdoing in these matters and°intends vigorously to contest these claims in the event that lawsuits are instituted arising out of these a egations. BONDHOLDER RISKS AND MARKET FACTORS AFFECTING FINANCINGS OF THE STATE AND MUNICIPALITIES OF THE STATE There are certain potential risks associated with an investment n the Bonds and investo t!~orough[y familiar w th this Officia Statement inclu,4 ......... 4. . , · : ~ r,s should be decision. Investors should consider, m particular, the following factors: investment · . The Town's credit rating could be affected by c rcumstances beyond the Town's control E ' ?nthtlons such as the rate of unemployment and inflation, termination of co ..... ;-~ ..... · L conom,c taxpayers an~ emp. l.oyers, as.we!l as natural catastro0hes could adverse y affect the assessed va[uati prqperty, and a,~ ab]ht3, to maintain fund ba ances andother statistica nd ces cum ............ ,. -. on of. To~¥~ rating. ^ccormngly, a decline in the Towns credit rating could adversely affect th"~'~ttCv~]~lne ~ tChuerr~tn~rffu't 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, mainta ned and be in existence for the urch sale of any Bonds. The price ornrinc ual value of the Bo,~ao ;o ,4 .... ~ ..... - .,. , ,-.P ase and If interest ra should ineroa~e t~v. nri~ ~x' ~ ~_ a . ,,,.,~ ,a u~ ~uucm ~n me revalnng level or ~nterest rates· · les ..............., -.-- v-.~ o~a t, ona or note may dec~l~e causing the gond or noteholder to potentially recur a capital loss if such bond or note is sold prior to its maturity. The financial condition of the Tow_n, as well as the market for the Bonds could be affected by a varieD' of factors, some of which are beyond the Town s controk There can be no assurance that adverse events in the State, including, for example the ~eeking by a municipality of remedies pursuant to the Federal Bankru icy Act or otherwise, will not occur which might affect the market price of and the market for the Bonds. Ifa si niufi~cant default or other financial crisis should occur in the affairs of the State or any of its agencies or r~o itical sub'visions thereby further impairing the acceptability of ob igations ssued by borrowers within the State, both the abilit3, of the Town to arrange for additional borrowings and the market for and market value of outstanding debt obligations, nc uding the Bonds, could be adversely affected· The Town is dependent in part on financial assistance from the State. If the State should for any.' rea?on delay in making State aid payments to municinalities and school districts in the State includin the ' future vears, the To~vn mav be affecte ~-, ~,,o~ ,4,.~ ....... :, ~. , o.. -~ , g Town, 19.this year or ~ ~ ~ ....... . .... c~: o, ....... y ~.m ~u.c~l ~tate alu payments are made In addition, there is nv assurance mat sucn aha WUl De contmuea at current levels in the future. If State aid to the Tow'n does continue, any unexpected reductions or de ays in the receipt thereof might temporarily delay payment by the To, wp of its anticipated apd budneted expenditures inc ud na the navment of debt ' · of the Town' and "l~evenues" herein)· ° ~ ~ service on outstanding bonds (see Finances Future amendments to applicable statutes affecting the treatment of interest paid on munici al bonds, including the ,,Bonds, for income taxation purposes could have an adverse effect on the market value of the ~onds (see "Tax Matters' herein). TAX MATTERS Opinion of Bond Counsel In the opinion of Hawkins Delafield & Wood LLP, Bond Counsel, under existing statutes and court decisions and assuming continuing comp ance xvith certain tax covenants described herein, (i) interest on the Bonds is excluded from gross income for, Federal income tax purposes pursuant to Section 103 of1986, as amended (the "Code ~) aod (i) nterest on the Bonds is not treated asa prefe°rfetnhceeI~tteemrn~nl cRa~cVt~lt?nCg~hdee alternative minimum tax imposed on individuals and ~orporations under the Code: such interest, however, is included in the adjusted current earnings of certain cor0oratlons for pnrposes ~f calculating th, e, alternative minimum tax imposed on such corporations. The tax certificate of the Town (the 'fax Certificate ), which will be delivered concurrently with the delivery of the Bonds will contain provisions and procedures relating to compliance with applicable requirements of the Code In rendering its opimon, Bond Counsel has relied on certain representations. certifications of fact, and statements of reasonable expectations made by the Town in connection with the Bonds, and Bond Counsel has assumed comp ance by the Town with certain ongoing covenants to comply with applicable requirements of the Code to assure the exclusion of interest on the Bonds from gross income un'er Section 103 of the Code. 15 In add t on, in the op n on of Bond Counse, under existing statutes, interest on the Bonds i, exempt from personal income taxes of New York State and its political subdivisions, ncluding The City of Ncxx York. Bond Counsel expresses no opinion regarding an}' other Federal or state tax consequences ?ith respect to the Bonds. Bond Coonsel renders ts opinion under existing statutes and Court decisions as of the issue date, aud assumes no obligation to update its opinion after the issue date to reflect any future action, tact or circumstance, or chan e in law or interpretatio 1 or otherw se Bond Counse expresses rio opinion on tile eftigct of' au'; action hereafter taken or not taken ill relia ice upo ~ an opinion of other counsel on the exclusion from ~,ross in,.~ome lin' Federal income tax purposes of interest oil the Bonds, or under state and local tax law. ~ Certain Ongoing Federal Tax Requirements and Covenants The Code establishes certain ongoing requirements that nust be met subseq~eut to ibc issuanc? and dclix, er3 of the Bonds in order that interest oil the Bonds be aad remain excluded from m'oss income under Section 103 ol tile Code These 'equirements include but are aot limited to. reqtlire nents relating to. use and expenditure ol gro>s proceeds of theBoods yield and other restr ctions oil investments of gross proceeds and thc arbitrave rebate requirement that certain ~xcess earn lgs o 1 erossproceeds be 'ebated to the Federal go~ernment. Noncompliance x~ t 1 such requirements nay cause interest o~ the,Bonds to beco ne ncluded in gro~s income tbr Federal income lax purposes retroactive to their'issue date. irrespecti',e of the date on which such noncompliance occurs or is discox ered. The Towm in executino the Tax Certificate, will certify to the effect that the q['ox~n will comply x~ ith the prox isions and procedures set fo~t~ there n a ~d that it will do and perform all acts and.thin~;s necessarx Sr desirable to assure the exclusion of interest on the Bonds from gross income under Section 10_, of tl~e Code. - Certain Collateral Federal Tax Consequences The fo ox~ ng is a briefd scussion ofcerta 1 co ateral Federal incom~ tax matters with respect to the Bonds. It does not purport to address a aspects of Federal taxat o ~ that nay be relc,,ant to a particular ox~ net of a Bond. Prospective investors, part cu arly those who may be subject to s,pec'ial rules, are advised to consuh their ox~n tax advisors regarding the Federal tax consequences of owning and msposing of the Bonds. Prospective owners of the Bonds should be ax~are that t ~e ownership tit' such obligatious ma5 resuh m collatera Federa income tax conseque ices to var ous categories of persons, such as corporations l iacluding ti comorations and foreign comorat OHS), financJa institut OhS r)roperty and casualty and life rosin'ante compames, indl'ddua[ recipients oiVSocia)Security and railroad retirement benefits, individuals ~them sc eligible for thc earned income tax credit, and taxpayers deemed to haxe incurred or continued indebtedness to pur,c, hase or c~rry obligation~ tle nterest on w l c ~ s exc uded from gross income for Federal income tax pm'poses, interest ou the Bouds may be taken into account in determ 1 ng the tax liab t¥ of foreign corporations subject to the branch profits tax i~np6sed by Section 884 of the Code. Legislation Leg slat on affectin~ nun c pal bonds is regularly under cons deratiou by the [ Inited States Cgngrcss. Iherc can be Ilo assurance that legislation euacted or proposed after the date of issuance of the Bo d< ~ II nol 'ir x e all adverse effect on the tax-exempt status or inarket puce of the Bonds. DOCUMENTS ACCOS. IPANYING DELIVERY OF THE BONDS Absence of Litigation Upon deliveD' of the Bo ids, the Town shall furnish a ceixificate of the '1-o~ n &ttomev. dated the date of de ve o'f the Bonds to the effect that there is ilo c) ~troversv or litigation of am nature pending or threatened to restraigor enjoin the ssuance, sale, execut oil or delNerv of't le Bo ids o' n a 13' x~ay contestiu~ or aft'coting the ~ aliditv of the Bo ids or an)' of the proceedings take 1 x~ th'respect to thc issuance and sale thereof bt tile application of norievs to the payment of the Bonds, and f'firther stat ne t iai there is no co ltroversv or litigation of an5 nature uoxx nendin~'or threatened by or a~ainst the Town wherein afl adverse iudgment or rulin~ could have a material adverse [m act~)n the financ a condi~on of the Town or adxersely affect the power of the Town to levy collect and enforce th[P~ollection of taxes or other revenues for the payment of the Bonds. which has not been disclosed in this Official Statement. Legal Matters Lega matters incident to the authorizat ol, ssualce and sale of the Bolds xxill be s?iect to the final a rovln' o tmon' '~- m-c tJ_..~.;.~,,,..,,..,. ~.r~elafield & Wood 1.I P. Bond Counsel Such opinion wi)l be ax ai~ablc !it tt!c tim,-.' o~e ve. gn ~PiJ the Bonds and v, ill be to the effect that the Bonds are valid and lega ly binding general obhgatlous ot the To'~n'for which the Towu has va dly pledged its faith and credit and, unless paid from other sourccs, all thc taxable real property w th n the Town s subject to the lev)' of ad valorem real estate taxes to pay the Bonds and interest thereon witfiout limitation of rate or amount. Said opinion sha a so contain further statements to the effect that (a) the enforceabd ~Pj of rights or remedies with respect to soch Bonds ma5' be lira ted by bankruptcs, iusolx ency. or other laws affecting creditors' rights or remedies heretofore or hereafter enacted, and (b) said law firm has not been requested to examine or review and has not examined or reviewed the accuracy or sufficiency of the Official Statement of the Town relating to the Bonds, or any additional proceedings, ~eports, correspondence, financial statements or other documents, containing financial or other information relhti~ e to the Town which have been or may be furnished or disclosed to purchasers of the Bonds and expresses no opinion with respect to such financial or other information, or the accuracy or sufficiency thereof. Closing Certificates Upon the delivery of the Bonds, the Purchasers will be furnished with the following items: (i) a Certificate of the Supervisor of the Town to the effect that as of the date of this Official Statement andat all times subsequeut thereto, tip to and including the time of delivery of the Bonds this Official Statement did not and does not conta ~ any untrue statement of a material fact or omit to state a material fact necessary to make the state nents here n, n 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 co'ndition of the Town since the date of this Official Statement to the date of issuance of the Bonds; and having attached thereto a cop7 of this Official Statement; (ii) a Certificate signed by an officer of the Towu evidencing payment for the Bonds; (iff! a Signature Certificate evidencing the due execut on of the Bonds, including statements that (a) no litigation o~an? nature is pending or, to the knowledge of the signers, threatened, restraining or enjoining the issuance and delixer) of the Bonds or tile lex? and collection of taxes to pay the principal of and. interest therepn, nor in .a. ny manner questioning theproceedings and authority under which the Bonds were authorized or affecting the vahdity of theBonds thereunder, (b) neither the corporate existence or boundaries of the Town nor the title of any of the officers thereof to their respect xe offices s be ~g contested, and (c) r~o authority or proceedings for the issuance of the Bonds have been repealed revoked or rescinded: and (iA') an Arbitrage and Use of Proceeds Certificate execnted by t ~e Supervisor, as described under "Tax Matters". DISCLOSURE UNDERTAKING · This Official Statement is in a form "deemed final" by the Town for the purposes of Securities and Exchange Commission Rule 15c2-12. At the time of the delivery of the Bonds the Town will provide an executed cop3, of ts "Undertaking to Provide Continuing Disclosure" (th6 "Undertaking"). Said Undertaking will constitute a written agreement or contract of the Town for the benefit of holders of andowners of beneficia/interests n the Bonds, to provide, or cause to be provided: (I) to (a) each nationall).' recognize, d municipal secur,,ities !nformation repository ("NRMSIR") and (b) the New York State Informat~op Depository, if created, ( SID' ) (i) certain annual financial informat on, n a for n generally c,o, nsistent w~th the information contained or cross-referenced in this Official Statement under the hea.d, ings:.' The Town", "Economic and Demographic In formation","lndebtedness of the Town", "Discussion of F~nancml Matters", "Real Property Tax Information", and "Litigation"; and in Appendix A, on or prior to the 180th day following the end of each fiscal 3,ear, commencing with the fiscalyear ~e, nding December 31, 2005, including (ii) the audited financial statement, if any, of the Town for each fiscal 3 e,a,r commenc ng with the fiscal year ending December 3 I, 2005, unless such audited financial statemenL if an3, shall not then be available in which case the unaudited financial statement shall bepr,o, vided and an audit,e,d financial .statement shall be delivered to each NRMSIR and to the SID within 30 da3s after t becomes available and m no event later than 360 days after the end of each fiscal 3,ear; (2) to (a) eacoh NRMSIR, or to the Municipal Securities Rulemaking Board ("MSRB"), and to (b) t ~e SiD, timely notice otthe occurrence of any of the tbllowing events with respect to the Bonds. if material: ' (i) principal and interest payment delinquencies:(ii) non-payment related defaults: (iii) unscheduled draws on debt service reserves reflecting financial difficulties (iv') unscheduled draws on credit enhance~nents re~lecti~g financial difficulties; (v) substitution of credit or hquidityproviders or their failure to per~brm (v0 ad,,erse tax opinions or events affectino the tax-exempt status otthe Bonds; (vii) modifications to rights of Bondholders; (viii) bond calls; (ix) de~easances; (x) release, substitntion, or sale of propert; securing 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, f 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 NRMSIR, or to the MSRB and to (b) the SID in a timely manner, notice ora failure to provide the annual financial information by the date specified· The Town s Undertaking, shall remam m full force and effect unttl such tune as the principal ot, 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 Undertaking is an action to compel specific performance of the un,d, ertakings of the Town, and no person or entity, including a holder of the Bonds, shall be entitled to recover monetar) damages thereunder under any circumstances· Any failure by the Town to comply with the Undertaking will not constitute a default ~ ith respect to the Bonds· 17 The Town reserves the right to amend or modify th,e: Undertaking under certa n circumstances set tbrt~h therein; provided that any such amendment or modification v, ill be done in a manner consistent with Rule 15c2- I as then ih effect. ' ' The Town is in compliance with all previous undertakings made pursuant to Rule 15c2-12. BOND RATING ]'he Town has applied to Moody's Investors Services tbr a rating on the Bonds. Such rating reflects cml3 the view of such rating agency and any desired explanation of the significance of such ratin should be obtained from such rating agency. Generall'½ a ratitig agency I~ases its ratings on tbe information and m~er a s furnished to t and on investiganon studies and assumpnons by the rating agency. There is no assurance that a part cu ar rat ~g apply ,four any given period of time or that it will not be lowe'red or withdrawn ent re v L ~ the judgment of the agenc3 originally establishing the rating, circumstances so warrant. Any down,yard re,;isioo or wifl~drawal of such ratings could have an adverse affect on the market_price of the Bo. ids or the availabilit3' of a ~secondary. market suchBonds. Such raUngs should not be taken as a recommendation to buy or ho d t ~e Bonds. FINANCIAL ADVISOR Munistat Services, loc. has assisted the Town as financial advisor in certain malters with respect to the preparation of this Official Statement. ADDITIONAL INFORMATION Additional information may be obtained upon request from the office of the Supervisor, '1'o~ n of Southold, 5309 Route 25 P.O.B. l 179, Southold, New York 1197~1~ telephone number 631/765-1800. or from thc office Mun stat Services, Inc., 12 Roosevelt Avenue. Port Jefferson Station, New York 11776. telephone numbcr 63 [ (33 8888. Any statements in this Official Statement involving matters of opinion or ~stimates. whether or not expresslx so stated, are intended as such and not as representations of fact. No representation is made that any' o{' sach statements will be realized. TOXl,"N OF SO[ITHOLI). NEW YORK February 10. 2005 B.',: s/s JOS;iUA Y. IIORTON Supcrx isor and Chief Fiscal ¢ )fficer 18 TOWN OF SOUTHOLD APPENDIX A FINANCIAL INFORMATION Balance Sheet General Fund I ~scal Year Ending December 31. 2.767. 119 14.8~5.02- 597o9.~"2 18.012 483?88 8.454 1.376.893 e I..145 $ 79.361.202 342.2>3 13 l I.\BII.IIIES AND FUND EQUI'I'~ [:und Balancc~- Rc,cr~ cd Suppb ]mentor5 Prepaid Fxpen,¢s l oral Fund Equil? [mai [ lablhtte', and [:und EquiD Sources Au&ted [:inancial Report ~2002 & 2003~ $ 559.u5n 6,15&o72 54.047.,)43 1.543.3611 13,276,(67 75.580.492 22v.3U5 I.I)92 61,415 I.Igb3}ut> 2.3~4.868 3.780,710 S 79.361,2U2 2.463.o59 3.682 725 l.t133,U85 ~9.865 2.2,J7, 5.319,112 $ 9,002, 137 Statement o[ Revenues, Expenditures and Changes in Fund Balance General Fund Town Wide Fiscal Year Ending December 3 I: 1999 2000 20kl I 2002 2003 Rcat Propert? 'Faxes $ 9,433,481 $ 9,720.896 $ 10,965,967 $ 12,237.940 $ 13.247,572 Other Real Property Vax Items 45.256 50.186 55.069 85.244 51,31 I Non-Propert3 'Fax Item:, 287,344 494,722 508,130 401,035 401,035 Departmental Income 316.388 2?6.733 3 t2,033 431,743 315.289 [ntergo; ernmental Charges 148,783 252,820 261,646 214.738 202,917 Use of Mone5 & Propert3 557,134 578.031 448,483 246.707 201,702 Licenses & Perm as 162,543 165,820 198,949 210,863 188.480 [:ine~ & Forlkitures 91,306 88,199 97,609 102,032 107,084 ~ '5'" 56.893 S:d¢ or Propcrt3 & C'omp. tbr Ix)ss 3-.>.- 282.741 76,471 135.345 Nhs,.cllaneous Local "~OtltC¢s 95.657 86,591 1119,026 115.619 133,346 State kid I )72,070 847.241 1.40>,~ [- 1,698,069 2.225.401 Federal .Md 127,840 96.439 239.649 132,52'v 146,574 I-.a ,0.3'~4 12.940,419 14,738.344 16,011.862 17.277,604 Pubhc Health Economic Assistance & Opportunity Culture & Recreation Ilome & Communit5 Services Emplo>ee Bone ilk-, 2,614.425 2.834,652 3.170,91)6 3,561,142 3.751,469 4.697,762 5,256,819 5,755.775 5.806,827 6.033,207 40,548 42.673 33.288 33.288 32,988 310,491 340.487 335.583 341,671 398.358 642,490 692.957 802.249 730,553 833.501 464. I 01 324.222 356,570 350,121 317,769 181,047 242,922 501,790 315.764 228,578 2.023.322 2.784.285 2.742,583 3,616,745 2,617,783 I. 180.779 1,262,923 1,41.12.074 1.550.~.47 1,007,318 12,154,965 13.781,940 15,100,818 16.306.558 15,220.971 _ 2~[5,389 t841c5_2_.F_} (3_6_¢.474~ __ (294,696t ~.~S6,~633 Operating I rans~rs In Operating Transl~t'5 Out 842.681 491,078 1.650.724 1,780,257 1.392,850 ,835,227) (201,638) {. 1.072,732~ ( 1~,0~ 1_,_93_ I_) ( 1,910.781 ) ! oral Other Financing Sources I Uses) 7.454 289.440 577,992 758.326 (517.931) Excess (Dcticienc)) of R¢,.enues and Other Sources (),.er E',,penditures and Other Uses 222.843 .... (~5~5__2 .~0 8 I~) .2_15,518 463,630 1.538,702 Fund Balance Beginning of Year 3.430,798 3,653.641 3.101,561 3,317,080 3.780.710 [.[md Balance End of' Year $ 3.653,641 $ 3,101.560 $ _~,31M1.,9 $ 3,~80,710 $ 5.319,412 Source: Audited Annual Financial Reports of thc To,,~ n (1999-2003) Table itself NO I' audited. A-2 Statement of Revenues, Expenditures and Fund Balance Highwa3 Fund Real Propm% laxes Other Real Propel't) Tax hems Non-Proper[> Tax items L!~c of Mone3 & Propelt> Sale of Propert) & Comp. lbr Loss S~ate Aid Federal Aid E,~pendJmrcs' Danspormtion Emplo3ee Benefits Debt Service Tutal E xpenditure~, Excess (Deficiency) of Revenue~, O~er kxpenditures Residual Equ/t.,, fransfcr Operating Transfers In Operating ['rans(eJ's Out ]'oral Other Financing Sources I U~c~ I Excess ( Deficienc~ ) of Revenues and Other gout'ce,~ O,, er Expendimre~ and Other Fund Balance Beginning of Year l:und Balance End of Yom Fiscal Year Ended [)ecembe~ 31 J 999 2000 2001 21JU2 7'14 840 $ , , - ...... 860,_3) $ Lll,5.059 ', , 12g.57- 'q ; 608 3.126 (,.tl28 r 1,885 304 440 396 0 0 110.821 II 15.57~ "~" I~ ' .9.8_ ;4,(,26 8_, 0 I la.086 ~ 3.695 '4 n .8 9 9.5t)3 H 4.iL/5 103 0 1410 253117 9.250 8.858 8.51 ' 4.Ns2 236,709 ~4 , _ .... 8A) ~I ;~is :~ 458.686 .,.uo0, I _= 3,258,61 I .~.616.849 3,519.3 I 't 4,093.072 2,522,866 2,604.822 31076.U12 n q- "~ ~ . ~ )( }..' l, 6 2,733.518 188,211 ""5 '~" -81.0 ~0 34IL 172 ~176.406 83.730 97.514 97,594 88._44' '; 15. 28 2.794.807 2.937,603 3,454.676 2.979.492 3.725.052 295.315 321,008 162.[73 539,827 g68.020 0 0 0 1218.824) 1287.7491 {380,965) ~43;.271 O ~60.0001 ~218.8241 1287 749 1380 965 , -~ 14B.271~ 76,491 33,25? (~ l S.l 9-} 106.556 308.021~ 596,550 073.04 1 706,300 487.508 594.064 $: :::=673'041~:± $ ,= 706300= $ 487,508 3 594,064 $ 902,084 Stlttl'Ce: ,\udited .\nnual Fina.cial Reports t,t tile '1'o~ n ( 1999-2003 ) Statement of Revenues, Expenditures and Changes in Fund Balance Non-Major Gnvernmental Funds (13 Fiscal Year Ending December 31: 199~9 2000 200_i 2002 200_3 Real Properly Taxes $ 1,736,257 $ 1,615,897 $ 1,584,261 $ 1.465.060 $ 2,197,525 Other Real Properb Tax Items 61 I 942 1,037 1,495 874 Non-Property, Fax Items 140,574 [35.963 97,680 110,225 117,,1.49 Deparmtenta[ Income 1,613,3 I6 1,936,837 2. I 25,493 2,931,896 2,339,227 lntergovermnental Charges 56,482 57,815 18,444 1.400 1,614 Use ofMone) & Property 86,234 114,137 88,750 35,650 18,147 Licenses & Permits 127,905 132.605 139,615 139,295 139,620 Fines and Forfeitures 0 0 0 0 49,000 Sale of Propert?: & Comp. for Loss 130,989 126,254 76,928 29,772 44,450 Miscellaneous Local Sources 17,822 8,830 13,462 I 1,423 230 Interfund ge',,enues 0 0 2.274 0 0 State A id 166,049 104,392 102,353 72,935 161,393 1~ ederal A id 66.199 145, 107 210.644 I 19,380 I 11,299 Inter fund Transfers 0 __ 0 0 0 0 4,142.438 4,378,779 4,460,941 4.918,531 5,180,828 Expenditures: General Go;'emntent Sapport 23,109 43,762 42.052 42,783 134,969 PuNic SateD' 585,926 624,190 786,251 875,307 749,904 Public Health 5,477 5,696 5,924 6,161 6,408 Home & Communi~, SerMces 2,457.225 2,518,630 0 0 3,230,201 Cultnrc and Reccreation 0 0 2,872,654 2,973,763 0 Employee Benefits 152,157 171, l l 3 188,543 226.380 874.049 Debt Set',,.ice 341. 1471- 751.624 314,869 624,315 117,562 Total Expenditures Excess I Deficiency'~ of Revenues Over Expenditures Operating Transfers ht Operating Transfers Out Total Other Financing Sources tUsesl Exces~ (Deficient3 ~ of Re,.enues and Other Sources O~er Expenditares and Other Uses Fund Balance Begim~ing of Year Fnnd Balance End of Year 3,565,038 4, I 15,015 4,210,293 4,748,709 577.40~0 _ 263,764 250.648 169,822 5,113,093 67,735 40,000 50,000 0 0 0 (204,1291 __ (203,272) 1491,6243 (375,055) (483,500) tl64,129) {153.272~ _ 14~1,624~) (a7~,0_5) (483,5003 ____413~,~1 110,492 (240,976't (205,233~ (415,7651 __ . 1,1~83,7.85 1,597,056~ 1,707,54~8 1,466,572 1,261,339 $ 1,5_97,05_6_ $ 1,707,548 $ 1,466,572 $ 1,261.339 $ 845,574 Includes the tbllowing funds: General Fund Part Town, Special Grant Fund, East-West Fire Protection Fund, Southold District, Fishers Island Se~er District and Solid Waste Management District. Source: Audited Annual Financial Reports of the Town (1999-2003 A-4 Fun~d General-Outside Village Highwa)-Fox; nv, ide Highwa>-Outside Village CommuniD De,,dopment ConlmLmlt5 Preser:ation Fund Employees Health Plan [ oral- low n East-Vvest Fire Protection Di>trict Fishers laland Fero District Solid \t-aste Management District Southold Wastewater I)~trict Fishers Nland SeBer District F.L Refuse & Garbage D~strict Orient Mosquito District Subtotal-Special Districb Orient-East Marion ]'ark Di.tricl Suuthold Park District Cutchogue-Nexx SuPrblk Park Di>t. Mattituck Park I)~gtnct Subtotal-Park Districts Fisher> Island Fire Distlicl Orient Fire District East Marion Fire District Southold Fire District Cutchogue Fire District Mattituck Fire District Subtotal-Fire D~=tricts rural-All Disn'lcts Grand l oral Source: Annual Budget ut'the 3 BUDGET SUblblARY Fiscal Year Ending Dycember 31.2~004 Appropriations l.ess: Less: and Provisions Estimated I inexpended (.or Other Uses gexenue~ Balance 19,445,978 h752.026 2,450 4,140,182 164.300 12.470,100 2.4853)00 40,460.036 $ 3.475,710 $ 2.008.000 9803.}50 329,000 271,300 ?~9,000 164300 It 2A85.o0_o , 373.523 2 227,~0( 072,684 245.702 20,000 455,350 70,000 0.961.259 0 1.837.000 1,08 h200 9h000 17.700 0 $ 3,926.900 30 00d .... 000 21.950 2u5,000 141.013 407,5~0 865,493 250 u 0 18,800 $ 1'4 050 135.400 392,280 3511,654 1.162.525 998,303 1.064,050 4344212 3.400 38,45h 1.570 0.000 3.500 6 56,920 $ 52.634.000 4,002.870 $ 14.929~30 11~67Qguu Raised by 13.962.268 442,970 1109,550~ 3.629.882 17 925.576 573 52; h555.484 [ 32.702 455350 70,oOt 2h700 14h013 386.236 843.943 332.000 353.830 390.084 1,152.525 994,803 !,064.05o 4.287.292 26:03)~870 A-5 Fund General-Outside Village Highway-Tox~ nwide ; Iighwa?Outside Village Communit) Dexelopment Risk Retention Fund Emplo~,ees Health Plan East-West Fire Protection District Fisher= I~land Ferry District Solid Wa=te Management District Southold Wasmwater District Fishers Island Sexver District F.h Refuse & Garbage District Orient Mosquito District Subtotal-Special District> Orient-East Marion Park District Soutbold Park District Cutebogue-New Suffolk Park Dist. Mattituck Park District Subtotal-Park Districts BUDGET SUMMARY Fiscal Year Ending December 31, 2005 Appropriations Less: Less: and Provisions Estimated Unexpended for Other Uses p,¢vcm;¢~ Balance $ 20,823,325 1,734.640 2,250 4,555.946 164,300 1,045.000 10.614.688 2,607,000 $ 41.547.149 $ 4,235.664 $ 1,978,987 975,350 220.517 300 125,000 258.300 369.564 164,300 0 1,045.000 0 3,564,000 7,050,688 2,607,000 0 $ 12,849,914 $ 9,744,756 Amount to be Raised bv Tax $ 14,608.674 538,773 (123.050) 3,928,082 0 0 0 0 $ 18,952,479 418,958 600 5.300 413,058 2,309,000 1,909,000 0 400,000 3.522,825 2,112,200 120,185 1,290,440 139.450 2.000 0 137.450 20,000 17,700 2,300 0 599.400 0 0 599,400 74,650 0 0 74.650 $ 7,084,283 $ 4,041,500 $ 127,785 2,914,998 25,000 150 0 24,850 315.000 0 0 315,000 141,000 0 0 141,000 494,730 18,800 70,000 405.930 $ 18,950 $ 70,000 $ 975,730 $ 886.780 Fishers Island Fire Districl 343.400 3.400 0 340,000 Orient Fire D~strict 348.421 2.000 0 346,421 Fast Marion Fire District 391,030 2.070 0 388,960 Southold Fire District 1,209.775 3,000 0 1,206,775 Cutchogue Fire District 1.482,375 575 0 1,481,800 Mattituck F~re District 1.374,331 0 0 1,374,331 Subtotal-Fire District~ $ 5.149,332 $ I 1.045 $ 0 $ 5.138,287 4,071,495 197,785 $ _ 9,942.541 [oral-Ail Districts Grand lotal Source: .Annual Budget of the [ox~n. 13z 2~07,_34~5 $ 54~756,494 $ 16,921,4_0--9_ 8,940.065 $ 27,892,544 A-6 TOWN OF SOUTHOLD APPENDIX B FINANCIAL STATEMENTS FOR THE FISCAL YEAR ENDED DECEMBER 31, 2003 NOTE: SUCH FINANCIAL REPORT AND OPINIONS WERE PREPARED AS OF THE DATE THEREOF AND HAVE NOT BEEN REVIEWED AND/OR UPDATED IN CONNECTION WITH THE PREPARATION AND DISSEMINATION OF THIS OFFICIAL STATEMENT. CONSENT OF THE AUD{TORS HAS NOT BEEN REQUESTED OR OBTAINED. FINANCIAL SECTION FINANCIAL SECTION independent Auditors' Repod .................................................................................................................... 1-2 I REQUIRED SUPPLEMENTARY INFORMATION I Management's Discussion and Analysis ................................................................................... 3-11 BASIC FINANCIAL STATEMENTS Govemment-Wide Financial Statements Statement of Net Assets ......................................................................................................................... 12 Statement of Activities ............................................................................................................................. 13 Fund Financial Statements Governmental Fund Financial Statements Balance Sheet and Reconciliation of the Govemmeetal Funds Balance Sheet to The Statement of Net Assets .......................................................................................... t 4-15 Statement of Revenues, Expenditures, and Changes in Fund Balances and Reconciliation of the Governmental Funds Statement of Revenues, Expenditures, And Changes in Fund Balances to the Statement of Activities ................................................ 16-17 Fiduciary Fund Financial Statements Statement of Fiduciary Net Assets ............................................................................................ 18 Notes to Financial Statements ................................................................................................................... 19-34 REQUIRED SUPPLEMENTARY INFORMATION OTHER THAN MD&A Schedule of Revenues, Expenditures and Changes in Fund Balances - Budget and Actual General Fund .............................................................................................................. 35 Highway Fund .............................................................................................................. 36 OTHER SUPPLEMENTARY INFORMATION COMBINING FUND STATEMENTS: Nonmajor Governmental Funds Combining Balance Sheet ............................................................................................. Combining Statement of Revenues, Expenditures, and Changes in Fund Balances .................... DISCRETLY PRESENTED COMPONENT UNITS I Discretely Presented Component Units: Combining Statement of Net Assets ....................................................................................................... Combining Statement of Activities .......................................................................................................... 