ROOSEVELT & CROSS, INC. AND ASSOCIATES

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1 OFFICIAL STATEMENT DATED MARCH 24, 2015 New Issue Rating: S&P: AAA (See RATING herein) In the opinion of McManimon, Scotland & Baumann, LLC, Bond Counsel to the Township (as defined herein), pursuant to Section 103(a) of the Internal Revenue Code of 1986, as amended (the Code ) and existing statutes, regulations, administrative pronouncements and judicial decisions, and in reliance on the representations, certifications of fact, and statements of reasonable expectation made by the Township and assuming continuing compliance by the Township with certain ongoing covenants set forth in its Tax Certificate (as defined herein), interest on the Bonds (as defined herein) is not included in gross income for Federal income tax purposes and is not an item of tax preference for purposes of calculating the alternative minimum tax imposed on individuals and corporations. Bond Counsel is also of the opinion that interest on the Bonds held by corporate taxpayers is included in adjusted current earnings in calculating alternative minimum taxable income for purposes of the federal alternative minimum tax imposed on corporations. Interest on and any gain from the sale of the Bonds is not includable as gross income under the New Jersey Gross Income Tax Act. See TAX MATTERS herein. TOWNSHIP OF HOPEWELL, In the County of Mercer, New Jersey $8,283,000 GENERAL OBLIGATION BONDS, CONSISTING OF $7,492,000 GENERAL IMPROVEMENT BONDS AND $791,000 SEWER UTILITY BONDS (CALLABLE)/(BOOK-ENTRY ONLY)/(BANK QUALIFIED) Dated: Date of Delivery Due: April 1, as shown on the inside front cover The $8,283,000 aggregate principal amount of General Obligation Bonds, consisting of $7,492,000 General Improvement Bonds (the General Improvement Bonds ) and $791,000 Sewer Utility Bonds (the Sewer Utility Bonds and, together with the General Improvement Bonds, the Bonds ) of the Township of Hopewell, in the County of Mercer, New Jersey (the Township ), will be issued in the form of one certificate for the aggregate principal amount of each series of Bonds maturing in each year 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 (the Securities Depository ). See THE BONDS Book-Entry Only System herein. Interest on the Bonds will be payable semiannually on the first day of April and October in each year until maturity, commencing October 1, The principal of and the interest on the Bonds will be paid to the Securities Depository by the Township. Interest on the Bonds will be credited to the Participants of DTC (as defined herein) as listed on the records of DTC as of each next preceding March 15 th and September 15 th (the Record Dates for the payment of interest on the Bonds). The Bonds are subject to optional redemption prior to their stated maturities. See "THE BONDS Optional Redemption" herein. The Bonds are valid and legally binding obligations of the Township and, unless paid from other sources, are payable from ad valorem taxes levied upon all the taxable real property within the Township for the payment of the Bonds and the interest thereon without limitation as to rate or amount. This cover page contains information for quick reference only. It is not a summary of this issue. Investors must read the entire Official Statement, including the Appendices, to obtain information essential to the making of an informed investment decision. The Bonds are offered when, as and if issued and delivered to the Underwriter (as defined herein), subject to prior sale, to withdrawal or modification of the offer without notice and to approval of legality by the law firm of McManimon, Scotland & Baumann, LLC, Roseland, New Jersey and certain other conditions described herein. Certain legal matters will be passed upon for the Township by its Counsel, Steve Goodell, Lawrenceville, New Jersey. Phoenix Advisors, LLC, Bordentown, New Jersey served as Financial Advisor to the Township in connection with the Bonds. The Bonds are expected to be available for delivery in definitive form to the Securities Depository in New York, New York on or about April 9, ROOSEVELT & CROSS, INC. AND ASSOCIATES

2 TOWNSHIP OF HOPEWELL, In the County of Mercer, New Jersey $8,283,000 GENERAL OBLIGATION BONDS, CONSISTING OF $7,492,000 GENERAL IMPROVEMENT BONDS AND $791,000 SEWER UTILITY BONDS (CALLABLE)/(BOOK-ENTRY ONLY)/(BANK QUALIFIED) MATURITIES, AMOUNTS, INTEREST RATES, YIELDS AND CUSIP NUMBERS Year General Improvement Bonds Sewer Utility Bonds Combined Amounts Interest Rate Yield CUSIP Number* 2016 $250,000 $30,000 $280, % 0.20% LX ,000 35, , LY ,000 35, , LZ ,000 30, , MA ,000 35, , MB ,000 45, , MC ,000 45, , MD ,000 45, , ME ,000 45, , MF ,000 45, , MG ,000 45, , MH ,000 60, , MJ ,000 60, , MK ,000 60, , ML ,000 60, , MM ,000 60, , MN ,000 56, , MP2 TOTAL: $7,492,000 $791,000 $8,283,000 * "CUSIP" is a registered trademark of the American Bankers Association. CUSIP numbers are provided by Standard & Poor s, CUSIP Service Bureau, a division of The McGraw-Hill Companies, Inc. The CUSIP Numbers listed above are being provided solely for the convenience of Bondholders only at the time of issuance of the Bonds and the Township does not make any representations with respect to such numbers or undertake any responsibility for their accuracy now or at any time in the future. The CUSIP number for a specified maturity is subject to being changed after the issuance of the Bonds as a result of various subsequent actions including, but not limited to, a refunding in whole or in part of such maturity or as a result of the procurement of secondary market portfolio insurance or other similar enhancement by investors that is applicable to all or a portion of certain maturities of the Bonds.

3 TOWNSHIP OF HOPEWELL, IN THE COUNTY OF MERCER, NEW JERSEY MAYOR Harvey Lester COMMITTEE MEMBERS Vanessa Sandom Kevin Kuchinski John Hart Todd Brant ADMINISTRATOR Paul Pogorzelski CHIEF FINANCIAL OFFICER Elaine C. Borges CLERK Laurie E. Gompf, Clerk TOWNSHIP ATTORNEY Herbert Van Ness Cayci & Goodell, PC Lawrenceville, New Jersey AUDITOR Inverso and Stewart Marlton, New Jersey BOND COUNSEL McManimon, Scotland & Baumann, LLC Roseland, New Jersey FINANCIAL ADVISOR Phoenix Advisors, LLC Bordentown, New Jersey

4 No broker, dealer, salesperson or other person has been authorized by the Township to give any information or to make any representations with respect to the Bonds other than those contained in this Official Statement, and, if given or made, such information or representations must not be relied upon as having been authorized by the foregoing. The information contained herein has been provided by the Township and other sources deemed reliable; however, no representation or warranty is made as to its accuracy or completeness and such information is not to be construed as a representation or warranty by the Underwriter or, as to information from sources other than itself, by the Township. The information and the expressions of opinion herein are subject to change without notice, and neither the delivery of this Official Statement nor any sale hereunder under any circumstances shall create any implication that there has been no change in any of the information herein since the date hereof or since the date as of which such information is given, if earlier. References in this Official Statement to laws, rules, regulations, resolutions, agreements, reports and documents do not purport to be comprehensive or definitive. All references to such documents are qualified in their entirety by reference to the particular document, the full text of which may contain qualifications of and exceptions to statements made herein, and copies of which may be inspected at the offices of the Township during normal business hours. For purposes of compliance with Rule 15c2-12 of the Securities and Exchange Commission, this document, as the same may be supplemented or amended by the Township from time to time (collectively, the "Official Statement"), may be treated as a "Final Official Statement" with respect to the Bonds described herein that is deemed final as of the date hereof (or of any such supplement or amendment) by the Township. The information and expressions of opinion herein are subject to change without notice, and neither the delivery of this Official Statement nor any sale hereunder shall under any circumstances create any implication that there has been no change in the affairs of the Township since the date hereof or any earlier date as of which any information contained herein is given. This Official Statement is submitted in connection with the sale of the Bonds referred to herein and may not be used, in whole or in part, for any other purpose. IN CONNECTION WITH THE OFFERING, THE UNDERWRITER MAY OVER-ALLOT OR EFFECT TRANSACTIONS WHICH STABILIZE OR MAINTAIN THE MARKET PRICE OF THE BONDS OFFERED HEREBY AT A LEVEL ABOVE THAT WHICH MIGHT OTHERWISE PREVAIL IN THE OPEN MARKET. SUCH STABILIZING, IF COMMENCED, MAY BE DISCONTINUED AT ANY TIME WITHOUT PRIOR NOTICE. This Official Statement does not constitute an offer to sell or the solicitation of an offer to buy, nor shall there be any sale of the Bonds in any jurisdiction in which it is unlawful for any person to make such an offer, solicitation or sale. No dealer, broker, salesperson or other person has been authorized to give any information or to make any representations other than as contained in this Official Statement. If given or made, such other information or representations must not be relied upon as having been authorized by the Township or the Underwriter. THE ORDER AND PLACEMENT OF MATERIALS IN THIS OFFICIAL STATEMENT, INCLUDING THE APPENDICES, ARE NOT TO BE DEEMED TO BE A DETERMINATION OF RELEVANCE, MATERIALITY OR IMPORTANCE, AND THIS OFFICIAL STATEMENT, INCLUDING THE APPENDICES, MUST BE CONSIDERED IN ITS ENTIRETY. THE OFFERING OF THE BONDS IS MADE ONLY BY MEANS OF THIS ENTIRE OFFICIAL STATEMENT. McManimon, Scotland & Baumann, LLC has not participated in the preparation of the financial or statistical information contained in this Official Statement nor have they verified the accuracy or completeness thereof, and, accordingly, they express no opinion with respect thereto. i

5 TABLE OF CONTENTS INTRODUCTION... 1 THE BONDS... 1 General Description... 1 Optional Redemption... 2 Notice of Redemption... 2 Book-Entry Only System... 2 Discontinuation of Book-Entry Only System... 5 AUTHORIZATION AND PURPOSE... 5 General Improvement Bonds... 5 Sewer Utility Bonds... 6 SECURITY AND SOURCE OF PAYMENT... 6 OTHER RECENT DEBT OFFERINGS.6 MUNICIPAL FINANCE - FINANCIAL REGULATION OF COUNTIES AND MUNICIPALITIES... 7 Local Bond Law (N.J.S.A. 40A:2-1 et seq.)... 7 The Local Budget Law (N.J.S.A. 40A:4-1 et seq.)... 8 Tax Assessment and Collection Procedure Tax Appeals The Local Fiscal Affairs Law (N.J.S.A. 40A:5-1 et seq.) LITIGATION TAX MATTERS General Certain Federal Tax Consequences Relating to the Bonds Bank Qualification New Jersey Gross Income Tax Future Events SECONDARY MARKET DISCLOSURE MUNICIPAL BANKRUPTCY APPROVAL OF LEGAL PROCEEDINGS UNDERWRITING RATING FINANCIAL ADVISOR PREPARATION OF OFFICIAL STATEMENT ADDITIONAL INFORMATION MISCELLANEOUS APPENDIX A APPENDIX B APPENDIX C Certain Economic and Demographic Information About the Township of Hopewell, in the County of Mercer, New Jersey Excerpts from the Financial Statements of the Township of Hopewell, in the County of Mercer, New Jersey Form of Approving Legal Opinion of Bond Counsel ii

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7 OFFICIAL STATEMENT Relating to $8,283,000 GENERAL OBLIGATION BONDS, CONSISTING OF $7,492,000 GENERAL IMPROVEMENT BONDS AND $791,000 SEWER UTILITY BONDS of the TOWNSHIP OF HOPEWELL, IN THE COUNTY OF MERCER, NEW JERSEY (CALLABLE)/(BOOK-ENTRY ONLY)/(BANK QUALIFIED) INTRODUCTION This Official Statement, which includes the cover page, the inside front cover page and the appendices attached hereto, has been prepared by the Township of Hopewell (the "Township"), in the County of Mercer (the "County"), New Jersey (the State ) in connection with the sale and the issuance by the Township of $8,283,000 aggregate principal amount of General Obligation Bonds, consisting of $7,492,000 General Improvement Bonds (the General Improvement Bonds ) and $791,000 Sewer Utility Bonds (the Sewer Utility Bonds and, together with the General Improvement Bonds, the Bonds ) dated their date of delivery and maturing as shown on the inside front cover page of this Official Statement. This Official Statement has been executed by and on behalf of the Township by its Chief Financial Officer and may be distributed in connection with the sale of the Bonds described herein. General Description THE BONDS The Bonds will be issued in the form of one certificate for the aggregate principal amount of each series of Bonds maturing in each year and when issued will be registered in the name of CEDE & CO. as nominee of The Depository Trust Company, Jersey City, New Jersey, which will act as securities depository ( DTC or the Securities Depository ). The certificates will be on deposit with the Securities Depository. The Securities Depository will be responsible for maintaining a book-entry system for recording the interest of its participants or the transfers of interests among its participants. The participants will be responsible for maintaining records regarding the beneficial ownership interests in the Bonds on behalf of the individual purchasers. Individual purchases may be made in the amount of any integral multiple of $5,000 (or a necessary odd denomination in excess thereof) through book entries made on the books and records of the Securities Depository and its participants. Individual purchasers of the Bonds will not receive certificates representing their beneficial interests in the Bonds, but each book-entry Bond owner will receive a credit balance on the books of its nominees, and this credit balance will be confirmed by an initial transaction statement stating the details of the Bonds purchased. 1

8 Interest on the Bonds is payable semi-annually on the first day of April and October in each year until maturity, commencing on October 1, 2015 to the registered owners thereof whose name appears on the registration books of the Township as of each preceding March 15 th and September 15 th, each such date being a record date for the payment of interest on the Bonds. The principal of and interest on the Bonds will be paid to the Securities Depository by the Township. Interest will be credited to the participants of the Securities Depository as listed on the records of the Securities Depository. Optional Redemption The Bonds of this issue maturing prior to April 1, 2024, are not subject to redemption prior to their stated maturities. The Bonds of this issue maturing on or after April 1, 2024 are redeemable at the option of the Township in whole or in part on any date on or after April 1, 2023 at a redemption price equal to 100% of the principal amount thereof, plus accrued interest to the date fixed for redemption. Notice of Redemption Notice of Redemption shall be given by mailing by first class mail in a sealed envelope with postage prepaid to the registered owners of the Bonds not less than thirty (30) days, nor more than sixty (60) days prior the date fixed for redemption. Such mailing shall be to the owners of such Bonds at their respective addresses as they last appear on the registration books kept for that purpose by the Township or a duly appointed Bond Registrar. Any failure of the depository to advise any of its participants or any failure of any participant to notify any beneficial owner of any Notice of Redemption shall not affect the validity of the redemption proceedings. If the Township determines to redeem a portion of the Bonds prior to maturity, the Bonds to be redeemed shall be selected by the Township; the Bonds to be redeemed having the same maturity shall be selected by the Securities Depository in accordance with its regulations. So long as CEDE & CO., as nominee of DTC, is the registered owner of the Bonds, the Township shall send redemption notices only to CEDE & CO. See "Book-Entry Only System" herein for further information regarding conveyance of notices and Beneficial Owners. If Notice of Redemption has been given as provided herein, the Bonds or the portion thereof called for redemption shall be due and payable on the date fixed for redemption at the redemption price, together with accrued interest to the date fixed for redemption. Interest shall cease to accrue on the Bonds after the date fixed for redemption and no further interest shall accrue beyond the redemption date. Payment shall be made upon surrender of the Bonds redeemed. Book-Entry Only System The description which follows of the procedures and recordkeeping with respect to beneficial ownership interest in the Bonds, payment of principal and interest and other payments on the Bonds to Direct and Indirect Participants (each as defined below) or Beneficial Owners (defined below), confirmation and transfer of beneficial ownership interests in the Bonds and other related transactions by and between DTC, Direct Participants and Beneficial Owners, is based on certain information furnished by DTC to the Township. Accordingly, the Township does not make any representations as to the completeness or accuracy of such information. 2

9 DTC will act as securities depository for the Bonds. The Bonds will be issued as fully-registered securities registered in the name of CEDE & CO. (DTC's partnership nominee) or such other name as may be requested by an authorized representative of DTC. One fully-registered Bond certificate will be issued for each year of maturity of the Bonds of each series, in the aggregate principal amount of each maturity, and will be deposited with DTC. DTC, the world's largest depository, is a limited-purpose trust company organized under the New York Banking Law, a "banking organization" within the meaning of the New 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 whollyowned subsidiary of The Depository Trust & Clearing Corporation ("DTCC"). DTCC is the holding company for DTC, National Securities Clearing Corporation and Fixed Income Clearing Corporation, 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 U.S. 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 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 and 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 the Bonds with DTC and their registration in the name of CEDE & CO. or such other DTC nominee do not affect 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. 3

