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Home My WebLink AboutLand Preservation SWMD - Land Acquisition Bond oPEN. 5Pf1cE ~C;,b-=r ~ -' . .In the ollinion of Hawk in;; Delafielfl & /food LLP,Bond Co.unsel fa the Town under existinl{ st(1tu~s and court declS~. ns af}~mg contmuIng compbance with cl!rtam tax certificatIons descnbed h~rem, fi) mterest on the Bonds is exc1uded om KrOSS income or federal income tax Purp9ses pursuanllo SectIOn 103 olthe Internal Revenue Code 01,986, as amended (the "Code "), and iiJ interest on the antis is not treated as a preJprcnce item in calculating the alternative minimum tax imposed on indiVidua~ Qf}d Qorporafions under the Code" sue interest however . is inclual!d in the a4iMS.ted c;urrent e<<rrzings of certain corpora/ions for purposes.o . calculatmg the alternative minimum tax imRosed on such qorporatlOns. fft, aadition, In the Opl1JlOn of lJond COI!~f!l to (fte Town, under f!X'S1)f)g statutt;s, interest on the Bonds is exempt 'from personal Income taxes oJ New York State add Us pofitlcal subdlVlSlOns, mcluding The City oJ New York. See "Tax Matters" herein. The Bonds will NOT be designated by the Town as "qualified tax-exempt obligations" pursuant to the provision olSection 265 olthe Code. NEW ISSUE - SERIAL BONDS $14,650,000 TOWN OF SOUTHOLD SUFFOLK COUNTY, NEW YORK (the "Town") PUBLIC IMPROVEMENT SERIAL BONDS - 2007 [BOOK-ENTRY-ONL Y BONDS] Dated: April 15, 2007 Principal Due: April 15, 2008-2030, inclusive Interest Due: October 15, 2007 and semi-annually thereafter BOND MATURITY SCHEDULE Amount Maturity Rate Yield Amount Maturity Rate Yield Amount Maturity Rate Yield $700,000 2008 4.00% 3.42% $625,000 2016 4.25% 3.82% $ 725,000 2024 4.25% 4.23% 725,000 2009 4-% 3.45 675,000 2017 4.25 3.87 725,000 2025 4.25 4.25 575,000 2010 4-% 3.50 675,000 2018 4.25 3.95 550,000 2026 4.25 4.26 575,000 2011 4.25 3.52 675,000 2019 4.25 4.00 550,000 2027 4.25 4.28 600,000 2012 4.25 3.57 675,000 2020 4.25 4.05 550,000 2028 4.25 4.29 625,000 2013 4.25 3.62 675,000 2021 4.25 4.10 550,000 2029 4.25 4.30 625,000 2014 4.25 3.70 675,000 2022 4.25 4.15 550,000 2030 4.25 4.31 625,000 2015 4.25 3.77 725,000 2023 4.25 4.20 .The payment of the principal of and interest on the Bonds when due will be insured by a financial guaranty insurance policy to be issued by Ambac Assurance Corporation simultaneously with the delivery of the Bonds. Ambac Security and Sources of Pqyment: The Bonds will constitute general obligations of the Town and will contain a pledge of its faith and credit for the punctual payment of the principal of and inlerest on the Bonds, and all the taxable real property WIthin the Town will be subject to the levy 01 ad valorem taxes, without limitation as to rate or amount, for such purpose. Prior Redemption: The Bonds maturing on April 15, 2018 and thereafter are subiect to redemption, at the option of the TownAprior to matuTlty in whole or in part, on any date on or after April 15, 2017 in accordance with the terms described herein. See "uptional Redemption" under "The Bonds," herein. Form and Denomination: The Bonds will be issued as reJlistered bond~, and, when issued, will be registered in the name of Cede & Co. as nominee of The Depository Trust Company ("DTC") New lork, 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 inte&';al multiples thereof. Bondholders will not receive certificates representing their ownership interest in the Bonds purchased. See Book-Entry-Only System" under "The Bonds," herein. Payment: Payment of the principal of and interest on the Bonds to the Beneficial Owners of the Bonds will be made by DTC Participants and Indirect Participants in accordance with standing instructions and customl!!Y practices, as is now the case with muniClp'al securities held for the accounts of customers in bearer form or registered in "street name." Payment will be the responsibility of the DTC Particip,ant or Indirect Participant and not ofDTC or the Town, suQiect to any statutory and regulatory requirements as may be in effect from time to time. See "Book-Entry-Only System" under WIlle Bonds," herein. Hawkins Delafield & W Qod LLP has not participated in the preparation of thi~ Official Statement, nQr verified the accuracy, completeness or fairness orthe intormation contained nerein, and, accordingly, expresses no opmion with respect thereto. The Bonds are offered subject to thefinal approvingop'inion of Hawkins Delafield & Wood LLP, New York, New York, Bond Counsel, and certain other conditions. It is eXJ!ected that ilelivery of the Bonds In book-entry form will be made through the facilities ofDTC on or about April 19,2007 in New York, New York. This revised cover, dated April I 0, 2007, supplements the Official Statement of the Town dated March 27, 2007, relating to the obligations described therein and herein including certain information omitted from such Official Statement in accordance with SecuTlties and Exchan~e Commission Rule 15c2-12 {the "Rule"), and shall constitute the Town's final Official Statement within the meaning of the Rule. other than as set forth on this revised cover page, the table of contents the section entitled "Bond Rating" and the addition of "Appendix C - The Bond Insurer", there have been no other revisions to the Official Statement. For a <!escription of the Town's agreement to provide continuing diSClOsure as described in the Rule, see "Disclosure Undertaking" herem. ROOSEVELT & CROSS, INC. AND ASSOCIATES TOWN OF SOUTHOLD SUFFOLK COUNTY, NEW YORK Town Hall 53095 Main Road Southold, NY 11971 Telephone: (631) 765-4333 Fax: (631) 765-1366 TOWN BOARD Scott A. Russell, Supervisor William P. Edwards Louisa P. Evans Albert J. Krupski, Jr. Daniel C. Ross Thomas H. Wickham Elizabeth A. Neville, Town Clerk Peter W. Harris, Superintendent of Highways John A. Cushman II, Town Comptroller Patricia A. Finnegan, Esq., Town Attorney George Sullivan, Receiver of Taxes . . . BOND COUNSEL Hawkins Delafield & Wood LLP New York, New York . . . FINANCIAL ADVISOR MUNISTAT SERVICES, 1Ne. Municipal Finance Advisory Service 12 Roosevelt Avenue Port Jefferson Station, NY. 11776 (631) 331-8888 E-mail: info@munistat.com Website: http://www.munistat.com No dealer, broker, salesman or other person has been authorized by the Town to give any information or to make any representations, other than those contained in this Official Statement and if given or made, such other information or representations must not be relied upon as having been authorized by the Town. This Official Statement does not constitute an offer to sell or the solicitation of an offer to buy, nor shall there be any sale 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 has been obtained by the Town from sources which are believed to be reliable but it is not g1;laranteed as to accuracy or completeness. The information and expressions of opinion herein are subject to change WIthOut notice and neither the delivery of this Official Statement nor any sale made hereunder shall, under any circumstances, create any implication that there has been no change in the affaIrs of the Town since the date hereof. TABLE OF CONTENTS Page THE BONDS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. I Description of the Bonds. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. I Optional Redemption. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. I Book-entry-only System .................................................................. I Authorization and Purpose. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. 3 Security and Source of Payment ............................................................ 3 RemedIes Upon Default. . . . . . . . . . . . . . . . . . . . ; . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. 3 THE TOWN ............................................................................... 4 General Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. 4 Government. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. 4 Employees .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. 5 ECONOMIC AND DEMOGRAPHIC INFORMATION. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. 5 Population Characteristics . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. 5 Median Income of Families . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. 5 Unemployment Rate Statistics . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. 6 Selected Listing of Larger Employers ........................................................ 6 INDEBTEDNESS OF THE TOWN ............................................................ 6 Constitutional Requirements ............................................................... 6 Statutory Procedure ...................................................................... 7 Computation of Debt Limit and Calculation of Net Debt Contracting Margin ......................... 8 Trena of Town Indebtedness. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. 8 Details of Short-Term Indebtedness Outstanding ............................................... 9 Debt Service Requirements - Outstanding Bonds ............................................... 9 Calculation of Estimated Overlapping and Underlying Indebtedness ................................ 9 Authorized But Unissued Items . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. 10 Capital Program. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. 10 Landfill Closure and Postclosure Care Costs. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. 10 FINANCES OF THE TOWN ................................................................ II Financial Statements and Accounting Procedures ... . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. II Fund Structure and Accounts ......................................................... II Basis of Accounting ................................................................ II Investment Policy ...................................................................... II Budgetary Proceaures ................................................................... 12 FinancialOperations .................................................................... 12 Revenues. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. 12 ~~~~ ~iJ'"rty :.ax~~.: : : : : : : : : : : : : : : : : : : : : : : : : : : : : : : : : : : : : : : : : : : : : : : : : : : : : : : : : : : : : : :: g ~~K:i~~i~~:e~s . : : : : : : : : : : : : : : : : : : : : : : : : : :: : : : : : : : : : : : : : : : : : : : : : : : : : : : : : : : : : : : : : : : : : : :: g ContributIOns to the Retirement Systems. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. 13 Other Post Employment Benefits. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. 14 REAL PROPERTY TAX INFORMATION .................................................... 14 Real Property Taxes. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. 14 t~~~rr.g::~nCp;~~~~:,Re~~r.d::::::::::::::::::::::::::::::::::::::::::::::::::::::::::: l~ Tax Rates. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. 15 Large Taxable Properties. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. 15 LITIGATION. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. 16 BONDHOLDER RISKS AND MARKET FACTORS AFFECTING FINANCINGS OF THE STATE AND MUNICIPALITIES OF THE STATE...................................... 16 TABLE OF CONTENTS (Continued) Page TAX MATTERS........................................................................... 17 Opinion of Bond Counsel ................................................................ 17 Certain On/loing Federal Tax Requirements and Covenants. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. 17 Certain Co ateral Federal Tax Consequences . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. 17 Original Issue Discount .................................................................. 17 Bond Premium ......................................................................... 18 Backup Withholding .................................................................... 18 Legislation. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. 18 DOCUMENTS ACCOMPANYING DELIVERY OF THE BONDS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. 18 Absence of Litigation .................................................................... 18 Legal Matters.......................................................................... 19 Closing Certificates. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. . .. 19 DISCLOSURE UNDERTAKING. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. . .. 19 BOND RATING........................................................................... 20 FINANCIAL ADVISOR .................................................................... 20 ADDITIONAL INFORMATION. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. 20 APPENDIX A: APPENDIX B: APPENDIX C: Financial Information Audited Financial Statements For the Fiscal Vear Ended December 31, 2005 Insurance on the Bonds ii OFFICIAL STATEMENT $14,650,000 TOWN OF SOUTHOLD SUFFOLK COUNTY, NEW YORK PUBLIC IMPROVEMENT SERIAL BONDS - 2007 [BOOK-ENTRY-ONLY BONDS] This Official Statement presents certain information relatin~ to the Town of Southold, in the County of Suffolk, in the State of New York (the "Town," "County" and "State, , respectively) in connection with the safe of $14,650,000 Public Improvement Serial Bonds - 2007 (the "Bonds"). All quotations from and summaries and explanations of provisions of the Constitution and laws of the State and acts and proceedings of the Town contained herein do not purport to be complete and are qualified in their entirety by reference to the official compilations thereof and all references to the Bonds and the proceedings of the Town relating thereto are qualified in their entirety by reference to the definitive form of the Bonds and such proceedings. THE BONDS Description of the Bonds The Bonds will be dated April 15, 2007 and will mature on April 15, in each ofthe years 2008 to 2030, inclusive, in the principal amounts as set forth on the cover page hereof. The Bonds will be issued in fully registered form and when issued will be registered in the name of Cede & Co. as nominee of The Depository Trust Company ("DTC"), New York, New York. DTC will act as Securities Depository for the Bonds. Individual purchases ofthe Bonds may be made in book-entry form only, in denominations of $5,000 or integral multiples thereof. Purchasers will not receive certificates representing their interest in the Bonds. Interest on the Bonds will be I?ayable October 15, 2007, and semi-annually thereafter on April 15 and October 15, in each year until maturity. PrincIpal and interest will be paid by the Town to DTC, which will in turn remit such principal and interest to its Participants, for subsequent distribution to the Beneficial Owners of the Bonds, as described herein. The Bonds may be transferred in tlie manner described on the Bonds and as referenced in certain proceedings of the Town referred to therein. The Record Date of the Bonds will be the last business day of the month preceding each interest payment date. Optional Redemption The Bonds maturing on or before April 15, 2017 will not be subject to redemption prior to maturity. The Bonds maturing on or after April 15, 2018 will be subject to redemption prior to maturity, at the option of the Town, on April 15, 2017 and thereafter on any date, in whole or in part, and if m part, in any order of their maturity and in any am~unt within a maturity (selected by lot within a maturity), at par, plus accrued interest to the date of redemptIon. The Bonds shall be redeemable prior to maturity upon the giving of notice which identifies the Bonds to be redeemed, by mailing such notice to the registered holders thereof at their respective addresses as shown upon the registration books of the Fiscal Agent at least 30 days prior to the date set for any such redemption. If notice of redemption shall have been given as aforesaid, the Bonds so called for redemption shall become due and payable at the applicable redemption price on the redemption date designated in such notice, and interest on such Bonds shall cease to accrue from and after such redemption date. Book-entry-only System DTC will act as securities depository for the Bonds (the "Bonds"). The Bonds will be issued as fully- registered Bonds registered in the name of Cede & Co. (DTC's partnership nominee) or such other name as may be requested by an authorized representative of DTC. One fully-registered Bond certIficate will be issued for each maturity of the Bonds, each in the aggregate principal amount of such maturity, and will be deposited with DTC. I DTC, the world's largest depository, is a limited-purpose trust company organized under the New York Banking Law, a "banking organization" within the meaning of the New Y ork Bankin~ Law, a member of the Federal Reserve System, a "clearing corporation" within the meaning of the New York UOlform Commercial Code, and a "clearing agency" registered pursuant to the provisions of Section 17 A of the Securities Exchange Act of 1934. DTC holds and provides asset servicing for over 2 million issues of U.S. and non-U.S. equi!r issues, corporate and municipal debt issues, and money market instruments from over 85 countries that DTC s JJarticipants ("Direct Participants") deposit with DTC. DTC also facilitates the post-trade settlement among Direct PartiCipants of sales and other securittes transactions in deposited securities, through electronic computerized book-entry transfers and pledges between Direct Participants accounts. This eliminates the need for physical movement of securities certificates. Direct Participants include both U.S. and non-U .S. securities brokers and dealers, banks, trust companies, clearing corporations, and certain other organizations. DTC is a wholly-owned subsidiary of The Depository Trust & Clearing Corporation ("DTCC"). DTCC, in turn, is owned by a number of Direct Participants of DTC and Members of the National Securities Clearing Corporation, Government Securities Clearing Corporation, MBS Clearing Corporation, and Emerging Markets Clearing Corporation, (NSCC, GSCC, MBSCC, and EMCC, also subsidiaries of DTCC), as well as by the New York Stock Exchange, Inc., the American Stock Exchange LLC, and the National Association of Securities Dealers, Inc. Access to the DTC system is also available to others such as both U.S. and non-U.S. securities brokers and dealers, banks, trust companies, and clearing corporations that clear throu~ or maintain a custodial relationship with a Direct Participant, either directly or indlrectry ("Indirect Participants' ). DTC has Standard & Poor's highest rating: AAA. The DTC Rules applicable to its Participants are on file with the Securities and Exchange Commission. More information about DTC can be found at www.dtcc.com. Purchases of Bonds under the DTC system must be made by or through Direct Participants, which will receive a credit for the Bonds on DTC's records. The ownership interest of each actual purchaser of each Bond ("Beneficial Owner")is in turn to be recorded on the Direct and Indirect Participants' records. Beneficial Owners will not receive written confirmation from DTC of their purchase. Beneficial Owners are, however, expected to receive written confirmations providing details of the transaction, as well as periodic statements of their holdings, from the Direct or Indirect Participant through which the Beneficial Owner entered into the transaction. Transfers of ownership interests in the Bonds are to be accomplished by entries made on the books of Direct and Indirect Participants acting on behalf of Beneficial Owners. Beneficial Owners will not receive certificates representing their ownership interests in Bonds, except in the event that use of the book-entry system for the Bonds is discontinued. To facilitate subseguent transfers, all Bonds deposited by Direct Participants with DTC are registered in the name of DTC's partnership nominee, Cede & Co., or such other name as may be requested by an authorized representative ofDTC. The deposit of Bonds with DTC and their registration in the name of Cede & Co. or such other DTC nominee do not effect any change in beneficial ownership. DTC has no knowledge ofthe actual Beneficial Owners of the Bonds; DTC's records reflect only the identity ofthe Direct Participants to whose accounts such Bonds are credited, which mayor may not be the Beneficial Owners. The Direct and Indirect Participants will remain responsible for keeping account of their holdings on behalf of their customers. Conveyance of notices and other communications by DTC to Direct Participants, by Direct Participants to Indirect PartiCipants, and by Direct Participants and Indirect Participants to BenefiCial Owners will be governed by arrangements among them, subject to any statutory or regulatory requirements as may be in effect from time to time. Redemption notices shall be sent to DTC. If less than all of the Bonds within an issue are being redeemed, DTC's practice is to determine by lot the amount of the interest of each Direct Participant in such issue to be redeemed. Payments on the Bonds will be made to Cede & Co., or such other nominee as may be requested by an authorized representative ofDTC. DTC's practice is to credit Direct Participants' accounts upon DTC's receipt of funds and corresponding detail information from the Town, on the payable date in accordance with their respective holdings shown on DTC's records. Payments by Participants to Beneficial Owners will be governed by standing instructions and customarr, practices, as is the case with bonds held for the accounts of customers in bearer form or registered in "street name, ' and will be the responsibility of such Participant and not ofDTC nor its nominee, or the Town, subject to any statutory or regulatory requirements as may be in effect from time to time. Payments to Cede & Co. (or such other nominee as may be requested by an authOrized representative ofDTC) is the responsibility of the Town, disbursement of such payments to Direct Participants will be the responsibili!y ofDTC, and disbursement of such payments to the BenefiCial Owners will be the responsibility of Direct and Indirect Participants. DTC may discontinue providing its services as depository with respect to the Bonds at any time by giving reasonable notice to the Town. Under such circumstances, in the event that a successor depository is not obtained, Bond certificates are required to be printed and delivered. The Town may decide to discontinue use of the sy'stem of book-entry transfers through DTC (or a successor securities depository). In that event, Bond certificates Will be printed and aelivered. The information in this section concerning DTC and DTC's book-en~ system has been obtained from sources that the Town believes to be reliable, but the Town takes no responsibility for the accuracy thereof. 2 THE TOWN WILL NOT HA VB ANY RESPONSIBILITY OR OBLIGATION TO PARTICIPANTS, TO INDIRECT PARTICIPANTS OR TO ANY BENEFICIAL OWNER WITH RESPECT TO (I) THE ACCURACY OF ANY RECORDS MAINTAINED BY DTC, ANY PARTICIPANT, OR ANY INDIRECT PARTICIPANT; (II) THE PAYMENTS BY DTC OR ANY PARTICIPANT OR INDIRECT PARTICIPANT OF ANY AMOUNT WITH RESPECT TO THE PRINCIPAL OF, OR PREMIUM, IF ANY, OR INTEREST ON THE BONDS; (III) ANY NOTICE WHICH IS PERMmED OR REQUIRED TO BE GIVEN TO BONDHOLDERS; (IV) THE SELECTION BY DTC OR ANY PARTICIPANT 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 OTHER ACTION TAKEN BY DTC AS BONDOWNER. Source: The Depository Trust Company Authorization and Purpose The Bonds are being issued pursuant to the Constitution and statutes of the State of New York, including among others, the Town Law and the Local Finance Law, and various bond resolutions duly adopted by the Town Board on their respective dates, authorizing the issuance of serial bonds for various capital projects of the Town. Such projects, and their respective amounts of Bonds to be issued for each, are as follows: Date of Voter Aooroval Date Authorized 08-26-03 08-28-01 08-23-99 09-01-98 03-13-01 & 11-19-02 09-07-04 11-16-04 02-27-07 02-27-07 Amount to Puroose be Issued 11-04-03 11-06-01 11-02-99 11-03-98 N.A. NA N.A. NA N.A. $ 4,000,000 2,000,000 2,000,000 1,987,900 1,200,000 315,000 3,000,000 95,000 52.100 Open Space Preservation Open Space Preservation Open Space Preservation Open Space Preservation Solid Waste Management District - Land Acquisition .... Payment of Settled Claim .......................... Solid Waste Management District - Transfer Station ..... Acquisition of Excavator ........................... Acquisition of Tractor-Mower ....................... Total ................................. $14.650.000 A portion of the proceeds of the Bonds, together with available funds in the amount of$I,895,000, will be used to redeem outstanding bond anticipation notes in the amount of$6,410,000; the balance of the proceeds of the Bonds will provide original funds for the above referenced projects. For further information regarding bond authorizations of the Town for capital purposes and other matters relating thereto see "Indebtedness of the Town". Security and Source of Payment Each Bond when duly issued and paid for will constitute a contract between the Town and the holder thereof. The Bonds will be general obligations of the Town and will contain a pledge 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 levy ad valorem taxes on all taxable real property in the Town without limitation as to rate or amount. Under the Constitution of the State, the Town is re<;@iredtopledge its faith and credit for the payment of the principal of and interest on the Bonds, and the State is speCIfically precluaed from restricting the power of the Town to levy taxes on real estate therefor. Remedies Upon Default Under current law, provision is made for contract creditors (including the Bondholders) of the Town to enforce payments upon such contracts, if necessary, through court action, although the present statute limits interest on the amount adjudged due to creditors to nine per centum per annum from the date due to the date of payment. As a general rule, property and funds of a municipal corporation serving the public welfare and interest have not been juaicially subjected to execution or attachment to satisfy a judgment, although judicial mandates to officials to appropriate and pay judgments out of current funds or the proceeds of a tax levy have been issued. 3 Remedies for enforcement of payment are not expressly included in the Town's contract with holders of its bonds and notes, although any permanent repeal by statute or constitUtional amendment of a Bondholder's remedial right to judicial enforcement of the contract should, in the opinion of Bond Counsel, be held unconstitutional. The State has consented that any mu.n!cipality in the State may file a petition with any Unite~ States district court or court of bankruptcy under:any proVISIOn of the laws of the Umted States, now or hereafter m 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 municipal corporations, under certain circumstances, with easier access to judicially approved adjustment of debts, mcludingjudicial control over identifiable and unidentifiable creditors. In recent times, certain events and legislation affecting remedies on default have resulted in litigation. While courts of final jurisdiction have upheld and sustained the rights of bondholders, such courts might hold that future events including financial crises as they may occur in the State and in municipalities of the State require the exercise by the State of ItS emergency police powers to assure the continuation of essential services. No principal or interest payments on Town indebtedness are past due. The Town has never defaulted in the payment of the prIncipal of and interest on any indebtedness. TIlE TOWN There follows in this Statement a brief description of the Town, together with certain information concerning its economy and governmental organization, its indebtedness, current major revenue 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 the north fork of Long Island. Settlementtook place in 1640. The Village of Green port is located wholly within the Town. The Town also mcludes the area of Fishers Island which is located approximately twelve miles east of the mainland. Fishers Island is accessible only by water or air with ferry service operating between the Island and New London, Connecticut. , ., . 'The Town is primarily amral resort area with substantial shopping facilities available at Greenport, at various shopping centers within the Town, and at Riverhead just to the west.' Somecommerciahlll'VWes are available within the Town in the hamlets of Southold, Cutchogue and Mattituck. . . . Agriculture has been a major industry in the Town since its origins. In recent years, farm crops are gradually evolving from basic production to nursery crops including shrubs, sod, potted plants and other ornamentals. A substantial portion of these products are shipped by ferry across Long Island Sound for distribution throughout New England. A number of vineyards have been establIshed and wine-making is an important industry. Fishing and fish processing are now growinll industries due to improved transportation facilities. The Town is also a major summer resort area, utilizing bays, mlets and Long Island and Block Island Sounds. The main highways in the Town are New York State Route 25 and North Road. Rail transportation is provided by the Long Island Rail Road with stations at Mattituck, Southold and Greenport. Ferry service is also available between Onent Point, east of Green port, and New London, Connecticut as well as from Greenport to Shelter Island. Electric service is provided by the Long Island Power Authority; gas service is provided by Keyspan Energy Corporation. Fire protection is the responsibilIty of volunteer fire and fire protection districts. The Town provides its own police protection. In the Village of Green port, electric service and fire protection are provided by the Village. Government Six independently governed school districts are located wholly or partially within the Town, which rely on their own taxing powers granted by the State to raise revenues. The school districts use the Town's assessment roll as their basis for taxation of property located within the Town. Subjecttothe provisions of the State Constitution, the Town operates pursuanttothe Town Law, the General Municipal Law, the Local Finance Law, other laws generally applicable to the Town, and any specIal laws generally applicable to the Town. Under such la,,;s, there is no authority for the Town to ~ave a ~harter, but pursuant to the Town Law and other laws generally applIcable to home rule, the Town may from time to tIme adopt local laws whIch do not conflict with existing laws as enacted by the State. 4 The legislative power of the Town is vested in the Town Board which consists of five members, elected for a term of four years, ana the Supervisor, who is the chief executive officer of the Town, elected for a term of two years; effective with the term commencing January 1, 2008, the term of office of the Supervisor will be four years. Such terms are staggered such that two or three councilmen are elected every two years. All the Town Board members are elected at large and there is no limitation to the number of terms each may serve. Employees The Town provides services through approximately 217 full-time and 59 part-time employees, some of whom are represented by organized labor. The following table presents the number of employees' represented by organized labor, name of union and contract expiration dates. Name of Union Civil Service Employees Assoc. ....................... Police Benevolent Assoc. . . . . . . . . . . . . . . . . . . . . . . . . . . . Approximate Membership Date Contract Exoires 163 48 12-31-07 12-31-09 ECONOMIC AND DEMOGRAPHIC INFORMATION Population Characteristics The Town has had a population trend, as compared to the County and the State, as indicated below: Year Town of Suffolk New York Southold County State 16,804 1,127,030 18,241,391 19,172 1,284,231 17,557,288 19,836 1,321,977 17,990,455 20,599 1,419,369 18,976,457 23,344 1,483,396 19,254,630 1970 . . . . .. .. .. . . . .. .. .. . . .. .. . . .. .. . .. . .. 1980 ..................................... 1990 ..................................... 2000 ..................................... 2005 ..................................... Source: u.s. Bureau of the Census, Long Island Power Authority. Median Income of Families Town County State 1980 $21,013 24,194 20,180 1990 $43,082 53,247 39,741 2000 $61,108 72,112 51,691 Source: U.S. Department of Commerce, Bureau of the Census. Per Caoita Monev Income 1990 2000 Town County State 1980 $8,258 7,576 7,496 $19,037 18,481 16,501 $ 27,619 26,577 23,389 Source: U.S. Department ofConunerce, Bureau of the Census. 5 Unemployment Rate Statistics Unemployment statistics are not available fortbe Town as such. The smallest area for which such statistics are available (wliich include~ the To,:"n) is tbe County of Suffolk. The i,!font.tation set for:ili bel~w witb respect to such County IS mcluded for mformatlon purposes onry. It should not be Implied from tbe mcluslOn of such data in this Statement that the Town is necessarily representative of the County or vice versa. Annual Averages: 2002 2003 2004 2005 2006 Source: Department of Labor, State of New York Suffolk County New York State 4.3% 4.3 4.5 4.2 3.9 5.9% 6.2 5.9 5.0 4.5 Selected Listing of Larger Employers Name East,":rn Long Island Hospital . . . . . . . . . . . . . . . . . . . . . . . Mattltuck-Cutchogue UFSD ....................... Plum Island ADC . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Town ofSoutbold ............................... Southold UFSD ................................. San Simeon by the Sound ......................... Peconic Landmg . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Greenport UFSD ................................ ~ Hospital Public School U.S. Gov!. Facility Local Government Public School Nursing Home Life Care Community Public School Approx. No. of Emolovees 376 330 290 276 194 165 160 137 INDEBTEDNESS OF THE TOWN Constitutional Requirements The New York State Constitution limits tbe power oftbe Town (and otber municil?alities and school districts of the State) to issue obligations and to contract indebtedness. Such constitutional limitatIOns include tbe following, in summary form, as generally applicable to tbe Town and the Bonds: Purpose and Pledge. The Town shall not give or loan any money or 'p'roperty to or in aid of any individual, or private corporation or pnvate undertaking or give or loan its credit to or in aid of any oftbe foregoing or any public corporation. The Town may contract indebtedness only for a Town purpose and shall pledge its faith and credit for tbe payment of principal of and interest thereon. Payment and Maturity. Except for certain short-term indebtedness contracted in anticipation of taxes or to be paid within three fiscal year periods, indebtedness shall be paid in armual installments commencing no later tban two years after the date such indebtedness shall have been contracted and ending no later tban tbe expiration of the period of probable usefulness of the object or Ilurpose determined by statute; no installment may be more tban fifty per centum in excess oftbe smallest pnor installment, unless tbe Town has authorized the issuance of indebtedness having substantially level or declining armual debt service. The Town is required to provide an annual appropriation for the payment of interest due during tbe year on its indebtedness and for tbe amounts required in such year for payment of principal on its serial bonds, bond anticipation notes and capital notes. Debt Limit. The Town has tbe power to contract indebtedness for any Town purpose so long as the principal amount thereof shall not exceed seven per centum oftbe average full valuation of taxable real estate oftbe 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 metbod for determining full valuation consists of dividing tbe total assessed valuation of taxable real estate for a specified assessment roll by tbe fmal equalization ratio established for such assessment roll by tbe State Board of Real Property Services (tbe "State Board'? The State Legislature is required to prescribe the marmer by which such ratio shan be determmed. Average ful valuation is determined by taking tbe sum of tbe full valuations of such last completed assessment roll and the four preceding assessment rolls and dividing such sum by five. 6 There is no constitutional limitation on the amount that may be raised by the Town by tax on real estate in any fiscal year to pay interest and principal on all indebtedness. General. The Town is further subject to constitutional limitation by the general constitutionally imposed duty ofthe State Legislature to restrict the power of taxation, assessment, borrowing money, contracting indebtedness and loaning the credit of the Town so as to prevent abuses in taxation and assessments and m contracting indebtedness; however, as has been noted under "Security and Source of Payment" the State Legislature is prohibited by a specific constitutional provision from restricting the power of the Town to levy taxes on real estate for the payment of interest on or pnncipal of indebtedness theretofore contracted. Statutory Procedure In general, the State Legislature has authorized the power and procedure for the Town to borrow and incur indebtedness by the enactment ofthe Local Finance Law suoject, of course, to the constitutional provisions set forth above. The power to spend money, however, generally derives from other law, including the Town Law and General Municipal Law of the State. Pursuant to the Local Finance Law, the Town authorizes the incurrence of indebtedness, including bonds and bond anticipation notes issued in anticipation of such bonds, by the adoption of a resolution, approved by at least two- thirds ofthe members of the Town Board, the fmance board of the Town. Certain of such resolutions may be subject to permissive referendum, or may be submitted to the Town voters at the discretion of the Town Board; m this latter scenario, only a three-fifths vote of the Town Board is required. The Local Finance Law also provides a twenty-day statute of limitations after publication of a bond resolution, which in effect, estops thereafter legal challenges to the validity of obligations authorized by such bond resolution except for alleged constitutional violations. The Town has complied with such procedure with respect to the Bonds. Each bond resolution usually authorizes the construction, acquisition or installation of the object or purpose to be financed, sets forth the plan of financing and specifies the maximum maturity of the bonds subject to the legal (Constitution, Local Finance Law and case law) restrictions relating to the period of probable usefulness with respect thereto. Each bond resolution also authorizes the issuance of bond anticipation notes prior to the sale of serial bonds. Statutory law in New York permits notes to be renewed each year, provided annual principal reductions are made and provided that such renewals generally do not extend five years beyond the original date of borrowing. However, notes issued in anticipation of the sale of serial bonds for assessable unprovements are not subject to such five year limit and may be renewed subject to annual principal reductions for the entire period of probable usefulness of the purpose for which such notes were originally Issued. (See "Payment and Maturity" under "Constitutional Requirements," and "Details of Short-Term Indebtedness Outstanding.") In general, the Local Finance Law contains similar provisions providing the Town with power to issue general obhgation revenue and tax anticipation notes and general obligatIOn budget and capital notes. The following tables set forth the computation of debt limit and the calculation of total net indebtedness of the Town in accordance with the constitutional requirements hereinabove described. The following pages set forth certain details with respect to the indebtedness of the Town. 7 Computation of Debt Limit and Calculation of Net Debt Contracting Margin (As of March 27, 2007) Fiscal Year Ending December 31: State Equalization Rate Assessed Valuation 2003 2004 2005 2006 2007 $ 98,928,528 101,872,561 104,228,885 105,502,965 106,950,027 1.71% 1.49 1.25 1.13 1.04 ............................... Total Five Year Full Valuation. . .. . . . .. .. . . . . . ... . . . . ... . .... .. " . .. .. .. .. .. " Average Five Year Full Valuation ............................................. Debt Limit - 7% of Average Full Valuation ...................................... Inclusions: OU~:~~1>~~n::~s ..................................................... Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Sub-Total ........................................................... Bond Anticipation Notes .................................................... Total Inclusions ........................................................ Exclusions: Cash on .H~d for Debt (Grant Proceeds) ..................................... AppropnatlOns ......................................................... Total Exclusions ........................................................ Total Net Indebtedness Before Issuing the Bonds ................................. The Bonds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Less: BANs to be paid from bond proceeds ...................................... Net Effect ofIssuing Bonds .............................................:.... Total Net Indebtedness After Issuing the Bonds .................................. Net Debt Contracting Margin After Issuing the Bonds ............................. Percent of Debt Limit Exbausted . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Full Valuation $ 5,785,294,035 6,837,084,630 8,338,3 10,800 9,336,545,575 10.283.656.442 $40,580,891,482 8,116,178,296 568,132,480 $10,775,000 -0- 10.775.000 8.244.000 19.019.000 1,504,689 1.003.311 $ 2.508.000 15.511.000 14,650,000 4.515.000 10.135.000 25.646.000 $542.486.480 4.51% Trend of Town Indebtedness The following table represents the outstanding indebtedness of the Town at the end ofthe last five preceding fiscal years. Fiscal Year Endinl! December 31: 2002 2003 2004 2005 2006 Debt Outstanding End of Year: $7,615,000 $6,950,000 $6,515,000 $ 11,349,098 Bonds ..............".. $12,299,098 Bond Anticipation Notes ... 11.020.709 14.768.302 12.625.600 11. 720.000 8.244.000 Total Outstanding Debt. . . . . . . . $18.635.709 $21.718.302 $19.140.600 $24.019.098 $19.593.098 8 --.~.. Details of Short-Term Indebtedness Outstanding Bond Anticioation Notes Maturity Puroose Amount 04-20-07 06-08-07 08-24-07 09-07-07 Various Purposes .......................................... Fishers Island Fel'!)' District. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Fishers Island Refuse and Garbage District . . . . . . . . . . . . . . . . Various Purposes .......................................... Tota] ................................................ $6,619,000' 1,625,000 560,000 1.110.000 $ 8.244.000 a. To be funded from the proceeds of the Bonds and from available funds of the Town. Debt Service Requirements - Outstanding Bonds Fiscal Year Endin~ Decem er 31: Princioal Interest Total 2007 ....................... $ 979,098 $376,468 $1,355,566 2008 ....................... 995,000 345,309 1,340,309 2009 ....................... 1,025,000 312,348 1,337,348 2010 ....................... 1,000,000 277,957 1,277,957 2011 ....................... 1,025,000 242,982 1,267,982 2012 ....................... 940,000 209,413 1,149,413 2013 ....................... 800,000 180,382 980,382 2014 ....................... 815,000 153,083 968,083 2015 ....................... 810,000 124,535 934,535 2016 ....................... 735,000 98,164 833,164 2017 . . . . . . . . . . . . . . . . . . . . . . . 745,000 72,318 817,318 2018 ....................... 760,000 45,712 805,712 2019 ....................... 320,000 26,020 346,020 2020 ....................... 200,000 15,600 215,600 2021 ....................... 200.000 8.000 208.000 Totals ................... $11.349.098 $2.488.291 $13.837.389 a. Does not included refunded bonds. Calculation of Estimated Overlapping and Underlying Indebtedness AJtclicable AP~licable Overlallping Date of Percenta~e otal et Units' Reoort Aoolicali e Indebtedness Indebtedness County of Suffolk ..................... 12-11-06 3.71% $36,425,459 $30,380,486 Village of Greenport ................... 03-10-06 100.00 13,583,997 12,564,797 School Districts: Fishers Island . . . . . . . . . . . . . 06-30-06 100.00 455,000 455,000 Greenport ................. 06-30-06 100.00 270,000 270,000 Mattituck-Cutchogue ....... 06-30-06 98.49 29,113,644 25,328,870 New Suffolk Common ...... 06-30-06 100.00 - - Oy~erPonds ........... ... 06-30-06 100.00 150,000 150,000 Southold ................. 06-30-06 100.00 10,795,000 10,795,000 Fire Districts: 12-31-05 100.00 Cutchogue . . . . . . . . . . . . . . . . . 12-31-03 100.00 410,683 410,683 East Marion ............... Fishers Island 12-31-05 100.00 . . . . . . . . . . . . . . 12-31-05 100.00 Mattituck . . . . . . . . . . . . . . . . . 12-31-05 100.00 25,000 25,000 Orient................... . 12-31-05 100.00 1.600.000 1.600.000 Southold .................. $ 97.693.283 $ 86.204.151 a. Does not include refunded bonds. Sources: Annual Financial Reports on file with the Office of the State Comptroller, or more recently published Official Statements. 9 Authorized But Unissued Items The following Bonds are authorized but unissued: Date Authorized Puroose 09-01-98 08-23-99 08-28-0 I 02-25-03 08-26-03 08-16-05 11-21-06 02-27-07 02-27-07 02-27-07 02-27-07 Acquisition of Rights in Land-Open Space Preservation. . . . . . . . . . . . . . . Acquisition of Rigllts in Land-Open Space Preservat!on .............. Acquisition of Rights in Land-Open Space PreservatIOn .............. Mattituck Inlet Shore Erosion Study ............:................. Acquisition of Rights in Land-Open Space PreservatIOn. . . . . . . . . . . . . . . Construction ofN'ew Town Animal Shelter. . . . . . . . . . . . . . . . . . . . . . . . . Improvements to Peconic Recre!ltion Center . . . . . . . . . . . . . . . . . . . . . . . . Acquisition of Air Vacuum Dram Cleaner .......:................. Acquisition of Rights in Land-Open Space Preserval10n . . . . . . . . . . . . . . . Acquisition of Excavator ....................................... Acquisition of Tractor-Mower . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Total ................................. a. To be funded in whole or in part from the proceeds of the Bonds. Amount $ 2,000,000' 2,000,000' 2,000,000' 82,750 4,000,000' 2,600,000 200,000 278,000 22,500,000 100,00' 60.000' $35.820.750 Capital Program The Town annually adopts a Capital Budget Projects may be funded fbib S~te ~t :e~er~lf, aid2007ei~::t proceeds of obligations, property taxes or a combmatlOn thereof. A summary 0 e apl u ge or forth below: 2007 Deoartment General Town .................................... Highway Dept. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . SoTid Waste District ............................... Wastewater Disposal District ....................... $3,327,428 788,000 465,000 Total.......................................... . $ 4.580.428 Sources Appropriations ................................... Grants .. . .. . .. . . .. . . . .. . .. . . .. . . .. .. .. .. .. . .. Town Debt . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 313,261 684,167 3.583.000 $ 4.580.428 Total.......................................... . Landfill Closure aud Postclosure Care Costs The Town owns a landfill on a site in the unincorporated area of Cutchogue, commonly known as the Cutchogue Landfill. The Town ceased accepting waste at its Cutchogue Landfill as of October 8, 1993. Placement of the final cover, referred to as car.Ping, on the landfill was c~mpleted in Novem~r 2003. In addition to placement of the final cover on the landfil , state and federal regulatIOns presently reqUIre the Town to perform certain maintenance and monitoring functions at the site for up to thirty years. The Town has and will continue to comply with said requirements. The ongoing p<;,st closure costs are estlm.ated to be be~een $~O,OOO and $25,000 per year from 2007 through 2009. The Town paId $23,920 for such costs m 2006 and WIll contmue to pay these costs in the future. Actual costs associated with the capping totaled $7,681,720. Financing for closure activities has been provided in part through a grant from the New York State Department of Environmental Conservation in the amount of$2,000,000. The balance was provided through a State subsidized loan received in July, 2004 from the New York State Environmental Facilities Corporation. Costs associated with postclosure care will be covered by charges to future users of the collection facility and site and future tax revenue. 10 ____,."