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HomeMy WebLinkAboutTax Receivers Software Nda ~ ~t L'n ~ ~ i. - le 1O m vk' ~ aN No. 6R-1 55,224,000ut/ 6 ~ UNITED STATES OF AMERICA ~ " STATE OF NEW YORK COUNTY OF SUFFOLK TOWN OF SOUTHOLD ,l'd BOND ANTICD?ATION NOTE FOR VARIOUS PURPOSES-2010 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 JPMorgan Chase Bank, N.A., Melville, New York, as ~ registered owneq the sum of FIVE MILLION TWO HUNDRED TWENTY-FOUR THOUSAND DOLLARS (SSZ24,000) on the 2nd day of Septembeq 2011, together with interest thereon from the date hereof at the rate of fiftysight hundredths per centum (0.58°/.) per annum, payable at maturity. Both principal of and interest on this Note will be paid in lawful money of the United States of America, at JPMorgan Chase Bank, N.A., Melville, New York. Both principal of and interest on this No[e shall be payable only to the registered holder, his legal ~ fl``~ representatives, successors or transferees. This Note shall be transferable only upon presentation to such Town Clerk with a _ _S;~. written transfer of title and such Town Clerk shall thereupon register this Note in the name of the transferee in his books and shall -~~7 endorse a certificate of such registration hereon. Such transfer shall be dated, and signed by the registered holder, or his legal representatives, and it shall be duly acknowledged or proved, or in the alternative the signature thereto shall be certified as to its ' genuineness by an officer of a bank or wst company located and authorized to do business in this State. .yr- I This Note is the only No[e of an authorized renewal issue, the principal amount of which is 55,224,000. ` This No[e is issued pursuant to the provisions of the Local Finance Law, constituting Chapter 33-a of the Consolidated b Laws of the State of New York, nine bond resolutions adopted by the Town Board on their respective dates, authorizing the issuance of serial bonds for various purposes in said Town, and the Certificate of Determination executed by the Supervisor on - r September 2, 2010. i I This Note has been designated by the Town as a qualified tax-exempt obligation pursuant to the provisions of Section 265 of the Internal Revenue Code of 1986, as amended. The faith and credit of such Town are hereby irrevocably pledged for the punctual payment of [he principal of and interest on this Note according [o its terms. It is hereby certified and recited that all wnditions, acts and things required by the Constitution and statutes of [he State of New York to exist, to have happened and to have been performed precedent to and in the n~. issuance of this No[e, exist, have happened and have been performed, and that this Note, together with all other indebtedness of ~ i such Town, is within every debt and other limit prescribed by the Constitution and laws of such State. IN WITNESS WHEREOF, the Town of Southold has caused this Note to be executed in its name by iu Supervisor, and its corporate seal (or a facsimile thereof) [o be affixed, imprinted, impressed or otherwise reproduced hereon and attested by ' its Town Clerk and this Note to be dated as of the 2nd day of September, 2010.. . _i TO FSOUTHOLD ;,1 (SEAL) .trr v. ,w.,± By Supervisor ~i` ~ ATTEST: m- 'S -'a Town Clerk ,s i ~ ~l w: ~t.~~ z i,~: ter; ' _ " € M, C r N D Wv l0. ~Z, ii S. CERTIFICATE OF DETERMINATION BY THE SUPERVISOR RELATIVE TO AUTHORIZATION, SALE, ISSUANCE, FORM AND CONTENTS OF THE $5,224,000 BOND ANTICIPATION NOTE FOR VARIOUS PURPOSES-2010 OF THE TOWN OF SOUTHOLD, NEW YORK. I, Scott A. Russell, Supervisor of the Town of Southold, New York (herein called the "Town"), HEREBY CERTIFY that pursuant to the powers and duties delegated to me, the chief fiscal officer of the Town, by the Town Boazd of the Town, pursuant to the bond resolutions duly adopted and amended and as referred to in the pazagraphs below and subject to the limitations prescribed in said bond resolutions, I have made the following determinations: 1. A bond anticipation note of the Town in the principal amount of $14,000 shall be issued to renew, in part, the $100,000 bond anticipation note dated September 4, 2009, maturing September 3, 2010, and heretofore issued in anticipation of the sale of the serial bonds authorized pursuant to the bond resolution entitled: "Bond Resolution of the Town of Southold, New York, adopted July 17, 2007, authorizing the construction of improvements to Ryder Farm Lane and Pazk View Lane; stating the estimated maximum cost thereof is $180,000; appropriating said amount therefor, including the expenditure of $30,000 expected to be paid from the proceeds of a separate issue of bonds and $60,000 expected to be received as a reimbursement from the County of Suffolk; and authorizing the issuance of $150,000 serial bonds of said Town to finance a part of said appropriation," duly adopted by the Town Board on the date therein referred to, and the Certificate of Determination executed by the Supervisor on September 4, 2009, the redemption of said $100,000 bond anticipation note having been heretofore provided to the extent of $86,000 from a source other than the proceeds of serial bonds. 2. A bond anticipation note of the Town in the principal amount of $2,389,000 shall be issued to renew, in part, the $2,580,000 bond anticipation note dated September 4, 2009, maturing September 3, 2010, and heretofore issued in anticipation of the sale of the serial bonds authorized pursuant to the bond resolution entitled: "Bond Resolution of the Town of Southold, New York, adopted August 16, 2005, and amended May 22, 2007 authorizing the construction of a new Town Animal shelter, in said Town, stating the estimated maximum cost thereof is $3,300,000, appropriating said amount therefor, including the appropriation of $280,000 held in trust and authorizing the issuance of $3,020,000 serial bonds of said Town to finance the balance of said appropriation," duly adopted by the Town Boazd on the date therein referred to, and the Certificate of Determination executed by the Supervisor on September 4, 2009, the redemption of said $2,580,000 bond anticipation note having been heretofore provided to the extent of $191,000 from a source other than the proceeds of serial bonds. 3. A bond anticipation note of the Town in the principal amount of $21,000 shall be issued to renew, in part, the $24,000 bond anticipation note dated September 4, 2009, maturing September 3, 2010, and heretofore issued in anticipation of the sale of the serial bonds authorized pursuant to the bond resolution entitled: "Bond Resolution of the Town of Southold, New York, adopted July 17, 2007, ratifying the appropriation of $30,000 to finance a part of the cost of construction of improvements to certain highways in the Hamlet of Orient, known as Ryder Farm Lane and Park View Lane; stating the estimated maximum cost thereof is $180,000, with $150,000 of said cost expected to be paid from other sources; and authorizing the issuance of $30,000 serial bonds of said Town to finance said $30,000 appropriation," duly adopted by the Town Boazd on the date therein referred to, and the Certificate of Determination executed by the Supervisor on September 4, 2009, the redemption of said $24,000 bond anticipation note having been heretofore provided to the extent of $3,000 from a source other than the proceeds of serial bonds. 4. A bond anticipation note of the Town in the principal amount of $55,000 shall be issued to renew, in part, the $75,000 bond anticipation note dated September 4, 2009, maturing September 3, 2010, and heretofore issued in anticipation of the sale of the serial bonds authorized pursuant to the bond resolution entitled: "Bond Resolution of the Town of Southold, New York, adopted Apri122, 2008, authorizing the acquisition of tax collection software for use by the Town Tax Receiver's Office, at the estimated maximum cost of $75,000; appropriating said amount therefor, and authorizing the issuance of bonds in the principal amount of $75,000 to finance said appropriation," duly adopted by the Town Boazd on the date therein referred to, and the Certificate of Detemunation executed by the Supervisor on September 4, 2009, the redemption of said $75,000 bond anticipation note having been heretofore provided to the extent of $20,000 from a source other than the proceeds of serial bonds. 5. A bond anticipation note of the Town in the principal amount of $315,000 shall be issued to renew, in part, the $590,000 bond anticipation note dated September 4, 2009, maturing September 3, 2010, and heretofore issued in anticipation of the sale of the serial bonds authorized pursuant to the bond resolution entitled: "Bond Resolution of the Town of Southold, New York, adopted June 17, 2008, appropriating $590,000 for the increase and improvement of facilities of the Southold Solid Waste Management District, in said Town, and authorizing the issuance of $590,000 serial bonds of said town to finance said appropriation," duly adopted by the Town Boazd on the date therein referred to, and the Certificate of Determination executed by the Supervisor on September 4, 2009, the redemption of said $590,000 bond anticipation note having been heretofore provided to the extent of $275,000 from a source other than the proceeds of serial bonds. 6. A bond anticipation note of the Town in the principal amount of $280,000 shall be issued to renew, in part, the $379,000 bond anticipation note dated September 4, 2009, maturing September 3, 2010, and heretofore issued in anticipation of the sale of the serial bonds authorized pursuant to the bond resolution entitled: "Bond Resolution of the Town of Southold, New York, adopted July 29, 2008, appropriating $400,000 to pay the cost of acquiring the easterly half of the certain piece of pazcel of land, containing one half of one acre, more or less, situate adjacent to the Town Hall property, and previously acquired by the town pursuant to the eminent domain proceeding (Index No. 06-23054) commenced in the Supreme Court of the State of New York, Suffolk County, on August 3, 2006, and authorizing the issuance of $400,000 serial bonds of said Town to finance said appropriation," duly adopted by the Town Board on the date therein referred to, and the Certificate of Determination executed by the Supervisor on September 4, 2009, the redemption of said $379,000 bond anticipation note having been heretofore provided to the extent of $99,000 from a source other than the proceeds of serial bonds. 7. A bond anticipation note of the Town in the principal amount of $50,000 shall be issued to renew, in part, the $90,000 bond anticipation note dated September 4, 2009 maturing September 3, 2010, and heretofore issued in anticipation of the sale of the serial bonds authorized pursuant to the bond resolution entitled: "Bond Resolution of the Town of Southold, New York, adopted September 9, 2008, appropriating $338,800 for the increase and improvement of facilities of the Mattituck Park District, including the expenditure of $39,000 from the District's operating fund and $100,000 available in the Town's recreation fund to pay a part of said appropriation; and authorizing the issuance of $199,800 serial bonds finance the balance of said appropriation," duly adopted by the Town Board on the date therein referred to, and the Certificate of Determination executed by the Supervisor on September 4, 2009, the redemption of said $90,000 bond anticipation note having been heretofore provided to the extent of $40,000 from a source other than the proceeds of serial bonds. 8. A bond anticipation note of the Town in the principal amount of $1,400,000 shall be issued in anticipation of the sale of serial bonds authorized pursuant to the resolution entitled: "Bond Resolution of the Town of Southold, New York, adopted Mazch 9, 2010 and amended May 4, 2010, authorizing the construction of improvements to various roads on Fishers Island, including related drainage improvements, stating the estimated maximum cost thereof is $1,400,000, appropriating said amount for such purpose, and authorizing the issuance of $1,400,000 serial bonds of said Town to finance said appropriation," duly adopted by the Town Boazd on the date therein referred to. 9. A bond anticipation note of the Town in the principal amount of $'700,000 shall be issued in anticipation of the sale of serial bonds authorized pursuant to the resolution entitled: "Bond Resolution of the Town of Southold, New York, adopted June 15, 2010 and amended May 4, 2010, appropriating $700,000 for the improvement of facilities of the Southold Town Wastewater Disposal District, and authorizing the issuance of $700,000 serial bonds of said Town to finance said appropriation," duly adopted by the Town Boazd on the date therein referred to. 10. Said $14,000 note, said $2,389,000 note, said $21,000 note, said $55,000 note, said $315,000 note, said $280,000 note, said $50,000 note, said $1,400,000 and said $700,000 note shall be combined for the purpose of sale into a single note issue in the aggregate principal amount of $5,224,000 (hereinafter referred to as the "Note"). 11. The terms, form and details of said Note shall be as follows: Amount and Title: $5,224,000 Bond Anticipation Note for Various Purposes-2010 Dated: September 2, 2010 Matures: September 2, 2011 Number and Denomination: Number 6R-1, at $5,224,000 Interest Rate per annum: 0.58% Form of Note: Substantially in accordance with form prescribed by Schedule B,2 of the Local Finance Law of the State of New York. 12. The respective amounts of bond anticipation notes originally issued in anticipation of the issuance of the serial bonds authorized pursuant to the bond resolutions referred to in paragraphs 1 to 9, inclusive, hereof, including the Note, aze: (1) $150,000, (2) $2,890,000, (3) $150,000, (4) $75,000, (5) $590,000, (6) $400,000, (7) $199,800, (8) $700,000 and (9) $1,400,000, and the respective amounts of bond anticipation notes which will be outstanding after the issuance of the Note, including said Note, will be: (1) $14,000, (2) $2,389,000, (3) $21,000, (4) $55,000, (5) $315,000, (6) $280,000, (7) $50,000, (8) $1,400,000 and (9) $700,000. 13 The serial bonds authorized pursuant to the resolution referred to in paragraphs 5, 7 and 9 hereof, aze for improvements which are assessable, and the serial bonds authorized pursuant to the resolutions refen•ed to in pazagraphs 1, 2, 3, 4, 6 and 8 hereof, aze for improvements which aze non-assessable. 14. Pursuant to said powers and duties delegated to me, I DO HEREBY AWARD AND SELL said Note to JPMorgan Chase Bank, N.A., Melville, New York, as registered owner, for the purchase price of $5,224,000.00, plus accrued interest, if any, from the date of said Note to the date of delivery thereof, and I FURTHER DETERMINE that said Note shall be payable as to both principal and interest at JPMorgan Chase Bank, N.A., Melville, New York, and shall beaz interest at the rate of fifty-eight hundredths per centum (0.58%) per annum, payable at maturity. 15. The Note shall be executed in the name of the Town by the manual signature of its Supervisor and the corporate seal of the Town will be affixed, imprinted, impressed or otherwise reproduced thereon and attested by its Town Clerk. I HEREBY FURTHER DETERMINE that at the time of the delivery of the Note, and as a condition to such delivery, I shall deliver or cause to be delivered to the financial institution referred to in pazagraph 14 hereof a copy of the Town's Undertaking to Provide Notices of Material Events, executed by the undersigned as chief fiscal officer of the Town, setting forth the Town's written agreement for the benefit of holders of or owners of beneficial interests in the Note, all in conformity with applicable provisions of Rule 15c2-12 of the Securities and Exchange Commission. I HEREBY FURTHER CERTIFY that the powers and duties delegated to me to issue and sell the Note hereinabove referred to aze in full force and effect and have not been modified, amended or revoked. IN WITNESS WHEREOF, I have hereunto set my hand this 2nd day of September, 2010. Supervisor ~ CLERK'S CERTIFICATE I, Elizabeth A. Neville, Town Clerk of the Town of Southold, in the County of Suffolk, New York, HEREBY CERTIFY that I have compared the foregoing copy of the Certificate of Determination executed by the Supervisor and the same is a true and complete copy of the Certificate filed with said Town in my office as Town Clerk on or before the 2nd day of September, 2010, and I FURTHER CERTIFY that no resolution electing to reassume any of the powers or duties mentioned in said Certificate and delegated to the Supervisor by the resolutions cited in said Certificate and exercised by the Supervisor has been adopted by said Town Board. IN WITNESS WHEREOF, I have hereunto set my hand and affixed the corporate seal of said Town this 2nd day of September, 2010. ~~..ao ~ .D ~i~„ODo Town Clerk (SEAL) f UNDERTAHING TO PROVIDE NOTICES OF MATERIAL EVENTS Section 1. Definitions "EMMA" shall mean Electronic Municipal Mazket Access System implemented by the MSRB. "Holder" shall mean any registered owner of the 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 Southold, in the County of Suffolk, a municipal corporation of the State of New York. "MSRB" shall mean the Municipal Securities Rulemaking Boazd established in accordance with the provisions of Section 15B(b)(1) of the Securities Exchange Act of 1934. "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 $5,224,000 Bond Anticipation Note for Various Purposes-2010, dated September 2, 2010, and maturing September 2, 2011, and delivered on the date hereof. Section 2. Obligation to Provide Notices of Material Events. (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 to the Electronic Municipal Mazket Access ("EMMA") System implemented by the Municipal Securities Rulemaking Boazd established pursuant to Section 15B(b)(1) of the Securities Exchange Act of 1934, or any successor thereto or to the functions of such Boazd contemplated by the Undertaking, 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; 795749.1033923 CLD (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. (b) 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. Remedies. If the Issuer shall fail to comply with any provision of this Undertaking, then any Holder of Securities may enforce, for the equal benefit and protection of all Holders similarly situated, by mandamus or other suit or proceeding at law or in equity, this Undertaking against the Issuer and any of the officers, agents and employees of the Issuer, and may compel the Issuer or any such officers, agents or employees to perform and carry out their duties under this Undertaking; provided that the sole and exclusive remedy for breach of this Undertaking shall be an action to compel specific performance of the obligations of the Issuer hereunder and no person or entity shall be entitled to recover monetary damages hereunder under any circumstances. Failure to comply with any provision of this Undertaking shall not constitute an event of default on the Securities. Section 4. Parties in Interest. This Undertaking is executed and delivered solely for the benefit of the Holders. No other person shall have any right to enforce the provisions hereof or any other rights hereunder. Section 5. Amendments. Without the consent of any holders of Securities, the Issuer at any time and from time to time may enter into any amendments or changes to this Undertaking for any of the following purposes: (a) to comply with or conform to any changes in Rule 15c2-12 (whether required or optional); (b) to change or add a dissemination agent for the notices required to be given hereunder 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; 795749.1 033923 CLD (d) to add to the duties of the Issuer for the benefit of the Holders, or to surrender any right or power herein conferred upon the Issuer; or (e) 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 5 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 6. 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 in accordance with their terms. Upon any such legal defeasance, the Issuer shall provide notice of such defeasance to the EMMA System. Such notice shall state whether the Securities have been defeased to maturity or to redemption and the timing of such maturity or redemption. Section 7. Undertaking to Constitute Written A~eement 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 8. Governing Law. This Undertaking shall be governed by the laws of the State of New York determined without regard to principles of conflict of law. IN WITNESS WHEREOF, the undersigned has duly authorized, executed and delivered this Undertaking as of September 2, 2010. Town o outhold, New York By Supervisor 795749.1 033923 CLD CERTIFICATES AS TO SIGNATURES, LITIGATION, AND DELIVERY AND PAYMENT WE, the undersigned officers of the Town of Southold, in the County of Suffolk, a municipal corporation of the State of New York and herein referred to as the "Town," HEREBY CERTIFY that on or before September 2, 2010, we officially signed and properly executed by manual signatures the $5,224,000 Bond Anticipation Note for Various Purposes- 2010 (the "Note") of the Town, payable to JPMorgan Chase Bank, N.A., Melville, New York, as registered owner, and as otherwise described in Schedule A annexed hereto and by this reference made a part hereof, and that at the time of such signing and execution and on the date hereof we were and are the duly chosen, qualified and acting officers of the Town authorized to execute the Note and holding the respective offices indicated by the titles set opposite our signatures hereto for terms expiring on the respective dates set opposite such titles. WE FURTHER CERTIFY that no litigation of any nature is now pending or threatened restraining or enjoining the issuance or delivery of the Note or the levy or collection of any taxes to pay the interest on or principal of the Note, or in any manner questioning the authority or proceedings for the issuance of the Note or for the levy or collection of said taxes, or relating to the Note or affecting the validity thereof or the levy or collection of said taxes, that neither the corporate existence or boundaries of the Town nor the title of any of the present officers thereof to their respective offices is being contested, and that no authority or proceedings for the issuance of the Note has or have been repealed, revoked or rescinded. WE FURTHER CERTIFY that the seal which is impressed upon this certificate (or a facsimile thereof) has been affixed, impressed, imprinted or otherwise reproduced upon the Note and is the legally adopted, proper and only official corporate seal of the Town. And I, Scott A. Russell, Supervisor, HEREBY FURTHER CERTIFY that on September 2, 2010, I delivered or caused the delivery of the Note to JPMorgan Chase Bank, N.A., Melville, New York„ the purchaser thereof, and that at the time of such delivery of said Note, the Town received from said purchaser the amount hereinbelow stated, in full payment for said Note, computed as follows: Price ......................................................................................$5,224,000.00 Interest on said Note accrued to the date of such delivery -0- Amount Received ..................................................................$5,224,000.00 795749.1 033923 CLD IN WITNESS WHEREOF, we have hereunto set our hands and said corporate seal has hereunto been affixed this 2nd day of September, 2010. ' afore Term of Office Ex~es Title December 31, 2011 Supervisor ' December 31, 2013 Town Clerk (SEAL) I HEREBY CERTIFY that the signatures of the officers of the above-named Town, which appeaz above, aze true and genuine and that I know said officers and know them to hold the offices set opposite their signatures. John A. Cushman, II Town Comptroller 795749.! 033923 CLD ATTORNEY'S CERTIFICATE I, Martin Finnegan, Esq., HEREBY CERTIFY that I am a licensed attorney at law of the State of New York, and am the duly chosen, qualified and acting Town Attorney of the Town of Southold, in the County of Suffolk, a municipal corporation of the State of New York and herein referred to as the "Town", that no litigation of any nature is now pending or threatened restraining or enjoining the issuance or delivery of the $5,224,000 Bond Anticipation Note for Various Purposes-2010 (the "Note") of the Town, payable to JPMorgan Chase Bank, N.A., Melville, New York, as registered owner, and as otherwise described in Schedule A annexed hereto and by this reference made a part hereof, or the levy or collection of any taxes to pay the interest on or principal of the Note, or in any manner questioning the authority or proceedings for the issuance of the Note or for the levy or collection of said taxes, or relating to the Note or affecting the validity thereof or the levy or collection of said taxes, that neither the corporate existence or boundaries of the Town nor the title of any of the present officers thereof to their respective offices is being contested, and that no authority or proceedings for the issuance of the Note has or have been repealed, revoked or rescinded. I HEREBY FURTHER CERTIFY 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 the financial condition of the Town or adversely affect the power of the Town to levy, collect or enforce the collection of taxes or other revenues for the payment of the Note, which has not been disclosed in the Official Statement relating to the Note. IN WITNESS WHEREOF, I have hereunto set my hand this 2nd day of September, Attorney 795749.1 033923 CLD SCHEDULE A Amount and Title: $5,224,000 Bond Anticipation Note for Various Purposes-2010 Dated: September 2, 2010 Matures: September 2, 2011 Number: 6R-1, at $5,224,000 Interest Rate per annum: 0.58% 795749.1 033923 CLD ARBITRAGE AND USE OF PROCEEDS CERTIFICATE I, Scott A. Russell, Supervisor of the Town of Southold, in the County of Suffolk, New York (the "Issuer"), HEREBY CERTIFY and reasonably expect with respect to the issuance of the Issuer's $5,224,000 Bond Anticipation Note for Various Purposes-2010 (herein referred to as the "Note" or "Notes"), dated and issued on September 2, 2010, as follows: Unless the context cleazly requires otherwise, all capitalized terms used but not otherwise defined herein shall have the meanings set forth in Article II hereof or in the Resolutions, the Code or the Regulations (each as defined below). ARTICLE I General 1.1. Authoritv of Si ng story. I am an officer of the Issuer chazged with the responsibility for the execution, delivery, and issuance of the Note and am acting for and on behalf of the Issuer in signing this certificate. 1.2. Purpose of Certificate. This certificate is made for the purpose of establishing evidence of the expectations of the Issuer as of the date hereof as to future events regazding the amount and use of proceeds of the Note. It is intended and may be relied upon for purposes of Sections 103 and 148 of the Internal Revenue Code of 1986, as amended (the "Code"), and as a certification described in Section 1.148-2(b)(2) of the Treasury Regulations (the "Regulations"). This certificate is executed and delivered as part of the record of proceedings in connection with the issuance of the Note. The provisions of this certificate constitute a contractual obligation of the Issuer in consideration for the purchase of and payment for the Note by the purchaser(s) thereof. 1.3. Reasonable Exnectations. This certificate sets forth the facts, estimates and circumstances now in existence which form the basis for the Issuer's expectation that the proceeds of the Note will not be used in a manner that would cause the Note to be an azbitrage bond under Section 148 of the Code or a private activity bond under Sections 103 and 141 of the Code. To the best of my knowledge and belief, such expectation is reasonable and there aze no other facts, estimates or circumstances that would materially change that expectation. 1.4. Composite Issue. No other governmental obligations have been sold fewer than 15 days prior to, or will be sold fewer than 15 days after, the sale date of the Note, pursuant to a common plan of financing which aze expected to be paid from substantially the same source of funds as the Note. 1.5 No Federal Guazantee. The Issuer represents and covenants that, except for the gross proceeds of the Note which aze: (a) invested during the temporary period referred to in Article III, (b) held in any refunding escrow, or (c) invested in obligations of the United States Treasury or in obligations issued pursuant to Section 21B(d)(3) of the Federal Home Loan Bank Act, as amended by Section 511(a) of the Financial Institutions Reform, Recovery and 795749.1 033923 CLD Enforcement Act of 1989, or any successor provision to Section 21B(d)(3) of the Federal Home Loan Bank Act, as amended: (i) No portion of the payment of principal or interest with respect to the Note is or will be guaranteed directly or indirectly by the United States or any agency or instrumentality thereof (herein "federally guaranteed"); and (ii) No portion of the gross proceeds of the Note in excess of five percent of such gross proceeds is or will be (A) used in making loans the payment of principal or interest with respect to which is to be federally guazanteed, or (B) invested directly or indirectly in federally insured deposits or accounts. 1.6. Tax Representation. The Issuer expects to be able to and will comply with all the procedures and provisions set forth herein, and will do and perform all acts and things necessary and desirable within its reasonable control in order to assure that interest paid on the Note shall be excluded from gross income of the owners thereof for the purpose of federal income taxation. 1.7. Additional Information. The Issuer will provide such other information as may be required to assure the exclusion from gross income of interest on the Note for federal income taxation purposes. 1.8. Non-Purpose Investments. Not more than 50% of the proceeds of the Note are being invested in investments not acquired to carry out the governmental purposes of the issue at a guazanteed yield and having a term of 4 yeazs or more. 1.9 IRS Information Reporting. The Issuer will make a timely filing of the appropriate IRS Form 8038G or 8038-GC. ARTICLE II Use of Project and Proceeds 2.1. Authorization. (a) The Note is authorized to be issued pursuant to applicable provisions of the laws of the State of New York and various bond resolutions duly adopted by the Town Board on their respective dates (the "Resolutions"), as refen•ed to in the Certificate of Determination executed by the Supervisor on September 2, 2010. (b) For purposes of this Article II the term "proceeds" means the net amount (afrer payment of all costs and expenses associated with issuing the Note) received by the Issuer from the sale of the Note, excluding accrued interest. 2.2. Purpose of Issue. The Note is being issued to provide funds for various purposes in the Town (the "Project" or "Projects"), as further described in the Resolutions. 795749.1033923 CLD 2.3. Use of Proceeds. A portion of the proceeds of sale of the Note in the amount of $3,124,000 (the "Current Refunding Note") will be used, together with $714,000 available funds, to redeem prior issues of bond anticipation notes currently outstanding in the aggregate principal amount of $3,838,000 (the "Prior Issues"), heretofore issued to finance the Project. The balance of the proceeds of sale of the Note in the principal amount of $2,100,000 (the "New Money Note") will be used to provide original financing for the New Money Projects. 2.4. Ownership/Lease/Sale. The Projects will be owned by the Issuer or another state or local governmental unit and will not be leased to any person who is not a state or local governmental unit. It will not (except to the extent that any of the projects financed involve grants) be sold or otherwise disposed of, in whole or in part, except for incidental sales of surplus items the proceeds of which will not constitute net operating profits or net capital profits to the Issuer, prior to the maturity date of the Note. 2.5. Private Loans. Not more than the lesser of 5 percent or $5,000,000 of the proceeds of the Note will be used directly or indirectly to make loans to persons other than a governmental unit. 2.6. Private Use. The aggregate amount of proceeds of the Note used directly or indirectly in a trade or business carried on by a person other than a state or local governmental unit ("Private Use"), will not exceed 10% of such proceeds in the event that more than 10% of the principal or 10% of the interest due on the Note during the term thereof is, under the terms of the Note or any underlying arrangement, directly or indirectly, secured by any interest in property used or to be used for a Private Use or in payments in respect of property used or to be used for a Private Use or is to be derived from payments, whether or not to the Issuer, in respect of property or borrowed money used or to be used for a Private Use. 2.7. Unrelated/Related Disproportionate Use. No more than 5% of the proceeds of the Note will be used directly or indirectly in the trade or business of a person other than a governmental unit that is unrelated or related and disproportionate to the governmental use of the property being financed, including any private loan financing described in Section 2.5 which meets this test. For purposes of this Arbitrage and Use of Proceeds Certificate, proceeds of the Note aze allocable to an unrelated Private Use if such use is neither directly nor operationally related to a governmental use and proceeds of the Note are allocable to a disproportionate related Private Use to the extent that the proceeds of the Note which aze to be used to finance property used by a nongovernmental person in a trade or business which is related to the governmental use of the property referred to in Section 2.6 above, exceeds the proceeds of the Note which are to be used for the governmental use to which such Private Use relates. 2.8. Other Private Uses Defined. For purposes of Section 2.6 and 2.7, a Private Use consists of any contract or other arrangement including, without limitation, leases, management contracts, guazantee contracts, take or pay contracts, or put or pay contracts, which provides for a use of the Projects by a person or persons who are not State or local govermnents on a basis different than the general public Any management, or operations contract or 795749.1 033923 CLD agreement which provides for nongovernmental use will provide for reasonable compensation which is in no pazt based on net profits and will satisfy the provisions of (a), (b) or (c) below: (a) for contracts which provide compensation for each annual period based on a periodic fixed fee, a capitation fee or combination thereof, (i) the contract has a term (including renewal options) not exceeding five yeazs; (ii) the issuer may terminate the contract, without penalty, at the end of any three yeaz period, and (iii) at least 50% of the compensation paid is on a periodic, fixed fee basis; (b) for contracts entered into or materially modified (other than pursuant to a renewal option) after March 15, 1993, which provide compensation based on a per unit fee or a combination per unit and periodic fixed fee, (i) the contract has a term (including renewal options) not exceeding three yeazs; (ii) the issuer may terminate such contract (without penalty) at the end of the second year of the term, and (iii) the amount of the per unit fee is specified in the contract or otherwise limited by the qualified user or a third party; (c) for contracts entered into or materially modified (other than pursuant to a renewal option) after Mazch 15, 1993, which provide compensation based on a percentage of fees charged, (i) the contract has a term (including renewal options) not exceeding two yeazs, (ii) the issuer may terminate the contract (without penalty) at the end of the first year, and (iii) the service provider primazily provides services to third pazties or the contract involves a facility during an initial start-up period; (d) For purposes of this Section 2.8: (i) "capitation fee" means a fixed periodic amount paid under a management contract or agreement for each person for whom the service provider assumes the responsibility to provide all needed services for a specified period, provided the quantity and type of services actually provided vary substantially; (ii) "periodic fixed fee" means a stated dollaz amount for services rendered during a specified period of time (i.e. $XX per month) which amount may automatically increase according to a specified, objective, external standazd; and (iii) "per unit fee" means a stated dollar amount for each unit of service provided (i.e. $XX per medical procedure). 2.9 Pooled Loan Financines. To the extent the amount of proceeds of the Note to be used to make loans to any borrowers (including loans referred to in Section 2.5 above and loans to state or local governmental units) exceeds $5,000,000, at least 95% of the net proceeds of the issue (as defined in Section 150 of the Code but without including proceeds used to finance costs of issuance or capitalized interest) that aze to be used to make loans, will have been used within 3 yeazs of the date hereof to make such loans. The payment of legal and underwriting costs is not contingent and at least 95% of the reasonably expected legal and underwriting costs associated with issuance will be paid within 180 days of the date hereof. 795749.1 033923 CLD 2.10 Output Facilities. No more than 5% of the proceeds of the Note aze to be used with respect to any output facility (other than a facility for the furnishing of water). No more than the lesser of $5,000,000 or 5% of the proceeds of the Note aze to be used (directly or indirectly) for the acquisition of a nongovenunental output facility. ARTICLE III Arbitrage/Rebate Exemption 3.1 Temporary Period-Refundine. With respect to the proceeds of the sale of the Current Refunding Note representing proceeds allocable to the Prior Issue: (a) All of the proceeds of the Prior Issue have been expended, or any such proceeds which have not been expended as of the date hereof, shall become transferred proceeds of this issue. Such transferred proceeds may be invested without restriction as to yield until three yeazs after the date of original issuance of the Prior Issue. If any transferred proceeds remain unexpended after three yeazs after the date of original issuance of the Prior Issue, such proceeds will be invested at a yield not in excess of the yield on the Note. (b) The proceeds of the Note will be used to refund the Prior Issue within 90 days of the date hereof, and may be invested during such time without restriction as to yield. 3.2 Temporary Period-New Money. With respect to the New Money Note: (a) The Issuer has entered into or will enter into within six months from the date of this certificate, binding commitment(s) for the acquisition, construction or accomplishment of the New Money Project cited in Section 2.2 hereof, and the amount of such commitment(s) with respect to such New Money Project will or do exceed the amount equal to 5% of $2,100,000, being the aggregate amount of obligations currently issued for such New Money Project. (b) Such New Money Project has been completed, or, if such New Money Project has not been completed, work on the acquisition, construction or accomplishment of such New Money Project will proceed or is proceeding with due diligence to completion. (c) It is reasonably expected that at least 85 percent of the net sale proceeds of such New Money Note will be expended within three yeazs from the date of this Certificate. No more than 50 percent of the proceeds of the Note will be invested in nonpurpose investments with a term of four years or more. 3.3 Rebate. (a) Neither the Prior Issue nor the New Money Note was or is subject to the rebate requirement imposed by Section 148 of the Code because, with respect to each: (i) the Issuer was or is a governmental unit with general taxing powers; (ii) the Prior Issue/New Money Note did not or does not constitute a "private activity bond" as that term is defined in Section 141 of the Code; 795749.1 033923 CLD (iii) ninety-five percent or more of the net proceeds of the sale of the Prior Issue/New Money Note was or is to be used for local governmental activities of the Issuer; and (iv) the Issuer (including all agencies, instrumentalities and political subdivisions of the Issuer) reasonably expected or expects that the aggregate face amount of all tax-exempt bonds issued by the Issuer during the calendaz yeaz in which the Prior Issue was issued and the current calendar year would not or will not exceed $5,000,000. For purposes of such determination, no tax-exempt obligation was or shall be taken into account if it was or is a current refunding obligation issued in the calendaz year in which the Prior Issue/New Money Note (as applicable) was or is being issued which does not exceed the outstanding (redeemed) principal amount of the obligation to be refunded. (b) The Current Refunding Note is not subject to the rebate requirement imposed by Section 148 of the Code because all of the Gross Proceeds of such Current Refunding Note will be expended to pay the Prior Issue within 90 days of the date hereof and will, therefore, qualify for the six-month expenditure exception to rebate. 3.4 No Excess Proceeds. The total proceeds of sale of all bond anticipation notes issued to date for the Project do not exceed the total cost of the Project. 3.5 Source of Repayment Funds. The Note will be paid from taxes and the proceeds of other obligations of the Issuer issued to fund the Note. 3.6 Debt Service Fund. The taxes used to pay principal and interest on the Note, whether or not deposited in a debt service fund, will be expended within 13 months of the date of deposit in such fund, or the date of their accumulation, in the payment of debt service on the Note. Any amounts received from the investment of such deposit or accumulation will be expended within one yeaz of receipt. The debt service fund, if any, will be used to achieve a proper matching of revenues and debt service and will be depleted at least annually except for a reasonable carryover amount which will not exceed the greater of the earnings on such fund for the immediately preceding year orone-twelfth of the debt service on the Note. 3.7 Sinking Funds. Except for the debt service fund described herein the Issuer has not created or established, and does not expect to create or establish, any sinking fund or other similar fund which the Issuer reasonably expects to use to pay principal or interest on the Note. ARTICLE IV Bank Qualification 4.1 Desi ation. The Note is hereby designated as a "qualified tax-exempt obligation" pursuant to the provisions of Section 265 of the Code. 795749.1 033923 CLD (a) In making such designation it has been determined with respect to the Current Refunding Note that: (i) the Note can-ently refunds the Prior Issue; (ii) the Prior Issue was designated as a "qualified tax-exempt obligation"; (iii) the aggregate face amount of the Note does not exceed $30,000,000; (iv) the Prior Issue had a weighted average maturity of 3 yeazs or less; (v) the maturity date of the Note, as measured from the original date of issuance of the notes issued pursuant to the Resolutions, in renewal of which such Note is being issued, does not exceed 30 yeazs; and (vi) not more than $30,000,000 of obligations issued by the Issuer during the calendaz year in which the Prior Issue was issued were designated by the Issuer as "qualified tax-exempt obligations." (b) In making such designation it has been determined with respect to the New Money Note that: (i) the Issuer does not reasonably anticipate that the amount of "qualified tax- exempt obligations" to be issued by the Issuer during the current calendaz yeaz will exceed $30,000,000; and (ii) the amount of "qualified tax-exempt obligations" issued by the Issuer during the current calendaz year does not as of this date, and including this issue, exceed $30,000,000. IN WITNESS WHEREOF, I have hereunto set my hand and affixed the corporate seal of the Town of Southold, as of the 2nd day of September, 2010. Q t~~~ (SEAL) Supervisor 795749.1 033923 CLD CERTIFICATE WITH RESPECT TO THE OFFICIAL STATEMENT OF THE TOWN OF SOUTHOLD, NEW YORK, DISTRIBUTED IN CONNECTION WITH THE SALE AND ISSUANCE OF A $5,224,000 BOND ANTICIPATION NOTE FOR VARIOUSPURPOSES-2010 I, Scott A. Russell, the undersigned Supervisor of the Town of Southold (the "Town"), in the County of Suffolk, New York, HEREBY CERTIFY that on August 17, 2010, the date of the Official Statement of the Town prepazed in connection with the sale of the $5,224,000 Bond Anticipation Note for Various Purposes-2010 (the "Note"), of the Town, and at all times subsequent thereto up to and including September 2, 2010, the date of delivery of the Note, the attached Official Statement of the Town did not and does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading. In addition, I FURTHER CERTIFY that there has been no adverse material change in the financial condition of the Town since August 17, 2010. Insofaz as any statements made in said Official Statement involve matters of opinion, estimates or statements as to matters not contained in or derived from the official records of the Town, whether or not expressly stated, they aze set forth as such and not as representations of fact by the Town, and no representation is made that any of the estimates or anticipated events will be realized. The Official Statement is not to be construed as a contract or agreement with the beneficial owners of the Note. IN WITNESS WHEREOF, I have hereunto set my signature and affixed the corporate seal of the Town as of the 2nd day of September, 2010 (SEAL) C~ Supervisor ~pF SOT, ELIZABETH A. NEVILLE Ol0 Town Hall, 53095 Main Road TOWN CLERK P.O. Box 1179 REGISTRAR OF VITAL STATISTICS ~ ~ Southold, New York 11971 H ~ Fax (631)765-6145 MARRL4GE OFFICER G Q RECORDS MANAGEMENT OFFICER ~ ~ Telephone (631) 765-1800 FREEDOM OF INFORMATION OFFICER ~liyCOU,M N~ southoldtown.northfork.net OFFICE OF THE TOWN CLERK TOWN OF SOUTHOLD May 29, 2008 Town of Southold, New York $75,000 Serial Bonds for Tax Collection Software (Our File Designation: 26]5/31832 ) Mr. Gerard Fernandez, Jr. Hawkins, Delafield & Wood One Chase Manhattan Plaza New York, NY 10005 Dear Mr. Fernandez, Jr.: Enclosed are the certified copy of the notice that appeared in the May 1, 2008 edition of the Suffolk Times, an affidavit of publication from the Suffolk Times, a certified copy of - ~ the Extract of Minutes, the certified SEQRA resolution, and the certified resolution of adoption for the above referenced bond. Please let me know if there is anything else for you files you need. Very truly yours, Lynda M Bohn Deputy Town Clerk Enc cc: Town Attorney file NOTICE The resolution, a summary of which is published herewith, has been adopted on 22"d day of April, 2008, and the validity of the obligations authorized by such resolution may be hereafter contested only if such obligations were authorized for an object or purpose for which the TOWN OF SOUTHOLD, in the County of Suffolk, New York, is not authorized to expend money or if the provisions of law which should have been complied with as of the date of publication of this Notice were not substantially complied with, and an action, suit or proceeding contesting such validity is commenced within twenty days after the publication of this Notice, or such obligations were authorized in violation of the provisions of the Constitution. ELIZABETH A. NEVILLE Town Clerk BOND RESOLUTION OF THE TOWN OF SOUTHOLD, NEW YORK, ADOPTED APRIL 22, 2008, AUTHORIZING THE ACQUISITION OF TAX • COLLECTION SOFTWARE FOR USE BY THE TOWN TAX RECEIVER'S OFFICE, AT THE ESTIMATED MAXIMUM COST OF $75,000; APPROPRIATING SAID AMOUNT THEREFOR, AND AUTHORIZING THE ISSUANCE OF BONDS IN THE PRINCIPAL AMOUNT OF $75,000 TO FINANCE SAID APPROPRIATION. Object or purpose: to acquire tax collection software for use by the Town Tax Receiver's Office, at the estimated maximum cost of $75,000, appropriating said amount therefor and stating that acquisition of said Tax Collection Software has been determined to be a Type II Action pursuant to the New • York State Environmental Quality Review Act ("SEQRA"). Amount of obligations to be issued: $75,000 Period of probable usefulness: ten (10) years; however, the bonds authorized pursuant to this resolution and any bond anticipation notes issued in anticipation of the sale of said bonds, shall mature no later than five (5) years from the earlier of the date of original issuance of said bonds or notes issued in anticipation of such bonds. A complete copy of the Bond Resolution summazized above shall be available for public inspection during normal business hours at the office of the Town Clerk, Town Hall, 53095 Main Road, Southold, New York. Dated: Apri122, 2008 Southold, New York 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 MAY 1, 2008 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 Town Attorney Comptroller Bond Counsel Town Clerk's Bulletin Board Tax Receivers Data Processing • • 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 April 22, 2008, 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 22"d day of April, 2008. (SEAL) ~ o~ri~~o, Town Clerk #BSOs STATE OF NEW YORK) SS: COUNTY OF SUFFOLK) Karen Kine of Mattituck, in said county, being duly sworn, says that 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 1st day of May, 2008. p~'-'~ Principal Clerk Sworn to before me this i ~ day of 2008 LECAL NOTICE The resolution, a summary of which is published herewith, has been adopted on 22nd day of April, 2008, and [he valid- ~ ~ ~ Q ~ j iry of [he obligations authorized by such s~lA UA wf`v"KI/~`// resolution may be hereafter contested ! V W only if such obligations were authorized for an object or purpose for which the CHR1S11NA VOLINSKI TOWN OF SOUTHOLD, N the County YORK of Suffolk, New York, is not authorized ,'svTARY PUBIIGSTATE OF NEW to expend money or if the provisions of NO. Ol -V06105060 law which should have been complied (Zt:01111gd IA 5U}fOlk COUfl1Y with as of [he date of publication of [his 1012 Notice were not substantially complied n.. Comml3slon Erp~fe5 FebrYOlY 111, with, and an action, suit or proceeding contesting such validity is commenced within twenty days after [he publication of this Notice, or such obligations were authorized in violation of the provisions of [he Constitution. ELIZA$ETH A. NEViLLE Town Clerk BOND RESOLUTION OF THE TOWN OF SOUTHOLD, NEW YORK, ADOPTED APRIL 22, 2008, AUTHO- R[ZINGTHE ACQUISITION OF'FAX COLLECTION SOFTWARE FOR USE BY THE TOWN TAX RECEIV- ER'S OFFICE, AT THE ESTIMATED MAXIMUM COST OF $75,000; AP- PROPRIATING SAID AMOUNT THEREFOR, AND AUTHORIZING THE ISSUANCE OF BONDS IN THE PRINCIPAL AMOUNT OF $75,000 TO FINANCE SAID APPROPRIATION. Object or purpose: to acquire tax collection software for use by the Tow_ n tion of such bonds A complete copy of the ~BOnd Reso- lutim summarized above sha0 be avail- able for public inspection during normal business hours at the office of the Town Clerk, Town HaO, 53095 Main Road, Southold, New York. Dated:ApriI 22, 20(18 Southold, New York BY ORDER OF THE TOWNBOARD OF THE TOWN OF SOUTHOLD, COUNTY OF SUFFOLK, STATE OF NEW YORK Elizabeth Neville Town Clerk 8808-IT 5/1 i it ~ Southold Town Board -Letter Board Meeting of April 22, ?008 d'W®~,~ RESOLUTION 2008-406 Item # ~~w ADOPTED DOC ID: 3813 THIS IS TO CERTIFY THAT THE FOLLOWING RESOLUTION N0.2008-406 WAS ADOPTED AT THE REGULAR MEETING OF THE SOUTHOLD TOWN BOARD ON APRIL 22, 2008: BOND RESOLUTION OF THE TOWN OF SOUTHOLD, NEW YORK, ADOPTED APRIL 22, 2008, AUTHORIZING THE ACQUISITION OF TAX COLLECTION SOFTWARE FOR USE BY THE TOWN TAX RECEIVER'S OFFICE, AT THE ESTIMATED MAXIMUM COST OF $75,000; APPROPRIATING SAID AMOUNT THEREFOR, AND AUTHORIZING THE ISSUANCE OF BONDS IN THE PRINCIPAL AMOUNT OF $75,000 TO FINANCE SAID APPROPRIATION. 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 two- thirds of all the members of said Town Board) AS FOLLOWS: • Section 1. The Town of Southold, in the County of Suffolk, New York (herein called the "Town"), is hereby authorized to acquire tax collection software for use by the Town Tax Receiver's Office, at the estimated maximum cost of $75,000, including preliminary, incidental and financing costs, and said amount is hereby appropriated therefor. The plan of financing includes the issuance of serial bonds of the Town in the principal amount of $75,000 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. Section 2. Serial bonds of the Town in the principal amount of $75,000 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 (referred to herein as the "Law"), to finance said appropriation. Generated April 24, 2008 Page 44 Southold Town Board -Letter [3oard n-i~. `n~ ofApril 22, ZOPB Section 3. The following additional matters are hereby determined and declazed: (a) The period of probable usefulness applicable to the specific object or purpose for which said serial bonds are authorized to be issued, within the limitations of Section 11.00 Chapter 53-a of the Law, is ten (10) yeazs; however, the bonds authorized pursuant to this resolution and any bond anticipation notes issued in anticipation of the sale of said bonds, shall mature no later than five (5) years from the earlier of the date of original issuance of said bonds or notes issued in anticipation of such bonds. (b) 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 for which said bonds are authorized, or for expenditures made on or prior to such date if a prior declazation of intent has been made. 