HomeMy WebLinkAboutSolid Waste Management
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RECEIVED
October 3, 2003
OCT 2 0 2003
The Town Board of the
Town of South old, in the
County of Suffolk, New York
Soulhold Town Clef'
Ladies and Gentlemen:
We have examined a record of proceedings relating to the issuance of the
$4,680,000 Bond Anticipation Note for Solid Waste Management District-2oo3 of the Town of
Southold, in the County of Suffolk, a municipal corporation of the State of New York. Said Note
is dated October 3, 2003, matures October I, 2004, subject to prior redemption, is numbered 2R-
1, bears interest at the rate of one and nineteen hundredths per centum (1.19%) per annum, is
payable to bearer without coupons and registrable as to both principal and interest, 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 bond resolution adopted by the Town Board on
November 25, 1997 and amended March 13,2001, authorizing the issuance of $7,800,000 serial
bonds for the increase and improvement of facilities of the Southold Solid Waste Management
District, in said Town, and the Certificate of Determination executed by the Supervisor on
October 4, 2003.
Said bond anticipation note is temporary obligations issued in anticipation of the
sale of permanent serial bonds.
In our opinion, the Note is a valid and legally binding general obligation of the
Town for which the Town has validly pledged its faith and credit 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 Note and interest thereon without limitation of rate or amount. The
enforceability of rights or remedies with respect to such Note may be limited by bankruptcy,
insolvency, or other laws affecting creditors' rights or remedies heretofore or hereafter enacted.
The Internal Revenue Code of 1986, as amended (the "Code"), establishes certain
requirements that must be met subsequent to the issuance and delivery of the Note in order that
interest on the Note 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 Note is excludable from gross income under Section 103 of the Code. We
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have examined such Arbitrage and Use of Proceeds Certificate of the Town delivered
concurrently with the delivery of the Note and, in our opinion, such certificate contains
provisions and procedures under which such requirements can be met.
In our opinion, the interest on said Note 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 Note 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, interest on the Note 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 any additional
proceedings, reports, correspondence, financial statements or other documents, containing
financial or other information relative to the Town, which have been or may hereafter be
furnished or disclosed to purchasers of said Note and we express no opinion with respect to any
such financial or other information or the accuracy or sufficiency thereof.
The form of said Note is prescribed by Schedule B, 2 of the Local Finance Law of
the State of New York, but we have not examined the executed Note.
Very truly yours,
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September 12,2003
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 issuance of the
$3,000,000 Bond Anticipation Notes for Fishers Island Ferry District-2003 of the Town of
Southold, in the County of Suffolk, a municipal corporation of the State of New York. Said
Notes are dated September 12,2003, mature September 10, 2004, subject to prior redemption,
are 2 in number, bear interest at the rates per annum set opposite the following numbers and
denominations:
Numbers Denominations Interest Rates
(inclusive ) (each) (per annum)
2R-1 $2,000,000 1.1 0%
2R-2 $1,000,000 1.22%
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 adopted by the Town Board on
July 31, 2001, authorizing the issuance of $4,800,000 serial bonds for the increase and
improvement of facilities of the Fishers Island Ferry District, in said Town, and the Certificate of
Determination executed by the Supervisor on September 12, 2003.
Said bond anticipation notes are temporary obligations issued in anticipation of
the sale of permanent serial bonds.
In our opinion, the Notes are valid and legally binding general obligation 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 Notes and interest thereon without limitation of rate or amount. The
euforceability of rights or remedies with respect to such Notes 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 Notes in order that
432959.1 019513 CERT
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interest on the Notes 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 Notes is excludable from gross income under Section 103 of the Code. We
have examined such Arbitrage and Use of Proceeds Certificate of the Town delivered
concurrently with the delivery of the Notes, and, in our opinion, such certificate contains
provisions and procedures under which such requirements can be met.
In our opinion, the interest on said Notes 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 Notes 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, interest on the Notes 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 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 Notes and we express no opinion with respect to any
such financial or other information or the accuracy or sufficiency thereof.
The form of said Notes is prescribed by Schedule B, 2 of the Local Finance Law
of the State of New York, but we have not examined the executed Notes.
Very truly yours,
4~~;kI
432959.1019513 CERT
$4,680,000
UNITED STATES OF AMERICA
STATE OF NEW YORK
COUNTY OF SUFFOLK
TOWN OF SOUTHOLD
BOND ANTICIPATION NOTE FOR SOLID WASTE MANAGEMENT DISTRICT -2003
The Town of Southold, in tJle County of SutTolk, 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 if it be registered. to the
registered holder, the sum of FOUR MILLION SIX HUNDRED EIGHTY THOUSAND DOLLARS ($4,680,000) on the 1st
day of October. 2004, together with interest thereon from the date hereof at the rate of one and nineteen hundredths per
centum (1.190/0) per annum, payable at maturity. Both principal orand interest on this Note will be paid in lawful money of the
United States of America, at the Office oflhe Town Clerk, Town of Southold, 53095 Main Road, Southold, 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 TOWIl Clerk and endorsing a certificate of such registration
hereon, after which both principal of and interest on tlus Note shall he payable only to the registered holder, his legal
representatives, successors or transferees. This Note shnll then be transferable only upon presentation to such Town Clerk with a
written transfer oftitle and such Town Clerk shall thereupon register this Note in the name ofthe transferee in Ius 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 altemative 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 nuthorized issue, the principal mnount of which is $4,680,000. 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 he 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 ndopled by the Town Board on November 25, 1997 and amended March 13.