....v FINANCES OF THE TOWN Financial Statements and Accounting Procedures The Town maintains its financial records in accordance with the Uniform System of Accounts for Towns prescribed by the State Comptroller. The financial records of the Town are audited by mdependent accountants. The last such audit made available for public inspection covers the fiscal year ended December 31, 2005. In addition, the financial affairs of the Town are subject to periodic compliance review by the Office of the State Comptroller to ascertain whether the Town has complied with the requirements of various State and Federal statutes. In June, 1999, the Governmental Accounting Standards Board ("GASB") issued Statement 34, "Basic Financial Statements and Management's Discussions and Analysis for State and Local Governments". This Statement established new finanCial reI?orting requirements for state and local governments throughout the United States. It will required new informatIOn and restructuring of much of the information that governments have presented in the past. Comparability with reports issued in all prior years will be affected. GASB required the Town to implement thIS standard for the fiscal year ending Decemoer 31, 2003 and the Town has complied with such requirements. Fund Structure and Accounts The Town utilizes fund accounting to record and report its various service activities. A fund represents both a legal and an accounting entity which segregates the transactions of specific programs in accordance with special regulations, restrictions or limItations. There are three basic fund types: (I) governmental funds that are used to account for basic services and capital projects; (2) proprietary funds that account for operations of a commercial nature; and, (3) fiduciary funds that account for assets held in a trustee capacity. Account groups, which do not represent funds, are used to record fixed assets and long-term obligations that are not accounted for in a specific fund. The Town presently maintains the following governmental funds: General Fund, Highway Fund and Special Districts Funds, ana the Capital Projects Fund. Fiduciary funds consist of a Trust and Agency Fund. There are no proprietary funds. Account groups are maintained for fixed assets and long-term debt. Basis of Accounting The Town's governmental funds are accounted for on a modified accrual basis of accounting. Under the modified accrual baSIS, revenues are recognized when they become susceptible to accrual- that is, when they become "measurable" and "available" to finance expenditures to the current period. Revenues are susceptible to accrual include real property taxes, intergovernmental revenues (State and Feaeral aid) and operating transfers. Expenditures are generally recognized under the modified accrual basis of accounting, that is when the related fund liability is incurred. An exception to this general rule is unmatured interest on general long-term debt which is recognized when due. Investment Policy Pursuant to State law, including Sections 10 and II ofthe General Municipal Law (the "GML"), the Town is generally permitted to deposit moneys in banks or trust companies located and authorized to do business in the State. All such deposits, including special time deposit accounts and certificates of deposit, in excess of the amount insured under the Federal Deposit Insurance Act, are required to be secured in accordance with the provisions of and subject to the limitations of Section I 0 of the GML. The Town may also temporarily invest moneys in: (I) 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 guaranteed by the United States of America; (3) obligations of the State of New York; (4) with the approval of the New York State Comptroller, in tax anticipation notes or revenue anticipation notes issued by any municipality, school district, or district corporation, other than those notes issued by the Town, itself; (5) certificates of participation issued in connection with installment purchase agreements entered into by political subdivisions ofthe State pursuant to Section I 09-b(10) of the GML; (6) obligations of a New York public benefit corporation which are made lawful investments for municipalities pursuant to the enabling statute of such public benefit corporation; or (7) in the case of moneys held in certam reserve funds established by the Town pursuant to law, in obligations of the Town. All of the foregoing investments are required to be. payable or redeemable at the option of the owner wi.thin such times as the proceeds will be needed to meet expendItures for purposes for whIch tlie moneys were prOVIded and, in the case of obligations purc~ased with the proceeds of bonds or notes, shall b~ payable ?r re~ee~able many event, atthe option of the owner, wlthm two years of the date of purchase. Unless regIstered or mscrIbed m the name 11 of the Town, such instruments and investments must be purchased through, delivered to and held in custody of a bank or trust company in the State pursuant to a written custodial agreement as provided by Section 10 of the GML. The Town Board has adopted an investment policy and such policy conforms with aJ>plicable laws of the State governing the deposit and investment of public moneys. All deposits and investments orthe Town are made in accordance with such policy. Budgetary Procedures The head of each administrative unit of the Town is reguired to file detailed estimates of revenues (other than real property taxes) and expenditures for the next fiscal year With the budget officer (Supervisor) on or before August IS"'. Estimates for each fire district situated within the Town must also be filed with 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 preliminary buClget. A public hearing, notice of which must be duly ~ublished in the Town's official newspaper, on the preliminary budget is generally required to be held on the Thursday immediately following the general election. At such hearing, any person may express his opinion concerning the preliminary budget; however, there is no requirement or proVision that the preliminary 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, the preliminary budget becomes the annual budget of the Town for the ensuing fiscal year. Budgetary control during the year is the responsibility of the Supervisor who is assisted in this area by the Town Comptroller. However, any changes or modifications to the annual budget including the transfer of appropriations among line items must be approved by resolution of the Town Board. Budget Summaries for the 2006 and 2007 fiscal years may be found in Appendix A. Financial Operations . The Supervisor functions as the chief fiscal officer as provided in Section 2 of the Local Finance Law; in this 'rolej.the Supervisor is responsible for the Town's accounting andfmancial reporting'lICti\lities. In addition, the :Supervisor1salsQ.the 'Town's budget,offlcerand must therefore prepareilie'anniml'tentatiWlbudget for submission to the'Town Board. Pursuant to Section 30 of the Local Finance Law,' the Supervisor hu-been authorized to issue '. or'renew certain specifietypes of notes. As required by law, the Supervisor must execntemauthorizing certificate which than becomes a matter of public record. The Town Board, as a whole, serves as the finance board of the Town and is responsible for authorizing, by resolution, all material financial transactions such as operating and capital budgets and bonded debt. Town fmances are operated primarily through the General and Special Revenue Funds. The General Fund receives most of its revenue from rear property tax and State aid. Current operating expenditures are I?aid from these funds subject to available appropriatIOns. The Town also has refuse, sewer and wastewater districts, which are accounted for within separate funds. The primary sources of income for these districts comes from special assessments levied against district properties at the same time real estate taxes are levied. Capital projects and equipment purchases are accounted for m special capital projects funds. The Town observes a calendar year (January I through December 31) for operating and reporting purposes. Revenues The Town receives most of its revenues from a real property tax on all non-exempt property situated within the Town and from State Aid. A summary of such revenues for the five most recently completed fiscal years may be found in Appendix A. Real Property Taxes See "Real Property Tax Information", herein. State Aid The Town is dependent upon financial assistance from the State which comes primarily in the form of a state appropriation for State Aid to municipalities for operating purposes. There is no assurance, however, that the State appropriation for State Aid to municipalities will continue, either pursuant to existing formulas or in any fo~ whatsoever and, in any event, if appropriated !!Dd !lpportione? to the Toym,.payment ~an lie mad~ only if such m<?OIes are available therefore. The State IS not constttutlOnally obliged to mamtam or contmue such ald. See AppendIX A. 12 __ r ~ Expenditures The maior categories of expenditure for the Town are General Government Support, Public Safety, Transportation, Economic Assistance and Opportunity Home and Community Services, Culture and Recreation Employee Benefits and Debt Service. A summary orthe expenditures for the five most recently completed fiscal years may be found in Appendix A. Pension Systems Substantiallx all employees of the Town are members of the New York State and Local Employees' Retirement System C'ERS") or the New York State and Local Police and Fire Retirement System ("PFRS"). (Both Systems are referred to together hereinafter as the "Retirement Systems" where appropriate.) The Retirement Systems are cost-sharing multiple public employer retirement systems. The obligation of employers and employees to contribute and the benefits to employees are governed by the New York State Retirement System and Social Security Law (the "Retirement System Law"). The Retirement Systems offer a wide range of plans and benefits which are related to years of service and fmal average salary vesting of retirement benefits, death and disability benefits and optional methods of benefit paJ.lllents. All beneflts generally vest after five years of credited service. The Retirement System Law generally provlCles that all participating employers in each retirement system are jointly and severally liable for any unfunded investments. Such amounts are collected throug!1 annual billings to all participating employers. Generally, all employeesl except certain part-time employees, participate in the Retirement Systems. The Retirement Systems are non-contrioutory with respect to memllers hired prior to July 27, 1976. All employees who became members on or after July 27, 1976 must contribute 3% of their gross annual salary towards the cost of their retirement program. Chapter 86 of the Laws of 2000 eliminated the 3% for Tier 3 and Tier 4 members with 10 years of service credit. Due to unfavorable capital market returns over recent years and negative returns in each of the past three years, the State Comptroller lias sent notice to every school district and municipality in New York State that he believes that the retirement contributions will continue to increase in subsequent years. With regard to the Retirement Systems, a pension reform bill was signed by the Governor into Law as Chapter 49 of the Laws of2003. Chapter 49 changed the cycle of billing to match budget cycles of the Town. Under the previous method, the Town was unsure of how much it would have to pay to the system until after its budget was implemented. Under the new system the contribution for a given fiscalyear will be based on the value of the pension fund on the prior April I instead of the following April I so that the Town will be able to more accurately include the cost oftlle contribution into its budget. Chapter 49 requires the Town to make a minimum contribution of 4.5% of payroll every year, including years in which the investment performance of the fund would make a lower -contribution pOSSible. On July 20,2004 the New York State Legislature passed a bill amendingthe General Municipal Law, Local Finance Law and the Retirement and Social Secunty Law. On July 30, 2004, the Governor signed the new retirement system legislation into Law as Chapter 260 of the Laws of2004. The bill gIVes the employer the option to move the annual payment date for contributions from December 15th to February I ", effective December 15,21>04. It increase,s; from five to ten years, the maximum amortization period of the portIOn of employer contributions that exceeds 7% of payroll for the 2004-2005 fiscal year of the Retirement System (April I - Marcb 31). It also allows employers to issue bonds to finance their 2005-2006 and 2006-2007 fiscal year contributions in excess of 9.5% and 10.5%, respectively. This amortization may be made with the Retirement System or the Town could issue a maximum of I O-year general obligation bondsl ilie interest on which would be set at prevailing bond market rates on the date of sale and would be taxable for feaeral income tax purposes. For the payment due December 15,2007, it is estimated that the contribution will be approximately 11.5% of payroll. The Town paid its retirement obligation in full on December 15, 2006 and has included its total obligation for the 2006 fiscal year in its current budget. The Town does not plan to amortize its retirement system obligations. While the Town is aware of the potential negative impact on its budget and will take the appropriate steps to budget accordingly for the increase, there can be no assurance that its financial position will not be negatively impacted as a result of the potential increase in such contributions. Contributions to the Retirement Systems Fiscal Year Ending December 3 I: Amount of Contribution 2002 ....................................... 2003 ....................................... 2004 ....................................... 2005 ....................................... 2006 ...................................... 2007 (Budget) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 164,287 684,617 1,670,102 2,085,137 1,837,992 1,827,000 13 Other Post Employment Benefits It should also be noted tbat the Town provides post-retirement healthcare benefits to various categories of former employees. These costs may be expected to rise substantially in tbe future. There is now an accounting rule that will reqUIre governmental entIties, such as tbe Town, to account for post-retirement healtbcare benefits as it accounts for vested pension benefits. GASB Statement No. 45 ("GASB 45") of the Governmental Accounting Standards Board ("GASB"), described below, requires such accounting. Although GASB 45 encourages earlier adoption, implementation is required by the following dates, based on tbe size of government measured by annual revenue: Annual Revenue Effective for Fiscal Year Ending After: December 15, 2006 December 15, 2007 December 15, 2008 Greater than $100 million Between $10 million and $100 million Less than $10 million School Districts and Boards of Cooperative Education Services, unlike otber municipal units of government in the State, have been prohibited from reducing retiree health benefits or increasing health care contributions received or paid by retirees below tbe level of benefits or contributions afforded to or required from active employees since the implementation of Chapter 729 oftbe Laws of 1994. This protection from unilateral reduction of benefits has been extended annually and continued through May 15,2006 pursuant to Chapter 16 oftbe Laws of 2006. Legislative attempts to provide similar protection to retirees of other local units of government in tbe State have not succeeded as oftbis date. Nevertbeless, many such retirees of all varieties of municipal units in tbe State do presently receive such benefits. GASB 45 and OPEB. OPEB refers to "otber post-employment benefits," meaning other than pension benefits, disability benefits and OPEB consist primarily ofhealtb care benefits, and may include other benefits such as disability benefits and life insurance. Until now, these benefits have generally been administered on a pay-as-you- go basis and have not been reported as a liability on governmental financial statements. GASB 45 will require municipalities and school districts to account for OPEB liabilities much like they already account for p'ension liabilities, generally adopting the actuarial methodologies used for pensions, with adjustments for the dIfferent characteristIcs ofOPEB and tbe fact that most municipahties and school districts have not set aside any funds against tbis liability. Unlike GASB 27, which covers accounting for pensions, GASB 45 does not require municipalities or school distrIcts to report a net OPEB obligation at the start. Under GASB 45, based on actuarial valuation, an annual required contribution ("ARC") will be determined for each municipality or school district. The ARC is the sum of (a) tbe normal cost for the year (the p'resent value offuture benefits being earned by current employees) plus (b) amortization oftbe unfunded accrued liabtlity (benefits already earned by current and former employees but not yet provided for), using an amortization period of not more than 30 years. If a municipality or school dIstrict contributes an amount less tban tbe ARC, a net OPEB obligation will result, which is required to be recorded as a liability on its financial statements. GASB 45 does not require tbat tbe unfunded liability actually be amortized nor tbat it be advance funded, only that tbe municipality or school district account for its unfunded accrued liability and compliance in meeting its ARC. The Town expects to be in compliance witb tbe requirements ofGASB 45 by or before tbe applicable effective date. Actuarial valuation will be required every 2 years for OPEB plans with more than 200 members, every 3 years if tbere are less than 200 members. REAL PROPERTY TAX INFORMATION Real Property Taxes The Town derives a significant portion of its annual revenue through a direct real property tax. The following table presents the total tax levy, by purpose, with adjustments and collection performance for each of the last five fiscal years. 14 Tax Levy and Collection Record Fiscal Year Endin~ December 31: 2004 200 2006 Total Tax Levy. . . . . . . . . . . . . . . . Amount Collected ............. Returned to County Amount .................... Percentage .................. Uncollected at End of Year of Levy ................... 2003 $74,603,829 72,211,402 2,392.427 3.20% $79,909,681 77,595,985 2,313,696 2.90% $89,495,573 83,356,976 2,138,597 2.39% $89,934,663 86,628,595 3,106,068 3.45% None None None None a. As of February 6, 2007 Tax Collection Procedure 2007 $97,216,091 54,175,000' 43,041,091" 44.27%" NA Property taxes for the Town are collected by the Town tax receiver. Such taxes are due and payable in equal installments on December I and May 10, but may be paid without penalty by January 10 and May 31, respectively. The penalty added to delinquent taxes is one-twelfth the rate of interest determined by the State Commissioner of Taxation and Finance. The rate is determined each year by July 15 based on the one-year constant maturity yield index for United States Treasury securities for the quarter-year ending on the immediately preceding June 30. The rate is effective for a twelve month period commencing August I each year and in no event will be less than ten per centum per annum. The Town receives its full levy before the end of its fiscal year. Uncollected amounts are not segregated by the Town tax receiver, and any deficiency in tax collection is the County's liability. Tax Rates (Per $100 Assessed Valuation) Fiscal Year Endin~ December 31: 2003 2004 005 2006 General - Townwide ................ General- Outside Village ............ Highway . . . . . . . . . . . . . . . . . . . . . . $133.38 3.10 36.59 $136.65 4.53 31.12 $139.73 5.43 38.37 $140.37 4.90 40.68 Large Taxable Propeljies 2007 Assessment Roll Name Peconic Landingat Southold ....................... qLCO, LIPA, Marketspan, Keyspan ................. Village of Greenport-Power Plant.. .. .. ... . ..... . .... Fishers Island Dev. Corp. .......................... Robins Island Holding LLC . . . . . . . . . . . . . . . . . . . . . . . . . Alan Cardinale .................................. Damianos, Herodotus. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . New York Telephone ............................. Levin Family Limited Partnership . . . . . . . . . . . . . . . . . . . . Anderson, Bradley & Francesca ..................... Norris, Susan .................................... Laurel Links & Country Club ....................... Kimogenor Pt Co. ................................ DriftWood Cove ................................. ~ Commercial Utility Utility Residential Development Private Lands S~opping Center V meyard Utility Motel & Restaurant Farmland & Private Lands Various Properties Country Club Co-Op Co-Op a. Assessmenl Roll established in 2006 for levy and collection of taxes during 2007 Fiscal Year. b. Represenls approximately 5.57% of the total taxable assessed valuation ofthe Town for 2007. 15 2007 $151.02 3.99 39.63 Assessed Valuation $ 1,707,704 1,558,702 585,000 362,000 330,500 285,500 234,000 233,985 148,950 113,800 111,800 96,300 94,600 90.000 $5.952.841 b LITIGATION The Town of South old is suhject to a number oflawsuits in the ordinary conduct of its affairs. For the most part, l!fiy potential adverse decisions in such suits, either individually or in the aggregate, are not likely to have a matenal adverse effect on the Town. There are certain matters worthy of special mention: Stanton. at al. v. Town of Southold - This is an action in inverse condemnation and nuisance l:lY fo!fY-two property owners, allegmg property damage in the form of erosion caused by a Town-owned jetty. The Town is engaged in studies to determme the issues surrounding the alleged erosion, its causes, and possible solutions. Although this case was frrst filed in 1997, discovery has not been completed. The issues in this case are complex and win require extensive expert testimony. The nature and extent of damages, if any, are unknown at this point. Insurance coverage may be available for potentialliabili!y for alleged compensatory damages. The Town has denied any wrongdoing and intends vigorously to defend any fUrther prosecution of this action. uad Ente rises et al. v. Town of Southold - This action arises from the Town Board of the Town of Southol s a ege re sa to approve a c ange 0 zone app.lication filed by.plaintiffs, which sought substantially to increase the zonmg density of a parcel ofland owned by a ileveloper plaintJtl. Plaintiffs assert claims under the Fair Housing Act, Americans with Disabilities Act, State and Town Law, alleginz housing discrimination against senior 1- handicapped and disabled residents who are also named as "Jane Doe" plamtiffs. Plaintiffs seek declaratory relier granting their desired zoning, as well as compensatory and punitive damages of$5 million eachl respectively, for each of the six federal causes of action. Insurance coverage may be available for potentia liability for alleged c9mpensatory damages. Fact apd expert discovery is proceeding. The Town has dented all wrongdoing and intends vigorously to contest these claims. Notices of Claim - Four noteworthy Notices of Claim have been filed against the Town relating to police matters. I'hree ot the matters relate back to events in 2003 or 2004/ none of which have yet ripened into'litigation. In the first claim, claiman~ Jason Weber, alleged that he suffereo physical injury, emotional injury, and loss of earnings by virtue of the alieged excessive force used by Town police officers in tlieir arrest of claimant. Claimant has sulisequently been convicted of driving while intoxicated, an underlying crime leading to the arrest at issue. Claimant demanded $20 million, but has not served the Town with any lawsuit. In the second claim, the same claimant demanded $2 million as a result of a traffic stop whereby claimant was ticketed for driving with a suspended license. In that instance, claimant alleged emotional injuries and loss of employment due to allegeil false imprisonment, and violation of his civil riiilits. Claimant has not served the Town with any lawsuit relating to this matter. In the third claim, claimant Mark graziller demanded $5 million for alleged physical and emotional mjuries and civil rights violations arising out of a traffic stop. Claimant has not served the Town with any lawsuit relating to this matter. Insurance coverage may be available m these matters for potential 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 instituteil arising out of these allegations. The statute of limitations for state law claims has run on each of these matters; the Federal statute of limitations has run on the first and third claims; and as of yet the Town has not been served with notice of any filed lawsuit. In the fourth Notice of Claim, Kenneth MacAlpin demands $5 million in damages for p.Jiysical , emotional and civil rights iniuries related to an alleged incident, Iielieved to be an arrest by Town police otlicers "on or about February 21,2007 and prior arrests." The Town is not aware of any details of this purported claim, and intends vigorously to contest it both prior to and after the institution of a lawsuit, if any is ever filed and served. BONDHOLDER RISKS AND MARKET FACTORS AFFECTING FINANCINGS OF THE STATE AND MUNICIPALITIES OF THE STATE There are certain potential risks associated with an investment in the Bonds and investors should be thoroughly familiar with thIS Official Statement, including its appendices, in order to make an informed investment decision. Investors should consider, in particular, the following factors: The Town's credit rating could be affected by circumstances beyond the Town's control. Economic conditions such as the rate of unemployment and inflation, termination of commercial operations by cO!Jlorate taxpayers and employers, as well as natural catastrophes, could adversely affect the assessed valuation of Town property and its aBility to maintain fund balances ana other statistical indices commensurate with its current credit rating. Accordingly, a decline in the Town's credit rating could adversely affect the market value of the Bonds. In addition, if and when a holder of any of the Bonds should elect to sell a Bond prior to its maturity, there can be no assurance that a market shall have been established, maintained and be in existence for the purchase and sale of any Bonds. The price or principal value of the Bonds is dependent on the prevailing level of mterest rates. If interest rates should increase, tfie price of a bond or note may decline causing the bond or noteholder to potentially incur a capital loss if such bond or note is sold prior to its maturity. The financial condition of the Town as well as the market for the Bonds could be affected by a variety of factors, some of which are beyond the Town's control. There can be no assurance that adverse events in the State, including, for example, the seeking by. a municipality of remedies pursuant to the Federal Bankru.ptcy Act or otherwise, will not occur which migfit affect the market price of and the market for the Bonds. If a significant default or other financial crisis should occur in the affairs of the State or any of its agencies or political subdivisions thereby further impairing the acceptability of obligations issued by borrowers withm the State, both the ability of the Town 16 -~,......,;...,~.--- "."..,.-.."._----;._,,-...'-""--~.~ to arrange for additional borrowings and the market for and market value of outstanding debt obligations, including the Bonos, could be adversely affected. Futnre amendments to applicable statutes affecting the treatment of interest paid on municipal bonds, including the Bonds) for income taxation purposes could have an adverse effect on the market value of the Bonds (see "Tax Matters" herem). TAX MATTERS Opinion of Bond Counsel In the opinion of Hawkins Delafield & Wood LLP, Bond Counsel to the Town, under existinll statutes and court decisions and assuming continuinR compliance with certain tax covenants described herein, (i) mterest on the Bonds is excluded from gross income Tor Federal income tax purposes pursuant to Section 103 of the Internal Revenue Code of 1986, as amended (the "Code"), and (ii) interest on the Bonds is not treated as a preference item in calculating the alternative minimum tax imposed on milividuals and corporations under the Code; such interest, however, is mcluded in the adjusted current earnings of certain corporations for J:lurposes of calculating the alternative minimum tax imposed on such corporations. In rendering its opinion, Bond Counsel has relied on certain representations, certifications of fact, and statements of reasonable expectations made by the Town in connection With the Bonds, and Bond Counsel has assumed compliance by the Town with certain onlloing covenants to comJ:lly with applicable requirements of the Code to assure the exclUSIOn of interest on the Bonds from gross income unaer Section 103 of the Code. In addition)n the opinion of Bond Counsel to the Town, under existing statutes, interest on the Bonds is exempt from New Iork Stafe and New York City personal income taxes. Bond Counsel expresses no opinion regarding any other Federal or state tax consequences with respect to the Bonds. Bond Counsel renders its opinion under existing statutes and court decisions as of the issue date, and assumes no obligation to update its opinion after the issue date to reflect any future action, fact or circumstance, or chan~ in law or interpretation, or otherwise. Bond Counsel expresses no opinion on the effect of any actIOn herealler taken or not taken in reliance upon an opinion of other counsel on the exclusion from gross income for Federal income tax purposes of interest on the Bonds, or under state and local tax law. Certain Ongoing Federal Tax Requirements and Covenants The Code establishes certain ongoing requirements that must be met subsequent to the issuance and delivery of the Bonds in order that interest on the l3onos be and remain excluded from gross mcome under Section 103 of the Code. These requirements include, but are not limited to, requirements relating to use and expenditnre of gross proceeds of the Bonds, yield and other restrictions on investments of gross proceeds, and the arbitrage rebate reguirement that certain excess earnings on grossproceeds be rebated to fhe Feoeral government. Noncompliance wifh such requirements may cause interest on the Bonds to become included in gross income for Federal income tax purposes retroactive to their issue date, irrespective of the date on which such noncompliance occurs or is discovered. The Town has covenanted to comply with certain applicable requirements of the Code to assure the exclusion of interest on the Bonds from gross income under SectIOn 103 of the Code. Certain Collateral Federal Tax Consequences The following is a brief discussion of certain collateral Federal income tax matters with respect to the Bonds. It does not purport to address all aspects of Federal taxation that may be relevant to a particular owner of a Bond. Prospective investors, particularly those who may be subject to special rule~ are advised to consult their own tax advisors regarding the Federal tax consequences of owning and disposing or the Bonds. Prosllective owners of the Bonds should be aware that the ownership of such obligations may result in collateral Feoeral income tax consequences to various categories of persons, such as cO!"porations (including S cOJ;porations and foreign corporations), financial institutions, property and casualty and life insurance companies individual recillients of Social Security and railroad retirement benefits, individuals otherwise eligible for the earned income tax creait, and taxpayers deemed to have incurred or continued mdebtedness to purchase or carry obligations the interest on which is excluded from gross income for Federal income tax Ilurposes. Interest on the Bonds may be taken into account in determining the tax liability of foreign corporations subject to the branch profits tax imposed by Section 884 of the Code. Original Issue Discount "Original issue discount" ("OlD") is the excess of the sum of all amounts payable at the stated maturity of a Bond (excluding certain "gualified stated interest" that is unconditionally payable at least annually at prescribed rates) over the issue frice onhat maturity. In general, the "issue price" of a maturity means the first price at which a substantial amoun of the Bonds of that maturity was sold (excludinll sales to bond houses, brokers, or similar persons acting in the capacity as underwriters, placement agents, or wholesalers). In general, the issue pnce for ea~h maturity of Bonds is expected to be the inittal public ofiering price set forth on fhe cover page of the OffiCial Statement. Bond Counsel further is of the opinion that, for any Bonds having OlD (a "Discountl3ond"), OlD that 17 has accrued and is properly allocable to the owners of the Discount Bonds under Section 1288 of the Code is excludable from gross Income for Federal income tax purposes to the same extent as other interest on the Bonds. In general, under Section 1288 of the Code, OlD on a Discount Bond accrues under a constant yield method, based on periodic compounding of interest over prescribed accrual periods using a compounding rate determined by reference to the yield on that Discount Bond. An owner's adjusted basis in a Discount Bond is increased by accrueo OlD for purposes of determining gain or loss on sale, exchange, or other disposition of such Bond. Accrued OlD may be taken into account as an increase in the amount of tax-exempt income received or deemed to have been receiveo for purposes of ~etermining various other tax consequences of owning a Discount Bond even though there will not be a corresponding cash payment. Owners of Discount Bonds should consult their own tax advisors with respect to the treatment of original issue discount for Federal income tax purposes; including various special rules relating thereto, and the state and local tax consequences of acquiring, holding, and oisposing of Discount Bonds. Bond Premium In general, if an owner acquires a Bond for a Ilurchase price (excluding accrued interest) or otherwise at a tax basis tJiat reflects a jJremium over the sum of lill amounts payable on the Bond after the acquisition date (excluding certain "qualified stated interest" that is unconditionally payable at least annually at prescribed rates). that premium constitutes "bond premium" on that Bond (a "Premium Bond"). In general, under Section 171 of the Codel an owner of a Premium Bond must amortize the bond premium over the remaining term of the Premium Bond, baseD on the owner's yield over the remaining term of the Premium Bond determined based on constant yield principles (in certain cases involving a Premium Bond callable prior to its stated maturity date, the amortization period and Yield may be required to be determined on the basis of an earlier call date that results in the lowest yield on such bond). An owner of a Premium Bond must amortize the bond premium by offsetting the qualified stated interest allocable to each interest accrual period under the owner's regular method of accounting against the bond premium allocable to that period. In the case of a tax-exempt Premium Bond, if the bond premium allocable to an accruallleriod exceeds the qualified stated interest allocable to that accrual period, the excess is a nondeductible loss. Under certain circumstancesj the owner of a Premium Bond may realize a taxable gain upon disposition of the Premium Bond even though it is so d or redeemed for an amount less than or equal to ttie owner's onginal acquisition cost. Owners of any Premium Bonds should consult their own tax advisors regarding the treatment of bond premium for Federal income tax P!l!1loses, including various special rules relating thereto, and state and local tax consequences, in connection witli the acquisition, ownership, amortization of bond premIUm on, sale, exchange, or other disposition of Premium Bonds. Backup Withholding Under the Code, interest on tax-exempt obligations paid after March 31, 2007, includinK interest on the Bonds, is subject to "backup withholding" if the recipient of the interest does not comlllete a Form W-9 Request for Taxpayer Identification Number and Certification, or otherwise provide to the payor (i.e., the financial instItution paying the interest on behalf of the Town a taxpayer identification number). "Backu:r Withholding" means that tlie payor is required to deduct and withhold a tax from the interest payment, calculate in the manner set forth in the Cooe. In general, it is expected that owners purchasing the Bonds through a brokerage account will have executed a Fonn W-9 in connection with the establishment of such account so that no backup withholding will occur. The backup withholding requirement does not affect the excludability of the interest on tlie Bonds from gross income for federal income tax purposes. Any amounts withheld pursuant to backup withholding would be allowed as a refund or a credit against tJie owner's federal income tax once the required information is furnished to the Internal Revenue Service. Legislation Legislation affecting municipal bonds is regularly under consideration by the United States Congress. There can be no assurance that legislation enacted or proposed after the date of issuance of the Bonds will not have an adverse effect on the tax-exempt status or market pnce of the Bonds. DOCUMENTS ACCOMPANYING DELIVERY OF THE BONDS Absence of Litigation Ullon delivery of the Bonds the Town shall furnish a certificate of the Town Attorney, dated the date of delivery or th!l ~onds,. to the effect that the~e is no coptroversy or litigation !lf any nature pendlpg or threat~ned to restrain or enJoin the Issuanc~ sale, execu.tlOn or dehv~!)' of the Bonos, or In any way contesting or affect!ng the validity of the Bonds or any or the proceedings taken wltli respectto the Issuance and sale thereof or the apphcatlOn of moneys to the pa)l1l)ent of the Bonds, and fUrther stating that there is no controversy or litigation of any nature now pending or threatened by or against the Town wherein an adverse judgment or ruling could have a material adverse Impact on ~he financial conditIOn of the Town or adversely affect the power of the Town to levy; collect and enforce the collectIon of taxes or other revenues for the payment of the Bonds, which has not been diSClOsed in this Official Statement. 18 _._~-*.".""".,~...--,..__.~,.,.,~--- ., Legal Matters Legal matters incident to the authorization issuance and sale of the Bonds will be subject to the final aJlProving opinion of Hawkins Delafield & Wood LLp, Bond Counsel. Such opinion will he available at the time of delivery of the Bonds and will be to the effect that the 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 propet1Y within the Town is subject to the levy of ad valorem real estate taxes to pay the Bo~ds and interest thereon wiiliout limitation of rate or amount. Said opinion shall also contain further statements to the effect that (a) the enforceability of rights or remedies with respectto such Bonds may be limited by bankruptcy, insolvency, or other laws affecting creditors' rights or remedies heretofore or hereafter enacted, and (b) said law Iirm has not been requested to examine or review and has not examined or reviewed the accuracy or sufficiency of the Official Statement, or any additional proceedings reports, correspondence, financial statements or other documents, containing financial or other inlormation relative to the Town which have been or may be furnished or disclosed to purchase.rs ofthe 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 Purchaser will be furnished with the following items: (i) a Certificate of the Supervisor to the effect that as of the date of this Official Statement and at all times subsequent thereto, up to and including the time of delivery of the Bonds, this Official Statement did not and does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements herein, in the light of the circumstances under which they were made, not misleading, and further stating that there has been no adverse material change in the financial condition of the Town since the date of this Official Statement up to and including the time of de1ivery of the Bonds, and having attached thereto a copy of this Official Statement; (ii) a Certificate signed by the Supervisor evidencing payment for the Bonds; (iii) a Signature Certificate evidencing die due execution of the Bonds, including statements iliat (a) no litigation of any nature is pending or threatened, restraining or enjoining the Issuance and delivery ofthe gonds or the levy and collection oftaxes to pay the principal of and interest thereon, nor in any manner _questIOning the proceedings and authority under which die Bonds were authorized or affecting the validity of the Bonds thereunder, (b) neitner the corporate existence or boundaries of the Town nor the title of any of the officers thereof to their respective offices is being contested, and (c) no authority or proceedings for the issuance of the Bonds have been reJlealed; revoked or rescinded; and (iv) an Arbitrage and1Jse of Proceeds Certificate executed by the Supervisor, as descrioed under "Tax Matters". DISCLOSURE UNDERTAKING This Official Statement is in a form "deemed final" by the Town for the pUl"Jloses of Securities and Exchange Commission Rule 15c2-12. At the time of the delivery of the Bonds, the Town will provide an executed copy of Its "Undertaking to Provide Continuing Disclosure" (the "Undertaking"). Said Undertaking will constitute a written agreement or contract ofthe Town for the benefit of holders of and owners of beneficiarinterests in the Bonds, to provide, or cause to be provided: (I) during any succeeding fiscal year of the Town in which the Bonds are outstanding to (a) each nationally recognized municipal securities information repository ("NRMSIR") and (b) the New V ork State Information DeJlository, if created, ("SID"), (i) certain annual financial information, in a form generally consistent with the information contamed or cross-referenced in this Official Statement under the-headings: "The Town" "Economic and Demogra~hic Information","Indebtedness of the Town", "Finances oftne Town", "Real Prope!1Y Tax Information, and "Litigation"; and in Appendix A, on or pnor to the I 80th day following the end of each fiscal year, including (ii) the audited financial statement, if any, for the preceeding fiscal year of the Town, unless such audited financial statement, if any, shall not then be available in which case the unaudited financial statement shall be provided and an audited financial statement shall be delivered to each NRMSIR and to the SID within 30 days after it becomes available and in no event later than 360 days after the end of each fiscal year; (2) to (a) each NRMSIR, or to the Municipal Securities Rulemaking Board ("MSRB "), and to (b) the SID, timely notice of the occurrence of any of the following events with respect to the Bonds, if material: (i) principal and interest paY!11ent delinquencies; (ii) non-payment related defaults; (iii) unscheduled draws on debt service reserves reflecting financial difficulties; (iv) unscheduled draws on credit enhancements reflecting financial difficulties; (V) substitution of credit or hquidity providers, or their failure to perform; (vi) adverse tax opinions or events affecting the tax-exempt status oftlie Bonds; (vii) modifications to rig):its of Bondholders; (viii) bond calls; (ix) defeasances; (x) release, substitution, or sale of property 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, if it determines th.at any such other event is material with respect to .the Bonds; but the T own doe~ not undertake to commit to provide any such notice of the occurrence of any matenal event except those events hsted above; and (3) to (a) each NRMS~ or to the MSRB, and to (b) the SID, in a timely manner, notice of a failure to provide the annual financial mformation hy the date specified. 19 The Town's Undertaking shall remain in full force and effect until such time as the principal of' redemption premiums, if any, and interest on the Bonds shall have been paid in full. The sole and exclusive remedy for breach or default under the Undertaking is an action to compel specific performance of the undertakings of the Town, and no person or entity, including a Ilolder of the Bonds, snail be entitled to recover monetary damages thereunder under any circumstances. Any failure by the Town to comply with the Undertaking will not constitute a default with respect to the Bonds. The Town reserves the right to amend or modifY the Undertaking under certain circumstances set forth therein provided that any such amendment or modification will be done in a manner consistent with Rule 15c2-12 as then m effect. The Town is in compliance with all previous undertakings made pursuant to Rule 15c2-12. BOND RATING Moody's Investors Service, Inc., will assign their municipal bond rating of "Aaa" respectively, to this issue of Bonds with the understandillg that up'on delivery of the Bonds, a policy insurin~ the payment when due of the principal of and interest on the Honds Will be issued by Ambac Assurance CorporatIOn. Such rating reflect only the views of such rating agency and any desired explanatIOn of the si/ll!ificance of such rating should be obtained from such rating agency. Glmeraily, a ratmgagency bases its ratings on the information and materials furnished it and on investigation, studies and assumptionsby the rating agency. There is no assurance that a particular ratin~ will apply for any given period of time or that it will not be lowered or withdrawn entirely if, in the judgment onhe agency originally establishing the rating, circumstances so warrant. The underwriter Ilas undertaken no responsibility to bring to the attention of the hoklers of the Bonds any proposed revision or withdrawal. Any downward revision or witharawal of such rating, or either of them, could have an adverse effect on the market pnce of the Bonds. Such rating should not be taken as a recommendation to buy or hold the Bonds. FINANCIAL ADVISOR Munistat Services, Inc. has assisted the Town as financial advisor in certain matters with respect to the sale and issuance of the Bonds. ADDITIONAL INFORMATION Additional information may be obtained upon request from the office of the Town Comptroller, Town of Southold, Town Hall, P.O.B. 1179, Southold, New York 11971, telel1.hone number 631/765-4333, or from the office of Munistat Services, Inc., 12 Roosevelt Avenue, Port Jefferson Station, New York 11776, telephone number 631/331-8888 and website: http://www.munistat.com. Any statements in this Official Statement involving matters of opinion or estimates, whether or not expressly so stated, are intended as such and not as representations of fact. No representation is made that any of such statements will be realized. This Official Statement is not to be construed as a contract or agreement between the Town and the original purchasers or holders of any of the Bonds. This Official Statement is submitted only in connection with the sale of the Bonds by the Town and may not be reproduced or used in whole or in part for any other purpose. TOWN OF SOUTHOLD, NEW YORK By: s/s SCOTT A. RUSSELL Town Supervisor and Chief Fiscal Officer March 27, 2007 20 ~ __,_.,,...,.~___.__"''-'-''___~..c_'.._ . ..' _'.~'._~~.__ APPENDIX A FINANCIAL INFORMATION Balance Sheet General Fnnd Fiscal Year Ending December 31 : 2003 2004 2005 ASSETS Cash and Investments $ 8,436,782 $ 10,081,581 $ 9,292,437 Cash - Restricted 0 0 0 Taxes Receivable 0 0 0 Accounts Receivable 1,168 85,426 24,533 Due From Other Funds 15,107 320,243 176,390 Due From Trust Funds 342,253 73 68 State and Federal Aid Receivables 13,195 56,357 81,849 Due From Other Governments 112,471 1,537,312 1,867,136 Supply Inventory 1,296 1,487 1,204 Prepaid Expenses 69,865 526,857 498,344 Deposit 10,000 2,219 0 Total Assets $ 9,002,137 $ 12,611,555 $ 11,941,961 LIABILITIES AND FUND EQUITY Accounts Payable $ 792,860 $ 1,052,240 $ 627,049 Due to Other Funds 426,211 1,625,700 1,888,241 Due to Other Governments 0 388,944 393,570 Due to Trust Funds 595 4,248 7,044 Due to Compnent Units 0 0 0 Deferred Revenues 2,463,059 2,900,729 3,018,595 Total Liabilities 3,682,725 5,971,861 5,934,499 Fund Balances - Reserved: Insurance claims 1,033,085 1,234,066 1,105,879 Encumbrances 71,342 4,009 Supply Inventory 1,296 1,487 1,204 Prepaid Expenses 69,865 526,857 498,344 Fund Balances - Unreserved: Designated - Ensuing Year's Budget 2,008,000 1,978,987 2,657,200 Undesignated 2,207,166 2,826,955 1,740,826 Total Fund Equity 5,319,412 6,639,694 6,007,462 Total Liabilities and Fund Equity $ 9,002,137 $ 12,611,555 $ 11,941,961 Sources: Audited Financial Reports of the Town Table itself NOT audited. A-I "'_~e.._,,~_.'~__"""~__ Statement of Revenue., Expenditure. and Fnnd Balance Highway Fund Fiscal Year Ended December 31: 2001 2002 2003 2004 2005 Revenues: Real Property Taxes $ 3,165,059 $ 3,428,570 $ 3,513,902 $ 3,520,332 $ 3,805,032 Other Real Property Tax Items 6,028 11,885 6,428 3,679 9,046 Non-Property Tax items 396 3,098 0 0 Intergovernmental Charges 116,821 0 15,573 0 0 Use of Money & Property 79,827 34,626 18,520 23,884 77,817 Licenses & Permits 5,887 10,351 8,231 4,937 11,126 Sale of Property & Compo for Loss 9,593 0 4,033 2,960 2,796 Miscellaneous Local Sources 1,416 25,937 0 16 155,054 Interfund Revenues 8,517 4,852 0 0 0 State Aid 223,305 0 458,686 228,337 188,147 Federal Aid 0 0 67,699 0 0 3,616,849 3,519,319 4,093,072 3,784,145 4,249,018 Expenditures: Transportation 3,076,012 2,550,776 2,733,518 2,638,121 2,913,768 Employee Benefits 281,070 340,172 976,406 415,102 500,343 Debt Service 97,594 88,544 15,128 22,219 178,371 Total Expenditures 3,454,676 2,979,492 3,725,052 3,075,442 3,592,482 Excess (Deficiency) of Revenues Over Expenditures 162,173 539,827 368,020 708,703 656,536 Residual Equity Transfer Operating Transfers In 0 0 0 0 0 Operating Transfers Out (380,965) (433,271) (60,000) (690,390) (520,085) Total Other Financing Sources (Uses) (380,965) (433,271) (60,000) (690,390) (520,085) Excess (Deficiency) of Revenues and Other Sources Over Expenditures and Other Uses (218,792) 106,556 308,020 18,313 136,451 Fund Balance Beginning of Year 706,300 487,508 594,064 902,084 920,397 ----_.