37 38 39 4O OTHER REPORTS J Schedule of Expenditures of Federal Awards .......................... . 41 Note to Schedule of Expenditures of Federal Awards ............................................................................ 42 Report on Compliance and on Internal Control Over Financial Reporting Based on an Audit of Financial Statements Perfon'ned in Accordance wfth Government AudiEng Standards ....................................................................... 43 Report on Comp/iance with Requirements Applicable to each Major Program and on intemal Centro/Over Compliance in Accordance wilh OMB Circular A-133 ................................................................... 44-45 Schedule of Findings and Questioned Costs ALBRECHT, VIGGIANO, ZURECK & COMPANY, P.C. INDEPENDENT AUDITORS' REPORT Honorable Supervisor and Town Board Town of Southold Southold, New York CERTIFIED PUBLIC ACCOUN3'ANTS 25 SUFFOLK COURT HAUPPAUGE, NY 11788 (631) 434-9500 We have audited the accompanying financial statements of the governmental activities, the aggregate discretely presented component units, each major fund, and the aggregate remaining fund information of the Town of Southold, New York, as of December 31, 2003, and for the year then ended, which collectively compdse the Town's basic financial statements as listed in the table of contents. These financial statements are the responsibility of the Town's management. Our responsibility is to express an opinion on these financial statements based on our audit. Except as discussed in the following paragraph, we conducted our audit in accordance with auditing standards generally accepted in the United States of America and the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States. The financial statements of the component units presented discretely in these financial statements were not audited in accordance with Government Auditing Standards. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion. The financial statements supporting the financial activities of 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, nor were we able to satisfy ourselves as to those financial activities by other auditing procedures. Those financial activities represent approximately 48% of the net assets of the discretely presented component units. The financial statements of the Fishers Island Ferry District were audited by other auditors whose report thereon have been furnished to us and in our opinion, insofar as it relates to the amounts included for that one component unit, is based solely on the reports of the other auditors. In our opinion, except for the effects of such adjustments if any as might have been determined to be necessary had the unaudited component units financial statements been audited and based on our audit and the reports of other auditors, the financial statements referred to above present fairly, in all material respects, the financial position of the Town of Southold, New York, as of December 31, 2003, and the results of its operations for the year then ended in conformity with accounting principles generally accepted in the United States of America. As described in Note A, the Town has implemented a new financial reporting model, as required by the provisions of GASB Statement No. 34, Basic Financial Statements---and Managernent's Discussion and Analysis---for State and Local Governments. In accordance with Government Auditing Standards, we have also issued our report dated June 8, 2004, on our consideration of the Town's internal control over financial reporting and on our tests of its compliance with certain provisions of laws, regulations, contracts, and grants. That report is an integral part of an audit performed in accordance with Government Auditing Standards and should be read in conjunction with this report in considering the results of our audit. The Management's Discussion and Analysis and the budgetary information are not a required part of the basic financial statements but are supplementary information required by accounting principles generally accepted in the United States of America. We have applied certain limited procedures, which consisted principally of inquiries of management regarding the methods of measurement and presentation of the supplementary information. However, we did not audit the information and express no opinion on it. -1- Our audit was conducted for the purpose of forming opinions 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 and the schedule of expenditures of federal awards 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 faidy presented in all material respects in relation to the basic financial statements taken as a whole. The accompanying schedule of expenditures of federal awards is presented for purposes of additional analysis as required by the U.S. Office of Management and Budget Circular A-133, Audits of States and Local Governments, and non-profit organizations, and is also not a required part of the basic financial statements of the Town of Southold, New York. Hauppauge, New York June 8, 2004 -2- I REQUIRED SUPPL.E. MENT.ARY INFORMATION Management's D~scuss~on and Analys~s TOWN OF SOUTHOLD MANAGEMENT'S DISCUSSION AND ANALYSIS December 31, 2003 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, 2003. Use this section in conjunction with the Town's basic financial statements. GASB Statement No. 34 Basic Financial Statements - and Management's Discussion and Analysis - for State and Local Governments, establishes new reporting requirements for state and local governments. The new reporting requirements implemented for these statements include new information and restructure the presentation of previous years. Consequently, for this 2003 implementation year, the presentation of comparative data is not available or required. Comparative data will be available and presented for the 2004 report. USING THIS ANNUAL REPORT This annual report consists of a series of financial statements. The Statement of Net Assets and the Statement of Activities (on pages 12-13) provide information about the activities of the Town as a whole and present a longer-term view of the Town's finances. Fund financial statements start on page 14. For governmental 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 repert the Town's operations in more detail than the government-wide statements by providing information about the Town's most significant funds. The remaining statements provide financial information about activities for which the Town acts solely as a trustee or agent for the benefit of those outside of the government. Reporting 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 wilt notice that expenses are listed in the first column with revenues from that particular program reported to the right. The result is a net (expense)/revenue. The reason for this kind of format 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 liabilities--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; cultural 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 off'roes (Note A). -3- TOWN OF SOUTHOLD MANAGEMENT'S DISCUSSION AND ANALYSIS December 31, 2003 ReportinR the Town's Most SiRnificant Fu~ Fund Financial Statements The fund financial sta{ements begin on page 14 and 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 bend 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 government operations and the basic services it provides. Governmental fund information helps you determine whether there are mere 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 governmental activities (reported in the Statement of Net Assets and the Statement of Activities) and governmental funds in a reconciliation that follows these fund financial statements. The Town as Trustee Reporlin,q the Town's Fiduciary Respe~sibiliti,~,_e All of the Town's fiduciary activities are reported in a separate Statement of Fiduciary Net Assets on page 18. 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. THE TOWN AS A WHOLE Our analysis below focuses on the net assets and changes in net assets of the Town's governmental activities. Condensed Statement of Net Assets Governmental Activities as of December 31, 2003 Assets Capital assets $ 76,948,071 Current and other assets 23,970,315 Total assets Liabilities 100,918,386 Long-term liabilities 14,461,033 Olher liabilities 17,769,928 Total liabilities Net assets 32,230,961 Invested in capital assets, net of related debt Unrestricted 69,872,715 (1,185,290) Total net assets $ 68,687,425 TOWN OF SOUI'HOLD MANAGEMENT'S DISCUSSION AND ANALYSIS December 31, 2003 THE TOWN AS A WHOLE (continued) The Town's combined net assets changed from the pdor year, increasing by $6.2 million from $62.5 million to $68.7 million. The Town's net assets include $69.9 million invested in capital assets and $1.2 million in unrestricted deficit. The deficit balance of unrestricted net assets does not necessarily indicate stress. The deficit balance of unrestricted net assets arose primarily because of certain factors. The Town, in an effort to maintain present tax rates, used up cash reserves and borrowed funds as needed. In addition, long-term liabili§es which include compensated absences, early retirement incentives, claims and judgments, the landfill closure and post closure monitoring will be funded through future budgetary appropriations when they become payable in future periods. Changes in Net Assets Governmental Activities for the year ended December 31, 2003 Program Revenues Charges for services Operating grants and contributions Capital grants and centdbutions General Revenues Real property taxes Other real property tax items Non*property tax items Interest earnings State aid - unrestricted Other Total Revenues Program Expenses General govemment support Public safety Public health Transportation Economic assistance and opportunity Culture and recreation Home and community services Interest on debt Total Expenses Increase in Net Assets $ 7,827,147 760,118 2,406,727 10,993,992 18,958,999 58,613 518,484 205,719 2,138,006 317,347 22,197,168 33,191,160 5,218,482 9,652,286 41,639 6,777,032 1,124,806 227,789 3,470,584 508,605 27,021,223 $ 6,169,937 TOWN OF SOUTHOLD MANAGEMENT,S DISCUSSION AND ANALYSIS December 31, 2003 THE TOWN AS A__WHOLE (continued) Net Cost of ,Services Governmental Activities for the year ended December 31, 2003 General government support Public safely Public health Transportation Economic assistance and opportunity Culture and recreation Home and COmmunity services Interest on debt Total Cost Net Cost of Services _ of Services -$ 5,218,482 $ 4,924,406- 9,652,286 8,947,863 41,639 32,829 6,777,032 6,226,842 1,124,806 762,537 227,789 50,799 3,470,584 (5,426,650) _ 508,605 508,605 $ 27,021,223 $ 16,027,231 The cost of all governmental activities this year was $27.0 million. The net cost of these services, however, after subsidized by program revenues including charges for services and program grants, was $16.0 million. The Town's change in net assets after general revenues of $22.2 million was $6.2 million. Since this is the first year to report all · ' activities on the accrual basis of accounting, a comparison to the prior year is not possible (with the exception of the above COmparison). However, in future years, this section will explain the differences between the current and prior year assets, liabilities, and changes in net assets. Net Cost of Services Governmental Activities for the year ended December 3'1, 2003 General government SUpport Public safety Public health Transportation ECOnomic assistance and opportunity Culture and recreation Home and Community services Interest on debt Total Cost Program of Services Revenues 5,218,482- ~ 294,076 9,652,286 704,423 41,639 8,810 6,777,032 550,190 1,124,806 362,269 227,789 176,990 3,470,584 8,897,234 508,605 27,021,223 -$ 1~,993,992 TOWN OF SOUTHOLD MANAGEMENT'S DISCUSSION AND ANALYSIS December 31, 2003 THE TOWN AS A WHOLE (continued) $12.0OO.OOO $10.OOO,OOO · Expenses · Program Revenues sup~pon ~ _ _ op~r~u.itv Revenue by Source Governmental Activities For the year ended December 31,2003 Real property taxes $ 18,958,999 State aid - unresticted 2.138,006 Charges for services 7,827,147 Other general revenues 1,100,163 Operating grants and contributions 760,118 Capital grants and contributions 2,406,727 $ 33.191,160 TOWN OF SOUTHOLD MANAGEMENT'S DISCUSSION AND ANALYSIS December 31, 2003 THE TOWN AS AWHOLE (continued) THE TOWN'S FUNDS The general fund balance has increased by $1.5 million due primarily to actual revenues in excess of those amounts budgeted. Mortgage tax received this year was up from the prior by $551 thousand. The refuse and garbage fund balance increased by $121 thousand to a fund balance of $224 thousand. 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, 2003, and the amount of change and percentage of total in relation to the prior year. Increase % 2003 2002 (Decrease) Change REVENUES Real property taxes Other real property tax items Non-properly tax items Departmental income Intergovernmental charges Use of money and property Licenses and permits Fines and forfeitures Sale of property and compensation for loss Miscellaneous local sources Interfund revenues State aid Federal aid Total Governmental Fund Revenues EXPENDITURES General government suppe~t Public safety Public health Traesporta§on Economic assislance and oppe~unity Culture and recreation Home and community services Employee benefits Debt service principal and interest Total Governmental Fund Expenditures 18,958,999 $ 17,131,570 $ 1,827,429 6.3% 58,613 98,624 (40,011) -0.1% 518,484 514,358 4,126 0.0% 2,654,516 3,363,639 (709,123) -2.4% 4,823,458 4,077,171 746,287 2.6% 320,963 472,358 (151,395) -0.5% 336,331 360,509 (24,178) -0.1% 156,084 102,032 54,052 0.2% 121,376 165,117 (43,741) -0.2% 211,240 159,982 51,258 0.2% 4,852 (4,852) 0.0% 4,226,230 2,275,101 1,951,129 6.7% 872,572 251,907 620,665 2.1% $ 33,258,866 $ 28,977,220 $ 4,281,646 14.8% $ 3,886,438 $ 3,603,925 $ 282,513 0.9% 6,783,111 6,682,130 100,981 0.3% 39,396 39,449 (53) 0.0% 3,131,876 2,892,447 239,429 0.7% 833,501 730,553 102,948 0.3% 3,547,970 3,289,527 258,443 0.8% 228,578 350,121 (121,543) -0.4% 4,468,238 4,183,297 284,941 0.9% 5,801,066 9,059,320 (3,258,254) -9.8% 1,171,737 2,263,306 (1,091,569) -3.3% $ 29,891,911 $ 33,094,075 $ (3,202,164) -9.6% GENERAL FUND BUDGETARY HIGHLIGHTS Over the course of the year the Town Beard 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 MANAGEMENT'S DISCUSSION AND ANALYSIS December 31, 2003 C.Z~PFFAL ASSET AND DEBT ADMINISTRATION Capital Assets As of December 31, 2003 the Town had $76.9 million in net capital assets including land, buildings, improvements, machinery and equipment, and infrastructure. The Town's component units had $9.7 million in net capital assets including land, buildings, improvements, machinery and equipment, and sewer mains. Capital Assets at December 31, Pdmary government Land Construction in progress Buildings Improvements other than buildings Machinery and equipment Infrastructure Total capital assets Less accumulated depreciation Pdmary government - Total net capital assets Component units Land Buildings Improvements o~er than buildings Machinery and equipment Infrastructure Total capital assets Less accumulated depreciation Component units - Total net capital assets 2003 2002 $ 31,253,329 $ 27,778,470 3,066,170 4,352, 714 4,102,824 10,585,564 9,080,465 8,118,119 7,650,557 68,977,685 67,938,222 126,353,581 116,550,538 49,405,510 45,905,974 $ 76,948,071 $ 70,644,564 $ 2,213,759 $ 2,213,759 3,361,906 3,341,126 3,916,748 3,521,031 2,959,367 2,922,606 2,121,386 2,121,386 14,573,166 14,119,908 4,837,344 4,453,467 $ 9,735,822 $ 9,666,441 -9- TOWN OF SOUTHOLD MANAGEMENT'S DISCUSSION AND ANALYSIS December 31, 2003 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 p_qrpose of expenditure. The following sets forth a summary of the Town's capital program, as originally adopted for 2004. (Dollars in thous~3nds): Equipment 2004 2005 General Fund $ 617 $ 16 Highway Fund 400 310 Special Districts 575 Total Equipment $1,592 $ 326 Improvements General Fund $1,077 Special Districts 2,110 Total Improvements $3,187 Total Program $4,779 $ 326 Additional information on the Town's capital assets can be found in Note C.3 to the financial statements. Debt Administration The Town of Southold's A2 credit rating from Moody's investment rating has remained unchanged. Debt Limit - 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 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 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 State Legislature is required to prescribe the manner by which such ratio shall be determined. Average full valuation is determined 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, 2003 was 2.05%. At December 31, 2003, the Town had approximately $6.9 million in long term general obligation bonds outstanding, of which $6.9 million was for general Town purposes. Also outstanding at year-end were bond anticipation notes in the amount of $14.8 million of which $10.6 million was for general Town purposes. Additional information 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, 2003 ECONOMIC FACTORS AND NEXT YEAR'S BUDGETS AND RATES Property Tax The Town has adopted a budget for the 2003 fiscal year which factors in inflation and other adjustments to revenues and expenditures as well as prior year positive and negative fund balances. The 2003 budget includes an overall increase in reel property tax revenues from the prior year of approximately 10.68% for the general Town governmental activities. State Aid and L. gcal Assistance. The Town receives financial assistance from New York State and from Suffolk County. During 2003, financial assistance included state aid - mortgage tax of $2.1 million; state aid - per capita $72.5 thousand and County local government assistance of $160.9 thousand. Additionally, if the State should not adopt its budget in a timely manner, municipalities and school districts in the State, 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 2004 budget included similar amounts for this financial assistance. Retirement System The New York State Employees Retirement System, having suffered some adverse effects of the week stock market conditions, was expected to require payments in excess of amounts the State had originally anticipated for the year ended 2003. When establishing the 2003 budget, the Town had anticipated these excess payments. However, due to a change in the billing cycle, the State was able to hold the contribution rates to those the State had originally anticipated. The Town subsequently re-appropriated that budgeted but unexpended excess payment in the 2004 budget The State's new billing cycle 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 eerly 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 STATEMENT STATEMENT OF NET ASSETS December 31, 2003 ASSETS Current Assets: Cash and investments Accounts receivable, net of allowances Due from fiduciary funds Due from other governments Due from primary government State and federal aid receivables Prepaid charges Inventory of material and supplies Other assets Total Current Assets Non-Current Assets: Non-depreciable capital assets Depreciable capital assets, net of depreciation Total Non-Current Assets Primary Governmental Component Activities Units 21,624,970 $ 3,245,231 129,301 4,254 498,377 725,051 464,236 753,091 481,075 228,229 16,691 1,296 10,000 23,970,315 4,211,487 34,319,499 2,213,759 42,628,572 7,522,063 76,948,071 9,735,822 Total Assets LIABILITIES Current Liabilities: Accounts payable and accrued liabilities Accrued interest payable Bond anticipation notes payable Due to other governments Due to fiduciary funds Uneamed revenue Non-current liabilities due within one year General obligation bonds payable Due to Employees Retirement System Compensated absences Total Current Liabilities Non-Current Liabilities: General obligation bonds payable Due to Employees Retirement System Compensated absences Claims and judgements payable Estimated liability for landfill closure and postclosure care costs Total Non-Current Liabilities 100,918,386 13,947,309 2,021,418 868,938 134,271 12,041 10,576,000 4,192,302 447 71,020 4,268,259 307,895 642,431 32,569 38,742 17,787 17,769,928 5,414,192 6,242,429 32,571 135,834 5,165,082 1,000,000 1,917,688 14,461,033 32,571 32,230,961 5,446,763 Total Liabilities NET ASSETS Investment in capital assets, net of related debt Unrestricted 69,872,715 7,206,528 (1,185,290) 1,294,018 Total Net Assets $ 68,687,425 $ 8,500,546 See notes to the financial statements -12- TOWN OF SOUTHOLD BALANCE SHEET GOVERNMENTAL FUNDS December 31,2003 ASSETS Cash and Investments Accounts Receivable Due from Other Funds Due from Trust Funds State and Federal Aid Receivable Due from Other Governments Supply Inventory Prepaids Deposit Total Assets LIABILITIES AND FUND BALANCES LIABILITIES Accounts Payable Retained Percentages Bond Anticipation Notes Payable Due to Other Funds Due to Trust Funds Deferred Revenue Total Liabilities FUND BALANCE Fund Balances - Reserved: Supply Inventory Prepaids Insurance Claims Fund Balance (Deficit) - Unreserved: Designated - Ensuing Year's Budget Undesignated Total Fund Equity(Deficit) Total Liabilities and Fund Equity(Deficit) MAJOR GOVERNMENTAL FUNDS Non-Major Capital Governmental General Highway Projects Funds Totals 8,436,782 $ 1,569,090 $ 9,673,846 $ 1,945,252 $ 21,624,970 1,168 1,154 31,004 95,975 129,301 15,107 3.469 194,719 230,623 443,918 342.253 83,198 6,830 66.096 498,377 13,195 49.843 601,310 88,743 753,091 112,471 577,529 35,051 725,051 1,296 1,296 69,865 1.320 71,185 10,000 10,000 $ 9,002,137 $ 1,706,754 $ 11,085,238 $ 2,463,060 $ 24,257,189 792,860 $ 185,976 $ 304,734 $ 342,848 $ 1,626,418 395,000 395,000 10,576,000 10,576,000 426,211 2,601 15,106 443,918 595 70,425 71,020 2,463,059 616,093 1,189,107 4,268,259 3.682.725 804.670 11.275.734 1.617.486 17.380.615 1,296 1,296 69,865 1,320 71,185 1,033.085 1,033,085 112,000 112,000 2,008,000 239.000 329,000 2,576,000 2,207,166 551,084 (190,496) 515,254 3,083,008 5.319,412 902,084 (190,496) 845,574 6,876,574 $ 9,002,137 $ 1,706,754 $ 11,085,238 $ 2,463,060 $ 24,257,189 See notes to the financial statements. -14- TOWN OF SOUTHOLD RECONCILIATION OF THE GOVERNMENTAL FUNDS BALANCE SHEET TO THE STATEMENT OF NET ASSETS As of December 31, 2003 Total Fund Balances - Governmental Funds Amounts reported for govermental activities in the Statement 07' Net Assets are different because: Capital assets less accumulated depreciation are included in the Statement of Net Assets: Capital assets - non-depreciable Capital assets - depreciable Accumulated depreciation 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 Due to Employees Retirement System Compensated absences Claims and judgements payable Estimated liability for landfill closure and postclosure care costs Prepaid items included in the Statement of Net Assets Interest payable 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. Net Assets of Governmental Activities $34,319,499 92,034,082 (49,405,510) (6,884,86o) (174,576) (5,182,869) (1,ooo,ooo) (1,917,688) 6,876,574 76,948,071 (15,159,993) 157,044 (134,271) 68,687,425 See notes to financial statements. TOWN OF SOUTHOLD STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES GOVERNMENTAL FUNDS For the year ended December 31. 2003 REVENUES Real Property Taxes Other Real Property Tax Items Non-Property Tax Items Departmental Income Intergovernmental Charges Use of Money and Property Licenses aed Permits Fines and Forfeitures Sale of Property and Compensation for Loss Miscellaneous Local Sources State Aid Federal Aid Total Revenues EXPENDITURES Current General Govemment Supped Public Safety Public Health Transportation Economic Assistance aed Opportunity Home and Community Services Culture and Recreation Employee Beneltts Capital Outlay Interest Total Expenditures Excess (Deficiency) of Revenues Over Expenditures Other Financing Sources (Uses) Transfers In Transfers Out Total Other Financing Sources (Uses) Excess (Deficiency) of Revenues and Other Sources Over Expenditures and Other Uses Fund Balance at Beginning of Year Prior Period Adjustment Fund Balances(Deficit) at End of Year MAJOR GOVERNMENTAL FUNDS Non-Major Capital Governmental General Highway Projects Funds Totals 13,247,572 $3,513,902 $2,197,525 $18.958,999 51,311 6.428 874 58,613 401,035 117,449 518.484 315.289 2,339,227 2,654,516 202,917 15.573 $4,603,354 1,614 4,823,458 201.702 18,520 82,594 18.147 320.963 188,480 8.231 139,620 336,331 107,084 49,000 156,084 56,893 4,033 16,000 44,450 121.376 133.346 77.664 230 211.240 2,225,401 458.686 1.380,750 161,393 4,226.230 146~574 67,699 547,000 111,299 8721572 17,277~604 4,093,072 6,707,362 5,180,828 33.258,866 3,751,469 134,969 3,886,438 6.033,207 749.904 6.783.111 32,988 6.408 39,396 398.358 2,733,518 3,131,876 833.501 833.501 317,769 3,230.201 3.547.970 228,578 228,578 2,617,783 976,406 874,049 4,468,238 5,801,066 5.801,066 1,007,318 15,128 31,729 117,562 1,171.737 15,220,971 3,725,052 5,832,795 5,113,093 29,891,911 2,056,633 368,020 874,567 67,735 3,366,955 1,392,850 1,061,431 2.454,281 (1,910,7811 (60,000) (483,500) (2,454,281) (517,931) (60,000) 1,061,431 (483,500) q)- 1,538,702 308,020 1.935.998 (415.765) 3.366.955 3.780,710 594.064 (3,645.679) 1,261.339 1,990,434 1.519,185 1.519,185 $ 5.319,412 $ 902,084 $ (190,496) $ 845,574 $ 6.876,574 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 December 31,2003 Net Change in Fund Balance Governmental funds report capital outlays as expenditures. However, in the Statement of Activities the cost of those assets is allocated ever their estimated useful lives and reported as depreciation expense. The amount by which capital outlay exceeds depreciation in the current period ia: Capital outlay Depreciation expense Loss on dispositions $ 9,942,859 (3,571,646) (67,706) Some expenses reported in the Statement of Activities do not require the use of current financial resources and therefore, are not reported as expoditures in governmental funds: Prepaid charges The issuance of long-term debt and increase in obligations under c~pital 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. Repayment of bond principal Due to Employees Retirement System Compensated absences Estimated liability for landfill closure and postclosure care costs Accrued interest payable $ 3,366,955 6,303,507 157,044 632,429 (174,576) (2,228,437) (1,917,688) 30,703 Change in Net Assets of Governmental Activities $ 6,169,937 See notes to financial statements. -17- TOWN OF SOUTI'IOI. D STATEMENT OF FIDUCIARY NET ASSETS December 31, 2003 ASSETS Cash and investments Other receivables Due from other funds LIABILITIES Due to other funds Due to school districts Due to component units Due to other governments Other liabilities Deposits held Total Assets Fishers Island Town Ferry District Totals $ 10,433,163 $ 121,469 $10,554,632 55,160 55,160 71,020 71,020 $ 10,504,183 $ 176,629 $10,680,812 498,377 $ 498,377 8,989,713 8,989,713 307,895 $ 156,341 464,256 1,634 1,634 5,542 5,642 700,922 20,288 721,210 TotalLiabilities $ 10,504,183 $ 176,629 $10,680,812 See notes to financial statements. TOWN OF SOUTHOLD NOTES TO FINANCIAL STATEMENTS December 31, 2003 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 counc~ m~mbers who are elected for terms of four years. The Town Board appoints the Town Attorney, Comptroller and the Commissioner of Public Works whose te~ns are fixed by Tow~ Law. The Town Clerk and Receiver of Taxes are elected and serve for four years, respectively. The Town provides a ~11 range of municipal services, including public safety, transportation, home and community services, public works and road maintenance, recreation and parks, and general and adminisfi'ative services. The financial statements of the Town of Southold have been prepared in conformity with accounting principles generally accepted in the United States of America (GAAP) as applied to govemmental units. The Govemmental Accounting Standards Board (GASB) is the accepted standard setting body for establishing govemmental accounting and financial reporting principles. In June 1999, the Governmental Accounting Standards Board (GASB) unanimously approved Statement No. 34, Basic Financial Statements--and Management's Discussion and Analysis--for State and Local Governments. Significant changes in the Statement include the following: For the first time the financial statements include: · A Management Discussion and Analysis (MD&A) section providing an analysis of the Town's overall financial position and results of operations. · The financial statements are prepared using full accrual accounting for all of the Town's activities, including the recording of depreciation expense for all capital assets. · A change in the fund financial statements to focus on the major funds. These and other changes are reflected in the accompanying financial statements (including notes to financial statements). The Town has elected to implement the general provisions of the Statement in the current year. The more signif~3nt of the government's accounting policies are described below. 1. REPORTING ENTITY The financial reporting entity consists of: (a) the primary government, which is the Town 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 prima~j government are such that exclusion would cause the reporting entity's financial statements 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 criteda set forth in GASB 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 Southold's reporting entity. Certain special districts of the Town of Southold provide sanitation, ferry, and park services to residents and businesses within the districts. These special districts are organ[zed under New York State 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. Budgets and tax rates are approved by the Town. Tax levies of the special districts are collected by the Town Receiver of Taxes. As a result of this fiscal dependency, the Town is financially accountable for these special districts. Accordingly, these special districts have been determined to be component units of the Town and are presented discretely in a separate column in the combined financial statements to emphasize that they are legally separate from the primary government. Condensed financial statements, along with the addresses of the administrative office for these component units, are presented in Note A. -19- TOWN OF SOUTHOLD NOTES TO FINANCIAL STATEMENTS December 31,2003 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued) 2. BASIS OF PRESENTATION The Town's basic financial statements include both government-wide (reporting the Town as a whole) and fund financial statements (reporting the Town's major funds). Government-wide Financial Statements The government-wide financial statements reports information on the Town as a whole, except fiduciary activities, with separate columns for the primary governmental activities as well 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 assets are reported in three pads--investments in capital assets, net of related debt; restricted net assets; and unrestricted net assets. 