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. (c) The Town Board of the Town, acting in the role of Lead Agency pursuant to the provisions of the New York State Environmental Quality Review Act ("SEQRA"), has heretofore determined that the said specific object or purpose herein above described in Section 1 is a Type II Action as defined in said Act and the Regulations promulgated thereunder and no further review is required. (d) The proposed maturity of the bonds authorized by this resolution will not • 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 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 Generated April 24, 2008 Page 45 Suuthold Town Board -Letter Board Meeting of April 22, 2008 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, 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 aze 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 shall take effect immediately, and the Town Clerk is hereby authorized and directed to publish a summary of this bond resolution, in substantially the form set forth in Exhibit A attached hereto and made a part hereof, together with a Notice attached in substantially the form prescribed by Section S 1.00 of the Law in "THE SUFFOLK TIMES," a newspaper published in Southold, New York, having a general circulation in the Town and hereby designated the official newspaper of said Town for such publication. * * ~ Generated April 24, 2008 Page 46 Southold Town Board -Letter [3oar~.i ~ ' ~etiug of April 2? 2005 ' EXHIBIT A BOND RESOLUTION OF THE TOWN OF SOUTHOLD, NEW YORK, ADOPTED APRIL 22, 2008, AUTHORIZING THE -ACQUISITION OF TAX COLLECTION SOFTWARE FOR USF, BY THE TUW"N TAX RECEIVER'S OFFICE, AT THE ESTIMATED MAXIMUM COST OF $75,000; APPROPRIATING SAID AMOUNT THEREFOR, AND AUTHORIZING THE ISSUANCE OF BONDS IN THE PRINCIPAL AMOUNT OF b75,000 TO FINANCE SAID APPROPRIATION. Object or purpose: to acquire tax collection software for use by the Town Tax Receiver's Office, at the estimated maximum cost of $75,000, appropriating said amount therefor and stating that acquisition of said • Tax Collection Software has been determined to be a Type II Action pursuant to the New York State Environmental Quality Review Act ("SEQRA"). Amount of obligations to be issued: $75,000 Period of probable usefulness: ten (]0) years; however, the bonds authorized pursuant to this resolution and any bond anticipation notes issued in anticipation of the sale of said bonds, shall mature no later than five (5) years from the earlier of the date of original issuance of said bonds or notes issued in anticipation of such bonds. 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, Town Hall, 53095 Main Road, Southold, New York. Dated: April 22, 2008 Southold, New York CCrY.~~-!°' Elizabeth A. Neville Southold Town Clerk RESULT: ADOPTED [UNANIMOUS] MOVER: Thomas H. Wickham, Councilman SECONDER: Vincent Orlando, Councilman Generated April 24, 2008 Page 47 a Southold Town Board -Letter Board Meetuig of Apri122, 2008 AYES: Ruland, Orlando, Krupski Jr., Wickham, Evans, Russell • • Generated Apri124, 2008 Page 48 1` Southold Town Board -Letter Board Meeting of April 22, 2008 ~°'"~~~IX"`~ RESOLUTION 2008-404 Item # +~©~f~ ADOPTED DOC ID: 3812 THIS IS TO CERTIFY THAT THE FOLLOWING RESOLUTION NO. 2008-404 WAS ADOPTED AT THE REGULAR MEETING OF THE SOUTHOLD TOWN BOARD ON APRIL 22, 2008: RESOLVED that the Town Board of the Town of Southold hereby finds that the issuance of a bond for the acquisition of tax collection software for use by the town tax receiver's office at the estimated maximum cost of $75 000 00 is classified as a Tvae II action aursuant to SEORA rules and reeulations, 6 NYCRR section 617.5, and is not subject to review under SEQRA. ~~e,a_r~. ~j~a ~Q Elizabeth A. Neville Southold Town Clerk RESULT: ADOPTED [UNANIMOUS] MOVER: Albert Krupski Jr., Councilman SECONDER: Vincent Orlando, Councilman AYES: Ruland, Orlando, Krupski ]r., Wickham, Evans, Russell • Generated April 24, 2008 Page 42 EXTRACT OF MINUTES Meeting of the Town Board of the Town of Southold, in the County of Suffolk, New York Apri122, 2008 ~ ~ 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, at 7:30 o'clock P.M., on April 22, 2008. There were present: Hon. Scott A. Russell, Supervisor; and Councilman William P. Ruland • Councilman Vincent M. Orlando Councilman Thomas H. Wickham Councilman Albert Krupski Jr Justice Louisa P. Evans Also present: Elizabeth A. Neville, Town Clerk Kieran Corcoran, Assistant Town Attorney + * ~ Councilman Thomas H. Wickham offered the following resolution and moved its adoption: BOND RESOLUTION OF THE TOWN OF SOUTHOLD, NEW YORK, ADOPTED APRIL 22, 2008, AUTHORIZING THE ACQUISITION OF TAX COLLECTION SOFTWARE FOR USE BY THE TOWN TAX RECEIVER'S OFFICE, AT THE ESTIMATED MAXIMUM COST OF $75,000; APPROPRIATING SAID AMOUNT THEREFOR, AND AUTHORIZING THE ISSUANCE OF BONDS IN THE PRINCIPAL AMOUNT OF $75,000 TO FINANCE SAID APPROPRIATION. 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 two- thirds of all the members of said Town Board) AS FOLLOWS: Section 1. The Town of Southold, in the County of Suffolk, New York (herein called the "Town"), is hereby authorized to acquire tax collection sofrware for use by the Town Tax Receiver's Office, at the estimated maximum cost of $75,000, including preliminary, incidental and financing costs, and said amount is hereby appropriated therefor. The plan of financing includes the issuance of serial bonds of the Town in the principal amount of $75,000 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. Section 2. Serial bonds of the Town in the principal amount of $75,000 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 (referred to herein as the "Law"), to finance said appropriation. Section 3. The following additional matters are hereby determined and declared: (a) The period of probable usefulness applicable to the specific object or purpose for which said serial bonds are authorized to be issued, within the limitations of Section 11.00 Chapter 53-a of the Law, is ten (10) years; however, the bonds authorized pursuant to this resolution and any bond anticipation notes issued in anticipation of the sale of said bonds, shall • mature no later than five (5) years from the earlier of the date of original issuance of said bonds or notes issued in anticipation of such bonds. (b) 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 for which said bonds are authorized, or for expenditures made on or prior to such date if a prior declaration of intent has been made. 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. (c) The Town Board of the Town, acting in the role of Lead Agency pursuant to the provisions of the New York State Environmental Quality Review Act ("SEQRA"), has heretofore determined that the said specific object or purpose herein above described in Section 1 is a Type II Action as defined in said Act and the Regulations promulgated thereunder and no further review is required. • (d) The proposed maturity of the bonds authorized by this resolution will not 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 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, 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 • (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 shall take effect immediately, and the Town Clerk is hereby authorized and directed to publish a summary of this bond resolution, in substantially the form set forth in Exhibit A attached hereto and made a part hereof, together with a Notice attached in substantially the form prescribed by Section 81.00 of the Law in "THE SUFFOLK TIMES," a newspaper published in Southold, New York, having a general circulation in the Town and hereby designated the official newspaper of said Town for such publication. • ~ ~ ~ The adoption of the foregoing resolution was seconded by Councilman Vincent M. Orlando and duly put to a vote on roll call, which resulted as follows: AYES: Hon. Scott A. Russell, Supervisor; and Councilman William P. Ruland Councilman Vincent M. Orlando Councilman Thomas H. Wickham Councilman Albert Krupski Jr Justice Louisa P. Evans NOES: None The resolution was declared adopted. EXHIBIT A BOND RESOLUTION OF THE TOWN OF SOUTHOLD, NEW YORK, ADOPTED APRIL 22, 2008, AUTHORIZING THE ACQUISITION OF TAX COLLECTION SOFTWARE FOR USE BY THE TOWN TAX RECEIVER'S OFFICE, AT THE ESTIMATED MAXIMUM COST OF $75,000; APPROPRIATING SAID AMOUNT THEREFOR, AND AUTHORIZING THE ISSUANCE OF BONDS IN THE PRINCIPAL AMOUNT OF $75,000 TO FINANCE SAID APPROPRIATION. Object or purpose: to acquire tax collection software for use by the Town Tax Receiver's Office, at the estimated maximum cost of $75,000, appropriating said amount therefor and stating that acquisition of said Tax Collection Software has been determined to be a Type II Action pursuant to the New York State • Environmental Quality Review Act ("SEQRA"). Amount of obligations to be issued: $75,000 Period of probable usefulness: ten (10) years; however, the bonds authorized pursuant to this resolution and any bond anticipation notes issued in anticipation of the sale of said bonds, shall mature no later than five (5) years from the earlier of the date of original issuance of said bonds or notes issued in anticipation of such bonds. 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, Town Hall, 53095 Main Road, Southold, New York. • Dated: Apri122, 2008 Southold, New York 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 April 22, 2008, 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 23`d day of April, 2008. (SEAL) ~~~Q. Town Clerk • DELAFIELD &~LLP PHDNE 12121 820-9300 ONE CHASE MANHATTAN PLPZ4 NEW YORK FAX (2121514-8425 NEW YORK, NY 10005 WASHINGTON WKNJ.HAWKINS.COM ryEWgRK H CRTFORO LOS ANGELES SACRAMENTO SAN FRANCISCO (212) 820-9416 April 21, 2008 Town of Southold, New York $75,000 Serial Bonds for Tax Collection Software (Our File Desi>?nation: 2615/31832 1 Kieran M. Corcoran, Esq. • Assistant Town Attorney Town of Southold Town Hall 53095 Main Road Southold, New York 11971-0959 Dear Kieran: Pursuant to your request, I have had prepared and enclose herewith the drafr Extract of Minutes of the regular Town Board meeting to be held on April 22, 2008, showing adoption of the bond resolution authorizing the above bonds and authorizing and directing the publication of a summary of such bond resolution together with the statutory form of notice. Please note that the bond resolution is to be adopted by at least atwo-thirds vote of the entire Town Board membership. • An extra copy of the summary of the bond resolution with the prescribed form of the Town Clerk's statutory notice affixed in readiness for publication in the official Town newspaper designated in the bond resolution is also enclosed. As you know, publication of the summary of the bond resolution with the prescribed form of Town Clerk's notice, commences a 20-day statute of limitations pursuant to the provisions of Section 80.00 et seq. of the Local Finance Law. Please note that incorporated in the bond resolution is the reference to the determination by the Town Board that the object or purpose is a Type II Action pursuant to the New York State Environmental Quality Review Act ("SEQRA"). Please confirm that the Town Board will make such SEQRA determinations prior to the adoption of this Bond Resolution. 541431.1 03183? R1:S Please obtain and forward to me a certified copy of the Extract of Minutes and an original Affidavit of Publication with respect to the summary of the bond resolution. Thanking you and with kind regards, I am Sincerely yours, Gerard Fernandez, Jr. GFjr/wjj Enclosures • cc: Mr. John Cushman, Comptroller (w/ encl.) • 541431.1 031832 RFS EXTRACT OF MINUTES Meeting of the Town Board of the Town of Southold, in the County of Suffolk, New York April 22, 2008 * ~ + 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, at o'clock P.M., on Apri122, 2008. 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: 541431.1 031832 RFS BOND RESOLUTION OF THE TOWN OF SOUTHOLD, NEW YORK, ADOPTED APRIL 22, 2008, AUTHORIZING THE ACQUISITION OF TAX COLLECTION SOFTWARE FOR USE BY THE TOWN TAX RECEIVER'S OFFICE, AT THE ESTIMATED MAXIMUM COST OF $75,000; APPROPRIATING SAID AMOUNT THEREFOR, AND AUTHORIZING THE ISSUANCE OF BONDS IN THE PRINCIPAL AMOUNT OF $75,000 TO FINANCE SAID APPROPRIATION. • 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 two- thirds of all the members of said Town Board) AS FOLLOWS: Section 1. The Town of Southold, in the County of Suffolk, New York (herein called the "Town"), is hereby authorized to acquire tax collection software for use by the Town Tax Receiver's Office, at the estimated maximum cost of $75,000, including preliminary, incidental and financing costs, and said amount is hereby appropriated therefor. The plan of • financing includes the issuance of serial bonds of the Town in the principal amount of $75,000 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. Section 2. Serial bonds of the Town in the principal amount of $75,000 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 (referred to herein as the "Law"), to finance said appropriation. 541431.1 031832 R8S Section 3. The following additional matters are hereby determined and declared: (a) The period of probable usefulness applicable to the specific object or purpose for which said serial bonds are authorized to be issued, within the limitations of Section 11.00 Chapter 53-a of the Law, is ten (10) years; however, the bonds authorized pursuant to this resolution and any bond anticipation notes issued in anticipation of the sale of said bonds, shall mature no later than five (5) years from the earlier of the date of original issuance of said bonds or notes issued in anticipation of such bonds. • (b) 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 for which said bonds are authorized, or for expenditures made on or prior to such date if a prior declaration of intent has been made. The foregoing statement of intent with respect to reimbursement is made in conformity with Treasury Regulation Section ] .150-2 of the United States Treasury Department. (c) The Town Board of the Town, acting in the role of Lead Agency pursuant • to the provisions of the New York State Environmental Quality Review Act ("SEQRA"), has heretofore determined that the said specific object or purpose herein above described in Section 1 is a Type II Action as defined in said Act and the Regulations promulgated thereunder and no further review is required. (d) The proposed maturity of the bonds authorized by this resolution will not 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 shall contain the recital of 541431.1 031832 RFS 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 [he 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, 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 (b) the provisions of law which should be complied with at the date of the publication of such resolution are not substantially complied with, 541431.1 031832 RGS 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 shall take effect immediately, and the Town Clerk is hereby authorized and directed to publish a summary of this bond resolution, in substantially the form set forth in Exhibit A attached hereto and made a part hereof, together with a Notice attached in substantially the form prescribed by Section 81.00 of the Law in "THE SUFFOLK TIMES," a newspaper published in Southold, New York, having a general circulation • in the Town and hereby designated the official newspaper of said Town for such publication. * : 541431.1 031 R32 R8S 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. 541431.1 031832 RHS EXHIBIT A BOND RESOLUTION OF THE TOWN OF SOUTHOLD, NEW YORK, ADOPTED APRIL 22, 2008, AUTHORIZING THE ACQUISITION OF TAX COLLECTION SOFTWARE FOR USE BY THE TOWN TAX RECEIVER'S OFFICE, AT THE ESTIMATED MAXIMUM COST OF $75,000; APPROPRIATING SAID AMOUNT THEREFOR, AND AUTHORIZING THE ISSUANCE OF BONDS IN THE PRINCIPAL AMOUNT OF $75,000 TO FINANCE SAID APPROPRIATION. Object or purpose: to acquire tax collection sofrware for use by the Town Tax Receiver's Office, at the estimated maximum cost of $75,000, appropriating said amount therefor and stating that acquisition of said • Tax Collection Software has been determined to be a Type II Action pursuant to the New York State Environmental Quality Review Act ("SEQRA"). Amount of obligations to be issued: $75,000 Period of probable usefulness: ten (10) years; however, the bonds authorized pursuant to this resolution and any bond anticipation notes issued in anticipation of the sale of said bonds, shall mature no later than five (5) years from the earlier of the date of original issuance of said bonds or notes issued in anticipation of such bonds. • 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, Town Hall, 53095 Main Road, Southold, New York. Dated: Apri122, 2008 Southold, New York 541431.1 031832 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 April 22, 2008, 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 day of April, 2008. (SEAL) Town Clerk 541431.1 031832 RGS (NOTICE TO BE ATTACHED TO AND TO BE PUBLISHED WITH RESOLUTION AFTER ADOPTION) NOTICE The resolution, a summary of which is published herewith, has been adopted on 22nd day of April, 2008, and the validity of the obligations authorized by such resolution may be hereafrer contested only if such obligations were authorized for an object or purpose for which the TOWN OF SOUTHOLD, in the County of Suffolk, New York, is not authorized to expend money or if the provisions of law which should have been complied with as of the date of publication of this Notice were not substantially complied with, and an action, suit or proceeding • contesting such validity is commenced within twenty days after the publication of this Notice, or such obligations were authorized in violation of the provisions of the Constitution. ELIZABETH A. NEVILLE Town Clerk • 541431.1 031832 RF,S BOND RESOLUTION OF THE TOWN OF SOUTHOLD, NEW YORK, ADOPTED APRIL 22, 2008, AUTHORIZING THE ACQUISITION OF TAX COLLECTION SOFTWARE FOR USE BY THE TOWN TAX RECEIVER'S OFFICE, AT THE ESTIMATED MAXIMUM COST OF $75,000; APPROPRIATING SAID AMOUNT THEREFOR, AND AUTHORIZING THE ISSUANCE OF BONDS IN THE PRINCIPAL AMOUNT OF $75,000 TO FINANCE SAID APPROPRIATION. Object or purpose: to acquire tax collection software for use by the Town Tax Receiver's Office, at the estimated maximum cost of $75,000, appropriating said amount therefor and stating that acquisition of said Tax Collection Software has been determined to be • a Type II Action pursuant to the New York State Environmental Quality Review Act ("SEQRA"). Amount of obligations to be issued: $75,000 Period of probable usefulness: ten (10) years; however, the bonds authorized pursuant to this resolution and any bond anticipation notes issued in anticipation of the sale of said bonds, shall mature no later than five (5) years from the earlier of the date of original issuance of said bonds or notes issued in anticipation of such bonds. 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, Town Hall, 53095 Main Road, Southold, New York. Dated: April 22, 2008 Southold, New York 54143 L 1 031832 RES i c~~fG~~J9~ ~E%l~Z~%LP.(~Q' CX, ,GI~~oZ~Z,~ ONE CHASE MANHATTAN PLAZA NEW VORK~ NY 10005 WWW.HAWKINS.COM May 29, 2008 Financial Security Assurance, [nc. 31 West 52nd Street New York, New York 10019 Dear Ladies & Gentlemen: We are bond counsel to the Town of Southold, in the County of Suffolk, New York (the "Town"), and are rendering today our final approving opinion with respect to the Town's $8,850,000 Public Improvement Serial Bonds-2008, dated May 15, 2008. We deliver to you herewith a copy of our approving opinion and advise you that you may rely on such opinion as if it were addressed to you. Very truly yours, ~~,~~~~C C/~ ONE CHASE MANHATTAN PLAZA NEW YORK, NV 10005 WWW.HAWKINS.COM May 29, 2008 The Town Board of the Town of Southold, in the County of Suffolk, New York Ladies and Gentlemen: We have examined a record of proceedings relating to the authorization, sale and issuance of $8,850,000 Public Improvement Serial Bonds-2008 (the "Bonds"), of the Town of Southold (the "Town"), in the County of Suffolk, New York. The Bonds are issued pursuant to the provisions of the Local Finance Law, constituting Chapter 33-a of the Consolidated Laws of the State of New York, two bond resolutions duly adopted by the Town Board on their respective dates, authorizing the issuance of serial bonds of the Town to finance open space preservation and the acquisition of land and construction of building improvements, and the Certificate of Determination executed by the Supervisor as of May 2, 2008, determining the terms, form and details of issuance of said $8,850,000 serial bonds and providing for their public sale. The Bonds are dated May 15, 2008, mature on May 15 in the principal amounts in each of the following years, and bear interest at the respective rates per annum payable November 15, 2008 and semiannually thereafrer on May 15 and November 15 in each year until maturity, as set forth below: Year of Principal Interest Year of Principal Interest Maturity Amount Rate Maturity Amount Rate 2009 $325,000 4.00% 2020 $400,000 4.00% 2010 325,000 4.00 2021 425,000 4.00 2011 325,000 4.00 2022 425,000 4.00 20]2 350,000 4.00 2023 425,000 4.00 2013 350,000 4.00 2024 450,000 4.00 2014 350,000 4.00 2025 450,000 4-1/8 2015 375,000 4.00 2026 450,000 4.25 2016 375,000 4.00 2027 450,000 4.25 2017 375,000 4.00 2028 475,000 4.25 2018 400,000 4.00 2029 475,000 4.25 2019 400,000 4.00 2030 475,000 4.25 The Bonds maturing on or before May 15, 2018 will not be subject to redemption prior to maturity. The Bonds maturing on or after May 15, 2019 will be subject to redemption prior to maturity, at the option of the Town, on May 15, 2018 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 abook-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 stariites 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 altemative 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 other documents 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 intezpretation, 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. This opinion is issued as of the date hereof, and we assume no obligation to update, revise or supplement this opinion to reflect any action hereafter taken or not taken, or any facts or circumstances, or changes in law or in interpretations thereof, that may hereafter occur, or for any other reason. Very truly yours, ~~~t L P it a1 x ~ ' "~~6G.. °sp 4 4. LJ c~ Ti hw ~i~w ~S. .a ~ J ' ri `np~ 32gm ~ a ~ ~ k ~.~~s ~y a _ i nom, ~'..6'^~'x /a~ w ~"2~~5{ j%~ ~ ~e DG 5' iil {j i ~o ..£~SP~S . k a> F ~il?r', REGISTERED REGISTERED ~",tl{i,..; z s NO. R-1 $325,000 ~ UNITED STATES OF AMERICA i ~ ~ STATE OF NEW YORK COUNTY OF SUFFOLK ~y i ~ ~e+ ` Ss~ll v: ~l~p§ <)af ~ ~ A ~l~)}F ~f I it f ; TOWN OF SOUTHOLD "j ry _ ~ xa ~ " PUBLIC IMPROVEMENT SERIAL BOND-2008 ~ ~rl+'s' I I !~~'r}~,"' MATURITY INTEREST DATE OF CUSIP '~~>3''~ ~~KK'•' DATE RATE ORIGI AL NUMBER ~1_~ilx~)a ~~~t' . ~:u `y s ~ ~ , ~ '<c~f~• ' May 15, 2009 4.00% r,`~Iay 15, 2008 844572 KCO ,~j- V ~ ~ II REGISTERED OWNER: CO. •'j _~~1}t,~'~; PRINCIPAL SUM: THREE HUNDRED TWENTY-FIVE THOUSAND DOLLARS i I I3i~r: ~,,§y,•" , I :~K~7 ~ The TOWN OF SOUTHOLD, in the County of Suffolk, a municipal i J:~; ~ 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 s , . a~~' Southold, Town Hall, 53095 Main Road, Southold, New York, as fiscal agent (herein a - ,F _ ,6,~ called "Fiscal Agent"), or any successor thereto, and to pay interest on such principal sum )'r'a = from May 15, 2008 or from the most recent interest pay ~~to which interest has 6x~" ~ been paid at the INTEREST RATE (stated above , ~eiTiber ] 5, 2008 and ~ ~~~r semiannually thereafter on May 15 and No e ~c year until maturity. Interest ~~~i ~~t~~) hereon shall be payable by wire tra~~ ouse funds by the Town or its agent on ~ it~~%i' each interest payment date to the r d caner hereof at his address as it appears on the registration books of the Town main med by the Fiscal Agent or at such other address as •~=a - 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 = ~1~ rt of and interest on this bond are payable in any coin or currency of the United States of ))J', ~'sf America which, at the date of payment, is legal tender for the payment of public and RI private debts; provided, however, that interest on this fully registered bond shall be paid by wire transfer or clearinghouse funds as set forth above. - :Cih~~\. ~~3i 3 ~ a i=: REFERENCE IS MADE TO THE FURTHER PROVISIONS OF THIS BOND SET FORTH HEREIN. p t~~n ~ Tt 3r1 svi ~s yr• 6 d \1 '.'F mMk 1 .'I .il }ier•w . F. .A.n ,2 ~lT,:. ~ £ ' ni~~ i r ILA': 'y.:" " ^r J=.Xe'7r ' ~ .rte. ^~.'A! -tx r ~mH ~ ao ~~if ~ ~ ~_F>~; The faith and credit of such Town are hereby irrevocably pledged to the punctual ~ + v r~~ s. a meet of the rinci al of and interest on this bond accordin to its teens. I z P Y P P g I, r - ~ rl ~e~ It is hereby certified and recited that all conditions, acts and things required by th ~ i 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 ,((lt, { 1 ~j performed, and that the issue of bonds of which this is one, together with all other indebtedness ; F, tam of the Town of Southold, is within ever debt and other limit rescribed b the Constitution and . ,,;:gay laws of such State. . ~ ~~Q; , 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 eal to be = t~t~' ' impressed hereon and attested by the manual signature of its Town Clerk. t `;~~~M; TOWN OF SO ~:=t,~ ~A r/fp ~ ~M - r ~ ` i~a? ~ (SEAL) By L°lQ~ ~ ~ w, li Supervisor ~~~1 ATTEST: G . a :dig, _ 3'i z~ 6" own Clerk ~~'3,e - r,~N` ' r ~~~~1~`a ' ~ll~s~ ~x~~ _ _((t z= . ~~l~~P;. ~iliil~ I ii~il ~~#i7~~~m ~ { e. ' ~v; I ~f'. ~ ~a3i ,pia z ~ ~ sly '~~1~'r , ' (t ~~>rt~ , ~ .f (iFi E r ~s +N((Fi' ' ~INI ~ _ z t~j (1(~g ~ itPl' L~ ~ ~ i f'3~ IMN~r4\ _ ^t : p . ~:G~ .n6P!" i • - ~H~'R"J~~n~.: ~ ~ ~`r•" ~ t:' - r - ~~~/~,.x ~ ^i" ^wi~ .-e. .k r ^sHt" ',~`w/o~naf '~.s. ~ ~ a a~ - i'.~.., c"t ~ ~,ezi ~,a,3. . ~ t ri_ a"~ux•~r ~ {gc:~gx -''r ~t m~ ht•-~....~,y,~; x ="l .:;~s ~ yT'°~ r6=.."'~ ~ "°°i € yW~~. r. lei Town of Southold, New York a _f~?,~, i; Public Improvement Serial Bond-2008 't{ Y`y'~~' .~~r - 11)Nl f' ' 9 ~==+.>3: This bond is one of an authorized combined issue, the aggregate principal .4{3~~v! amount of which is $8,850,000, the bonds of which are of like tenor, except as to number, ~~`}I ; I ~ a ~ denomination, interest rate and maturity, and is issued pursuant to the provisions of the ~(~~;a ' I a Local Finance Law, constituting Chapter 33-a of the Consolidated Laws of the State of z=::~• New York (the "Law"), two bond resolutions duly adopted by the Town Board on their ~ec~ respective dates, authorizing the issuance of serial bonds of the Town to finance open i ~dif~ E I B ~ space preservation and the acquisition of land and construction of building improvements, I and the Certificate of Determination executed by the Supervisor as of May 2, 2008, ~ _ ~lil~~ determining the terms, form and details of issuance of said $8,850,000 serial bonds (the ;~t'~ ~u°:: ' ta))~s "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 ~uM ~y I of $5,000, or any integral multiple thereof. ~ ~ ~ This Bond is transferable or exchangeable, as provided in the Certificate of ° ~ Determination, only upon the books of the Town kept for that purpose at the office of the I ~ I I Fiscal A ent b the re istered owner hereof in erson orb his attorne dul authorized ' e r~ w: g Y g~ P Y Y Y ~ ~l~c it in writing, upon the surrender of this Bond together with a written instrument of transfer or , Y, ' exchange satisfactory to the Fiscal Agent duly executed by the registered owner or his $ attorne dul authorized in writin and thereu on a new Bond or Bonds, in the same ' ~zc~ Y Y g~ P ~s y 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. I tl4r; w ~ The Bonds maturing on or before May 15, 2018 will not be subject to ~ ~ ,,z"~,,; redemption prior to maturity. The Bonds maturing on or after May 15, 2019 will be . subject to redemption prior to maturity, at the option of the Town, on May 15, 2018 and ` ' thereafter on any date, in whole or in part, and if in part, in any order of their maturity and " 44tai:I 1~ in an amount within a maturit selected b lot within a maturit =;g~ Y y ( y y), at par, plus accrued s,= , ~ interest to the date of redemption. ,sa>,ie ii( ~s . 5e-~'~° ' The Bonds shall be redeemable prior to maturity upon the givnrg of notice ~ ~ ~c~nt, 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 ' ~ I Agent at least 30 days prior to the dates set for any such redemption. If notice of ~t(~~j€, fall redemption shall have been given as aforesaid, the Bonds so called for redemption shall ~ , z<~~~' ia3 s become due and a able at the a licable redem hon rice on the redem hon date ' :1 §sdr i P Y PP ~ P P P designated in such notice, and interest on such Bonds shall cease to accrue from and after ~ ' ! such redemption date. ; ~~3a, I 1~ 9" as ; s, ~ pct§Pl},asl ni-- ~ ~ r x - d ~~ggy~~ l}~S ~ - ~ 3. ~ t ~ y~y~ ~ RNp? ~br R\ C x. rm .y.p~ '\~i" xy "•k h. y TY.. ? ~ ~ a~ ~~,N.i\~ 1'~.,w .~9a '~r~ L~M~,i 3.r ~ @uiil . Ir~\\\ ! i ~ N ~ x• Sx~ @dNA J .M, 1~^ r :M4 C x R""'+. NI/ "'~4.mwx o41. Z=~11n~ ~ ~ W •'.w~ 3 MNP ~ ~ ~'°'~1" ...~o.~{ x+ ~M $ ~ u~'"~ , w s. ~y ~ : - = ~~s_ ~ - arm - - - - Do~ #ss;~ Hawkins Delafield & Wood LLP ~ i „ One Chase Manhattan Plaza ~tf New York, New York 10005 ~ ° {c ~I F ~I S :334# ~ ~5£3"3 _ ` " " The Town Board of ~ :l~}r ~ the Town of Southold, ~~1~€ I in the County of Suffolk, New York ~ }'d I ~`s; Ladies and Gentlemen: ~ `~~"1, I' We have examined a record of proceedings relating to the authorization, ,mi(((l, ~ ~ i sale and issuance of $8,850,000 Public Improvement Serial Bonds-2008 (the "Bonds"), of the Town of Southold (the "Town"), in the County of Suffolk, New York. z::._,_ ims ~ The Bonds are issued pursuant to the provisions of the Local Finance Law, ,~3,- ' ~ a constituting Chapter 33-a of the Consolidated Laws of the State of New York, two bond ~ v~ ~ ~ i resolutions duly adopted by the Town Board on their respective dates, authorizing the i t~~I' = aS i issuance of serial bonds of the Town to finance open space preservation and the acquisition } ; e~ ~o~ *r< _ ~ - ~ of land and construction of buildin im rovements, and the Certificate of Determination ,tC~~i~£ zll#!~ au g P , . executed by the Supervisor as of May 2, 2008, determining the terms, form and details of issuance of said $8,850,000 serial bonds and providing for their public sale. H =3i a~t{• ~3Sa ~ ~ w The Bonds are dated May 15, 2008, mature on May 15 in the principal r, amounts in each of the following years, and bear interest at the respective rates per annum ' ~,1?. FK€°i M payable November 15, 2008 and semiannually thereafter on May 15 and November 15 in ~€#~s~}} each year until maturity, as set forth below: ' t ~ ' ' ~I Year of Princi al Interest Year of Principal Interes ~ Maturity Amount Rate Maturity Amount Rate #'~~lst 2009 $325,000 4.00% 2020 $400,000 4.00° ~(`lr,. x~°y,i 425 000 4.00 ~(i~" , _:=a~6}), 2010 325,000 4.00 2021 = 201 ] 325,000 4.00 2022 425,000 4.00 ~ 2012 350,000 4.00 2023 425,000 4.00 ,i'tisy' ~I ~3ro :i ~ ~ 2013 350,000 4.00 2024 450,000 4.00 2014 350,000 4.00 2025 450,000 4-I/8 # E,s','ll} 2015 375,000 4.00 2026 450,000 4.25 ' 2016 375,000 4.00 2027 450,000 4.25 ~Y> 1 t(a~ ,,el 2017 375,000 4.00 2028 475,000 4.25 ~,=~1 2018 400,000 4.00 2029 475,000 4.25 E ~~"t~. ' 2019 400,000 4.00 2030 475,000 4.25 ~ t ' , ~ t~~~ t' KK'I ~ 3 N tail}, ~t~~~,€3= ' IL-- ~ "x~ d ~ ~~N 3 = r 'Z : ~ '~°~'~.cx A ~..yg r v ~ 'S a. ,A.~ .t t.n~. ~ wHS€ r,~ 'a.. ~ L A ,`„e,,, muff w i k u r^~""w nn.K~, I` :r i mr~ N1@ ' .~~~u i m/ G...,,.,~ # a.~r' a ~".1 'L°~'' ~ ,.,•qq... a ~ N (yam u ~ "'ki ~o ii~i~~l i, > The Bonds maturing on or before May I5, 2018 will not be subject to „ i "a redemption prior to maturity. The Bonds maturing on or after May 15, 2019 will be ~ _ ! subject to redem tion rior to maturit at the o hon of the Town, on Ma 15, 2018 and ~ J P P Y, P~ Y ~ ~ ~~~if thereafter, on any date, in whole or in part, at par, and subject to notice and other conditions as stated in the Bonds. ~.I zl(i~ "-~Y~J~ yi The Bonds are issued only in fully registered form without interest coupons, . is 4° " ~ in the name of Cede & Co., as registered owner and nominee for The Depository Trust ~1_;f,: ~ ; lip i i " Company, an automated depository for securities and clearinghouse for securities transactions which will maintain abook-entry system for recording the ownership interests ~ ~,~A, J~ ~a`~- ~ in the Bonds. Only one Bond will be initially issued for each maturity in the aggregate ~ 5.-~.- principal amount of such maturity. Purchases of ownership interests in the Bonds will be ~ ~yi I ~ iz E'~t ?€~t~~ made in book-entry form in denominations of $5,000 or any integral multiple thereof. r, ; `t>J"~' In our opinion, said Bonds are valid and legally binding general obligations of the Town s-~'~lt~a~ for which the Town has validly pledged its faith and credit and, unless paid from other i sources, all the taxable real property within the Town is subject to the levy of ad valorem z real estate taxes to pay the Bonds and interest thereon without limitation of rate or amount. i 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 t ' ~~91Y~ ~ ~~~1 e;~Y~l, hereafter enacted. > ~ . r~ 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 y=~; ~ in order that interest on the Bonds be and remain excludable from gross income under ~'g ` ~ ~ 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 Js 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, s', ~ t and in our opinion, such certificate contains provisions and procedures under which such ~/~a` ~ requirements can be met. s.~t(~+a K>~~: Y In our opinion, under existing statutes and court decisions, (i) interest on the iii ; ` Bonds is excluded from gross income for federal income tax purposes pursuant to Section ~ ~ 'i I ~~Y~ ~~f,, 103 of the Code, and (ii) interest on the Bonds is not treated as a preference item in a~i,,, calculating the alternative minimum tax imposed on individuals and corporations under the , =r Code; such interest, however, is included in the adjusted current earnings of certain : 3 ~w~ ~ W I corporations for purposes of calculating the alternative minimum tax imposed on such '<1 corporations. In rendering the opinion in this paragraph, we have (i) relied on the tt 1~.,1 representations, certifications of fact, and statements of reasonable expectations made by the Town in the Arbitrage and Use of Proceeds Certificate and other documents in ~s~; ~ i connection with the Bonds, and (ii) assumed compliance by the Town with certain ~ a:. ~ provisions and procedures set forth in the Arbitrage and Use of Proceeds Certificate ~ml (ji ~'i~~SS ei ~ #p3 is 7~7 A I~ {{~3 ~ .'iid ~ ~ Ili~~l~l, n x a nay ,6 +ax. s, ' `5dx ''`~~k, `~eN. x. :app 3~,« v~'. ~_~~3~ i~ Na~"`~ ~rr R~~ } J£N~ 'a;,.;s~`~'a a , * ~ ~x "'~"`~r( n ~ ~ v WN xmm~ Sf...~ r m `'C^°' m s ~ relating to compliance with applicable requirements of the Code to assure the exclusion of m < , ~~f ~ s'1}a interest on the Bonds from gross income under Section 103 of the Code. z ~ a ~~~I Further, in our opinion, under existing statutes, interest on the Bonds is t~' ' 'mil f ~ exempt from personal income taxes of New York State and its political subdivisions, ~ £!3q including The City of New York. ry~yrr~ ' !£g£}i Y~ k/'k~13 Except as stated above, we express no opinion regarding any other federal or state I ` ~ tax consequences with respect to the Bonds. We render our opinion under existing statutes ~'v and court decisions as of the issue date, and we assume no obligation to update our opinion ~;u~';; s,~("t"(~:~ - after the issue date to reflect any future action, factor circumstance, or change in law or ~ interpretation, or otherwise. We express no opinion on the effect of any action hereafter ~ x ~tq~~}t taken or not taken in reliance upon an opinion of other counsel on the exclusion from gross ~~'t(: z ,Y~ income for federal income tax purposes of interest on the Bonds, or on the exemption from 1' ' ~ -~'i~a~ " state and local tax law of interest on the Bonds. ~ Other than such record of roceedin s we have not been re uested to ,~~3~>4 ~~a~ I', P g , q ~ examine or review and have not examined or reviewed the accuracy or sufficiency of the ~ ~ ~ Official Statement, or any additional proceedings, reports, correspondence, financial 1'zF ~ statements or other documents, containing financial or other information relative to the - ~ ~t€~l}, Town which have been or may hereafter be furnished or disclosed to purchasers of said I ~~1t1#. Bonds, and we express no opinion with respect to any such financial or other information ` ~i ' or the accuracy or sufficiency thereof. ~ g~; We have examined the executed first numbered Bond of said issue and in ~ _ ~~ti~~ ~ our opinion, the form of said Bond and its execution are regular and proper. ~ ~a~ _ This opinion is issued as of the date hereof, and we assume no obligation to ' update, revise or supplement this opinion to reflect any action hereafter taken or not taken, I ~c~~; . I or any facts or circumstances, or changes in law or in interpretations thereof, that may i 3 hereafter occur, or for any other reason. I i~ ~s I ~~~°~rt' I ~ tit{t~t~ > ~ Very truly yours, ~ , ~ ed~ a w~q}a ' ~ 9ahx ~ ~ /s/ Hawkins Delafield & Wood LLP ~ ' y,,,, i• (rt~, ~ ~a sa `t' ' w ~ r I • ~~~~,t 'n 0.'a ~ t i ~ \`W~ ~ i ~ fti 3 r. ~I ~x ~p 11 vl ~j3P~ _ t Y q i I ~ Sls ~ as 39 'K'inlx ; ~ ' a ~ it tG ' ~ t { ifS i ~ l~ 'EJ : - nn Ic^^.~~k_ " : '.:5....... ert.. , .1. . aho..a.. n;~ •u..~ w~, s .p. i` 3 r~ F3.R°' ' :.,,ud' 'a" 4 ~ iCF. 4'~. v - uT iyq i;c~:w ~ '~l. ~`.ar ;ti3~s L~~°"7 w.~ ~F l,m~ p~!6a~. vn ~jaq /n? i ti Wis. - - ~ a ~ z - STATEMENT OF INSURANCE x3+~ Financial Security Assurance, Ina ("FSA"), New York, New York, has 'lif€'ll delivered its municipal bond insurance policy (the "Policy") with respect to the scheduled > ~ 1'. `^£3~`A I payments due of principal of and interest on this Bond to the Town of Southold, Suffolk ~1, I County, New York, or its successor, as paying agent (the Paying Agent) for the $8,850,000 Public Improvement Serial Bonds-2008. Said Policy is on file and available ' For inspection at the principal ofSce of the Paying Agent and a copy thereof may be "'~~10~ obtained from FSA or the Paying Agent. _ II £l > a,1. it I ti £K rif "~~aas' e i ~ ~ S~ S& (p(p>~~ 1. jj~j)p~gT +l€f i' i iks~" it s 'gym, •i ~ ` _ F4 IX ~z ti/dX x+i e„ )KK1„ ~ . i I: ''-~Ij1 n~ lil f ~r sgCd£v,; ,~j~3n3ns` ~ i ~1, y _I- 9 , ~ z3 ~ Q.~%zr ~~yy,~ ; ~5~ 1 j ~i ' Sir' > q I,i ~yx'~ ~ .~i l~l} „ tl' ' ~ u t le ~ S rk AAuuS5. . 1~ 7 / 5 q: ~E p"'~h o. q..' r ph wq.. .m i ',~r e'~i ~,`.ru"~~ i ~!r '.n'r~ f~::,s~'mi, 'k ~f~~".,-~~ zit . t ~.,ai ~ . •aoa i „s ~ . ~ i a y e ~ aan ~ x ~ - ~ no - - - - p( ml T =P ~ i ~ jl~~~'~' ASSIGNMENT FOR VALUE RECEIVED, the Undersigned hereby sells, assigns and transfers unto " € { ` ~I a>'~ PLEASE INSERT SOCIAL SECURITY OR OTHER (~44, ' ,i~F s j IDENTIFYING NUMBER OF ASSIGNEE a. g~[4~. )`gyp) ?j tE' av P~ //L "I sus i £ I I~t} " PLEASE PRINT OR TYPEWRITE NAME AND ADDRESS INCLUDING ~>I ' gs€31+~ ^ POSTAL ZIP CODE OF ASSIGNEE the within Bond and does hereby irrevocably constitute and appoint = I y r ~ Sal;,. ' c~~,. Attorney I ~£l~~}t 3~~' to transfer said Bond on the books kept for registration of said Bond, with full power of 't{~~~I E`,>~ substitution in the premises. , z~I}y ~~I~a F nu Dated: ski,.. I sa =;I ~ai a Signature Guazanteed: Notice: The signature to ~~t€°~? Notice: Signature(s) must be this assignment must cor- ~t((~~;,l. acknowledged or proved, or in the respond with the name as ~ ' alternative, certified as to its it appears upon the face 1 ~p~ genuineness by an officer of a bank of the within bond in 3~ ' or trust company located and authorized every particular, without `'-bias} ~ to do business in New York State. alteration or enlargement or ~f((~;€ r > ~ ' any change whatever t ~ gkt~, _ ~f~~i.. _ ~1€37 ~~~fil , s<¢)~N ~r x } / 4 a 'a zk~ i ),5~p~ _~.~at ,1~~},~ I i <>IG CI ~ 3'i , ~y~lr i. I ' ~z = _ ~ ~ a ~ ~ s=~ s~s via mMne+~Vt 1~ +~~E. ,s..tw .,~~J~yR 5u',i" ~ rw'i~. .a~i~" ~ tai- r 1E _ ~p~!a^' _ a ar ~~d ~nii~ F. r ~m J `xS- mt~~t '!e.Y~~q :per' L~ 'lj~ $~~x.~ _ ~ ~~i ~,,~wn~ F i I M t _ ~ F] ~ ~ ~ ~1;;~~ REGISTERED REGISTERED a ~,'~1`lsl i NO. R-2 $325,000 I ati~ ~ i ~~F, ~ UNITED STATES OF AMERICA STATE OF NEW YORK I ~3 ' COUNTY OF SUFFOLK a`I+._ . ' '=~E~` TOWN OF SOUTHOLD ~ ~c ttEt+ °a~'~il z is i ~d PUBLIC IMPROVEMENT SERIAL BOND-2008 ~ MATURITY INTEREST DATE OF CUSIP - DATE RATE ORIGINAL NUMBER ~~f,~ ISSUE ~4~'' i 21113' Y „?~'fYl ~ May 15, 2010 4.00% Nlay 15, 2008 844572 KD8 ~ ~ i `fir ~ REGISTERED OWNER: CEDE & CO. '~~s(i, , L?r" ,_-s9 11 - ~ , PRINCIPAL SUM: THREE HUNDRED TWENTY-FIVE THOUSAND DOLLARS (~1" The TOWN OF SOUTHOLD, in the County of Suffolk, a municipal corporation of the State of New York, hereby acknowledges itself indebted and for value ~ ~i ~~lf received promises to pay to the REGISTERED OWNER named above, or registered ~ ~ assigns, on the MATURITY DATE (stated above), the PRINCIPAL SUM (stated above) ~ upon presentation and surrender of this bond at the office of the Town Clerk, Town of ~ ~`1}` ' Southold, Town Hall, 53095 Main Road, Southold, New York, as fiscal agent (herein ~ "I gar; ~5~..~ t~~ ` called "Fiscal A ent" or an successor thereto, and to a interest on such rinci al sum ' € ' r~l: g Y p Y P P ~~~'°i ~ from May 15, 2008 or from the most recent interest payment date to which interest has x ~ ` ~ been paid at the INTEREST RATE (stated above), payable November 15, 2008 and ,f~ =I' ?~c"i' semiannually thereafter on May 15 and November 15 in each year until maturity. Interest 1.~~~ £~s', hereon shall be payable by wire transfer or clearinghouse funds by the Town or its agent on y$kj~~ ~ ' each interest payment date to the registered owner hereof at his address as it appears on the ~,~t' kr" registration books of the Town maintained by the Fiscal Agent or at such other address as t vt~,ra~ may be furnished in writing by such registered owner to the Fiscal Agent as of the close of ,9 ' business on the last day of the month preceding each interest payment date. The principal 4- z= ns > ~c~ of and interest on this bond are payable in any coin or currency of the United States of 1 ~ A America which, at the date of payment, is legal tender for the payment of public and ;t~~ private debCs; provided, however, that interest on this fully registered bond shall be paid by i wire transfer or clearinghouse funds as set forth above. ~ = s rE REFERENCE IS MADE TO THE FURTHER PROVISIONS OF THIS BOND SET FORTH HEREIN. ~ ~ , F G; - - 3-w M1 t, a .1 \N//~ , - ' w w w. JaI\ I~ ~ .5e ..~.\'w.T ~ 9'~"' xkr ~e Vii.„~.k,.~ ~ *r t ~ '~"r ; +<e, r~, ~,iiri 31 i ~ Z REGISTERED REGISTERED 4-~('" . , _ ~ NO. R-3 $325,000 r~° z UNITED STATES OF AMERICA STATE OF NEW YORK j ®9 COUNTY OF SUFFOLK tr>~ TOWN OF SOUTHOLD I PUBLIC IMPROVEMENT SERIAL BOND-2008 § ' ~sy = ~~=f"~`- ' MATURITY INTEREST DATE OF CUSIP 5" t~ : i DATE RATE ORIGINAL NUMBER ==~I~~l ISSUE ,~:t}i May 15, 2011 4.00'% May 15, 2008 844572 KE6 ~;~g.: - ~ s< ~ ~ REGISTERED OWNER: CEDE & CO. ~w~ a= `~a~'lEti ~ J PRINCIPAL SUM: THREE HUNDRED TWENTY-FIVE THOUSAND DOLLARS +t(~ 3{~~,~~n~ ~ f~#I~tt I ~N§l~l , ~ , The TOWN OF SOUTHOLD, in the County of Suffolk, a municipal ~'~`I 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) t ~~tt ,j upon presentation and surrender of this bond at the office of the Town Clerk, Town of ' ~~~i ~ ~jql;, Southold, Town Hall, 53095 Main Road, Southold, New York, as fiscal agent (herein ' i X114}r ' called "Fiscal Agent"), or any successor thereto, and to pay interest on such principal sum ~~l from May 15, 2008 or from the most recent interest payment date to which interest has a~~; been aid at the INTEREST RATE stated above a able November 15, 2008 and `far z; semiannually thereafter on May 15 and November I S in each year until maturity. Interest a° hereon shall be payable by wire transfer or clearinghouse funds by the Town or its agent on ' ~~s(slt each interest payment date to the registered owner hereof at his address as it appears on the , <'r=~{ ~ I' registration books of the Town maintained by the Fiscal Agent or at such other address as ~{6€ "I, ;3'I /1 may be furnished in writing by such registered owner to the Fiscal Agent as of the close of ' ~ ' k`~ q``' ` business on the last day of the month preceding each interest payment date. The principal ~,~=a ~I"t'- of and interest on this bond are a able in an coin or current of the United States of p Y Y Y ~ \ c~,,~ America which, at the date of payment, is legal tender for the payment of public and m£$ 2 private debts; provided, however, that interest on this fully registered bond shall be paid by ell's ' ~~e~t F< > a I, wire transfer or clearinghouse funds as set forth above. ' x,~it, ~j' ~ REFERENCE IS MADE TO THE FURTHER PROVISIONS OF THIS BOND SET FORTH HEREIN. ,J.3 ~ /rl ~ (s~sr ~ { i yl L ~ i J It s l ~y ~@ V !.'~'rnLl\T+S ~:'~'S,S .+~§t .J`>ke.. ..."t...:r' "k .<h"~i }:~:.r i J ?ice ~n ~ ' e.~ ~ ~ ` ~i'`t,2.~rF ~ ~ a~a~~e wi~~'~ nuM ~'~~~i y~''~~'~5~' ~ii:~ c~ i ii r, ~ n~x`r - i REGISTERED > REGISTERED ~t ~ . ' ~ ~ I NO. R-4 $350 000 = ° ~ UNITED STATES OF AMERICA P ~ , STATE OF NEW YORK ~ COUNTY OF SUFFOLK d. €y1~1~ ui ' ~~i,~ ~ >a~:; TOWN OF SOUTHOLD ~.fi, - ~~~1€I PUBLIC IMPROVEMENT SERIAL BOND-2008 f' )i~'~' ~~"t~. w MATURITY INTEREST DATE OF CUSIP ~ , ~ DATE RATE ORIGINAL NUMBER ISSUE x'~g~;l . )+6i} . Pa is y i May 15, 2012 4.00% May 15, 2008 844572 KF3 REGISTERED OWNER: CEDE & CO. ~~f=~ i ~ ~ L ~ ~ ,3'~; PRINCIPAL SUM: THREE HUNDRED FIFTY THOUSAND DOLLARS ~ #aE r~ ~ , {>a~ ~=~"t' The TOWN OF SOUTHOLD, in the County of Suffolk, amunicipal - t,,, corporation of the State of New York, hereby acknowledges itself indebted and for value , j ~r~t ~ ~ received promises to pay to the REGISTERED OWNER named above, or registered I =~''~f assigns, on the MATURITY DATE (stated above), the PRINCIPAL SUM (stated above) : I ~ ~ upon presentation and surrender of this bond at the office of the Town Clerk, Town of ~ ~ r~,> Southold, Town Hall, 53095 Main Road, Southold, New Yorl~ as fiscal agent (herein I ~ called "Fiscal Agent"), or any successor thereto, and to pay interest on such principal sum ~ i s .i I, from May I5, 2008 or from the most recent interest payment date to which interest has ~ ~Ffrc been paid at the INTEREST RATE (stated above), payable November 15, 2008 and i semiannually thereafter on May 15 and November 15 in each year until maturity. Interest ~ 1„I~ 3' I hereon shall be payable by wire transfer or clearinghouse funds by the Town or its agent on ~l€g ' I y ~ ~ ~ each interest payment date to the registered owner hereof at his address as it appears on the Ae + re istration books of the Town maintained b the Fiscal A ent or at such other address as ~ ,.I g Y g .1 ' may be furnished in writing by such registered owner to the Fiscal Agent as of the close of ~~qL ~i K y, ' business on the last day of the month preceding each interest payment date. The principal ~ 343;=, of and interest on this bond are payable in any coin or currency of the United States of ~ mfr ~ America which, at the date of payment, is legal tender for the payment of public and 'i . i ,~il'P private debts; provided, however, that interest on this fully registered bond shall be paid by I i wire transfer or clearinghouse funds as set forth above. ~f~f_ 33j~}p~t3. a ~til4a REFERENCE IS MADE TO THE FURTHER PROVISIONS OF THIS ' )tH 3 ~.uts' ' BOND SET FORTH HEREIN- R gib"" _9 ~14~#37 ~P~ I! I ~~~3 z > i > y i i7,4~ ,~I~ ni ~ Nt~, n Y i ~ ~ ~ mn T w~ce u e y~~/ t y~~ ngMlr i . ~w~ . ~ P 'i,. ~`P ~ sd n. MN~..,r~ f.. b'f ~ ~ ~ _ ..t MiF%r A~. yry"1.,,~'? uxk "E ~k'`5. Mi 2~ ta`A. fit. ~ ~ M~ 4`r' ':dam J~ ~r4h mx i n „ yr~. ,~'a' „,„„^rk:~r".~»s£ Raiaa~' jiA x .w ~ecy°.r~.%.~^~..~i.^. +w~" ~ - txiii=~ . _ E ~ DO t.~j(t~P ~1 ~ , i (I3P 7N gPj,~; REGISTERED REGISTERED y~Ct<£__, . ~ i „ ~ itt~ z = NO. R-5 $350,000 UNITED STATES OF AMERICA ~ I STATE OF NEW YORK s;"' ~ ~ COUNTY OF SUFFOLK ~t } „ ~~{f€~} t ~<iu~ TOWN OF SOUTHOLD ~~j~, 1 3 ~ ~ II~£ i -)li} i' a„~' PUBLIC IMPROVEMENT SERIAL, BOND-2008 ~ ~ ~ . ~ MATURITY INTEREST DATE OF CUSIP ~II DATE RATE OWGINAL NUMBER ~~~~j i ,,I§,, ISSUE Y}'££ FY )£(i €t i#j£ P~~,~, I May 15, 2013 4.00% May 15, 2008 844572 KGL = I i ~ r has ~ REGISTERED OWNER: CEDE & CO. 5~~ ~ I v.~.. rG cl PRINCIPAL SUM: THREE HUNllRED FIFTY THOUSAND DOLLARS ~ $ ` I ~I~ I. I F; ~€~3g)}r I ~ ~j The TOWN OF SOUTHOLD, in the County of Suffolk, a municipal , ° =~y ' corporation of the State of New York, hereby acknowledges itself indebted and for value ~ Aga ~k received promises to pay to the REGISTERED OWNER named above, or registered ~~~~t=', ~ assigns, on the MATURITY DATE (stated above), the PRINCIPAL SUM (stated above) ~ } tl upon presentation and surrender of this bond at the office of the Town Clerk, Town of (~1 "d~ ~ i.; Southold, Town Hall, 53095 Main Road, Southold, New York, as fiscal agent (herein ii called "Fiscal A ent" , or an successor thereto, and to a interest on such nnci al sum ' ~~i g ) Y P Y p~ P , from May I5, 2008 or from the most recent interest payment date to which interest has i ~ . been paid at the INTEREST RATE (stated above), payable November 15, 2008 and ~ semiannually thereafter on May 15 and November 15 in each year until maturity. Interest ~,~,F ` w~ hereon shall be payable by wire transfer or clearinghouse funds by the Town or its agent on €t each interest payment date to the registered owner hereof at his address as it appears on the i., 33 registration books of the Town maintained by the Fiscal Agent or at such other address as r`~t(~~; ; 1;--=j,ll nl i may be furnished in writing by such registered owner to the Fiscal Agent as of the close of w~~'4 ~3.f; business on the last day ofthe month preceding each interest payment date. The principal a• of and interest on this bond are payable in any coin or currency of the United States of s z~;. America which, at the date of payment, is legal tender for the payment of public and ~;_;g~~~ ei~! private debts; provided, however, that interest on this fully registered bond shall be paid by a~F-..: F<ru "i. wire transfer or clearinghouse funds as set forth above. 1 REFERENCE IS MADE TO THE FURTHER PROVISIONS OF THIS BOND SET FORTH HEREIN. ;i i~ i. ~ ~ ; s ~,i , tt(~Ijj . , ~tib\~ ~ >i*F~ !94'..Y.~'i nt}.1`• ~ .~)Fi~T. j P 'Y'r'-•"WOS. d ~~"°S` n~a C ~ M W~! n' xF"'i .d S.w .d:~.vWi ~1 '~'~y}'~- w~~r-fy '''~C" .Ai~~ ~Y~~ll%p ~g~w\~~l ~ ~ s w ~ x y _ x 9GJ~ ~3SFD) ~ ~ ~ o ~Eflz' 'dam L m REGISTERED REGISTERED ~(d'€._.~. a ' NO. R-6 5350,000 iP UNITED STATES OF AMERICA 4 i'~'~ - STATE OF NEW YORK ~I ~ COUNTY OF SUFFOLK I I ~ "'t ~ ~~`ia ~ TOWN OF SOUTHOLD i ~ a - ~39J1 i tact PUBLIC IMPROVEMENT SERIAL BOND-2008 u,,~ MATURITY INTEREST DATE OF CUSIP DATE RATE ORIGINAL NUMBER ~a: ;1:?~.r', W. ISSUE ~~>1 ~ ~ May 15, 2014 4.00% May 15, 2008 844572 KH9 'tit' Y? y( I Y REGISTERED OWNER: CEDE & CO. ~ ~y i j;', PRINCIPAL SUM: THREE HUNDRED FIFTY THOUSAND DOLLARS `((~31~ e<'Yd y( '.E~i{j}~ II ~t~~il f The TOWN OF SOUTHOLD, in the County of Suffolk, a municipal ` - • I ~ ~ corporation of the State of New York, hereby acknowledges itself indebted and for value ;3s•~' ;z`"~ ~ received promises to pay to the REGISTERED OWNER named above, or registered assigns, on the MATURITY DATE (stated above), the PRINCIPAL SUM (stated above) , t=~~~ upon presentation and surrender of this bond at the office of the Town Clerk, Town of (Ii ~ii,RU Southold, Town Hall, 53095 Main Road, Southold, New York, as fiscal agent (herein ~ , .~iF~1~~M` is called "Fiscal A ent" or an successor thereto, and to a interest on such rind al sum '~~•II`~=~ g Y P Y P P s a ; _ ~ from May 15, 2008 or from the most recent interest payment date to which interest has been paid at the INTEREST RATE (stated above), payable November 15, 2008 and . semiannually thereafter on May 15 and November 15 in each year until maturity. Interest ~ ~ hereon shall be payable by wire transfer or clearinghouse funds by the Town or its agent on i f ~t~"t) each interest payment date to the registered owner hereof at his address as it appears on the f ~a~;; "t~~lw re istration books of the Town maintained b the Fiscal A ent or at such other address as ' g Y g ~{~i` 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 ~~~;_f of and interest on this bond are payable in any coin or currency of the United States of ~ a > America which, at the date of payment, is legal tender for the payment of public and I iaF £~slt private debts; provided, however, that interest on this fully registered bond shall be paid by ~~~;,3 F~ ~ wire transfer or clearinghouse funds as set forth above. ; :~"13 z t, REFERENCE IS MADE TO THE FURTHER PROVISIONS OF THIS ~ ~ BOND SET FORTH HEREIN. ~'A' F Vim( > ~{}i ~a1 g4i; L; < > ~ t- ; gw = Wf ~ ~N/NN ~I ~k>~ 1Miµ~ X3,.7 _ `en. .h',~" :C 'r„ - -o- r rwd~t _ "Np\ y +r r x-- ~ ! 