VILLAGE of RIDGEWOOD, in the County of Bergen, New Jersey
NEW ISSUE - Book-Entry-Only SERIAL BONDS Rating: S&P: “AAA” (See “RATING” herein)
In the opinion of McManimon, Scotland & Baumann, LLC, Bond Counsel to the Village (as defined herein), pursuant to Section 103(a) of the Internal Revenue Code of 1986, as amended (the “Code”) 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. It is also the opinion of Bond Counsel, 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. In addition, in the opinion of Bond Counsel, 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. Bond Counsel’s opinions described herein are given in reliance on representations, certifications of fact, and statements of reasonable expectation made by the Village in its Tax Certificate (as defined herein), assume continuing compliance by the Village with certain covenants set forth in its Tax Certificate, and are based on existing statutes, regulations, administrative pronouncements and judicial decisions. See “TAX MATTERS” herein.
VILLAGE OF RIDGEWOOD, In the County of Bergen, New Jersey
$17,733,000 GENERAL OBLIGATION BONDS, SERIES 2016 consisting of: $12,218,000 General Improvement Bonds and $5,515,000 Water Utility Bonds (Callable)
Dated Date: Date of Delivery Due: August 1, as shown on the inside front cover page
The $17,733,000 General Obligation Bonds, Series 2016, consisting of $12,218,000 General Improvement Bonds (the “General Improvement Bonds”) and $5,515,000 Water Utility Bonds (the “Water Utility Bonds” and, together with the General Improvement Bonds, the “Bonds”), of the Village of Ridgewood, in the County of Bergen, New Jersey (the “Village”), are being issued to provide funds to (i) currently refund $6,082,000 of the Village’s $6,869,350 Notes, dated and issued on June 16, 2016 and maturing on August 19, 2016, (ii) provide $11,651,000 in new money to fund various capital improvements; and (iii) provide for the costs associated with the authorization, sale and issuance of the Bonds. See “AUTHORIZATION AND PURPOSE OF THE BONDS – Purpose of the Bonds” herein.
Interest on the Bonds will be payable semiannually on the first day of February and August in each year until maturity, commencing February 1, 2017. The principal of and the interest on the Bonds will be paid to DTC by the Village as paying agent. Interest on the Bonds will be credited to the Participants (as defined herein) of DTC as listed on the records of DTC as of each next preceding January 15 and July 15 (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 will be issued in the form of one certificate for the principal amount of the Bonds of each series 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”. See “THE BONDS - Book Entry-Only System” herein.
The Bonds are valid and legally binding general obligations of the Village and, unless paid from other sources, are payable from ad valorem taxes levied upon all the taxable real property within the Village 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 ofan informed investment decision.
The Bonds are offered when, as and if issued and delivered to the purchaser, 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. Delivery is anticipated to be through the facilities of DTC in New York, New York, on or about August 18, 2016.
Dated: August 3, 2016 VILLAGE OF RIDGEWOOD, In the County of Bergen, New Jersey
$17,733,000 GENERAL OBLIGATION BONDS, SERIES 2016 consisting of: $12,218,000 General Improvement Bonds and $5,515,000 Water Utility Bonds (Callable)
MATURITIES, INTEREST RATES, YIELDS AND CUSIP NUMBERS
Combined Series 2016A Series 2016B Principal Interest CUSIP Year Principal Amount Principal Amount Amount Rate Yield Number** 2017 $600,000 $175,000 $775,000 3.000% 0.530% 766243 VD8 2018 600,000 175,000 775,000 3.000 0.600 766243 VE6 2019 600,000 175,000 775,000 3.000 0.700 766243 VF3 2020 600,000 175,000 775,000 3.000 0.840 766243 VG1 2021 700,000 175,000 875,000 3.000 0.970 766243 VH9 2022 800,000 200,000 1,000,000 3.000 1.160 766243 VJ5 2023 1,150,000 200,000 1,350,000 4.000 1.290 766243 VK2 2024 1,200,000 200,000 1,400,000 4.000 1.400 766243 VL0 2025 1,200,000 200,000 1,400,000 4.000 1.500 766243 VM8 2026 1,200,000 350,000 1,550,000 3.000 1.600 766243 VN6 2027 1,200,000 350,000 1,550,000 3.000 1.750 766243 VP1 2028 1,200,000 350,000 1,550,000 2.000 2.000 766243 VQ9 2029 1,168,000 350,000 1,518,000 2.000 2.088 766243 VR7 2030 -- 350,000 350,000 2.000 2.167 766243 VS5 2031 -- 350,000 350,000 2.125 2.244 766243 VT3 2032 -- 350,000 350,000 2.125 2.313 766243 VU0 2033 -- 350,000 350,000 2.250 2.394 766243 VV8 2034 -- 350,000 350,000 2.250 2.458 766243 VW6 2035 -- 350,000 350,000 2.375 2.508 766243 VX4 2036 -- 340,000 340,000 2.375 2.568 766243 VY2
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** "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 Village 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. VILLAGE OF RIDGEWOOD IN THE COUNTYOF BERGEN NEW JERSEY
MAYOR
Susan Knudsen
COUNCIL MEMBERS
Michael A. Sedon Ramon M. Hache Jeffrey Voigt Bernadette Coghlan-Walsh
VILLAGE MANAGER
Roberta Sonenfeld
VILLAGE CLERK
Heather A. Mailander
CHIEF FINANCIAL OFFICER
Robert G. Rooney
TREASURER
Stephen P. Sanzari
VILLAGE ATTORNEY
Matthew S. Rogers, Esq. Ridgewood, New Jersey
INDEPENDENT ACCOUNTANT
Nisivoccia LLP Mt. Arlington, New Jersey
BOND COUNSEL
McManimon, Scotland & Baumann, LLC Roseland, New Jersey
No broker, dealer, salesperson or other person has been authorized by the Village 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 Village 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 Village. 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. 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.
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 Village 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 Village 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 Village.
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 Village 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.
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 SECURITY AND SOURCE OF PAYMENT ...... 5 AUTHORIZATION AND PURPOSE OF THE BONDS...... 5 Authorization of the General Improvement Bonds ...... 5 Authorization of the Water Utility Bonds ...... 6 ADDITIONAL FINANCING ...... 7 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 ...... 10 Tax Appeals ...... 11 The Local Fiscal Affairs Law (N.J.S.A. 40A:5-1 et seq.) ...... 11 TAX MATTERS ...... 11 General ...... 11 Certain Federal Tax Consequences Relating to the Bonds ...... 12 Bank Qualification ...... 12 IRS Circular 230 Disclosure ...... 12 New Jersey Gross Income Tax ...... 13 Proposals for Legislative Change ...... 13 Future Events ...... 13 LITIGATION ...... 13 SECONDARY MARKET DISCLOSURE ...... 14 MUNICIPAL BANKRUPTCY ...... 15 APPROVAL OF LEGAL PROCEEDINGS ...... 16 UNDERWRITING ...... 16 RATING ...... 16 PREPARATION OF OFFICIAL STATEMENT ...... 17 ADDITIONAL INFORMATION ...... 17 MISCELLANEOUS ...... 18
CERTAIN ECONOMIC AND DEMOGRAPHIC INFORMATION ABOUT THE VILLAGE OF RIDGEWOOD ...... Appendix A
AUDITED FINANCIAL STATEMENTS FOR YEAR ENDED DECEMBER 31, 2015 ...... Appendix B
FORM OF APPROVING LEGAL OPINION OF BOND COUNSEL...... Appendix C
[ THIS PAGE INTENTIONALLY LEFT BLANK ] OFFICIAL STATEMENT Relating to
$17,733,000 GENERAL OBLIGATION BONDS, SERIES 2016 consisting of: $12,218,000 General Improvement Bonds and $5,515,000 Water Utility Bonds
of the
VILLAGE OF RIDGEWOOD IN THE COUNTY OF BERGEN, NEW JERSEY
INTRODUCTION
This Official Statement, which includes the cover page, the inside front cover page and the appendices attached hereto, has been prepared by the Village of Ridgewood (the "Village"), in the County of Bergen (the "County"), State of New Jersey (the "State"), in connection with the sale and the issuance of $17,733,000 aggregate principal amount General Obligation Bonds, Series 2016, consisting of $12,218,000 General Improvement Bonds (the "General Improvement Bonds") and $5,515,000 Water Utility Bonds (the "Water Utility Bonds" and, together with the General Improvement Bonds, the “Bonds”). This Official Statement has been executed by and on behalf of the Village by its Chief Financial Officer and may be distributed in connection with the sale of the Bonds described herein.
This Official Statement is "deemed final," as of its date, within the meaning of Rule 15c2- 12 of the Securities and Exchange Commission.
THE BONDS
General Description
The Bonds shall be dated their date of issuance and will mature on August 1 in the years and in the principal amounts as set forth on the inside front cover page hereof. The Bonds shall bear interest from their date, payable semiannually on each February 1 and August 1 (each, an "Interest Payment Date"), commencing February 1, 2017, in each year until maturity, at the interest rates shown on the inside front cover page hereof. Interest on the Bonds shall be computed on a 30-day month/360-day year basis.
The Bonds are issuable as fully registered book-entry bonds in the form of one certificate for each maturity of each series of the Bonds and in the principal amount of such maturity. The Bonds may be purchased in book-entry only form in the amount of $5,000 (and where necessary, in $1,000 increments in excess thereof) through book-entries made on the books and records of The Depository Trust Company, New York, New York ("DTC") and its participants. So long as DTC or its nominee, Cede & Co. (or any successor or assign), is the registered owner for the Bonds, payments of the principal of and interest on the Bonds will be made by the Village directly to Cede & Co. (or any successor or assign), as nominee for DTC. 1 Interest on the Bonds will be credited to the participants of DTC as listed on the records of DTC as of each next preceding May 15 and November 15 (the "Record Dates" for the payment of interest on the Bonds). See "Book-Entry-Only System" herein.
Optional Redemption
The Bonds of this issue maturing prior to August 1, 2027, are not subject to redemption prior to their stated maturities. The Bonds of this issue maturing on or after August 1, 2027 are redeemable at the option of the Village in whole or in part on any date on or after August 1, 2026 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 to 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 Village 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 Village determines to redeem a portion of the Bonds prior to maturity, the Bonds to be redeemed shall be selected by the Village; 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 Village 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 Village.
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 each series of the Bonds, in the aggregate principal amount of each maturity, and will be deposited with DTC.
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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 1934. DTC holds and provides asset servicing for over 3.5 million issues of U.S. and non-U.S. equity issues, corporate and municipal debt issues and money market instruments (from over 100 countries) that DTC's participants ("Direct Participants") deposit with DTC. DTC also facilitates the post- trade settlement among Direct Participants of sales and other securities transactions in deposited securities, through electronic computerized book-entry transfers and pledges between Direct Participants' accounts. This eliminates the need for physical movement of securities certificates. Direct Participants include both U.S. and non-U.S. securities brokers and dealers, banks, trust companies, clearing corporations and certain other organizations. DTC is a wholly-owned subsidiary of The Depository Trust & Clearing Corporation ("DTCC"). DTCC is the holding company for DTC, National Securities Clearing Corporation 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 a Standard & Poor's rating of AA+. The DTC Rules applicable to its Participants are on file with the Securities and Exchange Commission. More information about DTC can be found at www.dtcc.com and www.dtc.org.
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 effect any change in beneficial ownership. DTC has no knowledge of the actual Beneficial Owners of the Bonds; DTC's records reflect only the identity of the Direct Participants to whose accounts such Bonds are credited, which may or may not be the Beneficial Owners. The Direct and Indirect Participants will remain responsible for keeping account of their holdings on behalf of their customers.
Conveyance of notices and other communications by DTC to Direct Participants, by Direct Participants to Indirect Participants and by Direct Participants and Indirect Participants to Beneficial Owners will be governed by arrangements among them, subject to any statutory or regulatory requirements as may be in effect from time to time.
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Redemption notices, if applicable, 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 Village as soon as possible after the Record Date. The Omnibus Proxy assigns Cede & Co.'s consenting or voting rights to those Direct Participants to whose accounts the Bonds are credited on the Record Date (identified in a listing attached to the Omnibus Proxy).
Redemption proceeds, if applicable, 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 Village or the paying agent, if any, 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, the paying agent, if any, or the Village, subject to any statutory or regulatory requirements as may be in effect from time to time. Payment of redemption proceeds, if applicable, 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 Village or the paying agent, if any, 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 Village 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 Village may decide to discontinue use of the system of book-entry only transfers through DTC (or a successor securities depository). In that event, bond certificates will be printed and delivered to DTC.
The information in this section concerning DTC and DTC’s book-entry system has been obtained from sources that the Village believes to be reliable, but the Village takes no responsibility for the accuracy thereof.
THE VILLAGE 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.
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.
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Discontinuation of Book-Entry-Only System
If the Village, 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 Village will attempt to locate another qualified securities depository. If the Village fails to find such a securities depository, or if the Village determines, in its sole discretion, that it is in the best interest of the Village or that the interest of the Beneficial Owners might be adversely affected if the book-entry-only system of transfer is continued (the Village undertakes no obligation to make an investigation to determine the occurrence of any events that would permit it to make such determination), the Village shall notify DTC of the termination of the book-entry- only system.
SECURITY AND SOURCE OF PAYMENT
The Bonds are valid and legally binding general obligations of the Village, and the Village has pledged its full faith and credit for the payment of the principal of and the interest on the Bonds. The Village is required by law to levy ad valorem taxes upon all the real property taxable within the Village for the payment of the principal of and the interest on the Bonds without limitation as to rate or amount.
AUTHORIZATION AND PURPOSE OF THE BONDS
Authorization of the General Improvement Bonds
The General Improvement Bonds have been authorized and are being issued pursuant to the laws of the State, including the Local Bond Law (constituting Chapter 2 of Title 40A of the New Jersey Statutes, as amended) (the “Local Bond Law”), the bond ordinances adopted by the Village Council referred to in the chart below, and by a resolution adopted by the Village Council on June 8, 2016.
Principal Amount of Number of Description of Improvement and Date of Bonds Ordinance Adoption of Ordinance $230,000 #3316 Saddle River Stream Bank Erosion and Sanitary Sewer Restoration, finally adopted December 14, 2011. $320,000 #3337 Restoration of Village Hall, finally adopted March 28, 2012. $31,000 #3367 Various capital improvements, finally adopted December 12, 2012. $2,635,000 #3361 Various capital improvements, finally adopted December 5, 2012. $2,751,000 #3392 Various capital improvements, finally adopted October 9, 2013. $1,330,000 #3419 Various road improvements, finally adopted May 28, 2014.
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Principal Amount of Number of Description of Improvement and Date of Bonds Ordinance Adoption of Ordinance $1,290,000 #3421 Various capital improvements, finally adopted July 16, 2014. $679,000 #3460 Various capital improvements, finally adopted March 11, 2015. $1,431,000 #3475 Various capital improvements, finally adopted May 13, 2015. $1,051,000 #3520 2016 Road Resurfacing Program, finally adopted March 9, 2016. $470,000 #3531 Providing for the cleaning of the Anaerobic Digesters at the Water Pollution Control Facility, finally adopted May 11, 2016.
Proceeds from the sale and issuance of the General Improvement Bonds will be used by the Village to (i) currently refund $5,967,000 of the Village’s $6,754,350 Bond Anticipation Note (the “June 2016 Bond Anticipation Note”), dated and issued on June 16, 2016 and maturing on August 19, 2016 (together with $787,350 from the sale and issuance of the hereinafter defined August 2016 Bond Anticipation Note), (ii) provide $6,251,000 in new money proceeds to fund certain of the projects set forth above and (iii) provide for the costs associated with the authorization, sale and issuance of the Bonds.