2001. authorizing the issuance of $7,800,000 serial bonds for the increase and improvement of facilities of the Southold Solid
Waste Management District., in said Town, and the Certiticate of Detennination executed by the Supervisor on October, 3, 2003.
This Note has been desig.nated by the TO\\'11 as a qualitied L.'lx-exempt oblig.ation pursuant to the provisions of
Section 265 of the Intemal Revenue Code of 1986, as amended.
The faith and credit of such To"" of South old are herehy irrevocably pledged for the plUlctnal payment of the principal
of and interest on this Note according to its tenns.
It is hereby certified and recited that all conditions, acts and tlungs required by the Constitution and statutes of the State
of New York to exist. to have happened and to have been perfonned precedent to and in the issuance of this Note. exist:. have
happened and have been perfonned. 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 he signed by its Supervisor, and its
corporate seal (or a facsimile thereat) to be allixed, imprinted, impressed or otherwise reproduced hereon and attested by its
Town Clerk and this Note to be dated as of the 3rd day of October, 2003.
(SEAL)
By
ATTEST:
[1t?~An'#2 Y)gjj/~
own Clerk
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CERTIFICATE OF DETERMINATION BY THE SUPERVISOR
RELATIVE TO AUTHORIZATION, SALE, ISSUANCE, FORM AND
CONTENTS OF $4,680,000 BOND ANTICIPATION NOTE FOR
SOLID WASTE MANAGEMENT DISTRICT-20m OF THE TOWN OF
SOUTHOLD, NEW YORK
I, Joshua Y. Horton, Supervisor of the Town of Southold, New York (herein
called the "Town"), HEREBY CERTIFY that pursuant to the powers and duties delegated to me,
the chief fiscal officer of the Town, by the Town Board of the Town, pursuant to the resolution
duly adopted and amended and as referred to in paragraph 1 hereof, and subject to the limitations
prescribed in said resolution, I have made the following determinations:
1. A bond anticipation note (the "Note") ofthe Town in the principal amount of
$4,680,000 shall be issued in anticipation of the sale of serial bonds authorized pursuant to the
resolution entitled:
"Bond Resolution of the Town of New Southold, New York,
adopted November 25, 1997 and amended March 13, 2001,
appropriating the amount of $7,800,000 for the increase and
improvement of facilities of the Southold Solid Waste
Management District, in said Town, and authorizing the issuance
of $7,800,000 serial bonds for said Town to finance said
appropriation,"
duly adopted and amended by the Town Board on the date therein referred to.
2. The terms, form and details of said Note shall be as follows:
Amount and
Title:
$4,680,000 Bond Anticipation Note for Solid Waste
Management District-2003
Dated
October 3, 2003
Matures:
October 1, 2004, subject to prior redemption
Number
Denomination
Interest Rate
(per annum)
2R-1
$4,680,000
1.19%
Form of Note:
Substantially in accordance with form prescribed by
Schedule B, 2 of the Local Finance Law of the State
of New York.
434255.1019064 CERT
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3. The amount of bond anticipation notes originally issued in anticipation of the
issuance of the serial bonds authorized pursuant to the resolution referred to in paragraph 1
hereof, including the Note, is $6,595,884.43, and the amount of bond anticipation notes which
will be outstanding after the issuance ofthe Note, including said Note, will be $4,680,000.
4. The serial bonds authorized pursuant to the resolution referred to in paragraph
1 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 Fleet National Bank, Southold, New York, for the purchase price of
$4,680,000, 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 office of the Town Clerk, Town of Southold, 53095 Main Road, Southold, New
York, and shall bear interest at the rate of one and nineteen hundredths per centum (1.19%) per
annum, payable at maturity or prior redemption.
6. Said Note shall be executed in the name of the Town by its Supervisor and the
corporate seal of the Town shall be affixed thereto 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, have hereunto set my hand this 3rd day of October,
2003.
434255.\ 0\9064 CERT
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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 of the Certificate filed with said Town in the office of the Town Clerk on the 3rd day of
October, 2003; 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 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 3rd day of October,
2003.
(SEAL)
r!P~h4'2 Q~N;-&
Town Cler
434255.1019064 CERT
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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 and reasonably expect with respect to the
Issuer's $4,680,000 Bond Anticipation Note for Solid Waste Management District-20m (herein
referred to as the "Note"), dated and issued on October 3,2003, 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 Note and am acting for and on
behalf of the Issuer in signing this Arbitrage and Use of Proceeds Certificate (the "Certificate").
1.2. Description of Note. The Issuer represents that the Note is 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 ofthe 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 Note. 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.I48-2(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 Note. The provisions of this
Certificate constitute a contractual obligation of the Issuer in consideration for the purchase of
and payment for the Note by the purchaser(s) thereof.
1.4. No Hedge Bonds. The Issuer reasonably expects that 85% of the
Spendable Proceeds of the Note will be expended for governmental purposes within 3 years of
the Issue Date. In addition, not more than 50% of the Proceeds of the Note is 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.
I. 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
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proceeds of the Note will not be used in a manner that would cause the Note 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 Note, pursuant to the same plan of financing which are expected to be paid from substantially
the same source of funds as the Note.
