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The Town Board of the
Town of Southold, in the
County of Suffolk, New York
December 16, 2008
Ladies and Gentlemen:
We have examined a record of proceedings relating to the issuance of the
$299,800 Bond Anticpation Note for Various Purposes-2008 of the Town of Southold, in the
County of Suffolk, a municipal corporation of the State of New York. Said Note is dated
December 16, 2008, matures September 4, 2009, is numbered 1, bears interest at the rate of three
per centum (3.00%) per annum, payable at maturity, is of the denomination of $299,800, is
payable to bearer without coupons and registrable as to both principal and interest, and is issued
pursuant to the provisions of the Local Finance Law, constituting Chapter 33-a of the
Consolidated Laws of the State of New York, the bond resolutions adopted by the Town Board
their respective dates, authorizing the issuance of serial bonds for various purposes, and the
Certificate of Determination executed by the Supervisor on December 16, 2008
Said bond anticipation note is a temporary obligation issued in anticipation of the
sale of permanent serial bonds.
In our opinion, the Note is a valid and legally binding general obligation of the
Town tbr which the Town has validly pledged its faith and credit and, unless paid from other
sources, all the taxable real property within the Town is subject to the levy of ad valorem real
estate taxes to pay the Note and interest thereon without limitation of rate or amount. The
enforceability of rights or remedies with respect to such Note may be limited by bankruptcy,
insolvency, or other laws affecting creditors' rights or remedies heretofore or hereafter enacted.
The Internal Revenue Code of 1986, as amended (the "Code"), establishes certain
requirements that must be met subsequent to the issuance and delivery of the Note in order that
interest on the Note be and remain excludable from gross income under Section 103 of the Code.
The Town Supervisor, in executing the Arbitrage and Use of Proceeds Certificate, has certified
to the effect that the Town will comply with the provisions and procedures set forth therein and
that it will do and perform all acts and things necessary or desirable to assure that interest paid on
the Note is excludable from gross income under Section 103 of the Code. We have examined
such Arbitrage and Use of Proceeds Certificate of the Town delivered concurrently with the
delivery of the Note, and in our opinion, such certificate contains provisions and procedures
under which such requirements can be met
In our opinion, under existing statutes and court decisions, (i) interest on the Note
is excluded from gross income for federal income tax purposes pursuant to Section 103 of the
Code, and (ii) interest on the Note is not treated as a preference item in calculating the alternative
minimum tax imposed on individuals and corporations under the Code; such interest, however, is
included in the adjusted current earnings of certain corporations for purposes of calculating the
alternative minimum tax imposed on such corporations. In rendering the opinion in this
paragraph, we have (i) relied on the representations, certifications of fact, and statements of
reasonable expectations made by the Town in the Arbitrage and Use of Proceeds Certificate and
other documents in connection with the Note, 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 Note from gross income under Section 103 of the Code
Further, in our opinion, under existing statutes, interest on the Note 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 Note. We render our opinion under existing statutes and
court decisions as of the issue date, and we assume no obligation to update our opinion after the
issue date to reflect any future action, fact or circumstance, or change in law or interpretation, or
otherwise. We express no opinion on the effect of any action hereafter taken or not taken in
reliance upon an opinion of other counsel on the exclusion from gross income for federal income
tax purposes of interest on the Note, or on the exemption from state and local tax law of interest
on the Note
Other than such record of proceedings, we have not been requested to examine or
review and have not examined or reviewed the accuracy or sufficiency of any additional
proceedings, reports, correspondence, financial statements or other documents, containing
financial or other information relative to the Town, which have been or may hereafter be
furnished or disclosed to purchasers of said Note, and we express no opinion with respect to any
such financial or other information or the accuracy or sufficiency thereo£
The form of said Note is prescribed by Schedule B, 2 of the Local Finance Law of
the State of New York, but we have not examined the executed Note
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,
No. I $299,800
UNITED STATES OF AMERICA
STATE OF NEW YORK
COUNTY OF SUFFOLK
TOWN OF SOUTHOLD
BOND ANTICPATION NOTE FOR VARIOUS PURPOSES-2008
The Town of Southold, in the County of Suflblk, a municipal corporation of the State of New
acknowledges itself indebted and for value received promises to pay to the bearer of this Note, or if it be
registered holder, the sum of TWO HUNDRED NINETY-NINE THOUSAND EIGHT HUNDRED DOLLARS ($299,800)
on the 4th day of September, 2009, together with interest thereon from the date hereof at the rate of three per centum (3.00%)
per annum, payable at maturity Both principal of and interest on this Note will be paid in lawful mone~
America, at Bridgehampton National Bank, Southold, New York
At the request of the holder, the Town Clerk shall convert this Note into a registered Note by registering it in the name
of the holder in the books of the Town kept in the office of such Town Clerk end endorsing a certificate of such registration
hereon, aRer which both principal of end interest on this Note shall be payable only to the registered holder, his legal
representatives, successors or transferees. This Note shall then be transferable only upon presentation to such Town Clerk with a
written transfar of title end such Town Clerk shall thereupon register this Note in the name of the transferee in his books end shall
endorse a certificate of such registration bereon~ Such transfer shall be dated, end signed by the registered holdeL or his legal
representatives, end it shall be duly acknowledged or proved, or in the alternative the signature thereto shall be certified as to its
genuineness by en officer ora bank or trust company located end authorized to do business in this State.
This Note is the only Note ofen authorized issue, the principal mount of which is $299,800.
This Note is issued pursuant to the provisions of the Local Finance Law, constituting Chapter 33-a of the Consolidated
Laws of the State of New York, two bond resolutions adopted by the Town Board on their respective dates, authorizing the
issuance of serial bonds for various purposes in end for the Town end the Certificate of Determination executed by the Supervisor
on December 16, 2008.
The faith end credit of such Town of Southold are hereby irrevocably pledged for the punctual payment of the principal
of and interest on this Note according to its terms.
It is hereby certified end recited that all conditions, acts and things required by the Constitution and statutes of the State
of New York to exist, to have happened end to have been performed precedent to and in the issuance of this Note, exist, have
happened and have been performed, end that this Note, together with all other indebtedness of such Town of Southold, is within
every debt end other limit prescribed by the Constitution end laws of such State.