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 program revenues and operating and capital grants, to produce the net cost of each program. Program revenues include (al 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 column reflects capital- specific grants. The net costs (by function) are normally covered by general revenue (property, taxes, intergovernmental revenues, interest incame, etc). As a general rule the effect of intertund 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. Nen-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 accounted for with a separate set of self-balancing accounts that comprise its assets, liabilities, fund balances, revenues, and expenditures, which are segregated for the purpose of carrying on specific activities or attaining certain objectives in accordance with special regulations, restrictions or limitations. The various funds are presented by type in the fund financial statements. Accordingly, the Town maintains the following fund t~pes: Govemmental Funds - Governmental funds are those through which most governmental functions 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. Govemmental funds are furlher classif~:=~d as major and nonmajor funds. -20- TOWN OF SOUTHOLD NOTES TO FINANCIAL STATEMENTS December 31, 2003 SUMMARY OF SIGNIFICANT ACCOUNTING POI-ICIES (continued) 2. BASIS OF PRESENTATION (continued) Fund Financial Statements (continued) The Town reports the following major governmental ~nds: General Fund - is the principal operating fund of the Town. This fund is used to account for all financial resources except those required to be accounted for in other funds. Hi.qhway Funds - To maintain and operate highways. Capital Proiects Fund - used to account for financial resources to be used for the acquisition or construction of major capital facilities (other than those financed by special assessment flJnds and trust funds). Additionally, the Town reports the following nonmajor funds: Special Revenue Funds - are used to account for the proceeds of specific revenue sources (other than major capital projects) that are legally restricted to expenditures for specified purposes. Special Revenue Funds include the following: General Fund Part Town - To provide general services outside the Village of Greenport. Special Grant Fund - Segregate and account for projects funded by Community Development revenue. Special 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 capacity. Agency Fund - is for money (and/or property) received and held in the capacity of trustee, custodian or agent. Discretely Presented Component Units Certain special disti'icts that have separately elected boards provide transportation, park, mosquito control, and sanitation services to residents and businesses within Ihese districts, and follow govemment fund accounting principles. These dist~cts, which are accounted for as discretely presented component units, are as fellows: These districts include the following: 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 Mattifuck Park District, established in 1941 -21- TOWN OF SOUTHOLD NOTES TO FINANCIAL STATEMENTS December 31, 2003 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued) 2. BASIS OF PRESENTATION (continued) Complete financial statements of these component units can be obtained from their respective administrative offices: Odent Mosquito District Main Road Orient, NY 11957 Fishers Island Garbage & Refuse District Fishers Island, NY 06390 Cutchogue-New Suffolk Park District P.O. Box 311 Cutchogue, NY 11935 Orient-East Marion Park District Route 25 Odent, NY 11957 Southold Park District P.O. Box 959 Southold, NY 11971 Mattituck Park District P.O. Box 1413 Mattituck, NY 11952 Fishers Island Ferry Distdct Main Street Southold, NY 11971 3. BASIS OF ACCOUNTING/MEASUREMENT 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 government-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 ptace. 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 (measurable and available to finance current operations). "Measurable" means the amount of the transaction can be determined and "available" meens collectible within the current peded er soon enough thereafter to pay liabilities of the cun-ent period. The Town considers all revenues available if they are collected within 60 days after the year end. Revenues susceptible to accrual include 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 susceptible to accrual because generally they are not measurable until they are received in cash. In these instances where expenditures are the prime factor in determining eligibility for state and federal grants, revenues are recognized when the expenditure is incun'ed. 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. 3. TOWN OF SOUTHOLD NOTES TO FINANCIAL STATEMENTS December 31,2003 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued) BASIS OF ACCOUNTING/MEASUREMENT FOCUS (continued) Encumbrance accounting, under which purchase orders, contracts and olher commitments are recorded for budgetary control purposes in order to rase~ve 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-appropriated in the ensuing year. Encumbrances ara reported as reservations of fund balances since they do not constitute expondituras 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 inctude amounts due from Federal, State, and other governments or entities for services provided by the Town. Receivables are recorded and revenues mcagnized as eamed or as specific program expenditures are incurred. INVENTORY - MATERIALS AND SUPPLIES Inventory in the general and special revenue fonds is valued at cost. Inventory in these funds is accounted for under the consumption melhod. C~ITAL ASSETS Capital assets purchased or acquired with an original cost of $5,000 or more ara 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 outlays that significantly extend the useful life of an asset ara capitalized. Other casts 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 including 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 govemmental fund upon acquisition. DEFERRED REVENUF-JUNEARNED REVENUE Deferred revenues/unearned revenue are those where asset recognition criteria have been met, but which revenue recognition critada have not been met. Such amounts include collections in advance, unearned income and amounts have been deemed to be "measurable" but not "available" to finance current expenses pursuant to generally accepted accounting principals. PREPAIDS Prepaids record payments to venders that benefit future recording periods and are reported on the consumption basis. Prapaids in the General and Special Revenue Funds represent insurance premiums paid for caverage that will benefit the subsequent period and for retirement benefits that will benefit a future period. -23- TOWN OF $OUTHOLD NOTES TO FINANCIAL STATEMENTS December 31, 2003 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued) LONG-TERM OBLIGATIONS The liabilities for long-term obligations consisting of general obligation bond, compensated absences, due to employee retirement system, judgments, claims and liability for landfill dnsure and post closure costs are recognized in the government-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. 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 re/Is 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. The Town of Southold Receiver of Taxes collects all real property taxes for the Tow~, Suffolk County, Town Special Districis and School Districts. These taxes are levied on December 1, and are due in two installments, 50% on December 1 and 50% on May 10, payable wffhout 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 Cornmissio~er 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 fi.em the amount collected, and forwards the balance collected to the County which assumes collecfion responsibility. The Town and Town's Special Disthcts therefore realize annually the 100% collection of real property taxes. School District property taxes are also levied on December 1, and are also payable in two installments. School property taxes are due in two installments, 50% on December I 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 government-wide financial statements. In the funds statements interfund transactions include: a) Interfund Revenues b) Interfund revenues, quasi-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. Transfers Transfers represent payments to the debt service and capital projects funds from the other funds for their appropriate share of the debt service or capital project costs. -24- TOWN OF SOUTHOLD NOTES TO FINANCIAL STATEMENTS December 31, 2003 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued) COMPENSATED ABSENCES The liability for vested or accumulated vacation or sick leave (compensated absences) is recorded as current and noncurrent obligations in the government-wide statements. The current portion of this debt is estimated based on histedcal trends. In the fund financial statements only the compensated absence liability payable fi-om expendable available financial resources is incurred. The amount that is expected to be liquidated with ex, oendable available financial resources is reported as expenditures and a liability in the funds statement in the respective fund that will pay it. EQUITY CLASSIFICATIONS In the Government-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. b) c) Restricted net assets---Consists of net assets with constraints placed on the use either by (1) external groups such as creditors, grantors, contributors, or laws or regulations of other governments; or (2) law through constitutional provisions or enabling legislation. Unrestricted net assets--All other net assets that do not meet the definition of "restricted" or "invested in capital assets, net of related debt." In the Fund Statements, govemmental 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 appropdatiea or expenditure. Amounts reserved for encumbrances, inventory, insurance claims and debt service represent portions of fund equity, which are required to be segregated in accordance with state law or GAAP. Designations of fund balances in govemmental funds indicate the utilization of these resources in the subsequent year's budget or tentative plans for future use. STEWARDSHIP, COMPLIANCE AND ACCOUNTABILITY 1. BUDGETARY DATA Budgets 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 pdor 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. TOWN OF SOUTHOLD NOTES TO FINANCIAL STATEMENTS December 31, 2003 STEWARDSHIP, COMPLIANCE AND ACCOUNTABIUTY (continued) 1. BUDGETARY DATA (continued) 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 headngs are conducted to obtain taxpayer comments, no later than November 20, the Town Board adopts 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 individual statements of revenues, expenditures and changes in fund balances - budget and actual, are presented in a seperete budget report 2. FUND BALANCES DESIGNATION OF FUND BALANCE Portions of the unreserved balances at December 31, 2003 were designated for the subsequent year's operating budgets as follows: Fund Fund Balance Unreserved and Designated Fund Balance Total for Subsequent (Deficit) Fund Balance Year's Unreserved Unreserved Budget Undesignated Non-Major Funds: Town Outside Village Special Grant East West Fire Protection District Southold Wastewater District Fishers Island Sewer District Solid Waste Management District $ 555,356 $ 329,000 $ 225,036 7,532 7,532 22,265 22,265 36,066 36,066 224,355 224,355 Total $ 845,574 $ 329,000 $ 515,254 FUND DEFICffS The capital projects fund had a deficit fund balance at December 31, 2003. The capital projects fund deficit will be eliminated as shod-term debt is redeemed or converted to permanent financing. TOWN OF SOUTHOLD NOTES TO FINANCIAL STATEMENTS December 31, 2003 Co DETAILED NOTES ON ALL FUNDS AND ACCOUNT GROUPS 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 investments are govemed by a formal investment policy. The Town's monies must be deposited in FDiC-insured commercial banks or bust companies located within the state. The Town is authorized to use demand accounts and certificates of deposit. Permissible investments incJude obligations of the U.S. Treasury, U.S. Agencies and investments made by the Cooperative Liquid Asset Secudty System (CLASS). CLASS is a cooperative investment plan consisting of U.S. Treasury Obligations and repurchase agreements relating to treasury obligations. Investments 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, Article 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 cerflf'mates of deposit for apl 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 distri~s. At December 31, 2003 the cash in banks was approximately $35,500,000 and collateral held against cash in banks was $42,100,000 consisting of FDIC insurance and/or securities held in the name of the Town of Southold. INTERFUND RECEIVABLES AND PAYABLES Interfund receivables and payables for the primary government at December 31, 2003 were as follows: General Fund - Townwide Highway Fund Capital Projects Fund Part Town Special Grant Southold Wastewater Solid Waste Management District Amount Amount Receivable .. Payable $ 15,107 $ 426,211 3,469 2,601 194,719 56,007 106 15,000 3,283 171,333 ~ $ 443_918 Interfund receivable and payable, balances for the primary government at December 31, 2003 are expected to be paid cu~rentiy. -27- Co TOWN OF SOUTHOLD NOTES TO FINANCIAL STATEMENTS December 31, 2003 DETAILED NOTES ON ALL FUNDS (continued) 3. CAPITAL ASSETS Pdmary government Ca. pital assets net being depreciated Land Construction in progress Total capital assets net being depreciated Depreciable capital assets Buildings Improvements other than buildings Machinery and equipment Infrastructure Total depreciabte capital assets Less accumulated depreciation Buildings Improvements other than buildings Machinery and equipment Infrastructure Total accumulated depreciation Total net depreciable capital assets Total net capital assets Balance Balance 1/1/03 Additions Deletions 12/31/03 $ 27,778,470 $ 3,474,859 $ 31,253,329 3,066,170 3,066,170 27,778,470 6,541,029 34,319,499 4,102,824 249,890 4,352,714 9,080,465 1,505,099 10,585,564 7,650,557 607,378 $ 139,816 8,118,119 67,938,222 1,039,463 68,977,685 88,772,068 3,401,830 139,816 92,034,082 1,696,048 113,508 1,809,556 2,325,478 175,626 2,501,104 4,882,189 621,273 72,110 5,431,352 37,002,259 2,661,239 39,663,498 $ 45,905,974 $ 3,571,646 $ 72,110 49,405,510 42,628,572 $ 76,948,071 Depreciation expense was charged to govemmental functions as follows: General govemment support Public safety Transportation Economic assistance and opportunity Culture and recreation Home and community services $ 224,659 149,075 2,843,757 34,511 7,365 312,279 3,571,646 TOWN OF SOUTHOLD NOTES TO FINANCIAL STATEMENTS December 31, 2003 DETAILED NOTES ON ALL FUNDS (continued) 4. CAPITAL ASSETS (continued) Discretely presented component units Capital assets not being depreciated rand Depreciable capital assets Buildings Improvements other than buildings Machinery and equipment infmstnJcture Total depreclable capital assets Less accumulated depreciation Buildings Improvements other than buildings Machinery and equipment Infmstn. mture Total accumulated depreciation $ Total net depreciable capital assets Total net capital assets Balance Balance 1/1/03 Additions Deletions 12/3'1/03 2,213,759 $ 2,213,759 3,341,126 $ 20,780 3,361,906 3,521,031 395,717 3,916,748 2,922,606 36,761 2,959,367 2,121,386 2,121,386 11,906,149 453,258 12,359,407 981,356 100,954 1,082,310 799,977 85,596 885,573 1,774,186 103,651 1,877,837 897,948 93,676 991,624 4,453,467 $ 383,877 4,837,344 7,522,063 $ 9,735,822 4. INDEBTEDNESS SHORT TERMDEBT Bond Anticipation Notes (BANs) - Bond anticipation notes (BANs) are used as a temporary .means of financing capital expenditures in the capital projects fund. State law requires that BANs issued for cap/tal purposes be converted to 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 fi-em the proceeds of future bond issues after renewal of these notes. These BANs bear interest at various rates fi-om 0.00% to 1.22% and are due at vadous dates through 2004. When BANs are not redeemed with the proceeds of bend 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. -29- TOWN OF SOUTHOLD NOTES TO FINANCIAL STATEMENTS December 31,2003 DETAILED NOTES ON ALL FUNDS (continued) 4. INDEBTEDNESS (continued) SHORT TERM DEBT (continued) These notes are summarized as follows: Description Various Purposes Various Purposes Landfill Closure New London Wharf Pickett Landfill Closure Total $ To Be Redeemed 2004 Interest Budget Amount Rate Appropriations Bonds $ 2,096,000 1.140% $ 426,000$ 1,670,000 3,800,000 1.216% 370,000 3,430,000 4,680,000 1.190% 31 O, 000 4,370,000 3,045,000 1.220% 70,000 2,975,000 1,147,302 0.000% 1,147,302 141768.302 $ 1.176.000$~ Of the $14,768,302 in bond anticipation notes, $10,576,000 relates to the pdmary government and lhe remaining $4,192,302 relates to the component units. LONG TERM DEBT Summary of changes in Iong-te~n debt fi-ansacfions for the year ended December 31, 2003 is as follows: General Obligation Bonds - The Town borrows money in order to acquire land or equipment or construct buildings and improvements. This enables the cost of lhese capital assets to be bome by the present and future taxpayers receiving Ihe benefit of the capital assets. These Iong-torm liabilities, which are backed by the full faith and credit of the Town, bear interest at various rates fi-em 4.7% to 9.1% and have maturity dates in 2004 through 2019. TOWN OF SOUTHOLD NOTES TO FINANCIAL STATEMENTS December 31, 2003 Do DETAILED NOTES ON ALL FUNDS (continued) 4. INDEBTEDNESS (continued) LONG TERM DEBT (continued) Future principal and interest payments to maturity for both the primary government and the component units are as follows: ~'ear Endinq Principal Interest 2004 $ 675,000 $ 351,053 2005 700,000 309,748 2006 500,000 273,545 2007 520,000 247,053 2008 530,000 220,060 2009-2013 2,515,000 681,178 2014-2018 1,390,000 187,011 2019 120,000 2,820 Totels ~==P=,~=P=J;}~ Other long-term liabilities for claims and judgments, compensated absences, retirement system and the esfimated liability for landfill closure and post closure costs are to be paid by the fund that gave rise to the liability. RETIREMENT SYSTEM Plan Description The Town of Southold participates in the New York State and Local Employees' Retirement System (ERS). This is a cnst-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 benet'~s to employees are govemed by the New York State Retirement 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 Compb'oller shell adopt and may amend niles 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 annual report containing financial statements and required supplemental information for the Employees' Retirement System may be obtained by writing to the New York State Retirement System, Governor Smffh State Building, Albany, NY 12244. FundinR Policy The System is nenceeldbutory except for employees who joined the New York State and Local Employees' Retirement System after July 27, 1976 and who have less than ten years of membership and less than tea 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 cont~butions 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 equal to the actuarially required amounts and also include additional contributions to fund various early retirement incentives made available to the Town employees. The credits and miscellaneous adjustments represent modificatiea made by the ERS for prior year's contributions. -31- TOWN OF SOUTHOLD NOTES TO FINANCIAL STATEMENTS December 31, 2003 DETAILED NOTES ON ALL FUNDS (continued) 5. RETIREMENT SYSTEM (continued) Fundin.q Policy (continued) The required contributions, for the Pdmary government, for Ihe current year and two preceding yearn were: ERS PFRS 2003 $ 443,861 $ 240,756 2002 $ 99,200 $ 65,087 2001 $ 61,327 $ 63,568 The Town's contribution to the system was 100% of the contributions required each year. 6. POST EMPLOYMENT BENEFITS In addition to providing pensio~ benefits, the Town provides health insurance coverage and survivor benef'~s 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 Town. Health care benefits in accordance with New York State Health Insurance Rules and Regulations (administered by the New York State Department of Civil Service), are provided 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 pm~m~ums as an expenditure in the year paid. The Town's union conbacts and ordinances require that it provide its eligible enrollees with Empire Plan benefit coverage, or if another provider is utilized, the equivalent coverage. 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 participaUon in the Empire Plan at any time without liability for its respective share of any previously incurred loss. During the 2003 year, $2,396,302 was paid on behalf of 83 retirees and 206 active employees and recorded as an expenditure in the various funds of the Primary govemment. 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. Estimated vacation, sick leave and compensatory absences accumulated by governmental fund type employees have been recorded in the statements of net assets. Payment of vacation time and sick leave is dependent upon many factors; 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 compensatory absences when such payments become due. As of December 31, 2003, the value of the accumulated vacation time and sick leave was $5,182,869 for the primary govemment. -32- Do TOWN OF SOUTHOLD NOTES TO FINANCIAL STATEMENTS December 31, ZOO3 COMMITMENTS AND CONTINGENCIES Risk Management The State of New York has commenced a lawsuit against the Town for unlawful discharge of gasoline and petroleum products at the Town's Highway department on Peconic Lane. As of the date of this report, the likelihood of an unfavorable outcome is uncertain, but is at least reasonably possible that cleanup costs and interest could total up to $1,000,000. The Town is self-insured for medical insurance only. The amount of claims outstanding at December 31, 2003 is $112,929 and is reserved against fund balance in the General Fund. The Town is self-insured for workers' compensation insurance and disability insurance. Estimated bener~s to be paid are appropriated in the various operating funds of the Town. The Town is also self- insured for unemployment bener~s paid. Landfill Closure and Post. Closure Care Costs State 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 York 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 final 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 ragulafions presently require the Town to perform certain maintenance and monitoring functions at the site for up to thirty years. Accordingly, as of December 31, 2003 the Town has recorded a liability of $1,917,688 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 State Environmental Facilities Coq)oration. CostS associated with pest closure care will be covered by charges to future landfill users and future tax revenue. Lease Commitments And Leased Assets The Town leases property and equipment under operating leases. Total rental expenditures on such leases for the fiscal year ended December 31, 2003 were approximately $120,231. Future obligations over the primary terms of the Town's leases as of December 31,2003 are as follows: 2004 $ 153,192 2005 124,156 2006 108,405 2007 60,425 Total $_ ~ -33- TOWN OF SOUTHOLD NOTES TO FINANCIAL STATEMENTS December 31, 2003 CONDENSED FINANCIAL STATEMENTS FOR THE DISCRETELY PRESENTED COMPONENT UNITS The following represents condensed financial statements for the discretely presented component units as of and for the year ended December 31, 2003: Condensed Statement of Net Assets: Due from Capital Assets Other Cument Pdma~7 Net o~' Curren! Long-Term Net Assets Go~mment Depreciation Liabilities Liabilities Assets Fishers Island Feny Distdc! $ 2,952,718 Fi,shem Island Re[use and Garbage Dist~c' 420,511 Cutchogue-New SuffoLk Park District 98,713 Soulix~d Park Disbict 18,287 Odent-Easl Ma~ Pad( District 8.864 Mattituck Park District 232,976 Orient Mosquito Disbtct 17,182 $ 224,595 $ 5,172,242 $ 3,933,911 $ 32,571 $ 4,383,0/'3 79,691 2,509.008 1,255,389 1,753,821 126,254 370 224.597 58.666 655.861 103.676 627,138 5,421 432,985 14,412 432,858 83,612 839,472 94,183 1,~1,877 12,251 12,251 17,182 $ 3.747,251 $ 464,236 $ 9,735,822 $ 5,414,192 $ 32,571 $ 8.500,546 $ 4.857.672 $ 2,514,619 $ 2,343,C53 $ 1,595,738$ 178,588 $ 568,735$ 9,069,281$ 8.500,.546 F. SUBSEQUENT EVENTS In July 2004, the Town issued State Clean Water and Ddnking Water Revolving Fund Revenue Bonds, series 2004D through New York Environmental Facilities Corporation in the amount of $3,789,098 at interest rates ranging from 1.201% to 4.586%. In addition, the Town issued public improvement sedal bonds on behalf of the Maltituck Park Disbict in September 2004 in the amount of $240,000 with an interest rate of 3.14%. G. PRIOR PERIOD ADJUSTMENT As of January 1, 2003, all capital projects and related debt was transferred from the primary government to the discretely presented component units in accordance with generally accepted accounting principles. The net effect was an increase in fund balance in the capital projects fund of $1,519,185. REQUIRED SUPPLEMENTARY INFORMATION OTHER THAN MD&A TOWN OF SOUTHOLD GENERAL FUND SCHEDULE OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCE - BUDGET AND ACTUAL Year ended December 31, 2003 Odginal Final Budget Budget REVENUES Real Property Taxes $13,247,572 $13,247,572 Other Real Property Tax Items 60,000 60,000 Non-Property Tax Items 400,000 400,000 Departmental Income 336,400 410,121 Intergovernmental Charges 246,914 116,910 Use of Money and Property 243,964 243,964 Licenses and Permits 187,850 187,850 Fines and Forfeitures 96,500 96,500 Sale of Property and Compensation for Loss 240,400 249,939 Miscellaneous Local Sources 118,200 138,829 State Aid 1,302,000 1,339,616 Federal Aid 146,433 Total Revenues Vadance with Final Budget Actual Over/(Under) $13,247,572 51,311 $ (8,689) 401,035 1,035 315,289 (94,832) 202,917 86,007 201,702 (42,262) 188,480 630 107,084 1 O, 584 56,893 (193,046) 133,346 (5,483) · 2,225,401 885,785 146,574 141 16,479,800 16,637,734 17,277,604 639,870 EXPENDITURES General Govemment Support 3,836,825 4,024,052 Public Safety 6,235,956 6,272,245 Public Health 33,300 33,300 Transportation 369,200 410,725 Economic Assistance and Opportunity 849,560 866,388 Culture and Recreation 350,555 350,555 Home and Community Services 223,011 244,016 Employee Benefits 5,475,016 5,356,462 Debt Service - Principal and Interest 1,483,600 1,433,600 Total Expenditures Deficiency of Revenues Over Expenditures Other Financing Sources (Uses) Transfers In Transfers Out Total Other Financing Sources (Uses) Excess (Deficiency) of Revenues and Other Sources Over Expenditures and Other Uses Fund Balance at Beginning of Year Fund Balance at End of Year 3,751,469 272,583 6,033,207 239,038 32,988 312 398,358 12,367 833,501 32,887 317,769 32,786 228,578 15,438 3,795,373 1,561,089 1,007,318 426,282 18,857,023 18,991,343 16,398,561 2,592,782 (2,377,223) (2,353,609) 879,043 3,232,652 2,749,900 2,749,900 2,570,440 (179,460) (1,558,677) (1,582,291) (1,910,781) (328,490) 1,191,223 1,167,609 659,659 (507,950) $ (1,186,000) $ (1,186,000) 1,538,702 $ 2,724,702 3,780,710 $ 5,319,412 See notes to the financial statements. -35- TOWN OF SOUTHOLD HIGHWAY FUND SCHEDULE OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES - BUDGET AND ACTUAL Year ended December 31, 2003 REVENUES Odginal Final Budget Budget Actual Real Property Taxes $ 3,513,902 $ 3,513,902 $ 3,513,902 Other Real Property Tax Items 7,000 7,000 4,574 Non-Property Tax Items 1,854 Intergovernmental Charges 15,573 Use of Money and Property 32,000 32,000 18,520 Licenses and Permits 21,000 21,000 8,231 Sale of Property and Compensation for Loss 4,000 4,000 4,033 Interfund Revenues 3,500 3,500 State Aid 223,700 458,686 458,686 Federal Aid 67,699 67,699 Total Revenues EXPENDITURES Transportation Employee Benefits Debt Service - Principal and Interest Total Expenditures Excess (Deficiency) of Revenues Over Expenditures Other Financing Uses Transfers Out Total Other Financing Uses Variance with Final Budget Over/(Under) Excess (Deficiency) of Revenues Over Expenditures and Other Uses Fund Balance at Beginning of Year Fund Balance at End of Year (2,426) 1,854 15,573 (13,480) (12,769) 33 (3,5OO) 3,805,102 4,107,787 4,093,072 (14,715) 2,737,400 3,085,735 2,733,518 352,217 566,577 1,183,427 976,406 207,021 78,925 78,925 15,128 63,797 3,382,902 4,348,087 3,725,052 623,035 422,200 (240,300) 368,020 608,320 (689,000) (60,000) (60,000) (689,000) (60,000). (60,000) =$ (266,800)= $ (300,300) 308,020 594,064 $ 902,084 $ 608,320 See notes to the financial statements. -36- OTHER SUPPLEMENTARY INFORMATION Combining Fund Statements of Revenues, Expenditures and Changes in Fund Balance DISCRETLY PRESENTED COMPONENT UNITS o §~ ~oo~ OTHER REPORTS TOWN OF SO~J'rI-IOLD SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS Year ended December 31, 2003 Federal Grantor/Pass-through Grantor/ Pro~ram or Cluster Tiite U.S. Deparlment of A,qdculture Passed through Suffolk County Cash-In-Lieu of Food Awards Natural Resource Conservation Service Farm and Ranchland Protection Program U.S. Department of Health and Human Services Pass-through Suffolk County, New York Nutrition U. S. Department of Housin.q and Urban Development Pass-through from Suffolk County, New York Community Development Block Grant Program U. S. Department of Justice Bulletproof Vest Partnership Program Federal Emer.qency Manaqement A.qenc¥ Pass-through program from State of New York 2003 Presidents Day Snowsterm 3184 EM NY Total expenditures of federal awards Federal CFDA Number Federal Expenditures 10.550 $ 41,621 10.913 547,000 93.045 14.218 16.607 83.548 87,197 111,299 3,988 _ 81,467 $ 872.572 See accompanying note to schedule of expenditures of federal awards. -41- TOWN OF SOUTHOLD NOTE TO SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS Year ended December 31, 2003 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 Organizab'on$. Therefore, some amounts presented in this schedule may differ from amounts presented in, or used in the preparation of, the basic financial statements. ALBRECHT, VIGGIANO, ZURECK & COMPANY, P.C. CERTIFIED PUBLIC ACCOUNTANTS 25 SUFFOLK COURT HAUPPAUGE, NY 11788 (631) 434-9500 REPORT ON COMPLIANCE AND ON INTERNAL CONTROL OVER FINANCIAL REPORTING 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 governmental activities, the aggregate discretely presented component units, 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, 2003, which collectively comprise the Town of Southold's basic financial statements, and have issued our report thereon dated June 8, 2004, 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 States of America and the standards applicable to financial audits contained in Government Aud'rting Standards, issued by the Comptroller General of the United States. Compliance As part of obtaining reasonable assurance about whether the Town of Southold's financial statements are free of matedal misstatement, we performed tests of its compliance with certain provisions of laws, regulations, contracts, and grants, noncompliance with which could have a direct and material effect on the determination of financial statement amounts. However, providing an opinion on compliance with those provisions was not an objective of our audit, and accordingly, we do not express such an opinion. The results of our tests disclosed no instances of noncompliance that are required to be reported under Government Auditing Standards. Internal Control Over Financial Reportin.q 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 internal control over financial reporting would not necessarily disclose all matters in the internal control 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 Iow level the risk that misstatements in amounts that would be material 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 internal control over financial reporting and its operation that we consider to be material weaknesses. 