Authorization of the Water Utility Bonds
The Water Utility Bonds have been authorized and are being issued pursuant to the laws of the State, including the Local Bond Law, the bond ordinances adopted by the Village Council referred to in the chart below, and by a resolution adopted by the Village Council on June 8, 2016.
Principal Amount of Number of Description of Improvement and Date of Bonds Ordinance Adoption of Ordinance $115,000 #3393 Various water utility improvements, finally adopted October 9, 2013. $1,600,000 #3414 Various water utility improvements, finally adopted May 28, 2014. $1,200,000 #3476 Various improvements to the water utility, finally adopted May 13, 2015. $2,600,000 #3536 Various water utility improvements, finally adopted June 8, 2016.
Proceeds from the sale and issuance of the Water Utility Bonds will be used by the Village to (i) currently refund $115,000 of the Village’s Bond Anticipation Note, dated and issued on June 16, 2016 and maturing on August 19, 2016, (ii) provide $5,400,000 in new money proceeds to fund certain of the projects set forth above and (iii) provide for the costs associated with the authorization, sale and issuance of the Bonds. 6
ADDITIONAL FINANCING
On or about August 10, 2016, the Village will offer for sale a $787,350 Bond Anticipation Note (the “August 2016 Bond Anticipation Note”). The August 2016 Bond Anticipation Note will be dated and issued on or about August 19, 2016 and mature on August 18, 2017. Proceeds from the sale and issuance of the August 2016 Bond Anticipation Note will be used by the Village to currently refund $787,350 of the June 2016 Bond Anticipation Note, together with $6,082,000 from the sale and issuance of the Bonds.
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 Village are general full faith and credit obligations.
The authorized bonded indebtedness of the Village 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 Village, as annually determined by the State Director of Taxation is $6,187,504,550.
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 Village has not exceeded its statutory debt limit. As of December 31, 2015, the statutory net debt as a percentage of average equalized valuation was 0.73%. As noted above, the statutory limit is 3½%.
The Village 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 Village 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 Village or substantially reduce the ability of the Village 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 Village 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).
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The Village 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.
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.
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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.
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, drainage map preparation for flood control purposes and contractually required severance liabilities, 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:4-45.1 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
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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, legislation constituting P.L. 2010, c. 44, limits 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.
Neither the tax levy limitation nor the "Cap Law" limits the obligation of the Village to levy ad valorem taxes upon all taxable real property within the Village 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. A re-evaluation of all property in the Village was last completed in 2006. A Village-wide re-assessment was completed in 2012 and effective for the 2013 tax year.
Upon the filing of certified adopted budgets by the Village’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 Village. 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 $1,500.00 of the delinquency and 18% per annum on any amount in excess of $1,500.00. These interest rates and penalties are the highest permitted under New
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Jersey Statutes. Delinquent taxes open for one year or more are annually included in a tax sale in accordance with New Jersey Statues. A table detailing delinquent taxes and tax title liens is included in Appendix A.
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 Village 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, 2015 for the Village is on file with the Clerk and is available for review during business hours.
TAX MATTERS
General
Section 103(a) of the Internal Revenue Code of 1986, as amended (the "Code") provides that interest on obligations such as 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 Village will make certain representations, certifications of fact, and statements of reasonable 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 Village in the Tax Certificate and assuming compliance by the Village 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
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purposes pursuant to the Section 103(a) of 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. Interest on the Bonds held by corporate taxpayers is included in the relevant income computation for calculation of the federal alternative minimum tax imposed on corporations as a result of interest on the Bonds being included in "adjusted current earnings."
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.
There can be no assurance that legislation will not be introduced or enacted after the issuance and delivery of the Bonds so as to affect adversely the exclusion from gross income for federal income tax purposes of interest on 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 tax legislation.
Bank Qualification
The Bonds will not be designated as qualified under Section 265 of the Code by the Village 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, 1986. 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.
IRS Circular 230 Disclosure
To ensure compliance with requirements imposed by the Internal Revenue Service, any purchaser of a Bond is hereby informed that (i) any U.S. federal tax advice contained in this offering material (including any attachments) is not intended or written by Bond Counsel to the Village to be used, and that it cannot be used by any taxpayer, for the purpose of avoiding penalties that may be imposed on the taxpayer under the Code; (ii) such advice is written to support the promotion or marketing of the transaction(s) or matter(s) addressed by the written advice; and (iii) the taxpayer should seek advice based on the taxpayer’s particular circumstances from an independent tax advisor.
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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.
Proposals for Legislative Change
Purchasers of the Bonds should consult their tax advisors regarding any pending or proposed legislation, regulatory initiatives or litigation. The disclosures and opinions expressed herein are based upon existing legislation and regulations as interpreted by relevant judicial and regulatory authorities as of the date of issuance and delivery of the Bonds, and no opinion is expressed as of any date subsequent thereto or with respect to any proposed or pending legislation, regulatory initiatives or litigation.
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 purposes, 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.
LITIGATION
To the knowledge of the Village Attorney, Matthew S. Rogers, Esq., Ridgewood, 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 Village or the title of any of the present officers. Moreover, to the knowledge of the Village Attorney, except for the matter captioned Township of Wyckoff, et als. v. Village of Ridgewood, Docket BER-L-5651-12, described in Appendix A hereto under the heading "Village Water Utility", no litigation is presently pending or threatened that, in the opinion of the Village Attorney, would have a material adverse impact on the financial condition of the Village if adversely decided.
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SECONDARY MARKET DISCLOSURE
The Village, 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 Village will:
(a) On or prior to 270 days from the end of each fiscal year, beginning with the fiscal year ending December 31 of the year in which the Bonds are issued, to the Municipal Securities Rulemaking Board through the Electronic Municipal Market Access Data Port (the "MSRB"), annual financial information with respect to the Village 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 Village and certain financial information and operating data consisting of (i) the Village and overlapping indebtedness including a schedule of outstanding debt issued by the Village, (ii) property valuation information, and (iii) 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; (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
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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; (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 Village to provide required annual financial information on or before the date specified in the Resolution.
In the event that the Village fails to comply with the above-described undertaking and covenants, the Village 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 Village 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.
In the past five years, the Village has failed to timely file audited financial statements for the years ending December 31, 2014, 2012 and 2011, municipal budgets for each of the years ending December 31, 2011 through 2015 and operating data for the years ending December 31, 2011 through 2014, as well as notices of failure to timely file such audited financial statements, municipal budgets and operating data. The Village has engaged the services of Phoenix Advisors, LLC to act as dissemination agent for all of the Village's outstanding bonds and bond anticipation notes, including the Bonds.
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 Village may affect the future liquidity of the Bonds.
MUNICIPAL BANKRUPTCY
The undertakings of the Village should be considered with reference to Chapter IX of the Bankruptcy Act, 11 U.S.C. Section 901, et seq., as amended by Public Law 94-260, 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 100-597, effective November 3, 1988, and as further amended and other bankruptcy laws affecting creditor’s rights
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and municipalities in general. The amendments of P.L. 94-260 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 such 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 Village, whose approving legal opinion will be delivered with the Bonds substantially in the form set forth as Appendix C. Certain legal matters will be passed on for the Village by its Counsel, Matthew S. Rogers, Esq., Ridgewood, New Jersey.
UNDERWRITING
The Bonds have been purchased from the Village at a public sale by Morgan Stanley & Co. LLC (the “Underwriter”) at a price of $19,067,829.72 (consisting of the par amount of the Bonds plus an original issue premium of $1,334,829.72). The Underwriter has purchased the Bonds in accordance with the Notice of Sale. The Bonds are being offered for sale at the yields or prices set forth on the inside front cover of this Official Statement.
Morgan Stanley, parent company of Morgan Stanley & Co. LLC., an underwriter of the Bonds, has entered into a retail distribution arrangement with Morgan Stanley Smith Barney LLC. As part of the distribution arrangement, Morgan Stanley & Co. LLC may distribute municipal securities to retail investors through the financial advisor network of Morgan Stanley Smith Barney LLC. As part of this arrangement, Morgan Stanley & Co. LLC may compensate Morgan Stanley Smith Barney LLC for its selling efforts with respect to the Bonds.
RATING
Standard & Poor’s Rating Services, a division of the McGraw-Hill Companies, Inc. (the "Rating Agency"), has assigned a rating of "AAA" to the Bonds.
The rating reflects only the views of the Rating Agency and an explanation of the significance of such rating may only be obtained from the Rating Agency. There can be no
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assurance that the rating will be maintained for any given period of time or that they may not be raised, lowered or withdrawn entirely if, in the Rating Agency's judgment, circumstances so warrant. Any downward change in, or withdrawal of such rating, may have an adverse effect on the marketability or market price of the Bonds.
PREPARATION OF OFFICIAL STATEMENT
The Village 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 purchasers of the Bonds, by certificates signed by the Chief Financial Officer of the Village, 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.
Nisivoccia LLP, Mount Arlington, New Jersey, assisted in the preparation of information contained in this Official Statement and takes responsibility for the unaudited and audited financial statements to the extent specified in their Independent Auditor’s Report.
All other information has been obtained from sources which the Village considers to be reliable and they make no warranty, guaranty or other representation with respect to the accuracy and completeness of such information.
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 Robert G. Rooney, the Village’s Chief Financial Officer, at 131 N. Maple Avenue, Ridgewood, New Jersey 07451, telephone (201) 670-5500 or by email [email protected].
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MISCELLANEOUS
This Official Statement is not to be construed as a contract or agreement between the Village 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 Village since the date hereof. The information contained in the Official Statement is not guaranteed as to accuracy or completeness.
VILLAGE OF RIDGEWOOD
By: /s/_Robert G. Rooney Robert G. Rooney, Chief Financial Officer Dated: August 3, 2016
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APPENDIX A
CERTAIN ECONOMIC AND DEMOGRAPHIC INFORMATION ABOUT THE VILLAGE OF RIDGEWOOD
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GENERAL INFORMATION REGARDING THE VILLAGE OF RIDGEWOOD
Size and Geographical Location
The Village of Ridgewood (the "Village") is located in the northwestern part of Bergen County, New Jersey, in the foothills of the Ramapo Mountains, approximately 22 miles from New York City. The terrain is high and well drained. The area of the Village is approximately 6 square miles.
Characteristics of the Community
The Village is a predominately residential, suburban community with most residences being owner-occupied, single family dwellings. There is virtually no manufacturing or other industry and very little undeveloped land. The Village has, however, a substantial central business district and many professional and commercial offices, unique boutiques, popular retail stores and upscale family eateries. The Village is host to Valley Hospital that serves the Village and surrounding communities.
Government
Ridgewood was incorporated as a Village in 1894 from that portion of the County of Bergen previously known as the Township of Ridgewood. The Village form of government is Council-Manager, Plan B under the Faulkner Act. Five members, elected at large on a non-partisan basis for four-year overlapping terms make up the Village Council. The Council appoints the Village Manager to administer its directives and conduct municipal affairs. This form of government provides a stable, non-partisan government with professional administration for all municipal services. Municipal services include, among other things, full-time Police and Fire Departments, Solid Waste Collection, Ridgewood Water, Parks and Recreation services and Sewer Collection and Treatment.
Transportation
The Village is served by New Jersey Transit which offers direct rail service to Hoboken and mid- town Manhattan from the Train Station in the Village. From Hoboken, services are available to New York City via the Port Authority Trans Hudson Railroad. There are also bus transportation facilities to New York City, Paterson, Newark and other nearby cities.
Education and Schools
The Board of Education of the Village of Ridgewood operates under Title 18A, Education, of the New Jersey State Statutes and is an independent school district, coterminous in area with the Village of Ridgewood. It provides a full public education system and facilities from kindergarten through grade 12. The school system includes seven elementary school, two middle schools and one three-year high school.
Ridgewood has a reputation as one of the finest school systems in the area. The buildings are generally of fireproof construction. The system has enjoyed excellent administration and has kept pace through its building program with the growth of the Village.
The school district prides itself in being an exemplary school system. Many state of the art programs are available and student achievement is extraordinarily high when compared to all reference groups. The focus of the school district is to provide a well-rounded educational experience for its students, together with many opportunities for exploration and experimentation. The school district offers a wide array of services for special needs students, as well as for those in accelerated programs.
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Population Trends Village of County of State of Year Ridgewood Bergen New Jersey 2010 24,958 905,116 8,791,894 2000 25,508 884,118 8,414,350 1990 24,152 825,380 7,730,188 1980 24,936 845,385 7,365,011
Parks and Recreation Facilities
Ridgewood has excellent municipally owned and operated park and recreation facilities. Parks acreage totals 165 acres, which includes 16 tennis courts, 28 ball diamonds, one artificial turf field, 9 soccer fields, a municipal lake and two community centers. For many years, the Village has maintained an extensive park and shade tree maintenance program, which is particularly evident in its well- maintained athletic fields and beautiful tree-lined residential streets.
Public Safety
Ridgewood has a well-trained and efficient police force of 43 full-time officers, inclusive of 5 detectives, and operates 10 marked and 5 unmarked police vehicles. The Village Police Department was the first department in the State of New Jersey to become accredited through the Commission of Accreditation for Law Enforcement Agencies, Inc. (CALEA). Education and specialized police training are mandatory under this national accreditation. Complementing the regular force are Special Police Parking Enforcement officers and school crossing guards.
The Village, in conjunction with its neighboring community of Glen Rock, has formed a Central Dispatch/E911 Center, by entering into an Inter-local Service Agreement. The joint entity is called Northwest Bergen Central Dispatch, which handles full call taking/dispatch for Police, Fire, EMS and emergency services for the municipalities of Ridgewood and Glen Rock, as well as 911 call taking/dispatch for New Milford and Oradell Fire, and EMS and 911 call taking/dispatch for River Edge Fire. The Dispatch Center also performs E911 handoff calls for six other communities in the surrounding area.
The Northwest Bergen Central Dispatch is the first public safety communications agency to be nationally accredited by CALEA.
A 40 career, 10 volunteer-member fire department provides fire protection with one 105-foot ladder truck, five 1250 gallon per minute (GPM) pumpers and one rescue truck. Career firefighters are on duty at all times at the two fire stations located within the Village. All Firefighters have firefighter I & II certification from the NJ Division of Fire Safety and they receive annual training following the National Fire Protection Association (NFPA) guidelines. A mutual aid agreement is in effect with all surrounding municipalities.
The Ridgewood Fire Prevention Bureau operates under the provisions of the New Jersey State Uniform Fire Safety Act. All inspectors are certified Fire Inspectors and licensed as Fire Sub-Code Officials as required by the Uniform Construction Code. The Fire Prevention Bureau performs all inspections required under New Jersey State Law and Municipal Code Requirements. In addition, the Fire Prevention personnel are responsible for arson investigations and public education.
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Public Works
The Village of Ridgewood Department of Public Works has five principal divisions, with approximately 60 staff, under the oversight of the Director, that provide services to the residents.
The Engineering Division provides professional engineering services to all Village departments. The Engineering Division maintains records for the Village, provides stormwater management review of development projects, reviews development projects before the Village's Planning Board and Zoning Board of Adjustment, administers soil moving permits, oversees the Village's capital construction projects and provides technical advice to residents.
The Streets Division maintains the Village's approximately 100 miles of asphalt surfaced roads. The Streets Division maintains and operates a fleet of equipment to perform its assigned functions. The Streets Division provides leaf collection services for the Village in the fall, with collected leaves composted at the Village's compost facility. Finished compost is available for residents. The Streets Division also provides ice and snow control for Village streets during the winter months. Other times during the year the Streets Division patches potholes and maintains the Village's stormwater drainage system.
The Water Pollution Control Division of the Department Of Public Works operates the Village's wastewater treatment facility under the auspices of the New Jersey Department of Environmental Protection. The Water Pollution Control Division is also responsible for the maintenance and upkeep of the Village's pump stations and sanitary collection system.