10 Conveyance of notices and other communications by DTC to Direct Participants, by Direct Participants to Indirect Participants and by Direct Participants and Indirect Participants to Beneficial Owners will be governed by arrangements among them, subject to any statutory or regulatory requirements as may be in effect from time to time. Redemption notices shall be sent to DTC. If less than all of the Bonds within a maturity are being redeemed, DTC's practice is to determine by lot the amount of interest of each Direct Participant in such maturity 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 procedures. Under its usual procedures, DTC mails an Omnibus Proxy to the Township 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 the 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 DTC's receipt of funds and corresponding detail information from the Township as paying agent, on the payable date in accordance with their respective holdings shown on DTC's records. Payments by Participants to Beneficial Owners will be governed by standing instructions and customary practices, as is the case with securities held for the accounts of customers in bearer form or registered in "street name", and will be the responsibility of such Participant and not of DTC or the Township, subject to any statutory or regulatory requirements as may be in effect from time to time. Payment of redemption proceeds and principal and interest to CEDE & CO. (or such other nominee as may be requested by an authorized representative of DTC) is the responsibility of the Township, disbursement of such payments to Direct Participants shall be the responsibility of DTC, and disbursement of such payments to the Beneficial Owners shall be the responsibility of Direct and Indirect Participants. DTC may discontinue providing its services as securities depository with respect to the Bonds at any time by giving reasonable notice to the Township or the paying agent, if any. Under such circumstances, in the event that a successor depository is not obtained, bond certificates are required to be printed and delivered. The Township 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 Township believes to be reliable, but the Township takes no responsibility for the accuracy thereof. THE TOWNSHIP AS PAYING AGENT WILL NOT HAVE ANY RESPONSIBILITY OR OBLIGATION TO SUCH DTC PARTICIPANTS OR THE PERSONS FOR WHOM THEY ACT AS NOMINEES WITH RESPECT TO THE PAYMENTS TO OR PROVIDING OF NOTICE FOR THE DTC PARTICIPANTS, OR THE INDIRECT PARTICIPANTS, OR BENEFICIAL OWNERS. 4

11 SO LONG AS CEDE & CO. IS THE REGISTERED OWNER OF THE BONDS, AS NOMINEE OF DTC, REFERENCES HEREIN TO THE BONDHOLDERS OR REGISTERED OWNERS OF THE BONDS (OTHER THAN UNDER THE CAPTION "TAX MATTERS") SHALL MEAN CEDE & CO. AND SHALL NOT MEAN THE BENEFICIAL OWNERS OF THE BONDS. Discontinuation of Book-Entry Only System If the Township, in its sole discretion, determines that DTC is not capable of discharging its duties, or if DTC discontinues providing its services with respect to the Bonds at any time, the Township will attempt to locate another qualified securities depository. If the Township fails to find such a securities depository, or if the Township determines, in its sole discretion, that it is in the best interest of the Township or that the interest of the Beneficial Owners might be adversely affected if the book-entry only system of transfer is continued (the Township undertakes no obligation to make an investigation to determine the occurrence of any events that would permit it to make such determination), the Township shall notify DTC of the termination of the book-entry only system. General Improvement Bonds AUTHORIZATION AND PURPOSE The General Improvement Bonds are issued pursuant to the Local Bond Law of the State of New Jersey, N.J.S.A. 40A:2-1 et seq. (the Local Bond Law ), the bond ordinances of the Township set forth below and a resolution of the Township duly adopted on February 11, 2015 (the Resolution ): Number of Ordinance Description of Improvement and Date of Adoption Aggregate Amount of Bonds to be Issued Various capital improvements, finally adopted May 14, $3,206, Various capital improvements, finally adopted April 22, ,421, Various capital improvements, finally adopted March 24, ,865,000 Total General Improvement Bonds: $7,492,000 The proceeds of the General Improvement Bonds are being issued to: (i) currently refund $4,627,000 of the Township's $9,226,572 Bond Anticipation Note dated and issued April 10, 2014 and maturing April 10, 2015 (the April Note ), together with $1,648, in cancellations and $ in principal reduction payments from the Township s 2015 budget; (ii) currently refund $2,865,000 of the Township's $3,765,677 Bond Anticipation Note dated and issued May 20, 2014 and maturing April 10, 2015 (the May Note ), together with $86, in cancellations and a $8.91 principal reduction payment from the Township s 2015 budget; and (iii) pay costs and expenses incidental to the issuance and delivery of the General Improvement Bonds. 5

12 Sewer Utility Bonds The Sewer Utility Bonds are issued pursuant to the Local Bond Law, the bond ordinances of the Township set forth below and the Resolution: Number of Ordinance Description of Improvement and Date of Adoption Aggregate Amount of Bonds to be Issued Sewer Utility equipment improvements, finally adopted May 14, $316,000 Acquisition of equipment for the Sewer Department, finally adopted May 14, ,200 Various improvements to the sewer utilities, finally adopted March 24, ,800 Total Sewer Utility Bonds: $791,000 The proceeds of the Sewer Utility Bonds are being issued to: (i) currently refund $463,200 of the April Note, together with $559 in principal reduction payments, (ii) currently refund $327,800 of the May Note, and (iii) pay costs and expenses incidental to the issuance and delivery of the Sewer Utility Bonds. SECURITY AND SOURCE OF PAYMENT The Bonds are valid and legally binding general obligations of the Township, and the Township has pledged its full faith and credit for the payment of the principal of and the interest on the Bonds. The Township is required by law to levy ad valorem taxes upon all the real property taxable within the Township for the payment of the principal of and the interest on the Bonds without limitation as to rate or amount. OTHER RECENT DEBT OFFERINGS The Township will also be issuing $2,954,538 Notes, consisting of a (i) $537,677 Bond Anticipation Note (the Bond Anticipation Note ), (ii) $30,000 Water Utility Bond Anticipation Note (the Water Utility Bond Anticipation Note ), and (iii) $2,386,861 Open Space Bond Anticipation Note (the Open Space Bond Anticipation Note and, together with the Bond Anticipation Note and the Water Utility Note, the Notes ) on April 10, The proceeds of the Bond Anticipation Note will be used to provide funds to: (i) currently refund $537,677 of the April Note, together with an $8,621 principal reduction payment from the 2015 budget, and (ii) pay certain costs and expenses incidental to the issuance and delivery of the Bond Anticipation Note. The proceeds of the Water Utility Note will be used to provide funds to: (i) currently refund $30,000 of the April Note, together with a $10,000 principal reduction payment from the 2015 budget, and (ii) pay certain costs and expenses incidental to the issuance and delivery of the Water Utility Bond Anticipation Note. The Open Space Bond Anticipation Note will be used to: provide funds to (i) currently refund $1,900,000 of the April Note, (ii) currently refund $486,861 of the May Note, and (iii) pay certain costs and expenses incidental to the issuance and delivery of the Open Space Bond Anticipation Note. 6

13 MUNICIPAL FINANCE - FINANCIAL REGULATION OF COUNTIES AND MUNICIPALITIES Local Bond Law (N.J.S.A. 40A:2-1 et seq.) The Local Bond Law governs the issuance of bonds and notes to finance certain general municipal and utility capital expenditures. Among its provisions are requirements that bonds must mature within the statutory period of usefulness of the projects bonded and that bonds be retired in serial installments. A 5% cash down payment is generally required toward the financing of expenditures for municipal purposes. All bonds and notes issued by the Township are general full faith and credit obligations. The authorized bonded indebtedness of the Township for municipal purposes is limited by statute, subject to the exceptions noted below, to an amount equal to 3½% of its average equalized valuation basis. The average for the last three years of the equalized value of all taxable real property and improvements and certain Class II railroad property within the boundaries of Township, as annually determined by the State Director of Taxation is shown in Appendix A. Certain categories of debt are permitted by statute to be deducted for purposes of computing the statutory debt limit, including school bonds that do not exceed the school bond borrowing margin and certain debt that may be deemed self-liquidating. The Township has not exceeded its statutory debt limit. The Township s statutory net debt as a percentage of average equalized valuation, as of December 31, 2014, is shown in Appendix A. The Township may exceed its debt limit with the approval of the Local Finance Board, a State regulatory agency, and as permitted by other statutory exceptions. If all or any part of a proposed debt authorization would exceed its debt limit, the Township may apply to the Local Finance Board for an extension of credit. If the Local Finance Board determines that a proposed debt authorization would not materially impair the credit of the Township or substantially reduce the ability of the Township to meet its obligations or to provide essential public improvements and services, or if it makes certain other statutory determinations, approval is granted. In addition, debt in excess of the statutory limit may be issued by the Township to fund certain notes, to provide for self-liquidating purposes, and, in each fiscal year, to provide for purposes in an amount not exceeding 2/3 of the amount budgeted in such fiscal year for the retirement of outstanding obligations (exclusive of utility and assessment obligations). The Township may sell short-term bond anticipation notes to temporarily finance a capital improvement or project in anticipation of the issuance of bonds if the bond ordinance or a subsequent resolution so provides. Bond anticipation notes for capital improvements may be issued in an aggregate amount not exceeding the amount specified in the ordinance creating such capital expenditure, as it may be amended and supplemented. A local unit s bond anticipation notes may be issued for periods not greater than one year. Generally, bond anticipation notes may not be outstanding for longer than ten years. An additional period may be available following the tenth anniversary date equal to the period from the notes maturity to the end of the tenth fiscal year in which the notes mature plus 4 months (May 1) in the next following fiscal year from the date of original issuance. Beginning in the third year, the amount of notes that may be issued is decreased by the minimum amount required for the first year s principal payment for a bond issue. 7

14 The Local Budget Law (N.J.S.A. 40A:4-1 et seq.) The foundation of the New Jersey local finance system is the annual cash basis budget. Every local unit must adopt a budget in the form required by the Division of Local Government Services, Department of Community Affairs, State of New Jersey (the "Division"). Certain items of revenue and appropriation are regulated by law and the proposed budget must be certified by the Director of the Division ("Director") prior to final adoption. The Local Budget Law requires each local unit to appropriate sufficient funds for payment of current debt service, and the Director is required to review the adequacy of such appropriations. The local unit is authorized to issue Emergency Notes and Special Emergency Notes pursuant to the Local Budget Law. Tax Anticipation Notes are limited in amount by law and must be paid off in full within 120 days of the close of the fiscal year. The Director has no authority over individual operating appropriations, unless a specific amount is required by law, but the review functions focusing on anticipated revenues serve to protect the solvency of all local units. The cash basis budgets of local units must be in balance, i.e., the total of anticipated revenues must equal the total of appropriations (N.J.S.A. 40A:4-22). If in any year a local unit's expenditures exceed its realized revenues for that year, then such excess must be raised in the succeeding year's budget. The Local Budget Law (N.J.S.A. 40A:4-26) provides that no miscellaneous revenues from any source may be included as an anticipated revenue in the budget in an amount in excess of the amount actually realized in cash from the same source during the next preceding fiscal year, unless the Director determines that the facts clearly warrant the expectation that such excess amount will actually be realized in cash during the fiscal year and certifies that determination to the local unit. No budget or budget amendment may be adopted unless the Director shall have previously certified his approval of such anticipated revenues except that categorical grants-in-aid contracts may be included for their face amount with an offsetting appropriation. The fiscal years for such grants rarely coincide with the municipality's calendar year. However, grant revenue is generally not realized until received in cash. The same general principle that revenue cannot be anticipated in a budget in excess of that realized in the preceding year applies to property taxes. The maximum amount of delinquent taxes that may be anticipated is limited by a statutory formula, which allows the unit to anticipate collection at the same rate realized for the collection of delinquent taxes in the previous year. Also the local unit is required to make an appropriation for a "reserve for uncollected taxes" in accordance with a statutory formula to provide for a tax collection in an amount that does not exceed the percentage of taxes levied and payable in the preceding fiscal year that was received in cash by December 31 of that year. The budget also must provide for any cash deficits of the prior year. 8

15 Emergency appropriations (those made after the adoption of the budget and the determination of the tax rate) may be authorized by the governing body of a local unit. However, with minor exceptions, such appropriations must be included in full in the following year's budget. The exceptions are certain enumerated quasi-capital projects ( special emergencies ) such as ice, snow and flood damage to streets, roads and bridges, which may be amortized over three years, and tax map preparation, re-evaluation programs, revision and codification of ordinances, master plan preparation and drainage map preparation for flood control purposes, which may be amortized over five years. Of course, emergency appropriations for capital projects may be financed through the adoption of a bond ordinance and amortized over the useful life of the project. Budget transfers provide a degree of flexibility and afford a control mechanism. Transfers between appropriation accounts may be made only during the last two months of the year. Appropriation reserves may also be transferred during the first three (3) months of the year, to the previous year s budget. Both types of transfers require a 2/3 vote of the full membership of the governing body; however, transfers cannot be made from either the down payment account or the capital improvement fund. Transfers may be made between sub-account line items within the same account at any time during the year, subject to internal review and approval. In a CAP budget, no transfers may be made from excluded from CAP appropriations to within CAPS appropriations nor can transfers be made between excluded from CAP appropriations. A provision of law known as the New Jersey Cap Law (N.J.S.A. 40A: et seq.) imposes limitations on increases in municipal appropriations subject to various exceptions. The payment of debt service is an exception from this limitation. The Cap formula is somewhat complex, but basically, it permits a municipality to increase its overall appropriations by the lesser of 2.5% or the Index Rate if the index rate is greater than 2.5%. The Index Rate is the rate of annual percentage increase, rounded to the nearest one-half percent, in the Implicit Price Deflator for State and Local Government purchases of goods and services computed by the U.S. Department of Commerce. Exceptions to the limitations imposed by the Cap Law also exist for other things including capital expenditures; extraordinary expenses approved by the Local Finance Board for implementation of an interlocal services agreement; expenditures mandated as a result of certain emergencies; and certain expenditures for services mandated by law. Counties are also prohibited from increasing their tax levies by more than the lesser of 2.5% or the Index Rate subject to certain exceptions. Municipalities by ordinance approved by a majority of the full membership of the governing body may increase appropriations up to 3.5% over the prior year s appropriation and counties by resolution approved by a majority of the full membership of the governing body may increase the tax levy up to 3.5% over the prior years tax levy in years when the Index Rate is 2.5% or less. Additionally, new legislation constituting P.L. 2007, c.62, effective April 3, 2007, imposes a 4% cap on the tax levy of a municipality, county, fire district or solid waste collection district, with certain exceptions and subject to a number of adjustments. The exclusions from the limit include increases required to be raised for debt service and certain lease payments to county improvement authorities, increases to replace certain lost state aid, increases in certain pension contributions, increases in the reserve for uncollected taxes required for municipalities, and certain increases in health care costs over 4%. The Local Finance Board may approve waivers for certain extraordinary costs identified by the statute, and voters may approve increases above 4% not otherwise permitted by a vote of 60% of the voters voting on a public question. 9

