NEW ISSUE ROOSEVELT & CROSS, INC. AND ASSOCIATES. Coiu

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1 MUNICIPAL FINANCE NEW ISSUE OFFICIAL STATEMENT KROLL INSURED RATING AA+ (STABLE OUTLOOK) S&P INSURED RATING AA (STABLE OUTLOOK) S&P UNDERLYING RATING A+ (STABLE OUTLOOK) SERIAL BONDS In the opinion of Bond Counsel, under existing statutes, regulations, administrative rulings, and court decisions, and assuming continuing compliance by the Village with its covenants relating to certain requirements contained in the Internal Revenue Code of 1986, as amended (the Code, and the accuracy of certain representations made by the Village, interest on the Bonds is excluded from gross income of the owners thereof for Federal income tax purposes, and is not an item of tax preference for purposes of the Federal alternative minimum tax imposed on individuals and corporations; interest on the Bonds is, howeve,; included in adjusted current earnings for purposes of calculating the Federal alternative minimum tax imposed on certain corporations. Bond Counsel is also of the opinion that under existing statutes interest on the Bonds is exempt from personal income taxes imposed by the State of New York or any political subdivision thereof (including The City of New York). No opinion is expressed regarding other Federal or State tax consequences arising with respect to the Bonds. See TAX MATTERS herein. Code. The Bonds will be designated or deemed designated by the Village as qualified tax-exempt obligations pursuant to Section 265(b)(3) of the $6,865,000 VILLAGE OF BATH STEUBEN COUNTY, NEW YORK General Obligation Bonds $6,865,000 Public Improvement (Serial) Bonds, 2015 Dated: Date of Delivery Due: May 15, 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, New York, New York, ( DTC ) which will act as securities depository for the Bonds (see BOOK-ENTRY-ONLY SYSTEM herein). Individual purchases will be made in book-entry-only form, in the principal amount of $5,000 or integral multiples thereof. Purchasers will not receive certificates representing their ownership interest in the Bonds. The Bonds bear interest from the date of delivery thereof, with interest thereon payable on May 15, 2015, November 15, 2015 and semi-annually thereafter on each May 15 and November15 until maturity. Principal and interest will be paid by the Village to DTC, which will in turn remit such principal and interest to its Participants for subsequent distribution to the Beneficial Owners of the Bonds as described herein. The Record Date for the Bonds shall be the last business day of the calendar month preceding each payment date. Such Bonds mature on May 15 each year, as set forth below. MATURITIES CUSIP BASE # YEAR CUSIP AMOUNT RATE YIELD YEAR CUSIP AMOUNT RATE YIELD YEAR CUSIP AMOUNT RATE YIELD 2015 DL7 $370, % 0.300% 2024 DV5 $270, % 1850% 2033 EE2 $270, % 3.150% 2016 DM5 215, % 0.400% 2025 DW3 210, % 2000% 2034 EF9 280, % 3.200% 2017 DN3 225, % 0.700% 2026 DX1 220, % 2.250% 2035 EG7 290, % 3.230% 2018 DP8 230, % 0.900% 2027 DY % 2.500% 2036 EH5 295, % 3.250% % 1.100% 2028 DZ6 235, % 2750% 2037 Eli 305, % 3.300% 2020 DR4 245, % 1.300% 2029 EAO % 2900% 2038 EK8 315, % 3.350% 2021 DS2 250, % 1.450% 2030 E88 245, % 3.000% 2039 EL6 325, % 3.380% 2022 DTO 255, % 1.600% 2031 EC6 255, % 3.050% 2040 EM4 335, % 3.400% 2023 DU7 265, % 1.700% 2032 ED4 260, % 3.100% The scheduled payment of principal of and interest on the Bonds when due will be guaranteed under a municipal bond insurance policy to be issued concurrently with the delivery of the Bonds by MUNICIPAL ASSURANCE CORP. Mui.acni. ASSuRANcE Coiu Bonds maturing on or before May 15, 2023 are not subject to redemption prior to maturity. Bonds maturing on or after May 15, 2024 are subject to redemption, at the option of the Village, prior to maturity, in whole or in part, on any interest payment date on or after May 15, 2023, at par, plus accrued interest to the redemption date. All of the Bonds are general obligations of the Village of Bath, Steuben County, New York. All the taxable real property within the Village is subject to the levy of ad valorem taxes to pay the Bonds and interest thereon subject to certain statutory limitations imposed by Chapter 97 of the Laws of 2011 of the State of New York (see REAL PROPERTY TAX CAP herein). The Bonds are offered when, as and if issued and received by the purchasers and subject to the receipt of an approving legal opinion as to the validity of the Bonds of Hams Beach PLLC, Rochester, New York, Bond Counsel. It is anticipated that the Bonds will be available for delivery in escrow to DTC one day in advance of the date of delivery of the Bonds. The closing will be in New York, New York on April 14, March 25, 2015 Municipal Assurance Corp. ( MAC ) makes no representation regarding the Bonds or the advisability of investing in the Bonds. In addition, MAC has not independently verified, makes no representation regarding, and does not accept any responsibility for the accuracy or completeness of this Official Statement or any information or disclosure contained herein, or omitted herefrom, other than with respect to the accuracy of the information regarding MAC supplied by MAC and presented under the heading Bond Insurance and Appendix A - Specimen Municipal Bond Insurance Policy. ROOSEVELT & CROSS, INC. AND ASSOCIATES

2 No person has been authorized by the Village of Bath to give any information or to make any representations not contained in this Official Statement, and, if given or made, such information or representation must not be relied upon as having been authorized. This Official Statement does not constitute an offer to sell or solicitation of an offer to buy any of the Bonds in any jurisdiction to any person to whom it is unlawful to make such offer or solicitation or sale in such jurisdiction. The information, estimates and expressions of opinion herein are subject to change without notice, and neither the delivery of this Official Statement nor any sale made hereunder shall, under any circumstances, create any implication that there has been no change in the affairs of the Village of Bath since the date hereof. TABLE OF CONTENTS Description of the Bonds 3 Book-Entry-Only System 4 Certificated Bonds 5 Authorization and Purpose 6 Status of Projects 6 Remaining Bond Authorizations 6 Future Construction Plans 7 General Information 7 Bond Rating 7 General Location Map Village of Bath 8 Municipal Officials 9 Form of Village Government 10 Financial Organization 10 Budgetary Procedures 10 Employee Contracts 11 Status and Financing of Employee Pension Benefits 11 Other Post-Employment Benefits 13 Investment Policy 14 Major Employers 14 Unemployment Rates 15 Fiscal Stress Monitonng 15 Building Permits 16 Contracts with Other Municipalities 17 Other Information 17 Financial Audits 17 Financial Information 18 Statement of Net Position 19 Statement of Activities 20 General Fund - General Fund - Electric Fund - Electric Fund - Comparative Revenues, Comparative Revenues, Balance Sheet 21 Expenses and Fund Balance 22 Balance Sheet 23 Expenses and Fund Balance 24 Changes in Remaining Fund Balances 25 Tax Collection Procedure 26 Real Property Tax Cap 26 Tax Collection Record 28 Major Taxpayers 29 Village Indebtedness - Village Indebtedness - Constitutional Statutory Requirements 30 Procedure 31 Status of Short-Term Indebtedness 32 Status of Outstanding Bond Issues 33 Principal and Purposes of This Issue 35 Bond Principal Maturing in Current and Subsequent Fiscal Years 36 Debt Statement Summary 37 Estimated Calculation of Overlapping Indebtedness 38 Litigation 38 Special Provisions Affecting Remedies Upon Default 39 Market Factors Affecting Financings of the State and Municipalities of the State 39 Legal Matters 40 Tax Matters 41 Continuing Disclosure Undertaking 42 Miscellaneous 43 Bond Insurance 44 Appendix A Specimen Bond Insurance Policy A-I Prepared with the Assistance of: BERNARD P. DONEGAN, INC. P0 Box 70, Victor, New York (585)

3 OFFICIAL STATEMENT VILLAGE OF BATH STEUBEN COUNTY, NEW YORK Relating to $6,865,000 Public Improvement (Serial) Bonds, 2015 This Official Statement (the Official Statement ), which includes the cover page, has been prepared by the Village of Bath, Steuben County, New York (the Village, the County and the State, respectively) in connection with the sale by the Village of $6,865,000 Public Improvement (Serial) Bonds, 2015 (the Bonds ). This Official Statement is hereby deemed final by the Village within the meaning of, and for the purposes of, paragraph (b)(1) of Securities and Exchange Commission Rule 15c2-12. DESCRIPTION OF THE BONDS The Bonds contain a pledge of faith and credit of the Village for the payment of the principal of and interest on the Bonds as required by the Constitution and laws of the State of New York (State Constitution, Article VIII, Section 2; Local Finance Law, Section ). All the taxable real property within the Village is subject to the levy of ad valorem taxes to pay the Bonds and interest thereon, subject to certain statutory limitations imposed by Chapter 97 of the Laws of 2011 of the State of New York (see REAL PROPERTY TAX CAP herein). The Bonds comprise an issue in the principal amount of $6,865,000, will be dated April 14, 2015, and mature in annual installments on May 15 in the following years and amounts: MATURITIES 2015 $ 370, $ 255, $ 240, $ 290, , , , , , , , , , , , , , , , , , , , , , ,000 Bonds maturing on or before May 15, 2023 are not subject to redemption prior to maturity. Bonds maturing on or after May 15, 2024 are subject to redemption, at the option of the Village, prior to maturity, in whole or in part, on any interest payment date on or after May 15, 2023, at par, plus accrued interest to the redemption date. If less than all of the Bonds of any maturity are to be redeemed, the particular Bonds of such maturity to be redeemed shall be selected by lot in any customary manner of selection as determined by the Treasurer of the Village. Notice of such call for redemption shall be given by mailing such notice to the registered holder not more than sixty (60) days nor less than thirty (30) days prior to such date. Notice of redemption having been given as aforesaid, the Bonds so called for redemption shall, on the date for redemption set forth in such call for redemption, become due and payable together with interest to such redemption date. Interest shall cease to be paid thereon after such redemption date. 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, New York, New York ( DTC ), which will act as securities depository for the Bonds (see BOOK-ENTRY-ONLY SYSTEM herein). Individual purchases will be made in book-entry only form, in the principal amount of $5,000 or integral multiples thereof. Purchasers will not receive certificates representing their ownership interest in the Bonds. Principal and interest will be paid by the Village to DTC, which will in turn remit such principal and interest to its Participants, for subsequent distribution to the Beneficial Owners of the Bonds, as described herein. The Bonds bear interest from their date of delivery, with interest thereon payable on May 15, 2015, November 15, 2015 and semi-annually thereafter on each May 15 and November 15 until maturity. The Record Date for the Bonds shall be the last business day of the calendar month preceding each payment date. The Bonds may not be registered to bearer or converted to coupon bonds. 3

4 BOOK-ENTRY-ONLY SYSTEM The Depository Trust Company ( DTC ), New York, New York, will act as securities depository for the Bonds. The Bonds will be issued as fully-registered Bonds registered in the name of Cede & Co. (DTC s partnership nominee) or such other name as may be requested by an authorized representative of DTC. Upon issuance of the Bonds, one fully registered bond certificate will be issued for each maturity of the Bonds, in the aggregate principal amount of such issue, and will be deposited with DTC. DTC, the world s largest security depository, is a limited-purpose trust company organized under the New York Banking Law, a banking organization within the meaning of the New York Banking Law, a member of the Federal Reserve System, a clearing corporation within the meaning of the New York Uniform Commercial Code, and a clearing agency registered pursuant to the provisions of Section 17A of the Securities Exchange Act of DTC holds and provides asset servicing for over 3.5 million issues of U.S. and non-u.s. equity issues, corporate and municipal debt issues, and money market instruments (from over 100 countries) that DTC s participants ( Direct Participants ) deposit with DTC. DTC also facilitates the post-trade settlement among Direct Participants of sales and other securities transactions in deposited securities, through electronic computerized book-entry transfers and pledges between Direct Participants accounts. This eliminates the need for physical movement of securities certificates. Direct Participants include both U.S. and non-u.s. securities brokers and dealers, banks, trust companies, clearing corporations, and certain other organizations. DTC is a wholly-owned subsidiary of The Depository Trust & Clearing Corporation ( DTCC ). DTCC is the holding company for DTC, National Securities Clearing Corporation ( NSCC ) and Fixed Income Clearing Corporation ( FICC ), all of which are registered clearing agencies. DTCC is owned by the users of its regulated subsidiaries. Access to the DTC system is also available to others such as both US. and non-u.s. securities brokers and dealers, banks, trust companies and clearing corporations that clear through or maintain a custodial relationship with a Direct Participant, either directly or indirectly ( Indirect Participants ). DTC has a Standard & Poor s rating of AA. The DTC Rules applicable to its Participants are on file with the Securities and Exchange Commission. More information about DTC can be found at Purchases of Bonds under the DTC system must be made by or through Direct Participants, which will receive a credit for the Bonds on DTC s records. The ownership interest of each actual purchaser of each Bond ( Beneficial Owner ) is in turn to be recorded on the Direct and Indirect Participants records. Beneficial Owners will not receive written confirmation from DTC of their purchase. Beneficial Owners are, however, expected to receive written confirmations providing details of the transaction, as well as periodic statements of their holdings, from the Direct or Indirect Participant through which the Beneficial Owner entered into the transaction. Transfers of ownership interests in the Bonds are to be accomplished by entries made on the books of Direct and Indirect Participants acting on behalf of Beneficial Owners. Beneficial Owners will not receive certificates representing their ownership interests in the 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 Participants with DTC are registered in the name of DTC s partnership nominee, Cede & Co., or such other name as may be requested by an authorized representative of DTC. The deposit of Bonds with DTC and their registration in the name of Cede & Co. or such other DTC nominee do not effect any change in beneficial ownership. DTC has no knowledge of the actual Beneficial Owners of the Bonds; DTC s records reflect only the identity of the Direct 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 Participants to Beneficial Owners will be governed by arrangements among them, subject to any statutory or regulatory requirements as may be in effect from time to time. If applicable, 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. Neither DTC nor Cede & Co. (nor any other DTC nominee) will consent or vote with respect to the Bonds unless authorized by a Direct Participant in accordance with DTC s MMI Procedures. Under its usual procedures, DTC mails an Omnibus Proxy to the Village as soon as possible after the record date. The Omnibus Proxy assigns Cede & Co. s consenting or voting rights to those Direct Participants to whose accounts Bonds are credited on the record date (identified in a listing attached to the Omnibus Proxy). Redemption proceeds, and principal and interest payments on the Bonds will be made to Cede & Co., or such other nominee as may be requested by an authorized representative of DTC. DTC s practice is to credit Direct Participants accounts upon DTCs receipt of funds and corresponding detail information from the Village, on 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 securities held for the accounts of customers in bearer Concluded on following page. 4