9+w' sr : ~ '".m" '!t' ~m'a.~ `fix" `y . s~ r,:.,~^eu+: J~ `i... :':MI'. ~~ka g~run s.:.'N Via" ~ ~i ' ^e~' y t {"a1 `"V ~~t.~ ,qu ~ . r... na ~q/ ~ ~ ~ . ~xN/ ~ - _ _ n0 ,~1 no ..~~E1 ~l~t w r: ) ~ ~ REGISTERED REGISTERED ~ NO. R-7 $375,000 ~ may„ UNITED STATES OF AMERICA ~ ~L~ - v ' STATE OF NEW YORK ~~.3~ I, COUNTY OF SUFFOLK Ott€: =fi~13 f<a>?n' TOWN OFSOUTHOLD i ' s I PUBLIC IMPROVEMENT SERIAL BOND-2008 I 'c. ~Ni ~ +¢e~Nfs MATURITY INTEREST DATE OF CUSIP I DATE RATE ORIGINAL NUMBER ~ A~s' ~ =e~ " ISSUE ~.~lw'' '1~ Ma 15, 2008 844572 KJS I May 15, 2015 4.00% y = \~r ~ ~~~t`_, ~ ~ REGISTERED OWNER: CEDE & CO. ~ ~0 ~t£~ rn n~y PRINCIPAL SUM: THREE HUNDRED SEVENTY-FIVE THOUSAND DOLLARS ~ The TOWN OF SOUTHOLD, in the County of Suffolk, a municipal x ;;i~t,- ; 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) = a,4 i . ~~i Prot .~~ir 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 , ;u ~ called "Fiscal Agent"), or any successor thereto, and to pay interest on such principal sum from May 15, 2008 or from the most recent interest payment date to which interest has ~ ~ ~s~ been paid at the INTEREST RATE (stated above), payable November 15, 2008 and ~?t'~ s' semiannually thereafter on May l5 and November 15 in each year until maturity. Interest „1~~ .atoll hereon shall be payable by wue transfer or clearinghouse funds by the Town or rts agent nn ~3 f~`~> a.+: ' each interest payment date to the registered owner hereof at his address as it appears on the a,>~ ~€s~?r registration books of the Town maintained by the Fiscal Agent or at such other address as welt' ~,x 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 I ' America which, at the date of payment, is legal tender for the payment of public and ~.~€a~ private debts; provided, however, that interest on this fully registered bond shall be paid by ~.y y~Y wire transfer or clearinghouse funds as set forth above. x: " REFERENCE IS MADE TO THE FURTHER PROVISIONS OF THIS ~ BOND SET FORTH HEREIN. '~~"a,, 1} ~ -~t~~~f~ IYtytti t(F .r/ ~j~ \ .t t i=fs! Nh%^.' W .E"'N' N.::, .sF'.~'' \ i/'' sd "Tip k t d.^^,: _ € ' na 2F ^ac,,, .xugi. d ~ `i. ?r"" a~w Sian , I • t ~ 5x si ~a a ~ ue, ~ J drm~- ~z:nn t. I ~4. 'n7 d hF.°°.°ix. Nn n0 s~~"'~~"~s~: i~,°'"' _.s . mi: is p, g~ G ~ ~ ~ ~Ni ~r>~~ REGISTERED REGISTERED it :s •i ¢ ~ I NO. R-8 $375,000 ~ ~ ~ UNTIED STATES OF AMERICA `'t:,~ ' STATE OF NEW YORK - ~ COUNTY OF SUFFOLK SYI I IE4f~ <`Is~~~;' TOWN OFSOUTHOLD -t €~'.,I PUBLIC IMPROVEMENT SERIAL BOND-2008 ~sy. a MATURITY INTEREST DATE OF CUSH' llATE RATE ORIGINAL NUMBER I~g~ll~r ISSUE 1 f<d)N~~~I ~Ya ~atl~~l yr~'~ May 15, 2016 4.00'% May 15, 2008 844572 KK2 ~~r-,a'~~ REGISTERED OWNER: CEDE & CO. ~p,;:=:' y 'f PRINCIPAL SUM: THREE IIUNDRED SEVENTY-FIVE THOUSAND DOLLARS Y, p=t z~~, ,t 1~ l 3~3M ' The TOWN OF SOUTHOLD, in the County of Suffolk, a municipal fry corporation of the State of New York, hereby acknowledges itself indebted and for value ~ r{ received promises to pay to the REGISTERED OWNER named above, or registered 4>>t ~-3~r assigns, on the MATURITY DATE (stated above), the PRINCIPAL SUM (stated above) ~ ~~~jt'', upon presentation and surrender of this bond at the office of the Town Clerk, Town of ~ll~~. ~ 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 May I5, 2008 or from the most recent interest payment date to which interest has u Y" been paid at the INTEREST RATE (stated above), payable November 15, 2008 and ,j;io semiannually thereafter on May I S and November 15 in each year until maturity. Interest hereon shall be payable by wire transfer or clearinghouse funds by the Town or its agent on , n each interest a ment date to the re istered owner hereof at his address as it a ears on the 5 Y a~ i,;. P Y $ PP M,yM( ~ ~ registration books of the Town maintained by the Fiscal Agent or at such other address as ~ I ~t ~I 1t~E 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 e~ 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 rt({~=~3:' f wire transfer or clearinghouse funds as set forth above. y;= REFERENCE IS MADE TO THE FURTHER PROVISIONS OF THIS ~,~ast„ • BOND SET FORTH HEREIN. z°"'}; I €111' ' ~~°i= ' ~ra~;, ~ > ~ ~ _ a ~z F '~M,f/~~ °~;iC;a: 1h .mot?. ~e ed ~.t ~9. ..}.i:. r d 14p c W ~ "S+i'i s ~ .fir M4 6 -e-..h7; 5~. .N' ` . xis, r, `~~r. ~ ..."f"~° hq , ye luu,~ R~~°,.~ x 1 ~ X.~'IN a ~ .>,eNNI ~ ~ nx~xw N~r~ s t° N ~ ~ ~ ~j m A £'c ~ REGISTERED REGISTERED 2 NO. R-9 X375,000 ~ ~ UNITED STATES OF AMERICA `~=c STATE OF NEW YORK ~?±:,a ' COUNTY OF SUFFOLK ~ - £ ~ ~ rtlt ~ ~-tli+ ~ ~ TOWN OF SOUTHOLD w i „ PUBLIC IMPROVEMENT SERIAL BOND-2008 ~ ' I I~~c~~ MATURITY INTEREST DATE OF CUSH' I _ ~I ' DATE RATE ORIGINAL NUMBER £~el~ ISSUE ~I~~;1 a~ is t ~'r,~u May 15, 2017 4.00% May 15, 2008 844572 KLO ' ' ~ REGISTERED OWNER: CEDE & CO. ~y ~ PRINCIPAL SUM: THREE HUNDRED SEVENTY-FIVE THOUSAND DOLLARS ~'~(i~l~l s , ~pYd~., ~ ~Il'~~~; ' i t+ ~ The TOWN OF SOUTHOLD, in the County of Suffolk, a municipal yrt£~`I a £ n~ corporation of the State of New York, hereby acknowledges itself indebted and for value ~ x=: ~ ' I received promises to pay to the REGISTERED OWNER named above, or registered '€'~,t i.~ assigns, on the MATURITY DATE (stated above), the PRINCIPAL SUM (stated above) ~'1~' upon presentation and surrender of this bond at the office of the Town Clerk, Town of ~11~ E,<°sai'~', Southold, Town Hall, 53095 Main Road, Southold, New York, as fiscal agent (herein ~ i ~'l)1 ' called "Fiscal Agent"), or any successor thereto, and to pay interest on such principal sum + ~1€ - _ from May 15, 2008 or from the most recent interest payment date to which interest has w-~~ x,cuf~( been paid at the INTEREST RATE (stated above), payable November 15, 2008 and '~}t n, ~ § semiannually thereafrer on May 15 and November 15 in each year until maturity. Interest hereon shall be payable by wire transfer or clearinghouse funds by the Town or its agent on 30 u'! £S3}F i s~~~)/1~} each interest payment date to the registered owner hereof at his address as d appears on the ' registration books of the Town maintained by the Fiscal Agent or at such other address as ~((1£ €II~ 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 ~crt4„ • „~;io~. ~ ~ 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 "P >w, °''i', private debts; provided, however, that interest on this fully registered bond shall be paid by ~(t ;;tqq~ wire transfer or clearinghouse funds as set forth above. i ; REFERENCE IS MADE TO THE FURTHER PROVISIONS OF THIS c£ '~~k;, ~ BOND SET FORTH HEREIN- 7~n, r~ ,a(sl~a, ~ {(~€g E 9 (1 ~ 1\~ N 11 N ~ ~i + t 1 ItlU i~ ~.w~,n"+, ~L 'tfe`.u~.. d~ '4o-. R ~ ti r ~ r~~..~,: 1+. ~ ~~~~»,i a~ ,41 2r r ka i 'F icy 'i r~~ ~rF" ~ ~ ~ "+iC3~ J,_ '~'N.L "~vi•u I 7~i~nn f~l ~ A ,dom. ~ w ~ ,w~V!C~~it = a z ~ , ~ ~ "";K~,z 4 ~ ~ N ,~'°"'u 7 V f~.# ~ vo a~x el; ri ,~~#i a vmi r< j ' . °8^I is ~N ,.,I;,,~^ REGISTERED REGISTERED 'fit'=;f__._ _ ~ NO. R-10 5400,000 ~ i y _ UNITED STATES OF AMERICA ~ - I STATE OF NEW YORK ~i`'-~~ COUNTY OF SUFFOLK " Dau~;, TOWN OF SOUTHOLD „t PUBLIC IMPROVEMENT SERIAL BOND-2008 „ £ ` I Baia I MATURITY INTEREST DATE OF CUSIP ~ G._',~s'~„ DATE RATE ORIGINAL NUMBER , €l~t~~~ tl ISSUE . M~ (J , .C-~~~~~a„ May 15, 2018 4.00%" May 15, 2008 844572 KM8 ii ` ~ ~ REGISTERED OWNER: CEDE & CO. i ,tilt PRINCIPAL SUM: FOiIR HUNDRED'THOUSAND DOLLARS ~~'t ~Ii~~a II ~1~3 The TOWN OF SOUTHOLD, in the County of Suffolk, a municipal p corporation of the State of New York, hereby acknowledges itself indebted and for value v - received promises to pay to the REGISTERED OWNER named above, or registered o ~.~yi assigns, on the MATURITY DATE (stated above), the PRINCIPAL SUM (stated above) s°l~~ upon presentation and surrender of this bond at the office of the 'Town Clerk, Town of ~fj,''~. :I<t , ~ ~ Southold, Town Hall, 53095 Main Road, Southold, New York, as fiscal agent (herein , ;~s)~}a ' called "Fiscal Agent"), or any successor thereto, and to pay interest on such principal sum ~ I from May 15, 2008 or from the most recent interest payment date to which interest has ~ ~ ~c~~ been aid at the INTEREST RATE stated above a able November 15, 2008 and ~,~=t ' ~ semiannually thereafter on May I S and November 15 in each year until maturity. Interest ~ut~4 ~ hereon shall be payable by wire transfer or clearinghouse funds by the Town or its agent on >r ?'-i~lt1 fit` ~ ~ each interest payment date to the registered owner hereof at his address as it appears on the ; "t' registration books of the Town maintained by the Fiscal Agent or at such other address as i ~t~€~=~.__ s( g= a~ 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 principals 3-,. of and interest on this bond are payable in any coin or currency of the United States of America which, at the date of a ment, is le al tender for the a ment of ublic and " ~ a x, P Y g p Y P ~ +tq;t~' °,1 private debts; provided, however, that interest on this fully registered bond shall be paid by , f~ Y~M:i, ,f$, k wire transfer or clearinghouse funds as set forth above. REFERENCE IS MADE TO THE FURTHER PROVISIONS OF THIS eciHs - BOND SET FORTH HEREIN. >63~~i=~ fall, ,I ~i+~J$~{j~~~~ . C Kq~ ~ Al 11Lt€1~3 n ~1~ , h ~ GNIx s~ 1~~ u , ! ! r: $=~N P Wk ~~x ~'.~ru, A,~ ` 4 ~ .a; ~L,r~~it ~a~ ; ~r ~M ~q~~~ pl~w ~+I~~ ~ - ~ - r- nC a £ 1f7 i . - I I ~ r-t ~l~ Om i'} ~ - I _.t;;=~4~ ~I REGISTERED REGISTERED ~ ~tlll~l,_ I NO. R-11 $400,000 , UNITED STATES OF AMERICA a F '~=~'~t~ STATE OF NEW YORK COUNTY OF SUFFOLK ~ a ~ a ,~F{fit s r ,~„i,, TOWN OF SOUTHOLD ,'eFl~1.P1.. yl ~((ylf ~ PUBLIC IMPROVEMENT SERIAL BOND-2008 i ~~f~ MATURITY INTEREST DATE OF CUSIP ~''~s~i DATE RATE ORIGINAL NUMBER ~I ~ ISSUE ~ May 15, 2019 4.00% May 15, 2008 844572 KN6 IfSa. 3~ max,, c ~~I REGISTERED OWNER: CEDE & CO. i ~H=r` i ~l~» ~ e; PRINCHPAL SUM: FOUR HUNDRED THOUSAND DOLLARS ,~11 G9~ ~ / ?f4~; n~ 1 '!l~ ~ 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 ~~`~f~ received promises to pay to the REGISTERED OWNER named above, or registered 3t assigns, on the MATURITY DATE (stated above), the PRINCIPAL SUM (stated above) , li ;~I,l~ upon presentation and surrender of this bond at the office of the Town Clerk, Town of ' ~~j~~h' ~ I Southold, Town Hall, 53095 Main Road, Southold, New York, as fiscal agent (herein E; ==€I€')l)t called "Fiscal Agent"), or any successor thereto, and to pay interest on such principal sum l'f'. 3 ~ ~~,I from May 15, 2008 or from the most recent interest payment date to which interest has ~ , been paid at the INTEREST RATE (stated above), payable November I5, 2008 and semiannually thereafter on May 15 and November 15 in each year until maturity. Interest ' ~ hereon shall be payable by wire transfer or clearinghouse funds by the Town or rts agent on a£l~iR~~ each interest payment date to the registered owner hereof at his address as it appears on the "~~~~r' 3f~~IlI2 gin; registration books of the Town maintained by the Fiscal Agent or at such other address as `~i~fi_.> may be furnished in writing by such registered owner to the Fiscal Agent as of the close of I ~ f business on the last day of the month preceding each interest payment date. The principal ~ ;"'t`: of and interest on this bond are payable in any coin or currency of the United States of i America which, at the date of payment, is legal tender for the payment of public and ~ ;'{iii ,,1 private debts; provided, however, that interest on this fully registered bond shall be paid by .\yl'{t3,~ ~ = ri wire transfer or clearinghouse funds as set forth above. REFERENCE IS MADE TO THE FURTHER PROVTSIONS OF THIS {~c_ii:;, BOND SET FORTH HEREIN. ;~H3 'I s I l 5~5 1.! `ttt F m ~L~ 3~ ~l ~lt @a n xx * - s . '6i/M~ ~ ~ _ i~ ~ ~ ~ ~ t-'. ~S ~Q.~u± a"L ,..t d~IM n . :c"n k... ter_., r• ; s~'.. ~ • ~ S~'~.~^- a ~II¢t' .,..'.~w~, . i•• ~&n,. ' ~ ryN\~ 4 .~..-~x ~.F~ ` *J 1"W kti .~.Py a~' ~'deC..! -......7 ~$~a/.~W~ y.a 'q.:~'~ ~~,~..J„~ a" {tj ~"•rvt ~iNA a{ a. 1i~i~~~ I ~1`M11~ { ~ £ 1""~~ u '"+:.'9f'~'~"r~~+~-~ ~ '~+~~'~~aa ~xai ~ r~,".Z ful ai4i y w m ' d b .rv. ~ S ~ ~ y a. _ - ~ ~ Om ~';1E. m 3 a-1 REGISTERED REGISTERED fi~ ` ,iy , $400,000 I "t NO. R-12 ~ UNITED STATES OF AMERICA STATE OF NEW YORK ? COUNTY OF SUFFOLK TOWN OF SOUTHOLD ~ ~ i~ilg t(€(i" ~ PUBLIC IMPROVEMENT SERIAL BOND-2008 j ~ ~i MATURITY INTEREST DATE OF CUSIP r~ : . DATE RATE ORIGINAL NUMBER ` ,,€til ~ II ISSUE ~t~ii~ f<'~ fi ~ ti ~'ts~)}E ~lll€ ' May 15, 2020 4.00% May 15, 2008 844572 KPl i~ ~ ' ' REGISTERED OWNER: CEDE & CO. ~ I, "y~~l`g~„ PRINCfPAL SUM: FOUR HUNDRED THOUSAND DOLLARS ~ t ' ~s >v~ The TOWN OF SOUTHOLD, in the County of Suffolk, a municipal ; I ~a , ~ corporation of the State of New York, hereby acknowledges itself indebted and for value ~~z= r,:~~` received promises to pay to the REGISTERED OWNER named above, or registered ~~~',I assigns, on the MATURITY DATE (stated above), the PRINCIPAL SUM (stated above) , ~~~~a al upon presentation and surrender of this bond at the office of the Town Clerk, Town of ~t{(~€€ 3'' r~"~ Southold, Town Hall, 53095 Main Road, Southold, New York, as fiscal agent (herein r~ ~ ~I~l_~ ^ ' called "Fiscal A ent" , or an successor thereto, and to a interest on such rinci al sum 1~~ ~,ai, ~ g ) Y P Y P p from May 15, 2008 or from the most recent interest payment date to which interest has &`; 'Itu'~; been paid at the INTEREST RATE (stated above), payable November 15, 2008 and ,~u~l;; ! ~ semiannually thereafter on May 15 and November I S in each year until maturity. Interest j"~~ hereon shall be payable by wire transfer or clearinghouse funds by the Town or its agent on Eyli~'u,, each interest payment date to the registered owner hereof at his address as it appears on the €l~il, registration books of the Town maintained by the Fiscal Agent or at such other address as ~j' may be furnished in writing by such registered owner to the Fiscal Agent as of the close of ' I , - 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 ~ ~`F~s~~ ~ private debts; provided, however, that interest on this fully registered bond shall be paid by ~(j~ t '~;{ij ~'i' wire transfer or clearinghouse funds as set forth above. I =s REFERENCE IS MADE TO THE FURTHER PROVISIONS OF THIS ~ _ BOND SET FORTH HEREIN. q !4 ti y .e 1 aT Sa3m 1 Si. ~ , s'q. O %~w I„~'j' i 2~ ~~fl~oin .li'. q, ~ i~„C. ~~'G ~ La"ax h~„~w ti A:. ~7~ 'r~.W.°^~yL ~ ~4, ti"'^~r^~°'~rit ~wHd j^~rs i ~ i ~ . , ~ mom. . , 1~A_ ~ ~ , ~ Imo: - (=x( D ` ~li~p i~,~; REGISTERED REGISTERED I NO. R-13 $425,000 a ~ UNITED STATES OF AMERICA ~ ~ STATE OF NEW YORK COUNTY OF SUFFOLK `~i~i ~ aE. s a TOWN OF SOUTHOLD Vital t a{( F3f~)} ~'..i . PUBLIC IMPROVEMENT SERIAL BOND-2008 II stay ~.=a y MATURITY INTEREST DATE OF CUSIP I DATE RATE ORIGINAL NUMBER ' i £,~1';,,";i ISSUE ,D~~, ~ I ~ Ftgd ~ €.0€-}gyp' May 15, 2021 4.00% May I5, 2008 844572 KQ9 } '?.ia m:, k " L«~„. ~ ~ REGISTERED OWNER: CEDE & CO. ~,r ~ PRINCIPAL SUM: FOUR HUNDRED TWENTY-FIVE THOUSAND DOLLARS ~ ~t~l, i <d~ rc ~ 'i Wyk #ll~j~e~ ~ i tit} . I ' The TOWN OF SOUTFIOLD, in the County of Suffolk, a municipal ~ corporation of the State of New York, hereby acknowledges itself indebted and for value ,=f received promises to pay to the REGISTERED OWNER named above, or registered ~"a~i 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 ' 3 s'""' Southold, Town Hall, 53095 Main Road, Southold, New York, as fiscal agent (herein j -'I f'6i i ~ , ~4? called "Fiscal Agent"), or any successor thereto, and to pay interest on such principal sum i from May 15, 2008 or from the most recent interest payment date to which interest has ~ a~ li ~ been paid at the INTEREST RATE (stated above), payable November 15, 2008 and jjno F_ .r F . semiannually thereafter on May 15 and November 15 in each year until maturity. Interest ` hereon shall be payable by wire transfer or clearinghouse funds by the Town or its agent on s ~'Yw each interest payment date to the registered owner hereof at his address as it appears on the ~t~~It registration books of the Town maintained by the Fiscal Agent or at such other address as ~{l~~'s may be furnished in writing by such registered owner to the Fiscal Agent as of the close of 9 ~ business on the last day of the month preceding each interest payment date. The principal a~n€ 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 1"~ . ~~u€~i,~;,, private debts; provided, however, that interest on this fully registered bond shall be paid by 't((€1 c~)~,~, ,£I~€, wire transfer or clearinghouse funds as set forth above. ~",~B ' to REFERENCE IS MADF_ TO THE FURTHER PROVISIONS OF THIS ~=sa: ~ BOND SET FORTH HEREIN. ~ , I ~~;~}7 ~(~~li G~RJ; c~ e C g( v N }g`.it~~1,~ it ~ Li~~3}?. D 03Sa` _iL \'C +t. • ~ .n.~. `fi'r t ~ P Pfti- L~ ~ $ fpLVlp<~S II SC; 3} n1 ~ gt f O ~ H{~ ap ~_=~~4~~ ~ REGISTERED REGISTERED I i $425,000 t UNITED STATES OF AMERICA rq cnlyi„ ;~h,~y; ,3 STATE OF NEW YORK ~ COUNTY OF SUFFOLK ~ ~6~I~YI ~ i~l~ F<' r TOWN OF SOUTHOLD ~ : ~ a gty~ fglll}? m' I ~lttl' 3-r.' PiJBLIC IMPROVEMENT SERIAL BOND-2008 "I ~,g MATURITY IN1'ERF,ST DATE OF CUSIP ' F fir; DATE RATE ORIGINAL NUMBER _ ,:l--~l~# tl ISSUE : `'Ili ~ 4.00% May 15, 2008 844572 KR7 ~~l May 15, 2022 z.._. s_ REGISTERED OWNER: CF,DE & CO. , " ~~I PRINCIPAL SUM: FOUR HUNDRED TWENTY-FIVE THOUSAND DOLLARS i~~~ t ~ Y N ~ ~~#t}~ x; ~ 1!~ 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 , ' j received promises to pay to the REGISTERED OWNER named above, or registered assigns, on the MATURITY DATE (stated above), the PRINCIPAL SUM (stated above) ~~a 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 ~,~~r~#~t n{ called "Fiscal Agent"), or any successor thereto, and to pay interest on such principal sum ~+h from May 15, 2008 or from the most recent interest payment date to which interest has~-~ been paid at the INTEREST RATE (stated above), payable November 15, 2008 and semiannual) thereafter on Ma 15 and November 15 in each ear until maturit .Interest Y Y Y Y ~ hereon shall be payable by wire transfer or clearinghouse funds by the Town or its agent on ~t~t~} each interest payment date to the registered owner hereof at his address as it appears on the y~~~~`' registration books of the Town maintained by the Fiscal Agent or at such other address as ~~i ~ 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 `~e~. 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 ' ~at private debts; provided, however, that interest on this fully registered bond shall be paid by ~ " t<`h l~~ ' wire transfer or clearinghouse funds as set forth above. ~,,-j( , _ttlq~~_ w~ its=i,;=i: " REFERENCE IS MADE TO THI: FURTHER PROVISIONS OF THIS ,~,tt~;, BOND SET FORTH HEREIN. a~+~z=-;~ , t5~ ~ t Dg -r , r ? sg e 7•~~^e"4 \;"V~.f °~~.;~xry~ ~G. r,~n " j+,.. ~ .K ,w1d ~aMN?r• ~qp~ Q F~y^ °`^`•uF':, ~ ji'L" .~~f ~ y,.,a.~~Y fm.~HY r ~ ~y !"'Wa.~ '~~"i-r~'~j,,,~ui s..,....yµ w,xwq ~%M a i ~^xxl , i v~ / % 9 nc. ~ ' n~ } r i ~ I REGISTERED REGISTERED ~ ~ NO. R-15 $425,000 ~ _ , ~~I UNITED STATES OF AMERICA I il. STATE OF NEW YORK ~ COUNTY OF SUFFOLK ; ~ zx ~It~~~d,.' TOWN OFSOUTHOLD ~fi~ : Ft 1'1 t1~1}z ~~i t~~41' . ' PUBLIC IMPROVEMENT SERIAL BOND-2008 MATURITY IN'PEREST DATE OF CUSIP "~a~..~ s~ ~ DATE RATE ORIGINAL NUMBER ' ~s ~I<t~}, ISSUE ~ 'I s ' May 15, 2023 4.00% May I5, 2008 844572 KSS E "'~A I Mkt`' REGISTERED OWNER: CEDE & CO. i , ~ ~ PRINCIPAL SUM: FOUR HUNDRED TWENTY-FIVE THOUSAND DOLLARS ~ , ~ i I i ,~i~tFS~l n~ I ~ $y i The TOWN OF SOUTHOLD, in the County of Suffolk, a municipal = 3,~ ~ corporation of the State of New York, hereby acknowledges itself indebted and for value m~~a received promises to pay to the REGISTERED OWNER named above, or registered ?v~, I l ~ ~ ' @ assigns, on the MATURITY DATE (stated above), the PRINCIPAL SUM (stated above) al~~'I I, upon presentation and surrender of this bond at the office of the Town Clerk, Town of ~l~l~' ~ +}r~ Southold, Town Hall, 53095 Main Road, Southold, New York, as fiscal agent (herein ta~tlllt called "Fiscal Agent"), or any successor thereto, and to pay interest on such principal sum ~ ~~t~~t: from May 15, 2008 or from the most recent interest payment date to which interest has ~K,I;, been paid at the INTEREST RATE (stated above), payable November I5, 2008 and ~~713 ~ semiannually thereafter on May 15 and November 15 in each year until maturity. Interest ~ ~ ~ ~ z~'ii' hereon shall be payable by wire transferor clearinghouse funds by the Town or its agent on ` 3 _:,(~§~I~ " each interest payment date to the registered owner hereof at his address as it appears on the ' ' ~I~t~i sf registration books of the Town maintained by the Fiscal Agent or at such other address as =z may be furnished in writing by such registered owner to the Fiscal Agent as of the close of business on the last da of the month recedin each interest a ment date. The rind al ~ Y p g P Y P p 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 t~~a~3}~ r! private debts; provided, however, that interest on this fully registered bond shall be paid by ~ ii fs wire transfer or clearinghouse funds as set forth above. ' 9 ~.-„t ~ ; I REFERENCE IS MADE TO THE FURTHER PROVISIONS OF THIS -9'~ . ~4~u~s, BOND SET FORTH HEREIN. ~ _ ;}j3 , j`{ ~ . fj i , tl{~I~ J~}t > ~ n~~ _ ~ fi a ~ / _ ~ ~x F', sSR .,.J +•~.~.yi. `c :.i~ :a"•Ta.`~. ,h~ ..i. .r :I~.'•~' x"5 i:. +u ~ Wx~,£ ' >a0\ „AU N~ u,g, •.9h t..~p.,,y,?>` 0. yuS.. -'.„°`~"..0.,m. i~.iF. - C~ u! i-°i "~~aq%' ~ - ~ 1• ~Maxl\ ~A? .N is ~ ~,MJ,"m°..n ~ ;W4~ \r .A~..a..,~ \MII~ ~ ~4; pv.tL ,~~w~~-nt\. ~ ••.~+°g;~:%g^...,.µ t""~d`~ii W ~ i _ ' u :r. M ~ 0.Ra ~'1 ~ ~ r 4~~3t ~~l I _ - t~ aN'i ~ REGISTERED REGISTERED ~lkl\ ' ~ = t Vii! NO. R-I6 5450,000 ~ ? UNTTED STATES OF AMERICA ~~`4;; ~ STATE OF NEW YORK v~z„ - COUNTY OF SUFFOLK ' ~ ~~((s r,i TOWN OF SOUTHOLD PUBLIC IMPROVEMENT SERIAL BOND-2008 .v~ ~'`w' MATURITY INTEREST DATE OF CUSIP ~ ~f~-' 't--,,~.1__-.,,~ I DATE RATE ORIGINAL NUMBER ' ~:;r_;I~ Ir)' ISSUE ' St1 C°'-i))~ u„ May 15, 2024 4.00% May I5, 2008 844572 KT3 ~ ~ ~ =csf" REGISTERED OWNER: CEDE & CO. f~ 4 ~i y"j I, PRINCIPAL SUM: FOUR HUNDRED FIFTY THOUSAND DOLLARS ~ c<)+Ti i. ~ 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 s; received promises to pay to the REGISTERED OWNER named above, or registered ',4.' ~ assigns, on the MATURITY DATE (stated above), the PRINCIPAL SUM (stated above) U r ~ alb}} " upon presentation and surrender of this bond at the office of the Town Clerk, Town of ({I} ~~tie Southold, Town Hall, 53095 Main Road, Southold, New York, as fiscal agent (herein =i ts~~~ ~ called "Fiscal Agent"), or any successor thereto, and to pay interest on such principal sum I ~ from May 15, 2008 or from the most recent interest payment date to which interest has x~--.~~ been paid at the INTEREST RATE (stated above), payable November 15, 2008 and ~jn~ ; semiannually thereafter on May I S and November 15 in each year until maturity. Interest hereon shall be payable by wire transfer or clearinghouse funds by the Town or its agent on £1=~~i, each interest payment date to the registered owner hereof at his address as it appears on the ~~~1.` , ~ "~'i u~l registration books of the Town maintained by the Fiscal Agent or at such other address as ' ~~r;' J may be furnished in writing by such registered owner to the Fiscal Agent as of the close of business on the last da of the month recedin each interest a ment date. The nnci al e~ ~ Y P g p Y p P of and interest on this bond are payable in any coin or currency of the United States of ~ ~~-r• America which, at the date of payment, is legal tender for the payment of public and m,, , ~ii~l' ~ private debts; provided, however, that interest on this fully registered bond shall be paid by .fit({~, wire transfer or clearinghouse funds as set forth above. ~M REFERENCE IS MADE TO THE FURTHER PROVISIONS OF THIS ~~ara BOND SET FORTH HEREIN. ;T?~h~ y! i. m ~i~31I1}~ ii ' ~l?i. n Yj .u ~xY z y nA\ :y A x '~F ~ r r... - riH:e. at wt :x:IF ~ iii ~ rrx °e nA\ ' ~Sg11n +.~yy[ g$~ ~ _ M FP"°°°• i G'..i'. Fllr~ n0 f tp I n~ 8~~~ ~ ~~t~f E- REGISTERED REGISTERED `I =t=~} I, ~tl' Z ~ NO. R-17 $450,000 UNITED STATES OF AMERICA 'k STATE OF NEW YORK ?3i+~ COUNTY OF SUFFOLK ~ <I€f TOWN OF SOUTHOLD ~~{al PUBLIC IMPROVEMENT SERIAL BOND-2008 z ' ~3 MATURITY INTEREST DATE OF CUSIP ~ DATE RATE ORIGINAL NUMBER ' » 1. F,,t May 15, 2025 4-1/8°/n May I5, 2008 844572 KUO ~1~~~ ~ ~}y REGISTERED OWNER: CEDE & CO. ~3 r p ~ ~a „F` s, ~p}~ PRINCIPAL SUM: FOUR HUNDRED FIFTY THOUSAND DOLLARS G~?417" I „~q: I3~~i~ u~ ~lii~ ~a~u, The TOWN OF SOUTHOLD, in the County of Suffolk, a municipal a„~,i corporation of the State of New York, hereby acknowledges itself indebted and for value i received promises to pay to the REGISTERED OWNER named above, or registered ~,-f assigns, on the MATURITY DATE (stated above), the PRINCIPAL SUM (stated above) ~ " a Cpl}j I upon presentation and surrender of this bond at the office of the Town Clerk, Town of I~~1~~F > u 1 ' Southold, Town Hall, 53095 Main Road, Southold, New York, as fiscal agent (herein " ~1~1, called "Fiscal Agent"), or any successor thereto, and to pay interest on such principal sum ~d~D~e 1 from May 15, 2008 or from the most recent interest payment date to which interest has T~ been paid at the INTEREST RATE (stated above), payable November 15, 2008 and N~,~ a, semiannually thereafter on May I S and November 15 in each year until maturity- Interest ~ ' hereon shall be payable by wire transfer or clearinghouse funds by the Town or its agent on } =<i~l each interest payment date to the registered owner hereof at his address as it appears on the F~ rr<~' re istration books of the Town maintained b the Fiscal A ent or at such other address as -~~D ~t~i~. i; g Y g gr: may be furnished in writing by such registered owner to the Fiscal Agent as of the close of s business on the last day of the month preceding each interest payment date. The principal DD~e ~~~a= of and interest on this bond are payable in any coin or currency of the United States of 1' s~ America which, at the date of payment, is legal tender for the payment of public and ~ ~ - ~I; private debts; provided, however, that interest on this fully registered bond shall be paid by ~gg'~> a r; wire transfer or clearinghouse funds as set forth above. 34~ ~\t ~,l ~~a it REFERENCE IS MADE TO THE FURTHER PROVISIONS OF THIS ~ BOND SET FORTH HEREIN. j: ..ate. ~ s ~~~allt~ ~~~I° . 1:: n~_~~ „4iirw °b ~ c...: a;'!%. ~F4.i.~. 7 y k:te ! . W yF:f~i )g ~~l\i ~~,~:~2~~ ~~W ~ d \ t.6'~~•bi~ „ \ ~ i 7T,"". a Wt..~~ ~ ~ ~~µil ~ ~ - ~ ~ ~ ~y ~ _ y, > s = > I no ~~~~t~ ~REGISTERED REGISTERED i ~~~~f~ ''I I NO. R-18 $450,000 t,~: z ~ ~ ~I UNITED STATES OF AMERICA s ac f ' ~ STATE OF NEW YORK ,3:_,.. COUNTY OF SUFFOLK ~ ~ ~ I ~V ~~~It I `-a1~ TOWN OF SOUTHOLD I . >t n ~i ~t t PUBLIC IMPROVEMENT SERIAL BOND-2008 ~ ' ,:3~P''. nisyi X14=5!Kc:, ~j=. MATURITY INTEREST DATE OF CUSIP ~3 _ ~s ~ DATE RATE ORIGINAL NUMBER I r T~ \€~11~1' ISSUE '~~~i3 i KK is ~ ~}qa ; ! May 15, 2026 4.25'% May 15, 2008 844572 KV8 ~~,1 ~ ii , ~ REGISTERED OWNER: CEDE & CO. gyp; r ~i G PRINCIPAL SUNI: FOUR HUNDRED FIFTY TIIOUSAND DOLLARS ~(Id= IIIpl, , tx~~Iji~Sl ul ~fllf a.' 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 ~ ~a ~~~'t{ received promises to pay to the REGISTERED OWNER named above, or registered ,3' I~ ' assigns, on the MATURITY DATE (stated above), the PRINCIPAL SUM (stated above) f¢Il~~; ' upon presentation and surrender ofthis bond at the office of the Town Clerk, Town of \~~~I~I ~ a~~ Southold, Town Hall, 53095 Main Road, Southold, New York, as fiscal agent (herein ~ u?i3~, called "Fiscal Agent"), or any successor thereto, and to pay interest on such principal sum ~~~1~1 from May I5, 2008 or from the most recent interest payment date to which interest has ~ I rE been paid at the INTEREST RATE (stated above), payable November I5, 2008 and nI r semiannually thereafter on May 15 and November 15. in each year until maturity. Interest hereon shall be payable by wire transfer or clearinghouse funds by the Town or its agent on I~~li7 each interest payment date to the registered owner hereof at his address as it appears on the ; ~ye~: .fix ~ registration books of the Town maintained by the Fiscal Agent or at such other address as I ~'j~~~l may be furnished in writing by such registered owner to the Fiscal Agent as of the close of i 1~~r business on the last day of the month preceding each interest payment date. The principal i))~~ of and interest on this bond are payable in any coin or currency of the United States of s€ ~ America which, at the date of a ment, is le al tender for the a ment of ublic and ~:,~0~, ~I private debts; provided, however, that interest on this fully registered bond shall be paid by ~((~3,, a f< > u,. wire transfer or clearinghouse funds as set forth above. '`Ig``( I x133)f\ ~ REFERENCE IS MADE TO THE FURTHEK PROVISIONS OF THIS i~ ~~cks BOND SET FORTH HEREIN. { I' j ~s _ s I " t ~ ) w i:, 7{y> n ai ilii; s: a ,a ~ ~r ..,r. ~ r ~ ,rte Y~h C r'.'t .'J^'C~' ? R.F.N.. ~,y T ~ *rp~ rZ-- ! r Ane~ 3 F' , .y 3 r:P' ° w, - dire s£ ai, .~,.x w $b•nxa 1'~' r ~ p t{ra. ? > "~`fiee ~ ~ DC - - - - a ~~I ~3€ys O~i [1ta3 { ~ REGISTERED REGISTERED z NO.R-19 $450,000 tt`,t UNITED STATES OF AMERICA ~rx STATE OF NEW YORK ~~_`:~::a ~ COUNTY OF SUFFOLK ~~,g ~^I 3`°~~) ~1 TOWN OF SOUTHOLD <dD X~ If 1 ~I ; PUBLIC IMPROVEMENT SERIAL BOND-2008 MATURITY INTEREST DATE OF CUSIP DATE RATE ORIGINAL NUMBER Fz~~lt ISSUE ,t(~~,;.: ;£~a~; ~ ~~f--~}F ~j May 15, 2027 4.25°/n May 15, 2008 844572 KW6 '~t' ~i i ~ ~I ~a, '.c,~t ~ REGISTERED OWNER: CEDE & CO. : i ~ I s5 may.' ~i€IIF PRINCIPAL SUM: FOUR HUNDRED FIFTY THOUSAND DOLLARS ,~d j ~1 , F+ Yd,~) •~Y ~`~IFa~, The TOWN OF SOUTHOLD, in the County of Suffolk, a municipal j, corporation of the State of New York, hereby acknowledges €tself indebted and for value I ~~z received promises to pay to the REGISTERED OWNER named above, or registered ~ ~I assigns, on the MATURITY DATE (stated above), the PRINCIPAL SUM (stated above) j s~~~l~j ' upon presentation and surrender of this bond at the office of the Town Clerk, Town of ~ ~~1IF€,~. fi' ! Southold, Town Hall, 53095 Main Road, Southold, New York, as fiscal agent (herein ~ ` €,~h ~ called "Fiscal Agent"), or any successor thereto, and to pay interest on such principal sum ~ € from May 15, 2008 or from the most recent interest payment date to which interest has been paid at the INTEREST RATE (stated above), payable November 15, 2008 and ;~~a ~ semiannually thereafter on May 15 and November 15 in each year until maturity. Interest ~ €_1 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 tj?'„ ~eic; `~gjilt, ? registration books of the Town maintained by the Fiscal Agent or at such other address as „ f ~ _ ~ i >~e--~ may be furnished in writing by such registered owner to the Fiscal Agent as of the close of =t~ ~1`~ business on the last day of the month preceding each interest payment date. The principal it of and interest on this bond are payable in any coin or currency of the United States of j =~-~`z America which, at the date of payment, is legal tender for the payment of public and ~ l~~~r€ private debts; provided, however, that interest on this fully registered bond shall be paid by ~ wire transfer or clearinghouse funds as set forth above. ~ £A< + rte) ,i~ , ^I t REFERENCE IS MADE TO THE FURTHER PROVISIONS OF THIS z ~ ~ ~iH(, BOND SET FORTH HEREIN. ;j;µ ~ _ 3j {j fs£i~If y' ~tl~£i.'. c - d3} k Lei€1}t ^I {~9~'~ n a „ F ~ ~ "~N/ b i €F n n 3~€ ..c~:~ an •;'wF.F. ~1: w`v, F. f ..F 1... 'bMrsn T. _ _ _ ~na`I ~ ~'N~J ..tip' r^" y?t` J -=..rcl'7' ` ",Y' y-A.,~~° "r~"~ `ke z;,,'.~r•.~' IP\ . {~y111 ~•~ti~'1'~~.~ ~ N .,+t r n++.~i+M•"~ ~a N ~ y ~ I~\•uv~ .AY 'wy~q .~m~A A MI . ~i Ml. I~ ,s 'n'?i •~'i`P%ys 11 'w^9 I g" vlll Do ~~l~ll - - - - - ~ ltlj~l3 ~ > REGISTERED 1 REGISTERED ~~v ' NO. R-20 $475,000 UNITED STATES OF AMERICA ~ I STATE OF NEW YORK COUNTY OF SUFFOLK ~ Fg~~l ' ~ ~ Iptll, ~ ~,>~1'' TOWN OFSOUTHOLD :i g > zsu,~ ~ ~ i PUBLIC IMPROVEMENT SERIAL BOND-2008 ~ 4_' t:' I~ MATURITY INTEREST DATE OF CUSIP ~a2 r j ~ ~ ~ DATE RATE ORIGINAL NUMBER #~3~IIt ISSUE ~'((~I,'` i u~}€91).~,d' May 15, 2028 4.25 /y ~ ~ "1~ May I5, 2008 844572 KX4 l~` I ? REGISTERED OWNER: CEDE & CO. I ~ ~ PRINCIPAL SUM: FOUR HUNDRED SEVENTY-FIVE THOUSAND DOLLARS ~3 `i i ~ ~~`~~~i ' I The TOWN OF SOUTHOLD, in the County of Suffolk, a municipal 1 ~l: =I corporation of the State of New York, hereby acknowledges itself indebted and for value ~ ~~~zS€'i ='~"t';;• received promises to pay to the REGISTERED OWNER named above, or registered g~°~' I~ w~.i ~ assigns, on the MATURITY DATE (stated above), the PRINCIPAL SUM (stated above) , ; i tl~lgl)~ ~ upon presentation and surrender of this bond at the office of the Town Clerk, Town of ti ~~}1~ ~ I 1; Southold, Town Hall, 53095 Main Road, Southold, New York, as fiscal agent (herein 1 ~1~'i; called "Fiscal Agent"), or any successor thereto, and to pay interest on such principal sum ~atl from May 15, 2008 or from the most recent interest payment date to which interest has v,M -3' been aid at the INTEREST RATE stated above a able November 15, 2008 and ',4~fn~ ! P ~ P Y ~2io semiannually thereafter on May I S and November 15 in each year until maturity. Interest hereon shall be payable by wire transfer or clearinghouse funds by the Town or its agent on ~t,i;} each interest payment date to the registered owner hereof at his address as it appears on the ' ~~ti registration books of the Town maintained by the Fiscal Agent or at such other address as may be furnished in writing by such registered owner to the Fiscal Agent as of the close of business on the last da of the month recedin each interest a ment date. The nnci al Y P g P Y P P ~•3 ' 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 'I°~ ~1,~ private debts; provided, however, that interest on this fully registered bond shall be paid by ~'Iti wire transfer or clearinghouse funds as set forth above. ~ _ REFERENCE IS MADE TO THE FURTHER PROVISIONS OF THIS ~a`~ 3 `C z£~u}~" BOND SET FORTH HEREIN. ~ ?ii;> ~ i - 1. s wow q xxw.. `d~' ~ °~In.: ..qeR' ~ n..p„ '~..i:~' ' a~',^~,~ i~ . jq 'Cep na ~i JO! ..~'+'I . rk h,~`dlANt fji. N 9H ^+~+w t•.x... x+19'°"` ! E Z nili~ q!!n/L ~'waL r•+?ij ~ -~r~O ~ '!!rr. N ~N,~ G e~' ~ x y i ~ ulll~ ,fix ~ ~ q ~ I . 3, , - a nJ 1 ~ fef ~Y REGISTERED REGISTERED ~~~E, z ~ ~ NO. R-21 X475,000 ~ UNITED STATES OF AMERICA ~`3 r i ` STATE OF NEW YORK ;--a' COUNTY OF SUFFOLK ' I 33} 5'~g;~f V ~~~;P <rsa~ ' TOWN OF SOUTHOLD `ir{~}~ ~iz~l"s ~I PUBLIC IMPROVEMENT SERIAL BOND-2008 ' ~ I -I ~ MATURITY INTEREST DATE OF C[1SIP DATE RATE ORIGINAL NUMBER '(,1~~'~": ISSUE ~LI~7~-- ~ May I5, 2029 4.25% May 15, 2008 844572 KY2 . ii'~~ REGISTERED OWNER: CEDE & CO. i , ~ . a ii~"~ ;'=i~~~ 3ry~ PRINCIPAL SUM: FOUR HUNDRED SEVENTY-FIVE THOUSAND DOLLARS 1 -~1)~""' The TOWN OF SOUTHOLD, in the County of Suffolk, a municipal ~ ~ i ~ corporation of the State of New York, hereby acknowledges itself indebted and for value ~ ~~y i received promises to pay to the REGISTERED OWNER named above, or registered ;~€a''! h, lt- ~'=-i ~ assigns, on the MATURITY DATE (stated above), the PRINCIPAL SUM (stated above) ~1~}t upon presentation and surrender of this bond at the office of the Town Clerk, Town of (~~I,~' s'!~ Southold, Town Hall, 53095 Main Road, Southold, New York, as fiscal agent (herein ~ ~ I~(~~ls ^f called "Fiscal A ent" or an successor thereto, and to a interest on such rind al sum ~tt~~~ f from May I5, 2008 or from the most recent interest payment date to which interest has been paid at the INTEREST RATE (stated above), payable November 15, 2008 and r3)~, s: semiannually thereafrer on May 15 and November 15 in each year until maturity. Interest hereon shall be payable by wire transfer or clearinghouse funds by the Town or its agent on i i t 41 each interest payment date to the registered owner hereof at his address as it appears on the >~~r '£al~) ~ registration books of the Town maintained by the Fiscal Agent or at such other address as ~~~at ,a 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 aa. E~3~r' private debts; provided, however, that interest on this fully registered bond shall be paid by ' :{r> wire transfer or clearinghouse funds as set forth above. I < Fitt;}~. e~ ~~4€,re~. ~ ; REFERENCE IS MADE TO THE FURTHER PROVISIONS OF THIS ~o ze}, BOND SET FORTH HEREIN- ;61? r,„ ~~41 t ° ~~itf;' 4{ m ~rg~ltl~ Si ' l~tt3 D m:~ 'x _ _ _ tt { li iS ~ t -•~:•In, , .e'.C' ~ . Ai W ..,~4.:.":, _ aln t _ :.r'~. §d ~ _ _ _ a~ U YF. .i'^ /~q,lF ..^J.R "{.H' ' ~ ~ °tS '+ACV`\' ? XT- t +.1l~'. IF a :.L`}F° ~t~:~~\1~~ ' ~'~x n": '~v'£ i},~ ~ {~i ~4~M L\~~'-~°~'>My 5~.,'Y-~.."A}C'r ~S"X~'\ \ ~ \.;x,~,,..,.1xY \ ~°i f'~ DO ~ ~ vo 3SS7~F5 ~ '~t;;a5 .',~I a~ +~~s' REGISTERED REGISTERED z 3~ NO. R-22 X475,000 ~ UNTTED STATES OF AMERICA I STATE OF NEW YORK : COUNTY OF SUFFOLK ~ F '~iD)'a, TOWN OF SOUTHOLD ~`,2, ::I 'x9~l~a i i ~lSrv5:;~ PUBLIC IMPROVEMENT SERIAL BOND-2008 I ta~F~:' ':~4ni j! ,,,r NIATiJRITY INTEREST DATE OF CUSP ~ DATE RATE ORIGINAL, NUMBER ~~~lt, ~1 ISSUE ~~~;a£.~i n ~ : >a~;l ~ ' 4.25'% May 15, 2008 844572 KZ9 °#0 - .r~.~ May 15, 2030 - ~ REGISTERED OWNER: CEDE & CO. , ~ ~ ~ h~ ~ . ~I -PRINCIPAL SUM: FOUR HUNDRED SEVENTY-FIVE THOUSAND DOLLARS t , ~5~~~1 I=\ ~~~93~ 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 y, ; ~g: . i received promises to pay to the REGISTERED OWNER named above, or registered assigns, on the MATURITY DATE (stated above), the PRINCIPAL SUM (stated above) ~ h upon presentation and surrender of this bond at the office of the Town Clerk, Town of + ~Il}i' t~~i"M,~ ~ Southold, Town Hall, 53095 Main Road, Southold, New York, as fiscal agent (herein YFr I ~:~?~)t called "Fiscal Agent"), or any successor thereto, and to pay interest on such principal sum ~~~¥~t ~L1 5 from May 15, 2008 or from the most recent interest payment date to which interest has rt~.~ : been paid at the INTEREST RATE (stated above), payable November 15, 2008 and . ~ ' semiannually thereafter on May I S and November 15 in each year until maturity. Interest ~ Nr u I hereon shall be payable by wire transfer or clearinghouse funds by the Town or its agent on 'a=~~ each interest payment date to the registered owner hereof at his address as it appears on the ~~f~r' . ~ ~ ,l' ~a~~}I registration books of the Town maintained by the Fiscal Agent or at such other address as ~I(,+~ . ''t ~~;i I may be furnished in writing by such registered owner to the Fiscal Agent as of the close of ` I business on the last day of the month preceding each interest payment date. The principal I ~4 , m of and interest on this bond are payable in any coin or currency of the United States of ~ ~.'S=s ' America which, at the date of payment, is legal tender for the payment of public and rrE . i a<c~' private debts; provided, however, that interest on this fully registered bond shall be paid by ~y't((~t; wire transfer or clearinghouse funds as set forth above. ' [j ~e?\x!~ ni i 't~+SB i_~ se~~ REFERENCE IS MADE 'f0 THE FURTHER PROVISIONS OF THIS r~ces~s~ BOND SET FORTH HEREIN. ~~ai ;'i ~ _I ' li ~~~IS k ~ i,µi ! THE DEPOSITORY TRUST COMPANY 55 Water Street , New York, New York 10041 SUBJECT T~ CUNT Attention: Underwriting Packaging Department ~D EXAMINATION Phone- (212)558-8520 Tclecopy: (212)344-1533 SAFEKEEPING AGREEMENT Ref (Description of issue, number of certificates, number of CUSIPs assigned [o issue and $ value of securities) Town of Southold in the County of Suffolk New York $8,850,000 Public Improvement Serial Bonds - 2008, dated Mav L5, 2008, maturing May li, 2009 - 2030 CUS1P # 844572 KCO - KZ9 (TWENTY-TWO CERTIFICATES) $ VALUE $8,850,000 The Depository Trust Company (DTC) acknowledges receipt from Hawkins Delafield & Wood LLP (the tmstee, transfer agent, underwriter or other agent of the issuer, hereafter referred to as the "Agent") of possession, custody and control of the above securities for safekeeping. DTC is authorized to hold these securities in safekeeping until DTC is instmcted by telephone or in writing by one of the below designated representatives of the Agent either to. (1) deliver the securities by book-entry to the DTC account of the lead underwriter (or to the DTC account of its clearing agent) or (2) return the said securities to the Agent. In the event DTC is instructed to return said securities, DTC shall return lire securities to the Agent as soon as pmc[icable, but, in any event, no later than the DTC business day following the day such inswction is received. DTC shall hold the Agent, its officers and employees, harmless from any liability, loss, damage, and reasonable expense of any kind in connection with any loss, damage, theft or destruction of any kind of said securities while they are in the possession, custody or control of DTC, its o[(icers or employees or in the event securities are released from the control of DTC without the sp~fic approval of the Agent purs7>ant to this Safekeeping Agreement TF°' Ac"'"' The Depository Tru om ny ~ 1 By: By: Title: Title: i7PERVIS Date: Date: ~ (_S Authorized Representative of Trustee/Agent PRINT NAMI! ORGANIZATION ( ) TIiLIiPIIONE NO. PAIN"C NAME ORGANIZATION ( ) TF.i.BPHONF.NO PRINT NA1v1F. ORGANIZATION ( ) l"EI,F,PnONE NO DTC accepts authorization of closings on the phone number listed below: (212)855-3752 (212)855-3753 (212)855-3755 (212)855-3754 543520.1 037862 MSC - nnrrninJ u~Lnri~ WJ /VV4 lj'JIC~ILV ViS V~.L.7 hMR LIL 4i5V JJtlV lSUUJCVCLI k V15UJJ . FROM (THUS 5.29'08 9,15/ST. 9:14/N0.4B639554'l0 P t4 29Mey08 n9: 10: 37 0100 Ww CDC INQDIR V NT 1 of 1 PG VS7 0914 TYPE 10 TRN SE4 0000600 DATE OB/ 5/29(15 ) ID GI REC ENTER 7:46. 1 SOURCE MAL SITE HRXL RT CUST REG 010 cHP PSN INPUT KEY 0529 B1QGC06 001144 R CYCLE DO ASSOC TR CHF USN REF S KEY ATU6 80 DEBIT/ 066622530 ROOSE~1'ELT 6 CROSS INC xEC orrE EXCHANGE PLAZA FE O1 * * N 0 N E * * 55 BROADWAY 22ND FLOOR NEW YORK NY 10007- ORG'TRN MAIL OF DB/05/29 nR vAL DATE DR Anv CBCR AMOt3NT 8, 687,06q.33 CR VAL DATE 29 MAY OS FUNDS 5 CBAM oRG DATE 2.9 MAY OB ORD CUS ORD SK CREDIT ABA/021907912 NORTH FORK BANK OR PAY CAPITAL ONE N.A. FE O1 * • N 0 N E * * MELVSLLE NY BN RRN MAIL OF 08/05/29 cR ADV C8Ct1 caAM TP ADV HNTYP N CMCH CMAM ACCNT /0129108630 TOWN OF SOUTHHOLD, NY PARTY ULT GENE DETAIL TOWN pF SOUTHHOL D, NY PAYMT BANK/ BANK PRIORITY PRE APPROVE D PHONED MESSAGE _ INV1? NEXT SEQ ID DATE ERR 'TEXT ACTION cTS INFO PROCESS DATE 20081150 PRESS PF6 TO RETURN {19/LJ/LVVtl VJ.LJ fMX LIL 4tlV ~JOU nUUJCVCLI d UnUJJ ~ nnrrnlnJ UGLnf1C I(If VVC/4VY ' FROM (THU) 5. 29' OB 9:15/ST. 9 ~ 14/N0, 4863955420 P 12 29May06 09:10:46 0100 GDC INQUIR NT 1 OF 1 P F VS7 0919 TYPE 10 TRN S£Q 0000700 DATE OB/ 5/29( 50) ID GI REC RNT$R 07;98: SOURCE MAL SITE BRKL RLERT CUST REG 0100 CHP PSN INPUT KEY 0529 B1Q(;CO1 001035 SCYCLE 00 ASSOC TAN CHP OSN AEF I KEY STATUS 80 DEEIT/ 066622530 ROOSEVELT & CROSS INc AEC ONE EXCHANGE PLAZA FE O1 N 0 N E * * SS BROADWAY 22ND FLOOR NEW YORK NY 10007- ORG~TRN MAIL OF 08/05/29 DR VAI. DATE DR ADV CBCH AMOVNT SO, SOD.DD CR VAL DATE 29 MRY OB FUNDS 5 CsAM pRG OATS 29 MAY OB oAD CUS ORD BFG CREAIT ABA/021000018 8K of NYC OR PAY BANK OF NEW YORK FE O1 * ~ N O N E * " NEW YORK NY 10005-2901 BN RRN MAIL OF 06/05/29 CR ADV CBCH CRAM TP ADV BNTYP N CMCH CMAM aCCNT /8900297263 FINANCIAL 9ECUAITY ASSURANCE INC. PART7 ULT GENE DETAIL. REF: TOWN OF SOUTHOLD, NY PAYM`f HANK/ BANK PRIORITY PRE APPROVE D PHONED MESSAGE INV# NEXT SEQ TD DATE ERR TEXT ACTION CTS INFO PROCESS DATE 2008/1S0 PRESS PF6 TO RETURN SUPERVISOR'S CERTIFICATE OF AWARD I, SCOTT A. RUSSELL, Supervisor of the Town of Southold, in the County of Suffolk, New York (the "Town"), HEREBY CERTIFY AND REPORT AS FOLLOWS' 1. On May 13, 2008, at 11:00 o'clock A.M. (Prevailing Time}, bids were received at the offices of Munistat Services, lnc , 12 Rooseve]t Avenue, Port Jefferson Station, New York. 2 At that time and place, seven (7) sealed bids were received for the purchase of $8,850,000 Public Improvement Serial Bonds-2008 of the Town (the "Bonds") pursuant to the Notice of Sale of said Bonds heretofore duly published in conformity with the requirements of the Certificate of Determination executed by the Supervisor as of May 2, 2008, and said bids were thereupon opened and publicly read. 3. The sealed bids so opened and publicly read were each in legally acceptable form and were each accompanied by the check required by said Notice of Sale and constituted signed proposals to purchase all of the Bonds. 4. Forthwith upon receiving, opening, reading and considering said sealed bids, I caused to be publicly announced that Roosevelt & Cross, Inc., and Associates, New York, New York was the successful bidder to whom the bonds are to be awarded, at the purchase price of $8,850,049.75 together with interest at the rates to be borne by the Bonds from the date of the Bonds to the date of payment of the purchase price, said bid of said successful bidder being the best bid received under the terms of the Notice of Sale therefor and providing the lowest net interest cost over the life of the Bonds, computed as follows- X419)8.1 031862 CER't Gross Interest _ $4,473,000.00 Less Premium Bid OverPar._.......... 49.75 Net Interest Cost. $4,472,950.75 Net Interest Rate 4.1158% 5. As designated by the aforementioned successful bidder, said Bonds shall bear interest from their date in each year until maturity at the respective rates per annum stated in the following table: Bonds maturing in each of the years 2009 to 2024, inclusve, at 4.00%; Bond maturing in the year 2015, at 4-1/8%; and Bonds maturing in each of the years 2026 to 2030, inclusive, at 425%, such rates of interest being the rates necessary for the Town to sell said Bonds. 6 I thereupon returned to said other bidders the Good Faith Check (as defined in the Notice of Sale of the Town dated May 2, 2008) received, if any, with their aforesaid sealed bids. 7 Said Bonds will be delivered to the said successful bidder hereinabove referred to upon receipt of payment in accordance with the provisions of the Notice of Sale. IN WITNESS WHEREOF, [have hereunto set my hand as of the 13th day of May, 2008. Supervisor sai9~s i o3ia6zct~ar TOWN CLERK' 5 CERTIFICATE I, ELIZABETH A. NEVILLE, Town Clerk of the Town of Southold, in the County of Suffolk, New York, HERESY CERTIFY that I have compared the foregoing Certificate of Award of the Supervisor and the same is a true and complete copy of said Certificate filed with the Town Board on or before May 29, 2008_ I FURTHER CERTIFY that no resolution electing to reassume any of the powers or duties delegated to the Supervisor by the resolutions cited in the Certificate of Determination referred to in said Certificate of Award, has been adopted by said Town Board_ IN WITNESS WHEREOF, 1 have hereunto set my hand and affixed the corporate seal of said Town, this _ day of May, 2008. (SEAL) Town Clerk sa i ~~s_ i o~ i sbz chart UNDERTAKING TO PROVIDE CONTINUING DISCLOSURE Section 1. Definitions "Annual Information" shall mean the information specified in Section 3 hereof. "GAAP" shall mean generally accepted accounting principles as in effect from time to time in the United States. "Holder" shall mean any registered owner of the Securities and any beneficial owner of Securities within the meaning of Rule 13d-3 under the Securities Exchange Act of 1934. "Issuer" shall mean the Town of Southold, in the County of Suffolk, a municipal corporation of the State of New York. "MSRB" shall mean the Municipal Securities Rulemaking Board established in accordance with the provisions of Section 15B(b)(1) of the Securities Exchange Act of 1934. "NRMSIR" shall mean each nationally recognized municipal securities information repository within the meaning of Rule 15c2-12. "Rule 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 $8,850,000 Public Improvement Serial Bonds-2008, dated May 15, 2008, maturing in various principal amounts on May 15 in each of the years 2009 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 l 1776: (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 541998.1 031 R62 CERT (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. 5419981 031862 CERT Section 3. Annual Information. (a) The required Annual Infornation shall consist of the financial information and operating data for the preceding fiscal year, in a form generally consistent with the information contained or cross-referenced in the Issuer's final official statement relating to the Securities under the headings: "The Town," "Economic and Demographic Information," "Indebtedness of the Town," "Finances of the Town," "Real Property Tax Information," and "Litigation and in Appendix A. (b) All or any portion of the Annual Information may be incorporated in the Annual Information by cross reference to any other documents which have been filed with (i) the NRMSIRs and the State Information Depository, or (ii) the Securities and Exchange Commission. If such a document is a final official statement, it also must be available from the MSRB. (c) Annual Information for any fiscal year containing any modified operating data or financial information (as contemplated by Section 7(e) hereof) for such fiscal year shall explain, in narrative form, the reasons for such modification and the effect of such modification nn the Annual Information being provided for such fiscal year. If a change in accounting principles is included in any such modification, such Annual Information shall present a comparison between the financial statements or information prepared on the basis of the modified accounting principles and those prepared on the basis of the former accounting principles. Section 4. Financial Statements. The Issuer's annual financial statements for each fiscal year shall be prepared in accordance with GAAP as in effect from time to time. Such financial statements shall be audited by an independent accounting firm. Section 5. Remedies. If the Issuer shall fail to comply with any provision of this Undertaking, then any Holder of Securities may enforce, for the equal benefit and protection of all Holders similarly situated, by mandamus or other suit or proceeding at law or in equity, this Undertaking against the Issuer and any of the officers, agents and employees of the Issuer, and may compel the Issuer or any such officers, agents or employees to perform and carry out their duties under this Undertaking; provided that the sole and exclusive remedy for breach of this Undertaking shall be an action to compel specific performance of the obligations of the Issuer hereunder and no person or entity shall be entitled to recover monetary damages hereunder under any circumstances. Failure to comply with any provision of this Undertaking shall not constitute an event of default on the Securities. Section 6. Parties in Interest. This Undertaking is executed and delivered solely for the benefit of the Holders. No other person shall have any right to enforce the provisions hereof or any other rights hereunder. Section 7. Amendments. Without the consent of any holders of Securities, the Issuer at any time and from time to time may enter into any amendments or changes to this Undertaking for any of the following purposes: (a) to comply with or conform to any changes in Rule 15c2-12 (whether required or optional); 541998.1 031862 CEKT (b) to add a dissemination agent for the information required to be provided hereby and to make any necessary or desirable provisions with respect thereto; (c) to evidence the succession of another person to the Issuer and the assumption of any such successor of the duties of the Issuer hereunder; (d) to add to the duties of the Issuer for the benefit of the Holders, or to surrender any right or power herein conferred upon the Issuer; (e) to modify the contents, presentation and format of the Annual Information from time to time to conform to changes in accounting or disclosure principles or practices and legal requirements followed by or applicable to the Issuer or to reflect changes in the identity, nature or status of the Issuer or in the business, structure or operations of the Issuer or any mergers, consolidations, acquisitions or dispositions made by or affecting any such person; provided that any such modifications shall comply with the requirements of Rule 15c2-12 or Rule 15c2-12 as in effect at the time of such modification; or (f) to cure any ambiguity, to correct or supplement any provision hereof which may be inconsistent with any other provision hereof, or to make any other provisions with respect to matters or questions arising under this Undertaking which, in each case, comply with Rule 15c2-12 or Rule 15c2-12 as in effect at the time of such amendment or change; provided that no such action pursuant to this Section 7 shall adversely affect the interests of the Holders in any material respect. In making such determination, the Issuer shall rely upon an opinion of nationally recognized bond counsel. Section 8. Termination. This Undertaking shall remain in full force and effect until such time as all principal, redemption premiums, if any, and interest on the Securities shall have been paid in full ox 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 Yoxk determined without regasd to principles of conflict of law. IN WITNESS WHEREOF, the undersigned has duly authorized, executed and delivered this Undertaking as of May 29, 2008. TOWN OF SOUTHOLD ay Supervisor 541998.1 031862 CERT CLOSING CERTIFICATES RELATING TO THE BONDS OF THE TOWN OF SOUTHOLD, IN THF. COUNTY OF SUFFOLK, NEW YORK OFFICERS' CERTIFICATE AS TO SIGNATURES AND LITIGATION WE, the undersigned officers of the Town of Southold, in the County of Suffolk, a municipal corporation of the State of New York and herein referred to as the "Issuer", HEREBY CERTIFY that on or before the date hereof, each of the Issuer's $8,850,000 Public Improvement Serial Bonds-2008 (the "Bonds"), dated May 15, 2008, and more fully described in Schedule X attached hereto and hereby made a part hereof, were duly and completely executed in the name and on behalf of the Issuer by the manual signatures of the undersigned officers of the Issuer, each of whom did and does hereby adopt such respective signatures, and the impressing thereon of the official seal of the Issuer, and that on the date hereof, we are the duly chosen, qualified and acting officers of the Issuer holding the respective offices indicated by the official titles set opposite our several signatures hereto, for terms expiring on the respective dates set opposite such titles. WE FURTHER CERTTFY that the seal which is impressed upon this certificate has been impressed upon each of the Sonds and is the legally adopted, proper and only official corporate seal of the Issuer- WE FURTHER CERTIFY that no litigation of any nature is now pending or threatened restraining or enjoining the issuance or delivery of said Bonds or the levy or collection of any taxes to pay the interest on or principal of said Bonds, or in any manner questioning the authority or proceedings for the issuance of said Bonds or the levy or collection 541998. 