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2009-12-08 Board of Selectmen Agenda Packet
TOWN OF NORTH ANDOVER BOARD OF SELECTMEN 120 MAIN STREET NORTH ANDOVER, MASSACHUSETTS 01845 of No oTp q Tracy M. Watson,Chairman 3 William F.Gordon TEL. 978 68 8-95 10 o "'' p ( ) Daniel P. Lanen *i d FAX(978)688-9556 Richard A.Nardella ` Rosemary Cormelly Smedile BOARD OF SELECTMEN&LICENSING COMMISSIONERS AGENDA Tuesday,December 8,2009—7:00 p.m. TOWN HALL MEETING ROOM 120 MAIN STREET I. CALL TO ORDER i II. EXECUTIVE SESSION A. Collective Bargaining III. RECONVENE AND PLEDGE OF ALLEGIANCE IV. COMMUNICATIONS,ANNOUNCEMENTS,AND PUBLIC COMMENT A. Notice of Public Hearing—Tree Removal V. CONSENT ITEMS A. Acceptance of Student Awareness Fire Education(S.A.F.E.)Grant B. Authorization to Borrow Funds. VI. PUBLIC HEARINGS A. Tax Classification Hearing B. Proposed Changes to Personnel Policy VII. NEW BUSINESS A. Update on Grant and ARRA funding B. Meeting Schedule for I"Half of 2010 VIII. TOWN MANAGER'S REPORT IX. ADJOURNMENT i i Town of North Andover NOTICE OF PUBLIC HEARING In accordance with Massachusetts General Laws (MGL), Chapter 37, Public Shade Tree Law, Section 3 (Cutting of Public Shade Trees; Hearing; Damages), the Town of North Andover DPW Director, acting as Tree Warden, will hold a Public Hearing on Tuesday, December 15, 2009 at 4:00 PM regarding an application from National Grid Hazard Tree Mitigation Program to remove and/or prune public shade trees. The hearing will be held at the North Andover DPW, 334 Osgood Street, North Andover, MA. Any person interested or wishing to be heard on this matter should appear at the time and place designated. The program includes a tree-by-tree hazard assessment of public and private trees, along the main three-phase lines which serve the community. The work recommended, is to remove hazard trees and prune for additional clearance in order to reduce tree outage problems affecting large numbers of customers served by these main lines. National Grid's arborists have identified ninety one (91)town trees for removal along town roads, and five (5)town trees for pruning. Town trees located within the public way that are designated for removal have been posted with a notice of public hearing in the field. The trees designated for pruning have been marked with a small blue ribbon. The roads with town trees affected by the program are listed as follows: Foster Street - 19 tree removals, Salem Street - 45 removals and 3 pruning, Marbleridge Road — 17 removals and 1 pruning, and Johnson Street - 10 removals and 1 pruning. A complete list of town trees designated for removal or pruning including information about the location, size and species of the affected trees and the reason for the removal or pruning, is available from the Town Hall or the DPW Office during normal business hours (M-F 3:30 AM to 4:30 PM). This list is also available on the Town's web site at WWW.to wrioftrormth a rid over,cworri under Town Departments/Public Works/DPW General Office/DPW News. Bruce Thibodeau, P.E. Director, Division of Public Works North Andover C�fe ��o�n�rrr.��uvea�Gl a�CJ/���z��i DEVAL L,PATRICK �"Cau, �� QdQnC�ll� d 01775 STEPHEN 1).COAN (3OVF,RNOR STATE GIRL MARSHA[, TIMOTHY P,MURRAY (978)6-67-3-100 C9'CIC (978)567-31,01 THOMAS P.LEONARD LT.GOVERNOR DEPUTY STATE PIRG MARSHAL KEVIN M.BuRt:E SECRETARY November 23, 2009 Chief William P. Martineau North Andover Fire Department 124 Main Street North Andover, MA 01845 Dear Chief Martineau: I am pleased to inform you that your FY 2010 Student Awareness of Fire Education (S.A.F.E.) grant application has been approved for funding. The North Andover Fire Department has been awarded $2,392.00 in state funds. Unfortunately this year's awards were reduced by about forty percent through 9C budget cuts, but we are thankful that we are able to maintain some level of funding to keep these important public fire education programs in place. Fire departments may begin to incur costs upon receipt of this award letter. Funds will be electronically distributed on or about December 21, 2009. Please be sure to alert your treasurer and to check with them to ensure receipt of the funds. The grant award funds must be expended within 12 months of receipt. All grantees are required to submit the FY 2010 yearend report to the Department of Fire Services by January 31, 2011 or with your next year's application, whichever date is sooner, The FY 2009 year-end reports will be due February 15, 2010, We appreciate your cooperation throughout the application process and congratulate your department for taking advantage of this opportunity to secure funds, If you have any questions please feel free to contact Jennifer Mieth at (978) 567-3381 or the S.A.F,E. staff at(978) 567-3388, Sincerely, Stephen D. Coan State Fire Marshal LSYC7J�rUII.Cd�KQ CUP. G%-veCe4 a C7( YQ Cf4 ���'CfLtC31GClCd /i4b�44tAe l�auuc�t�sella c���,�/�� U�caa�.�n�r�® l'?�cce a�'l7ee Vl.CGCB C-��4ixe r?j��,�r.L UniBank Fiscal Advisory Seryices, Inc.. , :December 2,200.9.1 Mark H.Rees,Town Manager:. `. . Town of North Andover : 120 Main Street. North Andover,MA 01845.:: ; .Dear Mark: . . Today,the Town of.North Andover took bids.on$10,276,222 general obligation bonds. These bonds were sold iri two series 46,446,222 Municipal Purpose Loan Bonds.(Series: A)and$3,83.0-000 refunding Bonds(Series.B),:The Series,A"Bonds-are being issuedao fund Town's fiscal 2010 capital program aid-remaining items.from.past capital ptograms.'the Series B Bonds are refunding portions of bonds.issued in June 2001 and April 2002..The portions being refunded are bonds paid from the'Town's.Sewer Enterpxise.Fund..Tlie.Bonrd of Selectmen will be'votmg at itsnieetizig on Tuesday, •.•_December 8;on awarding and executing both series•of Bonds.The.Borids will be.-dated:: and will deliver on December The Series B:Bonds were undertaken in order to provide near-terrn:•relief to.the Sewer • 'Enterprise Fund. This was done by iefundirig:outstanding bon ls.that were.stsuct4ired.with level.principal amortization(declining annual debt service)with bonds structured for level annual debt service.The intention was to lower debt service in the,earlyyear5 of the loan, but to increase it later on;.This_.objeciive.wa§achieved:For fiscal-years.2011: through 2014,debt service'is to be reduced by more than$50;000 per year. The peak .• . savings year is fiscal 2012,when debt service will be reduced by alroost$82,000.The Town will see increases in.fiscal.years 2019:through•2022 averaging lessahan$40,000 per.year. in addition to providing,neaMerm relief,the Series•B Borids will provide overall economic savings. Debt service will be reduced.overall by more than$200,000 on a present value basis. Contributing to the.ecoribmic savings was the fact that the Town will be escrowing the proceeds needed to pay.the old bonds with certificates ofdeposit provided by RiverBank of North Andover: Typically,refunding escrows are funded with U.S.*government or-agency securities,but at this point rates on such.securities.are oery. low-'much lower than bank CD rates.RiverBank was-.selected.through a competitive process as required by federal law:The-batiks solicited,including.RiverBank,were vetted as participants_in the.Depositors Insurance Fund"(DIF),which•insures all:deposits.and as otherwise healthy financial institutions. UnIBahlc Fiscal Advisory Services,Inc.•A Subsidiary of UFS.Bancorp .39 Church'Street,Whitinsville,MA 01588•(508)234-8112 FAX(508)2341938•www.uniba6k.com Mark H. Rees,Town Manager Page.2. Th 'T own received four bids for,each series of Bonds:The winning bid for the Series•A. Bonds was.from first Southwest Corripany at'a true interest cast.(TIC)of 3.2060%:The.. . next bid;was from Roosevelt⨯.-Inc- at a TIC of 3.2273%The third Series;A bide . was..froin Janney Montgomery Scott,Inc at a TIC of 3.2698%.- The other"bid.was.from- Robe_rt W. Baird&."Co.at a,TIC of:3.4MO/o.The w'inn'ing bid for the Series'13 Bonds was . :also from Fiurst Southwest Company at a true interest cost(TIC).of 2.5490%.'The bid ; . was fro Roosevelt&Cross,Inc.at a TIC of 2.5804%:The third.Series B.bid was from Janney Montgomery Scott;:Inc at a TIC of 2.6301% The other bid was front Robert W: Baird.&Co. at a_TICof 2.8837%. One piece of troubling news related to-the-financing was that while:Standard affirmed the outstanding"- A'rating,it assigned a"negative;outlook":,to fihe.rating.The. . credit report.indicates.that the rating agency feels that the negative outlook"reflects decrease iri the town's financial position over-the fast threeaudited years,.which has . substantially limited its operating flexibility.Given the economy's current state,and.what, remains a challenging:budget environment,we believe the town's.reserves.are no longer comm6asurate'with a `AA' rating.We:will;lower the rating if the town is unable'to make the necessary.budgetazy adjustments to improve its.fZnancial position.".When the Town .. iasts6* -b6nds.in May,16ommented that North:Andover`.`lags its peer group. relative to` financial:position.and reserves.,I commented further that"if reserves narrow.further;,this: 'factor could cause adowngrade tothe AA-."I°airi available to`work with you;youx staff,. `and Town officials;to develop a plan to respond to the assignment of the negative :outlook. I look forward to meeting with-you and the.Board again on Tuesday.eveiiing::Pleasefet, me know if you.have any questions in advance of that meeting: 'ncerely .. .. David-M. Eisenth Vice,President/S. eni Fiscal Advisor ( 1 1 I I J I I JI JI I I I A November 24,2009 rninalir °u North. Andover, Massach-utsetts, General Obligatial-i- Primary Credit Analyst Victor Medeiros,Boston(1)617-530-8305;victor_medeiros@standardandpoors.com Secondary Credit Analyst: Michael P Taylor,New York(1)212-438-1458;michael_taylor@standardandpoors.com Rationale Outlook Related Research i www.standardandpours.com/ratingsdirect 1 Standard&Poor's.All rights reserved.No reprint or dissemination without S&P s permission.See Terms of Use/Disclaimer on the last page. Summary: .. bliga tt r / r / / US$10.436 mil GO bnds ser 2009 A&B dtd 12/15/2009 due 01/15/2030 Long Term Rating AA/Negative New Forth Andover GO Unenhanced Rating AA(SPUR)/Negative Outlook Revised Ratiorialc Standard&Poor's Ratings Services revised its outlook on the'AA'long-term rating and underlying rating(SPUR) on North Andover,Mass.' general obligation (GO)debt to negative from stable based on the town's deteriorated financial position. Standard &Poor's also assigned its 'AA' long-term rating,and negative outlook,to the town's series 2009A and 2009B GO bonds and affirmed its 'AA' SPUR on the town's existing GO debt outstanding. Unaudited fiscal 2009 draft results show management reduced reserves to offset revenue declines in state aid and other local receipts.The unreserved fund balance decline was worse than we initially expected. The negative outlook reflects our expectation that the town will continue to experience downward revenue pressures stemming from the economy,that the town's collective bargaining contracts will remain unsettled through 2011, and that the town's ability to raise the tax levy due to Proposition 2 1/2 constraints will remain limited. Credit strengths supporting the rating include the town's: • Location and access to large regional employment centers in the Boston metropolitan area and northern Massachusetts; • Very strong income levels with median household effective buying income at 135% of the commonwealth's level and 157% of the nation's level; • Extremely strong property tax base with a market value of$174,000 per capita;and • Low debt burden,net of school construction grants and self-supporting enterprise funds. Officials plan to use series A bond proceeds to fund various capital projects and series B bond proceeds to refund the town's 2001 and 2002 bonds outstanding. North Andover,with a population estimate of 27,957,is predominantly a residential community 24 miles north of Boston.The town's access to Boston and surrounding employment centers along interstates 93 and 495 provides residents with a diverse employment base.The local economic base has also remained stable recently with commercial and industrial properties accounting for 10% of assessed value(AV). Overall,North Andover's economic characteristics are very strong.Unemployment,at 8.9% as of September 2009,has risen but has remained Standard&Poor's I RatingsDirect on the Global Credit Portal I November 24,2009 2 Standard&Poor's.All rights reserved.No reprint or dissemination without S&P's permission.See Terms of Use/Disclaimer on the last page. Summary:North Andover,Massachusetts; General Obligation below commonwealth and national rates. Median household effective buying income was 135% and 157% of commonwealth and national rates,respectively. North Andover's AV declined by 1.7%in fiscal 2009 to $4.4 billion.As with many cities and towns in the commonwealth,North Andover experienced strong AV appreciation from fiscals 2000-2007;but real estate values have recently softened.Nevertheless,the town's corresponding market value remains,in our view,an extremely strong$174,000 per capita,reflecting the property tax base's current strength.Median home values are twice the national level.The tax base is very diverse with the 10 leading taxpayers accounting for 3.5% of total AV. North Andover's financial position remains adequate despite a recent reserve reduction for fiscals 2008 and 2009. Audited fiscal 2008 results showed an unreserved general fund decrease of approximately$1.1 million that reduced the balance to$1.6 million,or roughly 2.1% of expenditures.The town closed fiscal 2008 with a$1.19 million stabilization fund balance. Combined,the town maintained roughly$2.9 million,or 3.6% of general fund expenditures,in available reserves. In fiscal 2009,the town managed through a midyear state aid cut and local receipts coming in less than budgeted.In response,management made several budget adjustments and used roughly$1.4 million of unreserved fund balance, nearly depleting the balance.Unaudited draft results indicate a$164,000 unreserved fund balance,or less than 0.5% of expenditures.Despite the decrease to unreserved fund balance,the town was able to realize a$1.8 million savings in health insurance expenses that allowed management to appropriate funds intended for the health insurance trust fund into the stabilization fund,increasing that balance to$2.1 million.In total,the town has roughly$2.2 million of available reserves,or roughly 2.7% of expenditures.Property taxes are the town's largest revenue source,generating 66% of expenditures;property tax collections,averaging 98% over the past five fiscal years,have historically been strong. The current reserve position,while adequate,is below average compared with commensurate 'AA'ratings.A$1.8 million balance reserved in the health insurance trust fund,however,provides additional operating flexibility;we believe this provides some additional near-term budgetary relief in the event heath insurance costs increase. Finance officials are projecting balanced budgetary results in fiscal 2010 with no planned reserve reduction.Town officials reduced expenditures by$1.6 million in fiscal 2010 to better align revenues with expenditures.For the near future,the town will continue to manage through the recession with below-average reserves compared with its peers because it will be difficult to raise the tax levy due to Proposition 2 1/2 limits. Officials,however,are looking to initiate several cost-savings strategies that they hope will,over time,improve operating flexibility. Based on a review of several key financial practices,Standard 8c Poor's considers North Andover's financial practices "good" under its Financial Management Assessment(FMA)methodology,indicating financial practices exist in most areas but that governance officials might not formalize or regularly monitor all of them.The town has a finance committee in place that meets frequently.For revenue and expenditure assumptions,the town uses trend analysis that includes the previous years'results and commonwealth legislators in its planning for state aid receipt projections.The finance department reports monthly to the town manager on budgeted results and quarterly to the selectmen.The town has a five-year financial plan linked to its five-year capital plan. The town also maintains an investment policy.Management reports quarterly investment results to the selectmen and monthly investment results to the town manager.The town's formal reserve policy is to maintain reserves at 4%-6% of budget;the town is currently operating below the policy. www.standardandpoors.com/ratingsdirect 3 Standard&Poor's.All rights reserved.No reprint or dissemination without S&P's permission.See Terms of Use/Disclaimer on the last page. Summary:North Andover,Massachusetts; General Obligation Net of school construction grants and self-supporting enterprise funds,debt levels are low. Including this issuance, the town's overall net debt is$1,469 per capita,or 0.8% of total market value.Debt service carrying charges were a moderate 10% of 2008 expenditures.Amortization of existing debt,however,is above average with officials planning to retire 87% of principal by 2019 and 100% by 2029. Outlook The negative outlook reflects the decrease in the town's financial position over the past three audited years,which has substantially limited its operating flexibility. Given the economy's current state,and what remains a challenging budgetary environment,we believe the town's reserves are no longer commensurate with an 'AA'rating.We will lower the rating if the town is unable to make the necessary budgetary adjustments to improve its financial position. Related R(',Warch I USPF Criteria: "GO Debt," Oct. 12,2006 r r rr r rr ri , i i North Andover GO Long Term Rating AA/Negative Outlook Revised North Andover GO(ASSURED GTY) Unenhanced Rating AA(SPUR)/Negative Outlook Revised North Andover GO(FGIC)(MBIA)(National) Unenhanced Rating AA(SPUR)/Negative Outlook Revised Many issues are enhanced by bond insurance. Complete ratings information is available to RatingsDirect on the Global Credit Portal subscribers at www.globalcreditportal.com and RatingsDirect subscribers at www.ratingsdirect.com.All ratings affected by this rating action can be found on Standard&Poor's public Web site at www.standardandpoors.com.Use the Ratings search box located in the left column. I Standard&Poor's RatingsDirect on the Global Credit Portal November 24,2009 4 Standard&Poor's.All rights reserved.No reprint or dissemination without S&P's permission.See Terms of Use/Disclaimer on the last page. Copyright©2009 by Standard&Poors Financial Services LLC(S&P),a subsidiary of The McGraw-Hill Companies,Inc.All rights reserved.No part of this information may be reproduced or distributed in any form or by any means,or stored in a database or retrieval system,without the prior written permission of S&P. 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Copyright©1994-2009 by Standard&Poors Financial Services LLC,a subsidiary of The McGraw-Hill Companies,Inc.All Rights Reserved. www.standardandpoors.com/ratingsdirect 5 Town of North Andover,Massachusetts Debt Service Combined Refunded Target 200,099.38 . FV Savings 200.099.38 Percentage 3.1200% Fiscal Fiscal Fiscal Date Pnndp2l Coupon IPM Interest Total Total New New Savings Savings 12/15/2009 0.00 0.00 0.00 4112010 230,000.00 71,077.50 301,077.50 395,18424 395,184.24 (94,108.74) 6!152010 85,000.00 14,990.00 99,990100 401,067.50 0.00 99,990.00 5,83326 10112010 0.00 65,90250 65,90250 47,150.00 18,752.50 12M52010 0.00 13,247.50 13,247.50 0.00 13,247.50 4112011 230,000.00 65.902.50 285,902,50 352,150.00 399,300.00 (56,247.50) 61152011 85,000,00 13,24750 98,24750 473,300.00 UO 98,247.50 74,000.00 10/12011 0.00 60,727.50 60,727.50 43,71 151.75 17,008.75 12M52011 0.00 11,462.50 11,462.50 0.00 11,46250 4112012 230,000.00 60,727.50 290,727.50 348,71&75 392,437.50 (57,99125) 61152012 100,000,00 11,46250 111,462.50 474,380.00 0.00 111,48250 81,942.50 10/12012 0.00 55,55250 55,552.50 40,287.50 15,265.00 121t52012 0.00 9,275.00 9,275.00 0.00 9,275,00 4!12013 230,000,00 55,552.50 285155150 355,287.50 395,575.00 (69,735.00) 6!152013 100,000.00 9,775.00 109,275.00 459,655.00 0.00 109,275.00 84,080.00 10112013 0.00 56.377.50 50,377.50 $6,743.75 13,833,75 12/152013 0.00 7,025.00 7,025.00 0,00 7,025.00 4112014 230,000.00 50,377.50 280,377.50 356,743.75 393,407.50 (76,38625) 8/152014 100,000.00 7,025,00 107,025.00 444,805.00 0.00 107,025.06 51,317.50 10M2014 0.00 45,058.75 45,058.75 32.743.75 12,315.00 12/152014 0.00 4,725.00 4,725.00 0.00 4,725,06 4112075 230,000.00 45,058.75 275,058.75 382,743.75 395,487.50 (87,685.00) 6MS2015 100,000.00 4,725.00 104,725.00 429,56750 0.00 104,725.OD 34,080.00 10/12015 0.00 39,596,25 39,59625 28,61&75 '10,977.50 12/152015 0100 2,375.00 2,375.00 0.00 2,375.00 4/12016 230,000.00 39,696.25 269.59625 368,618.75 397,237.56 (99,022.50) 6/152016 100,000.00 2,375.00 102,375.00 413,94250 0.00 1O137S.00 16,705.00 10/1)2016 0100 34,133.75 34,133.75 23,518,75 10,615.00 12MSM16 0100 0.00 0.00 0.00 0.00 4/12017 230,000.00 34,133.75 264,13&75 283,518.75 267,037.50 615.00 6/152017 0.00 0.00 0.00 298,26750 0.00 0.00 11,230.00 10/12017 0.00 28,38&75 28,383.75 20,518.75 7,865.00 12115f2017 0.00 0.00 0.00 0.00 0.00 4/12018 230,000.00 28,383.75 258,383.75 265,518.75 266,037.50 (7,135.00) 8/552013 0.00 0,00 0.00 286,76750 0.00 0.00 730.00 10M2018 0100 22,633.75 22,63&75 16.843.75 5,790.00 12/152018 0.00 0.00 0.00 0.00 0.00 4M2019 230,000.00 22,633.75 252,633.75 271,843.75 286,687.50 (19,210.00) 611572019 0.00 0.00 0,00 275,267.50 0.00 0100 (13,420.00) 10/12019 0.OD 16,883.75 16,88&75 13,018.75 3,865.00 121152019 0.00 0.00 0.00 0.00 0.00 4112020 230,000.00 16,883.75 246.883.75 273.018.75 286,037.50 (26,135.00) 87152020 0.00 0.00 0.00 263,767.50 0.00 0.00 (22,270.00) 10/12020 0.00 11,018.75 11,01 8.75 9,118.75 1,900.OD 12/152020 0.00 0.00 0.00 0.00 0.00 4112021 215,000.00 11,01&75 226,018.75 279,118.75 283237.50 (53,100.00) 61152021 0.00 0.00 0.00 237,03750 0.00 0.00 (51,200.00) 10/12021 0.00 5,SO9.38 5,509.38 4,900.00 609.37 12/152021 0.00 0,00 0.00 0,00 0.00 4112022 215,OOD.00 5,509.38 220,509.38 284,900.00 289,600.00 (64,390.63) 6/152022 0.00 0.00 226,018.75 (63,781.25) 3,630,000,00 1,053,843.75 4,683,843.75 4,683,843.75 189,297.01 Unissued Debt as of 07/01/2009 Art/Sec Purpose Account Number Amount 14/2 Roadway Improvements (Autran Avenue) 3114044.1.4.0410.0000.0.491000.0000.0000.00.00 Bond Proceeds 235,000 14/3 Sidewalk Construction 3114045.1.4.0410.0000.0.491000.0000.0000.00.00 Bond Proceeds 72,200 19 Police Station 3093317.1.2.0210.0000.0.491000.0000.0000.00.00 Bond Proceeds 3,563,000 22/1A Modular Classrooms for Towns Community Program 3083368.1.0.0000.0000.0.491000.0000.0000.00.00 Bond Proceeds 301,022 4,171,222 14/17 East Side Trunk Sewer 6076232.1.0.0440.0000.0.491000.0000.0000.00.00 Bond Proceeds 250,000 250,000 14/15 Mater Main Rehab 6066343.1.0.0450.0000.0.491000.0000.0000.00.00 Bond Proceeds 250,000 14/16 Foxwood Booster Pump 6066344.1.0.0450.0000.0.491000.0000.0000.00.00 Bond Proceeds 175,000 22/1 Bear Hill Booster Pump Station 6066345.1.0.0450.0000.0.491000.0000.0000.00.00 Bond Proceeds 1,250,000 22/2 Rosemont Booster pump 6066346.1.0.0450.0000.0.491000.0000.0000.00.00 Bond Proceeds 350,000 2,025,000 Total 6,446,222 12/4/2009,9:45 AM,Authorized Unissued schedule for Dec borrowing.xls I, the Clerk of the Board of Selectmen of the Town of North Andover,Massachusetts, certify that at a meeting of the board held ,2009, of which meeting all members of the board were duly notified and at which a quorum was present,the following vote was unanimously passed, all of which appears upon the official record of the board in my custody: Voted: that the maximiun useful life of the departmental equipment listed below to be financed with the$545,000 appropriation authorized by the vote of the Town passed May 12,2009(Article 22,Line#1A)is hereby determined pursuant to G.L. c.44, §7(9)to be as follows: Purpose Appropriated Amount Maximum Useful Life Modular Classrooms $545,000 Years I further certify that the vote was taken at a meeting open to the public,that no vote was taken by secret ballot, that notice stating the place,date and time of the meeting was filed with the Town Clerk and a copy thereof posted in the office of the Town Clerk or on the principal, official bulletin board of the town at least 48 hours, including Saturdays but not Sundays and legal holidays,prior to the time of the meeting and remained so posted at the time of the meeting, that no deliberations or decision in connection with the vote were taken in executive session,and that the official record of the meeting was made available to the public promptly and remains available to the public, all in accordance with G.L. c.39,s.23B as amended. Dated: , 2009 Clerk of the Board of Selectmen BOS l 11 12434774.1 APPENDIX F This form is provided for the convenience of bidders but its use is not required PROPOSAL FOR $3,990,000* TOWN OF NORTH ANDOVER,MASSACHUSETTS GENERAL OBLIGATION REFUNDING BONDS,SERIES B December 2,2009 Ms.Jennifer Yarid,Treasurer/Collector Town of North Andover c/o UniBank Fiscal Advisory Services,Inc. 49 Church St. Whitinsville,MA 01588 Dear Ms.Yarid: Subject to the provisions and in accordance with the terms of the Notice of Sale dated November 18, 2009 which is hereby made a part of this proposal, we hereby offer to purchase all of the$3,990,000* General Obligation Series B Refunding Bonds,Book-Entry- Only, dated December 15,2009 of the Town of North Andover,Massachusetts described in said Notice of Sale, and to pay the Town $3,990,000*plus a premium of$ ,plus interest accrued on said Series B Bonds to the date of their delivery,provided that the Series B Bonds maturing in the several years set forth below shall bear interest from their dated date until maturity at the respective rates per annum stated in the following table: Year Rate* Year Rate* Year Rate* 2010 2015 2019 2011 2016 2020 2012 2017 2021 2013 2018 2022 2014 *Complete for maturing serial bonds TERM BONDS $ Term Bonds maturing on April 1, at %per annum $ Term Bonds maturing on April 1, at %per annum The undersigned hereby acknowledges the receipt of and the opportunity to examine the Preliminary Official Statement accompanying the said Notice of Sale. By Phone The following is our computation of the true interest cost and percent true interest cost,made as provided in the above-mentioned Notice of Sale,but not constituting any part of the foregoing proposal,of the purchase of$3,990,000*Series B Bonds under the foregoing proposal: *Preliminary,subject to change. True Interest Cost. $ Percent True Interest Cost. % (four decimals) UniBank Fiscal Advisory Services,Inc.will assist in submitting bids on this issue,if desired. Please sign a blank bid form and mail it in advance of the sale to David M.Eisenthal at the above address or fax it to(508)234-1938. UniBank Fiscal Advisory Services,Inc,will act as agent for bidders if they will telephone final figures to (508) 849-4222 approximately one-half hour before the sale. Bidders are responsible for any errors in bids submitted in this manner. F-1 APPENDIX E This form is provided for the convenience of bidders but its use is not required PROPOSAL FOR $6,446,222 TOWN OF NORTH ANDOVER,MASSACHUSETTS GENERAL OBLIGATION MUNICIPAL PURPOSE LOAN OF 2009 BONDS,SERIES A December 2,2009 Ms.Jennifer Yarid,Treasurer/Collector Town of North Andover c/o UniBank Fiscal Advisory Services,Inc. 49 Church St. Whitinsville,MA 01588 Dear Ms.Yarid: Subject to the provisions and in accordance with the terms of the Notice of Sale dated November 18, 2009 which is hereby made a part of this proposal,we hereby offer to purchase all of the$6,446,222 General Obligation Municipal Purpose Loan of 2008 Bonds,Series A,Book-Entry-Only, dated December 15, 2009 of the Town of North Andover, Massachusetts described in said Notice of Sale, and to pay therefore the price of $6,446,222 plus a premium of$ ,plus interest accrued on said Bonds to the date of their delivery,provided that the Bonds maturing in the several years set forth below shall bear interest from their dated date until maturity at the respective rates per annum stated in the following table: Year Rate* Year Rate* Year Rate* 2011 2018 2025 2012 2019 2026 2013 2020 2027 2014 2021 2028 2015 2022 2029 2016 2023 2030 2017 2024 *Complete for maturing serial bonds TERM BONDS $ Term Bonds maturing on January 15, at %per annum $ Term Bonds maturing on January 15, at %per annum $ Term Bonds maturing on January 15, at %per annum The undersigned hereby acknowledges the receipt of and the opportunity to examine the Preliminary Official Statement accompanying the said Notice of Sale. I By Phone The following is our computation of the true interest cost and percent true interest cost,made as provided in the above-mentioned Notice of Sale,but not constituting any part of the foregoing proposal,of the purchase of$6,446,222 Series A Bonds under the foregoing proposal: True Interest Cost. $ Percent True Interest Cost. % (four decimals) UniBank Fiscal Advisory Services,Inc.will assist in submitting bids on this issue,if desired. Please sign a blank bid form and mail it in advance of the sale to David M.Eisenthal at the above address or fax it to(508)234-1938.UniBank Fiscal Advisory Services,Inc.will act as agent for bidders if they will telephone final figures to (508) 849-4222 approximately one-half hour before the sale. Bidders are responsible for any errors in bids submitted in this manner. E-1 SECTION 9. Default. In the event of a failure of the Town to comply with any provision of this Disclosure Certificate any Owner of the Bonds may seek a court order for specific performance by the Town of its obligations under this Disclosure Certificate. A default under this Disclosure Certificate shall not constitute a default with respect to the Bonds, and the sole remedy under this Disclosure Certificate in the event of any failure of the Town to comply with this Disclosure Certificate shall be an action for specific performance of the Town's obligations hereunder and not for money damages in any amount. SECTION 10. Beneficiaries. This Disclosure Certificate shall inure solely to the benefit of the Owners of the Bonds from time to time, and shall create no rights in any other person or entity. Date: , 2009 TOWN OF NORTH ANDOVER, MASSACHUSETTS By Treasurer Selectmen i [EXHIBIT A: Filing Information for the MSRB] [EXHIBIT B: Form of Notice of Failure to File Annual Report] D-4 6. Adverse tax opinions or events affecting the tax-exempt status of the Bonds. 7. Modifications to rights of the Owners of the Bonds. 8. Bond calls. 9. Defeasances. 10. Release, substitution or sale of property securing repayment of the Bonds. 11. Rating changes. (b) Whenever the Town obtains knowledge of the occurrence of a Listed Event, the Town shall as soon as possible determine if such an event would be material under applicable federal securities laws and if so, the Town shall promptly file a notice of such occurrence with the MSRB. SECTION 6. Transmission of Information and Notices. Unless otherwise required by law, all notices, documents and information provided to the MSRB shall be provided in electronic format as prescribed by the MSRB and shall be accompanied by identifying information as prescribed by the MSRB. SECTION 7. Termination of Reporting_Obligation. The Town's obligations under this Disclosure Certificate shall terminate upon the legal defeasance in accordance with the terms of the Bonds, prior redemption or payment in full of all of the Bonds. SECTION 8. Amendment: Waiver. Notwithstanding any other provision of this Disclosure Certificate, the Town may amend this Disclosure Certificate and any provision of this Disclosure Certificate may be waived if such amendment or waiver is permitted by the Rule, as evidenced by an opinion of counsel expert in federal securities law (which may include bond counsel to the Town), to the effect that such amendment or waiver would not cause the Disclosure Certificate to violate the Rule. The first Annual Report filed after enactment of any amendment to or waiver of this Disclosure Certificate shall explain, in narrative form, the reasons for the amendment or waiver and the impact of the change in the type of information being provided in the Annual Report. If the amendment provides for a change in the accounting principles to be followed in preparing financial statements, the Annual Report for the year in which the change is made shall present a comparison between the financial statements or information prepared on the basis of the new accounting principles and those prepared on the basis of the former accounting principles. The comparison shall include a qualitative discussion of the differences in the accounting principles and the impact of the change in the accounting principles on the presentation of the financial information in order to provide information to investors to enable them to evaluate the ability of the Town to meet its obligations. To the extent reasonably feasible, the comparison shall also be quantitative. A notice of the change in the accounting principles shall be sent to the MSRB. D-3 documents comprising a package, and may cross-reference other information as provided in Section 4 of this Disclosure Certificate; provided that the audited financial statements of the Town may be submitted when available separately from the balance of the Annual Report. (b) If the Town is unable to provide to the MSRB an Annual Report by the date required in subsection (a), the Town shall send a notice to the MSRB, in substantially the form attached as Exhibit B. SECTION 4. Content of Annual Reports. The Town's Annual Report shall contain or incorporate by reference the following: (a) quantitative information for the preceding fiscal year of the type presented in the Town's Official Statement dated December _, 2009 relating to the Bonds regarding (i) the revenues and expenditures of the Town relating to its operating budget, (ii) capital expenditures, (iii) fund balances, (iv) property tax information, (v) outstanding indebtedness and overlapping debt of the Town, and (vi) pension obligations of the Town, and (b) the most recently available audited financial statements of the Town, prepared in accordance with generally accepted accounting principles, with certain exceptions permitted by the Massachusetts Uniform Municipal Accounting System promulgated by the Department of Revenue of the Commonwealth. If audited financial statements for the preceding fiscal year are not available when the Annual Report is submitted, the Annual Report will include unaudited financial statements for the preceding fiscal year and audited financial statements for such fiscal year shall be submitted when available. Any or all of the items listed above may be incorporated by reference from other documents, including official statements of debt issues of the Town or related public entities, which (i) are available to the public on the MSRB internet website or (ii) have been filed with the Securities and Exchange Commission. The Town shall clearly identify each such other document so incorporated by reference. SECTION 5. Reporting of Material Events. (a) The Town shall give notice, in accordance with subsection 5(b) below, of the occurrence of any of the following events with respect to the Bonds, if material: 1. Principal and interest payment delinquencies. 2. Non-payment related defaults. 3. Unscheduled draws on debt service reserves reflecting financial difficulties. 4. Unscheduled draws on credit enhancements reflecting financial difficulties. 