IN WITNESS WHEREOF, the Town of Southold has caused this Note to be signed by its Supervisor, end its
corporate seal (or a facsimile thereof) to be affixed, imprinted, engraved, or otherwise reproduced hereon and attested by its
Town Clerk and this Note to be dated as of the 16th day of December, 2008.
(SEAL)
ATTEST:
~Town Clerk -
TOWN OF SOUTHOLD
CERTIFICATE OF DETERMINATION BY THE SUPERVISOR
RELATIVE TO AUTHORIZATION, SALE, ISSUANCE, FORM
AND CONTENTS OF THE $299,800 BOND ANTICIPATION
NOTE FOR VARIOUS PURPOSES-2008 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 Board of the Town, pursuant to the bond
resolutions duly adopted and as referred to in paragraphs 1 and 2 hereof, and subject to the
limitations prescribed in said bond resolutions, I have made the following determinations:
1. A bond anticipation note of the Town in the principal amount of $199,800
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
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.
2. A bond anticipation note of the Town in the principal amount of $100,000
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 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 Board on the date therein referred to.
3. Said $199,800 note and said $100,000 note shall be combined for the
purpose of sale into a single note issue in the aggregate principal amount of $299,800
(hereina~er referred to as the "Note").
534101 1 030898 CERT
4. The terms, form and details of said Note shall be as follows:
Amount and Title:
$299,800 Bond Anticpation Note for Various Purposes-
2008
Dated:
December 16 2008
Matures: September 4, 2009
Number and
Denomination:
Number 1, at $299,800
Interest Rate
per annum: 3.00%
Form of Note:
Substantially in accordance with form prescribed by
Schedule B, 2 of the Local Finance Law of the State of
New York.
5. Said Note is not issued in renewal of any note or notes.
6. The amount of bond anticipation notes originally issued in anticipation of
the issuance of serial bonds authorized pursuant to the resolutions referred to in paragraph 1 and
2, hereof, including the Note, are (1) $199,800 and (2) $590,000 and the respective amount of
bond anticipation notes which will be outstanding after the issuance of the Note, including said
Note, will be (1) $199,800 and (2) $590,000
7. The serial bonds authorized pursuant to the resolution referred to in
paragraphs 1 and 2 hereof, are for improvements which are assessable.
8. Pursuant to said powers and duties delegated to me, I DO HEREBY
AWARD AND SELL said Note to Bridgehampton National Bank, Southold, New York, for
the purchase price of $299,800, 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 Bridgehampton National Bank, Southold, New York, and shall bear
interest at the rate of three per centum (3.00%) per annum, payable at maturity.
9. Said Note shall be executed in the name of the Town by its Supervisor and
the corporate seal of the Town (or a facsimile thereof) shall be affixed, imprinted, engraved or
otherwise reproduced thereon and attested by its Town Clerk
I HEREBY FURTHER CERTIFY that the powers and duties delegated to me to
issue and sell the Note hereinabove referred to are in full force and effect and have not been
modified, amended or revoked.
1N WITNESS WHEREOF, I have hereunto set my hand this 16th day of
Supervisor
534101.1 030898 CERT
CLERK' S CERTIFICATE
I, Elizabeth A. Neville, Town Clerk of the Town of Southold, in the County of
Suffolk, New York, HEREBY CERTIFY that I have compared the foregoing copy of the
Certificate of Determination executed by the Supervisor and the same is a true and complete
copy of the Certificate filed with said Town in the office of the Town Clerk on or before the 16th
day of December, 2008; and
I FURTHER CERTIFY that no resolution electing to reassume any of the powers
or duties mentioned in said Certificate and delegated to the Supervisor by the resolutions cited in
said Certificate has been adopted by said Town Board.
IN WITNESS WHEREOF,
I have hereunto set my hand and affixed the
corporate seal of said Town as of the 16th day of
December, 2008
(SEAL)
Town Clerk
534101 1 030898 CERT
CERTIFICATES AS TO SIGNATURES, LITIGATION,
AND DELIVERY AND PAYMENT
WE, the undersigned officers of the Town of Southold, in the County of Suffolk,
a municipal corporation of the State of New York (herein referred to as the "Town"), HEREBY
CERTIFY that on or before December 16 2008, we officially signed and properly executed by
manual signatures the $299,800 Bond Anticpation Note for Various Purposes-2008 (the "Note")
of the Town, payable to bearer and otherwise described in Schedule A annexed hereto and by
this reference made a part hereof, and that at the time of such signing and execution and on the
date hereof we were and are the duly chosen, qualified and acting officers of the Town
authorized to execute said Note and holding the respective offices indicated by the titles set
opposite our signatures hereto for terms expiring on the respective dates set opposite such titles.
WE FURTHER CERTIFY that no litigation of any nature is now pending or
threatened restraining or enjoining the issuance or delivery of said Note or the levy or collection
of any taxes to pay the interest on or principal of said Note, or in any manner questioning the
authority or proceedings for the issuance of said Note or for the levy or collection of said taxes,
or relating to said Note or affecting the validity thereof or the levy or collection of said taxes,
that neither the corporate existence or boundaries of the Town nor the title of any of the present
officers thereof to their respective offices is being contested, and that no authority or proceedings
for the issuance of said Note has or have been repealed, revoked or rescinded.
WE FURTHER CERTIFY that the seal which is impressed upon this certificate
has been affixed, impressed, imprinted or otherwise reproduced upon said 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
December 16 2008, I delivered or caused the delivery of said Note to Bridgehampton National
Bank, Southold, New York, the purchaser thereof, and that at the time of such delivery of said
Note, I received from said purchaser the amount hereinbelow stated, in full payment for said
Note, computed as follows:
Price ..................................................................... $299,800.00
Interest on said Note accrued to the
date of such delivery ............................................
0.00
Amount Received .......................................... $299,800.00
534101.1 030898 CERT
1N WITNESS WHEREOF, we have hereunto set our hands and said corporate
seal has hereunto been affixed this 16th day of December, 2008.