1031862 C&RT of said taxes, or relating to said Bonds or affecting the validity thereof or the levy or collection of said taxes, that neither the corporate existence or boundaries of the Issuer nor the title of any of the present officers thereof to their respective offices is being contested, that no authority or proceedings for the issuance of said Bonds has or have been repealed, revoked or rescinded, and that no Bonds of the Issuer have been heretofore issued under or pursuant to such proceedings. IN WITNESS WHEREOF, we have hereunto set our hands and said corporate seal has hereunto been affixed as of the 24th day of May, 2008. TERM OF OFFICE GNATURE OFFICIAL TITLE EXPIRES (~~Lt~ _ Supervisor December 31, 2011 Town Clerk December 31, 2009 (SEAL) I HEREBY CERTIFY that the signatures of the officers of the above-named Village, which appear above, are truc and genuine and that 1 know said officers and know them to hold the respective offices set opposite their signatures. Sii~,nature Title Name and Address of Bank ~q/~/ ~u ~ l)i'1C ~ , 5y 3 7 5- J/~/J Ct r r7 2 C~ ~~k-~c~e-t-I ~ JV~ t~! L ~~1 W1CIG~CI~~ v S~ the ld h ~G 7~ sa i 44x_ i os ~ aGZ cicx~r ATTORNEY'S CERTIFICATE I, Patricia A. Finnegan, Esq., HEREBY CERTIFY that [ am a licensed attorney at law of the State of New York, having affices at 53095 Main Road, Southold, New York, and am the duly chosen, qualified and acting Town Attorney of the Issuer hereinafter named, that I am familiar with the acts and proceedings heretofore had and or taken by said Issuer or by its officers relative to the authorization, sale and issuance of $8,850,000 Public Improvement Serial Bonds-2008, of the Town of Southold, in the County of Suffolk, a municipal corporation of the State of New York, and herein referred to as the "Issuer", all as described and set forth in Schedule X annexed hereto and by this reference made a part hereof; that no litigation of any nature is now pending or threatened restraining or enjoining the issuance or delivery of said Bonds or the levy or collection of any taxes to pay the interest on or principal of said Bonds, or in any manner questioning the authority or proceedings for the issuance of said Bonds or for the levy or collection of said taxes, or relating to said Bonds or affecting the validity thereof or the levy or collection of said taxes; that neither the corporate existence or boundaries of the Issuer nor the title of any of the present officers thereof to their respective ofTices is being contested; and that.no authority or proceedings for the issuance of said Bonds has or have been repealed, revoked or rescinded. I I~REBY FURTHER CERTIFY that there is no controversy or litigation of any nature now pending or threatened by or against the Issuer, wherein an adverse judgment or ruling could have a material adverse impact on the financial condition of the Issuer or adversely affect the power of the Issuer to levy, collect or enforce the collection of taxes or other revenues for the payment of the Bonds, which has not been disclosed in the Official Statement relating to the Bonds. IN WTTNESS WHEREOF, I have hereunto set my hand as of the 29th day of May, 200 . i To At of y sai9~~s t osis~2 c~u~r CERTIFICATE OF DELIVERY AND PAYMENT I, SCOTT A. RUSSELL, the duly elected, qualified and acting Supervisor of the Issuer hereinafter named, HEREBY CERTIFY that on the 29th day of May, 2008, I delivered or caused to be delivered to Roosevelt & Cross, Inc., and Associates, New York, New York, the purchaser thereof, $8,850,000 aggregate principal amount of Public Improvement Serial Bonds- 2008 (the "Bonds") of the Town of Southold, in the County of Suffolk, a municipal corporation of the State of New York and herein referred to as the "Issuer", each duly and completely executed by or on behalf of the Issuer and all as described and set forth in Schedule X annexed hereto and by this reference made a part hereof, and that at or before the time of such delivery of said Bonds, I received from said purchaser the following amounts: Received prior to such delivery 177,000.00 Received at time of such delivery ......................................................$8,687,064.32 Total amount received ........................................................................$8,864,064.32 being full payment for said Bonds in accordance with the contract of sale thereof, computed as follows: Contract Price .....................................................................................$8,850,049.75 Interest on said Bonds accrued to the date of delivery 14,014.57 Total 8,864,064.32 1 FURTHER CERTIFY that at the time of such delivery of said Bonds, a written opinion was rendered by the law firm of Hawkins Delafield & Wood LLP, dated as of the date of such delivery, as to the validity of said Bonds, said opinion (except as to omission of the date of such delivery) having been printed on each of said Bonds. IN WITNESS WHEREOF, I have hereunto set my hand as of the 29th day of May, 2008. r Supervisor 54199RJ 031862 CERT SCHEDULE X Bonds of the TOWN OF SOUTHOLD, NFW YORK, substantially in form, and offered for sale and sold, as provided by the Certificate of Determination executed by the Supervisor as of May 2, 2008 and to be deVivered thereunder in the aggregate principal amount of $8,850,000. Number of Issues: l Amount and Title: $8,850,000 Public Improvement Serial Bonds-2008 Dated' May ] 5, 2008 Denominations, Numbers and Letters: In the form of registered Bonds without coupons in denominations of $5,000 or integral multiples thereof, registered in the name of Cede & Co , as nominee of The Depository Trust Company, New York, New York, numbered separately and consecutively upward with the letter "R" prefixed thereto_ Place of Payment of The office of the Town Clerk, Town of Southold, Principal and Interest: Town Hall, 53095 Main Road, Southold, New York (the "Fiscal Agent")- Interest payable by wire transfer or in clearinghouse funds by the Town or its agent on each interest payment date to the person in whose name the bond is registered at the address shown on the registration book maintained by the Fiscal Agent as of the close of business on the last day of the month preceding each such interest payment date. Maturities, Interest Rates and Pa ment Dates, Mature on May 15 in the principal amounts in each of the foVlowing years and bear interest at the respective rates per annum, payable November 15, 2008 and semiannually thereafter on May IS and November 15 in each year until maturity, as set forth below: 541998.1031862 CHRI' Year of Principal Interest Year of Principal Interest Maturitv Amount Rate Maturitv Amount Rate 2009 $325,000 4.00% 2020 $400,000 4.00% 2010 325,000 4.00 2021 425,000 4.00 2011 325,000 4.00 2022 425,000 4.00 2012 350,000 4.00 2023 425,000 4.00 2013 350,000 4.00 2024 450,000 4.00 2014 350,000 4.00 2025 450,000 4-1/8 2015 375,000 4.00 2026 450,000 4.25 2016 375,000 4.00 2027 450,000 4.25 2017 375,000 4.00 2028 475,000 4.25 2018 400,000 4.00 2029 475,000 4.25 2019 400,000 4.00 2030 475,000 4.25 The Bonds maturing on or before May 15, 2018 will not be subject to redemption prior to maturity. The Bonds maturing on or after May 15, 2019 will be subject to redemption prior to maturity, at the option of the Town, on May I5, 2018 and thereafter on any date, in whole or in part, and if in part, in any order of their maturity and in any amount within a maturity (selected by lot within a maturity), at par, plus accrued interest to the date of redemption- The Bonds shall be redeemable prior to maturity upon the giving of notice which identifies the bonds to be redeemed, by mailing such notice to the registered holders thereof at their respective addresses as shown upon the registration books of the Fiscal Agent at least 30 days prior to the dates set for any such redemption. If notice of redemption shall have been given as aforesaid, the Bonds so called for redemption shall become due and payable at the applicable redemption price on the redemption date designated in such notice, and interest. on such Bonds shall cease to accrue from and after such redemption date. s4~~~~s i o3isbz cr.~z~r ARBITRAGE AND USE OF PROCEEDS CERTIFICATE I, SCOTT A RUSSELL, Supervisor of the Town of Southold (the "Issuer"), in the County of Suffolk, New York, HEREBY CERTIFY with respect to the Issuer's $8,850,000 aggregate principal amount Public Improvement Serial Bonds-2008 (the "Bonds"), dated May 15, 2008 and issued on May 29, 2008, as follows: Unless the context clearly requires otherwise, all capitalized terms not otherwise defined herein shall have the meanings set forth in Exhibit A attached hereto or in the Resolutions, the Code or the Regulations (each as defined in Exhibit A): ARTICLE I General 1.1 Authority of Sienatory. I am an officer of the Issuer charged with the responsibility for the execution, delivery, and issuance of the Bonds and am acting for and on behalf ofthe Issuer in signing this Arbitrage and Use of Proceeds Certificate (the "Certificate"). 1.2 Description of Bonds. The Issuer represents that the Bonds are sold at the aggregate Issue Price and are further described as set forth on the cover of the Official Statement. 13 Purpose of Certificate. This Certificate is made for the purpose of establishing evidence of the expectations of the Issuer as of the date hereof as to future events regarding the amount and use of proceeds of the Bonds. It is intended and may be relied upon for purposes of Sections 103 and 141 through I50 of the Internal Revenue Code of 1986, as amended (the "Code"), and as a certification described in Section 1.148-2(b)(2) of the Treasury Kegulations. This Certificate is executed and delivered as part of the record of proceedings in connection with the issuance of the Bonds- The provisions of this Certificate constitute a contractual obligation of the Issuer in consideration for the purchase of and payment for the Bonds by the purchaser(s) thereof 1.4 No Hedge Bonds. The Issuer reasonably expects that 85% of the Spendable Proceeds of the Bonds will be expended for governmental purposes within 3 years of the date hereof In addition, not more than 50% of the proceeds of the Bonds are being invested in investments not acquired to carry out the governmental purposes of the issue at a guaranteed yield for 4 years or more. 1.5 Reasonable Expectations. This Certificate sets forth the facts, estimates and circumstances now in existence which form the basis for the Issuer's expectation that the proceeds of the Bonds will not be used in a manner that would cause the Bonds to be arbitrage bonds under Section 148 of the Code or private activity bonds under Sections 103 and 141 of the Code. To the best of my knowledge and belief, such expectation is reasonable and there are no other facts, estimates or circumstances that would materially change that expectation. sn i yvx_ i o3t sbz cExr 1.6 No Composite Issue. No other tax-exempt governmental obligations have been sold fewer than 15 days prior to, or will be sold fewer than l5 days after, the sale date of the Bonds, pursuant to the same plan of financing which are expected to be paid from substantially the same source of funds as the Bonds. 1.7 Registration. The Bonds will be issued in registered form. 1.8 No Federal Guarantee. The Issuer represents and covenants that, except for the gross proceeds of the Bonds which are: (a) invested during the temporary period referred to in Article III, (b) held in any refunding escrow or (c) invested in obligations of the United States Treasury or in obligations issued pursuant to Section Z1B(d)(3) of the Federal Home Loan Bank Act, as amended by Section SIl(a) of the Financial Institutions Reform, Recovery and Enforcement Act of 1989, or any successor provision to Section 21B(d)(3) of the Federal Home Loan Bank Act, as amended: (i) No portion of the payment of principal or interest with respect to the Bonds is or will be guaranteed directly or indirectly by the United States or any agency or instrumentality thereof (herein "federally guaranteed"); and (ii) No portion of the gross proceeds of the Bonds in excess of five percent of such gross proceeds is or will be (A) used in making loans the payment of principal or interest with respect to which is to be federally guaranteed, or (B) invested directly or indirectly in federally insured deposits or accounts- , 1.9 Tax Representation. The Issuer expects to be able to and will comply with all the procedures and provisions set forth herein, and will do and perform all acts and things necessary and desirable within its reasonable control in order to assure that interest paid on the Bonds shall be excluded from gross income of the owners thereof for the purpose of federal income taxation. 1.10 Noncompliance- The Issuer shall perform each of the obligations undertaken by it in this Certificate unless, in the written opinion of Bond Counsel, noncompliance therewith will not cause interest on the Bonds to be included in gross income for purposes of Federal income taxation. 1 I I Reliance by Bond Counsel. The representations of the Issuer expressed in this Certificate may be relied upon by Bond Counsel in connection with the rendering of any opinion with respect to the Bonds. Ll2 IRS Form 8038-G. The Issuer shall file IRS Form 8038-G, set forth as part of the record of proceedings for the Bonds, by the 15th day of the second month after the calendar quarter in which the Bonds are issued- 541998.1 031862 CE2"C ARTICLE II Use of Project and Proceeds 21 Authorization. The Bonds are authorized to be issued pursuant to applicable provisions of the laws of the State of New York and two bond resolutions duly adopted by the Town Board on their respective dates, (the "Resolutions" or "Resolution"), as referred to in the Certificate of Determination relating to the Bonds, executed by the Supervisor as of May 2, 2008 (the "Certificate"). 2.2 Purpose of Issue. The proceeds from the sale of the Bonds will be used to provide financing for various projects in and for the Town (the "Projects"), as further described in the Resolutions. For purposes of this Article II the term "proceeds" means the net amount (after payment of all costs and expenses associated with issuing the Bonds) received by the Issuer from the sale of the Bonds excluding accrued interest. 23 Use of Proceeds. The proceeds of sale of the Bonds will be used to provide original funds for the Projects. For purposes of the Code, the Bonds shall constitute Construction Bonds as defined herein. 2.4 Ownership/Lease/Sale. The Projects will be owned by the Issuer and will not be leased to any person who is not a state or local governmental unit. It will not be sold or otherwise disposed of, in whole or in part, except for incidental sales of surplus items the proceeds of which will not constitute net operating profits or net capita] profits to the Issuer, prior to the maturity date of the Bonds. 2.5 Private Loans. Not more than the lesser of 5 percent or $5,000,000 of the proceeds of the Bonds will be used directly or indirectly to make loans to persons other than a governmental unit- 2.6 Private Use. The aggregate amount of proceeds of the Bonds used directly or indirectly in a trade or business carried on by a person other than a state or local governmental unit ("Private Use"), will not exceed 10% of such proceeds in the event that more than 10% of the principal or 10% of the interest due on the Bonds during the term thereof is, under the terms of the Bonds or any underlying arrangement, directly or indirectly, secured by any interest in property used or to be used for a Private Use or in payments in respect of property used or to be used for a Private Use or is to be derived from payments, whether or not to the Issuer, in respect of property or borrowed money used or to be used for a Private Use. 2.7 Unrelated/Related Disproportionate Use. None of the proceeds of the Bonds will be used directly or indirectly in the trade or business of a person other than a governmental unit that is unrelated or related and disproportionate to the governmental use of the property being financed, including any private loan financing described in Sectio? 2.5 which meets this test. For purposes of this Certificate, proceeds of the Bonds are allocable to an unrelated Private Use if such use is neither directly nor operationally related to a governmental use and proceeds of the Bonds are allocable to a disproportionate related Private Use to the extent that the proceeds of the Bonds which are to be used to finance property used by a s4 i ass. i o3~ xrz ct~.xr nongovernmental person in a trade or business which is related to the governmental use of the property referred to in Section 2.6 above, exceeds the proceeds of the Bonds which are to be used for the governmental use to which such Private Use relates. 2.8 Private Use Defined. For purposes of Section 2.6 and 2.7, unless otherwise provided in this Certificate, a Private Use consists of any contract or other arrangement including without limitation, leases, management contracts, guarantee contracts, take or pay contracts, or put or pay contracts, which provides for a use of the Project by a person or persons who are not State or local governments on a basis different than the general public. However, the Issuer may enter into asafe-harbor management contract which meets the requirements of Rev. Proc 97-13. (i) If the Issuer leases any portion of the facilities to an organization that is qualified under Code section 501(c)(3) or to any other entity which is not a State or a local governmental unit, it will abide by the limitations set forth in this Article II. If the Issuer enters into management contracts with respect to any areas included in the facilities to be financed or refinanced with the proceeds of the Bonds, including, without limitation, service areas, if any, it will follow the guidelines set forth in this Article II. 2.9 Reimbursement. Gross proceeds used to reimburse the Issuer for amounts expended in anticipation of the issuance of the Bonds are considered expended on the date of the reimbursement allocation made in accordance with Treas. Reg. § l .150-Z, if prior to or within 60 days after the date of such expenditure (except for certain preliminary expenditures described in Treas. Reg- §1.150-2(f)(2)), a declaration of intent to reimburse such expenditure is made and the reimbursement allocation is made within 18 months of the later of the placed in service date of the Projects or the date of the expenditure (but in no event more than three years after the original expenditure was paid)- The expenditures to be reimbursed are capita] expenditures as defined in Treas. Reg- Section 1.150- t (b). No reimbursement proceeds will be used for purposes that would prevent the allocation from being treated as an expenditure pursuant to Treas. Reg- Section 1.150-2 or prior law as applicable. ARTICLE III Arbitrage/Rebate 3.1 Issue Price_ The initial offering price [o the public of the Bonds is the Issue Price of the Bonds and at which price a substantial amount of each maturity of the Bonds was sold, as evidenced by the certificate of the representative of the underwriters, included as part of the record of proceedings for the Bonds. 3 2 Tem~or~ Period. With respect to the Bonds- (a) The Issuer has entered into or will enter into within six months from the date of this Certificate, binding commitment(s) foc the acquisition, construction or accomplishment of the Projects, and the amount of such commitment(s) with respect to such X41498.7 031862 C4?.R'C Projects will or do exceed the amount equal to 5% of $8,850,000, being the aggregate amount of obligations to be issued for such Projects. (b) In the event the Projects have not been completed, work on the acquisition, construction or accomplishment of such Projects will proceed or is proceeding with due diligence to completion and the final sales proceeds will be allocated to expenditures with due diligence. (c) It is reasonably expected that at ]east 85 percent of the net sale proceeds of such Bonds will be expended within three years from the date of this Certificate. Accordingly, the sale proceeds and investment proceeds of the Bonds may be invested without restriction as to yield for a temporary period of 3 years from the date hereof, subject to the rebate requirements set forth in Article IV of this Certificate. 3.3 No Excess Proceeds. The total proceeds of sale of do not exceed the total cost of the Projects- 3.4 Source of Repayment Funds. I'he Bonds will be paid from taxes and other revenues of the Issuer. 3S Debt Service Fund. The taxes used to pay principal and interest on the Bonds, whether or not deposited in a debt service fund, will be expended within 13 months of the date of deposit in such fund, or the date of their accumulation, in the payment of debt service on the Bonds. Any amounts received from the investment of such deposit or accumulation will be expended within one year of receipt. The debt service fund, if any, will be used to achieve a proper matching of revenues and debt service and will be depleted at least annually except for a reasonable carryover amount which will not exceed the greater of the earnings on such fund for the immediately preceding bond year or one-twelfth of the debt service on the Bonds for the immediately preceding bond year. 3.6 Sinking_Funds Except for the debt service fund described herein the Issuer has not created or established, and does not expect to create or establish, any sinking fund or other similar fund which the Issuer reasonably expects to use to pay principal or interest on the Bonds. 3.7 Universal C~ On each Valuation Date, the Issuer shall value the Universal Cap and the Nonpurpose Investments allocable to the Bonds thereunder. Nonpurpose Investments in a bona fide debt service fund such as the Bona Fide Debt Service Fund do not reduce the aggregate value of Nonpurpose Investments that may be allocated to the Bonds under the Universal Cap. Nonpurpose Investments cease to be allocated to the Bonds to the extent such Nonpurpose Investments have been expended for the governmental purpose of the issue, or to the extent the value thereof exceeds the value permitted to be allocated to the issue under the Universal Cap. To the extent Nonpurpose Investments cease to be allocated to an issue and the value of the Universal Cap exceeds the value of the remaining Nonpurpose Investment allocated to such issue, other Nonpurpose Investments may become allocated to the issue, provided that such Nonpurpose Investments are not already properly allocated to another issue and provided sai9<~a_i osisbz crxr that such allocation does not cause the value ofNonpurpose Investments allocated to the Bonds to exceed the Universal Cap. Generally, if Gross Proceeds of the Bonds invested in Nonpurpose Investments exceed the Universal Cap on a Valuation Date, such Nonpurpose Investments cease to be allocated to the Bonds in the following order (i) amounts allocable to Replacement Proceeds, (ii) amounts allocable to Transferred Proceeds, (iii) amounts allocable to Sale Proceeds and Investment Proceeds of the Bonds. Where a Nonpurpose Investment ceases to be allocated to the Bonds, such Nonpurpose Investment is susceptible of re-allocation under the Universal Cap calculated with respect to another bond issue. A Nonpurpose Investment which is reallocated to another bond issue may be valued under the same valuation method pursuant to which it was valued for purposes of applying the Universal Cap with respect to the Bonds. Notwithstanding anything herein to the contrary, the failure to perform the determination ofNonpurpose Investments allocable to the Bonds as of a Valuation Date shall not be considered a violation of this provision if the value of Nonpurpose Investments allocated to the Bonds did not exceed the value of the Bonds outstanding on such date. 3.8 Yield. When used in this Certificate, the term Yield is computed as described in Exhibit A and in connection with the Bonds, refers to the yield computed by the actuarial or present worth method using a 360-day year and semiannual compounding, and means that discount rate which, when used in computing the present worth of all payments of principal and interest to be paid on an obligation, produces an amount equal to the Issue Price thereof The Yield on the Bonds is as shown in Form 8038-G. 3.9 Yield Reduction Payments. The Issuer may make yield reduction payments, as such term is defined in the Regulations, to reduce the yield on investments under certain circumstances. The Issuer will consult with Bond Counsel prior to making any such payments. 3.10 No Replacement Proceeds. The weighted average maturity of the Bonds, as set forth in the Form 8038-G, does not exceed 120 percent of the average reasonably expected useful life of the Projects. 3.11 No Prohibited Payments The Issuer has not entered into and will not enter into any transaction to reduce the yield on the investment of the proceeds of the Bonds in such a manner that the amount to be rebated to the federal government is less than it would have been had the transaction been at arm's length and the yield on the issue not been relevant to either party- 3.12 Rebate Options. With respect to the investment of the proceeds of the Bonds, the Issuer will 541)98. 1031862 CGR"r (a) invest all gross proceeds at all times from the date hereof until expended in investments not constituting investment property for purposes of Section l48 of the Code such as obligations of a state or of a political subdivision of a state, the interest on which is excluded from gross income for purposes of Federal income taxation under Section 103 of the Code and is not a preference item for purposes of the alternative minimum tax imposed by Section 55 of the Code, (b) invest all gross proceeds in obligations having a yield that does not exceed the yield on the Bonds, or (c) comply with the provisions regarding rebate described in Article IV below. ARTICLE IV Rebate 4.1 Rebate Compliance. The Issuer understands that the continued non- inclusion of interest on the Bonds for purposes of federal income taxation depends, in part, upon compliance with the arbitrage limitations imposed by Section 148 of the Code, including the rebate requirements described in Section 42 hereof with respect to the Bonds. 42 Rebate Requirement for the Bonds. Section 148(f) of the Code requires the payment to the United States of the excess of the amount earned on the investment of Gross Proceeds in Nonpurpose Investments over the amount that would have been earned had the amount so invested been invested at a rate equal to the Yield on the Bonds, together with any income attributable to such excess. Except as provided below, all Gross Proceeds of the Bonds are subject to this requirement In order to meet the rebate requirement of the Code the Issuer must take the following actions: (a) Record of Investments. The Issuer will record the date of receipt, amount and source of any Gross Proceeds, e.g., proceeds from the sale of the Bonds, loan repayments, investment earnings. For each Nonpurpose Investment acquired with or allocated to Gross Proceeds of the Issue, the Issuer will record the purchase date or allocation date of such investment, its purchase price (excluding any broker or dealer's commission or discount), or, if not acquired directly with Gross Proceeds, its Value on the date the Nonpurpose Investment is allocated to Gross Proceeds, accrued interest due on its purchase date or allocation date, its face amount, its coupon rate, its Yield, the frequency of its interest payment, its disposition price (excluding any broker or dealer's commission or discount), the accrued interest due on its disposition date and its disposition date. In addition, the Issuer will record the date and amount of all expenditures of Bond proceeds, including expenditures for rebate, other than expenditures to acquire investments. (b) Computation of Rebate Amount. Subject to the special rules set forth in paragraphs (c), (d), (e) and (f) of this Section, the Issuer will determine the Rebate Amount on each Computation Date. The Rebate Amount as of any Computation Date is 541998. 1031862 CBRT the excess of the Future Value of all receipts with respect to Nonpurpose Investments over the Future Value of all payments with respect to the purchase of Nonpurpose Investments or the allocation of such investments to the proceeds of the Bonds, determined as of each Computation Date. To the extent amounts received from investments are reinvested, these amounts may be netted against each other and not taken into account in the Computation of Rebate Amount. The Issuer shall determine the nonpurpose receipts and nonpurpose payments as described below. (i) Receipts. Receipts with respect to Nonpurpose Investments include (i) actual receipts, amounts actua]ly or constructively received with respect to an investment, reduced by Qualified Administrative Expenses (ii) disposition receipts, the Fair Market Value of investments deemed to be sold on the date the investment ceases to be allocated to the issue, (except that Present Value may be substituted for Fair Market Value with respect to fixed yield investments, investments required to be yield restricted, and investments transferring by virtue of the universal cap or transferred proceeds rules) and (iii) Computation Date receipts, the Market Value (Present Value, in the case of guaranteed investment contracts and fixed rate investments) of all Nonpurpose Investments allocated to the issue at the close of business on a Computation Date; and (iv) rebate receipts, any recovery of an overpayment of rebate. (ii) Pa.~ts_ Payments with respect to Nonpurpose Investments include (i) direct payments, the amount of Gross Proceeds of the issue directly used to purchase the investment, including Qualified Administrative Costs; (ii) constructive payments, the Value of an investment allocated to (but not directly purchased with) Gross Proceeds on the date so allocated; (iii) Nonpurpose Investments allocated to an issue at the end of the preceding Computation Period, at the value of the investments at the beginning of the computation period; (iv) rebate payments, payments of rebate amounts when due and yield reduction payments on Nonpurpose Investments and (v) the Computation Date Credit. (c) Exceptio? for Gross Proceeds Entirely_ Spent Within Six Months. Notwithstanding anything in this Section 4.2 to the contrary, if all of the Gross Proceeds of the Bonds (other than amounts on deposit in the Debt Service Fund or a reserve fund), including investment earnings received with respect to all Funds and Accounts comprising such issue except the Debt Service Fund, have been expended for the governmental purpose of the issue within six months after the date of issue, then the only Nonpurpose Investments to be taken into account in the calculation of the Rebate Amount with respect to the Non-Construction Bonds are Nonpurpose Investments acquired with or allocated to Gross Proceeds held in the Reserve Fund, and to any gross proceeds arising after such six months which were not reasonably anticipated as of the date of issuance. The existence of sinking fund or pledged fund proceeds or the expectation that such proceeds will arise within six months of the issue date will make the six-month expenditure exception to rebate inapplicable. For purposes of this exception, Gross Proceeds used to pay principal of bonds are not treated as expended on the governmental purpose of the issue. 541998.1 031862 CliRT (d) Exception for Gross Proceeds Entirelypent Within Eighteen Months. Notwithstanding anything in this Section 42 to the contrary, if all of the Gross Proceeds of the Bonds (other than amounts on deposit in the Debt Service Fund or a reserve fund), including investment earnings received with respect to all Funds and Accounts comprising such issue except the Debt Service Fund, have been expended for the governmental purpose of the issue in accordance with the following schedule after the date of issue: I S% within 6 months, 60°/u within 12 months and 100% within l8 months, then the only Nonpurpose Investments to be taken into account in the calculation of the Rebate Amount with respect to the Non-Construction Bonds are Nonpurpose Investments acquired with or allocated to Gross Proceeds held in the Reserve Fund, and to any gross proceeds arising after such eighteen months which were not reasonably anticipated as of the date of issuance. The existence of sinking fund or pledged fund proceeds or the expectation that such proceeds will arise within eighteen months of the issue date will make the eighteen-month expenditure exception to rebate inapplicable. For purposes of this exception, Gross Proceeds used to pay principal of bonds are not treated as expended on the governmental purpose of the issue. However, an issue does not fail to satisfy the spending requirement for the third spending period referenced above in this paragraph as a result of a reasonable retainage, as defined in Treas. Reg. 1.148-7(d)(2), if the reasonable retainage is allocated to expenditures within 30 months of the date of issue. (e) Exception for Gross Proceeds Entirely Spent Within Twenty-Four Months- Notwithstanding anything in this Section 42 to the contrary, for Construction Bonds, if all of the Gross Proceeds of the Bonds (other than amounts on deposit in the Debt Service Fund or a reserve fund), including investment earnings received with respect to al] funds and accounts comprising such issue except the Debt Service Fund, have been expended for the governmental purpose of the issue in accordance with the following schedule after the date of issue: 10% within 6 months, 45% within 12 months, 75% within 18 months and 100% within 24 months, then the only Nonpurpose Investments to betaken into account in the calculation of the Rebate Amount with respect to the Non-Construction Bonds are Nonpurpose Investments acquired with or allocated to Gross Proceeds held in the Reserve Fund, and to any gross proceeds arising after such twenty-four months which were not reasonably anticipated as of the date of issuance. The existence of sinking fund or pledged fund proceeds or the expectation that such proceeds will arise within twenty-four months of the issue date will make the twenty-four expenditure exception to rebate inapplicable. For purposes of this exception, Gross Proceeds used to pay principal of bonds are not treated as expended on the governmental purpose of the issue. However, an issue does not fail to satisfy the spending requirement for the third spending period referenced above in this paragraph as a result of a reasonable retainage, as defined in Treas. Reg. 1.148-7(d)(2), if the reasonable retainage is allocated to expenditures within 30 months of the date of issue. (f) $100,000_Debt Service Fund Gross Earnings Exception. Notwithstanding anything in this Section 4.2 to the contrary, if the gross earnings from the investments held in a debt service fund for the Bond Year in question, as determined under paragraph (c), are less than $100,000 then any amount earned on such debt service fund shall not be taken into account in determining the Rebate Amount. In this regard, the $]00,000 541998.1 031862 CERT earnings limitation is deemed satisfied if the annual debt service on the issue does not exceed $2,500,000. For purposes of this paragraph (f), the term "gross earnings" means the aggregate amount earned on the Nonpurpose Investment in which the Gross Proceeds deposited to the debt service fund are invested, including amounts earned on such amounts if allocated to the debt service fund. (g) Debt Service Fund Exception. If the average maturity of the Bonds is at least 5 years and the rates of interest do not vary during the term of the issue, then any amount earned on a debt service fund (other than amounts representing accrued interest or capitalized interest) shall not betaken into account in determining the Rebate Amount. 4.3 Payment to United States. (a) Unless the Bonds are redeemed prior to such time, the Issuer will pay to the United States, not later than 60 days after each Installment Computation Date, an amount which, when added to previous rebate payments made with respect to the Bonds, is equal to not less than 90 percent of the Rebate Amount, less the Computation Date Credit. The Issuer will pay to the United States, not later than 60 days after the Bonds are fully paid or redeemed, 100 percent of the Rebate Amount, less the Computation Date Credit. If the final rebate payment is made within 60 days after the Final Computation Date, interest on the Rebate Amount will be deemed to accrue at the underpayment rate under Section 6201 of the Code, beginning on the date the Rebate Amount is due and ending on the date 10 days before it is paid. (b) The Issuer will mail each payment to the Internal Revenue Service Center, Philadelphia, Pennsylvania 19255. Each payment shall be accompanied by the copy of the Form 8038-T and the Form 8038-G or 8038-GC filed with respect to the Bond issue and a statement identifying the issuer and the issue, including the CUSIP number for the Bond with the latest maturity for which there is a CUSIP number. 4.4 Recordkeepina. In connection with rebate requirement the Issuer will maintain the following records- (a) The Issuer will retain records of the determinations made pursuant to Section 42 until six years after the retirement of the last obligation of the issue. (b) The Issuer will record all amounts paid to the United States pursuant to Section 4 3_ X41998. 1031862 CiiRT 4.5 Fair Market_ Value. The Issuer will not acquire Nonpurpose Investments at other than an arm's length, Fair Market Value price unless regulations addressing imputed receipts have been promulgated by the Treasury. [N WITNESS WHERI.OF, I have hereunto set my hand and affixed the corporate seal of Town of Southold, as of the 29th day of May, 2008.E Gw/ Supervisor (SEAL) saivea i n3ia~z c~.K~r Exhibit A Definitions (This exhibit includes definitions of certain terms which may not be used in the Issuer's Arbitrage and Use of Proceeds Certificate) "Available Construction Proceeds" means the Issue Price of the Construction Bonds (i) plus earnings on the Issue Price and on amounts in any reserve fund not funded from bond proceeds, and earnings on such earnings and (ii) less the amount of the Issue Price representing a reasonably required reserve or replacement fund and costs of issuance funded with proceeds received from the sale of the Bonds- For purposes of this definition earnings include earnings on any tax-exempt bond [f only a portion of the Bonds constitute Construction Bonds, a pro-rata portion of the above-described amount will constitute available construction proceeds. Pre-issuance accrued interest and earnings thereon may be disregarded. "Bona Fide Debt Service Fund" means a fund, which may include proceeds of an issue, that is used primarily to achieve a proper matching of revenues with principal and interest payments within each Bond Year and is depleted at least once each Bond Year except for a reasonable carry over amount (not in excess of the earnings on the fund for the immediately preceding Bond Year or one-twelfth of the principal and interest payments on the issue for the immediately preceding Bond Year). "Bond ComiseP' means any nationally recognised attorney or firm of attorneys, knowledgeable in the requirements of the Code, and the Regulations, and retained by the Issuer- "Bond Year" means each one-year period (or shorter period) from the date of issue that ends at the close of business on the day in the calendar year selected by the Issuer which day is no later than the last day within one year of the issue date of the Bonds- "Bonds" means the $8,850,000 Public Improvement Serial Bonds-2008. "Capital Project" means all capital expenditures, plus related working capital expenditures to which the de minimis rule under Treas. Reg. Section 1.148-6(d)(3)(ii)(A) applies, that carry out the governmental purposes of an issue. "Code" means the Internal Revenue Code of 1986, as amended, "Computation Date" means any Installment Computation Date or the Final Computation Date. "Computation Date Credit" means, for any issue of obligations, an amount equal to the Future Value of $1,000 for each Bond Year during which there are gross proceeds of the Bonds on a Computation Date other than the Final Computation Date, and $1,000 on the Final Computation Date_ sa i sus i o3 i s~z crag "Computation Period" means the period beginning on the day following a Computation Date (or in the case of the first period, the date of issuance of the Bonds) and ending on the next succeeding Computation Date. "Construction Bonds" means an issue in which all of the bonds are either (i) Governmental Bonds; (ii) Qualified 501(c)(3) bonds or (iii) Private Activity Bonds to finance property owned by a governmental unit or a 501(c)(3) organization, if at ]east 75 percent of the available construction proceeds of the issue are to be used, or are expected to be used for expenditures for construction, reconstruction and rehabilitation of property which is owned by a governmental entity or a 501(c)(3) organization- "Construction Expenditures" means capital expenditures (as defined in Treas. Reg. §1.150-1) (i.e., amounts used for construction, reconstruction or rehabilitation of buildings or other inherently permanent structures, including items that are structural components of such buildings or structures, and architectural and engineering fees, site survey fees, legal expenses, insurance premiums and development fees to the extent such fees and expenses directly relate to other construction costs). "Controlled Group" means a group of entities controlled directly or indirectly by the same entity or group of entities. In general, "direct control" exists while a controlling entity possesses either of the following rights or powers and such rights or powers are discretionary and non-ministerial The right or power (i) both to approve and to remove without cause a controlling portion of the governing body of the controlled entity, or (ii) to require the use of funds or assets of the controlled entity for any purpose of the controlling entity. If one entity (the "Controlling Entity") directly controls another (the "Controlled Entity"), then the Controlling Entity indirectly controls any entity controlled directly or indirectly by such Controlled Entity. However, an entity is not a Controlled Entity if it possesses substantial taxing, eminent domain and police powers. "Extraordinary Working Capital Item" means expenditures for extraordinary, nonrecurring items that are not customarily payable from current revenues, such as casualty losses or extraordinary legal judgments in amounts in excess of reasonable insurance coverage. "Fair Market Value" of an Investment shall have the following meanings: (a) In General. Except as elsewhere specifically stated below, the Fair Market Value of an Investment is the price at which a willing buyer would purchase the Investment from a willing seller in a bona fide, arm's -length transaction. (b) United States Treasury Obligation- The Fair Market Value of a United States Treasury Obligation that is purchased directly from the United States Treasury is its purchase price. (c) Certificate of Deposit. The Fair Market Value of a certificate of deposit with a fixed interest rate, a fixed payment schedule, and a substantial penalty for early withdrawal is its purchase price provided, the yield on the certificate of deposit is not less than (i) the yield on reasonably comparable direct obligations of the United X47998.1 031862 CNRT States and (ii) the highest yield published by the provider and currently available from the provider on reasonably comparable certificates of deposit offered to the public. (d) Guaranteed Investment Contracts. The Fair Market Value of a guaranteed investment contract is its purchase price, provided (i) the Issuer makes a bona fide solicitation for such contract and receives at least three bona fide bids from providers with no material interest in the issue; (ii) the Issuer purchases the highest-yielding guaranteed investment contract for which a qualifying bid is made (determined net of broker's fees); (iii) the yield on such contract (determined net of broker's fees) is not less than the yield then available from the provider on reasonably comparable investment contracts, if any, offered to other persons from a source of funds other than gross proceeds of tax-exempt bonds; (iv) the determination of the terms of a guaranteed investment contract takes into account as a significant factor the Issuer's reasonably expected drawdown schedule for amounts to be invested, exclusive of float and reserves, (v) the terms of the contract, including collateral security requirements are reasonable, and (vi) the obligor certifies the administrative costs it is paying to third parties in connection with the contract. To the extent that a broker's commission does not exceed the lesser of reasonable amount based on what would be charged for the same or comparable investment acquired with a source of funds other than gross proceeds of tax- exempt bonds to the present value of annual payments equal to OS percent of the amount expected to be invested per year, it may be taken into account in determining yield, with the effect that it will increase the payments for, or decrease the receipts from, Investments. "Final Computation Date" means the day the last Bond that is part of the Bonds is discharged. "Future Value" or "FV" of a payment or receipt means the amount, determined by using the economic accrual method (the method of computing yield based on the compounding of interest at the end of each compounding period), equal to the value of such payment or receipt at the time it is paid or received (or treated as paid or received), plus interest assumed to be earned and compounded over the period at a rate equal to the yield on the issue, using the same compounding interval and financial conventions used to compute yield. "Governmental Bonds" means bonds which are not Private Activity Bonds. "Gross Proceeds" means Sale Proceeds, Transferred Proceeds, Investment Proceeds and Replacement Proceeds. "Issue Price" when used in connection with an issue of publicly offered obligations (determined separately for obligations included in the issue that are not substantially identical) is the first price at which at least ten percent of each maturity of each series of the obligations are sold to the public. Bond house, brokers, or similar persons or organizations acting in the capacity of underwriters or wholesalers are not included in the definition of "public" for purposes of the preceding sentence. If the obligations are privately placed, the Issue Price is the price paid for them by the first buyer. The Issue Price of obligations that are publicly sai9va i o3tsbz cr~:a~r offered in a bona fide public offering is determined on the basis of actual facts and reasonable circumstances existing on the sale date unadjusted for subsequent occurrences. "Installment Computation Date" means the last day of the fifth Bond Year and the last day of each succeeding fifth Bond Year (until and excluding the Final Computation Date) and, if the Issuer so elects, the last day of any Bond Year. "Investment" means (i) any security (within the meaning of Section 165(g)(2)(A) or (B), (ii) any obligation (other than tax-exempt obligations which are not "specified private activity bonds" within the meaning of Section 57(a)(5)(C) of the Code), (iii) any annuity contract within the meaning of Section 72 of the Code, (iv) any residential real property for family units not located within the jurisdiction of the Issuer and which is not required to implement acourt- ordered or approved housing desegregation plan or (v) any investment-type property that is held as a passive vehicle for the production of income, including any prepayment for property or services if a principal purpose of prepayment is to receive an investment return from the time the prepayment is made unti] the time payment would otherwise have been made. "investment Proceeds" means any amounts actually or constructively received from investing proceeds of the Bonds. "Issuer" means the Town of Southold, New York. "Multipurpose Issue" means an issue the proceeds of which are used for two or more separate purposes determined in accordance with Section 1. ]48-9(h) of the Regulations. "Net Sale Proceeds" means sale proceeds less the portion of those sale proceeds invested in a reasonably required reserve or replacement fund or as part of a minor portion. "Nonpurpose investment" means any Investment in which Gross Proceeds are invested and which is not acquired to carry out the governmental purpose of the issue- "OtTicial Statement" means the Official Statement of the Issuer relating to the Bonds. "Person" means any individual, corporation, partnership, joint venture, association, joint stock company, trust, unincorporated organization or government or any agency or political subdivision thereof "Plain Par Bond" means a qualified tender bond or a bond that (i) is issued with original issue discount equal to not more than 2 percent of the stated redemption price at maturity plus the amount of original issue premium attributable exclusively to underwriters' compensation, (ii) is issued for a price that does not include Pre-Issuance Accrued Interest, (iii) bears interest from the issue date at a single stated fixed rate or is a variable rate obligation under Section 1275 of the Code, in either case, that pays interest unconditionally payable at least annually, and (iv) has a lowest stated redemption price not less than its outstanding stated principal amount. 