1.7. Registration. The Note will be issued in registered form.
1.8. No Federal Guarantee. The Issuer represents and covenants that, except
for the gross proceeds of the Note which are: (a) invested during the temporary period referred to
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 2IB(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 Note
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 Note in excess of five percent of
such Gross Proceeds is or will be (A) used in making loans the payment of
principal or interest with respect to which is to be federally guaranteed, or
(B) invested directly or indirectly in federally insured deposits or
accounts.
1.9. Tax Representation. The 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 Note will be excluded from gross income of the owners of the Note 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 Note to be included in gross
income for purposes of Federal income taxation.
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 Note.
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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 Note, by the 15th day of the second month
after the calendar quarter in which the Note is 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 duly adopted by the
Town Board on November 25, 1997 and amended March 13, 2001 (the "Resolution"), as
referred to in the Certificate of Determination (the "Certificate of Determination") executed by
the Supervisor as of October 3, 2003.
(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 Note net of
the amount used or to be used for the payment of all costs and expenses associated with issuing
the Note, and excluding accrued interest.
2.2. Purpose of Issue. The Note is being issued for the increase and improvement
offacilities ofthe Southold Solid Waste Management District, in said Town.
2.3. Use of Original Proceeds. The proceeds of sale of the Note in the amount of
$4,680,000 (the "Note") and $310,000 in available funds will be used to redeem a prior issue of
bond anticipation notes currently outstanding in the principal amount of $4,990,000, which
matures on October 3, 2003 (the "Prior Issue"), heretofore issued to finance the Project.
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 last 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
state or local governmental unit.
2.6. Private Use. Either (a) the aggregate amount of the 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 or (b) not more than
10% of the principal and interest due on the Note during the term of the Note, under the terms of
the Note or any underlying arrangement, directly or indirectly, (i) will be 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 (ii) will 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.
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2.7. Unrelated/Related Disproportionate Use. None of the Proceeds of the Note
will be used directly or indirectly in the trade or business of a person other than a state or local
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 above
which meets this test. For purposes of this Certificate, Proceeds of the Note is allocable to an
unrelated Private Use if such use is neither directly nor operationally related to a governmental
use and Proceeds of the Note is 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 person other
than a state or local governmental unit 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 Note which are
to be used for the governmental use to which such Private Use relates.
2.8. Private Use Defined. For purposes of Sections 2.6 and 2.7 above, 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 or any
portion of the Project by a person or persons who are not state or local governmental units on a
basis different than the general public. The Issuer has not and will not enter into any such
contract or arrangement without first consulting with Bond Counsel.
2.9. Reimbursement. Proceeds of the Note used to reimburse the Issuer for
amounts expended in anticipation of the issuance of the Note is considered expended on the date
of the reimbursement but only if (i) a declaration of intent to reimburse such expenditure is made
prior to or within 60 days after the date of the original expenditure (except for certain
preliminary expenditures described in Section 1.150-2(f)(2)) of the Regulations), and (ii) the
reimbursement is made within 18 months of the later of the placed-in-service date of the Project
or the date of the original expenditure (but in no event more than three years after the original
expenditure was paid). The expenditures to be reimbursed are Capital Expenditures. The Issuer
will not use any Proceeds of the Note for any reimbursement purpose that does not otherwise
qualify as an expenditure pursuant to Section 1.150-2 of the Regulations or prior law, as
applicable.
ARTICLE III
ARBITRAGE
3.1. Temporary Period-Refunding. With respect to the Current Refunding Note
and the Prior Issue:
(a) All of the proceeds of the Prior Issue have been expended, or any such
proceeds which have not been expended will be treated as Transferred Proceeds of the
Current Refunding Note as of the date the Prior Issue is redeemed. 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.
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(b) Allor a portion of the Proceeds of the Current Refunding Note will be
used to refund the Prior Issue within 90 days of the Issue Date. Such Proceeds and any
related Investment Proceeds may be invested during such time without restriction as to
Yield. The balance, if any, of the Proceeds of the Current Refunding Note will be used to
pay cost of issuance of the Current Refunding Note. Such Proceed and any related
Investment Proceeds may be invested for a period of thirteen months after the Issue Date
without restriction as to Yield.
3.3. No Overissuance. The Sale Proceeds of the Note do not exceed the total cost
of the New Project, the amount required to refund the Prior Issue and the amount required to pay
costs of issuance of the Note.
3.4. Source of Repayment Funds. The Note will be paid from taxes and other
revenues of the Issuer.
3.5. Debt Service Fund. The taxes and revenues used to pay principal and
interest on the Note, whether or not deposited in a debt service fund (the "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 Bond
Year or one-twelfth of the debt service on the Note for the immediately preceding Bond Year.
3.6. Sinking Funds. Except for the Debt Service Fund described in Section 3.5
above, the Issuer has not created or established, and does not expect to create or establish, any
sinking fund, debt service reserve fund or other similar fund which the Issuer reasonably expects
to use to pay principal or interest on the Note.
3.7. Universal Cap. On each Valuation Date, the Issuer will value the Universal
Cap and the Nonpurpose Investments allocable to the Note under the Universal Cap.