Term of Office Expires
Da*r~,"o~-Z -5 zotl
Title
Supervisor
Town Clerk
(SEAL)
I HEREBY CERTIFY that the signatures of the officers of the above-named
Town, which appear above, are true and genuine and that I know said officers and know them to
~/~~pposite their signatures.
~ ! (gig~ture) "' (~le) ' ' ~amdo~Bank) '
534101 1 030898 CERT
ATTORNEY'S CERTIFICATE
I, Kieran M. Corcoran, HEREBY CERTIFY that I am a licensed attorney at law
of the State of New York, having offices at 53095 Main Road, Southold, New York, and am the
duly chosen, qualified and acting Assistant Town Attorney of the Town of Southold, in the
County of Suffolk, a municipal corporation of the State of New York (herein referred to as the
"Town"), that no litigation of any nature is now pending or threatened restraining or enjoining
the issuance or delivery of the Note of the Town, payable bearer and otherwise described as set
forth in Schedule A annexed hereto and by this reference made a part hereof or the levy or
collection of any taxes to pay the interest on or principal of said Note, or in any manner
questioning the authority or proceedings for the issuance of said Note or for the levy or
collection of said taxes, or relating to said Note or affecting the validity thereof or the levy or
collection of said taxes, that neither the corporate existence or boundaries of the Town nor the
title of any of the present officers thereof to their respective offices is being contested, and that
no authority or proceedings for the issuance of said Note has or have been repealed, revoked or
rescinded.
1N WITNESS WHEREOF,
I have hereunto set my hand this 16th day of
Attorney
534101 1 030898 CERT
SCHEDULE A
Amount and Title:
Dated:
Matures:
Number and
Denomination:
Interest Rate
per annum:
$299,800 Bond Anticipation Note for Various Purposes-2008
December 16 2008
September 4, 2009
Number 1, at $299,800
3.00%
534101 1 030898 CERT
AFFIDAVIT AS TO NO CONFLICT OF INTEREST
STATE OF NEW YORK
COUNTY OF SUFFOLK
Elizabeth A. Neville, being duly sworn upon her oath deposes and says:
1. I am the duly elected, qualified and acting Town Clerk of the Town of
Southold, in the County of Suffolk, New York (herein and in Schedule A annexed hereto called
the "Town!');
2. That with respect to the contract of sale of the Note of the Town described
in the Certificate of Determination executed by the Supervisor on the 16th day of December,
2008, to the financial institution indicated in such Certificate, I have made a careful inquiry of
each officer and employee of the Town having the power or duty to (a) negotiate, prepare,
authorize or approve the contract or authorize or approve payment thereunder, (b) audit bills or
claims under the contract, or (c) appoint an officer or employee who has any of the powers or
duties set forth above, as to whether or not such officer or employee has an interest (as defined
pursuant to Article 18 of the General Municipal Law) in such contract;
3. That upon information and belief, as a result of such inquiry, no such
officer or employee has any such interest in said contract unless otherwise noted in Schedule A
annexed hereto and by this reference made a part hereof
Town Clerk
Subscribed and sworn to before me
this /~ day of December, 2008.
LYNDA M BOHN
NOTARY PUBLIC, State of New York
NO. 01BO6020932, Suffolk Cppnty
Term Expires March 8, 20./J_
5341011 030898 CERT
SCHEDULE A
1 , is a stockholder of the Purchaser owning or
controlling, directly or indirectly, less than five per centum (5%) of the outstanding stock thereof
but no disclosure of such interest by said officer is required pursuant to said Law.
2. , has an interest in the Purchaser solely by reason
of employment as an officer or employee thereof, but the remuneration of such employment will
not be directly affected as a result of said contract and the duties of such employment do not
directly involve the procurement, preparation or performance of any such part of such contract.
3. _, has publicly disclosed the nature and extent of
such interest in writing to the governing board of the Town. Such written disclosure has been
made a part of and set forth in the official record of proceedings of the Town.
534101 1 030898 CERT
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 $299,800 Bond Anticipation Note for Various Purposes-2008
(hereinat'ter referred to as the "Note" or "Notes"), dated and issued on December 16 2008, as
follows:
Unless the context clearly requires otherwise, all capitalized terms used but not
otherwise defined herein shall have the meanings set forth in Article II hereof or in the
Resolution, the Code or the Regulations (each as defined below).
ARTICLE I
GENERAL
1 1 Authority of Signatory. I am an officer of the Issuer charged with the
responsibility for the execution, delivery and issuance of the Note and am acting for and on
behalf of the Issuer in signing this Arbitrage and Use of Proceeds Certificate (the "Certificate").
1.2 Description of Notes. The Issuer represents that the Note is sold at the
aggregate Issue Price and is further described as set forth in the Certificate of Determination of
the Issuer.
1.3 Purpose of Certificate. This Certificate is made for the purpose of
establishing evidence of the expectations of the Issuer as of the Issue Date as to future events
regarding the amount and use of proceeds of the Note. It is intended and may be relied upon for
purposes of Sections 103 and 141 through 150 of the Code, and as a certification described in
Section 1.148-2(b)(2) of the Regulations. This Certificate is executed and delivered as part of
the record of proceedings in connection with the issuance of the Note. The provisiohs of this
Certificate constitute a contractual obligation of the Issuer in consideration for the purchase of
and payment for the Note by the purchaser(s) thereof
1.4 No Hedge Bonds. The Issuer reasonably expects that 85% of the
Spendable Proceeds of the Note will be expended for governmental purposes within 3 years of
the Issue Date In addition, not more than 50% of the Proceeds of the Notes are being invested
in investments not acquired to carry out the governmental purposes of the issue at a guaranteed
yield for 4 years or more.
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 Note will not be used in a manner that would cause the Note to be an Arbitrage
Bond under Section 148 of the Code or a Private Activity Bond under Sections 103 and 141 of
the Code. To the best of my knowledge and belief, such expectation is reasonable and there are
no other facts, estimates or circumstances that would materially change that expectation.