5~ 1998.1037 862 CGRT "Plain Par Investment" means an investment that is an obligation that (i) is issued with original issue discount (or if acquired on a date other than the issue date, acquired with market discount or premium) equal to not more than 2 percent of the stated redemption price at maturity, (ii) is issued for a price that does not include Pre-Issuance Accrued Interest, (iii) bears interest from the issue date at a single stated fixed rate or is a variable rate obligation under Section 1275 of the Code that pays interest unconditionally payable at least annually, and (iv) has a lowest stated redemption price not less than its outstanding stated principal amount- "Present Value" or "PV" means the amount determined by using the following formula: PV= FV n (1 +i) where i equals the discount rate divided by the number of compounding intervals in a year and n equals the sum of (i) the number of whole compounding intervals for the period beginning on the date as of which Present Value is computed and ending on the date the amount is to be received or paid or on a Computation Date and (ii) a fraction the numerator of which is the length of any short compounding interval during such period and the denominator of which is the length of a whole compounding interval. "Private Activity Bonds" means bonds which meet the definition contained in Section 141(a) of the Code and that are not "qualified bonds" as defined in Section 141(e) of the Code. "Project" means the project referred to in the Resolutions, which is being financed by the Bonds. "Qualified 501(c)(3) Bonds" means bonds which meet the definition contained in Section 145 of the Code. "Qualified Administrative Costs" mean. (a) In General. All reasonable, direct administrative costs, other than carrying costs, such as separately stated brokerage or selling commissions, but not legal and accounting fees, record keeping, custody, and similar costs. General overhead costs and similar indirect costs of the Issuer such as employee salaries and office expenses and costs associated with computing the Rebate Amount are not qualified administrative costs. In general, administrative costs are not reasonable unless they are comparable to administrative costs that would be charged for the same investment or a reasonably comparable investment if acquired with a source of funds other than gross proceeds of tax-exempt bonds. (b) Regulated Investment Companies and Extern_,a] Commin¢led_Funds. For publicly offered regulated investment companies (as defined in section 67(c) (2) (B)) and 541998.1031862 CERT commingled funds in which the Issuer and any Controlled Entity do not own more than ]0 percent of the beneficial interest in the fund, Qualified Administrative Costs are all reasonable administrative costs, without regard to the limitation on indirect costs described in the preceding paragraph- (c) GICs. For a guaranteed investment contract, a broker's commission paid on behalf of either an issuer or the provider is a Qualified Administrative Cost to the extent that it does not exceed the lesser of reasonable amount based on what would be charged for the same or comparable investment acquired with a source of funds other than gross proceeds oftax-exempt bonds to the present value of annual payments equal to five one-hundredths of one percent (0.05%) of the amount reasonably expected to be invested per year. (d) Purpose Investments. Qualified Administrative Costs include costs or expenses paid, directly or indirectly, to purchase, carry, sell, or retire the investment; costs of issuing, carrying, or repaying the issue, and any underwriters' discount, which are paid by the conduit borrower, even if such payments merely reimburse the Issuer, but only to the extent the present value of those payments does not exceed the present value of the reasonable administrative costs paid by the Issuer using the yield on the Bonds as the discount rate. (e) Program Investments- Qualified Administrative Costs include only costs of issuing, carrying, or repaying the issue, and any underwriters' discount, subject to the limitation contained in the preceding paragraph. "Qualified Guarantee" means, with respect to a bond, an unconditional transfer, in any form, of substantially all of the credit risk for all or part of the payments, such as payments for principal and interest, redemption prices or tender prices, on the guaranteed bonds The guarantor must not expect to make any payments other than those pursuant to a direct-pay letter of credit or similar arrangement for which the guarantor will be immediately reimbursed. Reasonable procedural or administrative requirements or, in the case of a guarantee against failure to remarket a qualified tender bond, commercially reasonable limitations based on credit risk, will not cause the guarantee to be conditional. The guarantor may not be a co-obligor, nor may the obligor and any related parties combined use more than 10 percent of proceeds of the guaranteed portion of the bonds- The guarantee fee must not exceed a reasonable arm's-length charge solely for the transfer of the credit risk. A guarantee will not be qualified unless, as of the date the guarantee is obtained, the issuer reasonably expects that the present value of all fees for the guarantee will be less than the present value of the expected interest savings on the issue as a result of the guarantee. For this purpose, present value is computed using the yield on the issue, determined with regard to the guarantee fees, as the discount rate. "Qualified Hedge" means, with respect to the Bonds, a contract between the [ssuer, and any unrelated party which is entered into primarily to reduce the Issuer's risk of interest rate changes with respect to the Bonds that meets the requirements of Regulation Section L 148-4(h)_ The contract may be an interest rate swap, an interest rate cap, a futures contract, a forward 541998.1 (131862 CERT contract, an option or may take another form. A contract will not be a Qualified Hedge if it contains any significant investment element (i. e., an expected return)- "Rebate Amount" means with respect to the Bonds, the amount computed as described in Section 42(c). "Regulations" means the Income Tax Regulations promulgated under Section 148 of the Code by the Department of the Treasury from time to time including the Regulations published on June 18, 1993 in the Federal Register, as they may be amended from time to time. "Replacement Proceeds" means amounts with a sufticiently direct nexus to the Bonds or Project to conclude that such amounts would have been used for the Project if the proceeds of the Bonds were not so used to the extent held by or derived from the Issuer or a controlled entity of the Issuer, including- sinking funds, pledged funds (including negative pledges), certain other amounts if the term of the issue is longer than necessary for the governmental purposes of the issue, and abond-funded working capital reserve unless the issue qualifies for the TRAM deemed 6-month expenditure exception or the under $5,000,000 small issuer exception. "Resolutions" means the bond resolutions of the •Issuer, as referred to in paragraph 2 1 hereof "Restricted Working Capital Expenditures" means working capital expenditures subject to the Gross-Proceeds-spent-last rule in Treas- Reg. Section 1.148-6(d)(3)(i) that are ineligible for any exception to that rule. "Sale Proceeds" means any amounts actually or constructively received from the sale of an issue, including amounts used to pay underwriters' discount or compensation, accrued interest other than Pre-Issuance Accrued Interest, or derived from the sale of a right associated with a bond as further described in Treas. Reg. Section 1148-4(b)(4). "SLG" means a U-S Treasury Book Entry Security, State and Local Government Series. "Spendable Proceeds" means sale proceeds, less the portion of those sale proceeds invested in a reasonably required reserve or replacement fund under section 148(d) of the Code and as part of a minor portion under section 148(e) of the Code. "'T'ransferred Proceeds" means unexpended original or investment proceeds of a refunded issue which transfer and become proceeds of the refunding issue when proceeds of the refunding issue are applied to pay principal of the refunded issue. ""Treasury" means the United States Department of Treasury. "Universal Cap" means the maximum value of Nonpurpose Investments which may be allocated to the Bonds and is determined by reference to the Value of all outstanding 541998.1 031862 C1iIZT Bonds of the issue- Nonpurpose Investments shall be taken into account as Nonpurpose Receipts at their Value on a Valuation Date. "Valuation Date" means the date on which the value of the Universal Cap and the Nonpurpose Investments allocable to the Bonds thereunder are determined. With respect to new money issues, the first Valuation Date shall be the second year anniversary date of the date of issuance of the Bonds; thereafter, the first day of each Bond Year shall constitute a Valuation Date. With respect to a refunding issue, each date on which proceeds of the refunded issue would become transferred proceeds of the refunding issue, e.g. each date on which principal of the refunded issue is paid with proceeds of the refunding bonds, shall constitute a Valuation Date. In addition, the first date of each Bond Year shall also be a Valuation Date- "Value" means, in the case of a Bond, the Value of a Bond and in the case of an Investment, the Value of an Investment. "Value of a Bond" means, in the case of a Plai? Par Bond, its outstanding stated principal amount, plus accrued unpaid interest or in the case of a Plain Par Bond actually redeemed, or treated as redeemed, its stated redemption price on the redemption date plus accrued unpaid interest. In the case of a bond other than a Plain Par Bond, the value on a date of such a bond is its Present Value on that date, using the yield on the issue of which the bonds are a part as the discount factor. In determining the Present Value of a variable rate bond, the initial interest rate on the bond established by the index or other rate setting mechanism is used to determine the interest payments on that bond- "Value of an Investment" means, as of any date, unless the Investment is required invested as a restricted yield, for any Investment, Fair Market Value as of that date; for any fixed rate investment, Present Value on that date; and for any Plain Par Investment, the outstanding stated principal amount, plus accrued unpaid interest, as of that date. Yield restricted investments must be valued at Present Value, amounts allocated or that cease to be allocated to an issue must be allocated at Fair Market Value, except in cases in which such Nonpurpose Investments are allocated as a result of the Universal Cap or Transferred Proceeds Hiles in which case they may be valued at Present Value, and amounts allocated to Transferred Proceeds may not be valued in excess of the value used for arbitrage restrictions applicable to the Refunded Issue. "Working Capital Expenditure" means any cost of a type that does not constitute a Capital F,xpenditure- "Yield" means, as of any Computation Date, that discount rate that, when used in computing the Present Value of (i) all unconditionally payable payments of principal and interest of or on the bonds included in such fixed yield issue, (ii) all unconditionally payable fees for Qualified Guarantees and Qualified Hedges on such bonds and (iii) all fees expected to be paid for Qualified Guarantees and Qualified Hedges, produces an amount equal to the sum of the Present Value of the aggregate Issue Prices of the bonds comprising the issue (determined using the same discount rate used to determine the Present Value of payments for principal, interest and Qualified Hedges and Qualified Guarantees). The Yield is computed as of the issue date of X47998.1 0318(2 Cli3ZT the fixed yield issue by treating each bond included in the issue that is either subject to mandatory or contingent early redemption or to certain optional redemption provisions as being redeemed on its expected early redemption date for an amount equal to its Value on that date- If a fixed yield bond (i) is subject to optional redemptions within 5 years of its issue date and the Yield not taking into account the optional redemption is more than I/8 of 1% above its Yield assuming the early redemption, (ii) is issued at an Issue Price that exceeds the stated redemption price at maturity by more than 1/4 of 1% multiplied by the product of the stated redemption price to maturity and the number of complete years to the first optiona] redemption date for the bond, or (iii) bears interest at increasing interest rates, the Yield on the issue including such fixed yield bond is computed by treating the fixed yield bond as redeemed at its stated redemption price on the optional redemption date that produces the lowest Yield on the issue. No adjustment will be made on any Computation Date to the Yield on a fixed yield issue as computed on its issue date unless redemption rights are subsequently transferred to a third party or termination payments are received with respect to Qualified Hedges. The Yield on a fixed yield bond is calculated in the same manner as Yield on a fixed yield issue- 541998-I 031862 CERT CERTIFICATE OF THE SUPERVISOR WITH RESPECT TO THE OFFICIAL STATEMENT OF THE TOWN OF SOUTHOLD, NEW YORK, DATED MAY 2, 2008, DISTRIBUTED IN CONNECTION WITH TIIE SALE OF THE $8,850,000 PUBLIC IMPROVEMENT SERIAL BONDS-2008 I, SCOTT A. RUSSELL, Supervisor of the Town of Southold, in the County of Suffolk, New York (the "Town"), HEREBY CERTIFY that as of May 2, 2008, the date of the Official Statement of the Town prepared and distributed in connection with the sale of the $8,850,000 Public Improvement Serial Bonds-2008 (the `Bonds"), and at all times subsequent thereto, up to and including the date of the delivery of the Bonds on May 29, 2008, the attached Official Statement did not and does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading. Insofar as any statements made in said Official Statement involve matters of opinion, estimates or statements as to matters not contained in or derived from the official records of the Town, whether or not expressly stated, they are set forth as such and not as representations of fact by the Town, and no representation is made that any of the estimates or anticipated events will be realized. The said Official Statement is not to be construed as a contractor agreement with the beneficial owners of the Bonds. I HEREBY FURTHER CERTIFY that there has been no adverse material change in the financial condition of the Town since the date of said Official Statement to the time of the delivery of the Bonds on May 29, 2008. IN W1TNF.SS WHEREOF, I have hereunto set my hand and affixed the corporate seal of the Town as of the 29th day of May, 2008. (SF,AL) Supervisor X41')98.7 031862 CR.R1' NEW ISSUE -SERIAL, BONDS MOODY'S INVESTORS SERVICE - "Asa"* See "Bond Ratings", herein ' In the oyinion aJ Hawkins Delafield & Wood L/_Y, Rond Cnuneel to the Tmvn, under exis7ing statutes and court decisions mrd assuming continuing rnmplianee with certain taz certifications described herein, (ti) interest nn the Bonds is excluded from gross income for Federal income tax purposes pursuant to Sertion 103 gj[he lnternal2evenue Code oj1986, as amended (the "Code and (ip interest on die Bonds is not treated as a preference uem m calculntinq, the alternative minimum tar imposed on individuals mrd em~porou ons raider the Code; such interest, however, is included in Ure adjusted current earnings of certain corpporations farpurpores of colculahnq the n[ternahve minimum (ax imposed on such eorporntioau. Gv addition, ir, the oppinion njDond Counsel to the Tuun, anr/t-r eristin,(~ statutes interest an the Bondr is exempt JFom personal income tares oJNew York S[n0.= and its politics[ nrbdirisimrs, includhig 77re City aJ New Fork See "'!'cix Matters herein. The Uonds k~i/t NO"% he designated by the 7~omn ns "qunli/icd ins-exempt ahliga[ione~"p+vsuant m Ore prm•i.eian o/.Cectinn ?h3 u~'the Code. $8,850,000 TOWN OF SOUTHOLD SUFFOLK COUNTY, NEW YORK (the "Town") PUBLIC IMPROVEMENT SERIAL BONDS - 2008 [BOOK-F,NTRY-ONLY BONDS Dated: May I5, 2008 Principal Due: May I5, 2009-2030, inclusive Interest Due: November 15,200Randsemi-annuallythercafter in each year until maturity. BOND MATURITY SCHEDULE Amount Maturity Rate Yield Amount Maturity Rate Yield Amount Maturity Rate Yield $325,000 2009 4.00% 1.85% $375,000 2017 4.00% 3.45% $45Q,000 2024 4.00% 4.10°/n 325,000 2010 A.00 2.25 400,000 201R 4.00 3.60 450,000 2025 4-Ya 4.15 325,000 2011 4.00 2.55 400,000 2019 4.00 3.70 450,000 2026 4.25 4.20 350,000 2012 4.00 2.75 400,000 2020 4.00 3.80 450,000 2027 4.25 4.25 350,000 2013 4.00 2.90 425,000 2021 4.00 3.40 475,000 2028 4.25 4.30 350,000 2014 4.OG 3.00 425,000 2022 4.00 4.00 475,000 2029 4.25 4.35 375,000 2015 4.00 3.15 425,000 2023 4.00 4.05 475,000 2030 425 4-3/e 375,000 2016 4.00 3.30 *i'he Bonds maturing in the years 2009 througgh 2018 inclusive, areNOT insured by Financial Security Assurance (defined below) and arc rated "Aa3 " by Mood 's Investors Service, Inc. Ttie scherjuled payment of principal of and interest on the Bonds maturing m the years 2019 through 2030, inclusive, ~ihe "Insured Bonds") when due WILL BE guaranteed under an insurance policy to be issued concurrently with the dclive ~ of the Bonds by F INANCIAL SECURITY ASSURANCE INC. (See Appendix C "Bond Insurance", herein. Also see "Bond Rating°, hereinn} F5A. Security and Sources ojPaymerrt: The Bonds will constitute general obligations of [he Town and will contain a pledge of its faith and credit for the punctual payment of the pprincipal of and interest on the Bonds, and all the taxable real property within the "Down will be subject to the levy of ad valorem taxes, without limitation as to rate or amount, for such purpose. Prior Redemption: The Bonds maturing on or after May 15, 2019 will be subject [o redemption prior to maturity, at the option of the "Down, on May 15, 2018 on any date and thereafter, in whole or m part, at par, in accordance with the terms described herein. See "Optional Redemption" under "The Bonds," herein. Form and Denomination: The Bonds will be issued as registered bonds, and, when issued, will be registered in the name of Cede & Co. as nominee of The Depository Trust Company ("D'IC"), New fork, New Yorki which will ac[ 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 integral multiples thereof. Bondholders will not receive certificates representing their ownership interests m the Bonds purchased. See "Book-Entry-Only System" under "The Bonds," herein. Payment: Payment of[he pprincipal of and interest on the Bonds will be made by the Town to DTC which will in turn remit such payment to its Participants for subsequent distributwn to the Beneficial Owners of the Bonds m accordance with standing instructions and customary practices, as is now the case with municipal securities held for the accounts of customers in bearer form or registered m "street name." Payment to the Beneficial Owners will be the responsibility of the DTC Participant or Indirect Participant and not of DTC or the Town, subject to any statutory and regulatory requirements as may be in effect from time to lime. See "Book-Entry-Only System" under "The Bonds," herein. Hawkins Delafield & W nod LLP, has not participated in the preparation of this Official Statement, nor verified the accuracy, completeness or fairness of the information contained herein, and, accordingly, expresses no opinion with respect [hereto. The Bonds are offered subject to [hefrnal approvin, opinion of Hawkins Delafield & Wood LLP, New York, New York, Bond Counse/. and certatn other conditions. It is expected that delivery oft~e Bonds in book-entry form will be made through the facilitie.v ojDTC on or nhout Mrry ?Q ?008 in Ner~~ York, New York. 'This revised cover, dated May 13, 2008, supplements the Official Statement of the Town, May 2, 2008, relating to the obligations described therein and herein including certain mformahon omitted from such Official Statement in accordance with Secunties and Exchange Commission Rule I Sc2-12 (the "Rule and shall constitute the Town's final Official Statement within the meaning of the Rule. Other than as se[ forth on this revised cover page, the table ofcontents, the section entitled "Bond Rating" and the addition of"Appendix C -bond Insurance", [here have been no other revisions to the Official Statement. Por a description of [he 'T'own's agreement to provide continuing disclosure as described in the Rule, see "Disclosure Undertaking" herein. ROOSEVELT & CROSS, INC. AND ASSOCIATES TOWN OF SOUTHOLD SUFFOLK COUNTY, NEW YORK Town Hall 53095 Main Road Southold, NY 11971 Telephone: (63])765-4333 Fax: (631)765-1366 TOWN BOARD Scott A. Russell, Supervisor Louisa P. Evans Albert J. Krupski, Jr. Vincent M. Orlando William P. Ruland Thomas H. Wickham Elizabeth A. Neville, Town Clerk Peter W. Harris, Superintendent of Highways .lohn A. Cushman 11, 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, INC. Municipal Finance Advisory Service 12 Roosevelt Avenue Port Jefferson Station, N.l'. 1 1776 (631)331-A88R F-mail: info(r~munistaLcom Website: http://www.inunistat.com No dealer. broker, salesman or other person has been authorized by the Town to give any information or to make any represenutions, other than those contained m this Official Statement and if liven or made, such other information or re resentat~ons must not he relied upon as having been authorized by the'Fown. "[Tiffs Official Statement does ?o[ constitute an of~er 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 otter, solicitation or saie. 'Che information set forth herein has been obtained by the Town from sources which are believed to be reliable but it is not guaranteed as to accuracy or completeness. Tite information and expressions of opinion herein are subject to change withoat nonce and neither the delivery of this Official Statement nor any sale made hereunder shall, under any circumstances, create any implication thatthere has been no change in the affairs of the'fown since the date hereof. TABLE OF CONTENTS Page THF,BONDS 1 Description of the Bonds I Optional Redemption _ 1 Book-entry-only System I Certificated Bonds 3 Authorization and Purrppose 3 Security and Sourceot~Payment 3 Remedies Upon Default 3 THE TOWN 4 Generallnformation..... _ 4 Government 4 Employees 5 ECONOMIC AND DEMOGRAPHIC INFORMATION 5 Population Characteristics . 5 ` MedianlncomeofPamilies 5 Unemployment Rate Statistics 6 Selected Listing of Larger Employers 6 INDEBTEDNESS OF THE TOWN 6 Constitutional Requirements 6 Statutory Procedure 7 Computation of Debt Limit and Calculation of Net Debt Contracting Margin 8 Trend of Townlndeb[edness 8 Details of Short-Term Indebtedness Outstanding 9 Debt Service Requirements -Outstanding Bonds 9 Calculation of Estimated Overlapping and Underlying Indebtedness I O Authorized But Unissuedltems 10 Capital Program 10 Landfill Closure and Postclosure Care Costs 1 I FINANCES OF THE TOWN 11 Financial Statements and Accounting Procedures 1 I Fund Structure and Accounts lI Basis of Accounting 11 ' Investment Policy I1 Budgetary Procedures 12 Financial Operations 12 Revenues 13 RealPropercy Taxes 13 State Aid 13 Expenditures 13 Pension Systems 13 Contribuhonstothe Retirement Systems l4 Other Post Employment Benefits 14 REAL PROPERTY TAX INFORMATION 15 Real Property Taxes ]5 Tax Levy and Collection Record l5 Tax Collection Procedure 15 Tax Ra[es 15 Large Taxable Properties 15 LITIGATION 16 BONDHOLDER RISKS AND MARKET FACTORS AFFECTING FINANCINGS OF THE STATE AND MUNICIPALITIES OF THE STATE 16 r l t TABLE OF CONTENTS (Continued) Page TAX MATTERS 17 Opinion of Bond Counsel 17 Certain On oing Federal Tax Requirements and Certifications I7 Certain Co~ateralFederalTax Consequences 17 Originallssue Discount 17 Bond Premmm 18 Information Reporting and Backup Withholding 18 Miscellaneous 18 DOCUMENTS ACCOMPANYING DELIVERY OF THE BONDS 19 Absence of Li[igation 19 Legal Matters 19 Closing Certificates 19 DISCLOSURE UNDERTAKING 20 BOND RATING 20 FINANCIAL ADVISOR 2I ADDITIONAL INFORMATION 21 - APPENDIX A: FINANCIAL INFORMATION APPENDIX B: FINANCIAL STATEMENTS FOR THE FISCAL YEAR ENDED DECEMBER 31, 2006 APPENDIX C: BOND INSURANCE ~i 1 1 ii i JJ i OFFICIAL STATEMENT 58,850,000 ~ TOWN OF SOUTHOLD M SUFFOLK COUNTY, NEW YORK I PUBLIC IMPROVEMENT SERIAL BONDS - 2008 (BOOK-ENTRY-ONLY BONDS i This Official Statement and the appendices hereto presents certain information relating to the Town of Southold, in the Cou?ty of Suffolk, in the State of New York (the "Town," "County" and "State,' respectively) in connection with the sale of $8,850,000 Public hnprovement Serial Bonds - 2008 (the "Bonds") of the Town. All quotations from and summaries and explanations of provisions ofthe Constitution and Laws ofthe State and acts and proceedings of the Town contained herein do not purport to be complete and are qualified in their entirety by reverence to the official compilation thereof and all references to the Bonds and the proceedings of the j 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 fhe Bonds will be dated May 15, 2008, and will mature on May 1 S, in each of the years 2009 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 Companyy, New York, New York ("D7"C' DTC will act as Securities Depository for the Bonds. Individual purchases ofthe Bonds may be made in book-entry fore 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 payable November 15, 2008 and semi-annually thereafter on May 15 and November I5, in each vear until maturity. Principal and interest will be paid by the Town to the Securities De ository which will in turn remit such princi al and interest to its Participants, for subsequent distribution to the Beneficial Owners of the Bonds, as described herein. The Bonds may be transferred in the manner described on the Bonds and as referenced in certain proceedings of the Town referred to therein. fhe Record Date of Che Bonds will be the last business day of the month preceding each interest payment date. Optional Redemption The Bonds maturing on or before Mayy 15, 2018 will not be subject to redemption prior to maturity. The Bonds maturing on or after May 15, 2019 will be subject to redemption prior to maturity, at the option of the Town, on May I5, 2018 and thereafter on any date, in whole or in part, and if m part, in any order of their maturity and in anv 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 gwing of notice which identifies the Bonds to be redeemed, by mailin such notice to the registered holders thereof at their respective addresses as shown upon the registration books o~ the Fiscal Agent at least 30 days prior to the date set Cor any such redemption. If notice of redemption shall have been given as aforesaid, the Bonds so called Cor redemption shall become due and payable at the applicable redemption price on the redemption date designated in such notice, and interest on the Bonds shall cease to accrue from and after such redemption date. Book-entry-only System D'fC will act as securities depository Cor the Bonds (the `Bonds"). The Bonds will he issued as fully- registered Bonds registered in the name ofCede & Co. ('OTC's partnership nominee) or such other name as may be requested by an authorized representative oC OTC. One fully-registered Bond certificate will be issued for each maturity of Lhe Bonds, each in the aggregate principal amount of such maturity. and will be deposited with 6fC. 1 l DTC, the world's largest depository, is alimited-purpose trust comppany organized under the New York BankingLaw,a"banking organization'withindicmeaningoftheNewYorkBanking ~aw,amemberofthefederal Reserve System a °clear~nu corporation" within the meaning, of the New York Uniform Commercial Code, and a °clearingag~ncy ' registere~pursuaut to the provisions of Section I7A ofthe Securities Exchange Act of 1934. DTC holds and provides asset servicing for over 2 million issues of U.S. and non-U.S. equity issues, corporate and municipal debt issues, and money market instruments from over RS countries that DIC s participants ("Direct Participants") deposit with DTC. b"TC also facilitates the post-trade settlement among Direct Participants of sales and otfier securities transactions in deposited securities, through electronic computerized book-entry transfers and pled=es betweer, Direct Participants accounts. This eliminates the need for physical movement of securities cert~~icates.DirectParticipantsincludebothU.S.andnon-U.S.securitiesbrokersanddealers,banks,trustcompanies, ~ 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 If Members of the National Securities Clearing Corporation, Government Securities Clearingg Corporation, MBS Clearing Corporation, and Emerging Markets Clearing Corporation, (NSCC, GSCC, MBSCC, and EMCC, also subsidiaries of DTCC), as well as by ffie New York Stock Exchange Inc., the American Stock Exchange LLC, and the National Association of Securities Dealers, lnc. Access to the DTC system is also available to others such asboth U.S. and non-U.S. securities brokers and dealers, banks, trustcompanies, and clearing corpporations thatclear through or maintain a custodial relationship with a Direct Participant, either directly or indirectly ("Indirect Particlpants~ DTC has Standard & Poor's highest rating: AAA. The D fC 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 D'CC 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 IndirectParticipants' records. Beneficial Owners wil I 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 D irect or I nd i root Partici pa nt through wh ich the Benefic ial Owner entered i nto the transact ion. Transfers of ownersh i p interests in the Bonds are to be accompplished by entries made on the books of Direct and Indirect Particippants acting onbehalfofBeneficialOwners.BeneficialOwnerswillnotreceivecertificatesrepresentingtheirowncrshipinterests in Bonds, except in the event that use of the book-entry system for the Bonds is discontinued. To facilitate subsequent transfers all Bonds deposited by Direct Participantswrth DTC are registered in the name of DTC's partnership nominee Cede & Co., or such other name as may be requested by an authorized representative of D'i'C. The deposit o~ Bond's with DTC and their re€=,istration in the name of Cede & Co. or such other DTC nominee do not effectanv change in beneficial ownershipp DTC has no knowledge ofthe actual Beneficial Owners of the Bonds; DTC's records reflect only the identity ofthe llirect Participants to whose accounts such Bonds are credited, which may or 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 Particpants to Benefical 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 reqqu~ested by an authorized representative of DTC. DTC's practice is to credit Direct Participants' accounts upon DTC's receipt of funds and correspondingg 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 customary practices as is the case with bonds held for the accounts of customers m bearer form or registered in "street name, 'and wil I ~e the responsibility of such Participant and not of DTC 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 & Ca (or such other nominee as may be requested by an authorized representative of DTC) is the responsibility of the Town, disbursement of such pa menu to Direct Participants will bethe responsibility of DTC, 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, m the event thaC a successor depository ~s not obtained, Bond certificates are required to be printed and delivered. The Town may decide to discontinue use of the system of book-entry transfers through DTC (or a successor securities depository). In that event, Bond certificates will be printed and delivered. The information in this section concerning DTC and DTC's book-entry syystem has been obtained from sources that the Town believes to be reliable, but the Town takes no responsibility for the accuracy thereof. THE TOWN WILL NOT HAVE ANY RESPONSIBILITY OR OBLIGATION TO ((PARTICIPANTS, TO OFDANY RECORDSIM INTAINED BY DTC, ANY PARTOIC PANT, OR ANY INDIREOCTI PARTIC PANT; (II) THE PAYMENTS BY DTC OR ANY PARTICIPANT OR INDIRECT PARTICIPANT OF ANY AMOUNT W I RESPECT TO THE PRINCIPAL OF, OR PREMIUM, IF ANY, OR INTEREST ON THE BONDS; (IB) ANY 2 t NOT[CEWHICHISPERMITTEDORRE~UIREDTOBEGIVENTOBONDHOLDERS~(IV)THESELECTION BY DTC OR ANY PARTICIPANT OR IND RECT PARTICIPANT OF ANY PERSON Tb RI?CEIVE PAYMENT j IN THE EVENTOFAPARTIALREDEMPTiONOFTHEBONDS;OR(V)ANYCONSENTGIVENOROTHER ACTION TAKEN BY DTC AS BONDOWNER. Certificated Bonds DTC may discontinue providing its services with respect to the Bonds at any time by giving notice to the Town and discharging its responsibilities with respect thereto under appiicable iaw, or the "Town may terminate its participation in the system o book-entry-only transfers through DTC at anv time. In the event that such book-entry- only system is discontinued, the following provisions will apply: Ttie Bonds will be in registered form m denominations of $5,000, or integral multiples thereof. Principal of and interest on the Bonds when due will be 4 payable atthe principal corporate trust office of a bank or trust company to be named by the "Town as the 5scal agent. f Certificated Bonds may be transferred or exchanged at no cost to the owner of such Bonds at any time prior to ~ maturity at the corporate trust office of the fiscal a ent for Bonds of the same or any other authorized denomination or denominations m the same aggregate rindpa~amount a on the terms set forth in the certificate of the'I'own Supervisor authorizing the sale otthe Bonds and fixing the detpails thereofand in accordance with the Local Finance Law. Authorization and Purpose The Bonds are being issued pursuant to the Constitution and statutes of the State oFNew York, including among others, the Town Law, General Municipal 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 two capital projects in and for the Town. Such projects, and the respective principal amounts of Bonds to be issued for each, are as follows: ~ Date Amount to Authorized Purpose be issued ' 02-27-07 Open Space Preservation $ 7.500,000 I 02-26-08 Land Acquisition and Building Improvements ],350,000 Total $ 8.850.000 I 1"he 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 beriveen the Town and the owner 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 authority to levy ad valorem taxes on all the taxable real property within the Town without limitation as to rate or amount. Under Article VIII of the State Constitution, the Town is reywred to pledge its faith and credit for the payment of the principal of and interest on the Bonds and the State Legislature is specifically precluded from restnchng the power of the Town to levy taxes on taxable real estate thereof. 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 i a general rule, property and funds of a municipal corporation serving the public welfare and interest have not been judicially subjected to execution or attachment to sahsfy a judgment, although Judicial mandates to officials to appropriate and payjudgments out of current funds or the proceeds of a tax levy have been issued. i Kemedies for enforcement of payment are not expressly included in the Town's contract with holders of its bands 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 municipality in the State may file a petition with any United States district court or court of bankruptcy under any~rovision of the laws of the United States, now or hereafter in effect, for the composition or adjustmentofmunicipa indebtedness. Subjecttosuchconsent,undertheUnitedStatesConstitution, Congress has jurisdiction over such matters and has enacted amendments to [he existing federal bankruptcy statute, generally to the effect and with the purpose of affording municipal corporations, under certain circumstances, with 3 I'i i 1 easieraccesstojudicial]yapprovedadjustmentofdebts,includingjudicia]Controloveridentifiableandunidentifiable creditors. In recenttimes, certain events and legislation affectingremedies 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 ofthe State, require theexercise by the State of its emergency police powers to assure [he 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. THE TOWN There follows in this Official Statement a brief description of the Town, together with certain information concerning its economy and governmental organization, its indebtedness current major 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 Longlsland. Settlementtookplacein 1640. The Village ofGreenportislocatedwhollywithintheTown. The Town also includes the area of Fishers Island which is located approximately twelve miles east of the mainland. Fishers i Island is accessible only by water or air with ferry service operating between the Island and New London, Connecticut. The TownispprimarilyaruralresortareawithsubstantialshoppingfacilitiesavailableatGreenpor[,atvarious ~ shopping centers witJiin theTown, and atRiverhead justto the west. Some commercial services are available within the Town m the hamlets of Southold, Cutchogue and Mattituck. Agriculture has been a major industry in the Town since its origins. In recent years, farm crops have gradually evolved 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 numberofvineyards have been established and wine-making is an important industry. Fishing and ~ fish processing are now growing industries due to improved transportation facilities. The Town is also a major summer resort area, utilizing bays, inlets and Long Island and Block Island Sounds. The main highways in the Town are New York State Route 25 and the North Road. Rail transportation is , provided by the Long Island Rail Road with stations at Mattituck, Southold and Greenport. Ferry service is also ~ available betweenOnentPoint,eastofGreenport,andNewLondon,ConnecticutaswellasfromGreenporttoShelter Island. Electric. service is provided by the Long Island Power Authority; gas service is provided by Keyspan Energy ~ Corporation. Fire protection is the responsibiLty of volunteer fire and fire protection districts. The Town provides its own police protection. In the Village of Greenport, electric service and fire protection are provided by the Village. Government Subject to the provisions ofthe State Constitution, the Town operates ppursuantto the Town Law, the General Municipal Law, the Local Finance Law, other Taws generally applicableto the Town, and any special laws specificaly applicable to the'fowu. Under such laws, there is no authority for the Town to have a charter, 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. The legislative power of the Town is vested in the Town Board which consists of five members, elected for a term of four years, and 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. Six independently governed school districts are located wholly or artially within the'I~own, which rely on their own lasing powers granted by the State to raise revenues. "fhe school districts use the Town's assessment roll as their basis for taxation of property located within the Town. 4 I Employees The Town provides services through approximately 216full-time and 69 part-time employees, some ofwhom are represented by organized labor. The following table presents the number of employees' represented by organized labor, name of union and contract expiration dates. I Appproximate Date Contract Name of Union Membership Ex fires Civil Service Employees Assoc . 168 12-31-10 Police Benevolent Assoc . 47 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: Town of Suffolk New York Year Southold Coun State 1970 16,804 1,127,030 18,241,391 1980 19,172 1,284,231 17,557,288 1990 19, 836 1,321,977 17,990,455 2000 20,599 1,419,369 18,976,457 2007 22, 852 1,504,947 19,297,729 Source: 11.5. Bureau of the Census, Long Island Power Authority, New York State Department of Labor. Median Income of Families 1980 1990 2000 Town $21,0]3 $43,082 $61,108 County 24,194 53,247 72,112 State 20,180 39,741 51,691 Source: U.S. Department oC Commerce, Bureau of the Census. Per Capita Money Income 18 1990 2000 Town $8,258 $19,037 $ 27,6]9 County 7 576 18,481 26,577 State 7,496 16,501 23,389 Source: U.S. Department of Commerce, Bureau of the Census. I 5 I I Unemployment Rate Statistics Unemployment statistics are not available for the Town as such. The smallest area for which such statistics are available (which includes the Town) is the County of Suffolk. 1'he information set forth below with respect to such County ~s included for information purposes oniy_ It should not be implied from the inclusion of such da±a in this Statement that the Town is necessarily representative of the Couni)~ or vice versa. Suffolk New York Cowl _Statc _ Annual Averages: 2003 4.3% 6.2% A 2004 4.5 5.9 2005 4.2 5.0 I 2006 3.9 4.5 ; 2007 3.8 4.5 2008(2 months) 4.8 53 Source Department of Labor, State ot'Vew York li Selected Listing of Larger Employers A rox. No. Name Tvue of Employees Mattituck-Cutchogue UFSD Public School 385 Eastern Long Island Hospital Hospital 350 Plum Island ADC U.S. Govt. Facility 300 Town of Southold Local Government 285 ~ Peconic Landing Life Care Community 204 Southold UFSD Public School 175 San Simeon by the Sound Nursin Home 154 Greenport UFSD Public chool 1.08 INDF,BTEDNESS OF THE TOWN Constitutional Requirements The State Constitution limits the power of the Town (as wet l as other municipalities and school districts of the State) to issue obligations and contract indebtedness. Such constitutional limitations include the following, in summary form, and are generally applicable to the Town and the Bonds: Purpose and Pledge. Subject to certain exceptions, the Town shall not give or loan any money or property ~ to or in aid of any individual or private corporation or prvate undertaking or give or loan its credit to or in atd of any j of the foregoing or any public corporation.' The Town may contract indebtedness only for a Town purpose and shall pledge its faith and credit for the payment of principal of and interest thereon. Payment and Maturity. Except for certain short-term indebtedness contracted in anticipation of taxes or to be paid with in three fi seal year periods, indebtedness shat l be paid in annual installments commencing no later than two years after the date such indebtedness shall have been contracted and ending no later than the expiration of the ~ period of probable usefulness of the obeect or purpose determined by statute or, in the alternative, the weighted I average period of probable usefulness o~the several objects or purposes for which it is contracted. No installment + may be more than fifty per centum in excess of the smallest prior installment, unless the Town Board provides for substantially level or declining debt service in the manner prescribed by the State Legislature. The Town rs required to provide an annual appropriation for the payment of interest due during the year on its indebtedness and for the amounts required in such year for the amortrzatron and redemption of its bonds and notes. Debt Limit. Pursuant to the Local Finance Law, the Town has the Power to contract indebtedness for any Town purpose authorized by the Legislature of the State provided the aggregate principal amount thereof shall not exceed seven percentum of the average five-year full valuation of the taxable real estate located in the Town and subject to certain enumerated exclusions and deductions such as debt contracted to provide water, self-liquidating I facditiesandcashorappropriationsforcurrentdebtservice.TheConstitutionalmethodfordetermimngfullvaluation consists of dividing thhe total assessed valuation of taxable real estate for a particular assessment roll by the final equalization ratio established for such assessment roll by the State Office of Real Propperty Services (the "ORPS"). ~ The State Legislature is required to prescribe the manner by which such ratio shall be determined. Average full 6 valuation is determined bF° taking the sum of the full valuations of the last five completed assessment rolls and dividin~* such sum by tine. Statutory Procedure In general, tt~e State Legislature has authorized the power and procedure for the Town to borrow and incur indebtedness by the enacunent ofthe Local Finance Law subject_ of course, to the constih;tional provisions set ti~rth above. The power to spend numev, i~owever_ generally derives tiom other law, including the "I own Law and General Municipal I,asv of tlic 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 ofa resolution, approved by at Icast two- thirds ofthe members of the Town Board, which is the finance board of the Town. Certain bond resolutions may he subject to permissive referendum, or may be submitted to the Town voters at the discretion of the "town Board. [f the resolution is submitted to the Town voters, only athree-fifths vote of the Town Board is required. "the Local Finance Law also provides atwenty-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. Each bond resolution usually authorizes the constriction, acquisition or installation oY the object or purpose to be financed, sets Corth 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 ofprobable usefulness with respect thereto. Each bond reselutiott alto 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 general)yy~ do not extend Gve years beyond the original date of bon-owina. However, notes issued in anticipation of the sale ot'serial bonds for assessable unprovemcnts are not subject to such five vear limit and may be renewed subject to annual principal reductions for the entire period of probable usefulness of'the pparposc for vv°hich such notes were ongmally issued. (Sec "Payment and Maturity" under "Constitutional Reymrements," and "Details of Short Term Indebtedness Outstanding.") In general, the Local Finance Law contains similar provisions providing the "town with power to issue general obligation revenue and tax anticipation notes and general obligation budget and capital Dotes. i i f t ~ I Computation of Debt Limit and Calculation of Net Debt Contracting Margin (As of May 2, 2008) Fiscal Year State ' Ending Assessed Equalization Full j December 31: Valuation Rate Valuation 2004 $101,872,561 1.49% $ 6,837,084,630 li 2005 104,228,885 1.25 8,338,310,800 2006 105,502,965 1.13 9,336,545,575 2007 106,950,027 1.04 10,283,656,442 . 2008 108,292,749 0.95 11,399,236,736 Total Five Year Full Valuation $46,194,834,183 Average Five Year Full Valuation 9,238,966,836 Debt Limit - 7% of Average Full Valuation 646,727,678 Inclusions: Outstanding Bonds: General Purposes 23,540,000 Other -0- Sub-Total 23.540.000 Bond Anticipation Notes 5,979,300 { Total Inclusions 29.519.300 i~ Exclusions: Appropriations 870,000 Other Exclusions - -0- I Total Exclusions 870,000 Total Net Indebtedness Before Issuing the Bonds 28 649 300 ~ i The Bonds 8,850,000 Less: BANS to be paid from bond proceeds -0- Net Effect of Issuing Bonds 8,850,000 Total Net Indebtedness After Issuing the Bonds 37,499,300 Net Debt Contracting Margin After Issuing the Bonds $609,228,378 Percent of Debt Limit Exhausted 5.80% i Trend of Town Indebtedness 1 The following table represents the outstanding indebtednessoftheTownattheendofthelastfivepreceding ~ fiscal years. ' Fiscal Year Ending December 31: 2003 2004 2005 2006 2007 Debt Outstanding End of Year: Bonds $6,950,000 $6,515,000 $12,299,098 $ ] 1,349,098 $25,020,000 Bond Anticipation Notes 14,768,302 12,625,600 ] 1,720,000 8,244,000 6.224,000 ~ Total Outstanding Debt $21,718,302 $19.140,600 $24.019,098 $19,593,098 $31,244,000 i r 1 8 i Details of Short-Term Indebtedness Outstanding Bond Anticipation Notes Maturit Purpose Amounts 06-06-08 Fishers Island Ferry District $ 1,800,000 09-OS-08 Various Capital Projects 3,680,000 04-17-09 Various Capital Projects 799,300 Total $ 5.979.300 a. To he funded from the proceeds of renewal notes and from available funds. Debt Service Requirements -Outstanding Bondsa Fiscal Year Ending December 3 ] : Principal Interest Total 20pg . . $1,695,000 $ 950,559 $2,645,559 2009 i,75Q,00p 888,645 2,638,645 2010 1,575,000 827,441 2,402,441 2011 1,600,000 769,388 2,359,388 2012 1,540,000 709,851 2,249,851 20 ] 3 1,425,000 654,788 2,079,758 2014 1,440,000 600,927 2,040,927 2015 1,435,000 848,816 1,980,816 2016 1,360,000 492,883 1,852,883 2017 1,420,000 439,412 1,559,412 2018 1,435,000 384,118 1,819,118 20]9 995,000 335,739 1,330,739 1 2020 875,000 296,63] 1,171,631 ' 2021 875,000 260,344 1,135,344 2022 675,000 223,656 898,656 r 2023 725,000 193,906 918,906 2024 725,000 163,094 888,094 C~ 2025 725,000 132,281 857,281 2026 550,000 ] 05,188 655, ] 88 2027 550,000 8],813 631,813 2028 550,000 >8,43g 508,438 2029 550,000 35,053 585,063 2030 880.000 11.688 551.688 Totals $25,020.000 $9.161,659 $34.181,669 n. Exclusive of the Bonds. 1 I 9 J~ Calculation of Estimated Overlapping and Underlying Indebtedness 1 Applicable Applicable i Overlapping Data of Percentage IPotal Net Units _ RepOYt Applicable Indebtedness Indebtedness Countv of Suffolk 10-23-07 3.71% $34,381,249 $29,783,231 ~ Village ofGrcenport OS-31-07 100.00 12,132,000 11,398,000 School Districts: Fishers Island 06-30-07 100.00 405,000 405,000 theenpoit 06-30-07 100.00 135,000 122,000 Mattihick-Cutchogue 12-27-07 98.49 43,424,241 34,973,151 ~ New Suffolk Common 06-30-07 100.00 - - Oyster Ponds 06-30-07 100.00 150,000 150,000 Southold 11-30-07 100.00 10,090,681 10,090,681 Piro Districts (Est.) Various 100.00 2.750,000 2.750,000 I $ 90.627,490 $ 81,831.382 Sources: Annual pinancial Reports on file with the Office of the State Comptroller, or more recently published Official Statements. Authorized But Unissued Items The following Bonds are authorized but unissued: Date Authorized Purpose Amount 02-25-03 Mattituck Inlet Shore Erosion Study $ 82,750 02-27-07 Open Space Preservation: Non-Agricultural Land 22,SOO,000a ~I 08-28-07 Open Space Preservation: Agricultural Lands 4,000,000 02-26-08 Acquisition of Land and Building (Peconic School Property) 1,350,000a 04-22-OS Tax Collection Software 75.000 I Total $28.007.750 ' a. To be funded in whole or in part by the issuance of the Bonds. Capital Program The Town annually adopts a Capital Budget. Projects may be funded by State and Federal aid, reserves, proceeds of obligations, property taxes or a combination thereof. A summary of the Capital Budget for 2008 is set forth below: Department 2008 ~ General Town $6,727,928 Highway Dept 110,000 Solid Waste District 689,000 Wastewater Disposal District 1 500_000 Total $ 9.026.928 Sources Appropriations $ 186,100 Grants - Town Debt 8.840.028 Total $ 9.026.828 { I 10 k E ~ Laudfill Closure and Postclosure Care Costs I i The Town owns a landfill on a site in the unincorporated area of Cutcl7ague, commonly known as the Cutchogue Landfill. The Town ceased accepting waste at its Cutchog?e Landfill as of October 8, 1993. Placement of the final cover, referred to as capping, on the landfill was completed in November 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. The Town has and will continue to comply j with said requirements. The ongoing post closure costs are estimated to be between $25,000 and $30,000 per year I` from 2008 through 2010. The Town paid $26,390 for such costs in 2007 and will continue to pay These costs in the future. ' Actual costs associated with the capping totaled $7,681,720. Financing for closure activities was 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 j 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. I FINANCES OF THE TOWN i Financial Statements and Accounting Procedures j The Town maintains its financial records in accordance with the Uniform System of Accounts for Towns f rescribed by the State Comptroller. The financial records ofthe Town are audited by independent accountants. The last such audit made available for public inspection covers the fiscal yeaz ended December 31, 2006. In addition, the financial affairs of the Town are subject to periodic compliance review by the Office of the State Comptroller j 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". GASB ~ required the Town to implement this standard for the fiscal year endingg December 31, 2003 and the Town has compliedwithsuchrequirements.'fhisStatementestablishednewfinancialreportingrequuementsforstateandlocal governments throughout the United States. It required new information and restructuring of much afthe information that governments have presented in the past. Comparability with reports issued in all prior years was affected. i 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 ar Iim~tations. There are three basic fund types: (1) 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 m a specific fund. The Town presentlymaintainsthefollowinggovernmentalfunds: General Fund, Highway Fund and Special ~ Districts Funds, and the Capual Projects Fund. Fiduciary funds consist of a Trust and Agency Fund. There are no proprietary funds. Account groups are maintained for fixed assets and tang-term debt. Basis of Accounting The "T'own'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 toaccrual - that is, when they become "measurable" and "available" to finance expenditures to the current penod. Revenues are susceptible to accrual .include real property taxes, intergovernmental revenues (State and Federal aid) and operating transfers. Expenditures are generallyy 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 11 of the General Municipal Law (the "GML"), the Town is generally permitted to deposit moneys in banks or trust companies located and authorized to do business in the State. All such deposits, including special time deposit accounts and certificates of deposit, in excess ofthe 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 10 of the GML. 11 The Town may also temporarily invest moneys in: (1) obligations of the United States of America; (2) obligations gguaranteed by agencies ofthe United States of America where the pa ment of principal and interest are i guaranteed by the United States of America; (3) obligations ofthe State of New York; (4) with the approval ofthe 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 I participation issued in connection with installment urchase agreements entered into by political subdivisions of the State pursuant to Section 109-b(10) ofthe GML; (6~obligations of a New York public benefit corporation which are j made lawful investments for municipalities pursuant to the enabling statute of such public benefit co oration; or (7) 1 in the case of moneys held in certain reserve funds established by the Town pursuant to law, in obligations ofthe Town. I All of the foregoing investments are required to be payable or redeemable at the option of the owner within such times as the pproceeds will be needed to meet expenditures for purposes for which the moneys were provided and, in the case of obligations purchased with the proceeds ofbonds or notes, shalt be payable or redeemable in any ~ event, at the option ofthe owner, within two years ofthe date ofpurchase. Unless registered or inscribed in the name ofthe Town, such instruments and investments must be purchased through, delivered to and held in custody of a bank or trust company in the State pursuant to a written custodial agreement as provided by Section 10 ofthe GML. The Town Board has adopted an investment policy and such policy conforms with applicable laws of the State governing the deposit and investment of public moneys. All deposits and investments ofthe Town are made J in accordance with such policy. 