5. Substitution of credit or liquidity providers, or their failure to perform. D-2 APPENDIX D PROPOSED FORM OF CONTINUING DISCLOSURE CERTIFICATE This Continuing Disclosure Certificate (the 'Disclosure Certificate") is executed and delivered by the Town of North Andover, Massachusetts (the "Town") in connection with the issuance of its $6,446,222 General Obligation Municipal Purpose Loan of 2009 Bonds, Series A, dated December 15, 2009 and its $3,990,000 General Obligation Refunding Bonds, Series B, dated December 15, 2009 (collectively, the 'Bonds"). The Town covenants and agrees as follows: SECTION 1. Purpose of the Disclosure Certificate. This Disclosure Certificate is being executed and delivered by the Town for the benefit of the Owners of the Bonds and in order to assist the Participating Underwriters in complying with the Rule. SECTION 2. Definitions. For purposes of this Disclosure Certificate the following capitalized terms shall have the following meanings: "Annual Report" shall mean any Annual Report provided by the Town pursuant to, and as described in, Sections 3 and 4 of this Disclosure Certificate. "Listed Events" shall mean any of the events listed in Section 5(a) of this Disclosure Certificate. "MSRB" shall mean the Municipal Securities Rulemaking Board as established pursuant to Section 15B(b)(1) of the Securities Exchange Act of 1934, or any successor thereto or to the functions of the MSRB contemplated by this Disclosure Certificate. Filing information relating to the MSRB is set forth in Exhibit A attached hereto. "Owners of the Bonds" shall mean the registered owners, including beneficial owners, of the Bonds. "Participating Underwriter" shall mean any of the original underwriters of the Bonds required to comply with the Rule in connection with offering of the Bonds. "Rule" shall mean Rule 15c2-12 adopted by the Securities and Exchange Commission under the Securities Exchange Act of 1934, as the same may be amended from time to time. SECTION 3. Provision of Annual Reports. (a) The Town shall, not later than [270] days after the end of each fiscal year, provide to the MSRB an Annual Report which is consistent with the requirements of Section 4 of this Disclosure Certificate. The Annual Report may be submitted as a single document or as separate Preliminary, subject to change. D-1 EDWARDsANGELL 1'ALMER.&DODGE as expressed in paragraph 4 below, we express no opinion regarding any other federal tax consequences arising with respect to the Bonds. 3. Interest on the Bonds is exempt from Massachusetts personal income taxes and the Bonds are exempt from Massachusetts personal property taxes. We express no opinion regarding any other Massachusetts tax consequences arising with respect to the Bonds or any tax consequences arising with respect to the Bonds under the laws of any state other than Massachusetts. 4. The Bonds are qualified tax-exempt obligations within the meaning of Section 265(b)(3) of the Code. This opinion is expressed as of the date hereof, and we neither assume nor undertake any obligation to update, revise, supplement or restate this opinion to reflect any action taken or omitted, or any facts or circumstances or changes in law or in the interpretation thereof, that may hereafter arise or occur, or for any other reason. The rights of the holders of the Bonds and the enforceability of the Bonds may be subject to bankruptcy, insolvency, reorganization, moratorium and other similar laws affecting creditors' rights heretofore or hereafter enacted to the extent constitutionally applicable, and their enforcement may also be subject to the exercise of judicial discretion in appropriate cases. Edwards Angell Palmer&Dodge LLP C-4 ED WAKDS ANGELL PALMER&, DODGE t.t.i, I l I I luntington Avenue Bosmn,IMA 02199 617.239.0100 fax 617,227-4420 capdIaNv 0m (Date of Delivery) Jennifer Yarid, Treasurer Town of North Andover North Andover, Massachusetts $3,990,000 Town of North Andover,Massachusetts General Obligation Refunding Bonds, Series B Dated December 15, 2009 We have acted as bond counsel to the Town of North Andover, Massachusetts (the"Town") in connection with the issuance by the Town of the above-referenced bonds (the"Bonds"). In such capacity, we have examined the law and such certified proceedings and other papers as we have deemed necessary to render this opinion. As to questions of fact material to our opinion we have relied upon representations and covenants of the Town contained in the certified proceedings and other certifications of public officials furnished to us, without undertaking to verify the same by independent investigation. Based on our examination, we are of the opinion, under existing law, as follows: 1. The Bonds are valid and binding general obligations of the Town and, except to the extent they are paid from other sources, the principal of and interest on the Bonds are payable from taxes which may be levied upon all taxable property in the Town, subject to the limit imposed by Chapter 59, Section 21C of the General Laws. i 2. Interest on the Bonds is excluded from the gross income of the owners of the Bonds for federal income tax purposes. In addition, interest on the Bonds is not a specific preference item for purposes of the federal individual or corporate alternative minimum taxes. However, such interest is included in adjusted current earnings when calculating corporate alternative minimum taxable income. In rendering the opinions set forth in this paragraph, we have assumed compliance by the Town with all requirements of the Internal Revenue Code of 1986 that must be satisfied subsequent to the issuance of the Bonds in order that interest thereon be, and continue to be, excluded from gross income for federal income tax purposes. The Town has covenanted to comply with all such requirements. Failure by the Town to comply with certain of such requirements may cause interest on the Bonds to become included in gross income for federal income tax purposes retroactive to the date of issuance of the Bonds. Except Preliminary, subject to change C-3 EDWARDS ANGELL PALMER&DODGE 3. Interest on the Bonds is exempt from Massachusetts personal income taxes and the Bonds are exempt from Massachusetts personal property taxes. We express no opinion regarding any other Massachusetts tax consequences arising with respect to the Bonds or any tax consequences arising with respect to the Bonds under the laws of any state other than Massachusetts. 4. The Bonds are qualified tax-exempt obligations within the meaning of Section 265(b)(3) of the Code. This opinion is expressed as of the date hereof, and we neither assume nor undertake any obligation to update, revise, supplement or restate this opinion to reflect any action taken or omitted, or any facts or circumstances or changes in law or in the interpretation thereof, that may hereafter arise or occur, or for any other reason. The rights of the holders of the Bonds and the enforceability of the Bonds may be subject to bankruptcy, insolvency, reorganization, moratorium and other similar laws affecting creditors' rights heretofore or hereafter enacted to the extent constitutionally applicable; and their enforcement may also be subject to the exercise of judicial discretion in appropriate cases. Edwards Angell Palmer&Dodge LLP C-2 PROPOSED FORMS OF LEGAL OPINIONS APPENDIX C EDWARD$ ANGELL PALMER&DODGE UT ]I I Huntington Avenue Bostwt,MA 02199 617.239.0100 fax 617.227.4420 eapolatv.com (Date of Delivery) Jennifer Yarid, Treasurer Town of North Andover North Andover, Massachusetts $6,446,222 Town of North Andover, Massachusetts General Obligation Municipal Purpose Loan of 2009 Bonds, Series A Dated December 15, 2009 We have acted as bond counsel to the Town of North Andover, Massachusetts (the"Town") in connection with the issuance by the Town of the above-referenced bonds (the"Bonds"). In such capacity, we have examined the law and such certified proceedings and other papers as we have deemed necessary to render this opinion. As to questions of fact material to our opinion we have relied upon representations and covenants of the Town contained in the certified proceedings and other certifications of public officials furnished to us, without undertaking to verify the same by independent investigation. Based on our examination, we are of the opinion, under existing law, as follows: 1. The Bonds are valid and binding general obligations of the Town and, except to the extent they are paid from other sources, the principal of and interest on the Bonds are payable from taxes which may be levied upon all taxable property in the Town, subject to the limit imposed by Chapter 59, Section 21C of the General Laws. 2. Interest on the Bonds is excluded from the gross income of the owners of the Bonds for federal income tax purposes. In addition, interest on the Bonds is not a specific preference item for purposes of the federal individual or corporate alternative minimum taxes. However, such interest is included in adjusted current earnings when calculating corporate alternative minimum taxable income. In rendering the opinions set forth in this paragraph, we have assumed compliance by the Town with all requirements of the Internal Revenue Code of 1986 that must be satisfied subsequent to the issuance of the Bonds in order that interest thereon be, and continue to be, excluded from gross income for federal income tax purposes. The Town has covenanted to comply with all such requirements. Failure by the Town to comply with certain of such requirements may cause interest on the Bonds to become included in gross income for federal income tax purposes retroactive to the date of issuance of the Bonds. Except as expressed in paragraph 4 below, we express no opinion regarding any other federal tax consequences arising with respect to the Bonds. C-1 This pate intentionally left blank. Sewer Fund Os&ood Hill Fund Variance Variance Original Final Positive/ Original FFinal Positive/ Budget Budget Actual (Negative) Budget Budget Actual (Negative) 9, 3,662,131 3,662,131 $ 3,674,811 $ 12,680 $ 520,000 $ 520,000 $ 257,694 $ (262,306) 16,000.. 16,000 . 14,856 1,144) - - 3,678,131 3,678,131 3,689,667 11,536 520,000 320,006 257,694 262,306 685,405 685,405 641,801 43,604 448,609 448,609 383,467 65,142 1,320,613 1,320,613 1,253,042 67,571 - - _ 1,350,405 1,350,405 1,329,92,5 ,. 20,480. 3,356,423. 3,356,493._ 3,224,768 _ 131,655. his 009 -. x,}48,609: 383,467„ 65,142 321,708 321,708 464,895 143,191 71,391 71,391 (125,773) (197,164) (521,102) (521,102) .(519,829) 1,27.3 - = (199,394) (199,394) (54,930) '1441164 71,391 71,391 (125,773) (197,164) (352,238) (352,238) (352,238) (71,341). (71391) 71,391 (551,632) (551,632) (407,168) 144,164 - - (197,164) (197,164) 1,425,867 . 1,425,867 1,425,867 - 19,221. 19,221_ 19,221. $ 874,235 $ 874,235 $ 1,018,699 $ 144,464.. $ 19,221 $ 19,221 $ 177,943 $ (197,164) Town of NorthAndover,Massachusetts B-71 Additional Information ENTERPRISE FUNDS SCHEDULE OF REVENUES, EXPENSES AND CHANGES IN FUND NET ASSETS BUDGETARY BASIS-BUDGET AND ACTUAL I FOR THE FISCAL YEAR ENDEDJUNE_30,2008 ._. ..... Water,F.µnd. _ Variance Original Final Positive/ Budget Budget Actual (Negative) OPERATING REVENUES Charges for services................................:........................... $ 5,432,714 $ 5,432,714 $ 5,679,594 $ 246,880 Penalties and interest........................................................... 19,000 19,000 19,850 850 TOTAL OPERATING REVENUES...............................: 5,451,714 5,451,714 5,699,444 247,730 OPERATING EXPENSES Cost of service and administration......................................... 2,050,934 2,050,934 1,805,968 244,966 GLSDassessment...................... - - Debt service-principal........................................................ 2,199,231 2,089,231 1,987,371 101,860 TOTAL OPERATING EXPENDITURES......................... 4,250,165 4,140,165 3,793,339 346,826 EXCESS(DEFICIENCY)OF REVENUES OPERATING INCOME(LOSS)............................................. 1,201,549 1,311,549 1,906,105 594,556 NONOPERATING REVENUES(EXPENSES) Interest expense................................................................. (612,940)_ (612,940) (511,646) 101,294 INCOME(LOSS)BEFORE TRANSFERS........................ 588,609 698,609 1,394,459 695,850 TRANSFERS Transfers out..........::.................................I.............I.......... (649,462) (759,462) (759,462) _ CHANGE IN FUND NET ASSETS............................................. (60,$53) (60,853) 634,997 695,850 FUND NET ASSETS AT BEGINNING OF YEAR.......................... 486,357 486,357 486,357 FUND NET ASSETS AT END OF YEAR...................................... $ 425,504 $ 425,504 $ 1,121,354 $ 695,850 Town of North Andover,Massachusetts B-70 Additional Information Additional Information B-69 No*to IZpqutred Supplementa Information.. For the Fiscal Year Ended June 30,2008 Actuarial assumptions: Investment rate of return: 8.50% Projected salary increases: 5.00% Cost of living adjustments: 3.00% of first$12,000 of retirement income I i i i i i I Town of North Andover,Massachusetts B_68 Required Supplementary_/Information Notes to Required Supplementary Information For the Fiscal Year Ended June 30,2008 NOTE A-BUDGETARY-GAAP RECONCILIATION Budgetary-GAAP Reconciliation For budgetary financial reporting purposes,the Uniform Massachusetts Accounting System basis of accounting (established by the Commonwealth)is followed,which differs from the GAAP basis of accounting. A reconciliation of budgetary-basis.to GAAP-basis results for the general fund for the fiscal year ended June 30, 2008,is presented below: Revenues Expenditures Budgetary basis as reported on the schedule of revenues,expenditures and changes in fund balance-budget and actual...................................................... $ 72,917,948 $ 74,958,418 Adjustments Net change in recording 60-day receipts..................................... 40,386 Net change in recording tax refunds payable............................... (309,126) To record MTRS on-behalf payments........................................:.: 5,717,320 x;717;320` Net change in recording short-term interest accrual...................... - To account for encumbrances and continuing appropriations......... GAAP basis as reported on the statement of revenues, expenditures and changes in fund balances................................. $ 78,366,528 $ 79,941,569 NOTE B-PENSION PLAN :Additional information as of the latest actuarial valuation is as follows: Valuation date: January 1,2006 Actuarial cost method: Entry Age Normal Cost Method Amortization method: Approximate level percent of payroll based on 4.5% annual increases; except level dollar for ERI liability for certain units Remaining amortization period: As of July 1,2006,2 years remaining for 1992 ERI liability;schedules as selected by the units for 2002 ERI liability,schedules as selected by units for 2003 ERI liability and 22 years for remaining unfunded liability Asset valuation method: A preliminary actuarial value is first determined by taking the actuarial value of assets at the beguuung of the year and adding assumed investment earnings(as the assumed actuarial rate of return) and the net new money during the year(contributions less benefit payments and administrative expenses). Twenty percent of the difference between the market value of assets and the preliminary actuarial value is added to the preliminary actuarial value. In order that the actuarial value not differ to significantly from the market value of assets,the final actuarial value of assets must be within 20% of the market value of assets. Town of North Andover,Massachusetts B-67 Required Supplementary Information PENSION PLAN SCHEDULES The following schedules provide information related to the System as a whole,for which the Town is one participating employer: SCHEDULES OF FUNDING PROGRESS(SYSTEM) Actuarial UAAL as a Actuarial Accrued Unfunded Percentage Actuarial Value of Liability(AAL) AAL Funded Covered of Covered Valuation Assets Entry Age (UAAL) Ratio Payroll Payroll Date (A) (B) (B-A) (A/B) (C) -A)/C) 01/01/06 $ 261,327,047 $ 375,593,562 $ 114,266,515 69.6% $ 98,641,094 115.8% 01/01/04 229,852,971 333,396,222 103,543,251 68.9% 93,404,002 110.9% 01/01/02 218,346,198 287,390,715 69,044,517 76.0% 85,005,338 81.2% 01/01/00 190,363,700 253,847,100 63,483,400 75.0% 69,525,900 91.3% 01/01/99 180,034,700 268,386,000 88,351,300 67.1% 89,645,300 98.6% 01/01/98 151,293,900 245,965,100 94,671,200 61.5% 85,785,000 110A% SCHEDULE EMPLOYER CONTRIBUTIONS (SYSTEM) Annually Required Percentage of Year Ended Contributions ARC December 31 (ARC) Contributed(%) 2002 $ 11,237,100 100 2003 11,784,852 100 2004 12,648,657 100 2005 14,609,198 100 2006 15,274,181 100 2007 16,294,571 100 The following schedule provides information related to the Town s portion of the System s ARC: i TOWN SHARE OF SYSTEM ARC Percentage of Town ARC Fiscal Year ARC as a Percentage of Ended ARC Contributed(%) stem ARC(%) 2003 x':: 1,569,691 100 14.0% 2004 1,693,461 100 14.4% 2005 1,946,329 100 15.47o 2006 2,181,588 100 14.9 2007 2,227,020 100 14.6% 2008 2,264,500 100 13.9% Town of North Andover,Massachusetts B-66 Required Supplementary Information Current Year Actual and Encumbrances Encumbrances Variance and Continuing and Continuing Positive/ Actual Appropriations Appropriations (Negative) 51,917,558 $' - ; 51,917,558 $ (690,653) 4,068,018 4,068,018 (277,196) 357,435 - 357,435 357,435 1,576,552 - 1,576,552 184,010 $28,544 828,544 2,714 10,687,493 10,687,493 578,325 292,512 - 292,512 59,512 1,536,606 1,536,606 200,206 169,526 169,526 55,526 634,707 - 634,707 {27,982) 848,997 ___ 848,997 (151,003) 72,917,948 - 72,917,948_ 290,894. 2,368,330 115,100 2,483,430 69,670 8,493,189 123,430 8,616,619 7,436 35,602,795 308,957 35,911,752 32,253 4,292,691 131,179 4,423,870 51,182 808,840 1,931 810,771 3,427 772,118 6,316 778,434 6,275 2,261,142 - 2,261,142 8,890,836 8,890,836 367 322,592 322,592 - 2,200,498 - 2,200,498 (17,172) 6,094,566 -. 6,094,566 101,193 2,163,908. 2,163,908 (56,908 74,271,505 686,913 74,958,418 197,723 (1,353,557) (686,913). (2,040,470) 488,617 1,178,418 1,178,418 247,327 12,615 12,615 12,615 (473,995) (473,995) 717,038_ _.. 717,038.. 259,942 (636,519) (686,913) (1,323,432) 748,559 4,959,246 4,959 246 4,959,246 4,272,333.:$ 3 635, 14 $. 748,559 Town of North Andover,Massachusetts B-65 Required Supplementaq Information GENERAL FUND SCHEDULE OF REVENUES,EXPENDITURES AND CHANGES IN FUND BALANCE BUDGET AND ACTUAL FOR THE FISCAL YEAR ENDED JUNE 30,200B Prior Year Encumbrances Supplemental and Continuing Original Appropriations Final Appropriations Budget and Transfers. Budget REVENUES Real estate and personal property taxes..............::................ $ r $ 52,608,211 $ $ 52,608,211 Motor vehicle and other excise taxes...............:.................... 4,345,214 4,345,214 Tax liens .. .. Payments in lieu of taxes............. .......—.................:....... 1,392,542 1,392,542 Charges for services................................................••...... 825,830 - 825,830 Intergovernmental.....................................................::... - 10,109,168 - 10,109,168 Penalties and interest on taxes........................................... 233,000 233,000 Licenses,permits and fees................................................. 1,336,400 1,336,400 Fines and forfeitures................................................:....... 114,000 114,000 Departmental................................................................. - 662,689 662,689 Investment income.. . .. .. __ 1,000,000 _ 1,000,000 TOTAL REVENUES...,.,...,.- 72,627,054 - 72,627,054 EXPENDITURES Current: General government................................................... 26,006 2,534,224 (7,130) 2,553,100 Public safety.............................................................. 41,305 8,627,242 (44,492) 8,624,055 Education..................................1...I...............:.......... 374,016 35,568,518 1,471 35,944,005 Public works..................................:.......................... 121,721 3,966,875 386,456 4,475,052 Health and human services.........................................- 182 848,664 (34,648) 814,198 Culture and recreation.................................................. 12,917 801,060 (29,268) 784,709 Pension benefits;,...................................................... - 2,247,155 13,987 2,261,142 Employee benefits...................................................... 6,000 8,994,352 (109,149) 8,691,203 Property and liability insurance.,:.................................. - 499,819 (177,227) 322,592 State and county charges..............................;................... 2,183,326 2,183,326 Debt service: Principal.................................................................. 6,195,759 6,195,759 Interest.................................................................... - 2,107,000 2,107,000 TOTAL EXPENDITURES......................................... 582,147_ 74,573,994 75,156,141 EXCESS(DEFICIENCY)OF REVENUES OVER EXPENDITURES................................................... (582,147) (1,946,940) (2,529,087) OTHER FINANCING SOURCES(USES) Transfers in..i.;................................ ......... ................ 931,091 931,091 Premium from issuance of bonds and notes........................... - Transfers out.................................................................. (473,995) (473,995) TOTAL OTHER FINANCING SOURCES(USES)........... 457,096 457,096. NET CHAMA IN FUND BALANCE....................................... (582,147) (1,489,844) (2,071,991) FUND BALANCE AT BEGINNING OF YEAR........................... _4,959,246 4 959,246,. 4,959,246 __.: 4,959,246 FUND BALANCE AT END OF YEAR:..................................... $ 4,377,099 $ 3,469,402 $ 4,959,246 $ 2,887,255 See notes to basic financial statements. Town of North Andover,Massachnsetts B-64 Required Supptementanj Information �I i i i i Required Supplementary Information Town of North Andover,Massachusetts B_63 Required Supplementarij Information This pate intentionally left blank. I B-62 Notes to Basic Financial Statements For the Fiscal Year Ended June 30,2008 ➢ Statement#51,Accounting and Financial Reporting for Intangible Assets,which is required to be implemented during fiscal year 2010. The Town is currently evaluating the effect that this Statement will have on its basic financial statements. ➢ Statement#52,Land and Other Real Estate Held as Investments by Endowments,which is required to be implemented during fiscal year 2009. The Town is currently evaluating the effect that this Statement will have on its basic financial statements. ➢ Statement#53,Accounting and Financial Reporting for Derivative Instruments,which is required to be implemented during fiscal year 2010. The Town is currently evaluating the effect that this Statement will have on its basic financial statements. I These pronouncements will be implemented by their respective due dates. Town of North Andover,Massachusetts Basic Financial Statements B-61 Notes to Basic Financial_Statements For the Fiscal Year Ended.June,_30,2008 NOTE 13-CONTINGENCIES Various legA arUPW anti clarrris"ire-end, -g V:Mst- Town►; Lltigatzon js suBJect:#o,rnan.un=extainhes;;:arid the outcoute of individual'Iikigatod zrtatters is nai always predietabl�, Although the;airtouzit of liability,if any,_at June 30,2408,cannot be ascex(ampd,xxtanage alt WidVes any liability should.,not miter ly.affect the!:, financial position of the Town at June 30,2008. The Town participates in a number of federal award programs. Although the grant programs have been audited in accordance with the provisions of the Single Audit Act Amendments of 1996 through June 30,2008,these programs are still subject to financial and compliance audits. The amount,if any,of expenditures which may be disallowed by the granting agencies cannot be determined at this time,although the Town expects such amounts, if any,to be immaterial. NOTE 14-PRIOR PERIOD ADJUSTMENT The Town has restated the beginning net assets of its business-type activities and water and sewer enterprise funds. The details of the adjustments are as follows: Business-type Water Sewer Activities Fund balances at June 30,2007,as previously reported...... $ 13,958,288 ' 17t1%251.6 $ 31,256,614 To restate accounts receivable........................................ 153,494 J157,pv), (3,555) Fund balances at June 30,2007,as restated....................... $ 14,111,782 1 ; 32; 7 $ _ 31,253,059 NOTE 15-IMPLEMENTATION OF GASB PRONOUCEMENTS ➢ Statement#43,Financial Reporting for Postemployment Benefit Plans Other Than Pension Plans. The implementation of this Statement had no impact on the financial statements. ➢ Statement#48,Sales and Pledges of Receivables and Future Revenues and Intra-Entihj Transfers of Assets and Future Revenues.The implementation of this Statement had no impact on the financial statements. ➢ Statement#50,Pension Disclosures. This Statement enhances pension disclosures in the notes to financial statements(see page 57)and required supplementary information(see pages 63-65)by state and local government employers that provide pension benefits. NOTE 16-FUTURE IMPLEMENTATION OF GASB PRONOUCEMENTS The GASB has issued the following statements: ➢ Statement#45,Accounting and Financial Reporting by Employers for Postemployment Benefits Other Than Pensions,which is required to be implemented during fiscal year 2009. The Town is currently evaluating the effect that this Statement will have on its basic financial statements. ➢ Statement#49,Accounting and Financial Reporting for Pollution Remediation Obligations,which is required to be implemented during fiscal year 2009. The Town is currently evaluating the effect that this Statement will have on its basic financial statements. Town of North Andover,Massachusetts Basic Financial Statements B-60 Notes to Basic Financial Statements For the Fiscal Year Ended June 30,2008 NOTE 10-PENSION PLAN Plan Description-The Town contributes to the Essex Retirement System(System),a cost-sharing multiple- employer defined benefit pension plan administered by the Essex County Retirement Board. Substantially all employees of the Town are members of the System,except for public school teachers and certain administrators who are members of the Massachusetts Teachers Retirement System, Chapter 32 of the MGL assigns authority to establish and amend benefit provisions of the plan. The System provides retirement,disability and death benefits to plan members and beneficiaries. Cost-of-living adjustments granted between 1981 and 1997 and any increases in other benefits imposed by the Commonwealth's state law during those years are borne by the Commonwealth and are deposited into the pension fund. Cost-of living adjustments granted after 1997 must be authorized by the Essex Retirement Board and are borne by the System. The System issues a publicly available report in accordance with guidelines established by the Commonwealth's Public Employee Retirement Administration Commission. That report may be obtained by contacting the System located at 36 Federal Street,Salem,Massachusetts,01970. Funding Policy-Chapter 32 of MGL governs the contributions of plan members and the Town. Plan members are required to contribute to the System at rates ranging from 5% to 11% of annual covered compensation. The Town is required to pay into the System its share of the system-wide actuarial determined contribution that is apportioned among the employers based on annual covered payroll. The Town's contributions to the System for the fiscal years ended June 30,2008,2007,and 2006 were$2,264,500,$2,227,020,and$2,181,588,respectively, which equaled its required contribution for each fiscal year. NOTE 11-MASSACHUSETTS TEACHERS RETIREMENT SYSTEM Public school teachers and certain administrators are members of the Massachusetts Teachers Retirement System, to which the Town does not contribute. Pension benefits and administrative expenses paid by the Teachers Retirement Board are the legal responsibility of the Commonwealth. The amount of these on-behalf payments totaled approximately$5,717,000 for the fiscal year ended June 30,2008,and,accordingly,are reported in the general fund as intergovernmental revenues and pension expenditures. NOTE 12-COMMITMENTS The Town has entered into contracts totaling approximately$7,754,000 for a new police station,new preschool, Franklin school roof replacement and roadway improvements. The Town has entered into,or is planning to enter into,contracts totaling approximately$875,000 for improvement projects related to its water and sewer distribution systems. The Town has entered into an agreement with Wheelabrator,Inc.to dispose a minimum tonnage of solid waste and make certain minimum payments for such disposal at Wheelabrator,Inc:s facility located within the Town. These payments are unconditionally obligated without regard to any tonnage at the facility and whether or not the facility continues in operation. The Town's cost under the agreement totaled approximately$593,000 for the fiscal year ended June 30,2008. As host community of the waste-to-energy facility(owned and operated by WNAI),the Town receives a "Payment in Lieu of Taxes (PILOT)"that is equal to$2.05 for each ton of waste processed. This amount is adjusted annually for changes in the Boston consumer price index and totaled approximately$1,287,000 during fiscal year 2008. Town of North Andover,Massachusetts :Basic Financial Statements B-59 Notes to Basic Financial Statements For the Fiscal Year Ended June 30,2008 Balance Balance June 30, June 30, Current 2007 Increases Decreases 2008 Portion Governmental Activities: Bonds and notes payable,gross..... $ 50,577,395 $: . 3OK026 `: (26,414,566) $ 38,148,855 $ 6,362,704 Unamortized deferred loss on ref undings........................... (486,252) ?3 , 96.: 65,205 (1,154,843) 134,366 Bonds and notes payable,net........ 50,091,143 =13;2$2;230 (26,349,361) 36,994,012 6,228,338 Compensated absences................ 1,408,844., ls;$Q 1,524,649 152,465 Total......................................... $ 51,499,987 $ 13,368,035 $ (26,349,3611 $ 38,518,661 $ _ 6,380,803 Business-type Activities: Bonds and notes payable,gross..... $: 30781$117 $ Q,376,6?9: $ (5,857,233)° $ 35,338,363 $ 3,864,467 Unamortized deferred loss 4;23., 428,732 on refundings........................... 81 _ .{422,7;8.8) (87;96 ( ) 90,219 Bonds and notes payable,net........ 3_.E1,39662,9 10,28$,? 2 (5;775; 14.}: 34,909,631 3,774,248 Courtjudgments......................... 6;000)` 168,900 56,000 Total......................................... $ 30,620,629 $ 10,288,712 $ (5,831,710) $ 35,077,631 $ 3,830,248 The governmental activities long-term liabilities are generally liquidated by the general fund,except for bond principal and interest costs related to the community preservation fund(major fund), NOTE 9-RISK FINANCING The Town is exposed to various risks of loss related to torts;theft of,damage to and destruction of assets;errors and omissions;and natural disasters for which the Town carries commercial insurance. The Town participates in a premium-based workers'compensation plan for its active and retired employees. The Town is self-insured for its health insurance activities. These activities are accounted for in the internal service fund where revenues are recorded when earned and expenses are recorded when incurred. Health Insurance The estimated"Incurred But Not Reported(IBNR)"claims are based on actual and historical lag claims. The liability at June 30,2008 totaled$456,306. Changes in the reported liability since July 1,2006,are as follows: Current Year Balance at Claims and Balance at Beginning of Changes in Claims Fiscal Fiscal Year Estimate Payments Year-end . Fiscal year 2007................... $ 1,140,814 $ 8,039,341 $ (8,310,648) $ 869,507 Fiscal year 2008................... $ 869,507 $ 8,310,142 $ (8,723,343) $ 456,306 Town of North Andover,Massachusetts Basic Financial Statements B-58 Notes to Basic Financial Statements For the Fiscal Year.Ended June 30,2008 Details of the advance refunding by major fund are as follows: General Water Sewer Description: Fund Enterprise Enterprise Total Net loss on refunding: Refunding bonds issued........ $ 12,500,000 $ 1,888,108 $ 656,$92" $ 15,045,000 Equity contribution*............. 8,435,555 - 8,435,555 Refunding bonds premium.... 182,791 19,027 5,744 207,558 Refunded bonds defeased...... (20,320,000) (1,833,500) 03£;500) (22,790,000) Bond issuance costs::. (64,550) (8,791) {3A09) (76,350) Net loss on refunding........... $ 733,796 $ 64,844 $ X3,123 $ _821,763 Net change in debt service payments................. $ (1L,420,171 $ (77,139) $ (30,309) $ (11,527,619) Economic gain..................... $ 1 1,094,564 $ 59,086 $ 28,534 $ 1,182,184 *During fiscal year 2008,the MSBA provided lump sum final reimbursements for the Middle School and Thomson School construction projects totaling$8,859,481. From this amount,$8,435,555 was used to partially fund the refunding of the related school construction bonds previously issued. The Town is subject to various debt limits by statute and may issue additional general obligation debt under the normal debt limit. At June 30,2008,the Town had the following authorized and unissued debt: Purpose Amount Public safety projects................................... $ 5,956,143 Education projects...................................... 2,829,249 Public worl<s projects................................... 1,336,432 Other general governmental projects.............. 1,018,400 Water projects............................................ 875,000 Sewer projects............................................ 750,000 Total....................................................... $ 12,765 223, *At June 30,2008,several BAN's totaling$2,144,430 were outstanding related to these authorizations. Changes in Long-Term Liabilities During the fiscal year ended June 30,2008,the following changes occurred in long-term liabilities: Town of North Andover,Massachusetts Basic Financial Statements B-57 Notes to Basic Financial Statements For the Fiscal Year Ended June 30,2008 Debt service requirements for gross principal and interest for sewer enterprise fund bonds and notes payable in future fiscal years are as follows: Fiscal Year Principal Interest Total 2009..........$ 1,589,723 $ 800,023 $ 2,389,746 2010.......... 1,597,460 774,599 2,372,059 2011.......... 1,620,529 690,657 2,311,186 2012.......... 1,661,635 625,072 2,286,707 2013.......... 1,645,755 551,440 2,197,195 2014.......... 1,680,199 483,419 2,163,618 2015.......... 1,704,476 403,018 2,107,494 2016.......... 1,314,849 327,963 1,642,812 2017.......... 1,056,057 268,653 1,324,710 2018.......... 1,066,057 217,236 1,283,293 2019.......... 864,600 168,111 1,032,711 2020.......... 839,600 128,402 968,002 2021.......... 589,600 93,736 683,336 2022.......... 429,600 69,930 499,530 2023.......... 209,600 50,328 259,928 2024.......... 204,601 41,682 246,283 2025.......... 204,601 32,986 237,587 2026.......... 194,601 114,109 308,710 2027.......... 189,601 66,104 255,705 2028.,,;:.:..,. 171,900 . 7,482 178,482 Total......... $ 18,834,144 $. 5,914,950 $ 24,749,094 During fiscal year 2008,the Town issued$6,411,316 in general obligation bonds for historic center roadway,olde center roadway,Franklin school roof,departmental vehicles,ambulance replacement,mosquito brook drainage, water mains,water meter replacement,Waverly road,sewer watershed and waste water management. The Town also issued MWPAT drinking water bonds in the amount of$2,906,389. The Town receives subsidy assistance from the Massachusetts Water Pollution Abatement Trust(MWPAT). Principal and interest on the outstanding bonds for MWPAT is subsidized over the life of the bonds to assist the Town in the repayment of this future debt. During fiscal year 2008,the Towr s subsidy totaled approximately $280,300. Future subsidies total approximately$2,428,000. The amount of MWPAT bonds outstanding at June 30, 2008,totaled$10,865,907. Advanced Refunding During fiscal year 2008,the Town issued$15,045,000 of general obligation refunding bonds,combined with an equity contribution of$8,435,555,to provide resources to purchase U.S.Government securities that were placed in an irrevocable trust for the purpose of generating resources for all future debt service payments of$14,354,445 of general obligation bonds. As a result,the refunded bonds are considered to be defeased and the liability has been removed from the government-wide financial statements. The reacquisition price exceeded the net carrying amount of the old debt by$821,763. This amount is being netted against the new debt and amortized over the remaining life of the refunded debt,which is 10 years. The advance refunding was undertaken to reduce total debt service payments over the next 11 years by$11,527,619 and resulted in an economic gain of$1,182,183. Town of North Andover,Massachusetts Basic Financial Statements B-56 Notes to Basic Financial Statements For the Fiscal Year Ended June 30,2008 Bonds and Notes Payable-Sewer Enterprise Fund Outstanding Outstanding Interest at June 30, at June 30, Project Rate 2007 Additions Reductions 2008 7. MWPAT .,........ ,. ...... 3.7-5.4% $ 408,476 $ $' (41,634) ':$ 366,842 MWPAT.. ........... ........ 3.4-5.4% 353,962 (36,078) 31.7,884 MWPAT................................... ,. 3.4-5.4% 503,873 - (51,357) 452,516 Municipal Purpose Loan of 1996... . 4.0-5.2% 260,555 - (67,476) 193,079 Municipal Purpose Loan of 1998.... 4.3-5.4% 335,700 (335,700) - Municipal Purpose Loan of 1998... .. . . .. 4.3-6.0% 425,000 (385,000) 40,000 MWPAT....................................................... 2.8-3.4% 774,979 (50,368) 724,611 MWPAT..........................:..,.:...::..;::::,;.::. ;: ,, 2.8-3.4% 288,626 (19,053) 269,573 MWPAT _:= 2.8-3.4% 1,042,524 (67,443) 975,081 MWPAT,..... >.. 2.8-3.5% 198,842 (12,616) 186,226 MWPAT............ :...::. ,,, 2.8-3.5% 162,322 - (10,503) 151,819 MWPAT 2.8-3.5% 120,781 (6,740) 114,041 MWPAT 2.6-2.8% 1,885,931 (110,905) 1,775,026 Municipal Purpose Loan of 2001.;,. , 4.0-4.8% 840,000 (85,000) 755,000 Municipal Purpose Loan of 2002-1 __ 4.0-5.1% 3,420,000 (230,000) 3,190,000 . .. Municipal Purpose Loan of 2003....................... 2.3-3.7% 2,973,649 (291,942) 2,681,707 Municipal Purpose Loan of 2005.,,,,,,,......... 3.0-4.0% 1,298,424 (166,288) 1,132,136 Municipal Purpose Loan of 2005,,.....,:.:..,;,,::,;.: 3.0-4.0% 326,230 - (20,509) 305,721 Sewer Extension............................................ 3,6-4.5% 668,350 (47,650) 620,700 Waverly Road............................................... 3.7-5.0% _ 3,693,420 3,693,420 Sewer Watershed........................................... 3.7-5.0% 200 200 Wastewater Management................................ 3.7-5.0% 231,670 - 231,670 Municipal Purpose Loan of 1998-Refunding...... 3.0-4.0% 301,892 - 301,B92 Municipal Purpose Loan of 1998-Refunding...... 3.0-4.0% 355,000 355,000 Sub-total __ 16,288,224 4,582,182 (2,036,262) 18 834,144 Deferred loss on refundings............................. (36,078) (23,123) 6;751 (52,450) Total sewer enterprise fund,net....................... $; 16,252,146 $ 4,559,059 $ (2,029,511) Town of North Andover,Massachusetts Basic Financial Statements B-55 Notes to Basic Financial Statements For the Fiscal Year Ended June 30,2008 Debt service requirements for gross principal and interest for water enterprise fund bonds and notes payable in future fiscal years are as follows: Fiscal Year Principal Interest Total 2009...........$ 2,274,744 $ 567,148 $ 2,841,892 2010........... 2,203,783 486,424 2,690,207 2011........... 2,195,046 387,672 2,582,718 2012........... 1,721,925 308,828 2,030,753 2013........... 1,575,378 236,837 1,812,215 2014........... 1,017,642 174,086 1,191,728 2015........... 1,012,122 139,515 1,151,637 2016........... 637,701 103,629 741,330 2017........... 407,058 83,072 490,130 2018........... 412,453 70,302 482,755 2019........... 277,957 58,148 336,105 2020........... 283,573 52,532 336,105 2021........... 289,301 46,803 336,104 2022: 295,146 40,959 336,105 2023.1,,,....., 301,108 34,997 336,105 2024>;, ,....... 307,191 28,914 336,105 2025....,...... 313,397 22,708 336,105 2026........... 319,729 16,377 336,106 2027....,,,.,,,. 326,188 9,918 336,106 2028.:,,.,....,;. 332,777 3,328 336,105 Tofil.., ,,;;,; $ 16,504,219 $ 2,872,197 $ 19,376,416 i Town of North Andover,Massachusetts Basic Financial Statements B-54 Notes to Basic Financial Statements For the Fiscal Year Ended June 30,2008 Bonds and Notes Payable—Water Enterprise Fund Outstanding Outstanding Interest at June 30, at June 30, Project Rate 2007 Additions _Reductions 2008 Municipal Purpose Loan of 1996..:,.....:.: <;:;: .;:.: 4.0-5.2% $ 1,184,444 $ $' (337,523) $ 846,921 Municipal Purpose Loan of 199&:;. .:.:..:.::::.::::... 4.5-5.4% 2,174,300 - (2,174,300) Municipal Purpose Loan of 2001 :;,,;,,.; ,;.;; ..:,.... 4.0-4.2% 260,000 - (65,000) 195,000 Municipal Purpose Loan of 2002...,..:,.:..........:.... 4.0-4.5% 1,206,250 - (300,000) 906,250 Municipal Purpose Loan of 2003,,,.,...........:...:.. 2.3-4.0% 2,836,231 - (442,329) 2,393,902 Refunding Bonds of 2004...,,.<.,................,..;;.:::.:; 2.0-4.2% 940,534 - (110,854) 829,680 Municipal Purpose Loan of 2005.:...;:;.,:.:...:...,.,. 3.0-4.0% 1,945,600 - (243,200) 1,702,400 Municipal Purpose Loan of 2005...,..,.,,...,;.,,,..:_.;,, 3.0-4.0% 479,835 (30,165) 449,670 Water Supply System Security........... .............. 3.6-4.5% 193,500 - (21,500) 172,000 Bear Hill Water Tank....................................... 3.6-4.5% 76,000 (19,000) 57,000 Sutton Hill Water Tank................................... 3.6-4.5% 68,000 = (17,000) 51,000 Lake Outlet Structure..................................... 3.6-4.5% 540,000 - (60,000) 480,000 MWPAT........................................................ 2.00% 2,625,899 2,906,389 - 5,532,288 Water Mains................................................. 3.7-5.0% - 650,000 - 650,000 Water Meter Replacement............................... 3.7-5.0% 350,000 - 350,000 Municipal Purpose Loan of 1998-Refunding...... 3.0-4.0°[o F 1,888,108 1,888,108 Sub-total ., 14,530,593 5,794,497 (3,820,871) 16,504,219 Deferred loss on refundings............................. (386,110) (64,844) 74,672 (376,282) Total water enterprise fund,net........................ $ 14,144,483 $ 5,729,653 $ (3,746,199) $ 16,127,937 i i Town of North Andover,Massachusetts Basic Financial Statements B-53 Notes to Basic Financial Statements 'For the Fiscal Year Ended June 30,2008 Debt service requirements for gross principal and interest for governmental bonds and notes payable in future fiscal years are as follows: Fiscal Year Principal Interest Total 2009........... $ 6,362,704 $ 2,194,323 $ 8,557,027 2010........... 4,777,467 2,042,582 6,820,049 2011........... 4,663,688 1,788,010 6,451,698 2012........... 4,584,691 1,536,883 6,121,574 2013........... 3,436,009 1,279,485 4,715,494 2014........... 3,414,003 1,063,636 4,477,639 2015........... 2,195,607 854,245 3,049,852 2016........... 1,899,220 664,115 2,563,335 2017........... 1,863,943 483,651 2,347,594 2018........... 1,893,943 297,909 2,191,852 2019........... 610,400 127,752 738,152 2020........... 385,400 91,976 477,376 2021........... 385,400 76,560 461,960 2022........... 380,400 61,244 441,644 2023........... 370,400 46,228 416,628 2024........... 370,399 31,172 401,571 2025........... 370,383 15,874 386,257 2026........... 165,399 4,709 170,108 2027........... 15,399 848 16,247 2028..:,.:....: 4,000 174 4,174 Total.......... $ 38,148,855 $ 12,661,376_ $_ 50,810,231 Town of North Andover,Massachusetts Basic Financial Statements B-52 Notes to Basic Financial Statements For the Fiscal Year Ended June 30,2008 .Bonds and Notes Payable-Governmental Funds Outstanding Outstanding Interest at June 30, at June 30, Projectl Rate 2007 :Additions Reductions 2008 Land Acquisition-Public Domain..;....: 43-6.0% 3,085,000 $ (3,085,000) $ Municipal Purpose Loan 1998.a 4.3-5.4% 13,220,000 - (13,220,000) Municipal Purpose Loan 1998.,. 4.3-6.0% 6,385,000 (5,770,000) 615,000 Municipal Purpose Loan of 2001.,.,,.,.:.;.,,,...,,,._ 4.0-4.27. 340,000 - (85,000) 255,000 Municipal Purpose Loan of 2002 <.. 4.0-4.5% 6,098,750 - (1,250,000) 4,848,750 Municipal Purpose Loan of 2003 2.3-4.0% 625,120 - (115,729) 509,391 Municipal Purpose Loan of 2004 2.0-5.0% 5,250,000 - (985,000) 4,265,000 Refunding Bonds of 2004 2.0-4.2% 5,229,466 - (649,147) 4,580,319 Municipal Purpose Loan of 2005 3.0-4.0% 1,100,976 - (230,512) 870,464 Municipal Purpose Loan of 2005.,..<.<::.:.._:::,;:. 3.0-4.0% 5,853,933 - (789,328) 5,064,605 High School Construction,..::,:,.;,,<:.....:.:.:...... 3.3-5.0% 2,850,000 - (150,000) 2,700,000 Sargent School Ventilation............................ 3.6-4.5% 72,195 (8,000) 64,195 School System Technology............................ 3.6-4.5% 224,055 - (25,750) 198,305 Roadwork.................................................. 3.6-4.5% 173,600 - (43,400) 130,200 Drainage Improvements............................... 3.6-4.5% 46,800 _ (5,200) 41,600 Town Garage Heating.................................. 3.6-4.5% 22,500 (2,500) 20,000 Historic Center Roadway............................. 4.0-4.4% - 404,000 - 404,000 Olde Center Roadway.................................. 4.0-4.4% - 391,891 391,891 Franklin School Roof................................... 4.0-4.4% 216,596 216,596 Front End Loader........................................ 4.0-4.4% - 180,000 180,000 Ambulance Replacement.............................. 4.0-4.4% 158,539 - 158,539 Mosquito Brook Drainage............................. 4.0-4.4% 80,000 - 80,000 Tractor...................................................... 4.0-4.4% 55,000 = 55,000 Land Acquisition-Refunding....................... 3.0-4.0% - 2,960,000 - 2,960,000 Municipal Purpose Loan 1998-Refunding...,.. 3.0-4.0% 2,070,000 - 2,070,000 Municipal Purpose Loan 1998-Refunding...... 3.0-4,00/o 7,470,000 - 7,470,000 Sub-total .....::. 50,577,395 13,986,026 (26,414,566) 38,148,855 Deferred loss on refund ings.......................... (486,252) (733,796) 65,_205. (1,154,543) Total governmental funds,net....................... $ 50,091,143 $ 13,252,230. $ (26,349,361) $ 36,994,0:12 'own of North Andover,Massachusetts Basic Financial Statements B-51 Notes to Basic Financial Statements For the Fiscal Year Ended June 30,2008 Notes Payable-Governmental Funds Origination Maturity Interest Balance at Balance at �P� DesCrijr?tiott Date Date Rate 6/30/2007 Increases .Decreases 6/30/2008 BAN Land Acquisition/CPA.........:........:........... 10/5/06 10/4/07 4.00% S 1,603,546 $ S: (1,603,546) 13AN Fire Equipment............................... ...... 6/19/07 6/19/08 3.85% 158,539 (158,539) - BAN School Projects.............................q........1. 6/19/07 6/19/08 3.85°% 216,729 - (216,729) BAN Roadway and Sidewalk Improvements....,.... 6/19/07 6/19/08 3.85% 794,360 (794,360) - BAN DPW Equipment..................................... 6/19/07 6/19/08 3.85% 270,000 (270,000) BAN Other Projects......................................... 6/19/07 6/19/08 3.85% 48,502 - (48,502) BAN Town/School Data Network...................... 6/18/08 6/8/09 2.50% 445,000 - 445,000 BAN Senior Center Improvements...................... 6/18/08 6/8/09 2,50% 250,000 - 250,000 BAN Upgrade Police Radios..;........................... 6/18/08 6/8/09 2,50% 228,480 228,480 BAN Radio Fire Alarm Box....-......................... 6/18/08 6/8/09 2.50°% > 160,000 160,000 BAN Ambulance Replacement........................... 6/18/08 6/8/09 2.50% 156,539 156,539 BAN Mosquito Brook Drainage.......................... 6/18/08 6/8/09 2.50% 135,000 - 135,000 BAN DumpTruck/Sander................................ 6/18/08 6/8/09 2,50% 134,000 134,000 BAN Sidewalk Construction.............................. 6/18/08 6/8/09 2.50°% 114,700 - 114,700 BAN Cab and Platform Truck............................ 6/18/08 6/8/09 2.50°% = 114,000 - 114,000 BAN Police Computer Upgrades........................ 6/18/08 6/8/09 2.50°% - 113,037 - 113,037 BAN Middle School Front Entry......................... 6/18/08 6/8/09 2,50"% 88,500 88,500 BAN Library'technology.................................. 6/18/08 6/8/09 2.50% 75,000 75,000 BAN Four Wheel Drive Vehicle.......................... 6/18108 6/8/09 2.50"% - 39,174 - 39,174 BAN One Ton Dump Truck-........:.................... 6/18/08 6/8/09 2.50% r; 36,000 - 36,000 BAN Fire Station Roof...................................... 6118108 6/8/09 2.50% 30,000 30,000 BAN Underground Storage Tank Monitoring........ 6/18/08 618109 2,50% 25,000 25,000 iiafal:;: ...... $ 3,091,676 $ 2,144,430 $ (3,091,676) $ 2,144,430 Notes Payable-Enterprise Funds Origination Maturity Interest Balance at Balance at 't'YPe Desczipti0%1_ Date Date Rate 6/30/2007 ..Increases. ,. Decreases 6/30/2008 BAN Sewer Projects....................................::...: 6119107 6/19/08 3.85% $ 231,870 $ - $ (231,870) $ BAN Water Mains....::. r .,.:.:..„.. - ::. 6/19/07 6/19/08 3.85% 110,000 Total. ., $ 341,870 $ - $ (341,870)$ NOTE 8-LONG-TERM DEBT Chapter 44,Section 10,of the MGL authorizes indebtedness up to a limit of 5% of the equalized valuation. Debt issued in accordance with this section of the law is designated as being"inside the debt limit". However,debt may be authorized in excess of that limit for specific purposes. Such debt,when issued,is designated as being "outside the debt limit". Details related to the outstanding indebtedness at June 30,2008,and the debt service requirements axe as follows: Town of North Andover,Massachusetts Basic Financial Statements B-50 Notes to Basic Financial Statements For the Fiscal Year Ended,June 30,2008 (1) Represents transfers to fund pay down of bond anticipation notes. (2) Represents transfer of remaining MSBA proceeds to the general fund. (3) Represents transfer from police fire complex fund($60,000),fire station renovations fund($265,262)and new police station design fund($578,026)to the new police station fund. (4) Represents budgeted transfers for indirect costs. NOTE 7-SHORT-TERM FINANCING Short-term debt may be authorized and issued to fund the following: • Current operating costs prior to the collection of revenues through issuance of revenue anticipation notes (RAN)or tax anticipation notes(TAN). • Capital project costs and other approved expenditures incurred prior to obtaining permanent financing through issuance of bond anticipation notes(BAN)or grant anticipation notes(GAN). Short-term loans are general obligations and carry maturity dates that are limited by statute. Interest expenditures/expenses for short-term borrowings are accounted for in the general fund,community preservation fund and enterprise funds, Details related to the short-term debt activity for the fiscal year ended June 30,2008,is as follows: II Town of North Andover,Massachusetts Basic Financial Statements B-49 Notes to Basic Financial Statements For the Fiscal Year Ended June 30,2008 Depreciation expense was charged to functions/programs of the primary government as follows: Governmental Activities: General government.............................................. $ 176,491 Public safety......................................................... 471,437 Education............................................................. 2,978,267 Public works......................................................... 1,297,277 Health and human services..................................... 118,167 Culture and recreation,. .,...,.. :....................... 273,634 Total depreciation expense-governmental activities.................. $ 5,315,273 .Business-Type Activities: Water.................................................................. $ 609,921 Sewer.................................................................. 870,568 Osgood Hill.......................................................... 79,323 Total depreciation expense-business-type activities.................. $ 1,559,812 I NOTE 6-INTERFUND RECEIVABLES,PAYABLES AND TRANSFERS Receivables and payables between funds at June 30,2008,are summarized as follows: Receivable Fund Payable Fund: Amount Ge�te�aI,l{undj,,..:, Osgacl; allltitexpris Ftnei ::,:;..; $ 116,344.:(l) (1) Represents operating cash advance Interfund transfers for the fiscal year ended June 30,2008,are summarized as follows: i Transfers.1n: Nonmajor School General Governmental Construction Transfers Out: Fund Funds Fund Total General Fund.............................. $' - $ 473,862 133 $ 473,995 (1) School Construction Fund............. 247,327 247,327 (2) Nonmajor Governmental Funds..... 903,288 - 903,288 (3) Water Enterprise Fund.................. 560,462 - 560,462 (4) Sewer Enterprise Fund................. 299,238 - 299,238 (4) Osgood Hill Enterprise Fund......... 71,391 - 71,391 (4) $ 1,178,418 $ 1,377,150 $ 133: $ 2,555,701 Town of North Andover,Massachusetts Basic Financial Statements B-48 Notes to Basic Financial Statements For the Fiscal Year Ended June 30,2008 Beginning Ending Balance Increases Decreases Balance Business-Type Activities: Capital assets not being depreciated: Land........................................................... $: 6,097,262 $ - $ - $ 6,097,262 Construction in progress................................. 5,850,598 1,858,957 (1,566,922) 6,142,633 Total capital assets not being depreciated...... 11,947,860 1.,858,957 (1,566,922) 12,239,895 Capital assets being depreciated: Land improvements.,;::,,. ,,;............:.......... 216,259 216,259 Buildings and improvements............................ 1,908,615 20,846 - 1,929,461 Machinery and equipment.............................. 1,738,289 58,586 1,796,875 Vehicles:;- »,s...: 387,288 115,506 (23,710) 479,084 Treatment plants............ „ .......,. 16,573,234 16,573,234 Pump stations.:...; 2,966,257 2,966,257 Reservoirs................................................ 1,477,296 1,477,296 Infrastructure............................................... 39,772,501 2,444,876 - 42,217,377 Total capital assets being depreciated.. 65,039,739 2,639,814 (23,710) 67,655,843 Less accumulated depreciation for: Land improvements....................................... (62,535) (9,047) - (71,582) Buildings and improvements........................... (451,895) (68,952) - (520,847) Machinery and equipment.............................. (781,695) (115,439) - (897,134) Vehicles....................................................... (2691854) (581266) 23,710 (304,406) Treatment plants........................................... (8,052,032) (452,258) - (8,504,290) Pump stations............................................... (1,633,347) (115,657) - (1,749,004) Reservoirs.................................................... (927,897) (52,321) - (980,218) Infrastructure............................................... 9,627,371) (687,872) - (10,315,243) Total accumulated depreciation................... (21,806,622) {1, 59,812}_ 23,710 (23,342,724) Total capital assets being depreciated,net............... 43,233,117. `l,t)8(1[?[12 44,313,119_ Total business-type activities capital assets,net........ $ 55,180,977 $ 2,938,959 $ (1,566,922) $ 56,553,014 Town of North Andover,Massachusetts Basic Financial Statements B-47 Notes to Basic Financial Statements For the Fiscal Year Ended June 30,2008 NOTE 5-CAPITAL ASSETS Capital asset activity for the fiscal year ended June 30,2008,was as follows: Beginning Ending Balance Increases Decreases_ Balance Governmental Activities: Capital assets not being depreciated: Land........................................................... $ 17,657,609 $ $ - ;5 17,657,609 Construction in progress................................. 6,456,948 510,747 (5,105,966) 1,861,729 Total capital assets not being depreciated...... 24,114,557 510,747 (5,105,966) 19,519,338 Capital assets being depreciated: Land improvements....................................... 2,717,500 539,950 r 3,257,450 Buildings and improvements........................... 116,565,417 5,131,275 = 121,696,692 Machinery and equipment.............................. 8,297,559 997,913 (106,000) 9,189,472 Library books................................................ 3,586,350 - - 3,586,350 Vehicles....................................................... 2,578,587 768,261 (59,000) 3,287,848 Infrastructure............................................... 31,139,308 1,803,718 - 32,943,026 Total capital assets being depreciated........... 164,884,721 9,241,117 (165,000) 173,960,838 Less accumulated depreciation for: Land improvements....................................... (1,637,263) (145,068) - (1,782,331) Buildings and improvements............I.............. (32,192,273) (3,120,401) - (35,312,674) Machinery and equipment.............................. (5,707,821) (541,248) 106,000 (6,143,069) Library books................................................ (3,271,581) (80,708) -: (3,352,289) Vehicles....................................................... (1,759,178) (346,888) 59,000 (2,047,066) Infrastructure............................................... (12,407,471) (1,080,960) (13,488,431) Total accumulated depreciation................... (56,975,587) (5,315,273) 165,000 (62,125,860)_ Total capital assets being depreciated,net............... 107,909,134 3,925,844 - 111,834,978 Total governmental activities capital assets,net........ $ 132,023,691 $ 4,436,591 $ (5,105,966) $ 131,354,316 Town of North Andover,Massachusetts Basic Financial Statements B-46 Notes to Basic Financial Statements For the Fiscal Year Ended June 30,2008 Governmental funds report deferred revenue in connection with receivables and other assets(tax foreclosures)for revenues that are not considered to be available to liquidate liabilities of the current period. The following identifies the various components of deferred revenue reported in the governmental funds: Com�n�tauty General Ptesorvation Fund. „ Fund:(Major) Total Receivable type: Real estate and personal property taxes.................... $ 1,357,780 $ - $ 1,357,780 Tax liens.............................................................. 1,059,427 1,059,427 Motor vehicle and other excise taxes........................ 348,460 - 348,460 Community preservation surcharges........................ - 23,293 23,293 Departmental and other......................................... 329,561 - 329,561 Intergovernmental(state school construction)............ 2,336,849 - 2,336,849 Intergovernmental(CPA state match)....................... - 1,245,598 1,245,598 Tax foreclosures.,,.. 330,961 - 330,961 TOW... ,., $ 5,763,038 $ 1,268,891 $ 7,031,929 The Commonwealth has approved school construction assistance. The assistance program,which is administered by the MSBA,provides resources for future debt service of previously issued general obligation school bonds outstanding. During fiscal year 2008,approximately$1,925,000 of such assistance was received. Approximately $2,885,000 will be received in future fiscal years. Of this amount,$548,066 represents reimbursement of long-term interest costs,and$2,336,849 represents reimbursement of approved construction costs. Accordingly,a$2,336,849 intergovernmental receivable and corresponding deferred revenue have been reported in the governmental funds financial statements. The deferred revenue has been recognized as revenue in the conversion to the government- wide financial statements. During fiscal year 2008,the MSBA provided lump sum final reimbursements for the Middle School and Thomson School construction projects totaling$8,859,481. From this amount,$8,435,555 was used to partially fund the refunding(see Note 8) of the related school construction bonds previously issued. i Town of North Andover,Massachusetts Basic Financial Statements B-45 Notes to Basic Financial Statements For the Fiscal Year Ended June 30,2008 NOTE 4-ACCOUNTS RECEIVABLE At June 30,2008,receivables for the individual major governmental funds and nonmajor governmental,internal service,and fiduciary funds in the aggregate,including the applicable allowances for uncollectible amounts,are as follows: Allowance Gross for Net Amount Uncollectibles Amounfi Receivables: Real estate and personal property taxes......... $ 1,756,396 $ (67,887) $: 1,688,509 Tax liens................................................... 1,059,427 1,059,427 Motor vehicle and other excise taxes.............. 633,196 (284,736) 348,460 Community preservation surcharges,:.;.,>.::.;,,, 23,293 23,293 Departmental and other;., 745,247 (296,841) 448,406 ZntergavernnLiEnta1 .... 3,830,599 - 3,830,599 $ 8,048,158_ $ (649,464) $ 7,398,694 At June 30,2008,receivables for the water and sewer enterprise funds consist of the following: Allowance Gross for Net Amount Uncollectibles Amount Receivables: User charges and utility liens...:,,.. $ 2,822,917 $ - $ 2,822,917 Intergovernmental . 1,649,787 1,649,787 $ 4,472,704 $ - $ 4,472,704 Town of North Andover,Massachusetts Basic Financial Statements B-44 Notes to Basic Financial Statements :For the Fiscal Year Ended June 30,2008 Investments-Custodial Credit Risk Custodial credit risk for investments is the risk that,in the event of the failure of the counterparty,the Town will not be able to recover the value of its investments or collateral securities that are in the possession of an outside party. The Town does not have a policy for custodial credit risk of investments. As of June 30,2008,the Town's investments of$32,248,034 were uninsured,not registered in the name of the Town,held by the counterparty and exposed to custodial credit risk as follows: Fair Investment Type Value. . Money market mutual funds......... $ 276,720 External investment pools............. 31,815,671 Equity securities.......................... 28,682 Equity mutual funds.................... 126,961 Total.......................................... $ 32,248,034 Investments-Credit Risk of Debt Securities Credit risk for debt securities is the risk that an issuer or other counterparty to a debt security will not fulfill its obligations. The Town does not have a policy for credit risk of debt securities. As of June 30,2008,the credit quality ratings of the Town's debt securities are as follows: Quality Ratings Fair Investment Type value Unrated Money market mutual funds........ $ 276,720 $ 276,720 External investment pools........... 3L761,710_ 32,038,436 $ 32,038,436 Per the rating scale of Standard and Poor's(a national credit rating organization) Deposits and Investments-Foreign Currency Foreign currency risk is the risk that fluctuations in exchange rates will adversely affect the fair value of an investment or a deposit. The Town does not have a policy for foreign currency risk. As of June 30,2008,the Town's exposure to foreign currency risk is as follows: U.S.Dollar _Depgst/ZnvestmentTy pe Balances Currency External investment pools.......................... $ 28,941 Australian Dollar External investment pools.......................... 25,014. Swedish Krona Totat _. 53,955 Town of North Andover,Massachusetts Basic Financial Statements B-43 Notes to Basic Financial Statements For the Fiscal Year Ended June 30,2008 NOTE 3-DEPOSITS AND INVESTMENTS The municipal finance laws of the Commonwealth authorize the Town to invest temporarily idle cash in bank term deposits and certificates of deposits,and treasury and agency obligations of the United States government, with maturities of one year or less;U.S.treasury or agency repurchase agreements with maturities of not more than 90 days;money market accounts;and the state treasurer's investment pool-the Massachusetts Municipal Depository Trust(MMDT). The MMDT meets the criteria of an external investment pool and operates in accordance with applicable state laws and regulations. The Treasurer of the Commonwealth serves as Trustee. The reported value of the pool is the same as the fair value of pool shares. A cash and investment pool is maintained that is available for use by all funds with unrestricted cash and investments. The deposits and investments of permanent and private purpose trust funds are held separately from other Town funds. Deposits-Custodial Credit Risk Custodial credit risk for deposits is the risk that,in the event of a bank failure,the Town's deposits may not be recovered. The Town does not have a policy for custodial credit risk of deposits. As of June 30,2008,$13,815,408 of the Towns bank balance of$26,932,102 was uninsured and uncollateralized. Investments Summary The Town's investments at June 30,2008 are presented below. All investments are presented by investment type, with debt securities presented by maturity. Investment Maturities Fair Less Than Investment Type Value 1 Year Debt Securities: Money market mutual funds......... $: 276,720 $ 276,720 External investment pools............. 31,815 671.. 31,815,671. i, Total debt securities..,,.....,..,...,,,, 32,092,391 ._. $_ 32,092,391 Other Investments., :Equity securities 28,682 Equity mutual funds. 126,961 Total other investments.,, 155,643 Total investments........................ $ 32,248,034 Investments-Interest Rate Risk of Debt Securities Interest rate risk for debt securities is the risk that changes in interest rates of debt securities will adversely affect the fair value of an investment. The Town does not have a policy for interest rate risk of debt securities. Town of North Andover,Massachusetts Basic Financial Statements B-42 Notes to Basic Financial Statements For the Fiscal Year Ended June 30,2008 B. Fund Deficits At June 30,2008,the following fund deficits exist: Fund Amount Funding Source Town/School Data Network..................................... $ 374,503 Issuance of long-term debt Roadway Unaccepted.............................................. 285,761 Issuance of long-term debt Upgrade Police Radios............................................. 192,264 Issuance of long-term debt i Radio Fire Alarm Box............................................... 159,900 Issuance of long-term debt Ambulance Repl acement.......................................... 155,576 Issuance of long-term debt Drainage Improvements........................................... 131,806 Issuance of long-term debt Equipment-Dump Truck w/ Sander......................... 131,063 Issuance of long-term debt Equipment-Cab&Platform Truck............................ 111,106 Issuance of long-term debt Middle School Front Entry........................................ 88,500 Issuance of long-term debt Computer Infrastructure Upgrade to Police Dept.......... 76,598 Issuance of long-term debt Community Development-Leasehold Improvements... 48,000 Issuance of long-term debt Four Wheel Drive Vehicle......................................... 39,174 Issuance of long-term debt Equipment-Ton Dump............................................ 33,900 Issuance of long-term debt DPW-Ton Pick Up................................................. 31,884 Issuance of long-term debt Building Permit Fee-GLSD...................................... 28,460 Available funds Replace Roof on Fire Station..................................... 23,600 Issuance of long-term debt Underground Storage Tank Monitoring System............ 20,621 Issuance of long-term debt Grant-Drug Free Schools........................................: 16,470 State grant Grant-Special Education Frameworks....................... 13,565 Federal grant Grant-Title V......................................................... 12,109 Federal grant Extra Stipends-School............................................. 11,342 Available funds Treacher Train/Math Science................................... 10,203 Federal grant Improvements to Senior Center................................. 8,980 Issuance of long-term debt Sidewalk Construction.............................................. 8,698 Issuance of long-term debt Library Technology................................................. 6,425 Issuance of long-term debt Partnership Award-School...................................... 3,767 State grant Grant-Academic Support Service.............................. 1,422 State grant Highway improvements fund................................... 11250 State grant C. Excess of Expenditures Over Appropriations During the fiscal year ended June 30,2008,expenditures exceeded appropriations for state and county charges and debt service interest. These over-expenditures will be funded by taxes during fiscal year 2009. Town of North Andover,Massachusetts Basic Financial Statements B-41 Notes to Basic Financial.Statements For the Fiscal Year Ended June 30,2008 S. Use of Estimates Government-Wide and Fund Financial Statements The preparation of basic financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure for contingent assets and liabilities at the date of the basic financial statements and the reported amounts of the revenues and expenditures/expenses during the fiscal year. Actual results could vary from estimates that were used. T. Total Column i Government-Wide Financial Statements The total column presented on the government-wide financial statements represents consolidated financial information. Fund Financial Statements The total column presented on the fund financial statements is presented only to facilitate financial analysis. Data in this column is not the equivalent of consolidated financial information. NOTE 2-STEWARDSHIP,COMPLIANCE AND ACCOUNTABILITY A. Budgetary Information Municipal Law requires the adoption of a balanced budget that is approved by Town Meeting vote. The Finance Committee presents an annual budget to Town Meeting,which includes estimates of revenues and other financing sources and recommendations of expenditures and other financing uses. Town Meeting,which has full authority to amend and/or reject the budget or any line item,adopts the expenditure budget by majority vote. Increases or transfers between and within departments subsequent to the approval of the annual budget,requires majority approval via Special Town Meeting and are included in the final budget. The majority of appropriations are non-continuing which lapse at the end of each fiscal year. Others are continuing appropriations for which the governing body has authorized that an unspent balance from a prior fiscal year be carried forward and made available for spending in the current fiscal year. Generally,expenditures may not exceed the level of spending(salaries,expenses and capital)authorized for an appropriation account. However,the Town is statutorily required to pay debt service,regardless of whether such amounts are appropriated. An annual budget is adopted for the general fund in conformity with the guidelines described above. The original fiscal year 2008 approved budget for the general fund authorized$75,047,989 in appropriations and other amounts to be raised. During fiscal year 2008,no supplemental appropriations were authorized. The Accountant's office has the responsibility to ensure that budgetary control is maintained. Budgetary control is exercised through the accounting system. Town of North Andover,Massachusetts Basic Financial Statements B-40 Notes to Basic Financial Statements For the Fiscal Year Ended June 30,2008 Fund balances have been"designated for"the following: "Subsequent year's expenditures"represents amounts appropriated for the fiscal year 2009 operating budget. O. Long-term Debt Government-Wide and Proprietary Fund Financial Statements. Long-term debt is reported as liabilities in the government-wide and proprietary fund statements of net assets. Material bond premiums and discounts are deferred and amortized over the life of the bonds using the straight- line method. Bonds payable are reported net of the applicable bond premium or discount. Governmental Funds Financial Statements The face amount of governmental funds long-term debt is reported as other financing sources when the debt is issued. Bond premiums and discounts,as well as issuance costs,are recognized in the current period. Bond premiums are reported as other financing sources and bond discounts are reported as other financing uses. Issuance costs,whether or not withheld from the actual bond proceeds received,are reported as general government expenditures. P. Investment Income Excluding the permanent funds,investment income derived from major and nonmajor governmental funds is legally assigned to the general fund unless otherwise directed by Massachusetts General Law(MGL). Q. Compensated Absences Employees are granted vacation and sick leave in varying amounts based on collective bargaining agreements, state laws and executive policies. Government-Wide and Proprietary Fund Financial Statements, Vested or accumulated vacation and sick leave are reported as liabilities and expensed as incurred. i Governmental Funds Financial Statements Vested or accumulated vacation and sick leave,which will be liquidated with expendable available financial resources,are reported as expenditures and fund liabilities upon employee retirements and resignations. R. Post Retirement Benefits Government-Wide and Fund Financial Statements In addition to providing pension benefits,health insurance coverage is provided(on a pay-as-you-go basis)for retired employees and their survivors in accordance with MGL Chapter 32. These costs are recognized by recording the employer's 65%share of insurance premiums in the general fund in the fiscal year paid. For the fiscal year ended June 30,2008,this expenditure totaled approximately$1,136,000. There were approximately 217 participants eligible to receive benefits at June 30,2008. Town of North Andover,Massachusetts Basic Financial Statements B-39 Notes to Basic Financial Statements For the Fiscal Year Ended June 30,2008 Fund Financial Statements Transfers between and within funds are not eliminated from the individual fund statements and are reported as transfers in and transfers out. M. Deferred Revenue Deferred revenue at the fund financial statement level represents billed receivables that do not meet the available criterion in accordance with the current financial resources measurement focus and the modified accrual basis of accounting. Deferred revenue is recognized as revenue in the conversion to the government-wide financial statements(full accrual). N. Net Assets and Fund Equity Government-Wide Financial Statements(Net Assets) Net assets are reported as restricted when amounts are restricted by outside parties for a specific future use. Net assets have been"restricted"for the following: "Debt service"represents amounts accumulated from the Massachusetts School Building Authority(MSBA)to reduce school construction excluded debt service costs over the next eighteen fiscal years. "Community preservation"represents amounts restricted for the purpose of acquiring land for conservation, recreational,and affordable housing purposes. "Permanent funds-expendable"represents amounts held in trust for which the expenditures are restricted by various trust agreements. "Permanent funds-nonexpendable"represents amounts held in trust for which only investment earnings may be expended. "Other specific purposes"represents restrictions placed on assets from outside parties. Fund Financial Statements(Fund Balances Fund balances are reserved for amounts that are not available for appropriation or are legally restricted by outside parties for a specific future use. Designations of fund balance represent tentative management plans that are subject to change. Fund balances have been"reserved for"the following: "Encumbrances and continuing appropriations"represents amounts obligated under purchase orders,contracts and other commitments for expenditures that are being carried over to the ensuing fiscal year. "Debt service" represents amounts accumulated from the Massachusetts School Building Authority(MSBA)to reduce school construction excluded debt service costs over the next eighteen fiscal years. "Perpetual permanent funds"represents amounts held in trust for which only investment earnings may be expended. "Other specific purposes"represents restrictions placed on assets from outside parties. Town of North Andover,Massachusetts Basic Financial Statements B-38 Notes to Basic Financial Statements For the Fiscal Year Ended June 30,2008 Estimated Useful Life Capital Asset Type (in years) Land improvements..: 20-30 Buildings and improvements...... iop 7-50 Machinery and equipment..................... 