1 6 No Composite Issue. No other tax-exempt governmental obligations have
been sold fewer than 15 days prior to, or will be sold fewer than 15 days after, the sale date of
5341011 030898 CERT
the Note, pursuant to the same plan of financing which are expected to be paid from substantially
the same source of funds as the Note.
1.7 Registration. The Note will be issued in registered form
1.8 No Federal Guarantee. The Issuer represents and covenants that, except
for the gross proceeds of the Note which are: (a) invested during the temporary period referred to
in Article III, (b) held in any refunding escrow or (c) invested in obligations of the United States
Treasury or in obligations issued pursuant to Section 2In(d)(3) of the Federal Home Loan Bank
Act, as amended by Section 511(a) of the Financial Institutions Reform, Recovery and
Enforcement Act of 1989, or any successor provision to Section 2 lB(d)(3) of the Federal Home
Loan Bank Act, as amended:
(i)
No portion of the payment of principal or interest with respect to the Note
is or will be guaranteed directly or indirectly by the United States or any
agency or instrumentality thereof (in this Certificate "federally
guaranteed"); and
(ii)
No portion of the Gross Proceeds of the Note in excess of five percent of
such Gross Proceeds is or will be (A) used in making loans the payment of
principal or interest with respect to which is to be federally guaranteed, or
03) invested directly or indirectly in federally insured deposits or
accounts.
1.9 Tax Representation. The Issuer expects to be able to and will comply with
all the procedures and provisions set forth in this Certificate, and will do and perform all acts and
things necessary and desirable within its reasonable control in order to assure that interest paid
on the Note will be excluded from gross income of the owners of the Note for the purpose of
federal income taxation.
1.10 Noncompliance. The Issuer shall perform each of the obligations
undertaken by it in this Certificate unless, in the written opinion of Bond Counsel,
noncompliance with such obligations will not cause interest on the Note to be included in gross
income for purposes of Federal income taxation.
1.11 Reliance by Bond Counsel. The representations of the Issuer expressed in
this Certificate may be relied upon by Bond Counsel in connection with the rendering of any
opinion with respect to the Note.
1.12 IRS Form 8038-G. The Issuer will file IRS Form 8038-G by the 15th day
of the second month after the calendar quarter in which the Note is issued, and such IRS Form
8038-G shall be included as part of the record of proceedings relating to the issuance of the Note.
534101 1 030898 CERT
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 bond resolutions duly adopted by
the Town Board on their respective dates (the "Resolutions"), as referred to in the Certificate of
Determination executed by the Supervisor as of December 16, 2008.
(b) For purposes of this Article II, the term "Original Proceeds" means the
Sale Proceeds received (or deemed to be received) by the Issuer from the sale of the Note, net of
the amount used or to be used for the payment of all costs and expenses associated with issuing
the Note, and excluding accrued interest.
2.2 Purpose of Issue. The Note is being issued to provide funds for various
purposes in and for the Town (referred to herein as the "Project" or "Projects"), as further
described in the Resolutions.
2.3 Use of Proceeds. The proceeds of the sale of the Note in the aggregate
principal amount of $299,800 will be used to provide original financing for the Project.
2.4 Ownership/Lease/Sale. The Project wilt 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
othenvise disposed of, in whole or in part, except for incidental sales of surplus items the
proceeds of which will not constitute net operating profits or net capital profits to the Issuer,
prior to the last maturity date of the Note,
2.5 Private Loans. Not more than the lesser of 5 percent or $5,000,000 of the
Proceeds of the Notes will be used directly or indirectly to make loans to persons other than a
state or local governmental unit.
2.6 Private Use. Either (a) the aggregate amount of the Proceeds of the Note
used directly or indirectly in a trade or business carried on by a person other than a state or local
governmental unit ("Private Use") will not exceed 10% of such Proceeds or (b) not more than
10% of the principal and interest due on the Note during the term of the Note, under the terms of
the Note or any underlying arrangement, directly or indirectly, (i) will be secured by any interest
in property used or to be used for a Private Use or in payments in respect of property used or to
be used for a Private Use, or (ii) will be derived from payments, whether or not to the Issuer, in
respect of property or borrowed money used or to be used for a Private Use.
2.7 Unrelated/Related Disproportionate Use. None of the Proceeds of the
Note will be used directly or indirectly in the trade or business of a person other than a state or
local governmental unit that is unrelated or related and disproportionate to the governmental use
of the property being financed, including any private loan financing described in Section 2.5
above which meets this test. For purposes of this Certificate, Proceeds of the Note are allocable
to an unrelated Private Use if such use is neither directly nor operationally related to a
governmental use and Proceeds of the Note are allocable to a disproportionate related Private
Use to the extent that the Proceeds of the Note which are to be used to finance property used by a
534101 1 030898 CERT
person other than a state or local governmental unit in a trade or business which is related to the
governmental use of the property referred to in Section 2.6 above, exceeds the Proceeds of the
Note which are to be used for the governmental use to which such Private Use relates
2.8 Private Use Defined. For purposes of Sections 2.6 and 2.7 above, unless
otherwise provided in this Certificate, a Private Use consists of any contract or other
arrangement including, without limitation, leases, management contracts, guarantee contracts,
take or pay contracts, or put or pay contracts, which provides for a use of the Project or any
portion of the Project by a person or persons who are not state or local governmental units on a
basis different than the general public. The Issuer has not and will not enter into any such
contract or arrangement without first consulting with Bond Counsel.
29 Reimbursement. Proceeds of the Note used to reimburse the Issuer for
amounts expended in anticipation of the issuance of the Note are considered expended on the
date of the reimbursement but only if (i) a declaration of intent to reimburse such expenditure is
made prior to or within 60 days after the date of the original expenditure (except for certain
preliminary expenditures described in Section 1.150-2(0(2)) of the Regulations), and (ii) the
reimbursement is made within 18 months of the later of the placed-in-service date of the Project
or the date of the original expenditure (but in no event more than three years after the original
expenditure was paid). Any such expenditures to be reimbursed must be Capital Expenditures.
The Issuer will not use any Proceeds of the Note for any reimbursement purpose that does not
otherwise qualify as an expenditure pursuant to Section 1.150-2 of the Regulations or prior law,
as applicable.