1 i Budgetary Procedures The head of each administrative unit of the Town is required to file detailed estimates ofrevenues (other than real property taxes) and expenditures for the next fiscal year with the budgget officer (Supervisor) on or before August ; 15`". 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 repares a tentative budget which includes his recommendations. A budget message expPlaining the main features ofthe 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 beheld 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 budget. A public hearing, notice of which must be duly published i in the Town's official newspaper, on the preliminary budget is generally required to be held on the Thursday immediately following the genera] 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 e voted on by members ofthe public. After thepublic hearing, the Town Board may further change and revise the preliminary budget. The Town Board, by resohrtwn, adopts the preliminary budget as submitted or amended no later than November 20th, at which time, the preliminary budget becomes the annual budget ofthe Town for the ensuing fiscal year. Budgetary control during the year is the responsibility ofthe 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 ofthe Town Board. Budget Summaries for the 2007 and 2008 fiscal years may be found in Appendix A. Financial Operations I The Supervisor functions as the chief fiscal officer as provided in Section 2 of the Local Finance Law; in this role, the Supervisor is responsible for the Town's accounting and financial reporting activities. In addition, the Supervisor is also the Town's budget officer and must therefore prepare the annual tentative budget for submission ~ to the Town Board. Pursuant to Section 30 ofthe Local Finance Law, the Supervisor has been authorized to issue J or renew certain specific types of notes. As required bylaw, the Supervisor must execute an authorizing certificate 1 which than becomes a matter of public record. 1 ' The Town Board, as a whole, serves as the finance board ofthe Town and is res onsible for authorizing, by { resolution, all material financial transactions such as operating and capital budgets andpbonded debt. JI Town finances are opperated primarily through the Genera] and Special Revenue Funds. The General Fund receives most of its revenue from real property tax and State aid. Current operating expenditures are paid 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 roperties at the same time real estate taxes are levied. Capital projects and equipmentpurchascsareaccounted~ormspecialcapitalprojectsfimds. "FheTownobservesacalendaryear(January 1 through December 3]}for operating and reporting purposes. { 12 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. Rea! Property Taxes See "Real Property Tax Information", herein. State Aid The Town receives 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 mmric~palities will continue, either ursuant to existing formulas or in any form whatsoever and, in any event, if appropriated and apportioned to the Town, payment can be made only if such monies are available therefore. The State is not constitutionally obliged to maintain or continue such aid. See Appendix A. Expenditures The ma'or categories of expenditure far the Town are General Government Support, Public Safety, Transportation, ~conomic .Assistance and Opportunity, Home and Community Services, Culture and Recreation, Employee Benefits and Debt Service. A summary of the expenditures for the five most recently completed fiscal years may be found in Appendix A. Pension Systems Substantial) all employees of the Town are members of the New York State and Local Employees' Retirement System ~'ERS") or the New York State and Local Police and Fire Retirement System ("PFRS"). (Both Systems are referred to together hereinafrer as the "Retirement Systems" where appropriate.) The Retirement Systems are cost-sharing multiple public employer retirement systems. The obligallon of employers and employees to contribute and the benefits to employees are =ovemed by the New York State Retirement System and Soaal Security Law (the "Retirement System Law"). ~he Retirement Systems offer a wide range of plans and benefits which are related to years of service and final average salary, vesting of retirement benefits, death and disability benefits and optional methods of benefit payments. All benefits generally vest after five years of credited service. The Retirement System Law generally provides that all participating employers in each retnement system are jointly and severally liable for any unfunded investments. Such amounts are collected through annual billings to all participating employers. Generally, al I employees except certain part-time employees, pame~pate in the Retirement Systems. The Retirement Systems are non-contributory with respect to members hired prior to July 27 1976. All employees who became members on or afar Julyy 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 ] 0 years of service credit. A pension reform bill was signed by the Governor into Law as Chapter 49 of the Laws of 2003 which changed the cycle of billing to match budget cycles of the Town. Under the previous method the Town was unsure of how much rt would have to pay to the system until after its budget was implemented. Un~er the new system the contribution for a given fiscal year will be based on the value of the pension fund on the prior April 1 instead of the followingg April I so that the Town will be able to more accurately include the cost ofthe contribution into its budget. Chapter 49 requires the Town to make a minimum contribution of 4.5% of payroll every year, including years m which the investment performance of the fund would make a lower contribution possible. On July 20, 2004 the Ncw York State Legislature passed a bill amending the General Municipal Law, Local Finance Lawand the Retirementand Social Security Law. On July 30, 2004, the Governor signed the new retirement system legislation into Law as Chapter 260 of the Laws of 2004. The bil I gives the employer the option to move the annual payment date for contributions from December 15°i to February 1 ",effective December 15, 2004. It increases, from five to ten years, the maximum amortization period of the portion of employer contributions that exceeds 7% of payroll for the 2004-2005 (fiscal year of the Retirement System (April I -March 31) For the payment due December 15, 2008, it is estimated that the contribution wi II be approximately 11.5% of payroll. The Town paid its retirement obligation in full on December 15, 2007 and has included its total obligation for the 2008 fiscal year in its current budget. The Town does not plan to amortize its retirement system obligations. While the Town is aware of the ~otential negative impact nn its budget and will take the appropriate ste~s to budget accordint;h~ for the increase, t icre can he no assurance that its financial position will not he negative y impacted as a resuCt ~>f the potential increase in such contributions. 13 Contributions to the Retirement Systems Fiscal Year Amount Ending of December 31: Contribution ?003 S 684,61? 2004 1,67Q10? 2005 2,085,13? 2006 1,837,992 2007 1,947.914 i 7.008(Budge±) 2,033,160 Other Post Employment Benefits It should also be noted that the Town provides pest-retirement healthcare benefits to various categories of former employees. 'These costs may be expected to rise substantially in the future. There is now an accounting rule that will requre governmental entities, such as the 'Town, to account for post-retirement healthcare benefits as it accounts for vested pension benefits. GASB Statement No. 45 ("GASB 45") of the Governmental Accounting Standards Board ("GASB"), described below, requires such accounting. Although GASB 45 encourages earlier adoption, implementation is required by the following dates, based on the size of government measured by annual revenue: Annual Revenue Effective for Fiscal Year Ending After: I Greater than $100 million December 15, 2006 Between $]0 million and $100 million December 15, 2007 I,css than $10 million December 15, 2008 School Districts and Boards ofCooperative F,ducation Services, unlike other municipal units ofgovernment in the State, have been prohibited from reducin retiree health benefits or increasing health care contributions received or paid by retirees below the level of benetits or contributions afforded to or required from active employees since the implementation of Chapter 729 of the Laws of 1994. This protection from unilateral reduction of benefits has been extended annually and continued through May l5, 2009 pursuant to Chapter 43 of the Laws of 2008. Legislative attempts to provide similar protection to retirees of other local units oC~overnment in the State have not succeeded as ofthis data Nevertheless, many such retirees of all varieties ofmunicipal units in the State do presently receive such benefits. I GASB 45 and OPEB. OPEB refers to "other post-employment benefits," meaning other than pension benetits, isa ~ ~ty ene .its and OPEB consist primarily of health care benefits, and may inchidc other benetits such as disability bene rts 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 accowrt for OPEB liabilities much like they already account Cor pension liabilities, generallyy adopting the actuarial methodologies used for pensions, with adjustments for the different characteristics of OYEB and the Cact that most municipalities and school districts have not set aside any funds against this liability. Unlike GASB 27, which coversaccountmgforpensions,GASB45docs not require municipalities or school districts to report a net OPEB obligation at the start. Under GASB 45, based on actuarial valuation, an annual required contribution ("ARC")will be determined for each municipality or school district. The ARC is the sum of (a) the normal cost for the year (the present value offuturcbenefitsbcingearnedbycurrentemployees)plus(b)amortizationof[heunfimdedaccruedliabihty(benefits already earned byy~ current and former employees but not yet provided for), using an amort¢ation period of not more than 30 years. It~a municipality or school district contributes an amount less than the ARC, a net OPEB obligation will result, which is required to be recorded as a liability on its financial statements. The actuarial study is in the process of being completed and is expected to be submitted to the Town in the next several months. "the "town's ARC is estimated to be approximately $4.5 million and its unfunded actuarial accrued liability is estimated to be approximately $43 million. GASB 45 does not require that the unfimded liability actually be unortized nor that it be advance fimded, only [hat the municipality or school district account for its unfunded accrued liability and compliance in meeting its ARC. Achiarial Valuation will be required every 2 years for OPF.B plans with more than 200 members, every 3 years if there are less than 200 members. 14 I REAL PROPERTY TAX INFORMATION Real Property Taxes The Town derives a sigititicant poa2ion of its annual revenue through a direct real property tax. Fhe following table presents the total tax levy, by purpose, with adjustments and collection performance for each of ll~e last five fiscal years. Tax Levy and Collection Record Fiscal Year Gndin December 31: ~6~ Total Tax Levy $79,909,681 $89,495,573 $89,934,663 $97,216,091 $103,216 661 Amount Collected 77,59S,98S 83,356,976 86,628,595 94,288,000 60,650,OOba Returned to County Amount 2,313 696 2,138 S97 3,106,068 2,928,091 42,566.661? Percentage 2.~0% 2.'39% 3.45% 3.01% 41.24%" Uncollected at Bnd of Year of Levy None None None None NA a. As oC April 21, 2008. Tax Collection Procedure Property taxes for the Town are collected by the Town tax receiver. Such taxes are due and ppayable in equal installments on December 1 and May 10, but may be paid without penalty by lamary 7 0 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 1 S based nn 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 penod commencing August 1 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 m tax collection is the County's liability. Tax Rates (Per $100 Assessed Valuation) Fiscal Year Endin * December 3 I 2004 2005 006 2007 2008 General-Townwide $136.65 $]39.73 $140.37 $157.02 $160.22 General -Outside Village 4.53 5.43 4.90 3.99 7.84 Highway 37.12 38.37 40.68 39.63 41.74 Large Taxable Properties 2008 Assessment Roll° Assessed Name ['ype Valuation Peconic Landingg at Southold Commercial $ 1,707,704 LILCQ, L[PA, Marketspan, Keyspan Utility 1,559.020 Village of Greenport-Power Plant Utility 585,000 Fishers Island Dev. Corp Residential Development 363,200 Robins Island Holding LLC Private Lands 330 S00 Alan Cardinale Shopping Center 285,500 North Fork Bank Bank Bmlding 268,531 Damianos, Herodotus Vineyard 234,000 New York Telephone Utility 218,496 ~ Levin Family Limited Partnership Motel & Restaurant 163,950 Anderson, Bradley & Francesca Farmland & Private Lands 121,400 Norris, Susan Various Properties 111,800 Laurel Links & Country Club Country Club 96,300 KimogenorPt Co . Co-Op 94,600 Driftwood Cove Co-Op 90,000 $6,230,001 i - a. Assessment Roll established in 2007 for levy and collection of taxes during 2008 Fiscal Year. h. Represents npproximatek 5.75% ofthc total taxable assessed valuation of the Toan for 2008. 1S f c LrTrGATION The Town is subject to a number of lawsuits in the ordinary conduct of its affairs. For the most part, any potential adverse decisions in such suits, either individually or in the aggregate, are not likely to have a material adverse effect on the Town. There are certain matters worthy of special mention: Stanton, at al. v. Town of Southold -This is an action in inverse condemnation and nuisance by forty-two property owners, alleging properly damage in the form of erosion caused by a "town-owned jetty. The Town is engaged m studies to determine the issues surrounding the alleged erosion, its causes, and possible solutions. Although this case was first filed in 1997, discovery has not been completed. The issues in this case are complex i and will require extensive expert testimony. The nature and extent of damages, if any, are unknown at this point. Insurance coverage may be available for potential liability for alleged compensatory damages. The Town has denied any wrongdoing and intends vigorously to defend any further prosecution of this action. Ouad Snter~rises, et al. v. Town of Southold -This action arises from the Town Board of the Town of Southold's alleged refusal to approve a than *e of zone application filed by laintiffs, which sought substantial ly to increase the zoning density of a parcel of lan~owned by a developer plaintiff. Plaintiffs assert claims under the Fair Housing Act, Americans with Disabilities Act, State and Town Law, alleging housing discrimination against senior, handicapped and disabled residents, who are also named as "Jane Doe" plaintiffs. Plaintiffs seek declaratory relief granting their desired zoning, as wel! as compensatory and punitive damages in the amount of $60 million ($5 million for each of the six federal causes of action). lnsurance coverage may be available for potential liability for j alleged compensatory damages. Fact and expert discovery is proceeding. The Town has denied all wrongdoing and intends vigorously to contest these claims. Notices of Claim -One noss-ible noteworthy Notice of Claim has been filed against the Town relating to police matters. In theNotice ofC~laim, the plaintiffdemands $5 million in damages for physical ,emotional and civil ~ ~ nghts igjuries related to an alleged incident, believed to be an arrest by Town police officers "on or about February 21, 2007 and prior arrests." Due to the vague nature of the allegations, the Town is not aware of any details of this put ported claim, and intends vigorously to contest it both prior to and after the institution ofa lawsuit As ofthe date of tCiis Official Statement, no lawsuit has been served upon thetown. BONDHOLDER RISKS AND MARKET FACTORS AFFECTING FINANCINGS i OF THF. 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 tMs Official Statement, including its appendices, in order to make an informed investment decision. investors should consider, in particular, the fol~owing factors: 1 he Town's credit rating could he affected by circumstances beyond the Town's control. 8conomic I conditions such as the rate of unemployment and int7ation, termination oC commercial operations by corporate taxpayers and employers, as well as natural catastrophes, could adversely affect the assessed valuation of "town properq~ and its ability to maintain fund balances and other statistical indices commensurate with its current credit rating. Accordingly, a decline in the "town's credit rating could adversely affect the market value of the Bonds. In addition, if and when a holder of any of the Bonds should elect to sell a Bond prior to its maturity, there can be no assurance that a market shall have been established, maintained and be in existence for the purchase and sale of any Bonds. The price or principal value of the Bonds is dependent on the prevailing level of interest rates. If interest rates should increase, the price ofa bond or note may decline causingthe bond or noteholder to potentially incur a capital loss if such hood 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 Bankruptcy Act or otherwise, wi 11 not occur which might affect the market price of and the market for the Bonds. If a sign ificant defau It 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 within the State, both the ability ofthe Town to arrange for additional borrowings and the market for and market value of outstanding debt obligations, including the Bonds, could be adversely affected. Future amendments to applicable statutes affecting the treatment of interest paid on nrwiieipal bonds, including the [3onds, for income taxation purposes could hate an adverse effect on the market value of the Bonds {see ""fax Matters" herein). lb 1 1 TAX MATTERS + Opinion of Bond Counsel ' In the opinion of Hawkins Delafield & Wood L,LP, Bond Counsel to the Town, under existin statutes and court decisions and assuming continuing compliance with certain tax certifications described herein, ~i) interest on the Bonds is excluded from gross income for 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 individuals and corporations under the Code; such interest, I however, is included in the adjusted current earnings of certain corporations for purposes of calculating the alternative minimum tax imposed on such corporations. Phe Arbitrage and Use of Proceeds Certificate of the Town (the "Tax Certificate"), which will be delivered concurrently with the delivery of the Bonds will contain provisions and procedures relating to compliance with applicable requirements of the Code. In rendering its opm+on, Bond Counsel has relied on certain re resentations, 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 ~ provisions and procedures set forth in the Tax Certificate relatingto compliance w+th applicable requirements of the Code to assure the exclusion of interest on the Bonds from gross income under Section 103 of the Code. In addition, in the opinion of Bond Counsel to the Town, under existing statutes, interest on the Bonds is exempt from personal income taxes of New York State and its political subdivis+ons, including The City of New York See "Miscellaneous" below for a discussion of certain litigation that may relate to this New York State tax exemption. i Bond Counsel to the'1~own expresses no opinion regarding any other Federal or state tax consequences with respect to the Bonds. Bond Counsel renders rts opinion under ex+sting statutes and court decisions as of the issue date, and assumes no obli=anon to update its opinion after the +ssue date to reflect any future action, fact or ~ circumstance, or change in~aw or interpretation, or otherwise. Bond Counsel expresses no opinion on the effect of any action hereafter taken or not taken m 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. i Certain Ongoing Federal Tax Requirements and Certifications The Code establishes certain significant ongoing requirements that must be met subsequent to the issuance and delivery of the Bonds in order that interest on such Bonds be and remain excluded from gross income under Section 703 of the Code. These re uiremcnts include, but are not limited to, requirements relating to use and expenditure of gross proceeds of the E3onds, yield and other restrictions on investments of gross proceeds, and the I arbitrage rebate requirement that certain excess earnings on gross proceeds be rebated to the Federal government. { Noncompliance with such requirements may cause interest on the Bonds to become included in gross income for Federal income tax purposes retroactive to their issue date, irres ective of the date nn which such noncompliance occurs or is discovered. The Town, in executing the Tax Certifitcate, will certify to the effect that the Town will comply with the previsions and procedures set forth therein and that it will do and perform all acts and things necessary or desirable 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 isabriefdiscussionofcertainco(IateralFederalincometaxmattcrswithrespecttotheBonds. tt does not purport to address all asppects of Federal taxat+on that may be relevant to a particular owner of a Bond. Prospective investors, articularly tliose who may be subject to sppecial rules, are advised to consult their own tax advisors regarding the Federal tax consequences of owning and disposing of the Bonds. Prospective owners of the Bonds should be aware that the ownership of such obligations may result i? collateral Federal income tax consequences to various categories of persons, such as corporations (including S corporations and foreign corporations), financial institutions, pproperty and casualty and life insurance companies, individual recipients of Social Security and railroad retirement benefits,iodividuals otherwise eligible for theearned income tax credit, and taxpayers deemed to have incurred or continued indebtedness to ppurchase or carry obligations the interest on which is excluded from gross income for Federal income tax purposes. Iirterest on the Bonds may be i 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 Aiscount Original issue discount' ("OID") is the excess of the sum of all amounts payable at .he staled maturity oC a Bond (excluding certain "qualified stated interest" that is unconditionally pa}~ablc at least annually at prescribed rates) over the issue price of that maturity. in general, the "issue price` of a maturity means the llrst puce at which a substantial amount of the Bond.c of that maturity vas sold {excludin sale, to bond house, broke rs, or sinular persons acting in the capacit} as m~derwriters, placunent agents, or who~~salers}, In general, the issuee pi ice for each 17 i maturity of the Bonds is expected to be the initial public offerin price set forth in this Official Statcmeut. Bond Counsel further is of the opinion that. for any Bond having OID ~a "Discount Bond"), OID that has accrued and is properly allocable to the owners of the Discount Bond 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, O[D on a Discount Bond accrues under a constant yield method, based on periodic compounding cf interest over prescribed accrual periods using a eompomrding rate determined by reference ro the yield on [hat Drscount Bond. An owner's adjusted basis in a Discount Bond is increased by accrued OlDforpurposesofdetermininggainorlossonsale,exchange, or other dispositionofsuchDiscountBond. Accrued OID may be taken into account as an increase in the amount oftax-exempt income received or deemed to have been I received for purposes of determining 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 origginal 1 issue discount for Federalincometaxpurposes,includingvariousspecialrulesrelatingthereto,andthestateandlocal i tax consequences of acquiring, holding, and disposing of Discount Bonds. Bond Premium In general, if au owner acyuires a Bond for a purchase price (excluding accrued interest) or otherwise at a tax basis that reflects a premium over the sum of all amounts payable on the Bond after the acquisition date (excluding certain"quell red stated interest"that is unconditionallypa able at least annuallyatprescribedrates),that premium constitutes "bond premium" on that Bond (a "Premium Bond"). In $eneral, under Section 171 ofthe Code, an ownerof 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 callableprior to its stated maturity date, the amortization period and yreld i may be required to be determined on the basis of an earlier cal l date that results in the lowest yield on such Premium j 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 atax-exempt Premium Bond, if the bond premium allocable to an accrual period exceeds the qualified stated interest allocable to thataccrual period, the excess is a nondeductible loss. Under certain circumstances, the owner of a Premium Bond may realize a taxable gain upon disposition of the Premium Bond even though it is sold or redeemed for an amount less than or equal to the owner's original acquisition cost. Owners of any Premium Bonds should consult their own tax advisors regarding the treatment of bond premium for Federal income tax purposes, including various special rules relating thereto, and state and local tax consequences, j y_., ~r^onnectionwith±..eac^~~~~rtrnn,ownership,amoM~izationofbondpremiumon,sale, exchange, orotherdisposition of Premium Bonds. Information Reporting and Backup Withholding Lrformation reporting requirements apply to interest on tax-exempt obligations, including the Bonds. ]n general, such requirements are satisfied ifthe interest reelpientcompletes, and provides the payor with, a Fonn W-9, ` Request for "Taxpayer Identification Number and Certification," or unless the recipient is one of a limited class of exempt recipients, including corporations. A recipient not otherwise exempt from information reporting who fails to satrsty the information reporting requirements will be subjectto "backup withholding," which means thatthe payor is required to deduct and withhold a tax from the interest payment, calculated in the manner set forth in the Code. For the foregoing purpose, a " ayor" generally refers to the person or entity from whom a recipient receives its payments of interest or who collects such payments on behalf of the recipient. if an owner purchasing a Bond through a brokerage account has executed a Form W-9 in connection with the establishment of such account, as generally can be expected, no backup withholding should occur. In any event, , backup withholding does not affect the excludability of the interest on the 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 the owner's Federal income tax once the required information is furnished to the Internal Revenue Service. Miscellaneous Tax legislation, administrative action taken by tax authorities, and court decisions, whether at the federal or j state level, may adversely affect the tax-exempt status of interest on the Bonds under Federal or state law and could ~ affect the market price or marketability of the Bonds. Prospective purchasers of the Bonds should be aware that the United States Supreme Court is in the process ~ ofreviewing Davis v. De 't. ofRevenue ofthe Fanance andAdmin. Cafirnei, 197 S. W. 3d 557 (Ky. App. 2006), cert. granged 127S.ct2451 (2007} (mein.), a decision of a Kentucky appellate court, which held that previsions of Kentucky tax taw that provided more favorable income tax treatment for holders of bonds issued by Kentucky municipal bond issuers than for holders of non-Kentucky municipal bonds violated the Commerce Clause of the United States Constitution. New York statutes provide more favorable New York income tax treatment for holders of bonds issued by the New York State and its political subdivisions, including the Bonds, than for bonds issued by I8 f other states and their political subdivisions. [f the United States Supreme Court were to affirm the holding of the ~ Kentucky appellate court, subsequent New York judicial decisions or legislation desig?ed to ensure the ' constitutionality of New York tax law could, among other alternatives, adversely affect the New York State tax exemption of outstanding bonds, including the Bonds, to the extent constitutionally permissible, or result in the exemption from personal income taxes imposed by the New York State and its political subdivisions, including The City of New York, of interest on certain bonds issued by other states and their political subdivisions, either ofwhich actions could affect the market price or marketability of the Bonds. Prospective purchasers of the Bonds should consult their own tax advisors regarding the foregoing matters. DOCUMENTS ACCOMPANYING DELIVERY OT THE BONDS Absence of Litigation ` Upon delivery of the Bonds, the Town shall furnish a certificate of the Town Attornev, dated the date of f[ delivery of the Bonds, to the effect that there is no controversy or litigation of any nature pending or threatened to restrain or enjoin the issuance, sale, execution or delivery of the Bonds, or in any way contesting or affecting the validity of the Bonds or any of the proceedings taken with respect to the issuance and sale thereof or the application of moneys to the payment 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 the financial condition of the Town or adversely affect the power ofthe Town to levy, collect and enforce I the collection of taxes or other revenues for the payment ofthe Bonds, which has not been disclosed in this Official t Statement. Legal Matters Legal matters incident to the authorization, issuance and sale of the Bonds will be subject to the final approving opinion of Hawkins Delafield & Wood LLP, Bond Counsel. Such opinion will be 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 1 taxable real property within the Town is subject to the levy of ad valorem real estate taxes to pay the Bonds and I! interest thereon without limitation of rate or amount. Said opinion shall also contain further statements to the effect that(a) the enforceability ofrights or remedies with respect to such Bonds maybe 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 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 be furnished or disclosed to purchasers 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 Certitcate of the Town 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 ofthe Bonds, this Official Statement did notand does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements herein, in the light of the circumstances under which they were made, not misleading, and further stating that there has been no adverse material Change in the financial condition of the Town since the date of this Official Statement up to and including the time of delivery of the Bonds, and having attached thereto a copy of this Official Statement; (ii) a Certificate signed by the Town Supervisor evidencing pa merit for the Bonds, (iii) a Signature Certificate evidencing the due execution of the Bonds, including statements that (a) no litigation of any nature is pending or threatened, restraining or enjoining the issuance and delivery of the Bonds or the levy and collection of taxes to pay the principal of and interestthereon,normany mannerquestioningthe roceedings and authorityunderwhichtheBondswereauthorized or affecting the validity of the Bonds thereunder, ~b) neither the corporate existence or boundaries of the Town nor the title ofany ofthe officers thereofto their respective offices is being contested, and (c) no authority or proceedings i for the issuance of the Bonds have been repealed, revoked or rescinded; and (iv~ an Arbitrage and Use of Proceeds E`[ Certificate executed by the Town Supervisor, as described under "Tax Matters'. l 19 I DISCIASURE UNDERTAKING This Official Statement is in a form "deemed final" by the'fown for the purpores 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 rts "Undertaking to Provide Continuingg Disclosure" (the "Undertaking"). 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, or cause to be provided: (1) during any succeeding fiscal year of the Town in which the Bonds are outstanding, Yo (a) each nationally recogn!zed mun icipal securities information repository ("NRMSIR")and (b) the New York State Information Depesrtory, if created, ("SID"), (i) certain annual financial infonnat!on, m a form generally consistent with the information contained or cross-referenced in this Official Statement under the headings: "The Town", "Economic and Demographic Information","Indebtedness of the Town", "Finances of the Town", "Real Property Tax Informaton and "Litigation' ; and in Appendix A, on or prior to the 180th day following the end of each fiscal year, including (ri) the audited financial statement, if any, for the preceedmg fiscal year of the Town, unless such audited financial statement, if any, shall not then be available in whroh 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 avai]able and in no event later than 360 days after the end of each fiscal year; (2) to (a) eachNRMSIR, 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 payment delinquencies; u) non-payment related defaults; (iii) unscheduled draws on debt service reserves reflectin financial dif iculties; (iv) unscheduled draws on credit enhancements reflecting financial difficulties, (v~ substitution of credit or liquidittyy providers, or their failure to perform; (vi) adverse tax opinions or events affectingg the tax-exempt status ofthe Bonds; (vii) modifications to rights of Bondholders; (viii) bond calls; (ix) deteasances; (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 that any such other event is material with respect to the Bonds; but the "Town does not undertake to commit to provide any such notice of the. occurrence of any material event except those events listed above; and (3) to (a) each NRMSIR, or to the MSRB, and to (b) the SID, in a timely manner, notice of a failure to provide the annual financial information by the date specified. The Tcw: ; Undertaking sliaii remain in foie 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 exclusrve remedy for breach or default under the Undertaking is an action to compel sppecific performance of the undertakings of the Town, and no person or entity, including a holder ofthe Bonds, shall be entitled to recover monetary damages thereunder under ~ any circumstances. Any failure by theTowntocomplywiththeUndertakingwillnotconstituteadefauhwithrespect to the Bonds. I 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 15e2-12 as then m effect. The Town is in compliance with all previous undertakings made pursuant to Rule 15c2-12. BOND RATING The Bonds maturing in the years 2009 through 2018, inclusive, are rated `Aa3" by Moody's Investors Service. The Bonds maturing in the years 2009 through 2018, inclusive, are NOT insured by Finanmal Security Assurance Inc. Moody's Investors Service Inc., will assign its municipal band rating of "Aaa", the Bonds maturing in the Years 2019 through 2030, inclusive with the understanding that upon delivery of the Bonds, a policy insuneg the pa}anent when due of the principal of and interest on the Bonds maturing in the years 2019 through 2030, inclusive will be issued by Financial Securrty Assurance Inc. Such ratings reflect only the views of such rating agency, and any desired explanation of the significance of such ratings should be obtained frotn such rating agency. (~"enerally~, a rating agency bases its ratings on the information and materials furnished it and on investigation, studies and assumptions by the rating agency. There is no assurance that a pariiculan~ating will apply far any given period of time or that it wi ll not be lowered or withdrawn entirely if, in the lodgment of the agencv originally establishing the rating, circumstances so warrant. The underwriter has undertaken no responsibility to bang to the artentron of the holders of the Bonds any proposed revisions or withdrawals. Any downward revisions or withdrawals of such ratings, could have an adverse eftect on the market price of the Bond. Such ratings should not betaken as a recommendation to buy or hold the Bonds. 20 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. y ADDITIONAL INFORMATION f` Additional information may be obtained upon request from the office of the Town Com troller, Town of Southold, Town Hall, P.O. Box 1179, Southold, New York 11971, telephone number 631/765-333, 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 ofoppinion or estimates, whether or notexpressly 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 ofthe Bonds by the Town and may not he reproduced or used in whole or in part for any other purpose. TOWN OF SOUTHOI,D, NEW YORK By: s/s SCOTT A. RUSSELL Town Supervisor and Chief Fiscal Officer May 13, 2008 f I 21 Balance Sheet 1 Generall<uod ~ i Fiscal Year Ending December 31: 2005 2006 2007 Ji ASSETS + Cash and Investments $ 9,292,437 $ 8,339,472 $ 21,437,689 i Cash -Restricted 0 0 0 Taxes Receivable 0 0 0 Accounts Receivable 24,533 22,346 17,263 Due From Other Funds 176,390 190,208 74,500 llue From Trust Funds 68 0 0 State and Federal Aid Receivables 81,849 11Q,153 62,377 ~ Due From Other Governments I,R67,136 2,075,955 826,834 f Supply htventory 1,204 2,099 1,275 1] Prepaid Expenses 448,344 426,200 46Q951 Deposit 0 0 0 "Cotal Assets $ 11,941,461 S 11,166,433 $ 22,SSQ889 LIABILITIES ,4ND FUND @QUITY' Accounts Payable $ 627,049 $ 701,018 $ 530,531 Due to Other Funds 1,888,341 1,205,516 2,974,237 Due to Other Governments 393,570 243,292 8,925,786 Uue to Trust Funds %,044 12,601 0 Due Io Cempnent Units 0 0 0 Deferred Revenues 3,018,595 3,619,307 5,066,541 'Ibtal Liabilities 5,9;4,499 5,781,734 17,797,095 Fund Balances -Reserved: Encumbrances 4,009 13,284 193,041 Insurance claims 1,105,879 513,329 588,6!4 Supply Inventory 1,204 2,099 0 Prepaid Expenses 495,344 426,200 0 Fund Balances -Unreserved: Designated -Ensuing Year's Budget 2,657,200 2,185,000 1,816,000 Undesignated 1,740,826 2,244,787 2,486.139 Total Fund Equity 6,007,462 5,384,699 5,083,794 Total Liabilities and Fend Equity $ __I 1941 961_ S 11,166,433_ S 22 880 559 Sources: Audited Financial Reports of the "Town (2005 and 2006) and Annual Financial Report (2007) unaudited. "Fable itself NU F audited. 1 A- i i ~ Statement of Revenues, Expenditures and Changes in Fund Balance i General Fund Town Wide Fiscal Year Ending December 31: 2003 2004 2005 2006 2007 Revenues: Keal Property Taxes $ 13,247,572 $ 13,962,268 $ 14,608,674 $ 14,872,736 $ 16,205,911 Other Real Property Tax Items ~ 1,31 I 65,720 68,807 85,808 92,606 Non-Property l'ax Items 401,035 415,071 415,071 616,670 683,873 Departmental income 315,289 344,217 345,956 477,849 417,790 IntergovernmentalCharges 202,917 296,050 252,558 316,049 329,202 Use of Money&Propcrty 201,702 254,142 489,796 684,166 764,9]2 Licenses & Permits 188,480 214,461 249,178 258,794 253,494 Fines & Porleitures 107,084 107,315 140,192 171,763 155,477 Sale of Property & Comp. for Loss 56,893 405,077 93,290 95,057 148,283 Miscellaneous Local Sources 133,346 128,027 432,269 146,260 185,945 State Aid 2,225,401 2,974,027 2,637,870 2,725,177 2,412,869 federal Aid 146,574 16Q,337 174,348 228.491 145,568 17,277,604 19,326,712 (9,908,009 2Q,678,R30 21,789,93(1 Expenditures: General Government Support 3,751;69 4.395,571 4,641,568 5,177,745 5,234,683 PublicSafcty 6,033,207 6,250.,365 7,177,145 7,371,280 7,816,643 Publicllcalth 32,988 33,288 33,288 32.988 35,238 Transportation 398,358 401,866 446,877 452,050 550,906 { Gconomic Assistance & Opportunity 833,501 931,566 901,139 949,740 1,064,905 Culture & Recreation 317,769 304,071 354,768 384,983 345,540 Home & Community Services 228,578 341,764 315,273 530,270 417,654 ~ Employee Benefits 2,617,783 4,868,116 5,857,963 5,811,868 6,172,279 Debt Service Principal & Interest 1,007,31 R 2,104,202 1,560,055 1 313,234 1,192,497 "total Cspcnditures 15,22Q,971 19,634,809 21,288,076 22,024,158 22,830,345 F.'xc.css Ne0ciency) of Revenues Over Expenditures 2,056,633 (308,097) (1,380,067) (1345,338) (1,04Q,415) Opcraung iYansfers In 1,392,850 2')32 574 2,642,859 2 v53,944 2,738,349 Uperaong "fnnsfcrs Out (1,910,781) (1,304,195) (1,895,023) (1 X31,369) (1,998,841) Ik~ "total Other Financing Souces (Uses) (517,931) 1,628.379 747,836 722,575 739,508 I - Excess Q)efciency)of Revenues and Other Sources Over Expenditures and Other Uses 1,538,702 1,320,282 (632,231) (6'72,763) (30Q907) fund Balance Beginning of Year 3,780,709 5,319,41 1 6,639,693 6,007,462 5,384,699 Ftmd Balance land of Year $ 5,319,41 I $ 6,639,F,93 S 6,007,462 $ 5,384,699 $ 5,(183.792 Sources: Audited I'inuncial (deports ofthe Town (2003 ~00(i) and Annual financial Report 12007} unaudited. fable itself NOT uudi feel. r` A -2 I Statement of Revenues, Expenditures and Fund Balance Highway Fund I Fiscal Year Ended December 31: X003 2004 2005 2006 2007 Revenues Real Property Taxes $ 3,513,902 $ 3,520,332 $ 3,805,032 $ 4,095,347 ~ 4,027,695 Other Real Property "Tax Items 6,428 3,679 9,046 12,689 12,722 I, Nor,-Property Tax items 0 0 0 0 ln[ergovernmental Charges 15,573 0 0 0 0 Use of Money & Property 18,520 23,884 77,817 140,578 142,501 Licenses Rc Permits 8,231 4,937 11,126 9,484 10,362 Sale of Property & Comp. for Loss 4,033 2,960 2,796 7,521 29,213 Miscellaneous Local Sources 0 I6 155,054 0 0 Interfund Revenues 0 0 0 0 0 State Aid 458,686 228,337 188,147 276,337 296,263 ~ Federal Aid 67,699 0 0 0 0 4,093,072 3,784,145 4,249,018 4,541,956 4,518,756 I Expenditures: Transportation 2,733,518 2,638,121 2,913,768 3,028,076 3,437,1'86 Employee Benefits 976,406 415,102 500,343 515,106 510,185 ~ Debt Service 15,128 22,219 178,371 283,652 250,001 Total Expenditures 3,725,052 3,075,442 3,592,482 3,826,834 4,197,372 Excess (Deficiency) of Revenues Over Expenditures 368,020 708,903 656,536 715,12_ 321,384 Residual Equity Transfer Operating Transfers In 0 0 0 0 212 J Operating Transfers Out (60,000) (690,390) (520,085) (452,648) (561,696) 1 'I'ota) Other Financing Sources (Uses) (60,000) (690,390) (520,085) (452,648) (561,484) Excess (Deficiency) of Revenues and Other Sources Over Expenditures and Other Uses 308,020 18,313 136,45 ( 262,474 (240,100) Fund Balance Beginning of Year 594,064 902,084 920,397 1 056,848 1,319,322 Fund Balance End of Year $ 902,084 $ 920,397 $ 1,056,848 $ 1,3]9,322 $ ],079,222 Sources: Audited Financial Reports of the Town (2003-2006) and Annual Financial Report (2007) unaudited. Table itself NOT audited. A-3 Statement of Revenues, Expenditures and Changes in Fund Balance Non-Major Governmental Funds (l) i Fiscal Year Ending December 3 L 200, 2004 2005 2006 2007 Revenues: ~ Real Property "lases 5 2,197,525 $ 2,506,945 S 2,381,335 S 2,741,362 $ 3,345,81 l Other Renl Property Tax Items 874 3,105 2,516 4,489 5,278 Non-Property Tas Items 117,449 336,139 213,786 229,346 234,091 Departmental Income 2,339,227 2,517,584 2,504,880 2,275,935 2,197,288 Intergovernmental Charges 1,614 1,013 1,013 1,809 905 Use of Money & Property 18,147 21,365 64,092 95,272 130,926 Licenses & Permits 139,620 199,849 165,965 163,730 169,338 Fines and Forfeitures 49,000 0 0 0 0 Sale of Property & Comp. for Loss 44,450 76,069 109,137 135,662 247,014 Miscellaneous Local Sources 230 5,025 153,591 6,652 73,265 State Aid 161,393 72,651 75,374 127,278 93,135 Federal Aid 111,299 166,368 224,136 41,163 210,175 r 5,180,828 5,906,113 5.895,825 5,822,748 _ 6,707,22 Expenditures: General Government Support 134,969 92,514 99,895 103,654 87,969 Public Safety 749,904 739,198 807,474 869,154 948,267 Public Health 6,408 6,664 6,864 7,104 7,370 Home & Community Services 3,230,201 3,225,586 3,102,639 3,363,781 3,797,322 Employee Benefits 874,049 371,038 444,858 470,377 468,988 Debt Service 117,562 88,803 671,720 822,590 1,089,449 Total Expenditures 5,113,093 4,523,803 5,133,450 5,636,660 6,399,365 { Excess (Deficiency) of Revenues Over !r Expenditures 67,735 1,382,370 762,375 186,088 307,861 Operating 'transfers In - 0 0 0 - ~ ~ Operating Transfers Out (483,500) (1,081,441) (504,720) (429,145) (534,804) I r Total Other Financing Sources (Uses) (48_3,50.0) _____(1,081,441) (504,720) (429,145) (534,804) Excess (Deficiency) of Revenues and Other iI Sources Over Expenditures and Other Uses (415,765) 300,869 257,655 (243,057) (226,943) Fund Balance Beginning of Year 1,261,339 845,574 1,146,444 1,446,849 (2) 1,807,810 Fund Balance End of Year $ 845,574 $ 1,146,443 $ 1 404,099 $ 1,203,792 $ 1,580,867 (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. (2) Difference due to Prior Year Accounting Adjustment Sources: Audited Financial Reports' of the Town (2003-2006) and Annual Financial Report (2007) unaudited. Table itself NOT audited. A-4 f iJ BUDCETSUMMARY 1 i Fiscal Year Ending December 31, 2007 _ Appropriations Less: Less: Amount to be and Provisions Estimated Unexpended Raised by Fund for Other Uses Revenues Balance Tax General $ 22,951,102 $ 4,810,197 $ ],935,000 $ 16,205,911 General-Outside Village 1,869,]39 1,002,600 459,000 407,539 Highway-Towmvide 0 600 16,900 (]7,500) Highway-Outside Village 4,938,330 406,635 486,500 4,045,L95 Community Development 136,000 136,000 0 0 Risk Retention Fund 1,0(5,000 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 J East-West Fire Protection District 509,828 4,600 6,228 499,000 1 Fishers Island Ferry District 3,038,000 2,448,000 0 590,000 ~ Solid Waste Management District 4,058,562 2,(51,500 0 1,907,062 Southold Wastewater District 128,3(6 10,020 700,000 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 $ 8,349,241 $ 4,631,820 $ 108,528 $ 3,608,893 I Orient-Gast Marion Park District 30,695 0 0 30,695 Southold Park District 3 (5,000 0 0 315,000 Cutchogue-New Suffolk Park Dist. 145,000 0 0 145,000 Marrituck P3rlr Disr,;cr 5an,027 22,500 5Q,000 467,527_ Subtotal-Park Districts $ 1,030,722 $ 22,500 50,000 $ 958,222 1 Fishers Island Fire District 357,300 3,300 0 354,000 Orient Fire District 401,040 2,000 0 399,040 Gast Marion Fire District 490,600 ]2,200 0 478,400 Southold Fire District ],512,875 33,540 0 1,479,335 Cutchogue Fire District 1,412,500 1,400 0 1,411, ] 00 Martituck Fire District 1,857,967 0 0 1,857,967 - - Subtotal-Fire Districts $ 6,032,282 $ 52,440 $ 0 $ 5,979,842 ~ Total-All Districts 15,412,245 4,706.760 158,528 10,546,957 Graud "Fotal $ 59,681 144 $ L9 839 786 $ 8,653,256 $ 31,188,102 Source: Adopted E3udget of the "CoNm. 1 A-5 1 I BUDGET SUMMARY ~I _ _ Fiscal Year Ending Dece_m_ber 31, 2008 _ Appropriations Less: Less: Amount to be and Provisions Estimated Unexpended Raised by ~ Fund for Other Uses Revenues Balance Tax General $ 24,413,069 $ 5,205,781 $ 1,816,000 $ 17,391,288 General-Outside Village 2,246,677 1,119,700 317,000 809,977 Highway Fund 5,198,627 396,032 491,000 4,311,595 Community Development 136,000 136,000 0 0 Risk Retention Fund 765,000 765,000 0 p Community Preservation Fund 5,200,000 5,200,000 0 0 Employees Health Plan 2,892,500 2,692,500 200,000 0 Total-Town $ 40,851,873_ $ 15,5]5,013 $ 2,824,000 $ 22,512,_860 Orient Road Improvement District 4,500 0 0 East-West Fire Protection District 552,863 5,000 6,400 541,463 ~ Fishers Island Ferry District 3,220,775 2,630,775 0 590,000 Solid Waste Management District 4,224,695 2,640,350 77,400 1,506,945 Southold Wastewater District L02,265 9,020 90,000 3,245 Fishers Island Sewer District 3Q,950 30,700 250 0 F.I. Refuse & Garbage District 563,800 0 0 563,800 Orient Mosquito District 86,900 0 0 _ 86,900 Subtotal-Special Districts $ 8,786,748 $ 5,315,845_ $ 174,050 $ 3,292,353 Orient-East Marion Park District 34,780 0 0 34,780 Southold Park District 315,000 0 0 315,000 Cutchogue-New Suffolk Park Dist. 145,000 0 0 145,000 Mattituck Park District 560,229 29,000 50,000 481,229 - - Subtotal-Park Districts $ 1,055,009 $ 29,000 $ 50,000 $ 976,009 Fishers Island Fire District 359,700 3,300 0 356,400 Orient Fire District 483,940 45,272 0 438,668 East Marion Fire District 536,380 13,200 0 523,180 Southold Fire District 1,631,025 33,000 0 1,598,025 Cutchogue Fire District 1,412,000 20,000 0 1,392,000 Mattituck Fire District 1,978,770 0 0 1,978,770 - Subtotal-Fire Districts $ 6,401,815 $ 114,772 $ 0 $ 6,287,043 Total-All Districts 16,243,572 5,459,617 224,050 10,555,405 Grand Total $_57,445 $ 20,930 $ 3,048050 $ 33068,265 I Source: Adopted Budget of the Town. A-6 G TOWN OF SOUTHOLD APPENDIX B ~ FINANCIAL STATEMENTS FOR THE FISCAL YEAR ENDED DECEMBER 31, 2006 NOTE: SUCH FINANCIAL REPOR"C AND OPINIONS WERE PREPARED AS OF THE DATE THEREOF AND HAVE NOT BEEN REVIEWED AND/OR UPDATED IN CONNF,CTION WITH THE PREPARATION AND DISSEMINATION OF THIS OFFICIAL STATEMENT. CONSENT OF THE AUDITORS HAS NOT BEEN REQUESTED OR OBTAINF_D. f I FINANCIAL SECTION Independent Auditors' Report 1-2 REQUIRED SUPPLEMENTARY INFORMATION Management's Discussion and Analysis 3-11 BASIC FINANCIAL STATEMENTS Government-NJide Financiai Statements Statement of Net Assets 12 i Statement of Activities 13 1 Fund Financial Statements Governmental Fund Financial Statements Balance Sheet and Reconciliation of the Governmental Funds Balance Sheet to The Statement of Net Asse±s 14-15 1 Statement of Revenues, Expenditures, and Changes in Fund Balances and Reconciliation of the Governmental Funds Statement of Revenues, Expenditures, And Chanyes in Fund Balances to the Statement of Activities 16-17 Fiduciary Fund Financial Statements Statement of Fiduciary Net Assets 18 I Notes to Financial Sta±emenis 19-34 ' ('REQUIRED SUPPLEMENTARY INFORMATION OTHER THAN MANGEMENT DISCUSSION AND ANALYSIS Schedule of Revenues, Expenditures and Changes in Fund Balances -Budget and Actual General Fund _ 35 Highway Fund 36 r- f OTHER SUPPLEMENTARY INFORMATION COMBINING FUND STATEMENTS: Non-major Governmental Funds Combining Balance Sheet......