5 BOOK-ENTRY-ONLY SYSTEM - Concluded form or registered in street name, and will be the responsibility of such Participant and not of DTC (nor its nominee), or the Village, subject to any statutory or regulatory requirements as may be in effect from time to time. Payment of redemption proceeds, principal and interest payments to Cede & Co. (or such other nominee as may be requested by an authorized representative of DTC) is the responsibility of the Village, disbursement of such payments to Direct Participants will be the 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 Village. Under such circumstances, in the event that a successor securities depository is not obtained, bond certificates are required to be printed and delivered (see CERTIFICATED BONDS herein). The Village may decide to discontinue use of the system of book-entry-only transfers through DTC (or a successor securities depository). In that event, bond certificates will be printed and delivered to DTC. The information in this section concerning DTC and DTC s book-entry system has been obtained from sources that the Village believes to be reliable, but the Village takes no responsibility for the accuracy thereof. Source: The Depository Trust Company, New York, New York. THE VILLAGE CANNOT AND DOES NOT GIVE ANY ASSURANCES THAT DTC, DIRECT PARTICIPANTS OR INDIRECT PARTICIPANTS OF DTC WILL DISTRIBUTE TO THE BENEFICIAL OWNERS OF THE BONDS (I) PAYMENTS OF PRINCIPAL OF OR INTEREST OR REDEMPTION PREMIUM ON THE BONDS, (II) CONFIRMATIONS OF THEIR OWNERSHIP INTERESTS IN THE BONDS, OR (III) OTHER NOTICES SENT TO DTC OR CEDE & CO., ITS PARTNERSHIP NOMINEE, AS THE REGISTERED OWNER OF THE BONDS, OR THAT THEY WILL DO SO ON A TIMELY BASIS, OR THAT DTC, DIRECT PARTICIPANTS OR INDIRECT PARTICIPANTS WILL SERVE AND ACT IN THE MANNER DESCRIBED IN THIS OFFICIAL STATEMENT. THE VILLAGE WILL NOT HAVE ANY RESPONSIBILITY OR OBLIGATIONS TO DTC, THE DIRECT PARTICIPANTS, THE INDTRECT PARTICIPANTS OF DTC OR THE BENEFICIAL OWNERS WITH RESPECT TO (I) THE ACCURACY OF ANY RECORDS MAINTAINED BY DTC OR ANY DIRECT PARTICIPANTS OR INDIRECT PARTICIPANTS OF DTC; (II) THE PAYMENT BY DTC OR ANY DIRECT PARTICIPANTS OR INDIRECT PARTICIPANTS OF DTC OF ANY AMOUNT DUE TO ANY BENEFICIAL OWNER IN RESPECT OF THE PRINCIPAL AMOUNT OF OR INTEREST OR REDEMPTION PREMIUM ON THE BONDS; (III) THE DELIVERY BY DTC OR ANY DIRECT PARTICIPANTS OR INDIRECT PARTICIPANTS OF DTC OF ANY NOTICE TO ANY BENEFICIAL OWNER THAT IS REQUIRED OR PERMITTED TO BE GIVEN TO OWNERS; OR (IV) ANY CONSENT GIVEN OR OTHER ACTION TAKEN BY DTC AS THE REGISTERED HOLDER OF THE BONDS. THE INFORMATION CONTAINED HEREIN CONCERNING DTC AND ITS BOOK-ENTRY SYSTEM HAS BEEN OBTAINED FROM DTC AND THE VILLAGE MAKES NO REPRESENTATION AS TO THE COMPLETENESS OR THE ACCURACY OF SUCH INFORMATION OR AS TO THE ABSENCE OF MATERIAL ADVERSE CHANGES IN SUCH INFORMATION SUBSEQUENT TO THE DATE HEREOF. CERTIFICATED BONDS In the event that the book-entry-only system is discontinued, the following provisions will apply: the Bonds will be issued in fully registered form in denominations of $5,000 each or any integral multiple thereof for any single maturity. Principal of the Bonds when due will be payable upon presentation at the office of a bank or trust company located and authorized to do business in the State of New York to be named as the fiscal agent by the Village upon termination of the book-entry-only system. Interest on the Bonds will remain payable May 15, 2015, November 15, 2015 and semi-annually thereafter on May 15 and November 15, in each year to maturity. Interest on the Bonds will be payable by check or draft mailed by the fiscal agent to the registered owners of the Bonds, as shown on the registration books of the Village maintained by the fiscal agent as of the close of business on the Record Date, being the last business day of the calendar month preceding each interest payment date. Bonds may be transferred or exchanged at no cost to the registered owner for Bonds of the same maturity or any other authorized denomination or denominations in the same aggregate principal amount in the manner described on the Bonds and as referenced in certain proceedings of the Village referred to therein. 5

6 AUTHORIZATION AND PURPOSE The Bonds are issued pursuant to the Constitution and statutes of the State of New York, including among others, the Village Law and the Local Finance Law, for the following purposes: The expansion, upgrade and improvement of the Village s electrical system pursuant to a Bond Resolution adopted by the Board of Trustees of the Village on May 17, 2010, as amended and restated on March 18, 2013 authorizing the issuance of $7,400,000 serial bonds, of which the Village is now issuing $6,340,000 serial bonds, and The improvement of the Village s municipal parking lot pursuant to a Bond Resolution adopted by the Board of Trustees of the Village on October 22, 2014 authorizing the issuance of $800,000 serial bonds, of which the Village is now issuing $525,000 serial bonds. Against the March 18, 2013 Resolution, there are currently outstanding $6,340,000 Bond Anticipation Notes, maturing May 22, Said Notes will be paid in full with a portion ($6,340,000) of the proceeds of this issue. The remaining portion ($525,000) of this issue represents the first issuance of indebtedness against the October 22, 2014 Resolution. STATUS OF PROJECT In 2008, the Village chose to follow the recommendation from PLM Engineering regarding the electric distribution system upgrade from 4kV to 12.47kV system. The Project is approximately 95% complete. The new substation was energized on April 16, A subsequent conversion of the distribution system was completed on May 19, The work completed has converted approximately 65% of the Village to 12.5kV. Remaining work to be completed prior to project closeout is landscaping around substation, as well as fuse coordination work for the new 12.5kV distribution circuits. Remaining conversion work will be completed as a separate project toward the end of The improvements to the Village of Bath s Municipal Parking Lot consisting of repaving of the parking lot, drainage improvements and repairs, improvements to the existing bus stop, lighting and access improvements. Construction contracts have been awarded and construction will begin as soon as possible. All construction should be completed by the end of summer REMAINING BOND AUTHORIZATIONS On January 6, 2014, the Village Board of Trustees adopted a Bond Resolution for a $15,500,000 Wastewater Treatment Facility Improvement Project. The Village is in the process of applying to NYS Environmental Facilities Corporation for the financing on this project. As of the date of this Official Statement, there are no final plans on when, or if, the Village will proceed with, or receive funds for, this project. 6

7 FUTURE CONSTRUCTION PLANS Bath Electric, Gas, Water and Sewer ( BEGWS ) is currently planning on implementing a smart grid in the Village and Town of Bath for the customers it serves. The plan involves a combination of renewable and conventional energy generation, load management, and energy conservation measures. Combining energy generation capability with load management will enable BEGWS to provide safe reliable energy to BEGWS customers at stable energy rates. Specific initiatives to be completed in the next five years are as follows: Transform Waste Water Treatment Plant into a Resource Recovery Hub Install Advanced Metering Infrastructure to all electric, gas and water meters Install renewable energies as opportunities are provided through grants or economic advantage Install approximately 5MW of either CHP or Distributive electric generation Install energy efficient technologies and equipment Manufactured gas plant evaluation and remediation Gas Pipe Replacement - Replace natural gas distribution pipe which is reaching the end of its useful life. Up to 5000 per year for approximately 15 years could be replaced Convert remainder of Electric System to 12.5kv GENERAL INFORMATION The Village of Bath is located in the heart of Steuben County, approximately 75 miles south of Rochester and 20 miles west of Corning. The Village was founded in 1793; was originally incorporated in 1816 but was not organized until The Village is the Steuben County seat and has an estimated population of 5,786 (2010 U.S. Census). The Village is adjacent to Interstate 86 (the Southern Tier Expressway ), a few miles east of the split with Interstate 390. NYS Route 54 intersects NYS Route 415 in the Village. County Roads 10 and 13 also lead into the Village. Interstate 390 provides easy access to Rochester, Corning, Elmira and Binghamton. Bus service is readily available and air transportation is available at the Elmira-Corning Regional Airport as well as in Rochester and Syracuse. Major employers of Village residents include Steuben County, Bath Central School District and the Bath Veteran s Affairs Medical Center. The Village supplies gas, electricity and water to many of the Village residents. A Village police department, supplemented by the Steuben County Sheriff s Department and the New York State Police, provides police protection. The Bath Central School District provides public education for grades K-12 in three buildings located in the Village. Higher educational opportunities are available nearby at Alfred University, the State University of New York campuses at Alfred and Geneseo, Elmira College, St. Bonaventure University, Keuka College and Houghton College. Village residents are afforded all the usual commercial services and the Village is served by Five Star Bank, Chemung Canal Trust Company, Community Bank, N.A. and Steuben Trust Company. Recreational facilities include the Finger Lakes Region to the north and the Watkins Glen, Letchworth and Stony Brook State Parks. Two ski centers are also located within an hour s drive of the Village. BOND RATING Standard & Poor s Ratings Services ( S & P ) and Kroll Bond Rating Agency, Inc. ( KBRA ) are each expected to assign the Bonds the rating of AA (stable outlook) and AA+ (stable outlook) respectively, based on the understanding that the standard municipal bond insurance policy of Municipal Assurance Corp. (MAC ), insuring the timely payment of principal of and interest due with respect to the Bonds, will be issued by MAC upon the issuance of the Bonds (for further details see Appendix A ). S & P is also expected to assign an underlying rating to the Bonds of A+ (stable outlook). Such ratings reflect only the view of such organization and an explanation of the significance of such ratings may be obtained from such rating agency as follows: Standard & Poor s Ratings Services, 55 Water Street, New York, New York 10041, (212) There is no assurance that such ratings will continue for any given period of time or that either or both of such ratings will not be revised downward or withdrawn entirely if, in the judgment of S & P, circumstances so warrant. Any such downward revision or withdrawal of any such rating may have an effect on the market price of the Bonds. 7

8 GENERAL LOCATION MAP - VILLAGE OF BATH 8

9 Electric Sewer MUNICIPAL OFFICIALS Name Title Expires William von Hagn Mayor Jeanne Glass Mark Bardeen Deputy Mayor/Trustee Trustee Mike McNally Trustee Mike Sweet Jacqueline Shroyer Stephany Bartusiak Harold Rodbourn Guy Hallgren Jim Housworth VACANT James H. Burns Chauncey Watches Chad Mullen Patrick McAllister, Esq. PLM Electric Power Engineering MRB Group Engineering, Architecture & Surveying, P.C. Bonadlo & Co., LLP Harris Beach, PLLC Bernard P. Donegan, Inc. Trustee Clerk/Treasurer Deputy Clerk/Treasurer Chairman, Municipal Utility Commission Director of Municipal Utilities Accounting Supervisor of Municipal Utilities Assistant to Director of Municipal Utilities Justice Justice Chief of Police Village Attorney Project Engineer Project Engineers Project Project Certified Public Accountants Bond Counsel Financial Consultants