~ Fund Balance End of Year $ 487,508 $ __.5.94,064 $ 902,084 $ 920,3?7 $ 1,056,848 Sources: Audited Financial Reports of the Town Table itself NOT audited. A.3 Statement of Revenues, Expenditures and Changes in Fund Balance Non-Major Governmental Funds (1) Fiscal Year Ending December 31 : 2001 2002 2QQ1 ~ 2005 Revenues: Real Property Taxes $ 1,584,26 I $ 1,465,060 $ 2,197,525 $ 2,506,945 $ 2,381,335 Other Real Property Tax Items 1,037 1,495 874 3,105 2,516 Non-Property Tax Items 97,680 110,225 117,449 336,139 213,786 Departmental Income 2,125,493 2,931,896 2,339,227 2,517,584 2,504,880 Intergovernmental Charges 18,444 1,400 1,614 1,013 1,013 Use of Money & Property 88,750 35,650 18,147 21,365 64,092 Licenses & Permits 139,615 139,295 139,620 199,849 165,965 Fines and Forfeitures 0 0 49,000 0 0 Sale of Property & Compo for Loss 76,928 29,772 44,450 76,069 109,137 Miscellaneous Local Sources 13,462 11,423 230 5,025 153,591 lnterfund Revenues 2,274 0 0 0 0 State Aid 102,353 72,935 161,393 72,651 75,374 Federal Aid 210,644 119,380 111,299 166,368 224,136 4,460,94 I 4,918,53 I 5,180,828 5,906,113 5,895,825 Expenditures: General Government Support 42,052 42,783 134,969 92,514 99,895 Public Safety 786,25 I 875,307 749,904 739, I 98 807,474 Public Health 5,924 6,161 6,408 6,664 6,864 Home & Community Services 0 0 3,230,201 3,225,586 3, I 02,639 Culture and Reccreation 2,872,654 2,973,763 0 0 0 Employee Benefits 188,543 226,380 874,049 371,038 444,858 Debt Service 314,869 624,315 117,562 88,803 671,720 Total Expenditures 4,210,293 4,748,709 5,113,093 4,523,803 5, I 33,450 Excess (Deficiency) of Revenues Over Expenditures 250,648 169,822 67,735 1,382,310 ~62,375 _ Operating Transfers In 0 0 0 0 0 Operating Transfers Out (491,624) _(3]~,055) (483,500) (1,081,441) (504,720) Total Other Financing Sources (Uses) (491,624) (375,055) ___~~3,500) (1,081,441) (504,720) Excess (Deficiency) of Revenues and Other Sources Over Expenditures and Other Uses (240,97_~ (205,233) ( 415,765) 300,869 257,655 Fund Balance Beginning of Year 1,707,548 1,466,572 1,261,339 845,574 1,146,444 Fund Balance End of Year $ 1,466,572 $ 1,261,339 $ 845,574 $ 1,146,443 $ 1,404,099 --~ (I) Includes the following funds: General Fund Part Town, Special Grant Fund, East-West Fire Protection Fund, Southold Wastewater District, Fishers Island Sewer District and Solid Waste Management District. Sources: Audited Financial Reports of the Town Table itself NOT audited. A-4 BUDGET SUMMARY Fiscal Year Ending December 31, 2006 Appropriations Less; Less: and Provisions Estimated Unexpended Amount to be Fund for Other (Jses Revenues Balance Raised bv Tax General $ 22,209,199 $ 4,679,263 $ 2,657,200 $ 14,872,736 General-Outside Village 1,795,416 958,174 344,246 492,996 Highway-Townwide 0 100 16,000 (16,100) Highway-Outside Village 4,769,679 318,332 339,900 4,111,447 Community Development 159,000 159,000 0 0 Risk Retention Fund 1,055,000 1,055,000 0 0 Community Preservation Fund 4,606,000 4,606,000 0 0 Employees Health Plan 2,411,400_ 2,036,400 375,000 0 Total-Town $ 37,005,694 $ 13,812,269 $ 3,732,346 $ 19,461,079 East-West Fire Protection District 464,393 2,000 4,350 458,043 Fishers Island Ferry District 2,389,000 1,989,000 0 400,000 Solid Waste Management District 4,031,733 2,096,200 168,000 1,767,533 Southold Wastewater District 111,790 14,000 75,000 22,790 Fishers Island Sewer District 20,000 17,700 2,300 0 F.l. Refuse & Garbage District 563,500 0 0 563,500 Orient Mosquito District 76,285 0 0 76,285 Subtotal-Special Districts $ 7,656,70 I $ 4,118,900 $ 249,650 $ 3,288,151 Orient-East Marion Park District 27,655 37 0 27,618 Southold Park District 315,000 0 0 315,000 Cutchogue-New Suffolk Park Dist. 141,000 0 0 141,000 Mattituck Park District 504,910 18,800 60,000 426,110 Subtotal-Park Districts $ 988,565 $ 18,837 $ 60,000 $ 909,728 Fishers Island Fire District 343,300 3,300 0 340,000 Orient Fire District 356,540 2,000 0 354,540 East Marion Fire District 427,342 8,640 0 418,702 Southold Fire District 1,358,392 21,000 0 1,337,392 Cutchogue Fire District 1,413,000 1,400 0 1,411,600 Mattituck Fire District 1,818,135 0 0 1,818,135 Subtotal-Fire Districts $ 5,716,709 $ 36,340 $ 0 $ 5,680,369 Total-All Districts 14,361,~ 4, 174,O~~ 309,650 9,878,248 Grand Total $ 51.367 669 $ 17,986,346 $ 4,041,996 $ 29,339,327 Source: Annual Budget of the Town. A-5 BUDGET SUMMARY Fiscal Year Ending December 3 J, 2007 Appropriations Less: Less: and Provisions Estimated Unexpended Amount to be Fund for Other Uses Revenues Balance Raised bv Tax General $ 22,951,102 $ 4,810,191 $ 1,935,000 $ 16,205,911 General-Outside Village 1,869, J 39 1,002,600 459,000 407,539 Highway~ Townwide 0 600 16,900 (17,500) Highway-Outside Village 4,938,330 406,635 486,500 4,045,195 Community Development 136,000 136,000 0 0 Risk Retention Fund 1,015,000 1,015,000 0 0 Community Preservation Fund 10,697,328 5,350,000 5,347,328 0 Employees Health Plan 2,662,000 2,412,000 250,000 0 Total.Town $ 44,268,899 $ 15,133,026 $ 8,494,728 $ 20,641,145 East-West Fire Protection District 509,828 4,600 6,228 499,000 Fishers Island Ferry District 3,038,000 2,448,000 0 590,000 Solid Waste Management District 4,058,562 2,15 J ,500 0 1,907,062 Southold Wastewater District 128,316 10,020 100,000 18,296 Fishers Island Sewer District 20,000 17,700 2,300 0 F.L Refuse & Garbage District 512,300 0 0 512,300 Orient Mosquito District 82,235 0 0 82,235 Subtotal-Special Districts $ 8,349,24 J $ 4,631,820 $ 108,528 $ 3,608,893 Orient-East Marion Park District 30,695 0 0 30,695 Southold Park District 315,000 0 0 315,000 Cutchogue-New Suffolk Park Dist. 145,000 0 0 145,000 Mattituck Park District 540,027 22,500 50,000 467,527 Subtotal.Park Districts $ 1,030,722 $ 22,500 $ 50,000 $ 958,222 Fishers Island Fire District 357,300 3,300 0 354,000 Orient Fire District 401,040 2,000 0 399,040 East Marion Fire District 490,600 12,200 0 478,400 Southold Fire District 1,512,875 33,540 0 1,479,335 Cutchogue Fire District 1,412,500 1,400 0 1,411,100 Mattituck Fire District 1,857,967 0 0 1,857,967 Subtotal-Fire Districts $ 6,032,282 $ 52,440 $ 0 $ 5,979,842 Total-All Districts J 5,412,245 4,706,760 158,528 10,546,957 Grand Total $ 59,68 J, J 44 $ 19,839,786 $ 8,653,256 $ 31,188,102 Source: Annual Budget of the Town. A-6 ~,~,'~""""'''_'''''''''~->''~'''''._,~.,''-''-''''' ""~"-"'''''>''"'----'' TOWN OF SOUTHOLD APPENDIX B AUDITED FINANCIAL STATEMENTS FOR THE FISCAL YEAR ENDED DECEMBER 31,2005 I FINANCIAL SECTION I Independent Audijors' Report.... ............... .............. ........... .......... .... ...... ......... ......... ................................. . 1-2 REQUIRED SUPPLEMENTARY INFORMATION Management's Discussion and Analysis............ ..................... .................. ......... ........ .............. 3-11 I BASIC FINANCIAL STATEMENTS I Government-Wide Financial Statements Statement of Net Assets.......................... ............. .... .... ..... .... ......... ...... ............... ....................... ....... ..... 12 Statement of Activities........ .......... ... ...... .......... ......... .............. ......... ....... ... ..... ........... ............... ......... ..... 13 Fund Financial Statements Governmental Fund Rnancial Statements Balance Sheet and Reconciliation of the Governmental Funds Balance Sheet to The Statement of Net Assets... ............ ......... ............ ... ...... ...... ... ............... '" .... ............. 14-15 Statement of Revenues, ExpendibJres, and Changes in Fund Balances and Reconciliation of the Governmental Funds Statement of Revenues, Expendijures, And Changes in Fund Balances to the Statement of ActiWies................................... ............ 16-17 Fiduciary Fund Rnancial Statements Statement of Rduciary Net Assets...... ... ... ...... ...... ...... ............ ............ '" .................................. 18 Notes to Financial Statements.... ............... .......... ......... .............. ..... .......... ...... ........... ........ ......... .... ...... ... 19-33 REQUIRED SUPPLEMENTARY INFORMATION OTHER THAN MANGEMENT DISCUSSION AND ANALYSIS Schedule of Revenues, ExpendibJres and Changes in Fund Balances - Budget and Actual General Fund .................. ............ ... .......................................................... ............ ...... 34 Highway Fund... '" ...... ... ... ...... ............... ................ ..... ___... ............ '" ............ ...... .... ...... 35 I OTHER SUPPLEMENTARY INFORMATION COMBINING FUND STATEMENTS: Non-major Governmental Funds Combining Balance Sheet... ...... ......... ...... ...... ... ...... ............... ... ... ...... ...... ... ...... ... ......... 36 Combining Statement of Revenues, Expenditures. and Changes in Fund Balances.................. . 37 DISCRETELY PRESENTED COMPONENT UNITS Discretely Presented Component Units: Combining Statement of Net Assets ...................................................................................................... 38 Combining Statement of Activities................. ............... .......... ......... ...... .................. ........... .......... .... ...... 39 OTHER REPORTS Schedule of Expenditures of Federal Awards......................................................................................... 40 Notes to Schedule of Expenditures of Federal Awards.......................................................................... 41 Report on Compliance and on Internal Control Over Financial Reporting Based on an Audit of Financial Statements Performed in Accordance with Government Auditing Standards............................................................................................................................ 42 Report on Compliance with Requirements Applicable To Each Major Program and Internal Control oVer Compliance in Accordance wnh OMB Circular A-133 ...................................................................... 43-44 Schedule of Findings and Questioned Costs.................................................................................... 45-46 -,,,...~""~~<~,"-'...."".-. ''''-'''~.-'''''' -_.,....~~.~- FINANCIAL SECTION CERTIFIED PUBLIC ACCOUNTANTS, BUSINESS ADVISORS AND CONSULTANTS 25 Suffolk Court, Hauppauge, New furk IJ 788 63/.434.9500 . Fax 63/.434.95/8 www.avz.com INDEPENDENT AUDITORS' REPORT Honorable Supervisor and Town Board Town of Southold Southold, New York 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, 2005, and for the year then ended, which collectively comprise 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 with the exception of one, the Fishers Island Ferry District, 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 34% 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, insotar 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 !he 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 tairiy, in all material respects, the financial position of the Town of Soulhold, New York, as of December 31,2005, and the results of its operations for the year then ended in conformity with accounting principles generally accepted in the United States of America. 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 Slates 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- ALBRECHT, VloolANo. ZURECK & CoMFWIY, P.C. LIl II' IiIu.uI 01"' INCR .....--wdML Our audit was conducted for the purpose of forming an opinion on the financial statements that collectively comprise the Town of Southold, New York's basic financial statements. The combining and individual fund financial statements are presented for purposes of additional analysis and are not a required part of the basic financial statements. The combining and individual fund financial statements has been subjected to the auditing procedures applied in the audit of the basic financial statements of the Town of Southold, New York, and, in our opinion, is fairly presented in all material respects in relation to the basic financial statements taken as a whole. In accordance with Government Auditing Standards, we have also issued a report dated June 8, 2006 on our consideration of the Town of Southold, New York intemal control over financial reporting and our tests of its compliance with certain provisions of laws, regulations, contracts and grants. Our audit was performed for the purpose of forming an opinion on the general-purpose financial statements, taken as a whole. The accompanying schedule of expenditures of federal awards is presented for purposes of additional analysis as required by U.S. Office Management and Budget Circular A-133, Audits of States, Local Governments, and Non-Profit Organizations, and is not a required part of the general purpose financial statements of the Town of Southold, New York. Such information has been subjected to the auditing procedures applied in the audit of the general purpose financial statements and, in our opinion, is fairly stated, in all material respects, in relation to the general purpose financial statements taken as a whole. ~ 'i.;,.;'~, ? 1....1' c....,-;t. {? C Hauppauge, New York June 8, 2006 -2- .----'""'.,'..,..,-.....-..."..,-..-...... REQUIRED SUPPLEMENTARY INFORMATION Management's Discussion and Analysis TOWN OF SOUTHOLD MANAGEMENrS DISCUSSION AND ANALYSIS December 31, 2005 The following is a discussion and analysis of the Town of Southold's financial performance, providing an overview of the Town's financial activities for the year ended December 31,2005. Use this section in conjunction with the Town's basic financial statements. USING THIS ANNUAL REPORT This annual report consists of a series of financial statements. The Statement of Net Assets and the Statement of Activities provide information about the activities of the Town as a whole and present a longer- term view of the Town's finances. 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 report 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 agent for the benefit of those outside of the government. ReDortinq the Town as a Whole The Staiement of Net Assets and the Statement of Activities One of the most important questions asked about the Town's finances is, "Is the Town as a whole better off or worse off as a result of the year's activities?" The Statement of Net Assets and the Statement of Activities report information about the Town as a whole and about its activities in a way that helps answer this question. These statements include all assets and liabilities using the accrual basis of accounting, which is similar to the accounting used by most private-sector companies. The Statement of Activities Is significantly different than a typical Statement of Revenues, Expenses, and Changes in Fund Balance. You will notice that expenses are listed in the first column with revenues from that particular program reported to the right. The result is a net (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 Iiabillties-as one way to measure the Town's financial health, or financial position. Over time, increases or decreases in the Town's net assets are one indicator of whether its financial health Is improving or deteriorating. You will need to consider other non-financial factors, however, such as changes in the Town's property tax base and the condition of the Town's buildings, roads, drainage and other assets to assess the overall health of the Town. In the Statement of Net Assets and the Statement of Activities, we divide the Town into two kinds of activities: . Governmental activities - The Town's basic services are reported here, including: general government support; public safety; public health; transportation; economic assistance and opportunity; culture and recreation and home and community services. Property taxes, sales taxes, franchise fees, flnes, and state and federal grants finance these activities. The Town also charges fees to customers to help it cover the cost of certain services it provides. . Component units - The Town Includes 7 separate legal entities in its report (one ferry district, one sanitation district, one mosquito district and four park districts). Although legally separate, these "component units" are Important because the Town is financially accountable for them. Complete financial statements of the individual component units can be obtained from their respective administrative offices (Note A). TOWN OF SOUTHOLD MANAGEMENT'S DISCUSSION AND ANALYSIS December 31, 2005 ReDortina the Town's Most Significant Funds Fund Financial Statements The fund financial statements provide detailed information about the most significant funds-not the Town as a whole. Some funds are required to be established by State law and by bond covenants. However, the Town establishes many other funds to help it control and manage sources of funding and spending related to specific activities. The Town's basic services are reported in governmental funds, which focus on how money flows into and out of those funds and the balances left at year-end that are available for spending. These funds are reported using an accounting method called modified accrual accounting, which measures cash and all other financial assets that can readily be converted to cash. The governmental fund statements provide a detailed short-term view of the Town's general government operations and the basic services it provides. Governmental fund information helps you determine whether there are more or fewer financial resources that can be spent in the near future to finance the Town's programs. We describe the relationship (or differences) between 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 Reoorllna the Town's Fiduciary Resoonsibilities All of the Town's fiduciary activities are reported in a separate Statement of Fiduciary Net Assets. We exclude these activities from the Town's other financial statements because the Town cannot use these assets to finance its operations. The Town is responsible for ensuring that the assets reported In these funds are used for their intended purposes. FINANCIAL ANALYSIS OF THE TOWN AS A WHOLE Our analysis below focuses on the net assets and changes in net assets of the Town's governmental activities. Condensed Statement of Net Assets Governmental Activities as of December 31,2005 and 2004 Assets Current and other assets Capital assets Total assets Liabilities Other Iiablltties Long-term liabilities T otalliabilities Net assets Invested in capital assets, net of related debt Unrestricted Total net assets 2005 2004 $ 26,265,665 $ 25,448,645 90,294,079 81,374,480 116,559,744 106,823,125 16,289,370 14,665,546 14,916,051 15,732,844 31,205,421 30,398,390 81,044,981 4,309,342 $ 85,354,323 $ 71,352,951 5,071,784 76.424,735 -4- TOWN OF SOUTHOLD MANAGEMENT'S DISCUSSION AND ANALYSIS December 31, 2005 FINANCIAL ANALYSIS OF THE TOWN AS A WHOLE (continued) Total assets in the Towns as of December 31, 2005 were $116.5 million, an increase of $9.7 million. Total liabilities as of December 31, 2005 were $31 million, an Increase of approximately $1 million. This results in a net asset balance of $85.3 million, an increase of $8.9 million. Of the Town's net asset balance $81 million were invested in capital assets, net of related debt; while $4.3 million was unrestricted. Changes In Net Assets Govemmental Activities for the years ended December 31,2005 and 2004 2005 2004 Program Revenues Charges for services $ 10,723,686 $ 9,556,554 Operating grants and contributions 859,484 790,169 Capital grants and contributions 3,502,247 915,998 Total Program Revenues 15,085,417 11,262,721 General Revenues Real property taxes 20,795,041 19,989,545 Other real property tax items 80,369 72,504 Non-property tax items 628,857 751,210 Interest earnings 766,413 264,223 State aid - unrestricted 2,527,110 2,867,169 Other 709,352 228,738 Total General Revenues 25,507,142 24,173,389 Total Revenues 40,592,559 35,436,110 Program Expenses General government support 6,621,408 7,274,110 Public safety 11,342,991 9,899,209 Public health 43,559 42,551 Transportation 6,627,876 6,297,105 Economic assistance and opportunity 1,208,467 1,225,690 Culture and recreation 356,167 447,119 Home and community services 4,961,051 2,052,178 Interest on debt 501,452 460,838 Total Expenses 31,662,971 27,698,800 Increase in Net Assets $ 8,929,588 $ 7,737,310 _'i- -~-"_"."'.".~-'~~'''' "...".~~"",,"""'''-'~~ TOWN OF SOUTHOLD MANAGEMENT'S DISCUSSION AND ANALYSIS December 31, 2005 FINANCIAL ANALYSIS OF THE TOWN AS A WHOLE (continued) Net Cost of Services Govemmental Activities for the year ended December 31, 2005 General government support Public safety Public heatth Transportation Economic assistance and opportunity Culture and recreation Home and community services Interest on debt Total Cost of Services $ 6,621,408 11,342,991 43,559 6,627,876 1,208,467 356,167 4,961,051 501,452 $ 31,662,971 Net Cost of Services $ 6,265,526 10,588,154 33,574 6,426,952 833,388 168,136 (8,239,628) 501,452 $ 16,577,554 The cost of all governmental activities this year was $31.6 million. The net cost of these services, however, after subsidized by program revenues including charges for services and program grants, was $16.5 million. The Town's change in net assets after general revenues of $25.5 million was an increase of $8.9 million. Net Cost of Services Govemmental Activities for the year ended December 31, 2005 General government support Public safety Public health Transportation Economic assistance and opportunity Cutture and recreation Home and community servIces Interest on debt -6- Total Cost of Services $ 6,621,408 11,342,991 43,559 6,627,876 1 ,208,467 356,167 4,961,051 501,452 $ 31,662,971 Program Revenues $ 355,882 754,837 9,985 200,924 375,079 188,031 13,200,679 $ 15,085,417 TOWN OF SOUTHOLD MANAGEMENT'S DISCUSSION AND ANALYSIS December 31,2005 FINANCIAL ANALYSIS OF THE TOWN AS A WHOLE (continued) $14,000,000 Expen.e. and Program Revenue. Governmente. ActMtJes $12,000,000 $10,000,000 . Expenses . Program Revenues $8.000,000 $8.000.000 $4,000.000 $2.000.000 $- - _m..... ........ Publk: s8fIly PutJlIc heeD T18nsporta1fon EconomIc ...-.. onl - Homo"" ........... ...- _an debt CUI'" and - 000nlIlrv _and -- 2% ~ -.... - 11% Revenue by Source Governmental AclIvlUes For the year ended December 31, 2005 Real property laXes Slale aid - unrestrlcted Charges for seMces Other general revenues Operating grants and contributions Capital grants and conbibuUons Olher - .......... 5% - ..- - !l2lro SIale .... - $20,795,041 2,527,110 10,723,686 2,184,991 659,484 3,502,247 $ 40,592,559 TOWN OF SOUTHOLD MANAGEMENTS DISCUSSION AND ANALYSIS December 31, 2005 FINANCIAL ANALYSIS OF THE TOWN AS A WHOLE (continued) THE TOWN'S FUNDS The general fund balance has decreased by approximately $600,000 due primarily to actual expenditures in excess of revenues. Although there was a decrease In fund balance, this decrease was less than amounts budgeted. The following schedule presents a summary of the governmental fund - (general, special revenue, and capital projects) revenues and expenditures for the year ended December 31, 2005, and the amount of change and percentage of total in relation to the prior year. Increase % 2005 2004 (Decrease) Change Kt:Vt:NUt:S Real property taxes $ 20,795,041 $ 19,989,545 $ 805,496 3.9% Other real property tax items 80,369 72,504 7,865 9.8% Non-property tax Items 628,857 751,210 (122,353) -19.5% Departmental income 2,850,836 2,861,801 (10,965) -0.4% Intergovernmental charges 7,453,845 6,342,748 1,111,097 14.9% Use of money and property 906,664 407,338 499,326 55.1% Licenses and permits 426,269 419,247 7,022 1.6% Fines and forfeitures 140,192 107,315 32,877 23.5% Sale of property and compensation for loss 205,223 484,106 (278,883) -135.9% Miscellaneous local sources 1,292,371 294,522 997,849 77.2% State aid 3,946,391 3,825,015 121,376 3.1% Federal aid 1,909,023 326,705 1,582,318 82.9% Total Governmental Fund Revenues $ 40,635,081 $ 35,882,056 $ 4,753,025 11.7% EXPENDITURES General government support $ 4,741,463 $ 4,488,085 $ 253,378 5.3% Public safety 7,984,619 6,993,563 991,056 12.4% Public health 40,152 39,952 200 0.5% Transportation 3,360,645 3,039,987 320,658 9.5% Economic assistance and opportunity 901,139 931,566 (30,427) -3.4% Culture and recreation 3,457,407 3,567,350 (109,943) -3.2% Home and community services 315,273 304,071 11,202 3.6% Employee benefits 6,803,164 5,654,256 1,148,908 16.9% Capital 12,788,366 8,756,057 4,032,309 31.5% Debt service principal and interest 2,439,675 2,215,224 224,451 9.2% Total Governmental Fund Expenditures $ 42,831,903 $ 35,990,111 $ 6,841,792 16.0% GENERAL FUND BUDGETARY HIGHLIGHTS Over the course of the year the Town Board revises the budget as needed so that expenditures do not exceed appropriations. In all Town funds, various transfers between appropriations were approved for this purpose. TOWN OF SOUTHOLD MANAGEMENTS DISCUSSION AND ANALYSIS December31,2oo5 CAPITAL ASSET AND DEBT ADMINISTRATION Caoital Assets As of December 31, 2005 the Town had $90.3 million in net capital assets including land, buildings, improvements. machinery and equipment, and infrastructure. The Town's component units had $8 million In net capital assets including land, buildings, improvements, machinery and equipment, and sewer mains. Capital Assets at December 31, PrimarY Clovemment 2005 2004 Land $ 47,772,278 $ 37,795,087 Construction in progress 1,608,081 398,912 Buildings 4,574,513 4,569,296 Improvements other than buildings 13.498,954 13,469,136 Machinery and equipment 9,522,815 8,686,593 Infrastructure 70,038,525 69,334,187 Total capnal assets 147,015,166 134,253,211 Less accumulated depreclation 56,721,087 52,878,731 Primary govemment - Total net capnal assets $ 90,294,079 $ 81,374,480 Comoonent unns Land $ 2,213,759 $ 2,213,759 Buildings 3,540,111 3,416,944 Improvements other than buildings 2,575,589 2,575,589 Machinery and equipment 3,200,728 3,170,695 Infrastructure 2,138,366 2,121,386 Total capnal assets 13,668,573 13,498,373 Less accumulated depreciation 5,639,830 5,236,652 Component units - Total net capital assets $ 8,028,743 $ 8,261,721 -9- TOWN OF SOUTHOLD MANAGEMENT'S DISCUSSION AND ANALYSIS December 31, 2005 CAPITAL ASSET AND DEBT ADMINISTRATION (continued) Capital Assets (continued) The capital program /s a long range financing guide and not a definitive plan. Each appropriation must be authorized by Town Board resolution before being undertaken. Each may be financed by issuance of general obligation bonds, which, at times, are preceded by issuance of bond anticipation notes for various periods of time depending on the probable usefulness of the purpose of expenditure. The following sets forth a summary of the Town's capital program. (Dollars In thousands): Eauipment General Fund Highway Fund Special Districts $ 2006 345,900 2,500 20.000 368.400 Total Equipment $ Improvements Talallmprovements $ 440,130 800.000 $ 1.240.130 9i 1 608 530 General Fund Special Districts Total Program Additional Infonnation on the Town's capital assets can be found in Note C.3 to the financial statements. Debt Administration The Town of Soothold's credit rating from Moody's Investors Services was upgraded to A 1 from A2 in February 2005. Debt Umit - The Town has the power to contract indebtedness for any Town purpose 50 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 detennining full valuation Is calculated by taking the assessed valuation of taxable real estate as shown upon the latest completed assessment roll and dividing the same by the equalization rate as detennined by the State Board of Equalization and Assessment. The State Legislature Is required to prescribe the manner by which such ratio shall be detennined. Average full valuation is detennlned by taking the sum of the full valuation of the last completed assessment roll and the four preceding assessment rolls and dividing such sum by five. Percentage of debt contracting power exhausted at December 31, 2005 was 2.16%. At December 31, 2005, the Town had approximately $9.2 million in long term general obligation bonds outstanding, of which $9 million was for general Town purposes. Also outstanding at year-end were bond anticipation notes in the amount of $8.8 million of which $6 million was for general Town purposes. Additional infonnation on the Town's debt activity can be found in Note C.4 to the financial statements. -10- TOWN OF SOUTHOLD MANAGEMENTS DISCUSSION AND ANALYSIS December 31, 2005 ECONOMIC FACTORS AND NEXT YEAR'S BUDGETS AND RATES Property Tax The Town has adopted a budget for the 2006 fiscal year which factors in inflation and other adjustments to revenues and expenditures as well as prior year positive and negative fund balances. The 2006 budget includes an overall Increase In real property tax revenues from the prior year of approximately 3.9% for the general Town governmental activities. State Aid and Local Assistance The Town receives financial assistance from New York State and from Suffolk County. During 2005, financial assistance Included state aid consisting of mortgage tax of $2.5 million, consolidated highway aid of $188 thousand, and community preservation aid of approximately $1 million. State aid per capita was $75.3 thou~nd and County local government assistance was $211.7 thousand. Additionally, if the State should not adopt Its budget in a timely manner, municipalities and school districts In the 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 2006 budget Included similar amounts for this financial assistance. Retirement SYStem The New York State Employees Retirement System, having suffered some adverse effects of the weak stock market conditions, was expected to require payments In excess of amounts the Stale had originally anticipated for the year ended 2005. When establishing the 2005 budget, the Town had anticipated these excess payments. However, due to a change in the billing cycle, the State was able to hold the contribution rates to those the State had originally anticipated. The Town subsequently re-appropriated the budgeted but unexpended excess payment in the 2005 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 early ran through December 31, 2002. The eligibility . varied based on tier, age and years of service, but all options required that the employees be at least fifty (50) years of age and being vested in the New York State Retirement System. As part of its contractual agreements with the unions, the Town of Southold also offers fully paid health insurance benefits (but not welfare benefits) for the retiree and their present spouse until death of the retiree. CONTACTING THE TOWN'S FINANCIAL MANAGEMENT This financial report is designed to provide our citizens, taxpayers, customers, and creditors with a general overview of the Town's finances and to show the Town's accountability for the money it receives. If you have questions about this report or need additional financial information, contact the Town of Southold, Office of the Town Comptroller, Southold, New York. """.._",.~,~_._--,~_.~~.,<.".--...,._._~"".-,_...,.,,, BASIC FINANCIAL STATEMENTS TOWN OF SOUTHOLD GOVERNMENT-WIDE FINANCIAL STATEMENTS STATEMENT OF NET ASSETS December 31,2005 Primary Governmental Component Activities Units ASSETS Current Assets: Cash and investments $ 20,968,117 $ 1,250,827 Accounts receivable, net of allowances 236,215 3,561 Due from fiduciary funds 68 Due from other governments 2,631,939 Due from primary government 949,145 State and federal aid receivables 1,127,523 48,767 Prepaid charges 1,130,599 45,140 Inventory of material and supplies 1,204 Tolal Current Assets 26,095,665 2,297,440 Non-Current Assets: Deferred charges, net of accumulated amortization 170,000 Non-depreciable capital assets 49,380,359 15,284,596 Depreciable capital assets, net of depreciation 40,913,720 5,918,714 Total Non-Current Assets 90,464,079 21,203,310 Total Assets 116,559,744 23,500,750 LIABILITIES Current Liabilities: Accounts payable and accrued liabilities 1,344,864 442,802 Accrued interest payable 227,617 63,941 Bond anticipation notes payable 8,875,000 2,845,000 Due to other governments 393,570 2,271 Due to fiduciary funds 7,044 Unearned revenue 4,402,014 392,414 Other liabilities Non-current liabilities due within one year General obligation bonds payable 755,000 195,000 Due to Employees Retirement System 45,189 Claims and judgments payable 220,000 Estimated liability for landfill closure and postclosure care costs 19,072 T olal Current Liabilities 16,289,370 3,941,428 Non-Current Liabilities: General obligation bonds payable 8,494,098 2,855,000 Due to Employees Retirement System 48,804 Compensated absences 5,779,826 Estimated liability for landfrtl closure and postclosure care costs 593,323 Total Non-Current Liabilities 14,916,051 2,855,000 Total Liabilities 31,205,421 6,796,428 NET ASSETS Investment in capital assets, net of related debt 81,044,981 14,093,268 Unrestricted 4,309,342 2,611,054 Total Net Assets $ 85,354,323 $ 16,704,322 See notes to the financial statements -12- TOVVN OF 80UTH0LD GOVERNMENT-WIDE FINANCIAL STATEMENTS STATEMENT OF ACTIVITIES Year ended December 31, 2005 NetExpen&e8(Revenues)and Program Ravenues Capital Change In Net Assets 0_ Charges for _.nd Grants and Prfmary Component FunctionlProaram Expenses - Contributions Contributions Government Un" PRIMARY GOVERNMENT Government ActIvftles: General government support $ 6,621,406 $ 204,757 $ 151,125 $ 6,265,526 Pubrlc safety 11,342,991 539,891 214,946 10,586,154 Public health 43,559 9,985 33,574 Transportation 6,627,876 12,777 $ 188,147 6,426,952 Economic assistance and opportunity 1,208,467 174,830 200.249 833,388 Culture and recreation 356,167 188,031 168,136 Home and community services 4,961,051 9,603,400 283,179 3,314.100 (8.239..28) Interest on debt 501,452 501 ,462 Total Primary Government $ 31.662,971 $ 10,723,686 $ 859,484 $ 3,502,247 $ 16,577,554 COMPONENT UNITS General government sLfJPOrt $ 80,610 $ 80.610 Public health 60,371 60.371 Transportation 2,532,192 $ 1,8&4,374 $ 1,983,139 (1,335.321) Culture and recreation 814,501 814.501 Home and commt..rllty services 495,832 47,644 448,188 Interest on debt 102,579 102,579 Tolal Component Units $ 4,086,085 $ 1,932,018 $ 1,983,139 $ 170,928 GENERAL REVENUeS Raal proparty ~ $ 20,795,041 $ 1,960,880 Other real property tax lIems 80.:389 56B Non-properly tax items 628,867 18,449 Interest earnings 766.413 68.863 State aid 2,527,110 B84 othar 709,352 40,296 Total General Revenues 25.507,142 2,089.738 Change In Net Assets 8.929.588 1,918,810 Net Auets at Beginning of Y..r 76.424,735 14,786,512 Net Assets at End of Year $ 85,354,323 $ 16,704,322 See notes to the financial statements. -13- TOWN OF SOUTHOLD BALANCE SHEET GOVERNMENTAL FUNDS December 31, 2005 MAJOR FUNDS Non-Major Capital Governmental General Highway Pro/eels Funds Tolals ASSETS Cash and invesbnents $ 9,292,437 $ 1,022,924 $ 9,406,620 $ 1,246,136 $ 20,968,117 Accounts receivable, net of allowance 24,533 8,190 30,500 172,992 236,215 Due from other funds 176,390 828,984 251,100 733,039 1,989,513 Due from trust funds 68 68 Stale and federal aid receivable 81,849 43,424 1,002,250 1,127,523 Due from other governments 1,867,136 759,803 5,000 2,631,939 Supply inventory 1,204 1,204 Prepaids 498,344 58,947 54,024 609,315 Tolal Assets $ 11,941,961 $ 1,960,469 $ 11,450,273 $ 2,211,191 $ 27,583,894 UABIUTIES AND FUND BALANCES LIABILITIES Accounts payable $ 627,049 $ 72,436 $ 337,613 $ 227,184 $ 1,264,282 Retained percentages 80,580 80,580 Bond antIclpatlon notes payable 8,875,000 8,875,000 Due 10 other funds 1,888,241 73,598 27,674 1,989,513 Due to trust funds 7,044 7,044 Due 10 other governments 393,570 393,570 Deferred revenue 3,018,595 831,185 552,234 4,402,014 Tolal Liabilities 5,934,499 903,621 9,366,791 807,092 17,012,003 FUND BALANCE Fund Balances - reserved: Encumbrances 4,009 4,009 Supply inventory 1,204 1,204 Prepaids 498,344 26,686 525,030 Insurance claims 1,105,879 1,105.879 Fund Balance - unreserved: 16,000 16,000 Designated - ensuing yea~s budget 2,657,200 339,900 348,596 3,345,696 Undeslgnated 1,740,826 700,946 2,083,482 1,028,817 5,554,073 Tolal Fund Equity 6,007,462 1,058,846 2,083,482 1.404,099 10.551,891 Total Liabilities and Fund Equity $ 11,941,961 $ 1,960,469 $ 11,450,273 $ 2,211,191 $ 27.583,894 See notes to the financial slatements. ~-_.._-- .-, ,~",--,,",_.~~ TOWN OF SOUTHOLD RECONCILIATION OF THE GOVERNMENTAL FUNDS BALANCE SHEET TO THE STATEMENT OF NET ASSETS December 31,2005 Total Fund Balances - Governmental Funds $ 10,551,891 Amounts reported for governmental activities in the Statement of Net Assets are different because: Capital assets less accumulated depreciation are included in the Statement of Net Assets: Capital assets - non-<lepreciable $49,380,359 CapRal assets - depreciable 97,634,807 Accumulated depreciation (56,721,087) 90,294,079 Other long-term assets are not available to pay for current-period expendRures and, therefore, are deferred in the funds Long-term liabilities applicable to the Town's governmental activities are not due and payable in the current period and accordingly are not reported in the funds. However these liabilities are included in the Statement of Net Assets: General obligation bonds payable (9,249,098) Due to Employees Retirement System (93,993) Compensated absences (5,779,826) Claims and judgments payable (220,000) Estimated liabilRy for landfill closure and postclosure care costs (612,395) (15,955,312) Prepaid items included in the Statement of Net Assets 521,282 Deferred charges Included in the Statement of Net Assets 170,000 Interest payable applicable to the Town's governmental activities are not due and payable in the current period and accordingly are not reported in the funds. However these liabilities are included in the Statement of Net Assets. (227,617) Net Assets of Governmental Activities $ 85,354,323 See notes to the financial statements. -15- TOWN OF SOUTHOLD STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BAlANCES GOVERNMENTAL FUNDS For the year ended December 31, 2005 MAJOR GOVERNMENTAL FUNDS Non-Major Capital Governmental General Highway Projects Funds Totals REVENUES Real property taxes $ 14,608,674 $3,805,032 $2,381,335 $ 20,795,041 other real property tax items 68,807 9,046 2,516 80,369 Non-property tax items 415.071 213,786 628,857 Departmental income 345,956 2,504,680 2,850,836 Intergovernmental charges 252,558 $ 7,200,274 1,013 7.453,845 Use of money and property 489,796 77,817 274,959 84,092 906,684 licenses and permits 249,178 11,126 165,965 426,269 Anes and forfei\u"es 140,192 140,192 Sale of property and compensation lor loss 93,290 2,796 109.137 205,223 Miscellaneous local sources 432.269 155,054 551,457 153,591 1,292,371 State aid 2,637.870 188,147 1,045,000 75,374 3,946.391 Federal aid 174,348 1.510,539 224,136 1,909,023 Total Revenues 19,908,009 4,249,018 10,582,229 5,895,825 40,635,081 EXPENDITURES C..rent General goverrvnent support 4,641,568 99,895 4,741,463 Public safety 7,177,145 807,474 7,984,619 Public heatih 33,288 6,864 40,152 Transportation 446,877 2,913,768 3,360,645 Economic assistance and opportunity 901,139 901,139 Home and communily services 354,768 3,102,639 3,457,407 Cullure and recreation 315,273 315.273 Employee benefits 5,857,963 500,343 444,858 6,803,164 Capital oullay 12,788,366 12,788,366 Principal and interest 1,560,055 178,371 29.529 671,720 2,439,675 Bond Issuance costs 70,075 70,075 Advanced refunding escrow 112,758 112,758 Total Expendftures 21,288,076 3.592,482 13,000,728 5,133,450 43,014,736 Excess (DefIciency) of Revenues Over Expenditu18S (1,380,067) 656.536 (2,418,499) 762,375 (2,379,655) other Financing Sources (Uses) Proceeds of refunding bonds 2,380,000 2,380,000 Payments to refunded bond escrow agents (2,210,000) (2,210,000) Premium on special assessment debt 12,833 12,833 BANs redeemed from appropriations 1,065,095 1,065.095 Transfers in 2,842,859 276,969 2,919,828 Transfers out (1,895,023) (520,085) (504,720) (2,919,828) Total other Anancing So..ces (Uses) 747,836 (520,085) 1,524,897 (504,720) 1,247,928 Excess (Deficiency) of Revenues and Other Sources Over Expenditures and Olher Uses (632,231 ) 136,451 (893,602) 257,655 (1,131,727) Fund Balance al Beginning ofVear 6,639,693 920,397 2,977,084 1,146,444 11.683,618 Fund Balances at End of Vear $ 6.007,462 $1,056,848 $ 2,083,482 $1,404,099 $ 10,551,891 See notes to the financial statements. -16- ,"__....-......_..__ ___ __ ,'..ft,~,____...'''~~___<-~_'''.' -. -,--....,...~_.~--..,,--...-..-~.~""~, TOWN OF SOUTH OLD RECONCILIATION OF THE GOVERNMENTAL FUNDS STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES TO THE STATEMENT OF ACTIVITIES For the year ended December 31, 2005 Net Change in Fund Balance $ (1,131,727) Governmental funds report capital outlays as expenditures. However, in the Statement of Activities the cost of those assets Is allocated over their estimated useful lives and reported as depreciation expense. The amount by which capital outlay exceeds depreciation in the current period is: Capital outlay Depreciation expense Loss on dispositions $13,205,174 (4,082,748) (202,828) 8,919,598 Some expenses reported In the Statement of Activities do not require the use of current financial resources and therefore, are not reported as expenditures in governmental funds: Prepaid charges Deferred charges (53,286) 170,000 The issuance of long-term debt and increase in obligations under capital leases provides current financial resources to governmental funds, while the repayment of the principal of long term debt and capital leases consumes the current financial resources of governmental funds. Neither transaction has any effect on net assets. Bonds issued Repayment of bond principal Due to Employees Retirement System Compensated absences Claims and judgments payable Estimated liability for landfill closure and postclosure care costs Accrued interest payable (2,380,000) 3,162,431 41,841 (117,468) 378,630 18,872 (79,303) Change in Net Assets of Governmental Activities $ 8,929,588 See notes to the financial statements. -17- TOWN OF SOUTHOlD STATEMENT OF FIDUCIARY NET ASSETS December 31, 2005 Fishers Island Town Ferry District Totals ASSETS Cash and investments $ 14,898,809 $ 43,462 $14,942,271 Other receivables 17 40,638 40,655 Due from other funds 7,044 7,044 Total Assets $ 14,905,870 $ 84,100 $14,989,970 lIABllmES Due to other funds $ 68 $ 38,829 $ 38,897 Due to school districts 11,675,920 11,675,920 Due to component units 517,902 517,902 Due to other governments 1,664,259 1,664,259 Other liabilities 8,881 8,881 Deposits held 1,038,840 45,271 1,084,111 Total Liabilities $ 14,905,870 $ 84,100 $14,989,970 See notes to the financial statements. -18- -~-~.,."_.".,- ,,-,,-,-"~-~-"'--"-"""'-'~- TOWN OF SOUTHOLD NOTES TO FINANCIAL STATEMENTS December 31, 2005 A. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES The Town of Soulhold (the "Town"), which was established in 1640, is governed by Town Law and other general laws of the State of New York and various local laws. The Town Board is the legislative body responsible for overall operations. The Town Board consists of the Supervisor who is elected for a term of two years and five council members who are elected for terms of four years. The Town Board appoints the Town Attorney, Comptroller and the Commissioner of Public Works whose terms are fixed by Town Law. The Town Clerk, Receiver of Taxes, Superintendent of Highways, Justices and Town Trustees are all elected and serve for four years, respectively. The Town provides a full range of municipal seNices, induding public safety, transportation, home and community services, public works and road maintenance, recreation and parks, and general and administrative services. The financial statements of the Town of Southold have been prepared in conformity with accounting principles generaUy accepted in the United Stales of America (GAAP) as applied to governmental units. The Governrnental Accounting Standards Board (GASB) is the accepted standard setting body for establishing governmental accounting and financial reporting principles. The more significant of the governmenfs 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 primary 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 Indude a potential component unit in the Town of Southold reporting entity is based on several criteria set forth in GASB Statement No. 14 induding legal standing, dependency and financial accountability. Based on the application of these criteria, thefolJowing is a summaI)' 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 organized 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. Tax levies of the special dislricls are collected by the Town Receiver ofTaxes. As a result of this fiscal dependency, the Town is financially acoountable for these special districts. Accordingly, these special dislricls have been determined to be component units of the Town and are presented discretely i1 a separate column In the cornbined financial statements to emphasize that they are legally separate from the primary government 2. BASIS OF PRESENTATION The Town's basic financial statements include both government-wide (reporting the Town as a whole) and fund financial statements (reporting the Town's major funds). Govemment-wlde Financial Statements The government-wide financial statements reports Information on the Town as a whole, except fiducial)' activities, with separate columns for the primary governmental activities as well as the discretely presented component units. In the governrnent-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 parts-investments In capital assets, net of related debt; restricted net assets; and unrestricted net assets. - 19- TOWN OF SOUTHOLD NOTES TO FINANCIAL STATEMENTS December 31, 2005 A. SUMMARY OF SIGNIFICANT ACCOUNTING POUCIES (continued) 2. BASIS OF PRESENTATION (continued) The government-wide Statement of Activities reports both the gross and net cost of each of the Town's functional categories (public safety, transportation, home and community services, etc.), which are otherwise supported by general government revenues (property, sales and use taxes, certain intergovernmental revenues, fines, pennlts and charges, etc.). The Statement of Activities reduces gross expenses (including depreciation), by related prograrn revenues and operating and capital grants, to produce the net cost of each program. Program revenues include (a) charges for services and (b) operating and capital grants and contributions that are directiy associated with the function. Operating grants include operating-specific and discretionary (either operating or capital) grants while the capital grants column reflects capltal- specific grants. The net costs (by function) are normally covered by general revenue (property, taxes, intergovernmental revenues, interest income, ete). As a general rule the effect of Interfund activity has been eliminated in general purpose financial statements. This government-wide focus is more on the sustainability of the Town as an entity and the change In the Town's net assets resulting from the current year's activities. Fund FInancial Statements The fund financial statements are similar to the financial statements presented in the previous model. The new ernphasis ts on the major funds In the fund financial slab nents. Non-major funds are summarized into a single column. The accounts of the Town are organized on the basis of funds. eachof-wh/ch 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, liabDitles, fund balances, revenues, and expenditures, which are segregated for the purpose of carrying on specific activities or attaining certain objectfves In accordance with Special regulations, restrictions or Iimltatfons. The various funds are presented by type In the fund financial statements. Accordingly, the Town maintains the following fund types: Governmental 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. Governmental funds are further classified as major and non-major funds. The Town reports the following major governmental funds: General FOnd - 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. Hiahwav Funds - to maintain and operate highways. Caoital 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 funds and trust funds). -20- ",_,--",--,_--"-~",,'-'-"-- TOWN OF SOUTHOLD NOTES TO FINANCIAL STATEMENTS December 31,2005 A. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued) 2. BASIS OF PRESENTATION (continued) Fund FinancIal Statements (continued) Additionally, the Town reports the following non-major funds: Special Revenue Funds - are used to account for the proceeds of specific revenue sources (other than major capnal projects) that are legally restricted to expendnures for specified purposes. Special Revenue Funds include the following: General Fund Part Town - to provide general services outside the Village of Greenport. Soecial Grant Fund - segregate and account for projects funded by Communny Development revenue. Soacial District Funds - to provide special services to areas thai encompass less than the whole town. Fiduciary Funds - Rduclary 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 districts that have separately elected boards provide transportation, park, mosquito control, and sanRation services to residents and businesses within these districts, and follow government fund accounting princlples. These districts, which are accounted for as discretely presented component units, are as follows: The Rshers Island Ferry District, established in 1947 Orient MosquRo 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 South old Park District, established in 1907 Mattiluck Park District, established in 1941 Complete financial statements of these component units can be obtained from their respeclive administrative offices: Orient Mosquito District 145 Platt Road Orient, NY 11957 Cutchogue-New Suffolk Park District P.O. Box 311 Cutchogue, NY 11935 Southold Park District P.O. Box 959 Southold, NY 11971 Fishers Island Ferry District P.O. Box 1179 Southold, NY 11971 Fishers Island Garbage & Refuse District Fishers Island, NY 06390 Orient-East Marion Park District P.O. Box 12 Orient, NY 11957 Mattiluck Park District P.O. Box 1413 Mattiluck, NY 11952 - 21 - TOWN OF SOUTHOLD NOTES TO FINANCIAL STATEMENTS December 31, 2005 A. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued) 3. BASIS OF ACCOUNTINGIMEASUREMENT FOCUS Measurement focus refers to what Is being measured whereas the basis of accounting refers to when revenues and expenditures are recognized in the accounts and reported in the financial statements. Basis of accounting relates to the timing of the measurement made, regardless of the measurement focus applied. In the govemment-wide statements, govemmental activities are presented using the economic resources measurement focus and are presented using the accrual basis of accounting. Under the accrual basis of accounting, revenues are recognized when earned and exPenses are recorded when the liability Is incurred or economic asset used. Revenues, expenses, gains, losses, assets, and liabilities resulting from exchange and exchange-like transactions are recognized when the exchange takes place. In the funds statements, governmental funds use a current financial resources measurement focus and are accounted for using the modified accrual basis of accounting. Under the modified accrual basis of accounting, revenues are recognized when susceptible to accrual (measurable and available to finance current operations). "Measurable" means the amount of the transaction can be determined and "available" means collectible within the current period or soon enough thereafter to pay liabilities of the current period. The Town considers all revenues available If they are collected within 60 days after the year end. Revenues susceptible to accrual include Suffolk County local assistance at year end on behalf of the Town, franchise fees. and charges for services, intergovemmental 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 those Instances where expenditures are the prime factor In determining eligibility for state and federal grants, revenues are recognized when the expenditure is incurred. In the Capital Projects Fund. long-term debt is recognized as revenue upon receipt of the proceeds. Expenditures are recorded on the accrual basis except that (a) expenditures for prepaid expenses are recognized when incurred; (b) principal and interest on indebtedness are recognized as expenditures when due; (c) compensated absences, such as vacation and sick leave, which vest or accumulate, are charged as expenditures when paid. Encumbrance accounting, under which purchase orders, contracts and other commibnents are recorded for budgetary control purposes in. order to reserve that portion of the applicable appropriation, is employed in the govemmental 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 are reported as reservations of fund balances since they do not constitute expenditures or liabilities. Expenditures for such commitments are recorded In the period in which the liability is incurred. 4. ASSETS, LIABILITIES AND FUND EQUITY RECEIVABLES Receivables include amounts due from Federal, State, and other governments or entities for services provided by the Town. Receivables are recorded and revenues recognized as earned or as specific program expenditures are incurred. INVENTORY - MATERIALS AND SUPPLIES Inventory In the general and special revenue funds is valued at cost Inventory in these funds is accounted for under the consumption method. _ 1)"_ ",_,,~,.,,-~_'--""_-""'----_""''''-'~~'-'-' TOWN OF SOUTHOLD NOTES TO FINANCIAL STATEMENTS December 31, 2005 A. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued) 4. ASSETS, LIABILITIES AND FUND EQUITY (continued) CAPITAL ASSETS Capital assets purchased or acquired wnh an original cost of $5,000 or more are reported at hislorical 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 are capitalized. Other costs incurred for repairs and maintenance are expensed as Incurred. Depreciation on all assets is provided on the straight- line basis over the following estimated useful lives: Buildings Improvements and other Machinery and equipment Infrastructure 10-40 years 20 years 5-10 years 20-30 years Infrastructure assets, consisting of certain improvements other than buildings induding roads, curbs, sidewalks, bridges, street lighting are capitalized along with other capital assets. In the fund financial statements, capital assets are recorded as capital outlay expendnures In the governmental fund upon acquisition. DEFERRED REVENUElUNEARNED INCOME Deferred revenues/uneamed Income are those where asset recognnion criteria have been mel, but which revenue recognition criteria have not been met. Such amounts indude collections In advance, unearned income and amounts that have been deemed 10 be "measurable" but not "available" 10 finance current expenses pursuant 10 generally accepted aocounting principles. PREPAlDS Prepaids record payments 10 venders that benefit future recording periods and are reported on the consumptlon basis. Prepalds in the General and Special Revenue Funds represent insurance premiums paid for coverage that will benefit the subsequent period and for retirement benefits that will benefit a future period. LONG.TERM OBUGATIONS The liabilities for long-term obligations consisting of general obligation bonds, compensated absences, due 10 employee retirement system, judgments, claims and lIabilny for landfill dosure and post dosure costs are recognized In the govemment-wide financial statements. In the fund statements, long-term obligations are not reported as liabilities. The debt proceeds are reported as other financing sources and payment of principal and Interest reported as expenditures. 5. REVENUES AND EXPENDITURES REAL PROPERTY TAX ASSESSMENT AND COLLECTION PROCEDURES In Suffolk County, the assessment and lien of real property for taxation Is done by the County Department of Assessment. Real property taxes become a lien on December 1 for both school and general taxes. The Town's assessment rolls are used for the levy of real property taxes by the Town and the School Districts, as well as by the County and by Special Districts of the County and the Town. -23 - TOWN OF SOUTHOLD NOTES TO FINANCIAL STATEMENTS December 31, 2005 A. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued) 5. REVENUES AND EXPENDITURES (continued) REAL PROPERTY TAX ASSESSMENT AND COLLECTION PROCEDURES (continued) The Town of Southold Receiver of Taxes collects all real property taxes for the Town, Suffolk County, Town Speclal Districts and School Distrlcls. These taxes are levied on December 1, and are due in two Installments, 500/. on December 1 and 50% on May 10, payable without penalty to January 10 and May 31, respectively. Penalties are Imposed thereafter at the rate of one-twelfth of the rate of interest detennined by the State Commissioner of Taxation and Finance, aller which taxes are payable to the County Treasurer. The Town retains the total amount of Town, Highway and Town Speclal Districts levies fiom the amount collected, and forwards the balance collected to the County which assumescolleclion responsibility. The Town and Town's Speclal Districts 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 1 and 50% on May 10 payable without penalty to January 10 and May 31, respectively. The County is also responsible for uncollected school taxes. INTERFUND TRANSACTIONS Interfund transactions have been eliminated from the govemment-wide financial statements. In the funds statements inlerfund transactions include: a) Interfund Revenues Interfund revenues, quasl-extemal transactions, in the general fund represent amounts charged for services or facllities provided by the general fund. The amounts paid by the fund receiving the benefit of the service or facilities are reflected as an expenditure of that fund. b) Transfers Transfers represent payments to the debt service, general fund and capital projects funds fiom the other funds for their appropriate share of the debt service, general fund or capital project cosls. COMPENSATED ABSENCES The liability for vested or accumulated vacation or sick leave (compensated absences) is recorded as current and noncurrent obligations In the govemment-wlde statements. The current portion of this debt Is estimated based on historical trends. In the fund financial statements only the compensated absence liability payable from expendable available financlal resources is incurred. The amount that is expected to be liquidated with expendable available financlal resources is reporled as expendnures and a rl8billty in the funds statement in the respective fund that will pay it 6. EQUITY CLASSIFICATIONS In the govemment-wide statements, equity is classified as net assets and displayed in three components: a) Invested In capital assets, net of related debt - consists of capital assets including restricted capital assets, net of accumulated depreciation and reduced by the outstanding balances of any bonds, notes, or other borrowings that are attributable to the acquisition, construction, or improvement of those assets. -24- ^' -~-">"<.<.,.~~,.."-""-~..,.,,,.,..-,...,,.-,,,,,-_..,.,..,.,-- TOWN OF SOUTH OLD NOTES TO FINANCIAL STATEMENTS December 31, 2005 A. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued) 6. EQUITY CLASSIFICATIONS (continued) b) 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. c) 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, governmental fund equity is classified as fund balance. Fund balance is further classified as reserved and unreserved, with unreserved further split between designated and undesignated. Portions of fund equity are segregated for future use and therefore not available for future appropriation or expenditure. Amounts reserved for encumbrances, Inventory, insurance claims and debt service represent portions of fund equity, which are required to be segregated In aocordance with state law or GAAP. Designations of fund balances in governmental funds Indicate the utilization of these resources in the subsequent year's budget or tentative plans for future use. B. STEWARDSHIP, COMPUANCE 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 prior year. Budgetary controls for special revenue funds are established in accordance with the applicable grant agreement, which may cover a period other than the Town's fiscal year. Appropriate budgetary adjustments have been made to reflect these grant agreements during the Town's fiscal year. The Town follows the procedures enumerated below In establishing the budgetary data reflected in the financial statements: a. No later than October 1, the Supervisor submits a tentative budget to the Town Board for the fiscal year commencing the following fiscal year. The tentative budget Includes the proposed means of financing for all funds. b. After public hearings are conducted to obtain taxpayer comments, no later than November 20, the Town Board 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 separate budget report. - 25- TOWN OF SOUTHOLD NOTES TO FINANCIAL STATEMENTS December 31, 2005 B. STEWARDSHIP, COMPLIANCE AND ACCOUNTABILITY (continued) 2. FUND BALANCES DESIGNATION OF FUND BALANCE Portions of the unreserved balances at December 31, 2005 were designated for the subsequent year's operating budgets as follows: Fund Balance Unreserved and Designated Total for Subsequent Fund Balance Fund Balance Year's Unreserved Fund Unreserved Budget Undesignated Non-Major Funds: Town Outside Village $ 845,309 $ 370,932 $ 474,377 East West Fire Protection District 15,112 4,350 10,762 Soulhold Wastewater District 176,657 176,657 Fishers Island Sewer District 32,546 32,546 Solid Waste Management District 334,475 334,475 Total $ 1,404,099 $ 375,282 $ 1,028,817 C. DETAILED NOTES ON ALL FUNDS AND ACCOUNT GROUPS 1. CASH AND INVESTMENTS Cash consists of funds deposited in demand accounts, time depostt accounts and certificates of depostt with maturities of less than three months. The Town's Investments are governed by a fonnal investment policy. The Town's monies must be deposited in FDIC-Insured commercial banks or trust companies located within the state. The Town is authorized to use demand accounts and certificates of deposit Pennissible investments include obligations of the U.S. Treasury, U.S. Agencies and investments made by the Cooperative Uquid Asset Security 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 cos~ 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 506. It is the Town's policy to require collateral held in the name of the Town for demand deposits, money market depostts and certificates of depostt for all depostts not covered by federal depostt insurance. Obligations that may be pledged as collateral are obligations of the United States and its agencies and obligations of the State and its municipalities and school districts. At December 31, 2005 the cash in banks was approximately $37,160,000 and collateral held against cash in banks was $60,410,000 consisting of FDIC insurance and/or securities held in the name of the Town of Southold. -26 - ",-"-~.,~,,-,,,----.~""'-'-'''-'-''''~'''~~~~--'~''~" ." TOWN OF SOUTH OLD NOTES TO FINANCIAL STATEMENTS December 31, 2005 C. DETAILED NOTES ON ALL FUNDS AND ACCOUNT GROUPS (continued) 2. INTERFUND RECEIVABLES AND PAYABLES Interfund receivables and payables for the primary government at December 31, 2005 were as follows: General Fund - Town wide Highway Fund Capital Projects Fund Part Town East-West Fire District Sou1hold Wastewater District Fishers Island Sewer District Solid Waste Management District Amount Receivable $ 176,390 $ 828,984 251,100 152,519 92,199 4,752 325 483.244 $ 1989513 $ Amount Pavable 1,888,241 73,598 6,974 20.700 1 989513 Interfund receivable and payable balances for the primary government at December 31, 2005 are expected to be paid currently. 3. CAPITAL ASSETS Primary govemment Capital assets not being depreciated Land Construction in progress Total capttal assets not being depreciated Depreciable capttal assets Buildings Improvements other than buildings Machinery and equipment Infrastructure Total depreciable capttal assets Less accumulated depreciation Buildings Improvements other than buildings Machinery and equipment Infrastructure Total accumulated depreciation $ Total net depreciable capttal assets Total net capital assets Balance 1/1/05 $ 37,795,087 $ 398,912 38,193,999 4,569,296 13,469,136 8,686,593 69,334,187 96,059,212 1,933,832 3,020,715 5,567,555 42,356,569 52,878,731 -27 - Additions 9,977,191 $ 1,362,656 11,339,847 5,217 29,818 1,125,955 704,338 1,865,328 $ 134,698 521,309 714,211 2,712,530 4,082,748 $ Deletions -0- $ 153,487 153,487 289,733 289,733 240,392 240,392 Balance 12/31105 47,772,278 1,608,081 49,380,359 4,574,513 13,498,954 9,522,815 70,038,525 91,634,807 2,068,530 3,542,084 6,041,374 45,069,099 56,721,087 40,913,720 $ 90,294,079 TOWN OF SOUTHOLD NOTES TO FINANCIAL STATEMENTS December 31. 2005 C. DETAILED NOTES ON ALL FUNDS AND ACCOUNT GROUPS (continued) 3. CAPITAL ASSETS (continued) Depreciation expense was charged to governmental functions as fonews: General government support Public safety Transportation Economic assistance and opportunity Culture and recreation Home and community services $ 231,471 179,200 2,923,649 36,230 61,206 650,992 $ 4,082,748 Balance Balance Discretely presented component units 1/1/05 Additions Deletions 12/31/05 Capital assets not being depreciated Land $ 2,213,759 $ 2,213,759 . Construction in progress 10,592,179 $ 2,598,828 $ 16,440 13.174,567 Total capital assets not being depreciated 12,805,938 2,598,828 16,440 15,388,326 Depreciable capital assets Buildings 3,416,944 123,167 3,540,111 Improvements other than buildings 2,575,589 2,575,589 Machinery and equipment 3,170,695 30,033 3,200,728 Infrastructure 2,121,388 17,000 2,138,386 Totai depreciable capital assets 11,264,614 170,200 11,454,814 Less accumulated depreciation Buildings 1,186,077 103,656 1,289,733 Improvements other than buildings 973,574 88,000 1,061;574 Machinery and equipment 2,003,454 129,203 2,132.657 Infrastructure 1,073,547 82,319 1,155,866 Total accumulated depreciation $ 5,236,652 $ 403,178 5,639.830 Total net depreciable capital assets 5,814,964 Total net capital assets $ 21,203,310 _i)g _ ""~""",,""~"-"'..'. "_...<-.......~~._._-,.,...,._~--""-,',,...._~.~_._-- TOWN OF SOUTHOLD NOTES TO FINANCIAL STATEMENTS December 31, 2005 C. DETAILED NOTES ON ALL FUNDS AND ACCOUNT GROUPS (continued) 4. INDEBTEDNESS SHORT TERM DEBT Bond Anticipation Notes (BANs) - Bond anticipation notes (BANs) are used as a temporary means of financing cap~al expencfJtures in the capital projects fund. State law requires that BANs issued for ca~al 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 from the proceeds of future bond Issues after renewal of these notes. These BANs bear interest at various rates from 2.64% to 3.06% and are due at various dates through 2006. When BANs are not redeemed with the proceeds of bond issues, but instead paid from budgetary appropriations, the principal amourll paid is recorded as an expend~ure in the operating fund and a financing source is recorded in the capilaJ projec1s fund. These notes are summarized as follows: Descriotion Various Purposes Various Purposes New London Wharf Fishers Island Garbage Total Amount $ 7.175,000 1.700,000 1,725,000 1.120.000 S 11.720000 Interest Rate 2.64% 3.05% 2.75% 3.06% Of the $11,720,000 In bond anticipation notes, $8,875,000 relates to the primary government and the remaining $2,845,000 relates to the component un~s. LONG TERM DEBT Summary of changes In long-term debt transactions for the year ended December 31, 2005 Is as follows: Non-current Balance Balance IlabDities due Non-current 1/1105 Incraases Reductions 12/31105 within one year IlabDities Primary Government General obIlgslion bonds $ 10,031,529 $ 2,380,000 $ 3,162,431 $ 9,249,098 $ 755,000 $ 6,494,098 Due to Employees Retirament Syste. 135,834 41,841 93,993 45,189 48,804 Compensated absences 5,562,358 860,531 743,063 5,779,826 5,779,826 Claims and judgments 598,630 378,830 220,000 220,000 Estimated Dability for landfill closura and post-aosura care costs 631,267 18,872 612,395 19,072 593,323 Component Unita: General obrlgation bonds 272,569 3,000,000 222,569 3,050,000 195,000 2,855,000 ~n TOWN OF SOUTH OLD NOTES TO FINANCIAL STATEMENTS December 31, 2005 C. DETAILED NOTES ON ALL FUNDS AND ACCOUNT GROUPS (continued) 4. INDEBTEDNESS (continued) LONG TERM DEBT (continued) General Obligation Bonds - The Town borrows money in order to acquire land or equipment or construct buildings and improvements. This enables the cost of these capital assets to be bome by the present and future taxpayers receiving the benefit of the capital assets. These long-term liabilities, which are backed by the full faith and credit of the Town, bear interest at various rates from 2.95% to 6.375% and have maturity dates in 2006 through 2021. Future principal and interest payments to maturity for both the primary govemment and the component units are as follows: Year Endina 2006 2007 2008 2009 2010 2011-2015 2016-2021 $ PrinclDal 950,000 979,098 995,000 1,025,000 1,000,000 4,390,000 2.960.000 $ Interest 405,624 376,466 345,307 312,347 277,956 910,394 265.814 Totals 1& 12 299 098 1& 2 893 908 Other long-term liabilities for claims and judgments, compensated absences, retirement system and the estimated liability for landfill clOsure and post closure costs are to be paid by the fund that gave rise to the liability. During the year ended 2005, the Town issued $2,380,000 in general obligation bonds with an interest rate ranging from 2.50% to 3.75% to advance refund $2,210,000 of outstanding 1993 and 1995 Serial bonds with Interest rates between 5.00% and 5.10%. The net proceeds of $2.392,833 include an original Issue premium of $12,833 which were used In part to pay insurance, undlllWriting fees end administrative costs of $70,075 with the balance deposited In an irrevocable trust with an escrow agent to provide for all future debt service payments on the various general obligation bonds. As a resuJl, these bonds are considered to be defeased and the liability for lhase bonds has been removed from the Town. The Towns advance refunded the various general obligation bonds in order to reduce its total debt service payments over the next 10 years by $100,505 and to obtain an economic gain of $66,538 (difference between the present values of the debt service payments on the old and new debt). 5. RETIREMENT SYSTEM Plan Descriolion The Town of SouthoJd participates In the New York State and Local Employees' Retirement System (ERS) and Local Police and FIfElRetlrement System (PFRS). This is a cost-sharing multiple- employer retirement system. The System provides retirement benefits as well as death and disability benefits. Obligation of employers and employees to contribute and benefits to employees are govemed by the New York Stale Retirement and SocIal Security Law (NYSRSSL). As set forth In the NYSRSSL, the Comptro/ler of the State of New York (Comptroller) serves as sole trustee and administrative head of the System. The Comptroller shall adopt and may amend rules and regulations for the administration and transaction of the business of the System and for the custody and control of their funds. A publicly avaUable 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, Govemor Smith State Building, Albany, NY 12244. - 30- _,""m'~"",,,"" ___^,,~,.,,____"'_~___'_c'___ "-,,,,~,,,,,,,,,-,~_,'-""'-~--"""'''-~' ---- TOWN OF SOUTHOLD NOTES TO FINANCIAL STATEMENTS December 31, 2005 C. DETAILED NOTES ON AU FUNDS AND ACCOUNT GROUPS (continued) 5. RETIREMENT SYSTEM (continued) Fundino Policv The System is noncontributory 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 ten years of credited service with a retirement system under the provisions of article fourteen or fifteen of the NYSRSSL, who contribute 3% of their salary. Prior to October 1, 2000, all employees who joined the System aller 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 contributions required to be made by employers to the pension accumulation fund. The Town is required to contribute at an actuarially detennined 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 modification made by the ERS for prior year's contributions. The required contributions, for the Primary govemment, for the ament year and two preceding years were: 2005 .2004 .2003 ERS $ 1 ,068,200 $ 992,023 $ 443,861 $ $ $ PFRS 1,016,937 679,079 240,756 The Town's contribution to the system was 100% of the contributions req~ each year. 6. POST EMPLOYMENT BENEFITS In addition to providing pension benefits, the Town provides health insurance coverage and survivor benefits for retired employees and their survivors. Substantially all of the Town's employees may become eligible for these benefits if they reach nonnal retirement age while worl<lng for the Town. Health care benefits are provided through either a self-funded plan whose premiums are based on the benefits paid during the year or are provided in accordance with New York State Health Insurance Rules and Regulations (administered by the New York State Department of Civil Service) through the New York State Empire Plan (the "Empire Plan") whose premiums are based on the benefits paid throughout the Slate during the year. The Town recognizes the cost of providing benefits by recording its share of insurance premiums or the actual benefits paid as expenditure in the year paid. The Town's union contracts and ordinances require that it provide its eligible enrollees with benefit coverage under either the self-funded plan or the Empire Plan. Under the provlsloos of the Empire Plan, premiums are adjusted on a prospective basis for any losses experienced by the Empire Plan. The Town has the option to terminate its participation In the Empire Plan at any time without liability for its respective share of any previously incurred loss. During the 2005 year, $3,014,128 was paid on behalf of 88 retirees and 207 active employees and is recorded as an expenditure in the General Fund. 7. COMPENSATED ABSENCES Town employees are granted vacation and sick leave and earn compensatory absences in varying amounts. In the event of termination or upon retirement, an employee is entitled to payment for accumulated vacation and sick leave and unused compensatory absences at various rates subject to certain maximum limitations. TOWN OF SOUTHOLD NOTES TO FINANCIAL STATEMENTS December 31,2005 C. DETAILED NOTES ON ALL FUNDS AND ACCOUNT GROUPS (continued) 7. COMPENSATED ABSENCES (continued) Estimated vacation, sick leave and compensatory absences accumulated by govemmental fund type employees have been recorded In the statements of net assets. Payment of vacation time and sick leave is dependent upon many factors; therefore, timing of future payments Is not readily determinable. However, management believes that sufllclent resources will be made available for the payments of vacation, sick leave and compensatory absences when such payments become due. As of December 31, 2005, the value of the accumulated vacation time and sick leave was $5,779,826 for the primary govemment D. COMMI1MENTS AND CONTINGENCIES Risk Management The Town Is self-insured for both medical Insurance and general liability insurance. The amount of medical claims outstanding at December 31, 2005 is $200,131. This amount has been reserved against fund balance in the General Fund. In common with other municipalities, the Town receives numerous notices of claims. Prior to 2005, coverage for bodily injury and property damage was previously written on a primary non-self Insured retention ("SIR") basis. Insurance market conditions and availability precluded the Town from obtaining coverage in 2005 without an SIR. As a result, In 2005 the Town self-insured for bodily injury and property damage up to a maximum of $50,000 per claim. The $50,000 IImilallon was the minimum retention amount available to the Town. Claims In excess of $50,000 are covered by excess liability policies providing coverage for $10,000,000 per occurrence and in the aggregate. AIlhough the eventual ou1come of these 2005 claims cannot presently be determined, the Town's third party administrator has estimated unselUed claims at December 31, 2005 to be $94 thousand. These amounts have been reserved against fund balance in the General Fund. The Town is of the opinion that the ultimate selUement of the ou1standing claims will not result in a material adverse effect on the Town's financl8l position. Since 2005, there have been no significant reductions in insurance coverage as compared to the prior year; in addition there were no selUements on excess of insurance coverage over the last three years. The Town Is also self-insured for unemployment benefits paid. landfill Closure and Post-Closure Care Costs Slate 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 selUement with the New Yark State Department of Environmental Conservation in October of 1994 in which all charges of operational violations at the Cutchogue landfill were dropped. Under the stipulation, the Town agreed to close and place a final cover over the landfill and. to pay a . civil penalty of $650,000 over seven years. Construction of the flnal cover commenced in the summer of 2001 and was completed In the fall of 2003. In addition to placement of the final cover on the landfill, state and federal regulations presently require the Town to perform certain maintenance and monitoring functions at the site for up to thirty years. Accordingly, as ofDecember 31, 2005 the Town has recorded a liability of $612,395 which represents the provision to be made In future budgets for posl-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 Yark Slate Environmental Facilities Corporation. Costs associated with post closure care will be covered by charges to future landfill users and future lax revenue. - 32- "~-._",""-~-,...._",..,......".,,,~"-_...~~,,-....;-_..-~,-,-.,",-..~~,.~....,,, TOWN OF SOUTH OLD NOTES TO FINANCIAL STATEMENTS December 31, 2005 D. COMMITMENTS AND CONTINGENCIES (continued) Lease Commitments and Leased Assets The Town leases property and equipment under operating leases. Total rental expend~ures on such leases for the flscal year ended December 31, 2005 were approximately $205,000. Future obligations over the primary terms of the Town's leases as of December 31, 2005 are as follows: 2006 2007 2008 2009 and thereafter Total $ 115,977 94,997 85,184 684.824 980 982 $ E. CONDENSED FINANCIAL STATEMENTS FOR THE DISCRETELY PRESENTED COMPONENT UNITS The following represents condensed financial statements for the discretely presented component un~ as of and for the year ended December 31, 2005: Condensed Statement of Net Assets: Due from Capital Assets Other Current Prfmary Nelo! Current Lo~Tenn Net District Ass... Government Dep'ee1aDon Uabll/tles LlaIJlIIties Assets Fishers Island Feny $ 333,136 $ 119,344 $ 15,757,994 S 2,439,520 $ 2,700,000 $ 11,070,954 Fishers Island Refuse and Garbage 640,862 631,328 3,026,171 1,235,336 3,063,025 CUtchogue-New Suflolk Park 125,728 28,382 124,218 28,382 249,946 Southold Park 21,550 63,406 648,159 65,677 667,438 Onent-Eas' Manon Park 4,182 5,559 432,985 16,002 426,724 MatIIIuck Park 190,451 85,771 1,204,103 141,156 155,000 1,184,169 Orient Mosqu~o 32,386 15,355 9,680 15,355 42,066 $ 1,348,295 $ 949,145 $ 21,203,310 S 3,941,428 $ 2,855,000 S 18,704,322 Condensed Statement o! _Illes: Program General Revenue Net Assets Property DistJfd Expenses Revenue Net Expense Tax Other Change 111105 12/31105 Fishers Island Ferry $ 2,714,385 $ 1,8801,374 $ 830,011 $ 400,000 $ 2,026,871 $ (1,598,850) $ 9,474,094 $ 11,070,954 Fishers Island Refuse & Garbage 489,606 47,644 441,962 599,400 36,698 (194,136) 2,866,8Il9 3,063,025 Culchogue-New Suffolk Park 136,633 138,633 141,000 2,850 (5,217) 244,729 249,946 SOuthold Park 350,089 350,088 315,000 34,090 998 8Il6,438 667,438 Ori...l-Easl Madan Park 29,000 29,000 24,900 62 4,038 430,762 426,724 MalliluckPark 304,002 304,002 405,930 11,025 (112,953) 1,071,216 1,1801,169 onenl Mosqudo 60,371 60,371 74,650 401 (14,680) 27,386 42,066 $ 4,086,065 $ 1,932,018 $ 2,154,067 $ 1.960,880 $ 2,111,997 $ (1,916,610) $ 14,785,512 $ 16,704,322 - 33- "'._-~-"~~-' < "'-'<-~,""",,"~~''''--'''''''''''-'-''''-'~'- REQUIRED SUPPLEMENTARY INFORMATION OTHER THAN MANAGEMENT DISCUSSION AND ANALYSIS TOWN OF SOUTHOLD GENERAL FUND SCHEDULE OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCE - BUDGET AND ACTUAL Year ended December 31, 2005 Original Final Variance Budget Budget Actual Positive/(Negative ) REVENUES Real property taxes $14,608,674 $ 14,608,674 $ 14,608,674 Other real property tax items 66,000 66,000 68,807 2,807 Non-property tax items 401,035 401,035 415,071 14,036 Departmental income 349,900 349,900 345,956 (3,944) Intergovernmental charges 194,160. 269,823 252,558 (17,265) Use of money and property 286,625 286,625 489,796 203,171 licenses and permits 218,330 218,330 249,178 30,848 Fines and forfeitures 112,000 112,000 140,192 28,192 Sale of property and compensation for loss 45,350 70,025 93,290 23,265 Miscellaneous local sources 86,646 113,654 432,269 318,615 State aid 2,348,264 2,483,083 2,637,870 154,787 Federal aid 270,000 270,000 174,348 (95,652) Tolal Revenues 18,986,984 19,249,149 19,908,009 658,860 EXPENDITURES General government support 5,545,742 5,764,043 4,641,568 1,122,475 Public safety 6,889,518 7,189,570 7,177,145 12,425 Public health 33,300 33,300 33,288 12 Transportation 420,500 466,131 446,877 19,254 Economic assistance and opportunity 993,400 982,510 901,139 81,371 Culture and recreation 388,870 398,370 354,768 43,602 Home and community services 299,101 316,755 315,273 1,482 Employee benefits 5,811,949 5,868,274 5,857,963 10,311 Debt service - principal and interest 1,773,100 1,577,799 1,560,055 17,744 T olal Expenditures 22,155,480 22,596,752 21,288,076 1,308,676 Deficiency of Revenues Over Expenditures (3,168,496) (3,347,603) (1,380,067) 1,967,536 Other Financing Sources (Uses) Transfers in 5,488,341 5,559,682 2,642,859 (2,916,823) Transfers out (2,319,845) (2,212,079) (1,895,023) 317,056 Total Other Financing Sources (Uses) 3,168,496 3,347,603 747,836 (2,599,767) Excess (Deficiency) of Revenues and Other Sources Over Expenditures and Other Uses (632,231 ) $ (632,231) Fund Balance at Beginning of Year 6,639,693 Fund Balance at End ofVear $ 6,007,462 See notes to the financial statements. -34- ..,.._-,.",-..~".,.--_.~-".~". TOWN OF SOUTHOLD HIGHWAY FUND SCHEDULE OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES - BUDGET AND ACTUAL Year ended December 31,2005 Original Final Variance REVENUES Budget Budget Actual Posltivel(Negative) Real Property Taxes $ 3.805,032 $ 3,805.032 $ 3.805,032 Other Real Property Tax Items 3.600 3,600 8,935 5,335 Non-Property Tax Items 111 111 Use of Money and Property 25.300 25,300 77.817 52,517 Licenses and Permits 5,000 5,000 11,126 6,126 Sale of Property and Compensation for Loss 1,000 1,000 2,796 1,796 Miscellaneous Local Sources 155,054 155,054 State Aid 223,700 223,700 188,147 (35,553) Total Revenues 4,063,632 4,063.632 4.249,018 185,386 EXPENDITURES Transportation 3,228,488 3.228,488 2,913,768 314,720 Employee Benefits 553,741 553.741 500.343 53,398 Debt Service - Principal and Interest 189,932 189,932 178,371 11,561 Total Expenditures 3,972,161 3,972,161 3.592,482 379,679 Excess of Revenues Over Expenditures 91,4 71 91.471 656.536 565,065 Other Financing Uses (Sources) Operating Transfers In 494,564 494,564 (494,564) Transfers Out (586,035) (586,035) (520,085) 65,950 Total Other Financing Uses (91,471 ) (91,471 ) (520,085) (428,614) Excess of Revenues Over Expenditures and Other Uses 136,451 $ 136,451 Fund Balance at Beginning of Year 920.396 Fund Balance at End of Year $ 1.056,847 See notes to the financial statements. -35- OTHER SUPPLEMENTARY INFORMATION TOWN OF SOUTHOLO COMBINING BAlANCE SHEET NON-MAJOR GOVERNMENTAL FUNDS December 31,2005 East-West Fire Southold Fishers Solid Waste General Fund Special Protection Wastewater Island Sewer Management Part Town Grant District District District Disbict Totals ASSETS Cash and investments $ 740,370 $ 27,767 $ 176,492 $ 30,994 $ 270,513 $1,246,136 Accounts receivable, net of allowance 46,769 1,269 124,934 172,992 Due from other funds 152,519 92,199 4,752 325 463,244 733,039 Due from other governments $ 5,000 5,000 State and Federal Receivables Prepaid expenditures 26,686 27,339 54,024 Total Assets $ 986,344 $ 5.000 $ 119.966 $ 181,244 $ 32.608 $ 906,029 $ 2,211,191 LIABIUTlES AND FUND EQUITY LIABILITIES Accounts payable $ 14,395 $ 5.000 $ 12,656 $ 62 $ 195,071 $ 227,184 Due to other funds 6,974 20,700 27,674 Deferred revenue 99,686 92,198 $ 4,587 355,783 552,234 Total Liabilities 121,035 5,000 104,854 4,587 62 571,554 807,092 FUND EQUITY Fund balance - reserved: Prepaid expenses 28,686 26,686 Fund balance - unreserved: Designated - ensuing year's budget 344,246 4,350 348,598 Undesignated 474,3n 10,762 176,657 32,546 334.475 1,028,817 Total Fund Equity 845,309 15,112 176,857 32,546 334,475 1,404,099 Total liabilities and Fund Equity $ 966,344 $ 5,000 $ 119,966 $ 181,244 $ 32,608 $ 906,029 $2,211,191 -36- TOWN OF SOUTHOLD COMBINING STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES. NON-MAJOR GOVERNMENTAL FUNDS i Year ended December 31. 2005 ! ! I East.West Fire Solid Waste , Southold Fishers I General Fund Special Protection Wastewater Island Sewer Management I Part Town Grant District District District District Totals I REVENUES i Real property taxes $ 538,773 $ 413,058 $ 137,450 $ 1,614 $ 1.290,440 $ 2,381,335 I Other real property tax items 1,220 290 97 2 907 2,516 1 Non property tax items 213,786 213,786 Departmental Income 739,283 26,231 17,423 1,721.943 2.504,880 Intergovernmental charges 1,013 1,013 Use of money and property 28,321 2,689 6,666 1,190 25,226 64,092 Licenses and pennlts 5,200 160,765 165.965 Sale of property and compensation for loss 8,556 100,581 109,137 Miscellaneous local sources 74,427 4,621 74,543 153,591 State aid 75,374 75,374 Federal aid $ 224,136 224,136 Total Revenues 1,684,940 224,136 418,037 175,065 20.229 3.375,418 5,895,825 EXPENDITURES General government support 99,895 99,895 Public safety 393,192 414,282 807,474 Public health 6,864 6,864 Home and community services 563,269 224,755 1,646 29,598 2,283,171 3,102.639 Employee benefits 210,776 212 233,870 444,858 Debt service - principal and interest 5,365 2,475 663,860 671,720 Total Expenditures 1,279.381 224.755 414,282 4,533 29,598 3,180,901 5,133,450 Excess (Deficiency) of Revenues Over Expenditures 405,559 (619) 1,755 170,532 (9,369) 194,517 762,375 Other Financing Uses: Operating transfers out (264,969) (239,751) (504,720) Total Other Financing Uses (264,969) (239,751 ) (504,720) Excess (Deficiency) of Revenues Over expenditures and Other Uses 140,590 (619) 1,755 170.532 (9,369) (45,234) 257.655 Fund Balance at Beginning of Year 704,719 619 13,357 6,125 41,915 379.709 1.146,444 Fund Balances at End of Year $ 845,309 $ -0- $ 15,112 $ 176,657 $ 32,546 $ 334,475 $ 1 ,404,099 -37- __~_..._~_ ,._._~,,~'M"""""""-___'_""'''-__''_''.._' DISCRETELY PRESENTED COMPONENT UNITS TOWN OF SOUTHOLD DISCRETELY PRESENTED CCMPDNENT UNITS COMBINING STATEMENT OF NET ASSETS December 31. 2005 Rshara leland Cutchogua- Southold Orlent-East Matt/tuck Orient Fish... Refuse and New Suffolk Po" Marion Park P... Mosquito Island Feny Gerboge DI&bict ParkOlstrlct District Dlobict Dislr1ct Dlsbict District rUnaudttedl (Uneudited) (Unaudited) (Unaudited) (Unaudited) (Unaudited) Totals ASSETS Current Assets: Cash and Investments $ 259.682 $ 617,409 $ 125.728 $ 21.550 $ 4,182 $ 189.690 $ 32,386 $ 1,250.827 Accounts receivable, net of allowance 3.561 3.581 Due from primary government 119,344 631,328 28,382 . 63,406 5,559 85,771 15,355 949,145 Stale and federal receivables 48,767 46,767 PrepaId charges 24,487 19.892 781 45,140 Total Current Assets 452.480 1.272.190 154.110 84.95B 9.741 276.222 47.741 2.297.440 Non~urrentAs..ts: Non-depreclable capital assets 11.203.623 2.442.737 101.198 588.847 432.985 515,306 15.284.596 Depreciable capital assets, net of depreciation 4.554.471 583.434 23.020 59.312 688.797 9.880 5.918.714 Total Assets 16,210,474 4.298.361 278.328 733.115 442.726 1.480.325 57,421 23.500,750 UABIUTlES Current UabiRttes: Accounts payable and accruod liabilities 421.634 1,910 10,443 8.815 442,802 Accrued Interest payable 62,371 1.570 63,941 Due to other govemments 2.271 2,271 Other liabilities Deferred revenue 80,515 113.426 28,382 63._ 5,559 85.n1 15.355 392.414 Due to other funds Bond enUdpetfon notes payable 1.726.000 1.120.000 2.845.000 NOll-oCurrent liabilities due within one year General obligation bond. payable 150.000 45.000 195.000 Total Current UabllitiBS 2.439.520 1.235.336 28,382 85.677 16,002 141.156 15.355 3.941.428 Noncurrent UabllltJes: General obligation bonds payable 2.700.000 155.000 2.855.000 Total LlablllUes 5.139.520 1235.336 28.382 65.6n 16.002 296.158 15.355 6.796.428 NET ASSETS Investment in capital assets. net of related debt 11.182.994 1.908.171 1.004,103 14,093,268 Unrestricted (112.040) 1.158.854 249.946 667.438 426.724 180.066 42.066 2.611,054 Total Net Assets $ 11,070.954 $ 3,063,025 $ 249.946 $ 667.438 $ 426,724 $ 1.184,169 $ 42.066 $ 16,704.322 -3B- TOWN OF SOUTHOLD DISCRETElY PRESENTED COMPONENT UNITS COMBINING STATEMENT OF ACTIVITIES Year ended December 31.2005 Fishers Island Cutchogue- Southold Orient-East Mattltuck Orient Fishers Refuse and New Suffolk Park Marion Park Park Mosquito Island Ferry Garbage District Park Dlsbict District District District Dlsbict DIstrict (Unaudited) (Unaudited) (Unaudited) (Unaudtted) (Unaudited) (Unaudited) Totals REVENUES Program revenues $ 1,884,374 $ 47.644 $ 1,932,018 Real property taxes 400,000 599,400 $ 141,000 $ 315,000 $ 24,900 $ 405,930 $ 74,650 1,960,860 Other real property tax Items 281 285 566 Miscellaneous revenue, other govemments 18.449 18,449 Interest and earnings 17,420 36,698 2,850 62 11,432 401 68,863 Stale Aid 684 684 Federal Aid 1,983,139 1,983,139 other 6,898 34,090 (692) 40,296 Total Revenues 4,311,245 683,742 143,850 349,090 24,962 416,955 75,051 6,004,895 EXPENSES General government support 80,610 80,610 Public health 60,371 60,371 Transportation 2,532,192 2,532,192 Culture and recreation 138,633 350,068 29,000 296,780 814,501 Home and community services 16,942 478,890 495,832 Interest 84,641 10,716 7,222 102,579 Total Expenses 2,714,385 489,606 138,633 350,088 29,000 304,002 60,371 4,086,085 Changes In Net Assets 1,596,860 194,138 5.217 (998) (4.038) 112.953 14,680 1,918,810 Net Assets at Beginning of Year 9,474,094 2,868.889 244,729 668,436 430,762 1,071,216 27,386 14.785,512 Net Assets at End of Year $11,070,954 $ 3,063,025 $ 249.946 $ 667,438 $ 426.724 $ 1.164,169 $ 42.066 $16,704,322 -39- TOWN OF SOUTHOLD SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS December 31.2005 FEDERALGRANTO~PASS THROUGH GRANTORIPROGRAM TITLE U.S. Department of Health & Human Services Passed throuah Suffolk Countv: Nutrition Services Incentive Program U.S Department of Hea~h & Human Services Passed throuah Suffolk County: Nutrition U..S. Department of Homeland Securitv Passed throuah the State of New Yark Buffer Zone Protection Plan U.S Department of Aariculture Natural Resouce Conservation Service Farm & Ranchland Protection Program U.S Department of Housina and Urban Development Passed throuah Suffolk Countv: Community Development Block Grant U.S Department of the Interior Fish and Wildlife Service Passed throuah the State of New Yark Department of Environmental Conservation: Coastal Wetlands Conservation Grant -40- FEDERAL CFDA NUMBER EXPENDITURES 93.053 $ 93.045 97.078 10.913 14.218 15.614 21,174 103,174 50,000 510,539 224,136 1,000,000 $ 1,909,023 ,~"",,>,,_,~'<0.______~~._'__'_"~_--'~ ""-'-~-~-'-~"'~~~."''''''''''-~"--,,,-,-~,--- ., TOWN OF SOUTHOLD NOTE TO SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS December 31, 2005 Note A - Basis of Presentation The accompanying schedule of expenditures of federal awards includes the federal grant activity of the Town of Southold and is presented on the modified accrual basis of accounting. The information in this schedule is presented in accordance with the requirements of OMS Circular A-133. Audits of States, Local Governments, and Non-Profit Organizations. Therefore, some amounts presented in this schedule may differ from amounts presented In, or used in the preparation of, the basic financial statements. -41- CERTIFIED PUBLIC ACCOUNTANTS. BUSINE:SS AOVISORS ANO CONSULTANTS 25 SuflOlk Court, Hauppauge, New 1&rk 11788 631.434.9500 . Fax 631.434.9518 WWtv.Qvz.com REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING AND ON COMPLIANCE AND OTHER MA TIERS 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, each major fund, and the aggregate remaining fund Information of the Town of Southold, New York as of and for the year ended December 31, 2005, which collectively comprise the Town of Southold's basic financial statements, and have issued our report thereon dated June 8, 2006, which was qualified because the Town of Southold's discretely presented component units with the exception of one, the Fishers Istand 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 apprlCable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States. Intemal Control Over Financial Reoortina 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 intemal control over financial reporting. Our consideration of the intemal control .over financial reporting would not necessarily disclose all matters In the internal conrol over financial reporting that might be material weaknesses. A material weakness Is a condition in which the design or operation of one or more of the internal control components does not reduce to a relatively low level the risk that misstatements in amounts that would be material In relation to the financial statements being audited may occur and n.ot be detected within a timely period by emplOyees in the n.ormal C()IJrse of performing their assigned functions. We noted no matters involving the inteinal control" over financial reporting and Its operation that we consider to be material weaknesses. Comoliance and Other Matters As part of obtaining reasonable assurance about whether the Town of South old's financiat statements are free of material 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. This report is intended solely for the information of the Town Board, management, others within the organization, and federal awarding agencies and pass-lhrough entities and is not intended to be and should not be used by anyone other than those specified parties. ~ ~(2....lv-r~/f?v Hauppauge, New York June 8, 2006 -42- ALBRECHT, VIGGIANO, ZURECK & CoMFWn', P.C. __ h..acrItDlHROI"DKR~ CERTIFIED PUBLIC ACCOUNTANTS. BUSINESS ADVISORS AND CONSULTANTS 25 Suffolk Court, Hauppauge, New York 11788 631.434.9500 . Fax 631.434.9518 WWlv.avz.com REPORT ON COMPLIANCE WITH REQUIREMENTS APPLICABLE TO EACH MAJOR PROGRAM AND INTERNAL CONTROL OVER COMPLIANCE IN ACCORDANCE WITH OMB CIRCULAR A-133 Town Board Town of Southold Southold, New York Compliance We have audited the compliance of the Town of Southold, New York with types of compliance requirements described in the U. S. Office of Management and Budget (OMB) Circular A-133 Compliance Supplement that are applicable to each of its major federal programs for the year ended December 31, 2005. The Town of 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, regulatfons, contracts, and grants applicable to each of its major federal programs is the responsibility of the Town of Southold, New York's management Our responsibility is to express an opinion on the Town of Southoid, New York's compliance based on our audit. We conducted our audit of compliance in accordance with auditing standards generally accepted in the United States of America; the standards applicable to financial audits contained in Government Auditing standards, issued by the Comptroller General of the United 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 oorripliance requirements referred to above that oould 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 Soulhold, New York's compliance with those requirements and performing such other procedures as we oonsidered 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, New York's compliance with those requirements. In our opinion, the Town of Southold, New York oomplied, in all material respects, with the requirements referred to above that are applicable to each of its major federal programs for the year ended December 31, 2005. Internal Control Over Compliance The management of the Town of Southold is responsible for establishing and maintaining effective intemal oontrol over compliance with the requirements of laws, regulations, contracts, and grants applicable to federal programs. In planning and performing our audit, we considered the Town of Southold's internal control over compliance with requirements that could have a direct and material effect on a major federal program In order to determine our auditing procedures for the purpose of expressing our opinion on oompliance and to test and report on the internal control 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 internal control that might be a material weakness. A material weakness is a condition in which the design or operation of one or more of the internal control components does not reduce to a relatively low level the risk of noncompliance with applicable requirements of laws, regulations, contracts and grarits 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 oourse of performing the assigned functions. We noted no matters involving the internal control over compliance and its operation that we consider to be material weaknesses. -43- ALBRECHT, VIoGIANO, ZURECK l50 CoMFW<<, P.C. 1_ . ......""'DICR~ This report is intended solely for the infonnation 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 specllled parties. ~I \f~1 ~. .~... J- Cr;, t'.G Hauppauge, New York June 8, 2006 -44" 'L"'""",,_~~___~~._""-"'-'-""'~'~_'~"___' -,- TOWN OF SOUTHOLD SCHEDULE OF FINDINGS AND QUESTIONED COSTS Year ended December 31, 2005 SUMMARY OF AUDIT RESULTS 1. The auditor's report expresses a qualified opinion on the financial statements of the Town of Southold due to the fact that six of the seven component units of the Town of Southold that were discretely presented were not audited. The remaining component uni~ the Fishers Island Ferry District, was audited by other auditors. 2. No reportable conditions disclosed during the audit of the financial statements are reported in the "REPORT ON COMPlIANCE AND ON INTERNAL CONTROL OVER FINANCIAL REPORTING BASED ON AN AUDIT OF FINANCIAL STATEMENTS PERFORMED IN ACCORDANCE WITH GOVERNMENT AUDITING STANDARDS~ None of the conditions are reported as a material weakness. 3. No instances of noncompliance material 10 the financial statements of the Town of Southold were disclosed during the audit. 4. No reportable conditions disclosed during the audit of the major federal award programs are reported in the "REPORT ON COMPLIANCE WITH REQUIREMENTS APPLICABLE TO EACH MAJOR PROGRAM AND ON INTERNAL CONTROL OVER COMPLIANCE IN ACCORDANCE WITH OMB CIRCULAR A- 133". No material weaknesses were noted. 5. The auditor's report on compliance for the U.S. Department of the Interior- Fish and Wildlife Service expresses an unqualified opinion; the report on the remaining programs are unqualified. 6. No audit findings relative to the major federal award programs for the Town of Southold are reported in this schedule. 7. The Town of Southold had two "Type A" programs for the year ended December 31, 2005. 8. The program tested as a major program includes: CFDA Number Name of Federal Proaram or Cluster 15.614 U.S. Department of the Interior Fish and Wildlife Service 9. The threshold for distinguishing Types A and B programs was $500,000. 10. The Town of Southold was determined to be a low-risk auditee. -45- TOWN OF SOUTHOLD SCHEDULE OF FINDINGS AND QUESTIONED COSTS Year ended December 31, 2005 FINDINGS-FINANCIAL STATEMENTS AUDIT REPORTABLE CONDmONS - FINDINGS AND QUESTIONED COSTS- MAJOR FEDERAL AWARD PROGRAMS AUDIT. Questioned Cost -46- None None $ AMBAC ASSURANCE Payment Pursuant to Financial Guaranty Insurance Policy Ambac Assurance Corporation ("Ambac Assurance") has made a commitment to issue a financial guaranty insurance policy (the "Financial Guaranty Insurance Policy") relating to the Bonds effective as of the date of insurance of the Bonds. Under the terms of the Financial Guaranty Insurance Policy, Ambac Assurance will pay to The Bank of New York, in New York, New York or any successor thereto (the "Insurance Trustee"), that portion of the principal of and interest on the Bonds which shall become Due for Payment but shall be unpaid by reason of Nonpa:r.ment by the Obligor (as such terms are defined in the Financial Guaranty Insurance Policy). Ambac Assurance wIll make such payments to the Insurance Trustee on the later of the date on which such principal and/or interest becomes Due for Payment or within one business day following the date on which Ambac Assurance shall have received notice of Nonpayment from the Trustee/Paying Agent. The insurance will extend for the term of the Bonds and, once issued, cannot be canceled by Ambac Assurance. The Financial Guaranty Insurance Policy will insure payment only on stated maturity dates and on mandatory sinking fund installment dates, in the case of prmcipal, and on stated dates for payment, in the case of interest. If the Bonds become subject to mandatory redemption and insufficient funds are available for redemption of all outstanding Bonds, Ambac Assurance will remain obligated to pay principal of and interest on outstanding Bonds on the originally scheduled interest and principal llayment dates including mandatory sinking fund redemptIOn dates. In the event of any acceleration of the principal of the Bonds, the insured payments will be made at such times and in such amounts as would have been made had there not been an acceleration, except to the extent that Ambac Assurance elects, in its sole discretion, to pay all or a portion ofthe accelerated principal and interest accrued thereon to the date of acceleration (to the extent unpaid by the Obligor). Upon payment of all such accelerated principal and interest accrued to the acceleration date, Ambac Assurance's obligations under the Financial Guaranty Insurance Policy shall be fully discharged. In the event the Trustee/Paying Agent has notice that any payment of principal of or interest on a Bond that has become Due for Payment and that is made to a Bondholder by or on behalf of the Obligor has been deemed a preferential transfer and theretofore recovered from its registered owner pursuant to the United States Bankruptcy Code in accordance with a final, nonappealable order of a court of competent jurisdiction, such registered owner will be entitled to payment from Ambac Assurance to the extent of such recovery if sufficient funds are not otherwise available. The Financial Guaranty Insurance Policy does not insure any risk other than Nonpayment, (as set fourth in the Financial Guaranty Insurance Policy). Specifically, the Financial Guaranty Insurance Policy does not cover: I. payment on acceleration, as a result of a call for redemption (other than mandatory sinking fund redemption) or as a result of any other advancement of maturity. 2. payment of any redemption, prepayment or acceleration premium; and 3. nonpayment of principal or interest caused by the insolvency or negligence of any Trustee, Paying Agent or Bond Registrar, if any. lfit becomes necessary to call upon the Finan~ial Guaranty Insur!lllce Policy, Jla~ent of principal requi~s surrend~r of Bonds to the Insurance Trustee together With an appropnate mstrument of assignment so as to permit ownership of such Bonds to be registered in the name of Ambac Assurance to the extent ofthe payment under the Financial Guaranty Insurance Policy. Payment of interest pursuant to the Financial Guaranty Insurance Policy requires proof of Bondholder entitlement to interest payments and an appropriate assignment of the Bondholder's right to payment to Ambac Assurance. Upon payment ofthe insurance benefits, Ambac Assurance will become the owner of the Bond, appurtenant coupon, if any, or right to payment of principal or interest on such Bond and will be fully subrogated to the surrendering Bondholder'S rights to payment. The insurance provided by the Financial Guaranty Insurance Policy is not covered by the property/casualty insurance security fund specified by the insurance laws of the State of New York. AMBAC ASSURANCE CORPORATION Ambac Assurance is a Wisconsin-domiciled stock insurance corporation regulated by the Office of the Commissioner of Insurance of the State of Wisconsin, and is licensed to do business in 50 states, the District of Columbia, the Territory of Guam, the Commonwealth of Puerto Rico and the U.S. Virgin Islands, with admitted assets of approximately $10,015,000,000 (unaudited) and statutory capital of approximately $6,371,000,000 (unaudited) as of December 31, 2006. Statutory capital consists of Ambac Assurance's policyholders' surplus and statuto~ contingency reserve. Standard & Poor's Ratings Services, a division of The McGraw-Hill Companies, Inc., Moody s Investor Service and Fitch Ratings have each assigned a triple-A financial strength rating to Ambac Assurance. Ambac Assurance has obtained a ruling from the Internal Revenue Service to the effect that the insuring of an obligation by Ambac Assurance will not affect the treatment for federal income tax purposes of interest on such obligation and that insurance proceeds representing maturing interest paid by Ambac Assurance under policy -",--,"",.."