16 This legislation has now been amended by P.L. 2010, c. 44, approved July 13, 2010 and applicable to the next local budget year following enactment to limit tax levy increases for those local units to 2% with exceptions only for capital expenditures including debt service, increases in pension contributions and accrued liability for pension contributions in excess of 2%, certain healthcare increases, extraordinary costs directly related to a declared emergency and amounts approved by a simple majority of voters voting at a special election. Chapter 44 eliminates the process for obtaining waivers for additional spending under the tax levy limitation. Neither the tax levy limitation nor the Cap Law limits the obligation of the Township to levy ad valorem taxes upon all taxable real property within the Township to pay debt service on its bonds or notes. In accordance with the Local Budget Law, each local unit must adopt and may from time to time amend rules and regulations for capital budgets, which rules and regulations must require a statement of capital undertakings underway or projected for a period not greater than over the next ensuing six years as a general improvement program. The capital budget, when adopted, does not constitute the approval or appropriation of funds, but sets forth a plan of the possible capital expenditures which the local unit may contemplate over the three years. Expenditures for capital purposes may be made either by ordinances adopted by the governing body setting forth the items and the method of financing or from the annual operating budget if the terms were detailed. Tax Assessment and Collection Procedure Property valuations (assessments) are determined on true values as arrived at by a cost approach, market data approach and capitalization of net income where appropriate. Current assessments are the results of new assessments on a like basis with established comparable properties for newly assessed or purchased properties. This method assures equitable treatment to like property owners. But it often results in a divergence of the assessment ratio to true value. Because of the changes in property resale values, annual adjustments could not keep pace with the changing values. Upon the filing of certified adopted budgets by the Township s Local School District and the County, the tax rate is struck by the County Board of Taxation based on the certified amounts in each of the taxing districts for collection to fund the budgets. The statutory provision for the assessment of property, levying of taxes and the collection thereof are set forth in N.J.S.A. 54:4-1 et seq. Special taxing districts are permitted in New Jersey for various special services rendered to the properties located within the special districts. Tax bills are mailed annually in June by the Township. The taxes are due August 1 and November 1 respectively, and are adjusted to reflect the current calendar year s total tax liability. The preliminary taxes due February 1 and May 1 of the succeeding year are based upon one-half of the current year s total tax. Tax installments not paid on or before the due date are subject to interest penalties of 8% per annum on the first $1, of the delinquency and 18% per annum on any amount in excess of $1, These interest rates and penalties are the highest permitted under New Jersey Statutes. Delinquent taxes open for one year or more are annually included in a tax sale in accordance with New Jersey Statues. The liens of the Township for the past 5 years are shown in Appendix A. 10

17 Tax Appeals The New Jersey Statutes provide a taxpayer with remedial procedures for appealing an assessment deemed excessive. Prior to February 1 in each year, the Township must mail to each property owner a notice of the current assessment and taxes on the property. The taxpayer has a right to petition the County Tax Board on or before April 1 for review. The County Board of Taxation has the authority after a hearing to decrease or reject the appeal petition. These adjustments are usually concluded within the current tax year and reductions are shown as canceled or remitted taxes for that year. If the taxpayer feels his petition was unsatisfactorily reviewed by the County Board of Taxation, appeal may be made to the Tax Court of New Jersey for further hearing. Some State Tax Court appeals may take several years prior to settlement and any losses in tax collections from prior years are charged directly to operations. The Local Fiscal Affairs Law (N.J.S.A. 40A:5-1 et seq.) This law regulates the non-budgetary financial activities of local governments. The chief financial officer of every local unit must file annually, with the Director, a verified statement of the financial condition of the local unit and all constituent boards, agencies or commissions. An independent examination of each local unit s accounts must be performed annually by a licensed registered municipal accountant. The audit, conforming to the Division of Local Government Services Requirements of Audit, includes recommendations for improvement of the local unit s financial procedures and must be filed with the report, together with all recommendations made, and must be published in a local newspaper within 30 days of its submission. The entire annual audit report for the year ended December 31, 2012 for the Township is on file with the Clerk and is available for review during business hours. LITIGATION To the knowledge of the Township Attorney, Steve Goodell, Lawrenceville, New Jersey, there is no litigation of any nature now pending or threatened, restraining or enjoining the issuance or the delivery of the Bonds, or the levy or the collection of any taxes to pay the principal of or the interest on the Bonds, or in any manner questioning the authority or the proceedings for the issuance of the Bonds or for the levy or the collection of taxes, or contesting the corporate existence or the boundaries of the Township or the title of any of the present officers. Moreover, to the knowledge of the Township Attorney, no litigation is presently pending or threatened that, in the opinion of the Township Attorney, would have a material adverse impact on the financial condition of the Township if adversely decided. A certificate to such effect will be executed by the Township s Attorney and delivered to the Underwriter at the closing. General TAX MATTERS Section 103(a) of the Internal Revenue Code of 1986, as amended (the Code) provides that interest on the Bonds is not included in gross income for federal income tax purposes only if certain requirements are met. In its Certificate as to Arbitrage and Compliance with the Code (the "Tax Certificate"), which will be delivered in connection with the issuance of the Bonds, the Township will make certain representations, certifications of fact, and statements of reasonable 11

18 expectation in connection with the issuance of the Bonds and certain ongoing covenants to comply with applicable requirements of the Code to assure the exclusion of the interest on the Bonds from gross income under Section 103(a) of the Code. In the opinion of Bond Counsel, under existing statutes, regulations, administrative pronouncements and judicial decisions, and in reliance on the representations, certifications of fact, and statements of reasonable expectation made by the Township in the Tax Certificate and assuming compliance by the Township with its ongoing covenants in the Tax Certificate, interest on the Bonds is not included in the gross income of the owners thereof for federal income tax purposes pursuant to the Code and is not an item of tax preference to be included in calculating alternative minimum taxable income under the Code for purposes of the alternative minimum tax imposed with respect to individuals and corporations. Bond Counsel is also of the opinion that interest on the Bonds held by corporate taxpayers is included in adjusted current earnings in calculating alternative minimum taxable income for purposes of the federal alternative minimum tax imposed on corporations. Certain Federal Tax Consequences Relating to the Bonds Although interest on the Bonds is excluded from gross income for federal income tax purposes, the accrual or receipt of interest on the Bonds may otherwise affect the federal income tax liability of the recipient. The nature and extent of these other tax consequences will depend upon the recipient s particular tax status or other items of income or deduction. Bond Counsel expresses no opinion regarding any such consequences. Purchasers of the Bonds, particularly purchasers that are corporations (including S corporations and foreign corporations operating branches in the United States), property or casualty insurance companies, banks, thrifts or other financial institutions and certain recipients of Social Security benefits, are advised to consult their own tax advisors as to the tax consequences of purchasing or holding the Bonds. Bank Qualification The Bonds will be designated as qualified under Section 265 of the Code by the Township for an exemption from the denial of deduction for interest paid by financial institutions to purchase or to carry tax-exempt obligations. The Code denies the interest deduction for certain indebtedness incurred by banks, thrift institutions and other financial institutions to purchase or to carry tax-exempt obligations. The denial to such institutions of one hundred percent (100%) of the deduction for interest paid on funds allocable to tax-exempt obligations applies to those tax-exempt obligations acquired by such institutions after August 7, For certain issues, which are eligible to be designated and which are designated by the issuer as qualified under Section 265 of the Code, eighty percent (80%) of such interest may be deducted as a business expense by such institutions. New Jersey Gross Income Tax In the opinion of Bond Counsel, the interest on the Bonds and any gain realized on the sale of the Bonds is not includable as gross income under the New Jersey Gross Income Tax Act. 12

19 Future Events Tax legislation, administrative action taken by tax authorities, and court decisions, whether at the Federal or state level, may adversely affect the exclusion from gross income of interest on the Bonds for federal income tax purpose, or the exclusion of interest on and any gain realized on the sale of the Bonds under the existing New Jersey Gross Income Tax Act, and any such legislation, administrative action or court decisions could adversely affect the market price or marketability of the Bonds. EACH PURCHASER OF THE BONDS SHOULD CONSULT HIS OR HER OWN ADVISOR REGARDING ANY CHANGES IN THE STATUS OF PENDING OR PROPOSED FEDERAL OR NEW JERSEY STATE TAX LEGISLATION, ADMINISTRATIVE ACTION TAKEN BY TAX AUTHORITIES, OR COURT DECISIONS. ALL POTENTIAL PURCHASERS OF THE BONDS SHOULD CONSULT WITH THEIR TAX ADVISORS IN ORDER TO UNDERSTAND THE IMPLICATIONS OF THE CODE. SECONDARY MARKET DISCLOSURE The Township, pursuant to the Resolution, has covenanted for the benefit of the Bondholders and the beneficial owners of the Bonds to provide certain secondary market disclosure information pursuant to the Securities and Exchange Commission Rule 15c2-12 (the "Rule"). Specifically, for so long as the Bonds remain outstanding (unless the Bonds have been wholly defeased), the Township will provide: (a) On or prior to September 30th, beginning with the fiscal year ending December 31, 2015 to the Municipal Securities Rulemaking Board through the Electronic Municipal Market Access Data Port ( MSRB ), annual financial information with respect to the Township consisting of the audited financial statements (or unaudited financial statements if audited financial statements are not then available, which audited financial statements will be delivered when and if available) of the Township and certain financial information and operating data consisting of (i) Township indebtedness, (ii) the Township s most current adopted budget, (iii) property valuation information, and (ii) tax rate, levy and collection data. The audited financial information will be prepared in accordance with modified cash accounting as mandated by State of New Jersey statutory principles in effect from time to time or with generally accepted accounting principles as modified by governmental accounting standards as may be required by New Jersey law and shall be filed electronically and accompanied by identifying information with the MSRB; (b) in a timely manner not in excess of ten business days after the occurrence of the event, to the MSRB, notice of any of the following events with respect to the Bonds (herein "Material Events"): (1) Principal and interest payment delinquencies; (2) Non-payment related defaults, if material; (3) Unscheduled draws on debt service reserves reflecting financial difficulties; (4) Unscheduled draws on credit enhancements reflecting financial difficulties; (5) Substitution of credit or liquidity providers, or their failure to perform; 13

20 (6) 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 security, or other material events affecting the tax status of the security; (7) Modifications to rights of security holders, if material; (8) Bond calls, if material, and tender offers; (9) Defeasances; (10) Release, substitution, or sale of property securing repayment of the securities, if material; (11) Rating changes; (12) Bankruptcy, insolvency, receivership or similar event of the obligated person; (13) The consummation of a merger, consolidation, or acquisition involving an obligated person or the sale of all or substantially all of the assets of the obligated person, 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; and (14) Appointment of a successor or additional trustee or the change of name of a trustee, if material. For the purposes of the event identified in subparagraph (12) above, the event is considered to occur when any of the following occur: the appointment of a receiver, fiscal agent or similar officer for an obligated person in a proceeding under the U.S. Bankruptcy Code or 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 obligated person, 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 obligated person. (c) in a timely manner to the MSRB, notice of failure of the Township to provide required annual financial information on or before the date specified in the Resolution. In the event that the Township fails to comply with the above-described undertaking and covenants, the Township shall not be liable for any monetary damages, remedy of the beneficial owners of the Bonds being specifically limited in the undertaking to specific performance of the covenants. The undertaking may be amended by the Township from time to time, without the consent of the Bondholders or the beneficial owners of the Bonds, in order to make modifications required in connection with a change in legal requirements or change in law, which in the opinion of nationally recognized bond counsel complies with the Rule. The Township previously failed to file, in accordance with SEC Rule 15c2-12, in a timely manner, under previous filing requirements: (i) its adopted budgets for the fiscal years ending December 31, 2010 through 2014; (ii) operating data for the fiscal years ending December 31, 2009 through 2013; and (iii) annual financial statements for the fiscal years ending December 31, 2009, 2010, and While the adopted budget information is included as a schedule in its 14

21 annual audited financial statements that have been filed with EMMA, the Township has subsequently filed the adopted budgets as separate filings. Additionally, the Township acknowledges that it previously failed to file material event notices and late filing notices in connection with (i) its timely filings of annual financial information; and (ii) certain underlying rating changes. Such notices of material events and late filings have been filed with EMMA as of the date of this Official Statement. The Township has hired Phoenix Advisors, LLC to serve as continuing disclosure agent. There can be no assurance that there will be a secondary market for the sale or purchase of the Bonds. Such factors as prevailing market conditions, financial condition or market position of firms who may make the secondary market and the financial condition of the Township may affect the future liquidity of the Bonds. MUNICIPAL BANKRUPTCY The undertakings of the Township should be considered with reference to Chapter IX of the Bankruptcy Act, 11 U.S.C. Section 401, et seq., as amended by Public Law , approved April 8, 1976, and as further amended on November 6, 1978 by the Bankruptcy Reform Act of 1978, effective October 1, 1979, as further amended by Public Law , effective November 3, 1988, and as further amended and other bankruptcy laws affecting creditor s rights and municipalities in general. The amendments of P.L replace former Chapter IX and permit the State or any political subdivision, public agency, or instrumentality that is insolvent or unable to meet its debts to file a petition in a court of bankruptcy for the purpose of effecting a plan to adjust its debts; directs such a petitioner to file with the court a list of petitioner s creditors; provides that a petition filed under this chapter shall operate as a stay of the commencement or continuation of any judicial or other proceeding against the petitioner; grants priority to debt owed for services or material actually provided within three months of the filing of the petition; directs a petitioner to file a plan for the adjustment of its debts; and provides that the plan must be accepted in writing by or on behalf of creditors holding at least two-thirds in amount or more than one-half in number of the listed creditors. The 1976 Amendments were incorporated into the Bankruptcy Reform Act of 1978 with only minor changes. Reference should also be made to N.J.S.A. 52:27-40 et. seq., which provides that a municipality has the power to file a petition in bankruptcy provided the approval of the Municipal Finance Commission has been obtained. The powers of the Municipal Finance Commission have been vested in the Local Finance Board. The Bankruptcy Act specifically provides that Chapter IX does not limit or impair the power of a state to control, by legislation or otherwise, the procedures that a municipality must follow in order to take advantage of the provisions of the Bankruptcy Act. APPROVAL OF LEGAL PROCEEDINGS All legal matters incident to the authorization, the issuance, the sale and the delivery of the Bonds are subject to the approval of McManimon, Scotland & Baumann, LLC, Roseland, New Jersey, Bond Counsel to the Township, whose approving legal opinion will be delivered with the Bonds substantially in the form set forth as Appendix C. 15

22 UNDERWRITING The Bonds have been purchased from the Township at a public sale by Roosevelt & Cross, Inc. and Associates, New York, New York (the Underwriter ), at a price of $8,448, (consisting of the par amount of the Bonds, plus a bid premium of $165,660.00). The Underwriter has purchased the Bonds in accordance with the Notice of Sale. The Bonds are being offered for sale at the yields set forth on the inside front cover of this Official Statement. RATING Standard & Poor s Ratings Services, a Standard & Poor s Financial Services, LLC business ( Standard & Poor s ) has assigned a rating of AAA to the Bonds. An explanation of the significance of such rating may be obtained from Standard & Poor s at 55 Water Street, New York, New York The rating is not a recommendation to buy, sell or hold the Bonds and there is no assurance that such rating will continue for any given period of time or that such rating will not be revised downward or withdrawn entirely by Standard & Poor s if, in its judgment, circumstances so warrant. Any such downward revision or withdrawal of such rating by Standard & Poor s may have an adverse effect on the market price of the Bonds. FINANCIAL ADVISOR Phoenix Advisors, LLC, Bordentown, New Jersey served as financial advisor to the Township (the Financial Advisor ) with respect to the issuance of the Bonds. This Official Statement has been prepared with the assistance of the Financial Advisor. Certain information set forth herein has been obtained from the Township and other sources, which are deemed reliable, but no warranty, guaranty or other representation as to the accuracy or completeness is made as to such information contained herein will be realized. The Financial Advisor is a financial advisory firm, and is not engaged in the business of underwriting, marketing or trading municipal securities or any other negotiable instrument. PREPARATION OF OFFICIAL STATEMENT The Township hereby states that the descriptions and statements herein, including financial statements, are true and correct in all material respects and it will confirm to the Underwriter, by certificates signed by the Chief Financial Officer of the Township, that to his knowledge such descriptions and statements, as of the date of this Official Statement, are true and correct in all material respects and do not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements herein, in light of the circumstances under which they were made, not misleading. Inverso and Stewart has reviewed certain financial and statistical information contained in this Official Statement and has compared it to the Township's audited financial statements. They have not verified the accuracy of other information or the completeness and fairness of that and other information contained herein, and accordingly, express no opinion with respect thereto. However, they take responsibility for the audited financial statements to the extent specified in the Independent Auditor's Report appearing in Appendix B. All other information has been obtained from sources which the Township considers to be reliable and it makes no warranty, guaranty or other representation with respect to the accuracy and completeness of such information. 16

23 McManimon, Scotland & Baumann, LLC has not participated in the preparation of the financial or statistical information contained in this Official Statement, nor have they verified the accuracy, completeness or fairness thereof and, accordingly, expresses no opinion with respect thereto. ADDITIONAL INFORMATION Inquiries regarding this Official Statement, including information additional to that contained herein, may be directed to Elaine C. Borges, Chief Financial Officer, (609) (Ext. 625) at 201 Washington Crossing Pennington Road, Titusville, New Jersey or Phoenix Advisors, LLC (609) MISCELLANEOUS This Official Statement is not to be construed as a contract or agreement between the Township and the purchasers or holders of any of the Bonds. Any statements made in this Official Statement involving matters of opinion, whether or not expressly so stated, are intended merely as opinions and not as representations of fact. The information and expressions of opinion contained herein are subject to change without notice and neither the delivery of this Official Statement nor any sale of Bonds made hereunder shall, under any circumstances, create any implication that there has been no change in the affairs of the Township since the date hereof. The information contained in this Official Statement is not guaranteed as to accuracy or completeness. TOWNSHIP OF HOPEWELL Dated: March 24, 2015 By: /s/ Elaine C. Borges Elaine C. Borges, Chief Financial Officer 17