10 FORM OF VILLAGE GOVERNMENT Subject Finance Law and other laws generally applicable to the Village and any special laws applicable to the provisions of the State Constitution, the Village operates pursuant to the Village Law, the Local the Village. to The chief executive officer of the Village succeed himself. He is is the Mayor, who also a member of the Board of Trustees. is In elected for a term of two years and is eligible addition to the Mayor, there are four Trustees who are elected for two-year terms. Elections are held every other year The Mayor and Trustees are elected at large. The terms are staggered so that every year two Trustees run for election. The Mayor, with the approval of the Board of Trustees, appoints the Clerk/Treasurer for a two-year term. to FINANCIAL ORGANIZATION fiscal officer The administrative responsibility for the Village is the Treasurer, who is is vested also the accounting and budget officer. in the Mayor. who is also the budget officer. The chief BUDGETARY PROCEDURES public hearing is The Mayor, with the assistance of the Clerk/Treasurer, prepares a preliminary budget each year, on which a is held on or before April adopted by the Board of Trustees on or before May subject to referendum. 15. Subsequent to the public hearing, revisions, 1 as its if any, are made and the budget final budget for the coming fiscal year. The Budget is not or The Village receives financial assistance from the State. In the Village s Budget, approximately 5.24% $234,909 of the operating revenues of the General Fund are estimated to be received from the State as State aid. borrowing funds municipalities and school districts the State should experience difficulty aid delay to in Additionally, the receipt of State aid if until in in anticipation of the receipt order the State, including the Village, any year, the Village may be affected in in of State taxes in to If pay State sufficient State taxes have been received by the State to make State aid payments. the State should not adopt including the Village, may be affected by a delay its budget in in a timely manner, municipalities and school districts the payment of State aid. in by a the State, particularly The State in is not constitutionally obligated to maintain or continue State aid to the Village. Accordingly, light of the difficulties encountered by the State may continue, no assurance can be given that present State aid levels in recent years will in balancing be maintained in budget, which problems the future. State budgeting restrictions which eliminated or substantially reduced State aid could have an adverse effect upon the Village, requiring either a counterbalancing increase expenditures. in revenues from other sources to the extent available, or its a curtailment of 10

11 EMPLOYEE CONTRACTS Number of Employees Association Periods Covered Covered Affiliation Police Benevolent Association / NONE Teamsters / AFLICO The Village currently has 22 full-time and 17 part-time employees. Note. 1 The Village is currently negotiating with the Association. STATUS AND FINANCING OF EMPLOYEE PENSION BENEFITS All employees of the Village eligible for pension or retirement benefits under the Retirement and Social Security Law of the State of New York are members of the New York State and Local Employees Retirement System (the ERS ) or the New York State and Local Police and Fire Retirement System (the PFRS ). In the Village s Budget, the appropriation for payments to the New York State and Local Employees Retirement System is $145,000, while the appropriation for payments to the Police and Fire Retirement System is $230,000. The ERS is non-contributory with respect to members hired prior to July 27, Other than as described below with respect to employees who are members of Tier V and Tier VI, all members hired on or after July 27, 1976 with less than 10 years of full-time service must contribute 3% of their gross annual salary toward the cost of the retirement programs. Members of the Police and Fire Retirement System are not required to contribute. The investment of monies, and assumptions underlying same, of the Retirement Systems covering the Village employees is not subject to the direction of the Village. Thus, it is not possible to predict, control or prepare for future unfunded accrued actuarial liabilities of the Retirement Systems ( UAALs ). The UAAL is the difference between total actuarially accrued liabilities and actuarially calculated assets available for the payment of such benefits. The UAAL is based on assumptions as to retirement age, mortality, projected salary increases attributed to inflation, across-the-board raises and merit raises, increases in retirement benefits, cost-of-living adjustments, valuation of current assets, investment return and other matters. Such UAALs could be substantial in the future, requiring significantly increased contributions from the Village which could affect other budgetary matters. Concerned investors should contact the Retirement Systems administrative staff for further information on the latest actuarial valuations of the Retirement Systems. In 2003, Chapter 49 of the Laws of 2003 amended the Retirement and Social Security Law and the Local Finance Law ( Chapter 49 ). Chapter 49 empowered the State Comptroller to implement a comprehensive structural reform program for the ERS The reform program established a minimum contribution for any local governmental employer equal to 4.5% of pensionable salaries for bills which were due December 15, 2003 and for all fiscal years thereafter, as a minimum annual contribution where the actual rate would otherwise be 4.5% or less due to the investment performance of the fund. In addition, the reform program instituted a billing system to match the budget cycle of municipalities and school districts that will advise such employers over one year in advance concerning actual pension contribution rates for the next annual billing cycle. Under the previous method, the requisite ERS contributions for a fiscal year could not be determined until after the local budget adoption process was complete. Under Chapter 49, a contribution for a given fiscal year is now based on the valuation of the pension fund on the prior April 1 of the calendar year preceding the contribution due date instead of the following April 1 in the year of contribution so that the exact amount may now be included in a budget. On July 20, 2004 Chapter 260 of the Laws of 2004 ( Chapter 260 ) was enacted amending the New York State General Municipal Law, Local Finance Law and the Retirement and Social Security Law. Chapter 260 contained three components which altered the way municipalities and school districts contribute to the State pension system: (1) revision of the payment due date, (2) extension of the period of time for pension debt amortization, and (3) authorization to establish a pension reserve fund. Prior to the effective date of Chapter 260, the Continued on following page. 11

12 STATUS AND FINANCING OF EMPLOYEE PENSION BENEFITS - Continued annual retirement bill sent to municipalities and school districts from the State had reflected pension payments due between April 1 and March 31 consistent with the State fiscal year. Chapter 260 provided for the following changes: Contribution Payment Date Change: The law changed the date on which local pension contributions are due to the State. The annual required contribution is now due February 1 annually instead of December 15. Pension Cost Amortization-Extension of Payout Period: The law also extended the ability of municipalities and school districts to amortize a portion of the current year pension cost over a period of 10 years, extending the term from five years as authorized under Chapter 49. Municipalities and school districts could choose to amortize, either directly through the State retirement system at a fixed interest rate annually determined by the State Comptroller or through the capital markets, pension payments in excess of 9.5% in 2006 and 10.5% in Pension Contributions Reserve Fund: The law created special authorization to create a new category of reserve fund under the General Municipal Law. Municipalities and school districts may now establish a retirement contribution reserve fund that can be funded from other available current government resources. On December 10, 2009, legislation was signed into law that created a new Tier V pension level. Key components of Tier V include: Raising the minimum age at which most civilians can retire without penalty from 55 to 62 and imposing a penalty of up to 38% for any civilian who retires prior to age 62. Requiring employees to continue contributing 3% of their salaries toward pension costs so long as they accumulate additional pension credits. Increasing the minimum years of service required to draw a pension from 5 years to 10 years. Capping the amount of overtime that can be considered in the calculation of pension benefits for civilians at $15,000 per year, and for police and firefighters at 15% of non-overtime wages. In accordance with constitutional requirements, Tier V applies only to public employees hired after December31, 2009 and before April 2, On March 16, 2012 legislation was signed into law that created a new Tier VI pension level. only applies to those employees hired on or after April 1, The Tier VI plan Below is a brief summary (compiled from information provided by the Governor s office) highlighting a number of components from the Tier VI legislation: The employee contribution rates vary based on a salary sliding scale from 3% to 6% of salary. Under previous tiers, there was no limit to the number of public employers a public employee worked for from which retirement benefits could be calculated. Tier VI permits only two salaries to be included in the calculation. The legislation includes an optional defined contribution plan for new non-union employees with annual salaries of $75,000 and over. The employer will make an 8% contribution to employee contribution accounts. This is a voluntary option for those employees. The new tier increases the minimum retirement age from 62 to 63 and allows for early retirement with penalties. There will be a permanent reduction of a pension payout for each year a person retires prior to age 63. The pension multiplier for Tier VI is 1.75% for the first 20 years of service and 2% starting in the 21st year. Employees will vest after 10 years of service. This is not a change from Tier V. The number of sick and leave days that can be applied toward retirement service credit is reduced from 200 to 100. The final average salary is based on a five-year average instead of the previous Tiers three-year average. The annual growth in salary used to determine pension allowances is capped at 10% of the average salary of the previous four years (lump sum payments of unused sick and vacation time are eliminated from the calculation). Pension eligible overtime for civilian and non-uniformed employees will be capped at $15,000 plus inflation. For uniformed employees (primarily police and fire) outside of New York City, the cap is set at 15% of base pay. The State is required to fund any pension enhancements on an ongoing basis. This is a potential future cost savings for local governments. On September 2, 2014, the State Comptroller announced that for the fiscal year the average contribution rate for the ERS will decrease from 20.1% of salaries to 18.2% of salaries. The average contribution rate for the PFRS will decrease from 27.6% to 24.7%. Concluded on following page. 12

13 STATUS AND FINANCING OF EMPLOYEE PENSION BENEFITS - Concluded The State Enacted Budget included a provision that provides local governments and school districts, including the Village, with the option to lock-in long-term, stable rate pension contributions for a period of years determined by the State Comptroller and TRS. The stable rates would be 12% for ERS and 14% for TRS for and ; and beyond are subject to adjustment. The pension contribution rates under this program will reduce near-term payments for employers, but will require higher than normal contributions in later years. This provision describes this savings as a spin up of future savings from the implementation of Tier VI of the State Retirement System last year. The Village has determined that it will not avail itself of this option. OTHER POST-EMPLOYMENT BENEFITS School districts and Boards of Cooperative Education Services, unlike other municipal units of government in the State, have been prohibited from reducing health benefits received by or increasing health care contributions paid by retirees below the level of benefits or contributions afforded to or required from active employees. Legislative attempts to provide similar protection to retirees of other local units of government in the State have not succeeded as of this date. Nevertheless, many such retirees of all varieties of municipal units in the State do presently receive such benefits. The Village provides post-retirement healthcare benefits to various categories of former employees. These costs may be expected to rise substantially in the future. GASB Statement No. 45 ( GASB 45 ) of the Governmental Accounting Standards Board ( GASB ) requires governmental entities, such as the Village, to account for the cost of certain non-pension post-employment benefits as it accounts for vested pension benefits. GASB 45 and OPEB. OPEB refers to other post-employment benefits, meaning other than pension benefits. OPEB consists primarily of health care benefits, and may include other benefits such as disability benefits and life insurance. Before GASB 45, OPEB costs were generally accounted for and managed as current expenses in the year paid and were not reported as a liability on governmental financial statements. GASB 45 requires municipalities and school districts to account for OPEB liabilities 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 the fact that most municipalities and school districts have not set aside any funds against this liability. Unlike GASB Statement No. 27, which covers accounting for pensions, GASB 45 does not require municipalities or school districts to report a net OPEB obligation at the start. Under GASB 45, based on actuarial valuation, an annual required contribution ( ARC ) will be determined for each municipality or school district. The ARC is the sum of (a) the normal cost for the year (the present value of future benefits being earned by current employees) plus (b) amortization of the unfunded accrued liability (benefits already earned by current and former employees but not yet provided for), using an amortization period of not more than 30 years. If a municipality or school district contributes an amount less than the ARC, a net OPEB obligation will result, which is required to be recorded as a liability on its financial statements. GASB 45 does not require that the unfunded liability actually be amortized nor that it be advance funded, only that the municipality or school district account for its unfunded accrued liability and compliance in meeting its ARC. Based on the most recent actuarial evaluation dated June 1, 2013 and financial data as of May 31, 2014, the actuarial accrued liability (AAL), the portion of the actuarial present value of the total future benefits based on the employees service rendered to the measurement date, is $4,672,070. The actuarial value of the Plan s assets was $0, resulting in an unfunded actuarial accrued liability (UAAL) of $4,672,070. The Village s beginning year Net OPEB obligation was $776,248. The Village s annual OPEB expense was $334,439 and is equal to the adjusted annual required contribution (ARC). The Village is on a pay-as-you-go funding basis and paid $316,549 to the Plan for the fiscal year ending May 31, 2014, resulting in a net increase to its unfunded OPEB obligation of $17,890 for a fiscal year ending May 31, 2014 total net unfunded OPEB obligation of $794,138, The aforementioned liability and ARC are recognized and disclosed in accordance with GASB 45 standards in the Village s May 31, 2014 financial statements. There is no authority in current State law to establish a trust account or reserve fund for this liability. The Village s unfunded actuarial accrued OPEB liability could have a material adverse impact upon the Village s finances and could force the Village to reduce services, raise taxes or both. Actuarial valuation will be required every two years for OPEB plans with more than 200 members, or every three years if there are less than 200 members. Additional information about GASB 45 and other accounting rules applicable to municipalities and school districts may be obtained from GASB. 13

14 INVESTMENT POLICY Pursuant to the statutes of the State of New York, the Village is permitted to invest only in the following investments: (1) special time deposit accounts in, certificates of deposit issued by or deposit placement program (as provided by statute) with a bank or trust company located and authorized to do business in the State of New York; (2) obligations of the United States of America; (3) obligations guaranteed by agencies of the United States of America where the payment of principal and interest is guaranteed by the United States of America; (4) obligations of the State of New York; (5) obligations issued pursuant to Local Finance Law Sections (tax anticipation notes) or (revenue anticipation notes) with approval of the State Comptroller, by any municipality, school district or district corporation other than the Village; and (6) in the case of the Village moneys held in certain reserve funds established pursuant to law, obligations issued by the Village. These statutes further require that all bank deposits, in excess of the amount insured under the Federal Deposit Insurance Act, be secured by a pledge of eligible securities, an eligible letter of credit, an eligible surety bond or a deposit placement program that meets the requirements of state law, as each such term is defined in the law, or satisfy the statutory requirements of the deposit placement program. Consistent with the above statutory limitations, t is the Villages current policy to invest in: (1) certificates of deposit or time deposit accounts that are fully secured as required by statute, (2) obligations of the United States of America or (3) obligations guaranteed by agencies of the United States of America where the payment of principal and interest is guaranteed by the United States of America. In the case of obligations of the United States government, the Village may purchase such obligations pursuant to a written repurchase agreement that requires the purchased securities to be delivered to a third party custodian. MAJOR EMPLOYERS Approximate Name Type of Number of Product or Service Employees Steuben County Municipal Government 973 Bath VA Medical Center Government Hospital 609 Bath Central School District Public Education 302 Ira Davenport Hospital Hospital