_."~.,...~._,"-~",.......,~.",......,,~~~-.,...~~.,,,~",~.,~---.,.,,,......'.-. .'-'''-'-'-- provisions substantially identical to those contained in its Financial Guaranty Insurance Policy shall be treated for federal income tax purposes in the same manner as if such payments were made by the Obligor of the Bonds. Ambac Assurance makes no representation regarding the Bonds or the advisability of investing in the Bonds and makes no representation regardmg, nor has it participated in the preparation of, the Official Statement other than the information supplied by Ambac Assurance and presented under the heading "Appendix C". . AVAILABLE INFORMATION The parent company of Ambac Assurance, Ambac Financial Group, Inc. (the "Com~any"), is subject to the informational requirements of the Securities Exchange Act of 1934, as amended (the 'Exchange Act"), and in accordance therewith files reports, proxy statements and other information with the Securities and Bxchange Commission (the "SEC"). These reports, proxy statements and other information can be read and copied at the SEC's public reference room at 100 F Street, N.E., Room 1580, Washington, D.C. 20549. Please call the SEC at 1-800- SEC-0330 for further information on the public reference room. The SEC maintains an internet site at http://www.sec.gov that contains reports, proxy and information statements and other information regarding companies that file electronically with the SEC, including the Company. These reports, proxy statements and other information can also be read at the offices of the New York Stock Exchange, Inc., at 20 Broad Street, New York, New York 10005. Copies of Ambac Assurance's financial statements prepared in accordance with statutory accounting standards are available from Ambac Assurance. The address of AmbacAssurance's administrative offices and its telephone number are One State Street Plaza, 19th Floor, New York, New York, 10004 and (212) 668-0340. INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE The following document filed by the Company with the SEC (File No. 1-10777) is incorporated by reference in this Official Statement: The Company's Annual Report of Form 10-K for the fiscal year ended December 31,2006 and filed on March 1,2007. All documents subsequently filed by the Company pursuant to the requirements of the Exchange Act after the date of this Official Statement will be available for inspection in the same manner as described above in "AVAILABLE INFORMATION". Ambac Ambac Assurance Corporation One State Street PIaza. 15th Floor New York. New York 10004 Telephone: (212) 668-0340 Financial Guaranty Insurance Policy Obligor: Policy Number: Obligations: Premium: o er than (1) the Obligor or (il) any person whose obligations constitute the alions who, at the time of Nonpayment, is the owner of an Obligation or of In, "Due for Payment", when referring to the principal of Obligations, Is when mandata emption date for the application of a required sinking fund installment has been any earlier date on which payment Is due by reason of call for redemption (other than by application tallments). acceleration or other advancement of matUrity: and, when referring to interest on the e uled date for payment of interest has been reached. As used herein. "Nonpayment" means the failure e ro sufficient funds to the trustee or paying agent for payment tn full of all prtnclpal of and interest 19ations ch are Due for Payment. . c celable. The premium on this Policy is not refundable for any reason, including payment of the ObUgations prior to m This Policy does not insure against loss of any prepayment or other acceleration payment which at any time may become due in respect of any Obligation, other than at the sole option of Ambac, nor against any risk other than Nonpayment. In witness whereof, Ambac has caused this Policy to be affixed with a facsimile of its corporate seal and to be signed by its duly authorized officers tn facsimile to become effective as its ortginal seal and signatures and binding upon Ambac by Virtue of the countersignature of its duly authorized representative. Ambac Assurance Corporation (Ambac), a Wisconsin stock insurance corporation, in consideration of the pa premium and subject to the tefIIlS of this Policy, hereby agrees to pay to The Bank of New York, as trustee, or its u r (the "Insurance Trustee"), for the benefit of the Holders, that portion of the principal of and interest on the above-describe 0 Igations (the "ObUgations") which shall become Due for Payment but shall be unpaid by reason of Nonpayment b e ObUg Ambac will make such payments to the Insurance Trustee within one (1) business day following w Nonpayment. Upon a Holder's presentation and surrender to the Insurance Trustee of such unpai, uncanceled and in bearer form and free of any adverse claim, the Insurance Trustee will d principal and interest which is then Due for Payment but is unpaid. Upon such disburse the surrendered Obligations and/or coupons and shall be fully subrogated to all of th Ho e In cases where the Obligations are issued in registered form, the Insurance Trustee 01 er only upon presentation and surrender to the Insurance Trustee of the unpaid Obligation, un v claim, together with an instrument of assignment, in fonn satisfactory to Ambac and nsurance the Holder or such Holder's duly authorized representative, so as to permit ownership of shaHan i e name of Ambac or its nominee, The Insurance Trustee shall disburse interest to a er a ed n y upon presentation to the Insurance Trustee of proof that the claimant is the person entitle 0 he toe Obligation and delivery to the Insurance Trustee of an instrument of assignment, in form satlsfac to urance Trustee, duly executed by the Holder or such Holder's duly authortzed representa rrtn t Am under such Obl1gation to receive the interest in respect of which the insurance disbu t was de. c sti e subrogated to all of the Holders' rtghts to payment on registered Obligations to the extent 0 y insurance dtsbu nts made, In the event that a trustee or paying bligations noti that any payment of principal of or interest on an Obl1gation which has become Due f ch is mad t a Holder by or on behalf of the Obligor has been deemed a preferential transfer and theretofo r vered f lder t to the United States Bankruptcy Code in accordance with a final, nonappealable order of a u of co Holder will be entitled to payment from Ambac to the extent of such recovery if sufficl nds As used herein, the underlying secur a coupon relating the sch tu reach of red sinking fit Ob g Uons oft on the f~j~ President ...,........ ,. ",,"H('f ~~ ,,,'!,.\..,;)i.;or"1'~."O' ,c...... f' ...... ,~I - .."'.... ,:/ ~... \\\ ,! DD&I.I : , f. i 1 I "\ - i, . ' I "'~'Jf:O"'~~'/ .. ,,- --..- . -'''... ~~-~ Secretary Effective Date: A- Authorized Representative ~ Authorized Officer of Insurance Trustee THE BANK OF NEW YORK acknowledges that It has agreed to perform the duties of Insurance Trustee under this Policy. Form No.: 2B-0012 (1101) Ambac Ambac Assurance Corporation One State Street Plaza, New York, New York 10004 Telephone: (212) 668-0340 Endorsement Policy (iJr: Attached to and forming part of Policy No.: The insurance provided by this Policy is not covered fund specified by the insurance laws of the State N ter, waive or extend any of the terms, conditions, provisions, agreements other than as above stated. J Ambac has caused this Endorsement to be affixed with a facsimile of its corporate seal and to ized officers in facsimile to become effective as its original seal and signahrres and binding 1e cOl.U1tersignature of its duly authorized representative. Amb.., Auuraac:e CorporatioA f~ j /!-L- .....,"- ..--;~!:~~.!.. ~\ '- .~,O'>tO.";",~,,o' ,,'-.' t'v"t ,."'1 _ '."... ,:i SEAL \'Ot ... I :'%. IJ : ; , t ; i . ,:. - :1 . \. l' . " " " . , .....~,$('O""~..... . , -....-. . ',-,... ~~~ President Secretary Authorized RepresentatiVt~ Form No.: 28.0004 (7/97) 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 1I 79 Southold, New York 1I97I Fax (631) 765-6145 Telephone (631) 765-1800 sou tholdtown. northfork. net OFFICE OF THE TOWN CLERK TOWN OF SOUTHOLD March 27, 2007 Robert P. Smith, Esq. Hawkins, Delafield & Wood, LLP One Chase Manhattan Plaza New York, NY 10005 Re: Town of Southold, New York- $14,650,000 Public Improvement Serial Bonds - 2007 Dear Mr. Smith: I hereby certify that on this date I have caused to be filed in my office the Debt Statement prepared as of March 27, 2007 in connection with the sale of the above referenced bond issue. ~~h~f7 ~.;N4) Iza th A. Neville Town Clerk (SEAL) cc: John Cushman Robert F. Sikora SUGGESTED FORM OF.cLEll'S CERTIFICATION LETTER (LETTERHEAD) (Date) Robert P. Smitb, Esq. Hawkins Delafield & Wood LLP One Chase Manhattan Plaza New York, New York 10005 Re: Town of Southold, New York- $14,650,000 Public Improvement Serial Bonds - 2007 Dear Mr. Smith: I hereby certify that on tbis date I have caused to be filed in my office tbe Debt Statement prepared as of March 27, 2007 in connection with tbe sale of the above referenced bond issue. ELIZABETH A. NEVILLE CLERK (SEAL) cc: John Cushman Robert F. Sikora . - ., AC 973 (Rev. 7/85) Cities under 125,000 population Counties Towns Villages STATE OF NEW YORK OFFICE OF THE STATE COMPTROLLER ALBANY, NEW YORK 12236 DEBT STATEMENT OF TOWN OF SOUTHOLD SUFFOLK COUNTY, NEW YORK PREPARED AS OF MARCH 27, 2007 THE FOLLOWING IS A STATEMENT OF THE TOWN OF SOUTHOLD IN THE COUNTY OF SUFFOLK, NEW YORK, TO CONTRACT INDEBTEDNESS, AND IS PREPARED AS OF MARCH 27, 2007 PURSUANT TO TITLE 8, ARTICLE II OF THE LOCAL FINANCE LAW. DEBT LIMIT Counties (except Nassau), cities, towns and villages. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 568.132,480 Multiply "Average Full Valuation" (page 5), Line 7 by .07 (Nassau County .10) TOTAL NET INDEBTEDNESS Total Inclusions (page 5) ........................................................ Less: Total. Exclusions (Page 6) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Total Net Indebtedness. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $19,019,000 2.508.000 $ 15.511.000 NET DEBT-CONTRACTING MARGIN Debt Limit (Above) .......................................... . . . . . . . . . . . . . . . . .. $568,132,480 Less: Total Net Indebtedness (Above) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15.511.000 Net Debt-Contracting Margin .................................................... $ 552.621.480 PERCENTAGE OF DEBT -CONTRACTING POWER EXHAUSTED Divide "Total Net Indebtedness" by "Debt Limit" and enter result here .' . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.73 % PROPOSED BOND ISSUE The amount of bonds proposed to be sold at public sale on April 10, 2007 in connection with which this statement is made and filed is ...................................... $ 14.650.000 The amount of bond anticipation notes heretofore issued in anticipation of the sale and issuance of such bonds and included at "Borrowings" at Item 1 of Inclusions at page 5 is . $ 4.515.000 -1- ST A TEMENT OF TOTAL DEBT AVERAGE FULL VALUATION OF TAXABLE REAL ESTATE Computation of Average Full Valuation Based on Last Five Completed Assessment Rolls (I) (2) (3) Taxable Assessed Full Valuation of Line For Fiscal Valuation of Final State Taxable Real Estate No. Year Ending Real Estate Equalization Rate (Column I - Column 2) 1. 12-31-03 98,928,528 1.71 5,785,294,035 2. 12-31-04 101,872,561 1.49 6,837,084,630 3. 12-31-05 104,228,885 1.25 8,338,310,800 4. 12-31-06 105,502,965 1.13 9,336,545,575 5. 12-31-07 106,950,027 1.04 10.283.656.442 6. Total of Lines I to 5 Inclusive.. . . . .. . . . . .. . .. . . .. ... . . . . .. . . . ... $40,580,891,482 7. Average Full Valuation (1/5 of Total of Column 3 . . . . . . . . . . . . . . . . . 8.116.178.296 INCLUSIONS 1. Borrowings. Sec. 135.00(a)(I) ................................... 2. Real Property Liabilities. Sec. 135.00(a)(2) ......................... 3. Contract Liabilities. Sec. 135.00(a)(3) ............................. 4. Cities, Towns and Villages: Contract Liabilities: Housing Guarantees; Subsidies. Sec. 135.00(a)(4),(a)(4-a),(a)(4-b) ............................... 5. Cities, Towns, Villages: State Loans to Certain Housing Authorities and Municipalities. Sec. 135.00(a)(5) .............. . . . . . . . . . . . . . . . . . . 6. Judgments, Claims, Awards and Determinations. Sec. 135.00(a)(6) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7. Cities, Towns, Villages: Indebtedness Contracted by Certain District Corporations. Sec. 135.00(a) (7) ............................................ 8. Indebtedness Contracted or incurred Pursuant to Article II, Title I-A of the Local Finance Law in relation to a Joint Service of Joint Water, Sewage, or Drainage Project: ~see Instruction 5, Page 2.) a) Borrowings: Several Indebtedness ...... . . . . . . . . . . . . . . . . . . . . . . . . b) Borrowings: Allocated or Apportioned Joint Indebtedness . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ~c} Real Property Liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . d Contract Liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . e Judgments, Claims, Awards and Determinations. . . . . . . . . . . . . . . . . . . TOTAL INCLUSIONS.. . . .... . . . . . .. .. . . .. .. . .. . $ 19.019.000 $19.019.000 1. Tax and Revenue Obligations. Sec. 136.00(1) .............................. $ 2'S~~~if3~.~(M~;)~~ :~r. ~t.h.e~.t~~ .~~~i~~I.I~~~~~e.~~~t.s: . .. .. . .. . . .. . . . . . . . . . . 3. Water Indebtedness. Sec. 136.00(2) ...................................... 4. Indebtedness Contracted for Self-Liquidating Projects. . Sec. 136.00(3) ....................................................... 5. Sewer Indebtedness Contracted on or after January I, 1962, and prior to January I, 1994. Sec. I36.00( 4-a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6. Bonds for Pensions. Sec. 136.00(4) ...................................... 7. Cities and Villages with Population of 5,000 or More: Indebtedness for Housing and Urban Renewal Purposes. Sec. 136.00(8) ....................................................... (See also, if applicable, indebtedness for housing or urban renewal purposes (Sec. 136.00(8-a)). 8. Towns and Villages with Population of Less than 5,000: Subsidies or Guarantees for Housing Purposes. See 136.00(9) . . . . . . . . . . . . . . . . . . 9. Assets of Sinking Funds. Sec. 136.00(10) ................................. 10. Refunded and Refunding bonds. Sec. 136.00(1 O-a)(1 O-b) .................... 11. Cash on Hand for Debts. Sec. 136.00(11) ................................. 1.504.689 12. Appropriations. Sec. 136.00(12) ........................................ 1.003.311 13. Cities Only: School Indebtedness. Sec. 136.00(13) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14. (~~~~ep~~J~~e~~~.ng~5~~~t~a~t~~ .i~ .r~~~t~~~ ~~ ~.J.o.i~~ . . . . . . . . . . . . . . . . . . . . . (ba) (b) Joint Indebtedness Contracted for such Purpose .......................... () 15. (a) Several Indebtedness Contracted for a Joint Service and Excluded Pursuant to Local Finance Law, Sec. 15.20 and 123.00. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (a) (b) The Apportioned or Allocated Amount of any such Joint Indebteaness so Excluded ........................................... . (b) 16. (a) Several Indebtedness Contracted for a Joint Sewage and/or Drainage Project and Excluded Pursuant to Local Finance Law, Sec. 123.00 and 124.10 . . .. .... .. . .. . . . . . . . . . . . . . .. . . (a) (b) The Apportioned or Allocated Amount of any such Joint Indebtedness so Excluded ........................................... . (b) -2- GROSS JOINT INDEBTEDNESS The aggregate gross amount of all joint indebtedness before apportionment of allocation is . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. $ (See Instruction 6, page 3.) EXCLUSIONS TOTAL EXCLUSIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. $ 2.508.000 3- SCHEDULE A PART 1. The following obligations will be sold at the sale in connection with which this debt statement is filed: Type Amount Object or Purpose of to be for whicli ObljMtion Sold Authorized 4,000,000 Open Space Preservation SB 2,000,000 Open Space Preservation SB 2,000,000 Open Space Preservation SB 1,987,900 Open Space Preservation SB 1,200,000 Solid Waste Mgmnt Dist - Land Acquis. SB 315,000 Payment of Settled Claim SB 3,000,000 Solid Waste Mgmnt Dist - Transfer Station SB 95,000 Acquis.ofExcavator SB 52.100 Acquis.ofTractor-Mower Total ............... $14.650.000 Date of Authorization 08-26-03 08-21-01 08-23-99 09-01-98 11-19-02 09-07 -04 11-16-04 02-27-07 02-27-07 PART 2. The following bond anticipation notes have been issued in anticipation of the bonds listed in PART I above, and are now outstanding. Date of Note 04-21-06 04-21-06 04-21-06 Total Amount 2,810,000 475,000 3.125.000 $6.410.000 Obiect or Purpose for which Authorized Solid Waste Mgmnt Dist - Land Acquis. Payment of Settled Claim Solid Waste Mgmnt Dist - Transfer Station To be funded from the proceeds of the serial bonds in connection with which this Debt Statement is filed, from grant funds received to date and from current budget appropriations. The following symbols may be used: Serial Bond-SB; Statutory Installment Bond-SIB; Bond Anticipation Note BAN; Capital Note-CN; Tax Anticipation Note-TAN; Revenue Anticipation Note-RAN; Budget Note-BN; Certificate ofindebtedness-CI; Sinking Fund Bonds-SFB. -4- SCHEDULE B Date of Authorization The following oblillations are authorized, unissued and will be sold prior to the sale of the obligatIons listed in Schedule A, PART J. Type Amount Object or Purpose of to be for which Obligation Issued Authorized PART J. Total. . . . . . . . . . . . . . . . . . $. -0- PART 2. The following obligations are authorized, unissued and will not be sold prior to the sale of the obligations listed in Schedule A, PART J. Date Type Amount Object or Purpose of of for which for which Authorization Obligation Authorized Authorized 01-09-98 SB 2,000,000 Open Space Preservation* 08-23-99 SB 2,000,000 Open Space Preservation* 08-28-01 SB 2,000,000 Open Space Preservation* 02-25-03 SB 82,750 Mattituck Inlet Shore Erosion Study 08-26-03 SB 4,000,000 Open Space Preservation* 08-16-05 SB 2,600,000 New Town Animal Shelter I 1-2 I -06 SB 200,000 Impvts to Peconic Recreation Center 02-27-07 SB 278,000 Acquis. Of Air Vacuum Drain Cleaner 02-27-07 SB 22,500,000 Open Space Preservation 02-27-07 SB 100,000 Acquis.OfExcavator* 02-27-07 SB 60,000 Acquis.OfTractor-Mower* Total $ 35,820,750 *To be funded in whole or in part by the issuance ofthe Bonds in connection with which this Debt Statement is being filed. . -5- VERIFICATION BY CHIEF FISCAL OFFICER State of New York SS: County of Suffolk Scott A. Russell, being duly sworn, deposes and says: That he is the duly qualified, and acting chief fiscal officer of the Town of Southold, in the County of Suffolk, New York; that he prepared and has read the foregoing debt statement and knows the contents thereof; that the same is true to his own knowledge except as to the matters therein stated to be alleged upon information and belief, and that as to those matters he believes it to be true. ~ Su~ervisor ITLE Town Hall - 53095 Main Road Southold. N.Y. 11971 MAIL ADDRESS SUBSCRIBED AND SWORN TO BEFORE ME THIS J-l~ DAY OF 1M arC L , 2007 fA ~ ~^AL' ~ NOTAR6J;~~7 MELANIE DOROSKl NOTARY PUBLlCbState of New Yolk No. 010 4634870 Qualified in Suffolk County ~II 0 Commission Expires September 30~ . CERTIFICATE OF DETERMINATION BY THE SUPERVISOR RELATIVE TO THE TERMS, FORM AND DETAILS OF SALE AND ISSUANCE OF $14,650,000 PUBLIC IMPROVEMENT SERIAL BONDS-2007 OF THE TOWN OF SOUTHOLD, NEW YORK, AND PROVIDING FOR THE PUBLIC SALE THEREOF I, SCOTT A. RUSSELL, Supervisor of the Town of Southold, in the County of Suffolk, New York (the "Town"), HEREBY CERTIFY that pursuant to the powers and duties delegated to me, as the chief fiscal officer of the Town, by the Town Board of the Town, pursuant to the bond resolutions duly adopted and as referred to herein and subject to the limitations prescribed in said bond resolutions, I have made the following determinations: 1. Authorization. Principal Amount. Maturitv Schedule and Designation. Serial Bonds (the "Bonds") of the Town in the respective principal amounts as set forth on line C of Schedule I, attached hereto and hereby made a part hereof, shall be issued for each of the respective purposes as set forth on line B of such Schedule I, pursuant to the bond resolutions duly adopted by the Town Board of the Town on their respective dates as set forth on line A of such Schedule I, and shall mature in the respective principal amounts on April 15 in each of the years 2008 to 2030, inclusive, as set forth on line D of such Schedule I. Each of said Bonds shall be designated "PUBLIC IMPROVEMENT SERIAL BOND-2007." Said Bonds shall mature on April 15 in the aggregate principal amounts of $700,000 in the year 2008; $725,000 in the year 2009; $575,000 in the years 2010 and 2011; $600,000 in the year 2012; $625,000 in each of the years 2013 through 2016, inclusive; $675,000 in each of the years 2017 through 2022, inclusive; $725,000 in each of the years 2023 through 2025, inclusive; and $550,000 in each of the years 2026 through 2030. 2. Issue Date. The Bonds shall be dated April 15, 2007. The date of each Bond shall appear on the face thereof under the caption "Date of Original Issue," and each Bond shall bear interest from such date. 3. Interest Rate, and Dates and Medium of Payment. The Bonds shall bear interest from their date at a rate or rates per annum necessary for the Town to sell said Bonds, the bidder to name a rate or rates of interest in multiples of one-hundredth of 1 % or multiples of one- eighth of 1 % which the Bonds are to bear, and said bidder may state different rates of interest for Bonds maturing in different calendar years; provided, however, that (i) only one rate of interest may be bid for all Bonds maturing in anyone calendar year, and (ii) variations in rates of interest so bid shall be in ascending progression in order of maturity so that the rate of interest on Bonds maturing in any particular calendar year shall not be less than the rate of interest applicable to Bonds maturing in any prior calendar year. The exact rate or rates shall be determined by the undersigned Supervisor upon the receipt of bids therefor, as hereinafter set forth, payable on October 15, 2007 and semiannually thereafter on April 15 and October 15 in each year until maturity, payable in any coin or currency of the United States of America which at the time of payment is legal tender for the payment of public and private debts. Interest shall be paid by wire transfer or in clearinghouse funds on each interest payment date, payable to the person in whose name the Bond is registered at his address shown upon the books of the Town kept for that purpose at the office of the Town Clerk, Town of Southold, Town Hall, 53095 Main Road, Southold, New York (the "Fiscal Agent"), as of the close of business on the last day of the month preceding each such interest payment date. 4. Bonds Subiect to Prior Redemption. The Bonds maturing on or before April 15,2017 will not be subject to redemption prior to maturity. The Bonds maturing on or after April 15, 2018 will be subject to redemption prior to maturity, at the option of the Town, on April 15, 2017 and thereafter on any date, in whole or in part, and ifin part, in any order of their maturity and in any amount within a maturity (selected by lot within a maturity), at par, plus accrued interest to the date of redemption. The Bonds shall be redeemable prior to maturity upon the giving of notice which identifies the bonds to be redeemed, by mailing such notice to the registered holders thereof at their respective addresses as shown upon the registration books of the Fiscal Agent at least 30 days prior to the dates set for any such redemption. If notice of redemption shall have been given as aforesaid, the Bonds so called for redemption shall become due and payable at the applicable redemption price on the redemption date designated in such notice, and interest on such Bonds shall cease to accrue from and after such redemption date. 5. Denominations, Numbers and Letters. The Bonds maturing in each year shall be issued as fully registered bonds in denominations of $5,000 or any integral multiple thereof,. The Bonds shall be numbered separately and consecutively upward with the letter "R" prefixed thereto, and shall be transferable and exchangeable as provided herein. 6. Book-Entry System. The Bonds when issued shall be (i) registered in the name of Cede & Co., as nominee of The Depository Trust Company, 55 Water Street, New York, New York ("DTC"), and (ii) deposited with DTC to be held in trust until maturity. Only one Bond will be initially issued for each maturity in the aggregate principal amount of such maturity. DTC is an automated depository for securities and clearinghouse for securities transactions, and will be responsible for establishing and maintaining a book-entry system for recording the ownership interests of its participants, which include certain banks, trust companiesr and securities dealers, and the transfers of the interests among its participants. The DTC participants will be responsible for establishing and maintaining records with respect to the beneficial ownership interests of individual purchasers in the Bonds. Individual purchases of beneficial ownership interests in the Bonds may only be made through book entries (without certificates issued by the Town) made on the books and records of DTC (or a successor depository) and its participants, in denominations of $5,000 or integral multiples thereof. Beneficial owners of the Bonds will not receive certificates representing their interest in the Bonds. Principal of and interest on the Bonds will be payable by the Town or its agent by wire transfer or in clearinghouse funds to DTC or its nominee as registered owner of the Bonds. Transfer of principal and interest payments to participants of DTC will be the responsibility of DTC; transfer of principal and interest payments to beneficial owners by participants of DTC will be the responsibility of such participants and other nominees of beneficial owners. The Town will not be responsible or liable for payments by DTC to its participants or by DTC participants to beneficial owners or for maintaining, supervising or reviewing the records maintained by DTC, its participants or persons acting through such participants. 7. Discontinuance of Book-Entrv Svstem. In the event that (a) DTC determines to discontinue providing its service with respect to the Bonds by giving notice to the Town and discharging its responsibilities with respect thereto under applicable law, and the Town fails to appoint a successor securities depository for the Bonds, or (b) the Town determines to discontinue the system of book-entry transfers through DTC (or a successor securities depository), then bond certificates shall be delivered to the beneficial owners upon registration of the Bonds held in the beneficial owners' names. After such registration the beneficial owners shall become the registered owners of the Bonds. In such event, the Supervisor of the Town shall execute a Supplemental Certificate of Determination which will set forth the terms, form and details of issuance of such bond certificates. 8. Fiscal Agent. The Town Clerk is hereby appointed as Fiscal Agent for the Bonds pursuant to, and to act in accordance with, applicable provisions of the Local Finance Law, constituting Chapter 33-a of the Consolidated Laws of the State of New York. In the event that the book-entry system described in Section 6 above is discontinued, the Town may appoint a bank or trust company located and authorized to do business in New York State to act as successor Fiscal Agent in connection with the issuance of bond certificates. 9. Execution of Bonds. The Bonds shall be executed in the name of the Town by the manual signature of the Supervisor, and shall have the corporate seal of the Town, or a facsimile thereof, affixed, imprinted, impressed or otherwise reproduced thereon and attested by the manual signature of the Town Clerk. 10. Transfer of Bonds. Each Bond shall be transferable only upon the books of the Town, which shall be kept for such purposes at the office of the Fiscal Agent, by the registered owner thereof in person or by his attorney duly authorized in writing, upon surrender thereor together with a written instrument of transfer satisfactory to the Fiscal Agent duly executed by the registered owner or his duly authorized attorney. Upon transfer of any such Bond, the Town shall issue in the name of the transferee a new Bond or Bonds of the same aggregate principal amount and maturity as the surrendered Bond. The Town and the Fiscal Agent may deem and treat the person in whose name any Bond shall be registered upon the books of the Town as the absolute owner of such Bond, whether such Bond shall be overdue or not, for the purposes ofreceiving payment of, or on account of, the principal of and interest on such Bond and for all other purposes, and all such payments so made to any such registered owner or upon his order shall be valid and effectual to satisfy and discharge the liability upon such Bond to the extent of the sum or sums so paid, and neither the Town nor the Fiscal Agent shall be affected by any notice to the contrary. II. Regulations With Respect to Exchanges and Transfers. In all cases in which the privilege of exchanging or transferring Bonds is exercised, the Town shall execute and the Fiscal Agent shall deliver Bonds in accordance with the provisions hereof. All Bonds surrendered in any such exchanges or transfers shall forthwith be cancelled by the Fiscal Agent. For every such exchange or transfer of Bonds, the Town or the Fiscal Agent may make a charge sufficient to reimburse it for any tax, fee or other governmental charge required to be paid with respect to such exchange or transfer, and may charge a sum sufficient to pay the cost of preparing each new Bond issued upon such exchange or transfer, which sum or sums shall be paid by the person requesting such exchange or transfer as a condition precedent to the exercise of the privilege of making such exchange or transfer. The Town shall not be obliged to make any such exchange or transfer of Bonds between the last day of the month preceding an interest payment date and such interest payment date. 12. Sale of Bonds. The Bonds shall be sold upon sealed proposals to be received by the undersigned Supervisor on April 10, 2007, at 11:00 o'clock A.M. (Prevailing Time), at the offices of Munistat Services, Inc., 12 Roosevelt Avenue, Port Jefferson Station, New York, pursuant to the Notice of Sale, in substantially the form as provided in Appendix A, which shall be published at least once in (a) "THE BOND BUYER," published in the City of New York, not less than five (5) nor more than thirty (30) days prior to the date of said sale. A copy of such notice shall be sent not less than eight (8) nor more than thirty (30) days prior to the date of said sale to (1) the State Comptroller, Albany, New York 12236; (2) at least two banks or trust companies having a place of business in Suffolk County, or, if only one bank is located in such County, then to such bank and to at least two banks or trust companies having a place of business in an adjoining county; (3) "THE BOND BUYER," I State Street Plaza, New York, New York 10004; and (4) at least 10 bond dealers. The Bonds shall be delivered to the purchaser thereof on or about April 19, 2007, upon receipt by the Town of the purchase price therefor in Federal Funds, and deposit ofthe Bonds with DTC to be held in trust until maturity. 13. Form of Bonds. Said Bonds shall be in substantially the form set forth in Appendix B hereto. 14. SEC Rule 15c2-l2. In order to assist bidders in complying with Rule l5c2- 12 promulgated by the Securities and Exchange Commission and as part of the Town's contractual obligation arising from its acceptance ofthe successful bidder's proposal, at the time of the delivery of the Bonds the Town will provide an executed copy of its "Undertaking to Provide Continuing Disclosure" in substantially the form set forth in Appendix C hereto. Said Undertaking will constitute a written agreement or contract of the Town for the benefit of holders of and owners of beneficial interests in the Bonds, to provide to (i) each nationally recognized municipal securities information repository, or to the Municipal Securities Rulemaking Board, and (ii) to the New York State Information Depository, if created, the annual financial information and notice of the occurrence of certain material events, as enumerated in said Rule l5c2-l2. I HEREBY FURTHER CERTIFY that the powers and duties delegated to me to issue and sell the Bonds hereinabove described and 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 as of the ~ay of March, 2007. ~AV" Supervisor CONSOLIDATED MA TURIn' SCHEDULE EXHIBIT 1 TOWN OF SOUmOLD, NEW YORK 514,650,000 PUBLIC IMPROVEMENT SERIAL BONDS _ 2007 Date of Authorization 8-26-03 8-28-01 8-23-99 9-01-98 3-13-01& 9-07-04 11-16-04 2-27-01 2-27-01 11-19-02 Amount Authorized 4,000,000 2,000,000 2,000,000 2,000,000 3,350,000 825,000 3,250,000 100,000 60,000 Purpose Open Space Open Space Open Space Open Space Solid Waste Settle Claim Solid Waste Acquisition of Acquisition of Preservation Preservation Preservation Preservation Management New York Management Excavator Tractor- District State District Mower Land Acquis TransferSta )eried of Use (Years) 30 30 30 30 30 5 20 TOTAL BOND Date First Borrowing 4-27-01 4-22-05 4-22-05 ISSUE Issued to Date 3,350,000 640,000 3,250,000 Paid Trough 2006 540,000 165,000 125,000 To Pay: 2007 1,610,000 160,000 125,000 Amount to Bonds 4,000,000 2,000,000 2,000,000 1,987,900 1,200,000 315,000 3,000,000 95,000 52,100 14,650,000 Due April 15: 2008 139,200 69,200 69,200 68,700 41,600 155,000 130,000 17,400 9,700 700,000 2009 142,700 71,600 71,600 71,2.00 42,900 160,000 135,000 19,400 10,600 725,000 2010 142,700 71,600 71,600 71,200 42,900 0 145,000 19,400 10,600 575,000 2011 142,700 71,600 71,600 71,200 42,900 0 145,000 19,400 10,600 575,000 2012 142,700 71,600 71,600 71,200 42,900 0 170,000 19,400 10,600 600,000 2013 160,900 80,400 80,400 80,000 48,300 0 175,000 0 0 625,000 2014 160,900 80,400 80,400 80,000 48,300 0 175,000 0 0 625,000 2015 160,900 80,400 80,400 80,000 48,300 0 175,000 0 0 625,000 2016 160,900 80,400 80,400 80,000 48,300 0 175,000 0 0 625,000 2017 178,800 89,400 89,400 88,800 53,600 0 175,000 0 0 675,000 2018 178,800 89,400 89,400 88,800 53,600 0 175,000 0 0 675,000 2019 178,800 89,400 89,400 88,800 53,600 0 175,000 0 0 675,000 2020 178,800 89,400 89,400 88,800 53,600 0 175,000 0 0 675,000 2021 178,800 89,400 89,400 88,800 53,600 0 175,000 0 0 675,000 2022 178,800 89.400 89,400 88,800 53,600 0 175,000 0 0 675,000 2023 196,700 98,300 98,300 97,700 59,000 0 175,000 0 0 725,000 2024 196,700 98,300 98,300 97,700 59,000 0 175,000 0 0 725,000 2025 196,700 98,300 98,300 97,700 59,000 0 175,000 0 0 725,000 2026 196,700 98,300 98,300 97,700 59,000 0 0 0 0 550,000 2027 196,700 98,300 98.300 97,700 59,000 0 0 0 0 550,000 2028 196,700 98,300 98,300 97,700 59,006 0 0 0 0 550,000 2029 196,700 98,300 98,300 97,700 59,000 0 0 0 0 550,000 2030 196,700 98.300 98,300 97,700 59,000 0 0 0 0 550,000 4,000,000 2,000,000 2,000,000 1,981,900 1,200,000 315,000 3,000,000 95,000 52,100 14,650,000 Bonds dated April 15, 2007 Interest due October 15, 2007 and semi-annually thereafter MunistatServices,Inc. 031407 DEPUTY CLERK'S CERTIFICATE I, LYNDA M. BOHN, Deputy 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 the office of the Town Clerk; and I FURTHER CERTIFY that no resolution electing to reassume any of the powers or duties mentioned in said Certificate and delegated to the Supervisor, by the resolutions cited in said Certificate 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 29th day of March, 2007. (SEAL) ~. YY\~ Deputy Town Clerk APPENDIX A TOWN OF SOUTHOLD, IN THE COUNTY OF SUFFOLK NEW YORK NOTICE OF $14,650,000 BOND SALE SEALED PROPOSALS will be received by the Supervisor, Town of Southold, New York, at the offices ofMunistat Services, Inc., 12 Roosevelt Avenue, Port Jefferson Station, New York (Telephone No. 631-331-8888, Fax No. 631-331-8834) on Tuesday, April 10, 2007, until II :00 o'clock A.M. (Prevailing Time) at which time they will be publicly opened and announced, for the purchase of $14,650,000 PUBLIC IMPROVEMENT SERIAL BONDS- 2007 (the "Bonds") due on April 15, as follows: $ 700,000 in the year 2008; $ 725,000 in the year 2009; $ 575,000 in the year 2010; $ 575,000 in the year 2011; $ 600,000 in the year 2012; $ 625,000 in the year 2013; $ 625,000 in the year 2014; $ 625,000 in the year 2015; $ 625,000 in the year 2016; $ 675,000 in the year 2017; $ 675,000 in the year 2018; $ 675,000 in the year 2019; $675,000 in the year 2020; $675,000 in the year 2021; $675,000 in the year 2022; $725,000 in the year 2023; $725,000 in the year 2024; $725,000 in the year 2025; $550,000 in the year 2026; $550,000 in the year 2027; $550,000 in the year 2028; $550,000 in the year 2029; and $550,000 in the year 2030. The Town reserves the right to change the time and/or date for the opening of sealed proposals. Notice of any such change shall be provided not less than 24 hours prior to the time set forth above for the opening of sealed proposals by means of a supplemental notice of sale to be transmitted over the Thomson Municipal News wire. The Bonds will be dated April 15, 2007, and will bear interest at the rate or rates per annum specified by the successful bidder therefor in accordance herewith, payable October 15, 2007 and semiannually thereafter on April 15 and October 15 in each year until maturity. The Bonds maturing on or before April 15, 2017 will not be subject to redemption prior to maturity. The Bonds maturing on or after April 15, 2018 will be subject to redemption prior to maturity, at the option of the Town, on April 15, 2017 and thereafter on any date, in whole or in part, and ifin part, in any order of their maturity and in any amount within a maturity (selected by lot within a maturity), at par, plus accrued interest to the date of redemption. The Bonds shall be redeemable prior to maturity upon the giving of notice which identifies the bonds to be redeemed, by mailing such notice to the registered holders thereof at their respective addresses as shown upon the registration books of the Fiscal Agent at least 30 days prior to the dates set for any such redemption. If notice of redemption shall have been given as aforesaid, the Bonds so called for redemption shall become due and payable at the applicable redemption price on the redemption date designated in such notice, and interest on such Bonds shall cease to accrue from and after such redemption date. The Bonds will be issued in the form of fully registered Bonds, in denominations corresponding to the aggregate principal amounts due in each year of maturity. As a condition to delivery of the Bonds, the successful bidder will be required to cause such Bond certificates to be (i) registered in the name of Cede & Co., as nominee of The Depository Trust Company, 55 Water Street, New York, New York ("DTC"), and (ii) deposited with DTC to be held in trust until maturity. DTC is an automated depository for securities and clearinghouse for securities transactions, and will be responsible for establishing and maintaining a book-entry system for recording the ownership interests of its participants, which include certain banks, trust companies and securities dealers, and the transfers of the interests among its participants. The DTC participants will be responsible for establishing and maintaining records with respect to the beneficial ownership interests of individual purchasers in the Bonds. Individual purchases of beneficial ownership interests in the Bonds may only be made through book entries (without certificates issued by the Town) made on the books and records ofDTC (or a successor depository) and its participants, in denominations of $5,000 or integral multiples thereof. Principal of and interest on the Bonds will be payable by the Town or its agent by wire transfer or in clearinghouse funds to DTC or its nominee as registered owner ofthe Bonds. Transfer of principal and interest payments to participants ofDTC will be the responsibility ofDTC; transfer of principal ~dinterest payments to beneficial owners by participants of DTC will be the responsibility of such participants and other nominees of beneficial owners. The Town will not be responsible or liable for payments by DTC to its participants or by DTC participants to beneficial owners or for maintaining, supervising or reviewing the records maintained by DTC, its participants or persons acting through such participants. Each proposal must be a bid of not less than $14,650,000 for all of the Bonds and must state in a multiple of one-hundredth of I % or a multiple of one-eighth of 1 %, the rate or rates of interest per annum which the Bonds are to bear and may state different rates of interest for Bonds maturing in different calendar years; provided, however, that (i) only one rate of interest may be bid for all Bonds maturing in anyone calendar year, and (ii) variations in rates of interest so bid shall be in ascending progression in order of maturity so that the rate of interest on Bonds maturing in any particular calendar year shall not be less than the rate of interest applicable to Bonds maturing in any prior calendar year. Each proposal must be enclosed in a sealed envelope and should be marked on the outside "Proposal for Bonds" and be addressed as follows to the Sale Officer, viz.: Hon. Scott A. Russell, Supervisor, Town of South old, New York, c/o Munistat Services, Inc., 12 Roosevelt Avenue, Port Jefferson Station, New York. As a condition precedent to the consideration of his proposal, a good faith deposit (the "Deposit") in the form of a certified or cashier's check or a financial surety bond in the amount of$293,000.00 payable to the order of the Town of South old is required for each bid to be considered. If a check is used, it must be drawn upon an incorporated bank or trust company to the order of "Town of South old, New York" and must accompany the bid. Ifa surety bond is used, it must be from an insurance company licensed to issue such a bond in the State of New York, the claims paying ability of which is rated in the highest rating category by at least two nationally recognized statistical rating organizations, and such bond must be submitted to the Town or its Financial Advisor prior to the opening of the bids. The financial surety bond must identify each bidder whose deposit is guaranteed by such financial surety bond. If the bonds are to be awarded to a bidder utilizing a financial surety bond, then the purchaser is required to submit its Deposit to the Town in the form of a certified or cashier's check, or a wire transfer in such amount, as instructed by the Town or its Financial Advisor, not later than 3:00 o'clock P.M. (Prevailing Time) on the next business day following the award. If such deposit is not received by that time, the financial surety bond may be drawn by the Town to satisfy the Deposit requirement. No interest on the Deposit will accrue to the Purchaser. The Deposit will be applied to the purchase price of the Bonds. The Bonds will be awarded and sold to the bidder complying with the terms of sale and offering to purchase the Bonds at the lowest net interest cost, and iftwo or more such bidders offer the same lowest net interest cost, then to one of said bidders selected by the Sale Officer by lot from among all said bidders. The successful bidder must also pay an amount equal to the interest on the Bonds, if any, accrued to the date of payment of the purchase price. No interest will be allowed on the good faith deposit. When the successful bidder has been ascertained, the Sale Officer will promptly return all deposits made to the persons making the same, except the deposit made by such bidder. Award of the Bonds to the successful bidder, or rejection of all bids, is expected to be made promptly after opening of the bids, but the successful bidder may not withdraw his proposal until after 1 :30 o'clock P.M. (Prevailing Time) of the day of such bid-opening and then only if such award has not been made prior to the withdrawal. The successful bidder will be promptly notified of the award to him, and if he refuses or neglects to pay the agreed price for the Bonds less the amount deposited by him, the amount deposited by him shall be forfeited to and retained by the Town as liquidated damages for such neglect or refusal. The right is reserved to reject all bids and any bid not complying with the terms of this notice will be rejected. If the Bonds qualify for issuance of any policy of municipal bond insurance or commitment therefor at the option of a bidder, the purchase of any such insurance policy or the issuance of any such commitment therefor shall be at the sole option and expense of such bidder and any increased costs of issuance of the Bonds resulting by reason of the same, unless otherwise paid, shall be paid by such bidder. Any failure of the Bonds to be so insured or of any such policy of insurance to be issued, shall not constitute cause for a failure or refusal by the purchaser of the Bonds to accept delivery of and pay for said Bonds in accordance with the terms hereof. A portion of the proceeds of the Bonds in the amount of$4,515,000, together with $1,895,000 in available funds, will be used to redeem outstanding bond anticipation notes. The balance ofthe proceeds ofthe Bonds, in the amount of$10,135,000 will be used to provide original funds for various purposes in and for the Town. The Bonds are general obligations ofthe Town. There is no limitation, either as to rate or amount, upon ad valorem taxes upon taxable real property in the Town which may be required to pay the Bonds and the interest thereon. The State Constitution requires the Town to pledge its faith and credit for the payment of the principal ofthe Bonds and the interest thereon and to make annual appropriations for the amounts required for the payment of such interest and the redemption of the Bonds. The State Constitution also provides that if at any time the appropriating authorities fail to make the required appropriations for the annual debt service on the Bonds and certain other obligations ofthe Town, a sufficient sum shall be set apart from the first revenues thereafter received and shall be applied for such purposes, and also that the fiscal officer of the Town may be required to set apart and apply such revenues as aforesaid at the suit of any holder of such obligations. The population ofthe Town is 20,599 according to the 2000 U.S. Census. The debt statement to be filed pursuant to Section 109.00 of the Local Finance Law in connection with the sale of the Bonds, prepared as of March 27, 2007, shows the average full valuation of real property subject to taxation by the Town to be $8,116,178,296, its debt limit to be $568,132,480, and its total net indebtedness (inclusive of the Bonds) to be $25,646,000. The indebtedness to be evidenced by the sale ofthe Bonds will increase the total net indebtedness of the Town by $10,135,000. The Bonds will be delivered to DTC and shall be paid for in Federal Funds on or about April 19, 2007, at such place in New York City, and on such business day and at such hour, as the Sale Officer shall fix on three business days'notice to the successful bidder, or at such other place and time as may be agreed upon with the successful bidder. The deposit of the Bonds with DTC under a book-entry system requires the assigrrment of CUSIP numbers prior to delivery. It shall be the responsibility ofthe successful bidder to obtain CUSIP numbers for the Bonds prior to delivery and the Town will not be responsible for any delay occasioned by the inability to deposit the Bonds with DTC due to the failure of the successful bidder to obtain such numbers and to supply them to the Town in a timely manner. All expenses in relation to the printing of CUSIP numbers on the Bonds shall be paid for by the Town; provided, however, that the CUSIP Service Bureau charge for the assigrrment of said numbers shall be the responsibility of and shall be paid for by the successful bidder. The successful bidder will be furnished without cost with the approving opinion ofthe law firm of Hawkins Delafield & Wood LLP, New York, New York to the effect that the 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. Said opinion shall also contain further statements to the effect that (a) 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, and (b) said law firm has not been requested to examine or review and has not examined or reviewed the accuracy or sufficienc)' 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 be furnished or disclosed to purchasers of the Bonds, and expresses no opinion with respect to such financial statements or other information or the accuracy or sufficiency thereof. The successful bidder may at his option refuse to accept the Bonds if prior to their delivery the certificate referred to in the following paragraph in form and tenor satisfactory to Bond Counsel is not delivered or if any income tax law of the United States of America is hereafter enacted which shall provide that the interest thereon is taxable, or shall be taxable at a future date, for federal income tax purposes, and in such case the deposit made by him will be returned and he will be relieved of his contractual obligations arising from the acceptance of his proposal. 