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. Hauppauge, New York June 8, 2004 -43- ALBRECHT, VIGGIANO,ZURECK & COMPANY, P.C. CERTIFIED PUBLIC ACCOUNTANTS 25 SUFFOLK COURT HAUPPAUGE, NY 11788 (631) 434-9500 REPORT ON COMPLIANCE WITH REQUIREMENTS APPLICABLE TO EACH MAJOR PROGRAM AND ON 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 cornpliance 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, 2003. The Town of Southold'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, regulations, contracts, and grants applicable to each of its major federal programs is the responsibility of the Town of Southold's management. Our responsibility is to express an opinion on the Town of Southold, New York s compl'ance 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 States; and OMB Circular A-133, Audits of States, Local Governments, 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 determination of the Town of Southold's compliance with those requirements. 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, 2003. Internal Controls Over Complian,'--= The management of the Town of Southold is responsible for establishing and maintaining effective intemal control over compliance with the requirements of laws, regulafions, contracts, and grants applicable to federal programs. In planning and performing our audit, we considered the Town of Southold's internal contro~ 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 conbol over compliance in accordance with OMB Circular A-133. Our consideration of the internal control over compliance would not necessarily disclose all matters in the intemal conl~ol 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 Iow level the dsk of noecempliance 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 ~ncfions. We noted no matters involving the internal control over compliance and its opera§on that we consider to be material weaknesses. 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. Hauppauge, New York June 8, 2004 TOWN OF SOl.ri'HOLD SCHEDULE OF FINDINGS AND QUESTIONED COSTS Year ended December 31, 2003 SUMMARY OF AUDITOR'S RESULTS 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. No reportable conditions disclosed during the audit of the financial statements are reported in the "REPORT ON COMPLIANCE AND OH INTERNAL CONTROL OVER FINANCIAL REPORTING BASED ON AN AUDIT OF FINANCIAL STATEMENTS PERFORMED IN ACCORDANCE WITH GOVERNMENT AUDITING STANDARDS". 3. No instances of noncompliance material to the financial statements of the Town of Southold were disclosed during the audit. No reportable conditions disclosed dudng 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 OMB CIRCULAR A- 133'. No material weaknesses were noted. 5. The auditor's report on compliance for the Farm and Ranchland Protection Program expresses an unqualified opinion; the report on the re~qaining 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 Southold had one "Type A' program for the year ended December 31, 2003. 8. The program tested as a major progrem includes: CFDA Number Name of Federal Proqram or Cluster 10.913 U.S. Department of Agriculture Farm and Ranchland Protection Program 9. The threshold for distinguishing Types A and B programs was $300,000. 10. The Town of Southold was determined t~ be a Iow-risk auditee. TOWN OF Sou'rNOLD SCHEDULE OF FINDINGS AND QUESTIONED COSTS Year ended December 31, 2003 FINDINGS-FINANCIAL STATEMENTS AUDIT REPORTABLE COHDITIONS Them were no findings or repodable conditions noted. FINDINGS AND QUESTIONED COSTS- MAJOR FEDERAL AWARD PROGRAMS AUDIT U.S. Dept of Agriculture - CFDA # 10.913 Farm and Ranchland Protection Program There were no findings or reportable conditions noted. Questioned Cost Azure Dee Emerle, Project Engineer 35 Corporale Drive. Trumbull. CT 06611 ph 203-268-5007 Ix 203-268-8821 aemerleti)ocean-coastal.com http:/^www.ocean-coastal.com Ocean and Coastal Consultants, Inc. Transmittal ~~ To: Keith Neilson clo: Docko, Inc. PO Box 421 Mystic. CT 06355 Dale: November 23, 2004 Re: Fishers Island Ferry District - LOMR We are sending you the following: One (1) copy of the Application for a Letter of Map Revision (LOMR). Please retain for your records. The original Application has been submitted to FEMA for review on behalf of Fishers Island Ferry District. Please note that FEMA has a 90 day period to review the application. Cc: Tony flJves, Building Official City of New London 181 State Street New London. CT 06320 Joshua Y. Horton. Supervisor. Town of Southold Town Hall. 53095 Route 25 PO Box 1179 Southold. NY 11971-0959 Mr. Reynolds duPont do Fishers Island Feny llisbict Town of Soulhold Town Haft. 53094 Main Road SouthoId. NY 11971 Richard Brown. City Manager City of New London 181 State Street New London. CT 06320 Marl< Easter do Fishers Island Ferry District Town of Southold Town Hall, 53094 Main Road Southold, NY 11971' Azure /3v.::pf! A projed~ Via: us Mail ~ " -} J. C,_ :" :-, , OCEAN AND COASTAL OCEAN AND COASTAL CONSULTANTS, INC. 35 CORPORATE DRIVE, SUITE 1200 TRUMBULL, CT 06611 PH 203-268-5007 FX 203-268-8821 hllp://www.ocean-coastal.com CONSULTANTS INC. November 23, 2004 VIA CERTIFIED MAIL Federal Emergency Management Agency Fee Charge System Administrator P.O. Box 3173 Merrifield, VA 22216 Reference: Request for Letter of Map Revision (LOMR) Application Fee Fishers Island Ferry District, New London, Connecticut OCC Project #202013.1 Dear LOMR Manager: Ocean and Coastal Consultants, Inc. (OCe) herein submits the enclosed Letter of Map Revision (LOMR) application fee of $3,800.00. This LOMR request is a follow-up to the Conditional Letter of Map Revision (CLOMR), case #02-01-039R, issued on September 30, 2002. The supporting technical information has been sent to FEMA Region 1 Office in Boston as directed in the CLOMR (copy of correspondence and CLOMR enclosed for reference). Please do not hesitate to contact me should you require any additional information regarding the LOMR application. Very trul y yours, OCEAN AND COASTAL CONSULTANTS, INC. ~!JA ~0 Azure Dee Emerle, P.E. Proj ect Engineer , Encl: As stated I I I I I I I I I I I I I I I I I I I APPLICATION FOR LETTER OF MAP REVISION FEDERAL EMERGENCY MANAGEMENT AGENCY NATIONAL FLOOD INSURANCE PROGRAM For FISHERS ISLAND FERRY DISTRICT FOOT of STATE STREET NEW LONDON, CT Project No. 202013.1 November 2004 Prepared By: Ocean and Coastal Consultants, Inc. 35 Corporate Drive Trumbull, CT 06611 Tel (203) 268-5007 Fax (203) 268-8821 I I I I I I I I I I I I I I I I I I I OCEAN AND COASTAL OCEAN AND COASTAL CONSULTANTS, INC. 35 CORPORATE DRIVE, SUITE 1200 TRUMBULL, CT 06611 PH 203-268-5007 FX 203-268-8821 http://WoNW.ocean-coastal.com CONSULTANTS. INC November 19, 2004 VIA CERTIFIED MAIL FEMA Region 1 Hazard ill and Risk Assessment Team 99 High Street 6th Floor Boston, MA 02110 Reference: Request for Letter of Map Revision (LOMR) Fishers Island Ferry District New London, Connecticut OCC Project #202013.1 Dear LOMR Manager: Ocean and Coastal Consutants, Inc. (OCe) is please to submit for your review, the enclosed request for a Letter of Map Revision (LOMR) and supporting information in which the Applicant seeks to revise the existing FIRM map for the above referenced site. This request is a follow-up to the Conditional Letter of Map Revision (CLOMR), case #02-01-039R, issued on September 30, 2002. The steel sheet pile bulkhead has been built as proposed. As requested in the CLOMR, please find the following items: . Overview and Concurrence Form, MT-2 Form I . Coastal Structures Form, MT-2 Form 5 . Certified As-built Plan . Site Plan with Revised Flood Hazard Zones . Annotated Portion of FIRM Number 090100, Panel 0001 C . Operation and Maintenance Plan . Evidence ofNFIP Compliance As directed in the CLOMR, CHAMP modeling and wave runup and overtopping calculations have not been provided since the bulkhead was constructed as proposed. Additionally, the $3,800 application fee (copy of check enclosed) has been sent to the "Fee Charge System Administrator" in Merrifield, Virginia, as directed in the CLOMR. We appreciate your expedited review of this application. This LOMR will enable Mr. Tony Alves, the Building Official for the City of New London, to allow the placement of electrical receptacles, fuel oil pumps for the heating system, and other necessary utilities for the building at the CLOMR BFE. I I I I I I I I I I I I I I I I I I I Request for Letter of Map Revision (LOMR) Fishers Island Ferry District, New London, CT November 19, 2004 Page 2 Please do not hesitate to contact Ms. Azure Dee Emerle or the undersigned at (203) 268-5007, should you require any additional information regarding the proposed change of flood zone designation. Very truly yours, OCEAN AND COASTAL CONSULTANTS, INC. tanley M. White, P.E. President cc: Reynolds duPont, FIFD Mark Easter, FIFD Joshua Horton, Supervisor, Town of South old Richard M. Brown, City Manager, City of New London Tony Alves, Building Official, City of New London Keith Neilson, Docko, Inc. Encl: As stated OCEAN AND COASTAL CONSULTANTS, INC. . lAY CHELSEA GROTON SAVINGS BANK CONNECTICUT DOCKO, INC. P.O. BOX 421 MYSTIC, CONNECTICUT 06355.0421 (860) 572.8939 51.7335/2111 11/1912004 National Flood Insurance Program TO THE IROER OF Three Thousand Eight Hundred and 00/1 00*************************************************************** '*3,800,00 . National Flood Insurance Program IEMO Fi~hers~~lan~.!erry Disn:i~_.....__.__.~.~_.~_ . 11'00970711' 1:2~~~7:l:l571: 550001. 951.11' OOCKO, INC. . National Flood Insurance Program FIFD. LOMR . . . . . . . . . . . . CaSH-Checking accoun Fishers Island Ferry District $ AUTHOR,(2( 11119/2004 9707 DOLLARS ~ D c o . . . c ~ ~ " .~ w I?i ... 9707 3,800.00 3,800.00 I I I I I I I I I I I I I I I I I I I Fishers Island Ferry District Application for Letter of Map Revision TABLE OF CONTENTS New London, CT November 2004 Descriotion Transmittal Letter Vicinity Map Flood Insurance Rate Map 090 I 00-000 I C Site Photographs Overview and Concurrence Form (MT-2 Form I) Coastal Structures Form (MT -2 Form 5) Certified As-built Plan Revised Flood Hazard Zones on Existing Site Plan Drawing Annotated FIRM Panel Operation and Maintenance Plan Effective CLOMR Evidence ofNFIP Compliance Section Attachment I Attachment 2 Attachment 3 Attachment 4 Attachment 5 Attachment 6 Attachment 7 Attachment 8 Attachment 9 Attachment 10 Attachment II OCEAN AND COASTAL CONSULTANTS, INC. I I I I I I I I I I I I I I I I I I I Fishers Island Ferry District Application for Letter of Map Revision New London, CT Novemher 2004 ATTACHMENT 1 VICINITY MAP APPLICATION FOR LETTER OF MAP REVISION For Fishers Island Ferry District Foot of State Street New London, CT OCEAN AND COASTAL CONSULTANTS, INC. I I I I I I I I I I I I I I A TAI(EN FROl.l DelORME IoIAPEXPERT WINDOWS V2.0 I I Gold Star Memorial Inthrop Point SITE NEW LON DON H ARB 0 R o 2000 ~ SCALE I , ~ I I OCEAN AND COASTAL I 0fJt I CONSULTANTS. INC. DESlCNED BY: DRAYtN BY: CHECl<EQ BY: C" AE FISHERS ISLAND FERRY DISTRICT NEW LONDON, CT SCALE ~ AS NOTED DAn: 0 10 26 . SKETCH NO. VICINITY MAP I 20201J.l\TASKJ\SK\1 (1) 4000 FT. SK 01 I I I I I I I I I I I I I I I I I I I Fishers Island Ferry District New London, CT Application for Letter of Map Revision November 2004 ATTACHMENT 2 FLOOD INSURANCE RATE MAP 0901000001 C APPLICATION FOR LETTER OF MAP REVISION For Fishers Island Ferry District Foot of State Street New London, CT OCEAN AND COASTAL CONSULTANTS, INC. - - - - - - - - - - - - - THAMES COASTAL BASE FLO APPLY ONLY LANOWA AfelflO ''''N ! z -I J: :D o .. - 600 - - - - - ~ APPROXIMATE SCALE o 500 FEET FIRM FLOOD INSURANCE RATE MAP CITY OF NEW LONDON, CONNECTICUT NEW LONDON COUNTY PANEL 1 OF 2 .IE. MAP INDEX '0" 'ANELB ".OT 'I""TEDI COIIIlUNITY .PANEL NUIlBER 0901 DO 0001 C IIAP REVISED: AUGUST 19, 1995 IN. is an ofIichilll copy 01 II portion at the .~ referenced ftood map. It _ extracted u.lng F-MIT On-Una. lNa map does not relect CMngeI or amendments which mil)' hMe been made aut.equent to the date on the title block. For the latMt product Information about Netionel Flood IMurllnce Program tODd mape, check the FEMA Flood Map Store at _.mac.fema.gov I I I I I I I I I I I I I I I I I I I Fishers Island Ferry District Application for Letter of Map Revision New London, CT November 2004 A TT ACHMENT 3 SITE PHOTOGRAPHS APPLICATION FOR LETTER OF MAP REVISION For Fishers Island Ferry District Foot of State Street New London, CT OCEAN AND COASTAL CONSULTANTS, INe. I I I I I I I I I I I I I I I I I I I Fishers Island Ferry DIstrict Application for Letter of Map Revision New London, CT November 2004 ~ Photo 1: New bulkhead and fill behind - approximately 90% complete. OCEAN AND COASTAL CONSULTANTS, INC. I I I I I I I I I I I I I I I I I I I Fishers Island Ferry District Application for Letter of Map Revision New London, CT November 2004 Photo 2: Post-construction. Temporary wave barriers at ramp location. '" diiC."~l' Photo 3: Close-up of temporary wave barriers. OCEAN AND COASTAL CONSULTANTS, INC. I I I I I I I I I I I I I I I I I I I Fishers Island Ferry District Application for Letter of Map Revision New London, CT November 2004 ATTACHMENT 4 OVERVIEW AND CONCURRENCE FORM (MT-2 FORM 1) APPLICATION FOR LETTER OF MAP REVISION For Fishers Island Ferry District Foot of State Street New London, CT OCEAN AND COASTAL CONSULTANTS, INC. I I FEDERAL EMERGENCY MANAGEMENT AGENCY OVERVIEW & CONCURRENCE FORM O.M.B No. 3067-1)148 Expires September 30, 2005 I PAPERWORK BURDEN DISCLOSURE NOTICE I Public reporting burden for this form is estimated to average 1 hour per response. The burden estimate includes the time for reviewing instructions. searching existing data sources, gathering and maintaining the needed data, and completing, reviewing. and submitting the form. You are not required to respond to this collection of information unless a valid OMS control number appears in the upper right corner of this form. Send comments regarding the accuracy of the burden estimate and any suggestions for reducing this burden to: Information Collections Management, Federal Emergency Management Agency, 500 C Street. SW, Washington DC 20472, Paperwork Reduction Project (3067-0148). Submission of the fonn is required to obtain or retain benefits under the National Flood Insurance ?rnnram. Please do not send vour comaleted survey to the above address. I A. REQUESTED RESPONSE FROM FEMA This request is for a (check one): I o CLOMR: A letter from FEMA commenting on whether a proposed project, if built as proposed, would justify a map revision, or proposed hydrology changes (See 44 CFR Ch. 1, Parts 60, 65 & 72). I El LOMR: A letter from FEMA officially revising the current NFIP map to show the changes to floodplains, regulatolY floodway or flood elevations. (See Parts 60 & 65 of the NFl? Regulations.) I B. OVERVIEW I 1. The NFIP map panel(s) affected for all impacted communities is (are): Community No. CommunitY Name State MaD No. Panel No. Effective Date Ex: 480301 CityofKaty 1)( 480301 0005D 02/08/83 480287 Harris Cou'ntv 1)( 46201C 0220G 09/26190 090100 City of New London CT 090100 0001C 08/19/85 2. Flooding Source: Thames River, New London Harbor 3. Project Name/Identifier: Fishers Island Ferry District 4. FEMA zone designations affected: V9(EI. 12). A7(EI. 10) (choices: A, AH. AO, Al-A30, A99, AE. AR, V, Vl-V30, VE, B. C. D, X) 5. Basis for Request and Type of Revision: a. The basis for this revision request is (check all that apply) [2] Physical Change D Improved Methodology/Data D RegUlatory Floodway Revision D Other (Attach Description) Note: A photograph and narrative description of the area of concern is not required, but is velY helpful during review. b. The area of revision encompasses the following types of flooding and structures (check all that apply) Types of Flooding: D Riverine G Coastal o Shallow Flooding (e.g.. Zones AO and AH) D Alluvial fan o Lakes D Other (Attach Description) Structures: D Channelization D Levee/Floodwall o Bridge/Culvert o Dam o Fill o Other, Attach Description \)uLKI-IE/1\) I I I I I I I I I I FEMA Form 81-89. SEPT 02 Overview & Concurrence Form MT -2 Form 1 Page 1 of 2 I I I I I I I I I I I I I I I I I I I C. REVIEW FEE Has the review fee for the appropriate request category been included? o Yes Fee amount $3.1.00 D No, Attach Explanation Please see the FEMA Web site at httn://INww.fema.aovlfhmlfrm fees.shtm for Fee Amounts and ExemDtions. D. SIGNATURE All documents submitted in support of this request are correct to the best of my knowledge. I understand that any false statement may be punishable by fine or imprisonment under Tille 18 of the United States Code, Section 1001. Name: Joshua Horton Company: Supervisor, Town of Southold, NY Mailing Address: Southold Town Hall 53095 Route 25, PO Box 1179 Southold, NY 11971 Daytime Telephone No.: (631) 765-1800 Fax No.: (631) 765-1823 E-Mail Address:Joshua.Horton@town.southold.ny.us Date: /I III~ /o<-t As the community official sponsible for floodplain management, I hereby acknowledge that we have received and reviewed this Letter of Map Revision (LOMR) or conditional MR request. Based upon the community's review, we find the completed or proposed project meets or is designed to meet all of the community floodplain management requirements, including the requirement that no fill be placed in the regulatory f1oodway, and that all necessary Federal, State, and local permits have been, or in the case of a conditional LOMR, will be obtained. In addition, we have determined that the land and any existing or proposed structures to be removed from the SFHA are or will be reasonably safe from flooding as defined in 44CFR 65.2(c), and that we have available upon request by FEMA, aU analyses and documentation used to make this determination. Community Official's Name and Title: Antonio Alves, Building Official Telephone No.: (860) 447-5240 Community Name: Date: City of New London / / ~ &-- ~ C' V CERTIFICATION BY REGISTERED PROFESSIONAL ENGINEER AND/OR LAND SURVEYOR This certification is to be signed and sealed by a licensed land surveyor, registered professional engineer, or architect authorized by law to certify elevation information. All documents submitted in support of this request are correct to the best of my knolNledge. I understand that any false statement may be punishable by fine or imprisonment under Title 18 of the United States Code, Section 1001. Certifier's Name: Stanley M. White License No.: 12042 Expiration Date: 01/31/05 Telephone No.: (203) 268-5007 Fax No.: (203) 268-8821 IL/~ Signature: Date: jl/tI'I/O'j Ensure the fonns that are appropriate to your revision request are Included in your submittal. ..~~,\:' \~'.. f~.:.,.~~: .-'f!;I.'. ?~~;;?j~~5:'i.~i-,~\:~. . :. e-"" ~ ~;:3;;i ; , ... ';;;Seal~Optiq~al). .>,. ..':\:.;,.,' Fonn Name and INumber' Reauired if ... D Riverine Hydrology and Hydraulics Form (Form 2) New or revised discharges or water-surface elevations o Riverine Structures Form (Form 3) Channel is modified, addition/revision of bridge/culverts, addition/revision of leveelfloodwall, addition/revision of dam o Coastal Analysis Form (Fonn 4) o Coastal Structures Form (Form 5) o Alluvial Fan Flooding Fonn (Form 6) New or revised coastal elevations Addition/revision of coastal structure Flood control measures on alluvial fans FEMA Form 81-89, SEPT 02 Overview & Concurrence Form MT-2 Form 1 Page 2 of 2 I I I I I I I I I I I I I I I I I I I ELIZABETH A. NEVILLE TOWN CLERK REGISTRAR OF VITAL STATISTICS MARRIAGE OFFICER RECORDS MANAGEMENT OFFICER FREEDOM OF INFORMATION OFFICER Town Hall, 53095 Main Road P.O. Box 1179 Southold, New York 11971 Fax (631) 765-6145 Telephone (631) 765-1800 southoldtown.northfork.net OFFICE OF THE TOWN CLERK TOWN OF SOUTHOLD THIS IS TO CERTIFY THAT THE FOLLOWING RESOLUTION NO. 821 OF 2004 WAS ADOPTED AT THE REGULAR MEETING OF THE SOUTHOLD TOWN BOARD ON NOVEMBER 16, 2004: RESOLVED that the Town Board ofthe Town of Southold hereby authorizes and directs Supervisor Joshua Y. Horton to execute the FEMA Overview and Concurrence Form as part of the Application for Letter of Map Revision in connection with the construction of the Fishers Island Ferry terminal. P~rLlrfa2;k~'ti.. Elizabeth A. Neville SouthoId Town Clerk I I I I I I I I I I I I I I I I I I I Fishers Island Ferry District New London, CT Application for Letter of Map Revision November 2004 ATTACHMENT 5 COASTAL STRUCTURES FORM (MT -2 FORM 5) APPLICA nON FOR LETTER OF MAP REVISION For Fishers Island Ferry District Foot of State Street New London, CT OCEAN AND COASTAL CONSULTANTS, INC. I I I I I I I I I I FEDERAL EMERGENCY MANAGEMENT AGENCY COASTAL STRUCTURES FORM O.M.B. No. 3067-0/48 Expiru September JO. 2005 PAPERWORK REDUCTION ACT Public reporting burden for this form is estimated to average 1 hour per response. The burden estimate includes the time for reviewing instructions, searching existing data sources, gathering and maintaining the needed data, and completing, reviewing, and submitting the form. You are not required to respond to this collection of information unless a valid OMS control number appears in the upper right comer of this form. Send comments regarding the accuracy of the burden estimate and any suggestions for reducing this burden to: Information Collections Management, Federal Emergency Management Agency, 500 C Street, SW, Washington DC 20472, Paperwork Reduction Project (3067-0148). Submission of the form is required to obtain or retain benefits under the National Flood Insurance Program. Please do not send your completed survey to the above address. Flooding Source: Note: FiJI out one form for each flooding source studied A. BACKGROUND 1. Name of structure (if applicable):Steel sheetpile bulkhead 2. Structure location: South and east sides of property 3. Type of structure (check one): D Levee/Floodwall* D Breakwater [2] Anchored Bulkhead D Pile supported seawall D Revetment D Gravity Seawall o Other: *Note: If the coastal structure is a levee/floodwalJ, complete Section E of Form 3 (Riverine Structures Form). The remainder of this form does not need to be completed. 4. Material structure is composed of (check all that apply): o Stone o Sand I 5. The structure is (check one): I I I I I I I I o Earthen fill OOtl1er EI Steel D Concrete D New or proposed [2] Existing D MOdification of existing structure D Replacement structure of the same size and design as what was previously at the site Describe in detail the existing structure and/or modifications being made to the structure and the purpose of the modifications: If existing, please include date of construction: 6. Copies of certified "as-built" plans EI are D are not attached. Attach all design analyses that apply. If "as-built" plans are not available for submittal, please explain why and attach a sketch with general structure dimensions including: face slope, height, length, depth, and toe elevation referenced to the appropriate datum (e.g. NGVD 1929, NAVD 1988, etc.). 7. Has a Federal agency with responsibility for the design of coastal flood protection structures designed or certified that the structures have been adequately designed and constructed to provide protection against the 1 %-annual~chance event? DYes EI No If Yes, specify the name of the agency and dates of project completion and certification. If Yes, then no other sections of this form need to be completed. FEMA Form 81-89D, SEPT 02 Coastal Structures Form MT-2 Form 5 Page 1 of 4 I I B. DESIGN CRITERIA I 1. Desio" Parameters a. Were physical parameters representing the 1 %-annual-chance event or greater used to design the coastal flood protection structure? GO] Yes 0 No I b. The number of design water levels that 'Here evaluated 3(number) range from the mean low water elevation of -0.9 feet to the 1 %-annual-chance stillwater surge elevation of 10feel. The critical water level is 3teet. The datum that these elevations are referenced to is NGVD 1929 (e.g.: NGVD 1929. NAVD 1988, etc.). Attach an explanation specifying which water levels and associated wave heights and periods were analyzed. I c. Were breaking wave forces used to design the structure? GO] Yes 0 No If No, attach an explanation why they were not used for design. I 2. Settlement a. VVhat is the expected settlement rate at the site of the structure? No appreciable settlement of structure I Please attach a settlement analysis. 3. Freeboard I a. Does the structure have 1 foot of freeboard above the height of the 1 %-annual-chance wave-height elevation or maximum wave runup (Vv'hichever is greater)? o Yes GO] No I b. Does the structure have freeboard of at least 2 feet above the 1% annual chance stillwater surge elevation? o Yes GO] No 4. Toe Protection I Specify the type of toe protection: Riprap stone provided along southern face of bulkhead for scour protection If no toe protection is provided, provide analysis of scour potential and attach an evaluation of structural stability performed with potential scour at the toe. I 5. Backfill Protection Will the structure be overtopped during the 1%-annual-chance event? GO] Yes ONo I If the structure will be overtopped, attach an explanation of what measures are used to prevent the loss of backfill from rundown over the structure, drainage landward, under or laterally around the ends of the structure, or through seams and drainage openings in the structure. 6. Structural Stability - Minimum Water Level I a. For coastal revetments, was a geotechnical analysis of potential failure in the landward direction by rotational gravity slip performed for maximum loads associated with minimum seaward water level, no wave action, saturated soil conditions behind the structure, and maximum toe scour? I DYes 0 No b. For gravity and pile-supported seawalls, 'Were engineering analyses of landward sliding, landward overturning, and of foundation adequacy using maximum pressures developed in the sliding and overturning calculations performed? I DYes 0 No c. For anchored bulkheads, were engineering analyses performed for shear failure, moment failure, and adequacy of tiebacks and deadmen to resist loading under low-water conditions? I GO] Yes 0 No I I I FEMA Form 81-89D, SEPT 02 Coastal Structures Form MT-2 Form 5 Page 2 of 4 I I B. DESIGN CRITERIA (CONTINUED) 7. Structural Stabilitv - Critical Water Level (Note: All structures must be designed to resist the maximum loads associated with the critical water level to be credited as providing protection from the 1 % annual chance event.) I a. For coastal revetments were geotechnical analyses performed investigating the potential failure in the seaward direction by rotational gravity slip or foundation failure due to inadequate bearing strength? o Yes 0 No I b. For revetments, were engineering analyses of rock, riprap, or armor blocks' stability under wave action or uplift forces on the rock, riprap, or armor blocks performed? o Yes 0 No I C. Are the rocks graded? o Yes ONo I d. Are soil or geotextile filters being used in the design? o Yes 0 No I e. For gravity and pile supported seawalls, were engineering analyses of landward sliding, landward overturning, and foundation adequacy performed? , o Yes 0 No I f. For anchored bulkheads, were engineering analyses of shear and moment failure performed using "shock" pressures? o Yes 0 No I For all analyses marked "No" above for the appropriate type of structure, please attach an explanation why the analyses were not performed. 8. Material Adeauacv I The design life of the structure given the existing conditions at the structure site is 50 years. 9. Ice and lmoact Alianment I a. Will the structure be subjected to ice forces? o Yes 0No If Yes, attach impact analysis and design details for such forces. I b. Will the structure be subjected to impact forces from boats, ships, or large debris? BYes ONo I If Yes, attach impact analysis. 