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25 APPENDIX A Certain Economic and Demographic Information about the Township of Hopewell, in the County of Mercer, New Jersey

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27 INFORMATION REGARDING THE TOWNSHIP 1 The following material presents certain economic and demographic information of the Township of Hopewell (the Township ) in the County of Mercer (the County ) in the State of New Jersey (the State ). General Information The Township is comprised of an area of approximately sixty (60) square miles and it is bounded by Hunterdon County to the north, the Delaware River to the west, Lawrence and Ewing Townships to the south and Princeton to the east. The Township also surrounds the Boroughs of Hopewell and Pennington. The Township is divided by New Jersey State Highway Route 31. The cities of Philadelphia and New York provide cultural and economic centers which are easily accessible via Interstates 95 and 295 which run through the Township, commuter railroad transportation and/or bus service. Air travel connections are available at the Trenton/Mercer Airport which is located just over the Township's southern border in Ewing Township. The area encompassing the Township is bucolic in nature. A mixture of pastoral, wooded and rugged terrain guarantees that future development will be limited to suitable areas, allowing the Township to retain its rural and unspoiled characteristics. A full range of commercial establishments are located in the Township. Restaurants, service stations, grocery and food specialty shops, banks and offices complement the residential nature of the Township's developed areas. Additional commercial and retail shopping is available in the boroughs of Hopewell and Pennington. Major corporate employers are Bristol-Myers Squibb, Janssen Pharmaceutical (a division of Johnson & Johnson) and Bank of America Merrill Lynch. Public and quasi-public land uses in the Township include the Mercer County Howell Living History Farm and the Mercer County Belle Mountain recreation area in the northwest section of the Township. Washington Crossing State Park, Mercer County Park Northwest and Mercer County's Rosedale Park provide both passive and active recreation areas within the Township. Baldpate Mountain, owned by the County, the State and the Township; the Aliger property which is owned by the Township; and Independence Park which is owned by the Township, also provide for passive and active recreation. Vacant land area is predominately zoned for residential development, which provides for several zoning classifications from five units per acre in the Township's growth zone up to fourteen acre sites in the mountainous areas. 1 Source: The Township (unless otherwise indicated). A-1

28 Education The Township is served by the Hopewell Valley Regional School District, an all-purpose regional school district which is comprised of Hopewell Borough, the Township, and Pennington Borough (the "School District"). The School District is a type II school district and currently provides education for grades pre-k through 12. There are four (4) elementary schools that house grades pre-k through 5; one (1) middle school that houses grades 6 through 8; and one (1) high school for grades 9 through 12. The School District s Board of Education is comprised of nine (9) elected members, elected for staggered three (3) year terms. Pursuant to State statute, the Board of Education appoints a Superintendent and Business Administrator/Board Secretary. In addition to the schools of the Hopewell Valley Regional School District, there are several private schools conveniently available in the adjacent communities. Area higher education is provided by The College of New Jersey, Princeton University, Rider University and Mercer County Community College, all of which are located in adjacent communities. These universities and colleges offer a full range of curriculum in undergraduate, graduate and doctoral studies. Form of Government The Township is governed by a five-member Township Committee elected on an at-large basis. Each year the elected body selects one of its members to serve as Mayor for a one-year term. The Township Committee has responsibility for all executive and legislative matters, including the enactment of all ordinances and resolutions. Administrative responsibilities are vested in a full-time professionally trained Township Administrator, who is charged with overseeing the "day-to-day" operations of the municipal government. Township offices and departments include: the Office of the Township Administrator, Municipal Court, the Office of the Township Clerk, the Department of Finance, the Department of Revenue Collection, the Offices of Planning, Zoning and Affordable Housing, the Municipal Construction Department, the Police Department, the Department of Public Works and the Health Department. The Township Committee formulates policy with input from the Township's professional staff, as well as resident volunteers who serve on various boards, commissions or committees. The volunteer boards of the municipal government are: Zoning Board of Adjustment, Planning Board, Environmental Commission, Historic Preservation Commission, Affordable Housing Committee, Board of Health, the Agricultural Advisory Committee and the Open Space Committee. A-2

29 Collective Bargaining Units Public Works The Township currently has contracts with the following collective bargaining units: Contract Association Expiration Superior Officers Association (S.O.A.) December 31, 2015 P.B.A. Local 342 December 31, 2015 C.W.A. No December 31, Operators December 31, 2015 AFSCME Local 3867 December 31, 2015 Public Works provides curbside service Township-wide including: bulky waste (January, April, May, June, September and October) and brush pickup monthly by zone (exceptions: the months of July, August, November and December), Freon disposal (monthly), leaf pickup (spring and autumn) and tire pickup (twice during the year). Additionally, this department maintains 144 miles of Township roadway (including surface repairs and snow removal), all Township vehicles, all municipal buildings and any parks or recreational facilities that are the responsibility of the Township. Utilities Electric and gas service is provided by Jersey Central Power & Light, PSE&G Gas Company, and Elizabeth Gas Company. Private companies supply garbage collection. Comcast Cablevision and Verizon Fios provide cable television service. Seventy percent of Township residents have septic systems and well water. Trenton Water Works supplies water to neighborhoods south of Lawrenceville-Pennington and Washington Crossing-Pennington Roads. Elizabethtown Water Company has a limited franchise to provide water for a few neighborhoods in the northern section of the Township. Stony Brook Regional Sewerage Authority and the Ewing-Lawrence Sewerage Authority provide sewage treatment to those areas, which are sewered. Public Safety The Police Department provides 24-hour service to the residents of the Township and to the residents of Hopewell Borough via an interlocal service agreement that has been in place since January The department consists of a Chief, Lieutenants, Sergeants, Patrol Officers, Dispatchers, Secretary and a Discovery Clerk. Services to the public include: Resident Identification Cards, Crime Watch, Domestic Violence Task Force, a Traffic Service Unit and educational services in local schools. A-3

30 Recreation The Hopewell Valley Recreation Department was created to foster a regional approach to the delivery of recreation and leisure services. The department sponsors a comprehensive array of recreation and leisure services and a wide variety of community trips, senior citizens activities and programs for children and teens. More than 40 programs were offered throughout the year, including senior breakfasts, community trips, baseball games, a weekly senior bridge program, voice and dance lessons, a youth wrestling program and a youth field hockey program. The department also manages the Township's parks, playgrounds and athletic facilities, including the Municipal Athletic Complex, the 22-acre Independence Park and the 49-acre Twin Pines facility that is currently being used as a practice sight for many of the community's soccer and lacrosse teams. The Township continues its partnership with neighboring Lawrence Township in the maintenance and development of the Twin Pines Site. The Township is the recreation department's fiscal agent and provides salary and certain operating expenses through its annual municipal budget. A trust fund was established for feebased programs that are designed to be self-supporting and provide employment to part-time staff members. Retirement Systems All full-time permanent or qualified Township employees who began employment after 1944 must enroll in one of two retirement systems depending upon their employment status. These systems were established by acts of the State Legislature. Benefits, contributions, means of funding and the manner of administration are set by State law. The Division of Pensions within the New Jersey Department of Treasury (the Division ) is the administrator of the funds with the benefit and contribution levels set by the State. The Township is enrolled in the Public Employees' Retirement System ( PERS ) and the Police and Firemen's Retirement System ( PFRS ). Pension Information 2 Employees, who are eligible to participate in a pension plan, are enrolled in PERS or PFRS, administered by the Division. The Division annually charges municipalities and other participating governmental units for their respective contributions to the plans based upon actuarial calculations. The employees contribute a portion of the cost. The Township s share of pension costs in 2014, which is based upon the annual billings received from the State, amounted to $504,358 for PERS and $617,339 for PFRS. 2 Source: State of New Jersey Department of Treasury, Division of Pensions and Benefits A-4

31 Employment and Unemployment Comparisons For the following years, the New Jersey Department of Labor reported the following annual average employment information for the Township, the County, and the State: Total Labor Employed Total Unemployment Force Labor Force Unemployed Rate Township ,587 9, % ,526 9, % ,380 9, % ,854 8, % ,994 9, % County , ,564 13, % , ,226 15, % , ,552 15, % , ,171 16, % , ,820 15, % State ,537,800 4,166, , % ,595,500 4,159, , % ,556,200 4,131, , % ,502,400 4,076, , % ,536,700 4,118, , % Source: New Jersey Department of Labor, Office of Research and Planning, Division of Labor Market and Demographic Research, Bureau of Labor Force Statistics, Local Area Unemployment Statistics Income (as of 2010) Township County State Median Household Income $145,924 $71,217 $71,180 Median Family Income 159,519 88,694 86,779 Per Capita Income 61,903 36,016 35,768 Source: US Bureau of the Census 2010 A-5

32 Population The following tables summarize population increases and the decreases for the Township, the County, and the State. Township County State Year Population % Change Population % Change Population % Change , % 366, % 8,791, % , , ,414, , , ,730, , , ,365, , , ,168, Source: United States Department of Commerce, Bureau of the Census Largest Taxpayers The ten largest taxpayers in the Township and their assessed valuations are listed below as of December 31, 2014: 2014 % of Total Taxpayers Assessed Valuation Assessed Valuation Bristol Myers Squibb $233,794, % CF Hopewell Core LLC 108,762, % Cole Hopewell Twp 92,400, % Janssen Pharmaceuticals 90,979, % CF Hopewell Core LLC 74,025, % CF Hopewell 2 YR LLC 52,925, % Hopewell TC Asssociates 24,646, % 350 Carter Rd LLC - Thomson Tax 16,954, % Trap Rock Industries Inc 14,687, % Montpen SC LLC 13,036, % Total $722,211, % Source: School District Comprehensive Annual Financial Report & Municipal Tax Assessor A-6

33 Comparison of Tax Levies and Collections Current Year Current Year Year Tax Levy Collection Percentage of Collection 2014U $103,892,266 $102,962, % ,965, ,035, % ,518,159 97,330, % ,379,395 95,840, % ,046,971 92,863, % U: Unaudited Source: Annual Audit Reports of the Township and Unaudited Annual Financial Statement of the Township Delinquent Taxes and Tax Title Liens Amount of Tax Amount of Total % of Year Title Liens Delinquent Tax Delinquent Tax Levy 2014U $134,362 $810,430 $944, % , , , % , , , % ,352 1,277,942 1,387, % , ,078 1,035, % U: Unaudited Source: Annual Audit Reports of the Township and Unaudited Annual Financial Statement of the Township Property Acquired by Tax Lien Liquidation Year Amount 2014U $ U: Unaudited Source: Annual Audit Reports of the Township and Unaudited Annual Financial Statement of the Township (Remainder of Page Intentionally Left Blank) A-7

34 Tax Rates per $100 of Net Valuations Taxable and Allocations The table below lists components of the tax rates for Township residents, per $100 of assessed valuation, for the past five (5) years. Municipal Regional Fire Total Year Municipal Open Space School County District Taxes 2014 $0.342 $0.030 $1.481 $0.670 $0.077 $ Source: Abstract of Ratables and State of New Jersey Property Taxes Valuation of Property Aggregate Assessed Aggregate True Ratio of Assessed Valuation of Value of Assessed to Value of Equalized Year Real Property Real Property True Value Personal Property Valuation 2014 $3,982,778,000 $3,987,163, % $5,426,768 $3,992,590, ,999,790,300 3,915,221, ,706,907 3,921,928, ,050,947,200 3,961,419, ,828,000 3,968,247, ,176,264,300 4,108,070, ,188,189 4,115,258, ,332,156,800 4,204,752, ,703,188 4,214,455,978 Source: Abstract of Ratables and State of New Jersey Table of Equalized Valuations Classification of Ratables The table below lists the comparative assessed valuation for each classification of real property within the Township for the past five (5) years. Year Vacant Land Residential Farm Commercial Industrial Apartments Total 2014 $45,419,400 $2,739,937,800 $266,811,700 $525,123,300 $400,165,600 $5,320,200 $3,982,778, ,281,400 2,750,531, ,713, ,657, ,985,600 5,621,400 3,999,790, ,584,900 2,784,798, ,915, ,848, ,178,400 5,621,400 4,050,947, ,450,500 2,903,055, ,083, ,613, ,027,400 5,033,800 4,176,264, ,451,500 3,021,846, ,705, ,276, ,811,400 5,065,000 4,332,156,800 Source: Abstract of Ratables and State of New Jersey Property Value Classification A-8

35 Financial Operations The following table summarizes the Township s Current fund budget for the past five (5) fiscal years ending December 31. This summary should be used in conjunction with the tables from which it is derived. Summary of Current Fund Budget Anticipated Revenues Fund Balance $1,415,811 $1,415,811 $1,915,811 $1,415,811 $1,615,811 Miscellaneous Revenues 5,852,509 6,166,990 4,752,016 6,035,335 5,014,165 Receipts from Delinquent Taxes 950, ,000 1,210, , ,000 Amount to be Raised by Taxes for Support of Municipal Budget 11,687,555 11,978,669 12,211,510 12,749,536 13,633,685 Total Revenue: $19,905,876 $20,503,470 $20,089,338 $21,116,199 $20,963,661 Appropriations General Appropriations $11,975,788 $11,912,140 $12,236,639 $12,646,396 $12,628,106 Operations 1,878,379 2,189, , ,402 1,001,872 Deferred Charges and Statutory Expenditures 1,533,039 1,708,323 1,690,140 2,428,570 1,754,310 Judgments Capital Improvement Fund 98, , , , ,319 Municipal Debt Service 3,105,870 3,214,047 3,167,994 3,582,014 3,964,596 Local School District Purposes , Reserve for Uncollected Taxes 1,314,554 1,332,808 1,349,507 1,401,338 1,459,458 Total Appropriations: $19,905,876 $20,503,470 $19,589,338 $21,116,199 $20,963,661 Source: Annual Adopted Budgets of the Township (Remainder of Page Intentionally Left Blank) A-9

36 Fund Balance Current Fund The following table lists the Township s fund balance and the amount utilized in the succeeding year s budget for the Current Fund for the past five (5) fiscal years ending December 31. Fund Balance - Sewer Utility Operating Fund Balance Utilized in Budget Year 12/31 of Succeeding Year 2014U $646,501 N/A , , , , ,045, , ,998 61,620 U: Unaudited Source: Annual Audit Reports of the Township and Unaudited Annual Financial Statement of the Township Water Utility Fund The following table lists the Township s fund balance and the amount utilized in the succeeding year s budget for the Water Utility Fund for the past five (5) fiscal years ending December 31. Fund Balance - Water Utility Operating Fund Balance Utilized in Budget Year 12/31 of Succeeding Year 2014U $102,277 N/A , , ,335 1, ,634 7,160 U: Unaudited Source: Annual Audit Reports of the Township and Unaudited Annual Financial Statement of the Township Sewer Utility Fund The following table lists the Township s fund balance and the amount utilized in the succeeding year s budget for the Sewer Utility Fund for the past five (5) fiscal years ending December 31. Fund Balance - Sewer Utility Operating Fund Balance Utilized in Budget Year 12/31 of Succeeding Year 2014U $646,501 N/A , , , , ,045, , ,998 61,620 U: Unaudited Source: Annual Audit Reports of the Township and Unaudited Annual Financial Statement of the Township A-10

37 Township Indebtedness as of December 31, 2014 General Purpose Debt Serial Bonds $59,330,000 Bond Anticipation Notes 12,160,690 Bonds and Notes Authorized but Not Issued 551,000 Other Bonds, Notes and Loans 323,315 Total: $72,365,005 Regional School District Debt Serial Bonds $23,886,211 Temporary Notes Issued 0 Bonds and Notes Authorized but Not Issued 0 Total: $23,886,211 Self-Liquidating Debt Serial Bonds $660,000 Bond Anticipation Notes 831,559 Bonds and Notes Authorized but Not Issued 0 Other Bonds, Notes and Loans 0 Total: $1,491,559 TOTAL GROSS DEBT $97,742,775 Less: Statutory Deductions General Purpose Debt $17,145,999 Regional School District Debt 23,886,211 Self-Liquidating Debt 1,491,559 Total: $42,523,769 TOTAL NET DEBT $55,219,006 Source: 2014 Annual Debt Statement of the Township (Remainder of Page Intentionally Left Blank) A-11