3-20 Library books...................................... 10 Vehicles.............................................. 5 Treatment plants.................................. 10-40 Pump stations...................................... 20-40 Reservoirs........................................... 20-40 Infrastructure _.. .. . . 20-60 The cost of normal maintenance and repairs that do not add to the value of the assets or materially extend asset lives are not capitalized and are treated as expenses when incurred. Improvements are capitalized. Governmental Funds Financial Statements Capital asset costs are recorded as expenditures in the acquiring fund in the fiscal year of the purchase. K. Interfund Receivables and Payables During the course of its operations,transactions occur between and within funds that may result in amounts owed between funds. Government-Wide Financial Statements Transactions of a buyer/seller nature between and within governmental funds are eliminated from the governmental activities in the statement of net assets. Any residual balances outstanding between the governmental activities and business-type activities are reported in the statement of net assets as"internal balances". Fund.Financial Statements Transactions of a buyer/seller nature between and within funds are not eliminated from the individual fund statements. Receivables and payables resulting from these transactions are classified as"Due from other funds" or"Due to other funds" on the balance sheet. L. Interfund Transfers During the course of its operations,resources are permanently reallocated between and within funds. Government-Wide Financial Statements Transfers between and within governmental funds are eliminated from the governmental activities in the statement of net assets. Any residual balances outstanding between the governmental activities and business- type activities are reported in the statement of activities as"Transfers,net". Town of North Andover,Massachusetts Basic Financial Statements B-37 Notes to Basic Financial Statements For the Fiscal Year Ended June 30,2008 The following types of accounts receivable are secured via the lien process and are considered 100% collectible. Accordingly,an allowance for uncollectible amounts is not reported. ➢ Real estate taxes ➢ Tax and utility liens ➢ Community preservation surcharges ➢ User charges Intergovernmental receivables are considered 100% collectible. H. Inventories Government-Wide and Fund Financial Statements Inventories are recorded as expenditures at the time of purchase. Such inventories are not material in total to the government-wide and fund financial statements and therefore are not reported. i I. Restricted Assets Government-Wide and Fund Financial Statements Assets are reported as restricted when limitations on their use change the nature of the availability of the asset. Such constraints are either externally imposed by creditors,contributors,grantors,or laws of other governments, or are imposed by law through constitutional provisions or enabling legislation. J. Capital Assets Government Wide and Proprietary Fund Financial Statements Capital assets,which consist of land,land improvements,buildings and improvements,machinery and equipment,library books,vehicles,treatment plants,pump stations,reservoirs,infrastructure(e.g.,roads,water mains,sewer mains,and similar items)and construction-in-progress,are reported in the applicable governmental or business-type activities column of the government-wide financial statements, Capital assets are recorded at historical cost or at estimated historical cost if actual historical cost is not available. Donated capital assets are recorded at the estimated fair market value at the date of donation. i All purchases and construction costs in excess of$10,000 are capitalized at the date of acquisition or construction, respectively,with expected useful lives of greater than one year. Capital assets(excluding land and construction-in-progress)are depreciated on a straight-line basis. The estimated useful lives of capital assets are as follows: Town of North Andover,Massachusetts Basic Financial Statements B-36 Notes to Basic Financial Statements For the Fiscal Year Ended June 30,2008 Real Estate Taxes,Personal Property Taxes and Tax Liens Real estate and personal property taxes are levied and based on values assessed on January 1st of every year. Assessed values are established by the Board of Assessor's for 100% of the estimated fair market value. Taxes are due on August 151,November 1st,February 1s1 and May 1st and are subject to penalties and interest if they are not paid by the respective due date. Real estate tax liens are processed approximately one-year after the close of the valuation year on delinquent properties and are recorded as receivables in the fiscal year they are processed. Motor Vehicle Excise Taxes Motor vehicle excise taxes are assessed annually for each vehicle registered in the Town and are recorded as receivables in the fiscal year of the levy. The Commonwealth is responsible for reporting the number of vehicles registered and the fair values of those vehicles to the Town. The tax calculation is the fair value of the vehicle multiplied by$25 per$1,000 of value. Community Preservation Surcharges Community preservation surcharges are levied annually and at a rate of 3% of residents'real estate tax bills with exemptions for the first$100,000 of residential property and property owned by qualified persons with low income and seniors(60+)with low or moderate income as defined by DOR guidelines. The surcharge is due with the real estate tax on August 1st,November 111,February 1st and May 1s1 and are subject to penalties and interest if they are not paid by the respective due date. Overdue surcharges are included on the tax liens processed on delinquent real estate taxes. Surcharges are recorded as receivables in the fiscal year of the levy. Water and Sewer User Charges and Utility Liens User fees are levied monthly based on individual meter readings and are subject to penalties and interest if they are not paid by the respective due date. Water and sewer liens are processed approximately six months after the end of the fiscal year and are included as a lien on the property owner's tax bill. Water and sewer charges and liens are recorded as receivables in the fiscal year of the levy. Departmental and Other Departmental and other receivables primarily consist primarily of amounts due from ambulance charges and police details. These receivables are recorded when the applicable service has been performed. Intergovernmental Various state and federal operating and capital grants are applied for and received annually. For non- expenditure driven grants,revenue is recognized as soon as all eligibility requirements imposed by the provider have been met. For expenditure driven grants,revenue is recognized when the qualifying expenditures are incurred and all other grant requirements are met. G. Allowance for Unco llectib le Amounts The allowance for uncollectible amounts is estimated based on historical trends and specific account analysis for the following accounts receivable: ➢ Personal property taxes ➢ Motor vehicle and other excise taxes ➢ Departmental and other Town of North Andover,Massachusetts Basic Financial Statements B-35 Notes to Basic Financial Statements For the Fiscal Year Ended June 30,2008 Proprietary funds financial statements are reported using the flow of economic resources measurement focus and use the accrual basis of accounting,whereby revenues are recorded when earned and expenses are recorded when the liabilities are incurred. Proprietary funds distinguish operating revenues and expenses from nonoperating items. Operating revenues and expenses generally result from providing services and producing and delivering goods in connection with the proprietary funds principal ongoing operations. All revenues and expenses not meeting this definition are reported as nonoperating revenues and expenses. The following major proprietary funds are reported: The water enterprise fund is used to account for the water activities. The sewer enterprise fund is used to account for the sewer activities. The Osgood Hill enterprise fund is used to account for the operation of Osgood Hill Estate activities. I Additionally,the following proprietary fund type is reported: The internal service fund is used to account for the financing of services provided by one department to other departments or governmental units. This fund is used to account for risk financing activities related to employees'health insurance. Fiduciary funds financial statements are reported using the flow of economic resources measurement focus and use the accrual basis of accounting. Fiduciary funds are used to account for assets held in a trustee capacity for others that cannot be used to support the government's programs. The following fiduciary fund types are reported: The private-purpose trust fund is used to account for trust arrangements,other than those properly reported in the permanent fund,under which principal and investment income exclusively benefits individuals,private organizations,or other governments. The agency fund is used to account for assets held in a custodial capacity. Such assets consist primarily of performance bonds and bid deposits. Agency funds do not present the results of operations or have a measurement focus. E. Cash and Investments .Government-Wide and Fund Financial.Statements Cash and cash equivalents are considered to be cash on hand,demand deposits and short-term investments with an original maturity of three months or less from the date of acquisition. Investments are carried at fair value. F. Accounts Receivable Government-Wide and Fund Financial Statements The recognition of revenue related to accounts receivable reported in the government-wide financial statements and fund financial statements are reported under the accrual basis of accounting and the modified accrual basis of accounting,respectively. Town of North Andover,Massachusetts Basic Financial Statements B-34 Notes to Basic Financial Statements For the Fiscal Year Ended June 30,2008 Fund Financial Statement Governmental funds financial statements are reported using the flow of current financial resources measurement focus and the modified accrual basis of accounting. Under the modified accrual basis of accounting,revenues are recognized when susceptible to accrual(i.e.,measurable and available). Measurable means the amount of the transaction can be determined and available means collectible within the current period or soon enough thereafter to pay liabilities of the current period. Expenditures are recorded when the related fund liability is incurred,except for unmatured interest on general long-term debt which is recognized when due,and certain compensated absences,claims and judgments which are recognized when the obligations are expected to be liquidated with current expendable available resources. Real estate and personal property tax revenues are considered available if they are collected within 60-days after the end of the fiscal year. Investment income is susceptible to accrual. Other receipts and tax revenues become measurable and available when the cash is received and are recognized as revenue at that time. Entitlements and shared revenues are recorded at the time of receipt or earlier if the susceptible to accrual criteria is met. Expenditure driven grants recognize revenue when the qualifying expenditures are incurred and all other grant requirements are met. The following major governmental funds are reported; The general fund is the primary operating fund. It is used to account for all financial resources,except those required to be accounted for in another fund. The stabilization fund is a special revenue fund used to account for the accumulation of resources to provide general and/or capital reserves. Use of this fund is subject to Town Meeting approval. The communifi/preservation fund is a special revenue fund used to account for the 3%local real estate tax surcharge on nonexempt property(and matching state trust fund distribution)that can be used for open space,historic resource and affordable housing purposes. Property exempt from the surcharge consists of the first$100,000 of all residential property and also property owned by low income or seniors with a low or moderate income as defined by Massachusetts Department of Revenue(DOR)guidelines. Disbursements from this fund must originate from the Community Preservation Committee and be approved by Town Meeting. The school construction project fund is a capital projects fund used to account for financial resources to expand and upgrade the school facilities. The nonmajor governmental funds consist of other special revenue,capital projects and permanent funds that are aggregated and presented in the nonmajor governmental funds column on the governmental funds financial statements. The following describes the general use of these fund types: The special revenue fund is used to account for the proceeds of specific revenue sources(other than capital projects funds or permanent funds)that are restricted by law or administrative action to expenditures for specified purposes. The capital projects fund is used to account for financial resources to be used for the acquisition or construction of major capital facilities(other than those financed by enterprise funds). The permanent fund is used to account for financial resources that are legally restricted to the extent that only earnings,and not principal,may be used for purposes that support governmental programs. Town of North Andover,Massachusetts Basic Financial Statements B-33 Notes to Basic Financial Statements For the Fiscal Year Ended June 30,2008 C. Government-Wide and Fund Financial Statements Government-Wide Financial Statements The government-wide financial statements(statement of net assets and the statement of activities)report information on all non-fiduciary activities of the primary government and its component units. Governmental activities,which are primarily supported by taxes and intergovernmental revenues,are reported separately from business-hjpe activities,which are primarily supported by user fees. Fund Financial Statements I Separate financial statements are provided for governmental funds,proprietary funds,and fiduciary funds,even though fiduciary funds are excluded from the government-wide financial statements. Major individual governmental funds and major individual enterprise funds are reported as separate columns in the fund financial statements. Nonmajor funds are aggregated and displayed in a single column. Internal service funds and fiduciary funds are reported by fund type. D. Measurement Focus,Basis of Accounting and Basis of Presentation Government-Wide and Fund Financial Statements i The government-wide and enterprise fund financial statements apply all applicable Financial Accounting Standards Board (FASB)pronouncements issued on or prior to November 30,1989,unless those pronouncements conflict with or contradict GASB pronouncements. Government-Wide Financial Statements The government-wide financial statements are reported using the economic resources measurement focus and the accrual basis of accounting. Under this method,revenues are recorded when earned and expenses are recorded when the liabilities are incurred. Real estate and personal property taxes are recognized as revenues in the fiscal year for which they are levied. Grants and similar items are recognized as revenue as soon as all eligibility requirements imposed by the provider have been met. The statement of activities demonstrates the degree to which the direct expenses of a function or segment are offset by program revenues. Direct expenses are those that are clearly identifiable with a specific function or segment. Program revenues include the following: ➢ Charges to customers or applicants who purchase,use,or directly benefit from goods,services,or privileges provided by a given function or segment. ➢ Grants and contributions that are restricted to meeting the operational requirements of a specific function or segment. ➢ Grants and contributions that are restricted to meeting the capital requirements of a specific function or segment. Taxes and other items not identifiable as program revenues are reported as general revenues. Except for charges between the general fund and enterprise funds,the effect of interfund activity has been eliminated from the government-wide financial statements. Elimination of these charges would distort the direct costs and program revenues reported for the functions affected. Town of North Andover,Massachusetts Basic Financial Statements B-32 Notes to Basic Financial Statements For the Fiscal Year Ended June 30,2008 NOTE 1 -SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES A. General The basic financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America(GAAP). The Governmental Accounting Standards Board(GASB)is the standard- setting body for establishing governmental accounting and financial reporting principles. The significant accounting policies are described herein. B. Reporting Entity The Town of North Andover,Massachusetts(Town)is a municipal corporation that is governed by an elected Board of Selectmen. For financial reporting purposes,the basic financial statements include all funds,organizations,agencies,boards, commissions and institutions that are not legally separate from the Town. The Town has also considered all potential component units for which it is financially accountable as well as other organizations for which the nature and/or significance of their relationship with the Town are such that exclusion would cause the Town's basic financial statements to be misleading or incomplete. It has been determined that there are no component units that require inclusion in the basic financial statements. Joint Venture A joint venture is an organization(resulting from a contractual arrangement)that is owned,operated or governed by two or more participants as a separate and specific activity subject to joint control in which the participants retain an ongoing financial interest or ongoing financial responsibility. Joint control means that no single participant has the ability to unilaterally control the financial or operating policies of the joint venture. The Town participates in the following joint ventures with other municipalities to pool resources and share the costs,risks and rewards of providing goods and services to venture participants directly,or for the benefit of the general public or specified recipients. Greater Lawrence Sanitary/District(GLSD) GLSD operates a wastewater treatment plant for five member communities and is located within the Town. The GLSD is governed by a seven member board consisting of one appointed representative from the Town. The Town is indirectly liable for the GLSD's debt and other expenditures and is assessed annually for its share of operating and capital costs. For the fiscal year ended June 30,2008,the Town's assessment totaled$1,253,042. Separate financial statements may be obtained by writing to the Treasurer of the GLSD at 240 Charles Street, North Andover,MA 01845. Greater Lawrence Regional Technical Vocational School(GLRTVS) The GLRTVS is governed by a seven member school committee consisting of one elected representative from the Town. The Town is indirectly liable for the GLRTVS'debt and other expenditures and is assessed annually for its share of operating and capital costs. For the fiscal year ended June 30,2008,the Town's assessment totaled $269,493. Separate financial statements may be obtained by writing to the Treasurer of the GLRTVS at 57 River Road,Andover,MA 01801. Town of North Andover,Massachusetts Basic Financial Statements B-31 FIDUCIARY FUNDS STATEMENT OF CHANGES IN FIDUCIARY NET ASSETS FOR THE FISCAL YEAR ENDED JUNE 30,2008 Privat& S'uxpose ADDITIONS Net investment income: Interest.................................................................................... $ 1,037 NET ASSETS AT BEGINNING OF YEAR.......................................... 69,444 NET ASSETS AT END OF YEAR ..................................................... 70,481 See notes to basic financial statements. Town of North Andover Massachusetts B-30 Basic Financial Statements FIDUCIARY FUNDS STATEMENT OF FIDUCIARY NET ASSETS ,JUNE 30,2008 Private Purpose Agency ASSETS S.11ITS TrustFunds Funds Cash and cash equivalents........................................................ 70,481 $ 4,300,725 LIA131LITIES Warrantspayable................................................... 3,881 Liabilities due depositors..................................................... 4,296,844 NET ASSETS Held in trust for other purposes............................................. $ 70,481 See notes to basic financial statements, Town of North Andover,Massachusetts B-29 Basic Financial Statements PROPRIETARY FUNDS STATEMENT OF CASH FLOWS _..... __.... _-_.:...... FOR THE FISCAL YEAR ENDED JUNE 3D,2006 Businessw'ype:Activities-Enterprise Funds Governmental Activities- '.. Internal Osgood Service Water. Hill Total Funds CASH FLOWS FROM OPERATING ACTIVITIE S Receipts from customers and users:.........................................•..>.,......•....•..... $ 5,608,143 $ 3,692,964 S 257,694 $ 9,558,801 $ 1,724,722 Receipts from interfund services provided..........................................•............ - - 8,149,177 Payments to vendors.................................................................................... (1,487,928) (1,493,945) (155,872) (3,137,745) (8,705,865) Payments to employees......................................•...........,...•...•...........,;;........ (703,774) (332,467) (141,855) (1,178,096) NET CASH FROM OPERATING ACTfV1T1ES.. :.:...::.:...::.:.. :.::..:„.;,; 3,416,441 1,866,552 (40,033) 5,242,960 1,168,034 CASI4 FLOWS FROM NONCAPTTAL FINANCING ACTIVITTES Transfers out..................................................•...................:........................ (560,462) (299,238) (71,391) (931,091) CASH FLOWS FROM CAPITAL AND RELATED FINANCING ACTIVITIES Proceeds from the issuance of bonds and notes..................... ........... 3,517,936 3,925,290 7,443,226 - Proceeds from the issuance of refunding bonds................_................................. 1,888,108 656,892 2,545,000 Acquisition and construction of capital assets.................................................... (2,091,892) (819,111) (20,846) (2,931,849) Principal payments on bonds and notes...........,„...................:......................... (2,097,371) (1,561,796) (3,659,167) Premium from issuance of bonds and refunding bonds.......:....................:.......... 27,991 11,183 - 39,174 - Interest expense...:.....................I.......................,.;...............::....:............... (502,855) (516,819) _ - (1,019,674) NET CASH FROM CAPITAL AND RELATED FINANCING ACI-IVT11ES,.--,. 741,917 795,639 (20,846) 2,416,710 '.. CASH FLOWS FROM INVESTING ACTIVITIES ', Investment income....:...................::...::.•.................:,...::::........::.;:>.:............. - 1,120. ... 7,544.. .2,664. .. .. 76,492 NET CHANGE IN CASH AND CASH EQUIVALENTS-........... .................... 3,264,073 (130,726) 6,731,243 1,244,526 CASH AND CASH EQUIVALENTS AT BEGINNING OF YEAR (Includes$646,299 and$2,429,370 reported as restricted in the water and sewer enterprise funds,respectively)..................................................,,..... 646,299 3,457,857 130,726 4,234,882 1,252,816 CASH AND CASH EQUIVALENTS AT END OF YEAR (Includes$3,663,753 and$5,979,681 reported as restricted in the water and sewer enterprise funds,respectively)..................................................••..... $ 4,244,195 $ 6,721,930 $ .-. $, .10,966,125_ $ .... 2497,342. RECONCILIATION OF OPERATING INCOME(LOSS)TO NET CASH FROM OPERATING ACTIVITIES Operating income(loss).............::::............... ........................ ................. $ 3,094,478 $ 1,171,113 $ (216,719) $ 4,048,872 $ 1563757 Adjustments to reconcile operating income Ooss)to net cash from operating activities: Depreciation............................................•.............::.......................::....:: 609,921 870,568 79,323 1,559,812 Changes in assets and liabilities: Accounts receivable.........:..:::.................:.......::................................. (62,301) (180,597) (242,898) Warrants payable :::,:;: ::..:. :...................:...... (165,277) 63,880 (78308) (119,705) 17,478 Accrued payroll......................C.................•..,:..................1...............: (7,037) (2,412) (673) (10,116) Accruedhealth claims payable.:.................:........................................... - - - (413,201) Court judgments...............................................................................• (56,000) (56,000) Due to other funds....... ............... . ...........y,,. (53,349) 116349 62,995 Total adjustments"..,,,..............I....................... .............. 321,963. 695,439. 176,686 1,194,068. (395,723) NETCASH FROM OPERATING ACTTVTTIES $ 3,416,441 $ 1,866,552 $ (40,033) $: 1,242,960: NONCASH INVESTING,CAPITAL AND FINANCING ACTIVITIES Intergovernmental debt subsidies(MWPAT).......:......................................•..... $ 280,264 S S: 280,264 $ - Netamortizationofdeferredcharges...........::.........................:.•.•.............::.... 74,672 6,751 81,423 See notes to basic financial statements. Town of NorthAudover Massachusetts $-28 Basic Financial Statements PROPRIETARY FUNDS STATEMENT'OF REVENUES,EXPENSES AND CHANGES IN FUND NET ASSETS FOR THE FISCAL YEAR ENDEDjUNL..30, 008.. Business-Type Activities-Enterprise Funds Governmental Activities- Intemal Osgood Service Water _ Sewer. Hill _ Total__ Funds__ OPERATING REVENUES Charges for services........................................... 5,650,594 $ 3,858,705 $ 257,694 $ 9,766,993 $ -. Penalties and interest..............:,...:............................................ 19,850 14,856 - 34,706 - Employer contributions.........:................................................... - 8,149,177 Employee contributions..;..... .......................................... - 1,654,156 Other...................... ........................................................... 70,566 TOTAL OPERATING REVENUES................................. .. 5,670,444. 3,873,561 257,694 9,801,699 9,873,899 OPERATING EXPENSES Cost of service and administration............................................. 1,782,258 512,887 382,998 2,678,143 GLSD assessment..............:.: -,.:...::;.:...;�....c.:...................... - 1,253,042 1,253,042 Repairs and maintenance.............:..::.......................................:. 183,787 65,951 12,092 261,830 Depreciation...:...................................................................... 609,921 870,568 79,323 1,559,812 Employee benefits....,.....................................................,.,.:..,... - _ 8,310,142 TOTAL OPERATING EXPENSES.........................:................. _ .2,57$466 . 2,702,448_ 474,913, .5,752,827„ 0,310,142 OPERATING INCOME(LOSS).............................................. 3,094,478 1,171,113 (216,719) 4,048,872 1,563,757 NONOPERATING REVENUES(EXPENSES) '.. Intergovemmental....-,.......-,..„.................................,.............. - 210,428 210,428 '.. Investment income.................................................................... 1,120 1,544 2,664 76,492 Interest expense....:.:.:...............::................:.:.......................... (646,285) (721,286) (1,367,571) Premium from issuance of bonds.......:................1.........I............. 27,991 5,443 = 33,434 Premium from issuance of refunding bonds.................................. 5,740 5,740 TOTAL NONOPERATING REVENUES(EXPENSES),NET........ (618,294) (498,555) 1,544- (1,115,305) 76,492 INCOME(LOSS)BEFORE TRANSFERS.................................. 2,476,184 672,558 (215,175) 2,933,567 1,640,249 TRANSFERS Transfers out.....................................................:........:c::,:,.,..a (560,462) (299,238) (71,391) (931,091) CHANGE IN FUND NET ASSETS.................................................. 1,915,722 373,320 (286,566) 2,002,476 1,640,249 I FUND NET ASSETS AT BEGINNING OF YEAR(AS RESTATED),..,:.,,, 14,111,782 11,332,157 5,809,120 31,253,059 383,173 FUND NET ASSETS AT END OF YEAR::+::...:.:..:...c»d:.....:+:.:<a:.......: $.. .16,027504 $ 11,705,477_, §.. 5,522,559._ $ _33,255,535... $ ,. 2023,422 See notes to basic financial statements. �I Town of North Andover,Massachusetts B-27 Baste Financial Statements PROPRIETARY FUNDS STATEMENT OF FUND NET ASSETS JUNE 30,2008 Business-Type Ac 6vities-Enterprise Funds Governmental Activities- Internal Osgood. Service ASSETS Water Sewer Sill Total Funds. _ Current assets: Cash and cash equivalents.......:........... ....................:........ $ 580,442 :5i 742,249 S $ 1,322,691 $ 2,497,342 Restricted cash and cash equivalents..................................... 3,663,753 5,979,681 = 9,643,434 Receivables,net of allowance for uncollectible amounts: User charges and utility liens:......:.....:......................:...... 1,623,726 1,199,191 2,822,917 - Intergovemmental.,,, . ............ ........ 388,453 79,382 467,835 - Total current assets.......:..........................................:. 6,256,374 8,000,503 , 14,256,877 2,497,342 Noncurrent assets: Receivables,net of allowance for uncollectible amounts: Intergovernmental......................................................... 1,181,952 1,181,952 Capital assets not being depreciated...................................... 8,106,162 133,733 4,000,000 12,239,895 Capital assets,net of accumulated depreciation....................... 20,313,790. 22,352,285 1,647,044 44,313,119 Total noncurrent assets............................................. __..28,419,952 23 667,970 5,647,044 57,734,966 Total assets...........................:......,:................. 34,676,326 31,668,473 5,647,044 71,991,843 2497,342 LIABILITIES Current liabilities: Warrants payable................................ ..:............................ 444,552 177,143 8,146 629,841 17,614 Accruedpayroll................................................................. - Other liabilities............................................„....,:,............. 8,791 31009 c 11,800 Accrued payment to refunded bond escrow agent................... 1,898,344 .659,623 - 2,557,967 Due to other funds,........................................:......::..r:.al;.:: 116,344 116,344 _ Accrued interest....,<........................................................... 169,198 173,527 342,725 Accrued health claims payable _ - - 456,306 Courtjudgments.:....:...................... ,: 56,000 56,000 - Long-term bonds and notes payable_,....,.1.........::..........:...... 2,193,589 .1,580,659 3,774,248 Total current liabilities............................................... 4,714,474 2,649,961 124,490 7,488,925 473,920 Noncurrent liabilities: Courtjudgments......._:......................................I............... - 112,ODO 112,000 - Long-term bonds and notes payable...................................... 13,934,348 17,201,035, 31,135,383 Total noncurrent liabilities.....................................I.... 13,934,348 17,313,035 .31j247,383„ Total liabilities................................................. 18,648,822 19,962,996 124,490 .38,736,308 473,920 FUND NET ASSETS Invested in capital assets,net of related debt............................ 14,045,347 10,285,477 5,646,302 29,977,126 - Unrestricted.................................... 1,982,157_ 1,420,000 (123,748): _.;3278 409: 2,023,422 Total fund net assets..............................s......,:::.......;....:::::. $ 16,027,504.. $ 11,705,477. $. 5,522,554 $ 33,255,535 . $ 2,023,422 See notes to basic financial statements, Town of North Andover,Massachusetts B-26 Basic Financial Staterneuts RECONCILIATION OF THE STATEMENT OF REVENUES,EXPENDITURES AND CHANGES IN FUND BALANCES OF GOVERNMENTAL FUNDS TO THE STATEMENT OF ACTIVITIES FOR THE FISCAL YEAR ENDED JUNE 30,2008 A IYYYY�I I YYYY��II I I III I II I I Y�4YY�111 R I ITl a YYYAYYYYYYII I. I ..... ■ I ..� .. _, Net change in fund balances-total governmental funds(page 21)................................................... $ (351,683) Governmental funds report capital outlays as expenditures. However,in the statement of activities the cost of those assets is allocated over their estimated useful lives and reported as depreciation expense. These amounts represent the related activity of the current period. Capitaloutl ays........................................................................................................ 4,645,898 Depreciation.......................................................................................... ................ (5,315,273) Revenues in the statement of activities that do not provide current financial resources are fully deferred in the statement of revenues,expenditures and changes in fund balances. Therefore,the recognition of revenue for various types of accounts receivable (i.e.,real estate and personal property,motor vehicle excise,etc.)differ between the two statements. This amount represents the net change in deferred revenue............................ (9,293,780) The issuance of long-term debt(e.g.,bonds and leases)provides current financial resources to governmental funds,while the repayment of the principal of long-term debt consumes the financial resources of governmental funds. Neither transaction,however,has any impact on net assets. Also,governmental funds report the effect of issuance costs, premiums,discounts,and similar items when debt is first issued,whereas these amounts are deferred and amortized in the statement of activities. These amounts represent the related activity of the current period. Bondproceeds......................................................................................................... (1,486,026) Proceeds of refunding bonds...................................................................................... (12,500,000) Payments to refunding bond escrow agent.................................................................... 21,053,797 Bondmaturities....................................................................................................... 6,094,566 Amortization of deferred losses on refundings............................................................... (65,205) In the statement of activities,interest is accrued on outstanding long-term debt whereas in the governmental funds interest is not reported until due. This amount represents the net change in accrued interest payable.......................................................... 67,744 Some expenses reported in the statement of activities do not require the use of current financial resources and,therefore,are not reported in the governmental funds. This amount represent the net change in long-term liabilities: Compensatedabsences.............................................................................................: (115,805) Internal service funds are used by management to account for health insurance. The net activity of the internal service funds is reported with governmental activities................. 1,64D,249 Changes in net assets of governmental activities(page 17).............................................................: $..: . 4,374,4$2 See notes to basic financial statements. Town of North Andover,Massachusetts B-25 Basic Financial Statements RECONCILIATION OF THE GOVERNMENTAL FUNDS BALANCE SHEET TOTAL FUND BALANCES TO THE STATEMENT OF NET ASSETS FOR THE FISCAL YEAR ENDED JUNE 30,2008 Total governmental fund balances(page 19)....................................................................................... $ 14,213,295 Capital assets(net of accumulated depreciation)used in governmental activities are not financial resources and,therefore,are not reported in the governmental funds.................................. 131,354,316 Other assets are not available to pay for current period expenditures and, therefore,are deferred in the governmental funds....................................................................... 7,031,929 In the statement of activities,interest is accrued on outstanding long-term debt, whereas in the governmental funds interest is not reported until due.............................................. (717,412) Long-term liabilities are not due and payable in the current period and, therefore,are not reported in the governmental funds. Bonds and notes payable,net of unamortized premiums and deferred losses on refundings............ (36,994,012) Compensated absences..................................................................................................... (1,524,649) Internal service funds are used by management to account for health insurance activities.The assets and liabilities of the internal service funds are reported as governmental activities in the statement of net assets................................................... 2,023,422 Net assets of governmental activities(page 15).......................................................................,,,,., ...... $ 115,386,889 See notes to basic financial statements. Town of North Andover,Massachusetts B-24 Basic Financial Statements School Nonmajor Total Construction Governmental Governmental,_ Project „ ., Funds Funds _. 51,648,818 4,068,018 357,435 128,125 1,704,677 1,234,529 3,624,775 4,453,319 9,435,555 4,472,209 30,502,211 292,512 417,050 1,953,656 169,526 22,364 657,071 573,845 573,845 67,891 1,062,356 8,435,555 9,306,259 98,677,973 893,681 3,262,011 - 2,126,017 10,619,206 903,815. 5,763,912 42,270,522 2,249,197 6,541,888 373,940 1,182,780 221,184 1,544,228 r 7,978,462 - 8,890,836 - - 322,592 2,200,498 6,094,566 2,180,794 903,815 11,627,931 93,088,383 7,531,740 (2,321,672) 5,589,590 133 1,377,150 2,555,701 216,596 1,269,430 1,486,026 - - 12,615 8,525,000 3,975,000 12,500,000 129,729 53,063 182,792 (247,327) (903,288) (1,624,610) (17,050,284), (4,003,513) (21,053,797) (8,426,153) 1,767,842 (5,941,273)., (894,413) (553,830) (351,683) 2,185,653 4,801,243 14,564,978 $ 1,291,240_$ 4,247,413 $ 14,213,295 Town of North Andover,Massachusetts B-23 Basic Financial Statements GOVERNMENTAL FUNDS STATEMENT OF REVENUES,EXPENDITURES AND CHANGES IN FUND BALANCES FOR THE FISCAL YEAR ENDED JUNE 30,2008 Community .....General., Stabilization. Preservation- REVENUES Real estate and personal property taxes,,.................................................... $ 51,648,818 $ $ - Motor vehicle and other excise taxes.......................................::....::........... 4,068,018 - Tax and utility liens......................................................:......................... 357,435 - Payments in lieu of taxes................................................................... ..... 1,576,552 - Community preservation surcharges.—..................................................... »; 1,234,529 Charges for services............................................................................... 828,544 - Intergovernmental................................................................................ 16,404,813 - 1,189,634 Penalties and interest on taxes....................................:....:........................ 292,512 - Licenses,permits and fees....................................................................... 1,536,606 = Fines and forfeitures............................................................:.................. 169,526 Departmental...........,............................................................................ 634,707 - Contributions....................:...........................;....................................... - - - Investment income-............................................................................ 848,997 39,155 106,313 TOTAL REVENUES...................................................................... 78,366,528 39,155 2,530,476 EXPENDITURES Current: General government.......................................................................... 2,368,330 Publicsafety..................................................................................... 8,493,189 Education...........................................................................:,........... 35,602,795 _ Publicworks............................................................,....................... 4,292,691 _ Healthand human services........................:........................................ 808,840 - Culture and recreation........................................................................ 772,118 550,926 Pension benefits..................................................................;..,.......:. 7,978,462 - Employee benefits............................................................................. 8,890,836 Property and liability insurance-....................................................... 322,592 State and county charges......................................................................... 2,200,498 Debt service: Principal.................................,........................................................ 6,094,566 , Interest........................................................................................... 2,116,652 64,142 79,941,569 615,068 EXCESS(DEFICIIINCY)Or RtN NUSS OVER EXPENDITURES..................................:....................................... (1,575,041) 39,155 1,915,408 OTHER FINANCING SOURCES(USES) Transfersin.......................................................................................... 1,178,418 - - Proceeds of bonds and notes......... —...................................................... - Premium from issuance of bonds and notes................:......................:........ 12,615 Proceeds of refunding bonds..................................................1-. ................ - - - Premium from issuance of refunding bonds................................................ - - - Transfers out................. ......... .. . .. (473,995) _ :Payments to refunding bond escrow agent... - - TOTAL OTHER FINANCING SOURCES(USES)................................ 717,038: NFr CHANGE IN FUND BALANCES.......................::.................................. (858,003) 39,155 1,915,408 FUND BALANCES AT BEGINNING OF YEAR,. ;.: .:......:.:.:. 4,470,101. 1,193,194 1,914,787 FUND BALANCES AT END OF YEAR........................................................... $ 3,612,098.$. 1,232,349 .$. . . $,830,195 See notes to basic financial statements. Town of Nortlt Andover,Massaclttrsetts B-22 Basic Financial Statements .......... schqpl Nollwajpr TOW ConsEYUCliote GoVIOMM q,t1w Govew.meqW: Funds Funds: 12.9% 1,959,427. 48b 118,035 40;406 24$152 3F83Q,693,: 18X1,872 8,353,g2,$ 46,983,617 "431 17,050;2.9.4 1,ozop1D. 1841)40;591 1,742: 2,144,430 2,144,430 VpO W. . 4,106,029 32,770,322 6,84913 2S4602 28,601 1,28S,-V8 401,236 x,855,18 6,917;72$ 1,2911249 241;0130 #,532,2411 531,528 531,528 . .......... 14� 295 8,381,872 $ B-21 Basic Financial Statements GOVERNMENTAL FUNDS BALANCE SHEET JUNE 30,2008 __:::::. Community ASSETS _.. General: .. Stabilization - Preservation Cash and cash equivalents............................................................... $ 7,580,332 $ 1,232,349 $ Investments.................................................................................. Receivables,net of allowance for uncollectible amounts: Real estate and personal property taxes......................................... 1,688,509 - Taxliens.................................................................................. 1,059,427 - Motor vehicle and other excise taxes.............................................. 348,460 - Community preservation surcharges............................................. - - 23,293 Departmentaland other.............................................................. 330,371 - - Intergovernmental..................................................................... 2,336,849 - 1,245,598 Duefrom other funds........................::............................................ 116,344 - - Tax foreclosures............................................................................. 330,961 - - Restricted assets: Cash and cash equivalents........................................................... f 3,955,810 TOTAL ASSETS............................................................................. $ 13,791,253 _ 1232,349.. . . ._5,224,701 LIABILITIES AND FUND BALANCES LIABILITIES: Warrants payable...................................................................... $ 698.028 $ - $ 125,615 Accrued payroll........................................................................ 2,455,539 - Tax refunds payable................................................................... 1,039,614 - - Otherliabilities......................................................................... 115,034 - - Accrued payment to refunded bond escrow agent............................ - - Liabilities due depositors............................................................ 106,160 _ Deferred revenue...................................................................... 5,763,038 - 1,268,891 Accruedshort-term interest......................................................... 1,742 Short-term notes payable.......................................................:.... TOTAL LIABILITIES....................................................... .............. 10,179,155 -. 1,394,506 FUND BALANCES: Reserved for: Encumbrances and continuing appropriations............................ 686,913 - - Debtservice......................................................................... '1,240,671 - - Perpetualpermanent funds..................................................... - Otherspecific purposes.......................................................... Unreserved: Designated for subsequent year's expenditures........................... 1,283,278 - - Undesignated,reported in: Generalfund................................................................... 401,236 _ Special revenue funds....................................................... 1,232,349 3,830,195 Capital projects funds........................................................ - - - Permanent funds.............................................................. - - - TOTAL FUND BALANCES... 3;612,098 1,232,349 3,830,195 TOTAL LIABILITIES AND FUND BALANCES.................................... $ 13,791,253.. $ 1,232,34,, $,_ 5,224,701 . See notes to basic financial statements. Town of North Andover,Massachusetts B-20 Basic Financial Statements STATEMENT OF ACTIVITIES(Continued) FOR THE FISCAL YEAR ENDED.JUNE_30,..2008,....,._... Primary Government Governmental Business-type Activities. Activities Total Changes in net assets: Net(expense)/revenue(from previous page)........... << ;. $i MOORS,2.1 2 ; General revenues: Real estate and personal property taxes.................. 52,131,731 - 52,131,731 Motor vehicle and other excise taxes...................... 4,148,303 - 4,148,303 Tax liens.......................................................... 293,055 - 293,055 Penalties and interest on taxes.............................. 292,512 - 292,512 Payments in lieu of taxes..................................... 1,704,677 - 11704,677 Community preservation surcharges..................... 1,240,697 = 1,240,697 Grants and contributions not restricted to specific programs........................................:.... 4,071,414 4,071,414 Unrestricted investment income........................... 888,152 888,152 Transfers,net......................................................... 931,091 (931,091) Total general revenues and transfers.......................... 65,701,632 (931,091) 64,770,541 Change in net assets........................................... 4,374,482 2,002,476 6,376,958 Net assets-beginning of year(as restated).................. 111,012,407. 31.,253,059 142,265,460 Net assets-end of year............................................ $. 115,386,889_ $ 33,255,535, $ '148,642,424 I I Town of North Andover,Massachusetts B-19 Basic Financial Statements STATEMENT OF ACIT=ES FOR THE FIS.CAL.YEAR ENDED JUNE 30,2008 Program Revenues Operating Capital Net Charges for Grants and Grants and (Expense)/ Functions/Programs Expenses Services Contributions Contributions . Revenue primary government: -.... Governmental activities: General government....................... 3,531,917 S 684,981 $ 881,271 $ - $ (1,965,665) Public safety.................................. 12,929,068 3,028,126 457,127 - (9,443,815) Education...................................... 57,679,448 3,328,079 13,281,265 - (41,070,104) Public works.................................. 6,097,048 130,794 69,453 975,861 (4,920,940) Health and human services.............. 1,766,854 148,566 469,858 - (1,148,430) Culture and recreation.................... 1,953,619 18,097 315,778 (1,619,744) Debt service-interest...................... 2,178,255. 1,019,803:. Total governmental activities....... 86,136,209 7,338,643 16,494,555 975,861 Business-type activities: 3,222,251 5,670,444 27,991 Water.......................................... Sewer...................... .................... 3,423,734 3,873,561 222,731 g Os ood Hill................................... 474,413 257,694 1,544 Total business-type activities.:..... __.7120,398. 9,801,699_. 252,266 - �, 3,�a6T• Total primary government........................ $ 93,256,607. $ . 17,140,342 S. 16,746,821 $.. . ... 975,861 See notes to basic financial statements. i I i i Town of NorthAudover,Massachusetts B-18 Basic Financial Statements STATEMENT OF NET ASSETS JUNE30,2008 _.....__... __.._.__ .... Primary Government Governmental Business-type ASSETS Activities _ Activities,,. .. Total _ Current assets: Cash and cash equival ents..................:.........;....:;:.;,:..:.::,.;..:....:.. $ 15,449,196 $ 1,322,691 $ 16,771,887 Restricted cash and cash equivalents....................::..................;..... 26,030,121 9,643,434 35,673,555 Investments..::.:...r.::.i :. :.:.. 155,643 155,64-3 Receivables,net of allowance for uncollectible amounts: Real estate and personal property t axes...................................... 1,688,509 1,688,509 Tax and utility liens............................................................... 1,059,427 72,743 1,132,170 Motor vehicle and other excise taxes................................,,,,«.•... 348,460 - 348,460 Community preservation surcharges......................................... 23,293 23,293 Usercharges:::.....::...........................:...:..,:::,.....:,..::........,:.,. 2,750,174 2,750,174 1 Departmental and other......................................................... 448,406 448,406 Intergovetmnental................................................................ 1,758,761 467,835 2,226,596 Internal bal ances....................................................................... 116.344 (116,344) Taxforecl osures...........„.......,,.............,,,.,,........,., .,......,...... 330,961 . - 330,961 Total currentassets.:......................................................... 47,409,121 14,140,533 61,549,654 Noncurrent assets: Receivables,net of allowance for uncollectible amounts: Intergovernmental,,.:,..............:, ..,............. ,.........,......... 2,071,838 1,181,952 3,253,790 Capital assets not being depreciated.............................................. 19,519,338 12,239,895 31,759,233 Capital assets,net of accumulated depreciation.;;,..,.;...........::.:.::...:: 111,834,978 44,313,119 156,148,097 Total noncurrent assets.,:..........................r..:L.f,..,...........: 133,426,154 57,734,966 191,161,120 Total assets............................................................. 180,835,275 71,875,499 252,710,774_ LIABILITIES Current liabilities: Warrants payable...................................................................... 1,515,038 629,841 2,144,879 Accrued payroll. .. _ ........ .. ........-.,................. 2,698,844 - 2,698,844 Tax refunds payable .................... .. .. ., 1,039,614 - 1,039,614 ....4.. Other liabil ities......................................................................... 179,594 11,800 191,384 Accrued payment to refunded bond escrow agent-:...................... 18,070,594 2,557,967 20,628,561 Liabilities due depositors.......................................:.................... 106,160 106,160 Accrued interest::.................:.....:.........:......_..,.......:......:,...:..., 719,155 342,725 1,061,880 Accrued health claims payable...............,..,,,.....,...,.,...,..•..,.,.,.,.,.. 456,306 456,306 Courtjudgments...................................................... 56,000 56,000 Compensated absences.., ..................... 152,465 - 152,465 Short-term notes payable........................................................ 2,144,430 2,144,430 Long-term bonds and notes payable.............................................. 6,228,338 3,774,248 10,002,586 Total current liabilfties....................................................... 33,310,528 7,372,581. ...40,683,109 Noncurrent liabilities: Court judgments,:....:.:...:................:......r;.:,:...:.,rt................t.., - 112,000 112,000 Compensated absences.........i:..:...........s.................:...:i............. 1,372,184 - 1,372,184 Long-term bonds and notes payabl e.............................................. 30,765,674 31,135,383. 61,901,057 . Total noncurrent liabilities........ ..... ................... 32,137,858 31,247,383 63,385,241 Total liabilities...............:....................................,,... 65,548,386 38,619,964,. 104068350. NET ASSETS Invested in capital assets,net of related debt.................................... 98,468,392 29,977,126 128,445,518 Restricted for; Debtservice.:.....:a...............;..,.........r.............,.......,,:.....,:;:: 1,240,671 - 1,240,671 Community preservation..........................I..............I.............. 5,099,086 5,099,086 Permanent funds: Expendable..................................................................... 531,528 531,528 Nonexpendable...............................................................: 28,602 28,602 Other specific purposes.,1-1...' -..I... ...... 1,591,099 1,591,099 Unrestricted;...:. ......... 3,278,409, 11,705,920,: Total net assets.. - t::........::......:...::.....::.....--s..: $ 115,386,889 $ 33,255,535 $ 148,642,424 '.. See notes to basic financial statements. Town offorth Andover,Massachusetts B-17 Basic Fnancial Statements This uaLye intentionally left blank. i I B-16 Basic Financial Statements B-15 This na2e intentionally left blank. i B-14 114nageirieat's Discussion and Analysis: For the Fiscal Year Ended June 30,2008 Economic Factors and Next Year's Budgets and Rates After the successful passage in fiscal year 2008 of a$1.65 million dollar Proposition 21/2 operational override that restored school and municipal services to acceptable levels after several years of decline,the fiscal year 2009 budget provides for maintaining those levels of services moving forward. The slow down in the economy has impacted several key revenue sources important to North Andover's financial stability. One is the amount of additional property tax revenue received from new construction. In previous years North Andover received approximately$900,000 in"new growth"property tax revenues. In fiscal year 2009,the anticipated revenue from this source has been reduced to$600,000. Other revenue sources projected to bring in less money then prior years include motor vehicle excise taxes(-3%), building permit fees(-11%),and interest earnings(-15%). While financial assistance to the state consists of only 13.4% of the town's total operating revenue,due to legal limitations on our other major revenue sources,we are dependent upon this aid to bridge the gap between what our restrained revenues provide and increasing demand for services. In fiscal year 2009,one major state aid source of funding,Lottery Aid,is anticipated to be level funded at the prior year level of$2.4 million',while the other major source,Chapter 70 Aid for Education,is projected to increase by 9.14% to$5,551,977. In order to maintain existing levels of service,the fiscal year 2009 budget allocates all of the town's certified free cash,$983,278,plus$300,000 in overlay surplus to balance the budget, The use of Other Financing Sources to balance the budget has decreased by 14% from the prior year,thus moving us in the direction of a achieving a structurally balanced budget,i.e.,operating revenues equaling operating expenses. In regards to North Andover's operating expenses,certain non-departmental costs such as retirement expenses, state assessments and employee health insurance costs continue to increase thus putting financial strains on our ability to fund the operating budgets of town departments. The retirement budget is expected to increase by 12% and state assessments,primarily payment for retired teacher's health insurance,is expected to increase by 147o, both a higher rate then expected growth in revenues at 3%. Employee health insurance costs are projected to increase at 9.4%,however,a surplus in the health insurance trust fund will allow us to limit the increase in the town appropriation to the trust fund to a 1%increase. The North Andover Public Schools budget will increase 3.2% to$36,395,338 in fiscal year 2009 while municipal department budgets will grow by 2% to$17,113,840. These modest increases will allow service levels to remain at their current levels. However,requests for enhanced or expanded services will not be able to be met. Requests for Information This financial report is designed to provide a general overview of the Town's finances for all those with an interest in its finances. Questions concerning any of the information provided in this report or requests for additional financial information should be addressed to the Budget Director/Town Accountant,Town Hall,120 Main Street,North Andover,Massachusetts 01845, In January of 2009,the State reduced FY09 lottery aid by 21.9%from$2,430,080 to$1,,896,665 Town of North Andover,Massachusetts B-13 Basic Financial Statements Management's Discussion and Analysis .;For the Fiscal Year Ended June 30,2008 The following table summarizes the Town's capital assets(net of accumulated depreciation): Governmental Activities Business-Type Activities Total: 2008 2007 2008 2007 .2008 X07 L and...................I................ $ 17,657,609 $ 17,657,609 $ 6,097,262 $ 6,097,262 $ 23,754,871 'S; 23,754,871 Land improvements................ 1,475,119 1,080,237 144,677 153,724 1,619,796 1,233,961 Buildings and improvements..... 86,384,018 84,373,144. 1,408,614 1,456,720 87,792,632 85,829,864 Machinery and equipment........ 3,046,403 2,589,738 899,741 956,594 3,946,144 3,546,332 library books......................... 234,061 314,769 - - 234,061 314,769 vehicles...................... 1,240,782 819,409 174,678 117,438 1,415,460 936,847 Pump stations......................;.. - - 1,217,253 1,332,910 1,217,253 1,332,910 Treatment plants..................... - 8,068,944 8,521,202 8,068,944 8,521,202 Reservoirs............................. - 497,078 549,399 497,078 549,399 Infrastructure......................... 19,454,595 18,731,837 31,902,134 30,145,130 51,356,729 48,876,967 Construction in progress........... 1,861,729 6,456,948 6,142,633 5,850,598 8,004,362 _ 12.307,546 Total capital assets.................. $ 131,354,316 $ 132,023,691 $ 56,553,014 $, 55,180,977 $. 187,907,330 $_ .. 187204,668. Additional information on the Town's capital assets can be found in Note 5 on pages 44-46 of this report, Long-Term Debt At the end of the current fiscal year,total gross bonded debt outstanding was$73,487,218,which is backed by the full faith and credit of the Town,and is summarized as follows: Governmental Activities Business-Type Activities Total 2008 2007 2008 2007 2008 2007 General obligation bonds........ +. 38,148,855 $ 50,577,395 $ 24,472,456 $ 22,452,602 $ 62,621,311 $ 73,029,997 MWPAT:nptes. .o ........ - 10,865,907 8,366,215 10,865,907 8,366,215 Total bonds and notes............ $ 38,148,855 .$ 50,577,395_ $ 35,338,363 $ 30,818,817 $ 73,487,218 $ 81,396,212 The Town's total gross bonded debt decreased by$7,908,994(9.7%)during the current fiscal year. The Town's bond-ratings from Standard&Poor s and Moody's Investors Services far the 3une 2008 band issue was AAA and Aaa,respectively. Additional information on the Town's long-term debt can be found in Note 8 on pages 48-56 of this report. I Town of North Andover,Massachusetts B-12 Basic Financial Statements Mnageme�tt's Dzscu: slQtl did t7 nalys�s._. _ For the Fiscal Year Ended June 30,2008 Proprietary funds The Town's proprietary funds provide the same type of information found in the government-wide financial statements,but in more detail. Unrestricted net assets of the water,sewer and Osgood Hill enterprise funds at the end of the year amounted to $1,982,157,$1,420,000 and($123,748),respectively. The water,sewer and Osgood Hill enterprise funds had increases/(decreases)in net assets for the year totaling$1,915,722,$373,320 and($286,566),respectively. Other factors concerning the finances of these three funds have already been addressed in the discussion of the Town's business-type activities. General Fund Budgetary Highlights The original general fund budget authorized$75,047,989 in appropriations. During the year,general fund revenues and other financing sources exceeded budgetary estimates,while expenditures and encumbrances and continuing appropriations were less than budgetary estimates,resulting in an actual decrease in fund balance that was less than the final amended budget amount by approximately $749,000. Encumbrances at June 30,2008,total$686,913, Capital Asset and Debt Administration Capital assets The Town's investment in capital assets for its governmental and business type activities at the end of the fiscal year totaled$187,907,330(net of accumulated depreciation). This investment in capital assets includes land,land improvements,buildings and improvements,machinery and equipment,library books,vehicles,treatment plants,pump stations,reservoirs,infrastructure and construction in progress. The total increase in the investment in capital assets for the current fiscal year totaled$702,662 or 0.4% (a 0.3% decrease for governmental activities and a 0.7% increase for business-type activities). Major capital asset events that occurred during the current fiscal year include the following: ➢ Construction in progress-water storage tanks($1,346,000),Franklin school($383,000)and various water projects($513,000) ➢ Public safety equipment($434,000) ➢ Town/School data network($374,000) ➢ Continued reconstruction of roadways and sidewalks($1,804,000) ➢ Continued upgrades of the water and sewer infrastructure($2,445,000) Town of North Andover,Massachusetts B-11 Basic Financial Statements I i I Management's Discussion and Analysis For the Fiscal Year Ended June 30,2008 Business-type activities increased the Towns net assets by$2,002,476,accounting for 31.4% of the total growth in net assets. In the prior year,business-type activities increased the Towns net assets by$1,614,931. The key elements of this change are increases to fiscal year 2008 water and sewer user charge rates of approximately fifteen and thirty percent,respectively. Fund Financial Statement Analysis As noted earlier,the Town uses fund accounting to ensure and demonstrate compliance with finance-related legal requirements. Governmental funds, The focus of the governmental funds is to provide information on near-term inflows,outflows,and balances of expendable resources. Such information is useful in assessing the Town's financing requirements. In particular, unreserved fund balance may serve as a useful measure of a government's net resources available for spending at the end of the fiscal year. At the end of the current fiscal year,the governmental funds reported combined ending fund balances totaling $14,213,295,a decrease of$351,683,in comparison with the prior year. Approximately$9,383,000 represents undesignated fund balance. The remainder of fund balance is designated or reserved to indicate that it is not available for new spending because it has already been committed to: ➢ Liquidate contracts and purchase orders of the prior period($686,913) ➢ Debt service($1,240,671) ➢ Perpetual permanent funds($28,602) ➢ Other specific purposes($1,591,099) ➢ Funding a portion of the fiscal year 2009 budget($1,283,278) The general fund is the chief operating fund of the Town. At the end of the current fiscal year,undesignated fund balance of the general fund totaled.$401,236,while total fund balance was$3,612,098. As a measure of the general fund's liquidity,it may be useful to compare both undesignated fund balance and total fund balance to total general fund expenditures. Undesignated fund balance represents 0.5% of total general fund expenditures,while total fund balance represents 4.5% of that same amount. The balance of the Town's general fund decreased by$858,003,during fiscal year 2008. The net change in fund balance on a budgetary basis(excluding encumbrances and continuing appropriations)was a decrease of approximately$637,000 and tax refunds payable(on a GAAP basis)increased approximately$309,000. i Financial highlights of the Town's other major governmental funds are as follows: The fund balance of the stabilization fund(special revenue)increased by$39,155 during the current fiscal year. This is attributable to investment income. The fund balance of the community preservation fund(special revenue)increased by$1,915,408 during the current fiscal year. The fund recognized$1,234,529 in surcharges,$1,189,634 in intergovernmental revenues and $106,313 in investment income. Expenditures of$615,068 were incurred during the fiscal year. The fund balance of the school construction capital projects fund decreased by$894,413 during the current fiscal year. The fund recognized$8,435,555 in intergovernmental revenues,$133 in transfers in from the general fund, $216,596 in proceeds of bonds and notes,$129,729 in premium from issuance of bonds and notes and$8,525,000 proceeds of refunding bonds. Expenditures of$903,815 were incurred during the fiscal year.Transfers out of $247,327 to the general fund and payments to refunding bond escrow agent of$17,050,284 were made during the fiscal year. Town of North Andover,Massachusetts B-10 Basic Financial Statements Management's Discussion and Analysis For the Fiscal Year Ended June 30,2008 Changes in Net Assets For the fiscal year ended June 30,2008,the Towns total net assets increased by$6,376,958 compared to an increase of$7,685,984 in the prior fiscal year. These amounts are summarized as follows: Governmental Activities Business-Type Activities Tutnt 2t)p& 24p7 2008 251�7 200& 407 Revenues --^-^— - Progmm Revenues. Charges for services................................... $ 7,338,643 $ 6,446,239 :$ 9,801,699 $ 9,071,735 $ 17,140,342 $ 15,517,974 Operating grants and contributions................ 16,494,555 14,159,597 252,266 227,214 16,746,821 14,386,811 Capital grants and contributions................... 975,861 3,273,196 - 975,861 3,273,196 General Revenues., Real estate and personal property taxes.........., 52,131,731 49,146,112 , 52,131,731 49,146,112 Motor vehicle and other excise taxes..............: 4,148,303 3,432,710 ; - 4,148,303 3,432,710 Tax liens.................................................. 293,055 290,057 = - 293,055 290,057 Penalties and interest on taxes.. ....... 292,512 305,539 +, 292,512 305,539 Payments in lieu of taxes......................;,..... 1,704,677 1,623,750 - 1,704,677 1,623,750 Community preservation surcharges.............. 1,240,697 1,249,235 - 1,240,697 1,249,235 Grants and contributions not restricted to specific programs.................................. 4,071,414 3,589,640 4,071,414 3,589,640 Unrestricted investment income.................... 888,152 1,136,035 - 888,152 1,136,035 Gain on disposal of capital assets................... - 1,770 -- - 1,770 Total revenues..................................... 89,579,600 84,653,880, 10,053,965 9,298,949 99,633,565 93,952,829 Expenses General government........................................ 3,531,917 3,299,710 3,531,917 3,299,710 Public safety.................................................. 12,929,068 12,241,105 12,929,068 12,241,105 Education........I....... 57,679,448 52,015,222 57,679,448 52,015,222 Public works.................................................. 6,097,048 5,496,347 ? - 6,097,048 5,496,347 Health and human services.............................. 1,766,854 1,697,653 = 1,766,854 1,697,653 Culture and recreation...................................... 1,953,619 1,931,878 1,953,619 1,931,878 DebtservIce-interest....................................... 2,178,255 2,720,892 f 2,178,255 2,720,892 Water........................................................... - 3,222,251 2,929,823 3,222,251 2,929,823 Sewer....................................................... 3,423,734 3,418,575 3,423,734 3,418,575 Osgood Hill..............._.................................. 4744413 515,640 474,413 515,640 Total expenses.......................................... 