Nonpurpose Investments in a bona fide debt service fund such as the Debt Service Fund
described in Section 3.5 above do not reduce the aggregate value of Nonpurpose Investments
that may be allocated to the Note under the Universal Cap. Nonpurpose Investments cease to be
allocated to the Note to the extent such Nonpurpose Investments have been expended for the
governmental purpose of the Note, or to the extent the Value of such investments exceeds the
value permitted to be allocated to the Note under the Universal Cap. To the extent Nonpurpose
Investments cease to be allocated to the Note and the Value of the Universal Cap exceeds the
Value of the remaining Nonpurpose Investment allocated to the Note, other Nonpurpose
Investments may become allocated to the Note, provided that such Nonpurpose Investments are
not already properly allocated to another bond issue and provided that such allocation does not
cause the Value of Nonpurpose Investments allocated to the Note to exceed the Universal Cap.
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Generally, if Gross Proceeds of the Note invested in Nonpurpose Investments
exceed the Universal Cap on a Valuation Date, such Nonpurpose Investments cease to be
allocated to the Note in the following order:
(i) amounts allocable to Replacement Proceeds,
(ii) amounts allocable to Transferred Proceeds,
(iii) amounts allocable to Sale Proceeds and Investment Proceeds of the Note.
Where a Nonpurpose Investment ceases to be allocated to the Note, such
Nonpurpose Investment may be reallocated 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 Note.
Notwithstanding anything in this Certificate to the contrary, the failure to perform
the determination of Nonpurpose Investments allocable to the Note as of a Valuation Date will
not be considered a violation of this provision if the Value of Nonpurpose Investments allocated
to the Note did not exceed the Value of the Note outstanding on such date.
3.8. Yield. When used in this Certificate, the term Yield is computed as
described in the Regulations and, in connection with the Note or any investment acquired with
the Gross Proceeds of the Note, refers to the Yield computed by the actuarial or present worth
method using a 360-day year and semiannual compounding, and means that discount rate which,
when used in computing the Present Value of all payments of principal and interest to be paid on
an obligation, produces an amount equal to, in the case of the Note, the Issue Price of the Note
with certain adjustments as required by the Regulations, and in the case of an Investment, the
purchase price of such Investment. The underwriters of the Note have made certain
representations regarding the Issue Price of the Note, which representations are included as part
of the record of legal proceedings relating to the Note. The Yield on the Note is as shown in
Form 8038-G.
The Issuer will not enter into any hedge, contract to sell call right options or other
arrangement with respect to the Note without first consulting with Bond Counsel.
3.9. Yield Reduction Payments. The Issuer may make Yield Reduction
Payments, as such term is defined in the Regulations, to the Internal Revenue Service for the
purpose of reducing the Yield on investments under certain circumstances. The Issuer will
consult with Bond Counsel prior to making any such payments.
3.10. No Replacement Proceeds. The weighted average maturity of the Note, as
set forth in the Form 8038-G, does not exceed 120 percent of the average reasonably expected
useful life ofthe Project.
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3.11. Investments at Fair Market Value. The Issuer has not entered and will not
enter into any transaction to reduce the Yield on the investment of the Gross Proceeds of the
Note in such a manner that the amount to be rebated to the Federal government pursuant to
Article IV below is less than it would have been had the transaction been at arm's length and the
Yield of the Note not been relevant to either party to the transaction. All investments of Gross
Proceeds ofthe Note will be made on an arms' length, Fair Market Value basis.
ARTICLE IV
REBATE
4.1. Rebate Compliance. The Issuer understands that the continued non-inclusion
of interest on the Note for purposes offederal income taxation depends, in part, upon compliance
with the arbitrage limitations imposed by Section 148 of the Code, including the rebate
requirements described in Sections 4.3 and 4.5 below with respect to the Note (and the Prior
Issue) unless the Issuer complies with Sections 4.2(a) and 4.2(b) below or qualifies for one or
more of the rebate exceptions described in Section 4.4 below.
4.2. Rebate Options. With respect to the investment of the Proceeds of the Note,
the Issuer will:
(a) invest all Gross Proceeds of the Note at all times from the Issue Date until
expended in Investments not constituting Investment Property for purposes of Section
148 of the Code such as obligations of a state or of a political subdivision of a state, the
interest on which is excluded from gross income for purposes of Federal income taxation
under Section 103 of the Code and is not a preference item for purposes ofthe alternative
minimum tax imposed by Section 55 of the Code,
(b) invest all Gross Proceeds of the Note in obligations having a Yield that
does not exceed the Yield on the Note, or
(c) comply with the provisions regarding rebate or qualify for one or more of
the exceptions to rebate as described in this Article IV.
4.3. Rebate Requirement for the Note. Section 148(f) 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 Note, together with any
income attributable to such excess. Except as provided in Section 4.4 below, all Gross Proceeds
of the Note is subject to this requirement. In order to meet the rebate requirement of the Code,
the Issuer will 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 Note, loan
repayments, investment earnings and Transferred Proceeds. For each Nonpurpose
Investment acquired with or allocated to Gross Proceeds of the Note, the Issuer will
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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 Gross Proceeds of the Note, including expenditures for
rebate, other than expenditures to acquire Investments.
(b) Computation of Rebate Amount. Subject to the special rules set forth in
Section 4.4 below, the Issuer will determine the Rebate Amount on each Computation
Date. The Rebate Amount as of any Computation Date is the excess of the Future Value
of all receipts with respect to Nonpurpose Investments over the Future Value of all
payments with respect to the purchase of Nonpurpose Investments or the allocation of
such investments to the Gross Proceeds of the Note, 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 will determine the nonpurpose receipts and nonpurpose payments as
described below.