38 Overlapping Debt (as of December 31, 2014) 3 Related Entity Township Township Name of Related Entity Debt Outstanding Percentage Share Regional School District $28,790, % $23,886,211 County 387,479, % 36,007,956 Net Indirect Debt $59,894,167 Net Direct Debt 55,219,006 Total Net Direct and Indirect Debt $115,113,173 Debt Limit Average Equalized Valuation Basis (2012, 2013, 2014) $3,954,601,508 Permitted Debt Limitation (3 1/2%) 138,411,053 Less: Net Debt 55,219,006 Remaining Borrowing Power $83,192,047 Percentage of Net Debt to Average Equalized Valuation 1.40% Gross Debt Per Capita based on 2010 population of 17,304 $5,649 Net Debt Per Capita based on 2010 population of 17,304 $3,191 Source: 2014 Annual Debt Statement of the Township 3 Township percentage of County debt based on the Township s share of total equalized valuation in the County. A-12

39 APPENDIX B Excerpts From the Financial Statements of the Township of Hopewell, in the County of Mercer, New Jersey

40 [ THIS PAGE INTENTIONALLY LEFT BLANK ]

41 INVERSO & STEWART, LLC Certified Public Accountants 6SI Route 73 North, Suite 402 Marlton, New Jersey (856) Fax (856) Member of- American Institute of CP As New Jersey Society of CPAs The Honorable Mayor and Members of the Township Committee Township of Hopewell County of Mercer Hopewell, New Jersey Report on the Financial Statements INDEPENDENT AUDITOR'S REPORT I have audited the accompanying statements of assets, liabilities, reserves and fund balance - regulatory basis of the various funds of the Township of Hopewell, in the County of Mercer, State of New Jersey, as of December 31,2013 and 2012, and the related statements of operations and changes in fund balance - regulatory basis for the years then ended, and the related statement of revenues - regulatory basis, statement of expenditures - regulatory basis, and statement of general fixed assets group of accounts for the year ended December 31, 2013 and the related notes to the financial statements, which collectively comprise the Township's basic financial statements as listed in the table of contents. Management's Responsibility for the Financial Statements Management is responsible for the preparation and fair presentation of these financial statements in accordance with the financial reporting provisions of the Division of Local Government Services, Department of Community Affairs, State of New Jersey. Management is also responsible for the design, implementation and maintenance of internal control relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error. Auditor's Responsibility My responsibility is to express opinions on these fmancial statements based on my audit. I conducted my audit in accordance with auditing standards generally accepted in the United States of America; the standards applicable to fmancial audits contained in Government Auditing Standards. issued by the Comptroller General of the United States; and in compliance with audit requirements as prescribed by the Division of Local Government Services, Department of Community Affairs, State of New Jersey. Those standards require that I plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditor's judgment, including the assessment of the risks of material misstatement of the fmancial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity's preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity's internal control. Accordingly, I express no such opinion. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management, as well as evaluating the overall presentation of the fmancial statements. I believe that the audit evidence I have obtained is sufficient and appropriate to provide a basis for my audit opinions. 14 B-1

42 Basis for Adverse Opinion on U.S. Generally Accepted Accounting Principles As described in Note I of the financial statements, the financial statements are prepared by the Township on the basis of the financial reporting provisions of the Division of Local Government Services, Department of Community Affairs, State of New Jersey, which is a basis of accounting other than accounting principles generally accepted in the United States of America, to meet the requirements of the State of New Jersey. The effects on the fmancial statements of the variances between the regulatory basis of accounting described in Note I and accounting principles generally accepted in the United States of America, although not reasonably determinable, are presumed to be material. Adverse Opinion on U.S. Generally Accepted Accounting Principles In my opinion, because of the significance of the matter discussed in the "Basis for Adverse Opinion on U.S. Generally Accepted Accounting Principles" paragraph, the financial statements referred to above do not present fairly, in accordance with accounting principles generally accepted in the United States of America, the financial position of the Township of Hopewell, in the County of Mercer, State of New Jersey, as of December 31,2013 and 2012, or the results of its operations and changes in fund balance for the years then ended. Opinion on Regulatory Basis of Accounting In my opinion, the financial statements referred to previously present fairly, in all material respects, the assets, liabilities, reserves and fund balance - regulatory basis of the various funds of the Township of Hopewell, in the County of Mercer, State of New Jersey, as of December 31,2013 and 2012, and the results of its operations and changes in fund balanceregulatory basis of such funds for the years then ended, and the revenues - regulatory basis, expenditures - regulatory basis of the various funds, and general fixed assets, for the year ended December 31, 2013 in conformity with accounting principles and practices prescribed by the Division of Local Government Services, Department of Community Affairs, State of New Jersey as described in Note 1. Other Information My audits were conducted for the purpose of forming opinions on the financial statements that collectively comprise the Township's basic financial statements. The supplemental financial statements presented for the various funds are presented for purposes of additional analysis as required by the Division of Local Government Services, Department of Community Affairs, State of New Jersey, and are not a required part of the basic financial statements The supplementary financial statements presented for the various funds are the responsibility of management and were derived from and relate directly to the underlying accounting and other records used to prepare the financial statements. Such information has been subjected to the auditing procedures applied in the audit of the basic fmancial statements and certain additional procedures, including comparing and reconciling such information directly to the underlying accounting and other records used to prepare the basic financial statements or to the basic financial statements themselves, and other additional procedures in accordance with auditing standards generally accepted in the United States of America. In my opinion, the information described in the previous paragraph is fairly stated, in all material respects, in relation to the basic fmancial statements taken as a whole. 15 B-2

43 Other Reporting Required by Government Auditing Standards In accordance with Government Auditing Standards, I have also issued my report dated May 28, 2014 on my consideration of the Township of Hopewell's, in the County of Mercer, State of New Jersey, internal control over financial reporting and my tests of its compliance with certain provisions of laws, regulations, contracts and grant agreements and other matters. The purpose of that report is to describe the scope of my testing of internal control over financial reporting and compliance and the results of that testing, and not to provide an opinion on the internal control over financial reporting or on compliance. That report is an integral part of an audit performed in accordance with Government Auditing Standards in considering the Township of Hopewell's internal control over financial reporting. Respectfully submitted, INVERSO & STEWART, LLC Certified Public Accountants Marlton, New Jersey May2S, 2014 Robert P. Inverso Certified Public Accountant Registered Municipal Accountant 16 B-3

44 INVERSO & STEWART, LLC Certified Public Accountants 651 Route 73 North, Suite 402 Marlton, New Jersey (856) Fax (856) Isepa!!(ifeoneentrie.n~t -Member of- American Institute of CPAs New Jeney Soelety of CP As REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING AND ON COMPLIANCE AND OTHER MATIERS BASED ON AN AUDIT OF FINANCIAL STATEMENTS PERFORMED IN ACCORDANCE WITH GOVERNMENT AUDITING STANDARDS The Honorable Mayor and Members of the Township Committee Township of Hopewell County of Mercer Hopewell, New Jersey INDEPENDENT AUDITOR'S REPORT I have audited, in accordance with the auditing standards generally accepted in the United States of America: the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States; and the audit requirements as prescribed by the Division of Local Government Services, Department of Community Affairs, State of New Jersey, the financial statements prepared on a regulatory basis of accounting prescribed by the Division of Local Government Services, Department of Community Affairs, State of New Jersey of the Township of Hopewell, in the County of Mercer, State of New Jersey, as of and for the year ended December 31, 2013, and the related notes to the financial statements, which collectively comprise the Township's basic financial statements, and have issued my report thereon dated May 28,2014. That report indicated that the Township of Hopewell's financial statements were not prepared in accordance with accounting principles generally accepted in the United States of America, but were prepared on a regulatory basis of accounting prescribed by the Division of Local Government Services. Department of Community Affairs, State of New Jersey. Internal Control (her Financial Reporting In planning and performing my audit of the financial statements, I considered the Township of Hopewell's internal control over financial reporting (internal control) to determine the audit procedures that are appropriate in the circumstances for the purpose of expressing my opinions on the financial statements, but not for the purpose of expressing an opinion on the effectiveness of the Township's internal control. Accordingly, I do not express an opinion on the effectiveness of the Township of Hopewell's internal control. A deficiency in internal control exists when the design or operation of a control does not allow management or employees, in the normal course of performing their assigned functions, to prevent, or detect and correct misstatements on a timely basis. A material weakness is a deficiency, or combination of deficiencies, in internal control, such that there is a reasonable possibility that a material misstatement of the entity's financial statements will not be prevented, or detected and corrected on a timely basis. A significant deficiency is a deficiency, or a combination of deficiencies, in internal control that is less severe than a material weakness, yet important enough to merit attention by those charged with governance. 17 B-4

45 My consideration of internal control was for the limited purpose described in the first paragraph of this section and was not designed to identify all deficiencies in internal control that might be material weaknesses or significant deficiencies. Given these limitations, during my audit I did not identify any deficiencies in internal control that I consider to be material weaknesses. However, material weaknesses may exist that have not been identified. Compliance and Other Matters As part of obtaining reasonable assurance about whether the Townsbip of Hopewell's financial statements are free from material misstatement, I performed tests of its compliance with certain provisions of laws, regulations, contracts and grant agreements, noncompliance with which could have a direct and material effect on the determination of financial statement amounts. However, providing an opinion on compliance with those provisions was not an objective of my audit and, accordingly, I do not express such an opinion. The results of my tests disclosed no instances of noncompliance or other matters that are required to be reported under Government Auditing Standards and audit requirements as prescribed by the Division of Local Governments Services, Department of Community Affairs, State of New Jersey. Purpose of this Report The purpose of this report is solely to describe the scope of my testing of internal control and compliance and the results of that testing, and not to provide an opinion on the effectiveness of the Township's internal control or on compliance. This report is an integral part of an audit performed in accordance with Government Auditing Standards and audit requirements as prescribed by the Division of Local Government Services, Department of Community Affairs, State of New Jersey in considering the Township's internal control and compliance. Accordingly, this communication is not suitable for any other purpose. Respectfully submitted, INVERSO & STEWART, LLC Certified Public Accountants Marlton, New Jersey May 28,2014 Robert P. Inverso Certified Public Accountant Registered Municipal Accountant 18 B-5

46 EXHIBIT A TOWNSHIP OF HOPEWELL Current Fund Statement of Assets. Uabilities. Reserves and Fund Balance - Regulatory Basis For the Years Ended December and 2012 ASSETS REFERENCE zsia Regular Fund: Cash - Treasurer A-4 $ $ Change Fund A Total Receivables and Other Assets with Full Reserves: Delinquent Property Taxes Receivable A Tax Title Liens Receivable A Revenue Accounts Receivable A , Other Accounts Receivable Due from Trust - Other Funds B Due from General Capital Fund C Total , Deferred Charges: Special Emergency A-9 201, , Total Regular Fund 15,623, ,895, Federal and State Grant Fund: Cash - Treasurer A-4 456, , Federal and State Grants Receivable A-25 1,186, , Due from Trust - Payroll Fund B 0.56 Total Federal and State Grant Fund 1,643, ,610, Total Assets $ 17,266, $ 20,506, B-6

47 EXHIBITA TOWNSHIP OF HOPEWELL Current Fund Statement of Assets, Liabilities, Reserves and Fund Balance - Regulatory Basis For the Years Ended December 31, 2013 and 2012 LIABILITIES, BESEBVES AND FUND BALANCE REFEBENQE 2013 ~ Regular Fund: Uabilities: Appropriation Reserves A-3 $ 744, $ 564, Encumbrances Payable A-3 580, ,206, Prepaid Taxes A , , Tax Overpayments A-12 23, Reserve for Tax Appeals A , , Reserve for Revaluation A-14 12, , Reserve for Preparation of Master Plan A 15 50, , Reserve for Hurricane Damage A , Reserve for Capital Health A Reserve for Historic Building Repairs A Due State of New Jersey - Senior Citizens and Veterans Deductions A-19 1, Due State of New Jersey- Marriage License Fees A Due County for Added Taxes A-21 41, , Due to Trust- Municipal Open Space Tax Payable A 24 & B 3, , Due to Trust- Other B , Other Liabilities , Reserve for Garden State Trust 32, Total Liabilities 2, , Reserve for Receivables and Other Assets A , Fund Balance A ,164, Total Regular Fund , Federal and State Grant Fund: Unappropriated Reserves A-26 60, , Appropriated Reserves A , ,554, Total Federal and State Grant Fund 1.643, Total Liabilities, Reserves and Fund Balance $ , $ 20,506, The accompanying Notes to Financial Statements are an integral part of this statement. 20 B-7

48 EXHIBIT A-1 TOWNSHIP OF HOPEWELL Current Fund Statement of Operations and Changes in Fund Balance - Regulatory Basis For the Years Ended December 31,2013 and Revenue and Other Income Realized: Fund Balance Utilized $ 1,415, $ 1,915, Miscellaneous Revenue Anticipated 6,735, ,015, Receipts from Delinquent Taxes 879, ,282, Receipts from Current Taxes 100,035, ,330, NonbudgetRevenues 96, , Other Credits to Income: Unexpended Balance of Appropriation Reserves 666, , Total Revenue and Other Income Realized 109,829, ,411, Expenditures: Operations Within CAPS": Salaries and Wages 7,246, ,218, Other Expenses 5,396, ,952, Deferred Charges and Statutory Expenditures Within CAPS 1,720, ,755, Operations Excluded from CAPS : Salaries and Wages 872, , Other Expenses 772, , Capital Improvements Excluded from CAPS 160, , Municipal Debt Service Excluded from CAPS 3,577, ,167, Regional School - Capital Project 500, Special Emergency 700, County Taxes 25,721, ,127, Due County for Added Taxes 41, , Regional School District Tax 58,151, ,166, Fire District Tax 2,970, ,670, Municipal Open Space Tax 1,201, ,217, Municipal Open Space Tax - Added Taxes 1, , Prior Year Senior Citizens Disallowed 3, , Accounts Receivable Originating in , Prior Year Tax Overpayments Total Expenditures 108,539, ,209, less: Expenditures to be Raised by Future Taxes Total Expenditures 108,539, ,209, Statutory Excess to Fund Balance (Carried Forward) 1,290, ,202, B-8

49 EXHIBIT A-1 TOWNSHIP OF HOPEWELL Current Fund Statement of Operations and Changes in Fund Balance - Regulatory Basis For the Years Ended December 31, 2013 and Statutory Excess to Fund Balance (Brought Forward) $ 1,290, $ 1,202, Fund Balance January 1 12,164, ,878, Total 13,455, ,080, Decreased by Utilization as Anticipated Revenue 1,415, ,915, Fund Balance December 31 $ 12,039, $ 12,164, B-9

50 TOWNSHIP Current OF HOPEWELL Fund Statement of Revenues - Regulatory Basis For the Year Ended December 31, 2013 EXHIBITA-2 SPECIAL EXCESS BUDGET NJS 40A:4-jl7 REALIZED (DEFICIIl Fund Balance Anticipated s 1,415, $ 1,415, Miscellaneous Revenues: Loeal Revenues: Licenses: Alcoholic Beverage 30, $ Fees and Permits 235, , Fines and Costs: Municipal Court 407, ( ) Interest and Costs on Taxes PILOT Program (500.00) Capital Health System Settlement 145, Interest on Investments and Deposits 140, (29,434.82) Comeast Franchise Fee 228, Cell Tower Rents , Sale of Solar Panel Energy (SRECS) , State Aid Without Offsetting Appropriations: Energy Receipts Tax 1,601, ,601, Garden State Trust Fund 32, , Interloeal Agreements Interlocal Police Services - Hopewell Borough 515, (8,622.00) Interlocal Alliance Services 2, Interiocal Police Services Pennington Borough Special Items Offset with Appropriations: Clean Communities Grant $ , Municipal Alliance on Alcoholism and Drug Abuse 18, , Hopewell Harvest Fair I Hopewell Harvest Fair II DOT HopewelllWertsville Road Ride Provide , Drunk Driving Enforcement Fund 5, , Recycling Tonnnage Grant 27, Mercer al Play 78, , DOT Lawrence Hopewell Trail 350, Body Armor Replacement Grant 3, , Refund of Capital Surplus Refund of Affordable Housing 336, , Reserve for Debt Service 835, Refund of Affordable Housing Capital Surplus 230, , FEMA Revenues - Hurricane Sandy 700, Total { ) Receipts from Delinquent Taxes 915, (35,673.30) Amount to be Raised by Taxes for Support of Municipal Budget Local Tax for Municipal Purposes , Budget Totals , , , NonbudgetRevenues Total s $ s $ B-10