The Traffic and Signals Division of the Department of Public Works maintains the Village's traffic markings and signals. Village facilities are maintained by personnel from the Traffic and Signals Division.
The Fleet Services Division of the Department of Public Works maintains the Village's rolling stock. Fleet Service's mechanics service the equipment and vehicles for all of the Village's Departments. Fleet Services has an interlocal agreement with an adjacent municipality to provide service that town's Fire Department vehicles.
Utilities
Electric and gas are supplied by Public Service Electric and Gas Company.
Village Water Utility
The Village owns and operates a substantially self-supported water utility, which sells water retail to a population of approximately 60,000 persons, consisting not only of the residents of the Village, but also the adjoining Boroughs of Glen Rock and Midland Park and the Township of Wyckoff. All water consumption is metered to insure full payment for water use.
Litigation captioned Township of Wyckoff, et als. v. Village of Ridgewood, Docket No. BER-L- 5651-12 (the "Litigation") remains pending at this time with respect to the Village’s Water Utility, and a commensurate dispute over several ordinances that increased water rates from 2010 to 2012.
The Litigation involves a challenge, brought by three (3) constituent municipalities that receive water from the Village Water Utility, to certain water rates that were set by Village ordinance from 2010 to 2012. It is alleged by the Plaintiff municipalities that the Village’s water rates set by the challenged
A-3
ordinances are arbitrary, unreasonable and capricious, were not uniform between Village and non-Village water users (although Plaintiffs seem to have retreated from that position), and improperly allocate certain budgetary and operational expenses between the Village Current Fund and its Water Utility. The Village has vigorously resisted and contested the Litigation, engaging in extensive discovery and continuing to argue that the Village’s allocation of expenses is proper, that they are customary and consistent with local government practice in this State, and were done pursuant to a Local Finance Board approved expense allocation methodology dating back over a decade. The Village has also argued that Plaintiffs’ lawsuit is an untimely challenge to the methodology used to allocate such costs, and also an untimely, de facto challenge to past budget years in which the Village now has repose.
After extensive discovery in the matter, in the fall of 2013 both Plaintiffs and the Village moved for summary judgment in the Litigation. However, in December of 2013, Judge Friscia in the Bergen County Vicinage, rather than addressing the substance of the summary judgment motions respecting the challenged water rate methodology, instead determined on her own motion that the New Jersey Board of Public Utilities (the "BPU") needed to review the Village Water Utility’s rates for uniformity as a threshold matter. Plaintiffs immediately sought interlocutory review of that determination by the Appellate Division of the Superior Court, which subsequently agreed to hear the matter in early 2014.
Following oral argument in the matter on October 22, 2014, the Appellate Division, in July of 2015, remanded the matter back to the Superior Court of Bergen County, ruling that the BPU did not have jurisdiction in this case, as all of the challenged water rates are facially uniform. As a result of the 2015 appellate ruling, Judge Frisica again reviewed the respective summary judgment motions of the Plaintiffs and the Village (together, the "Parties"), and substantively denied both by opinion and order dated August 27, 2015.
Since the August 2015 denial of summary judgment to the respective Parties, the Parties have continued to prepare for trial, including witness preparation, exhibit preparation and, as necessary, deposition of respective expert witnesses. The Parties did attempt to mediate the matter twice – on January 8, 2016 and again on March 24, 2016 – to no avail. The trial is presently scheduled to commence on September 12, 2016.
An adverse judgment against the Village would impact on the Village’s ability to continue to supply water service through an internally owned and operated water system. If Plaintiffs were to prevail at trial, the Village would have to review and evaluate options going forward. Plaintiffs currently claim damages of approximately $15 million in connection with the Litigation.
Income Median Household Median Family Per Capita Income Income Income Village of Ridgewood $141,348 $169,490 $68,939 County of Bergen 83,686 102,429 43,194 State of NJ 72,062 87,999 36,359 ______US Censes Bureau – 2010-2014 American Community Survey 5-Year Estimates.
The high-income level of residents approximately double the State's average, produces a consistently high percentage of stable tax collections. Also, this income insures the maintenance of a healthy shopping district, Village residences and community facilities.
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Financial Institutions
Excellent banking facilities can be found within the Village's boundaries in the following institutions:
Atlantic Stewardship Capital One Bank Connect One Bank TD Bank Bank of America Chase Bank M & T Bank Valley National Boiling Springs Savings Citibank Northern NJ Savings Wells Fargo Columbia PNC
Village Parking Utility
The parking utility uses metered revenues received from shoppers and commuters to pay costs involved in providing parking, both on street and in municipally owned and operated facilities. On March 23, 2016, the Village Mayor & Council finally adopted bond ordinance 3521 (the "Ordinance"), authorizing the Village (1) to appropriate $11,500,000 to provide for the construction of the Hudson Street parking deck (the "Project") and (2) to borrow an amount not to exceed $11,500,000 in bond anticipation notes and parking utility bonds to finance the costs of the Project. The Project would provide approximately 325 additional parking spaces in the Central Business District.
On April 12, 2016, the Village received a petition seeking to protest and repeal the Ordinance under the power of referendum, and if the Ordinance were not repealed, demanding that the Ordinance be submitted to the electorate for a vote. By resolution adopted by the Village Mayor and Village Council on April 27, 2016, the Village authorized a special binding election to be held on June 21, 2016 to determine whether the Ordinance should be adopted. By a vote of 1,428 in favor of adoption and 2,675 opposed to adoption, the Ordinance was voted down.
Free Public Library
The Village, under the direction of a Board of Library Trustees, operates its own library, housed in a 20,000 square foot structure of its own. It continually increases its volumes for the needs of its residents. The Library has been substantially updated and expanded to continue to increase services for Village residents.
A-5 A‐6
Labor Force Estimates VILLAGE OF RIDGEWOOD Number Number Unemployment YEAR Labor Force Employed Unemployed Rate %
2014 11942 11206 736 6.2 2013 12003 11246 757 6.3 2012 11952 11261 691 5.8 2011 11,841 11,106 734 6.2 2010 11,818 11,215 603 5.1 2009 11,079 10,625 454 4.1 2008 11,565 11,172 393 3.4 2007 12,005 11,549 456 3.8 2006 12,055 11,722 333 2.8 2005 11,926 11,629 299 2.5 2004 13,033 12,665 368 2.8 2003 12,168 11,747 421 3.5 2002 12,196 11,768 428 2.5
COUNTY OF BERGEN Number Number Unemployment YEAR Labor Force Employed Unemployed Rate %
2014 486,823 451,145 35,678 7.3 2013 482,842 446,366 36,476 7.6 2012 479,549 441,164 38,385 7.0 2011 482,198 445,069 37,129 7.7 2010 481,285 449,520 31,765 6.6 2009 478,832 454,412 24,420 5.1 2008 477,789 456,289 21,501 4.5 2007 470,475 446,480 23,994 5.1 2006 473,700 456,100 17,600 3.7 2005 472,488 454,850 17,638 3.7 2004 453,100 437,900 15,200 3.3 2003 450,300 431,300 14,000 3.1 2002 448,877 426,471 22,406 5.0
Source; US Census Bureau, American Community Survey 3 year estimate A‐7 VILLAGE OF RIDGEWOOD BUDGET SUMMARY OF 2016 BUDGET (AS ADOPTED) (VILLAGE OPERATIONS ONLY)
Revenues:
Surplus Anticipated$ 3,300,000 Miscellaneous Revenues 9,789,905 Delinquent Taxes 700,000 Amount to be Raised by Taxes for Support of Municipal Budget 33,962,030
$ 47,751,935
Appropriations: Legislative, Judicial and Executive Agencies$ 902,474 Ridgewood Public library 2,366,776 Insurance 7,275,611 Administration 765,923 Finance 632,059 Uniform construction Code 660,425 Public Works 4,304,768 Solid Waste 2,227,046 Recycling and Clean communities 874,269 Property Maintenance 157,492 Parks & Recreation 1,469,329 Health & Welfare 288,390 Public Safety 12,712,289 Utility Expenses and Bulk Purchases 1,330,775 Contingent 25,000 Reserve for Terminal leave 400,000 Pension and Social Security 4,868,660 Deferred Charges 53,000 Debt Service and Capital Improvements: Principal Repayment 3,723,937 Interest Expense 1,181,063 Capital Improvements 157,000 Reserve for Uncollected Taxes 1,375,649
$ 47,751,935 Page A‐8
Comparative Schedule of Fund Balances
Current Fund
Utilized in Total Fund Budget of Balance Succeeding YEAR Available Year
2003$ 4,237,680 $ 3,837,000 2004 5,318,209 4,977,000 2005 5,256,128 5,000,000 2006 3,299,891 2,613,518 2007 3,869,658 3,371,000 2008 2,444,115 3,100,000 2009 2,855,710 2,606,710 2010 4,453,617 2,670,000 2011 3,983,184 2,200,000 2012 4,340,213 2,567,129 2013 4,441,128 2,950,000 2014 4,856,193 3,032,000 2015 5,178,166 3,300,000
Water Utility Operating Fund
Utilized in Fund Budget of Balance Succeeding YEAR December 31, Year
2003$ 107,400 $ 67,340 2004 578,831 524,568 2005 1,651,968 578,831 2006 2,378,085 ‐ 2007 3,125,591 668,268 2008 2,457,323 1,543,275 2009 914,048 ‐ 2010 914,048 175,000 2011 881,042 ‐ 2012 2,069,591 ‐ 2013 3,283,776 300,000 2014 5,766,509 645,420 2015 8,308,773 2,147,351 PAGE A9
Summary of Water Utility Levies and Collections
YEAR LEVY COLLECTIONS
2003$ 7,658,172 $ 7,654,278 2004 9,293,261 8,854,815 2005 10,097,861 10,147,483 2006 10,084,795 9,975,305 2007 9,805,961 10,234,157 2008 10,200,000 9,858,364 2009 9,858,000 8,984,425 2010 11,950,245 10,961,634 2011 11,444,466 11,017,959 2012 13,679,543 12,237,244 2013 11,687,600 12,018,520 2014 11,450,000 13,921,652 2015 11,430,000 13,687,362
Current Tax Collections Collection During Levy Year YEAR LEVY AMOUNT %
2003$ 90,794,860 $ 90,850,090 99.32% 2004 95,867,223 95,255,222 99.36% 2005 100,313,363 99,746,416 99.44% 2006 105,421,704 104,099,948 98.74% 2007 111,226,353 110,494,590 99.34% 2008 116,134,231 115,026,839 99.05% 2009 120,478,825 119,378,365 99.09% 2010 126,434,009 125,038,024 98.90% 2011 130,488,773 128,895,911 98.77% 2012 133,839,843 132,459,568 98.97% 2013 135,038,077 133,056,899 98.53% 2014 137,031,046 135,455,286 98.85% 2015 140,449,848 139,674,940 99.45%
Delinquent Taxes and Tax Title Liens
Delinquent Tax Title Perrcentage Taxes Liens Total of Levy
2003$ 607,141 $ 10,360 $ 617,501 0.68% 2004 534,430 6,998 541,428 0.56% 2005 538,314 28,873 567,187 0.57% 2006 622,134 37,758 659,892 0.63% 2007 660,000 47,077 707,077 0.64% 2008 868,237 68,956 937,193 0.81% 2009 898,284 68,845 967,129 0.80% 2010 951,962 80,854 1,032,816 0.82% 2011 940,801 92,982 1,033,783 0.79% 2012 749,735 106,152 855,887 0.64% 2013 905,951 117,489 1,023,440 0.76% 2014 706,469 130,119 836,588 0.61% 2015 700,599 157,482 858,081 0.61% Page A‐10
Ten largest Taxpayers
The ten largest taxpayers in the Village and their 2016 assessed valuations are as follows:
As a Percent of Total Net Assessed Assessed Valuation Valuation Taxpayer Type of Business 2016 Taxable
1200 E RIDGEWOOD AVE LLC% HARTZ MTN Offices$ 23,000,000 0.402% MILRIDGE REALTY, LLC Offices 11,516,700 0.201% LSREF4 OAK MANOR LLC Apartments 9,705,700 0.170% RIDGEWOOD MAYFLOWER REALTY Apartments 8,700,600 0.152% 257 RIDGEWOOD AVENUE LLC Commercial/Stores 8,468,300 0.148% CAMERON APARTMENTS Apartments 8,167,200 0.143% LUCERNE ‐ RIDGEWOOD LLC Offices 8,080,000 0.141% PONDVIEW MEDICAL CTR OF RIDGEWOOD Offices 8,063,800 0.141% KIMCO RIDGEWOOD Offices 7,452,500 0.130% KEW MANAGEMENT CORPORTION Apartments 7,431,700 0.130%
$ 100,586,500 1.757% Page A‐11
Assessed Valuations of land and Improvements by Class
Vacant YEAR Land Residential Commercial Apartment Farm Total
2003$ 10,557,500 $ 3,431,122,000 $ 352,424,800 $ 61,074,000 $ 1,520,200 $ 3,856,698,500 2004 11,276,300 3,453,940,100 347,560,100 60,770,700 1,520,200 3,875,067,400 2005 12,207,800 3,477,133,000 347,364,700 59,563,600 ‐ 3,896,269,100 2006 13,498,200 3,501,301,100 346,683,900 59,404,000 ‐ 3,920,887,200 2007 12,831,200 3,525,797,000 349,937,500 59,304,000 ‐ 3,947,869,700 2008 19,347,800 5,972,283,900 619,430,500 116,784,800 ‐ 6,727,847,000 2009 22,187,800 5,950,585,100 613,560,000 114,272,000 ‐ 6,700,604,900 2010 24,188,000 5,948,400,600 596,467,300 106,335,700 ‐ 6,675,391,600 2011 22,561,000 5,928,833,100 593,617,600 106,335,700 ‐ 6,651,347,400 2012 23,955,900 5,908,926,300 574,609,800 102,767,000 ‐ 6,610,259,000 2013 16,795,700 5,111,925,100 506,624,400 88,306,400 ‐ 5,723,651,600 2014 17,989,100 5,122,760,900 504,096,500 88,306,400 ‐ 5,733,152,900 2015 18,991,800 5,138,526,500 504,214,500 88,306,400 ‐ 5,750,039,200
Assessed valuations ‐ Net Valuation Taxable Assessed Value Total Business Net to True Value True value Real Personal Valuation of Real of Assessed YEAR Property Property Taxable Property Property
2003$ 3,856,698,500 $ 6,878,058 $ 3,863,576,558 $ 1 $ 4,245,688,525 2004 3,875,067,400 6,488,177 3,881,555,577 1 4,703,075,542 2005 3,896,269,100 5,758,519 3,902,027,619 1 5,177,339,485 2006 3,920,887,200 5,003,153 3,925,890,353 1 5,793,999,462 2007 3,947,869,700 5,610,668 3,953,480,368 1 6,503,504,471 2008 6,727,847,000 5,610,668 6,733,457,668 1 6,833,916,237 2009 6,700,604,900 10,343,605 6,711,348,505 1 6,812,168,600 2010 6,675,391,600 10,616,803 6,686,008,403 1 6,692,701,104 2011 6,651,347,400 9,425,266 6,660,772,666 1 6,463,004,722 2012 6,610,259,000 10,000 6,610,269,000 1 6,329,856,363 2013 5,723,651,600 ‐ 5,723,656,100 1 5,955,932,986 2014 5,733,152,900 ‐ 5,733,152,900 1 6,022,176,495 2015 5,750,039,200 ‐ 5,750,039,200 1 6,213,571,645
Components of real estate tax Rate (per $100. of Assessment)
YEAR Total Municipal School County
2003$ 2.34 $ 0.55 $ 1.56 $ 0.24 2004 2.46 0.58 1.63 0.25 2005 2.56 0.59 1.70 0.26 2006 2.67 0.63 1.77 0.27 2007 2.80 0.68 1.83 0.29 2008 1.72 0.42 1.12 0.19 2009 1.79 0.43 1.17 0.20 2010 1.89 0.45 1.24 0.20 2011 1.96 0.49 1.27 0.20 2012 2.02 0.51 1.30 0.21 2013 2.36 0.59 1.54 0.24 2014 2.39 0.58 1.56 0.25 2015 2.43 0.59 1.59 0.26
Components of Total Tax levy