86,136,209 7.9,4.02,807 7,120,398 __6,864,038_ 93,256,607 86,266,845 Change in net assets before transfers......................... 3,443,391: 5,251,073 2,933,567 2,434,911 6,376,958 7,685 984 Transfers,net....................................................... ,931.49E 819,980,: (931,091) (819,980) - Change in net assets.............................................. 4,3791482 6,071,053 2,002,476 1,614,931 6,376,958 7,685,984 Net assets-beginning of year(as restated).................. 111,012,407 104,941,354 31,253,059__ 29,638,128. 142,265,466 134,579,482 Net assets-end of year.......................................... $ 115,386,889:,$ ;;,111,012,407 :$ 33,255,535 $ 31,253,059 $ 148,642,424 $ 142,265,466 Governmental activities increased the Towns net assets by$4,374,482,accounting for 68.6% of the total growth in net assets. In the prior year,governmental activities increased the Towns net assets by$6,071,053. The key element of this change is the fiscal year 2007 accrual of$2,985,922 in intergovernmental revenue from the :Massachusetts School Building Authority(MSBA)for school construction assistance. Town of North Andover,Massachusetts B-9 Basic Financial Statements Management's Discussion and Analysis For the Fiscal Year Ended June 30,2008 Govenlnlental Activities Business-Type Activities Total '.... z0O6 9007 2006 2007 2008 2097 Assets Current assets........................: $ 47,409,121 $ 28,566,912 $ 14,140,533 $ 6,831,388 $ 61,549,654 $ 35,398,300 Noncurrent assets(excluding capital assets).................... 2,071,838 11,059,498 1,181,952 1,261,334 3,253,790 12,320,832 Capital assets(net)................... 131,354,316 132,023,691 56,553,014 55,1801977 187,907,330 187,204,668 4-- Total assets..:.................... 180,835,275 171,650,101 71,875,499 63,273,699 252,710,774 234,923,800 Liabilities Current liabilities (excluding debt)................. 24,937,760 6,186,915 3,598,333 1,114,141 28,536,093 7,301,056 Noncurrent liabilities (excluding debt)................. 1,372,184 1,267,960 112,000 168,000 1,484,184 1,435,960 Current debt........................... 8,372,768 9,121,037 3,774,248 3,647580 12,147,016 12,768,617 Noncurrent debt...........,.........., 30,765,674 44,061,782 31,1351383 27,090,919 61,901,057 71,152,701 Total liabilities.................. 65,448,386 60,637,694 38,619,964 32,020,64D 104,068,350 92,658,334 Net Assets Invested in capital assets (net of related debt)..........., 98,468,392 96,211,743 29,977,126 28,849,317 128,445,518 125,061,060 Restricted.............................. 8,490,986 5,327,670 8,490,986 5,327,670 Unrestricted........................... 8,427,511 9,472,994 3,278,409 2,403,742 11,705,920 11,876,736 Total net assets.................. $ 115,386,889 $ 111,012,407 $ 33,255,535 $ 31,253,059 $ 148,642,424 $ 142,265,466 A portion of the Towxi s net assets(86.4%)is its investment in capital assets(i.e.,land,construction in progress, land improvements,buildings and improvements,machinery and equipment,library books,vehicles,treatment plants,pump stations,reservoirs and infrastructure);less any related outstanding debt used to acquire those assets. These capital assets are used to provide services to citizens;consequently,these assets are not available for future spending. Although the investment in its capital assets is reported net of related debt,it should be noted that the resources needed to repay this debt must be provided from other sources,since the capital assets themselves cannot be used to liquidate these liabilities. The governmental activities investment in capital assets includes$2,336,849 of state school construction assistance which will be received in subsequent fiscal years as described in Note 4 on page 43 of this report. i An additional portion of the Town's net assets(5.7%)represents resources that are subject to external restrictions on how they may be used. The remaining balance of unrestricted net assets(7.9%or$11,705,920)may be used to meet the Town's ongoing obligations to citizens and creditors. Of this amount,$8,427,511 may be used to support governmental activities and$3,278,409 may by used to support business-type activities. At the end of the current fiscal year,the Town reports positive balances in all three categories of net assets,both for the government as a whole,as well as for its separate governmental and business-type activities. Town of North Andover,Massachusetts B-8 Basic Financial Statements Management's Discussion and Analysis For the Fiscal Year Ended June 30,2008 Internal service fiends are an accounting device used to accumulate and allocate costs internally among the Towns various functions. The Town uses an internal service fund to account for its employees'health insurance risk- financing activities. Because these services predominantly benefit governmental rather than business-type functions,they have been included within governmental activities in the government-wide financial statements but are combined into a single,aggregated presentation in the proprietary fund financial statements. The basic proprietary fund financial statements can be found on pages 24-26 of this report. Fiduciary funds Fiduciary funds are used to account for resources held for the benefit of parties outside the government. Fiduciary funds are not reflected in the government-wide financial statements because the resources of those funds are not available to support the Town's programs. The accounting used for fiduciary funds is similar to that used for proprietary funds. Private-purpose trust funds and agency funds are reported and combined into a single,aggregate presentation in the fiduciary fund financial statements under the captions"private purpose trust funds"and"agency funds", respectively. The basic fiduciary fund financial statements can be found on pages 27-28 of this report. Notes to the basic financial statements The notes provide additional information that is essential to a full understanding of the data provided in the government-wide and fund financial statements. The notes to the financial statements can be found on pages 29- 59 of this report. Other information In addition to the basic financial statements and accompanying notes,this report also presents certain required supplementary information and additional'information(located on pages 60 through 65 and 66 through 68, respectively). Presented in this information is the budget comparison for the general fund,certain pension information and budgetary comparisons of the enterprise funds on the budgetary basis of accounting. Government-Wide Financial Analysis The following tables present current and prior year data on the government-wide financial statements. I Net Assets As noted earlier,net assets may serve over time as a useful indicator of a government's financial position. The Town's assets exceeded liabilities by$148,642,424 at the close of the fiscal year and are summarized as follows: Town of North Andover,Massachusetts B-7 Basic Financial Statements Management's Discussion and Analysis For the Fiscal Year Ended June 30,2008 Both of the government-wide financial statements distinguish functions of the Town that are principally supported by taxes and intergovernmental revenues(governmental activities)from other functions that are intended to recover all or a significant portion of their costs through user fees and charges(business-type activities). Governmental activities include general government,public safety,education,public works,health and human services,culture and recreation and debt service(interest). Business-type activities include the Town's water, sewer and Osgood Hill Estate operations. The government-wide financial statements can be found on pages 15-17 of this report. Fund financial statements A fund is a grouping of related accounts that is used to maintain control over resources that have been segregated for specific activities or objectives. The Town,like other state and local governments,uses fund accounting to ensure and demonstrate compliance with finance-related legal requirements. All of the funds can be divided into the following categories and are described below: 1. Governmental funds 2. Proprietary funds 3. Fiduciary funds Governmental Funds Governmental funds are used to account for essentially the same functions reported as governmental activities in the government-wide financial statements. However,unlike the government-wide financial statements, governmental funds financial statements focus on near-term inflows and outflows of expendable resources,as well as on balances of expendable resources available at the end of the fiscal year. Such information may be useful in evaluating a governments near-term financing requirements. Because the focus of governmental funds is narrower than that of the government-wide financial statements,it is useful to compare the information presented for governmental funds with similar information presented for governmental activities in the government-wide financial statements. By doing so,readers may better understand the long-term effect of the government's near-term financing decisions. Both the governmental funds balance sheet and the governmental funds statement of revenues,expenditures,and changes in fund balances provide a reconciliation to facilitate this comparison between governmental funds and governmental activities. The Town maintains 262 individual governmental funds. Information is presented separately in the governmental funds balance sheet and in the governmental funds statement of revenues,expenditures,and changes in fund balances for the general,stabilization(special revenue),community preservation(special revenue),and school construction project(capital project)funds,each of which are considered to be major funds. Data from the other 258 governmental funds are combined into a single,aggregated presentation titled nonmajor governmental funds. The basic governmental fund financial statements can be found on pages 18-23 of this report. Proprietary funds The Town maintains two types of proprietary funds. Enterprise funds are used to report the same functions presented as business-type activities in the government- wide financial statements. The Town uses enterprise funds to account for its water,sewer and Osgood Hill Estate operations,all of which are considered to be major funds. Town of North Andover,Massachusetts B-6 Basic Financial Statements Management's Discussion and Analysis: For the Fiscal Year Ended June 30,2008 As management of the Town of North Andover,Massachusetts(Town),we offer readers of these financial statements this narrative overview and analysis of the Town's financial activities for the fiscal year ended June 30, 2008, Financial Highlights ➢ The assets of the Town exceeded its liabilities at the close of the most recent fiscal year by$148,642,424 (net assets). Of this amount,$11,705,920(unrestricted net assets)may be used to meet the government's ongoing obligations to citizens and creditors. ➢ The Town's total net assets increased by$6,376,958. ➢ As of the close of the fiscal year,the Town's governmental funds reported a combined ending fund totaling$14,213,295;a decrease of$351,683 in comparison with the prior year. $10,666,010 represents unreserved fund balance. ➢ At the end of the fiscal year,undesignated fund balance for the general fund totaled$401,236,or 0.5 percent of total general fund expenditures. In the prior year,undesignated fund balance for the general fund totaled$1,308,742. ➢ The Town's total gross bonded debt decreased by$7,908,994 during the fiscal year. Overview of the Basic Financial Statements This discussion and analysis is intended to serve as an introduction to the basic financial statements,which consists of the following three components: 1. Government-wide financial statements 2. Fund financial statements 3. Notes to the basic financial statements. This report also contains other supplementary information in addition to the basic financial statements themselves. Government-wide financial statements The government-wide financial statements are designed to provide readers with a broad overview of the Town's finances,in a manner similar to a private-sector business. The statement of net assets presents information on all of the Town's non-fiduciary assets and liabilities,with the difference between the two reported as net assets. Over time,increases or decreases in net assets may serve as a useful indicator of whether the financial position of the Town is improving or deteriorating. The statement of activities presents information showing how the government's net assets changed during the most recent fiscal year. All changes in net assets are reported as soon as the underlying event giving rise to the change occurs,regardless of the timing of related cash flows. Thus,revenues and expenses are reported in this statement for some items that will only result in cash flows in future fiscal periods (e.g.,uncollected taxes,earned but unused vacation leave,etc.). Town of North Andover,Massachusetts B-5 Basic Financial Statemei. i This page intentionally left blank. i i i I B-4 Management's Discussion and Analysis B-3 Our audit was conducted for the purpose of forming opinions on the financial statements that collectively comprise the Town of North Andover,Massachusetts'basic financial statements. The additional information located on pages 66 through 68 is presented for purposes of additional analysis and is not a required part of the basic financial statements. Such information has been subjected to the auditing procedures applied in the audit of the basic financial statements and,in our opinion,is fairly stated in all material respects in relation to the basic financial statements taken as a whole. December 8,2008 B-2 FYI gr r Ii� t SULLIVAN, ROGERS & COMPANY, LLC Corporate Place I,Suite 204 • 99 South Bedford Street ` Burlington,Massachusetts 01803 P-781-229-5600 F•781-229-5610 www.sullivan-rogers.corn Certified Public Accountants Independent Auditors'Report To the Honorable Board of Selectmen Town of North Andover,Massachusetts We have audited the accom panying financial statements of the governmental activities,the business-type activities,each major fund,and the aggregate remaining fund information of the Town of North Andover, Massachusetts,as of and for the fiscal year ended June 30,2008,which collectively comprise the Town's basic financial statements as listed in the table of contents. These financial statements are the responsibility of the Town of North Andover,Massachusetts'management. 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 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 of material misstatement. An audit includes examining,on a test basis,evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinions. In our opinion,the financial statements referred to above present fairly,in all material respects,the respective financial position of the governmental activities,the business-type activities,each major fund,and the aggregate remaining fund information of the Town of North Andover,Massachusetts as of June 30,2008,and the respective changes in financial position and cash flows,where applicable,thereof for the fiscal year then ended in conformity with accounting principles generally accepted in the United States of America. I As more fully described in Note 14,the Town has restated the accounts receivable balances of its business-type activities and water and sewer enterprise funds. In accordance with Government Auditing Standards,we have,also issued our report dated December 8,2008,on our consideration of the Town of North Andover,Massachusetts'internal control over financial reporting and on our tests of its compliance with certain provisions of laws,regulations,contracts,and grant agreements and other matters. The purpose of that report is to describe the scope of our testing of internal control over financial reporting and compliance and the results of that testing and not to provide an opinion on the internal control over financial reporting or on compliance. That report is an integral part of an audit performed in accordance with Government Auditing Standards and should be considered in conjunction with this report in considering the results of our audit. The management's discussion and analysis(located on pages 4 through 13)and budgetary comparison for the general fund and certain pension information(located on pages 60 through 65)are not a required part of the basic financial statements but are supplementary information required by accounting principles generally accepted in the United States of America. We have applied certain limited procedures,which consisted principally of inquiries of management regarding the methods of measurement and presentation of the required supplementary information. However,we did not audit the information and express no opinion on it. B-1 This page intentionally left blank. Independent Auditors Report TOWN OF NORTH ANDOVER,MASSACHUSETTS INDEPENDENT AUDITORS'REPORT ON BASIC FINANCIAL STATEMENTS AND REQUIRED SUPPLEMENTARY INFORMATION FOR THE FISCAL YEAR ENDED JUNE 30,2008 TABLE OF CONTENTS i Page IndependentAuditors'Report..............................................................................................................................................B-1 Management's Discussion and Analysis.............................................................................................................................B-3 BasicFinancial Statements.....................................................................................................................................................B-IS Statementof net assets.............................................................................................................................................. .....B-17 Statementof activities........................................................................................................................................................B-18 Governmentalfunds-balance sheet...............................................................................................................................B-20 Governmental funds-statement of revenues,expenditures and changes in fund balances..................................B-22 Reconciliation of governmental funds balance sheet total fund balances to the statement of net assets.........I.....B-24 Reconciliation of the statement of revenues,expenditures and changes in fund balances of governmental funds tothe statement of activities..............................................................................................................................................B-25 Proprietary funds-statement of fund net assets...........................................................................................................B-26 Proprietary funds-statement of revenues,expenses and changes in fund net assets..............................................B-27 Proprietary funds-statement of cash flows...................................................................................................................B-28 Fiduciary funds-statement of fiduciary net assets.......................................................................................................B-29 Fiduciary funds-statement of changes in fiduciary net assets...................................................................................B-30 Notesto basic financial statements..................................................................................................................................B-31 Required Supplementary Information.................................................................................................................................B-63 General Fund-schedule of revenues,expenditures and changes in fund balance-budget and actual..............B-64 Pensionplan schedules......................................................................................................................................................B-66 Schedule of funding progress (system) ......................................................................................................................B-66 Schedule of employer contributions(system)............................................................................................................B-66 Townshare of system ARC.............. .............................................................................................................B-66 Notes to required supplementary information..............................................................................................................B-67 AdditionalInformation..........................................................................................................................................................B-69 Enterprise funds-schedule of revenues,expenses and changes in fund net assets-budgetary basis-budget andactual.............................................................................................................................................................................B-70 APPENDIX B I TOWN OF NORTH ANDOVER, MASSACHUSETTS INDEPENDENT AUDITORS' REPORT ON BASIC FINANCIAL STATEMENTS AND REQUIRED SUPPLEMENTARY INFORMATION FOR THE FISCAL YEAR ENDED JUNE 30, 2008 This page intentionally left blank. APPENDIX B There follows in this Appendix audited financial statements for the fiscal year ended June 30, 2008 together with the report of the certified public accountants Sullivan,Rogers &Company, LLC.& Company,LLC. i i Town of North Andover,Massachusetts Combined Statement of Revenues,Expenditures and Changes in Fund Equity General Fund(1) Fiscal Year Ended June 30, Revenues 2008 2007 2006 2005 2004 Property taxes $51,648,818 $48,777,621 $47,835,561 $45,008,746 $44,597,907 Excise taxes 4,068,018 3,477,581 4,010,270 3,784,239 3,549,757 Penalties and interest 292,512 305,539 410,394 230,649 227,021 Licenses,permits and fees 1,536,606 1,245,595 1,771,187 1,379,672 1,393,472 Intergovernmental 16,404,813 15,208,051 13,940,898 12,619,519 11,605,472 Charges for service 828,544 797,455 770,526 631,631 662,256 Interest earnings 848,997 1,082,484 849,810 347,318 370,720 Tax and utility liens 357,435 282,196 393,770 151,272 228,941 Payments in lieu of taxes 1,576,552 1,586,050 1,401,504 1,227,201 1,236,263 Fines and forfeitures 169,526 124,303 120,993 108,026 100,230 Departmental and other 634,707 415,233 503,197 317,726 189,497 Total Revenues $78,366,528 $73,302,108 $72,008,110 $65,805,999 $64,161,536 Expenditures General government $ 2,368,330 $ 2,427,837 $ 2,214,520 $ 2,316,497 $ 2,150,986 Public safety 8,493,189 8,308,701 7,917,432 7,832,236 7,318,587 Education 35,602,795 32,052,996 31,605,215 30,514,809 30,458,713 Public works 4,292,691 3,599,351 2,558,203 4,780,034 4,001,013 Employee benefits 8,890,836 7,957,488 6,842,992 6,411,883 6,276,190 Debt service: Principal 6,094,566 6,588,374 5,784,931 5,792,801 5,377,635 Interest 2,116,652 2,687,682 3,389,448 3,277,873 3,184,401 Health and human services 808,840 729,238 710,325 666,008 641,460 Culture and recreation 772,118 675,313 711,554 644,185 644,272 Pension benefits 7,978,462 7,212,850 6,544,992 6,048,643 4,822,461 Property and liability insurance 322,592 415,406 340,145 338,998 295,993 State and County charges 2,200,498 2,170,566 1,508,576 1.239,139 930,898 Total Expenditures $79,941,569 $74,825,802 $70,128,033 $69,863,106 $66,102,609 Excess of revenues over/(under) expenditures $ (1,575,041) $ (1,523,694) $ 1,880,077 $(4,057,107) $ (1,941,073) Other Financing Sources(Uses) Operating transfers in 1,178,418 889,668 799,728 1,656,438 1,047,415 Sale of capital assets 0 1,770 0 0 0 Premium from issuance of bonds And notes 12,615 0 61,582 527,918 389,070 Operating transfers(out) (473,995) (503,666) (887,811) 0 (40,000) Total Other Financing Sources/(Uses) $ 717,038 $ 387,772 $ (26,501) $ 2,184,356 $ 1,396,485 Excess of revenues and other financing sources over/(under)expenditures and other financing uses $ (858,003) $(1,135,922) $ 1,853,576 $ (1,872,751) $ (544,588) Fund Equity,beginning of year $ 4,470,101 $ 5,606,023 $ 3,752,447 $ 5,625,198 $ 6,169.786 Fund Equity,end of year 3.612.098 4.470.101 5.606.023 3.752.447 5.625.198 (2) Taken from the audited financial statements of the Town prepared by Sullivan,Rogers& Company,LLC. A-4 Town of North Andover,Massachusetts Combined Statement of Revenues,Expenditures and Changes in Fund Equity General Fund(1) Fiscal Year Ended June 30,2009 Revenues Property taxes&personal property $54,496,257 Tax and utility liens 135,451 Payments in lieu of taxes 1,687,058 Motor vehicle excise taxes 3,727,728 Charges for service 911,929 Penalties and interest 331,059 Licenses,permits and fees 215,563 Fines and forfeitures 155,272 Intergovernmental 14,984,540 Departmental and other 1,240,084 Investment earnings 472,013 Total Revenues $78,356,954 I Expenditures General government $ 2,550,085 Public safety 8,587,440 Education 35,729,622 Public works 4,686,678 Health and human services 881,624 Culture and recreation 799,424 Pension benefits 8,632,667 Property and liability insurance 321,675 Employee benefits 9,389,284 Debt service: Principal 6,362,702 Interest 1,275,869 State and County charges 2,267,181 Total Expenditures 81,484,251 Excess of revenues over/(under) expenditures (3,127,297) Other Financing Sources(Uses) Operating transfers in 1,100,814 Premium from issuance of bonds 202,338 Operating transfers(out) (196,295) Total Other Financing Sources/(Uses) 1,106,857 Excess of revenues and other financing sources over/(under)expenditures and other financing uses (2,020,440) Fund Equity,beginning of year 3,612,098 Fund Equity, end of year $ 1.591.658 (1) Unaudited.Excerpted from drat financial statements of the Town prepared by Sullivan,Rogers&Company,LLC A-3 TOWN OF NORTH ANDOVER MASSACHUSETTS BALANCE SHEET (1) GENERAL FUND June 30 Assets 2008 2007 2006 2005 2004 Cash&Investments $ 7,580,332 $ 7,976,017 $ 9,406,450 $ 6,848,418 $ 8,147,559 Receivables: Property Taxes 1,688,509 1,165,210 674,261 906,439 393,601 Excise Taxes 348,460 268,174 313,045 246,931 201,418 Due from Other Governments 2,336,849 12,296,650 14,379,161 15,218,320 16,648,471 Tax Liens 1,059,427 1,217,457 1,218,260 1,259,459 1,068,245 Tax Foreclosures 330,961 237,311 228,647 216,078 216,078 Departmental & Other 330,371 245,956 200,640 0 0 Investment in Joint Venture 0 0 0 599,290 957,944 Prepaid Expenditures 0 0 5,875 0 0 Other Assets 116,344 237,311 146 330,296 188,758 Total Assets 13,791,253 23,460.124 $26,426,485 $25,625,231 $27,822,074 Liabilities and Fund Equity Liabilities Warrants Payable $ 698,028 $ 678,148 $ 667,522 $ 938,465 $ 1,171,595 Accrued Liabilities 2,455,539 2,186,778 2,209,844 1,957,371 1,880,117 Deferred Revenue 5,763,038 15,118,950 16,786,212 17,771,938 18,385,462 Reserve for Tax Refunds 1,039,614 730,488 470,300 208,250 156,095 Liabilities Due Depositors 106,160 106,160 106,160 51,334 51,334 Accrued Interest 1,742 48,998 322,347 769,602 468,875 Other Liabilities 115,034 120,501 258,077 175,824 83,398 Total Liabilities 10,179,155 18,990,023 20,820,462 21,872,784 22,196,876 Fund Equity j Reserved for Encumbrances 686,913 582,147 239,040 275,028 149,346 Reserved for Debt Service 1,240,671 1,088,368 776,905 0 0 Unreserved: Designated 1,283,278 1,490,844 515,267 2,486,550 2,648,325 Undesignated 401,236 1,308,742 4,074,811 990,869 2,827,527 Total Fund Equity 3,612,098 4,470,101 5,606,023 3,752,447 5,625,198 Total Liabilities and Fund Equity 13.791.253 23,460,124 $26,426,485 $25,625,231 $27,822,074 (1) Taken from the audited financial statements of the Town prepared by Sullivan,Rogers&Company,LLC. A-2 TOWN OF NORTH ANDOVER MASSACHUSETTS BALANCE SHEET(1) GENERAL FUND JUNE 30,2009 Assets Cash& Cash Equivalents $5,796,160 Receivables: Real Estate&Personal Property Taxes 1,812,854 Tax Liens 963,122 Motor Vehicle &Other Excise Taxes 306,586 Departmental &Other 516,900 Intergovernmental 2,198,586 Tax Foreclosures 377,080 Due from Other Funds 301,187 Total Assets 12,272,475 Liabilities and Fund Equity Liabilities Warrants Payable $ 934,202 Accrued Payroll 2,570,790 Tax Refunds Payable 1,001,000 Liabilities Due Depositors 106,160 Other Liabilities 71,299 Deferred Revenue 5,997,366 Total Liabilities 10,680,817 Fund Equity Reserved for Encumbrances 250,920 Reserved for Debt Service 1,175,881 Unreserved: Undesignated 164,857 Total Fund Equity 1,591,658 Total Liabilities and Fund Equity 12,272.475 (1) Unaudited.Excerpted from drat financial statements of the Town prepared by Sullivan,Rogers& Company,LLC. A-1 This page intentionally left blank. I I APPENDIX A The Balance Sheet and Combined Statement of Revenues,Expenditures and Changes in Fund Balance for fiscal year 2009 are taken from the draft financial statements prepared by Sullivan,Rogers & Company, LLC. The Balance Sheets and Combined Statement of Revenues, Expenditures and Changes in Fund Balance for fiscal year 2004 through 2008 are taken from the audited financial statements prepared by Sullivan, Rogers & Company,LLC. There follows in Appendix B the audited financial statements for the Town for fiscal year ended June 30, 2008. i i I i LITIGATION In the opinion of Town Counsel, no pending litigation is considered likely to result, either individually or in the aggregate, in final judgments which would materially affect the Town's financial position. TOWN OF NORTH ANDOVER Massachusetts /s/Jennifer Yarid Treasurer/Collector Dated: November 18, 2009 i 44 Housing Unit Inventory 2000 (1) North Andover Essex County Massachusetts Units in Structure Number Percent Number Percent Number Percent 1,Detached 5,609 56.4% 149,666 52.1% 1,374,479 52.4% 1, Attached 651 6.5 13,755 4.8 104,129 4.0 2 to 4 1,448 14.6 70,039 24.4 603,917 23.0 5 to 9 652 6.6 15,840 5.5 156,135 6.0 10 to 19 998 10.0 11,735 4.1 113,697 4.3 20 or More 572 5.8 24,127 8.4 244,892 9.3 Mobil Home, Trailer, or Other 13 0.1 1,982 0.7 24,740 0.9 Total 9.943 100.0% 287,144 100.0° 2.621.989 100.0°0 (1)Source: U.S. Department of Commerce. Educational Attainment 2000 (1) North Andover Essex County Massachusetts Years of School Completed Number Percent Number Percent Number Percent Less than 9th Grade 400 2.3% 28,862 5.9% 247,556 5.8% 9th to 12th Grade,No Diploma 827 4.7 46,105 9.5 403,537 9.4 High School Graduate 3,501 19.8 136,744 28.1 1,165,489 27.3 Some College,No Degree 2,903 16.4 86,102 17.7 730,135 17.1 Associate's Degree 1,149 6.5 37,065 7.6 308,263 7.2 Bachelor's Degree 5,207 29.5 95,184 19.5 834,554 19.5 Graduate or Professional Degree 3,685 20.9 57,041 11.7 583,741 13.7 Total 17672 iffl,-OOA 100.00 4.273.275 100.0% High School Graduate or Higher 16,445 93.1% 412,136 84.6% 3,622,182 84.8% Bachelor's Degree or Higher 8,892 50.3% 152,225 31.3% 1,418,295 33.2% (1)Source: U.S.Department of Commerce. 43 Household Income Distribution 1999 (1) North Andover Essex County Massachusetts Income for Households Households Percent Households Percent Households Percent Less than$10,000 448 76% 24,033 8.7% 214,700 8.8% $10,000 -$24,999 1,122 11.6 42,354 15.4 385,395 15.8 $25,000 - $49,999 1,812 18.7 66,519 24.2 608,320 24.9 $50,000 - $74,999 1,562 16.1 54,048 19.6 490,998 20.1 $75,000 - $99,999 1,334 13.8 36,066 13.1 312,741 12.8 $100,000- $149,999 1,929 19.9 32,016 11.6 267,300 10.9 $150,000 or more 1,492 15.4 20,374 7.4 165,134 6.8 Total E69-9 100.0° 275 410 100.0° 2.444,588 100.0° (1)Source: U.S.Department of Commerce. Value Distribution Of Specified Owner-Occupied Housing Units 2000 (1) North Andover Essex County Massachusetts Units Number Percent Number Percent Number Percent Less than$100,000 39 0.7% 6,159 4.4% 113,263 9.5% $100,000- $149,999 282 5.0 22,028 15.7 277,571 23.4 $150,000- $199,999 681 12.0 32,305 23.1 273,542 23.0 $200,000 - $299,999 1,599 28.2 42,625 30.5 286,599 24.1 $300,000 - $499,999 2,394 42.3 28,043 20.0 170,536 14.4 $500,000 or more 669 11.8 8,771 6.3 66,360 5.6 Total 5 664 100.0°0 139,931 100.0% 1,187,871 100.0° Median Value $316,500 $220,000 $185,700 (1)Source. U.S.Department of Commerce Age Distribution Housing Units 2000 (1) North Andover Essex County Massachusetts Year Built Number Percent Number Percent Number Percent 1990 to March 2000 1,401 14.17/o 21,706 7.6% 218,407 8.3% 1980 to 1989 1,599 16.1 31,301 10.9 292,701 11.2 1940 to 1979 5,116 51.5 124,424 43.3 1,205,183 46.0 1939 or Earlier 1,827 18.4 109,713 38.2 905,698 34.5 Total 9.943 100.0°0 2 100.0° 2 621 98 100.0°o (1)Source: U.S.Department of Commerce. 42 Population Composition 2000 (1) North Andover Essex County Massachusetts Age Number Percent Number Percent Number Percent Under 5 Years 1,915 7.0% 48,254 6.7% 397,268 6.3% 5 Years to 19 Years 6,078 22.3 151,038 20.9 1,277,845 20.1 20 Years to 64 Years 15,565 57.2 423,821 58.6 3,813,822 60.1 65 Years &Over 3,644 13.4 100,306 13.9 860,162 13.5 Total 27.202 100.0°0 723.419 100.0% 66 34 100.0°o Median Age 37.2 37.5 36.5 Median Age(1990) 34.2 34.5 33.6 (1)Source: U.S.Department of Commerce. Income Levels (1) North Andover Essex County Massachusetts % Change from % Change from % Change from Year Amount Previous Census Amount Previous Census Amount Previous Census Per Capita-Personal 1999 $34,335 49.6% $26,358 49.9% $25,952 50.7% 1989 22,957 168.4 17,586 129.2 17,224 131.0 1979 8,554 7,673 7,457 Median Family Income(1999) $91,105 $63,746 $61,664 Median Household Income(1999) $72,728 $51,576 $50,502 %Below Poverty Level (1999) 2.9% 8.9% 9.3% (1)Source: U.S.Department of Commerce. Family Income Distribution 1999 (1) North Andover Essex County Massachusetts Income for Families Families Percent Families Percent Families Percent Less than $10,000 77 1.1% 8,075 4.3% 71,198 4.5% $10,000- $24,999 423 6.0 20,022 10.8 175,120 11.0 $25,000 -$49,999 1,118 15.9 41,277 22.2 368,418 23.2 $50,000 - $74,999 1,187 16.9 40,776 21.9 359,202 22.6 $75,000 - $99,999 1,107 15.8 30,224 16.2 251,231 15.8 $100,000 - $149,999 1,692 24.1 27,479 14.8 222,234 14.0 $150,000 or more 1,408 20.1 18,190 9.8 140,134 8.8 Total 2 100.0° 186.043 100.00° 1.587.537 100.0°° (1)Source: U.S.Department of Commerce. 41 OTHER DATA Unemployment (1) Year North Andover Massachusetts United States 2009 (September) 8.9% 9.3% 9.8% 2008 4.5 5.3 5.8 2007 3.9 4.5 4.6 2006 4.3 5.0 4.6 2005 4.2 4.8 5.1 (1) Massachusetts Department of Employment and Training. Full year annual averages except for 2009 which is for the month indicated. i Population (1) North Andover Essex County Massachusetts Year Number % Change Number % Change Number % Change 2020 (Proj.) 32,153 6.9% 787,032 4.3% 6,767,712 3.2% 2010 (Prof.) 30,082 8.8 754,724 2.9 6,557,001 1.7 2008 (Est.) 27,522 1.2 736,457 1.8 6,497,967 2.3 2000 27,202 19.3 7235419 8.0 6,349,097 5.5 1990 22,792 13.2 670,080 5.8 6,016,425 4.9 1980 20,129 23.6 633,632 (0.7) 5,737,037 0.8 1970 16,284 637,887 5,689,170 (1)Source: U.S. Department of Commerce for actuals,Massachusetts Institute for Social&Economic Research for projections. Population Density (1) North Andover Essex County Massachusetts Year Number Density(2) Number Density Number Density 2020 (Prof.) 32,153 1,205.9 787,032 1,580.2 6,767,712 863.5 2010 (Proj.) 30,082 1,127.9 754,724 1,515.3 6,557,001 836.6 2008 (Est.) 27,522 1,031.9 736,457 1,478.6 6,497,967 829.0 2000 27,202 1,019.9 723,419 1,452.4 6,349,097 810.0 1990 22,792 854.6 670,080 1,345.4 6,016,425 767.6 1980 20,129 754.7 633,632 1,272.2 5,737,037 732.0 1970 16,284 610.6 637,887 1,280.7 5,689,170 725.8 (1)Source: U.S. Department of Commerce. (2)Based on 26.7 square miles. 