15 UNEMPLOYMENT RATES Unemployment statistics are not available for the Village as such. The smallest area for which such statistics are available (which includes the Village) is Steuben County. The data set forth below with respect to the County is included for information purposes only. It should not be inferred from the inclusion of such data in this Official Statement that the Village is necessarily representative of the County or vice versa. County New York State U.S. Unemployment Unemployment Unemployment % 5.8% 5.5% % 5.0% 5 1% % 4.6% 4.6% % 4.6% 4.6% % 5.4% 5.8% % 8.3% 9.3% % 8.6% 9.6% % 8.2% 8.9% % 8.5% 8.1% % 7.7% 7.4% Source: New York State Department of Labor, abstracted April Rates shown are not seasonally adjusted. FISCAL STRESS MONITORING The New York State Office of the State Comptroller ( OSC ) has developed a Fiscal Stress Monitoring System (FSMS ) to provide independent information to Village officials, taxpayers and policy makers regarding the various levels of fiscal stress under which the State s diverse villages are operating. The fiscal stress scores are based on financial information submitted as part of each Village s Annual Financial Report Update Document filed yearly with the Office of the State Comptroller. Using financial indicators that include May 31, 2014 year-end fund balance, cash position and patterns of operating deficits, the OSC system creates an overall fiscal stress score which classifies whether a district is in significant fiscal stress, in moderate fiscal stress, as susceptible to fiscal stress or no designation. Entities that do not accumulate the number of points that would place them in a stress category will receive a financial score but will be classified in a category of no designation. This classification should not be interpreted to imply that the entity is completely free of fiscal stress conditions. Rather, the entity s financial information, when objectively scored according to the FSMS criteria, did not generate sufficient points to place them in one of the three established stress categories. The report of the State Comptroller using financial indicators through May 31, 2014 designates the Village as No Designation. For a complete list of municipal fiscal stress scores, visit: ny. us/localgov/fiscalmonitoring/pdf/municipalities_summary.,jist2ol 3.pdf For quick facts on the Fiscal Monitoring System, visit: http :// ny. us/press/fiscal_stress_monitoringjjune_201 3/fact_sheet_monitoringsystem.pdf Note: Reference to websites implies no warranty of accuracy of information therein. 15

16 BUILDING PERMITS Calendar Year Ended December 31: RESIDENTIAL: One Family Units Two Family Units Apartment Units Total Units Number of Permits Estimated Value $ 165 $ 253 $ 215 $ 346 $ 0 RETAIL BUSINESS: Number of Permits 0 Estimated Value $ 0 $ 303 $ 300 $ 180 $ COMMERCIAL/INDUSTRIAL: Number of Permits Estimated Value $ 240 $ 0 $ 437 $ 0 $ 914 OTHER: Number of Permds Estimated Value $ 3260 $ 3046 $ 2,700 $ 3,607 $ 3,073 YEARLY TOTAL Number of Permits Estimated Value $ 3,665 $ 3,602 $ 3,652 $ 4,133 $ 3,987 16

17 U.S. CONTRACTS WITH OTHER MUNICIPALITIES The Village has several contracts with the Town of Bath to supply water and sewer for the various water and sewer districts located within the Town of Bath. These agreements may be modified or amended only in writing. As of January 1, 2015, the Village entered into a contract with the Town of Bath and the Bath Volunteer Fire Department, Inc. to provide fire protection and emergency aid for its residents. The Town has agreed to pay the Village $214, for the 2015 calendar year. This agreement may be modified or amended only upon further written agreements of the parties. OTHER INFORMATION The statutory authority for the power to spend money for the object or purpose, or to accomplish the object or purpose, for which the Bonds are to be issued is the Village Law and the Local Finance Law. No principal or interest upon any obligation of the Village is past due. The fiscal year of the Village is from June 1 to May 31. Population - Census , , , , ,786 Other than Estimated Calculation of Overlapping Indebtedness, this Official Statement does not include the financial data of any other political subdivisions of the State having power to levy taxes within the Village. FINANCIAL AUDITS The Village annually completes an Annual Update Document that is filed with the Office of the State Comptroller; the most recent report covers the period ended May 31, Also, the Village retains an independent accounting firm to conduct an annual audit of its affairs. The most recent report covers the year ended May 31, Copies of both reports may be examined at the Village offices. In addition, the Office of the State Comptroller, Department of Audit and Control, may periodically perform a compliance review to ascertain whether the Village has complied with the requirements of various State and Federal statutes. The Village complies with the Uniform System of Accounts as prescribed for towns/villages in New York State. This system differs from generally accepted accounting principles as prescribed by the American Institute of Certified Public Accountants Industry Audit Guide, Audits of State and Local Governmental Units, and codified in Government Accounting, Auditing and Financing Reporting (GJFR ), published by the National Committee on Government Accounting Standards Board ( GASB ). 17

18 FINANCIAL INFORMATION Fiscal Year Ended May 31 Assessed Valuation Equalization Rate Equalized Value General Fund Tax Levy $ 100,996,943 $ 104,146,115 $ 99,369,547 $ 99,130,942 $ 98,372,281 $ 98,458, % 50.00% 5000% 47.00% 47.00% 47.00% $ 198,033,221 $ 208,292,230 $ 198,739,094 $ 210,916,897 $ 209,302,725 $ 209,485,653 $ 2,013,557 $ 2,024,095 $ 2,112,431 $ 2,400,228 $ 2,423,682 $ 2,595,695 Tax Rate/$1,000: Assessed Value Equalized Value Tax Levy as a Percentage of Equalized Value $ $ $ $ $ $ % 0.97% 1.06% 114% 1.16% 1 24% Outstanding Debt Serial Bonds Bond Anticipation Notes Revenue Anticipation Notes $ 610,000 $ 368, ,000 5,207,476 $ 5,641,000 $ 5,315,000 $ 4,982,000 3,517,914 5,654,000 6,907,000 6,340, , , ,000 $ N/A N/A N/A Total Debt $ 1,778,308 $ 9,450,390 $ 11,945,000 $ 12,222,000 $ 11,762,000 $ N/A Per Capita Debt $ $ 1, $ 2,06447 $ 2, $ 2, $ N/A (2010 US. Census) Debt/$1,000 Equalized Value $ 8.98 $ 45,37 $ $ 5795 $ 5620 $ N/A Debt as a Percentage of Equalized Value 0.90% 4.54% 6.01% 579% 562% N/A% Notes: N/A Not available until May

19 STATEMENT OF NET POSIflON As of May 31, 2014 Primary Government Governmental Component Activities Units ASSETS: Cash & Cash Equivalents $ 1,502,043 $ 3,113,214 Cash - Restricted 98,815 0 Investments 0 476,911 Investments in Affiliated Companies 0 397,000 Accounts Receivable, Net 0 951,183 Prepaid Expenses & Other Assets 0 89,497 Inventory 0 454,898 Due from Other Governments 310,187 0 Capital Assets, Net 1,874,342 19,719,892 TOTAL ASSETS $3,785,387 $ 25,202,595 LIABILITIES: Accounts Payable $ 0 $ 884,987 Accrued Liabilities 3, ,647 Notes Payable to Affiliated Companies 0 397,000 Bond Anticipation Notes 104,000 6,529,296 Revenue Anticipation Notes 0 440,000 Unearned Revenue 0 259,972 Long-Term Liabilities Due Within One Year 194, ,559 Due in More Than One Year ,463,288 TOTAL LIABILITIES $ 1,973,252 $ 13,338,749 NET POSITION: Invested in Capital Assets, Net of Related Debt $ 1,116,763 $ 8,013,596 Restricted 98,815 0 Unrestricted 596,557 3,850,250 TOTAL NET POSITION $ 1, $ 11,863,846 Source: Annual Financial Report prepared by Certified Public Accountants. 19

20 Unallocated STATEMENT OF ACTIVITIES As of May 31, 2014 Net (Expense) Revenue & Changes in Net Position Program Revenues Primary Government Operating Capital Charges for Grants & Grants & Governmental Component Functions/Programs Expenses Services Contributions Contributions Activities Primary Government: Governmental Activities - General Support $ 532,126 $ 233,057 $ $ 0 $ (171,577) Public Safety 1, , (1,378,320) Health 7, (5,328) Transportation 1320, ,218 89,499 0 (1,116,409) Culture & Recreation 399,713 8, ,387 (69,724) Economic Assistance & Opportunity (1,045) Home & Community Services 154,777 3, (150,930) Interest on Debt 27, (27,880) Depreciation (219,629) Total Governmental Activities $ 4,274,266 $ 595,098 $ 217,939 $ 320,387 $ (3,140,842) Business-Type Activities: Electric Fund $ 5,277,924 $ 5,037,703 $ 0 $ 0 $ (240,221) Gas Fund 3,192,334 3,363, ,898 Water Fund 1,106,405 1,118, ,443 Sewer Fund 1,171,625 1,251, ,735 Total Business-Type Activities $ 10748,288 $ 10, $ 0 $ 0 $ 22,855 General Revenues: Real Property Taxes & Real Property Tax Items $ 2,531,118 $ 0 Nonproperty Tax Items 819,555 0 Use of Money & Property 43,943 4,907 Miscellaneous 30,414 11,623 Total General Revenues $ $ 16,530 Change in Net Position 284,188 39,385 NET POSITION, BEGINNING OF YEAR $ 1, $ 11,824,461 TOTAL NET POSITION, END OF YEAR $ 1,812,135 $ 11,863,846 Source. Annual Financial Report prepared by Certified Public Accountants 20

21 GENERAL FUND COMPARATIVE BALANCE SHEET Fiscal Year Ended May 31: ASSETS: Cash & Cash Equivalents $ 1,884,043 $ 1864,838 $ 1, $ 1,643,514 $ 1,309,829 Due from Other Funds 523, ,423 0 Due from Other Governments ,187 Total Assets $ 2,407,223 $ 1,864,838 $ 1,766,371 $ 1,647,937 $ 1,620,016 LIABILITIES: Due to Employees Retirement System $ 39,076 $ 0 $ 0 $ 0 $ 0 OtherLiabilities 281,845 7, FUND BALANCE. Restricted: 0 0 Assigned: 0 0 Appropriated Fund Balance 625, ,000 Unassigned: 436, , ,345 Unappropriated Fund Balance 1,461,302 1,477,637 1,329,671 1,379,421 1,428,671 Total Fund Balance 2,086,302 1,857,637 1,766,371 1,647,937 1,620,016 Total Liabilities & Fund Balance $ 2,407,223 $ 1,864,838 $ 1,766,371 $ 1,647,937 $ 1,620,016 Source Annual Financial Reports prepared by Certified Public Accountants. 21

22 - Interest Principal GENERAL FUND REVENUES, EXPENSES AND FUND BALANCE Modified Accrual Double-Entry Basis Fiscal Year Ended Actual Budget May 31 QiQ?211 9i2 ZQi Balance June 1 $ 2, $ 2086,302 $ 1,857,637 $ 1,766,371 $ 1,647,937 $ 1,620,016 REVENUES: Real Property Taxes $ 2,013,557 $ 2,024,095 $ 2,112,431 $ 2,400,228 $ 2,423,682 $ 2,595,695 Other Tax Items 32,626 92,720 80, ,436 92,662 Non-Property Tax Items 727, , , , , Department Income 68,690 90,840 83, , , ,100 Intergovernmental Charges 146, , , , , ,625 Use of Money & Property 52,608 55,802 51,290 41,014 43,811 32,000 Licenses & Permits 4,333 5,937 5,464 4,873 5,436 4,700 Fines & Forfeitures 108,913 87,974 75,055 86, ,503 80,180 Sale of Property? Compensation for Loss 0 11,523 72, ,881 5,000 Miscellaneous 37, ,057 43,486 3,350 17,533 0 State Aid 192, , , , , ,909 Federal Aid , Interfund Transfers Total Revenues $ 3,384,250 $ 3,714,775 $ 3,897,578 $ 4,036,982 $ 4,558,322 $ 4,308,871 Total Revenues & Beginning Balance $ 5,867,228 $ 5,801,077 $ 5,755,215 $ 5,803,353 $ 6,206,259 $ 5,928,887 EXPENSES: Contingency $ N/A $ N/A $ N/A $ N/A $ N/A $ 65,000 General Government Support 451, , , , , ,674 Public Safety 1,673,815 1,561,186 1,473,708 1,437,361 1, ,550,884 Health 4,457 3,990 4,231 4,411 4,681 4,700 Transportation 1,069, , , ,228 1,020,184 1,107,598 Economic Assistance & Opportunity 1,367 1, ,517 1,045 1,000 Culture & Recreation 65,533 61,243 50,551 73, ,480 Home & Community Services 70,208 65, ,758 63,454 52,525 Employee Benefits 227, , ,856 1,056,788 1, ,128,804 Debt Service - 84,000 58, ,914 61,860 89,860 65,000 10,105 3,985 31,753 25,017 25,968 23,207 Interfund Transfers 33, ,000 28,000 3,000 Total Expenses $ 3,691,479 $ 3,848,717 $ 4,704,844 $ 4,155,416 $ 4,586,243 $ 4, Adjustments (89,447) 2 (94,723) 2 716, Balance May31 $ 2,086,302 $ 1,857,637 $ 1,766,371 $ 1,647,937 $ 1,620,016 $ 1.445,015 E Fund Balance as a Percentage of Total Revenues 61.65% 50.01% 45.32% 40.82% 35.54% E Source Annual Financial Reports prepared by Certified Public Accountants and Annual Budgets. Notes N/A The Contingency account code is used for budget purposes only. No expenditures are charged directly to the 1 Contingency Code. Appropriated Fund Balance equals $175, Prior period adjustment 3 Proceeds from bonds. E Estimated based on the Budget. 22