YEAR Total Municipal School County
2003$ 90,031,394 $ 20,679,889 $ 60,266,945 $ 9,084,560 2004 95,245,792 22,081,687 63,248,930 9,915,175 2005 99,941,398 23,131,220 66,381,294 10,428,884 2006 104,484,987 24,240,212 69,375,833 10,868,942 2007 110,334,611 26,100,822 72,400,666 11,833,123 2008 115,875,101 27,967,616 75,238,284 12,669,201 2009 120,249,588 28,977,910 78,193,475 13,078,203 2010 126,151,459 30,366,180 82,661,789 13,123,490 2011 130,248,198 32,398,038 84,454,658 13,395,502 2012 133,395,596 33,407,621 86,150,328 13,837,647 2013 135,038,077 33,040,376 87,847,977 13,663,318 2014 136,706,394 33,238,991 89,437,119 14,030,284 2015 140,449,848 34,212,897 91,260,570 14,976,381 Page A‐12
VILLAGE OF RIDGEWOOD IN THE COUNTY OF BERGEN, NEW JERSEY DEBT STATEMENT AS OF DECEMBER 31, 2015
Gross Debt
School District General Serial Bonds$ 48,392,662 Bond Anticipation Notes Authorized but Not Issued ‐ $ 48,392,662
Municipal Debt General Improvements: General Serial Bonds and Loans Issued and Outstanding 29,301,210 Bond Anticipation Notes Issued 7,269,350 Bond Anticipation Notes Authorized but Not Issued 8,813,946 45,384,506
Water Utility General Serial Bonds and Loans Issued and Outstanding 15,500,000 Bond Anticipation Notes Issued 1,675,000 Bond Anticipation Notes Authorized but Not Issued 5,616,200 22,791,200
Parking Utility Bond Anticipation Notes Issued 186,000 Bond Anticipation Notes Authorized but Not Issued 2,048,615 2,234,615
Gross Debt 118,802,983
Statutory Deductions School Debt Local School District Minimum (4% of Average Equalized Valuations 48,392,662
Water Utility 22,791,200 Parking Utility 2,234,615 Reserve for Debt Service 274,311 73,692,788
Statutory Net Debt $ 45,110,195
Average Equalized Valuation of Real Property for 2013‐2015 $ 6,187,504,550
Debt Percentage (Statutory Debt Limit ‐ 3 1/2%) 0.729%
REMAINING STATUTORY BORROWING POWER
3.5% of Equalized Valuation Basis$ 216,562,659
Statutory Net Debt 45,110,195
Remaining Borrowing Power December 31, 2015$ 171,452,464
Gross Debt is the total Financial obligation of the Municipality and its Subdivisions. Statutory deductions determine the borrowing power and Statutory Net Debt under the laws of the State of New Jersey. Page A‐13
VILLAGE OF RIDGEWOOD COUNTY OF BERGEN,NEW JERSEY
UNDERLYING DEBT 12/31/2015
County of Bergen Net Debt December 31, 2015 $ 1,089,653,537
Apportionment to Village of Ridgewood $ 41,392,883
Basis of Debt Apportionment: Net Valuation for County Tax Appprotionment
Village of Ridgewood True Value $ 6,213,571,645
County of Bergen True Value $ 163,570,157,295
Percentage Apportionment to Village of Ridgewood 3.80%
GROSS DEBT COMPARED WITH TRUE VALUE Village Debt Including Village Apportioned Debt Underlying Debt
Net Debt as of December 31, 2015 $ 45,110,195 $ 118,802,983
Net Valuation Taxable for 2015$ 5,750,039,200
Amount Deducted for Equalization: Real property Assessed at 92.54% of True Value $ (463,532,445)
Real property at True Value $ 6,213,571,645
Net Debt as a percentage of True Value 0.73% 1.91% [ THIS PAGE INTENTIONALLY LEFT BLANK ] APPENDIX B
AUDITED FINANCIAL STATEMENTS FOR YEAR ENDED DECEMBER 31, 2015
VILLAGE OF RIDGEWOOD TABLE OF CONTENTS
FINANCIAL STATEMENTS FOR THE YEARS ENDED DECEMBER 31, 2015
Independent Auditors' Report B-1 to B-2
Combined Balance Sheet – All Fund Types and Account Groups – Regulatory Basis B-3 Combined Statement of Revenues, Expenditures and Changes in Fund Balances - Budget and Actual – Current and Utility Operating Funds – Regulatory Basis B-4 Notes to Financial Statements B-5 to B-34
Mount Arlington Corporate Center 200 Valley Road, Suite 300 Mt. Arlington, NJ 07856 973-328-1825 | 973-328-0507 Fax Lawrence Business Park 11 Lawrence Road Newton, NJ 07860 973-383-6699 | 973-383-6555 Fax
Independent Auditors' Report
The Honorable Mayor and Members of the Village Council Village of Ridgewood Ridgewood, New Jersey
Report on the Financial Statements
We have audited the financial statements – regulatory basis - of the various funds of the Village of Ridgewood, in the County of Bergen (the "Village") as of and for the year ended December 31, 2015 and the related notes to the 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 accounting practices prescribed or permitted by the Division of Local Government Services, Department of Community Affairs, State of New Jersey (the “Division”) to demonstrate compliance with the Division's regulatory basis of accounting, and the budget laws 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.
Auditors’ Responsibility
Our responsibility is to express opinions on these financial statements based on our audit. We conducted our audit in accordance with auditing standards generally accepted in the United States of America, audit requirements prescribed or permitted by the Division, and the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from 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 financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the Village’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 Village’s internal control. Accordingly, we 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 financial statements.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinions.
B-1
www.nisivoccia.com Independent Member of BKR International The Honorable Mayor and Members of the Village Council Village of Ridgewood Page 2
Basis for Adverse Opinion on U.S. Generally Accepted Accounting Principles
As described in Note 1, the financial statements have been prepared by the Village on the basis with accounting practices prescribed or permitted by the Division to demonstrate compliance with the Division's regulatory basis of accounting and the budget laws of New Jersey, which is a basis of accounting other than accounting principles generally accepted in the United States of America. The effects on the financial statements of the variances between the regulatory basis of accounting described in Note 1 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 our 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 above do not present fairly, in accordance with accounting principles generally accepted in the United States of America, the financial position of each fund and account group of the Village as of December 31, 2015, or the changes in financial position or where applicable, cash flows thereof for the year then ended.
Opinion on Regulatory Basis of Accounting
In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of the various funds of the Village of Ridgewood as of December 31, 2015, and the results of operations and changes in fund balance, where applicable, of such funds, thereof for the year then ended, on the basis of the accounting practices prescribed or permitted by the Division to demonstrate compliance with the Division's regulatory basis of accounting and the budget laws of New Jersey, as described in Note 1.
Emphasis of Matter
As discussed in Note 5 to the financial statements, the Village implemented Governmental Accounting Standards Board (“GASB”) Statement No. 68, Accounting and Financial Reporting for Pensions – An Amendment to GASB Statement No. 27, and GASB Statement No. 71, Pension Transition for Contributions Made Subsequent to the Measurement Date – an amendment of GASB Statement No. 68 during the year ended December 31, 2015. Our opinions are not modified with respect to this matter.
Mount Arlington, New Jersey June 17, 2016
NISIVOCCIA LLP
B-2 VILLAGE OF RIDGEWOOD COMBINED BALANCE SHEET - ALL FUND TYPES AND ACCOUNT GROUPS - REGULATORY BASIS DECEMBER 31, 2015 (With Comparative Totals for 2014)
Account Group General General Totals ASSETS AND OTHER DEBITS:Current Fund Trust Capital Utility Funds Fixed (Memorandum Only) Regular Grant Funds Fund Operating Capital Assets 2015 2014 Assets: Cash and Cash Equivalents$ 8,743,598 $ 30,650 $ 4,224,376 $ 2,486,819 $ 11,190,803 $ 4,926,589 $ 31,602,835 $ 34,971,758 Receivables and Other Assets: Property Taxes Receivable 688,738 688,738 706,469 Consumer Accounts Receivable 3,404,696 3,404,696 2,545,822 Assessments Receivable 3,158 3,158 3,766 Prospective Assessments 249,000 249,000 249,000 Liens Receivable 157,482 157,482 130,119 Federal and State Grant Fund 358,576 358,576 346,732 Interfunds Receivable 31,828 1,752 8,556 102 42,238 221,895 Other Receivables 1,025,960 108,770 1,134,730 1,137,431 Property Acquired for Taxes at Assessed Valuation 324,000 324,000 324,000 Fixed Assets in General Fixed Assets Account Group $ 184,088,225 184,088,225 180,311,273
Total Assets 9,945,646 389,226 4,229,286 3,770,335 14,704,371 4,926,589 184,088,225 222,053,678 220,948,265
B-3 Other Debits: Deferred Charges: Emergency Authorizations 96,000 96,000 144,000 To Future Taxation 45,383,953 45,383,953 46,028,290 Fixed Capital 74,809,638 74,809,638 71,624,638 Total Other Debits 96,000 45,383,953 74,809,638 120,289,591 117,796,928
Total Assets and Other Debits$ 10,041,646 $ 389,226 $ 4,229,286 $ 49,154,288 $ 14,704,371 $ 79,736,227 $ 184,088,225 $ 342,343,269 $ 338,745,193
LIABILITIES, RESERVES AND FUND BALANCES:
Appropriation Reserves$ 2,248,344 $ 526,546 $ 2,774,890 $ 3,239,312 Improvement Authorizations $ 7,391,013 $ 5,837,801 13,228,814 15,196,758 Accrued Interest on Bonds and Notes 116,000 116,000 112,208 Interfunds Payable 10,308 $ 30,828 1,000 102 42,238 221,895 Reserves for Amortization 49,783,823 49,783,823 48,206,823 Various Liabilities and Reserves 1,402,780 $ 389,226 4,191,638 4,531,889 1,044,572 5,956,503 $ 184,088,225 201,604,833 198,116,280 Serial Bonds, Bond Anticipation Notes and Loans Payable 36,570,560 17,361,000 53,931,560 57,461,788 Reserve for Receivables and Other Assets 1,202,048 3,513,466 4,715,514 3,857,829 Fund Balance 5,178,166 6,820 660,826 9,502,787 796,998 16,145,597 12,332,300
Total Liabilities, Reserves and Fund Balances$ 10,041,646 $ 389,226 $ 4,229,286 $ 49,154,288 $ 14,704,371 $ 79,736,227 $ 184,088,225 $ 342,343,269 $ 338,745,193 VILLAGE OF RIDGEWOOD COMBINED STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES - BUDGET AND ACTUAL CURRENT AND UTILITY OPERATING FUNDS - REGULATORY BASIS FOR THE YEAR ENDED DECEMBER 31, 2015
Current Fund Utility Operating Funds Final Final Budget Actual Variance Budget Actual Variance
REVENUES: Fund Balance Utilized $ 3,032,000 $ 3,032,000 $ 799,104 $ 799,104 Water Rents 11,430,000 13,687,362 $ 2,257,362 Parking Lot Fees and Permits 1,155,000 1,305,869 150,869 Miscellaneous Revenue 9,975,618 9,961,207 $ (14,411) 327,000 482,163 155,163 Receipts from Delinquent Taxes 700,000 700,599 599 Amount to be Raised by Taxes for Support of Municipal Budget: Local Tax for Municipal Purposes, Including Reserve for Uncollected Taxes 33,391,289 34,528,254 1,136,965
Municipal Budget Totals - Revenue 47,098,907 48,222,060 1,123,153 13,711,104 16,274,498 2,563,394
Non-budget Revenues 298,714 298,714 879,765 879,765 Other Credits to Income 2,406,700 2,406,700 259,680 259,680 Taxes Allocated to School, County and Open Space 106,522,085 106,522,085
TOTAL REVENUES 153,620,992 157,449,559 3,828,567 13,711,104 17,413,943 3,702,839
EXPENDITURES: General Government 16,639,349 16,639,349 Public Safety 12,489,957 12,489,957 Streets and Roads 4,878,956 4,878,956 Health and Welfare 305,809 305,809 Recreation and Education 1,445,752 1,445,752 Deferred Charges and Statutory Expenditures 4,848,134 4,847,910 224 633,153 633,153 Budgeted Fund Balance 840,496 840,496 Utility Operating 9,174,338 9,174,338 Capital 157,000 157,000 601,000 601,000 Debt Service: Principal 3,950,066 3,928,191 21,875 1,605,000 1,385,000 220,000 Interest 1,008,235 991,994 16,241 857,117 660,601 196,516 Reserve for Uncollected Taxes 1,375,649 1,375,649
Municipal Budget Totals - Expenditures 47,098,907 47,060,567 38,340 13,711,104 13,294,588 416,516
County Taxes 14,976,381 14,976,381 Local School Taxes 91,260,570 91,260,570 Municipal Open Space Taxes 285,134 285,134 Other Expenditures 493,906 (493,906)
TOTAL EXPENDITURES$ 153,620,992 154,076,558 (455,566) $ 13,711,104 13,294,588 416,516
Excess of Revenues Over Expenditures 3,373,001 $ 3,373,001 4,119,355 $ 4,119,355
Fund Balances January 1 4,837,165 6,182,536
Less: Utilized as Anticipated Revenue 3,032,000 799,104
Fund Balances December 31$ 5,178,166 $ 9,502,787
B-4 VILLAGE OF RIDGEWOOD NOTES TO FINANCIAL STATEMENTS DECEMBER 31, 2015
Note 1: Summary of Significant Accounting Policies
A. Reporting Entity
Except as noted below, the financial statements of the Village of Ridgewood (the “Village”) include every board, body, officer or commission supported and maintained wholly or in part by funds appropriated by the Village, as required by N.J.S. 40A:5-5. Accordingly, the financial statements of the Village do not include the operations of the Free Public Library.
Governmental Accounting Standards Board ("GASB") codification section 2100, "Defining the Financial Reporting Entity" establishes standards to determine whether a governmental component unit should be included in the financial reporting entity. The basic criterion for inclusion or exclusion from the financial reporting entity is the exercise of oversight responsibility over agencies, boards and commissions by the primary government. The exercise of oversight responsibility includes financial interdependency and a resulting financial benefit or burden relationship, selection of governing authority, designation of management, ability to significantly influence operations, and accountability for fiscal matters. In addition, certain legally separate, tax-exempt entities that meet specific criteria (i.e., benefit of economic resources, access/entitlement to resources, and significance) should be included in the financial reporting entities. As the financial reporting entity was established in accordance with New Jersey statutes, the requirements of the GASB were not followed and, accordingly, the reporting entity could be different from accounting principles generally accepted in the United States of America.
B. Description of Funds
The accounting policies of the Village conform to the accounting practices applicable to municipalities which have been prescribed or permitted by the Division of Local Government Services, Department of Community Affairs, State of New Jersey (the "Division"). Such principles and practices 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. Under this method of accounting, the Village accounts for its financial transactions through the following separate funds:
Current Fund - Resources and expenditures for governmental operations of a general nature, including Federal and State grant funds which are not accounted for in another fund.