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. As part of the Town's contractual obligation arising from its acceptance of the successful bidder's proposal, the Town will furnish the successful bidder concurrently with the delivery of the Bonds with its Arbitrage and Use of Proceeds Certificate, which will contain provisions and procedures relating to compliance with the requirements ofthe Code and a certification 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 ofthe Code. Under the Code, interest on the Bonds is to be taken into account in the computation of certain taxes that may be imposed with respect to corporations, including without limitation, the alternative minimum tax and the foreign branch profits tax. In addition under the Code, an individual who owns the Bonds may be required to include in gross income a portion of his or her Social Security or railroad retirement payments and interest on the Bonds will be included as disqualified income when computing the earned income credit. Bondholders should consult their tax advisors with respect to the computation of alternative minimum tax or foreign branch profits tax liability, the earned income credit, or the inclusion of Social Security or other retirement payments in gross income. The opinion of Bond Counsel shall also contain further statements to the effect that, under existing statutes and court decisions and assuming continuing compliance with the Arbitrage and Use of Proceeds Certificate, (i) interest on the Bonds is excluded from gross income for federal income tax purposes pursuant to Section 103 of the Code and (ii) interest on the Bonds is not treated as a preference item in calculating the alternative minimum tax imposed on individuals and corporations under the Code; such interest, however, is included in the adjusted current earnings of certain corporations for purposes of calculating the alternative minimum tax imposed on such corporations. In rendering its opinion, Bond Counsel shall rely on certain representations, certifications of fact, and statements of reasonable expectations made by the Town in connection with the Bonds, and shall assume compliance by the Town with certain ongoing certifications in the Arbitrage and Use of Proceeds Certificate to comply with applicable requirements of the Code to assure the exclusion of interest on the Bonds from gross income under Section 103 of the Code. Further, such opinion shall state that, under existing statutes, interest on the Bonds is exempt from New York State and New York City personal income taxes. Each successful bidder also must submit to the Town a certificate (the "Reoffering Price Certificate"), satisfactory to Bond Counsel, prior to the delivery of the Bonds, which states that: (a)(i) on the date of award, such successful bidder made a bona fide public offering of all Bonds of all maturities at initial offering prices corresponding to the prices or yields indicated in the information furnished in connection with the successful bid, and (ii) as of such date, the first price at which an amount equal to at least ten percent of each maturity of the Bonds was sold to the public was a price not higher or a yield not lower than indicated in the information furnished with the successful bid (the "first price rule"), with the exception of those maturities, if any, identified in such certificate, as to which such certificate shall explain the reasons why the first price rule was not satisfied, OR (b) such successful bidder has purchased the Bonds for its own account and not with a view to distribution or resale and not in the capacity of a bond house, broker or other intermediary, and the price or prices at which such purchase was made. For the purposes of the Reoffering Price Certificate, the "public" does not include bond houses, brokers or similar persons or organizations acting in the capacity of underwriters or wholesalers. In making such representations, the successful bidder must reflect the effect on the offering prices of any i'derivative products" (e.g., a tender option) used by the bidder in connection with the initial sale of any of the Bonds. The Bonds will not be designated by the Town as "qualified tax-exempt obligations" pursuant to the provisions of Section 265 of the Code. The Official Statement is in a form "deemed final" by the Town for the purposes of Securities and Exchange Commission Rule 15c2-12 but may be modified or supplemented as noted below. In order to assist bidders in complying with Rule 15c2-12 and as part ofthe Town's contractual obligation arising from its acceptance of the successful bidder's proposal, at the time of the delivery of the Bonds the Town will provide an executed copy of its "Undertaking to Provide Continuing Disclosure." Said Undertaking will constitute a written agreement or contract of the Town for the benefit of holders of and owners of beneficial interests in the Bonds, to provide to (i) each nationally recognized municipal securities information repository, or to the Municipal Securities Rulemaking Board, and (ii) to the New York State Information Depository, if created, the annual financial information and notice of the occurrence of certain material events, as enumerated in said Rule 15c2-12. The Town will provide a reasonable number of Official Statements to the successful bidder within five (5) business days following receipt of a written request therefor made to the Town and its financial advisor. Such request may specify the applicable (a) offering price(s), (b) selling compensation, (c) rating(s), (d) credit enhancement and (e) identity and complete name of such bidder and any participating underwriters, and if so, the Official Statement will be modified or supplemented by the information so specified. Neither the Town nor its financial advisor shall be liable in any manner for any delay, inaccuracy, or omission on the part ofthe successful bidder with respect to such request, nor shall the Town's failure, as a result thereof, to provide the Official Statement (whether or not modified or supplemented) within the above time period, constitute cause for a failure or refusal by such bidder to accept delivery of and pay for the Bonds in accordance with the terms hereof. The obligations hereunder to deliver or accept the Bonds pursuant hereto shall be conditioned on the availability to the successful bidder and delivery at the time of delivery of the Bonds of said approving opinion; of certificates in form and tenor satisfactory to said law firm evidencing the proper execution and delivery ofthe Bonds and receipt of payment therefor and including a statement, dated as ofthe date of such delivery, to the effect that there is no litigation pending or (to the knowledge ofthe signer or signers thereof) threatened relating to the Bonds; and of the several certificates as described in the Official Statement under the heading "Documents Accompanying Delivery of the Bonds." A copy of said approving opinion will appear on the Bonds. Copies of the Notice of Sale and the Official Statement may be obtained upon request from the offices ofMunistat Services, Inc., 12 Roosevelt Avenue, Port Jefferson Station, New York 11776, telephone number (631) 331-8888. Dated: March 27, 2007 SCOTT A. RUSSELL Supervisor and Chief Fiscal Officer PROPOSAL FOR BONDS April 10, 2007 Hon. Scott A. Russell Supervisor Town of Southold, New York c/o Munistat Services, Inc. 12 Roosevelt Avenue Port Jefferson Station, New Yark Dear Mr. Russell: Subject to the provisions and in accordance with the terms ofthe annexed Notice of Sale dated March 27, 2007, which is hereby made a part of this Proposal, we offer to purchase all of the $14,650,000 Public Improvement Serial Bonds-lOO? of the Town of Southold, New Yark, described in said Notice of Sale, and to pay therefor the price of$14,650,000 plus $ , plus interest, if any, accrued on said Bonds from their date to the date of their delivery, provided that the Bonds maturing in the several years set forth below shall bear interest from their date until maturity at the respective rates per annum stated in the following table: Bonds maturing in the year 2008, at % Bonds maturing in the year 2020, at % Bonds maturing in the year 2009, at % Bonds maturing in the year 2021, at % Bonds maturing in the year 20 I 0, at % Bonds maturing in the year 2022, at % Bonds maturing in the year 2011, at % Bonds maturing in the year 2023, at % Bonds maturing in the year 2012, at % Bonds maturing in the year 2024, at % Bonds maturing in the year 2013, at % Bonds maturing in the year 2025, at % Bonds maturing in the year 2014, at % Bonds maturing in the year 2026, at % Bonds maturing in the year 2015, at % Bonds maturing in the year 2027, at % Bonds maturing in the year 2016, at % Bonds maturing in the year 2028, at % Bonds maturing in the year 2017, at % Bonds maturing in the year 2029, at % Bonds maturing in the year 2018, at % Bonds maturing in the year 2030, at % Bonds maturing in the year 2019, at % Check one of the following: We enclose herewith a certified or cashier's check in the sum of $293,000, made payable to the order of the Town of Southold. New York, which check is to be returned to the undersigned if the bid is not accepted; otherwise to be applied as part payment for the Bonds, or to be retained by the Town as and for liquidated damages in case we should not take up and pay for the Bonds in accordance with the terms of this Proposal. We are an authorized principal ofa Financial Surety Bond with respect to this bid as described in the Notice of Sale. The following is our computation of the net interest cost, made as provided in the above-mentioned Notice of Sale, but not constituting any part of the foregoing Proposal for the purchase of$14,650,000 bonds under the foregoing Proposal: Gross Interest ........................... ............................ ....................... .............. $ Less Premium Bid Over Par............... .......$ Net Interest Cost..... Net Interest Rate.... ...........$ % ( four decimals) By: Telephone ( ) Return of the good faith check on April 10, 2007, in the amount of $293,000 from the Town of Southold, New York, is hereby acknowledged: APPENDIX B REGISTERED NO.R- REGISTERED $ UNITED STATES OF AMERICA STATE OF NEW YORK COUNTY OF SUFFOLK TOWN OF SOUTH OLD PUBLIC IMPROVEMENT SERIAL BOND-2007 MATURITY DATE INTEREST RATE DATE OF ORIGINAL ISSUE CUSIP NUMBER April 15, April 15, 2007 REGISTERED OWNER: CEDE & CO. PRINCIPAL SUM: 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, Town Hall, 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 April 15, 2007 or from the most recent interest payment date to which interest has been paid at the INTEREST RATE (stated above), payable October IS, 2007 and semiannually thereafter on April 15 and October IS in each year until maturity. Interest hereon shall be payable by wire transfer or clearinghouse funds by the Town or its agent on each interest payment date to the registered owner hereof at his address as it appears on the registration books ofthe Town maintained by the Fiscal Agent or at such other address as may be furnished in writing by such registered owner to the Fiscal Agent as of the close of business on the last day of the month preceding each interest payment date. The principal of and interest on this bond are payable in any coin or currency of the United States of America which, at the date of payment, is legal tender for the payment of public and private debts; provided, however, that interest on this fully registered bond shall be paid by wire transfer or clearinghouse funds as set forth above. REFERENCE IS MADE TO THE FURTHER PROVISIONS OF THIS BOND SET FORTH HEREIN. The faith and credit of such Town are hereby irrevocably pledged to the punctual payment of the principal of and interest on this bond 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 bond, exist, have happened and have been performed, and that the issue of bonds of which this is one, together with all other indebtedness ofthe 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 bond to be executed in its name by the manual signature of its Supervisor and its corporate seal to be impressed hereon and attested by the manual signature of its Town Clerk. TOWN OF SOUTH OLD (SEAL) By Supervisor ATTEST: Town Clerk Town of South old, New York Public Improvement Serial Bond-2007 This bond is one of an authorized issue, the aggregate principal amount of which is $14,650,000, the bonds of which are oflike tenor, except as to number, denomination, interest rate and maturity, and is issued pursuant to the provisions of the Local Finance Law, constituting Chapter 33-a of the Consolidated Laws of the State of New York (the "Law"), various bond resolutions duly adopted by the Town Board on their respective dates, authorizing the issuance of serial bonds of the Town to finance various purposes in and for the Town, and the Certificate of Determination executed by the Supervisor as of March 27, 2007, determining the terms, form and details of issuance of said $14,650,000 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 ofthe 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 instrument oftransfer 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 April 15, 2017 will not be subject to redemption prior to maturity. The Bonds maturing on or after April 15, 2018 will be subject to redemption prior to maturity, at the option of the Town, on April 15, 2017 and thereafter on any date, in whole or in part, and if in part, in any order of their maturity and in any amount within a maturity (selected by lot within a maturity), at par, plus accrued interest to the date ofredemption. The Bonds shall be redeemable prior to maturity upon the giving of notice which identifies the bonds to be redeemed, by mailing such notice to the registered holders thereof at their respective addresses as shown upon the registration books of the Fiscal Agent at least 30 days prior to the dates set for any such redemption. If notice of redemption shall have been given as aforesaid, the Bonds so called for redemption shall become due and payable at the applicable redemption price on the redemption date designated in such notice, and interest on such Bonds shall cease to accrue from and after such redemption date. Hawkins Delafield & Wood LLP One Chase Manhattan Plaza New York, New York 10005 The Town Board of the Town of Southold, in the County of Suffolk, New York Ladies and Gentlemen: We have examined a record of proceedings relating to the sale and issuance of $14,650,000 Public Improvement Serial Bonds-200? (the "Bonds"), ofthe 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 ofthe Consolidated Laws of the State of New York, various bond resolutions duly adopted by the Town Board on their respective dates, authorizing the issuance of serial bonds of the Town to finance various purposes in and for the Town, and a Certificate of Determination executed by the Supervisor as of March 27,2007, determining the terms, form and details of issuance of said $14,650,000 serial bonds and providing for their public sale. The Bonds are dated April 15, 2007, mature on April 15 in the principal amounts in each ofthe following years, and bear interest at the respective rates per annum payable October 15, 2007 and semiannually thereafter on April 15 and October 15 in each year until maturity, as set forth below: Year of Principal Interest Year of Principal Interest Maturitv Amount Rate Maturitv Amount Rate 2008 $700,000 2020 $675,000 2009 725,000 2021 675,000 2010 575,000 2022 675,000 2011 575,000 2023 725,000 2012 600,000 2024 725,000 2013 625,000 2025 725,000 2014 625,000 2026 550,000 2015 625,000 2027 550,000 2016 625,000 2028 550,000 2017 675,000 2029 550,000 2018 675,000 2030 550,000 2019 675,000 The Bonds maturing on or before April 15, 2017 will not be subject to redemption prior to maturity. The Bonds maturing on or after April 15, 2018 will be subject to redemption prior to maturity, at the option of the Town, on April 15, 2017 and thereafter, on any date, in whole or in part, at par, and subject to notice and other conditions as stated in the Bonds. The Bonds are issued only in fully registered form without interest coupons, in the name of Cede & Co., as registered owner and nominee for The Depository Trust Company, an automated depository for securities and clearinghouse for securities transactions which will maintain a book-entry system for recording the ownership interests in the Bonds. Only one Bond will be initially issued for each maturity in the aggregate principal amount of such maturity. Purchases of ownership interests in the Bonds will be made in book-entry form in denominations of $5,000 or any integral multiple thereof. In our opinion, said Bonds are valid and legally binding general obligations of the Town for which the Town has validly pledged its faith and credit and, unless paid from other sources, all the taxable real property within the Town is subject to the levy of ad valorem real estate taxes to pay the Bonds and interest thereon without limitation of rate or amount. The enforceability of rights or remedies with respect to such Bonds may be limited by bankruptcy, insolvency or other laws affecting creditors' rights or remedies heretofore or hereafter enacted. The Internal Revenue Code of 1986, as amended (the "Code"), establishes certain requirements that must be met subsequent to the issuance and delivery of the Bonds in order that interest on the Bonds be and remain excludable from gross income under Section 103 of the Code. The Supervisor of the Town, in executing the Arbitrage and Use of Proceeds Certificate, has certified to the effect that the Town will comply with the provisions and procedures set forth therein and that it will do and perform all acts and things necessary or desirable to assure that interest paid on the Bonds is excludable from gross income under Section 103 of the Code. We have examined such Arbitrage and Use of Proceeds Certificate of the Town delivered concurrently with the delivery of the Bonds, and in our opinion, such certificate contains provisions and procedures under which such requirements can be met. In our opinion, under existing statutes and court decisions, (i) interest on the Bonds is excluded from gross income for federal income tax purposes pursuant to Section 103 of the Code, and (ii) interest on the Bonds is not treated as a preference item in calculating the alternative minimum tax imposed on individuals and corporations under the Code; such interest, however, is included in the adjusted current earnings of certain corporations for purposes of calculating the alternative minimum tax imposed on such corporations. In rendering the opinion in this paragraph, we have (i) relied on the representations, certifications of fact, and statements of reasonable expectations made by the Town in the Arbitrage and Use of Proceeds Certificate and others in connection with the Bonds, and (ii) assumed compliance by the Town with certain provisions and procedures set forth in the Arbitrage and Use of Proceeds Certificate relating to compliance with applicable requirements of the Code to assure the exclusion of interest on the Bonds from gross income under Section 103 of the Code. Further, in our opinion, under existing statutes, interest on the Bonds is exempt from personal income taxes of New York State and its political subdivisions, including The City of New York. Except as stated above, we express no opinion regarding any other federal or state tax consequences with respect to the Bonds. We render our opinion under existing statutes and court decisions as of the issue date, and we assume no obligation to update our opinion after the issue date to reflect any future action, fact or circumstance, or change in law or interpretation, or otherwise. We express no opinion on the effect of any action hereafter taken or not taken in reliance upon an opinion of other counsel on the exclusion from gross income for federal income tax purposes of interest on the Bonds, or on the exemption from state and local tax law of interest on the Bonds. Other than such record of proceedings, we have not been requested to examine or review and have not examined or reviewed the accuracy or sufficiency of the Official Statement, or any additional proceedings, reports, correspondence, financial statements or other documents, containing financial or other information relative to the Town which have been or may hereafter be furnished or disclosed to purchasers of said Bonds, and we express no opinion with respect to any such financial or other information or the accuracy or sufficiency thereof. We have examined the executed first numbered Bond of said issue and, in our opinion, the form of said Bond and its execution are regular and proper. Very truly yours, ASSIGNMENT FOR VALUE RECENED, the Undersigned hereby sells, assigns and transfers unto PLEASE INSERT SOCIAL SECURITY OR OTHER IDENTIFYING NUMBER OF ASSIGNEE PLEASE PRINT OR TYPEWRITE NAME AND ADDRESS INCLUDING POSTAL ZIP CODE OF ASSIGNEE the within Bond and does hereby irrevocably constitute and appoint Attorney to transfer said Bond on the books kept for registration of said Bond, with full power of substitution in the premises. Dated: Signature Guaranteed: Notice: Signature(s) must be acknowledged or proved, or in the alternative, certified as to its genuineness by an officer of a bank or trust company located and authorized to do business in New York State. Notice: The signature to this assignment must cor- respond with the name as it appears upon the face of the within bond in every particular, without alteration or enlargement or any change whatever Appendix C 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 ofthe Securities and any beneficial owner of Securities within the meaning of Rule 13d-3 under the Securities Exchange Act of 1934. "ISSuer" shall mean the Town of South old, 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 )(1) ofthe 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 $14,650,000 Public Improvement Serial Bonds-Z007, dated April 15,2007, maturing in various principal amounts on April 15 in each of the years 2008 to 2030, inclusive, and delivered on the date hereof. "State Information Depository" shall mean the New York State Information Depository, if and when created. Section 2. Obligation to Provide Continuing Disclosure. (a) The Issuer hereby undertakes, for the benefit of Holders of the Securities, to provide or cause to be provided either directly or through Munistat Services, Inc., 12 Roosevelt Avenue, Port Jefferson Station, New York 11776: (i) to each NRMSIR and to the State Information Depository, no later than 180 days after the end of each fiscal Year, the Annual Information relating to such fiscal year, together with audited financial statements of the Issuer for such fiscal year if audited financial statements are then available; provided, however, that if audited financial statements are not then available, unaudited financial statements shall be provided with the Annual Information, and audited financial statements, if any, shall be delivered to each NRMSIR and to the State Information Depository within thirty (30) days after they become available and in no event later than 360 days after the end of each fiscal year; and (ii) to (a) each NRMSIR, or to the MSRB, and to (b) the State Information Depository, in a timely manner, notice of any of the following events with respect to the Securities, if material: (1) principal and interest payment delinquencies; (2) non-payment related defaults; (3) unscheduled draws on debt service reserves reflecting financial difficulties; (4) unscheduled draws on credit enhancements reflecting financial difficulties; (5) substitution of credit or liquidity providers, or their failure to perform; (6) adverse tax opinions or events affecting the tax-exempt status of the Securities; (7) modifications to rights of Securities holders; (8) bond calls; (9) defeasances; (10) release, substitution, or sale of property securing repayment of the Securities; and (11) rating changes. (iii) to (a) each NRMSIR, or to the MSRB, and to (b) the State Information Depository, in a timely manner, notice of a failure to provide by the date set forth in Section 2(a)(i) hereof any Annual Information required by Section 3 hereof. (b) Nothing herein shall be deemed to prevent the Issuer from disseminating any other information in addition to that required hereby in the manner set forth herein or in any other manner. If the Issuer disseminates any such additional information, the Issuer shall have no obligation to update such information or include it in any future materials disseminated hereunder. (c) Nothing herein shall be deemed to prevent the Issuer from providing notice of the occurrence of certain other events, in addition to those listed above, if the Issuer determines that any such other event is material with respect to the Securities; but the Issuer does not undertake to commit to provide any such notice of the occurrence of any material event except those events listed above. Section 3. Annual Information. (a) The required Annual Information shall consist of the financial information and operating data for the preceding.fiscal year, in a foim 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,"" Finances ofthe Town," "Real Property Tax Information," and "Litigation ," and in Appendix A. (b) All or any portion of the Annual Information may be incorporated in the Annual Information by cross reference to any other documents which have been filed with (i) the NRMSIRs and the State Information Depository, or (ii) the Securities and Exchange Commission. If such a document is a final official statement, it also must be available from the MSRB. (c) Annual Information for any fiscal year containing any modified operating data or financial information (as contemplated by Section 7(e) hereof) for such fiscal year shall explain, in narrative form, the reasons for such modification and the effect of such modification on the Annual Information being provided for such fiscal year. If a change in accounting principles is included in any such modification, such Annual Information shall present a comparison between the financial statements or information prepared on the basis of the modified accounting principles and those prepared on the basis of the former accounting principles. Section 4. Financial Statements. The Issuer's annual financial statements for each fiscal year shall be prepared in accordance with GAAP as in effect from time to time. Such financial statements shall be audited by an independent accounting firm. Section 5. Remedies. If the Issuer shall fail to comply with any provision of this Undertaking, then any Holder of Securities may enforce, for the equal benefit and protection of all Holders similarly situated, by mandamus or other suit or proceeding at law or in equity, this Undertaking against the Issuer and any ofthe 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 ofthis 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 ofthe Holders. No other person shall have any right to enforce the provisions hereof or any other rights hereunder. Section 7. Amendments. Without the consent of any holders of Securities, the Issuer at any time and from time to time may enter into any amendments or changes to this Undertaking for any of the following purposes: (a) to comply with or conform to any changes in Rule 15c2-12 (whetherrequired 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 ofthe 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 ofthe 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. 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 oflaw. IN WITNESS WHEREOF, the undersigned has duly authorized, executed and delivered this Undertaking as of April 19, 2007. TOWN OF SOUTHOLD By Supervisor and Chief Fiscal Officer . . ELIZABETH A. NEVILLE TOWN CLERK REGISTRAR OF VITAL STATISTICS MARRIAGE OFFICER RECORDSMANAGEMENTOFflCER 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 August 24, 2007 Town of South old, New York $22,500,000 Serial Bonds for Land Preservation (Our File Designation: 2615/ ) Robert P. Smith Hawkins, Delafield & Wood One Chase Manhattan Plaza New York, NY 10005 Dear Mr. Smith: I have enclosed herewith the, a copy of the legal notice that I sent to be published, an affidavit of posting and an affidavit of publication in reference to the above file. Please do not hesitate to contact me if you need anything else for your files. Sincerely, t1~~0JL Lynda M Bohn Deputy Town Clerk enc , . LEGAL NOTICE . BOND RESOLUTION OF THE TOWN OF SOUTHOLD, NEW YORK, ADOPTED FEBRUARY 27, 2007, AUTHORIZING THE ACQUISITION OF INTERESTS OR RIGHTS IN REAL PROPERTY, INCLUDING, BUT NOT LIMITED TO, DEVELOPMENT RIGHTS IN OPEN AGRICULTURAL LANDS, WITHIN SAID TOWN, FOR THE PRESERVATION OF OPEN SPACES AND AREAS AND TO MAINTAIN AND ENHANCE THE CONSERVATION OF NATURAL RESOURCES, PROVIDED, HOWEVER, THAT NO SUCH INTERESTS OR RIGHTS IN REAL PROPERTY SHALL BE ACQUIRED UNTIL ALL RELEVANT PROVISIONS OF THE STATE ENVIRONMENTAL QUALITY REVIEW ACT HAVE BEEN COMPLIED WITH AND A FINAL DECLARATION AS TO ENVIRONMENTAL IMPACT HAS BEEN DULY DECLARED, STATING THE ESTIMATED MAXIMUM COST THEREOF IS $22,500,000, APPROPRIATING SAID AMOUNT THEREFOR, AUTHORIZING THE ISSUANCE OF $22,500,000 SERIAL BONDS OF SAID TOWN TO FINANCE SAID APPROPRIATION AND STATING THAT LAND INSTALLMENT PURCHASE OBLIGATIONS ARE AUTHORIZED TO BE ISSUED PURSUANT TO THIS BOND RESOLUTION The object or purpose for which the bonds are authorized is to acquire interests or rights in real property for the preservation of open spaces and areas as defined in Section 247. The amount of obligations to be issued is $22,500,000. The period of probable usefulness of the bonds is thirty (30) years. A complete copy of the bond resolution summarized above shall be available for public inspection during normal business hours at the office of the Town Clerk, at the Town Hall, 53095 Main Street, Southold, New York. This bond resolution is dated February 27, 2007. BY ORDER OF THE TOWN BOARD OF THE TOWN OF SOUTHOLD, COUNTY OF SUFFOLK, STATE OF NEW YORK Elizabeth A. Neville Southold Town Clerk PLEASE PUBLISH ON AUGUST 9, 2007 AND FORWARD THREE (3) AFFIDAVITS OF PUBLICATION TO ELIZABETH A. NEVILLE, TOWN CLERK, TOWN HALL, P.O. BOX 1179, SOUTHOLD, NY 11971 Copies to the following: The Suffolk Times Town Board Members Comptroller Land Preservation Town Clerk's Bulletin Board Town Attorney Bond Counsel . . . ST ATE OF NEW YORK ) SS: COUNTY OF SUFFOLK) ELIZABETH A. NEVILLE, Town Clerk ofthe Town of Southold, New York being duly sworn, says that on the ~ day of OH1f U"*- ,2007, she affixed a notice of which the annexed printed notice is a true copy, in a proper and substantial manner, in a most public place in the Town of South old, Suffolk County, New York, to wit: Town Clerk's Bulletin Board, 53095 Main Road, Southold, New York. 2007 Land Preservation Bond Adoption u~~~q ry)#/~- El" beth A. eville Southold Town Clerk S~m before ~ ~dayof ~J' 2007. d~m(b 0 otary Public LYNDA M. BOHN NOTARY PUBLIC, State of New York No. 01 B06020932 Qualified in Suffolk County Term Expires March 8, 20.LI- 1 #8480 STATE OF NEW YORK) )SS: COUNTY OF SUFFOLK) Dina MacDonald of Mattituck, in said county, being duly sworn, says that he/she is Principal clerk of THE SUFFOLK TIMES, a weekly newspaper, published at Mattituck, in the Town of Southold, County of Suffolk and State of New York, and that the Notice of which the annexed is a printed copy, has been regularly published in said Newspaper once each week for 1 week(s), successively, commencing on the 9TH day of Auaust. 2007. ~q~Q!kO Principal Clerk Sworn to before me this 2007 If) day of OiJ~~ cnlli:Lf}t&, w lWtt ( NOTARY PUBlIC.STATE OF NEW YORK No. 01-'/06105050 Quclltied In suffolk County CtH'l\'\ ,;t.tlt;;)l'I hp!r~$ February 28, 2008 LEGAL NOTICE BOND RESOLlJIlON OF mE TOWN OF SOUTHOLD, NEW YORK, ADOPTED FEBRUARY 27,2007, AUTHORIZING THE AC QUISITION OF INTERESTS OR RIGHTS IN REAL PROPERTY, IN- CLUDING, BUT NOT LIMITED TO. DEVELOPMENT RIGHTS IN OPEN AGRICULTURAL LANDS. WITHIN SAID TOWN, FOR THE PRESERVA- TION OF OPEN SPACES AND AR- EAS AND TO MAINTAIN AND EN- HANCE THE CONSERVATION-OF NATURAL RESOURCES, PROVID- ED. HOWEVER, THAT NO SUCH INTERESTS OR RIGHTS IN REAL PROPERTY SHALL BE ACQUIRED UNTIL ALL RELEVANT PROVI- SIONS OF THE STATE ENVIRON- MENTAL QUALITY REVIEW ACT HAVE BEEN COMPLIED WITH AND A FINAl. DECLARATION AS TO ENVIRONMENTAL IMPACT HAS BEEN DULY DECLARED, STATING THE ESTIMATED MAXI- MUM COSTTHEREOFIS $22.500,000. APPROPRIATING SAID AMOUNT THEREFOR. AUTHORIZING THE ISSUANCE OF $22,500,000 SERIAL BONDS OF SAID TOWN TO FI- NANCE SAID APPROPRIATION AND STATING THAT LAND IN- STALLMENT PURCHASE OBLI- GATIONS ARE AUTHORIZED TO BE ISSUED PURSUANT TO THIS BOND RESOLUTION The object or purpose for which the bonds are authorized is to acquire in- terests or rights in real property for the preservation of open spaces and areas as defined in Section 247. The amount of obligations to be is- sued is $22,500.000. . The period of probable usefulness of the bonds is thirty (30) years. A complete copy of the bond resolu- tion summarized above shall be avail- able for public inspection during normal business hours at the office of the Town Clerk, at the Town Hall. 53095 Main Street, Southold, New York. This bond resolution is dated February 27.2007. BY ORDER OF THE TOWN BOARD OF THE TOWN OF SOUTHOLD. COUNTY OF SUFFOLK. STATE OF NEW YORK Elizabeth A. Neville Southokl Town Cieri< 8480-1 T 819 .. . LEGAL NOTICE · BOND RESOLUTION OF THE TOWN OF SOUTHOLD, NEW YORK, ADOPTED FEBRUARY 27, 2007, AUTHORIZING THE ACQUISITION OF INTERESTS OR RIGHTS IN REAL PROPERTY, INCLUDING, BUT NOT LIMITED TO, DEVELOPMENT RIGHTS IN OPEN AGRICULTURAL LANDS, WITHIN SAID TOWN, FOR THE PRESERVATION OF OPEN SPACES AND AREAS AND TO MAINTAIN AND ENHANCE THE CONSERVATION OF NATURAL RESOURCES, PROVIDED, HOWEVER, THAT NO SUCH INTERESTS OR RIGHTS IN REAL PROPERTY SHALL BE ACQUIRED UNTIL ALL RELEVANT PROVISIONS OF THE STATE ENVIRONMENTAL QUALITY REVIEW ACT HAVE BEEN COMPLIED WITH AND A FINAL DECLARATION AS TO ENVIRONMENTAL IMPACT HAS BEEN DULY DECLARED, STATING THE ESTIMATED MAXIMUM COST THEREOF IS $22,500,000, APPROPRIATING SAID AMOUNT THEREFOR, AUTHORIZING THE ISSUANCE OF $22,500,000 SERIAL BONDS OF SAID TOWN TO FINANCE SAID APPROPRIATION AND STATING THAT LAND INSTALLMENT PURCHASE OBLIGATIONS ARE AUTHORIZED TO BE ISSUED PURSUANT TO THIS BOND RESOLUTION The object or purpose for which the bonds are authorized is to acquire interests or rights in real property for the preservation of open spaces and areas as defined in Section 247. The amount of obligations to be issued is $22,500,000. The period of probable usefulness of the bonds is thirty (30) years. A complete copy of the bond resolution sununarized above shall be available for public inspection during normal business hours at the office of the Town Clerk, at the Town Hall, 53095 Main Street, Southold, New York. This bond resolution is dated February 27, 2007. BY ORDER OF THE TOWN BOARD OF THE TOWN OF SOUTHOLD, COUNTY OF SUFFOLK, STATE OF NEW YORK Elizabeth A. Neville Southold Town Clerk PLEASE PUBLISH ON AUGUST 9, 2007 AND FORWARD THREE (3) AFFIDAVITS OF PUBLICATION TO ELIZABETH A. NEVILLE, TOWN CLERK, TOWN HALL, P.O. BOX 1179, SOUTHOLD, NY 11971 Copies to the following: The Suffolk Times Town Board Members Comptroller Land Preservation Town Clerk's Bulletin Board Town Attorney Bond Counsel . . ST ATE OF NEW YORK ) SS: COUNTY OF SUFFOLK) ELIZABETH A. NEVILLE, Town Clerk of the Town of Southold, New York being duly sworn, says that on the q day of (] I. ~ LL1\- ,2007, she affixed a notice of which the annexed printed notice is a true copy, in a proper and substantial manner, in a most public place in the Town of South old, Suffolk County, New York, to wit: Town Clerk's Bulletin Board, 53095 Main Road, Southold, New York. 2007 Land Preservation Bond Adoption C1i~A[lf)4/4d izabeth A. Neville Southold Town Clerk S"Xom before me this ....:::L.- day Of~, 2007. ~~. (Y) ~JL otary Public LYNDA M. BOHN NOTARY PUBLIC, State of New York No. 01 B06020932 Qualified In Suffolk County Term Expires March 8, 20 ll. . . LEGAL NOTICE BOND RESOLUTION OF THE TOWN OF SOUTHOLD, NEW YORK, ADOPTED FEBRUARY 27, 2007, AUTHORIZING THE ACQUISITION OF INTERESTS OR RIGHTS IN REAL PROPERTY, INCLUDING, BUT NOT LIMITED TO, DEVELOPMENT RIGHTS IN OPEN AGRICULTURAL LANDS, WITHIN SAID TOWN, FOR THE PRESERVATION OF OPEN SPACES AND AREAS AND TO MAINTAIN AND ENHANCE THE CONSERVATION OF NATURAL RESOURCES, PROVIDED, HOWEVER, THAT NO SUCH INTERESTS OR RIGHTS IN REAL PROPERTY SHALL BE ACQUIRED UNTIL ALL RELEVANT PROVISIONS OF THE STATE ENVIRONMENTAL QUALITY REVIEW ACT HAVE BEEN COMPLIED WITH AND A FINAL DECLARATION AS TO ENVIRONMENTAL IMPACT HAS BEEN DULY DECLARED, STATING THE ESTIMATED MAXIMUM COST THEREOF IS $22,500,000, APPROPRIATING SAID AMOUNT THEREFOR, AUTHORIZING THE ISSUANCE OF $22,500,000 SERIAL BONDS OF SAID TOWN TO FINANCE SAID APPROPRIATION AND STATING THAT LAND INSTALLMENT PURCHASE OBLIGATIONS ARE AUTHORIZED TO BE ISSUED PURSUANT TO THIS BOND RESOLUTION The object or purpose for which the bonds are authorized is to acquire interests or rights in real property for the preservation of open spaces and areas as defined in Section 247. The amount of obligations to be issued is $22,500,000. The period of probable usefulness of the bonds is thirty (30) years. A complete copy of the bond resolution summarized above shall be available for public inspection during normal business hours at the office of the Town Clerk, at the Town Hall, 53095 Main Street, Southold, New York. This bond resolution is dated February 27, 2007. BY ORDER OF THE TOWN BOARD OF THE TOWN OF SOUTHOLD, COUNTY OF SUFFOLK, STATE OF NEW YORK . . Elizabeth A. Neville Southold Town Clerk PLEASE PUBLISH ON June 28, 2007 AND FORWARD THREE (3) AFFIDAVITS OF PUBLICATION TO ELIZABETH A. NEVILLE, TOWN CLERK, TOWN HALL, P.O. BOX 1179, SOUTHOLD, NY 11971 Copies to the following: The Suffolk Times Town Board Members Comptroller Land Preservation Town Clerk's Bulletin Board Town Attorney Bond Counsel . . . STATE OF NEW YORK ) SS: COUNTY OF SUFFOLK) ELIZABETH A. NEVILLE, Town Clerk of the Town of South old, New York being duly sworn, says that on the Q8 day of ~~ ,2007, she affixed a notice of which the annexed printed notice is a true copy, in a proper and substantial manner, in a most public place in the Town of South old, Suffolk County, New York, to wit: Town Clerk's Bulletin Board, 53095 Main Road, Southold, New York. 2007 Land Preservation bond C'Y~,;~dI{1 ~~, Elizabeth A. Neville Southold Town Clerk Sworn before ~this ~daYOf~~'(~d007. ~ Public LYNDA M. BOHN NOTARY PUBLIC, State of New York No. 01 B06020932 Qualified in Suffolk County Term Expires March 8, 20 LL. . ELIZABETH A. NEVILLE TOWN CLERK REGISTRAR OF VITAL STATISTICS MARRIAGE OFFICER RECORDS MANAGEMENT OFFICER FREEDOM OF INFORMATION OFFICER . OFFICE OF THE TOWN CLERK TOWN OF SOUTHOLD March 14,2007 Town of Southold, New York $278,000 Serial Bonds for Air Vacuum Drain Cleaner $100,000 Serial Bonds for Excavator $60,000 Serial Bonds for Tractor-Mower $22,500,000 Serial Bonds for Land Preservation (Our File Designation: 2615/ ) Robert P. Smith Hawkins, Delafield & Wood 67 Wall Street New York, NY 10005 Dear Mr. Smith, Town Hall, 53095 Main Road P.O. Box 1179 Southold, New York 11971 Fax (631) 765-6145 Telephone (631) 765-1800 sou tholdtown. northfork. net Enclosed find the certified resolution, original affidavit of publication and Extract of Minutes for each of the above referenced Serial Bonds. Please advise if you require anything else for your files at this time. Encs. Very truly yours, Lynda M Bohn Deputy Town Clerk . . EXTRACT OF MINUTES Meeting of the Town Board of the Town of Southold, in the County of Suffolk, New York February 27, 2007 * * * A regular meeting of the Town Board of the Town of Southold, in the County of Suffolk, New York, was held at the Town Hall, 53095 Main Road, Southold, New York, on February 27, 2007 at 4:30 o'clock P.M. (Prevailing Time). There were present: Hon. Scott A. Russell, Supervisor Board Members: Justice Louisa P. Evans Councilman Thomas H. Wickham Councilman Daniel C. Ross Councilman William P. Edwards Councilman Albert Krupski, Jr. There were absent: None Also present: Elizabeth A. Neville, Town Clerk Patricia Finnegan, Town Attorney * * * Councilman Thomas H. Wickham offered the following resolution and moved its adoption: BOND RESOLUTION OF THE TOWN OF SOUTHOLD, NEW YORK, ADOPTED FEBRUARY 27, 2007, AUTHORIZING THE ACQUISITION OF INTERESTS OR RIGHTS IN REAL PROPERTY, INCLUDING, BUT NOT LIMITED TO, DEVELOPMENT RIGHTS IN OPEN AGRICULTURAL LANDS, WITHIN SAID TOWN, FOR THE PRESERVATION OF OPEN SPACES AND AREAS AND TO MAINTAIN AND ENHANCE THE CONSERVATION OF NATURAL RESOURCES, PROVIDED, HOWEVER, THAT NO SUCH INTERESTS OR RIGHTS IN REAL PROPERTY SHALL BE ACQUIRED UNTIL ALL RELEVANT PROVISIONS OF THE STATE ENVIRONMENTAL QUALITY REVIEW ACT HAVE BEEN COMPLIED WITH AND A FINAL DECLARATION AS . . TO ENVIRONMENTAL IMPACT HAS BEEN DULY DECLARED, STATING THE ESTIMATED MAXIMUM COST THEREOF IS $22,500,000, APPROPRIATING SAID AMOUNT THEREFOR, AUTHORIZING THE ISSUANCE OF $22,500,000 SERIAL BONDS OF SAID TOWN TO FINANCE SAID APPROPRIATION AND STATING THAT LAND INSTALLMENT PURCHASE OBLIGATIONS ARE AUTHORIZED TO BE ISSUED PURSUANT TO THIS BOND RESOLUTION Recitals WHEREAS, pursuant to Section 247 of the General Municipal Law, constituting Chapter 24 of the Consolidated Laws of the State of New York (herein called "Section 247"), the Town of Southold, Suffolk County, New York (herein called "Town"), is authorized to acquire interests or rights in real property for the preservation of open spaces and areas as defined in Section 247; and WHEREAS, such acquisition of interests or rights in land situate throughout the Town for the preservation of open spaces and areas and maintaining and enhancing the conservation of natural resources, as defined in Section 247, must be found, determined and deemed to be necessary, in the public interest and a proper public purpose of the Town in accordance with the findings and determinations of the State Legislature as set forth in Section 247; and WHEREAS, in pursuance thereof, the Town desires to implement the land acquisition and financing program hereinafter set forth and to authorize the issuance of land installment purchase obligations for the purpose of financing the acquisition of such interests or rights in real property; Now, therefore THE TOWN BOARD OF THE TOWN OF SOUTHOLD, IN THE COUNTY OF SUFFOLK, NEW YORK, HEREBY RESOLVES (by the favorable vote of not less than three-fifths of all the members of said Town Board) AS FOLLOWS: Section 1. The Town is hereby authorized to acquire by purchase, gift, grant, bequest, devise, lease or otherwise, the fee or any lesser interest, development right, easement, covenant or other contractual right necessary to achieve the purposes of Section 247, in various parcels of real property, including, but not limited to, development rights in open agricultural lands, within the Town, for the preservation of open spaces and areas and to maintain and enhance the conservation of natural or scenic resources, after due notice and a public hearing, pursuant to the provisions of Section 247 and applicable provisions of the Town of Southold Code, including incidental costs incurred in relation thereto, such acquisition being hereby found, determined and deemed to be necessary and in the public interest and a proper public purpose of the Town in accordance with the findings and determinations set forth in Section 247; provided, however, that no such right, including the fee or any lesser interest, or development right, . . easement, covenant, or other contractual right in any piece or parcel of such lands shall be so acquired until all relevant provisions of the State Environmental Quality Review Act (herein called "SEQRA"), constituting Article 8 of the New York Environmental Conservation Law, have been complied with and a final declaration as to environmental impact has been duly declared by the entity duly authorized to make such determination and declaration. The estimated total cost of said class of objects or purposes, including preliminary costs and costs incidental thereto and the financing thereof, is $22,500,000, and said amount is hereby appropriated therefor. The plan of financing includes the expenditure of funds currently available or to become available in the Town of Southold Community Preservation Fund ("CPF"), the issuance of $22,500,000 serial bonds of the Town to finance said appropriation, and the levy and collection of taxes on all the taxable real property in the Town to pay the principal of said bonds and the interest thereon as the same shall become due and payable. Any funds currently available or to become available in the CPF are hereby authorized to be expended to pay for all or part of the cost of the object or purpose for which said serial bonds are authorized or to pay principal and/or interest on any obligations issued pursuant to this bond resolution or any other bond resolutions adopted by the Town Board to finance the acquisition of open space or any other purposes authorized under Section 247, subject to the availability of such funds and only for such purposes authorized by applicable law. Section 2. Serial bonds of the Town in the principal amount of $22,500,000 are hereby authorized to be issued pursuant to the provisions of the Local Finance Law, constituting Chapter 33-a of the Consolidated Laws of the State of New York (herein called the "Law"), to finance said appropriation. Section 3. The following additional matters are hereby determined, stated and declared: (a) The period of probable usefulness of said class of objects or purposes, as described herein, for which the serial bonds authorized pursuant to this resolution are to be issued, within the limitations of Section 11.00 (a) 21. of the Law, is thirty (30) years. (b) All or a portion of the indebtedness to be contracted by the Town for the purpose of financing the acquisition of such interests or rights in real property may be issued in the form of a land installment purchase obligation or obligations pursuant to the provisions of Section 29.1 0 of the Law; any portion of said estimated maximum cost that is not financed by the issuance of a land installment obligation or obligations may be financed through the issuance of such bonds or bond anticipation notes issued in anticipation of the sale of such bonds. (c) The proceeds of the bonds herein authorized and any bond anticipation notes issued in anticipation of said bonds may be applied to reimburse the Town for expenditures made after the effective date of this resolution for the purpose or purposes for which said bonds are authorized. The foregoing statement of intent with respect to . . reimbursement is made in conformity with Treasury Regulation Section 1.150-2 of the United States Treasury Department. (d) The proposed maturity of said $22,500,000 serial bonds will exceed five (5) years. Section 4. Each of the bonds authorized by this resolution and any bond anticipation notes issued in anticipation of the sale of said bonds as well as any bond purchase obligation shall contain the recital of validity as prescribed by Section 52.00 of the Law and said bonds and any notes issued in anticipation of said bonds, shall be general obligations of the Town, payable as to both principal and interest by general tax upon all the taxable real property within the Town without limitation of rate or amount. Tbe faith and credit of the Town are hereby irrevocably pledged to the punctual payment of the principal of and interest on said bonds and any notes issued in anticipation of the sale of said bonds and provision shall be made annually in the budget of the Town by appropriation for (a) the amortization and redemption of the bonds and any notes in anticipation thereof to mature in such year and (b) the payment of interest to be due and payable in such year. Section 5. Subject to the provisions of this resolution and of the Law and pursuant to the provisions of Section 21.00 relative to the authorization of the issuance of bonds with substantially level or declining annual debt service and of Section 30.00 relative to the authorization of the issuance of bond anticipation notes and of Section 50.00 and Sections 56.00 to 60.00 of the Law, the powers and duties of the Town Board relative to authorizing bond anticipation notes and prescribing the terms, form and contents and as to the sale and issuance of the bonds herein authorized and of any bond anticipation notes issued in anticipation of said bonds, and the renewals of said bond anticipation notes, are hereby delegated to the Supervisor, the chief fiscal officer of the Town. Section 6. Tbe validity of the bonds authorized by this resolution and of any notes issued in anticipation of the sale of said bonds, may be contested only if: (a) such obligations are authorized for an object or purpose for which the Town is not authorized to expend money, or (b) the provisions of law which should be complied with at the date of the publication of such resolution are not substantially complied with, and an action, suit or proceeding contesting such validity, is commenced within twenty days after the date of such publication, or (c) such obligations are authorized in violation of the provisions of the constitution. Section 7. This bond resolution is subject to a permissive referendum and the Town Clerk is hereby authorized and directed, within ten (10) days after the adoption of this resolution, to cause to be published, in full, in the "THE SUFFOLK TIMES," a newspaper published in Southold, New York and hereby designated the official . . newspaper for such publication and posted on the sign board of the Town maintained pursuant to the Town Law, a Notice in substantially the following form: TOWN OF SOUTHOLD. NEW YORK PLEASE TAKE NOTICE that on February 27, 2007, the Town Board of the Town of Southold, in the County of Suffolk, New York, adopted a bond resolution entitled: "Bond Resolution of the Town of Southold, New York, adopted February 27, 2007, authorizing the acquisition of interests or rights in real property, including, but not limited to, development rights in open agricultural lands, within said Town, for the preservation of open spaces and areas and to maintain and enhance the conservation of natural resources, provided, however, that no such interests or rights in real property shall be acquired until all relevant provisions of the State Environmental Quality Review Act have been complied with and a final declaration as to environmental impact has been duly declared, stating the estimated maximum cost thereof is $22,500,000, appropriating said amount therefor, authorizing the issuance of $22,500,000 serial bonds of said Town to finance said appropriation and stating that land installment purchase obligations are authorized to be issued pursuant to this Bond Resolution," an abstract of which bond resolution concisely stating the purpose and effect thereof, being as follows: FIRST: RECITING that pursuant to Section 247 of the New York General Municipal Law ("Section 247"), the Town of Southold ("Town"), is authorized to acquire interests or rights in real property for the preservation of open spaces and areas and maintaining and enhancing the conservation of natural or scenic resources, as defined therein; that such acquisition of interests or rights in real property throughout the Town must be found, determined and deemed to be necessary, in the public interest and a proper public purpose of the Town in accordance with the provisions of Section 247 and the Town desires to implement the land acquisition and financing program hereinafter set forth and to authorize the issuance of land installment purchase obligations for such purpose; SECOND: AUTHORIZING the Town to acquire by purchase, gift, grant, bequest, devise, lease or otherwise, the fee or any lesser interest, development right, easement, covenant or other contractual right necessary to achieve the purposes of Section 247, in various parcels of real property, including, but not limited to, development rights in open agricultural lands, within the Town, for the preservation of open spaces and areas and to maintain and enhance the conservation of natural or scenic . . resources, after due notice and a public hearing, pursuant to the provisions of Section 247 and applicable provisions of the Town of Southold Code, including incidental costs incurred in relation thereto, such acquisition being hereby found, determined and deemed to be necessary and in the public interest and a proper public purpose of the Town in accordance with the findings and determinations set forth in Section 247; provided, however, that no such right, including the fee or any lesser interest, development right, easement, covenant, or other contractual right in any piece or parcel of such lands shall be so acquired until all relevant provisions of the State Environmental Quality Review Act ("SEQRA"), have been complied with and a final declaration as to environmental impact has been duly declared by the entity duly authorized to make such determination and declaration; STATING the estimated total cost thereof is $22,500,000; APPROPRIATING $22,500,000 to pay said cost; STATING the plan of financing includes the issuance of $22,500,000 serial bonds of the Town and the levy and collection of taxes upon all the taxable real property within the Town to pay the principal of said bonds and interest thereon; and STATING any funds currently available or to become available in the CPF are hereby authorized to be expended to pay for all or part of the cost of the object or purpose for which said serial bonds are authorized or to pay principal and/or interest on any obligations issued pursuant to this bond resolution or any other bond resolutions adopted by the Town Board to finance the acquisition of open space or any other purposes authorized under Section 247, subject to the availability of such funds and only for such purposes authorized by applicable law. THIRD: AUTHORIZING the issuance of $22,500,000 serial bonds of the Town pursuant to the Local Finance Law of the State of New York (the "Law") to finance said appropriation; FOURTH: DETERMINING and STATING the period of probable usefulness applicable to the class of objects or purposes for which said bonds are authorized to be issued is thirty (30) years; that all or a portion of such bonds or any bond anticipation notes may be issued in the form of a land installment purchase obligation or obligations pursuant to Section 29.10 of the Law; the proceeds of the bonds may be used to reimburse the Town for expenditures made after the effective date hereof for the purpose for which said bonds are authorized; and the proposed maturity of said serial bonds will exceed five (5) years; FIFTH: DETERMINING that said bonds and any bond anticipation notes issued in anticipation of said bonds and the renewals of said bond anticipation notes shall be general obligations of the Town; and PLEDGING to their payment the faith and credit ofthe Town; SIXTH: DELEGATING to the Supervisor the powers and duties as to the issuance of said bonds and any bond anticipation notes issued in anticipation of said bonds, or the renewals thereof; and SEVENTH: DETERMINING that the bond resolution is subject to a permissive referendum. . . DATED: February 27, 2007 Elizabeth A. Neville Town Clerk Section 8. The Town Clerk is hereby authorized and directed to cause said bond resolution to be published, in summary, in substantially the form set forth in Exhibit A attached hereto and made a part hereof, after said bond resolution shall take effect, in the newspaper referred to in Section 7 hereof, and hereby designated the official newspaper for said publication, together with a Notice in substantially the form as provided by Section 81.00 of the Local Finance Law, constituting Chapter 33-a of the Consolidated Laws of the State of New York. * * * The adoption ofthe foregoing resolution was seconded by Councilman William P. Edwards and duly put to a vote on roll call, which resulted as follows: A YES: Hon. Scott A. Russell, Supervisor Justice Louisa P. Evans Councilman Thomas H. Wickham Councilman Daniel C. Ross Councilman William P. Edwards Councilman Albert Krupski, Jr. NOES: None The resolution was declared adopted. ******** Exhibit A BOND RESOLUTION OF THE TOWN OF SOUTHOLD, NEW YORK, ADOPTED FEBRUARY 27, 2007, AUTHORIZING THE ACQUISITION OF INTERESTS OR RIGHTS IN REAL PROPERTY, INCLUDING, BUT NOT LIMITED TO, DEVELOPMENT RIGHTS IN OPEN AGRICULTURAL LANDS, WITHIN SAID TOWN, FOR THE PRESERVATION OF OPEN SPACES AND AREAS AND TO MAINTAIN AND ENHANCE THE CONSERVATION OF NATURAL RESOURCES, PROVIDED, HOWEVER, THAT NO SUCH INTERESTS OR RIGHTS IN REAL PROPERTY SHALL BE ACQUIRED UNTIL ALL RELEVANT PROVISIONS OF THE STATE ENVIRONMENTAL QUALITY REVIEW ACT HAVE BEEN COMPLIED WITH AND A FINAL DECLARATION AS TO ENVIRONMENTAL IMPACT HAS BEEN DULY DECLARED, STATING THE ESTIMATED MAXIMUM . . COST THEREOF IS $22,500,000, APPROPRIATING SAID AMOUNT THEREFOR, AUTHORIZING THE ISSUANCE OF $22,500,000 SERIAL BONDS OF SAID TOWN TO FINANCE SAID APPROPRIATION AND STATING THAT LAND INSTALLMENT PURCHASE OBLIGATIONS ARE AUTHORIZED TO BE ISSUED PURSUANT TO THIS BOND RESOLUTION The object or purpose for which the bonds are authorized is to acquire interests or rights in real property for the preservation of open spaces and areas as defined in Section 247. The amount of obligations to be issued is $22,500,000. The period of probable usefulness ofthe bonds is thirty (30) years. A complete copy of the bond resolution summarized above shall be available for public inspection during normal business hours at the office of the Town Clerk, at the Town Hall, 53095 Main Street, Southold, New York. This bond resolution is dated February 27, 2007. . . CERTIFICATE I, ELIZABETH A. NEVILLE, Town Clerk of the Town of Southold, in the County of Suffolk, State of New York, HEREBY CERTIFY that the foregoing annexed extract from the minutes of a meeting of the Town Board of said Town of Southold duly called and held on February 27, 2007, has been compared by me with the original minutes as officially recorded in my office in the Minute Book of said Town Board and is a true, complete and correct copy thereof and of the whole of said original minutes so far as the same relate to the subject matters referred to in said extract. IN WITNESS WHEREOF, I have hereunto set my hand and affixed the corporate seal of said Town of Southold this 27th day of February, 2007. (SEAL) ~ J..