(i) Receipts. Receipts with respect to Nonpurpose Investments include
(A) amounts actually or constructively received from a Nonpurpose Investment
(including amounts treated as received from a commingled fund), such as
earnings and return of principal; (B) for a Nonpurpose Investment that ceases to
be allocated to the Note before its disposition or redemption date (e.g., an
Investment that becomes allocable to transferred proceeds of another issue or that
ceases to be allocable to the Note pursuant to the Universal Cap under Section
1.148-6 of the Regulations) or that ceases to be subject to the rebate requirement
on a date earlier than its disposition or redemption date (e.g., an investment
allocated to a fund initially subject to the rebate requirement but that subsequently
qualifies as a bona fide debt service fund), the Value of that Nonpurpose
Investment on that date; (C) for a Nonpurpose Investment that is held at the end
of a Computation Period, the Value of that Investment at the end of that period;
and (0) any recovery of an overpayment of rebate.
(ii) Payments. Payments with respect to Nonpurpose Investments
include: (A) amounts actually or constructively paid to acquire a Nonpurpose
Investment (or treated as paid to a commingled fund); (B) for a Nonpurpose
Investment that is first allocated to the Note on a date after it is actually acquired
(e.g., an investment that becomes allocable to Transferred Proceeds or to
Replacement Proceeds) or that becomes subject to the rebate requirement on a
date after it is actually acquired (e.g., an Investment allocated to a reasonably
required reserve or replacement fund for a Construction Issue at the end of the
2-year spending period), the Value of that Investment on that date; (C) for a
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Nonpurpose Investment that was allocated to the Note at the end of the preceding
Computation Period, the Value of that Investment at the beginning of the
Computation Period; (D) on the last day of each Bond Year during which there
are amounts allocated to Gross Proceeds of the Note that are subject to the rebate
requirement, and on the final maturity date, a Computation Credit of $1,000; (E)
Yield Reduction Payments on Nonpurpose Investments made pursuant to
Section I.I48-5(c) of the Regulations; and (F) payments of rebate amounts when
made.
4.4. Exceptions to Rebate Requirement. Notwithstanding anything in Section
4.3 above to the contrary, some or all of the Gross Proceeds of the Note is not subject to the
rebate requirement if the conditions described below are satisfied.
(a) Exception for Gross Proceeds Entirely Spent Within Six Months. If all of
the Gross Proceeds of the New Money Note or the Current Refunding Note (other than
amounts in the Debt Service Fund and proceeds of the P~ior Issue that become
Transferred Proceeds of the Current Refunding Note), as the case may be, including
investment earnings received with respect to all funds and accounts established with
respect to the Note except the Debt Service Fund, have been expended for the
governmental purpose of the New Money Note or the Current Refunding Note, as the
case may be, within six months (or alternatively with respect to the Gross Proceeds of the
New Money Note, 95% within six months and 100% within one year) after the Issue
Date, then the only Nonpurpose Investments to be taken into account in the calculation of
the Rebate Amount with respect to the New Money Note or the Current Refunding Note,
as the case may be, are any Gross Proceeds of the New Money Note or the Current
Refunding Note, as the case may be, arising after such six months which were not
reasonably anticipated as of the Issue Date and proceeds of the Prior Issue that become
Transferred Proceeds of the Current Refunding Note unless such Transferred Proceeds
qualify for one or more of the rebate exceptions applicable to the Prior Issue. 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 the Note is not treated as expended for the governmental purpose of the
Note.
(b) Exception for Gross Proceeds Entirely Spent Within Eighteen Months. If
all of the Gross Proceeds of the New Money Note (other than amounts in the Debt
Service Fund), including investment earnings received with respect to all funds and
accounts established with respect to the New Money Note except the Debt Service Fund,
have been expended for the governmental purpose ofthe New Money Note in accordance
with the following schedule measured from the Issue Date: (a) at least IS percent within
6 months (the "first spending period"); (b) at least 60 percent within 12 months (the
"second spending period"); and (c) 100 percent within 18 months (the "third spending
period"); then the only Nonpurpose Investments to be taken into account in the
calculation of the Rebate Amount with respect to the New Money Note is any Gross
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Proceeds arising after such 18 months which were not reasonably anticipated as of the
Issue Date. 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 the Note is not treated as expended on
the governmental purpose of the issue. For purposes of determining compliance with the
first two spending periods, the amount of Investment Proceeds included in Gross
Proceeds of the New Money Note is determined based on the Issuers's reasonable
expectations on the Issue Date. The spending requirement for the third spending period
is, nevertheless, satisfied if the unspent amount is a result of a Reasonable Retainage as
defined in Section I.I48-7(h) of the Regulations as modified by Section I.I48-7(d)(2) of
the Regulations and such unspent amount is expended within 30 months of the Issue
Date. The spending requirement for the third spending period is also, nevertheless,
satisfied if the Issuer exercises due diligence to complete the New Project and the unspent
amount does not exceed the lesser of3% of the Issue Price of the New Money Note or an
amount equal to the product of $250,000 times the ratio of the Issue Price of the New
Money Note over the Issue Price of the Note.