Trust Funds - Receipts, custodianship and disbursement of funds in accordance with the purpose for which each reserve was created. The Trust Funds include the Public Assistance Fund which accounts for the balance in the accounts since this function was transferred to Bergen County.
General Capital Fund - Receipt and disbursement of funds for the acquisition of general capital facilities, other than those acquired in the Current Fund. General bonds and notes payable are recorded in this fund offset by deferred charges to future taxation.
Water Utility Operating Fund - Account for the operations of the Village Water Utility.
Water Utility Capital Fund - Account for the acquisition of capital facilities of the Water Utility.
B-5 VILLAGE OF RIDGEWOOD NOTES TO FINANCIAL STATEMENTS DECEMBER 31, 2015 (Continued)
Note 1: Summary of Significant Accounting Policies (Cont'd)
B. Description of Funds (Cont’d)
Parking Utility Operating Fund – Account for the operations of the Village Parking Utility.
Parking Utility Capital Fund - Account for the acquisition of capital facilities of the Parking Utility.
General Fixed Asset Group of Accounts (Unaudited) - These accounts were established with estimated values of land, buildings and certain fixed assets of the Village as discussed under the caption "Basis of Accounting".
C. Basis of Accounting
Basis of accounting refers to when revenue and expenditures or expenses are recognized in the accounts and reported in the financial statements. Basis of accounting relates to the timing of the measurements made, regardless of the measurement focus applied.
The more significant accounting policies in New Jersey follow.
Revenue is recorded when received in cash except for certain amounts which may be due from the State of New Jersey. Grant revenue is realized in the operating funds when it is budgeted and in the capital funds when improvements are authorized. The amounts recorded as property taxes and consumer accounts receivable have not been included in revenue. Amounts that are due to the municipality, which are susceptible of accrual, are recorded as receivables with offsetting reserves in the Current Fund and Water and Parking Utility Operating Funds.
Expenditures are charged to operations generally based on budgeted amounts. Exceptions to this general rule include:
1. Accumulated unpaid vacation, sick pay and other employee amounts are not accrued.
2. Prepaid expenses, such as insurance premiums applicable to subsequent periods, are charged to current budget appropriations in total.
3. Principal and interest on long-term debt are recognized when due.
Expenditures, if any, in excess of appropriations, appropriation reserves or ordinances become deferred charges which must be raised by future taxes. Outstanding encumbrances at December 31, are reported as a cash liability in the financial statements and constitute part of the statutory appropriation reserve balance. Appropriation reserves covering unexpended appropriation balances are automatically created at December 31 of each year 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.
B-6 VILLAGE OF RIDGEWOOD NOTES TO FINANCIAL STATEMENTS DECEMBER 31, 2015 (Continued)
Note 1: Summary of Significant Accounting Policies (Cont'd)
C. Basis of Accounting (Cont’d)
Had the Village’s financial statements been prepared under generally accepted accounting principles, encumbrances would not be considered as expenditures; appropriation reserves would not be recorded; revenue susceptible to accrual would have been reflected without offsetting reserves; Federal and State grants and assistance would be recognized when earned, not when received, inventories would not be reflected as expenditures at the time of purchase, fixed assets purchased by the Utility Capital Funds would be depreciated, and the Village’s net pension liability and related deferred inflows and outflows would be recorded.
The cash basis of accounting is followed in the Trust Funds.
D. Deferred Charges to Future Taxation
The General Capital Fund balance sheet includes both funded and unfunded deferred charges. Funded means that bonds or loans have been issued and are being paid off on a serial basis. Unfunded means that debt has been authorized but not permanently financed. A municipality can eliminate an unfunded deferred charge by raising it in the budget, by collecting a grant, or by selling bonds.
E. Other significant accounting policies include:
Management Estimates – The preparation of financial statements requires management to make estimates and assumptions that affect the reported amounts of revenues and expenditures/expenses during the reporting period. Actual results could differ from those estimates.
Cash and Cash Equivalents – Amounts include petty cash, change funds, amounts on deposit, and short-term investments with original maturities of three months or less.
Investments – Investments, if any, are stated at cost or amortized cost, which approximates market.
Grants Receivable – Grants receivable represent total grant awards less amounts collected to date. Because the amount of grants funds to be collected are dependent on the total costs eligible for reimbursement, the actual amount collected may be less than the total amount awarded.
Allowance for Uncollectible Accounts – No allowance for uncollectible accounts has been recorded as all amounts are considered collectible.
Compensated Absences – Expenditures relating to unused vested accumulated vacation and sick pay are not recorded until paid.
Property Acquired For Taxes - Assessed Valuation – Property Acquired For Taxes - Assessed Valuation is recorded in the Current Fund at the assessed valuation when such property was acquired and is fully reserved.
B-7 VILLAGE OF RIDGEWOOD NOTES TO FINANCIAL STATEMENTS DECEMBER 31, 2015 (Continued)
Note 1: Summary of Significant Accounting Policies (Cont'd)
E. Other significant accounting policies include (Cont’d)
Interfunds - 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 cost of inventories of supplies for all funds are recorded as expenditures at the time individual items are purchased. The cost of inventories are not included on the various balance sheets.
Fixed Assets - Property and equipment purchased by the Current and General Capital Funds are recorded as expenditures at the time of purchase and are not capitalized. Property and equipment purchased by the Utility Funds is recorded in the Utility Capital Funds at cost.
General Fixed Assets Account Group (Unaudited) - General fixed assets are recorded at cost except for land and buildings which are recorded at estimated historical cost. Infrastructure assets are not included in general fixed assets, as per state directive. Major renewals and betterments are charged to the asset accounts; maintenance and minor repairs and replacements, which do not improve or extend the lives of the respective assets, are expensed currently. Donated fixed assets are valued at their fair market value on the date donated. No depreciation has been provided on general fixed assets. The total value recorded for general fixed assets is offset by a "Reserve for Fixed Assets". When properties are retired or otherwise disposed of, the asset and the reserve are adjusted accordingly. Fixed assets may also be recorded in the Current Fund and Capital Funds. The values recorded in the General Fixed Asset Account Group and the Current and Capital Funds may not always agree due to differences in valuation methods, timing of recognition of assets, and the recognition of infrastructures. Fixed assets are reviewed for impairment.
F. Budget/Budgetary Control
Annual appropriated budgets are usually prepared in the first quarter for Current, operating utilities, and Open Space Trust Funds. The budgets are submitted to the governing body and the Division of Local Government Services. Budgets are prepared using the cash basis of accounting. The legal level of budgetary control is established at the line item accounts within each fund. Line item accounts are defined as the lowest (most specific) level of detail as established pursuant to the flexible chart of accounts referenced in N.J.S.A. 40A. All budget amendments/transfers must be approved by the Village during the year.
Note 2: Cash and Cash Equivalents and Investments
Cash and cash equivalents include petty cash, change funds, amounts in deposit, and short-term investments with original maturities of three months or less.
Investments are stated at cost, which approximates market. The Village classifies certificates of deposit which have original maturity dates of more than three months but less than twelve months from the date of purchase, as investments.
GASB Statement No. 40 Governmental Accounting Standards Board Deposit and Investment Risk Disclosures requires disclosure of the level of custodial credit risk assumed by the Village in its cash, cash equivalents and investments, if those items are uninsured or unregistered. Custodial risk is the risk that in the event of bank failure, the government’s deposits may not be returned. B-8 VILLAGE OF RIDGEWOOD NOTES TO FINANCIAL STATEMENTS DECEMBER 31, 2015 (Continued)
Note 2: Cash and Cash Equivalents and Investments (Cont’d)
Interest Rate Risk – In accordance with its cash management plan, the Village ensures that any deposit or investment matures within the time period that approximates the prospective need for the funds, deposited or invested, so that there is not a risk to the market value of such deposits or investments.
Credit Risk – The Village limits its investments to those authorized in its cash management plan which are permitted under state statutes as detailed below.
Deposits
New Jersey statutes permit the deposit of public funds in institutions located in New Jersey, which are insured by the Federal Deposit Insurance Corporation (FDIC), or by any other agencies of the United States that insure deposits or the State of New Jersey Cash Management Fund.
New Jersey statutes require public depositories to maintain collateral for deposits of public funds that exceed insurance limits as follows:
The market value of the collateral must equal 5% of the average daily balance of public funds; and in addition
If the public funds deposited exceed 75% of the capital funds of the depository, the depository must provide collateral having a market value equal to 100% of the amount exceeding 75%.
All collateral must be deposited with the Federal Reserve Bank, the Federal Home Loan Bank Board or a banking institution that is a member of the Federal Reserve System and has capital funds of not less than $25,000,000.
Investments
New Jersey statutes permit the Village to purchase the following types of securities:
(1) Bonds or other obligations of the United States of America or obligations guaranteed by the United States of America;
(2) Government money market mutual funds;
(3) Any obligation that a federal agency or a federal instrumentality has issued in accordance with an act of Congress, which security has a maturity date not greater than 397 days from the date of purchase, provided that such obligation bears a fixed rate of interest not dependent on any index or other external factor;
(4) Bonds or other obligations of the local unit or bonds or other obligations of school districts of which the local unit is a part or within which the school district is located;
(5) Bonds or other obligations, having a maturity date not more than 397 days from the date of purchase, approved by the Division of Investment of the Department of the Treasury for investment by local units;
B-9 VILLAGE OF RIDGEWOOD NOTES TO FINANCIAL STATEMENTS DECEMBER 31, 2015 (Continued)
Note 2: Cash and Cash Equivalents and Investments (Cont’d)
Investments (Cont’d)
(6) Local government investment pools;
(7) Deposits with the State of New Jersey Cash Management Fund; or
(8) Agreements for the repurchase of fully collateralized securities if:
(a) the underlying securities are permitted investments pursuant to (1) and (3) above;
(d) the custody of collateral is transferred to a third party,
(c) the maturity of the agreement is not more than 30 days;
(d) the underlying securities are purchased through a public depository as defined in statute;
(e) a master repurchase agreement providing for the custody and security of collateral is executed.
As of December 31, 2015, cash and cash equivalents of the Village of Ridgewood consisted of the following:
Cash on Checking Fund Hand Accounts Total Current$ 1,115 $ 8,742,483 $ 8,743,598 Grant Fund 30,650 30,650 Trust and Agency 4,224,376 4,224,376 General Capital 2,486,819 2,486,819 Water Utility Operating 100 9,666,555 9,666,655 Parking Utility Operating 3,496 1,520,652 1,524,148 Water Utility Capital 4,601,447 4,601,447 Parking Utility Capital 325,142 325,142 $ 4,711 $ 31,598,124 $ 31,602,835
The carrying amount of the Village's cash and cash equivalents at year end was $31,602,835 and the bank balance was $32,135,923. The Village did not hold any investments during the year.
B-10 VILLAGE OF RIDGEWOOD NOTES TO FINANCIAL STATEMENTS DECEMBER 31, 2015 (Continued)
Note 3: Interfunds
The following interfund receivable and payable balances appear on the combined balance sheet as of December 31, 2015:
Interfund Interfund Fund Receivable Payable
Current Fund$ 31,828 $ 10,308 Trust Funds 1,752 30,828 General Capital Fund 8,556 Water Utility Operating Fund 1,000 Parking Utility Operating Fund 102 Parking Utility Capital Fund 102
$ 42,238 $ 42,238
The majority of the interfund balances from the prior year were liquidated as of December 31, 2015. Current year interfund balances added include $1,000 due to the Current Fund from the Water Utility Operating Fund as a result of a deposit error, $1,134 due from the Current Fund to the Other Trust Funds for added/omitted open space taxes, $30,774 and $54 due from the Other Trust Funds to the Current Fund for animal control statutory excess and interest earnings, respectively, $8,556 due from the Current Fund to the General Capital Fund for deferred charges funded by budget appropriation, and $102 due to the Parking Utility Operating Fund from the Parking Utility Capital Fund for interest earnings. Interest earned in the Capital Funds, General and Utility, was realized as revenue in the Current and Utility Operating Funds, respectively.
Note 4: Long-Term Debt
The Local Bond Law governs the issuance of bonds to finance general Village capital expenditures. All bonds are retired in serial installments within the statutory period of usefulness. All bonds issued by the Village are general obligation bonds. The Village’s full faith and credit and taxing power have been pledged to the payment of general obligation debt principal and interest.
B-11
VILLAGE OF RIDGEWOOD NOTES TO FINANCIAL STATEMENTS DECEMBER 31, 2015 (Continued)
Note 4: Long-Term Debt (continued):
Summary of Municipal Debt December 31,
Issued General: Bonds, Loans and Notes$ 36,570,560 $ 38,715,788 $ 37,599,986 Water Utility: Bonds, Loans and Notes 17,175,000 18,510,000 18,488,788 Parking Utility: Notes 186,000 236,000 280,000 Total Issued 53,931,560 57,461,788 56,368,774 Authorized but not Issued: General: Bonds and Notes 8,813,393 7,312,502 11,056,083 Water Utility: Bonds and Notes 5,616,200 3,123,200 1,738,200 Parking Utility: Bonds and Notes 2,048,615 1,548,615 1,353,615 Total Authorized but Not Issued 16,478,208 11,984,317 14,147,898 Less: General: Reserve for: Payment of Debt Service 274,311 653,114 255,579 Water Utility: Reserve for: Payment of Debt Service 1,310,000 1,310,000 335,000 Total Deductions 1,584,311 1,963,114 590,579 Net Bonds, Notes and Loans Issued and Authorized but not Issued$ 68,825,457 $ 67,482,991 $ 69,926,093
Summary of Statutory Debt Condition – Annual Debt Statement
The summarized statement of debt condition, which follows, is prepared in accordance with the required method of setting up the Annual Debt Statement and indicates a statutory net debt of .73%.
B-12 VILLAGE OF RIDGEWOOD NOTES TO FINANCIAL STATEMENTS DECEMBER 31, 2015 (Continued)
Note 4: Long-Term Debt (Cont’d)
Summary of Statutory Debt Condition – Annual Debt Statement (Cont’d)
Gross Debt Deductions Net Debt Local School District Debt$ 43,900,000 $ 43,900,000 Water Utility Debt 22,791,200 22,791,200 Parking Utility Debt 2,234,615 2,234,615 General Debt 45,383,953 274,311 $ 45,109,642 $ 112,075,153 $ 66,965,511 $ 45,109,642
Net Debt $45,109,642 divided by Equalized Valuation Basis per N.J.S. 40A:2-2 as amended, $6,187,504,550 = .73%.
Borrowing Power Under N.J.S. 40A:2-6 As Amended 3-1/2% Average Equalized Valuation of Real Property$ 216,562,659 Net Debt 45,109,642 Remaining Borrowing Power$ 171,453,017
Calculation of "Self-Liquidating Purpose", Water Utility Per N.J.S. 40A:2-45 Cash Receipts from Fees, Rents or Other Charges for Year$ 14,277,332 Deductions: Operating, Maintenance and Debt Service Costs 11,384,798 Excess in Revenue$ 2,892,534
Calculation of "Self-Liquidating Purpose", Parking Utility Per N.J.S. 40A:2-45 Cash Receipts from Fees, Rents or Other Charges for Year$ 2,077,827 Deductions: Operating, Maintenance and Debt Service Costs 1,308,790 Excess in Revenue$ 769,037
Footnote: If there is an "excess in revenue", all such utility debt is deductible. If there is a "deficit", then utility debt is not deductible to the extent of 20 times such deficit amount. The foregoing debt information is in general agreement with the Annual Debt Statement filed by the Chief Financial Officer.