_ 37 Combining Statement of Revenues, Expenditures, and Changes in Fund Balances 38 DISCRETLY PRESENTED COMPONENT UNITS i Discretely Presented Component Units: Combining Statement of Net Asse±s_........._......._ 39 Combining5tatementofActivities 40 1 CERTIFIED PUBLIC ACCOUNTA h'T5, DUSINESS ADVISO R> AND CONSULTANTS v 25 SujG;Lk Court, Hal~ppauge New York 11788 JI 631.43d95G0 Fax 631.4349518 ivivw. avz. com II I INDEPENDENT AUDITORS' REPORT i 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 I the Town of Southold, New York, as of December 31, 2006, and for the year then ended, which i collectively comprise the Tcwn's basic financial statements as listed in the table of contents. These financial statements are the responsibility of the Tov?n's management. Our responsibility is to express an opinion on these financial statements based on our audit. I' Except as discussed in the following paragraph, we conducted our audit in accordance with auditing standards generally accepted in the United States of America. Those standards require that we plan and perform fhe audit to obtain reasonable assurance about whether the financial statements are free of j material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts l and disclosures in the financial statements. An audit also includes assessing the accounting principles j used and significant estimates made by management, as well as evaluating the overall financial statement presentation. UVe 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 net 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, insofar as it relates to the amounts included for that one component unit, is based solely on the reports of the other auditors. i In our opinion, except for the effects of such adjustments if any as might have been determined to be necessary had the unaudited component units financial statements been audited and based on our audit and the reports of other auditors, the financial statements referred to above present fairly, in all material respects, the financial position of the Town of Southold, New York, as of December 31, 2006, 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 1 basic financial statements but are supplementary information required by accounting principles generally { accepted in the United States of America. We have applied certain limited procedures, which consisted principally of inquiries of management regarding the methods of measurement and presentation of the supplementary information. However, we did not audit the information and express no opinion on it. 1 ALBRECHT, VIOOIANO, ZURECK & COMPANY, P. C. INOE'ENOCM MEMOQi OI BNR IMiE11MI.TOX/.L i Our audit was conducted for the purpose of forming an opinion or the financial statements that I 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 hasic financial statements of the Town of Southold, New York, and, in our opinion, is fairly presented in all material respects in relation to 4 the basic financial statements taken as a whole. Hauppauge, New York September 11, 2007 2 REQUIRED SUPPLEMENTARY INFORMATION Management's Discussion and Analysis i L TOWN OF SOUTHOLD MANAGEMENT'S DISCUSSION AND ANALYSIS December 31, 2006 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, 2006. Use this section in conjunction with the Town's basic financial statements. i I 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 alonger- 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 mast 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. Reporting the Town as a Whole The Statement of Net Assets and the Statement of Activities One of the most important questions asked about the Town's finances is, "Is the Town as a whole better off or worse off as a result of the year's activities?" The Statement of Net Assets and the Statement of Activities report information about the Town as a whole and about its activities in a way that helps answer this question. These statements include all assets and liabilities using the accrual basis of accounting, which is similar to the accounting used by most private-sector companies. The Statement of Activities is significantly different than a typical Statement of Revenues, Expenses, and Changes in Fund Balance. You 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 liabilities-as one way to measure the Town's financial health, or financial position. Over time, increases or decreases in the Town's net assets are one indicator of whether its financial health is improving or deteriorating. You will need to consider other non-financial factors, however, such as changes in the Town's property tax base and the condition of the Town's buildings, roads, drainage and other assets to assess the overall health of the Town. In the Statement of Net Assets and the Statement of Activities, we divide the Town into two kinds of activities: Governmental activities -The Town's basic services are reported here, including: general government support; public safety; public health; transportation; economic assistance and opportunity; culture and recreation and home and community services. Property taxes, sales taxes, franchise fees, fines, and state and federal grants finance these activities. The Town also charges fees to customers to help it cover the cost of certain services it provides. • Component units -The Town includes seven 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). -3- ' TOWN OF SOUTHOLD MANAGEMENT'S DISCUSSION AND ANALYSIS December 31, 2006 Reporting 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 ~~r~"a~u~ 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 it governmental activities (reported in the Statement of Net Assets and the Statement of Activities) and governmenta! funds in a reconciliation that follows these fund financial statements. The Town as Trustee Reporting the Town's Fiduciary Responsibilities ` 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 I finance its operations. The Town is responsible for ensuring that the assets reported in these funds are used far 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 I Governmental Activities as of December 31, 2006 and 2005 2006 2005 Assets Current and other assets $ 23,769,534 $ 26,265,665 Capital assets 100,557,312 90,294,079 Totaf assets 124,326,846 116,559,744 Liabilities Current and other liabilities 15,552,211 16,289,370 Long-term liabilities 14,773,434 14,916,051 Total liabilities 30,325,645 31,205,421 Net assets Invested in capital assets, net of related debt 92,063,214 81,044,981 Unrestricted 1,937,987 4,309.342 Total net assets $ 94,001,201 $ 85,354,323 4 TOWN OF SOUTHOLD MANAGEMENT'S DISCUSSION AND ANALYSIS i December 31, 2006 FINANCIAL ANALYSIS OF THE TOWN AS A WHOLE (continued) Total assets in the Town as of December 31, 2006 were $124.3 million, an increase of 7.8 million. Tota! liabilities as of December 31, 2006 were $30.3 million, which represents a decrease of $800,000 from December 31, 2005. This results in a net asset balance of $94 million, an increase of $8.6 million. Of the Town's net asset balance $92 million were invested in capital assets, net of related debt; while $1.9 million was unrestricted. Changes in Net Assets Governmental Activities for the years ended December 31, 2006 and 2005 2006 2005 Program Revenues ' Charges for services $ 9,231,396 $ 10,723,686 'i Operating grants and contributions 713,597 859,484 Capital grants and contributions 4,834,716 3,502,247 14, 779, 709 15.08 5, 417 General Revenues Real property taxes 21,709,445 20,795,041 Other real property tax items 102,986 80,369 Non-property tax items 846,016 628,857 Interest earnings 1,233,122 766,413 State aid -unrestricted 2,610,189 2,527,110 Other 463,671 709,352 26,965,429 25,507,142 Total Revenues 41,745,138 40,592,559 Program Expenses General government support 6,843,661 6,621,408 Public safety 11,421,283 11,342,991 Public health 43,499 43:559 Transportation 7,298,698 6,627,876 1 Economic assistance and opportunity 1,354,610 1,208,467 Culture and recreation 713,164 356,167 Home and community services 4,912,384 4,961,051 Interest on debt 553,713 501,452 Total Expenses 33,141,012 31,662,971 Increase in Net Assets $ 8,604,126 $ 8,929,588 i -5- TOWN OF SOUTHOLD MANAGEMENT'S DISCUSSION AND ANALYSIS December 31, 2006 FINANCIAL ANALYSIS OF THE TOWN AS A WHOLE (continued) Net Cost of Services l Governmental Activities for the year ended December 31, 2006 Total Cost of Services r General government support $ 6,843,661 flf Public safety 11,421,283 Public health 43,499 Transportation 7, 298,698 { Economic assistance and opportunity 1,354,610 Culture and recreation 713,164 Hcme and community services 4,912,384 Interest on debt 553,713 $ 33,141,012 Net Cost of Services ~i Governmental Activities for the year ended December 31, 2006 Total Cost Program Net Cost of Services Revenues of Services General government support $ 6,843,661 $ 319,565 $ 6,524,096 Public safety 11,421,283 674,617 10,746,666 Public health 43,499 10,185 33,314 Transportation 7,298,698 340,659 6,958,039 Economic assistance and opportunity 1,354,610 415,263 939,347 Culture and recreation 713,164 208,37^0 504,788 I~ Home and community services 4,912,384 12,811,044 (7,898,660) Interest on debt 553,713 553,713 $ 33,141,012 $ 14,779,709 $18,361,303 The cost of all governmental activities this year was $33.1 mi6ion. The net cost of these services, however, after subsidized by program revenues including charges for sen~ices and program grants, was $18.4 million. The Town's change in net assets after generaV revenues of $27 million was an increase of $8.6 mil!ion. TOWN OF SOUTHOLD MANAGEMENT'S DISCUSSION AND ANALYSIS December 31.2006 FINANCIAL ANALYSIS OF THE TOWN AS A WHOLE (continued) - _ -I I $in,oco,oon 1 Expenses and Program Revenues Governmental Activities $~z,ooc.oao r Expenses $10,000,000 - ¦Program Revenues I $8,000,000 JI I $6,000,000 $4,000.000 ' I $2,000,000 I 3. j I Puelic safety Public Gea;m Transpotla(on Economic Culture antl Home ana Interest on Gehl i Genera gvremmept assistance anc recrea0on community I suPPOn oPPOnunitY_ ____erHCes ! - t ~ _ Capital 9ranls a~,tl Revenue by Source Operating centrihufons gran:aand tz~ Governmental Activities j cPneihumns For the year ended December 31, 2006 Other general I, revenues Real property taxes $ 21,709,445 j si State aid -unrestricted 2,610,189 Real Charges for services 9,231,396 property Other general revenues 2,645,795 I Charges for i52% services li Operating grants and contributions 713,597 zzr Capital grants and contributions 4,834,716 $ 41,745,138 I State aid - unrestridetl 6k 1 -7- TOWN OF SOUTHOLD MANAGEMENT'S DISCUSSION AND ANALYSIS December 3 i, 2006 FINANCIAL ANALYSIS OF THE TOWN AS A WHOLE (continued) THE TOWN'S FUNDS i The general fund balance has decreased by approximately $600,000 due primarily to actual expenditures in excess of revenues. The following schedule presents a summary of the governmental funds - (general, special revenue, and capital projects) revenues and expenditures for the year ended December 31, 2006, and the amount of I change and percentage of total in relation to the prior year. I Increase 2006 2005 (Decrease) Change REVENUES Real property taxes $ 21,709,445 $ 20,795,041 $ 914,404 4.2% Other real property tax items 102,986 80,369 22,617 22.0% Non-property tax items 846,016 628,557 217,159 25.7% Departmental income 2,753,784 2,850,836 (97,052) -3.5% Intergovernmentalcharges 6,142,177 7,453,845 (1,311,668) -21.4% Use of money and property 1,376,729 906,664 470,065 34.1% Licenses and permits 432,058 426,269 5,789 '.3% Fines and forfeitures 171,763 140,192 31,571 18.4% Sale of property and compensation for loss 236,240 205,223 33,017 13.9% Miscellaneous local sources 303,912 1,292,371 (988,459) -325.2% State aid 7,108,866 3,946,391 3,162,475 44.5% Federal aid 595,604 1,909,023 (1,313,419) -220.5% ' Total Governmental Fund Revenues $ 41,761,580 $ 40,635,081 $ 1.146,499 2.7% EXPENDITURES General government support $ 5,281,399 $ 4,741,463 $ 539,936 10.2% Public safety 8,240,434 7,984,619 255,815 3.1 Public health 40,092 40,152 (60) -0.1% Transportation 3,480,126 3,360,645 ^19,481 3.4% Economic assistance and opportunity 949,740 901,139 48,601 5.1% Culture and recreation 3,748,764 3,457,407 291,357 7.8% Home and community services 530,270 315,273 214,997 40.5% Employee benefits 6,797,351 6,803,164 ;5,813) -0.1% Capital 13,324,168 12,788,366 535,822 41.0% Debt service principal and interest 2,504,007 2,439,675 64,332 2.6% Total Governmental Fund Expenditures $ 44,896,371 $ 42,831,903 $ 2.064,468 4.6% GENERAL FUND BUDGETARY HIGHLIGHTS Over the course of the year the Town Board revises the budget as needed so that expenditures do not exceed r appropriations. In all Town funds, various transfers between appropriations were approved for this purpose. 8 TOWN OF SOUTHOLD MANAGEMENT'S DISCUSSION AND ANALYSIS December 31, 2006 CAPITAL ASSET AND DEBT ADMINISTRATION Capital Assets As of December 31, 2006 the Town had $100.5 million in net capital assets including land, buildings, improvements, machinery and equipment, and infrastructure. The Town's component units had $8.4 million in net capital assets including land, buildings, improvements, machinery and equipment, and sewer mains. Capital Assets at December 31, Primary government 2006 2D05 Land $ 58,341,517 $ 47,772,278 Construction in progress 220,114 1,608,081 Buildings 8,307,223 4,574,513 Improvements other than buildings 13,618,159 13,498,954 Machinery and equipment 9,916,143 9,522,815 Infrastructure 70,694,655 70,038,525 Total capital assets 161,097,811 147,015,166 Less accumulated depreciatlon 60,540,499 56,721,087 Primary government -Total net capital assets $ 100,557,312 $ 90,294,079 Component units Land $ 2,213,759 $ 2,213,759 Construction in prpgres., i2,947,D8 i 13,174.567 Buildings 3,566,885 3,540,111 Improvements other than buildings 3,220,732 2,575,589 Machinery and equipment 3,320,899 3,200,728 Infrastructure 2,145,280 2,138,386 Total capital assets 27,414,636 26,843,140 Less accumulated depreciation 6,074,572 5,639,830 Component units -Total net capital assets $ 21,340,064 $ 21,203,310 i _g_ TOWN OF SOUTHOLD MANAGEMENT'S DISCUSSION AND ANALYSIS December 31, 2006 CAPITAL ASSET AND DEBT ADMINISTRATION (continued) Capital Assets (continued) The capital program is a long range financing guide and not a definitive plan. Each appropriation must be authorized by Town Board resolution before being undertaken. Each may be financed by issuance of general obligation bonds, which, at times, are preceded by issuance of bond anticipation notes for various periods of time depending on the probable usefulness of the purpose of expenditure. The following sets forth a summary ~Il of the Town's capital program. (Dollars in thousands): ~ Ecuipment 2007 General Fund $ 540,467 Highway Fund 488,000 Special Districts 305.000 Total Equipment $ 1,333,467 ~ I m provem ents General Fund $ 2,786,961 Highway Fund 300,000 Special Districts 160,000 Totallmprovements $ 3.246,961 Total Program Additional information on the Town's capital assets can be found in Note C.3 to the financial statements. f Debt Administration The Town of Southold's credit rating from Moody's Investors Services was Al as of December 31, 2006. Subsequent to the year end the Town's credit rating was upgraded to Aa2. Debt Limit -The Town has the power to contract indebtedness for any Town purpose so long as the principal amount thereof, subject to certain limited exceptions, shall not exceed seven percent of the average full valuation of taxable real estate of the Town, and subject to certain enumerated exclusions and deductions such as water and certain sewer facilities and cash or appropriations for current debt service. The constitutional method for determining full valuation is calculated by taking the assessed valuation of taxable real estate as shown upon the latest completed assessment roll and dividing the same by the equalization rate as determined by the State Board of Equalization and Assessment. The State Legislature is required to prescribe the manner by which such ratio shall be determined. Average full valuation is determined by taking the sum of the full valuation of the last completed assessment roll and the four preceding assessment rolls and dividing such sum by five. Percentage of debt contracting power exhausted at December 31, 2006 was 3.35%. At December 31, 2006, the Town had approximately $8.5 million in long term general obligation bonds outstanding, of which $8 million was for general Town purposes. Also outstanding at year-end were bond anticipation notes in the amount of $7.7 million of which $6 million was for general Town purposes. Additional information on the Town's debt activity can 'oe found in Note C 4 to the financial statements. -1 e- TOWN OF SOUTHOLD MANAGEMENT'S DISCUSSION AND ANALYSIS December 31, 2006 ECONOMIC FACTORS AND NEXT YEAR'S BUDGETS AND RATES Prooertv Tax The Town has adopted a budget for the 2006 fiscal year which factors in inflation and other adjustments to revenues and expenditures as well as prior year positive and negative fund balances. The 2006 budget includes an overall increase in real property tax revenues from the prior year of approximately 4.26% 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 2006, financial assistance included state aid consisting of mortgage tax of $2.6 million, consolidated highway aid of $276 1 thousand, and community preservation aid of approximately $2.475 million. State aid per capita was $90.4 ~ j thousand and County local government assistance was $296.4 thousand. Additionally, if the State should not l 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. i Retirement Svstem i 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 (60) I years of age and being vested in the New York State Retirement System. The Town funds it retirement billing currently. As part of its contractual agreements with the unions, the Town of Southold also offers fully paid health i insurance benefits /but not welfare henefiisl fnr the retirees and thafr pragonr spo! use ~~!.^.ti! 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 far 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. 1 1 11 I i I I BASIC FINANCIAL STATEMENTS l TOWN OF SOUTHOLD GOVERNMENT-WIDE FINANCIAL STATEMENT STATEMENT OF NET ASSETS December 31, 2006 Primary J Governmental Component Activities Units ASSETS Current Assets: Cash and investments $ 19,073,290 $ 1,236,451 Accounts receivable, net of allowances 205,234 15,167 Due from fiduciary funds Due from other governments 2,541,813 Due from primary government 360,178 Slate and federal aid receivables 801,197 237,056 Prepaid charges 997,151 ~ 39,171 Inventory of material and supplies _ 2,099 Total Current Assets 23,620,784 1,888,023 Non-Current Assets: Deferred charges, net of accumulated amortization 148,750 Non-depreciable capital assets 58,561,631 15,160,840 Depreciable capital assets, net of depreciation 41,995,681 6,179,224 Total Non-Current Assess 100,706,062 21,340,064 Total Assets 124,326,846 23,228;087 LIABILITIES 1 Current Liabilities: Accounts payable and accrued liabilities 1,320,029 369,893 ~ J Accrued interest payable 261,058 69,176 Bend anticipation notes payabie 7,729,000 2,185,000 Due to other governments 243,292 2,431 Due to fiduciary funds 12,601 Unearned revenue 5,147,779 366,282 Non-current liabilities due within one year General obligation bonds payable 779,098 200,000 Due to Employees Retirement System 48,804 Claims and judgments payable 50,000 Estimated liability for landfill closure and postclosure care costs 10,550 Total Current Liabilities 15,552,211 _ 3,242,782 Non-Current Liabilities: General obligation bonds payable 7.715,000 2,655,000 Compensated absences 6,475,661 Claims and judgments payable 150,000 Estimated liability for landfll closure 1 and postclosure care costs 582,773 Total Non-Current Liabilities 14,773,434 2,805,000 Total Liabilities 30,325,645 _ 6,047,782 NET ASSETS Investment in capital assets, net of related debt 92,063,214 15,579,033 Unrestricted 1,937,937 1,601,272 Total Net Assets $ 94,pU1,201 $ 17;180,305 _ See notes to the fnancial statements _12_ 1 --r TOWN OF SOUTHOLO GOVERNMENT-WIDE FINANCIAL STATEMENT STATEMENT OF ACTIVITI`c5 Year er~tletl December 31. 1006 Net Expenses (Revenues)and _ Program Revenues Change in Ne: Assets Operating Capital Charges (or Grants and Grams and Prifnary Component P,; retion/Program _ Expenses Services Contributions Contributions Government Units PRIMARY GOVERNMENT Gevernment Activipes'. General government suppod $ 6,843,661 $ 229,092 $ 90,473 B 6,524,096 Public safety 11.421,283 534,8[1 139,806 1074fi,666 Public health 43,499 10,185 33,314 Transportation ] 298,098 8.489 28,838 5 3D2,337 6,958,039 economic assistance and opportunity [,354,610 189,983 245.280 939,347 Culture and recreation ]13,164 208,376 504,]88 Home and community serves 4,912.384 8,0]9,650 199.015 4,5.32,379 (7,898,660) Imcrest on debt 553,713 553,]13 Total Pdmary GOVemmem $ 33,141,052 $ 9,231,396 $ 713,59] S 4,834 J16 5 18,361,303 COMPONENT UNITS General governmen, support S 130,910 $ 130.910 Public health 8fi,9]7 86,97] Traneporlalion 2.751,284 $ 2,013,785 S 810.646 (73,147) Culturz and rscreallan 837,563 837.563 Home and wmmuniy services 473,074 32938 440,136 Interest endebt 250.382 250,382 Total Component Units S 4,530,190 5 2046,723 $ 0 5 810.646 S 1,8]2,821 ' GENERAL REVENUES 4eal pmpady bxes 21,]09,445 1,949,512 Other real property taz items 102,986 1,124 Nun-property lax Items 846,016 Interest earnings 1233,122 155,484 State a:d 2,610,789 Other 463,671 42.684 Total General Revenues 26,965,429 2,148,804 Change in Ne! Assets 8.604,12fi 475,983 Nel Assets at Beginning of Year 95.397,075 16,704,922 Net Asso[s at Entl o1 Vear S 94,001,201 $ 17.180,305 Sea notes to financial statements. 13 i TOWN OF SOUTHOLD oAL4NCE SfiEET GOVERNMF_NTALFUNDS December 31, 2006 I M,4JOR GOVERNMENTAL FUNDS Non-Major Capital Governmental General Highway Projects Funds _ Totals _ ASSETS Cash and Investments $ 8,339,472 $ 1,574,794 $ 7,806,802 $ 1,352,222 $ 19,073,290 Amounts Receivable 22,346 60 182,828 205,234 Due from Other Funds 19D,208 461,241 234,970 475,547 1,361,966 Due from Trust Funds State and Federal Aid Receivable 110,153 276,337 325,950 88,757 SOL197 Due from Other Governments 2,C7S,955 465.858 2,541,813 Supply Inventory ~ 2,099 ~ 2,099 Prepaids 426,200 57,594 53,559 537,653 Total Assets $ 11,166,433 $ 2,370,266 $ 8,833,640 2,152,913 24,52_3,252 LIABILITIES AND FUND BALANCES LIABILITIES Accounts Payable $ 701,018 $ 101,474 $ 189,921 $ 320,656 $ 1,313,069 Retained Percentages 6,960 6,960 Bond Anticipation Notes Payable 7,729,000 7,729,000 Due to Other Funds 1,205,516 49,296 106,987 173 1,361,966 Due to Trust Funds 12,601 12,601 Due to Other Governments 243.292 243,292 Deferred Revenue 3,619,307 900,180 _ 628,292 5,147,779 Total Liabilities 5,781,734 1,050,944 8,032,868 949,121 15,A 14,667 FUND BALANCE Fund Balances -Reserved: Encumbranres 13,284 129,285 142,569 Supply Inven±ory 2,095 2,099 Prepaids 426,200 25,599 451,799 Insurance Claims 513,329 513,329 Fund Balance -Unreserved: ~ 16,900 16,900 Designated -Ensuing Year's Budget 2, 155,000 4S6,SD0 470,229 3,147,725 Undesignated 2244,787 _ 686,637 800,772 707,965 4,440,161 Total Fund liquify 5,354,699 1,319,322 800,772 1,2D3,792 5,708,585 Total Liabilities and Fund Equity $ 11,166,433 $ 2,370,266 $ 8,833,640 $ 2,152,913 $ 24,523.252 1 I, i See notes to the financial statements. -14- I TOWN OF SOUTHOLD RECONCILIATION OF THE GOVERNMENTAL FUNDS BALANCE SHEET TO THE STATEMENT OF NET ASSETS December 31, 2006 Total Fund Balances -Governmental Funds $ 8,708,585 i Amounts reported for governmental activities in the Ir Statement of Net Assets are different because: Capital assets less accumulated depreciation are included in the Statement of Net Assets: Capital assets -non-depreciable 58,561,631 Capital assets -depreciable 102,536,180 Accumulated depreciation (60,540,499) 'I 100,557,312 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 (8,494,098) ~ Due to Employees Retirement System (48,804) Compensated absences (6,475,661) Estimated liability for landfill closure ' and postclosure care costs (593,323) (15,611,886) ' Prepaid items included in the Statement of Net Assets 459,498 Deferred charges, included in the Statement of Net Assets 148,750 I~~ Interest payable applicable to the Town's governmental t activities are not due and payable in the current period and accordingly are not reported in the funds. However I these liabilities are included in the Statement of Net Assets. (261,058) Net Assets of Governmental Activities $ 94,001,201 I See notes to financial statements. -15- TOWN OF SOUTHOLD STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES i GOVERNMENTAL FUNDS For the year ended December 31, 2006 MAJOR GOVERNMENTAL FUNDS Non-Major ' Capital Governmental General Highway Projects Funds Totals i REVENUES 1 Real Property Taxes $14,872,736 $4,095,347 $2,741,362 $21,709,445 Other Real Property Tax Items 85,808 12,689 4,489 102,98E Non-Property Tax Items 616,670 229,346 846,016 Departmental Income 477,849 2,275,935 2,753,784 i Intergovernmental Charges 316,049 $ 5,824,319 1,809 E,142,177 Use of Money and Property 684,166 140,578 456,713 95,272 1,376 729 Licenses and Permits 258,794 9 484 163,780 432,058 i Fines and Forfeitures 171,763 171,763 j Sale of Property and Compensation for Loss 95,057 7,521 135,662 238,240 it Miscellaneous Loral Sources 146,260 151,000 6,652 303,912 State Aid 2,725,177 276,337 3,980,074 127,278 7,108,866 Federal Aid 228,491 325,950 41,163 595.604 Total Revenues 20,678,820 4,541,956 10,738.056 5,8<""2,748 41,781,580 EXPENDITURES Current General Government Support 5,177,745 103,654 5,281,399 Public Safety 7,371,280 869,154 8,240,43A Public Health 32.988 7,104 40,092 Transportation 452,050 3,028,076 3,480,126 Economic Assistance and Opportunity 949,740 949,740 Home and Community Services 384,983 3,363,781 3,748,764 CulWre and Recreation 530,270 530,270 Employee Benefits 5,811,868 515,106 470,377 6,797,351 Capital Outlay 13, 324,188 13,324,188 Principal and Interest 1,313,234 283,652 84,531 822,590 2,504,007 Total Expenditures 22,024,158 3,826,634 13,408,719 __5,63_6,6_60 _ 44,896,_3_71_ Excess (Deficiency) of Revenues Over Expenditures (1,345,338) 715,122 (2,670,663) 186,088 (3,114_791) Other Financing Sources (Uses) BANS Redeemed From Appropriations 1,226,735 1,228,735 i Transfers In 2,253,944 159,218 2,413,162 ' Transfers Out (1,531,369) (452,648) (429,145) (2,413,162) J Total Olher Financing Sources (Uses) 722,575 (452,648) 1,367,953 (429,145 1,228,735_ + Excess (Deficiency) of Revenues and Other I Sources Over Expenditures and Other Uses (622,763) 262,474 (1,282,710) (243,057) (1,886,056) ~ Fund Balances at Beginning of Year 6,007,462 1,056,848 2,083,482 1,446,849 14594,641 ~i Fund Balances at End of Year $ 5,384,699 $1,319,322- $ 800,772 _ $1_203,792 $ 8,708,585 J I, See notes to the financial statements. 16- TOWN Of SOUTHOLD RECONCILIATION OF THE GOVERNMENTAL FUNDS STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES TO THE STATEMENT OF ACTIVITIES For the year ended December 31, 2006 Net Change in Fund Balance $ (1,886,056) 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 15,722,766 Depreciation expense (3,987,397) Loss cn dispositions (1,472,136) 10,263,233 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: PrepaVd charges (61,786) Deferred charges (21,250) 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 tong term debt and capital teases consumes the current financial resources of governmental funds. Neither transaction has any effect on net assets. Repayment of bond principal 755,000 Due to Employees Retirement System 45,189 Compensated absences (695,835) Claims and judgments payable 220,000 Estimated liahility for landfill closure and postclosure care costs 19,072 Accrued interest payable (33,441) Change in Net Assets of Governmental Activities $ 8,604,926 I ll I See notes to financial statements. _17_ iI I TOWN OF SOUTHOLD STATEfv1ENT OF FIDUCIARY NET ASSETS December 31, 2006 ~i Fishers Island Town Ferry District Totals ASSETS Cash and investments $ 9,262,983 $ 56,490 $ 9,319,473 Other receivables 59,504 59,504 Due from other funds 12,601 12,601 Total Assets $ 9,275,584 $ 115,994 $ 9,391,578 LIABILITIES Due to other funds $ 8,152,880 $ 115,994 $ 8,268,874 I Other liabilities 307 307 Deposits held 1,122,397 1,122,397 Total Liabilities $ 9,275,584 $ 115,994 $ 9,391,578 i I 1 See notes to financial statements. iI -18- I I TOWN OF SOUTHOLD NOTES TO FINANCIAL STATEMENTS December 31, 2006 A. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES The Town of Southold (the "Town"), which was established in 1640, is governed by Town Law and other general laws of the State of New York and various local laws. The Town Board is the legislative body responsible for overall operations. The Town Board consists of the Supervisor who is elected for a term of lwo years and five council members who are elected for terms of four years. The Totiam 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 services, including public safety, transportation, home and community services, public works and road rnaintenance, recreation and parks, and general and administrative services. The financial statements of the Town of Southold have been prepared in conformity with accounting principles generally accepted in the United States of America (GAAP) as applied to governmental units. The Governmental Accounting Standards Board (GASB) is the accepted standard setting body for establishing governmental accounting and financial reporting principles. The more significant of the government's accounting policies are described below. 1. REPORTING ENTITY The financial reporting entity consists of: (a) the primary government, whichi is the Town of Southold; (b) organizations for which the primary government is financially aca~untable; 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 include a potential component unit in the Town of Southold reporting entity is based on several criteria set forth in GASB Statement No. 14 including legal standing, dependency and financial accountability. Based on the application of these criteria, the following is a summary of certain entities considered in determining the Town of Southold's reporting entity. Certain special districts of the Town of Southold provide sanitation, ferry, and (park services to residents and businesses within the districts. These special districts are 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 [he special districts are collected by the Town Receiver of Taxes. As a result of this fiscal dependency, the Town is financially accountable for these special districts. Accordingly, these special districts have been determined to be component units of the Town and are presented discretely in a separate column in the combined financial statements to emphasize that they are legally separate ' from the primary government. 2. BASIS OF PRESENTATION The Town's basic financial statements include both government-wide (reporting the Town as a whole) and fund financial statements (reporting the Town's major funds). Government-wide Financial Statements The government-wide financial statements reports information on the Town as a whole, except fiduciary activities, with separate columns for the primary governmental activities as well as the discretely presented component units. In the government-wide Statement of Net Assets, the Town's governmental activities are presented on a consolidated basis and are reported on a full accrual, economic resource basis, which recognizes all long-term assets and receivables as well as long-term debt and obligations. The Town's net assets are reported in three parts-investments in capital assets, net of related debt; restricted net assets; and unrestricted net assets. 19 TOWN OFSOUTHOLD NOTES TO FINANCIAL STATEMENTS December 31, 2006 i I A. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued) 2. BASIS OF PRESENTATION (continued) The government-wide Statement of Activities reports both the gross and net cost of each of the Town's functional categories (public safety, transportation, home and community services, etc.), which are otherwise supported by general government revenues (property, sales and use taxes, certain intergovernmental revenues, fines, permits and charges, etc.). The Statement of Activities reduces gross expenses (including depreciation), by related program revenues and operating and capital grants, to produce the net cost of each program. Program revenues include (a) charges for services and (b) operating and capital grants and contributions that are directly associated with the function. Operating grants include operating-specific and discretionary (either operating or capital) grants while the capital grants column reflects capital- specific grants. The net costs (by function) are normally covered by general revenue (property, taxes, intergovernmental revenues, interest income, etc). 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 financia! statements are similar to the financial statements presented in the previous model. The new emphasis is on the major funds in the fund fnancial statements. Non-major funds are summarized into a single column. The accounts of the Town are organized on the basis of funds, each of which is considered a separate accounting entity. The operations of each fund are accounted for with a separate set of celf_halan~rng areCi nth 4hat rnmrnrigo itc accc}c liahili}ie~ fiinA halanrec, rovcnCec an~V ~ expenditures, which are segregated for the purpose of carrying on specific activities or attaining certain objectives in accordance with special regulations, restrictions or limitations. The various funds are presented by type in the fund financial statements. Accordingly, the Town maintains the following fund types: Governmental Funds -Governmental funds are those through which most governmental functions are fnanced. The acquisition, use and balances of expendable fnancial 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 classrfied as major and non-major funds. The Town reports the following major governmental funds: General Fund - is the principal operating fund of the Town. This fund is used to account for all financial resources except those required to be accounted for in other funds. Highway Funds - To account for the maintenance and operation of highways. Capital Protects 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 trus4 funds). { -20- { TOWN OF SOUTHOLD NOTES TO FINANCIAL STATEMENTS December 31, 2006 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 capital projects) that are legally restricted to expenditures for specified purposes. Special Revenue Funds include the following: General Fund Part Town - To provide general services outside the Village of Greenport. Special Grant Fund - Segregate and account for projects funded by Community Development revenue. Special District Funds - Tc provide special services to areas that encompass less than the whole town. Fiduciary Funds -Fiduciary Funds are used to account for assets held by the Town in a Trustee ` or custodial capacity. Agency Fund - is for money (and/or property) received and held in the capacity of trustee, custodian or agent. Discretely Presented Component Units I { Certain special districts that have separately elected boards provide transportation, park, mosquito control, and sanitation services to residents and businesses within these districts, and follow government fund accounting principles. These districts, which are accounted for as discretely presented component units, are as follows: The Fishers Island Ferry District, established in 1947 i Orient Mosquito District, established in 1916 Fishers Island Garbage and Refuse District, established in 1952 Cutchogue-New Suffolk Park District, established in 1953 Orient-East Marion Park District, established in 1969 Southold Park District, established in 1907 Mattituck Park District, established in 1941 Complete financial statements of these component units can be obtained from their respective I administrative offices: Orient Mosquito District Fishers Island Garbage 145 Platt Road & Refuse District Orient, NY 11957 Fishers Island, NY 06390 Cutchogue-New Suffolk Orient-East Marion Park District Park District P.O. Box 311 P.O. Box 12 Cutchogue, NY 11935 Orient, NY 11957 Southold Paris District itfattr!uck Park Distrct P.O. Box 959 P.O. Box 1413 Southold, NY 11971 Mattituck, NY 11952 Fishers Island Ferry District P.O. Box 1179 Southold, NY 11971 -21- TOWN OF SOUTHOLD NOTES TO FINANCIAL STATEMENTS I December 31, 2006 A. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES {continued) 3. BASIS OFACCOUNTING/MEASUREMENT FOCUS Measurement focus refers to what is being measured whereas the basis of accounting refers to when revenues and expenditures are recognized in the accounts and reported in the financial statements. Basis of accounting relates to the timing of the measurement made, regardless of the measurement focus applied. In the government-wide statements, governmental activities are presented using the economic resources measurement focus and are presented using the accrual basis of accounting. Under the accrual basis of accounting, revenues are recognized when earned and expenses are recorded when the liability is incurred or economic asset used. Revenues, expenses, gains, losses, assets, and liabilities resulting from exchange and exchange-like transactions are recognized when the exchange takes place. In the funds statemeras, 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 'rf they are collected I within 60 days after the year end. Revenues susceptible to accrual include Suffolk County local i assistance at year end on behalf of the Town, franchise fees, and charges for services, intergovernmental revenues and operating transfers. Permits, fees, and other similar revenues are not susceptible to accrual because generally they are not measurable until they are received in I 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 commitments are recorded for budgetary control purposes in order to reserve that portion of the applicable appropriation, is employed in the governmental funds. Appropriations for all governmental funds except the capital projects fund lapse at year-end. Ho~.vever, 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 I, 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 i Inventory in the general and special revenue funds is valued at cost. Inventory in these funds is accounted for under the consumption method. _22_ i ` TOWN OF SOUTHOLD NOTES TO FINANCIAL STATEMENTS December 31, 2006 A. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued) 4. ASSETS, LIABILITIES AND FUND EQUITY (continued) CAPITAL ASSETS Capital assets purchased or acquired with an original cost of $5,000 or more are reported at historical cost or estimated historical cost. Contributed assets are reported at fair market value as of the date received. Additions, improvements and other capital 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 sfraight- line basis over the fallowing estimated useful lives: Buildings 10-40 years Improvements and other 20 years Machinery and equipment 5-10 years Infrastructure 20-30 years l Infrastructure assets, consisting of certain Improvements other than buildings including roads, curbs, sidewalks, bridges, street lighting are capitalized along with other capital assets. In the fund financial statements, capital assets are recorded as capital outlay expenditures in the governmental fund upon acquisition. DEFERRED REVENUE/UNEARNED INCOME Deferred revenues/unearned income are those where asset recognition criteria have been met, but which revenue recognition criteria have not been met. Such amounts include collections in advance, unearned income and amounts that have been deemed to be "measurable' but not "available" to fnance current expenses pursuant to generally accepted accounting principles. ` PREPAIDS Prepaids record payments to venders that benefit future recording periods and are reported on the ~ consumption basis. Prepaids in the General and Special Revenue Funds represent insurance { premiums paid for coverage that will benefit the subsequent period and for retirement benefits that will benefit a future period. ` LONG-TERM OBLIGATIONS The liabilities for long-term obligations consisting of general obligation bonds, compensated absences, due to employee retirement system, judgments, claims and liability for landfll closure I and post closure costs are recognized in the government-wide financial statements. f 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 j Department of Assessment. Real property taxes become a lien on December 1 for both school and f 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 l` the Town. I -23- TOWN OF SOUTHOLD NOTES TO FINANCIAL STATEMENTS December 31, 200n A. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued) 5. REVENUES AND EXPENDITURES (continued) REAL PROPERTY TAX ASSESSMENT AND COLLECTION PROCEDURES (continued) The Tov?n of Southold Receiver of Taxes collects all real property taxes for the Town, Suffolk County, Town Special Districts and School Districts. These taxes are levied on December 1, and are due in two installments, 50% on December 1 and 50% on May 10, payable without penalty to January 10 and May 31, respectively. Penalties are imposed thereafter at the rate of one-twelfth of the rate of interest determined by the State Commissioner of Taxation and Finance, after which taxes are payable to the County Treasurer. The Town retains the total amount of Town, Highway and Town Special Districts levies from the amount collected, and forwards the balance collected to the County which assumes collection responsibility. The Town and Town's Special Districts therefore realize annually the 100°/° collection of real property taxes. School District property taxes are also levied on December i, and are also payable in two installments. School property taxes are due in two installments, 50% on December 1 and 50% on Ivtay 10 payable without penalty to January 10 and May 31, respectively. The County is also responsible for uncollected school taxes. INTERFUND TRANSACTIONS Interfund transactions have been eliminated from the government-wide financial statements. In the funds statements interfund transactions include: a) Interfund Revenues Interfund revenues, quasi-external transactions, in the general fund represent amounts charged for services or facilities provided by the general fund. The amounts paid by the fund receiving the benefit of the service or facilities are reflected as an expenditure of that fund. b) Transfers Transfers represent payments to the debt service, general fund and capital projects funds from fhe other funds for Yheir appropriate share of the debf service, general fund or capital project costs. COMPENSATED ASSENCES The liability for vested or accumulated vacation or sick leave (compensated absences) is recorded as current and noncurrent obligations in the government-wide statements. The current portion of this debt is estimated based on historical trends. In the fund financial statements only the compensated absence liability payable from expendable available financial resources is incurred. The amount that is expected to be liquidated with expendable available financial resources is ~ reporied as expenditures and a liability in the funds statement in the respective fund that will pay it. 6. EQUITY CLASSIFICATIONS Ir, the Government-wide Statements, equity is classified as net assets and displayed in three I 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 athibutable to the acquisition, construction, or improvement of those assets. i -24- i TOWN OF SOUTHOLD NOTES TO FINANCIAL STATEMENTS December 31, 2006 A. SUMMARY OF SIGNIFICANT ACCOUNTING POLVCIES (continued) ` 6. EQUITY CLASSIFICATIONS (continued) b) Restricted net assets-Consists of net assets with constraints placed on the use either by l (1) external groups such as creditors, grantors, contributors, or laws or regulations of other ` governments; or (2) law through constitutional provisions or enabling legislation. f 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 accordance 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, COMPLIANCE AND ACCOUNTABILITY 1. BUDGETARY DATA Budgets are adopted annually on a basis consistent with generally accepted accounting principles. Appropriations authorized for the current year are increased by the amount of encumbrances carried forward from the prior year. i 4 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 fnancial 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 i 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. 2~ 1 TOWN OF SOUTHOLD NOTES TO FINANCIAL STATEMENTS ~ December 31, 2006 i B. STEWARDSHIP, COMPLIANCE AND ACCOUNTABILITY (continued) 2. FUND BALANCES DESIGNATION OF FUND BALANCE j Portions of the unreserved balances at December 31, 2006 were designated for the subsequent I 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 i Non-Major Funds: Town Outside Village $ 908,193 $ 484,599 $ 423,594 Special Grant 5,000 5,000 East West Fire Protection District 19,648 6,228 13,420 Southold Wastewater District 223,779 223,779 Fishers Island Sewer District 40,948 40,948 i Solid Waste Management District 6,224 6,224 Total $ 1,203,792 $ 495,827 $ 707,965 C. DETAILED NOTES ON ALL FUNDS 1. CASH AND INVESTMENTS Cash consists of funds deposited in demand accounts, time deposit accounts, and certificates of deposit with maturities of less than three months. i The Town's investments are governed by a formal 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. Permissible investments include obligations of the U.S. Treasury, U.S. Agencies and investments made by the Cooperative Liquid 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 cost, which approximates market value. CLASS was established as a cooperative investment arrangement organized under [he CLASS Municipal Cooperation Agreement made pursuant to New York General Municipal Law, Article 3A and 5-G. Collateral is required for demand deposits and time deposits accounts at 105% of all deposits not covered by federal deposit insurance. Obligations that may be pledged as collateral include obligations of the United States and its agencies and obligations of the State and its municipalities and school districts. The Town's collateral agreements are based on the Town's available balance. 1 -26- TOWN OF SOUTHOLD f NOTES TO FINANCIAL STATEMENTS December 31, 2006 C. DETAILED NOTES ON ALL FUNDS (continued) 1. CASH AND INVESTMENTS (continued) Custodial Credit Risk -Deposits/ Investments -Custodial credit risk for deposits exists when, In the event of the failure of a depository financial institution, a government may be unable to recover deposits, or recover collateral securities that are in possession of an outside agency. Custodial credit risk for investments exists when, in the event of the failure of the counterparty, a j government will not be able to recover the value of its investments or collateral securities that are in possession of an outside party. Governmental Accounting Standards Board Statement No. 40 d reds that deposits be disclosed as exposed to custodial credit risk if they are not covered by depository insurance, and the deposits are either: • Uncollateralized i • Collateralized with securities held by the pledging financial institution, or • Collateralized with securities held by the pledging fnancial institution's trust department or agent but not in the Town's name At December 31, 2006 the Town's cash book balance was approximately $29,624,000. This amount is inclusive of Fiduciary fund deposits of approximately $9,300,000 but exclusive of petty cash of approximately $2,200. The available bank balance was approximately $32,500,000. Of the bank balance, $1,100,000 was covered by Federal deposit insurance, and approximately $40,706,000 was covered by collateral held by the Town's agent, athird-party financial institution, in the Town's name. I 2. INTERFUND RECEIVABLES AND PAYABLES Interfund receivables and payables for the primary government at December 31, 2006 were as i follows: Amount Amount Receivable Payable General Fund-Town wide $ 190,208 $ 1,171,758 Highway Fund 461,241 49,290 Capital Projects Fund 234,970 140,745 Part T own 115,236 Special Grant 5,000 East-West Fire District 56,488 Southold Wastewater District 2,146 173 I Fishers Island Sewer District 9,806 Solid Waste Management District 286,871 $ 1 ~&1 966 $ 1 361 966 Interfund receivable and payable balances for the primary government at December 31, 2006 are expected to be paid currently. _27_ i TOWN OFSOUTHOLD NOTES TO FINANCIAL STATEMENTS I pecember 31, 2006 1 C. DETAILED NOTES ON ALL FUNDS (continued) 3. CAPITAL ASSETS Balance Balance Primarygovemment 1/1/06 Additions Deletions 12/31/06 Capital assets not being depreciated I Land $ 47,772,278 $ 10,569,239 $ -0- $ 58,341,517 i Construction in progress 1,608,081 18,264 1,406,231 220,114 Total capital assets not being depreciated 49,380,359 10,587,503 1,406,231 58,561,631 Depreciable capital assets Buildings 4,574,513 3,732,710 8,307,223 Improvements other than buildings 13,498,954 119,205 13,618,159 Machinery and equipment 9,522,815 627,218 233,890 9,916,143 Infrastructure 70,038,525 656,130 70,694,655 Total depreciable capital assets 97,634,807 5,135,263 233,890 102,536,180 Less accumulated depreciation Buildings 2,068,530 137,736 2,206,266 Improvements other than buildings 3,542,084 390,004 3,932,088 Machinery and equipment 6,041,374 724,481 167,985 6,597,870 Infrastructure 45,069,099 2,735,176 47,804,275 ~ Total accumulated depreciation $ 56.721,087 $ 3;987,397 $ 167,985 6n,54n,49o Tota! net depreciable capita{ assets 41,995,681 Total net capital assets $100,557,312 Depreciation expense was charged to governmental functions as follows: General government support $ 249,268 Public safety 169,011 i Transportation 2,949,839 l Economic assistance and opportunity 37,610 Culture and recreation 62,609 Home and community services 519,060 $ 3,987,397 l I 28 - 'I TOWN OF SOUTHOLD I`{ NOTES TO FINANCIAL STATEMENTS December 31, 2006 C. DETAILED NOTES ON ALL FUNDS (continued) 3. CAPITAL ASSETS (continued) Balance Balance Discretely presented component units 1/1/06 Additions Deletions 12/31/06 Capital assets not being depreciated Land $ 2,213,759 $ 2,213,759 Construction in progress 13,174,567 $ 324,711 $ 552,197 12,947,081 Total capital assets not being depreciated 15,388,326 324,711 552,197 15,160,840 Depreciable capital assets Buildings 3,540,111 26,774 3,566,885 ` Improvements other than buildings 2,575,589 645,143 3,220,732 Machinery and equipment 3,200,728 120,171 3,320,899 ~ Infrastructure 2,138,386 6,894 2,145,280 f Total depreciable capital assets 11,454,814 798,982 12,253,796 i Less accumulated depreciation Buildings 1,289,733 83,842 1,373,575 Improvements other than buildings 1,061,574 117,672 1,179,246 Machinery and equipment 2,132,657 151,754 2,284,411 Infrastructure 1,155,866 81,474 1,237,340 Total accumulated depreciation $ 5,639,830 $ 434,742 6,074,572 Total net depreciable capital assets 6,179,224 Total netcapital assets $ 21,340,064 li 4. INDEBTEDNESS I SHORT TERM DEBT Bond Anticipation Notes (BANS) -Bond anticipation notes (BANS) are used as a temporary ~ means of financing capital expenditures in the capital projects fund. State law requires that BANS issued for capital 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 4` expected to be paid from the proceeds of future bond issues after renewal of these notes. These BANS bear interest at various rates from 3.66% to 3.76% and are due at various dates through 2007. When BANS are not redeemed with, the proceeds of bond issues, but instead paid from budgetary appropriations, the principal amount paid is recorded as an expenditure in the operating fund and a f f nancirg source is recorded in the capital projects fund. I ` _29_ 1 i ' TOWN OF SOUTHOLD NOTES TO FINANCIAL STATEMENTS December 31, 2006 C. DETAILED NOTES ON ALL FUNDS (continued) 4. INDEBTEDNESS (continued) SHORT TERM DEBT (continued) I These Holes are summarized as follows i Interest Description Amount Rate Various Purposes $ 6,619,000 3.66% ! Various Purposes 1,110,000 3.73% + New London Wharf 1,625,000 3.70% Fishers Island Garbage 560.000 3.76% Total x_9.914.000 j Of the $9,914,000 in bond anticipation notes, $7,729,000 relates to the primary government and the JI remaining $2,185,000 relates to the component units. LONG TERM DEBT Summary of changes in long-term debt transactions for the year ended December 31, 2006 is as follows: Non-current Balance Balance liabilities due Non-current 1/1/06 Increases Reductions 12/31/06 within one year liabilities j{ Primary Government: I General obligation bonds $ 9,249,098 $ 755,000 $ 8,494,098 $ 779,098 $ 7,715,000 Cue to Empiu'y'ec'a Retirement System 93„993 45,199 48 °C4 48,894 J Compensated absences 5,779,826 695,835 6,475,661 6,475,664 Claims and judgments 220,000 220,000 -0- -0- ~ Estimated liability for landfill closure and post-closure care costs 612,395 19,072 593,323 10,550 582,773 Component Units: 1 General obligation bonds 3,050,000 195,000 2,855,000 200,000 2,655,000 l Claims and judgments -0- 200,000 200,000 50,000 150,000 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 borne by the present and future taxpayers receiving the benefit of the capital assets. These long-term I liabilities, which are backed by the full faith and credit of the Town, bear interest at various rates from 3.14% to 6.375% and have maturity dates in 2009 through 2021. Future principal and interest payments to maturiy for both the primary government and the component units are as follows: Year Ending Principal Interest 2007 $ 979,098 $ 376,466 111 2008 995,000 345,307 2009 1,025,000 312,347 2010 1,000,000 277,956 2011 1,025,000 242,981 2012-2016 4,100,000 765,577 2017-2021 2 225.000 167,650 Totals $ 11 349.098 $ 2 488 284 -30- f rowN of souTwoLD NOTES TO FINANCIAL STATEMENTS December 31, 2006 C. DETAILED NOTES ON ALL FUNDS (continued) I 4. INDEBTEDNESS (continued) LONG TERM DEBT (continued) 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. PRIOR YEAR DEFEASANCE OF DEBT In prior years, the Town defeased certain bonds by placing the proceeds of new bonds in an irrevocable trust with an escrow agent to provide for all future debt service payments on the old bonds. Accordingly, the trust account assets and liability for the defeased bonds are not including in the Town's financial statements. At December 31, 2006, $1,950,000 of these bonds outstanding are considered defeased. 