(c) Exception for Gross Proceeds Entirely Spent Within Twenty-Four
Months. The Issuer reasonably expects the New Money Note to qualify as Construction
Bonds because at least seventy-five percent (75%) of the Available Construction
Proceeds are to be used for expenditures of construction, reconstruction or rehabilitation
of property which is owned by the Issuer. If all of the Available Construction Proceeds of
the New Money Note have been expended for the governmental purpose of the the New
Money Note in accordance with the following schedule measured from the Issue Date:
10% within 6 months (the "first spending period"), 45% within 12 months (the "second
spending period"), 75% within 18 months (the "third spending period") and 100% within
24 months (the "fourth spending period"), then no Nonpurpose Investments are to be
taken into account in the calculation of the Rebate Amount with respect to the New
Money Note. For purposes of this exception, Available Construction Proceeds used to
pay principal of bonds are not treated as expended on the governmental purpose of the
New Money Note. For purposes of determining compliance with the first three spending
periods, the amount ofInvestment Proceeds included in Available Construction Proceeds
of the New Money Note is determined based on the Issuers's reasonable expectations on
the Issue Date. The spending requirement for the fourth spending period is, nevertheless,
satisfied if the unspent amount is a result of a Reasonable Retainage as defined in Section
1. 148-7(h) of the Regulations and such unspent amount is expended within 36 months of
the Issue Date. The spending requirement for the fourth spending period is also,
nevertheless, satisfied if the Issuer exercises due diligence to complete the New Project
and the unspent amount does not exceed the lesser of3% of the Issue Price of the New
Money Note or an amount equal to the product of $250,000 times the ratio of the Issue
Price of the New Money Note over the Issue Price of the Note. In connection with this
rebate exception, the Issuer elects to pay the Rebate Amount calculated for the period
starting from the Issue Date in the event of noncompliance with the two (2) year phased
expenditure requirement.
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(d) Debt Service Fund Exception. If the average maturity of the Note is at
least 5 years and the rates of interest do not vary during the term of the Note, then any
amount earned on the Debt Service Fund (including amounts representing accrued
interest but excluding amounts representing capitalized interest) will not be taken into
account in determining the Rebate Amount.
4.5. Payment to United States. (a) If the Issuer is required to make a rebate
payment to the United States. Unless the Note is 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 Note, 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 Note is 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 appropriate Internal Revenue
Service Center. 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 Note issue and a statement identifying the
Issuer and the Note, including the CUSIP number for the Note with the latest maturity for which
there is a CUSIP number.
4.6. Recordkeeping. In connection with rebate requirement, the Issuer will
maintain the following records:
(a) The Issuer will retain records of the determinations made pursuant to
Section 4.3 until six years after the retirement of the last obligation of the issue.
(b) The Issuer will record all amounts paid to the United States pursuant to
Section 4.5.
4.7. Rebate Regarding Prior Issues. The Issuer understands that it must make a
final rebate accounting and submit a Form 8038-T, if applicable, to the Internal Revenue Service
with any required rebate or penalty payments within 60 days of the final redemption date of the
Prior Issue with respect to the Prior Issue being refunded with Proceeds of the Current Refunding
Note.
IN WITNESS WHEREOF, I have hereunto set my hand and affixed the
corporate seal of the Town of Southold, as of the
3rd day of October, 2003.
(SEAL)
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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. The terms "Bond" and "Bonds," as used in the
following definitions, shall also refer to the Note, where appropriate.)
"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 Note. For purposes of this definition earnings include
earnings on any tax-exempt bond. If only a portion of the Note 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 last day within one year of the issue date of the Bonds.
"Capital Expenditure" means any costs of a type that is properly chargeable to
capital account (or would be so chargeable with a proper election or by virtue, based on all the
facts and circumstances, of a facility having reached a degree of completion which would permit
its operation at substantially its design level and the facility is, in fact, in operation at such level)
under general federal income tax principles, e.g., costs incurred to acquire, construct or improve
land, buildings, and equipment are generally capital expenditures. Whether an expenditure is a
capital expenditure is determined at the time the expenditure is paid with respect to the property.
Future changes in law do not affect whether an expenditure is a capital expenditure.
"Code" means the Internal Revenue Code of 1986, as amended.
"Computation Date" means any Installment Computation Date or the Final
Computation Date.
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"Computation Date Credit" means, for any issue of obligations, an amount
equal to the Future Value of $1,000 for each Bond Year during which there are gross proceeds of
the Note on a Computation Date other than the Final Computation Date, and $1,000 on the Final
Computation Date.
"Computation Period" means the period beginning on the day following a
Computation Date (or in the case of the first period, the date of issuance of the Note) 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
Construction Expenditures for property which is owned by a governmental entity or a 501(c)(3)
organization.
"Construction Expenditures" means Capital Expenditures which are properly
chargeable to or may be capitalized as part of the basis of (a) real property other than
expenditures for the acquisition of any interest in land or any interest in real property other than
land, (b) Constructed Personal Property; or (c) specially developed computer software that is
functionally related and subordinate to real property or Constructed Personal Property.
Construction Costs may include the acquisition of an interest in real property (other than land) if
such acquisition is pursuant to a contract which requires the seller to build or install the property
(e.g., a "turnkey" contract) and the property has not been built or installed at the time the parties
enter into the contract. For purposes of this definition, real property means land improvements,
buildings, other inherently permanent structures, including items that are structural components
of such buildings or structures, wiring in a building, plumbing systems, central heating or central
air -conditioning systems, pipes or ducts, elevators or escalators installed in a building, paving
parking areas, roads, wharves and docks, bridges, and sewage lines.
"Fair Market Value" of an Investment shall have the following meanings:
(a) In General. Except as elsewhere specifically stated below, the Fair Market
Value of an Investment is the price at which a willing buyer would purchase the
Investment from a willing seller in a bona fide, arm's -length transaction.