51 EXHIBITA 2 TOWNSHIP OF HOPEWELL Current Fund Statement of Revenues - Regulatory Basis For the Year Ended December ANALYSIS OF REALIZED REVENUE Allocation of Current Tax Collections: Revenue from Collections $ Allocated to School. Fire District, Open Space, and County Taxes 88, Balance for Support of Municipal Budget Appropriations 11,947, Add Appropriation - Reserve for Uncollected Taxes 1,401, Amount for Support of Municipal Budget Appropriations $ 13,348, Receipts from Delinquent Taxes: Tax Title Liens Delinquent Tax Collections Total $ 1, , $ 879, Miscellaneous Revenue Not Anticipated: Treasurer: DMV Inspection Fees Mowing Dispatch Other Refunds Refund of Prior Years Expense Auction Proceeds Senior Citizen and Veterans Administrative Senior Services Bid Deposits Deer Hunt Fees Rifle Range Miscellaneous Fee $ 6, , , , , , , Total $ 96, The accompanying Notes to Financial Statements are an integral part of this statement. 24 B-11

52 EXHIBIT A-3 TOWNSHIP OF HOPEWELL Current Fund Statement of Expenditures - Regulatory Basis For the Year Ended December 31, 2013 Appropriations Emergency Appropriation Budget After Modification Paid or Charged Expended Unexpended Balance Canceled GENERAL APPROPRIATIONS: Operations Within CAPS a : General Government: Administrative and Executive: Salaries and Wages Governing Body $ 17, $ $ 17, $ 15, $ 1, $ Administrator's Office 395, , , , Clerk's Office 133, , , , Other Expenses Governing Body 18, , , Administrator's Office 169, , , , Clerk's Office 25, , , I\.) C1I Financial Administration: Salaries and Wages 180, , , Other Expenses 25, , , , Assessment of Taxes: Salaries and Wages 172, , , , Other Expenses 32, , , Collection of Taxes: Salaries and Wages 78, , n, Other Expenses 13, , , , Legal Services and Costs: Salaries and Wages 43, , , Other Expenses 214, , , engineering Services and Costs: Other Expenses 99, , , , Public Buildings and Grounds: Salaries and Wages 79, , n, , Other Expenses n,226.oo n,226.oo 73, , Reet Maintenance: Salaries and Wages 206, , , , Other Expenses 123, , , , B-12

53 EXHIBIT A-3 TOWNSHIP OF HOPEWELL Current Fund Statement of Expenditures - Regulatory Basis For the Year Ended December 31, 2013 Agl2rol2riations Emergency Budget After Paid or ~ Appropriation Modification Charged Expended Unexpended Balance canceled GENERAL APPROPRIATIONS: Operations Within CAPS : I\) 0) Audit Services: Other Expenses S 30, $ S 30, $ 30, s S Municipal Land Use Law (N.J.S.A. 40:550-1): Planning Board: Salaries and Wages 64, , , , Other Expenses 136, , , , Zoning Board: Salaries and Wages 99, , , , Other Expenses 12, , , Parks and Maintenance: Salaries and Wages 53, , , , Other Expenses 26, , , Environmental Commission: Other Expenses 6, , , , Insurance: Uablllty Insurance 483, , , Medical Insurance 2,129, ,129, ,972, , Public Safety: Police Salaries and Wages 3,309, ,318, ,240, , Other Expenses 192, , , Contribution to Affordable Housing Other Expenses 48, , , Contribution to Recreation Trust Other Expenses 3, , , Contribution to Water Utility Other Expenses 3, , , Road Repair and Maintenance: Salaries and Wages 1,566, ,566, ,491, , Other Expenses 410, , , , Sanitation: Other Expenses , , , B-13

54 EXHIBIT A-3 TOWNSHIP OF HOPEWELL Current Fund Statement of Expenditures Regulatory Basis For the Year Ended December 31, 2013 Appropriations Emergency Appropriation Budget After Modification Paid or Charged Expended Unexpended Balance canceled GENERAL APPROPRIAT10NS: Operations Within "CAPS": Board of Health: Salaries and Wages $ 364, $ $ 364, $ 347, S 16, $ Other Expenses 35, , , , Dog Regulation Other Expenses 45, , , Historic Preservation Committee (RS 400: ): Salaries and Wages Other Expenses 14, , Municipal Court:..., Salaries and Wages 287, , , , , Other Expenses 22, , , , Public Defender: Salaries and Wages 21, , , , UnclassHied: Recreation: Salaries and Wages 124,2n ,2n , , Other Expenses 2, , , Senior Services: Salaries and Wages 57, , , Other Expenses 15, , , Utilities: Street Ughts 175, , , , Utilities 210, , , , Telephone 100, , , , Motor Fuels Other Expenses 400, , , , Disability Insurance Other Expenses 31, , , , Total Operations Including Contingent Within "CAPS" 12,646, ,654, ,933, , Detail: Salaries and Wages 7,255, ,246, ,013, , Other Expenses 5,390, ,407,9n.57 4,920, , , , , B-14

55 EXHIBIT A-3 TOWNSHIP OF HOPEWELL Current Fund Statement of Expenditures - Regulatory Basis For the Year Ended December 31,2013 Appropriations Emergency Appropriation Budget After Modification Paid or Charged Expended Unexpended Balance Canceled Deferred Charges and Statutory Expenditures - Municipal - Within CAPS : STATUTORY EXPENDITURES: Contribution to: Public Employees' Retirement System s 512, s $ 512, $ 512, S $ Police and Firemen's Retirement System 635, , , Defined Contribution Retirement Program Social Sef:urity System (O.A.S.!,) 580, , , , Total Deferred Charges and Statutory Expenditures - MunicIpal Within CAPS 1,728, ,720, ,682, , II.) TotaPbeneral ApproprIations - For Municipal Purposes Within CAPS 14,374, ,374, ,616, , , GENERAL APPROPRlAllONS: Operations Excluded from CAPS : Recycling Tonnage Tax 1, , , Insurance Medical Insurance 106, , , Interiocal Municipal Alliance: Hopewell Borough 1, , , Pennington Borough 1, , , Interlocal Recycling 160, , , Interlocal POlice Services: Hopewell Borough Salaries and Wages 458, , , , Other Expenses 56, , , Pennington Borough Salaries and Wages 66, , , Interlocal Sr. Service Coordinator Other Expenses 4, , , Total Other Operations Excluded from CAPS : , , , B-15

56 EXHIBIT A-3 TOWNSHIP OF HOPEWELL Current Fund Statement of Expenditures - Regulatory Basis For the Year Ended December 31, 2013 Appropriations Emergency Appropriation Budget After Modification Paid or Charged Expended Unexpended Balance Canceled GENERAL APPROPRIATIONS: Operations Excluded from"caps : Public and Private Programs Offset by Revenues: Body Armor Grant $ s s 3, $ 3, $ s Drunk Driving Enforcement Grant 5, , Clean Communities 47, , Municipal Alliance on Alcoholism and Drug Abuse Township Match 10, , , State Share 18, , , Supplemental Fire Services Program 4, , , NJ Department of Transportation 249, , I\) Hopewell Harvest Fair I CD Hopewell Harvest Fair II Ride Provide 7, , , Mercer at Play 78, , Res. Recycling Tonnage Grant 27, , LHTBikeway 350, , Total Public and Private Programs Offset by Revenues 40, , , Total Operations - Excluded From "CAPS" 897, ,660, ,646, , Detail: Salaries and Wages 524, , , , Other Expenses 372, , , , GENERAL APPROPRIATIONS: Capital Improvements - Excluded From "CAPS" Capital Improvement Fund 160, , , Total Capital Improvements Excluded From CAPS" 160,479,00 160, , B-16

57 EXHIBIT A-3 TOWNSHIP OF HOPEWELL Current Fund Statement of Expenditures - Regulatory Basis For the Year Ended December 31, 2013 GENERAL APPROPRIAll0NS: Annronri!)lions Exnended Unexpended Emergency Budget After Paid or Balance Budget Appropriation Modification Charged Canceled Municipal Debt Service - Excluded From CAPS" Payment of Bond Principal $ 1,697, s $ 1,697, $ 1,697, $ $ Payment of Bond Anticipation Notes 527, , , Interest on Bonds 1,008, ,008, ,008, Interest on Notes 319, , , , NJEDA Loan - Principal 28, , , NJEDA Loan - Interest Total Municipal Dept Service - Excluded From CAPS 3,582, ,582, ,577, , DefIed Charges and Statutory Expenditures nlclpal - Excluded from CAPS Special Emergency Authorizations 5 yrs (N.J.S. 40A:4-55) 700, , , Total Deferred Charges - Excluded From CAPS 700, , , Total General Appropriations for Municipal Purposes Excluded From CAPS 5,339, ,102, ,084, , Subtotal General Appropriations 19,714, ,477, ,700, , , Reserve for Uncollected Taxes 1,401, ,401, ,401, TOTAL GENERAL APPROPRIATIONS $ 21,116, $ $ 21,878, $ 21,102, s 744, $ 32, B-17

58 EXHIBIT A-3 TOWNSHIP OF HOPEWELL Current Fund Statement of Expenditures - Regulatory Basis For the Year Ended December 31, 2013 Analysis of Budget After Modification: Original Budget Appropriation by 40A:4-87 Total $ 21,116, , $ 21,878, Analysis of Paid or Charged: Reserve for Federal and State Grants - Appropriated Encumbrances Payable Reserve for Uncollected Taxes Reserve for Special Emergency Cash Disbursed $ 789, , ,401, , ,631, Total $ 21,102, The accompanying Notes to Financial Statements are an Integral part of this statement. 31 B-18

59 EXHIBITS TOWNSHIP OF HOPEWELL Trust Fund Statement of Assets, Liabilities, Reserves and Fund Balance Regulatory Basis For the Years Ended December 31,2013 and 2012 REFERENCE &Q1.a ASSETS Animal controt Fund: Cash - Treasurer B-1 $ 25, $ 16, Other Funds: Cash - Treasurer B-1 6,782, ,733, Accounts Receivable 37, , Due from General Capital Fund C 34, , Due from Current Fund - Open Space Tax A 3, Due from Current Fund A 197, , Total Other Funds 7,055, ,995, Total Assets $ 7,081, $ LIABILITIES AND RESERVES Animal Control Fund: Due to Stale of New Jersey $ s Reserve for Dog Fund Expenditures B-2 25, , Total Dog License Fund 25, , Other Funds: Due 10 Current Fund A Due to Federal and State Grant Fund A 0.56 Due to State NJ - UCC Fees B-4 12, , Payroll Deductions Payable B Reserve for: Unemployment Compensation B-3 30, , Trust Other B-3 1,030, , Plot Planning B-3 15, , Planning B-3 316, Open Space Trust 8-3 3,842, ,949, Low Income Housing B-3 159, , Community Activities B Off-Site Improvements B-3 668, , Performance Guarantees B-3 179, , Recreation Trust B-3 209, , Tax Collectors' Premium B-3 388, , TaxTiUe Uen B Off-Duty Police B-3 197, , Stream Corridor B FSA B-3 2, , Total Other Funds 7,055, !995, Total Uabilities and Reserves $ 7,081, $ 9, The accompanying Notes to Financial Statements are an integral part of this statement. 32 B-19

60 EXHIBITC TOWNSHIP OF HOPEWELL General Capital Fund Statement of Assets, Liabilities, Reserves and Fund Balance - Regulatory Basis For the Years Ended December 31, 2013 and 2012 REFERENCE ASSETS Cash - Treasurer C-2 $ , $ Deferred Charges to Future Taxation: Funded C-4 37, ,743, Unfunded C Total $ $ 86, LIABILITIES. RESERVES AND FUND BALANCE Serial Bonds C-6 $ $ Bond Anticipation Notes C NJ Economic Development Authority Loan Payable C Green Trust Loan Payable C , Improvement Authorizations: Funded C-10 1,570, ,658, Unfunded C-10 10,493, ,079, Capital Improvement Fund C Reserve for Preliminary Planning 2, , Reserve for Encumbrances Reserve for: Payment of Serial Bonds and Notes 1,692, ,124, Reserve for Weidel 588, Reserve for Green Trust Loan 1, , Interfund Payable: Due to Current Fund A Due to Trust Fund B , Fund Balance C-1 2,338, ,340, Total $ 86,027, $ 86,218, The accompanying Notes to Financial Statements are an integral part of this statement. 33 B-20

61 EXHIBITC 1 TOWNSHIP OF HOPEWELL General Capital Fund Statement of Fund Balance - Regulatory Basis For the Year Ended December 31, 2013 Balance December 31,2012 $ 2,340, Increased By: Cancellation of Funded Ordinances Reclassify Weidel Principal Premium on Sale of Bond Anticipation Notes Prior Year Adjustment $ 865, , , ,233, Total 3,573, Decreased By: Current Fund - Budget Appropriation 1,235, Balance December 31, 2013 $ 2,338, The accompanying Notes to Financial Statements are an integral part of this statement. 34 B-21

62 EXHIBIT 0 TOWNSHIP OF HOPEWELL Water Utility Operating Fund Statement of Assets, Uabilitites, Reserves and Fund Balance - Regulatory Basis For the Year Ended December 31, 2013 and 2012 REFERENQE Operating Fund: Cash 0-5 $ 106, $ 70, Due from Water Capital Fund Receivables with Full Reserves: Consumer Accounts Receivable 0-7 3z , Total Operating Fund 110, , Capital Fund: Cash , , Axed Capital , , Fixed Capital Authorized and Uncompleted , Total Capital Fund 422, '44.63 Total Assets $ 533, $ LIABILITIES. RESERVES AND FUND BALANQE Operating Fund: Liabilities: Appropriation Reserves 0-4 & 0-10 $ 8, $ Encumbrances Payable 0-4 7, Water Rent Overpayments Accrued Interest on Bonds and Notes Total Uabilities 16, , Reserve for Receivables 0 3, , Fund Balance , Total Operating Fund 110, Capital Fund: Serial Bonds , , Bond Anticipation Notes Improvement Authorizations: Funded 0-14 Unfunded , Capital Improvement Fund , , Due to Water Utility Fund Reserve for: Amortization , , Fund Balance Total Capital Fund '4 1 '44.63 Total Liabilities. Reserves and Fund Balance $ $ The accompanying notes to f1nanclal;statementa are an Integral part of this statement. B-22

63 EXHIBIT 0-1 TOWNSHIP OF HOPEWELL Water Utility Operating Fund Comparative Statement of Operations and Changes in Fund Balance - Regulatory Basis For the Years Ended December 31, 2013 and Revenue and Other Income Realized: Fund Balance Utilized $ $ 1, Water Rents 83, , Interest on Investments and Deposits Miscellaneous Contribution from Current Fund 3, , Other Credits to Income: Unexpended Balance of Appropriation Reserves 21, , Total Revenue and Other Income Realized 109, , Expenditures: Operating 45, , Deferred Charges and Statutory Expenditures , Capital Improvement Fund 13, Debt Service 6, , Total Expenditures 66, , Excess in Revenue 43, , Fund Balance January 1 47, , Total 90, , Decreased by Utilization by Water Utility Operating Budget 1, Balance December 31 $ 90, $ 47, The accompanying Notes to Financial Statements are an integral part of this statement. 36 B-23

64 EXHIBIT 0-2 TOWNSHIP OF HOPEWELL Water Utility Capital Fund Statement of Fund Balance For the Year Ended December 31, 2013 Balance December 31,2012 $ 13, Increased By: BAN Interest Total 13, Decreased By: Current Fund - Budget Appropriation Balance December 31,2013 $ 13, The accompanying Notes to Financial Statements are an integral part of this statement. 37 B-24