23 ELECTRIC FUND COMPARATIVE BALANCE SHEET Fiscal Year Ended May 31?.QIJ QJ2?9J4 ASSETS Cash & Cash Equivalents $ 115,917 $ 2,735,221 $ 1,546,635 $ 1,537,889 $ 1,774,865 Investments 673,335 71,028 71,036 71,049 71,069 Accounts Receivable, Net of Allowances 190, , , , ,772 Due to Other Funds 0 0 4,232 2,905 3,437 Inventories 268, , , ,585 Prepaid Expenses 83,067 74,303 64,997 70,409 68,932 Other Assets 479 4, Capital Assets, Net 0 4,648,055 9,045,097 9,793,979 10,074,204 Property, Plant & Equipment 8,902, Accumulated Depreciation (4,898,959) Total Assets $5,334,945 $ 8,076,168 $ 11,142,771 $ 12,433,159 $ 12,767,864 LIABILITIES Accounts Payable $ 268,029 $ 359,226 $ 313,643 $ 224,883 $ 638,444 Accrued Liabilities 57,912 62,895 75,536 82,246 80,758 Accrued Interest 3, Customer Deposits 201, Deferred Items 0 202, , , ,103 Bond Anticipation Notes Payable 56,308 2,500,000 5,600, ,000 6,529,296 Revenue Anticipation Note Payable 100,000 50, ,000 Long-Term Liabilities - Due Within One Year 0 15,251 8,971 9,669 10,223 Due in More Than One Year 0 83,987 94, ,745 NET POSITION. Invested in Capital Assets, Net of Related Debt 3,947,268 2,098,055 3,445,097 3,038,979 3,104,908 Reserved Unreserved 700,673 2,704,039 1,401,573 1,925,021 1,620,387 Total Retained Earnings 4,647,941 4,802,094 4,846,670 4,964,000 4,725,295 Total Liabilities & Retained Earnings $ 5,334,945 $ 8,076,168 $ 11,142,771 $ 12,433,159 $ 12,767,864 Source Annual Financial Reports prepared by Certified Public Accountants. 23

24 ELECTRIC FUND REVENUES, EXPENSES AND FUND BALANCE Modified Accrual Double-Entry Basis Fiscal Year Ended Actual May31: ii Pi2 Qi4 Retained Earnings, Unreserved Balance June 1 $ $ 4,647,941 $ 4,802,094 $ 4846,670 $ 4,964,000 OPERATING REVENUES: Electricity Sales $ 4,273,357 $ 4,604,001 $ 4,050,802 $ 4,513,376 $ 5,037,703 Total Operating Revenues $ 4,273,357 $ 4,604,001 $ 4,050,802 $ 4,513,376 $ 5,037,703 Total Operating Revenues & Beginning Balance $ 8,750,527 $ 9,251,942 $ 8,852,896 $ 9,360,046 $ 10,001,703 OPERATING EXPENSES: Power Purchased $ 2,474,866 $ 2,584,719 $ 2,229,007 $ 2,551,615 $ 3,240,714 Transmission & Distribution 509, , , , ,604 Maintenance 1,706 29,877 15,903 59,087 78,898 Customer Accounting & Collection Expenses 170, , ,107 91,520 65,609 Taxes 57,232 58,568 60,137 62,353 64,045 General &Administrative 591, , , , ,086 Depreciation 267, , , , ,472 Bad Debt Expense 0 9,098 8,021 7,997 14,309 Interfund Transfers Total Operating Expenses $ 4, $ 4,318,852 $ 3,887,876 $ 4,186,849 $ 5,062,740 NON-OPERATING REVENUES (EXPENSES): lnterestlncome $ 2,298 $ 5,229 $ 4,225 $ 2,277 $ 1,516 Interest Expense (10,168) (41,492) (81,723) (77,561) (72,840) Miscellaneous Expense (3,387) (731) (559) (96,679) (93,044) Miscellaneous Income 20, Total Non-Operating Revenues (Expenses) $ 8,972 $ (36,994) $ (78,057) $ (171,963) $ (164,368) Contribution to Operating Municipality (37,862) (39,310) (40,293) (37,234) (49,300) Prior Period Adjustment 0 (54,692) Retained Earnings, Unreserved Balance May 31 $ 4,647,941 $ 4,802,094 $ 4,846,670 $ 4,964,000 $ 4,725,295 Source: Annual Financial Reports prepared by Certified Public Accountants. 24

25 CHANGES IN REMAINING FUND BALANCES Modified Accrual Double-Entry Basis Fiscal Year Ended May 31: Zii Zi Zi4 GAS FUND: Balance June 1 $ 1, $ 1,199,076 $ 1,118,970 $ 939,538 $ 902,939 Revenues 3,214,676 3,035,951 2,315,606 2,937,519 3,371,521 Expenses 3,147,548 3,080,998 2,495,038 2, ,192,334 Adjustments 0 (35,059) Balance May31 $ 1,199,076 $ 1,118,970 $ 939,538 $ 902,939 $ 1,082,126 WATER FUND: Balance June 1 $ 2,765,959 $ 2,741,500 $ 2,590,551 $ 2,552,025 $ 2,567,762 Revenues 767, , ,007 1,065,552 1,122,664 Expenses 791, , ,533 1,049,815 1,106,405 Adjustments 0 (25,243) Balance May31 $ 2,741,500 $ 2,590,551 $ 2,552,025 $ 2,567,762 $ 2,584,021 SEWER FUND Balance June 1 $ 3,560,365 $ 3,483,942 $ 3,378,287 $ 3,363,522 $ 3,389,760 Revenues 965, ,321 1,116,266 1,168,615 1,254,269 Expenses 1,041, ,733 1,131,031 1,142,377 1,171,625 Adjustments 0 (25,243) Balance May 31 $ 3,483,942 $ 3,378,287 $ 3,363,522 $ 3,389,760 $ 3,472,404 1 CAPITAL FUND: Balance June 1 $ (35,430) $ (61,252) $ (831,969) $ 97,074 $ 148,444 Revenues 173,511 58, , ,120 76,132 Expenses 199, , ,750 37,547 Adjustments 0 (16,072) Balance May31 $ (61,252) $ (831,969) $ 97,074 $ 148,444 $ 187,029 Source: Annual Financial Reports prepared by Certified Public Accountants. Notes: 1 The Governmental Accounting Standards Boards NCGA Interpretation #9 requires proceeds of shortterm obligations (including bond anticipation notes) to be recorded as a liability on the balance sheet. Revenue may only be recognized as subsequent principal reductions are made to the short-term liability. Consequently, capital projects financed with short-term obligations appear to be overspent until permanent bonds are sold or the short-term obligation is liquidated. 2 Prior Period Adjustment. 25

26 TAX COLLECTION PROCEDURE Taxes are payable during June without penalty. Beginning July 1, a 5% penalty is added for the first month and an additional 1% penalty for each month thereafter until paid. Tax collections run through October 31. During the month of November a list of unpaid taxes is certified by the Village Board and turned over to the County on November 15. The Village is reimbursed by the County for all unpaid taxes each year, thus assuring 100% collection of its annual levy. REAL PROPERTY TAX CAP On June 24, 2011, Chapter 97 of the Laws of 2011 was signed into law by the Governor (the Tax Levy Limitation Law ). The Tax Levy Limitation Law applies to all local governments, including school districts (with the exception of New York City, the counties comprising New York City and the Big 5 City School Districts (Buffalo, Rochester, Syracuse, Yonkers and New York). It also applies to independent special districts and to town and country improvement districts as part of their parent municipalities tax levies. The Tax Levy Limitation Law restricts, among other things, the amount of real property taxes (including assessments of certain special improvement districts) that may be levied by or on behalf of a municipality in a particular year, beginning with fiscal years commencing on or after January 1, It expires on June 16, 2016 unless extended. Pursuant to the Tax Levy Limitation Law, the tax levy of a municipality cannot increase by more than the lesser of (I) two percent (2%) or (ii) the annual increase in the consumer price index ( CPI ), over the amount of the prior year s tax levy. Certain adjustments would be permitted for taxable real property full valuation increases or changes in physical or quantity growth in the real property base as defined in Section 1220 of the Real Property Tax Law. A municipality may exceed the tax levy limitation for the coming fiscal year only if the governing body of such municipality first enacts, by at least a sixty percent vote of the total voting strength of the board, a local law (resolution in the case of fire districts and certain special districts) to override such limitations for such coming fiscal year only. There are permissible exceptions to the tax levy limitation provided in the Tax Levy Limitation Law, including expenditures made on account of certain tort settlements and certain increases in the average actuarial contribution rates of the New York State and Local Employees Retirement System, the Police and Fire Retirement System, and the Teachers Retirement System. Municipalities are also permitted to carry forward a certain portion of their unused levy limitation from a prior year. Each municipality prior to adoption of each fiscal year budget must submit for review to the State Comptroller any information that is necessary in the calculation of its tax levy for each fiscal year. The Tax Levy Limitation Law does not contain an exception from the levy limitation for the payment of debt service on either outstanding general obligation debt of municipalities or such debt incurred after the effective date of the tax levy limitation provisions. Article 8 Section 2 of the State Constitution requires every issuer of general obligation notes and bonds in the State to pledge its faith and credit for the payment of the principal thereof and the interest thereon. This has been interpreted by the Court of Appeals, the State s highest court, in Flushing National Bank v. Municipal Assistance Corporation for the City of New York, 40 N.Y.2d 731 (1976), as follows: A pledge of the city s faith and credit is both a commitment to pay and a commitment of the city s revenue generating powers to produce the funds to pay. Hence, an obligation containing a pledge of the City s faith and credit is secured by a promise both to pay and to use in good faith the city s general revenue powers to produce sufficient funds to pay the principal and interest of the obligation as it becomes due. That is why both words, faith and credit, are used and they are not tautological. That is what the words say and that is what the courts have held them to mean. Concluded on following page. 26

27 REAL PROPERTY TAX CAP - Concluded Article 8 Section 12 of the State Constitution specifically provides as follows: It shall be the duty of the legislature, subject to the provision of this constitution, to restrict the power of taxation, assessment, borrowing money, contracting indebtedness, and loaning the credit of counties, cities, towns and villages, so as to prevent abuses in taxation and assessments and in contracting of indebtedness by them. Nothing in this article shall be construed to prevent the legislature from further restricting the powers herein specified of any county, city, town village or school district to contract indebtedness or to levy taxes on real estate. The legislature shall not, however, restrict the power to levy taxes on real estate for the payment of interest on or principal of indebtedness theretofore contracted. On the relationship of the Article 8 Section 2 requirements to pledge the faith and credit and the Article 8 Section 12 protection of the levy of real property taxes to pay debt service on bonds subject to the general obligation pledge, the Court of Appeals in the Flushing National Bank case stated: So, too, although the Legislature is given the duty to restrict municipalities in order to prevent abuses in taxation, assessment, and in contracting of indebtedness, it may not constrict the city s power to levy taxes on real estate for the payment of interest on or principal of indebtedness previously contracted... While phrased in permissive language, these provisions, when read together with the requirement of the pledge of faith and credit, express a constitutional imperative: debt obligations must be paid, even if tax limits be exceeded. In addition, the Court of Appeals in the Flushing National Bank case has held that the payment of debt service on outstanding general obligation bonds and notes takes precedence over fiscal emergencies and the police power of municipalities. Therefore, while the New Tax Levy Limitation Law may constrict an issuer s power to levy real property taxes for the payment of debt service on debt contracted after the effective date of said New Tax Levy Limitation Law, it is clear that no statute is able (1) to limit an issuer s pledge of its faith and credit to the payment of any of its general obligation indebtedness or (2) to limit an issuer s levy of real property taxes to pay debt service on general obligation debt contracted prior to the effective date of the New Tax Levy Limitation Law. Whether the Constitution grants a municipality authority to treat debt service payments as a constitutional exception to such statutory tax levy limitation outside of any statutorily determined tax levy amount is not clear. It is possible that the New Tax Levy Limitation Law will be subject to judicial review to resolve the constitutional issues raised by its adoption. 27