New Jersey Environmental Infrastructure Trust (NJEIT) Loans
On August 1, 2001 the Village of Ridgewood entered into a New Jersey Environmental Infrastructure Financing Program loan agreement with the State of New Jersey, acting by and through the New Jersey Department of Environmental Protection. The Village borrowed $7,795,000 from the program at interest rates of 4% to 5.5% and $8,472,000 at 0% payable each August 1 and February 1 until the loans are paid in full in 2021. Balances outstanding are $3,300,000 and $2,602,510, respectively. B-13 VILLAGE OF RIDGEWOOD NOTES TO FINANCIAL STATEMENTS DECEMBER 31, 2015 (Continued)
Note 4: Long-Term Debt (Cont’d)
New Jersey Environmental Infrastructure Trust (NJEIT) Loans (Cont’d)
On November 4, 2004 the Village of Ridgewood entered into a New Jersey Environmental Infrastructure Financing Program loan agreement with the State of New Jersey, acting by and through the New Jersey Department of Environmental Protection. The Village borrowed $675,000 from the program at interest rates of 3% to 5% and $1,990,172 at 0% payable each September 1 and March 1 until the loans are paid in full in 2024. Balances outstanding are $390,000 and $916,700, respectively.
Schedule of Changes in Debt Issued
Balance Balance 1/0/1900 Additions Retirements 1/0/1900 General Capital Fund: Serial Bonds$ 24,177,000 $ 2,085,000 $ 22,092,000 Bond Anticipation Notes 6,299,350 $ 1,600,000 630,000 7,269,350 NJEIT Loans 8,239,438 1,030,228 7,209,210 Water Utility Capital Fund: Serial Bonds 16,585,000 1,085,000 15,500,000 Bond Anticipation Notes 1,925,000 250,000 1,675,000 Parking Utility Capital Fund: Bond Anticipation Notes 236,000 50,000 186,000 Total$ 57,461,788 $ 1,600,000 $ 5,130,228 $ 53,931,560
At December 31, 2015, the Village had debt issued and outstanding as follows:
General Capital - Bond Anticipation Notes Payable Date of Original Interest Balance Improvement Description Note Maturity Rate Dec. 31, Acquisition of Land 7/14/2009 6/17/2016 2.00%$ 427,000 Restoration of Saddle River Bank and Pipeline 6/22/2012 6/17/2016 2.00% 240,000 Restoration of Village Hall Level 1 6/22/2012 6/17/2016 2.00% 330,000 Various Capital Improvements 6/19/2014 6/17/2016 2.00% 2,500,000 Various Capital Improvements 6/17/2016 6/17/2016 2.00% 700,000 Various Capital Improvements 6/21/2013 6/17/2016 2.00% 272,350 Various Capital Improvements 6/19/2014 6/17/2016 2.00% 1,900,000 Various Capital Improvements 6/17/2016 6/17/2016 2.00% 900,000 $ 7,269,350
B-14 VILLAGE OF RIDGEWOOD NOTES TO FINANCIAL STATEMENTS DECEMBER 31, 2015 (Continued)
Note 4: Long-Term Debt (Cont’d)
At December 31, 2015, the Village had debt issued and outstanding as follows: (Cont’d)
Water Capital - Bond Anticipation Notes Payable Date of Original Interest Balance Improvement Description Note Maturity Rate Dec. 31, Various Water Improvements 6/19/2014 6/17/2016 2.00%$ 850,000 Various Water Improvements 6/19/2014 6/17/2016 2.00% 825,000 $ 1,675,000 Parking Capital - Bond Anticipation Notes Payable Date of Original Interest Balance Improvement Description Note Maturity Rate Dec. 31, Various Improvements 6/29/2006 6/17/2016 2.00%$ 186,000
General Capital - Serial Bonds Payable Maturities at December 31, Improvement Date of Date of Interest Balance Description Issue Maturity Amount Rate Dec. 31, General Bonds of 2007 06/29/2007 06/15/16$ 900,000 4.250% 06/15/17 900,000 4.250% 06/15/18 900,000 5.000% 06/15/19 900,000 4.125% 06/15/20 900,000 4.250% 06/15/21 925,000 4.250% 06/15/22 950,000 4.300% 06/15/23 950,000 4.375% 06/15/24 914,000 4.375%$ 8,239,000 General Refunding 05/08/2013 07/01/16 555,000 4.000% Bonds of 2013 07/01/17 575,000 4.000% 07/01/18 600,000 4.000% 07/01/19 600,000 4.000% 07/01/20 620,000 4.000% 07/01/21 645,000 4.000% 07/01/22 675,000 4.000% 4,270,000
B-15 VILLAGE OF RIDGEWOOD NOTES TO FINANCIAL STATEMENTS DECEMBER 31, 2015 (Continued)
Note 4: Long-Term Debt (Cont’d)
At December 31, 2015, the Village had debt issued and outstanding as follows: (Cont’d)
General Capital - Serial Bonds Payable (Cont'd) Maturities at December 31, Improvement Date of Date of Interest Balance Description Issue Maturity Amount Rate Dec. 31, General Improvement 06/15/2013 06/15/16$ 700,000 3.000% Bonds of 2013 06/15/17 750,000 4.000% 06/15/18 800,000 4.000% 06/15/19 850,000 4.000% 06/15/20 950,000 4.000% 06/15/21 1,000,000 4.000% 06/15/22 1,050,000 3.500% 06/15/23 1,100,000 3.500% 06/15/24 1,150,000 3.500% 06/15/25 1,233,000 3.500%$ 9,583,000 Total General Capital - Serial Bonds Payable$ 22,092,000
Water Capital - Serial Bonds Payable Maturities at December 31, Improvement Date of Date of Interest Balance Description Issue Maturity Amount Rate Dec. 31, Water Bonds of 2007 06/15/2007 06/15/16$ 275,000 4.250% 06/15/17 275,000 4.250% 06/15/18 275,000 5.000% 06/15/19 275,000 4.125% 06/15/20 275,000 4.250% 06/15/21 275,000 4.250% 06/15/22 275,000 4.300% 06/15/23 275,000 4.375% 06/15/24 275,000 4.375% 06/15/25 300,000 4.400% 06/15/26 300,000 4.400% 06/15/27 300,000 4.500% 06/15/28 300,000 4.500% 06/15/29 300,000 4.500% 06/15/30 300,000 4.500% 06/15/31 300,000 4.500% 06/15/32 286,000 4.500%$ 4,861,000
B-16 VILLAGE OF RIDGEWOOD NOTES TO FINANCIAL STATEMENTS DECEMBER 31, 2015 (Continued)
Note 4: Long-Term Debt (Cont’d)
At December 31, 2015, the Village had debt issued and outstanding as follows: (Cont’d)
Water Capital - Serial Bonds Payable (Cont'd) Maturities at December 31, Improvement Date of Date of Interest Balance Description Issue Maturity Amount Rate Dec. 31, Water Refunding 05/08/2013 07/01/16$ 215,000 4.000% Bonds of 2013 07/01/17 215,000 4.000% 07/01/18 225,000 4.000% 07/01/19 225,000 4.000% 07/01/20 240,000 4.000% 07/01/21 245,000 4.000% 07/01/22 245,000 4.000% 07/01/23 250,000 4.000% 07/01/24 275,000 4.000% 07/01/25 275,000 4.250% 07/01/26 295,000 4.250% 07/01/27 290,000 4.375% 07/01/28 310,000 4.375% 07/01/29 305,000 4.400% 07/01/30 320,000 4.400%$ 3,930,000 Water Bonds of 2013 06/15/2013 06/15/16 600,000 3.000% 06/15/17 650,000 4.000% 06/15/18 650,000 4.000% 06/15/19 650,000 4.000% 06/15/20 650,000 4.000% 06/15/21 700,000 4.000% 06/15/22 700,000 3.500% 06/15/23 700,000 3.500% 06/15/24 700,000 3.500% 06/15/25 709,000 3.500% 6,709,000 Total Water Capital - Serial Bonds Payable$ 15,500,000
General Capital - NJ Environmental Infrastructure Trust (NJEIT) Loans Payable Date of Final Interest Balance Maturity Rate Dec. 31, NJEIT Loan #1 8/1/2021 4 to 5.5%$ 5,902,510 NJEIT Loan #2 8/1/2024 3 to 5% 1,306,700 $ 7,209,210
B-17 VILLAGE OF RIDGEWOOD NOTES TO FINANCIAL STATEMENTS DECEMBER 31, 2015 (Continued)
Note 4: Long-Term Debt (Cont’d)
Schedule of Annual Debt Service for Principal and Interest for the Next Five Years and Thereafter for Bonded Debt Issued and Outstanding
General Capital: Calendar Year Principal Interest Total 2016$ 2,155,000 $ 853,418 $ 3,008,418 2017 2,225,000 767,468 2,992,468 2018 2,300,000 671,843 2,971,843 2019 2,350,000 573,780 2,923,780 2020 2,470,000 476,093 2,946,093 2021-2025 10,592,000 911,041 11,503,041
$ 22,092,000 $ 4,253,643 $ 26,345,643
Water Capital: Calendar Year Principal Interest Total 2016$ 1,090,000 $ 602,323 $ 1,692,323 2017 1,140,000 560,036 1,700,036 2018 1,150,000 512,717 1,662,717 2019 1,150,000 465,170 1,615,170 2020 1,165,000 418,654 1,583,654 2021-2025 6,199,000 1,380,587 7,579,587 2026-2030 3,020,000 483,975 3,503,975 2031-2032 586,000 26,055 612,055
$ 15,500,000 $ 4,449,517 $ 19,949,517
Net Pension Liability
The State of New Jersey Public Employees’ Retirement System’s (PERS) net pension liability was calculated to be $33,712,969 at June 30, 2015. The State of New Jersey Police and Firemen’s Retirement System’s (PFRS) net pension liability was calculated to be $50,699,807 at June 30, 2015. See Note 5 for further information on the PERS and PFRS.
B-18 VILLAGE OF RIDGEWOOD NOTES TO FINANCIAL STATEMENTS DECEMBER 31, 2015 (Continued)
Note 5: Pension Plans
Village employees participate in one of the two contributory, defined benefit public employee retirement systems: the State of New Jersey Public Employee’s Retirement System (PERS) or the State of New Jersey Police and Firemen’s Retirement System (PFRS); or the Defined Contribution Retirement Program (DCRP), a tax-qualified defined contribution money purchase pension plan under Internal Revenue Code (IRC) 401(a).
A. Public Employees’ Retirement System (PERS)
Plan Description
The State of New Jersey, Public Employees’ Retirement System (PERS) is a cost-sharing multiple- employer defined benefit pension plan administered by the State of New Jersey, Division of Pensions and Benefits (the Division).
For additional information about the PERS, please refer to the Division’s Comprehensive Annual Financial Report (CAFR) which can be found at www.state.nj.us/treasury/pensions/annrpts.shtml.
Benefits Provided
The vesting and benefit provisions are set by N.J.S.A. 43:15A. PERS provides retirement, death and disability benefits. All benefits vest after ten years of service, except for medical benefits, which vest after 25 years of service or under the disability provisions of PERS. The following represents the membership tiers for PERS:
Tier Definition 1 Members who were enrolled prior to July 1, 2007 Members who were eligible to enroll on or after: 2 July 1, 2007 and prior to November 2, 2008 3 November 2, 2008 and prior to May 22, 2010 4 May 22, 2010 and prior to June 28. 2011 5 June 28, 2011
Service retirement benefits of 1/55th of final average salary for each year of service credit is available to Tiers 1 and 2 members upon reaching age 60 and to Tier 3 members upon reaching age 62. Service retirement benefits of 1/60th of final average salary for each year of service credit is available to Tier 4 members upon reaching age 62 and to Tier 5 members upon reaching age 65.
Early retirement benefits are available to Tiers 1 and 2 members before reaching age 60, to Tiers 3 and 4 before age 62 with 25 or more years of service credit and Tier 5 with 30 or more years of service credit before age 65. Benefits are reduced by a fraction of a percent for each month that a member retires prior to the age at which a member can receive full early retirement benefits in accordance with their respective tier. Tier 1 members can receive an unreduced benefit from age 55 to age 60 if they have at least 25 years of service. Deferred retirement is available to members who have at least 10 years of service credit and have not reached the service retirement age for the respective tier.
B-19 VILLAGE OF RIDGEWOOD NOTES TO FINANCIAL STATEMENTS YEAR ENDED DECEMBER 31, 2015 (Continued)
Note 5: Pension Plans (Cont’d)
A. Public Employees’ Retirement System (PERS) (Cont’d)
Contributions
The contribution policy for PERS is set by N.J.S.A. 15A and requires contributions by active members and contributing members. The local employers’ contribution amounts are based on an actuarially determined rate which includes the normal cost and unfunded accrued liability. Chapter 19, P.L. 2009 provided an option for local employers of PERS to contribute 50% of the normal and accrued liability contribution amounts certified for payments due in State fiscal year 2009. Such employers will be credited with the full payment and any such amounts will not be included in their unfunded liability. The actuaries will determine the unfunded liability of those retirement systems, by employer, for the reduced normal and accrued liability contributions provided under this law. This unfunded liability will be paid by the employer in level annual payments over a period of 15 years beginning with the payments due in the fiscal year ended June 30, 2012 and will be adjusted by the rate of return on the actuarial value of assets. Village contributions to PERS amounted to $1,226,826 for 2015.
The employee contribution rate was 6.92% effective July 1, 2014 and increased to 7.06% effective July 1, 2015. Increases after October 1, 2011 are being phased in over 7 years effective on each July 1st to bring the total pension contribution rate to 7.5% of base salary as of July 1, 2018.
Pension Liabilities and Pension Expense
At June 30, 2015, the Village’s liability was $33,712,969 for its proportionate share of the net pension liability. The net pension liability was measured as of June 30, 2015, and the total pension liability used to calculate the net pension liability was determined by an actuarial valuation as of July 1, 2014 which was rolled forward to June 30, 2015. The Village's proportion of the net pension liability was based on a projection of the Village's long-term share of contributions to the pension plan relative to the projected contributions of all participating members, actuarially determined. At June 30, 2015, the Village's proportion was 0.1502%, which was an increase of 0.0014% from its proportion measured as of June 30, 2014.
For the year ended December 31, 2015, the Village recognized actual pension expense in the amount of $1,226,826.
Actuarial Assumptions
The total pension liability for the June 30, 2015 measurement date was determined by an actuarial valuation as of July 1, 2014 which was rolled forward to June 30, 2015. This actuarial valuation used the following actuarial assumptions:
Inflation Rate 3.04% Salary Increases: 2012 - 2021 2.15% - 4.40% based on age Thereafter 3.15% - 5.40% based on age Investment Rate of Return 7.90%
B-20 VILLAGE OF RIDGEWOOD NOTES TO FINANCIAL STATEMENTS YEAR ENDED DECEMBER 31, 2015 (Continued)
Note 5: Pension Plans (Cont’d)
A. Public Employees’ Retirement System (PERS) (Cont’d)
Actuarial Assumptions (Cont’d)
Mortality rates were based on the RP-2000 Combined Healthy Male and Female Mortality Tables (setback 1 year for females) for service retirement and beneficiaries of former members with adjustments for mortality improvements from the base year of 2012 based on Projection Scale AA. The RP-2000 Disabled Mortality Tables (setback 3 years for males and setback one year for females) are used to value disabled retirees.
The actuarial assumptions used in the July 1, 2014 valuation were based on the results of an actuarial experience study for the period July 1, 2008 to June 30, 2011. It is likely that future experience will not exactly conform to these assumptions. To the extent that actual experience deviates from these assumptions, the emerging liabilities may be higher or lower than anticipated. The more the experience deviates, the larger the impact on future financial statements.