~ 0 YJ..n~J.J Town Clerk #8263 STATE OF NEW YORK) )SS: COUNTY OF SUFFOLK) Candice Schott of Mattituck, in said county, being duly sworn, says that he/she is Principal clerk of THE SUFFOLK TIMES, a weekly newspaper, published at Mattituck, in the Town of Southold, County of Suffolk and State of New York, and that the Notice of which the annexed is a printed copy, has been regularly published in said Newspaper once each week for 1 week(s), successively, commencing on the 8th ,daY of Ma];7 W ~/~ Co . " Principal Clerk Sworn to before me this 2007 Ot day of LfrruZ0 (!j/l!~--hUt (L)lj)fy C~~!TINi MlINSKI NOTARY PUBLIC-STATE OF NEW YORK No, 01-V061 05050 Quollfled In Suffolk County Commission Expires February 28, 2008 II i I, I I I LEGAL NOTICE TOWN OF SOumOID,NEW YORK PLEASE TAKE NOTICE that on February 27. 2007, the Town Board of the Town of Southold. in the County of Suffolk, New York, adopted a bond resolution entitled: "Bond Resolution of the ToWn of Southold, New York, adopted February 27,2007. authorizing the acquisition of interests or rights in real property, in- cluding, but not limited to, development rights in open agricu1turallanchi. within said Town, for the preservation of open spaces and areas and to maintain and enhance the conservation of natural re- sources, provided,however, that no such interests or rights in real property shall be acquired until aU relevant provisions of the State Environmental Quality Re- View Act hav~ been complied with and a final declaration as to environmental impact has been duly declared, stating the estimated maximum cost thereof is $22,500,000, appropriating said amount therefor, authori:cing the issuance of $22,500,000 serial bonds of said Town to finance said appropriation and stating that land installment purchase obliga. tions are authorized to be.issued pursu. ant to this Bond Resolution," an abstract of which bono resolution concisely stating the purpose and effect -thereof, being ~ folloWs: FIRST: RECITING that pursuant to Section 247 of the New York Gen- eral Municipal Law ("Section 247"), the Town of Southold ("Thwn"), is au. thorized to acquire interests or rights in real property for the preservation of open spaces and areas and maintaining and enhancing the conservation of natu. ral or scenic resources, as defined there. in; that such acquisition of interests or rights in real property throughout the Town must be found, determined and . '--. _____n__..... tM_ nuhlic thereOf is. $22,500,000; APPROPRIAT- ING $22,500,000 to pay said cost; STAT- ING the plan of financing includes the issuance of $22,500,000 serial bonds of the Town and the levy and collection at taxes upon aU the taxable real property within the Town to pay the principal of said bonds and interest thereon; and STATING any funds currently avail- able or to become available in the CPF are hereby authorized to be expended to pay for all or part of the cost of the object or purpose for which said serial bonds are authorized or to pay princi" pal andlor interest on any obligations issued pursuant to this bond resolution or any other bond resolutions adopted by the Town Board to finance the ac- quisition of open space or any other purposes authorized under Section 247. subject to the availability of such funds and only for such purposes authorized by applicable law. THIRD: AUfHORIZING the issu- ance of $22,500,000 serial bonds of the Town pursuant to the Local Fmance 'Law of the State of New York (the "Law") to finance said appropriation; FOURTH, DETERMINING and STATING the period of probable use- fulness applicable to the class of objects or purposes for which said bonds are authorized to be issued is thirty (30) years; that all or a portion of such bQBds or any bond anticipation notes may be issued in the form of a land installment purchase obligation or obligations pur- suant to Section 29.10 of the Law; tbe proceeds of the bonds may be used to reimburse the Town for expenditures ma~ after the effective date hereof for . Town of Southold - Letter e?d\\6 Board Meeting of February 27,2007 RESOLUTION 2007-252 ADOPTED Item # 48 DOC ID: 2648 TillS IS TO CERTIFY THAT THE FOLLOWING RESOLUTION NO. 2007-252 WAS ADOPTED AT THE REGULAR MEETING OF THE SOUTHOLD TOWN BOARD ON FEBRUARY 27, 2007: BOND RESOLUTION OF THE TOWN OF SOUTHOLD, NEW YORK, ADOPTED FEBRUARY 27, 2007, AUTHORIZING THE ACQUISITION OF INTERESTS OR RIGHTS IN REAL PROPERTY, INCLUDING, BUT NOT LIMITED TO, DEVELOPMENT RIGHTS IN OPEN AGRICULTURAL LANDS. WITHIN SAID TOWN, FOR THE PRESERVATION OF OPEN SPACES AND AREAS AND TO MAINTAIN AND ENHANCE THE CONSERVATION OF NATURAL RESOURCES, PROVIDED, HOWEVER, THAT NO SUCH INTERESTS OR RIGHTS IN REAL PROPERTY SHALL BE ACQUIRED UNTIL ALL RELEVANT PROVISIONS OF THE STATE ENVIRONMENTAL QUALITY REVIEW ACT HAVE BEEN COMPLIED WITH AND A FINAL DECLARATION AS TO ENVIRONMENTAL IMPACT HAS BEEN DULY DECLARED, STATING THE ESTIMATED MAXIMUM COST THEREOF IS $22,500,000, APPROPRIATING SAID AMOUNT THEREFOR, AUTHORIZING THE ISSUANCE OF $22,500,000 SERIAL BONDS OF SAID TOWN TO FINANCE SAID APPROPRIATION AND STATING THAT LAND INSTALLMENT PURCHASE OBLIGATIONS ARE AUTHORIZED TO BE ISSUED PURSUANT TO THIS BOND RESOLUTION Recitals WHEREAS, pursuant to Section 247 of the General Municipal Law, constituting Chapter 24 of the Consolidated Laws of the State of New York (herein called "Section 247"), the Town of Southold, Suffolk County, New York (herein called "Town"), is authorized to acquire interests or rights in real property for the preservation of open spaces and areas as defined in Section 247; and WHEREAS, such acquisition of interests or rights in land situate throughout the Town for the preservation of open spaces and areas and maintaining and enhancing the conservation of natural resources, as defined in Section 247, must be found, determined and deemed to be necessary, in the public interest and a proper public purpose of the Town in accordance with the findings and determinations of the State Legislature as set forth in Section 247; and Generated March 1, 2007 Page 80 Town of Southold - Lette. Boardeeting of February 27, 2007 WHEREAS, in pursuance thereof, the Town desires to implement the land acquisition and financing program hereinafter set forth and to authorize the issuance of land installment purchase obligations for the purpose of financing the acquisition of such interests or rights in real property; Now, therefore THE TOWN BOARD OF THE TOWN OF SOUTHOLD, IN THE COUNTY OF SUFFOLK, NEW YORK, HEREBY RESOLVES (by the favorable vote of not less than three- fifths of all the members of said Town Board) AS FOLLOWS: Section 1. The Town is hereby authorized to acquire by purchase, gift, grant, bequest, devise, lease or otherwise, the fee or any lesser interest, development right, easement, covenant or other contractual right necessary to achieve the purposes of Section 247, in various parcels of real property, including, but not limited to, development rights in open agricultural lands, within the Town, for the preservation of open spaces and areas and to maintain and enhance the conservation of natural or scenic resources, after due notice and a public hearing, pursuant to the provisions of Section 247 and applicable provisions of the Town of Southold Code, including incidental costs incurred in relation thereto, such acquisition being hereby found, determined and deemed to be necessary and in the public interest and a proper public purpose of the Town in accordance with the findings and determinations set forth in Section 247; provided, however, that no such right, including the fee or any lesser interest, or development right, easement, covenant, or other contractual right in any piece or parcel of such lands shall be so acquired until all relevant provisions of the State Environmental Quality Review Act (herein called "SEQRA"), constituting Article 8 of the New York Environmental Conservation Law, have been complied with and a final declaration as to environmental impact has been duly declared by the entity duly authorized to make such determination and declaration. The estimated total cost of said class of objects or purposes, including preliminary costs and costs incidental thereto and the financing thereof, is $22,500,000, and said amount is hereby appropriated therefor. The plan of financing includes the expenditure of funds currently available or to become available in the Town of Southold Community Preservation Fund ("CPF"), the issuance of $22,500,000 serial bonds of the Town to finance said appropriation, and the levy and collection of taxes on all the taxable real property in the Town to pay the principal of said bonds and the interest thereon as the same shall become due and payable. Any funds currently available or to become available in the CPF are hereby authorized to be expended to pay for all or part of the cost of the object or purpose for which said serial bonds are authorized or to pay principal and/or interest on any obligations issued pursuant to this bond resolution or any other bond resolutions adopted by the Town Board to finance the acquisition of open space or any other purposes authorized under Section 247, subject to the availability of such funds and only for such purposes authorized by applicable law. Section 2. Serial bonds of the Town in the principal amount of $22,500,000 are hereby authorized to be issued pursuant to the provisions of the Local Finance Law, constituting Chapter 33-a of the Consolidated Laws of the State of New York (herein called the "Law"), to finance said appropriation. Generated March I, 2007 Page 81 ~ . Town of Southold - Letter . Board Meeting of February 27, 2007 Section 3. The following additional matters are hereby determined, stated and declared: (a) The period of probable usefulness of said class of objects or purposes, as described herein, for which the serial bonds authorized pursuant to this resolution are to be issued, within the limitations of Section 11.00 (a) 21. of the Law, is thirty (30) years. (b) All or a portion of the indebtedness to be contracted by the Town for the purpose of financing the acquisition of such interests or rights in real property may be issued in the form of a land installment purchase obligation or obligations pursuant to the provisions of Section 29.10 of the Law; any portion of said estimated maximum cost that is not financed by the issuance of a land installment obligation or obligations may be financed through the issuance of such bonds or bond anticipation notes issued in anticipation of the sale of such bonds. (c) The proceeds of the bonds herein authorized and any bond anticipation notes issued in anticipation of said bonds may be applied to reimburse the Town for expenditures made after the effective date of this resolution for the purpose or purposes for which said bonds are authorized. The foregoing statement of intent with respect to reimbursement is made in conformity with Treasury Regulation Section 1.150-2 of the United States Treasury Department. (d) The proposed maturity of said $22,500,000 serial bonds will exceed five (5) years. Section 4. Each of the bonds authorized by this resolution and any bond anticipation notes issued in anticipation of the sale of said bonds as well as any bond purchase obligation shall contain the recital of validity as prescribed by Section 52.00 of the Law and said bonds and any notes issued in anticipation of said bonds, shall be general obligations of the Town, payable as to both principal and interest by general tax upon all the taxable real property within the Town without limitation of rate or amount. The faith and credit of the Town are hereby irrevocably pledged to the punctual payment of the principal of and interest on said bonds and any notes issued in anticipation of the sale of said bonds and provision shall be made annually in the budget of the Town by appropriation for (a) the amortization and redemption of the bonds and any notes in anticipation thereof to mature in such year and (b) the payment of interest to be due and payable in such year. Section 5. Subject to the provisions of this resolution and of the Law and pursuant to the provisions of Section 21.00 relative to the authorization of the issuance of bonds with substantially level or declining annual debt service and of Section 30.00 relative to the authorization of the issuance of bond anticipation notes and of Section 50.00 and Sections 56.00 to 60.00 of the Law, the powers and duties of the Town Board relative to authorizing bond anticipation notes and prescribing the terms, form and contents and as to the sale and issuance of the bonds herein authorized and of any bond anticipation notes issued in anticipation of said bonds, and the renewals of said bond anticipation notes, are hereby delegated to the Supervisor, the chief fiscal officer of the Town. Generated March I, 2007 Page 82 . Town of Southold - Lette. Boardeeting of February 27, 2007 Section 6. The validity of the bonds authorized by this resolution and of any notes issued in anticipation of the sale of said bonds, may be contested only if: (a) such obligations are authorized for an object or purpose for which the Town is not authorized to expend money, or (b) the provisions of law which should be complied with at the date of the publication of such resolution are not substantially complied with, and an action, suit or proceeding contesting such validity, is commenced within twenty days after the date of such publication, or (c) such obligations are authorized in violation of the provisions of the constitution. Section 7. This bond resolution is subject to a permissive referendum and the Town Clerk is hereby authorized and directed, within ten (10) days after the adoption of this resolution, to cause to be published, in full, in the "THE SUFFOLK TIMES," a newspaper published in Southold, New York and hereby designated the official newspaper for such publication and posted on the sign board of the Town maintained pursuant to the Town Law, a Notice in substantially the following form: TOWN OF SOUTHOLD. NEW YORK PLEASE TAKE NOTICE that on February 27, 2007, the Town Board of the Town of Southold, in the County of Suffolk, New York, adopted a bond resolution entitled: "Bond Resolution of the Town of Southold, New York, adopted February 27,2007, authorizing the acquisition of interests or rights in real property, including, but not limited to, development rights in open agricultural lands, within said Town, for the preservation of open spaces and areas and to maintain and enhance the conservation of natural resources, provided, however, that no such interests or rights in real property shall be acquired until all relevant provisions of the State Environmental Quality Review Act have been complied with and a final declaration as to environmental impact has been duly declared, stating the estimated maximum cost thereof is $22,500,000, appropriating said amount therefor, authorizing the issuance of $22,500,000 serial bonds of said Town to finance said appropriation and stating that land installment purchase obligations are authorized to be issued pursuant to this Bond Resolution," an abstract of which bond resolution concisely stating the purpose and effect thereof, being as follows: FIRST: RECITING that pursuant to Section 247 of the New York General Municipal Law ("Section 247"), the Town of Southold ('Town"), is authorized to acquire interests or rights in real property for the preservation of open spaces and areas and maintaining and enhancing the conservation of natural or scenic resources, as defined therein; that such Generated March I, 2007 Page 83 . Town of Southold - Letter .. Board Meetmg of February 27, 2007 acquisition of interests or rights in real property throughout the Town must be found, determined and deemed to be necessary, in the public interest and a proper public purpose of the Town in accordance with the provisions of Section 247 and the Town desires to implement the land acquisition and financing program hereinafter set forth and to authorize the issuance of land installment purchase obligations for such purpose; SECOND: AUTHORIZING the Town to acquire by purchase, gift, grant, bequest, devise, lease or otherwise, the fee or any lesser interest, development right, easement, covenant or other contractual right necessary to achieve the purposes of Section 247, in various parcels of real property, including, but not limited to, development rights in open agricultural lands, within the Town, for the preservation of open spaces and areas and to maintain and enhance the conservation of natural or scenic resources, after due notice and a public hearing, pursuant to the provisions of Section 247 and applicable provisions of the Town of Southold Code, including incidental costs incurred in relation thereto, such acquisition being hereby found, determined and deemed to be necessary and in the public interest and a proper public purpose of the Town in accordance with the findings and determinations set forth in Section 247; provided, however, that no such right, including the fee or any lesser interest, development right, easement, covenant, or other contractual right in any piece or parcel of such lands shall be so acquired until all relevant provisions of the State Environmental Quality Review Act ("SEQRA"), have been complied with and a final declaration as to environmental impact has been duly declared by the entity duly authorized to make such determination and declaration; STATING the estimated total cost thereof is $22,500,000; APPROPRIATING $22,500,000 to pay said cost; STATING the plan of financing includes the issuance of $22,500,000 serial bonds of the Town and the levy and collection of taxes upon all the taxable real property within the Town to pay the principal of said bonds and interest thereon; and STATING any funds currently available or to become available in the CPF are hereby authorized to be expended to pay for all or part of the cost of the object or purpose for which said serial bonds are authorized or to pay principal and/or interest on any obligations issued pursuant to this bond resolution or any other bond resolutions adopted by the Town Board to finance the acquisition of open space or any other purposes authorized under Section 247, subject to the availability of such funds and only for such purposes authorized by applicable law. THIRD: AUTHORIZING the issuance of $22,500,000 serial bonds of the Town pursuant to the Local Finance Law of the State of New York (the "Law") to finance said appropriation; FOURTH: DETERMINING and STATING the period of probable usefulness applicable to the class of objects or purposes for which said bonds are authorized to be issued is thirty (30) years; that all or a portion of such bonds or any bond anticipation notes may be issued in the form of a land installment purchase obligation or obligations pursuant to Section 29.10 of the Law; the proceeds of the bonds may be used to reimburse the Town for expenditures made after the effective date hereof for the purpose for which said bonds are authorized; and the proposed maturity of said serial bonds will exceed five (5) years; Generated March I, 2007 Page 84 Town of Southold - Lette. Board.eting of February 27, 2007 FIFTH: DETERMINING that said bonds and any bond anticipation notes issued in anticipation of said bonds and the renewals of said bond anticipation notes shall be general obligations of the Town; and PLEDGING to their payment the faith and credit of the Town; SIXTH: DELEGATING to the Supervisor the powers and duties as to the issuance of said bonds and any bond anticipation notes issued in anticipation of said bonds, or the renewals thereof; and SEVENTH: DETERMINING that the bond resolution is subject to a permissive referendum. DATED: February 27, 2007 Elizabeth A. Neville Town Clerk Section 8. The Town Clerk is hereby authorized and directed to cause said bond resolution to be published, in summary, in substantially the form set forth in Exhibit A attached hereto and made a part hereof, after said bond resolution shall take effect, in the newspaper referred to in Section 7 hereof, and hereby designated the official newspaper for said publication, together with a Notice in substantially the form as provided by Section 81.00 of the Local Finance Law, constituting Chapter 33-a of the Consolidated Laws of the State of New York. ******** Exhibit A BOND RESOLUTION OF THE TOWN OF SOUTHOLD, NEW YORK, ADOPTED FEBRUARY 27, 2007, AUTHORIZING THE ACQUISITION OF INTERESTS OR RIGHTS IN REAL PROPERTY, INCLUDING, BUT NOT LIMITED TO, DEVELOPMENT RIGHTS IN OPEN AGRICULTURAL LANDS, WITHIN SAID TOWN, FOR THE PRESERVATION OF OPEN SPACES AND AREAS AND TO MAINTAIN AND ENHANCE THE CONSERVATION OF NATURAL RESOURCES, PROVIDED, HOWEVER, THAT NO SUCH INTERESTS OR RIGHTS IN REAL PROPERTY SHALL BE ACQUIRED UNTIL ALL RELEVANT PROVISIONS OF THE STATE ENVIRONMENTAL QUALITY REVIEW ACT HAVE BEEN COMPLIED WITH AND A FINAL DECLARATION AS TO ENVIRONMENTAL IMPACT HAS BEEN DULY DECLARED, STATING THE ESTIMATED MAXIMUM COST THEREOF IS $22,500,000, APPROPRIATING SAID AMOUNT THEREFOR, AUTHORIZING THE ISSUANCE OF $22,500,000 SERIAL BONDS OF SAID TOWN TO FINANCE SAID APPROPRIATION AND STATING THAT LAND INSTALLMENT PURCHASE Generated March 1, 2007 Page 85 . Town of South old - Letter . Board Meeting of February 27,2007 OBLIGATIONS ARE AUTHORIZED TO BE ISSUED PURSUANT TO THIS BOND RESOLUTION The object or purpose for which the bonds are authorized is to acquire interests or rights in real property for the preservation of open spaces and areas as defined in Section 247. The amount of obligations to be issued is $22,500,000. The period of probable usefulness of the bonds is thirty (30) years. A complete copy of the bond resolution summarized above shall be available for public inspection during normal business hours at the office of the Town Clerk, at the Town Hall, 53095 Main Street, Southold, New York. This bond resolution is dated February 27, 2007. ~~_:IA. Elizabeth A. Neville Southold Town Clerk RESULT: ADOPTED [UNANIMOUS] MOVER: Thomas H. Wickham, Councilman SECONDER: William P. Edwards, Councilman AYES: Evans, Wickham, Ross, Edwards, Russell, Krupski Jr. Generated March 1,2007 Page 86 . . #8241 STATE OF NEW YORK) ) SS: COUNTY OF SUFFOLK) Candice Schott of Mattituck, in said county, being duly sworn, says that he/she is Principal clerk of THE SUFFOLK TIMES, a weekly newspaper, published at Mattituck, in the Town of Southold, County of Suffolk and State of New York, and that the Notice of which the annexed is a printed copy, has been regularly published in said Newspaper once each week for 1 week(s), successively, commencing on the 22nd day of Februarv, 2007. a ~ (} (=;;q/ .... 'A-. ('~.JC-/; Principal Clerk Sworn to before me this 2007 :>> day of rtiJ ~L I V\;% Vl UC ~I CHRI~lINA VOLlN~KI NOTARY PUBLlC.STATE OF NEW YORK No. 0 1.V061 05050 Quoll/led In Suffolk County Commission Expires February 28. 2008 LEGAL NOTICE NOnCE IS HEREBY GIVEN that the Town Board of the Town of South- old hereby sets Fehruarv 27. 2007 at 5:05 JYll,. at Southald Town HaU, 53095 Main Road, Southold, NY, as the time and place to hold a public hearing on the ouestion of authorizinp It'2.5 million in ~ said funds to be used to acquire and manage interests and rights in real property in furtherance of Chapter 17 Community Preservation Fund of the Code of the Town of Southold. BYORDEROFTHESOUTHOLD TOWN BOARD OF THE TOWN OF SOUTHOLD, FEBRUARY 13,2007. EUZABETH A. NEVILLE SOUTHOLD TOWN CLERK 8241-lT 2/22 . '. TOWN OF SOUTHOLD. NEW YORK PLEASE TAKE NOTICE that on February 27, 2007, the Town Board of the Town of Southold, in the County of Suffolk, New York, adopted a bond resolution entitled: "Bond Resolution of the Town of Southold, New York, adopted February 27, 2007, authorizing the acquisition of interests or rights in real property, including, but not limited to, development rights in open agricultural lands, within said Town, for the preservation of open spaces and areas and to maintain and enhance the conservation of natural resources, provided, however, that no such interests or rights in real property shall be acquired until all relevant provisions of the State Environmental Quality Review Act have been complied with and a final declaration as to environmental impact has been duly declared, stating the estimated maximum cost thereof is $22,500,000, appropriating said amount therefor, authorizing the issuance of $22,500,000 serial bonds of said Town to finance said appropriation and stating that land installment purchase obligations are authorized to be issued pursuant to this Bond Resolution," an abstract of which bond resolution concisely stating the purpose and effect thereof, being as follows: FIRST: RECITING that pursuant to Section 247 of the New York General Municipal Law ("Section 247"), the Town of Southold ("Town"), is authorized to acquire interests or rights in real property for the preservation of open spaces and areas and maintaining and enhancing the conservation of natural or scenic resources, as defined therein; that such acquisition of interests or rights in real property throughout the Town must be found, determined and deemed to be necessary, in the public interest and a proper public purpose of the Town in accordance with the provisions of Section 247 and the Town desires to implement the land acquisition and financing program hereinafter set forth and to authorize the issuance of land installment purchase obligations for such purpose; SECOND: AUTHORIZING the Town to acquire by purchase, gift, grant, bequest, devise, lease or otherwise, the fee or any lesser interest, development right, easement, covenant or other contractual right necessary to achieve the purposes of Section 247, in various parcels of real property, including, but not limited to, . . development rights in open agricultural lands, within the Town, for the preservation of open spaces and areas and to maintain and enhance the conservation of natural or scenic resources, after due notice and a public hearing, pursuant to the provisions of Section 247 and applicable provisions of the Town of Southold Code, including incidental costs incurred in relation thereto, such acquisition being hereby found, determined and deemed to be necessary and in the public interest and a proper public purpose of the Town in accordance with the findings and determinations set forth in Section 247; provided, however, that no such right, including the fee or any lesser interest, development right, easement, covenant, or other contractual right in any piece or parcel of such lands shall be so acquired until all relevant provisions of the State Environmental Quality Review Act ("SEQRA"), have been complied with and a final declaration as to environmental impact has been duly declared by the entity duly authorized to make such determination and declaration; STATING the estimated total cost thereof is $22,500,000; APPROPRIATING $22,500,000 to pay said cost; STATING the plan of financing includes the issuance of $22,500,000 serial bonds of the Town and the levy and collection of taxes upon all the taxable real property within the Town to pay the principal of said bonds and interest thereon; and STATING any funds currently available or to become available in the CPF are hereby authorized to be expended to pay for all or part of the cost of the object or purpose for which said serial bonds are authorized or to pay principal and/or interest on any obligations issued pursuant to this bond resolution or any other bond resolutions adopted by the Town Board to finance the acquisition of open space or any other purposes authorized under Section 247, subject to the availability of such funds and only for such purposes authorized by applicable law. THIRD: AUTHORIZING the issuance of $22,500,000 serial bonds of the Town pursuant to the Local Finance Law of the State of New York (the "Law") to finance said appropriation; FOURTH: DETERMINING and STATING the period of probable usefulness applicable to the class of objects or purposes for which said bonds are authorized to be issued is thirty (30) years; that all or a portion of such bonds or any bond anticipation notes may be issued in the form of a land installment purchase obligation or obligations pursuant to Section 29.10 of the Law; the proceeds of the bonds may be used to reimburse the Town for expenditures made after the effective date hereof for the purpose for which said bonds are authorized; and the proposed maturity of said serial bonds will exceed five (5) years; FIFTH: DETERMINING that said bonds and any bond anticipation notes issued in anticipation of said bonds and the renewals of said bond anticipation notes shall be general obligations of the Town; and PLEDGING to their payment the faith and credit of the Town; SIXTH: DELEGATING to the Supervisor the powers and duties as to the issuance of said bonds and any bond anticipation notes issued in anticipation of said bonds, or the renewals thereof; and . . SEVENTH: DETERMINING that the bond resolution is subject to a permissive referendum. DATED: February 27,2007 Elizabeth A. Neville Southold Town Clerk PLEASE PUBLISH ON March 8, 2007 AND FORWARD THREE (3) AFFIDAVITS OF PUBLICATION TO ELIZABETH A. NEVILLE, TOWN CLERK, TOWN HALL, P.O. BOX 1179, SOUTHOLD, NY 11971 Copies to the following: The Suffolk Times Town Board Members Comptroller Land PReservation Town Clerk's Bulletin Board Town Attorney Bond Counsel . . . . ST ATE OF NEW YORK ) SS: COUNTY OF SUFFOLK) ELIZABETH A. NEVILLE, Town Clerk of the Town of South old, New York being duly sworn, says that on the ~ day of~, 2007, she affixed a notice of which the annexed printed notice is a true copy, in a proper and substantial manner, in a most public place in the Town of South old, Suffolk County, New York, to wit: Town Clerk's Bulletin Board, 53095 Main Road, Southold, New York. Acquisition of interests or rights in real property, including, but not limited to, development rights in open agricultural lands ~AQ,~~1k Elizabeth A. N ille Southold Town Clerk Sworn before me this ..,,.'" day of j'/\~ ,2007. ~~~ '(Y\ ~O_ ~Notary Public . . DELAFIELD & WOODLLP PHONE (212) 820-9300 FAX (212) 514-8425 ONE CHASE MANHATTAN PLAZA NEW YORK, NY 10005 l/WN./.HAWKINS.COM (212) 820-9662 February 21,2007 NEW YORK WASHINGTON NEWARK HARTFORD LOS ANGELES SACRAMENTO SAN FRANCISCO Town of South old, New York $22,500,000 Serial Bonds for Land Preservation (Our File Designation: 2615/ ) John Cushman Town Comptroller Town of South old 53095 Main Road Southold, New York 11971 Dear John: Pursuant to your request, 1 have prepared and enclose herewith the Extract of Minutes of a Town Board meeting to be held on February 27, 2007, showing adoption of the above bond resolution. The bond resolution contains the form of notice to be published in the official Town newspaper and posted on the sign board of the Town maintained pursuant to the Town Law within ten (10) days after adoption of the bond resolution. Please note that the bond resolution is to be adopted by at least a two-thirds vote of the entire membership of the Town Board. In addition, I have enclosed extra copies of the notice of permissive referendum and the draft Affidavit of Posting to be executed by the Town Clerk. A copy of the notice, as posted, should be attached to this Affidavit. Please obtain and forward to me a certified copy of the Extract of Minutes, an executed Affidavit of Posting and an original Affidavit of Publication. Upon receipt of same, we will forward the additional documents required with respect to the final estoppel publication of the resolution. With best regards, I am Very truly yours, Robert P. Smith RPS/ml Enclosures 517961.1 001098 RES . . EXTRACT OF MINUTES Meeting of the Town Board of the Town of South old, in the County of Suffolk, New York February 27, 2007 * * * A regular meeting of the Town Board of the Town of Southold, in the County of Suffolk, New York, was held at the Town Hall, 53095 Main Road, Southold, New York, on February 27,2007 at _:_ o'clock P.M. (Prevailing Time). There were present: Hon. Scott A. Russell, Supervisor; and Board Members: There were absent: Also present: Elizabeth A. Neville, Town Clerk Patricia Finnegan, Town Attorney John A. Cushman, Town Comptroller * * * offered the following resolution and moved its adoption: 517961.1 001098 RES . . BOND RESOLUTION OF THE TOWN OF SOUTHOLD, NEW YORK, ADOPTED FEBRUARY 27, 2007, AUTHORIZING THE ACQUISITION OF INTERESTS OR RIGHTS IN REAL PROPERTY, INCLUDING, BUT NOT LIMITED TO, DEVELOPMENT RIGHTS IN OPEN AGRICULTURAL LANDS, WITHIN SAID TOWN, FOR THE PRESERVATION OF OPEN SPACES AND AREAS AND TO MAINTAIN AND ENHANCE THE CONSERVATION OF NATURAL RESOURCES, PROVIDED, HOWEVER, THAT NO SUCH INTERESTS OR RIGHTS IN REAL PROPERTY SHALL BE ACQUIRED UNTIL ALL RELEVANT PROVISIONS OF THE STATE ENVIRONMENTAL QUALITY REVIEW ACT HAVE BEEN COMPLIED WITH AND A FINAL DECLARATION AS TO ENVIRONMENTAL IMPACT HAS BEEN DULY DECLARED, STATING THE ESTIMATED MAXIMUM COST THEREOF IS $22,500,000, APPROPRIATING SAID AMOUNT THEREFOR, AUTHORIZING THE ISSUANCE OF $22,500,000 SERIAL BONDS OF SAID TOWN TO FINANCE SAID APPROPRIATION AND STATING THAT LAND INSTALLMENT PURCHASE OBLIGATIONS ARE AUTHORIZED TO BE ISSUED PURSUANT TO THIS BOND RESOLUTION Recitals WHEREAS, pursuant to Section 247 of the General Municipal Law, constituting Chapter 24 ofthe Consolidated Laws of the State of New York (herein called "Section 247"), the 517961.1 001098 RES . . Town of Southold, Suffolk County, New York (herein called "Town"), is authorized to acquire interests or rights in real property for the preservation of open spaces and areas as defined in Section 247; and WHEREAS, such acquisition of interests or rights in land situate throughout the Town for the preservation of open spaces and areas and maintaining and enhancing the conservation of natural resources, as defined in Section 247, must be found, determined and deemed to be necessary, in the public interest and a proper public purpose of the Town in accordance with the findings and determinations of the State Legislature as set forth in Section 247; and WHEREAS, in pursuance thereof, the Town desires to implement the land acquisition and financing program hereinafter set forth and to authorize the issuance of land installment purchase obligations for the purpose of financing the acquisition of such interests or rights in real property; Now, therefore THE TOWN BOARD OF THE TOWN OF SOUTHOLD, IN THE COUNTY OF SUFFOLK, NEW YORK, HEREBY RESOLVES (by the favorable vote of not less than three- fifths of all the members of said Town Board) AS FOLLOWS: Section 1. The Town is hereby authorized to acquire by purchase, gift, grant, bequest, devise, lease or otherwise, the fee or any lesser interest, development right, easement, covenant or other contractual right necessary to achieve the purposes of Section 247, in various parcels of real property, including, but not limited to, development rights in open agricultural lands, within the Town, for the preservation of open spaces and areas and to maintain and enhance the conservation of natural or scenic resources, after due notice and a public hearing, 517961.1 001098 RES . . pursuant to the provisions of Section 247 and applicable provisions of the Town of Southold Code, including incidental costs incurred in relation thereto, such acquisition being hereby found, determined and deemed to be necessary and in the public interest and a proper public purpose of the Town in accordance with the findings and determinations set forth in Section 247; provided, however, that no such right, including the fee or any lesser interest, or development right, easement, covenant, or other contractual right in any piece or parcel of such lands shall be so acquired until all relevant provisions of the State Environmental Quality Review Act (herein called "SEQRA"), constituting Article 8 of the New York Environmental Conservation Law, have been complied with and a final declaration as to environmental impact has been duly declared by the entity duly authorized to make such determination and declaration. The estimated total cost of said class of objects or purposes, including preliminary costs and costs incidental thereto and the financing thereof, is $22,500,000, and said amount is hereby appropriated therefor. The plan of financing includes the expenditure of funds currently available or to become available in the Town of Southold Community Preservation Fund ("CPF"), the issuance of $22,500,000 serial bonds of the Town to finance said appropriation, and the levy and collection of taxes on all the taxable real property in the Town to pay the principal of said bonds and the interest thereon as the same shall become due and payable. Any funds currently available or to become available in the CPF are hereby authorized to be expended to pay for all or part of the cost of the object or purpose for which said serial bonds are authorized or to pay principal and/or interest on any obligations issued pursuant to this bond resolution or any other bond resolutions adopted by the Town Board to finance the acqui,;~i()ll "f OPC:lj"",c or any other purposes authorized under Section 247, subject to the availability of such funds and only for such purposes authorized by applicable law. 51796Ll 001098 RES . . Section 2. Serial bonds of the Town in the principal amount of $22,500,000 are hereby authorized to be issued pursuant to the provisions of the Local Finance Law, constituting Chapter 33-a of the Consolidated Laws of the State of New York (herein called the "Law"), to finance said appropriation. Section 3. The following additional matters are hereby determined, stated and declared: (a) The period of probable usefulness of said class of objects or purposes, as described herein, for which the serial bonds authorized pursuant to this resolution are to be issued, within the limitations of Section 11.00 (a) 21. of the Law, is thirty (30) years. (b) All or a portion of the indebtedness to be contracted by the Town for the purpose of financing the acquisition of such interests or rights in real property may be issued in the form of a land installment purchase obligation or obligations pursuant to the provisions of Section 29.10 of the Law; any portion of said estimated maximum cost that is not financed by the issuance of a land installment obligation or obligations may be financed through the issuance of such bonds or bond anticipation notes issued in anticipation of the sale of such bonds. (c) The proceeds of the bonds herein authorized and any bond anticipation notes issued in anticipation of said bonds may be applied to reimburse the Town for expenditures made after the effective date of this resolution for the purpose or purposes for which said bonds are authorized. The foregoing statement of intent with respect to reimbursement is made in conformity with Treasury Regulation Section 1.150-2 of the United States Treasury Department. (d) The proposed maturity of said $22,500,000 serial bonds will exceed five (5) years. 517961.1 001098 RES . . Section 4. Each of the bonds authorized by this resolution and any bond anticipation notes issued in anticipation of the sale of said bonds as well as any bond purchase obligation shall contain the recital of validity as prescribed by Section 52.00 of the Law and said bonds and any notes issued in anticipation of said bonds, shall be general obligations of the Town, payable as to both principal and interest by general tax upon all the taxable real property within the Town without limitation of rate or amount. The faith and credit of the Town are hereby irrevocably pledged to the punctual payment of the principal of and interest on said bonds and any notes issued in anticipation of the sale of said bonds and provision shall be made annually in the budget of the Town by appropriation for (a) the amortization and redemption of the bonds and any notes in anticipation thereof to mature in such year and (b) the payment of interest to be due and payable in such year. Section 5. Subject to the provisions of this resolution and of the Law and pursuant to the provisions of Section 21.00 relative to the authorization of the issuance of bonds with substantially level or declining annual debt service and of Section 30.00 relative to the authorization of the issuance of bond anticipation notes and of Section 50.00 and Sections 56.00 to 60.00 of the Law, the powers and duties of the Town Board relative to authorizing bond anticipation notes and prescribing the terms, form and contents and as to the sale and issuance of the bonds herein authorized and of any bond anticipation notes issued in anticipation of said bonds, and the renewals of said bond anticipation notes, are hereby delegated to the Supervisor, the chief fiscal officer of the Town. Section 6. The validity of the bonds authorized by this resolution and of any notes issued in anticipation of the sale of said bonds, may be contested only if: (a) such obligations are authorized for an object or purpose for which the Town is not authorized to expend money, or 517961.1 001098 RES . . (b) the provisions of law which should be complied with at the date of the publication of such resolution are not substantially complied with, and an action, suit or proceeding contesting such validity, is commenced within twenty days after the date of such publication, or (c) such obligations are authorized III violation of the provisions of the constitution. Section 7. This bond resolution is subject to a permissive referendum and the Town Clerk is hereby authorized and directed, within ten (10) days after the adoption of this resolution, to cause to be published, in full, in the "THE SUFFOLK TIMES," a newspaper published in Southold, New York and hereby designated the official newspaper for such publication and posted on the sign board of the Town maintained pursuant to the Town Law, a Notice in substantially the following form: 517961.1 00 I 098 RES . . TOWN OF SOUTHOLD. NEW YORK PLEASE TAKE NOTICE that on February 27, 2007, the Town Board of the Town of Southold, in the County of Suffolk, New York, adopted a bond resolution entitled: "Bond Resolution of the Town of Southold, New York, adopted February 27,2007, authorizing the acquisition of interests or rights in real property, including, but not limited to, development rights in open agricultural lands, within said Town, for the preservation of open spaces and areas and to maintain and enhance the conservation of natural resources, provided, however, that no such interests or rights in real property shall be acquired until all relevant provisions of the State Environmental Quality Review Act have been complied with and a final declaration as to environmental impact has been duly declared, stating the estimated maximum cost thereof is $22,500,000, appropriating said amount therefor, authorizing the issuance of $22,500,000 serial bonds of said Town to finance said appropriation and stating that land installment purchase obligations are authorized to be issued pursuant to this Bond Resolution," an abstract of which bond resolution concisely stating the purpose and effect thereof, being as follows: FIRST: RECITING that pursuant to Section 247 of the New York General Municipal Law ("Section 247"), the Town of Southold ("Town"), is authorized to acquire interests or rights in real property for the preservation of open spaces and areas and maintaining and enhancing the conservation of natural or scenic resources, as defined therein; that such acquisition of interests or rights in real property throughout the Town must be found, determined and deemed to be necessary, in the public interest and a proper public purpose of the Town in accordance with the provisions of Section 247 and the Town desires to implement the land acquisition and financing program hereinafter set forth and to authorize the issuance of land installment purchase obligations for such purpose; SECOND: AUTHORIZING the Town to acquire by purchase, gift, grant, bequest, devise, lease or otherwise, the fee or any lesser interest, development right, easement, covenant or other contractual right necessary to achieve the purposes of Section 147, in vari""s parcels of real property, including, but not limited to, development rights in open agricultural lands, within the Town, for the preservation of open spaces and areas and to maintain and enhance the conservation of natural or scenic resources, after due notice and a public hearing, pursuant to the provisions of Section 247 and applicable provisions of the Town of Southold Code, including incidental costs incurred in relation thereto, such acquisition being hereby found, determined and deemed to be necessary and in the public interest and a proper public purpose of the Town in accordance with the findings and determinations set forth in Section 247; 51796 Ll 001098 RES . . provided, however, that no such right, including the fee or any lesser interest, development right, easement, covenant, or other contractual right in any piece or parcel of such lands shall be so acquired until all relevant provisions of the State Environmental Quality Review Act ("SEQRA"), have been complied with and a final declaration as to environmental impact has been duly declared by the entity duly authorized to make such determination and declaration; STATING the estimated total cost thereof is $22,500,000; APPROPRIATING $22,500,000 to pay said cost; STATING the plan of financing includes the issuance of $22,500,000 serial bonds of the Town and the levy and collection of taxes upon all the taxable real property within the Town to pay the principal of said bonds and interest thereon; and STATING any funds currently available or to become available in the CPF are hereby authorized to be expended to pay for all or part of the cost of the object or purpose for which said serial bonds are authorized or to pay principal and/or interest on any obligations issued pursuant to this bond resolution or any other bond resolutions adopted by the Town Board to finance the acquisition of open space or any other purposes authorized under Section 247, subject to the availability of such funds and only for such purposes authorized by applicable law. THIRD: AUTHORIZING the issuance of $22,500,000 serial bonds of the Town pursuant to the Local Finance Law of the State of New York (the "Law") to finance said appropriation; FOURTH: DETERMINING and STATING the period of probable usefulness applicable to the class of objects or purposes for which said bonds are authorized to be issued is thirty (30) years; that all or a portion of such bonds or any bond anticipation notes may be issued in the form of a land installment purchase obligation or obligations pursuant to Section 29.10 of the Law; the proceeds of the bonds may be used to reimburse the Town for expenditures made after the effective date hereof for the purpose for which said bonds are authorized; and the proposed maturity of said serial bonds will exceed five (5) years; FIFTH: DETERMINING that said bonds and any bond anticipation notes issued in anticipation of said bonds and the renewals of said bond anticipation notes shall be general obligations of the Town; and PLEDGING to their payment the faith and credit ofthe Town; SIXTH: DELEGATING to the Supervisor the powers and duties as to the issuance of said bonds and any bond anticipation notes issued in anticipation of said bonds, or the renewals thereof; and SEVENTH: DETERMINING that the bond resolution is subject to a permissive referendum. DATED: February 27,2007 Elizabeth A. Neville Town Clerk 517961.1 001098 RES . . Section 8. The Town Clerk is hereby authorized and directed to cause said bond resolution to be published, in summary, in substantially the form set forth in Exhibit A attached hereto and made a part hereof, after said bond resolution shall take effect, in the newspaper referred to in Section 7 hereof, and hereby designated the official newspaper for said publication, together with a Notice in substantially the form as provided by Section 81.00 of the Local Finance Law, constituting Chapter 33-a of the Consolidated Laws of the State of New York. * * * 517961.1 001098 RES . . The adoption of the foregoing resolution was seconded by and duly put to a vote on roll call, which resulted as follows: AYES: NOES: The resolution was declared adopted. ******** 517961.1 001098 RES . . Exhibit A BOND RESOLUTION OF THE TOWN OF SOUTHOLD, NEW YORK, ADOPTED FEBRUARY 27, 2007, AUTHORIZING THE ACQUISITION OF INTERESTS OR RIGHTS IN REAL PROPERTY, INCLUDING, BUT NOT LIMITED TO, DEVELOPMENT RIGHTS IN OPEN AGRICULTURAL LANDS, WITHIN SAID TOWN, FOR THE PRESERVATION OF OPEN SPACES AND AREAS AND TO MAINTAIN AND ENHANCE THE CONSERVATION OF NATURAL RESOURCES, PROVIDED, HOWEVER, THAT NO SUCH INTERESTS OR RIGHTS IN REAL PROPERTY SHALL BE ACQUIRED UNTIL ALL RELEVANT PROVISIONS OF THE STATE ENVIRONMENTAL QUALITY REVIEW ACT HAVE BEEN COMPLIED WITH AND A FINAL DECLARATION AS TO ENVIRONMENTAL IMPACT HAS BEEN DULY DECLARED, STATING THE ESTIMATED MAXIMUM COST THEREOF IS $22,500,000, APPROPRIATING SAID AMOUNT THEREFOR, AUTHORIZING THE ISSUANCE OF $22,500,000 SERIAL BONDS OF SAID TOWN TO FINANCE SAID APPROPRIATION AND STATING THAT LAND INSTALLMENT PURCHASE OBLIGATIONS ARE AUTHORIZED TO BE ISSUED PURSUANT TO THIS BOND RESOLUTION The object or purpose for which the bonds are authorized is to acquire interests or rights in real property for the preservation of open spaces and areas as defined in Section 247. The amount of obligations to be issued is $22,500,000. The period of probable usefulness of the bonds is thirty (30) years. A complete copy of the bond resolution summarized above shall be available for public inspection during normal business hours at the office of the Town Clerk, at the Town Hall, 53095 Main Street, Southold, New York. This bond resolution is dated February 27,2007. 