10. Structure Plan Alianment I The structure is (check one): o Isolated o Part of a continuous structure with redundant return walls at frequent intervals. I Please provide a map showing the location of the structure and any natural land features that shelter the structure from wave actions. I I I FEMA Form 81-89D, SEPT 02 Coastal Structures Form MT-2 Form 5 Page 3 014 I I I C. ADVERSE IMPACT EVALUATION If the structure is new, proposed, or modified, will the structure impact flooding and erosion for areas adjacent to the structure? DYes 0No I If Yes, attach an explanation. I D. COMMUNITY AND/OR STATE REVIEW Has the design, maintenance, and impact of the structure been reviewed and approved by the community, and any Federal, State, or local agencies having jurisdiction over flood control and coastal construction activities in the area the structure impacts? I o Yes D No I IfVes, attach a list of agencies who have revie'Ned and approved the project. If No, attach an explanation why review and approval by the appropriate community or agency has not been obtained. E. CERTIFICATION I I As a Professional Engineer, I certify that the above structures will withstand all hydraulic and wave forces associated with the 1% annual chance flood without significant structural degradation. All documents submitted in support of this request are correct to the best of my knowledge. I understand that any false statement may be punishable by fine or imprisonment under Title 1 a of the United States Code, Section 1001. Certifier's Name: Charles C. Brown, P .E. License No.: 14390 Exp. Date: 01/31/2005 Company Name: Gibble Norden Champion Brown TelePhon~ Fax. No.: (860) 388-4613 Date II/S{cA Signature Seal (optional) I I I I I The as-built bulkhead is consistent with the structural stability analysis prepared by Gi~ble, Norden, Champion and Brown Consulting Eng~~ers, Inc., dated August 1,2002, and submItted in support of the Conditional Letter of Map ReVISIOn. I I I I I I FEMA Form 81-890. SEPT 02 Coastal Structures Form MT-2 Fonn 5 Page 4 014 I I I I I I I I I I I I I I I I I I I Fishers Island Ferry District Application for Letter of Map Revision New London, CT November 2004 MT-2 FORM 5 ATTACHMENT A. Background 6. As-built Plans Design analyses were provided in the Application for a Conditional Letter of Map Revision. The structure has been built in accordance with those specifications. Therefore, the analyses have not been provided again. B. Design Criteria lb. Design Parameters The following water levels and associated wave heights and periods were used in the design: Water level (feet NGVD) Maximum Wave Heil!ht (feet) Period (seconds) 100-year storm +10.0 15.61 5.62 Mean low water -0.9 12.56 5.62 Critical water level +3.0 15.61 5.62 The structural stability of the bulkhead has been investigated with respect to the design wave forces. It was determined that the wave forces were not the controlling condition in the bulkhead design. Normal live load conditions govern the design of the bulkhead. As such, the bulkhead will resist the forces, associated with the 100-year storm condition. 5. Backfill Protection The entire area upland of the bulkhead will be paved to prevent erosion. Drainage is provided to control surface water on the upland surface. 9. Ice and Impact Alignment Impact of floating objects are incidental to the design. OCEAN AND COASTAL CONSULTANTS, INC. ------------------- LIST ALL OTHER FEDERAL, STATE OR LOCAL GOVERNMENTAL AGENCY LICENSES PERMlTS OR CERTIFICA nON OBTAINED FOR TIlE PROJECT Site Develo ment Plan. Coaslal Site Development Plan 3. Minor Modification of Site Develo ment Plan 4. Zonin Permit 5. Modification of Basic Buildin Code 6 . Variance 7. Variance 8. Permit to place fill and structures in the waters of the State 9. Section 401 Water Quality Certification 10. Section 10 and Section 404 permits to place fill and structures in waters oftbe United States. New London Plannin and Zonin Commission New London Planning and Zomng Commission ., A roval Issued I ~ Approval Issued t . , Approval Issued , t ,. Permit No. 0079 M-256A-93 M-256B-93 < '-. 199501 565-PF I~ ... ] 99501565.PF ,. ~= c ,. 1998-02195 i ~... New London Zoning Enforcement Officer New London Planmn and Zonin Commission Department of Public Safety, State Building Inspector's Office Connecticut Department of Environmental Protection, Office of Long Island Sound Pro rams U. S. Army Corps of Engineers IE;! o o '" HARTJ.lOi7173-2 I I I I I I I I I I I I I I I I I I I Fishers Island Ferry District New London, CT .' Application for Letter of Map Revision November 2004 ATTACHMENT 6 CERTIFIED AS-BUILT PLAN APPLICATION FOR LETTER OF MAP REVISION For Fishers Island Ferry District Foot of State Street New London, CT OCEAN AND COASTAL CONSULTANTS, INC. I I I I I I I I I I I I I I I I I I I Fishers Island Ferry District Application for Letter of Map Revision New London, CT November 2004 ATTACHMENT 7 REVISED FLOOD HAZARD ZONES ON EXISTING SITE PLAN DRAWING APPLICATION FOR LETTER OF MAP REVISION For Fishers Island Ferry District Foot of State Street New London, CT OCEAN AND COASTAL CONSULTANTS, INC. I I I I I I I I I I I I I I I I I I I Fishers Island Ferry District New London, CT Application for Letter of Map Revision November 2004 ATTACHMENT 8 ANNOTATED FIRM PANEL APPLICATION FOR LETTER OF MAP REVISION For Fishers Island Ferry District Foot of State Street New London, CT OCEAN AND COASTAL CONSULTANTS, INC. - - - - - - - - - -.- - - 500 - - - - - - ~ APPROXIMATE SCALE o 500 FEET ......--. - THAMF:S --"'::::::...-:-::: COASTAL BASE FLO APPLY ONLY LANDWA FIRM FLOOD INSURANCE RATE MAP erTY OF NEW LONDON, CONNECTICUT NEW LONDON COUNTY PANEL 1 OF :I lUll: .........DC. I'OlltP4lftLS NCWUII.."lD) CDIIUlnT-PAln IUIII:I DIGIDG ODOI C MAP REYISED: IOOUsr II. 1..5 rh~ Iii it... ofIlc;.a1 Cot'll of iI por11on or (hQ ..00... letere~d.ood map It __ edradl!d using F.UIT On-UrIC:' lhi.. rNIp c:Io&-s nllC relied chilngc:. or .menll'l'le-.... ~c.h may h81ie'Deen maGI!' .U~fQuent to tne Gate on Ine liflC! bloc" For tnCll.~1 pIOduct Inbrm..~ ..tJaut ~0lUIl Flood InsuranclCl PrCJ9."1lm had m... check the FEMA Floc::ld M.p Slare lit _.m.c: 'aot. (IOY I I I I I I I I I I I I I I I I I I I Fishers Island Ferry District Application for Letter of Map Revision New London, CT November 2004 ATTACHMENT 9 OPERATION AND MAINTENANCE PLAN APPLICATION FOR LETTER OF MAP REVISION For Fishers Island Ferry District Foot of State Street New London, CT OCEAN AND COASTAL CONSULTANTS, INC. I I I I I I I I I I I I I I I I I I I Docko. Inc. P.O. Box 421, Mystic, CT 06355 (860) 572-8939 Fax: (860) 572-7569, e-mail: docko@snet.net November 2, 2004 Captain Mark Easter Fishers Island Ferry District Foot of State Street New London, CT 06320 Re: Bulkhead Maintenance Program Dear Captain Easter: Following up on our recent conversation and with assistance and review by Ms Azure Dee Emerle, P.E. of Ocean & Coastal Consultants, I have outlined the elements of a bulkhead inspection and maintenance program in this letter for consideration by the Board of Commissioners. A visual inspection of the bulkhead should be made on an annual basis at low tide from the water to observe and document locations and extent of any corrosion which might be visible. This splash zone is the area most susceptible to corrosion and will be the first indication of the need for any maintenance effort. If structural deterioration is observed or suspected in the condition of the sheeting, the interlocks or the exposed tie-back connections, a marine or waterfront structural engineer should be called in to make the necessary evaluations and effectuate repairs. Every five years, a full bulkhead inspection, above the water line and below, should be conducted by a registered Professional Engineer familiar with underwater structures as set forth in ASCE 10 1. The inner face of the bulkhead above grades should be monitored annuaily for corrosion as well. It should be anticipated that the inner face of the bulkhead be touched up or repainted above grade every five years or as needed to minimize corrosion. It will also be necessary to observe and document settlement in the fill. We anticipate that there will be some differential settlement in the backfill materials as a result of the significant extent of fill being placed and the variable support provided by the underlying sediments. These depressions will become very evident during the routine operation of vehicles around the site and should be addressed immediately. Topographic surveys at fill and surface structures should be conducted at five-year intervals. If a persistent area of settlement is noted, a geo-technical engineer should be solicited for an evaluation and remedy. Bulges in the face of the bulkhead in areas of settlement may also indicate a problem or failure of the tie back system. Bulkhead condition assessments and surveys should be documented on a standardized form where conditions can be adequately noted and remedial actions and responsibilities can be assigned. I I I I I I I I I I I I I I I I I I I Captain Mark Easter Fishers Island Ferry District November 2, 2004 I trust that you will find this bulkhead and fill maintenance program acceptable. Please let me know if the need for further discussion arises. KBN:jm CC: OCC: Emerle File: 00-12-1187 FIFD.NL TERMINAL EXPANSION Yours truly, DOCKO, INC. ~~ Keith B. Neilson, P.E. .i. I I I I I I I I I I I I I I I I I I I FISHERS ISLAND FERRY DISTRICT NEW LONDON TERMINAL BULKHEAD MAINTENANCE PLAN MAINTENANCE PLAN The bulkhead will be inspected by a licensed Professional Engineer with experience in the design and construction of shore protection facilities at an interval not greater than every five (5) years. Inspections will also be completed when anyone of the following occurs: 1. Within one (1) month of a tropical or extra-tropical storm system with sustained wind speeds in excess of 50 knots, which impacts the Connecticut coast. 2. Within one (1) month of significant damage to the bulkhead being reported by one of the property owners. 3. As requested by the City of New London, Connecticut, official responsible for administering the FEMA regulations. (The City official will request the inspection in writing with an explanation of why the inspection is needed.) The results of the inspection will be summarized into a written report. T~e report will indicate the condition of the bulkhead, evaluate the ability of the seawall to resist the 100-year storm design wave, and make recommendations for repairs I maintenance as needed. Copies of the report will be distributed to the land owners and to the City of New London, Connecticut official responsible for administering the FEMA regulations and the Connecticut Office of Emergency Management. A letter I report indicating that all recommended repairs I maintenance has been completed will also be issued. The cost of the inspection and report will be borne by the Fishers Island Ferry District. The cost of any required maintenance will be borne by the land owner. Recommended repairs and I or maintenance activities will be completed as soon as practical after the report is issued. The Fishers Island Ferry District will be responsible for complying with the maintenance and operations plan for the proposed bulkhead modifications. The Fishers Island Ferry District will review inspection reports and take appropriate actions to ensure the bulkhead functions as designed to maintain the revise flood zones of the area. I I I I I I I I I I I I I I I I I I I Fishers Island Ferry District Application for Letter of Map Revision New London, CT November 2004 ATTACHMENT 10 EFFECTIVE CLOMR APPLICATION FOR LETTER OF MAP REVISION For Fishers Island Ferry District Foot of State Street New London, CT OCEAN AND COASTAL CONSULTANTS, INC. I I I I I I I I I I I- I I I I I I. I I Federal Emergency Management Agency Washington, D.C. 20472 SEP 3 0 2002 Mr. Richard Brown New London City Manager 181 State Street New London, Connecticut 06320 IN REPLY REFER TO: Case Number: 02-01-039R Community Name: City of New London, New London County, Connecticut Community Number: 090 100 (104) Dear Mr. Brown: This letter is in reference to a May 17,2002, letter from Mr. Stanley White, P.E., President, Ocean and Coastal Consultants, Inc., requesting a conditional Letter of Map Revision (LOMR) for the proposed expansion of the Fishers Island Ferry terminal along New London HarborlThames River. The proposed project, which will be located approximately 500 feet west of the intersection of Water Street and State Street, will consist of the construction of a continuous steel sheetpile bulkhead, as well as the placement of fill. The area of the proposed project is shown on Flood Insurance Rate Map (FIRM) number 090100, panel 0001 C, dated August 19, 1985. We received the following teclmical data, prepared by Ocean and Coastal Consultants, Inc., unless otherwise noted, in support of this request: . Coastal Hazard Analysis Modeling Program (CHAMP), input and output files, dated August 21, 2002, for 2 transects along the project site; . an Automated Coastal Engineering System analysis of the I % annual chance (I OO-year) wave conditions at the site; . an analysis of wave forces acting on the bulkhead during the I OO-year and breaking wave conditions; . a structural stability analysis of the proposed bulkhead, prepared by Gibble Norden Champion Brown Consulting Engineering, Inc., dated August I, 2002; . design calculations for the temporary wave barrier, dated April I 0, 2002, revised August 20, 2002; . a certified topographic map, titled Revised Flood Hazard Zones on Proposed Site Plan, dated April 12, 2002, revised August 20,2002, at a scale of I "=30', with a contour interval of I foot, referenced to National Geodetic Vertical Datum of 1929 (NGVD 29), reflecting the proposed site plan and locations and alignments of transects used in the aforementioned CHAMP modeling, and proposed modifications to the flood hazard zone designations and Base (1 % annual chance) Flood Elevations (BFEs); . a certified topographic survey, titled Topographic Survey, dated April 4, 2002, at a scale of I "=40', with a contour interval of 1 foot and spot elevations, referenced to I I I I I I I I I I I I I I I I I I I 2 NGVD 29, reflecting existing conditions at the project site, prepared by Resource Management and Mapping; and . annotated portions of FIRM number 090100, panel 0001 C, dated August 19, 1985, showing the proposed flood hazard zone designations and BFEs. In addition to the aforementioned technical data, we received the following documentation in support of this request: . a letter from Mr. Joshua Y. Horton, Supervisor for the Town of South old, New York, dated April 30, 2002, acknowledging the proposed increases in the I % annual chance floodplain and BFEs on the property; . a letter from Ms. Azure Dee Emerle, of Ocean and Coastal Consultants, Inc., dated August 5, 2002, stating that the increased BFEs at the project site are not a result of the proposed bulkhead, but rather more detailed and up-to-date analyses; and . completed application/certification forms, including community concurrence with the request. - We received all data necessary to process this request by August 23, 2002. We have reviewed the submitted data and determined that the proposed project meets the minimum floodplain management criteria of the National Flood Insurance Program (NFlP). If the project is built as proposed, a revision to the FIRM, for your community will be warranted. This revision will show a change in the flood hazard zone designations and BFEs both seaward and landward of the proposed bulkhead as follows: . a portion of the area currently designated as Zone V9 with a BFE of 12 feet NGVD 29, will be revised to Zone A9 with a BFE of 12 feet NGVD 29; and . a portion of the area currently designated as Zone A 7 with a BFE of 10 feet NGVD 29 will be revised to Zone A9 with a BFE of 12 feet NGVD 29. Future revisions to the FIRM, or restudies of the flood hazards in this area, could modify this determination. We based this determination on the 1 % annual chance stillwater elevations published in the February 19, 1985, Flood Insurance Study (FIS) for the City of New London, Connecticut. A comprehensive restudy of your community's flood hazards will consider any changes to flood hazard conditions subsequent to the publication of the FIS for the City of New London, Connecticut, and the flood hazards shown in the FIS and FIRM could be increased. Your community must approve all proposed floodplain development, including this proposed project, and ensure that permits required by other Federal agencies and/or State and local agencies have been obtained. State and/or community officials may set standards for construction that are more restrictive than the minimum NFIP standards or may limit development in floodplains, based on knowledge oflocal conditions and in the interest of safety. I I I I I I I I I I I I I I I I I I I 4 Upon completion of the proposed project, your community should request a revision to the FIRM. The revision request should be submitted to our Regional Office in Boston, Massachusetts, and include the data listed below. I. Evidence of compliance with NFIP regulations Paragraph 65.4(b), which states that "all requests for changes to effective maps. . . must be made in writing by the community's Chief Executive Officer (CEO) or an official designated by the CEO. Should the CEO refuse to submit such a request on behalf of another party, we will agree to review the request only if written evidence is provided indicating the CEO or designee has been requested to do so." 2. As-built plans of the project, certified by a registered professional engineer. 3. CHAMP modeling of as-built conditions, in digital and hard copy format. 4. Wave runup and overtopping calculations based on procedures outlined in the U.S. Army Corps of Engineers' Shore Protection Manual, dated 1984, and FEMA's document, titled Guidelines and Specifications for Flood Hazard Mapping Partners. Appendix D: Guidance for Coastal Flooding Analvses and Mapping, dated February 2002. - 5. A certified topographic map of the entire area of revision, reflecting the locations of transects used in the aforementioned CHAMP modeling. This map should also include the proposed flood hazard zone. boundaries. Please show this information on a map of suitable scale and topographic definition to provide reasonable accuracy. 6. A copy of the City of New London FIRM number 090100, panel 0001 C, dated August 19, 1985, at FIRM scale of I "=500', annotated to show the proposed revisions to the flood hazard zone designations and BFEs. The proposed flood hazard zone designations and BFEs must tie-in to the effective flood hazard zone designations and BFEs at the limits of the area of revision. 7. For coastal structures to be recognized as reducing flood hazards, they must be maintained in accordance with an officially adopted operation and maintenance plan. The owner of the bulkhead system must provide a copy of this plan to us when recognition is being sought or when the plan for a previously recognized system is revised in any manner. This plan must document the formal procedure to maintain the bulkhead and its associated structures and systems. 8. Evidence of compliance with NFIP regulations Paragraph 65. I O( d) which states that "all maintenance activities must be under the jurisdiction of a Federal or State agency, an agency created by Federal or State law, or an agency of a community participating in the NFIP that must assume ultimate responsibility for maintenance. " If the project is built as proposed, you do not have to resubmit items 3 and 4; otherwise, please resubmit them. I I I I I I I I I I I I I I I I I I I 3 comprehensive floodplain management criteria, those criteria take precedence over the minimum NFIP requirements. NFIP regulations Section 65.3 states that when a community's BFEs increase or decrease because of physical changes that affect flooding conditions, the community must submit technical or scientific data to the Federal Emergency Management Agency (FEMA) that substantiate these changes. Your community must submit such data as soon as possible, but no later than 6 months after such data become available, so that FEMA can base flood insurance premium rates and floodplain management requirements on the most up-to-date and accurate information available. Your community must meet the criteria ofNFIP regulations Subparagraphs 65.5(a)(4) or 65.6(a)(14), which require that the community's NFIP permit official or any community official having authority for floodplain management, provide written assurance that the community has complied with the appropriate minimum floodplain management requirements under NFIP regulations Section 60.3, which includes the requirements that: . residential structures built or substantially improved in the I % annual chance floodplain have their lowest floor elevated to or above the BFE; . the participating community has determined that the land and any existing or proposed structures to be removed from the I % annual chance floodplain are reasonably safe from flooding and that the community has on file, available upon request, all supporting analyses and documentation used to make that determination; . the participating community has issued permits for all proposed construction or other proposed development; and . all necessary permits have been received from those governmental agencies where approval is required by Federal, State, or local law. We remind you of the elevation and floodproofing requirements contained in NFIP regulations Subparagraphs 60.3(c)(2) through (4). These requirements apply to the construction of new residential and nonresidential structures, as well as to the substantial improvement of existing structures, located within the I % annual chance floodplain. In accordance with Subparagraphs 65.5(a)(3) and 65.5(a)(4)(i), for a structure to be removed from the 1% annual chance floodplain, the lowest adjacent grade (the lowest ground touching the structure) of the structure must be at or above the BFE, and a completed community acknowledgment form must be submitted, which is FEMA's assurance that all appropriate Federal, State, and local requirements regarding the fill placement have been met. I I I I I I I I I I I I I I I I I I I 5 We have enclosed a copy of our application/certification fonns for your reference. Typically, we do not require these forms if the project is completed as proposed. The enclosed document, titled Requirements for Submitting Application/Certification Forms to Support Requests for NFIP Map Revisions, describes in detail the circumstances under which the forms are required. The NFIP is primarily funded by policyholders, not taxes. We recover costs associated with reviewing and processing requests for revisions to published FISs and FIRMs to minimize the financial burden on the policyholders. The fee for an as-built LOMR request in follow-up to this conditional LOMR is $3,800, which we must receive before we can begin processing. This fee represents the fee schedule which became effective September 1, 2002. Please note that the fees are subject to change, and the fee for the follow-up LOMR may change between the date of this letter and the date that the follow-up LOMR is submitted. If items 3 and 4 listed above must be resubmitted, the processing fee could be higher. Your payment must be a check or money order made payable to the National Flood Insurance Program and should be forwarded to: Federal Emergency Management Agency Fee Charge System Administrator P.O. Box 3173 Merrifield, Virginia 22216 Once we receive the processing fee and the items listed above, complete our review, and verify that the completed project meets all applicable NFIP standards, we will revise your community's FIRM to incorporate the effects of the completed project, as appropriate. Part 65 of the enclosed NFIP regulations further describes the data needed to support a request to revise a FIRM. Your compliance with the criteria outlined in the NFIP regulations will streamline our review, allowing us to eXpeditiously revise your community's FIRM. I I I I I I I I I I I I I I I I I I I 6 If you have any questions, please do not hesitate to contact the Director, Federal Insurance and Mitigation Division ofFEMA in Boston, Massachusetts, at (617) 223-9561, or the FEMA Map Assistance Center toll free at 1-877-FEMA MAP (1-877-336-2627). :;tvmA Mark Crowell Project Engineer Hazards Study Branch Federal Insurance and Mitigation Administration For: Matthew B. Miller, P.E., Chief Hazards Study Branch Federal Insurance and Mitigation Administration Enclosures cc: Mr. Tony Alves, New London Building Official Mr. Stanley M. White, P.E. Mr. Joshua Y. Horton Mr. Reynolds DuPont, Chainnan, Fishers Island Ferry District Ms. Azure Dee Emerle State NFIP Coordinator I I I I I I I I I I I I I I I I I I I Fishers Island Ferry District Application for Letter of Map Revision New London, CT November 2004 ATTACHMENT 10 EVIDENCE OF NFIP COMPLIANCE APPLICATION FOR LETTER OF MAP REVISION For Fishers Island Ferry District Foot of State Street New London, CT OCEAN AND COASTAL CONSULTANTS, INC. I I JF hhell'~ rr~iaD.J JF ell'll'Y Dhhid I DlsrrlaCrutd By Spc:WAaDjTM New Yori; SIIfU ~ (Lnln tlfNew Ymi, 1947, CluIyur 699) Fishers IslanJ. New York 06390 I RODERT P. KNAUFF Manager. Secraary T.I.,b..e 631.788-7463 F.~ 631-Wa~fj, 2002 BOARD OF COMMISSIONERS Re,.oIJ. J"PODl. Jr. Chairman lbo..... F. DoLel'ly. Jr. Lillie M. ALma. DnlJ C. RuraL.. II Geroge 1. E-I'. Jr. I I Dewberry & Davis LLC 840 I Arlington Boulevard Fairfax, VA 22031 I Re: Fishers Island Ferry District Terminal Foot of State Street New London, CT Conditional Letter of Map Revision I Dear Sirs; I This letter is submitted with respect to an application of the Town of South old to amend the Flood Insurance Rate Map designation for the property ofthe Fishers Isiand Ferry District's ferry terminal at the Foot of State Street in New London, Connecticut ("Ferry Terminal"). I The Town of Southold holds title to the Ferry Terminal property. The Fishers Island Ferry District was created by Special Act of the New York State Legislature to acquire, construct, equip, operate and maintain a public ferry for the transportation for hire of persons and vehicles, and goods, wares and merchandise, to and from Fishers Island. (Chapter 620 of the Laws of 1957, N.Y.S.) I This Jetter will acknowledge that a government agency must assume responsibility for overseeing compliance with the maintenance and operation plans for the proposed modifications to the bulkhead at the Ferry Terminal property. I I The Fishers Island Ferry District will be responsible for complying with the maintenance and operations plans for the proposed bulkhead modifications. The Fishers Island Ferry District will review inspection reports and take appropriate actions to ensure the bulkhead functions as designed to maintain the revised flood zones of the area. I Sincerely, ~__ R~ont, chairm1- Fishers Island Ferry District ---- I I Cc; Richard Brown, City Manager, City of New London, CT Joshua Y. Horton, Supervisor, Town of Southold, NY I I I I I I I I I I I I I I I I I I I I I I JOSHUA Y. HORTON SUPERVISOR Town Hall, 53095 Route 25 P.O. Box 1179 Southold, New York 11971-0959 Fax (631) 765-1823 Telephone (631) 765-1889 OFFICE OF THE SUPERVISOR TOWN OF SOUTHOLD May 8, 2002 Mr. Joseph Marrone, P.E. Ocean and Coastal Consultants, Inc. 35 Corporate Drive Trumbull, CT 06611 Re: Conditional Letter of Map Revision Fishers Island Ferry District Terminal New London, CT Dear Mr. Marrone: This letter will acknowledge that, based upon the CLOMR application referenced above, a government agency must assume responsibility for overseeing compliance with the maintenance and operation plans of the Fishers Island Ferry District terminal in the City of New London, CT. As the official property owner of the site, the Fishers Island Ferry District is willing to oversee the maintenance program for the Fishers Island Ferry District (FIFD) terminal. The Fishers Island Ferry District will review inspection reports and recommendations made by an engineer hired by the FIFD and coordinate with the Town of Southold to take appropriate actions to ensure the bulkhead functions as designed to maintain the revised flood zones of the area. Sincerely, ~ZX~ /~pervisor, Town of South old cc: City of New London, CT Reynold duPont, FIFD Ocean and Coastal Consultants, Inc. I I I I I I I I I I I I I I I I I City of New London 181 State Street- New London, CT 06320 - Phone (860) 447-5201 - Fax (860) 447-7971 May 17, 2002 Dewberry & Davis, LLC 8401 Arlington Boulevard Fairfax, VA 22031 Re: Maintenance Program, Fishers Island Ferry District Terminal New London, CT It is our understanding that the Fishers Island Ferry District (FIFD) of the Town of Southold, New York has applied to FEMA for a Conditional Letter of Map Revision (CLOMR) based on the proposed expansion of the ferry terminal and construction of a new bulkhead. One condition of the approval of the modification is that the Fishers Island Ferry District develop a maintenance program for the bulkhead. The maintenance program is to be overseen by a government agency. The Town of Southold is willing to oversee the maintenance program for the Fishers Island Ferry District (FIFD) terminal. The Town of Southold will review inspection reports and recommendations made by an engineenng hired by the FIFD. Based on these facts, if maintenance and recommendations made by an engineer hired by FIFD, are not carried out, the City of New London will notify FEMA that the necessary maintenance/repairs have not been completed. Sincerely, '~J&r-'" Richard M. Brown City Manager cc: Town of Southold, NY Ocean and Coastal Consultants, Inc. FEMA . DELAFIELD & WOOD LLP PHONE (212) 820-9300 FAX (212) 514-8425 67 WALL STREET NEW YORK, NY 10005 WNW.HAWKINS.COM (212) 820-9416 .