Long Term Expected Rate of Return
In accordance with State statute, the long-term expected rate of return on pension plan investments (7.90% at June 30, 2015) is determined by the State Treasurer, after consultation with the Directors of the Division of Investments and Division of Pensions and Benefits, the Board of Trustees and the actuaries. The long-term expected rate of return was determined using a building block in which best-estimate ranges of expected future real rates of return (expected returns, net of pension plan investment expense and inflation) are developed for each major asset class. These ranges are combined to produce the long-term expected rate of return by weighting the expected future real rates of return by the target asset allocation percentage and by adding expected inflation. Best estimates of arithmetic real rates of return for each major asset class included in PERS’ target asset allocation as of June 30, 2015 are summarized in the following table:
Long-Term Expected Real Target Rate of Asset Class Allocation Return Cash 5.00% 1.04% U.S. Treasuries 1.75% 1.64% Investment Grade Credit 10.00% 1.79% Mortgages 2.10% 1.62% High Yield Bonds 2.00% 4.03% Inflation-Indexed Bonds 1.50% 3.25% Broad U.S. Equities 27.25% 8.52% Developed Foreign Equities 12.00% 6.88% Emerging Market Equities 6.40% 10.00% Private Equity 9.25% 12.41% Hedge Funds/Absolute Return 12.00% 4.72% Real Estate (Property) 2.00% 6.83% Commodities 1.00% 5.32% Global Debt ex. U.S. 3.50% -0.40% REIT 4.25% 5.12% B-21 VILLAGE OF RIDGEWOOD NOTES TO FINANCIAL STATEMENTS YEAR ENDED DECEMBER 31, 2015 (Continued)
Note 5: Pension Plans (Cont’d)
A. Public Employees’ Retirement System (PERS) (Cont’d)
Discount Rate
The discount rate used to measure the total pension liability was 4.90% as of June 30, 2015. This single blended discount rate was based on the long-term expected rate of return on pension plan investments of 7.90% and a municipal bond rate of 3.80% as of June 30, 2015 based on the Bond Buyer GO 20 Bond Municipal Bond Index which includes tax-exempt general obligation municipal bonds with an average rating of AA/Aa or higher. The projection of cash flows used to determine the discount rate assumed that contributions from plan members will be made at the current member contribution rates and that contributions from employers will be made based upon the average of the last five years of contributions made in relation to the last five years of actuarially determined contributions. Based on those assumptions, the plan's fiduciary net position was projected to be available to make projected future benefit payments of current plan members through 2033. Therefore, the long-term expected rate of return on plan investments was applied to projected benefit payments through 2033, and the municipal bond rate was applied to projected benefit payments after that date in determining the total pension liability.
Sensitivity of the Village's Proportionate Share of the Net Pension Liability to Changes in the Discount Rate
The following presents the Village's proportionate share of the collective net pension liability as of June 30, 2015 calculated using the discount rate as disclosed below, as well as what the Village's proportionate share of the net pension liability would be if it were calculated using a discount rate that is 1-percentage-point lower or 1-percentage-point higher than the current rate:
June 30, 2015 1% Current 1% Decrease Discount Rate Increase (3.90%) (4.90%) (5.90%) Village's proportionate share of the Net Pension Liability$ 41,901,096 $ 33,712,969 $ 26,848,103
Pension Plan Fiduciary Net Position
Detailed information about the pension plan's fiduciary net position is available in the separately issued PERS financial statements.
B. Police and Firemen’s Retirement System (PFRS)
Plan Description
The State of New Jersey, State of New Jersey Police and Firemen’s Retirement System (PFRS), is a cost-sharing multiple-employer defined benefit pension plan administered by the State of New Jersey Division of Pensions and Benefits (the Division).
For additional information about the PFRS, please refer to the Division’s Comprehensive Annual Financial Report (CAFR) which can be found at www.state.nj.us/treasury/pensions/annrpts.shtml.
B-22 VILLAGE OF RIDGEWOOD NOTES TO FINANCIAL STATEMENTS YEAR ENDED DECEMBER 31, 2015 (Continued)
Note 5: Pension Plans (Cont’d)
B. Police and Firemen’s Retirement System (PFRS) (Cont’d)
Benefits Provided
The vesting and benefit provisions are set by N.J.S.A. 43:16A. The PFRS provides retirement as well as death and disability benefits. All benefits vest after ten years of service, except for disability benefits which vest after 4 years of service. The following represents the membership tiers for PFRS:
Tier Definition 1 Members who were enrolled prior to May 22, 2010 Members who were eligible to enroll on or after: 2 May 22, 2010 and prior to June 28, 2011 3 June 28, 2011
Service retirement benefits are available at age 55 and are generally determined to be 2% of final compensation for each year of creditable service, as defined, up to 30 years plus 1% for each year of service in excess of 30 years. Members may seek special retirement after achieving 25 years of creditable service, in which benefits would equal 65% (tiers 1 and 2 members) and 60% (tier 3 members) of final compensation plus 1% for each year of creditable service over 25 years but not to exceed 30 years. Members may elect deferred retirement benefits after achieving ten years of service, in which case benefits would begin at age 55 equal to 2% of final compensation for each year of service.
Contributions The contribution policy for PFRS is set by N.J.S.A. 43:16A and requires contributions by active members and contributing members. The Local employers’ contribution amounts are based on an actuarially determined rate which includes the normal cost and unfunded accrued liability. Chapter 19, P.L. 2009 provided an option for local employers of PFRS to contribute 50% of the normal and accrued liability contribution amounts certified for payments due in State fiscal year 2009. Such employers will be credited with the full payment and any such amounts will not be included in their unfunded liability. The actuaries will determine the unfunded liability of those retirement systems, by employer, for the reduced normal and accrued liability contributions provided under this law. This unfunded liability will be paid by the employer in level annual amounts over a period of 15 years beginning with the payments due in the fiscal year ended June 30, 2012 and will be adjusted by the rate of return on the actuarial value of the assets.
Special Funding Situation Under N.J.S.A. 43:16A-15, local participating employers are responsible for their own contributions based on actuarially determined amounts, except where legislation was passed which legally obligated the State if certain circumstances occurred. The legislation which legally obligates the State is as follows: Chapter 8, P.L. 2000, Chapter 318, P.L. 2001, Chapter 86, P.L. 2001, Chapter 511, P.L. 1991, Chapter 109, P.L. 1979, Chapter 247, P.L. 1993 and Chapter 201, P.L. 2001. The amounts contributed on behalf of the local participating employers under this legislation is considered to be a special funding situation as defined by GASB Statement No. 68 and the State is treated as a nonemployer contributing entity. The June 30, 2015 State special funding situation net pension liability amounts are the accumulated differences between the annual actuarially determined State obligation under the special funding situation and the actual State contribution through the valuation date. The fiscal year ended June 30, 2015 State special funding situation pension expense is the actuarially determined contribution amount that the State owes for the fiscal year ended June 30, 2015. B-23 VILLAGE OF RIDGEWOOD NOTES TO FINANCIAL STATEMENTS YEAR ENDED DECEMBER 31, 2015 (Continued)
Note 5: Pension Plans (Cont’d)
B. Police and Firemen’s Retirement System (PFRS) (Cont’d)
Special Funding Situation (Cont’d)
The pension expense is deemed to be a State administrative expense due to the special funding situation. Since the local participating employers do not contribute under this legislation directly to the plan (except for employer specific funded amounts), there is no net pension liability or deferred outflows or inflows to report in the financial statements of the local participating employers related to this legislation. However, the notes to the financial statements of the local participating employers must disclose the portion of the nonemployer contributing entities’ total proportionate share of the collective net pension liability that is associated with the local participating employer.
Village contributions to PFRS amounted to $2,370,135 for 2015. During the fiscal year ended June 30, 2015, the State of New Jersey contributed $231,448 to the PFRS for normal pension benefits on behalf of the Village, which is less than the contractually required contribution of $554,599.
The employee contributions for PFRS are 10.00% of employees' annual compensation, as defined.
Pension Liabilities and Pension Expense
At June 30, 2015, the Village’s liability for its proportionate share of the net pension liability was $50,699,807. The net pension liability was measured as of June 30, 2015, and the total pension liability used to calculate the net pension liability was determined by an actuarial valuation as of July 1, 2014 which was rolled forward to June 30, 2015. The Village's proportion of the net pension liability was based on a projection of the Village's long-term share of contributions to the pension plan relative to the projected contributions of all participating members, actuarially determined. At June 30, 2015, the Village's proportion was 0.30438%, which was a decrease of 0.0001% from its proportion measured as of June 30, 2014.
Additionally, the State’s proportionate share of the net pension liability attributable to the Village is $4,446,203 as of June 30, 2015. The net pension liability was measured as of June 30, 2015, and the total pension liability used to calculate the net pension liability was determined by an actuarial valuation as of July 1, 2014 which was rolled forward to June 30, 2015. The State's proportionate share of the net pension liability associated with the Village was based on a projection of the Village’s long-term share of contributions to the pension plan relative to the projected contributions of all participating members, actuarially determined. At June 30, 2015, the State's proportion was 0.30438%, which was a decrease of 0.0001% from its proportion measured as of June 30, 2014 which is the same proportion as the Village’s.
B-24 VILLAGE OF RIDGEWOOD NOTES TO FINANCIAL STATEMENTS YEAR ENDED DECEMBER 31, 2015 (Continued)
Note 5: Pension Plans (Cont’d)
B. Police and Firemen’s Retirement System (PFRS) (Cont’d)
Pension Liabilities and Pension Expense (Cont’d)
Village's Proportionate Share of the Net Pension Liability$ 50,699,807
State's Proportionate Share of the Net Pension Liability Associated with the Village 4,446,203
Total Net Pension Liability$ 55,146,010
For the year ended December 31, 2015, the Village recognized total pension expense of $2,370,135.
Actuarial Assumptions
The total pension liability for the June 30, 2015 measurement date was determined by an actuarial valuation as of July 1, 2014 which was rolled forward to June 30, 2015. This actuarial valuation used the following actuarial assumptions:
Inflation Rate 3.04% Salary Increases: 2012 - 2021 2.60% - 9.48% based on age Thereafter 3.60% - 10.48% based on age Investment Rate of Return 7.90%
Mortality rates were based on the RP-2000 Combined Healthy Mortality Tables projected one year using Projection Scale AA and one year using Projection Scale BB for male service retirements with adjustments for mortality improvements from the base year based on Projection Scale BB. Mortality rates were based on the RP-2000 Combined Healthy Mortality Tables projected fourteen years using Projection Scale BB for female service retirements and beneficiaries with adjustments for mortality improvements from the base year of 2014 based on Projection Scale BB.
The actuarial assumptions used in the July 1, 2014 valuation were based on the results of an actuarial experience study for the period July 1, 2010 to June 30, 2013.
Long Term Expected Rate of Return
In accordance with State statute, the long-term expected rate of return on pension plan investments (7.90% at June 30, 2015) is determined by the State Treasurer, after consultation with the Directors of the Division of Investments and Division of Pensions and Benefits, the Board of Trustees and the actuaries. The long-term expected rate of return was determined using a building block in which best-estimate ranges of expected future real rates of return (expected returns, net of pension plan investment expense and inflation) are developed for each major asset class. These ranges are combined to produce the long-term expected rate of return by weighting the expected future real rates of return by the target asset allocation percentage and by adding expected inflation.
B-25 VILLAGE OF RIDGEWOOD NOTES TO FINANCIAL STATEMENTS YEAR ENDED DECEMBER 31, 2015 (Continued)
Note 5: Pension Plans (Cont’d)
B. Police and Firemen’s Retirement System (PFRS) (Cont’d)
Long Term Expected Rate of Return (Cont’d)
Best estimates of arithmetic real rates of return for each major asset class included in PFRS’ target asset allocation as of June 30, 2015 are summarized in the following table:
Long-Term Expected Real Target Rate of Asset Class Allocation Return Cash 5.00% 1.04% U.S. Treasuries 1.75% 1.64% Investment Grade Credit 10.00% 1.79% Mortgages 2.10% 1.62% High Yield Bonds 2.00% 4.03% Inflation-Indexed Bonds 1.50% 3.25% Broad U.S. Equities 27.25% 8.52% Developed Foreign Equities 12.00% 6.88% Emerging Market Equities 6.40% 10.00% Private Equity 9.25% 12.41% Hedge Funds/Absolute Return 12.00% 4.72% Real Estate (Property) 2.00% 6.83% Commodities 1.00% 5.32% Global Debt ex. U.S. 3.50% -0.40% REIT 4.25% 5.12%
Discount Rate – PFRS
The discount rate used to measure the total pension liability was 5.79% as of June 30, 2015. This single blended discount rate was based on the long-term expected rate of return on pension plan investments of 7.90% and a municipal bond rate of 3.80% as of June 30, 2015 based on the Bond Buyer GO 20 Bond Municipal Bond Index which includes tax-exempt general obligation municipal bonds with an average rating of AA/Aa or higher. The projection of cash flows used to determine the discount rate assumed that contributions from plan members will be made at the current member contribution rates and that contributions from employers and the nonemployer contributing entity will be made based on the average of the last five years of contributions. Based on those assumptions, the pension plan's fiduciary net position was projected to be available to make projected future benefit payments of current plan members through 2045. Therefore, the long-term expected rate of return on pension plan investments was applied to projected benefit payments through 2045, and the municipal bond rate was applied to projected benefit payments after that date in determining the total pension liability.
B-26 VILLAGE OF RIDGEWOOD NOTES TO FINANCIAL STATEMENTS YEAR ENDED DECEMBER 31, 2015 (Continued)
Note 5: Pension Plans (Cont’d)
B. Police and Firemen’s Retirement System (PFRS) (Cont’d)
Sensitivity of the Total Net Pension Liability (including the State’s proportionate share of the net pension liability attributable to the Village) to Changes in the Discount Rate
The following presents the total net pension liability (including the State’s proportionate share of the net pension liability attributable to the Village) as of June 30, 2015 calculated using the discount rate as disclosed above, as well as what the collective net pension liability would be if it were calculated using a discount rate that is 1-percentage-point lower or 1-percentage-point higher than the current rate:
June 30, 2015 1% Current 1% Decrease Discount Rate Increase (4.79%) (5.79%) (6.79%) Village's proportionate share of the Net Pension Liability and the State's proportionate share of the Net Pension Liability associated with the Village$ 72,699,949 $ 55,146,010 $ 40,832,341
Pension Plan Fiduciary Net Position - PFRS
Detailed information about the PFRS's fiduciary net position is available in the separately issued PFRS financial statements.
C. Defined Contribution Retirement Program (DCRP)
Prudential Financial jointly administers the DCRP investments with the NJ Division of Pensions and Benefits. If an employee is ineligible to enroll in the PERS or PFRS, the employee may be eligible to enroll in the DCRP. DCRP provides eligible members with a tax-sheltered, defined contribution retirement benefit, along with life insurance and disability coverage. Vesting is immediate upon enrollment for members of the DCRP.
The State of New Jersey, Department of the Treasury, Division of Pensions and Benefits, issues publicly available financial reports that include the financial statements and required supplementary information of the DCRP. The financial reports may be obtained by writing to the State of New Jersey, Department of the Treasury, Division of Pensions and Benefits, PO Box 295, Trenton, New Jersey, 08625-0295.
Employers are required to contribute at an actuarially determined rate. Employee contributions are based on percentages of 5.50% for DCRP of employees’ annual compensation, as defined. The DCRP was established July 1, 2007, under the provisions of Chapter 92, P.L. 2007 and Chapter 103, P.L. 2007 and expanded under the provisions of Chapter 89, P.L. 2008. Employee contributions for DCRP are matched by a 3% employer contribution.
For DCRP, the Village recognized pension expense of $4,804 for 2015. Employee contributions to DCRP were $8,824 for 2015.