ARTICLE 11I
ARBITRAGE
3.1 Temporary Period. (a) The Issuer has entered into or will enter into
within six months from the date of this Certificate, binding commitment(s) for the acquisition,
construction or accomplishment of the Project, and the amount of such commitment(s) with
respect to such Project will or do exceed the amount equal to 5% of $299,800, being the
aggregate amount of obligations to be issued for such Project.
(b) In the event the Project has not been completed, work on the acquisition,
construction or accomplishment of such Project will proceed or is proceeding with due diligence
to completion and the final sales proceeds will be allocated to expenditures with due diligence.
(c) It is reasonably expected that at least 85 percent of the net sale proceeds of
such Notes will be expended within three years from the date of this Certificate. Accordingly,
the sale proceeds and investment proceeds of the Notes 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.
3.2
cost of the Project
No Excess Proceeds. The total proceeds of sale of do not exceed the total
534101 1 030898 CERT
3.3 Source of Repayment Funds. The Notes will be paid from taxes and other
revenues of the Issuer.
3.4 Debt Service Fund. The taxes used to pay principal and interest on the
Notes, 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 Notes. 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 Notes for the
immediately preceding bond year.
3.5 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 Notes.
3.6 Universal Cap. On each Valuation Date, the Issuer shall value the
Universal Cap and the Nonpurpose Investments allocable to the Notes 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 Notes under
the Universal Cap. Nonpurpose Investments cease to be allocated to the Notes to the extent such
Nonpurpose Investments have been expended for the governmental purpose of the issue, or to
the extent the value thereof exceeds the value permitted to be allocated to the issue under the
Universal Cap. To the extent Nonpurpose Investments cease to be allocated to an issue and the
value of the Universal Cap exceeds the value of the remaining Nonpurpose Investment allocated
to such issue, other Nonpurpose Investments may become allocated to the issue, provided that
such Nonpurpose Investments are not already properly allocated to another issue and provided
that such allocation does not cause the value of Nonpurpose Investments allocated to the Notes
to exceed the Universal Cap.
Generally, if Gross Proceeds of the Notes invested in Nonpurpose Investments
exceed the Universal Cap on a Valuation Date, such Nonpurpose Investments cease to be
allocated to the Notes 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 Notes.
Where a Nonpurpose Investment ceases to be allocated to the Notes, 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 Notes.
534101.1 030898 CERT
Notwithstanding anything herein to the contrary, the failure to perform the
determination of Nonpurpose Investments allocable to the Notes as of a Valuation Date shall not
be considered a violation of this provision if the value of Nonpurpose Investments allocated to
the Notes did not exceed the value of the Notes outstanding on such date.
3.7 Yield. When used in this Certificate, the term "Yield" means the
computation as described in Exhibit A and in connection with the Notes, 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 Notes is as shown in Form 8038-G.
3.8 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.
3.9 No Replacement Proceeds. The weighted average maturity of the Notes,
as set forth in the Form 8038-G, does not exceed 120 percent of the average reasonably expected
useful life of the Project.
3.10 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 Notes 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.
3.11 Rebate Options. With respect to the investment of the proceeds of the
Notes, the Issuer will:
(a) invest all gross proceeds at all times from the date hereof until expended
in investments not constituting investment property for purposes of Section 148 of the Code such
as obligations of a state or of a political subdivision of a state, the interest on which is excluded
from gross income for purposes of Federal income taxation under Section 103 of the Code and is
not a preference item for purposes 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 Notes, or
(c) comply with the provisions regarding rebate described in Article IV
below.
534101 1 030898 CERT
ARTICLE IV
Rebate
4 I Rebate Compliance. The Issuer understands that the continued non-
inclusion of interest on the Notes 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 Notes.
4.2 Rebate Requirement for the Notes. Section 148(0 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 Notes, together with any
income attributable to such excess. Except as provided below, all Gross Proceeds of the Notes
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 Notes, 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
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 Notes,
determined as of each Computation Date. To the extent amounts received from
investments are reinvested, these amounts may be netted against each other and not taken
into account in the Computation of Rebate Amount. The Issuer shall determine the
nonpurpose receipts and nonpurpose payments as described below.
(i)
Receipts. Receipts with respect to Nonpurpose Investments include (i)
actual receipts, amounts actually or constructively received with respect to
an investment, reduced by Qualified Administrative Expenses (ii)
disposition receipts, the Fair Market Value of investments deemed to be
sold on the date the investment ceases to be allocated to the issue, (except
534101 1 030898 CERT
that Present Value may be substituted for Fair Market Value with respect
to fixed yield investments, investments required to be yield restricted, and
investments transferring by virtue of the universal cap or transferred
proceeds rules) and (iii) Computation Date receipts, the Market Value
(Present Value, in the case of guaranteed investment contracts and fixed
rate investments) of all Nonpurpose Investments allocated to the issue at
the close of business on a Computation Date; and (iv) rebate receipts, any
recovery of an overpayment of rebate.
(ii)
Payments. Payments with respect to Nonpurpose Investments include
(i) direct payments, the amount of Gross Proceeds of the issue directly
used to purchase the investment, including Qualified Administrative
Costs; (ii) constructive payments, the Value of an investment allocated to
(but not directly purchased with) Gross Proceeds on the date so allocated;
(iii) Nonpurpose Investments allocated to an issue at the end of the
preceding Computation Period, at the value of the investments at the
beginning of the computation period; (iv) rebate payments, payments of
rebate amounts when due and yield reduction payments on Nonpurpose
Investments and (v) the Computation Date Credit.
(c) Exception for Gross Proceeds Entirely Spent Within Six Months.
Notwithstanding anything in this Section 4.2 to the contrary, if all of the Gross Proceeds
of the Notes (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 Notes 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 notes are not treated as expended on
the governmental purpose of the issue.
(d) Exception for Gross Proceeds Entirely Spent Within Eighteen Months.