65 EXHIBIT 0-3 TOWNSHIP OF HOPEWELL Water Utility Operating Fund Statement of Revenues - Regulatory Basis For the Year Ended December 31,2013 Excess Anticipated Realized (Deficit) Water Rents $ 62, $ 83, $ 21, Interest on Investments and Deposits Contribution from Current Fund 3, , Miscellaneous Total $ 66, $ 88, $ 21, Analysis of Realized Revenues Miscellaneous: Water Penalties Miscellaneous $ $ The accompanying Notes to Financial Statements are an integral part of this statement. 38 B-25

66 EXHIBIT 0-4 TOWNSHIP OF HOPEWELL Water Utility OperaUng Fund Statement of Expenditures - Regulatory Basis For the Year Ended December AOIH2IHIi!llgn E!50!!n!!ed Spadal Budget Paid Unexpended Emergency After or Balance AOoroortalion Modification ~ ~ canceled Operating: Salaries and Wages Other Expenses Deferred Charges and Statutory expenditures: Statutory Expenditures: Social security Capital Improvements capital Improvement Fund Debt Service: Payment of Bond Principal Interest on Bonds Interest on Notes $ $ $ $ $ Total $ $ $ S $ Analysis of Paid or Charged: Cash Disbursed Encumbrances Payable Interest on Bonds and Notes S Total $ The accompanying Notes to Financial Statements are an integral part of this slatement. 39 B-26

67 EXHIBITE TOWNSHIP OF HOPEWELL Sewer Utility Operating Fund Statement of Assets. Uabilitites. ReselVes and Fund Balance - Regulatory Basis For the Year Ended December and 2012 REFERE~CE Operating Fund: Cash E-5 $ $ Receivables with Full ReselVes: Consumer Accounts Receivable E Due from Sewer Utility Capital Fund E Deferred Charges: Emergency Authorization (40A:4-47) Total Operating Fund Capital Fund: Cash E Fixed Capital E , Fixed Capital Authorized and Uncompleted E Total Capital Fund , Total Assets $ $ LIABILITIES. RESERVES AND FUND BALANCE Operating Fund: Uabilities: Appropriation ReselVes E-4 $ $ Encumbrances Payable E Sewer Rent Overpayments Accrued Interest on Bonds and Notes E Other Uability Total Uabilities ReselVe for Receivables E Fund Balance E-1 822, Total Operating Fund Capital Fund: Serial Bonds E Bond Anticipation Notes E , Improvement Authorizations: Funded E-14 10, Unfunded E , , Due to Sewer Utility Operating Fund E Encumbrances Payable Capital Improvement Fund E ReselVe for Amortization E , , ReselVe for Deferred Amortization E-17 21, Fund Balance E Total Capital Fund Total Liabilities, ReselVes and Fund Balance $ $ , The accompanying notes to financial statements are an integral part of this statement. 40 B-27

68 EXHIBITE 1 TOWNSHIP OF HOPEWELL Sewer Utility Operating Fund Comparative Statement of Operations and Changes in Fund Balance- Regulatory Basis For the Years Ended December 31,2013 and Revenue and Other Income Realized: Fund Balance Utilized $ 213, $ 406,n8.14 Sewer Rents 1,135, ,064, Interest on Investments 6, , Miscellaneous 3, , Other Credits to Income: Unexpended Balance of Appropriation ReselVes 121, , Total Revenue and Other Income Realized 1,479, ,502, Expenditures: Operating 1,114, ,153, Capital Improvements 7, Deferred Charges and Statutory Expenditures 2, , Debt servlce 74, , Total Expenditures 1,191, ,398,3n.47 Excess (Deficit) in Revenue 287,n , Adjustments to Income before Surplus: Expenditures included above which are by Statute Deferred Charges to Budget of Succeeding Year 4, Statutory Excess to Surplus 291, , Fund Balance January 1 743, ,045, Total 1,035, ,150, Decreased by Utilization by Sewer Utility Operating Budget 213, ,n8.14 Balance December 31 $ 822, $ 743, The accompanying Notes to Financial Statements are an integral part of this statement. 41 B-28

69 EXHIBITE 2 TOWNSHIP OF HOPEWELL Sewer Utility Capital Fund Statement of Fund Balance For the Year Ended December 31, 2013 Balance December 31,2012 $ 95, Increased By: Premium on Sale of Bond Anticipation Notes 3, Balance December 31,2013 $ 98, The accompanying Notes to Financial S1~tementsare an integral part of this statement. B-29

70 TOWNSHIP OF HOPEWELL SEWER UTILITY OPERATING FUND Statement of Revenues - Regulatory Basis For the Year Ended December 31, 2013 EXHIBITE 3 Anticipated Realized Excess (Deficit) Fund Balance Sewer Rents Interest on Investments Miscellaneous $ 213,22S.n 995, , $ 213, ,135, , , $ 140, , Total $1,214,225.n $ 1,358, $ 144, Analy,ls of Realized Revenue, Miscellaneous: Sewer penalties Miscellaneous Total $ 3, $ 3, The accompanying Notes to Financial Statements are an integral part of this statement. 43 B-30

71 EXHIBrrE-4 TOWNSHIP OF HOPEWELL Sewer Utility Operating Fund Statement of expenditures - Regulatory Basis For the Year Ended December 31, 2013 :t Operating: salaries and Wages Other Expenses Capltallmprovemente Capital Improvement Fund Deferred Charges and Statutory Expendltul1I8: Defened Charges Emergency Authorizations Statutory Expenditures: Social Security Debt Service: Payment of Bond Principal Payment of Bond Anticipation Note Principal Interest on Bonds Interest on Noles AllllrQIHil!li2D Budget E!!Il!!n~ed Paid After or Balance ~ Modification ~ R!!S8rved ~ $ 31, $ 31, $ 27,1n.15 $ 3, ,101, ,105, ,053, , $ 21, , , , , , , , , , , , , , , , $ 3, , Tolal $1,214, $ 1,218, $1 1 ' $ 34, $ 26, Original Budget Emergency Authorization (40A:4-47) Analysis of Paid or Charged: Cash Disbursed Encumbrances Payable Interest on Bonds and Notes Tolal $1,214, , i 1,218, $ 1,103, , , $1,157, The accompanying Notes to Ananclal Statements are an integral part of this statement. B-31

72 EXHIBIT F TOWNSHIP OF HOPEWELL Public Assistance Fund Statement of Assets, Liabilities and Reserves For the Years Ended December 31, 2013 and 2012 REFERENCE ASSETS Cash F-1 $ 9, Total $ 9, $ 9, $ 9, LIABILITIES AND RESERVES Reserve for Public Assistance $ 9, $ 9, The accompanying Notes to Financial Statements are an integral part of this statement. 45 B-32

73 EXHIBITG TOWNSHIP OF HOPEWELL ACCOUNT GROUP Statement of General FIXedAssets Group of Accounts For the Year Ended December Balance Balance December 31. December Addlllgns Deletions ~ General Fixed Assets: Land $ 46,216, $ 2,662, $ $ Buildings and Building Improvements , , Machinery and Equipment 7.441, Total General Fixed Assets $ 64, $ $ $ 67,633, Total Investment in General Fixed Assets $ , $ 3,216, $ 40, $ The accompanying Notes to Financial Statements are an Integral part of this statement. 46 B-33

74 Township of Hopewell Notes to Financial Statements December 31, 1013 NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Description of Financial Reporting Entity - The Township of Hopewell is located in the western portion of Mercer County, New Jersey, midway between Philadelphia and New York City. The present population according to the 2010 census is 17,325. The Township of Hopewell was incorporated in 1798 and operates under the Township Committee form of government. The Committee is the legislative body of the Township and consists of five members elected by popular vote to a three year term. Each year the elected body selects one of its members to serve as Mayor for a one-year term. Component Units - GASa Statement No. 14, Tile Financial Reporting Entity, provides guidance that all entities associated with a primary government are potential component units and should be evaluated for inclusion in the financial reporting entity. A primary government is financially accountable not only for the organizations that make up its legal entity, but also for legally separate organizations that meet the criteria established by GASa Statement No. 14, as amended by GASa Statement No. 39, Determining Whether Certain Organizations are Component Units. There are no organizations that are considered to be component units. Basis of Accounting, Measurement Focus and Basis of Presentation - The financial statements of the Township of Hopewell contain all funds in accordance with the "Requirements of Audit" as promulgated by the State of New Jersey, Department of Community Affairs, Division of Local Government Services. The principles and practices established by the Requirements of Audit are designed primarily for determining compliance with legal provisions and budgetary restrictions and as a means of reporting on the stewardship of public officials with respect to public funds. Generally, the financial statements are presented using the flow of current financial resources measurement focus and modified accrual basis of accounting with minor exceptions as mandated by these "Requirements". In addition, the prescribed accounting principles previously referred to differ in certain respects from accounting principles generally accepted in the United States of America applicable to local government units. The more significant differences are explained in this Note. In accordance with the "Requirements", the Township of Hopewell accounts for its financial transactions through the use of separate funds which are described as follows. Current Fund - The Current Fund accounts for resources and expenditures for governmental operations of a general nature, including Federal and State grant funds. Trust Funds - The various Trust Funds account for receipts, custodianship and disbursement of funds in accordance with the purpose for which each reserve was created. General Capital Fund - The General Capital Fund accounts for receipt and disbursement of funds for the acquisition of general capital facilities, other than those acquired in the Current Fund. Water/Sewer Utility Operating and Capital Fund - The Water/Sewer Utility Operating and Capital Funds account for operations of the utility and the acquisition of capital facilities of the municipally-owned water/sewer utility. Public Assistance Fund - The Public Assistance Funds account for receipt and disbursement of funds that provide assistance to certain residents of the Township pursuant to Title 44 of New Jersey Statutes. Budgets and Budgetary Accounting - The Towriship of Hopewell must adopt an annual budget for its current fund and utility operating funds in accordance with the N.J.S.A. 40A:4 et seq. N.J.S.A. 40A:4-5 requires the governing body to introduce and approve the annual municipal budget no later than February 10 of each year. At introduction, the governing body shall fix the time and place for a public hearing on the budget and must advertise the time and place at least ten days prior to the hearing in a newspaper published and circulating in the municipality. The public hearing must not be held less than twenty-eight days after the date the budget was introduced. After the hearing has been held, the governing body may, by majority vote, adopt the budget or may amend the budget in accordance with N.J.S.A. 40A:4-9. Amendments to the adopted budgets, if any, are detailed in the statements of revenues and expenditures. 47 B-34

75 Township of Hopewell Notes to Financial Statements December 31,2013 NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) Budgets and Budgetary Accounting (Cont'd) - An extension of the statutory dates for introduction, approval and adoption of the municipal budget may be granted by the Director of the Division of Local Government Services, with the permission of the Local Finance Board. Budgets are adopted on the same basis of accounting utilized for the preparation of the Township's financial statements. Cash, Cash Equivalents and Investments - Cash and cash equivalents include petty cash, change funds and cash in banks. All certificates of deposit are recorded as cash regardless of the date of maturity. Investments are stated at cost. Consequently, unrealized gain or loss on investments has not been recorded in accordance with Governmental Accounting Standards Board Statement No. 31. New Jersey municipal units are limited as to the types of investments and types of fmancial institutions they may invest in. NJ.S.A. 40A:5-15. I provides a list of permissible investments that may be purchased by New Jersey municipal units. NJ.S.A. 17:9-41et seq. establishes the requirement for the security of deposits of governmental units. The statute requires that governmental units shall deposit public funds in public depositories protected from loss under the provisions of the Governmental Unit Deposit Protection Act. The Act was enacted in 1970 to protect governmental units from a loss of funds on deposit with a failed banking institution in New Jersey. Public depositories include State or federally chartered banks, savings banks or associations located in the State of New Jersey or state or federally chartered banks, savings banks or associations located in another state with a branch office in the State of New Jersey, the deposits of which are federally insured. All public depositories must pledge collateral, having a market value at least equal to five percent of the average daily balance of collected public funds, to secure the deposits of governmental units. If a public depository fails, the collateral it has pledged, plus the collateral of all other public depositories, is available to pay the amount of their deposits to the governmental units. The cash management plan adopted by the Township of Hopewell requires it to deposit funds in public depositories protected from loss under the provisions of the Act. Interfunds - Interfund receivables and payables that arise from transactions between funds are recorded by all funds affected by such transactions in the period in which the transaction is executed. Interfund receivables in the Current Fund are recorded with offsetting reserves which are created by charges to operations. Income is recognized in the year the receivables are liquidated. Interfund receivables in the other funds are not offset by reserves. Inventories of Supplies - The costs of inventories of supplies for all funds are recorded as expenditures at the time individual items are purchased. The costs of inventories are not included on the various statements of assets, liabilities, reserves and fund balance. General Fixed Assets - Accounting for Governmental Fixed Assets, as required by N.J.A.C. 5:30-5.6, differs in certain respects from accounting principles generally accepted in the United States of America. In accordance with the regulations, all local units, including municipalities, must maintain a general fixed assets reporting system that establishes and maintains a physical inventory of nonexpendable, tangible property as defined and limited by the U.S. Office of Management and Budget Circular A-87 (Attachment B, Section 19), except that the useful life of such property is at least five years. The Township has not adopted a capitalization threshold as required by the Circular. Generally, assets are valued at historical cost; however, assets acquired prior to December 31, 1985 are valued at actual historical cost or estimated historical cost. Donated general fixed assets are recorded at their estimated fair market value on the acquisition date. Interest costs relative to the acquisition of general fixed assets are recorded as expenditures when paid. Public domain ("infrastructure") general fixed assets consisting of certain improvements other than buildings, such as roads, bridges, curbs and gutters, streets and sidewalks and drainage systems are not capitalized. Expenditures for construction in progress are recorded in the Capital Funds until such time as the construction is completed and put into operation. The Township is required to maintain a subsidiary ledger detailing fixed assets records to control additions, retirements and transfers of fixed assets. In addition, a Statement of General Fixed Assets, reflecting the activity for the year, must be included in the Township's basic financial statements. 48 B-35

76 Township of Hopewell Notes to Financial Statements December 31,2013 NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) General Fixed Assets (Cont'd) - The regulations require that general fixed assets, whether constructed or acquired through purchase, grant or gift be included in the aforementioned inventory. In addition, property management standards must be maintained that includes accurate records indicating asset description, source, ownership, acquisition cost and date, the percentage of Federal participation (if any), and the location, use, and condition of the asset. Periodically, physical inventories must be taken and reconciled with these records. Lastly, all fixed assets must be adequately controlled to safeguard against loss, damage or theft. No depreciation of general fixed assets is recorded. Utility Fixed Assets - Property and equipment purchased by the Water/Sewer Utility Fund are recorded in the capital account at cost and are adjusted for dispositions and abandorunents. Contributions in aid of construction are capitalized, whereas those made in the form of tangible assets, such as land are not. The balance in the Reserve for Amortization and Deferred Reserve for Amortization accounts in the utility capital fund represents the costs of acquisition of property, equipment and improvements. Depreciation is not recorded on these fixed assets. Foreclosed Property - Foreclosed property is recorded in the Current Fund at the assessed valuation when such property was acquired and is fully reserved. Ordinarily it is the intention of the municipality to resell foreclosed property in order to recover all or a portion of the delinquent taxes or assessments accrued and to return the property to a taxpaying basis. For this reason the value of foreclosed property has not been included in the General Fixed Assets Account Group. If such property is converted to a municipal use, it will be capitalized in the General Fixed Assets Account Group. Deferred Charges - The recognition of certain expenditures is deferred to future periods. These expenditures, or deferred charges, are generally overexpenditures of legally adopted budget appropriations or emergency appropriations made in accordance with NJ.S.A. 40A:4-46 et a1. Deferred charges are subsequently raised as items of appropriation in budgets of succeeding years. Liens Sold for Other Governmental Units - Liens sold on behalf of other governmental units are not recorded on the records of the tax collector until such liens are collected. Upon their collection, such liens are recorded as a liability due to the governmental unit net of the costs of the initial sale. The related costs of sale are recognized as revenue when received. Fund Balance - Fund Balance included in the current fund and sewer utility operating fund represents an amount available for anticipation as revenue in future year's budgets, with certain restrictions. Revenues - Revenues are recorded when received in cash except for certain amounts which are due from other governmental units. Revenue from Federal and State grants are realized when anticipated as such in the Township's budget. Receivables for property taxes, water rents, and sewer rents are recorded with offsetting reserves on the statement of assets, liabilities, reserves and fund balance of the Township's Current Fund, Water Utility Operating Fund, and Sewer Utility Operating Fund, respectively; accordingly, such amounts are not recorded as revenue until collected. Other amounts that are due the Township which are susceptible to accrual are also recorded as receivables with offsetting reserves and recorded as revenue when received. Property Tax Revenues - Property tax revenues are collected in quarterly installments due February 1, May I, August 1, and November 1. The amount of tax levied includes not only the amount required in support of the Township's annual budget, but also the amounts required in support of the budgets of the Hopewell Valley Regional School District. County of Mercer and the Hopewell Township Fire District. Unpaid property taxes are subject to tax sale in accordance with the statutes. School Taxes - The Township is responsible for levying, collecting and remitting school taxes for the Hopewell Valley Regional School District. Operations are charged for the full amount required to be raised from taxation to operate the local school district for the period from January 1,2013 to December B-36