28 TAX COLLECTION RECORD Fiscal Year Ended May 31: jq Village Tax Items General Fund $ 2013,557 $ 2,024,095 $ 2,112,431 S 2,400,228 $ 2423,682 $ 2,595,695 Adjustments (215,130) (1,191) (1445) Total Tax Levy $ 1,798,427 $ 2,024,095 $ 2, $ 2,400,228 $ 2,422,491 $ 2,594,250 Collections Prior to Return 1,685,780 1,913,525 2,018,168 2,192,680 2,310,018 2, Uncollected Returned to County April 1 $ 112,647 $ I 10,570 $ 94,263 $ 207,548 $ 112,473 $ Percentage Collected Prior to Return 93.74% 94.54% 95.54% 91.35% 95.36% 95.07% 28

29 MAJOR TAXPAYERS 2013 Assessment Rolls Used for Taxes Name Iy Equalized Value Lake Country Estates Inc. Mobile Home Park $ BATHCANPUL LLC Supermarket 2,884,681 Cavalier Development LTD Shopping Center 2, Finger Lakes Lodging Assoc, LLC Hotel/Shopping Plaza 2,340,426 Indus Mehta Properties LLC Hotel/Shopping Plaza 2,194,787 Manor Village Associates LP Apartments 2,052,128 Chilmark Properties LLC Apartments 1,807,447 Meyer s RV Center LLC RV Dealership 1,671,702 Plaza 15, LLC Shopping Plaza 1,451,489 Cole WG Bath NY LLC Total Pharmacy ial6,383.0&1921 Note: 1 The above taxpayers represent 10.89% of the Village s equalized value of $209,485,

30 VILLAGE INDEBTEDNESS - CONSTITUTIONAL REQUIREMENTS The New York State Constitution limits the power of the Village (and other municipalities and certain school districts of the State) to issue obligations and to otherwise contract indebtedness. Such constitutional limitations, in summary form and as generally applicable to the Village and the Bonds, include the following: Purpose and Pledge. Subject to certain enumerated exceptions, the Village shall not give or loan any money or property to or in aid of any individual or private corporation or private undertaking or give or loan its credit to or in aid of any of the foregoing or any public corporation. The Village may contract indebtedness only for a Village 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 within three fiscal year periods, indebtedness shall 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 (i) the expiration of the period of probable usefulness of the object or purpose as determined by statute; (ii) alternatively, the weighted average period of probable usefulness of 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 Village shall have authorized repayment of the debt with substantially level or declining debt service. The Village is 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 amortization of its serial bonds and such required annual installments on its bonds. Debt Limit. The Village has the power to contract indebtedness for any Village purpose so long as the principal amount thereof shall not exceed seven per centum of the average full valuation of taxable real estate of the Village 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 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 Office of Real Property Services. Average full valuation is determined by taking the sum of the full valuations of such last completed assessment roll and the four preceding assessment rolls and dividing such sum by five. 30

31 VILLAGE INDEBTEDNESS - STATUTORY PROCEDURE In general, the State Legislature has authorized the power and procedure for the Village to borrow and incur indebtedness by the enactment of the Local Finance Law, subject, of course, to the constitutional provisions set forth above. The power to spend money, however, generally derives from other law, including specifically the Village Law and the General Municipal Law. Pursuant to the Local Finance Law, the Village authorizes the issuance of bonds by the adoption of a bond resolution, approved by at least two-thirds of the members of the Village Board, the finance board of the Village. Customarily, the Village Board has delegated to the Treasurer, as chief fiscal officer of the Village, the power to authorize and sell bond anticipation notes in anticipation of authorized bonds. The Local Finance Law also provides that where a bond resolution is published with a statutory form of notice, the validity of the bonds authorized thereby, including bond anticipation notes issued in anticipation of the sale thereof, may be contested only if 1 Such obligations are authorized for a purpose for which the Village is not authorized to expend money, or 2 There has not been substantial compliance with the provisions of law which should have been complied with in the authorization of such obligations and an action contesting such validity is commenced within twenty days after the date of such publication, or 3 Such obligations are authorized in violation of the provisions of the Constitution. Except on rare occasions, the Village complies with this estoppel procedure. It is a procedure that is recommended by Bond Counsel, but it is not an absolute legal requirement. Each bond resolution usually authorizes the construction, acquisition or installation of the object or purpose to be financed, sets forth the plan of financing and specifies the maximum maturity of the bonds subject to the legal (Constitution, Local Finance Law and case law) restrictions relating to the period of probable usefulness with respect thereto. Statutory law in New York permits bond anticipation notes to be renewed each year provided annual principal installments are made in reduction of the total amount of such notes outstanding, commencing no later than two years from the date of the first of such notes and provided, generally, that such renewals do not exceed five years beyond the original date of borrowing. (See PAYMENT AND MATURITY under VILLAGE INDEBTEDNESS - CONSTITUTIONAL REQUIREMENTS herein, and STATUS OF SHORT-TERM INDEBTEDNESS herein.) In general, the Local Finance Law contains provisions providing the Village with power to issue certain other short-term general obligation indebtedness including revenue and tax anticipation notes and budget notes (See STATUS OF SHORT-TERM INDEBTEDNESS herein.) 31

32 STATUS OF SHORT-TERM INDEBTEDNESS As of March 11,2015 Interest Amount Bond Anticipation Notes Dated Maturity Rate Outstanding ElectricUpgrades % $ BEGWS BucketTruck % 151,437 Street Equipment % 78,000 Total Source: Village Note Records. Note: 1 To be paid in full at maturity with a portion ($6,340,000) of the proceeds of this issue. 32

33 DWSRF RD STATUS OF OUTSTANDING BOND ISSUES Ongnal Amount $4,907,476 $716,000 Dated Date. 06/24/10 05/09/12 Purpose: Water Project Fire Trucks Last Maturity: Call Date Any Date Any Date Interest Rate! Instrument: Various% - Balance Principal SB 3.375% $4,340,000 $ Principal Interest SB 1 Ejjjcigj Interest May 31: 2015 $ 140, , , ,351 * $ 119,067 $ 39,000 $ 21, , ,542 42,000 18, , ,864 44,000 17, , ,043 45,000 16, , ,063 47,000 14, , ,903 49,000 12, , ,511 51,000 11, , ,898 53,000 9, , ,199 54,000 7, ,000 98,352 57,000 5, ,000 95,381 59,000 4, , ,000 2, ,000 89, ,000 85, ,000 82, ,000 78, ,000 73, ,000 64, ,000 55, ,000 46, ,000 37, , ,000 16, ,000 5,641 Totals $ 4,340,000 $ 2,062,550 $ 642,000 $ 162,878 Notes 1 * Estimated interest payments abstracted from information prepared by NYS Environmental Facilities Corporation. Pnncipal reducton made pr:orto date of Debt Statement, March 11, Concluded on following page. 33

34 STATUS OF OUTSTANDING BOND ISSUES - Concluded Total Year-End Fiscal Year Ending Totals Debt Outstanding May 31: Principal Interest Service Principal 2015 $ 179,000 $ 140,735 $ 319,735 $ 4,803, , , ,300 4,622, , , ,510 4,435, , , ,414 4,246, , , ,108 4,056, , , ,609 3,859, , , ,863 3,660, , , ,817 3,454, , , ,483 3,246, , , ,995 3,037, , , ,326 2,820, ,000 99, ,431 2,601, ,000 94, ,350 2,375, ,000 89, ,126 2,210, ,000 85, ,891 2,040, ,000 82, ,452 1,865, ,000 78, ,961 1,690, ,000 73, ,149 1,510, ,000 64, ,739 1,320, ,000 55, ,874 1,120, ,000 46, , , ,000 37, , , ,000 27, , , ,000 16, , , ,000 5, ,641 0 Totals $ 4,982,000 $ 2,225,428 $ 7,207,428 Source, Viflage Bond Records, 34

35 PRINCIPAL AND PURPOSES OF THIS ISSUE Electric Municipal Substation & Payment Parking Lot Distribution Consolidated Date Improvement System * Issue 05/31/15 $ 0 $ 370,000 $ 370,000 05/31/16 50, , ,000 05/31/17 55, , ,000 05/31/18 55, , ,000 05/31/19 55, , ,000 05/31/20 60, , ,000 05/31/21 60, , ,000 05/31/22 60, , ,000 05/31/23 65, , ,000 05/31/24 65, , ,000 05/31/25 210, ,000 05/31/26 220, ,000 05/31/27 225, ,000 05/31/28 235, ,000 05/31/29 240, ,000 05/31/30 245, ,000 05/31/31 255, ,000 05/31/32 260, ,000 05/31/33 270, ,000 05/31/34 280, ,000 05/31/35 290, ,000 05/31/36 295, ,000 05/31/37 305, ,000 05/31/38 315, ,000 05/31/39 325, ,000 05/31/40 335, ,000 Totals $ 525,000 $ 6,340,000 $ 6,865,000 35

36 BOND PRINCIPAL MATURING IN CURRENT AND SUBSEQUENT FISCAL YEARS Total Year-End Fiscal Year Ending Prior This Maturing Outstanding May 31: Issues Issue Principal Principal 2015 $ 179,000 $ 370,000 $ 549,000 $ 11,298, , , ,000 10,902, , , ,000 10,490, , ,000 10,071, , , ,000 9,646, , , ,000 9,204, , , ,000 8,755, , , ,000 8,294, , , ,000 7,821, , , ,000 7,342, , , ,000 6,915, , , ,000 6,476, , , ,000 6,025, , , ,000 5,625, , , ,000 5,215, , , ,000 4,795, , , ,000 4,365, , , ,000 3,925, , , ,000 3,465, , , ,000 2,985, , , ,000 2,490, , , ,000 1,980, , , ,000 1,455, , , , , , , , , , ,000 0 Totals $ 4,982,000 $ 6,865,000 $ 11,847,000 36

37 DEBT STATEMENT SUMMARY As of March 11,2015 Fiscal Year Assessed Equalization Ended Valuation Rates Equalized Value 05/31/11 $ 104,146, % $ 208,292,230 05/31/12 99,369, % 198,739,094 05/31/13 99,130, % 210,916,897 05/31/14 98,372, % 209,302,725 05/31/15 98,458, % 209,485,653 Total $ 1,036,736,599 Five-Year Average Full Valuation $ 207,347,320 Debt Limit (7% thereof) $ 14,514,312 Inclusions: Serial Bonds $ 4,842,000 Bond Anticipation Notes 6,569,437 Total Inclusions $ 11,411,437 Exclusions: Water Indebtedness $ 4,200,000 1 Appropriations 409,000 2 Total Exclusions $ 4,609,000 Total Net Indebtedness Before Giving Effect to This Issue $ 6,802,437 This Issue $ 6,865,000 Amount of This Issue Included Above as Bond Anticipation Notes 6,340, ,000 Total Net Indebtedness After Giving Effect to This Issue $ 7,327,437 Net Debt-Contracting Margin $ 7,186,875 Percentage of Debt-Contracting Power Exhausted 50.48% Notes: 1 Water indebtedness is automatically exctuded pursuant to provisions of Article VIII, Section 5B of the New York State Constitution and Section of the Local Finance Law. 2 Revenue Anticipation Notes and Budgeted Appropriations are automatically excluded pursuant to provisions of the New York State Constitution and Section of the Local Finance Law. 37

38 ..., ESTIMATED CALCULATION OF OVERLAPPING INDEBTEDNESS Estimated Applicable Overlapping Applicable Gross Net Overlapping Unit Equalized Value Percent Indebtedness Exclusions Indebtedness Indebtedness 1 Steuben $ 209, County $ 5,243,877, % $ 18,805,000 $ N/A $ 18,805,000 $ 750,320 Town of $ 209, Bath $ 493,575, % 207,133 N/A 207,133 87,845 Bath $ 209,302,725 CSD $ 474,542, % 32,735,000 N/A 32, ,439,409 Total $ 15,277,573 Source: Comptrollers Special Report on Municipal Affairs for Local Fiscal Years Ended in Notes. 1 Bonds and bond anticipation notes as of 2013 fiscal year. Not adjusted to include subsequent bond and note sales. N/A Information not available from source document. LITIGATION The Village is subject to a number of lawsuits in the ordinary conduct of its affairs. The Village does not believe, however, that such suits, individually or in the aggregate, are likely to have a material adverse effect on its financial condition. 38