517961.1 001098 RES . . CERTIFICATE I, ELIZABETH A. NEVILLE, Town Clerk of the Town of Southold, in the County of Suffolk, State of New York, HEREBY CERTIFY that the foregoing annexed extract from the minutes of a meeting of the Town Board of said Town of Southold duly called and held on February 27,2007, has been compared by me with the original minutes as officially recorded in my office in the Minute Book of said Town Board and is a true, complete and correct copy thereof and of the whole of said original minutes so far as the same relate to the subject matters referred to in said extract. IN WITNESS WHEREOF, I have hereunto set my hand and affixed the corporate seal of said Town of Southold this 27th day of February, 2007. (SEAL) Town Clerk 517961.1 001098 RES . . STATEOFNEWYORK ) :ss: COUNTY OF SUFFOLK ) ELIZABETH A. NEVILLE, being duly sworn, deposes and says: That she is and at all times hereinafter mentioned she was the duly elected, qualified and acting Town Clerk of the Town of South old, State of New York; That on ,2007, she has caused to be conspicuously posted and fastened up a Notice setting forth an abstract of the bond resolution duly adopted by the Town Board on February 27, 2007, a copy of which is annexed hereto and made a part hereof, on the sign board of the Town maintained pursuant to the Town Law. Town Clerk Subscribed and sworn to before me this day of February, 2007. Notary Public, State of New York 517961.1 001098 RES Town of Southold - Letter. Board ating of February 27, 2007 RESOLUTION 2007-252 ADOPTED Item # 48 DOC ID: 2648 THIS IS TO CERTIFY THAT THE FOLLOWING RESOLUTION NO. 2007-252 WAS ADOPTED AT THE REGULAR MEETING OF THE SOUTHOLD TOWN BOARD ON FEBRUARY 27, 2007: BOND RESOLUTION OF THE TOWN OF SOUTHOLD, NEW YORK, ADOPTED FEBRUARY 27, 2007, AUTHORIZING THE ACQUISITION OF INTERESTS OR RIGHTS IN REAL PROPERTY, INCLUDING, BUT NOT LIMITED TO, DEVELOPMENT RIGHTS IN OPEN AGRICULTURAL LANDS. WITHIN SAID TOWN, FOR THE PRESERVATION OF OPEN SPACES AND AREAS AND TO MAINTAIN AND ENHANCE THE CONSERVATION OF NATURAL RESOURCES, PROVIDED, HOWEVER, THAT NO SUCH INTERESTS OR RIGHTS IN REAL PROPERTY SHALL BE ACQUIRED UNTIL ALL RELEVANT PROVISIONS OF THE STATE ENVIRONMENTAL QUALITY REVIEW ACT HAVE BEEN COMPLIED WITH AND A FINAL DECLARATION AS TO ENVIRONMENTAL IMPACT HAS BEEN DULY DECLARED, STATING THE ESTIMATED MAXIMUM COST THEREOF IS $22,500,000, APPROPRIATING SAID AMOUNT THEREFOR, AUTHORIZING THE ISSUANCE OF $22,500,000 SERIAL BONDS OF SAID TOWN TO FINANCE SAID APPROPRIATION AND STATING THAT LAND INSTALLMENT PURCHASE OBLIGATIONS ARE AUTHORIZED TO BE ISSUED PURSUANT TO THIS BOND RESOLUTION Recitals WHEREAS, pursuant to Section 247 of the General Municipal Law, constituting Chapter 24 of the Consolidated Laws of the State of New York (herein called "Section 247"), the Town of Southold, Suffolk County, New York (herein called "Town"), is authorized to acquire interests or rights in real property for the preservation of open spaces and areas as defined in Section 247; and WHEREAS, such acquisition of interests or rights in land situate throughout the Town for the preservation of open spaces and areas and maintaining and enhancing the conservation of natural resources, as defined in Section 247, must be found, determined and deemed to be necessary, in the public interest and a proper public purpose of the Town in accordance with the findings and determinations of the State Legislature as set forth in Section 247; and Generated March I, 2007 Page 80 Town of South old - Letter- Board 'eting of February 27, 2007 WHEREAS, in pursuance thereof, the Town desires to implement the land acquisition and financing program hereinafter set forth and to authorize the issuance of land installment purchase obligations for the purpose of financing the acquisition of such interests or rights in real property; Now, therefore THE TOWN BOARD OF THE TOWN OF SOUTHOLD, IN THE COUNTY OF SUFFOLK, NEW YORK, HEREBY RESOLVES (by the favorable vote of not less than three- fifths of all the members of said Town Board) AS FOLLOWS: Section 1. The Town is hereby authorized to acquire by purchase, gift, grant, bequest, devise, lease or otherwise, the fee or any lesser interest, development right, easement, covenant or other contractual right necessary to achieve the purposes of Section 247, in various parcels of real property, including, but not limited to, development rights in open agricultural lands, within the Town, for the preservation of open spaces and areas and to maintain and enhance the conservation of natural or scenic resources, after due notice and a public hearing, pursuant to the provisions of Section 247 and applicable provisions of the Town of Southold Code, including incidental costs incurred in relation thereto, such acquisition being hereby found, determined and deemed to be necessary and in the public interest and a proper public purpose of the Town in accordance with the findings and determinations set forth in Section 247; provided, however, that no such right, including the fee or any lesser interest, or development right, easement, covenant, or other contractual right in any piece or parcel of such lands shall be so acquired until all relevant provisions of the State Environmental Quality Review Act (herein called "SEQRA"), constituting Article 8 of the New York Environmental Conservation Law, have been complied with and a final declaration as to environmental impact has been duly declared by the entity duly authorized to make such determination and declaration. The estimated total cost of said class of objects or purposes, including preliminary costs and costs incidental thereto and the financing thereof, is $22,500,000, and said amount is hereby appropriated therefor. The plan of financing includes the expenditure of funds currently available or to become available in the Town of Southold Community Preservation Fund ("CPF"), the issuance of $22,500,000 serial bonds of the Town to finance said appropriation, and the levy and collection of taxes on all the taxable real property in the Town to pay the principal of said bonds and the interest thereon as the same shall become due and payable. Any funds currently available or to become available in the CPF are hereby authorized to be expended to pay for all or part of the cost of the object or purpose for which said serial bonds are authorized or to pay principal and/or interest on any obligations issued pursuant to this bond resolution or any other bond resolutions adopted by the Town Board to finance the acquisition of open space or any other purposes authorized under Section 247, subject to the availability of such funds and only for such purposes authorized by applicable law. Section 2. Serial bonds of the Town in the principal amount of $22,500,000 are hereby authorized to be issued pursuant to the provisions of the Local Finance Law, constituting Chapter 33-a of the Consolidated Laws of the State of New York (herein called the "Law"), to finance said appropriation. Generated March I, 2007 Page 81 Town of Southold - Letter. Board _ting of February 27, 2007 Section 3. The following additional matters are hereby determined, stated and declared: (a) The period of probable usefulness of said class of objects or purposes, as described herein, for which the serial bonds authorized pursuant to this resolution are to be issued, within the limitations of Section 11.00 (a) 21. of the Law, is thirty (30) years. (b) All or a portion of the indebtedness to be contracted by the Town for the purpose of financing the acquisition of such interests or rights in real property may be issued in the form of a land installment purchase obligation or obligations pursuant to the provisions of Section 29.10 of the Law; any portion of said estimated maximum cost that is not financed by the issuance of a land installment obligation or obligations may be financed through the issuance of such bonds or bond anticipation notes issued in anticipation of the sale of such bonds. (c) The proceeds of the bonds herein authorized and any bond anticipation notes issued in anticipation of said bonds may be applied to reimburse the Town for expenditures made after the effective date of this resolution for the purpose or purposes for which said bonds are authorized. The foregoing statement of intent with respect to reimbursement is made in conformity with Treasury Regulation Section 1.150-2 of the United States Treasury Department. (d) The proposed maturity of said $22,500,000 serial bonds will exceed five (5) years. Section 4. Each of the bonds authorized by this resolution and any bond anticipation notes issued in anticipation of the sale of said bonds as well as any bond purchase obligation shall contain the recital of validity as prescribed by Section 52.00 of the Law and said bonds and any notes issued in anticipation of said bonds, shall be general obligations of the Town, payable as to both principal and interest by general tax upon all the taxable real property within the Town without limitation of rate or amount. The faith and credit of the Town are hereby irrevocably pledged to the punctual payment of the principal of and interest on said bonds and any notes issued in anticipation of the sale of said bonds and provision shall be made annually in the budget of the Town by appropriation for (a) the amortization and redemption of the bonds and any notes in anticipation thereof to mature in such year and (b) the payment of interest to be due and payable in such year. Section 5. Subject to the provisions of this resolution and of the Law and pursuant to the provisions of Section 21.00 relative to the authorization of the issuance of bonds with substantially level or declining annual debt service and of Section 30.00 relative to the authorization of the issuance of bond anticipation notes and of Section 50.00 and Sections 56.00 to 60.00 of the Law, the powers and duties of the Town Board relative to authorizing bond anticipation notes and prescribing the terms, form and contents and as to the sale and issuance of the bonds herein authorized and of any bond anticipation notes issued in anticipation of said bonds, and the renewals of said bond anticipation notes, are hereby delegated to the Supervisor, the chief fiscal officer of the Town. Generated March 1, 2007 Page 82 Town of Southold - Letter. Board ating of February 27, 2007 Section 6. The validity of the bonds authorized by this resolution and of any notes issued in anticipation ofthe sale of said bonds, may be contested only if: (a) such obligations are authorized for an object or purpose for which the Town is not authorized to expend money, or (b) the provisions of law which should be complied with at the date of the publication of such resolution are not substantially complied with, and an action, suit or proceeding contesting such validity, is commenced within twenty days after the date of such publication, or (c) such obligations are authorized in violation of the provisions of the constitution. Section 7. This bond resolution is subject to a permissive referendum and the Town Clerk is hereby authorized and directed, within ten (10) days after the adoption of this resolution, to cause to be published, in full, in the "THE SUFFOLK TIMES," a newspaper published in Southold, New York and hereby designated the official newspaper for such publication and posted on the sign board of the Town maintained pursuant to the Town Law, a Notice in substantially the following form: TOWN OF SOUTHOLD, NEW YORK PLEASE TAKE NOTICE that on February 27, 2007, the Town Board of the Town of South old, in the County of Suffolk, New York, adopted a bond resolution entitled: "Bond Resolution of the Town of Southold, New York, adopted February 27, 2007, authorizing the acquisition of interests or rights in real property, including, but not limited to, development rights in open agricultural lands, within said Town, for the preservation of open spaces and areas and to maintain and enhance the conservation of natural resources, provided, however, that no such interests or rights in real property shall be acquired until all relevant provisions of the State Environmental Quality Review Act have been complied with and a final declaration as to environmental impact has been duly declared, stating the estimated maximum cost thereof is $22,500,000, appropriating said amount therefor, authorizing the issuance of $22,500,000 serial bonds of said Town to finance said appropriation and stating that land installment purchase obligations are authorized to be issued pursuant to this Bond Resolution," an abstract of which bond resolution concisely stating the purpose and effect thereof, being as follows: FIRST: RECITING that pursuant to Section 247 of the New York General Municipal Law ("Section 247"), the Town of Southold ("Town"), is authorized to acquire interests or rights in real property for the preservation of open spaces and areas and maintaining and enhancing the conservation of natural or scenic resources, as defined therein; that such Generated March 1, 2007 Page 83 Town of Southold - Letter- Board .ting of February 27, 2007 acquisition of interests or rights in real property throughout the Town must be found, determined and deemed to be necessary, in the public interest and a proper public purpose of the Town in accordance with the provisions of Section 247 and the Town desires to implement the land acquisition and financing program hereinafter set forth and to authorize the issuance of land installment purchase obligations for such purpose; SECOND: AUTHORIZING the Town to acquire by purchase, gift, grant, bequest, devise, lease or otherwise, the fee or any lesser interest, development right, easement, covenant or other contractual right necessary to achieve the purposes of Section 247, in various parcels of real property, including, but not limited to, development rights in open agricultural lands, within the Town, for the preservation of open spaces and areas and to maintain and enhance the conservation of natural or scenic resources, after due notice and a public hearing, pursuant to the provisions of Section 247 and applicable provisions of the Town of Southold Code, including incidental costs incurred in relation thereto, such acquisition being hereby found, determined and deemed to be necessary and in the public interest and a proper public purpose of the Town in accordance with the findings and determinations set forth in Section 247; provided, however, that no such right, including the fee or any lesser interest, development right, easement, covenant, or other contractual right in any piece or parcel of such lands shall be so acquired until all relevant provisions of the State Environmental Quality Review Act ("SEQRA"), have been complied with and a final declaration as to environmental impact has been duly declared by the entity duly authorized to make such determination and declaration; STATING the estimated total cost thereof is $22,500,000; APPROPRIATING $22,500,000 to pay said cost; STATING the plan of financing includes the issuance of $22,500,000 serial bonds of the Town and the levy and collection of taxes upon all the taxable real property within the Town to pay the principal of said bonds and interest thereon; and STATING any funds currently available or to become available in the CPF are hereby authorized to be expended to pay for all or part of the cost of the object or purpose for which said serial bonds are authorized or to pay principal and/or interest on any obligations issued pursuant to this bond resolution or any other bond resolutions adopted by the Town Board to finance the acquisition of open space or any other purposes authorized under Section 247, subject to the availability of such funds and only for such purposes authorized by applicable law. THIRD: AUTHORIZING the issuance of $22,500,000 serial bonds of the Town pursuant to the Local Finance Law of the State of New York (the "Law") to finance said appropriation; FOURTH: DETERMINING and STATING the period of probable usefulness applicable to the class of objects or purposes for which said bonds are authorized to be issued is thirty (30) years; that all or a portion of such bonds or any bond anticipation notes may be issued in the form of a land installment purchase obligation or obligations pursuant to Section 29.10 of the Law; the proceeds of the bonds may be used to reimburse the Town for expenditures made after the effective date hereof for the purpose for which said bonds are authorized; and the proposed maturity of said serial bonds will exceed five (5) years; Generated March 1, 2007 Page 84 Town of South old - Letter- Board Ating of February 27, 2007 FIFTH: DETERMINING that said bonds and any bond anticipation notes issued in anticipation of said bonds and the renewals of said bond anticipation notes shall be general obligations of the Town; and PLEDGING to their payment the faith and credit ofthe Town; SIXTH: DELEGATING to the Supervisor the powers and duties as to the issuance of said bonds and any bond anticipation notes issued in anticipation of said bonds, or the renewals thereof; and SEVENTH: DETERMINING that the bond resolution is subject to a permissive referendum. DATED: February 27, 2007 Elizabeth A. Neville Town Clerk Section 8. The Town Clerk is hereby authorized and directed to cause said bond resolution to be published, in summary, in substantially the form set forth in Exhibit A attached hereto and made a part hereof, after said bond resolution shall take effect, in the newspaper referred to in Section 7 hereof, and hereby designated the official newspaper for said publication, together with a Notice in substantially the form as provided by Section 81.00 of the Local Finance Law, constituting Chapter 33-a ofthe Consolidated Laws ofthe State of New York. ******** Exhibit A BOND RESOLUTION OF THE TOWN OF SOUTHOLD, NEW YORK, ADOPTED FEBRUARY 27, 2007, AUTHORIZING THE ACQUISITION OF INTERESTS OR RIGHTS IN REAL PROPERTY, INCLUDING, BUT NOT LIMITED TO, DEVELOPMENT RIGHTS IN OPEN AGRICULTURAL LANDS, WITHIN SAID TOWN, FOR THE PRESERVATION OF OPEN SPACES AND AREAS AND TO MAINTAIN AND ENHANCE THE CONSERVATION OF NATURAL RESOURCES, PROVIDED, HOWEVER, THAT NO SUCH INTERESTS OR RIGHTS IN REAL PROPERTY SHALL BE ACQUIRED UNTIL ALL RELEVANT PROVISIONS OF THE STATE ENVIRONMENTAL QUALITY REVIEW ACT HAVE BEEN COMPLIED WITH AND A FINAL DECLARATION AS TO ENVIRONMENTAL IMPACT HAS BEEN DULY DECLARED, STATING THE ESTIMATED MAXIMUM COST THEREOF IS $22,500,000, APPROPRIATING SAID AMOUNT THEREFOR, AUTHORIZING THE ISSUANCE OF $22,500,000 SERIAL BONDS OF SAID TOWN TO FINANCE SAID APPROPRIATION AND STATING THAT LAND INSTALLMENT PURCHASE Generated March I, 2007 Page 85 Town of Southold - Letter. Board ating of February 27, 2007 OBLIGATIONS ARE AUTHORIZED TO BE ISSUED PURSUANT TO THIS BOND RESOLUTION The object or purpose for which the bonds are authorized is to acquire interests or rights in real property for the preservation of open spaces and areas as defined in Section 247. The amount of obligations to be issued is $22,500,000. The period of probable usefulness of the bonds is thirty (30) years. A complete copy of the bond resolution sununarized above shall be available for public inspection during normal business hours at the office of the Town Clerk, at the Town Hall, 53095 Main Street, Southold, New York. This bond resolution is dated February 27, 2007. ~Q.-.:p... Elizabetb A. Neville Soutbold Town Clerk RESULT: ADOPTED [UNANIMOUS] MOVER: Thomas H. Wickham, Councilman SECONDER: William P. Edwards, Councilman AYES: Evans, Wickham, Ross, Edwards, Russell, Krupski Jr. Generated March 1, 2007 Page 86 . . #8241 STATE OF NEW YORK) )SS: COUNTY OF SUFFOLK) Candice Schott of Mattituck, in said county, being duly sworn, says that he/she is Principal clerk of THE SUFFOLK TIMES, a weekly newspaper, published at Mattituck, in the Town of Southold, County of Suffolk and State of New York, and that the Notice of which the annexed is a printed copy, has been regularly published in said Newspaper once each week for 1 week(s), successively, commencing on the 22nd day of Februarv. 2007. ~ifvltruYu{d/ Principal Clerk Sworn to before me this 2007 de3 day of !=G(Q en lVSnL (blc>>e1l CHRISTINA VOllNSKI NOTARY PUBLIC-STATE OF NEW N YORK O.01-V06105050 , Qualified In Suftolk C '~:>l'\""'J, I Ounty . ".. Ii on ExpIre. F b e ruary 2B, 200B LEGAL NOTICE NOnCE IS HEREBY GIVEN that the Town Board of the Town of South- old hereby set'i Febmarv 27. 2007 at 5:05 lWIL at Southold Town Hall, 53095 Main Road, Southold, NY, as the time and place to hold a public hearing on the question of autboriziDI!' <1:1..5 million in .ImIuIL said funds to be used to acquire and manage interests and rights in real property in furtherance of Chapter 17 Community Preservation Fund of the Code of the Town of Southold. BYORDEROFTHESOUTHOLD TOWN BOARD OF THE TOWN OF SOUTHOLD, FEBRUARY 13, 2007. ELIZABETH A. NEVILLE SOUTHOLD TOWN CLERK 8241-IT2J22 . . LEGAL NOTICE NOTICE IS HEREBY GIVEN that the Town Board of the Town of South old hereby sets February 27, 2007 at 5:05 D.m. at Southold Town Hall, 53095 Main Road, Southold, NY, as the time and place to hold a public hearing on the Question of authorizinl! $22.5 million in bonds, said funds to be used to acquire and manage interests and rights in real property in furtherance of Chapter 17 Community Preservation Fund of the Code of the Town of South old. BY ORDER OF THE SOUTHOLD TOWN BOARD OF THE TOWN OF SOUTHOLD, FEBRUARY 13,2007. ELIZABETH A. NEVILLE SOUTHOLD TOWN CLERK PLEASE PUBLISH ON FEBRUARY 22, 2007, AND FORWARD TWO (2) AFFIDAVIT OF PUBLICATIONS TO ELIZABETH NEVILLE, TOWN CLERK, TOWN HALL, PO BOX 1179, SOUTHOLD, NY 11971. Copies to the following: The Suffolk Times Land Preservation Town Board Members Comptroller Town Attorney Town Clerk's Bulletin Board . . STATE OF NEW YORK) SS: COUNTY OF SUFFOLK) ELIZABETH A. NEVILLE, Town Clerk ofthe Town of South old, New York being duly sworn, says that on the.dL- day of t ~J..!\.Lu\ . '" , 2007, she affixed a notice of which the annexed printed notice is a true copy, in~ proper and substantial manner, in a most public place in the Town of South old, Suffolk County, New York, to wit: Town Clerk's Bulletin Board, 53095 Main Road, Southold, New York. PH on Comm. Pres. Bonds 2/27/07 5:05 pm ~#t7Q'h(~ lizabeth A. Nev Ie Southold Town Clerk LYNDA M. BOHN NOTARY PUBLlCj.. Stale of New'illlll No. 01 Bu6020932 Ouelified In Suffolk CounIL. Term expires March 8, 20 Q:J. . 617.20 Appendix C Slate Envlronmentel Quality Review SHORT ENVIRONMENTAL ASSESSMENT FORM For UNUSTED ACTIONS Only . :sr: PART I-PROJECT INFORMAnON (To be completed by Applicant OR Project) Page 1 of 2 A..i\.O~""-;N <:; .f?:l..5 "'; II.'"", 12. PROJECT NAME: '!'1 ~~~~ to ....~j.i~C .. "'...~..~ < lI\Tl.(.,...'1'" +,. .~:x:s ,no ~IJ nt p' c".~t.1l. \7. County: "::>vI' I'D <-Ie. 1. APPUCANT /SPONSOR: Southold Town Board 3. PROJECT LOCAnON: Municipality: I -"IVo.J 0+ Sou... ,,"O'-\> 4. PRECISE LOCATION: (Street address and road intersectionsl prominent landmarks, etc, or provide map) ?l'.o~er~II!~S ~o ~E i'I'C.Qu'IZe'l:> t.l>'"l"","" \l>wr,J Of" 5o<n-I-\OLI:> 5. IS PROPOSED ACTION: ~ New 0 Expansion 0 Modification 6. DESCRIBE PROJECT BRIEFLY: " J-." ~o"QcI. c>.&l""'" 1'0 ",,,-t-..o<,i"-<. '-".5 ..";\\.'",,, it- \.o~<', s..;~ .(..,,,,c\.S ib 'or <>secl.. ~~~t~~/ &::~:~~~;:;:~~~~;\~~~cI. ~.~ ~::~r~ ~;.:;:";t~.:~()\~ 7. AMOUNT OF LAND AFFECTED: ." '" 1I~1r""", n ..~r"~" INITALlY tt: acres ULTIMATELY acres . .,- B. WIll PROPOSED ACTION COMPLY WITH EXISTING ZONING OR OTHER EXISTING LAND USE RESTRICTIONS? ~ Yes 0 No if No, describe briefly 9. WHAT IS PRESENT LAND USE IN VICINITY OF PROJECT? 'I ~ Residential r Commercial L! Industrial ~ Agriculture ~ Parl<!ForesVOpen space r' Other DesCribe.7ro~~r+l~$/i,,~rt's+-<" Qc''l'l>,r-tJ <He lik,',! +eo ~ i" Ulc1~loy ~ A':J/~nSp.c,., IJUOS. I' ~. -~~~"'~~'~~-~-'~-~~~'~.~~,~--,--~~,-~-,--,-~---,-.~--~-._,-~~ .10. DOES ACTION INVOLVE A PERMIT APPROVAL, OR FUNDING, NOW OR ULTIMATELY FROM ANY OTHER GOVERNMENTAL 'I ~ENCY ;:DERAl, STATE OR lOCAL)? , Yes No if yes, list agency(s) and permit/approvals ; , [---~-----"'--~~-~~.~-~_.._~-,~.~---~----~.~,---~,-_.~._~~. ~~-----~--_.._-~_..,-,--~ ill. DOES ANY ASPECT OFTHE ACTION HAVE A CURRENTlYVAUD PERMIT OR APPROVAL? , I r: Yes J:il; No if yes, list agency(s) and pem7i(/approvals r-""-"---~~~-_.~~~~'-'~---' -"~--"---~"-""--'~~~'----"--'~~~~-'-'"'-'~-~'-"~'_.~-~- ~-----._.~-~--"~-~- ! 12. AS RESULT OF PROPOSED ACTION WIll EXISTING PERMIT/APPROVAL REQUIRE MODIFICATION? Ir r Yes No (VA I I - ___~_I i I , , r-~.----~-~~" .-----....- i I CERTIFY THAT THE INFORMATION PROVIDED ABOVE IS TRUE TO THE BEST OF MY KNOWLEDGE Applica"t/sporo" Name _~"/"S_t;f!r_~\n.O J.p,.~~ j)r6.~o', D"te_G~Z- I.. ~rt?"'ll<';::) I""~ :SlgnatlJI:~~ ~ If the action is in the Coastal Area, and you are a state agency, complete the Coastal Assessment Form before proceeding with this assessment P~RT U-ENVIRONMENTAL ASSESSMI (To be completed by Agency) Page 2 of 2 . A. DOES AC110N EXCEED ANY TYPE I THRESHOLD IN 6 NYCRR, PART 617.41 o YesrtJ. No If yes coordinate the ",view process and use the full EAF B. WILL AC110N RECEIVE COORDINATED REVIEW AS PROVIDED FOR UNUSTED AC110NS IN 6 NYCRR, PART 617.61 o YesflJ No If no, a negative declaration may be suspended by another Involved agency C. COULD AC110N RESULT IN ANY ADVERSE EFFECTS ASSIOCIATED WITH THE FOLLOWING: (Answers may be handwritten, If legible) C1. Existing air quality, surface or groundwater quality or quantity, noise levels, existing traffic patterns solid waste production or disposal, potential for erosion, drainage or flooding problem? Explain briefly: )\)0 C2. Aesthetic, agricultural, archaeological, historic or other natural or cultural resources; or community or neighborhood character? ExPI\:) grleflY: C3. v;J~tation or fauna fishes shellfish, or wildlife spedes, significant habitats, or threatened or endangered species? Explain briefly; C4. A community's existing plans or goals as offidally adopted! or change in use or intensity of use of land or other natural resources' EXPlal\J ~ieflY: CS. GRJ~h, subsequent development, or related activities likely to be induced by the proposed action? Explain briefly: C6. lm term, short term, cumulative, or other effects not identified in Cl ~CS? Explain briefly: C7. Other-impacts (including changes in use of either quantity of type of energy)? Explain briefly: D. WILL THE PROJECT HAVE AN IMPACT ON THE ENVIRONMENTAL CHARACTERICS THAT CAUSED THE ESTABLISHMENT OF A CEA? o IY1 Yes No E. IS THERE, OR IS THERE LIKELY TO BE, CONTROVERSY RELATED TO POTENTIAL ADVERSE ENVIRONMENTAL IMPACTS? n I)lI Yes No PART 111- DETERMINATION OF SIGNIFICANCE (To be completed by Agency) INSTRUCTIONS; For each adverse effect identified above, determine whether It Is substantial, large, or otherwise significant. Each effect should be assessed in connection with its (a) setting (i.e. urban or rural); probability of occurring; (c) duration; (dO irreversibility; (e) geographic scope; and (f) magnitude. If necessary, add attachments or reference supporting materials. Ensure that explanations contain sufficient detail to show that all relevant adverse impacts have been identified and adequately addressed. If question D of part II was checked yes, the determination and significance must evaluate the potential impact of the proposed action on the environmental characteristics of the CEA. ['"'i Check this box if you have identified one or more potentially large or significant adverse impacts, which may occur. Then proceed directly to the fULL ENVIRONMETNAL ASSESSMENT FORM and/or prepare a positive declaration. Check this box if you have determined, based on the information and analysis above and any supporting documentation, that the proposed action WILL NOT result in any significant adverse environmental impacts AND provide on attachments as necessary, the reasons supporting this determination: ~ <::;"'.,.t!oc..1> """f<,'<l'" _o"'lll:> ~ Name of Leac.- gency __ c- ::;/Cd"J"r 11 IOwAI ::>"PElflv,>On.. Print of type Name of Title of Responsible Officer . tJl?k-;,. ~ Signatu Signatureof prepare(if.. ,~eren~fro~ofresponSible OffiC~-J , " I<>' ,',...' I I I , ! L Town of Southold - Letter. Board .tin~ruary 13, 2007 RESOLUTION 2007-198 ADOPTED Item # 38 DOC 10: 2621 THIS IS TO CERTIFY THAT THE FOLLOWING RESOLUTION NO. 2007-198 WAS ADOPTED AT THE REGULAR MEETING OF THE SOUTHOLD TOWN BOARD ON FEBRUARY 13,2007: RESOLVED that the Town Board of the Town of South old hereby sets February 27. 2007 at 5:05 n.m. at Southold Town Hall, 53095 Main Road, Southold, NY, as the time and place to hold a public hearing on the question of authorizin!!: $22.5 million in bonds. said funds to be used to acquire and manage interests and rights in real property in furtherance of Chapter 17 Community Preservation Fund of the Code of the Town of Southold. ~2f..J.L. Elizabeth A. Neville Southold Town Clerk RESULT: ADOPTED [UNANIMOUS] MOVER: Albert Krupski Jr., Councilman SECONDER: Louisa P. Evans, Justice AYES: Evans, Wickham, Ross, Edwards, Russell, Krupski Jr. Generated February 14,2007 Page 57 SOUTHOLD TOWN BOARD PUBLIC HEARING February 27,2007 5:05 PM COUNCILMAN WICKHAM: NOTICE IS HEREBY GIVEN that the Town Board of the Town of Southold hereby sets Februarv 27. 2007 at 5:05 p.m. at Southold Town Hall, 53095 Main Road, Southold, NY, as the time and place to hold a public hearing on the Question of authorizinl! $22.5 million in bonds, said funds to be used to acquire and manage interests and rights in real property in furtherance of Chapter 17 Community Preservation Fund of the Code of the Town of Southold. It has appeared as a brief legal in the local newspaper, the Suffolk Times and it has also appeared on the Town Clerk's bulletin board outside and this is a public hearing that does not have a great deal of planning attachments to it so there are no further communications in the file. SUPERVISOR RUSSELL: Would anybody like to come up and address the Town Board on this issue? BERNARD HEINISCH: My name is Bernard Heinisch, I live on County Road 48. I would like to know approximately how many millions in bonds we already have for agricultural? SUPERVISOR RUSSELL: Right now? I would say we have access to about $23 million, $13 million which is money in the Community Preservation Fund and about $10 million in bonds that have been authorized by the voters over the years but we have never gone to the bond market for. MR. HEINISCH: Okay. So now you are going to be over $50 million. How is the interest and the principal paid on these bonds? SUPERVISOR RUSSELL: In the CPF fund there is no interest, that money, that is available each year through the sale or transactions in real estate. The bonds, they will be budgeted for. If we have to go to the bond market right now to access the $10 million, we will need to find a way to budget in December approximately $700,000 worth of debt service, $600,000 worth of debt service. Those are things to be worked out when we have the budget hearings in November. MR. HEINISCH: How would this money be paid? Out of the general fund or out of the 2%.... SUPERVISOR RUSSELL: Out of the general fund. The voters have authorized this already. We have, we are not, we wouldn't go to the bond market for bonds that hadn't already been authorized by the voters. So, the voters have authorized the use of their tax dollars to pay the debt service on those bonds. MR. HEINISCH: But this new one... SUPERVISOR RUSSELL: Oh, this one. In this particular one, this is to access future, anticipated revenue. My presumption is we will finance through the regular... COUNCILMAN EDWARDS: Through the regular 2% fund. The 2% fund in the year 2005 produced about $7 million for the Town. In the year 2006 the number is in the $5.8 million area, reflecting some softening in price, some reduced activity and also, in 2005 it peaked a little bit because of Peconic Landing was in there. We have made what we think are very conservative assumptions that if it were to drop as low as $5 million for a year for a couple of years because we can't expect the real estate market to pick up too quickly, this will only take up $2.5 million of the anticipated flow from the 2% funds. So we feel it is a very conservative use of monies, that the majority of the money coming in on the 2% should remain available for other acquisitions but in order to make the acquisitions that are on the table right now, we would like to be able to bond. It should also be mentioned that all four of the other east end towns have already bonded against the 2% because they have had opportunities and finally we have opportunities that are greater than the cash on hand. SUPERVISOR RUSSELL: As a clarification, I am sorry, I talked about the taxes for the existing bonds. For this you are talking about, every dollar of this would be paid for through future CPF or transfer earnings. Community Preservation Fund earnings, not one dollar would come from a regular tax levy. COUNCILMAN EDWARDS: Exactly. SUPERVISOR RUSSELL: We are borrowing against money that we know we are going to be making over the next 20 years. MR. HEINISCH: Okay. And not out of capital funds? SUPERVISOR RUSSELL: No. COUNCILMAN EDWARDS: No, definitely not. SUPERVISOR RUSSELL: No, that was another issue. MR. HEINISCH: Thank you. LAURA BAVARO: Hi, my name is Laura Bavaro, I am director of Terrestrial Programs for the Nature Conservancy and I am also a Southold resident. I personally and also we at the Nature Conservancy thank you for considering the resolution to bond $22.5 million by borrowing against anticipated CPF revenues. And as you all know, land protection is a proven strategy to protect critically important habitat. Nature Conservancy sees Southold as an extremely important partner for protecting bio-diversity on Long Island, which is Nature Conservancy's main mission. And we have enjoyed working with you on several initiatives, including Peconic estuary programs as well as protecting the watershed at Pipe's Cove. Protecting an eco-system through land protection is many times a once in a lifetime chance because if the public funds aren't there to protect that parcel, another buyer might come along and then develop it and then it is gone forever. As Councilman Edwards mentioned because of this fact that it is just a once in a lifetime chance and that land values continue to rise Riverhead, Southampton, East Hampton and Shelter Island have already borrowed against their future CPF revenues. And also as an aside, the county has also borrowed against future things there for land protection through their Y. percent sales tax. We look forward to continued collaborations with you and we really urge you to pass this resolution. Thank you. SUPERVISOR RUSSELL: Thank you. Would anybody else like to come up before the Town Board? John? JOHN NICKLES, JR.: More of a question, really. I didn't quite get the numbers. You say you how many millions of dollars available through the.... SUPERVISOR RUSSELL: About, without discussing.. MR. NICKLES: Without discussing that. SUPERVISOR RUSSELL: 23. MR. NICKLES: Okay. 23. SUPERVISOR RUSSELL: And offers out there far exceeding 23. I have to tell you the pace of preservation has picked up briskly in the past year. These are properties that we have been pursuing for years. Republican boards, Democratic boards, the same properties have been there for a long time. They are finally coming into the door and they are accepting offers. Melissa's office, Melissa with the Land Preservation Committee, has been working day and night to get these things done. It has been a, look, it is a good news thing, at least from my point of view because you know, you and I are in agreement on some of these things. You want to preserve it, than go and buy it. Well, that is exactly what we are doing. MR. NICKLES: That is a great point. So, I guess you will have some great news to be announcing to the Town of Southold. There is going to be about $50 million worth of preservation happening in the next couple of years. Is that correct? COUNCILMAN WICKHAM: Maybe I can address that. As Scott said, there IS something over $20 million that we have access to at this time. MR. NICKLES: One particular project? Or are you talking the amount of several? COUNCILMAN WICKHAM: There is just over $20 million that we have access to at this time. MR. NICKLES: Right. COUNCILMAN WICKHAM: We have just about $20 million worth of projects in the pipeline. We expect virtually all of them to come to fruition. At the rate that we have been going, that money will be used up by July of this year probably. June, July in that range. Some may drop out, some other projects may come on but all indications are that we will have expended that money and preserved that much land by the middle of this year. The proposal that we are making here, the bond proposal that we have before us today which is out for public hearing calls for borrowing $23, $22.5 million and that is the number, where did that number come from? That is the amount of money that we can borrow by paying an amortization every year equal to about half of what we take in with the 2 % transfer tax. Using that 2 % transfer tax and applying it to pay off that bond until the end of the period that we can appropriate that tax will allow us to borrow about $22.5 million. The purpose of doing it is that we can purchase that property now, this year and next year, before the prices go higher and while there are willing sellers out there that want to participate in the program. So we think it is a prudent thing to do and it will give us, the Town, the opportunity to continue the program after June, July or so of this year when we will expect to exhaust our current resources. And I might add, there are on the order of another $20 million of possible acquisitions that are not yet certain but have expressed interest, have come to the Town and would like to participate in one form or another. MR. NICKLES: Okay. Thank you. SUPERVISOR RUSSELL: Thanks, John. Would anybody else like to address the Town Board on this? Supervisor? Josh Horton? You earned that title. JOSHUA HORTON: Good evening, Josh Horton, Village of Greenport. I just wanted to touch base with you on a couple of things. One on this hearing and then something post hearing. But in regard to the bonding of$22.5 million against future earnings of the CPF, now is definitely the time to do that. When you say you have close to $20 million in the pipeline that could be expended by July; take advantage of the market where it is. I mean, right now we have heard from a couple of different people that the market has softened a bit. It puts the Town a little closer to where you want to be, which is in the drivers seat. You know, two, three years ago when developers would offer $100,000 to $150,000 an acre and the Town could cough up $20,000 to $30,000 you know, difficult to compete with that. But now you are in a position where the playing field is leveling out a bit, between the Town what you can offer and perhaps what developers or potential purchasers of the land are willing to speculate on. So I think now is definitely the time to do it and I think it is really important to drive home the fact that this isn't a tax on the general fund, this is a tax or this is a bond that will be repaid by earnings that are continuously coming in on an annual basis, monthly, weekly basis. And it is what, extended to the year 2030 now? SUPERVISOR RUSSELL: Yes, 2030. MR. HORTON: And I think this is conservatively about half of that amount, so obviously there is plenty of cushion there and plenty of opportunity to continue to preserve even beyond this noted bond issuance. The couple of other points that I think are really important to note here is you know, buy now or let it be developed and pay later. If we can buy these properties, not only is there the benefit to the environment if we are purchasing land surrounding estuaries or open space to preserve wildlife habitat and then preserving the business of agriculture through the purchasing of development rights but you are also creating a framework for tax stability, increase, increase stability if you will for lack of a better description, you know, in our school taxes. Because we do know, it has been proven that land preservation does have that effect. While it does take some lands off the tax rolls, it is not nearly the amount that would be put into the school systems and put on the shoulders of the tax payers. So preservation pays in more ways than one obviously. You know, that being said, combined with your efforts to assure local working people can stay here and find a place to live and continue to raise their families, combined with a balance of preservation. Obviously you are hitting that right balance, so the school tax implications here are paramount and really important to recognize in your efforts and I think you have all hit on that and I applaud and support your efforts in this regard. And that is really, you know I always looked forward to the opportunity where I might be able to get up here and say a couple of things and then go home for dinner while you guys are sitting there running the Town. But no, thank you, it is a great idea and the last point that I would also hit on and I think you refer to this often in your decisions is that you know, this isn't a willy nilly decision. There has been a lot of analysis that has gone into this, the legal analysis. Obviously Melissa Spiro who is renowned in the field, is recommending that this is something, I am assuming you are going to recommend it, Melissa? John Cushman, who is a sage in the municipal finance throughout the business not only in the east end but in the field, you know, these people are saying it is the time to do it and it is a safe bet. Let's do it. It helps everybody. Thanks and congratulations. SUPERVISOR RUSSELL: Thank you very much. One other point also. The rules have changed a little. Suffolk county has made it perfectly clear they will not spend any money in Southold Town unless we match the money. We need to be in a position to leverage as much ofthat county money as possible. This is going to be one ofthose ways we are going to be able to do that. That is going to be the future of preservation for the next few years, at least with Suffolk County, is that we are going to have to be in for a substantial match and if we want to keep that money coming, we need to have money in place to do that. So, anyway thank you very much, Josh, for your statements. BOB DELUCA: Good evening, Mr. Supervisor and members of the Town Board. My name is Bob DeLuca, I live at 175 The Crossway, East Marion. And I would like to add my voice to Mr. Horton's in supporting your efforts to go forward with this bonding. In my day job I serve as the director of Group for the South Fork, so on the other side of the bay but I have been involved in the CPF for some period of time and one thing, I just want to give you a sort of a report from the south side and the way that things have worked down there, the access to this available funding going forward, you know, the ability to borrow against anticipated revenue has been absolutely critical to the success of the programs. In East Hampton, for example, they bonded against anticipated revenue almost from the day that they started with the Community Preservation Fund because the marketplace was so hot that they simply would have been outbid or outrun to the finish line in terms of the acquisitions that they did there and they have done, you know, the Town of East Hampton has about 48 to 50 % of its property now in preservation. They have done a fantastic job against unbelievable odds. The Town of Southampton, which has a fairly good revenue stream, is also finding that there is a need to go out and to borrow this anticipated money and I think the Town of Southold really, it would be a great addition to what the other towns are doing. I can also tell you that just as you said, you know, we are always asking Suffolk County to come on board with various projects and we know as you do that one of the criteria is that you have to match their match, so you don't want to leave that money on the table if you can help it. This will you to achieve that and I think at the same time, all of these efforts toward acquisition at this particular time in the real estate market where you have a little more opportunity, you know, it helps you to achieve the goals of the Peconic Estuary plan, your own comprehensive plan and also the county partnerships that are out there all at the same time. I was very happy to vote for this every time I had the chance and I would vote for it more if I could and I really appreciate your efforts to move the program forward and get the best acquisitions that you can for the dollars when the market is in the best position to do so. At least the best position it has been in. So, thank you. SUPERVISOR RUSSELL: Thank you very much. Would anyone else like to come before the Town Board and address us on this particular public hearing? MELISSA SPIRO, LAND PRESERVATION COORDINATOR: Hi, Melissa Spiro. I waited until the end so that I didn't have to say that much and hold you any longer but all the comments here tonight were really just great and wonderful and I would just like to mention our program is up and running right now, we have been asked a lot in the past years about why we hadn't bonded. We didn't have the need to bond. Now we do and it is just a wonderful that is supported by the Land Preservation Committee and myself, to have the Town Board go ahead, we gave a lot of thought to this in the last couple of weeks and months. Now is the time to do it, this will keep our program, which I think is really the busiest it has been in the long time, not that I get that much sleep due to that but it is a good thing and just knowing that we have the ability to go out for this bond will enable the program to keep going, it will enable all the people who are out there and interested in our program at this time to come in and to keep us going forward in the same direction we have been. As I said, the Committee and I both support the adoption of this and thank you. SUPERVISOR RUSSELL: Thank you, Melissa. ~ COUNCILMAN KRUPSKI: Thank you. SUPERVISOR RUSSELL: Would anybody else like to come up and address the Town Board on this issue? (No response) Okay. Can I get a motion to close this hearing? * * * * * ~Q.~ Elizabeth A. Neville Southold Town Clerk