~;:-c , ",'~ < ~ '" if'. .. j\ " lv\/'IR \ A 2A?05 I i \_-' Town of South old, New York $3,000,000 Fishers Island Ferry District Serial Bonds-2005 (Our File Designation: 2615/19513) Mr. John A. Cushman, II Comptroller Town of Southold 53095 Main Road Southold, New York 11971 Dear John: ~I\ ~ -;::y 1" ~, March 8, 2005 touJ~ (JM;tL / NEW YORK WASHINGTON NEWARK HARTFORD LOS ANGELES SACRAMENTO SAN FRANCISCO The closing of the above-referenced issue of Bonds took place in our offices today and I enclose herewith two (2) transcripts of proceedings for your records. If you have any questions please do not hesitate to contact me. Thanking you and with kind regards, I remain GF,JL:bf Enclosures Gerard Fernandez, JL 468972.1 019513 CER T . . ~ q)ekjkId &: ft/cuuI Hf/> 67 WALL STREET NEW YORK, NY 10005 WINW.HAWKIN5.COM March 8, 2005 The Town Board of the Town of Southold, in the County of Suffolk, New York Ladies and Gentlemen: We have examined a record of proceedings relating to the sale and issuance of $3,000,000 Fishers Island Ferry District Serial Bonds-2005 (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, the bond resolution duly adopted by the Town Board on July 31, 2001 and amended on October 31, 2003, authorizing the issuance of serial bonds of the Town to finance part of the costs of the construction of a new and expanded ferry terminal on land acquired and owned by the Town for Fishers Island Ferry District purposes, being the site of the existing ferry terminal in the City of New London, Connecticut, including bulkheading, construction of a new ticketing and administration building, installation of utilities, parking area for vehicles and all other necessary facilities and appurtenances thereto, and the Certificate of Determination executed by the Supervisor as of February 10, 2005, determining the terms, form and details of issuance of said $3,000,000 serial bonds and providing for their public sale. The Bonds are dated March 1, 2005, mature on September 1 in the principal amounts in each of the following years, and bear interest at the respective rates per annum payable on September 1, 2005, and semiannually thereafter on March 1 and September 1 in each year to maturity, as set forth below: Year of Principal Interest Year of Principal Interest Maturity Amount Rate Maturity Amount Rate 2005 $150,000 375% 2014 $175,000 3.75% 2006 150,000 3.75 2015 175,000 3.75 2007 150,000 3.75 2016 200,000 3.75 2008 150,000 3.75 2017 200,000 3.75 2009 150,000 3.75 2018 200,000 3.75 2010 175,000 3.75 2019 200,000 3.80 2011 175,000 3.75 2020 200,000 3.80 2012 175,000 3.75 2021 200,000 4.00 2013 175,000 3.75 . . The Bonds maturing on or before September 1, 2014 will not be subject to redemption prior to maturity. The Bonds maturing on or after September 1,2015 will be subject to redemption prior to maturity, at the option of the Town, on September 1, 2014 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) and subject to such notice and other conditions 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 multiples 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 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, the interest on the Bonds is excludable under existing statutes and court decisions, from the gross income of the recipients thereof for federal income tax purposes pursuant to Section 103 ofthe Code, and under existing statutes interest on the Bonds will not be treated as a preference item in calculating the alternative minimum tax that may be imposed under the Code with respect to individuals and corporations. In rendering the foregoing opinion, we have assumed the Town's compliance with the Arbitrage and Use of Proceeds Certificate. Further, in our opinion, under existing statutes the interest on the Bonds is exempt from New York State and New York City personal income taxes. 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. H:1:Iy;;p 1J).1.t.LJ . . ~q)eIaIdd &1Y~Dg> 67 WALL STREET NEW YORK, NY 10005 WWW.HAWKINS.COM March 8, 2005 Financial Security Assurance Inc. 350 Park Avenue New York, New York 10022 To Whom It May Concern: We are bond counsel to the Town of Southold, in the County of Suffolk, New Yark (the "Town"), and are rendering today our final approving opinion with respect to the Town's $3,000,000 Fishers Island Ferry District Serial Bonds-2005, dated March I, 2005. 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. Very truly yours, ~~~1kItL/J REGISTERED $150,000 UNITED STATES OF AMERICA STATE OF NEW YORK COUNTY OF SUFFOLK TOWN OF SOUTHOLD FISHERS ISLAND FERRY DISTRICT SERIAL BOND-2005 MATURITY DATE INTEREST RATE DATE OF ORIGINAL ISSUE CUSIP NUMBER September 1, 2005 3.75% March 1, 2005 844572 HH3 REGISTERED OWNER: CEDE & CO. PRINCIPAL SUM: ONE HUNDRED FIFTY THOUSAND DOLLARS The TOWN OF SOUTHOLD, in the County of Suffolk, a municipal corporation of the State of New York, hereby acknowledges itself indebted and for value received promises to pay to the REGISlERED OWNER named above, or registered assigns, on the MATURITY DATE (stated above), the PRINCIPAL SUM (stated above) upon presentation and surrender of this bond at the office of the Town Clerk, Town of Southold, 53095 Main Road, Southold, New York, as fiscal agent (herein called "Fiscal Agent"), or any successor thereto, and to pay interest on such principal sum from March 1, 2005 o~the most recent interest payment date to which interest has been paid at the INT~ (stated above), payable on September 1, 2005 and semiannually thereafter on d September 1 of each year until maturity. Interest hereon shall be paYable~ er or clearinghouse funds by the Town or its agent on each interest payment date t r Istered owner hereof at his address as it appears on the registration books of the Town ntained 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 fifteenth 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. ;,,@ i" <D.~ ifoo :o~ .ro ~ . . ~ Town of Southold, New York Fishers Island Ferry District Serial Bond-2005 This bond is one of an authorized issue, the aggregate principal amount of which is $3,000,000, the bonds of which are of like tenor, except as to nwnber, 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"), the bond resolution duly adopted by the Town Board on July 31, 2001 and amended on October 21, 2003, authorizing the issuance of serial bonds of the Town to finance part of the costs of the construction of a new and expanded ferry terminal on land acquired and owned by the Town for Fishers Island Ferry District purposes, being the site of the existing ferry terminal in the City of New London, Connecticut, including bulkheading, construction of a new ticketing and administration building, installation of utilities, parking area for vehicles and all other necessary facilities and appurtenances thereto, and the Certificate of Determination executed by the Supervisor as of February 10, 2005, determining the terms, form and details of issuance of said $3,000,000 serial bonds (the "Bonds") and providing for the public sale thereof (the "Certificate of Determination"). The Bonds are issuable in the form of registered bonds without coupons in denominations of $5,000, or any integral multiple thereof. This Bond is transferable or exchangeable, as provided in the Certificate of Determination, only upon the books of the Town kept for that purpose at the office of the Fiscal Agent, by the registered owner hereof in person, or by his attorney duly authorized in writing, upon the surrender of this Bond together with a written instrwnent of transfer or exchange satisfactory to the Fiscal Agent duly executed by the registered owner or his attorney duly authorized in writing, and thereupon a new Bond or Bonds, in the same aggregate principal amount and of the same maturity, shall be issued to the transferee or the registered owner in exchange therefor as provided in the Certificate of Determination and upon the payment of the charges, if any, therein prescribed. The Bonds maturing on or before September I, 2014 will not be subject to redemption prior to maturity. The Bonds maturing on or after September 1,2015 will be subject to redemption prior to maturity, at the option of the Town, on September 1, 2014 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 Town may select the maturities of the Bonds to be redeemed and the amount of each maturity selected, as the Town shall determine to be in the best interest of the Town at the time of such redemption. If less than all of any of the Bonds of any maturity are to be redeemed prior to maturity, the particular Bonds of such maturity to be redeemed shall be selected by the Town by lot in any customary manner of selection as determined by the Supervisor. 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 ~'" =DO> (Q~ 0:00 ;~ m~ . " . ~ ;,,@ i" (j5"ffl ~'" i!'~ $ ~ Hawkins Delafie1d & Wood LLP 67 Wall Street New York, New York 10005 The Town Board of the Town of South old, in the County of Suffolk, New York Ladies and Gentlemen: We have examined a record of proceedings relating to the sale and issuance of $3,000,000 Fishers Island Ferry District Serial Bonds-2005 (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, the bond resolution duly adopted by the Town Board on July 31,2001 and amended on October 31, 2003, authorizing the issuance of serial bonds of the Town to finance part of the costs of the construction of a new and expanded ferry terminal on land acquired and owned by the Town for Fishers Island Ferry District purposes, being the site of the existing ferry terminal in the City of New London, Connecticut, including bulkheading, construction of a new ticketing and administration building, installation of utilities, parking area for vehicles and all other necessary facilities and appurtenances thereto, and the Certificate of Determination executed by the Supervisor as of February 10, 2005, determining the terms, form and details of issuance of said $3,000,000 serial bonds and providing for their public sale. The Bonds are dated March 1, 2005, mature on September I in the principal amounts in each of the following years, and bear interest at the respective rates per annum payable on September I, 2005, and semiannually thereafter on March 1 and September 1 in each year to maturity, as set forth below: Year of Principal Interest Year of Principal Interest Maturity Amount Rate Maturity Amount Rate 2005 $150,000 3.75% 2014 $175,000 3.75% 2006 150,000 3.75 2015 175,000 3.75 2007 150,000 3.75 2016 200,000 3.75 2008 150,000 3.75 2017 200,000 3.75 2009 150,000 3.75 2018 200,000 3.75 2010 175,000 3.75 2019 200,000 3.80 2011 175,000 3.75 2020 200,000 3.80 2012 175,000 3.75 2021 200,000 4.00 2013 175,000 3.75 ~@ :DOl .a-o ~m -'" ;;~ ~ro . ~ ~ The Bonds maturing on or before September 1, 2014 will not be subject to redemption prior to maturity. The Bonds maturing on or after September 1,2015 will be subject to redemption prior to maturity, at the option of the Town, on September 1,2014 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) and subject to such notice and other conditions 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 multiples 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 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, the interest on the Bonds is excludable under existing statutes and court decisions, from the gross income of the recipients thereof for federal income tax purposes pursuant to Section 103 of the Code, and under existing statutes interest on the Bonds will not be treated as a preference item in calculating the alternative minimum tax that may be imposed under the Code with respect to individuals and corporations. In rendering the foregoing opinion, we have assumed the Town's compliance with the Arbitrage and Use of Proceeds Certificate. Further, in our opinion, under existing statutes the interest on the Bonds is exempt from New York State and New York City personal income taxes. ~ . 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 ,,@ :DO> U5.~ ~(/) ,,~ rn~ . " . ~ ~@ i" <S.~ ~~ ,,~ ~N ~ )>@ ~g lrn ,,~ !!iN < . n ,,@ :cO) cC.~ ~" ~~ ~~ ~ ~ UNITED STATES OF AMERICA STATE OF NEW YORK COUNTY OF SUFFOLK TOWN OF SOUTHOLD FISHERS ISLAND FERRY DISTRICT SERIAL BOND-2005 MATURITY DATE INTEREST RATE CUSIP NUMBER DATE OF ORIGINAL ISSUE September 1, 2006 3.75% March 1,2005 844572 HJ9 REGISTERED OWNER: CEDE & CO. PRINCIPAL SUM: ONE HUNDRED FIFTY THOUSAND DOLLARS The TOWN OF SOUTHOLD, in the County of Suffolk, a municipal corporation of the State of New York, hereby acknowledges itself indebted and for value received promises to pay to the REGISTERED OWNER named above, or registered assigns, on the MATURITY DATE (stated above), the PRINCIPAL SUM (stated above) upon presentation and surrender of this bond at the office of the Town Clerk, Town of Southold, 53095 Main Road, Southold, New York, as fiscal agent (herein called "Fiscal Agent"), or any successor thereto, and to pay interest on such principal sum from March I, 2005 or from the most recent interest payment date to which interest has been paid at the INTEREST RATE (stated above), payable on September I, . 2005 and semiannually thereafter on March I and September I of 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 fifteenth 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. ~" :D" <o.~ "V> .~ N UNITED STATES OF AMERICA STATE OF NEW YORK COUNTY OF SUFFOLK TOWN OF SOUTHOLD FISHERS ISLAND FERRY DISTRICT SERIAL BOND-200S MATURITY DATE INTEREST RATE DATE OF ORIGINAL ISSUE CUSIP NUMBER September 1,2007 3.75% March 1, 2005 844572 HK6 CEDE & CO. PRINCIPAL SUM: ONE HUNDRED FIFTY THOUSAND DOLLARS The TOWN OF SOUTHOLD, in the County of Suffolk, a municipal corporation of the State of New York, hereby acknowledges itself indebted and for value received promises to pay to the REGISTERED OWNER named above, or registered assigns, on the MATURITY DATE (stated above), the PRINCIPAL SUM (stated above) upon presentation and surrender of this bond at the office of the Town Clerk, Town of Southold, 53095 Main Road, Southold, New York, as fiscal agent (herein called "Fiscal Agent"), or any successor thereto, and to pay interest on such principal sum from March I, 2005 or from the most recent interest payment date to which interest has been paid at the INTEREST RATE (stated above), payable on September I, 2005 and semiannually thereafter on March I and September I of 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 fifteenth 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. >-@ ~g ~rn ~~ $ ~ UNITED STATES OF AMERICA STATE OF NEW YORK COUNTY OF SUFFOLK TOWN OF SOUTHOLD FISHERS ISLAND FERRY DISTRICT SERIAL BOND-2005 MATURITY DATE September 1, 2008 INTEREST RATE DATE OF ORIGINAL ISSUE CUSIP NUMBER 3.75% March 1, 2005 844572 HL4 REGISTERED OWNER: CEDE & CO. PRINCIPAL SUM: ONE HUNDRED FIFTY THOUSAND DOLLARS The TOWN OF SOUTHOLD, in the County of Suffolk, a munic,ipal corporation of the State of New York, hereby ackoowledges itself indebted and for value received promises to pay to the REGISTERED OWNER named above, or registered assigns, on the MATURITY DATE (stated above), the PRINCIPAL SUM (stated above) upon presentation and surrender of this bond at the office of the Town Clerk, Town of Southold, 53095 Main Road, Southold, New York, as fiscal agent (herein called "Fiscal Agent"), or any successor thereto, and to pay interest on such principal sum from March I, 2005 or from the most recent interest payment date to which interest has been paid at the INTEREST RATE (stated above), payable on September 1, 2005 and semiannually thereafter on March I and September 1 of 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 fifteenth 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. ~@ :DO> ,g'~ "00 ;',\e ON m ~ ~ REGISTERED $150,000 UNITED STATES OF AMERICA STATE OF NEW YORK COUNTY OF SUFFOLK TOWN OF SOUTHOLD FISHERS ISLAND FERRY DISTRICT SERIAL BOND-2005 MATURITY DATE INTEREST RATE CUSIP NUMBER DATE OF ORIGINAL ISSUE September 1, 2009 3.75% March 1, 2005 844572 HM2 REGISTERED OWNER: CEDE & CO. PRINCIPAL SUM: ONE HUNDRED FIFTY THOUSAND DOLLARS The TOWN OF SOUTHOLD, in the County of Suffolk, a municipal corporation of the State of New York, hereby acknowledges itself indebted and for value received promises to pay to the REGISTERED OWNER named above, or registered assigns, on the MATURITY DATE (stated above), the PRINCIPAL SUM (stated above) upon presentation and surrender of this bond at the office of the Town Clerk, Town of Southold, 53095 Main Road, Southold, New York, as fiscal agent (herein called "Fiscal Agent"), or any successor thereto, and to pay interest on such principal sum from March I, 2005 or from the most recent interest payment date to which interest has been paid at the INTEREST RATE (stated above), payable on September 1, 2005 and semiannually thereafter on March I and September I of 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 fifteenth 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 $175,000 UNITED STATES OF AMERICA STATE OF NEW YORK COUNTY OF SUFFOLK TOWN OF SOUTHOLD FISHERS ISLAND FERRY DISTRICT SERIAL BOND-2005 MATURITY DATE INTEREST RATE DATE OF ORIGINAL ISSUE September 1, 2010 3.75% March 1,2005 CUSIP NUMBER 844572 HNO REGISTERED OWNER: CEDE & CO. PRINCIPAL SUM: ONE HUNDRED SEVENTY-FIVE THOUSAND DOLLARS The TOWN OF SOUTHOLD, in the County of Suffolk, a municipal corporation of the State of New York, hereby acknowledges itself indebted and for value received promises to pay to the REGISTERED OWNER named above, or registered assigns, on the MATURITY DATE (stated above), the PRINCIPAL SUM (stated above) upon presentation and surrender of this bond at the office of the Town Clerk, Town of Southold, 53095 Main Road, Southold, New York, as fiscal agent (herein called "Fiscal Agent"), or any successor thereto, and to pay interest on such principal sum from March I, 2005 or from the most recent interest payment date to which interest has been paid at the INTEREST RATE (stated above), payable on September I, 2005 and semiannually thereafter on March I and September I of 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 fifteenth 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. ~@ i" ,o'1i 3:", :;,~ .~ ~ , . ~ REGISTERED $175,000 UNITED STATES OF AMERICA STATE OF NEW YORK COUNTY OF SUFFOLK TOWN OF SOUTHOLD FISHERS ISLAND FERRY DISTRICT SERIAL BOND-2005 MATURITY DATE INTEREST RATE CUSIP NUMBER DATE OF ORIGINAL ISSUE September 1, 2011 3.75% March 1,2005 844572 BPS REGISTERED OWNER: CEDE & CO. PRINCIPAL SUM: ONE HUNDRED SEVENTY-FIVE THOUSAND DOLLARS The TOWN OF SOUTHOLD, in the County of Suffolk, a municipal corporation of the State of New York, hereby acknowledges itself indebted and for value received promises to pay to the REGISTERED OWNER named above, or registered assigns, on the MATURITY DATE (stated above), the PRINCIPAL SUM (stated above) upon presentation and surrender of this bond at the office of the Town Clerk, Town of Southold, 53095 Main Road, Southold, New York, as fiscal agent (herein called "Fiscal Agent"), or any successor thereto, and to pay interest on such principal sum from March 1, 2005 or from the most recent interest payment date to which interest has been paid at the INTEREST RATE (stated above), payable on September 1, 2005 and semiannually thereafter on March 1 and September 1 of 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 fifteenth 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. >@ ~8 1m ~* $ ~ ~ UNITED STATES OF AMERICA STATE OF NEW YORK COUNTY OF SUFFOLK TOWN OF SOUTHOLD FISHERS ISLAND FERRY DISTRICT SERIAL BOND-2005 MATURITY DATE INTEREST RATE CUSIP NUMBER DATE OF ORIGINAL ISSUE September 1, 2012 3.75% March 1, 2005 844572 HQ3 REGISTERED OWNER: CEDE & CO. PRINCIPAL SUM: ONE HUNDRED SEVENTY -FIVE THOUSAND DOLLARS The TOWN OF SOUTHOLD, in the County of Suffolk, a municipal corporation of the State of New York, hereby acknowledges itself indebted and for value received promises to pay to the REGISTERED OWNER named above, or registered assigns, on the MATURITY DATE (stated above), the PRINCIPAL SUM (stated above) upon presentation and surrender of this bond at the office of the Town Clerk, Town of Southold, 53095 Main Road, Southold, New York, as fiscal agent (herein called "Fiscal Agent"), or any successor thereto, and to pay interest on such principal sum from March I, 2005 or from the most recent interest payment date to which interest has been paid at the INTEREST RATE (stated above), payable on September I, 2005 and semiarmually thereafter on March I and September I of 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 fifteenth 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 FISHERS ISLAND FERRY DISTRICT SERIAL BOND-2005 MATURITY DATE INTEREST RATE DATE OF ORIGINAL ISSUE CUSIP NUMBER September 1, 2013 3.75% March 1,2005 844572 HRl REGISTERED OWNER: CEDE & CO. PRINCIPAL SUM: ONE HUNDRED SEVENTY-FIVE THOUSAND DOLLARS The TOWN OF SOUTHOLD, in the County of Suffolk, a municipal corporation of the State of New York, hereby acknowledges itself indebted and for value received promises to pay to the REGISTERED OWNER named above, or registered assigns, on the MATURITY DATE (stated above), the PRINCIPAL SUM (stated above) upon presentation and surrender of this bond at the office of the Town Clerk, Town of Southold, 53095 Main Road, Southold, New York, as fiscal agent (herein called "Fiscal Agent"), or any successor thereto, and to pay interest on such principal sum from March 1, 2005 or from the most recent interest payment date to which interest has been paid at the INTEREST RATE (stated above), payable on September 1, 2005 and semiannually thereafter on March 1 and September 1 of 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 fifteenth 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. "" :no> <c.~ ifw ",Ie ~N . < . ~ UNITED STATES OF AMERICA STATE OF NEW YORK COUNTY OF SUFFOLK TOWN OF SOUTHOLD FISHERS ISLAND FERRY DISTRICT SERIAL BOND-2005 MATURITY DATE INTEREST RATE CUSIP NUMBER DATE OF ORIGINAL ISSUE September 1, 2014 3.75% March 1, 2005 844572 HS9 REGISTERED OWNER: CEDE & CO. PRINCIPAL SUM: ONE HUNDRED SEVENTY-FIVE THOUSAND DOLLARS The TOWN OF SOUTHOLD, in the County of Suffolk, a municipal corporation of the State of New York, hereby acknowledges itself indebted and for value received promises to pay to the REGISTERED OWNER named above, or registered assigns, on the MATURITY DATE (stated above), the PRINCIPAL SUM (stated above) upon presentation and surrender of this bond at the office of the Town Clerk, Town of Southold, 53095 Main Road, Southold, New York, as fiscal agent (herein called "Fiscal Agent"), or any successor thereto, and to pay interest on such principal sum from March I, 2005 or from the most recent interest payment date to which interest has been paid at the INTEREST RATE (stated above), payable on September I, 2005 and semiannually thereafter on March 1 and September I of 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 fifteenth 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. )>@ ;p.@ ~m ,,~ m~ . < . ~ REGISTERED $175,000 UNITED STATES OF AMERICA STATE OF NEW YORK COUNTY OF SUFFOLK TOWN OF SOUTHOLD FISHERS ISLAND FERRY DISTRICT SERIAL BOND-2005 MATURITY DATE INTEREST RATE CUSIP NUMBER DATE OF ORIGINAL ISSUE September 1, 2015 3.75% March 1, 2005 844572 HT7 REGISTERED OWNER: CEDE & CO. PRINCIPAL SUM: ONE HUNDRED SEVENTY-FIVE THOUSAND DOLLARS The TOWN OF SOUTHOLD, in the County of Suffolk, a municipal corporation of the State of New York, hereby acknowledges itself indebted and for value received promises to pay to the REGISTERED OWNER named above, or registered assigns, on the MATURITY DATE (stated above), the PRINCIPAL SUM (stated above) upon presentation and surrender of this bond at the office of the Town Clerk, Town of Southold, 53095 Main Road, Southold, New York, as fiscal agent (herein called "Fiscal Agent"), or any successor thereto, and to pay interest on such principal sum from March 1, 2005 or from the most recent interest payment date to which interest has been paid at the INTEREST RATE (stated above), payable on September 1, 2005 and semiannually thereafter on March 1 and September 1 of 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 fifteenth 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. ,,@ :D" -0 ~rn ;~ mN . " 2. UNITED STATES OF AMERICA STATE OF NEW YORK COUNTY OF SUFFOLK TOWN OF SOUTHOLD FISHERS ISLAND FERRY DISTRICT SERIAL BOND-2005 MATURITY DATE INTEREST RATE CUSIP NUMBER DATE OF ORIGINAL ISSUE September 1, 2016 3.75% March 1, 2005 844572 HU4 REGISTERED OWNER: CEDE & CO. PRINCIPAL SUM: TWO HUNDRED THOUSAND DOLLARS The TOWN OF SOUTHOLD, in the COWlty of Suffolk, a municipal corporation of the State of New York, hereby acknowledges itself indebted and for value received promises to pay to the REGISTERED OWNER named above, or registered assigns, on the MATURITY DATE (stated above), the PRINCIPAL SUM (stated above) upon presentation and surrender of this bond at the office of the Town Clerk, Town of Southold, 53095 Main Road, Southold, New York, as fiscal agent (herein called "Fiscal Agent"), or any successor thereto, and to pay interest on such principal sum from March I, 2005 or from the most recent interest payment date to which interest has been paid at the INTEREST RATE (stated above), payable on September 1, 2005 and semiannually thereafter on March I and September I of each year Wltil 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 fifteenth 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 FISHERS ISLAND FERRY DISTRICT SERIAL BOND-2005 MATURITY DATE INTEREST RATE DATE OF ORIGINAL ISSUE CUSIP NUMBER September 1, 2017 3.75% March 1,2005 844572 HV2 REGISTERED OWNER: CEDE & CO. PRINCIPAL SUM: TWO HUNDRED THOUSAND DOLLARS The TOWN OF SOUTHOLD, in the County of Suffolk, a municipal corporation of the State of New York, hereby acknowledges itself indebted and for value received promises to pay to the REGISTERED OWNER named above, or registered assigns, on the MATURITY DATE (stated above), the PRINCIPAL SUM (stated above) upon presentation and surrender of this bond at the office of the Town Clerk, Town of SouthoId, 53095 Main Road, SouthoId, New York, as fiscal agent (herein called "Fiscal Agent"), or any successor thereto, and to pay interest on such principal sum from March 1, 2005 or from the most recent interest payment date to which interest has been paid at the INTEREST RATE (stated above), payable on September 1, 2005 and semiannually thereafter on March I and September 1 of 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 fifteenth 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. "" :D" lC.~ gr<n "'~ m~ i UNITED STATES OF AMERICA STATE OF NEW YORK COUNTY OF SUFFOLK TOWN OF SOUTHOLD FISHERS ISLAND FERRY DISTRICT SERIAL BOND-2005 MATURITY DATE INTEREST RATE CUSIP NUMBER DATE OF ORIGINAL ISSUE September 1, 2018 3.75% March 1,2005 844572 HWO REGISTERED OWNER: CEDE & CO. PRINCIPAL SUM: TWO HUNDRED THOUSAND DOLLARS The TOWN OF SOUTHOLD, in the COWlty of Suffolk, a municipal corporation of the State of New York, hereby acknowledges itself indebted and for value received promises to pay to the REGISTERED OWNER named above, or registered assigns, on the MATURITY DATE (stated above), the PRINCIPAL SUM (stated above) upon presentation and surrender of this bond at the office of the Town Clerk, Town of Southold, 53095 Main Road, Southold, New York, as fiscal agent (herein called "Fiscal Agent"), or any successor thereto, and to pay interest on such principal sum from March 1, 2005 or from the most recent interest payment date to which interest has been paid at the INTEREST RATE (stated above), payable on September I, 2005 and semiannually thereafter on March 1 and September 1 of each year Wltil 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 fifteenth 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. ~@ ~" <S.~ ~<n ~\e mro . ~ ~ REGISTERED $200,000 UNITED STATES OF AMERICA STATE OF NEW YORK COUNTY OF SUFFOLK TOWN OF SOUTHOLD FISHERS ISLAND FERRY DISTRICT SERIAL BOND-2005 MATURITY DATE INTEREST RATE CUSIP NUMBER DATE OF ORIGINAL ISSUE September 1, 2019 3.80% March 1, 2005 844572 HX8 REGISTERED OWNER: CEDE & CO. PRINCIPAL SUM: TWO HUNDRED THOUSAND DOLLARS The TOWN OF SOUTHOLD, in the County of Suffolk, a municipal corporation of the State of New York, hereby acknowledges itself indebted and for value received promises to pay to the REGISTERED OWNER named above, or registered assigns, on the MATURITY DATE (stated above), the PRINCIPAL SUM (stated above) upon presentation and surrender of this bond at the office of the Town Clerk, Town of Southold, 53095 Main Road, Southold, New York, as fiscal agent (herein called "Fiscal Agent"), or any successor thereto, and to pay interest on such principal sum from March 1, 2005 or from the most recent interest payment date to which interest has been paid at the INTEREST RATE (stated above), payable on September I, 2005 and semiannually thereafter on March 1 and September I of 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 fifteenth 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. ~" p.8 'grn .~ ~~ ~N l REGISTERED $200,000 UNITED STATES OF AMERICA STATE OF NEW YORK COUNTY OF SUFFOLK TOWN OF SOUTHOLD FISHERS ISLAND FERRY DISTRICT SERIAL BOND-2005 MATURITY DATE INTEREST RATE CUSIP NUMBER DATE OF ORIGINAL ISSUE September 1, 2021 4.00% March 1,2005 844572 HZ3 REGISTERED OWNER: CEDE & CO. PRINCIPAL SUM: TWO HUNDRED THOUSAND DOLLARS The TOWN OF SOUTHOLD, in the County of Suffolk, a municipal corporation of the State of New York, hereby acknowledges itself indebted and for value received promises to pay to the REGISTERED OWNER named above, or registered assigns, on the MATURITY DATE (stated above), the PRINCIPAL SUM (stated above) upon presentation and surrender of this bond at the office of the Town Clerk, Town of Southold, 53095 Main Road, Southold, New York, as fiscal agent (herein called "Fiscal Agent"), or any successor thereto, and to pay interest on such principal sum from March I, 2005 or from the most recent interest payment date to which interest has been paid at the INTEREST RATE (stated above), payable on September I, 2005 and semiannually thereafter on March I and September I of 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 fifteenth 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. THE DEPOSITORY TRUST COMPANY. ' 55 Water Street , New York,New York 10041 . SUBJECT TO COUNT Attention: Phone: Telecopy: Underwriting Packaging Department (212) 558-8520 (212)344-1533 AND EXAMINATION SAFEKEEPING AGREEMENT Ref: (Description of issue, number of certificates, number of CUSIPs assigned to issue and $ value of securities) Town of Southold, in the County of Suffolk, New York $3,000,000 Fishers Island Ferry District Serial Bonds-2005, dated March 1,2005, maturing September I, 2005-2021 CUSIP # 844572 HH3-HZ3 (SEVENTEEN CERTIFICATES) $ VALUE $3,000,000 The Depository Trust Company (DTe) acknowledges receipt from Hawkins Delafield & Wood LLP (the trustee, transfer agent, underwriter or other agent of the issuer, hereafter referred to as the "Agent") of possession, custody and control of the above securities for safekeeping. DTC is authorized to hold these securities in safekeeping until DTC is instructed by telephone or in writing by one of the below designated representatives of the Agent either to: (1) deliver the securities by book-entry to the DTC account of the lead underwriter (or to the DTC account of its clearing agent) or (2) return the said securities to the Agent. In the event DTC is instructed to return said securities, DTC shall return the securities to the Agent as soon as practicable, but, in any event, no later than the DTC business day following the day such instruction is received. DTC shall hold the Agent, its officers and employees, harmless from any liability, loss, damage, and reasonable expense of any kind in connection with any loss, damage, theft or destruction of any kind of said securities while they are in the possession, custody or control of DTC, its officers or employees or in the event securities ~e released from the control of DTC without the specific approval of the Agent pursuant to this Safekeeping Agreement. THE AGENT By: By: Title: Title: Date: Date: 3h 1;7R Authorized Representative of Trustee/Agent PRTNTNAME ORGANIZATION PRINT NAME ORGANIZA nON ,.,J;ELEPH<~llE NO. - -.... c:::tr") "'YELE~ NO. S! :z .- ) ~::'":) ::q"LErH<'!/1E NO . r' ....., (:--0. ':'.__1.t;: ('1':: '" ,.