B-27 VILLAGE OF RIDGEWOOD NOTES TO FINANCIAL STATEMENTS DECEMBER 31, 2015 (Continued)
Note 6: Other Post-Employment Benefits
In addition to the pension benefits described in Note 5, the Village provides other post- employment benefits to certain employees after retirement, substantially similar in nature to the health benefits provided to employees presently working
The Village contributes to the State Health Benefits Program (“SHBP”), a cost-sharing, multiple- employer defined benefit post-employment healthcare plan administered by the State of New Jersey Division of Pensions and Benefits. SHBP was established in 1961 under N.J.S.A. 52:14- 17.25 et seq. to provide health benefits to State employees, retirees, and their dependents.
The SHBP was extended to employees, retirees, and dependents of participating local public employers in 1964. Local employers must adopt a resolution to participate in the SHBP.
In accordance with the Village’s resolution, Village employees are entitled to the following benefits:
Municipal and Police Employees: Married Village employees retiring at age 62 or older who have accumulated 15 years or more of uninterrupted service, or under age 62 with 25 years or more, are entitled to fifty percent of the premium for hospital and surgical health insurance family coverage to be paid by the Village. Single employees retiring at age 62 or older who have accumulated 15 years or more of uninterrupted service, or under age 62 with 25 years or more, are entitled to one hundred percent of the premium for hospital and surgical insurance individual coverage to be paid by the Village. All years of qualifying service must be with the Village of Ridgewood.
Rules governing the operation and administration of the program are found in Title 17, Chapter 9 of the New Jersey Administrative Code. SHBP provides medical, prescription drugs, mental health/substance abuse, and Medicare Part B reimbursement to retirees and their covered dependents.
The State Health Benefits Commission is the executive body established by statute to be responsible for the operation of the SHBP. The State of New Jersey Division of Pensions and Benefits issues a publicly available financial report that includes financial statements and required supplementary information for the SHBP. That report may be obtained by writing to:
State of New Jersey Division of Pensions and Benefits, P.O. Box 295, Trenton, NJ 08625- 0295.
Participating employers are contractually required to contribute based on the amount of premiums attributable to their retirees. Post-retirement medical benefits under the plan have been funded on a pay-as-you-go basis since 1994. Prior to 1994, medical benefits were funded on an actuarial basis. Contributions to pay for the health premiums of participating retirees in the SHBP are billed to the Village on a monthly basis. The Village’s portion of post-retirement benefits is funded on a pay-as-you-go basis from the Current Fund and Utility Operating Fund budgets.
B-28 VILLAGE OF RIDGEWOOD NOTES TO FINANCIAL STATEMENTS DECEMBER 31, 2015 (Continued)
Note 6: Other Post-Employment Benefits (cont’d)
In the event an employee qualifying under these conditions is eligible for Medicare coverage with supplemental coverage, the total cost of which amounts to less than fifty percent of the cost of the premium for hospital and surgical health insurance family coverage, or less than the cost of the premiums for hospital and surgical insurance individual coverage presently supplied by the Village to its employees, such employee will be required to enroll in the Medicare supplemental coverage program, the cost of which will be reimbursable by the Village.
The Village's portion of post-retirement benefits is funded on a pay-as-you-go basis from the Current Fund operating budget. During 2015 the Village had 178 retirees who met the eligibility requirements and recognized expenditures in the amount of $2,804,237.
Note 7: Accrued Sick and Vacation Benefits
Municipal employees are permitted to accrue unused sick time of which may be taken as time off or paid upon retirement or separation at an agreed upon rate. It is estimated that the current cost of such unpaid compensation would approximate $6,623,538. This amount is not reported either as an expenditure or liability. However, it is expected that the cost of such unpaid compensation will be included in the Village's budget operating expenditures in the year in which it is used.
The above amount is partially funded by the Reserve for Terminal Leave of $529,383 on the Other Trust Funds balance sheet at December 31, 2015.
Note 8: Selected Tax Information
Property taxes are levied as of January 1 on property values assessed as of the previous calendar year. The tax levy is divided into two billings. The first billing is an estimate of the current year's levy based on the prior year's taxes. The second billing reflects adjustments to the current year's actual levy. The final tax bill is usually mailed on or before June 14th, along with the first half estimated tax bills for the subsequent year. The first half estimated taxes are divided into two due dates, February 1 and May 1. The final tax bills are also divided into two due dates, August 1 and November 1. A ten-day grace period is usually granted before the taxes are considered to be delinquent and the imposition of interest charges is made. A penalty may be assessed for any unpaid taxes in excess of $10,000 at December 31 of the current year.
Unpaid taxes of the current year may be placed in lien at a tax sale held after December 10.
B-29 VILLAGE OF RIDGEWOOD NOTES TO FINANCIAL STATEMENTS DECEMBER 31, 2015 (Continued)
Note 8: Selected Tax Information (Cont’d)
Tax Rate $ 2.433 $ 2.385 $ 2.356 Apportionment of Tax Rate Municipal .581 .574 .578 County .260 .246 .239 Local School 1.587 1.560 1.535 Municipal Open Space .005 .005 .004 Assessed Valuations $5,750,039,200 $ 5,733,152,900 $ 5,723,651,600
Comparison of Tax Levies and Collections Currently
A study of this tabulation could indicate a possible trend in future tax levies. A decrease in the percentage of current collection could be an indication of a probable increase in future tax levies.
Currently Cash Percentage of Year Tax Levy Collections Collection
$ 140,449,848 $ 139,674,690 99.44% 137,031,046 136,226,560 99.41% 135,038,077 134,066,846 99.28%
Also, increases in future tax levies can also be warranted if revenue sources outside of those directly generated by the municipality, such as federal or state aid, should decline without corresponding decreases in budgeted expenditures.
Note 9: Risk Management
The Village is exposed to various risks of loss related to torts; theft of, damage to, and destruction of assets, errors and omissions; injuries to employees; and natural disasters. Health benefits are provided to employees through the State of New Jersey Health Benefits Plan.
The Village is currently a member of the Bergen County Municipal Joint Insurance Fund (the "Fund"). The Fund provides its members with Liability, Property, Environmental, Public Officials and Employer Practices, and Workers' Compensation Insurance. The Fund is a risk-sharing public entity risk pool that is both an insured and self-administered group of governmental entities established for the purpose of providing low-cost insurance coverage for their respective members in order to keep local property taxes at a minimum. Each member appoints an official to represent their respective entity for the purpose of creating a governing body from which officers for the Fund are elected.
B-30 VILLAGE OF RIDGEWOOD NOTES TO FINANCIAL STATEMENTS DECEMBER 31, 2015 (Continued)
Note 9: Risk Management (Cont’d)
As a member of the Fund, the Village could be subject to supplemental assessments in the event of deficiencies. If the assets of the Fund were to be exhausted, members would become responsible for their respective shares of the Fund’s liabilities. The Fund can declare and distribute dividends to members upon approval of the State of New Jersey Department of Banking and Insurance. These distributions are divided amongst the members in the same ratio as their individual assessment relates to the total assessment of the membership body.
Selected financial information for the Fund as of December 31, 2015 is as follows:
Total Assets$ 14,585,883 Net Position$ 3,521,882 Total Revenue$ 16,557,868 Total Expenses$ 16,888,511 Change in Net Position$ (330,643) Member Dividends$ 502,207
Financial statements for the Fund are available at the offices of the Fund’s Executive Director:
Bergen County Municipal Joint Insurance Fund PERMA Risk Management Services 9 Campus Drive, Suite 216 Parsippany, NJ 07054 (201) 881-7633
New Jersey Unemployment Compensation Insurance
The Village has elected to fund its New Jersey Unemployment Compensation Insurance under the “Benefit Reimbursement Method”. Under this plan, the Village is required to reimburse the New Jersey Unemployment Trust Fund for benefits paid to its former employees and charged to its account with the State. The Village is billed quarterly for amounts due to the State. The following is a summary of Village contributions, employee contributions, interest earned, reimbursements to the State for benefits paid and the ending balance of the Village’s expendable trust fund for the current and previous two years.
B-31 VILLAGE OF RIDGEWOOD NOTES TO FINANCIAL STATEMENTS DECEMBER 31, 2015 (Continued)
Note 9: Risk Management (Cont’d)
New Jersey Unemployment Compensation Insurance (Cont’d)
Fiscal Contributions Interest Amount Ending Year Village Employee Earned Reimbursed Balance
$ 142,084 $ 42,938 $ 425 $ 116,854 $ 237,552 101,080 88,807 127 91,796 168,959 113,060 * 87,748 70,741
* Detail was not available for the amount of the contributions between the Village, employees and interest earned.
Note 10: Fund Balances Appropriated
Fund balances at December 31, 2015, which were appropriated and included as anticipated revenue for the year ending December 31, 2016 are as follows:
Current Fund$ 3,300,000 Water Utility Operating Fund 2,173,167 Parking Utility Operating Fund 504,000
Note 11: Fixed Assets
The following schedule is a summarization of general fixed assets for the year ended December 31, 2015:
Balance Balance December, December, 2014 Additions Deletions 2015 Land $ 127,410,600 $ 127,410,600 Buildings 27,648,165 $ 79,826 27,727,991 Machinery and Equipment 25,252,508 3,852,570 $ 155,444 28,949,634 $ 180,311,273 $ 3,932,396 $ 155,444 $ 184,088,225
Note 12: Commitments and Contingencies
Claims and Other Legal Proceedings
The Village is periodically involved in lawsuits arising in the normal course of business, including claims for property damage, personnel litigation, personal injury, disputes over contract awards and property tax assessment appeals. The Village is involved in property tax assessment appeals which are pending at the Tax Court of New Jersey. The Village has established a reserve for litigation at December 31, 2015 in the amount of $2,170 in the Water Utility Operating Fund. In the opinion of management, the ultimate outcome of these lawsuits will not have a material adverse effect on the Village’s financial position as of December 31, 2015. B-32 VILLAGE OF RIDGEWOOD NOTES TO FINANCIAL STATEMENTS DECEMBER 31, 2015 (Continued)
Note 12: Commitments and Contingencies (Cont’d)
Claims and Other Legal Proceedings (Cont’d)
Amounts received or receivable from grantors, principally the federal and state governments are subject to regulatory requirements and adjustments by the agencies. Any disallowed claims, including amounts previously recognized by the Village as revenue would constitute a liability of the applicable funds. The amount, if any, of expenditures which may be disallowed by the grantors cannot be determined at this time, although Village officials expect such amounts, if any, to be immaterial.
In accordance with the NJ Division of Pension and Benefits regulations, the Village previously elected to defer the payment of two months health insurance premiums. The December 31, 2015 and 2014 deferrals were approximately $718,630 and $730,929, respectively; which becomes payable upon the Village leaving the State Health Benefits Program.
Note 13: Local School District Taxes
Regulations provide for the deferral of not more than 50% of the annual levy when school taxes are raised for a school year and have not been requisitioned by the school district. The Village of Ridgewood has elected to defer school taxes.
The Local School District Tax was raised on the school year basis and liability deferred by statute, resulting in school tax payable set forth in liabilities computed as follows:
Balance December 31,
Balance of School Tax$ 45,630,456 $ 44,718,552 Less: Amount Deferred 45,630,456 44,718,552
School Tax Payable (Cash Liability)$ - 0 - $ - 0 -
Note 14: Other Reserves
Reserves on the balance sheet of the Current Fund at December 31, 2015, consisted of the following:
Sale of Municipal Assets$ 16,974 Flood Emergency 302,995 $ 319,969
B-33 VILLAGE OF RIDGEWOOD NOTES TO FINANCIAL STATEMENTS DECEMBER 31, 2015 (Continued)
Note 15: Open Space Trust Fund
The Village created an Open Space Trust Fund with a tax levy of up to $.02 per $100 of assessed valuation in 1998. The funds collected are used to acquire and maintain open space, historical preservation and farm land property in the Village. To date, $3,758,502 has been collected and the balance in the Open Space Trust Fund at December 31, 2015 was $672,168.
Note 16: Related Party Transactions
During 2015 the Village appropriated and charged $2,340,446 to operations for the 2015 budget appropriation to the free public library. Of that amount $2,065,106 was the minimum required library tax per state requirements.
Note 17: Deferred Compensation Plans
The County offers its employees deferred compensation plans created in accordance with internal Revenue Code Section 457. The plans, which are administered by Nationwide and Valic, permit participants to defer a portion of their salary until future years. Amounts deferred under the plans are not available to employees until termination, retirement, death or unforeseeable emergency.
Note 18: Subsequent Events
The Village’s Bond Anticipation Notes outstanding matured in June of 2016 and a Bond Sale is scheduled to take place in August of 2016.
B-34 APPENDIX C
FORM OF APPROVING LEGAL OPINION OF BOND COUNSEL
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75 Livingston Avenue, Roseland, NJ 07068 (973) 622-1800
______, 2016
Village Council of the Village of Ridgewood, in the County of Bergen, New Jersey
Dear Council Members:
We have acted as bond counsel to the Village of Ridgewood, in the County of Bergen, New Jersey (the "Village") in connection with the issuance by the Village of $17,733,000 General Obligation Bonds, Series 2016, consisting of $12,218,000 General Improvement Bonds and $5,515,000 Water Utility Bonds (together, the "Bonds"). In order to render the opinions herein, we have examined laws, documents and records of proceedings, or copies thereof, certified or otherwise identified to us, as we have deemed necessary.
The Bonds are issued pursuant to the Local Bond Law of the State of New Jersey, a resolution of the Village adopted June 8, 2016 pursuant to N.J.S.A. 40A:2-26(f), in all respects duly approved, and the various bond ordinances referred to therein, each in all respects duly approved and published as required by law.
In our opinion, except insofar as the enforcement thereof may be limited by any applicable bankruptcy, moratorium or similar laws or application by a court of competent jurisdiction of legal or equitable principles relating to the enforcement of creditors' rights, the Bonds are valid and legally binding general obligations of the Village, and the Village has the power and is obligated to levy ad valorem taxes upon all the taxable real property within the Village for the payment of the Bonds and the interest thereon without limitation as to rate or amount.
On the date hereof, the Village has covenanted in its Arbitrage and Tax Certificate (the "Certificate") to comply with certain continuing requirements that must be satisfied subsequent to the issuance of the Bonds in order to preserve the tax-exempt status of the Bonds pursuant to Section 103(a) of the Internal Revenue Code of 1986, as amended (the "Code"). Pursuant to Section 103(a) of the Code, failure to comply with these requirements could cause interest on the Bonds to be included in gross income for federal income tax purposes retroactive to the date of issuance of the Bonds. In the event that the Village continuously complies with its covenants and in reliance on representations, certifications of fact and statements of reasonable expectations made by the Village in the Certificate, it is our opinion that, pursuant to Section 103(a) of the Code, interest on the Bonds is not included in gross income for purposes of federal income tax and is not an item of tax preference for purposes of calculating the federal alternative minimum tax imposed on individuals and corporations. It is also our opinion that interest on the Bonds held by a corporate taxpayer is included in "adjusted current earnings" in calculating alternative minimum taxable income for purposes of the federal alternative minimum tax imposed on corporations. We express no opinion regarding other federal tax consequences arising with respect to the Bonds. Further, in our opinion, interest on the Bonds and any gain on the sale thereof are not included in gross income under the New Jersey Gross Income Tax Act. These opinions are based on existing statutes, regulations, administrative pronouncements and judicial decisions.
This opinion is issued as of the date hereof. We assume no obligation to update, revise or supplement this opinion to reflect any facts or circumstances that may come to our attention or any changes in law or interpretations thereof that may occur after the date of this opinion or for any reason whatsoever.
Very truly yours,
McManimon, Scotland & Baumann, LLC Newark - Roseland - Trenton [ THIS PAGE INTENTIONALLY LEFT BLANK ]