77 Township of HopeweU Notes to Financial Statements December 31,2013 NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) County Taxes - The Township is responsible for levying, collecting and remitting county taxes for the County of Mercer. Operations is charged for the amount due the County for the year, based upon the ratables required to be certified to the County Board of Taxation by January 10 of the current year. In addition, operations is charged for the County share of Added and Omitted Taxes certified to the County Board of Taxation by October 10 of the current year and due to be paid to the County by February 15 of the following year. Fire District Taxes - The Township is responsible for levying, collecting and remitting fire district taxes for the Hopewell Township Fire District No. I. Operations are charged for the full amount required to be raised from taxation to operate the fire district for the period from January I, 2013 to December 31, Reserve for Uncollected Taxes - The inclusion of the "Reserve for Uncollected Taxes" appropriation in the Township's annual budget protects the Township from taxes not paid currently. The Reserve, the minimum amount of which is determined on the percentage of collections experienced in the immediate preceding year, with certain exceptions, is required to provide assurance that cash collected in the current year will provide sufficient cash flow to meet expected obligations. Expenditures - Expenditures are recorded on the "budgetary" basis of accounting. Generally expenditures are recorded when paid. However, for charges to amounts appropriated for "other expenses", an amount is encumbered through the issuance of a numerically controlled purchase order or when a contract is executed as required by NJ.A.C. 5: When encumbered charges are paid, the amount encumbered is simultaneously liquidated in its original amount. Outstanding encumbrances are offset by an account entitled "Reserve for Encumbrances". The reserve is classified as a cash liability under New Jersey municipal accounting. At December 31, this reserve represents the portion of appropriation reserves that has been encumbered and is subject to the same statutory provisions as appropriation reserves. Appropriations for principal and interest on outstanding general capital bonds and notes and for principal on outstanding sewer utility capital bonds are provided on the cash basis. Appropriations for interest on outstanding water/sewer utility capital bonds and notes are provided on the accrual basis. Appropriation Reserves - Appropriation reserves covering unexpended appropriation balances are automatically created at year end and recorded as liabilities, except for amounts which may be canceled by the governing body. Appropriation reserves are available, until lapsed at the close of the succeeding year, to meet specific claims, commitments or contracts incurred during the preceding fiscal year. Lapsed appropriation reserves are recorded as income. Compensated Absences and Postemployment Benefits - Compensated absences for vacation, sick leave and other compensated absences are recorded and provided for in the annual budget in the year in which they are paid, on a pay-asyou-go basis. Likewise, no accrual is made for postemployment benefits, if any, which are also funded on a pay-as-you-go basis. Long Term Debt - Long Term Debt, relative to the acquisition of capital assets, is recorded as a liability in either the General Capital Fund or the Water/Sewer Utility Capital Fund. Where an improvement is a "local improvement", i.e. assessable upon completion, long-term debt associated with that portion of the cost of the improvement to be funded by assessments is transferred to the Trust Fund upon confirmation of the assessments or when the improvement is fully and permanently funded. Interest on Delinquent Taxes - It is the policy of the Township to collect interest for the nonpayment of taxes, sewer or assessments on or before the date when they would become delinquent. The Tax Collector is authorized to charge eight percent (8%) per annum on the first $1,500 of taxes becoming delinquent after due date and eighteen percent (18%) per annum on any amount of taxes in excess of $1,500 becoming delinquent after the due date and if a delinquency is in excess of$io,oooand remains in arrears beyond December 31", an additional penalty of six percent (6%) shall be charged against the delinquency. There is a ten (10) day grace period. 50 B-37

78 Township of Hopewell Notes to Financial Statements December 31,2013 NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) Comparative Data - Comparative total data for the prior year has been presented in the accompanying Balance Sheets and Statement of Operations in order to provide an understanding of changes in the Township's financial position. However, comparative (i.e., presentation of prior year totals by fund type) data have not been presented in the statement of revenues - regulatory basis and the statement of expenditures - regulatory basis since their inclusion would make the statements unduly complex and difficult to read. NOTE 2. CASH AND CASH EQUIVALENTS Custodial Credit Risk Related to Deposits - Custodial credit risk refers to the risk that, in the event of a bank failure, the Municipality's deposits may not be recovered. Although the Municipality does not have a formal policy regarding custodial credit risk, NJ.S.A. 17:9-41 et seq. requires that governmental units shall deposit public funds in public depositories protected from loss under the provisions of the Governmental Unit Deposit Protection Unit. Under the Act, the first $250,000 of governmental deposits in each insured depository is protected by the Federal Deposit Insurance Corporation (FDIC). Public funds owned by the municipality in excess of FDIC insured amounts are protected by GUDPA. However, GUDPA does not protect intermingled trust funds such as salary withholdings or funds that may pass to the Municipality relative to the happening of a future condition. Such funds are shown as uninsured and uncollateralized. Of the Municipality's amount on deposit of $27,987,950 as of December 31, 2013, $538,093 was insured under FDIC and the remaining balance of$27,449,857 was collateralized under GUDPA NOTE 3. INVESTMENTS New Jersey municipalities are limited as to the types of investments and types of financial institutions they may invest in. N.J.S.A. 40A: provides a list of permissible investments that may be purchased by New Jersey municipalities. These permissible investments generally include bonds or other obligations of the United States of America or obligations guaranteed by the United States of America, government money market funds, any obligation that a federal agency or a federal instrumentality has issued in accordance with an act of Congress, bonds or other obligations of the local unit or other obligations approved by the Division of Investment in the Department of Treasury for investment by local units, local government investment pools, deposits with the State of New Jersey Cash Management Fund, and agreements for the repurchase of fully collateralized securities with certain provisions. The Township has no investment policy that would further limit its investment choices. Custodial Credit Risk Related to Investments - For an investment, custodial credit risk is the risk that, in the event of failure of the counterparty, the Township will not be able to recover the value of its investments or collateral securities that are in the possession of an outside party. Investment securities are exposed to custodial credit risk if the securities are uninsured, are not registered in the name of the Township, and are held by either the counterparty or the counterparty's trust department or agent but not in the Township's name. As of December 31, 2013 the Township had the following investments: Investment Maturities Credit Rating Fair Value Money Market Fund Less than 1 Year AAAm $ 9,786, B-38

79 Township of Hopewell Notes to Financial Statements December 31,2013 NOTE 4. PROPERTY TAXES The following is a five year comparison of certain statistical information relative to property taxes and property tax collections for the current and previous four years. Coml!arative Schedule of Tax Rates Total Tax Rate $ 2.51 $ 2.42 $ 2.27 $ 2.15 $ 2.06 Apportionment of Tax Rate: Municipal County Regional School Fire District Municipal Open Space Assessed Valuation Amount $ 4,006,497,207 4,057,775,200 4,183,452,489 4,341,859,988 4,489,000,000 Coml!arison of Tax Levies and Collections Year Ended Tax LeVY Collections Percentage Of Collections $ 100,965,562 98,518,159 97,379,395 94,046,971 92,607,494 $ 100,035,296 97,330,347 95,840,228 92,863,564 91,396, % Delinguent Taxes and Tax Title Liens Percentage Tax Title Delinquent Total of Year Ended Liens Taxes Delinguent TaxLevv 2013 s 125,730 s 701,641 $ 827,371.82% , , , ,352 1,277,942 1,387, , ,078 1,035, , ,890 1,032, B-39

80 Township of HopeweU Notes to Financial Statements December 31,2013 NOTE 4. PROPERTY TAXES (Continued) The following comparison is made of the number of tax title liens receivable on December 31, of the current year and previous four years. Year Ended Number NOTE 5. PROPERTY ACQUIRED BY TAX TITLE LIEN LIQUIDATION The value of property acquired by liquidation of tax title liens on December 31, on the basis of the last valuation of such properties, for the current and previous four years was as follows: Year Ended Amount 2013 None 2012 None 2011 None 2010 None 2009 None NOTE 6. WATER/SEWER UTILITY LEVY The following is a five year comparison of water and sewer utility charges (rent) and collections for the current and previous four years. Water Utility Levv: Balance Water Cash Year Jan. I.!&!I Total CoUections Percentage 2013 $ 6,531 $ 81,112 $ 87,643 $ 83, % ,696 62,110 72,806 66, ,758 70,128 71,886 61, ,466 63,954 66,420 64, ,071 60,608 58, B-40

81 Township of HopeweU Notes to Financial Statements December 31,2013 NOTE 6. WATER/SEWER UTILITY LEVY (CONT'D) Sewer Utility Levy: Balance Sewer Cash Year Jan. I.!&.n Total Collections Percentage 2013 $ 46,631 $ 1,148,043 $ 1,194,674 $ 1,135, % ,928 1,055,658 1,1l1,586 1,064, ,843 1,046,362 1,098,205 1,042, ,600 1,080,997 1,141,597 1,089, ,307 1,030,409 1,088,716 1,028, NOTE 7. FUND BALANCES APPROPRIATED The following schedule details the amount of fund balances available at the end of the current year and four previous years and the amounts utilized in the subsequent year's budgets. Utilized Percentage Balance In Budget of of Fund Current Fund December 31 Succeeding Year Balance Used 2013 $ 12,039,768 $ 1,615, % ,164,634 1,415, ,878,445 1,915, ,794,837 1,415, ,777,174 1,415, Water Utility Utilized Percentage Operating Balance In Budget of of Fund Fund December 31 Succeeding Year Balance Used 2013 $ 90,578 $ % , ,335 1, ,634 7, ,617 16, Sewer Utility Utilized Percentage Operating Balance In Budget of of Fund Fund December 31 Succeeding Year Balance Used 2013 s 822,416 s 145, % , , ,045, , ,998 61, , , B-41

82 Township of Hopewell Notes to Financial Statements December 31,2013 NOTE 8. PENSION PLANS Substantially all of the Fire District's employees participate in one of the following pension plans which have been established by State statute, and are administered by the New Jersey Division of Pensions and Benefits (Division): the Police and Firemen's Retirement System (PFRS), the Public Employees' Retirement System (PERS) or the Defined Contribution Retirement Program (DCRP). Each plan has a Board of Trustees that is primarily responsible for its administration. The Division issues a publicly available financial report that includes financial statements and required supplementary information. That report may be obtained by writing to the State of New Jersey, Division of Pensions and Benefits. P.O. Box 295, Trenton, New Jersey, Public Employees' Retirement System (PERS) The Public Employees' Retirement System was established in The PERS provides retirement, death and disability, and medical benefits to qualified members. Vesting and benefit provisions are established by N.J.S.A 43: 15A and 43:3B. The contribution requirements of plan members are determined by State statute. In accordance with Chapter 62, P.L. 1994, plan members enrolled in the Public Employees' Retirement System were required to contribute 5% of their annual covered salary. Effective July 1,2008, however, in accordance with Chapter 92 P.L and Chapter 103, P.L. 2007, plan members are required to contribute 5.5% of their annual covered salary. For employees enrolled in the retirement system prior to July 1,2008, the increase is effective with the payroll period that begins immediately after July 1,2008. Pursuant to the provisions of Chapter 78, P.L. 2011, effective October I, 2011, the active member contribution rate was increased to 6.5%. An additional 1.0% increase will be phased-in over seven years beginning on July I, The State Treasurer has the right under the current law to make temporary reductions in rates based on the existence of surplus pension assets in the retirement system; however, statute also requires the return to the normal rate when such swplus pension assets no longer exist. Police and Firemen's Retirement System (PFRS) The Police and Firemen's Retirement System was established in The PFRS provides retirement, death and disability, and medical benefits to qualified members. Vesting and benefit provisions are established by N.J.S.A 43: 16A and 43:3B. The contribution requirements of plan members are determined by State statute. In accordance with Chapter 204, P.L. 1989, plan members enrolled in the PFRS are required to contribute 8.5% of their annual covered salary. Pursuant to the provisions of Chapter 78, P.L. 2011, the active member contribution rate increased to 10.0% in October, 20 II. The State Treasurer has the right under the current law to make temporary reductions in member rates based on the existence of swplus pension assets in the retirement system; however, the statute also requires the return to the normal rate when such surplus pension assets no longer exist. The Township is billed annually for its normal contributions plus any accrued liability. These contributions, equal to the required contributions are detailed below PERS PFRS PERS PFRS PERS PFRS Normal Contribution s 142,671 s 306,466 s 166,471 s 307,454 s 189,751 s 348,839 Accrued Liability 341, , , , , ,047 Retroactive Appropriation 4,595 Total Regular Contributions 488, ,204 s 499,414 s 554,174 s 492,107 $ 565,886 Non-Contributory Group Life Insurance 28,794 29,270 31,819 24,233 37,375 32,455 Total Due $ 517,191 $ 635,474 s 531,233 $ 578,407 $ 529,482 $ 598, B-42

83 Township of HopeweU Notes to Financial Statements December 31,2013 NOTE 8. PENSION PLANS (CONTINUED) Defined Contribution Retirement Program (DCRP) The Defmed Contribution Retirement Program was established in 2007, under the provisions of Chapter 92, P.L and Chapter 103, P.L (NJ.S.A.43:15C-1 et. seq), and expanded under the provisions of Chapter 89, P.L and Chapter I, P.L The Defined Contribution Retirement Program Board oversees the DCRP, which is administered by Prudential Financial on behalf of the Divisions of Pensions and Benefits. The DCRP provides eligible members, and their beneficiaries, with a tax-sheltered, defined contribution retirement benefit, along with life insurance and disability coverage. Vesting and benefit provisions are established by N.J.S.A. 43:15C-I et. seq. The contribution requirements of plan members are determined by State statute. In accordance with Chapter 92, P.L and Chapter 103, P.L. 2007, plan members are required to contribute 5.S% of their annual covered salary. Pursuant to the provisions of Chapter 78 P.L. 20 II, the active member contribution rate was increased to 6.5% plus an additional 1.0% phased-in over seven years beginning in the first year. The phase-in of the additional incremental member contribution amount will take place in July of each subsequent year. The State Treasurer has the right under the current law to make temporary reductions in rates based on the existence of surplus pension assets in the retirement system; however, state statute also requires the return to the normal rate when such surplus pension assets no longer exist. The employee contributions along with the Township's contribution for each pay period are transmitted to Prudential Financial not later than the fifth business day after the date on which the employee is paid for that pay period. There were no Township employees enrolled in the DCRP for the years ended December 31,2013,2012 and Related Party Investments - The Division of Pensions and Benefits does not invest in securities issued by the Township. NOTE 9. POST EMPLOYMENT BENEFITS OTHER THAN PENSIONS (OPEB) Plan Description The Township provides postretirement benefits other than pension benefits to active employees who retire from the Township and meet certain eligibility criteria. These are known as other postemployment benefits (OPEB). OPEB include postemployment healthcare benefits provided separately from a pension plan, excluding benefits defined as termination ottersand benefits. Benefit Eligibility An employee is eligible to receive postretirement health benefits through the Hopewell Township health plan by meeting the following criteria: For PBA and SOA, retire from active employment with Hopewell Township with at least 2S years of service with Hopewell Township, 2S years in PERSIPFRS and meet PFRS retirement criteria. For all others, (I) retire from active employment with Hopewell Township at age 60 or later and have at least 25 years of service in PERS, with at least 10 years of service with Hopewell Township, (2) retire from active employment with Hopewell Township at age SS or later and have at least 25 years of service with Hopewell Township and 25 years in PERS, or (3) retire from active employment with Hopewell Township with at least 25 years of service with Hopewell Township and 25 years in PERS. 56 B-43