39 SPECIAL PROVISIONS AFFECTING REMEDIES UPON DEFAULT Section 3-a of the General Municipal Law provides, subject to exceptions not pertinent, that the rate of interest to be paid by a municipality upon any judgment or accrued claim against such municipality shall not exceed nine per centum per annum. This provision might be construed to have application to the holders of the Bonds in the event of a default in the payment of the principal of or interest on the Bonds. As is the general rule with respect to municipal corporations, judgments against the Village may not be enforced by levy and execution against Village property. Recent amendments to the Federal Bankruptcy Act have the effect of facilitating recourse to the protection of a Federal Court by public bodies for the purpose of adjusting outstanding indebtedness. Section of the Local Finance Law contains specific authorization for any municipality in the State to file a petition with any United States District Court or Court of Bankruptcy under any provision of Federal law for the composition or adjustment of municipal indebtedness. As a result of a certain 1975 Court of Appeals decision, the constitutionality of that portion of Title 6-A of the Local Finance Law enacted at the 1975 Extraordinary Session of the State Legislature, authorizing any county, city, town or village with respect to which the State has declared a financial emergency to petition the State Supreme Court to stay the enforcement against such municipality of any claim for payment relating to any contract, debt or obligation of the municipality during the emergency period, is subject to doubt. In any event, no such emergency has been declared with respect to the Village. MARKET FACTORS AFFECTING FINANCINGS OF THE STATE AND MUNICIPALITIES OF THE STATE The financial and economic condition of the Village, as well as the market for the Bonds, could be affected by a variety of factors, some of which are beyond the Village s control. There can be no assurance that adverse events in the State and in other jurisdictions in the country, including, for example, the seeking by a municipality or large taxable property owner of remedies pursuant to the Federal Bankruptcy Code or otherwise, will not occur which might affect the market price of and the market for the Bonds If a significant default or other financial crisis should occur in the affairs of the State or another jurisdiction, or of any of its respective agencies or political subdivisions thereby further impairing the acceptability of obligahons issued by borrowers within the State, both the ability of the Village to arrange for additional borrowings and the market for and market value of outstanding debt obligations, including the Bonds, could be adversely affected. The Village is dependent in part on financial assistance from the State. However, if the State should experience difficulty in borrowing funds in anticipation of the receipt of State taxes and revenue in order to pay State aid to municipalities, including the Village, in any year, the Village may be affected by a delay until sufficient taxes have been received by the State to make State aid payments to the Village. In several recent years the Village has received delayed payments of State aid which resulted from the State s delay in adopting its budget and appropriating State aid to municipalities and school districts, and consequent delay in State borrowing to finance such appropriations. 39

40 LEGAL MATTERS The legality of the authorization and issuance of the Bonds will be covered by an approving legal opinion of Harris Beach PLLC, Bond Counsel, Rochester, New York. Such legal opinion will state that in the opinion of Bond Counsel (i) the Bonds have been authorized and issued in accordance with the Constitution and statutes of the State of New York and constitute valid and legally binding general obligations of the Village, all the taxable real property within which is subject to the levy of ad valorem taxes to pay the Bonds and interest thereon, waiting on limitation as to rate of amount; provided, however, that the enforceability (but not the validity) of the Bonds may be limited by any applicable existing or future bankruptcy, insolvency or other law (State or Federal) affecting the enforcement of creditors rights; (ii) under existing statutes, regulations, administrative rulings and court decisions, interest on the Bonds is excluded from the gross income of the owners thereof for Federal income tax purposes, is not an item of tax preference for purposes of the Federal alternative minimum taxes imposed on individuals and corporations by the Code; interest on the Bonds is, however, included in adjusted current earnings, for purposes of calculating the Federal alternative minimum tax imposed on certain corporations; (iii) interest on the Bonds is exempt from personal income taxes imposed by the State of New York or any political subdivision thereof (including the City of New York); and (iv) based upon Bond Counsel s examination of law and review of the arbitrage certificate executed by the Treasurer of the Village pursuant to Section 148 of the Code and the regulations thereunder, the facts, estimates and circumstances as set forth in said arbitrage certificate are sufficient to support the conclusion that the Bonds will not be arbitrage bonds within the meaning of said section, and no matters have come to Bond Counsel s attention which makes unreasonable or incorrect the representations made in said arbitrage certificate. Bond Counsel will express no opinion regarding other Federal or State income tax consequences arising with respect to the Bonds. Such legal opinion also will state that (i) in rendering the opinions expressed therein, Bond Counsel has assumed the accuracy and truthfulness of all public records, documents and proceedings examined by Bond Counsel which have been executed or certified by public officials acting within the scope of their official capacities, and has not verified the accuracy or truthfulness thereof, and Bond Counsel also has assumed the genuineness of the signatures appearing upon such public records, documents and proceedings and such certifications thereof, (U) the scope of Bond Counsel s engagement in relation to the issuance of the Bonds has extended solely to the examination of the facts and law incident to rendering the opinions expressed therein; (Ui) the opinions expressed therein are not intended and should not be construed to express or imply any conclusion that the amount of real property subject to taxation within the boundaries of the Village together with other legally available sources of revenue, if any, will be sufficient to enable the Village to pay the principal of and interest on the Bonds as the same respectively become due and payable; (iv) reference should be made to the Official Statement for factual information which, in the judgment of the Village, would materially affect the ability of the Village to pay such principal and interest; and (v) while Bond Counsel has participated in the preparation of the Official Statement, Bond Counsel has not verified the accuracy, completeness or fairness of the factual information contained therein and, accordingly, no opinion is expressed by Bond Counsel as to whether the Village, in connection with the sale of the Bonds, has made any untrue statement of a material fact, or omitted to state a material fact necessary in order to make any statement made, in the light of the circumstances under which they were made, not misleading. 40

41 TAX MATTERS In the opinion of Bond Counsel, based on existing statutes, regulations, administrative rulings and court decisions and assuming compliance by the Village with certain covenants and the accuracy of certain representations, interest on the Bonds s excluded from gross income for federal income tax purposes under Section 103 of the Internal Revenue Code of 1986, as amended (the Code ). The Code imposes various limitations, conditions and other requirements which must be met at and subsequent to the date of issue of the Bonds in order that interest on the Bonds will be and remain excluded from gross income for federal income tax purposes. Included among these requirements are restrictions on the investment and use of proceeds of the Bonds and in certain circumstances, payment of amounts in respect of such proceeds to the United States. Failure to comply with the requirement of the Code may cause interest on the Bonds to be includable in gross income for purposes of federal income tax, possibly from the date of issuance of the Bonds. In the Arbitrage Certificate to be executed by the Village in connection with the issuance of the Bonds, the Village will covenant to comply with certain procedures and it has made certain representations and certifications, designed to assure satisfaction of the requirements of the Code in respect to the Bonds. The opinion of Bond Counsel assumes compliance with such covenants and the accuracy, in all material respects, of such representations and certificates. Bond Counsel is of the further opinion that interest on the Bonds is not an item of tax preference for purposes of federal alternative minimum tax on individuals and corporations; interest on the Bonds is, however, included in adjusted current earnings for purposes of calculating the Federal alternative minimum tax imposed on certain corporations. Prospective corporate purchasers of the Bonds should consult with their tax advisors regarding the calculation of any alternative minimum tax liability with respect to interest on the Bonds. Corporate purchasers of the Bonds should consult their tax advisors concerning the computation of any alternative minimum tax. Prospective purchasers of the Bonds should be aware that ownership of the Bonds, and the accrual or receipt of interest thereon, may have collateral federal income tax consequences for certain taxpayers, including financial institutions, property and casualty insurance companies, S corporations, certain foreign corporations, individual recipients of Social Security or Railroad benefits and taxpayers who may be deemed to have incurred or continued indebtedness to purchase or carry such obligations. Prospective purchasers should consult their tax advisors as to any possible collateral consequences of their ownership of the Bonds and their accrual or receipt of interest thereon. Bond Counsel expresses no opinion regarding any such collateral federal income tax consequences. The Bonds will be designated or deemed designated by the Village as qualified tax exempt obligations within the meaning of, an pursuant to Section 265(b)(3) of the Code. In the opinion of Bond Counsel, interest on the Bonds is exempt from personal income taxes imposed by the State or any political subdivision thereof, including the City of New York. Bond Counsel has not undertaken to determine (or to inform any person) whether any actions taken (or not taken) or events occurring (or not occurring) after the date of issuance and delivery of the Bonds may affect the tax status of interest on the Bonds. No assurance can be given that any future legislation or governmental actions, including amendments to the Code or State income tax laws, regulations, administrative rulings, or court decisions, will not, directly or indirectly, cause interest on the Bonds to be subject to federal, State or local income taxation, or otherwise prevent holders of the Bonds from realizing the full current benefit of the tax status of such interest. Further, no assurance can be given that the introduction or enactment of any such future legislation, or any judicial decision or action of the Internal Revenue Service or any State taxing authority, including, but not limited to, the promulgation of a regulation or ruling, or the selection of the Bonds for audit examination or the course or result of an audit examination of the Bonds or of obligations which present similar tax issues, will not affect the market price, value or marketability of the Bonds. For example, President Obama has released various legislative proposals that would limit the extent of the exclusion from gross income of interest on obligations of states and political subdivisions under Section 103 of the Code (including the Bonds) for taxpayers whose income exceeds certain threshold levels. No prediction is made as to whether any such proposals will be enacted. Prospective purchasers of the Bonds should consult their own tax advisors regarding the foregoing matters. All summaries and explanations of provisions of law do not purport to be complete and reference is made to such laws for full and complete statements of their provisions. ALL PROSPECTIVE PURCHASERS OF THE BONDS SHOULD CONSULT WITH THEIR TAX ADVISORS IN ORDER TO UNDERSTAND THE IMPLICATIONS OF THE CODE AS TO THE TAX CONSEQUENCES OF PURCHASING OR HOLDING THE BONDS. 41

42 CONTINUING DISCLOSURE UNDERTAKING In accordance with the requirements of SEC Rule 15c2-12 as the same may be amended or officially interpreted from time to time (the Rule ), promulgated by the Securities and Exchange Commission (SEC), in the Notice of Sale for the Bonds, the Village has agreed to provide, or cause to be provided either directly or through a designated agent, (i) (ii) During any succeeding fiscal year in which the Bonds are outstanding, to the Electronic Municipal Market Access (EMMA ) system maintained by the Municipal Securities Rulemaking Board ( MSRB ), certain annual financial information and operating data for the preceding fiscal year, and a copy of the audited financial statements for the preceding fiscal year, if any, such information, data and audited financial statements, if any, will be of the type included in the final Official Statement delivered in connection with the Bonds, with consistent accounting principles pursuant to State law and regulations in effect from time to time, and will be so provided on or prior to the latter of either the end of the sixth month of each such succeeding fiscal year or, if audited financial statements are prepared, sixty days following receipt by the Village of audited financial statements for the preceding fiscal year, but, in any event, not later than the last business day of each such succeeding fiscal year; In a timely manner not in excess of ten (10) business days after the occurrence of the event Notice of any of the following events with respect to the Bonds: (a) (b) (c) principal and interest payment delinquencies non-payment related defaults, if material unscheduled draws on debt service reserves reflecting financial difficulties (d) in the case of credit enhancement, if any, provided in connection with the issuance of the Bonds, unscheduled draws on credit enhancements reflecting financial difficulties (e) (f) (g) (h) (I) (j) (k) (I) (m) (n) substitution of credit or liquidity providers, or their failure to perform adverse tax opinions, the issuance by the Internal Revenue Service of proposed or final determinations of taxability, Notices of Proposed Issue (IRS Form 5701 TEB) or other material notices or determinations with respect to the tax status of the Bonds, or other material events affecting the tax status of the Bonds modifications to rights of Bond holders, if material bond calls, if material and tender offers defeasances release, substitution, or sale of property securing repayment of the Bonds, if material rating changes bankruptcy, insolvency, receivership or similar event of the Village the consummation of a merger, consolidation, or acquisition involving the Village or the sale of all or substantially all of the assets of the Village, other than in the ordinary course of business, the entry into a definitive agreement to undertake such an action or the termination of a definitive agreement relating to any such actions, other than pursuant to its terms, if material appointment of a successor or additional trustee or the change of name of a trustee, if material Event (c) is included pursuant to a letter from the SEC staff to the National Association of Bond Lawyers dated September 19, However, event (c) is not applicable, since no debt service reserves will be established for the Bonds. With respect to event (d) the Village does not undertake to provide any notice with respect to credit enhancement added after the primary offering of the securities. With respect to event (I) above, the event is considered to occur whether any of the following occur: The appointment of a receiver, fiscal agent or similar officer for the Village in a proceeding under the U.S. Bankruptcy Code or Concluded on following page. 42