(b) United States Treasury Obligation. The Fair Market Value ofa United States
Treasury Obligation that is purchased directly from the United States Treasury is its
purchase 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 (ii) the highest Yield published by the provider and currently available from the
provider on reasonably comparable certificates of deposit offered to the public.
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(d) Guaranteed Investment Contracts. The Fair Market Value of a guaranteed
investment contract is its purchase price, provided (i) the Issuer makes a bona fide
solicitation for such contract and receives at least three bona fide bids from providers
with no material interest in the issue; (ii) the Issuer purchases the highest-yielding
guaranteed investment contract for which a qualifying bid is made (determined net of
broker' s fees); (iii) the Yield on such contract (determined net of broker' s fees) is not less
than the Yield then available from the provider on reasonably comparable investment
contracts, if any, offered to other persons from a source of funds other than gross
proceeds of tax-exempt bonds; (iv) the determination 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 the administrative cost does not exceed
the lesser of a 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 or the Present Value of annual payments equal to five one-hundredths of
one percent (0.05%) of the weighted average amount reasonably expected to be invested
each year of the contract, 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.
For this purpose, Present Value is to be computed using the taxable discount rate used by
the parties to compute the commission or, if not readily ascertainable, a reasonable
taxable discount rate.
"Final Computation Date" means the day the last Bond that is part ofthe 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 Date" means October 3, 2003, the date on which the Note is delivered to
the underwriters and payment of the purchase price of the Note is received by the Issuer.
"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
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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
offered in a bona fide public offering is determined on the basis of actual facts and reasonable
circumstances existing on the sale date unadjusted for subsequent occurrences.
"Installment Computation Date" means the last day of the fifth Bond Year and
the last day of each succeeding fifth Bond Year (until and excluding the Final Computation
Date) and, if the Issuer so elects, the last day of any Bond Year.
"Investment" means (i) any security (within the meaning of Section 165(g)(2)(A)
or (8) of the Code, (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 ofthe Note.
"Issuer" means Town of South old, in the County of Suffolk, 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" meal)S any Investment in which Gross Proceeds are
invested and which is not acquired to carry out the governmental purpose of the issue.
"Note" means the $4,680,000 Bond Anticipation Note for Solid Waste
Management District-2003, dated October 3, 2003.
"Official Statement" means the Official Statement of the Issuer relating to the
Note.
"Person" means any individual, corporation, partnership, joint venture,
associatiOn, joint stock company, trust, unincorporated organization or government or any
agency or political subdivision thereof
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"Plain Par Note" 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.
"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
FV
PV= (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.
by the Note.
"Project" means the project referred to in the Resolution, which is being financed
"Qualified SOl(c)(3) Bonds" means bonds which meet the definition contained in
Section 145 of the Code.
"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
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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 ofthe 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.
"Rebate Amount" means with respect to the Note, the amount computed as
described in Section 4.3 ofthe Certificate.
"Regulations" means the Income Tax Regulations promulgated under Sections
103 and 141 to 150 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
Note or Project to conclude that such amounts would have been used for the Project if the
proceeds of the Note 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 Note, and a bond-funded working capital reserve unless the Note
qualify for one of the exceptions provided in the Regulations.
"Resolution" or "Resolutions" means the bond resolutions of the Issuer, as
referred to in the Certificate.
"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 Section 1. I 48-4(b)(4) of the Regulations.
"SLG" means a U.S. Treasury Book Entry Security, State and Local Government
Series.
"Spendable Proceeds" means sale proceeds, less the portion of those sale
proceeds invested in a reasonably required reserve or replacement fund under Section 148(d) of
the Code and as part of a minor portion under Section 148( e) of the Code.
"Transferred Proceeds" means unexpended original or investment proceeds of a
refunded issue which transfer and become proceeds 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 Note and is determined by reference to the Value of all outstanding Note
of the issue. Nonpurpose Investments shall be taken into account as Nonpurpose Receipts at
their Value on a Valuation Date.
"Valuation Date" means the date on which the value of the Universal Cap and
the Nonpurpose Investments allocable to the Note 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 Note; thereafter, the first day of each Note 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 Note Year shall also be a Valuation Date.
"Value" means, in the case of a Note, the Value of a Note and in the case of an
Investment, the Value ofan Investment.
"Value of a Note" means, in the case of a Plain Par Note, its outstanding stated
principal amount, plus. accrued unpaid interest or in the case of a Plain Par Note 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 Note, 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 subj ect to optional redemptions within 5 years of its issue date and the
Yield not taking into account the optional redemption is more than 1/8 of 1 % above its Yield
assuming the early redemption, (ii) is issued at an Issue Price that exceeds the stated redemption
price at maturity by more than 1/4 of 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.
i
.
.