5. RETIREMENT SYSTEM Plan Description The Town of Southold participates in the New York State and Local Employees' Retirement System (ERS) and Local Police and Fire Retirement System (PFRS). This is acost-sharing multiple- employer retirement system. The System provides retirement benefits as wel! as death ar,d disability benefits. Obligation of employers and employees to contribute and benefits to employees are governed by the New York State Retirement and Social Security Law (NYSRSSL). As set forth in the NYSRSSL, the Comptroller of the State of New York (Comptroller) serves as sole trustee and administrative head of the System. The Comptroller shall adopt and may amend rules and ~ regulations for the administration and transaction of the business of the System and for the custody and control of their funds. A publicly available annual report containing financial statements and required supplemental { information for the Employees' Retirement System may be obtained by writing to the New York State Retirement System, Governor Smith State Building, Albany, NY 12244. `i Funding Policv I The System is noncontributory except for employees who joined the New York State and Local I Employees' Retirement System after July 27, 1976 and who have less than ten years of membership and less than ten years of credited service with a retirement system under the provisions of article fourteen or fifteen of the NYSRSSL, who contribute 3% of their salary. Prior to October 1, 2000, all employees who joined the System after July 27, 1976 wee required to contribute 3% of their salary. Under the authority of the NYSRSSL, the Comptroller shall cert'rfy 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 determined rate. The actual contributions were equal to the actuarially required amounts and also include additional contributions to fund various early retirement incentives made available to the Town employees. The credits and miscellaneous adjustments represent mod cation made by the ERS far prior year's contributions. The re wired contributions, for the Prima overnment, for the current year and two precedin q 9 9 years were: ERS PFRS 2006 $ 1,096,547 S 741,445 2005 $ 1,068,200 $ 1,016,937 2004 $ 992,023 $ 679,079 The Town's contribution to the system was 100% of the contributions required each year. - 31 - TOWN OFSOUTHOLD NOTES TO FINANCIAL STATEMENTS December 31, 2006 C. DETAILED NOTES ON ALL FUNDS (continued) 6. POST EMPLOYMENT BENEFITS J In addition to providing pension benefits, the Town provides health insurance coverage and survivor benefits for retired employees and their survivors. Substantially all of the Town's employees may ~ become eligible for these benefits if they reach normal retirement age while working for the Town. J Health care benefits are provided through either aself-funded plan whose premiums are based on the benefits paid during the year or are provided in accordance with New York State Health j 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 II benefits paid throughout the State during the year. The Town recognizes the cost of providing benefits by recording its share of insurance premiums or the actual benefits paid as expenditure in the year paid. The Town's union contracts and ordinances require that it provide its eligible enrollees with benefit coverage under either the self-funded plan or the Empire Plan. Under the provisions of the Empire Plan, premiums are adjusted on a prospective basis for any losses experienced by the Empire Plan. The Town has the option to terminate its participation in the Empire Plan at any time without liability for its respective share of any previously incurred loss. During the 2006 year, $3,261,660 was paid on behalf of 93 retirees and 223 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. ? + Estimated vacation, sick leave and compensatory absences accumulated by governmental fund +l type employees have been recorded in the statements of net assets. Payment of vacation time and sick leave is dependent upon many factors; therefore, timing of future payments is not readily determinable. However, management believes that sufficient resources will be made available for 1 the payments of vacation, sick leave and compensatory absences when such payments become due. As of December 31, 2006, the value of the accumulated vacation time and sick leave was $6,475,661 for the primary government D. COMMITMENTS AND CONTINGENCIES Risk Management ~i The Town is self-insured for both medical insurance and general liability insurance. The amount of medical claims outstanding at December 31, 2006 is $161,976. 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 2006 the Town self-insured for bodily injury and property damage up to a maximum of $50,000 per claim. The $50,000 limitation was the minimum retention amount available to the Town. Claims in excess of $50,000 are covered by excess liability policies providing coverage for $10,000,000 per occurrence and in the aggregate. Although the eventual outcome of these 2006 claims cannot presently be determined, the Town's third party administrator has estimated unsettled claims at December 31, 2006 to be $53,863. These amounts have been reserved against fund balance in the General Fund. The Town fs of the opinion that the ultimate seitlement of the outstanding claims will not result Lr a material advere effect on the Town's financial aosition. Since 2005, there have been no significant reductions in insurance coverage as compared to the prior year, in addition there were no settlements on excess of insurance coverage over the last three years. The Town is also serf-insured for unemployment benefits paid. -32- TOWN OF SOUTHOLD NOTES TO FINANCIAL STATEMENTS December 31, 2006 D. COMMITMENTS AND CONTINGENCIES (continued} Landfili Closure and Post-Closure Care Costs State and federal laws and regulations require the Town to place a final cover on its landfill sites and to perform certain maintenance and monitoring functions at the sites for thirty years after closure. The Town ceased accepting waste at its Cutchogue landfill as of October 8, 1993. The Town entered into a stipulation of settlement with the New York State Department of Environmental Conservation in October of 1994 in which all charges of operational violations at the Cutchogue landfill were dropped. Under the stipulation, the Town agreed to close and place a final cover over the landfill and to pay a civil penalty of $650,000 over seven years. Construction of the final cover commenced in the summer of 2001 and was completed in the fall of 2003. In addition to placement of the final cover on the landfill, state and federal regulations presently require the Town to perform certain maintenance and moni?oring functions at the site for up to thirty years. Accordingly, as of December 31, 2006 the Town has recorded a liability of $593,323 which represents the provision to be made in future budgets for post-closure landfill costs. Actual costs may vary due to inflation or deflation, changes in technology, or changes in regulations or applicable laws. Actual cos?s associated with the placement of the final cover totaled $7,681,719. Financing for closure activities was provided through a $2,000,000 grant from the New York State Department of Environmental Conservation with the balance provided with a state subsidized loan through the New York State Environmental Facilities Corporation. Costs associated with post closure care will be covered by charges to future landfill users and future tax revenue. Lease Commitments and Leased Assets The Town leases property and equipment under operating leases. Total rental expenditures on such leases for the year ended December 31, 2006 were approximately $191,773- Future obligations over the primary terms of the Town's leases as of December 31, 2006 are as follows: 2007 $ 109,824 2008 109,028 2009 107,3480 2010 86,909 2011 and thereafter 563.901 Total $ 977 010 E. CONDENSED FINANCIAL STATEMENTS FOR THE DISCRETELY PRESENTED COMPONENT UNITS The following represents condensed financial statements for the discretely presented component units as of and for the year ended December 31, 2006: Condensed Statement of Net Assets: Due from Capital Assets Other Current Primary Net of Current Long-Term Net Assets Government Depreciation Liabilities Liabilities Assets Fishers Island Ferry District $ 489,288 $ 182,783 $ 15,672,853 $ 2,367,007 $ 2,700,000 $ 11,277,917 Fishers Island Refuse and Garbage 607,760 59,673 3,146,256 621,736 3,191,893 Cutchogue-New Suffolk Park District 108,649 16 414 123,200 16,414 231,849 Southold Park District 43,842 35,659 696,59A 37,930 73A,169 Orient-East Marion Park District 5,496 3,475 432,985 14,602 a27,354 Maditock Park District 255,994 >2,925 1,242,272 16s,85B 105,000 1,279,337 Orient Mosquito Di slr,cl 16,812 9,309 25,90G 1A,235 33,7A6 $ 1,527,845 $ 360,178 $ 21.340,064 $ 3,242.?A2 $ 2,A05,000 $ 17,180.305 -33- 1 TOWN OFSOUTHOLD NOTES TO FINANCIAL STATEMENTS December 31, 2006 E. CONDENSED FINANCIAL STATEMENTS FOR T'HE DISCRETELY PRESENTED COMPONENT UNITS (continued) I', Contlensed Statement of Agivitles: 1 ' I Program General Revenue Net Assets Ne!Expense Property Expenses Revenue (Revenue) Tax Other Change 1!1/06 12/31106 +J Fshers lslantl Ferry District 5 3061,265 $ Z,G13,785 $ 1047480 $ 400,000 $ 854,443 $ (206,963) $ 11,070,954 $ 11,277,917 1 Fishers Island Refuse and Garbage 538,458 32 938 505,520 563,500 70,088 (128,868) 3,063,025 3,191,893 1 Culchogue-New suficlk Park District 160,014 160,014 141,000 917 18,097 249,946 231,849 Southold Park Dlsirct 2879fiG 287,960 315,000 43,691 (70,731) 667438 736,tfi9 Orient-East Marion Park Dlslncl 27,063 270fi3 27,617 76 (630) 426,724 427 354 Mattituck Park Distrito 368,453 368,453 426,110 37,511 (95,tfi8) 1,184,169 1273337 Orient Wtosquto Oidtt^..t 86,977 8fi,977 76,285 2pt2 8280 42p66 3,4?86 I $ 4,530,190 $ 2,046,723 $ 2,463,467 $ 1,949,512 $ 1,009,938 $ (475,983) $ 16,704,322 $ 17,!80,305 F. SUBSEQUENT EVENTS On April 15, 2007, the Town issued Serial Bonds for public improvements in the amount of $14,650,000. These public improvements bonds are allocated as follows $9,987,900 for open space preservation, $1,200,000 for land acquisition, $3,000,000 for a solid waste management transfer l station, $315,000 for a settlement with New York State and $147,100 for equipment. The interest rate on these bonds range from 4% during the initial year to 4.25% for the final 20 years. The bonds finai J maturity date is 2030. G. NEW PRONOUNCEMENTS 1) The Governmental Accounting Standards Board (GASB) approved new accounting standards J{ applicable to "other post-employment benefits" (OPEB's) and "±ermination benefits", which are non- l pension benefits provided after a person leaves employment, including retiree health care. Until now, these benefits have generally been administered by municipalities on apay-as-you-go basis and have not been reported as a liability on financial statements. GASB 45 and 47 requires municipalities which adhere to GAAP (Generally Accepted Accounting Principles) to account for OPEB and termination liabilities on an accrual basis much like they already account for pension liabilities, generally adopting the actuarial methodologies used for pensions, with adjustments for the different characteristics of OPEB and termination benefits and the fact that most municipalities have not set aside any funds against this liability. f Under GASB 45 and 47, based on actuarial valuation, an annual required contribution ("ARC") will be 1 determined for each municipality and then be periodically updated depending on the number of members within the plan. i The Town, as well as its component units are required to implement GASB 45 and 47 for the year ended December 31, 2007. I I -34- REQUIRED SUPPLEMENTARY INFORMATION OTHER THAN MANAGEMENT DISCUSSION AND ANALYSIS f ' I I f TOWN OF SOUTHOLD GENERAL FUND SCHEDULE OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCE -BUDGET AND ACTUAL Year ended Decerriber 31, 2006 Variance with Original Final Final Budget Budget Budget Actual Positive/(Negative} REVENUES Real Property Taxes $14,872,736 $ 14,872,736 $ 14,872,736 Other Real Property Tax Items 68,500 68,500 85,808 $ 17,308 Non-Property Tax Items 616,000 616,000 616,670 670 Departmentallncome 342,100 585,100 477,849 (107,251) Intergovernmental Charges 386,616 297,379 316,049 18,670 Use of Money and Property 460,000 460,000 684,166 224,166 Licenses and Perrnits 223,100 223,691 258,794 35,103 Fines and Forfeitures 112,000 112,000 171,763 59,763 Sale of Property and Compensation for Loss "74,050 77,505 95,057 17,552 Miscellaneous Local Sources 47,420 109,669 146,260 36,591 State Aid 2,434,897 2,561,687 2,725,177 163,490 Federal Aid _ 238,737_ 228,491 (10,246) Total Revenues 19,637,419 20,223,004 20,678,820 455,816 EXPENDITURES General Government Support 6,116,403 6,175,733 5,177,745 997,988 Piihlir_ Safaty 7,797,533 7,392,:?R6 7,371,280 ?1,106 Public Health 33,300 33,300 32,988 312 Transportation 442,71C 472,173 452,050 20,123 Economic Assistance and Opportunity 1,030,920 1,022,324 949,740 72,584 Culture and Recreation 395,3?4 396,830 384,983 11,847 Home and Community Services 362,224 660,814 530,270 130,544 Employee Bonefits 6,25'7,400 6,69Q,613 5,811,868 878,745 Debt Service -Principal and Interest 1,559,500 1,434,500 1,313,234 121,266 Total Expenditures 23,495,304 24,278,673 22,024,158 2,254,515 deficiency of Revenues Over Expenditures (3,857,885) (4,055,669) (1,345,338) 2,710,331 Other Financing Sources (Uses) Transfers In 6,038,180 6,308,189 2,253,944 (4,054,245) Transfers Out (2,180,295) (2,252,520)_ (1,531,369) 721,151 Total Other Financing Sources (Uses) 3,857.885 4,055,669 _ 722,575 _ (3,333,094) Nef Change in Fund Balance $ -0- $ -0- (622,763) $ (622,763) Fund Balance at Beginning of Year 6,007,462_ J~ Fund Balance at End of Year $ 5,384,699 1 1 1 I See notes to the financial statements. _3 J_ I I TOWN OF SOUTHOLD HIGHWAY FUND SCHEDULE OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES -BUDGET AND ACTUAL Year ended December 31, 2006 Variance with Original Final Final Budget REVENUES Budget Budget Actual Positive/(Negative) Real Property Taxes $ 4,095,347 $ 4,095,347 $ 4,095,347 Other Real Property Tax Items 8,500 8,500 12,689 $ 4,189 Use of Money and Property 72,100 72,100 140,578 68,478 Licenses and Permits 6,500 6,500 9,484 2,984 Sale of Property and Compensation for Less 7,521 7,521 State Aid 231,332 306,719 276,337 30,382) Total Revenues 4,413,779 4,489,166 4,541,956 52,790 EXPENDITURES Transportation 3,485,358 3,551,971 3,028,076 523,895 Employee Benefits 543,162 543,162 515,106 28,056 Debt Service -Principal and Interest 294,785 294.785 283,652 11,133 Tctal Expenditures 4,323,305 4,389,918 3,826,834 563,084 { Excess (Deficiency) of Revenues Over Expenditures 90,474 99,248 715,12.2 615,874 Other Financing Uses Operating Transfers in 355,900 355,900 (355,900) Transfers Out (446,374) _~455,14~ (452,648) 2,500 Total Other Financing Uses (90,474) _ (99,248) (452,648 35( 3,400) Net Change in Fund Balance $ -0- $ 0- 262,474 $ 262,474 Fund Balance at Beginning of Year 1,056,848 Fund Balance at End of Year $ 1,319,322 See notes to the financial statements. -36- i OTHER SUPPLEMENTARY INFORMATION TOWN OF SOUTHOLD COMBINING BALANCE SHEET NON-MAJOR GOVERNMENTAL FUNDS December 31, 2006 East-West Rre Southold Fishers Solid Waste General Fund Special Protection Wastewater Islantl Sewer Management Part Town Grant District District DiSMCI District Totals ASSETS Cash and investments $ 821,446 $ 86,470 5 225,862 $ 29,959 $ 188,485 $ 1,352,222 Arcounts receivable, net of allowance 58,401 1,259 123,168 182,828 Due tram other funds 115,236 $ 5,000 56,488 2,146 9,806 286,871 475,547 Due from other governments 9,150 79,607 88,757 Prepaid expenditures 25,599 27,960 53,559 Total Assets $1,020,682 $ 14,150 $ 142,958 $ 228008 $ 41,024 $ 706,091 $2,152,913 LIABILITIES AND FUND EQUITY IJAHILITIES Accounts; payable $ 21,800 $ 9,150 $ 12,656 $ 76 $ 276,974 $ 320,656 Due fo other funds $ 173 173 Deferred revenue 90,689 - 110,654 4,056 422 893 628,292 Total Liabilities 112,489 8,150 123,310_ 4,229 76 699,867 949.121 FUND EQUITY Fund balance -reserved' Prepaic{ expenses 25,599 25,599 Fund balance - unreserved_ Designated -ensuing year's budget 459,000 5,000 6,228 470,228 Undesi0nated 423,594 13,420 223,779 40,948 6,224 707,965 Total Fund Equity 908,193 5,:100 19,648 223,779 40,948 fi,224 1,203,792 Totai Liabilities and Fund Equity $1,020,682 $ 14,150 $ 142,958 $ 228,008 $ 41,024 $ 706,091 $ 2.152,913 -37- TOWN OF SOUTHOLD COMBINING STATEMENT OF REVENUES. EXPENDITURES AND CHANGES IN FUND BALANCES -NON-MAJOR GOVERNMENTAL FUNDS Year ended December 31, 2006 East-West Fire Southold Fishers Solid Waste General Fund Special Protection Wastewater Island Sewer Management Part Town Grant District _ Dishict District f)istdct To[als REVENUES " F.eal property taxes $ 492,996 $ 458,043 5 22,790 $ 1,767,533 $ 2,741,362 Ocher real property taz items 1,523 604 30 $ 2 2,330 4,489 Non prnparty tax items 229,346 229,346 Departmental income 656,644 17,060 29,117 1,573,114 2,275,935 Intergovernmental charges 1,809 1,809 Gse o! money and property 41,074 5,594 9,677 1,689 31,238 95,272 Licenses and permits 7,232 156,548 163,780 Sale o' property and compensation for loss 6,738 128,924 136,662 M isce!laneous local sources 7 $ 5,000 1,645 6,652 State aid 47,671 79,607 127,278 Peaeral aid 41,163 41,163 Total Revenues 1,489,231 46,163 464,241 49557 34808 3,742,748 5,822,748 EXPENDITURES G enrral government support 103.554 103,654 PuL1ic safety 409,449 459,705 869,154 Public health 7,104 7.104 Home and community serviczs 523,926 41,163 22,406 2,776,286 3,363,781 Employee benefits 214,993 255,384 470,377 Debt service -principal and interest 2,436 820,155 822,590 Total Expenditures 1,259,126 41,163 459,705 2,435 22,406 3,851,825 5,636,660 Ezcess (Deficiency) of Revenues Over Expenditures 230,105 5,000 4,536 47,122 8,402 (109,077) 186,088 Other Financing Uses: Opereling transfers out (209,971) ~ _ (219,174) (429,145) Total O[her Financing Uses (209,97 - (219,174) (429,145) Ne[ Change in Fund Balance 20,134 5,000 4,536 47,122 8,402 (328,251) (243,057) Fund Balances at Beginning of Year 888,059 15,112 176,657 32,546 "534,475 1,446,849 Fund Balances at End of Year $ 908,193 $ 5,000 $ 19,648 $ 223,779 $ 40,948 $ 6,224 $ 1,203,792 -38- k t DISCRETELY PRESENTED COMPONENT UNITS f i TOWN OF 5OUTNOLD DISCRETELY PRES ENTE.D COMPONENT UNITS COMBINING STATEMENT OF NET ASSF_TS December 31, 200"a Flshors Island Gu0.:hogua- Sootholtl OnenbEast Mat(tuck Orient F=_ners f.eluse and New Suffolk Park b1anon Park Park Mosquito ~slantl Ferry Gecbage District Park Dfstrlfl District 6stnct DVstnci dlslricl Dlslnet _ Unaudited (Unaudted (Unautlited)_ ~naudted ~naudted _(Unaodlled) Totals A:•SE1 S Current 0.s-seta . Cann and invesVmenis $ 215,455 $ 591,364 5 108,649 $ 43,A42 S 5,496 5 254,833 $ 16812 $ 1.236451 Accn:nls ruceivable, rac el allowance 11,64fi 3,371 150 15,167 Due BOm primary government 182,783 59613 16,414 35,659 3475 52,925 9.309 360,178 State and :edera~ recebsbles 237,656 237,056 Pnpa:d charges 25,131 _ 13,025 _ 1A15 39,171 Total Current Assets _-_72,071 _ F67,373_ _ 125.063 79,501 8971 _368.923_ _ 26,121 _1,SBB.D23 Non-Current AsseCS: Nan-depreciab`c capital assets 10.874 b36 2607,599 101,198 588,847 432,985 555,575 15,160.84D ~opmc~iabie napita'assets, net of depreciatlon 4798.217 538,657 22,002 107,751 __686,697 25,900 fi,179,<24 Talal ASSels 16,344,924 3,813,623 248,263 __776.099 0.41,956 _1.551.195 52,021 _23228,087 LIAE}ILI iIFS L~IRC~If Lldb(t~<tHS- Ar<pants payable snd acrruad !iablF[ies 343,215 3,747 11,127 11.808 369,893 Accred interest payable 67 959 1,217 69.176 Duo to ether governments 2271 160 2 431 Dgieued Revenue 130 N33 57,993 16,414 35,6.`,9 3 475 103.673 18,235 366,282 Hond anbCipation notos payablo 1 625,000 560,000 2,185 000 carmnt liabllihes due within one year Gennml obligation bonds payable 150,000 50,000 200,000 Claims and juegements payable SU,000 _ 50,000 local Current LlablGtles _ 2.367,007 621_,736- 16,41_4 37,930_ 14,602 1668-~8 18,235 3242,782 Noncurrent Liabilif!es. General obligation bonds payable 2550,000 105,000 2.655,000 Clams and ;uogemenis payable 150.D00 150,000 Total Gabillfes 5,067,007 _621,71,76 16,Y4 37,930 14_60P 271,858 18.235 6,047,782 NET ASS~CS Investment in capiai assets, riot of relateu' debt 11,347.853 2.503,025 640.883 1,087,272 15,579,033 ^m _ 849 97,286 _427,354 192065 33,786 1,601272 _n<esmcfed SB9,936~ 60A,89R 231, _ Thal Net Assets $ 11,277,917 5 3.191693 S 231,849 $ 738,169 8 427,354 5 1279.337 $ 33,796 S 17.180,305 39 TOWN OF SOUTHOLD DISCRETELY PRESENTED COMPONENT UNITS COMBINING STATEMENT OF ACTNtTIES Year ended Deczmber 31, 2006 Fishers Island Cutchogue- Southold Orient-East Matlituck Orient Fishers Refuse and New Suffolk Park Marion Park Park Mosquito Island Ferry Cdarbage Dlstnct Park Distdci District District District District District _ (Unaudited (Unaudited) _ ~UnauditedZ (Unaudited) _ (Unaudited) (Unaudited)_ _ Totals REVENU[5 Program revenues $ 2,013,785 S 32,938 $ 2,046,723 Fealpmperty taxes 400,000 563,500 5 141,000 5 315,000 $ 27,617 $ 426,110 $ 76,286 1949,512 Other real propany [ax items 527 35 562 1,124 Interest and ea mings 21,506 70,888 917 41,591 41 18,879 1,662 155,484 Federal F:d 810,646 810,646 Gtner 21,764 2,700 18,070 750 42,684 Tctal Revenues _ 3,266,228 _6_67,326 _ 141,917 358,697 27,693 _463,621 78,697 S.OG6,173 EXPENSES Ge oeia~ oo vern ment support 150,910 130,910 Pui~llc heal(h 86,977 86,977 'rarspoeafion 2,751,284 2,751,284 Cunure and 2cr=atior. 160,C14 287,960 27,063 362,526 837,563 Neree and cemmuNty services 18,602 454,472 473,074 ,_.~-rest 160.469 83,986 5,927 250,382 Total Expenses 3,061,265 538 '~58 160,014 287,960 27,063 368,453 86,977 4,530,190 charges 7n Net Assets 206,963 128,868 (18,097) 70 731 630 95,168 (8,280] 475,983 Nc!Assets at 6eglnning of Year 11,070,954_ 3.063,025 _249,946 667,438 426,724 1,184,769 42,066 16704,322 Nzt Assets at End o(Year 511,277,9 i7 $ 3.191,893 $ 231,849 $ 738.169 5 427,354 5 1,279,337 $ 33,786 $17,180305 40- BOND INSURANCE ~ Other than with respect to information concerning Financial Security Assurance Inc. ("Financial Security") contained herein under the caption "Bond Insurance" and specimen "Municipal Bond Insurance Policy", none ofthe ~ information in this Official Statement has been supplied or verified by Financial Security and Financial Security makes no representation or warranty, express or implied, as to (i) the accuracy or completeness of such information; (ii) the validity of the Bonds; or (iii) the tax exempt status of the interest on the Bonds. ~ Bond Insurance Policy Concurrently with the issuance of the Bonds maturing in the years 2019 through 2030, inclusive (the "Insured Bonds"), Financial Security Assurance Inc. ("Financial Security") will issue its Municipal Bond Insurance Policy for [he Insured Bonds (the "Policy"). The Policy guarantees the scheduled payment of principal of and interest on the Insured Bonds when due as set forth in the form of the Policy included as an appendix to this Official Statement. The Policy is not covered by any insurance security or guaranty fund established under New York, California, Connecticut or Florida insurance law. Financial Security Assurance Lrc. Financial Security is a New York domiciled financial guaranty insurance company and a wholly owned subsidiary I{J of Financial Security Assurance Holdings Ltd. ("Holdings"). Holdings is an indirect subsidiary of Dexia, S.A., a publicly held Belgian corporation, and of Dexia Credit Local, a direct wholly-owned subsidiary of Dexia, S.A. Dexia, S.A., through its bank subsidiaries, is primarily engaged in the business of public finance, banking and asset management in France, Belgium and other European countries. No shareholder of Holdings or Financial Security is liable for the obligations of Financial Security. At March 31, 2008, Financial Security's consolidated policyholders' surplus and contingency reserves were approximately $3,012,872,486 and its total net unearned premium reserve was approximately $2,419,501,630 in accordance with statutory accounting principles. At March 31,2008, Financial Security's consolidated shareholder's equity was approximately $3,053,752,711 and its total net unearned premium reserve was approximately ~ $1,882,057,335 in accordance with generally accepted accounting principles. The consolidated financial statements of Financial Security included in, or as exhibits to, the annual and quarterly reports filed after December 31, 2007 by Holdings with the Securities and Exchange Commission are hereby incorporated by reference into this Official Statement. All financial statements of Financial Security included in, or as exhibits to, documents filed by Holdings pursuant to Section 13(a), 13(c), 14 or 15(d) of the Securities Exchange Act of 1934 after the date of this Official Statement and before the termination of the offering of the Insured Bonds shall be deemed incorporated by reference into this Official Statement. Copiesofrnaterialsincorporatedbyreference will be provided upon request to Financial Security Assurance Inc.: 31 West 52nd Street, New York, New York 10019, Attention: Communications Department (telephone (272) 826-0100). The Policy does not protect investors against changes in market value of thelnsuredBonds,whichmarketvaluemay ' be impaired asaresultofchangesinprevailinginterestrates,changesinapplicableraYingsorothercauses. Financial Security makes no representation regarding the Insured Bonds or the advisability of investing in the Insured Bonds. Financial Security makes?orepresentationregardingtheOfficialStatement,uorhasitparticipatedinthepreparation thereof, except thzt Financial Security has provided to the Issuer the information presented under this caption for J inclusion in the Officiai Statement. 11 J~ I I i ' r FINANCIAL, ~ .MUNICIPAL BO .SECURITY INSURANCE I Y ASSURANCE® , . _ -ISSUER" . ~ : " . - ~ ' , Pol' o::. -N , ` 80ND$::'~ - i ' ' active Date . , Pre ium:• ' a - s FINANCIAL SECUR)TY,. ASSURANCE, INC. ~("Fin nci t ecu. ~y" , or G si do . r cei d, hereby, UNCONDITIONALLY AND IRREVOCABLY ag es to 'pay h t st a (he " ee' or paying agent (the "Paying Agenty (as'set forth' end u` n ati~n "r vi ih f ;thG lssli 'c of d ' securing;the Bgpds)._ foc the Bqnds, fqr the., en t..o th , rs t t e election ina aI ' Security, directly to each Owner, sutiject my to th to o t s P lic hich' in d s a h endor~~ment Fieleto)'. that portion of-the pri ipal of n inf re t o ^t B d tat sh eco e . for Payment but shall.;bq unpaid b~ re n o Nonpay t b (h Is ue : , 'On; fhe, Iafef: of tfie day o hich• uc ! pri ipal f e st e u fo Payme or th" a , Business ¢aynextfollowing a eusine s ay ~ hi _ Ina ~i I cu al h ye, .ceiy ot(e 4 Nonpa"ymeht, Financial Sec pity will di b` e o r e h fit f c O` h r o 9 n e aCe ' artfioub! of.princlpal `d 'fe}est brr h B' d. af~ls the + ue r a 'e t of i hen psi 'by ~ i reason o;<Nonpey nhb {t , Issu at nl uponJep ptj y; In lal u _ in•a form on ply ._satisfactor~ t~ ".qf (a) ev a ce he _ ne r(ght to r cei a ay nt o f ,e ri ci}ial o dip s . en " ~ r Dub fdr Paym -and (b)' v en , fictu ng' y appFo a~t 7 ants a si nment, tb of th'e ~ ` y w, K Owner' ` 'ht's ",ifh 'r_e9p t $Qe Lyme f, ofs uoh prim alt to ' t. t ' f;5 D q `figf P` enf shay c ; t j ~ ther ,PQn, a¢ In Flnanci I S~ :r , NQ, e}of t+(op ay o t I be a race' on a ~gjyep ~u BsS~D Y h pn o'F . , p. ,(N Y'or ti 'f n h in s d ,otherwise, dwih 4 6e eerited re e • d` n e'ntsxttBt7st'q s y~ N® to of np ' e t elved`tiy.Fin2n~idl ,ty,;~ g R e d s bbe.dee nqt h e„ m e iv n n al Securi for ur o es F- , ` of he ace i 's t: Ge a d Finar,cr I ec f~. all p y o' s t trustee, Paying Agent o} ~ 6 , ~ ~ n S? op t , o tn~y su it n'' me d'e'', of N meitt' Upon disbursement in ` ` =y, ~ y? t B ~d, ' an al ac y~~ be o jt a r: t qnd any appurtgnantcoupon, to s, t e, o~_ or r ht, q re i o_f pal(men of. cip f q ,m s't,on the Bond and stiall,be fully ' " s Dr ` tad to' O'hgFfs f t e ner, me ding the r'~ 'g to receive payments under the Bond, ~ ° i- f ;ha=e t,, ;;any Pa a b Firjancie Security: er u P;3ym@nYby Financial Security to the ; , st@e;ou a ~ng Ag t f F b d f the ne, 4ftall, tq the extent thereof, discharge- the o Ilgatidn o Fi ahciat ecur 'u ' r lii fi licy.' ' i a - Except q ha xtenbe .rgssly mq 'die n gndgrsement hereto,, the following termsshallhave < th eaning pec fled i`or a L,purposes f this Policy. ""Business Day' means any day other than (a)'a Saf dr da d'r(b) a day on wh' h banking institutidn§' in ttie.State.of New~York or thelnsurer's ' ' FjscahA ant " "'a hpri~ed r requir by IavJ orexecutive prder tq remain closeds "pue'foc.P,aymenY' , mea is ~ w [e erring. to ,he cipat of a Bond, payab(@.on thestated maturity date thereof pr the ' d R hl Re' ame sh II ve been' du' ly`c~alled for mandatory sinking fund redemption and' does t.r fe t0 A -e li2r;date on-which payment: i5 due; by rbAsan dt'call for redernpfion (offietthartby ? an try rg ing qnd redempption)5:acgeleration QQr,o~hey ~d~ancement-of matunty unlgss Finaggial , ' ' ecu "'sli I act in R~ 3D1$ dtscretign, to pa sucfh ptinclpat'due upon such`accejeratrontogether witFt y accrue in 'r ' t tolhe dete`of acceleYatlod and (b~ when ref~rring'td interest ore a Bond, payabfe'on S e stated. at or payment qt intergst: =,,"Nonpayrgent"; means„in respectrof,a Bond, the~fail4fe of the (s firer. to ave pYovided sufficientiunds to d1§ 7ri~stee or, if there is nq Tru'stee,' to the Paying Agent for ' p `men ri full of all principal and interest that is Due'for Paym~nt'oii such Bond. "Nonpayment" shall - ~ : ~ a,ls ude ~ ih; tespect •of a ~_Bond; any payrnan~~ of °principal or'intgrest that is. Due for Payment r : 1 1 _ ~ - Page 2 of 2 Policy No. -N i ^ ~ made_to an Owner by or on behalf of the Issuer which has,been'recover fr such.Ow r ursu to tlie' United'States Bankruptcy Code by a trustee in bankruptcy in accor nce wl h a'fin , no appea le order; of . a bourt having competehR jurisdiction.. ?'Notice": me s, leph n o eleco ed ' no i e, - - subsepUegtly,cgnfirmed in a signed writirig, or written nghce. b~ r t re qr,c ,rti ied ail, fro an Ow r; -the' TYustee or the Paying Ageht to ~iriancial Security which- tlce ti I spe i (a the pets n `ore ity + ~ , making Rhe claim,. (b), the. Policy Number, (c) the claimed o nt a (pthe d to uch i ed, mo nt became. Due for,Paylnent, ';Owner" rrfeahs;'in respect a o d,ah p rson r nti o a the ime of `Nonpayment, ~is:.entitled~under the termsof such Bontl p t! ent^t et o e c 't t t "O `h t' elf not ~ include the Issuer ocany person or. entity who dire qr in irept b g iq nstitutes h un dying ' SedurRy fof the Bonds. ' a 1. ~ - ~ „ ~ , , FinancialppSeourity may appo(nt a fiscal. ent (th ';I sq r,' F c. g Rt" f Gpurpo s o thi nlicy, . by givlrtg,vdritfen riotide fo the Trustee tl t aylrig nt I n t e a e nd ic'e~ad re f the Insurer'rFisce) ~+'gent: ' Front' and e ~ date. of r c pt'. ~ c n e y: h Tr tee~arid the P ing ~ 1 .Agent -(a), copies pf all noticgs f irgd q Qellvete. F) n lal gg rit pus ~ nt p th(s.pa cy h f be . ' slmuRehz;'dus delivered Fo t Insure scat en a d t ~ na t S un nd halhnof e' Ae ed x. 'R i receiv6d',ayyjttil4r@~~iveEf tiy;b "arid (b) aTl xay a t3~ a ire ~t .b a y- In hci ISe i. u 'er his t ~'s';; i ~ S~ounfyyaThe'[AsL eN ire~CS bAg InErl flit Sa t Ftn nci !n o ' ty n ~ g e I ure f isc' I"Ag la ~,.3 shalllnrlgl,everit"' I1a51 ;t any et-f re y,actq¢pi Ili d r Iscal get f2nyYfatlU f rianaal' Security to de jtorcau e b eposft ds fflclentfu s,t ak ~ay is u .~nder(hi I t t.a ~ t k' F 9 - t i f. 1. R . _ , a To full ;t~ext~nt a itt ~ by a II ~ lalaw,°~Fi an ial S r~ a ot~to'as'S ;arid Hereby < t i s waiv ,qo r jhe.bene R f c erA II rlg~iks,( ¢t e b un la ,setoff othervxise) and y _ + " def es cl f' "'Yho t ink ' rT,- de nee bffra d), th aeq i d su gati~n,'asSignrhent - 4 - or th~nyf$ ,*t tfi R en aE uch r sa d~1 5. a ails I a F ial 6ecunty.to(avoid , " , , p' menl of s` bli ~i ns es tFiis P' i iq cco a ' wit t e es si ns of this, Policy , ' " I x T P.o q s f, rth n 14the un a akl y o ffi lal a ur ; an all; not be modified, ahered or e ' s ` ~'a ec By f1 04 er agr a ~erit o ` st m2 , I lu n an'' od is 'nor amendment thereto. Except ' ' „ , 't th ~e t'e pfe y m d ed fame ors n4 a td, d) an 'pr$mlLiti paid ih respeof of th[sPOlicy~ " ? •1 , i p rs unda, g f r any a snn whatspe er, udi a @ f•prRVisfo0 heing,mad~fgr payment, of; t e s pri to matu tY lid b) thl3 licy may` of a n eled or revoked. THIS POLICY IS NO7' f OV~ft 8; Th`CE PI2~ P GgSa c INSU ~CUFtI;I'Y=FUND SPEGIFIED IN ARTICLE 76 - F3~EN OF2KI U ,hj ~ a r,: ~ w:.. ~ , 1, s 1.'f.fi t t In<`Nlthe S h off, fr.IN ALTS U I~Y~ EJRpNCE~(NGi lids caused this.Policy to be executed , z - f ;,;,o Its bghalf ,iks~ ythgnze Officery, y ; t ' j ~ ` . : , [Coun Ig t re) ~ , FINANCIAL $ECUE~ITY ASSURANCE INC ~ , s a E'- . ~ ~ , .f ~ , Authored gfficer _ . ti, subsidia o inanolal,SecurityAssurance HoldingsLtd...~ , - ~ i ~ (212).82f-01Q0 , - 3West Stfeet, New York, N:Y. 10015 , , Fo ONY{5/90) .i .r , , = `e , DISCLOSURE, NO DEFAULT AND TAX CERTIFICATE OF FINANCIAL SECURITY ASSURANCE INC. The undersigned hereby certifies on behalf of Financial Security Assurance Inc. ("Financial Security"), in connection with the issuance by Financial Security of its Policy No. 210455-N (the "Policy") in respect of the $5,300,000 in aggregate principal amount of Town of Southold, Suffolk County, New York Public Improvement Serial Bonds - 2008 maturing May 15 in the years 2019 through 2030, inclusive (the "Bonds") that: (i) The information contained in Appendix C set forth under the caption "BOND INSURANCE -Financial Security Assurance Inc." in the official statement datetl May 13, 2008, relating to the Bonds is true and correct, except as set forth in (ii) below. (ii) At March 31, 2006, Financial Security's consolidated policyholders' surplus and contingency reserves were approximately $3,012,872,486 and its total net unearned premium reserve was approximately $2,419,501.630 in accordance with statutory accounting principles. At March 31, 2008, Financial Security's consolidated shareholder's equity was approximately $3,053,752,711 and its total net unearned premium reserve was approximately $1,882,057,335 in accordance with generally accepted accounting principles. (iii) Financial Security is not currently in default nor has Financial Security ever been in default under any policy or obligation guaranteeing the payment of principal of or interest on an obligation, (iv) the Policy is an unconditional and recourse obligation of Financial Security (enforceable by or on behalf of the holders of the Bonds) to pay the scheduled principal of and interest on the Bonds in the event of Nonpayment by [he Issuer (asset forth in the Policy), (v) the insurance premium of $50,500.00 (the "Premium") is a charge for the transfer of credit risk and was determined in arm's length negotiations and is required to be paid to Financial Security as a condition to the issuance of the Policy, (vi) no portion of such Premium represents an indirect payment of costs of issuance, including rating agency fees, other than fees paid by Financial Security to maintain its ratings, which, together with all other overhead expenses of Financial Security, are taken into account in the formulation of its rate structure, or for the provision of additional services by us, nor the direct or indirect payment for a cost, risk or other element [hat is not customarily borne by insurers of tax-exempt bonds (in transactions in which the guarantor has no involvement other than as a guarantor), (vii) Financial Security is not providing any services in connection with the Bonds other than providing the Policy, and except for the Premium, Financial Security will not use any portion of the Bond proceeds; provided, however, that Financial Security or its affliates may independently provide a guaranteed investment contract for the investment of all or a portion of the proceeds of the Bonds, (viii) except for payments under the Policy in the case of Nonpayment by the Issuer, there is no obligation to pay any amount of principal or interest on the Bonds by Financial Security, (ix) Financial Security does notexpect that a Gaim will be matle on the Policy, (z) [he Issuer is not entitled to a refund of the premium for the Policy in the event a Bontl is retired before the final maturity date, and (xi) for Bonds which are secured by a deb[ service reserve, Financial Security would not have issued the Policy unless the authorizing or security agreement for the Bonds provided for a debt service reserve account or fund funded and maintained in an amount at least equal to, as of any particular date of computation, [he reserve requirement as set forth in such agreement. Financial Security makes no representation as to the nature of the interest to be paid on the Bonds or the treatment of the Policy under Section 1.148-4(f) of the Income Tax Regulations. FINANCIAL SECURITY ASSURANCE INC. i% By: Authorized Officer Dated: May 29, 2008 ~-~FSA ,t Dna+tn Cmmparry May 29, 2008 Municipal Bond Insurance Policv No. 210455-N with Respect to $5.300.000 in Aeereaate Principal Amounl of Town of Southold. Suffolk Countv New York Public Improvement Serial Bonds - 2008 maturing Mav 15 in the years 2019 through 2030 inclusive Ladies and Gentlemen: I am Associate General Counsel of Financial Security Assurance Inc., a New York stock insurance company ("Financial Security"). You have requested my opinion in such capacity as to the matters set forth below in connection with the issuance by Financial Security of its above-referenced policy (the "Policy"). In that regard, and for purposes of this opinion, I have examined such corporate records, documents and proceedings as I have deemed necessary and appropriate. Based upon the foregoing, I am of the opinion that: 1. Financial Security is a stock insurance company duly organized and validly existing under the laws of the State of New York and authorized to transact fnancial guaranty insurance business therein. 2. The Policy has been duly authorized, executed and delivered by Financial Security. 3. The Policy constitutes the valid and binding obligation of Financial Security, enforceable in accordance with its terms, subject, as to the enforcement of remedies, to bankruptcy, insolvency, reorganization, rehabilitation, moratorium and other similar laws affecting the enforceability of creditors' rights generally applicable in the event of the bankruptcy or insolvency of Financial Security and to the application of general principles of equity. In addition, please be advised that I have reviewed the description of the Policy contained in Appendix C under the caption "BOND INSURANCE -Bond Insurance Policy" in the official statement relating to the above-referenced Bonds dated May 13, 2008 (the "Official Statement"). There has not come to my attention any information which would cause me to believe that the description of the Policy referred to above, as of the date of the Offcial Statement or as of the date of this opinion, contains any untrue statement of a material fact or omits to state a material fact necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading. Please be advised that I express no opinion with respect to any information contained in, referred to or omitted from under the caption "BOND INSURANCE -Financial Security Assurance Inc." as set forth in Appendix C of the Official Statement. I am a member of the Bar of the State of New York, and do nol express any opinion as to any law other than the laws of the State of New York. Very truly yours, Associate General Counsel Town of Southold, 53095 Main Road, Southold, New York 11971. Roosevelt & Cross, Inc. and Associates, as Representative of the Underwriters, 55 Broadway, 22nd Floor, New York, New York 10006. {~'inmirinl Se~nn•iry Aecur:uue 3 ~ ~1"~ .i-nil :tn~rt .Ara lor6_ Acw Yurk a nne~ • `li~l' z ~ e.7Sefi o un~ . I'n c: e ~ z6ii7l_;j kn hark • 1)alLn ~ Jcm I~rnici ~ Londvn ~ lladrirl I ari? ~ Sin~(nl m:-SsiLrec ~ lirkpi NOTICE OF CLAIM AND CERTIFICATE Financial Security Assurance Inc. 31 West 52nd Street New York, NY 10019 The undersigned, a duly authorized officer of [FULL NAME OF TRUSTEE or PAYING AGENT) (the "Trustee/Paying Agent"), hereby certifes to Financial Security Assurance Inc. ("Financial Security"), with reference to Municipal Bond Insurance Policy No. 210455-N dated May 29, 20D8 (the "Policy") issued by Financial Security in respect of the Town of Southold, Suffolk County, New York Public Improvement Serial Bonds - 2008 maturing May 15 in the years 2019 through 2030, Inclusive (the "Bonds"), that: (i) The Trustee/Paying Agent is the Trustee/Paying Agent under the document authorizing the issuance of the Bonds (the "Indenture") for the Holders. (ii) The sum of all amounts on deposit (or scheduled to be on deposit) in the [RELEVANT ACCOUNTS] and available for distribution to the Holders pursuant to the Indenture will be $ (the "Shortfall") less than the aggregate amount of principal and interest Due for Payment on _("Scheduled Payments"). (iii) The Trustee/Paying Agent is making a claim under the Policy for the Shortfall to be applied to the payment of Scheduled Payments. (iv) The TrusteelPaying Agent agrees that, following receipt of funds from Financial Security, it shall (a) hold such amounts in trust and apply the same directly to the payment of Scheduled Payments on the Bonds when due; (b) not apply such funds for any other purpose; (c) not commingle such funds with other funds held by the Trustee/Paying Agent and (d) maintain an accurate record of such payments with respect to each Bond and the corresponding claim on the Policy and proceeds thereof, and, if the Bond is required to be [SURRENDERED/PRESENTED] far such payment, shall stamp on each such Bond the legend $"(insert applicable amount] paid by Financial Security and the balance hereof has been canceled and reissued" and then shall deliver such Bond to Financial Security. (v) The Trustee/Paying Agent, on behalf of the Holders, hereby assigns to Financial Security the rights of the Holders with respect to the Bonds to the extent of any payments under the Policy, including, without limitation, any amounts due to the Holders in respect of securities law violations arising from the offer and sale of the Bonds. The foregoing assignment is in addition to, and not in limitation of, rights of subrogation otherwise available to Financial Security in respect of such payments. Payments to Financial Security In respect of the foregoing assignment shall in all cases be subject to and subordinate to the rights of the Holders to receive all Scheduled Payments in respect of the Bonds. The Trustee/Paying Agent shall take such action and deliver such instruments as may be reasonably requested or required by Financial Security to effectuate the purpose or provisions of this clause (v). (vi) The Trustee/Paying Agent, on its behalf and on behalf of the Holders, hereby appoints Financial Security as agent and attorney-in-fact for the Trustee/Paying Agent and each such Holder in any legal proceeding with respell to the Bonds. The Trustee/Paying Agent hereby agrees that, so long as Financial Security shall not be in default in its payment obligations under the Policy, Financial Security may at any time during the continuation of any proceeding by or against the Issuer under the United States Bankruptcy Code or any other applicable bankruptcy, insolvency, receivership, rehabilitation or similar law (an "Insolvency Proceeding") direct all matters relating to such Insolvency Proceeding, including without limitation, (A) all matters relating to any claim in connection with an Insolvency Proceeding seeking the avoidance as a preferential transfer of any payment made with respect to the Bonds (a "Preference Claim"), {B) the direction of any appeal of any order relating to any Preference Claim at the expense of Financial Security but subject to reimbursement as provided in the Indenture and (C) the posting of any surety, supersedeas or performance bond pending any such appeal. In addition, the Trustee/Paying Agent hereby agrees that Financial Security shall be subrogated to, and the Trustee/Paying Agent on its behalf and on behalf of each Holder, hereby delegates and assigns, to the fullest extent permitted by law, the rights of the Trustee/Paying Agent and each Holder in the conduct of any Insolvency Proceeding, including, without limitation, all rights of any party to an adversary proceeding or action with respect to any court order issued in connection with any such Insolvency Proceeding. (vii) Payment should be made by wire transfer directed to [SPECIFY INSURANCE ACCOUNT]. Unless the context otherwise requires, capitalized terms used in this Notice of Claim and Certificate and not defned herein shall have the meanings provided in the Policy. IN WITNESS WHEREOF, the Trustee/Paying Agent has executed and delivered this Notice of Claim and Certificate as of the day of By Title For Financial Security or Fiscal Agent Use Only Wire transfer sent on By Confirmation Number -2- PROCEDURES FOR PREMIUM PAYMENT TO FINANCIAL SECURITY ASSURANCE INC. Financial Security's issuance of its municipal bond insurance policy at bond closing is contingent upon payment and receipt of the premium. NO POLICY MAY BE RELEASED UNTIL PAYMENT OF SUCH AMOUNT HAS BEEN CONFIRMED. Set forth below are the procedures to be followed for confirming the amount of the premium to be paid and for paying such amount: Confirmation of Upon determination of the final debt service Amount to be Paid: schedule, fax such schedule to Financial Security Attention: James Mann, Vice President Phone No.: (212) 339-3467 Fax No.: (212) 857-0448 Confirm with the individual in our underwriting department that you are in agreement with respect to par and premium on the transaction prior to the closing date. Payment Date: Date of Delivery of the insured bonds. Method of Payment: Wire transfer of Federal Funds. Wire Transfer Instructions: Bank: The Bank of New York ABA#: 021 000 018 Acct. Name: Financial Security Assurance Inc. Account No.: 8900297263 Policy No.: 210455-N CONFIRMATION OF PREMIUM WIRE NUMBER AT CLOSING Financial Security will accept as confirmation of the premium payment a wire transfer number and the name of the sending bank, to be communicated on the closing tlate to Lillie Santana, Assistant Vlce President Documentation and Closing Supervisor, (212) 339-3537. FINANCIAL MUNICIPAL BOND ~~r SECURITY INSURANCE POLICY ASSURANCE® iS'SUER: Tcvm at Sculhoid, Suffolk County, Nev+ Yodc PoBay Na.- 210455-N 60NDS: SS.300.000 In aggregate principal amount of Effective Date: May 29. 200II Public Improvement Serial Bonds - 2008 premium: 550,500.00 maturing May 16 in the years 2079 through 2030. ittalusive FINANCIAL SECUf9ITY ASSURANCE INC. i"Financial Security"), for cansiderttion :eceived. hereby UNCONDITIONAt_I.Y AND IRREVOCABLY agrees to pay to the trustee {the "Trustee") or paying agent (the 'Paying Agent") (as set faith In the rJocumantatlon providing for the issuance of and securing the Donds) Iar the Bonds, (or Oto benefit of the Owners or, al the election of Financial Security, directly to each Owner, subject only to the terms of this Policy (which includes each endorsement fteretoj, the! portion of the prinr,ipai of and interest on the Bonds that shall become Due for Payment but shall be ' anpaid Dy reason of Nonpayment by the Issuer. Ott the later of the day on which such principal and interest becomes Due for Payment or thr. Dusiness Day next lollowiny the Business Day on which Financial Socurity shall have received Notice of Nonpayment. Financial Security will disburse to or for the benefit of each Owner of a Bond the Lace amount of principal of and interest an the Bond chat Is then puo for Payment but is thou unpaid by mason ' of Nonpayment by the Issuer, but only upon receipt by Financial Security, in a form reasonably satisfactory to it, of (aj evidence at the Owners right to receive payment of the principal ar interest then Due for Payment and (b) evidence, including any approprate instruments a1 assignment, that all of the Owner's rights with respect to payment of such principal or interest that is Due for Payment shall thereupon vest in Financial Security. A Notice of Nonpayment will be deemed received on a given Business Day if it is received prior fo 1:00 p.m. {New York time) on such Business Day; oiharwfse, ii will be deemed received on the nexf Business Day. It any Notice of Nonpayment received by Financial Security is inoomplate, it shall be deemed not io have been raceivetl ny Financial Security for purposes of the preceding sentence and Financial Security shall promptly so advise the Trustee, Paying Agent or Owner, as appropriate, who may submit an amended Notice of Nonpayment. Upon disbursement in respect of a Bond, Financial Security shall become the owner of the Bond, any appunanant coupon to the Band or right io receipt of payment of prinoipai of or Interest on the Bond and shall be fully subrogated to the rights ai the Owner, including the Owner's right to receive payments under the Bond, to the extent of any {taymant Uy Financiaf Security hereunder. Payment by Financial Socurity io the Trustee ar Paying Agent for iho 17anofit of the Owners shall, to the extent thereof, discharge the obligation of Financial Securely under this Ppi(cy. Except to the extent expressly modified by an endorsement hereto, the loliawing terms shall have the meanings specitirri far all purposes of this Policy. "Dusiness Day" means any day other than (a) a Saturday or Sunday or (U) a tlay on which banking institutions In the State of New Yark or the Insurers Flsral Agent are authorized or required by law ar executive order to remain closed. "Duo for Paymonl" means (aj when referring to the principal of a Boncf, payable on the staters maturity date thereof ar the date on which the same shall have been duly called for mandatory sinking funtl redemption and does not refer to any ear{ier date on which paymont is duo by reason o1 call for redemption (other than by mandatory sinking fund redemption), acceleration or other advancement of maturity unless Financiers Security shall elect, in its sole discretion. to pay such principal due upon such acceleration fogother with any accrued (ntarasi to the date of acceleration and (b) when referring to interest an a Band, payable an the stated date for paymem of interest. "Nonpayment" means, in respect of a bond, iho failure of the Issuer to have provided sufficient funds to the Trustee or, it there is no Trustee. to She Paying Agent for payment in (u(1 of all principal and interest That is Uue for PaymaN on such Dond. "Nonpayment" shall also include, in r©spoct ai a bond. any payment of principal or interest that is Due for Payment made to an Owner by or on behalf of the issuer which has been recovered from such Owner pursuant to the Page 2 of 2 Policy No. 210455-N united Slates Bankruptcy Code by a trustee in bankruptcy in accardance with a final, nonappealable order of a court having eompatent judsdiciion. "Notice" means telephonic or telecopieU notice, subsequently eoniimted in a signed writing, or written notice by registered or certified mail, from an Owner, the Tnrslea or the Paying Agent to Financial Security which notice shalt spoclfy t,ai the person or entity making the claim, (b} the Policy Number, {c) the claimed amount and (d) the date such claimed amount bacarne Due for Paymonl. "Owner" means, in respect of a Bond. Iha person or entity who, at the 6me of Nonpayment, is entitled under the terms of such Bond to payment tbareo4 axt;epl that 'Owner" sha71 not 7noiurle the Issuer or any person or entity whose direct or inrliroct obligation constihrtas the tiuxiedyirxd secunly inr the bands. Financial Security may appo{M a 1i5cat agent (the'insuror's Fiscal Agent") far purposes of this Policy ny giving written not(na to iho Trustee and the Paying Agent spactfyfng the Warne anrJ notice address of the Insurer's Fiscal Agent. From and after the date of receipt of such notice by the Trustee and the Paying Agent, (a} copies of all notices required to bo delivered to Financial Securely pursuant to this Polioy shall be simuitanepusly tlelivared to the Insurer's Fiscal Agent and to Fittancial Security and shall not be deemed received until received by both and (b) all payments required to bn made by Financial Security under this Policy may be made directly by Financial Seourity or by the Insurer's Flscal ' Agent on behalf of Financial 5acurity. The Insurer's Fiscal Agent is the avant at Financial Security only and the Insurers Fiscal Agent shall in no event be liable to any Owner for any act at the Insurers Fiscal Agent or env failure et F4nanniaf Security to deposit or cause to be dopositect sufficient funds to make payments duo under this Policy. To iha lutlesl extent permitted by applicable law, Financaa! Security agrees not to asses, and hereby waives, only for lire benefit of each Owner, all rights (whother by countarciaim, setoff or otherwise) and defenses (inciudtny, without IimitaUon, the defense of fraud), whether acquired by subrogation, assignment nr othenvisa, to the extent that such rights anti defenses may ba avaUabie to Financial Security to avoid payment or its obligations under this Policy in accordance with the express provisions of this Polioy. This Policy sets forth in Tull the undertaking of Financia! Security, and shall not 6e modifed. altered or a11ec1ed by any other agreement ar instrument, including any modiitcaiian ar amendment thereto. Except to Iho oxtont expressly modified by an endorsement harem, (a) any premium paid in respect of this Policy is nonsefundahle for any reason whatsoever, including payment, br provision being made tar payment, of the bonds prior to maturity and {b) this Policy may not be canceled or revoked 7FiIS POLICY !S NOT COVERED BY THE PROPERTYlGA5UALTY INSURANCE SECURITY FUND SPECIFIED IN ARTICLE "15 OF "1"HE NEW YORK INSURANCE LAW. Ir. witness whnronl. FINANCIAL. SECURITY ASSURANCE INC. has caused this Policy to he executed on its behalf by ifs Authorized Officer. FtNANCtAL SECURITY ASSIiHAtJCE INC. Authorized Officer A subsidiary of Financial Security Assuranno Holdings Ltd. (2111 826-0700 3t West 5?_nd Street, Naw York. N.Y. 10019 Farm 500NV ;5790) Moody's Investors Service 7 World Trade Center at 250 Greenwich Street, New York, New York 10007 May 28, 2008 Financial Security Assurance, Inc 31 West 52nd Street New York, NY 10019 To Whom It May Concern: Moody's Investors Service has assigned the rating of Aaa to the $5,300,000.00, Town of Southold, Suffolk County, New York -Public Improvement Serial Bonds-2008 maturing May 15 in the years 2019 through 2030, inclusive, dated May 15, 2008 which sold on May 13, 2008, insured by Financial Security Assurance, Inc (Policy No. 210455-N). The rating is the highest of (i) the guarantor's financial strength rating, (ii) any published underlying rating on the security, or (iii) any published enhanced rating based on a state credit enhancement program. Should you have any questions regarding the above, please do not hesitate to contact Vincent Guadagno Jr. at (212) 553-2948. Sincerely yours, Joann Hempel Vice President /Senior Credit Officer JH/TM