40 The Town operates the Cyr Recycling Facility on a portion of this property and Eastern Technologies is located here. The Town of North Andover provides the water services. The seventh industrial zone is located east of Osgood Street and is comprised of 95 acres of land. Microwave Engineering, which manufactures electronic components specializing in waveguides, adapters, antennas, coils, connectors &passive microwave devices; L-com, a leading manufacturer of connectivity products such as cable assemblies, fiber optics and network equipment; Palestra Gymnastics Academy and Alco Electronics. The Town provides sewer and water services. Airport Industrial Project: This project involves the proposed development of 40.37 acres of the Lawrence Municipal Airport, located off Sutton Street in North Andover, into 10 industrial properties. The project site lies at the end of Clark Road in North Andover on property owned by the Lawrence Municipal Airport. The shape and topography of the site warrants the development of a mix of building sizes from 49,400 sf to 146,000 sf as listed below: Lot# Maximum Size (Square Feet Lot 1 146,000 Lot 2 54,000 Lot 3 77,000 Lot 4 49,400 j The City of Lawrence is working cooperatively with the Town to pursue the construction of the industrial subdivision. The two communities are working together to prepare the description, documents, and plans necessary to complete the installation of utilities and any roadway construction necessary for the industrial park. The project is currently on hold. Adjacent to the airport property is OSI Electronics. OSI is well positioned to meet the challenges of today's Electronic Manufacturing Services Market. The North Andover facility presents their customers with a range of options, whether designing and building prototype or pre-production quantities or transferring mature products to a lower cost environment. Their expertise is in medical, aerospace/military, and telecommunications product manufacturing from components and board assemblies to complete systems, establishes a framework of high quality that encompasses all products we manufacture. i 39 Economic Development Holt Road/Clark Street: This industrial park is located west of Route 125 in the northern part of Town and encompasses a total of 395 acres, with direct access to Route 125. When the Sweetheart Cup Facility re-located into the Town of North Andover, the Town entered into a TIF agreement with the company. Sweetheart Cup Facility and the AEP Industrial are the major companies located in this park. The Town provides water and sewer services. Crusader Paper, located on Holt Road is completing a 30,000 square foot addition to their facility and TBI, Inc. will be opening a state-of-the-art recycling facility encompassing 30,000 square feet by the end of this calendar year. North Andover Business Park: This industrial park, which is connected to the Willows Industrial Park, is located on the west side of Route 114 and encompasses 60 acres of land with direct access to Route 114. Companies located in the park include Bake-n-Joy, United Plastics and Material Installation. The Town provides water and sewer services. Willows Industrial Park: This park is also located on the west side of Route 114 and encompasses 50 acres of land. Companies located in this park include Watts Regulators, Rohm & Haas, Inc. (recently purchased by Dow Chemical), Micromatic Products, and Kenics Division Chemineer. The park is connected to the North Andover Business Parks. The Town provides water and sewer services. Osgood LandinLr at 1600 Osgood Street: The Town entered into a 20 year TIF agreement with Ozzy Properties, current owners of this industrial parcel, located on Route 125 in an Industrial 2 zone. The property also has a 40R designation, which includes a residential, mixed-use, and business zoning overlay. The owners are developing the structure into a multi-tenant commercial and industrial complex. Ozzy Properties has converted several thousand square feet of office and manufacturing space. The property is averaging a lease rate of 75,000 square feet annually. Ophir Optics,Inc. filled 30,000 square feet and expects to increase that size by another 15,000 square feet in 2010. The facility is also being used for movie film production and as a conference and training center;both of these activities bring hundreds of people into North Andover regularly. Town Meeting adopted the provisions of Massachusetts General Laws, Chapter 43D, which allows expedited permitting. The adoption of 43D allows the Town to identify the portion of commercial property at Osgood Landing as a "Priority Development Site" (PDS). The approval allows the Town to seek funding to support commercial development at Osgood Landing. The goal of the PDS is to recognize property that is specifically identified for commercial development and has a distinct set of permitting regulations that allow potential developers to "fast-track" applications through regulatory boards and commissions. This past year, the Town was awarded "Platinum" status from the Massachusetts Biotechnology Council for the ability to be shovel- ready when allowing new business to locate in North Andover. Downtown Davis & Furber Mill: This industrial zone, which is adjacent to the downtown and contains mill buildings covers approximately 16.5 acres and contains the headquarters of Converse Inc. footwear and consumer audio manufacturer and retailer Cambridge Soundworks. The mill complex also has offices for Schneider Electric, a French global company that is a world leader in electricity management, and Aurora Imaging. Aurora Imaging Technology, Inc. is a leader in the fight against breast disease as the manufacturer of the Aurora 1.5T Dedicated Breast MRI System. The Aurora Breast MRI System is the only FDA cleared, truly dedicated and truly integrated MRI system designed specifically for breast imaging. With an exclusive precision gradient coil design, the Aurora System provides an elliptical "sweet spot" that images both breasts, chest wall, and axillae in a single bilateral scan without compromise in image contrast or resolution. The Town provides water and sewer services to the mill complex. Other Areas: The sixth industrial zone, which is located on the southern end of Route 114 on both the northeast and southwest sides of the highway, is comprised of 85 acres of land with direct access to Route 114. 38 Principal Employers (1) Other than the Town itself,the following are the principal employers located in the Town: Approximate Company Nature of Business Current Employees Merrimack College Higher Education 465 Demoulas Supermarkets,Inc. Grocery Store 456 Sweetheart Plastics Plastics Manufacturer 400 Lawrence Eagle Tribune Newspaper 367 Genesis Healthcare Healthcare 356 Edgewood Retirement Community Healthcare 259 A.E.G. Schneider Electronic Controls 256 National Grid Utility Service 244 Brooks School Education 180 Watts Regulators Manufacturing 175 (1)Source: The Town Employment and Payrolls Calendar Year Average 2007 2006 2005 2004 2003 Construction&Natural Resources 513 517 510 607 582 Manufacturing 2,698 2,954 2,668 2,913 3,575 Trade, Transportation&Utilities 1,975 1,971 1,950 1,882 1,990 Financial Activities 517 581 573 538 487 Professional &Business Services 2,440 2,228 2,381 1,996 1,926 Education&Health Services 3,160 3,132 3,193 3,136 3,030 Leisure&Hospitality 1,207 1,140 1,062 988 945 Information & Other Services 991 967 1,021 999 862 Total Employment 13,501 13,490 13,358 13,059 13,397 Number of Establishments 934 928 908 930 905 Total Wages (000 omitted) $679,800 $670,411 $652,748 $590,761 $646,211 Average Weekly Wage $953 $940 $925 $856 $913 Source: Massachusetts Division of Employment and Training. Building Permits Calendar Estimated Year Number Value 2009 (to 9/30/09) 600 $43,481,206 2008 708 47,154,238 2007 814 57,681,115 2006 818 53,094,496 2005 781 75,629,662 2004 809 122,634,558 37 STABILIZATION FUND The Town has a Stabilization Fund. Under Massachusetts statutes, funds may be appropriated from the Fund for any municipal purpose by a two-thirds vote of town meeting. As of September 30, 2009, the Stabilization Fund had a balance of$2,176,956. The following is the balance in the Fund at the end of the most recent fiscal years: June 30 Balance 2009 $1,264,956 2008 1,232,349 2007 1,193,194 2006 1,141,436 2005 325,970 2004 319,631 COLLECTIVE BARGAINING City and town employees (other than managerial and confidential employees) are entitled to join unions and to bargain collectively on questions of wages,hours and other terms and conditions of employment. The Town has approximately 745 full time employees of which approximately 93 percent belong to unions or other collective bargaining groups as follows: Number of Contract Employee Category Represented by Employees Expires General Government Public Works AFSCME, Council 93 32 6/30/09 (l) Town Clerical and Custodian AFSCME, Council 93 29 6/30/09 (l) Police Officers IBPO Local 496 37 6/30/09 (l) Firefighters IAFF,Local 2035 53 6/30/08 (l) Communications Officers AFSCME, Council 93 9 6/30/09 (l) Police Lieutenants IBPO,Local 454 2 6/30/09 (l) Professional Librarians AFSCME, Council 93 6 6/30/09 (l) School Department Teachers Massachusetts Teachers Association 348 8/31/09 (l) Cafeteria Workers North Andover Cafeteria Workers Assoc. 42 6/30/12 Secretaries North Andover Educational Secretaries Assoc. 15 6/30/08 (l) Custodians North Andover Custodial Association 24 6/30/08 (l) Aides and Assistants North Andover Professional Support Assoc. 90 8/31/08 (l) Nurses North Andover School Nurses 9 8/31/08 (l) Total 696 (I) In negotiation. PHYSICAL AND ECONOMIC CHARACTERISTICS General The Town of North Andover (the "Town") is located in the Merrimack Valley of northeastern Massachusetts, approximately 24 miles north of Boston. Located in Essex County, the Town is bordered on the north by the Town of Methuen and the City of Haverhill, on the east by the Town of Boxford, on the west by the Town of Andover and the City of Lawrence, and on the south by the Towns of Middleton and North Reading. 36 The following table shows the actual receipts in each of the most recent fiscal years: For Fiscal Year(1) 2009 2008 2007 2006 2005 Motor Vehicle Excise Taxes $3,267,835 $4,068,019 $3,490,987 $3,536,682 $3,713,348 (])Net after refunds. Includes receipts for prior years. UNDESIGNATED GENERAL FUND BALANCE AND FREE CASH Under Massachusetts law an amount known as "free cash" is certified as of the beginning of each fiscal year by the State Bureau of Accounts and this, together with certain subsequent tax receipts, is used as the basis for subsequent appropriations from available funds, which are not required to be included in the annual tax levy. Subject to certain adjustments, free cash is surplus revenue less uncollected and overdue property taxes from prior years. The Town Accountant may certify as available for appropriation an adjusted free cash figure by adding back those uncollected and overdue property taxes which are subsequently collected between July 1 and the following April 30 of any year. The following table sets forth the undesignated general fund balance and certified free cash for the most recent fiscal years: Undesignated General July 1, Fund Balance Free Cash 2009 NA $(71,033) 2008 $ 401,236 (380,948) 2007 1,308,742 983,278 2006 4,074,811 2,919,156 2005 990,869 65,267 INVESTMENTS Investments of funds of cities and towns, except for trust funds, are generally restricted by Massachusetts General Laws Chapter 44 section 55. That statute permits investments of available revenue funds and bond and note proceeds in term deposits and certificates of deposits of banks and trust companies, in obligations issued or unconditionally guaranteed by the federal government or an agency thereof with a maturity of not more than one year, in repurchase agreements with a maturity of not more than 90 days secured by federal or federal agency securities, in participation units in the Massachusetts Municipal Depository Trust ("MMDT"), or in shares in SEC-registered money market funds with the highest possible rating from at least one nationally recognized rating organization. MMDT is an investment pool created by the Commonwealth. The State Treasurer is the sole trustee and the funds are managed under contract by an investment firm. According to the State Treasurer the Trust's investment policy is designed to maintain an average weighted maturity of 90 days or less and is limited to high-quality, readily marketable fixed income instruments, including U.S. Government obligations and highly- rated corporate securities with maturities of one year or less. Trust funds, unless otherwise provided by the donor, may be invested in accordance with section 54 of Chapter 44, which permits a broader range of investments than section 55, including any bonds or notes that are legal investments for savings banks in the Commonwealth. The restrictions imposed by sections 54 and 55 do not apply to city and town retirement systems. (See page 40 of the audited financial statements for fiscal year 2008 in Appendix B for additional information regarding the Town's investments.) 35 which takes into account equalized property valuation and population, resulting in larger distributions to those communities with low valuations and small populations. The total state distribution made to any city or town may not, however,exceed 100% of the amount raised locally by the surcharge on the real property tax levy. The amounts raised by the surcharge on real property taxes and received in state matching funds are required to be deposited in a dedicated community preservation fund. Each city or town that accepts the provisions of the CPA is required to establish a community preservation committee to study the community preservation needs of the community and to make recommendations to the legislative body of the city or town regarding the community preservation projects that should be funded from the community preservation fund. Upon the recommendations of the committee, the legislative body of the city or town may appropriate amounts from the fund for permitted community preservation purposes or may reserve amounts for spending in future fiscal years, provided that at least 10% of the total annual revenues to the fund must be spent or set aside for open space purposes, 10% for historic resource purposes and 10% for affordable housing purposes. The CPA authorizes cities and towns that accept its provisions to issue bonds and notes in anticipation of the receipt of surcharge revenues to finance community preservation projects approved under the provisions of the CPA. Bonds and notes issued under the CPA are general obligations of the city or town and are payable from amounts on deposit in the community preservation fund. In the event that a city or town revokes its acceptance of the provisions of the CPA, the surcharge shall remain in effect until all contractual obligations incurred by the city or town prior to such revocation, including the payment of bonds or notes issued under the CPA, have been fully discharged. The Town of North Andover adopted the CPA in March 2001, and has authorized a total of $6,810,000 of bonds under the Act for community preservation purposes. As of June 30, 2009, the CPA fund had a balance of $5,265,723. TAX INCREMENT FINANCING FOR DEVELOPMENT DISTRICTS Under recent legislation, cities and towns are authorized to establish development districts to encourage increased residential, industrial and commercial activity. All or a portion of the taxes on growth in assessed value in such districts may be pledged and used solely to finance economic development projects pursuant to the city or town's development program for the district. This includes pledging such "tax increments" for the payment of bonds issued to finance such projects. As a result of any such pledge, tax increments raised from new growth properties in development districts are not available for other municipal purposes. Tax increments are taken into account in determining the total taxes assessed for the purpose of calculating the maximum permitted tax levy under Proposition 2'/2(see"Tax Limitations"under"TAX LEVIES"herein). MOTOR VEHICLE EXCISE An excise is imposed on the registration of motor vehicles (subject to exemptions) at the rate of$25 per $1,000 of valuation. The excise is collected by and for the benefit of the municipality in which the motor vehicle is customarily kept. Valuations are determined by a statutory formula based on manufacturer's list price and year of manufacture. Bills not paid when due bear interest at 12 percent per annum. Provision is also made, after notice to the owner, for suspension of the owner's operating license or registration by the registrar of motor vehicles. 34 Projects on the priority waiting list as of July 1, 2004 are also entitled to receive grant payments from the Authority based on the eligible project costs and reimbursement rates applicable under the prior law. With limited exceptions, the Authority is required to fund the grants for such projects in the order in which they appear on the waiting list. Grants for any such projects that have been completed or substantially completed have been paid and are expected to continue to be paid by the Authority in lump sum payments, thereby eliminating the need for the Authority to reimburse interest expenses that would otherwise be incurred by the municipalities to permanently finance the Authority's share of such project costs. Interest on debt issued by municipalities prior to July 1, 2004 to finance such project costs, and interest on temporary debt until receipt of the grant, shall be included in the approved costs of such projects. Grants for any such projects that have not yet commenced or that are underway have been and are expected to continue to be paid by the Authority as project costs are incurred by the municipality pursuant to a project funding agreement between the Authority and the municipality, eliminating the need for the municipality to borrow even on a temporary basis to finance the Authority's share of the project costs in most cases. The range of reimbursement rates for new project grant applications submitted to the Authority on or after July 1, 2007 has been reduced to between 40% and 80% of approved project costs. The Authority promulgated new regulations with respect to the application and approval process for projects submitted after July 1, 2007. The Authority expects to pay grants for such projects as project costs are incurred pursuant to project funding agreements between the Authority and the municipalities. None of the interest expense incurred on debt issued by municipalities to finance their portion of the costs of new projects will be included in the approved project costs eligible for reimbursement. Community Preservation Act The Massachusetts Community Preservation Act (the "CPA"), permits cities and towns that accept its provisions to levy a surcharge on its real property tax levy and to receive state matching funds for the acquisition, creation,preservation,rehabilitation and restoration of open space,historic resources and affordable housing. The provisions of the CPA must be accepted by the voters of the city or town at an election after such provisions have first been accepted by either a vote of the legislative body of the city or town or an initiative petition signed by 5% of its registered voters. A city or town may approve a surcharge of up to 3% of the real property tax levy, and it may accept one or more exemptions to the surcharge under the CPA, including an exemption for low-income individuals and families and for low and moderate-income senior citizens, an exemption for $100,000 of the value of each taxable parcel of residential real property, and an exemption for commercial and industrial properties in cities and towns with classified tax rates. The surcharge is not counted in the total taxes assessed for the purpose of determining the permitted levy amount under Proposition 2'/2 (see "Tax Limitations"under"PROPERTY TAX LEVIES" herein). A city or town may revoke its acceptance of the provisions of the CPA at any time after 5 years from the date of such acceptance and may change the amount of the surcharge or the exemptions to the surcharge at any time, provided that any such revocation or change must be approved pursuant to the same process as acceptance of the CPA. Any city or town that accepts the provisions of the CPA will receive annual state matching grants to supplement amounts raised by its surcharge on the real property tax levy. The state matching funds are raised from certain recording and filing fees of the registers of deeds. Those amounts are deposited into a state trust fund and are distributed to cities and towns that have accepted the provisions of the CPA,which distributions are not subject to annual appropriation by the state legislature. The amount distributed to each city and town is based on a statutory formula which requires that 80% of the amount in the state trust fund be used to match an equal percentage of the amount raised locally by each city and town, and that the remaining 20% of the amount in the fund be distributed only to those cities and towns that levy the maximum 3% surcharge based on a formula 33 In the fall of 1986, both the State Legislature (by statute, repealed as of July 1, 1999) and the voters (by initiative petition) placed limits on the growth of state tax revenues. Although somewhat different in detail, each measure essentially limited the annual growth in state tax revenues to an average rate of growth in wages and salaries in the Commonwealth over the three previous calendar years. If not amended, the remaining measure could restrict the amount of state revenues available for state aid to local communities. Legislation was enacted in 1991 to help municipalities compensate for additional local aid reductions by the Commonwealth for fiscal year 1992. Under that law, municipalities were allowed to defer budgeting for teacher's summer compensation payable by the end of the fiscal years 1992 and 1993. Municipalities that chose to defer such amounts are required to amortize the resulting budget deficiency by raising at least one fifteenth of the deferred amount in each of the fiscal years 1997 through 2011, or in accordance with a more rapid amortization schedule. The Town chose to accept the deferral in the deferred amount of$351,122. The Town will retire this liability over a fifteen year schedule paying$23,408 each year. The following table sets forth the actual State aid received in each of the most recent fiscal years and budgeted to be received in fiscal year 2010: Fiscal Year Total State Aid 2010 (budgeted) $7,687,468 2009 7,877,022 2008 8,246,640 2007 7,658,655 2006 6,760,182 State School Building Assistance Program Under its school building assistance program, the Commonwealth of Massachusetts provides grants to cities, towns and regional school districts for school construction projects. Until July 26, 2004, the State Board of Education was responsible for approving grants for school projects and otherwise administering the program. Grant amounts ranged from 50% to 90% of approved project costs. Municipalities generally issued bonds to finance the entire project cost, and the Commonwealth disbursed the grants in equal annual installments over the term of the related bonds. Pursuant to legislation which became effective on July 26, 2004, the state legislature created the Massachusetts School Building Authority (the "Authority") to finance and administer the school building assistance program. The Authority has assumed all powers and obligations of the Board of Education with respect to the program. In addition to certain other amounts, the legislation dedicates a portion of Commonwealth sales tax receipts to the Authority to finance the program. Projects previously approved for grants by the State Board of Education are entitled to receive grant payments from the Authority based on the approved project cost and reimbursement rate applicable under the prior law. The Authority has paid and is expected to continue to pay the remaining amounts of the grants for such projects either in annual installments to reimburse debt service on bonds issued by the municipalities to finance such projects, or as lump sum payments to contribute to the defeasance of such bonds. 32 Water and sewer department expenditures are included in the budgets adopted by town meetings but electric and gas department funds may be appropriated by the municipal light boards. Under certain legislation any city or town which accepts the legislation may provide that the appropriation for the operating costs of any department may be offset, in whole or in part, by estimated receipts from fees charged for services provided by the department. It is assumed that this general provision does not alter the pre-existing power of an electric or gas department to appropriate its own receipts. The school budget is limited to the total amount appropriated by the town meeting, but the school committee retains full power to allocate the funds appropriated. State legislation known as the Education Reform Act of 1993, as amended, imposes certain minimum expenditure requirements on municipalities with respect to funding for education. The requirements are determined on the basis of formulas affected by various measures of wealth and income, enrollments,prior levels of local spending and state aid, and other factors. In fiscal years 1994 through 2009, the Town's net spending exceeded the minimum required local contribution. The Town anticipates the same in fiscal 2010. State and county assessments, abatements in excess of overlays, principal and interest not otherwise provided for, and final judgments are included in the tax levy whether or not included in the budget. Revenues are not required to be set forth in the budget but estimated non-tax revenues are taken into account by the assessors in fixing the tax levy. (See Property Taxation and Valuation herein.) Budget Comparison The following table sets forth the budgets for fiscal years 2006-2010: (000 omitted) 2010 2009 2008 2007 2006 General Government $2,718 $2,650 $2,321 $2,331 $2,326 Public Safety 8,926 8,737 8,340 8,255 7,985 Public Health and Sanitation 897 891 728 697 692 Public Works 3,922 4,014 3,685 3,920 3,586 Schools 36,762 36,660 32,079 32,079 31,406 Culture/Recreation 813 822 686 719 732 Employee Benefits 10,520 11,734 10,183 10,169 9,011 Unclassified(1) 4,222 3,060 3,287 2,893 2,794 Interest and Debt 6,557 8,373 9,549 9,399 9,622 Totals $75,335 76 942 0 859 70 461 68 154 (1)Includes overlay,state assessments,liability insurance,transfers to Stabilization Fund,transfers for deficits,and the assessment for the Greater Lawrence Regional Vocational Technical School District. STATE AID In addition to grants for specified capital purposes (some of which are payable over the life of the bonds issued for the projects), the Commonwealth provides financial assistance to cities and towns for current purposes. Payments to cities and towns are derived primarily from a percentage of the State's personal income, sales and use and corporate excise tax receipts, together with the net receipts from the State Lottery. A municipality's state aid entitlement is based on a number of different formulas, of which the "schools" and "lottery" formulas are the most important. Both of the major formulas tend to provide more state aid to poorer communities. The formulas for determining a municipality's state aid entitlement are subject to amendment by the State Legislature and,while a formula might indicate that a particular amount of state aid is owed,the amount of state aid actually paid is limited to the amount appropriated by the state legislature. The state annually estimates state aid,but the actual state aid payments may vary from the estimate. 31 The following shows the abatements granted during the current and most recent fiscal years: For Fiscal Year 2009 2008 2007 2006 2005 Tax Levy(1) $55,074,898 $52,961,163 $49,783,252 $48,400,403 $45,816,708 Overlay Reserve for Abatements 319,197 353,952 461,962 590,643 392,122 Percent of Tax Levy 0.6% 0.7% 0.9% 1.2% 0.9% Abatement Granted: During Fiscal Year Tax Levy $272,993 $213,894 $178,796 $130,542 $166,409 Through 9/30/09 274,767 315,480 256,732 251,603 168,108 (1)Exclusive of the surcharge property tax levied under the Community Preservation Act Taking and Sale. Massachusetts law permits a municipality either to sell by public sale (at which the municipality may become the purchaser) or to take real property for nonpayment of taxes. In either case the !, property owner can redeem the property by paying the unpaid taxes, with interest and other charges, but if the right of redemption is not exercised within six months (which may be extended an additional year in the case of certain installment payments), it can be foreclosed by petition to the Land Court. Upon foreclosure, a tax title purchased or taken by the municipality becomes a "tax possession" and may be held and disposed of in the same manner as other land held for municipal purposes. Sale of Tax Receivables. Cities and towns are authorized to sell delinquent property tax receivables by public q sale or auction, either individually or in bulk. Taxes Outstanding(1) For Fiscal Year 2009 2008 2007 2006 2005 Aggregate (1) $1,631,060 $1,599,095 $1,062,685 $715,635 $838,636 For Current Year(1) $1,168,416 $1,220,977 $839,011 $559,645 $710,449 Tax Titles &Possessions $1,371,734 $1,415,731 $1,457,623 $1,500,599 $1,460,619 (1) Excludes tax titles, tax possessions and abated taxes. Includes taxes in litigation, if any. TOWN FINANCES i Budget and Appropriation Process The annual appropriations of a town are ordinarily made at the annual meeting which takes place in February, March, April, May, or June. Appropriations may also be voted at special meetings. Every town must have an appropriation, advisory or financial committee. The committee (or the board of selectmen if authorized by by- law) is required to submit a budget of proposed expenditures at the annual town meeting. Under certain circumstances and subject to certain limits and requirements, in a town, town meeting may at any time vote to transfer any amount previously appropriated to any other authorized use by law, and, under certain circumstances and subject to certain limits and requirements, the selectmen of a town, with the concurrence of the finance committee, may transfer amounts appropriated for the use of any department to any other appropriation for the same department or to any other department. 30 TAX COLLECTIONS & ABATEMENTS Payment Dates. The taxes for each fiscal year are due on August 1 and November 1 with payment of the actual tax bill (after credit is given for the preliminary payments) in installments on February 1 and May 1 if the actual tax bills are mailed by December 31. Interest accrues on delinquent taxes at the rate of 14 percent annum. Lien. Real property (land and buildings) is subject to a lien for the taxes assessed upon it subject to any paramount federal lien and subject to bankruptcy and insolvency laws. (In addition,real property is subject to a lien for certain unpaid municipal charges or fees.) If the property has been transferred, an unenforced lien expires on the fourth December 31 after the end of the fiscal year to which the tax relates. If the property has not been transferred by the fourth December 31, an unenforced lien expires upon a later transfer of the property. Provision is made, however, for continuation of the lien where it could not be enforced because of a legal impediment. Personal Liability. The persons against whom real or personal property taxes are assessed are personally liable for the tax (subject to bankruptcy and insolvency laws.) In the case of real property, this personal liability is effectively extinguished by sale or taking of the property as described in"Taking and Sale"herein. The following shows the total tax levy, the reserve for abatements, the net levy and the amounts collected during each fiscal year and as of a more recent date for the most recent fiscal years, exclusive of the surcharge property tax levied under the Community Preservation Act: For Fiscal Year 2009 2008 2007 2006 2005 Total Levy $55,074,898 $52,961,163 $49,783,252 $48,400,403 $45,816,708 Overlay Reserve for Abatements 319,197 353,952 461,962 590,643 392,122 Net Tax Tevy (1) $54.755.701 52.607.211 49.321.290 47.809.760 45.424.586 Amount collected during Fiscal Year Payable(2) $53,598,367 $51,363,007 $47,753,806 $47,564,781 $44,800,961 Percent of Net Tax Levy 97.87% 97.67% 96.82% 99.49% 98.63% Amount collected through 9/30/09 2 $54,158,653 $52,289,327 $49,214,874 $47,794,399 $45,361,520 Percent of Net Tax Levy 98.89% 99.43% 99.78% 99.97% 99.86% (1)Net a f ter deduction of overlay reserve f or abatements. (2)Actual collections of levy less refunds and amounts refundable but including proceeds of tax titles and tax possessions attributed to such levy but not including abatements or other credits. Abatements and Overlay. A city or town is authorized to increase each tax levy by an amount approved by the State Commissioner of Revenue as an "overlay" to provide for tax abatements. If abatements are granted in excess of the applicable overlay,the excess is required to be added to the next tax levy. Abatements are granted where exempt real or personal property has been assessed or where taxable real or personal property has been overvalued or disproportionately valued. The assessors may also abate uncollectible personal property taxes. They may abate real and personal property taxes on broad grounds (including inability to pay) with the approval of the State Commissioner of Revenue. But uncollected real property taxes are ordinarily not written off until they become municipal "tax titles" by purchase at the public sale or by taking, at which time the tax is written off in full by reserving the amount of the tax and charging surplus. 29 (000 omitted) For Fiscal Year 2009 2008 2007 2006 2005 Gross Amount to be Raised: Appropriations $85,801 $85,333 $79,278 $79,503 $76,117 Other Local Expenditures 523 63 100 50 (1,237) State &County Charges 2,307 2,183 2,128 1,602 1,350 Overlay Reserve 319 354 462 591 392 Total Gross Amount to be Raised $88,950 $87,933 $81,968 $81,746 $76,622 Less Estimated Receipts & Other Revenue: Estimated Receipts from State $10,310 $10,173 $ 9,601 $ 8,734 $ 8,354 Estimated Receipts -Local 22,282 22,457 21,300 22,123 20,014 Available Funds Appropriated: Free Cash 0 854 0 0 0 Other Available Funds 0 0 1,219 1,000 1,187 Free Cash& Other Revenue Used to Reduce Tax Rate 1,283 1,491 65 1,487 1,250 Total Estimated Receipts &Revenue $33,875 $34,972 $32,185 $33,345 $30,805 Net Amount to be Raised(Tax Levy) 55 0 5 52 61 4 783 48 400 45 817 The following table shows the calculation of levy limits for the most recent fiscal years: (000 omitted) For Fiscal Year 2009 2008 2007 2006 2005 Primary Levy Limit(1) $111,378 $113,362 $116,291 $106,019 $98,283 Prior Fiscal Year Levy Limit 49,875 46,116 44,061 42,071 40,136 2.5%Levy Growth 1,247 1,153 1,102 1,052 1,003 Current Fiscal Year New Growth (2) 533 955 954 938 931 Current Fiscal Year Override 0 1,650 0 0 0 Growth Levy Limit 51,654 49,875 46,116 44,061 42,071 Current Fiscal Debt Exclusion 3,422 3,098 3,685 4,370 3,756 Current Fiscal Year Capital Expenditure 0 0 0 0 0 Tax Levy Limit 55,077 52,973 49,801 48,431 45,827 Actual Tax Levy(3) 55,075 52,961 49,783 48,400 45,817 Unused Levy Capacity(4) $ 2 $ 11 $ 18 $ 31 $ 11 Unused Primary Levy Capacity(5) 59 724 63 487 70 174 61 958 56 211 (1) 2.5%of assessed valuation. (2) Allowed increase for new valuations-certified by the Department of Revenue. (3) Exclusive of the surcharge property tax levied under the Community Preservation Act, which is not included in the total taxes assessed for purposes of calculating and determining compliance with the levy limits. See "Community Preservation Act"herein. (4) Tax Levy Limit less Tax Levy. The additional amount which may be levied without voter approval. (5) Primary Levy Limit less Growth Levy Limit. 