Notwithstanding anything in this Section 4.2 to the contrary, if all of the Gross Proceeds
of the Notes (other than amounts on deposit in the Debt Service Fund or a reserve fund),
including investment earnings received with respect to all Funds and Accounts
comprising such issue except the Debt Service Fund, have been expended for the
governmental purpose of the issue in accordance with the following schedule after the
date of issue: 15% within 6 months, 60% within 12 months and 100% within 18 months,
then the only Nonpurpose Investments to be taken into account in the calculation of the
Rebate Amount with respect to the Non-Construction Notes 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
534101 1 030898 CERT
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 notes 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 4.2 to the contrary, for Construction
Bonds, if all of the Gross Proceeds of the Notes (other than amounts on deposit in the
Debt Service Fund or a reserve fund), including investment earnings received with
respect to all funds and accounts comprising such issue except the Debt Service Fund,
have been expended for the governmental purpose of the issue in accordance with the
following schedule after the date of issue: 10% within 6 months, 45% within 12 months,
75% within 18 months and 100% within 24 months, then the only Nonpurpose
Investments to be taken into account in the calculation of the Rebate Amount with respect
to the Non-Construction Notes 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 notes 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 $100,000
earnings limitation is deemed satisfied if the annual debt service on the issue does not
exceed $2,500,000. For purposes of this paragraph (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 Notes is at
least 5 years and the rates of interest do not vary during the term of the issue, then any
amount earned on a debt service fund (other than amounts representing accrued interest
or capitalized interest) shall not be taken into account in determining the Rebate Amount.
534101 1 030898 CERT
43 Payment to United States
(a) Unless the Notes 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 Notes,
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 Notes are
fully paid or redeemed, 100 percent of the Rebate Amount, less the Computation Date
Credit. If the final rebate payment is made within 60 days after the Final Computation
Date, interest on the Rebate Amount will be deemed to accrue at the underpayment rate
under Section 6201 of the Code, beginning on the date the Rebate Amount is due and
ending on the date 10 days before it is paid.
(b) The Issuer will mail each payment to the Internal Revenue Service Center,
Philadelphia, Pennsylvania 19255. Each payment shall be accompanied by the copy of
the Form 8038-T and the Form 8038-G or 8038-GC filed with respect to the Bond issue
and a statement identifying the issuer and the issue, including the CUSiP number for the
Bond with the latest maturity for which there is a CUSIP number.
4.4 Recordkeeping In connection with rebate requirement the Issuer will
maintain the following records:
(a) The Issuer will retain records of the determinations made pursuant to
Section 42 until six years alter the retirement of the last obligation of the issue~
(b) The Issuer will record all amounts paid to the United States pursuant to
Section 43.
.4.5 Fair Market Value. The Issuer will not acquire Nonpurpose Investments
at other than an arm's length, Fair Market Value price unless regulations addressing imputed
receipts have been promulgated by the Treasury.
(SEAL)
1NWITNESSWHEREOF,
I have hereunto set my hand and affixed the
corporate seal of said Town as of the 16th day of
December, 200~
SupC~-lsor - ~
534101.1 030898 CERT
Exhibit A
Definitions
(This exhibit includes definitions of certain terms which may not be used in the
Issuer's Arbitrage and Use of Proceeds Certificate)
"Available Construction Proceeds" means the Issue Price of the Construction
Bonds (i) plus earnings on the Issue Price and on amounts in any reserve fund not funded from
bond proceeds, and earnings on such earnings and (ii) less the amount of the Issue Price
representing a reasonably required reserve or replacement fund and costs of issuance funded with
proceeds received from the sale of the Note. For purposes of this definition earnings include
earnings on any tax-exempt bond. If only a portion of the Note constitutes Construction Bonds,
a pro-rata portion of the above-described amount will constitute available construction proceeds.
Pre-issuance accrued interest and earnings thereon may be disregarded.
"Bona Fide Debt Service Fund" means a fund, which may include proceeds of
an issue, that is used primarily to achieve a proper matching of revenues with principal and
interest payments within each Bond Year and is depleted at least once each Bond Year except for
a reasonable carry over amount (not in excess of the earnings on the fund for the immediately
preceding Bond Year or one-twelfth of the principal and interest payments on the issue for the
immediately preceding Bond Year).
"Bond Counsel" means any nationally recognized attorney or firm of attorneys,
knowledgeable in the requirements of the Code, and the Regulations, and retained by the Issuer.
"Bond Year" means each one-year period (or shorter period) from the date of
issue that ends at the close of business on the day in the calendar year selected by the Issuer
which day is no later than the last day within one year of the issue date of the Bonds.
"Capital Expenditure" means any costs ora type that is properly chargeable to
capital account (or would be so chargeable with a proper election or by virtue, based on all the
facts and circumstances, of a facility having reached a degree of completion which would permit
its operation at substantially its design level and the facility is, in fact, in operation at such level)
under general federal income tax principles, e.g., costs incurred to acquire, construct or improve
land, buildings, and equipment are generally capital expenditures. Whether an expenditure is a
capital expenditure is determined at the time the expenditure is paid with respect to the property.
Future changes in law do not affect whether an expenditure is a capital expenditure.
"Code" means the Internal Revenue Code of 1986, as amended.
"Computation Date" means any Installment Computation Date or the Final
Computation Date.
"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 Notes on a Computation Date other than the Final Computation Date, and $1,000 on the Final
Computation Date.
"Computation Period" means the period beginning on the day following a
Computation Date (or in the case of the first period, the date of issuance of the Notes) and ending
on the next succeeding Computation Date.
"Construction Bonds" means an issue in which all of the bonds are either (i)
Governmental Bonds; (ii) Qualified 501(c)(3) bonds or (iii) Private Activity Bonds to finance
property owned by a governmental unit or a 501(c)(3) organization, if at least 75 percent of the
Available Construction Proceeds of the issue are to be used, or are expected to be used for
Construction Expenditures for property which is owned by a governmental entity or a 501(c)(3)
organization.
"Construction Expenditures" means Capital Expenditures which are properly
chargeable to or may be capitalized as part of the basis of (a) real property other than
expenditures for the acquisition of any interest in land or any interest in real property other than
land, (b) Constructed Personal Property; or (c) specially developed computer software that is
functionally related and subordinate to real property or Constructed Personal Property.