-<n Z :;;:'~'i '~tn :;r;O ...:3: '--0 :> :z: ..:" ~ Q CC PRINT NAME ORGANIZA nON DTC accepts authorization of closings on the phone number listed below: (212) 855-3752 (212) 855-3753 (212) 855-3755 (212) 855-3754 470800.1019513 MSC M~-~-~~~~ ~~:~~ ~UU~~V~LI ~ CRU~~ INC, , . TYPE 10 SOURCE HAL CRP pSN CRP OSN DEBIT/ 066622530 llEc FE 01 ** GOC INQUIRY CURRENT 1 OF 1 ** PGFP VS700368 E 05/03/08(067) 10 GI REC ENTER 08:01:49 ALERT CUST REGN 0100 B1QGC08C 000859 RECYCLE 00 AS50C TRN STATUS 80 ROOSEVELT , CROSS IHC ONe: txCIlANGt PLAZA S5 BROADWAY 22NO ,Looa NEW YORR NY 10007- DR VAL DAn ' Oil AnV CR V~L DATE 08 MAR 05 FONDS 5 ORG DATE: oe * * NONE .. caCH CBl\M MAR 05 OIlG TRN MAIL OF 05/03/08 AMOUNT ~,,9~i.j,ll;ii,1.:I: ORI3 zW'~ ~ oaD aK catoI'l' IIlRi\4t4,lfljU4' OR PAY FE 01 * * NON E.. surFOLK RIVERKEAO surFOLK COUNTY NATIONAL BANK RIVERKEAO NY 11901- BN RRN MAIL OF 05/03/08 TP AnV i\CCNT ,!ilI-"' ,PARTY CR AnV BNTYf N caCH CBAM CMCR CMAtoI TIO SOOTilOLD NY ULT BENE DETAIL SOUTKOLD NY PAYMT ~NK/ ITIME/09:09 B~NK PRIOlUTY MESSAGE NEXT SEO ACTION C'I'S PRE APPROVE 0 PHONED INVjt ERR TEXT PROCESS DATE 2005/067 10 DATE INFO PRtSS PF6 '1'0 ~TURN b .. I,AA0910Lsl> 'ON/EllOt '.LS/vl '(it so ,8 'E (;lO.L) t-'.~~ ~, /1' " , '. " "r ;':, " '.. \'" " , . , (, . . I. .~ , " 'i'.' /I".' . 1 '. ~ I" :' ", I .: ;. ,:.l. i.:,' ;'~~ .:' " .', . ~I' ' , .. . 1'- " 'f\' 1(0114 f'lnr;. uu c;,UU.... UJoc;,c;, ~UU.;:J~V~L.. I Oc l,../";'U.;:J.;:J .Ll'tl,... , . SHar05 09:12:11 0100 .. GDC INQUIRY CURRENT 1 OF 1.* pGrp VS700368 TYPE 10 TaN SEQ 0000500 0 TE 05/03/0B(067) 10 GI REC E~TER 08:02:58 SOURCE MAL SITE llRKL ALERT CUST REGN 0100 CHI' PSN INPUT KEY ~08 81 GCOIC 000065 RECYCLE 00 ASSOC TRN CHP QSN RE~ I ~EY ~ STATUS 80 DEBIT/ REC FE 01 066622530 t. NONE .. , ' ROOSEVELT , CROSS INC ONE EXCHMGE PLAZA 55 BROADWAY 221'10 FLOOR NEW YORK ~y 10007- DR AD" CBCH FUNDS S CBAM ORG DATE 08 NAR 05 OR VAL DATE CR VAL DATE OB MAR 05 ORG TaN MAIL OF 05/03/08 AMOU~T 11,300.00 ORD C~ ORD BI< CREDIT ABA/021000018 OR PAY FE 01 .. NON E *. BN RRN ~IL OF 05/03/08 TP ADV ACCNT ACC 8900297263 &ARTY CR ADV BNTYP N ULT BENE DETAIL SOUTHOLD NY I>AYMT BANK/ BA~K ' PRIORITY MESSAGE NEXT SEQ ACTION CTS fiRE APPROVE 0 I D DATE INtO 9K OF NYC BANK OF NEW 'lORK NEW YORK NY 10005-2901 eaCH CBAM CMcH CWlM FSA AC SOUTHOLD NY PHONED INvt ERR TEXT PROCESS DATE 2005/067 PRESS PFB TO RETURN " . "..oqtOLS~ 'oN/'tIOI'~S/.t'OI so ,s '. (:mJ,) r.~~ 4. " " . >, ;'.. : "~: \ " ,~:: , '*.; ~f' >,' I, ':1 " ,~ , *"., .. , .. 'S":" '" '.' ,,' I ".',HI.'" , "I ~,.'v Nolli ., . . . SUPERVISOR'S CERTIFICATE OF AWARD I, JOSHUA Y HORTON, Supervisor of the Town of Southold, in the County of Suffolk, New York (the "Town"), HEREBY CERTIFY AND REPORT AS FOLLOWS 1. On February 23, 2005, at 11:00 AM. (Prevailing Time), bids were received at the Offices of Munistat Services, Inc., 12 Roosevelt Avenue, Port Jefferson, New York. 2. At that time and place, three (3) sealed bids were received for the purchase of $3,000,000 Fishers Island Ferry District Serial Bonds-200S 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 February 10, 2005, 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 or financial surety bond 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 $3,000,000.00 plus accrued 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 468972.1019513 CERT , . . Gross Interest $1,026,562.50 0.00 Less the Amount of the Premium Bid Above Par Net Interest Cost $1,026,562.50 Effective Net Interest Rate 3.79155% 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 each of the years 2005 to 2018, inclusive..................... Bonds maturing in the years 2019 and 2020 ................................... ............. Bonds maturing in the year 2021... ................... .... .......................... 3.75% 3.80% 400% such rates of interest being the rates necessary for the Town to sell said Bonds. 6. I thereupon returned or caused to be returned to said other bidder or bidders the good faith check or checks, if any, received with the other sealed bid or 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 23rd day of February, 2005. 0f t"ri Supervisor 468972.1019513 CERT . . 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 March 8, 2005. 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 corporate seal of said Town, this tI- day of February, 2005. (SEAL) ~o~ Town Cler 468972.1019513 CERT . . 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 the Securities within the meaning of Rule 13d-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 15B(b)(I) 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 15c2-12" 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 $3,000,000 Fishers Island Ferry District Serial Bonds-2005, dated March I, 2005, maturing in various principal amounts on September I in each of the years 2005 to 2021, 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, commencing with the fiscal year ending December 31,2005, 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 468972.1019513 CERT . . 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; (11) rating changes; and (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. 468972.1019513 CERT . . (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 of the Town," "Discussion of Financial Matters," "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 of the 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. 468972.1019513 CERT . . 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 ofthe following purposes: (a) to comply with or conform to any changes III 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 15c2-12. 468972.1019513 CERT . . 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 March 8,2005. TOWN OF SOUTHOLD By o Supervisor and Chief Fiscal Officer 468972.1019513 CERT ;' . . 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 $3,000,000 Fishers Island Ferry District Serial Bonds-200S (the "Bonds"), dated March I, 2005, 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 468972.1019513 CERT . . 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 8th day of March, 2005. (SEAL) (; SIGNATURE 0/: ~ (IV" / ~'~a:Q 0 t({~/h OFFICIAL TITLE TERM OF OFFICE EXPIRES , Supervisor December 31, 2005 Town Clerk December 31, 2005 I HEREBY CERTIFY that the signature of the officers of the above-named Town, which appear above, are true and genuine and that I know said off~cers a~d k~ow them to hold the respective offices set Opposlte thelr slgnatures. (!/l~tJ-g/~ !14!.it ~ . fIfj1. (SignatCre) (Title) of NOr+h fi;v/t.. /3uJ-/C (Name of Bank) 468972.1019513 CERT . . ATTORNEY'S CERTIFICATE I, Patricia A. 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 $3,000,000 Fishers Island Ferry District Serial Bonds-2005, 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", 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 of taxes 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, March, 2005. 468972.1019513 CERT J . . CERTIFICATE OF DELIVERY AND PAYMENT I, JOSHUA Y HORTON, the duly chosen, qualified and acting Supervisor of the Issuer hereinafter named, HEREBY CERTIFY that on the 8th day of March, 2005, I delivered or caused to be delivered to Roosevelt & Cross, Inc. and Associates, New York, New York, the purchaser thereof, $3,000,000 aggregate principal amount of Fishers Island Ferry District Serial Bonds-2005 (the "Bonds") 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", 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 $ 60,000.00 Received at time of such delivery......... 2.942.201 I 1 $3,002,20 I.I 1 Total amount received being full payment for said Bonds in accordance with the contract of sale thereof, computed as follows: Contract Price. ................ .......... ................ .............. Interest on said Bonds accrued to the date of delivery..... ............ $3,000,000.00 2.201.1 I $3,002,201.1 I Total... 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. March, 2005. IN WITNESS WHEREOF, I have hereunto set my hand as of the 8th day of 468972.1 019513 CERT . . 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 February 10, 2005 and to be delivered thereunder in the aggregate principal amount of$3,000,000. Number of Issues: 1 Amount and Title: $3,000,000 Fishers Island Ferry District Serial Bonds-2005 Dated: March 1, 2005 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 of the Town Clerk, Town of Southold, 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 fifteenth day of the month preceding each such interest payment date. Maturities, Interest Rates and Payment Dates: Mature on September 1 in the principal amounts in each of the following years and bear interest at the respective rates per annum, payable September 1, 2005, and semiannually thereafter on March 1 and September 1 in each year to maturity as set forth below: 468972.1019513 CERT . . . . Year of Principal Interest Year of Principal Interest Maturity Amount Rate Maturitv Amount Rate 2005 $150,000 3.75% 2014 $175,000 3.75% 2006 150,000 3.75 2015 175,000 3.75 2007 150,000 3.75 2016 200,000 3.75 2008 150,000 3.75 2017 200,000 3.75 2009 150,000 3.75 2018 200,000 3.75 2010 175,000 3.75 2019 200,000 3.80 2011 175,000 3.75 2020 200,000 3.80 2012 175,000 3.75 2021 200,000 4.00 2013 175,000 3.75 The Bonds maturing on or before September 1, 2014 will not be subject to redemption prior to maturity. The Bonds maturing on or after September 1, 2015 will be subject to redemption prior to maturity, at the option of the Town, on September 1,2014 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 Town may select the maturities of the Bonds to be redeemed and the amount of each maturity selected, as the Town shall determine to be in the best interest of the Town at the time of such redemption. If less than all of any of the Bonds of any maturity are to be redeemed prior to maturity, the particular Bonds of such maturity to be redeemed shall be selected by the Town by lot in any customary manner of selection as determined by the Supervisor. 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. 468972.1019513 CERT . . ARBITRAGE AND USE OF PROCEEDS CERTIFICATE I, JOSHUA Y. HORTON, Supervisor of the Town of Southold (the "Issuer"), in the County of Suffolk, New York, HEREBY CERTIFY with respect to the Issuer's $3,000,000 aggregate principal amount Fishers Island Ferry District Serial Bonds-2005 (the "Bonds"), dated March 1,2005, 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 Section I. I. Authoritv of Signatory. 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"). Section 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. Section 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 connection 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. Section 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. Section 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. 468972.1019513 CERT . . Section 1.6. No Composite Issue. No other tax-exempt governmental obligations have been sold fewer than IS days prior to, or will be sold fewer than IS 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 Section 1.7. Registration. The Bonds will be issued in registered form. Section 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 51l(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. Section 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. Section 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. Section 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. Section 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 468972.1019513 CERT . . ARTICLE II Use of Project and Proceeds Section 2.1. Authorization. The Bonds are authorized to be issued pursuant to applicable provisions of the laws of the State of New York and the bond resolution duly adopted by the Town Board on July 31, 2001 and amended on October 21, 2003 (the "Resolution"), as referred to in the Certificate of Determination executed by the Supervisor as of February 10, 2005 (the "Certificate"). Section 2.2. Purpose of Issue. The proceeds from the sale of the Bonds will be used to finance part of the costs of the construction of a new and expanded ferry terminal on land acquired and owned by the Town for Fishers Island Ferry District purposes, being the site of the existing ferry terminal, in the City of New London, Connecticut, including bulkheading, construction of a new ticketing and administration building, installation of utilities, parking area for vehicles and all other necessary facilities and appurtenances thereto ("the Project"), as further described in the Resolution. 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. Section 2.3. Use of Proceeds. The proceeds of the Bonds will be used to redeem outstanding bond anticipation notes currently outstanding in the principal amount of$3,000,000. Section 2.4. Ownership/Lease/Sale. The Project will be owned by the Issuer and will not be leased to any person who is not a state or local governmental 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. Section 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 governmental unit. Section 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 I 0% of such proceeds in the event that more than I 0% 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. Section 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 468972.1019513 CERT . . meets this test. For 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. Section 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. 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. Section 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. SI.150-2, if prior to or within 60 days after the date of such expenditure (except for certain preliminary expenditures described in Treas. Reg. SI.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 I.l50-1 (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 Section 3.1. Temporary Period-Refunding. With respect to the proceeds of the Current Refunding Bonds allocable to the Prior Issue: 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. 468972.] 019513 CERT . . 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. (a) 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. (b) Source of Repayment Funds. The Bonds will be paid from taxes and the proceeds of other obligations of the Issuer. (c) 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 I3 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. (d) 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. (e) 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 governmental 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 of the 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. (i) amounts allocable to Replacement Proceeds, (ii) amounts allocable to Transferred Proceeds, 468972.1019513 CERT . . (iii) 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 of re-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 of a 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 Section 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. Section 4.2. Rebate Requirement for the Bonds. Section 148(t) 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 of receipt, 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 (t) of this Section, the Issuer will determine the Rebate 468972.1019513 CERT . . 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. (iii) 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. 468972.1019513 CERT . . 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. (iv) Exception for Gross Proceeds Entirely 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. (v) Exception for Gross Proceeds Entirely 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 468972.1019513 CERT . . 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. (vi) $100,000 Debt Service Fund Gross Earnings Exceotion. 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. (vii) Debt Service Fund Excevtion. 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. Section 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. Section 4.4. Recordkeeping. In connection with rebate requirement the Issuer will maintain the following records: 468972.1019513 CERT . . (i) 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. (ii) The Issuer will record all amounts paid to the United States pursuant to Section 4.3. Section 45. 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. ARTICLE V Bank Qualification Section 5.1. Designation. The Bonds are hereby designated as "qualified tax- exempt obligations" pursuant to the provisions of Section 265 of the Code. In making such designation it has been determined with respect to the Bonds 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 WITNESS WHEREOF, I have hereunto set my hand and affixed the corporate seal of the Town of South old as of the 8th day of March, 2005. (SEAL) 468972.1019513 CERT . . Exhibit A Definitions (This exhibit includes definitions of certain terms which may not be used In 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 carry over 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 fifteenth day within one year of the issue date of the Bonds. "Bonds" means the $3,000,000 Fishers Island Ferry District Serial Bonds-200S. "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. "Compntation 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. 468972.1019513CERT . . "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. "Constru~tion 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 of a United States Treasury Obligation that is purchased directly from the United States Treasury is its purchase price. (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 468972.1019513 CERT . . (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 ofbroker'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 of the 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 of the 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 468972.1019513 CERT . . 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 fifteenth day of the fifth Bond Year and the fifteenth day of each succeeding fifth Bond Year (until and excluding the Final Computation Date) and, if the Issuer so elects, the fifteenth 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 1. 148-9(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 original 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. 468972.1.019513 CERT . . "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 annually, and (iv) has a lowest stated redemption price not less than its outstanding stated principal amount. formula: "Present Value" or "PV" means the amount determined by using the following PV= FV n (Hi) 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 10 the Resolutions, which IS being financed by the Bonds. "Qualified 501(c)(3) Bonds" means bonds which meet the definition contained in Section 145 of the 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 468972.1019513 CERT . . 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) Purpose 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 ifit contains any significant investment element (ie., an expected return) 468972.1 019513 CERT . . "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 of the 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 of the 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. 2.1 hereof. "Resolution" means the bond resolution of the Issuer, as referred to in paragraph "Restricted Working Capital Expenditures" means working capital expenditures subject to the Gross-Proceeds-spent-Iast rule in Treas. Reg. Section 1148-6(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). Series. "SLG" means a U.S. Treasury Book Entry Security, State and Local Government "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 ofa 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 of the 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. 468972.1019513 CERT . . "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 anniversary 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 bond 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 118 of I % above its Yield 468972.1019513 CERT . . 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 1% 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. 468972.1019513 CERT . . SUPPLEMENTAL GENERAL CERTIFICATE OF THE TOWN CLERK I, ELIZABETH A. NEVILLE, Town Clerk of the Town of Southold, in the County of Suffolk, State of New York, HEREBY CERTIFY as follows: 1. That the names of the members of the Town Board and of the officers of the Town, the dates of their election or appointment and the dates of commencement and expiration of their terms of office for the official year commencing January 1, 2005 and ending December 31,2005 are as follows: Name and Office Date of Commencement of Term Date of End of Term Supervisor: Joshua Y. Horton January 1, 2004 December 31, 2005 Members ofthe Town Board: William P Edwards January 1, 2004 December 31, 2007 Louisa P. Evans January 1, 2002 December 31, 2005 John M. Romanelli January 1, 2002 December 31, 2005 Daniel C. Ross January 1, 2004 December 31, 2007 Thomas H. Wickman January 1, 2002 December 31, 2005 Town Clerk: Elizabeth A. Neville January 1, 2002 December 31, 2005 Town Attornev: Patricia A. Finnegan, Esq. January 1, 2004 December 31, 2005 468972.1019513 CERT . . All of the foregoing officers filed their oaths of office with the undersigned Town Clerk and such of them as were required to file or give bonds or official undertakings, filed or gave such bonds or official undertakings in form and sum approved by the Town Board and all of such members of the Town Board and officers are legally eligible and are otherwise duly qualified as such and are the acting members of the Town Board and officers of the Town. 2. The seal impressed upon this Certificate is the duly adopted and only official corporate seal of the Town. IN WITNESS WHEREOF, I have hereunto set my hand and affixed the corporate seal of said Town as of the 8th day of March, 2005. (SEAL) ~hdfoOQ4,di, own Clef 2 468972.1019513 CERT . . . .... FINANCIAL I~~ SECURITY ...! ASSURANCE@ MUNICIPAL BOND INSURANCE POLICY ISSUER: Town of Southold, Suffolk County, New York BONDS: $3,000,000 in aggregate principal amount of Fishers Island Ferry District Serial Bonds - 2005 Policy No.: 204316-N Effective Date: March 8, 2005 Premium: $11,300.00 FINANCIAL SECURITY ASSURANCE INC. ("Financial Security"), for consideration received, hereby UNCONDITIONALLY AND IRREVOCABLY agrees to pay to the trustee (the "Trustee") or paying agent (the "Paying Agent") (as set forth in the documentation providing for the issuance of and securing the Bonds) for the Bonds, for the benefit of the Owners or, at the election of Financial Security, directly to each Owner, subject only to the terms of this Policy (which includes each endorsement hereto), that portion of the principal of and interest on the Bonds that shall become Due for Payment but shall be unpaid by reason of Nonpayment by the Issuer. On the later of the day on which such principal and interest becomes Due for Payment or the Business Day next following the Business Dayan which Financial Security shall have received Notice of Nonpayment, Financial Security will disburse to or for the benefit of each Owner of a Bond the face amount of principal of and interest on the Bond that is then Due for Payment but is then unpaid by reason of Nonpayment by the Issuer, but only upon receipt by Financial Security, in a form reasonably satisfactory to it, of (a) evidence of the Owner's right to receive payment of the principal or interest then Due for Payment and (b) evidence, including any appropriate instruments of assignment, that all of the Owner's rights with respect to payment of such principal or interest that is Due for Payment shall thereupon vest in Financial Security. A Notice of Nonpayment will be deemed received on a given Business Day if it is received prior to 1 :00 p.m. (New York time) on such Business Day; otherwise, it will be deemed received on the next Business Day_ If any Notice of Nonpayment received by Financial Security is incomplete, it shall be deemed not to have been received by Financial Security for purposes of the preceding sentence and Financial Security shall promptly so advise the Trustee, Paying Agent or Owner, as appropriate, who may submit an amended Notice of Nonpayment. Upon disbursement in respect of a Bond, Financial Security shall become the owner of the Bond, any appurtenant coupon to the Bond or right to receipt of payment of principal of or inlerest on the Bond and shall be fully subrogated to the rights of the Owner, including the Owner's right to receive payments under the Bond, to the extent of any payment by Financial Security hereunder. Payment by Financial Security to the Trustee or Paying Agent for the benefit of the Owners shall, to the extenf thereof, discharge the obligation of Financial Security under this Policy. Except to the extent expressly modified by an endorsement hereto, the following terms shall have the meanings specified for all purposes of this Policy. "Business Day" means any day other than (a) a Saturday or Sunday or (b) a day on which banking institutions in the State of New York or the Insurer's Fiscal Agent are authorized or required by law or executive order to remain closed. "Due for Payment" means (a) when referring to the principal of a Bond, payable on the stated maturity date thereof or the date on which the same shall have been duly called for mandatory sinking fund redemption and does not refer to any earlier date on which payment is due by reason of call for redemption (other than by mandatory sinking fund redemption), acceleration or other advancement of maturity unless Financial Security shall elect, in its sole discretion, to pay such principal due upon such acceleration together with any accrued interest to the date of acceleration and (b) when referring to interest on a Bond, payable on the stated date for payment of interest. "Nonpayment" means, in respect of a Bond, the failure of the Issuer to have provided sufficient funds to the Trustee or, if there is no Trustee, to the Paying Agent for payment in full of all principal and interest that is Due for Payment on such Bond. "Nonpayment" shall also include, in respect of a Bond, any payment of principai or interest that is Due for Payment made to an Owner by or on behalf of the Issuer which has been recovered from such Owner pursuant to the . . Page 2 of 2 Policy No. 204316-N United States Bankruptcy Code by a trustee in bankruptcy in accordance with a tinal, nonappealable order of a court having competent jurisdiction. "Notice" mean,s telephonic or telecopied notice, subsequently confirmed in a signed writing, or written notice by registered or certified mail, from an Owner, the Trustee or the Paying Agent to Financial Security which notice shall specify (a) the person or entity making the claim, (b) the Policy Number, (c) the claimed amount and (d) the date such claimed amount became Due for Payment. "Owner" means, in respect of a Bond, the person or entity who, at the time of Nonpayment, is entitled under the terms of such Bond to payment thereof, except that "Owner" shall nof include the Issuer or any person or entity whose direct or indirect obligation constitutes the underlying security for the Bonds. Financial Security may appoint a fiscal agent (the "Insurer's Fiscal Agent") for purposes of this Policy by giving written notice to the Trustee and .the Paying Agent specifying the name. and notice address of the Insurer's Fiscal Agent. From and after the date of receipt of such notice by the Trustee and the Paying Agent, (a) copies of all notices required to be delivered to Financial Security pursuant to this Policy shall be simultaneously delivered to the Insurer's Fiscal Agent and to Financial Security and shall not be deemed received until received by both and (b) all payments required to be made by Fin.ancial Security unoer this Policy may ba made directly by Financial Security or by the Insurer's Fiscal Agent on behalf of Financial Security. The Insurer's Fiscal Agent is the agent of Financial Security only and the Insurer's Fiscal Agent shall in no event be liable to any Owner for any act of the Insurer's Fiscal Agent or.. any failure of Financial Security to deposit or cause to be deposited sufficient funds to make payments due under this Policy. To the fullest extent permitted by applicable law, Financial Security agrees not to assert, and hereby waives, only for the benefit of each Owner, all rights (whether by counterclaim, setoff or otherwise) and defenses (including, withouf limitation, the defense of fraud), whether acquired by subrogation, assignment or otherwise, to the extent that such rights and defenses may be available to Financial Security to avoid payment of its obligations under this Policy in accordance with the express provisions of this Policy. This Policy sets forth in full the undertaking of Financial Security, and shall not be modified, altered or affectad by any other agreement or instrument, including any modification or amenoment thereto. Except to the extent expressly modified by an endorsement hereto, (a) any premium paid in respect of this Policy is nonrefundable for any reason whatsoever, including payment, or provision being made for payment, of the Bonds prior to maturity and (b) this Policy may not be canceled or revoked. THIS POLICY IS NOT COVERED BY THE PROPERTY/CASUALTY INSURANCE SECURITY FUND SPECIFIED IN ARTICLE 76 OF THE NEW YORK INSURANCE LAW. In witness whereof, FINANCIAL SECURITY ASSURANCE INC. has caused this Policy to be executed on its behalf by its Authorized Officer. A subsidiary of Financial Security Assurance Holdings Ltd. 350 Park Avenue, New York, N.Y. 10022-6022 (212) 826-0100 Form 500NY (5/90) 1~~FSA . . A Dexia Company March 8, 2005 Municipal Bond Insurance Policv No. 204316-N With Respect to $3.000.000 In Aaoreaate Principal Amount of Town of Southold. Suffolk Countv. New York Fishers Island Ferry District Serial Bonds - 2005 Ladies and Gentlemen: I am Associate General Counsel of Financial Security Assurance Inc., a New York stock insurance company ("Financial Security"). You have requested my opinion in such capacity as to the matters set forth below in connection with the issuance by Financial Security of its above-referenced policy (the "Policy"). In that regard, and for purposes of this opinion, I have examined such corporate records, documents and proceedings as I have deemed necessary and appropriate. Based upon the foregoing, I am of the opinion that: 1. Financial Security is a stock insurance company duly organized and validly existing under the laws of the State of New York and authorized to transact financial guaranty insurance business therein. 2. The Policy has been duly authorized, executed and delivered by Financial Security. 