AFFIDAVIT AS TO NO CONFLICT OF INTEREST
STATE OF NEW YORK )
:ss:
COUNTY OF SUFFOLK )
Elizabeth A. Neville, being duly sworn upon her oath deposes and says:
1. I am the duly appointed, qualified and acting Town Clerk of the Town of
Southold, in the County of Suffolk, New York (herein and in Schedule A annexed hereto called
"Town");
2. That with respect to the contract of sale of the Note of the Town described
in the Certificate of Determination executed by the Supervisor on the 3rd day of October, 2003,
to the financial institution indicated in such Certificate, I have made a careful inquiry of each
officer and employee of the Town having the power or duty to (a) negotiate, prepare, authorize
or approve the contract or authorize or approve payment thereunder, (b) audit bills or claims
under the contract, or (c) appoint an officer or employee who has any of the powers or duties set
forth above, as to whether or not such officer or employee has an interest (as defined pursuant to
Article 18 of the General Municipal Law) in such contract;
3. That upon information and belief, as a result of such inquiry, no such
officer or employee has any such interest in said contract unless otherwise noted in Schedule A
annexed hereto and by this reference made a part hereof
~rh"~ 0 -rrH/};
Town Clerk
Subscribed and sworn to before me
this 3rd day of October, 2003.
~~~;,~.~
NOTARY ~0~Pf'c M. aOHN
N ,State otN 'l'l
OUaliti~'(P.1806020932 ew ork
Term Expjr~~ SMuttolk County
arch B, 20 a::z.
434255.1019064 CERT
,
.
.
.
SCHEDULE A
1. , is a stockholder of the Purchaser owning or
controlling, directly or indirectly, less than five per centum (5%) of the outstanding stock thereof
but no disclosure of such interest by said officer is required pursuant to said Law.
2. , has an interest in the Purchaser solely by reason of
employment as an officer or employee thereof, but the remuneration of such employment will
not be directly affected as a result of said contract and the duties of such employment do not
directly involve the procurement, preparation or performance of any such part of such contract.
3. . has publicly disclosed the nature and extent of such
interest in writing to the governing board of the Town. Such written disclosure has been made a
part of and set forth in the official record of proceedings of the Town.
434255.1019064 CERT
,
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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 October 3, 2003, we officially signed and properly executed by
manual signatures $4,680,000 Bond Anticipation Note for Solid Waste Management District-
2003 (the "Note") of the Town, payable to bearer and otherwise described in Schedule A
annexed hereto and by this reference made a part hereof, and that at the time of such signing and
execution and on the date hereof we were and are the duly chosen, qualified and acting officers
of the Town authorized to execute said Note and holding the respective offices indicated by the
titles set opposite our signatures hereto for terms expiring on the respective dates set opposite
such titles.
WE FURTHER CERTIFY that no litigation of any nature is now pending or
threatened restraining or enjoining the issuance or delivery of said Note or the levy or collection
of any taxes to pay the interest on or principal of said Note, or in any manner questioning the
authority or proceedings for the issuance of said Note or for the levy or collection of said taxes,
or relating to said Note or affecting the validity thereof or the levy or collection of said taxes,
that neither the corporate existence or boundaries of the Town nor the title of any of the present
officers thereof to their respective offices is being contested, and that no authority or proceedings
for the issuance of said Note has or have been repealed, revoked or rescinded.
WE FURTHER CERTIFY that the seal which is impressed upon this certificate
has been affixed, imprinted, impressed or otherwise reproduced upon said Note and is the legally
adopted, proper and only official corporate seal of the Town.
And, I, Joshua Y. Horton, Supervisor, HEREBY FURTHER CERTIFY that on
October 3, 2003, I delivered or caused the delivery of said Note to Fleet 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 .........
.......... $4,680,000
Interest on said Note accrued to the
date of such delivery ................................
0.00
Amount Received... ......................... ................................... $4,680,000
434255.] 019064 CERT
.
.
IN WITNESS WHEREOF, we have hereunto set our hands and said corporate
seal has hereunto been affixed this 3rd day of October, 2003.
Term of Office
Expires
Title
December 31, 2003
Supervisor
December 31, 2005
Town Clerk
I HEREBY CERTIFY that the signatures of the officers of the above named
Town which appear above, are true and genuine and that I know said officers and know them to
hold the re ective offices set opposite their several signatures.
~Of
(Title)
rM~~
(Name of Bank)
(SEAL)
434255.1019064 CERT
.
.
ATTORNEY'S CERTIFICATE
I, Gregory F. Yakaboski, HEREBY CERTIFY that I am a licensed attorney at law
of the State of New York, having offices at 53095 Main Road, Southold, New York, and am the
duly chosen, qualified and acting Town Attorney of the Town of Southold, in the County of
Suffolk, a municipal corporation of the State of New York and herein referred to as the "Town",
that no litigation of any nature is now pending or threatened restraining or enjoining the issuance
or delivery of the Note of the Town, payable to bearer and otherwise described as set forth in
Schedule A annexed hereto and by this reference made a part hereof or the levy or collection of
any taxes to pay the interest on or principal of said Note, or in any manner questioning the
authority or proceedings for the issuance of said Note or for the levy or collection of said taxes,
or relating to said Note or affecting the validity thereof or the levy or collection of said taxes,
that neither the corporate existence or boundaries of the Town nor the title of any of the present
officers thereof to their respective offices is being contested, and that no authority or proceedings
for the issuance of said Note has or have been repealed, revoked or rescinded.
IN WITNESS WHEREOF, I have hereunto set my hand this 3rd day of October,
2003.
T ttorney
434255.10]9064 CERT
Amount and Title:
Dated:
Matures:
Number
2R-I
.
SCHEDULE A
.
$4,680,000 Bond Anticipation Note for Solid Waste
Management District-20OJ
October 3, 2003
October I, 2004, subject to prior redemption
Denomination
$4,680,000
Interest Rate
(per annum)
1.19%
434255.1019064 CERT