Construction Costs may include the acquisition of an interest in real property (other than land) if
such acquisition is pursuant to a contract which requires the seller to build or install the property
(e.g., a "turnkey" contract) and the property has not been built or installed at the time the parties
enter into the contract. For purposes of this definition, real property means land improvements,
buildings, other inherently permanent structures, including items that are structural components
of such buildings or structures, wiring in a building, plumbing systems, central heating or central
air-conditioning systems, pipes or ducts, elevators or escalators installed in a building, paving
parking areas, roads, wharves and docks, bridges, and sewage lines.
"Fair Market Value" of an Investment shall have the following meanings:
(a) In General. Except as elsewhere specifically stated below, the Fair Market
Value of an Investment is the price at which a willing buyer would purchase the Investment from
a willing seller in a bona fide, arm's-length transaction.
(b) United States Treasury_ Obligation. The Fair Market Value of a United States
Treasury Obligation that is purchased directly from the United States Treasury is its purchase
price.
(c) Certificate of Deposit. The Fair Market Value of a certificate of deposit with a
fixed interest rate, a fixed payment schedule, and a substantial penalty for early withdrawal is its
purchase price provided, the Yield on the certificate of deposit is not less than (i) the Yield on
reasonably comparable direct obligations of the United States and (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 the administrative cost does not exceed the lesser of a reasonable
amount based on what would be charged for the same or comparable investment acquired with a
source of funds other than Gross Proceeds of tax exempt bonds or the Present Value of annual
payments equal to five one-hundredths of one percent (0.05%) of the weighted average amount
reasonably expected to be invested each year of the contract, it may be taken into account in
determining Yield, with the effect that it will increase the payments for, or decrease the receipts
from, Investments. For this purpose, Present Value is to be computed using the taxable discount
rate used by the parties to compute the commission or, if not readily ascertainable, a reasonable
taxable discount rate.
"Final Computation Date" means the day the last Bond that is part 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 Date" means December 16 2008, the date on which the Notes are
delivered to the underwriters and payment of the purchase price of the Notes is received by the
Issuer
"Issue Price" when used in connection with an issue of publicly offered
obligations (determined separately for obligations included in the issue that are not substantially
identical) is the first price at which at least ten percent of each maturity of each series of the
obligations are sold to the public. Bond house, brokers, or similar persons or organizations
acting in the capacity of underwriters or wholesalers are not included in the definition of
"public" for purposes of the preceding sentence. If the obligations are privately placed, the Issue
Price is the price paid for them by the first buyer. The Issue Price of obligations that are publicly
offered in a bona fide public offering is determined on the basis of actual facts and reasonable
circumstances existing on the sale date unadjusted for subsequent occurrences.
"Installment Computation Date" means the last day of the fifth Bond Year and
the last day of each succeeding fifth Bond Year (until and excluding the Final Computation
Date) and, if the Issuer so elects, the last day of any Bond Year.
"Investment" means (i) any security (within the meaning of Section 165(g)(2)(A)
or (B) of the Code, (ii) any obligation (other than tax-exempt obligations which are not
"specified private activity bonds" within the meaning of Section 57(a)(5)(C) of the Code), (iii)
any annuity contract within the meaning of Section 72 of the Code, (iv) any residential real
property for family units not located within the jurisdiction of the Issuer and which is not
required to implement a court-ordered or approved housing desegregation plan or (v) any
investment-type property that is held as a passive vehicle for the production of income, including
any prepayment for property or services if a principal purpose of prepayment is to receive an
investment return from the time the prepayment is made until the time payment would otherwise
have been made.
"Investment Proceeds" means any amounts actually or constructively received
from investing proceeds of the Notes.
"Issuer" means Town of Southold, in the County of Suffolk, New York.
"Multipurpose Issue" means an issue the proceeds of which are used for two or
more separate purposes determined in accordance with Section 1.148-9(h) of the Regulations.
"Net Sale Proceeds" means sale proceeds less the portion of those sale proceeds
invested in a reasonably required reserve or replacement fund or as part of a minor portion.
"Nonpurpose Investment" means any Investment in which Gross Proceeds are
invested and which is not acquired to carry out the governmental purpose of the issue.
"Note" or "Notes" means the $299,800 Bond Anticipation Note for Various
Purposes-2008, dated December 16 2008.
"Official Statement" means the Official Statement of the Issuer relating to the
Note, if any Official Statement has been prepared.
"Person" means any individual, corporation, partnership, joint venture,
association, joint stock company, trust, unincorporated organization or government or any
agency or political subdivision thereo£
"Plain Par Note" means a qualified tender bond or a bond that (i) is issued with
original issue discount equal to not more than 2 percent of the stated redemption price at maturity
plus the amount of original issue premium attributable exclusively to underwriters'
compensation, (ii) is issued for a price that does not include Pre-Issuance Accrued Interest,
(iii) bears interest from the issue date at a single stated fixed rate or is a variable rate obligation
under Section 1275 of the Code,, in either case, that pays interest unconditionally payable at least
annually, and (iv)has a lowest stated redemption price not less than its outstanding stated
principal amount.
"Plain Par Investment" means an investment that is an obligation that (i)is
issued with original issue discount (or if acquired on a date other than the issue date, acquired
with market discount or premium) equal to not more than 2 percent of the stated redemption
price at maturity, (ii) is issued for a price that does not include Pre-Issuance Accrued Interest,
(iii) bears interest from the issue date at a single stated fixed rate or is a variable rate obligation
under Section 1275 of the Code that pays interest unconditionally payable at least annually, and
(iv) has a lowest stated redemption price not less than its outstanding stated principal amount.
"Present Value" or "PV' means the amount determined by using the following
formula:
PV= FV
n
(l+i)
where FV equals Future Value, as defined herein, i equals the discount rate
divided by the number of compounding intervals in a year and n equals the sum of (i) the number
of whole compounding intervals for the period beginning on the date as of which Present Value
is computed and ending on the date the amount is to be received or paid or on a Computation
Date and (ii) a fraction the numerator of which is the length of any short compounding interval
during such period and the denominator of which is the length of a whole compounding interval.