3. The Policy constitutes the valid and binding obligation of Financial Security, enforceable in accordance with its terms, subject, as to the enforcement of remedies, to bankruptcy, insolvency, reorganization, rehabilitation, moratorium and other similar laws affecting the enforceability of creditors' rights generally applicable in the event of the bankruptcy or insolvency of Financial Security and to the application of general principles of equity. In addition, please be advised that I have reviewed the description of the Policy contained in Appendix C under the caption "BOND INSURANCE - Bond Insurance Policy" in the official statement relating to the above- referenced Bonds dated February 23, 2005 (the "Official Statement"). There has not come to my attention any information which would cause me to believe that the description of the Policy referred to above, as of the date of the Official Statement or as of the date of this opinion, contains any untrue statement of a material fact or omits to state a material fact necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading. Please be advised that I express no opinion with respect to any information contained in, referred to or omitted from under the caption "BOND INSURANCE - Financial Security Assurance Inc." I am a member of the Bar of the State of New York, and do not express any opinion as to any law other than the laws of the State of New York. Very truly yours, [S~ Associate General Counsel Town of South old, 53095 Main Road, Southold, New York 11971. Roosevelt & Cross, Inc. and Associates, One Exchange Plaza, 22nd Floor, New York, New York 10006. Financial Security Assurance 350 Park Avenue. New York, New York 10022 . Tel: 212.826.0100. Fax: 212.688,3101 New York. Dallas. San Francisco. London. Madrid. Paris. Singapore. Sydney. Tokyo . . DISCLOSURE, NO DEFAULT AND TAX CERTIFICATE OF FINANCIAL SECURITY ASSURANCE INC. The undersigned hereby certifies on behalf of Financial Security Assurance Inc. ("Financial Security"), in connection with the issuance by Financial Security of its Policy No. 204316-N (the "Policy") in respect of the $3,000,000 in aggregate principal amount of Town of Southold, Suffolk County, New York Fishers Island Ferry District Serial Bonds - 2005 (the "Bonds") that: (i) the information contained in Appendix C set forth under the caption "BOND INSURANCE - Financial Security Assurance Inc." in the official statement dated February 23, 2005, relating to the Bonds is true and correct, (ii) Financial Security is not currently in default nor has Financial Security ever been in default under any policy or obligation guaranteeing the payment of principal of or interest on an obligation, (iii) the Policy is an unconditional and recourse obligation of Financial Security (enforceable by or on behalf of the holders of the Bonds) to pay the scheduled principal of and interest on the Bonds in the event of Nonpayment by the Issuer (as set forth in the Policy), (iv) the insurance premium of $11,300.00 (the "Premium") is a charge for the transfer of credit risk and was determined in arm's length negotiations and is required to be paid to Financial Security as a condition to the issuance of the Policy, (v) no portion of such Premium represents an indirect payment of costs of issuance, including rating agency fees, other than fees paid by Financial Security to maintain its ratings, which, together with all other overhead expenses of Financial Security, are taken into account in the formulation of its rate structure, or for the provision of additional services by us, nor the direct or indirect payment for a cost, risk or other element that is not customarily borne by insurers of tax-exempt bonds (in transactions in which the guarantor has no involvement other than as a guarantor), (vi) Financial Security is not providing any services in connection with the Bonds other than providing the Policy, and except for the Premium, Financial Security will not use any portion of the Bond proceeds, (vii) except for payments under the Policy in the case of Nonpayment by the Issuer, there is no obligation to pay any amount of principal or interest on the Bonds by Financial Security, (viii) Financial Security does not expect that a claim will be made on the Policy, (ix) the Issuer is not entitled to a refund of the premium for the Policy in the event a Bond is retired before the final maturity date, and (x) for Bonds which are secured by a debt service reserve, Financial Security would not have issued the Policy unless the authorizing or security agreement for the Bonds provided for a debt service reserve account or fund funded and maintained in an amount at least equal to, as of any particular date of computation, the reserve requirement as set forth in such agreement. Financial Security makes no representation as to the nature of the interest to be paid on the Bonds or the treatment of the Policy under Section 1.148-4(f) of the Income Tax Regulations. FINANCIAL SECURITY ASSURANCE INC. L/~ By: Authorized Officer Dated: March 8, 2005 . . .,~,::.,:~,. ~i~;.;: Moody's Investors Service 99 Church Street New York, NY March 8, 2005 Financial Security Assurance Inc 350 Park Avenue New York, NY 10022 To Whom It May Concern: Moody's Investors Service has assigned the rating of Aaa (Financial Security Assurance Inc Insured - Policy No. 204316-N) to the $3,000,000.00, Town of Southold, Suffolk County, New York - Fishers Island Ferry District Serial Bonds - 2005, dated March 1, 2005 which sold on February 23, 2005. The rating is based upon an insurance policy provided by Financial Security Assurance Inc. Should you have any questions regarding the above, please do not hesitate to contact the assigned analyst, Margaret Kessler at (212) 553-7884. Sincerely yours, ~X~ Margaret L. Kessler Vice President/Senior Analyst MLK I NM TOWN COMPTROLLER John A. Cushman . CENTRAL DATA PROCESSING John Sepenoski 53095 Main Road P.O. Box 1179 Southold, New York 11971-0959 TOWN OF SOUTHOLD OFFICE OF THE SUPERVISOR To: Betty Neville - --- From: John Cushman ~'/J(/y Date: May 5, 1999 Re: !/ Fishers Island Ferry District Serial Bonds -- 1977 Series . ACCOUNTING & FINANCE DEPT. Telephone (516) 765-4333 E-mail: accounting@southold.org CENTRAL DATA PROCESSING Telephone (516) 765-1891 E-mail: dataprocessing@southold.org Fax (516) 765-1366 Enclosed is our file relating to the above referenced Serial Bonds. These bonds were paid off in August, 1997. These records can be held with your records for the same issue. No.R-1 $725,000 UNITED STATES OF AMERICA STATE OF NEW YORK COUNTY OF SUFFOLK TOWN OF SOUTHOLD BOND ANTICIPATION NOTE FOR FISHERS ISLAND FERRY DISTRlCT-2005 The Town of Southold, in the County of Suffolk, a municipal corporation of the State of New York, hereby acknowledges itself indebted and for value received promises to pay to the bearer of this Note or, ifit be registered, to the registered holder, the sum of SEVENTY HUNDRED TWENTY-FIVE THOUSAND DOLLARS ($725,000) on the 10th day of June, 2005, together with interest thereon from the date hereof at the rate of two per centum (2.00%) per annum, payable at maturity, unless redeemed prior to maturity as herein provided. Both principal of and interest on this Note will be paid in lawful money oflhe United States of America, at Bridgehampton National Bank, South old, New York. At the request of the holder, the Town Clerk shall convert this Note into a registered Note by registering it in the name of the holder in the books of the Town kept in the office of such Town Clerk and endorsing a certificate of such registration hereon, after which both principal of and interest on this Note shaJl be payable only to the registered holder, his legal representatives, successors or transferees. This Note shall then be transferable only upon presentation to such Town Clerk with a written transfer of title and such Town Clerk shall thereupon register this Note in the name of the transferee in his books and shall endorse a certificate of such registration hereon. Such transfer shall be dated, and signed by the registered holder, or his legal representatives, and it shall be duly acknowledged or proved, or in the alternative the signature thereto shall be certified as to its genuineness by an officer of a bank or trust company located and authorized to do business in this State. This Note is one of an authorized renewal issue, the principal amount of which is $725,000. This Note may be called for redemption, after the giving of at least five (5) days' written notice of the date of redemption by mailing of written notice to the original purchaser, or if this Note be registered to the registered holder, and interest shall cease to be paid hereon after such date of redemption. This Note is issued pursuant to the provisions of the Local Finance Law, constituting Chapter 33-a ofthe Consolidated Laws of the State of New York, the bond resolution adopted by the Town Board on July 31, 2001 and amended on October 21, 2003, authorizing the issuance of $4,800,000 serial bonds for the increase and improvement of the facilities of the Fishers Island Ferry District, in said Town, and the Certificate of Determination executed by the Supervisor on March 10, 2005. This Note has been designated by the Town as a qualified tax~exempt obligation pursuant to the provisions of Section 265 of the Internal Revenue Code of 1986, as amended. The faith and credit of such Town are hereby irrevocably pledged for the punctual payment of the principal of and interest on this Note according to its terms. It is hereby certified and recited that all conditions, acts and things required by the Constitution and statutes of the State of New York to exist, to have happened and to have been performed precedent to and in the issuanceofthis Note, exist, have happened and have been performed, and that this Note, together with all other indebtedness of such Town, is within every debt and other limit prescribed by the Constitution and laws of such State. IN WITNESS WHEREOF, the Town of Southold has caused this Note to be executed in its name by its Supervisor, and its corporate seal (or a facsimile thereof) to be affixed, imprinted, impressed or otherwise reproduced hereon and attested by its Town Clerk and this Note to be dated as of the 10th day of March, 2005. (SEAL) ATTEST: ~:'~N-l{) R,,~/h. T wn Clerk . . 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 $725,000 Bond Anticipation Note for Fishers Island Ferry District- 2005, (herein referred to as the "Note" or "Notes"), dated and issued on March 10, 2005, as follows: Unless the context clearly 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 charged with the responsibility for the execution, delivery, and issuance of the Notes and am acting for and on behalf ofthe Issuer in signing this Arbitrage and Use of Proceeds Certificate (the "Certificate"). 1.2 Description of Notes. The Issuer represents that the Notes are sold at the aggregate Issue Price and are further described as set forth in the Certificate of Determination of the Issuer and 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 Issue Date as to future events regarding the amount and use of proceeds of the Notes. It is intended and may be relied upon for purposes of Sections 103 and 141 through 150 of the Code, and as a certification described in Section 1.148-2(b )(2) of the Regulations. This Certificate is executed and delivered as part of the record of proceedings in connection with the issuance of the Notes. The provisions of this Certificate constitute a contractual obligation of the Issuer in consideration for the purchase of and payment for the Notes by the purchaser(s) thereof. 1.4. No Hedge Bonds. The Issuer reasonably expects that 85% of the Spendable Proceeds of the Notes will be expended for governmental purposes within 3 years of the Issue Date. In addition, not more than 50% of the Proceeds of the Notes 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. With respect to the Prior Issue, the Issuer reasonably expected as of the issue date of the Prior Issue that 85% of the spendable proceeds of the Prior Issue would be expended for governmental purposes within 3 years of such issue date, and, in addition, not more than 50% of the proceeds of the Prior Issue were invested in investments not acquired to carry out the governmental purposes of the issue at a guaranteed yield for 4 years or more. 470498.1019513 CERT . . 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 Notes will not be used in a manner that would cause the Notes 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. No Composite Issue. 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 Notes, pursuant to the same plan of financing which are expected to be paid from substantially the same source of funds as the Notes. 1.7. Registration. The Notes will be issued in bearer form. 1.8. No Federal Guarantee. The Issuer represents and covenants that, except for the gross proceeds of the Notes 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 Notes is or will be guaranteed directly or indirectly by the United States or any agency or instrumentality thereof (in this Certificate "federally guaranteed"); and (ii) No portion of the Gross Proceeds of the Notes 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. Tbe Issuer expects to be able to and will comply with all the procedures and provisions set forth in this Certificate, 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 Notes will be excluded from gross income of the owners of the Notes 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 with such obligations will not cause interest on the Notes to be included in gross income for purposes of Federal income taxation. 470498.1019513 CERT . . 1.11. Reliance by 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 Notes. 1.12. IRS Form 8038-G. The Issuer will file IRS Form 8038-G, included as part of the record of proceedings for the issuance of the Notes, by the 15th day of the second month after the calendar quarter in which the Notes are issued. 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 the bond resolution adopted by the Town Board on July 31,2001 and amended October 21, 2003, (the "Resolution"), as referred to in the Certificate of Determination executed by the Supervisor on March 10,2005. (b) For purposes of this Article II, the term "Original Proceeds" means the Sale Proceeds received (or deemed to be received) by the Issuer from the sale of the Notes net of the amount used or to be used for the payment of all costs and expenses associated with issuing the Notes, and excluding accrued interest. 2.2. Purpose of Issue. The Notes are being issued for the increase and improvement of the facilities ofthe Fishers Island Ferry District, in said Town. 2.3. Use of Original Proceeds. The proceeds of sale of the Note in the amount of $725,000 (the "Note") and $25,000 in available funds will be used to redeem a prior issue of bond anticipation notes in the amount of $750,000, which will be redeemed prior to maturity in accordance with its terms on March 10, 2005 (the "Prior Issue"), heretofore issued to finance 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 470498.1019513 CERT . . 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. Umelated/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 goverrunental unit that is umelated or related and disproportionate to the goverrunental 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 umelated Private Use if such use is neither directly nor operationally related to a goverrunental 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 nongoverrunental person in a trade or business which is related to the goverrunental use of the property referred to in Section 2.6 above, exceeds the proceeds of the Note which are to be used for the goverrunental 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, 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 goverrunents on a basis different than the general public. Any management, or operations contract or agreement which provides for nongoverrunental 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 IS, 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 ofthe 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 IS, 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; 470498.1019513 CERT . . (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. $XX 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. $XX 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 of the issue (as defined in Section 150 of the Code but without including proceeds used to [mance 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 hereof. 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 III Arbitrage/Rebate Exemption 3.1. Temporarv Period-Refunding. With respect to the proceeds of the Note allocable to the Prior Issue, such proceeds may be invested without restriction as to yield during the three-year temporary period commencing on the date hereof, because: (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 ofthis 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. 470498.1019513 CERT . . (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. Rebate. (a) The Prior Issue was not subject to the rebate requirement imposed by Section 148 of the Code because at the time of original issuance of the first note or notes issued pursuant to the Resolution, in renewal of which the Prior Issue and/or the Note are issued: (i) the Issuer was a governmental unit with general taxing powers; (ii) the Prior Issue did not constitute a "private activity bond" as that term is defined in Section 141 of the Code; (iii) ninety-five percent or more ofthe net proceeds of the sale of the Prior Issue was used for local governmental activities of the Issuer; and (iv) the Issuer (including all agencies, instrumentalities and political subdivisions of the Issuer) reasonably expected 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 would not exceed $5,000,000. For purposes of such determination, no tax-exempt obligation was taken into account if it was a current refunding obligation issued in the calendar year in which the Prior Issue was being issued which does not exceed the outstanding (redeemed) principal amount of the obligation to be refunded. (b) The Note is not subject to the rebate requirement imposed by Section 148 of the Code because all of the proceeds of such 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. 3.3. No Excess Proceeds. The total proceeds of sale of all obligations issued to date for the Project do not exceed the total cost of the Project. 3.4. Source of Repayment Funds. The Note will be paid from taxes and the proceeds of other obligations ofthe Issuer issued to fund the Note. 3.5. 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 Bonds for the immediately preceding year. 470498.1019513 CERT . . 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. ARTICLE IV Bank Oualification 4.1. Designation. The Note is hereby designated as a "qualified tax-exempt obligation" pursuant to the provisions of Section 265 of the Code. In making such designation it has been determined 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 Resolution, 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." IN WITNESS WHEREOF, I have hereunto set my hand and affixed the corporate seal ofthe Town of South old, as of the 10th day of March, 2005. (SEAL) 470498.1019513 CERT . . CERTIFICATE OF DETERMINATION BY THE SUPERVISOR RELATIVE TO AUTHORIZATION, SALE, ISSUANCE, FORM AND CONTENTS OF THE $725,000 BOND ANTICIPATION NOTE FOR FISHERS ISLAND FERRY DISTRICT-2005 OF THE TOWN OF SOUTHOLD, NEW YORK. I, Joshua Y. Horton, Supervisor of the Town of South old, 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 resolution duly adopted and amended and as referred to in paragraph I hereof, and subject to the limitations prescribed in said bond resolution, I have made the following determinations: I. A bond anticipation note ofthe Town in the principal amount of $725,000 shall be issued to renew, in part, a bond anticipation note in the aggregate amount of $750,000 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 and amended October 21,2003, appropriating the amount of $1 0,500,000, 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 and amended by the Town Board on the dates therein referred to, and the Certificate of Determination executed by the Supervisor on December 21, 2004, the redemption of said $750,000 bond anticipation note having been heretofore provided to the extent of $25,000 from a source other than the proceeds of serial bonds. 2. The terms, form and details of said Note shall be as follows: Amount and Title: $725,000 Bond Anticipation Note for Fishers Island Ferry District-2005 Dated: March 10, 2005 Matures: June 10, 2005, subject to prior redemption Number and Denomination: Number R-I, at $725,000 470498.1019513 CERT . . Interest Rate per annum: 2.00% Form of Note: Substantially in accordance with form prescribed by Schedule B, 2 of the Local Finance Law of the State of New York. 3. The amount of bond anticipation notes originally issued in anticipation of the issuance of the serial bonds authorized pursuant to the bond resolution referred to in paragraph I, hereof, including the Note, is, $4,800,000, and the amount of bond anticipation notes which will be outstanding after the issuance of the Note, including said Note, will be $4,700,000. 4. The serial bonds authorized pursuant to the resolution referred to in paragraph I, hereof, are for improvements which are assessable. 5. Pursuant to said powers and duties delegated to me, I DO HEREBY AWARD AND SELL said Note to Bridgehampton National Bank, Southold, New York, for the purchase price of $725,000, plus accrued interest, if any, from the date of said Note to the date of delivery thereof; and I FURTHER DETERMINE that said Note shall be payable as to both principal and interest at the Bridgehampton National Bank, Southold, New York, and shall bear interest at the rate of two per centum (2.00%) per annum, payable at maturity, or prior redemption. 6. The Note shall be executed in the name of the Town by the manual signature of its Supervisor and the corporate seal of the Town will be affixed, imprinted, impressed 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 10th day of March, 2005. 470498.1019513 CERT . . 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 copy of the Certificate of Determination executed by the Supervisor and the same is a true and complete copy ofthe Certificate filed with said Town in my office as Town Clerk on or before the 10th day of March, 2005, 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 resolution cited in said Certificate and exercised by the Supervisor has been adopted by said Town Board. IN WITNESS WHEREOF, I have hereunto set my hand and affixed the corporate seal of said Town this lOth day of March, 2005 (SEAL) ~h1~ Z:)"h~i4 470498.1019513 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: I. 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 lOth day of March, 2005, to the financial institution indicated in such Certificate, I have made a careful inquiry of each officer and employee ofthe 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. c(};'(,~7./Q ?2'''~/~ To Clerk Subscribed and sworn to before me this 10 day OfM::;: 2~~ No ary Public, State of New York LYNDA M. BOHN NOTARY PUBLIC, State of New York No. 01 B06020932 Qualified in Suffolk County Term Expires March 8, 20 Q1 470498.1019513 CERT ) . . SCHEDULE A I. , 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. 470498.1019513 CERT . . CERTIFICATES AS TO SIGNATURES, LITIGATION, AND DELIVERY AND PAYMENT 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 March 10,2005, we officially signed and properly executed by manual signatures the $725,000 Bond Anticipation Note for Fishers Island Ferry District-2005 (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 the 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 the Note or the levy or collection of any taxes to pay the interest on or principal of the Note, or in any manner questioning the authority or proceedings for the issuance of the Note or for the levy or collection of said taxes, or relating to the Note or affecting the validity thereof or the levy or collection of said taxes, that neither the corporate existence or boundaries ofthe 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 the Note has or have been repealed, revoked or rescinded. WE FURTHER CERTIFY that the seal which is impressed upon this certificate (or a facsimile thereof) has been affixed, impressed, imprinted or otherwise reproduced upon the Note and is the legally adopted, proper and only official corporate seal of the Town. And, I, Joshua Y. Horton, Supervisor, HEREBY FURTHER CERTIFY that on March 10,2005, I delivered or caused the delivery of the Note to Bridgehampton National Bank, Southold, New York, the purchaser thereof, and that at the time of such delivery of said Note, the Town received from said purchaser the amount hereinbelow stated, in full payment for said Note, computed as follows: Price ... .... ........... .... ........ ... ....... .... ..... ......... .... ..... ... ....... .... ... .... .$725,000 .00 Interest on said Note accrued to the date of such delivery .............................................................. -0- Amount Received.. ........ .... ...... .... .......... ......... .... .... ...... .... ........$725,000.00 (SEAL) 470498.1019513 CERT . . IN WITNESS WHEREOF, we have hereunto set our hands and said corporate seal has hereunto been affixed this lOth day of March, 2005. Term of Office Expires Title December 31, 2005 Supervisor December 31, 2005 Town Clerk I HEREBY CERTIFY that the signatures ofthe officers of the above-named Town, which appear above, are true and genuine and that I know said officers and know them to hold the respective offices set opposite their signatures. CilAtt-e &u (Signatfue) (} /Jd~ (lj1 of (Title) /VilY-JIL. W ~ !xuL (Name of Bank) 470498.1019513 CERT . . ATTORNEY'S CERTIFICATE I, Patricia A. 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 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, 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 the Note, or in any manner questioning the authority or proceedings for the issuance of the Note or for the levy or collection of said taxes, or relating to the 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 the Note has or have been repealed, revoked or rescinded. IN WITNESS WHEREOF, I have hereunto set my hand this 10th day of March, 2005 470498.1019513 CERT Amount and Title: Dated: Matures: Number: Interest Rate per annum: . . SCHEDULE A $725,000 Bond Anticipation Note for Fishers Island Ferry District- 2005 March 10,2005 June 10, 2005, subject to prior redemption R-I 2.00% 470498.\ 019513 CERT = No.1 UNITED STATES OF AMERICA STATE OF NEW YORK COUNTY OF SUFFOLK TOWN OF SOUTHOLD 10'%< LA } I ""'_,,,~31i) 0<;""" BOND ANTICIPATION NOTE FOR FISHERS ISLAND FERRY DISTRICT -2004 The Town of South old, in the County of Suffolk, a municipal corporation of the State of New Yark, hereby acknowledges 'itself indebted and for value received promises to pay to the bearer of this Note, or if it be registered, to the registered holder, the sum of SEVEN HUNDRED FIFTY THOUSAND DOLLARS ($750,000) on the 10th day of June, 2005, together with interest thereon from the date hereof at the rate of two per centum (2.00%) per annum, payable at maturity. Both principal of and interest on this Note will be paid in lawful money of the United States of America, at Bridgehampton National Bank, Southold, New York. At the request of the holder, the Town Clerk shall convert this Note into a registered Note hy registering it in the name of the ho~der in the books of the Tuwn kept in the office of such Town Clerk and endorsing a certificate of such registration hereon, after which both principal of and interest on this Note shall be payable only to the registered holder, his legal representatives, successors or transferees. This Note shall then be transferable only upon presentation to such Town Clerk with a written transfer of title and such Town Clerk shall thereupon register this Note in the name of the transferee in his books and shall endorse a certificate of such registration hereon. Such transfer shall be dated, and signed by the registered holder, or his legal representatives, and it shall be duly acknowledged or proved, or in the alternative the signature thereto shall be certified as to its genuineness by an officer of a bank or trust company located and authorized to do business in this State. This Note is the only Note of an authorized issue, the principal amount of which is $750,000. This Note may be called for redemption, after the giving of at least five (5) days' written notice of the date of redemption by mailing of written notice to the original purchaser, or if this Note be registered to the registered holder, and interest shall cease to be paid hereon after such date of redemption. This Note 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 bond resolution adopted by the Town Board on July 31, 200 I, authorizing the issuance of $4,800,000 serial bonds for the increase and improvement of the facilities of the Fishers Island Feny District, in said Town, and the Certificate of Determination executed by the Supervisor on December 21, 2004. This Note has been designated by the Town as a qualified tax-exempt obligation pursuant to the provisions of Section 265 of the Internal Revenue Code of 1986, as amended. The faith and credit of such Town of Southold are hereby irrevocably pledged for the punctual payment of the principal of and interest on this Note according to its terms. It is hereby certified and recited that all conditions, acts and things required by the Constitution and statutes of the State of New York to exist, to have happened and to have been performed precedent to and in the issuance of this Note, exist, have happened and have been performed, and that this Note, together with all other indebtedness of such Town of Southold, is within every debt and other limit prescribed by the Constitution and laws of such State. IN WITNESS WHEREOF, the Town of Southold has caused this Note to be signed by its Supervisor, and its corporate seal (or a facsimile thereof) to be affixed, impressed, imprinted, or otherwise reproduced hereon and attested by its Town Clerk and this Note to be dated as of the 21st day of December, 2004. TOWN OF SOUTHOLD &r,fA'() Y..)p~~;a- Town Clerk' ~ . < . . ~. ~<r 002 w~ o,g> ,,~ @<{ . REGISTRATION CERTIFICATE . It is hereby certified that the within Note has been registered as follows: Date of Registration Name of Registered Holder Registered by