43 CONTINUING DISCLOSURE UNDERTAKING Concluded in any other proceeding under state or federal law in which a court or governmental authority has assumed jurisdiction over substantially all of the assets or business of the Village, or if such jurisdiction has been assumed by leaving the existing governing body and officials or officers in possession but subject to the supervision and orders of a court or governmental authority, or the entry of an order confirming a plan of reorganization, arrangement or liquidation by a court or governmental authority having supervision or jurisdiction over substantially all of the assets or business of the Village. The Village may from time to time choose to provide notice of the occurrence of certain other events, in addition to those listed above, if the Village determines that any such other event is material with respect to the Bonds; but the Village does not undertake to commit to provide any such notice of the occurrence of any material event except those events listed above. The Village shall provide any Material Event Notice, accompanied by required identifying information, to the MSRB in an electronic format as prescribed by the MSRB for their EMMA system. (iii) In a timely manner, to the MSRB s EMMA system, notice of its failure to provide the aforedescribed annual financial information and operating data and such audited financial statement, if any, on or before the date specified. The Village reserves the right to terminate its obligations to provide the aforedescribed annual financial information and operating data and such audited financial statements, if any, and notices of Material Events as set forth above, if and when the Village no longer remains an obligated person with respect to the Bonds within the meaning of the Rule. The Village acknowledges that its undertaking pursuant to the Rule provided herein is intended to be for the benefit of the holders of the Bonds (including holders of beneficial interests in the Bonds). The right of holders of the Bonds to enforce the provisions of this undertaking will be limited to a right to obtain specific enforcement of the Village s obligations under this continuing disclosure undertaking and any failure by the Village to comply with the provisions of this undertaking will neither be a default with respect to the Bonds nor entitle any holder of the Bonds to recover monetary damages. The Village reserves the right to modify from time to time the specific types of information provided or the format of the presentation of such information, to the extent necessary or appropriate in the judgment of the Village; provided that, the Village agrees that any such modification will be done in a manner consistent with the Rule. The Village is in compliance, in all material respects, with all prior undertakings pursuant to the Rule, to the extent any such undertakings have been made. MISCELLANEOUS The execution and delivery of this Official Statement have been duly authorized by the Board of Trustees of the Village. Concurrently with the delivery of the Bonds, the Village Treasurer will furnish a certificate to the effect that as of the date of the Official Statement, the Official Statement did 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, subject to the condition that while information in the Official Statement obtained from sources other than the Village is not guaranteed as to accuracy, completeness or fairness, the Village Treasurer has no reason to believe and does not believe that such information is materially inaccurate or misleading, and to the knowledge of the Village Treasurer, since the date of the Official Statement, there have been no material transactions not in the ordinary course of affairs entered into by the Village and no material adverse changes in the general affairs of the Village or in its financial condition as shown in the Official Statement other than as disclosed in or contemplated by the Official Statement. Certain information contained in the Official Statement has been obtained from sources other than the Village. All quotations from and summaries and explanations of provisions of laws herein do not purport to be complete and reference is made to such laws for full and complete statements of their provisions. So far as any statements made in this Official Statement involve matters of opinion or estimates, whether or not expressly stated, they are set forth as such and not as representations of fact, and no representation is made that any of the statements will be realized. Neither this Official Statement nor any statement which may have been made verbally or in writing is to be construed as a contract with the holders of the Bonds. Dated: March 11,2015 Bath, New York Jacqueline Shroyer ClerklTreasurer 43

44 BOND INSURANCE BOND INSURANCE POLICY Concurrently with the issuance of the Bonds, Municipal Assurance Corp. (MAC) will issue its Municipal Bond Insurance Policy for the Bonds (the Policy). The Policy guarantees the scheduled payment of principal of and interest on the Bonds when due as set forth in the form of the Policy included as an appendix to this Official Statement. The Policy is not covered by any insurance security or guaranty fund established under New York or Connecticut insurance law. MUNICIPAL ASSURANCE CORP. MAC is a New York domiciled financial guaranty insurance company and an indirect subsidiary of Assured Guaranty Ltd. ( AGL ), a Bermuda-based holding company whose shares are publicly traded and are listed on the New York Stock Exchange under the symbol AGO. AGL, through its operating subsidiaries, provides credit enhancement products to the U.S. and global public finance, infrastructure and structured finance markets. Neither AGL nor any of the shareholders or affiliates of AGL, other than MAC, is obligated to pay any debts of MAC or any claims under any insurance policy issued by MAC. MAC is wholly owned by Municipal Assurance Holdings Inc., which, in turn, is owned 61% by Assured Guaranty Municipal Corp. and 39% by Assured Guaranty Corp. MAC s financial strength is rated AA (stable outlook) by Standard and Poor s Ratings Services, a Standard & Poor s Financial Services LLC business ( S&P ) and AA+ (stable outlook) by Kroll Bond Rating Agency, Inc. ( KBRA ). Each rating of MAC should be evaluated independently. An explanation of the significance of the above ratings may be obtained from the applicable rating agency. The above ratings are not recommendations to buy, sell or hold any security, and such ratings are subject to revision or withdrawal at any time by the rating agencies, including withdrawal initiated at the request of MAC in its sole discretion. In addition, the rating agencies may at any time change MAC s long-term rating outlooks or place such ratings on a watch list for possible downgrade in the near term. Any downward revision or withdrawal of any of the above ratings, the assignment of a negative outlook to such ratings or the placement of such ratings on a negative watch list may have an adverse effect on the market price of any security guaranteed by MAC. MAC only guarantees scheduled principal and scheduled interest payments payable by the issuer of bonds insured by MAC on the date(s) when such amounts were initially scheduled to become due and payable (subject to and in accordance with the terms of the relevant insurance policy), and does not guarantee the market price or liquidity of the securities it insures, nor does it guarantee that the ratings on such securities will not be revised or withdrawn. Current Financial Strength Ratings On August 4, 2014, KBRA issued a press release in which it affirmed MAC s financial strength rating of AA+ (stable outlook). MAC can give no assurance as to any further ratings action that KBRA may take. On July 2, 2014, S&P issued a credit rating report in which it affirmed MAC s financial strength rating of AA (stable outlook). MAC can give no assurance as to any further ratings action that S&P may take. For more information regarding MAC s financial strength ratings and the risks relating thereto, see AGL s Annual Report on Form 10-K for the fiscal year ended December 31, Capitalization of MAC As of December 31, 2014, MAC s policyholders surplus and contingency reserve were approximately $912 million and its unearned premium reserve was approximately $591 million, in each case, determined in accordance with statutory accounting principles. Concluded on following page. 44

45 BOND INSURANCE - Concluded Incorporation of Certain Documents by Reference Portions of the following document filed by AGL with the Securities and Exchange Commission (the SEC ) that relate to MAC are incorporated by reference into this Official Statement and shall be deemed to be a part hereof: the Annual Report on Form 10-K for the fiscal year ended December (filed by AGL with the SEC on February 26, 2015). All financial statements of MAC and all other information relating to MAC included in, or as exhibits to, documents filed by AGL with the SEC pursuant to Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended, excluding Current Reports or portions thereof furnished under Item 2.02 or Item 7,01 of Form 8-K, after the filing of the last document referred to above and before the termination of the offering of the Bonds shall be deemed incorporated by reference into this Official Statement and to be a part hereof from the respective dates of filing such documents. Copies of materials incorporated by reference are available over the internet at the SEC s website at htto:// at AGL s website at or will be provided upon request to Municipal Assurance Corp.: 31 West 52 uid Street, New York, New York 10019, Attention: Communications Department (telephone (212) ). Except for the information referred to above, no information available on or through AGL s website shall be deemed to be part of or incorporated in this Official Statement. Any information regarding MAC included herein under the caption BOND INSURANCE Municipal Assurance Corp. or included in a document incorporated by reference herein (collectively, the MAC Information ) shall be modified or superseded to the extent that any subsequently included MAC Information (either directly or through incorporation by reference) modifies or supersedes such previously included MAC Information. Any MAC Information so modified or superseded shall not constitute a part of this Official Statement, except as so modified or superseded. Miscellaneous Matters MAC makes no representation regarding the Bonds or the advisability of investing in the Bonds. In addition, MAC has not independently verified, makes no representation regarding, and does not accept any responsibility for the accuracy or completeness of this Official Statement or any information or disclosure contained herein, or omitted herefrom, other than with respect to the accuracy of the information regarding MAC supplied by MAC and presented under the heading BOND INSURANCE. 45

46 APPENDIX A MuNIcIPAl. SPECIMEN A CCTT1) ATCI? MUNICIPAL BOND Coiu AN ASSURED UJARANTY COAPANY INSURANCE POLICY ISSUER: Policy No: -N BONDS: $ in aggregate principal amount of,ective Date: Pjemium: $ MUNICIPAL ASSURANCE CORP. (MAC), for copsidration.xeceived, hereby UNCONDITIONALLY AND IRREVOCABLY agrees to pay to the trusteøhe Trustee) dr paying agent (the Paying Agent ) (as set forth in the documentation providing for the issiaçce of an securinghe Bonds) for the Bonds for the benefit of the Owners or at the election of MC directly t? each Owner subject only to the terms of this Policy (which includes each endorsement heqto) thatpprtion of U,e principal of and interest on the Bonds that shall become Due for Payment but shalje unpa1dby reaøn of Nonpayment by the Issuer. On the later of the day on which such principal and interest bkoipes Due for Payment or the Business Day next following the Business Day on whrft MAC shali fiave received Notice of Nonpayment MAC will disburse to or for the benefit of each Owner of a pond thee face amount of principal of and interest on the Bond that is then Due for Payment but Is th?n unpald by reason of Nonpayment by the Issuer but only upon receipt by MAC in a form reasotiably satisfactory to it of (a) evidence of the Owner s right to receive payment of the principal or interest then be for Payment and (b) evidence including any appropriate instruments of assignmet that all of theowner rights with respect to payment of such principal or interest that is Due for Payment shall thereupâñvést in MAC. A Notice of Nonpayment will be deemed received on a given Busine Day if it is rceived prior to 1:00 p.m. (New York time) on such Business Day; otherwise it.wi!j bedçemed receid on the next Business Day. If any Notice of Nonpayment received by i incorilte, it shawbe deemed not to have been received by MAC for purposes of the precedin sentence and: MAC shall promptly so advise the Trustee Paying Agent or Owner as appropriate who may,si.bmit an arliended Notice of Nonpayment Upon disbursement in respect of a Bond MAC shall ec6me the wner of the Bond any appurtenant coupon to the Bond or right to receipt of paymeit of principat of or interest on the Bond and shall be fully subrogated to the rights of the Owner inciudin. the Owner s right to receive payments under the Bond to the extent of any payment by MAC hereunderi Paymen by MAC tq the Trustee or Paying Agent for the benefit of the Owners shall to the extent thereof discharge the obligation of MAC under this Policy Except to the extent expressly modified by an endorsement hereto the following terms shall have the manings sp?clfied fotatf purposes of this Policy Business Day means any day other than (a) a Saturday Qr $rtday pr (b) a day on which banking institutions in the State of New York or the Insurers Fiscal Aht are authbrized or required by law or executive order to remain closed. Due for Payment means (a) when refeiing to the principal of a Bond, payable on the stated maturity date thereof or the date on which thesarp shail have been duly called for mandatory sinking fund redemption and does not refer to any earlier dateôn which payment is due by reason of call for redemption (other than by mandatory sinking fund redemption), acceleration or other advancement of maturity unless MAC shall elect, in its sole discretion, to pay such principal due upon such acceleration together with any accrued interest to the date of acceleration and (b) when referring to interest on a Bond, payable on the stated date for payment of interest. Nonpayment means, in respect of a Bond, the failure of the Issuer to have provided sufficient funds to the Trustee or, if there is no Trustee, to the Paying Agent for payment in full of all principal and interest that is Due for Payment on such Bond Nonpayment shall also include, in respect of a Bond, any payment of 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,,. A-i

47 By Page 2 of 2 Policy No. -N United States Bankruptcy Code by a trustee in bankruptcy in accordance with a final, nonappealable order of a court having competent jurisdiction. Notice means telephonic or telecopied notice, subsequently confirmed in a signed writing, or written notice by registered or certified mail, from an Owner, the Trustee or the Paying Agent to MAC which notice shall specify (a) the person or entity making the claim, (b) the Policy Number, (c) the claimed amount and (d) the date such claimed amount became Due for Payment. Owner means, in respect of a Bond, the person or entity who, at the time of Nonpayment, is entitled under the terms of such Bond to payment thereof, except that Owner shall not include the Issuer or any person or entity whose direct or indirect obligation constitutes the underlying security for the Bonds. MAC may appoint a fiscal agent (the Insurer s Fiscal Agent ) for purposeê of this Policy by giving written notice to the Trustee and the Paying Agent specifying the name and notice: address of the Insurer s Fiscal Agent. From and after the date of receipt of such notice by the Trustee nd the Paying Agent, (a) copies of all notices required to be delivered to MAC pursuant to,this Policy shall be simultaneously delivered to the Insurer s Fiscal Agent and to MAC and shall not be d8 d.ieived until received by both and (b) all payments required to be made by MAC under this Polic9 rnay be malè IirectIy by MAC or by the Insurer s Fiscal Agent on behalf of MAC. The Insurer s Fiscal Agentis the agent of MAC only and the Insurer s Fiscal Agent shall in no event be liable to any Owner for any act of the Insurer s Fiscal Agent or any failure of MAC to deposit or cause to be deposited &ifflcient funds to makpayments due under this Policy. To the fullest extent permitted by applicable law, MAC agres not to assert, and hereby waives, only for the benefit of each Owner, all rights (whether by counteriaim, setoff àrotherwise) and defenses (including, without limitation, the defense of fraud) whether acquird by subrogation, assignment or otherwise, to the extent that such rights and defensesmay be availableto MAC to avoid payment of its obligations under this Policy in accordance with the expe roviioris of thi Policy. This Policy sets forth in full the undertaking of MAC, rd shall not be modified, altered or affected by any other agreement or instrument, including any mbdiflcation or amendment thereto. Except to the extent expressly modified by an endorsement hereta, (a) an.ypremium paid in respect of this Policy is nonrefundable for any reason whatso&ver, including payment,.or provision being made for payment, of the Bonds prior to maturity and (b) this.poiicy may not, be hceled or revoked. THIS POLICY IS NOT COVERED BY THE PROPERTY/CASUALTY INSURANCE SECURITY FUND SPECIFIED IN ARTICLE 76 OF THE NEW YORK INSURANCE LAW In witness wherçof, MUNICIPAL ASSURANCE CORP. has caused this Policy to be executed on its behalf by its Authorized Qfficer.: MUNICIPAL ASSURANCE CORP. Authorized Officer A subsidiary of Assured Guaranty Ltd. 31 West 52nd Street, New York, N.Y (212) Form 500NY (5/13) (MAC)