"Private Activity Bonds" means bonds which meet the definition contained in
Section 141(a) of the Code and that are not "qualified bonds" as defined in Section 141(e) of the
Code.
"Project" means the projects referred to in the Resolution, which is being
financed by the Note.
"Qualified 501(c)(3) Bonds" means bonds which meet the definition contained
in Section 145 of the Code.
"Qualified Guarantee" means, with respect to a bond, an unconditional transfer,
in any form, of substantially all of the credit risk for all or part of the payments, such as
payments for principal and interest, redemption prices or tender prices, on the guaranteed bonds.
The guarantor must not expect to make any payments other than those pursuant to a direct-pay
letter of credit or similar arrangement for which the guarantor will be immediately reimbursed.
Reasonable procedural or administrative requirements or, in the case of a guarantee against
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.
"Rebate Amount" means with respect to the Notes, the amount computed as
described in Section 4.3 of the Certificate.
"Regulations" means the Income Tax Regulations promulgated under Sections
103 and 141 to 150 of the Code by the Department of the Treasury from time to time, including
the Regulations published on June 18, 1993 in the Federal Register, as they may be amended
from time to time.
"Replacement Proceeds" means amounts with a sufficiently direct nexus to the
Notes or Project to conclude that such amounts would have been used for the Project if the
proceeds of the Notes 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 Notes, and a bond-funded working capital reserve unless the Notes
qualify for one of the exceptions provided in the Regulations.
"Resolution" means the bond resolutions of the Issuer, as referred to in the
Certificate.
"Sale Proceeds" means any amounts actually or constructively received from the
sale of an issue, including amounts used to pay underwriters' discount or compensation, accrued
interest other than Pre-Issuance Accrued Interest, or derived from the sale of a right associated
with a bond as further described in Section 1.148-4(b)(4) of the Regulations.
"SLG" means a U.S. Treasury Book Entry Security, State and Local Government
Series.
"Spendable Proceeds" means sale proceeds, less the portion of those sale
proceeds invested in a reasonably required reserve or replacement fund under Section 148(d) of
the Code and as part of a minor portion under Section 148(e) of the Code.
"Transferred Proceeds" means unexpended original or investment proceeds of a
refunded issue which transfer and become proceeds of the refunding issue when proceeds of the
refunding issue are applied to pay principal of the refunded issue.
"Treasury" means the United States Department of Treasury.
"Universal Cap" means the maximum value of Nonpurpose Investments which
may be allocated to the Notes and is determined by reference to the Value of all outstanding
Notes 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 Notes 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 Notes; thereafter, the first day of each Note Year shall constitute a Valuation
Date. With respect to a refunding issue, each date on which proceeds of the refunded issue
would become transferred proceeds of the refunding issue, e.g each date on which principal of
the refunded issue is paid with proceeds of the refunding bonds, shall constitute a Valuation
Date. In addition, the first date of each Note Year shall also be a Valuation Date.
"Value" means, in the case of a Note, the Value of a Note and in the case of an
Investment, the Value of an Investment.
"Value of the Note" means, in the case of a Plain Par Note, its outstanding stated
principal amount, plus accrued unpaid interest or in the case of a Plain Par Note actually
redeemed, or treated as redeemed, its stated redemption price on the redemption date plus
accrued unpaid interest. In the case of a bond other than a Plain Par Note, the value on a date of
such a bond is its Present Value on that date, using the yield on the issue of which the bonds are
a part as the discount factor. In determining the Present Value of a variable rate bond, the initial
interest rate on the bond established by the index or other rate setting mechanism is used to
determine the interest payments on that bond.
"Value of an Investment" means, as of any date, unless the Investment is
required invested as a restricted yield, for any Investment, Fair Market Value as of that date; for
any fixed rate investment, Present Value on that date; and for any Plain Par Investment, the
outstanding stated principal amount, plus accrued unpaid interest, as of that date. Yield
restricted investments must be valued at Present Value, amounts allocated or that cease to be
allocated to an issue must be allocated at Fair Market Value, except in cases in which such
Nonpurpose Investments are allocated as a result of the Universal Cap or Transferred Proceeds
rules in which case they may be valued at Present Value, and amounts allocated to Transferred
Proceeds may not be valued in excess of the value used for arbitrage restrictions applicable to the
Refunded Issue
"Working Capital Expenditure" means any cost of a type that does not
constitute a Capital Expenditure.
"Yield" means, as of any Computation Date, that discount rate that, when used in
computing the Present Value of (i) all unconditionally payable payments of principal and interest
of or on the bonds included in such fixed yield issue, (ii) all unconditionally payable fees for
Qualified Guarantees and Qualified Hedges on such bonds and (iii) all fees expected to be paid
for Qualified Guarantees and Qualified Hedges, produces an amount equal to the sum of the
Present Value of the aggregate Issue Prices of the bonds comprising the issue (determined using
the same discount rate used to determine the Present Value of payments for principal, interest
and Qualified Hedges and Qualified Guarantees). The Yield is computed as of the issue date of
the fixed yield issue by treating each bond included in the issue that is either subject to
mandatory or contingent early redemption or to certain optional redemption provisions as being
redeemed on its expected early redemption date for an amount equal to its Value on that date. If
a fixed yield bond (i) is subject to optional redemptions within 5 years of its issue date and the
Yield not taking into account the optional redemption is more than 1/8 of 1% above its Yield
assuming the early redemption, (ii) is issued at an Issue Price that exceeds the stated redemption
price at maturity by more than 1/4 of 1% multiplied by the product of the stated redemption price
to maturity and the number of complete years to the first optional redemption date for the bond,
or (iii) bears interest at increasing interest rates, the Yield on the issue including such fixed yield
bond is computed by treating the fixed yield bond as redeemed at its stated redemption price on
the optional redemption date that produces the lowest Yield on the issue. No adjustment will be
made on any Computation Date to the Yield on a fixed yield issue as computed on its issue date
unless redemption rights are subsequently transferred to a third party or termination payments
are received with respect to Qualified Hedges. The Yield on a fixed yield bond is calculated in
the same manner as Yield on a fixed yield issue.