28 The State Commissioner of Revenue may adjust any tax limit "to counterbalance the effects of extraordinary, non-recurring events which occurred during the base year". The statute further provides that voters may exclude from the taxes subject to the tax limits and from the calculation of the maximum tax levy (a) the amount required to pay debt service on bonds and notes issued before November 4, 1980, if the exclusion is approved by a majority vote of the voters, and (b) the amount required to pay debt service on any specific subsequent issue for which similar approval is obtained. Even with voter approval,the holders of the obligations for which unlimited taxes may be assessed do not have a statutory priority or security interest in the portion of the tax levy attributable to such obligations. It should be noted that Massachusetts General Laws Chapter 44, Section 20 requires that the taxes excluded from the levy limit to pay debt service on any such bonds and notes be calculated based on the true interest cost of the issue. Accordingly, the Department of Revenue limits the amount of taxes which may be levied in each year to pay debt service on any such bonds and notes to the amount of such debt service, less a pro rata portion of any original issue premium received by the city or town that was not applied to pay costs of issuance. The Town has voted to exempt the debt service on $18,758,077 currently outstanding bonds from the limitations of Proposition 2 '/Z. Voters may also exclude from the Proposition 2 1/2 limits the amount required to pay specified capital outlay expenditures or for the city or town's apportioned share for certain capital outlay expenditures by a regional governmental unit. In addition, the city council of a city, with the approval of the mayor if required, or the board of selectmen or town council of a town may vote to exclude from the Proposition 2 1/2 limits taxes raised in lieu of sewer or water charges to pay debt service on bonds or notes issued by the municipality (or by an independent authority, commission or district) for water or sewer purposes, provided that the municipality's sewer or water charges are reduced accordingly. In addition, the statute limits the annual increase in the total assessments on cities and towns by any county, district, authority, the Commonwealth or any other governmental entity (except regional school districts, the MWRA, and certain districts for which special legislation provides otherwise) to the sum of(a) 2 1/2 percent of the prior year's assessments and (b) "any increases in costs, charges or fees for services customarily provided locally or for services subscribed to at local option". Regional water districts, regional sewerage districts and regional veterans districts may exceed these limitations under statutory procedures requiring a two-thirds vote of the district's governing body and either approval of the local appropriating authorities (by two-thirds vote in districts with more than two members or by majority vote in two-member districts) or approval of the registered voters in a local election (in the case of two-member districts). Under the statute any State law to take effect on or after January 1, 1981 imposing a direct service or cost obligation on a city or town will become effective only if accepted or voluntarily funded by the city or town or if State funding is provided. Similarly, State rules or regulations imposing additional costs on a city or town or laws granting or increasing local tax exemptions are to take effect only if adequate State appropriations are provided. These statutory provisions do not apply to costs resulting from judicial decisions. Pledged Taxes. Taxes on certain property in designated development districts may be pledged for the payment of costs of economic development projects within such districts and may therefore be unavailable for other municipal purposes(see"TAX INCREMENT FINANCING FOR DEVELOPMENT DISTRICTS"herein). Initiative Petitions. Various other proposals have been made in recent years for legislative amendments to the Massachusetts Constitution to impose limits on state and local taxes. To be adopted such amendments must be approved by two successive legislatures and then by the voters at a state election. CALCULATION OF TAX LEVIES AND LEVY LIMITS The following table shows the details of the calculation of the tax levies for the current and most recent fiscal years (does not include amounts raised as surcharges under the Community Preservation Act—see "Community Preservation Act"herein): 27 receipts on account of earlier years' taxes after that date. Subject to certain adjustments, free cash is surplus revenue less uncollected overdue property taxes from earlier years. Although an allowance is made in the tax levy for abatements (see "Abatements and Overlay" herein) no reserve is generally provided for uncollectible real property taxes. Since some of the levy is inevitably not collected, this creates a cash deficiency which may or may not be offset by other items (see "Taxation to Meet Deficits"herein). Taxation to Meet Deficits. As noted elsewhere (see "Abatements and Overlay" herein) overlay deficits, i.e. tax abatements in excess of the overlay included in the tax levy to cover abatements, are required to be added to the next tax levy. It is generally understood that revenue deficits, i.e. those resulting from non-property tax revenues being less than anticipated, are also required to be added to the tax levy (at least to the extent not covered by surplus revenue). Amounts lawfully expended since the prior tax levy and not included therein are also required to be included in the annual tax levy. The circumstances under which this can arise are limited since municipal departments are generally prohibited from incurring liabilities in excess of appropriations except for major disasters, mandated items, contracts in aid of housing and renewal projects and other long-term contracts. In addition, utilities must be paid at established rates and certain established salaries, e.g. civil service, must legally be paid for work actually performed,whether or not covered by appropriations. In the opinion of Bond Counsel, cities and towns are authorized to appropriate sums, and thus to levy taxes, to cover deficits arising from other causes, such as "free cash" deficits arising from a failure to collect taxes. This is not generally understood, however, and it has not been the practice to levy taxes to cover free cash deficits. Except to the extent that such deficits have been reduced or eliminated by subsequent collections of uncollected taxes (including sales of tax titles and tax possessions), lapsed appropriations, non-property tax revenues in excess of estimates, other miscellaneous items or funding loans authorized by special act, they remain in existence. Tax Limitations. Chapter 580 of the Acts of 1980, which was proposed by initiative petition known as "Proposition 2 1/2", was adopted at the November 4, 1980 general election and took effect on December 4, 1980. The law is subject to amendment or repeal by the legislature. The legislation (as subsequently amended) imposes two separate limits on the annual tax levy of a city or town. The primary limitation is that the tax levy cannot exceed 2 1/2 percent of the full and fair cash value. If a city or town exceeds the primary limitation, it must reduce its tax levy by at least 15 percent annually until it is in compliance, provided that the reduction can be reduced in any year to not less than 7 1/2 percent by majority vote of the voters, or to less than 7 1/2 percent by two-thirds vote of the voters. For cities and towns at or below the primary limit, a secondary limitation is that the tax levy cannot exceed the maximum levy limit for the preceding fiscal year as determined by the State Commissioner of Revenue by more than 2 1/2 percent subject to exceptions for property added to the tax rolls or property which has had an increase, other than as part of a general revaluation, in its assessed valuation over the prior year's valuation. This "growth" limit on the tax levy may be exceeded in any year by a majority vote of the voters, but an increase in the secondary or growth limit under this procedure does not permit a tax levy in excess of the primary limitation, since the two limitations apply independently. In addition, if the voters vote to approve taxes in excess of the "growth" limit for the purpose of funding a stabilization fund, such increased amount may only be taken into account for purposes of calculating the maximum levy limit in each subsequent year if the board of selectmen of a town or the city council of a city votes by a two-thirds vote to appropriate such increased amount in such subsequent year to the stabilization fund. The applicable tax limits may also be reduced in any year by a majority of voters. 26 TAX RATES The following shows the actual tax rates per $1,000 of assessed valuation and the full value rate based on the equalized valuations for the most recent fiscal years: Fiscal Actual Full Value Year Tax Rate Rate 2009 Residential $11.76 $11.21 Commercial/Industrial/Pers. 16.69 2008 Residential 11.40 11.39 Commercial/Industrial/Pers. 13.78 2007 Residential 10.45 10.71 Commercial/Industrial/Pers. 12.63 2006 Residential 11.14 12.07 Commercial/Industrial/Pers. 13.47 2005 Residential 11.52 11.42 Commercial/Industrial/Pers. 12.59 LARGEST TAXPAYERS (1) The following is a list of the largest taxpayers for fiscal year 2009: Nature Assessed Amount % of Name of Business Valuation of Tax Total Levy AIMCO (Royal Crest). Apartments $60,163,990 $707,529 1.28% National Grid Utility 34,885,260 582,235 1.06 Edgewood Retirement Comm. Congregate Care/Nursing Home 28,016,530 467,596 0.85 NAM Partners Limited Office/Manufacturing 27,503,800 459,038 0.83 Ozzy Properties (2) Office Space 19,154,200 319,684 0.58 Delta/Delta Realty Trust Shopping Mall 19,042,980 317,827 0.58 RCG North Andover Mills Office 11,473,500 191,493 0.35 Wood Ridge Homes Co-op Housing 11,218,050 187,229 0.34 NOAP Office 11,179,200 186,581 0.34 North Andover 2004 Office 9,545,800 159,319 0.29 Total $232,183,310 $3,578,531 6.50% i (1) All listed taxpayers are current in their real estate and personal property taxes. (2) Formerly owned by Lucent Technologies. TAX LEVIES Levy-General. The principal tax of Massachusetts cities and towns is the tax on real and personal property. The amount to be levied in each year is the amount appropriated or required by law to be raised for municipal expenditures less estimated receipts from other sources and less appropriations voted from funds on hand. The total amount levied is subject to certain limits prescribed by law; for a description of those limits (see "Tax Limitations"herein). As to the inclusion of debt service and final judgments, see Security and Remedies herein. The estimated receipts for a fiscal year from sources other than the property tax may not exceed the actual receipts during the preceding fiscal year from the same sources unless approved by the State Commissioner of Revenue. Excepting special funds, the use of which is otherwise provided for by law, the deduction for appropriations voted from funds on hand for a fiscal year cannot exceed the "free cash" as of the beginning of the prior fiscal year as certified by the State Director of Accounts plus up to nine months' collections and 25 Valuations The following shows the assessed and equalized valuations for the current and most recent fiscal years: For Fiscal Year 2009 2008 2007 (1) 2006 2005 Real Property (2) $4,355,309,100 $4,452,463,247 $4,573,701,819 $4,159,757,400 $3,853,680,429 Personal Property(2) 99,814,430 82,002,220 77,931,290 81,016,630 77,626,380 j Total Assessed Valuation 4,455,123.530 $4,534,465,467 4,651,633,109 4.240,774,030 $3,931,306,809 Equalized Valuation (3) $4,913,038,200 $4,648,968,500 $4,648,968,500 $4,010,449,200 $4,010,449,200 Percent of Total Assessed to Equalized Valuation 90.7% 97.5% 100.1% 105.7% 98.0% I (1)Revaluation year. (2)As of.7anuary 1, 2008, 2007, 2006, 2005, and 2004 respectively. (3)Based on equalized valuation in effect for each year. The following table shows the breakdown of the total assessed valuation for fiscal years 2009, 2008, and 2007, by classification: Fiscal Fiscal Fiscal 2009 % 2008 % 2007 % Assessed of Assessed of Assessed of Class Valuation Total Valuation Total Valuation Total Residential $3,910,976,509 87.8% $4,001,584,703 88.2% $4,113,245,116 88.4% Commercial 280,591,491 6.3 283,789,944 6.3 286,085,303 6.2 Industrial 163,741,100 3.7 167,088,600 3.7 174,371,400 3.7 Personal Property 99,814,430 2.2 82,002,220 1.8 77,931,290 1.7 Total $4.455.123.530 100.0% 4,534,465,467 100.00° $4,651,633,109 100.0% �I i 24 Other Post-Employment Benefits. In addition to pension benefits, cities and towns may provide retired employees with health care and life insurance benefits. The portion of the cost of such benefits paid by cities or towns is generally provided on a pay-as-you-go basis. The Governmental Accounting Standards Board ("GASB") recently promulgated its Statement Nos. 43 and 45, which will for the first time require public sector entities to report the future costs of these non-pension, post-employment benefits in their financial statements. These new accounting standards do not require pre-funding such benefits, but the basis applied by the standards for measurement of costs and liabilities for these benefits is conservative if they continue to be funded on a pay-as-you- go basis and will result in larger yearly cost and liability accruals than if such benefits were pre-funded in a trust fund in the same manner as traditional pension benefits. Cities and towns that choose to self-insure all or a portion of the cost of the health care benefits they provide to employees and retirees may establish a trust fund for the purpose of paying claims. In addition, cities and towns may establish a trust fund for the purpose of pre-funding other post-employment benefits liability in the same manner as traditional pension benefits. i The Town's OPEB expenditures are financed on a pay-as-you-go-basis from annual appropriations and the j Town's current financial statements do not report the financial impact of OPEB until the benefits are paid. During fiscal year 2009, the Town had approximately 217 retirees that received such benefits. For the year ended June 30, 2009, the cost of these benefits totaled approximately $3,978,109. The Town contracted with Nyhart of Indianapolis, Indiana, a benefits consulting firm, to complete a GASB 45 Financial Report for the year ended June 30, 2009. According to this report, at a discount rate of 4.50%, the present value of future benefits totals $190,998,820. The actuarial accrued liability is $114,931,210, current normal cost is $5,804,674, and the,present value of future normal costs is $70,262,936. The annual required contribution to cover normal cost and the actuarial accrued liability is $10,964,222. Based on current funding of $3,978,109,the current unfunded portion of the annual required contribution is $6,986,613. The foregoing data do not include the retirement system costs or liabilities attributable to employees of the county or the retirement system costs or liabilities of any other entity of which the Town is a constituent part. PROPERTY TAXATION Tax Rate and Valuation - General. Property is classified for the purpose of taxation according to its use. The legislature has in substance created three classes of taxable property: (1) residential real property, (2) open space land, and(3) all other (commercial, industrial and personal property). Within limits, cities and towns are given the option of determining the share of the annual levy to be borne by each of the three categories. The share required to be borne by residential real property is at least 50 per cent of its share of the total taxable valuation; the effective rate for open space must be at least 75 per cent of the effective rate for residential real property; and the share of commercial, industrial and personal property must not exceed 175 per cent of their share of the total valuation. A city or town may also exempt up to 20 per cent of the valuation of residential real property (where used as the taxpayer's principal residence) and up to 10 percent of the valuation of commercial real property (where occupied by certain small businesses). Property may not be classified in a city or town until the State Commissioner of Revenue certifies that all property in the city or town has been assessed at its fair cash value. Such certification must take place every three years. I Related statutes provide that certain forest land, agricultural or horticultural land(assessed at the value it has for these purposes) and recreational land (assessed on the basis of its use at a maximum of 25 percent of its fair cash value) are all to be taxed at the rate applicable to commercial property. Land classified as forest land is valued for this purpose at five percent of fair cash value but not less than ten dollars per acre. In order to determine appropriate relative values for the purposes of certain distributions to and assessments upon cities and towns, the Commissioner of Revenue biennially makes his own redetermination of the fair cash value of the taxable property in each municipality. This is known as the "equalized value". (See Debt Limits herein.) 23 If a city or town, or each member city and town of a county retirement system, has accepted the applicable law, it is required to annually appropriate an amount sufficient to pay not only its current pension obligations, but also a portion of its future pension liability. The portion of each such annual payment allocable to future pension obligations is required to be deposited in the pension reserve fund. The amount of the annual city or town appropriation for each such system is prescribed by a retirement system funding schedule which is periodically reviewed and approved by PERAC. Each system's retirement funding schedule is designed to reduce the unfunded actuarial pension liability of the system to zero by not later than June 30,2028, with annual increases in the scheduled payment amounts of not more than 4.5 percent. City, town and county systems which have an approved retirement funding schedule receive annual pension funding grants from the Commonwealth for the first 16 years of such funding schedule. City, town and county systems may choose to participate in the Pension Reserves Investment Trust Fund (the "PRIT Fund'), which receives additional state funds to offset future pension costs of participating state and local systems. If a local system participates in the PRIT Fund, it must transfer ownership and control of all assets of its system to the Pension Reserves Investment Management Board, which manages the investment and reinvestment of the PRIT Fund. Cities and towns with systems participating in the PRIT Fund continue to be obligated to fund their pension obligations in the manner described herein. The additional state appropriations to offset future pension liabilities of state and local systems participating in the PRIT Fund are required to total at least 1.3 percent of state payroll. Such additional state appropriations are deposited in the PRIT Fund and shared by all participating systems in proportion to their interests in the assets of the PRIT Fund as of July 1 for each fiscal year. Substantially all full-time employees of the Town (except teachers and administrators under contract employed by the School Department) participate in the Essex County Public Employees Retirement System (PERS), a contributory retirement system that is partially funded by employee contributions. The Town meets it share of cost primarily on a pay-as-you-go basis by contributing annually the amount determined by the State Division of Insurance. The retirement system covers substantially all municipal employees except school teachers, whose pensions are paid by the Commonwealth. The annual contributions of the Town to the Retirement System for the last four fiscal years as well as a budgeted amount for fiscal 2010 are as follows: Fiscal Year Amount 2010 (budgeted) $2,516,530 2009 2,468,667 2008 2,261,142 2007 2,227,020 2006 2,093,553 Cost-of-living increases for each local retirement system may be granted and funded only by the local system, and only if it has established a funding schedule. Those statutory provisions are subject to acceptance by the local retirement board and approval by the local legislative body, which acceptance may not be revoked. Essex County has accepted this new legislation. As of January 1, 2008 (the most recent available information), the unfunded accrued actuarial liability of the System was approximately$143,750,589. 22 OVERLAPPING DEBT The following table sets forth the portion of overlapping debt assessed to the Town: (1) Assessments for Operations Authorized and Debt Service Outstanding Unissued FY 2010 Greater Lawrence Regional Vocational- Technical School District(2) $36,515,000 $0 $259,239 Greater Lawrence Sanitary District(3) $30,502,672 $0 $1,367,010 (1) Excludes temporary loans in anticipation of revenue. Omits debt of the Commonwealth. (2) Source: Greater Lawrence Regional Vocational-Technical School District. Debt is as of December 15, 2009. Other member communities are Andover, Lawrence, and Methuen. Towns may organize regional school districts to carry out general of specialized educational functions. Pursuant to special laws a number of cities may also participate in regional school districts, primarily for vocational education. The operating expenses and debt service of regional school districts are apportioned among the member municipalities in accordance with agreements establishing the districts, subject to the provisions of Education Reform Act of 1993. The Commonwealth has approved a school building assistance grant to the District reimbursing 85.5%of eligible project costs, including interest. (3) Source:The District.Debt is as of December 15, 2009. Other member communities are Andover,Lawrence,Methuen, and Salem, New Hampshire. Each member community pays for its proportionate share of the District's operating costs based on the percent of wastewater received from each community. The District recently completed construction of a sludge bioprocessing facility. The Town's share of capital costs for the District is 7 percent. This percentage is set by statute. I RETIREMENT SYSTEM The Massachusetts General Laws provide for the establishment of contributory retirement systems for state employees, for teachers and for county, city and town employees other than teachers. Teachers are assigned to the separate statewide teachers' system and not to the city and town systems. For all employees other than teachers, this law is subject to acceptance in each city and town. Substantially all employees of an accepting city or town are covered. If a town has a population of less than 10,000 when it accepts the statute, its non- teacher employees participate through the county system and its share of the county cost is proportionate to the aggregate annual rate of regular compensation of its covered employees. In addition to the contributory systems, cities and towns provide non-contributory pension to a limited number of employees, primarily persons who entered service prior to January 1, 1937 and their dependents. The Public Employee Retirement Administration Commission ("PERAC") provides oversight and guidance for and regulates all state and local retirement systems. The obligations of a city or town whether direct or through a county system, are contractual legal obligations and are required to be included in the annual tax levy. If a city or town, or the county system of which it is a member, has not established a retirement system funding schedule as described herein, the city or town is required to provide for the payment of the portion of its current pension obligations which is not otherwise covered by employee contributions and investment income. "Excess earnings," or earnings on individual employees' retirement accounts in excess of a predetermined rate, are required to be set aside in a pension reserve fund for future, not current, pension liabilities. Cities and towns may voluntarily appropriate to their system's pension reserve fund in any given year up to five percent of the preceding year's tax levy. The aggregate amount in the fund may not exceed ten percent of the equalized valuation of the city or town. 21 REVENUE ANTICIPATION BORROWING The Town has not issued revenue anticipation notes within the past five years. CONTRACTS Municipal contracts are generally limited to currently available appropriations. A city or town generally has authority to enter into contracts for the exercise of any of its corporate powers for any period of time deemed to serve its best interests, but generally only when funds are available for the first fiscal year; obligations for succeeding fiscal years generally are expressly subject to availability and appropriation of funds. Municipalities have specific authority in relatively few cases to enter into long-term contractual obligations that are not subject to annual appropriation, including contracts for refuse disposal and sewage treatment and disposal. Municipalities may also enter into long-term contracts in aid of housing and renewal projects. There may be implied authority to make other long-term contracts required to carry out authorized municipal functions, such as contracts to purchase water from private water companies. Municipal contracts relating to solid waste disposal facilities may contain provisions requiring the delivery of minimum amounts of waste and payments based thereon and requiring payments in certain circumstances without regard to the operational status of the facilities. Municipal electric departments have statutory power to enter into long-term contracts for joint ownership and operation of generating and transmission facilities and for the purchase or sale of capacity, including contracts requiring payments without regard to the operational status of the facilities. The Town does not have an electric department. The Town has a contract with Wheelabrator North Andover Inc. relating to the disposal of solid waste for a term ending on June 30, 2010. Under the terms of the contract the Town shall pay the following per ton tipping fee for each of the periods indicated: Period Tipping Fee July 1, 2008 through June 30, 2009 71.50 July 1, 2009 through June 30, 2010 73.00 Pursuant to the Home Rule Amendment to the Massachusetts Constitution, (see Constitutional Status and Form of Government herein), cities and towns may also be empowered to make other contracts and leases. i i 20 Bond Debt vs. Population,Valuations and Income As of June 30 2009 2008 2007 2006 2005 Amount(1)(000 omitted) $71,332 $73,487 $78,770 $86,507 $85,159 Per Capita(2) $2,592 $2,659 $2,850 $3,200 $3,167 Percent of Assessed Valuation (3) 1.60% 1.62% 1.69% 2.04% 2.17% Percent of Equalized Valuation (4) 1.45% 1.58% 1.69% 2.16% 2.12% Per Capita as a Percent of Personal Income(2)per Capita 7.55% 7.74% 8.30% 9.32% 9.22% (1) Outstandingpr-incipal on general obligation bonds. Excludes lease and installmentpurchase obligations, overlapping debt and unfunded pension liability. (2)Source: U.S. Department of Commerce,Bureau of the Census-latest applicable actuals or estimates. (3) The assessed valuation used here is the assessed valuation for that fiscal year. (4) The equalized valuation used here is the equalized valuation in effect for that fiscal year. Annual Debt Service (1) Fiscal Outstanding as of 12/15/09 Series A Bonds Total Debt % of Principal Year Principal (2) Interest(2) Principal (3) Interest(3) Service Retired (4) 2010 $ 5,591,710 $ 1,492,561 - $ 7,084,271 7.5% 2011 9,154,458 2,234,200 $ 486,222 $ 261,878 12,136,757 20.6 2012 83643,056 1,913,841 480,000 2233500 11,260,397 32.9 2013 7,332,139 1,594,153 480,000 205,500 9,611,792 43.4 2014 6,786,843 1,339,379 48000 187,500 8,793,722 53.2 2015 53557,204 1,096,159 425,000 169,500 7,247,863 61.3 2016 4,496,770 885,625 365,000 153,563 5,900,958 67.8 2017 35972,058 719,355 365,000 139,875 5,196,288 73.7 2018 4,007,453 561,723 365,000 126,188 5,060,363 79.6 2019 2,262,957 422,488 350,000 112,500 3,147,945 83.1 2020 1,683,573 377,734 300,000 99,375 2,420,682 85.8 2021 1,439,301 276,235 250,000 88,125 2,053,661 88.1 2022 1,280,146 2245272 250,000 78,750 1,833,168 90.1 2023 1,056,108 176,690 250,000 69,375 1,552,173 91.9 2024 1,0575191 139,904 250,000 60,000 1,507,095 93.7 2025 1,063,397 102,530 250,000 50,625 1,466,552 95.4 2026 829,729 69,164 250,000 41,250 1,190,143 96.9 2027 681,188 44,180 250,000 31,875 1,0075243 98.1 2028 647,777 22,247 250,000 225500 942,524 99.4 2029 125,000 5,313 2505000 13,125 393,438 99.9 2030 0 0 100,000 3,750 103,750 100.0 67.668.058 13,657.751 $6,446,222 2,138,753 89.910.784 (1) Excludes revenue anticipation notes, grant anticipation notes, bond anticipation notes, lease and installment purchase obligations, overlapping debt, and unfunded pension liability, and the Series B Bonds.Includes Refunded Bonds. (2) Principal totaling$18,758,077 and interest totaling$3,777,489 has been excluded from the limitations of Proposition 2 Y2. Does not include the Series B Bonds (3) Assumes average coupon rate of 3.75%. (4) Includes the Series A Bonds and the Refunded Bonds, but not the Series B Bonds. 19 Authorized Unissued and Prospective Financing Following delivery of the Bonds, the Town will have no authorized unissued debt. Typically, the Town authorizes $4 million to $6 million in new borrowing annually to fund in part its capital improvement program. According to capital improvement plans adopted in the spring of 2009, the Town expects to authorize $1,331,000 general obligation bonds for general fund supported purposes and $1,777,000 general obligation bonds for water purposes at the 2010 annual town meeting in the spring of 2010. In the subsequent three years, the Town expects to authorize an additional $6,735,000 general obligation bonds for general purposes and $4,295,000 general obligation bonds for water purposes. Five Years Outstandinll Debt(1) As of June 30 2009 2008 2007 2006 2005 Long-Term Indebtedness Within the General Debt Limit: Sewers &Drains $16,322,997 $17,079,067 $14,250,137 $14,665,819 $17,355,829 Land Acquisition 2,680,000 3,247,625 3,662,625 4,160,000 4,649,750 Schools 17,566,442 17,485,819 23,072,580 25,780,630 21,114,864 Other Building 3,344,141 2,541,060 2,983,385 3,447,378 3,841,010 Streets Sidewalks &Parking 1,195,407 1,233,801 633,715 612,520 464,400 Departmental Equipment 3,451,758 1,804,604 1,892,659 2,449,488 1,292,485 Architectural &Engineering Services 521,864 835,818 1,149,772 1,284,726 589,680 Athletic &Recreational Facilities 7,525 45,225 82,908 200,153 322,459 Other Inside General 714,818 536,700 604,800 112,900 610,720 Total Within the General Debt Limit 45,804,952 44,809,719 48,332,581 52,713,614 50,241,197 Outside the General Debt Limit: Sewers 1,200,730 1,410,803 1,621,236 1,826,776 295,505 Schools 10,065,000 11,315,000 17,600,000 19,000,000 20,320,000 Water 14,261,509 15,951,701 11,216,499 12,967,079 14,302,537 Total Outside the General Debt Limit 25,527,238 28,677,504 30,437,735 33,793,855 34,918,042 Total Long-Term Indebtedness $71,332,190 $73,487,223 $78,770,316 $86,507,469$ 85,159,239 Short-Term Indebtedness Revenue Anticipation Notes $ 0 $ 0 $ 0 $ 0 $ 0 Grant Anticipation Notes 0 0 0 0 0 Bond Anticipation Notes 0 2,144,430 13,044,445 11,870,078 51,422,000 Total Short-Term Indebtedness 0 2,144,430 13,044,445 11,870,078 51,422,000 Total Outstanding Indebtedness 71,332.190 75,631.653 91,814.761 $98,377,547$136,581,23 9 (1) Principal amount only. Excludes lease and installment purchase obligations, overlapping debt and unfunded pension liability. 18 Revenue Anticipation Notes. These are issued to meet current expenses in anticipation of taxes and other revenues. They must mature within one year but, if payable in less than one year, may be refunded from time to time up to one year from the original date of issue. Grant Anticipation Notes. These are issued for temporary financing in anticipation of federal grants and state and county reimbursements. They must generally mature within two years but may be refunded from time to time as long as the municipality remains entitled to the grant or reimbursement. Revenue Bonds. Cities and towns may issue revenue bonds for solid waste disposal facilities, for projects financed under the Commonwealth's Water Pollution Abatement or Drinking Water Revolving Loan Programs and for certain economic development projects supported by tax increment financing. In addition, cities and towns having electric departments may issue electric revenue bonds, and notes in anticipation of such bonds, subject to the approval of the State Department of Telecommunications and Energy. The Town does not have an electric department. DEBT 1 The following shows the direct debt to be outstanding as of December 15, 2009, including the Series A Bonds and the Refunded Bonds, but not the Series B Bonds: General Obligation Bonds: Within General Debt Limit(2) Sewers&Drains(3) $15,913,473 Land Acquisition 2,420,000 Schools 16,620,043 Other Building 3,069,766 Streets&Sidewalks 1,171,682 Departmental Equipment 3,341,932 Architectural&Engineering Services 521,864 Athletic&Recreational Facilities 7,525 Other Inside General 714,818 The Series A Bonds 4,171,222 $47,952,325 Outside General Debt Limit Sewers(3) $ 1,135,997 Schools(4) 9,415,000 Water(3) 13,335,959 The Series A Bonds 2,275,000 Total Outstanding General Obligation Bonds(5) $26,161,956 $74,114,281 Temporary Loans in Anticipation of- Revenue $ 0 Bonds 0 Grants 0 Total Temporary Loans 0 Total Direct Debt 74,114,281 (1)Principal amount only. Excludes lease and installment purchase obligations,overlapping debt and unfunded pension liability. (2),4t the present time, the Town's normal general debt limit is$232,448,425 and the double general debt limit is$464,896,850. (3)Supported by enterprise revenues. (4)The unpaid balance of state school construction grants was approximately$2,472,786 as of June 30,2009 according to the Massachusetts School Building Authority. Such grants have been and are expected to continue to be payable in annual installments over a period of time, usually twenty years from the first annual payment for the related project (5)$17,758,077 has been exempted from the provisions of Proposition 2%. 17 telecommunications systems (subject to a separate limit). Revenue bonds are not subject to these debt limits. The General Debt Limit and the special debt limit for water bonds apply at the time the debt is authorized. The other special debt limits generally apply at the time the debt is incurred. Revenue Anticipation Notes. The amount borrowed in each fiscal year by the issue of revenue anticipation notes is limited to the tax levy of the prior fiscal year,together with the net receipts in the prior fiscal year from the motor vehicle excise and certain payments made by the Commonwealth in lieu of taxes. The fiscal year ends on June 30. Notes may mature in the following fiscal year, and notes may be refunded into the following fiscal year to the extent of the uncollected, unabated current tax levy and certain other items, including revenue deficits, overlay deficits, final judgments and lawful unappropriated expenditures, which are to be added to the next tax levy, but excluding deficits arising from a failure to collect taxes of earlier years. (See "Taxation to Meet Deficits" herein.) In any event, the period from an original borrowing to its final maturity cannot exceed one year. I TYPES OF OBLIGATIONS General Obligations. Massachusetts cities and towns are authorized to issue general obligation indebtedness of these types: Serial Bonds and Notes. These are generally required to be payable in equal or diminishing annual principal amounts beginning no later than the end of the next fiscal year commencing after the date of issue and ending within the terms permitted by law. Level debt service is permitted for bonds or notes issued for certain purposes, including self-supporting enterprise purposes, certain state-aided school projects and certain community preservation and open space projects and certain small municipal renewable energy generating facilities projects,as well as for those projects for which debt service has been exempted from property tax limitations. The principal amounts of certain economic development bonds supported by tax increment financing may be payable in equal, diminishing or increasing amounts beginning within 5 years after the date of issue. The maximum terms of serial bonds and notes vary from one year to 40 years, depending on the purpose of the issue. Most of the purposes are capital projects. Bonds or notes may be made callable and redeemed prior to their maturity, and a redemption premium may be paid. Refunding bonds or notes may be issued subject to the maximum applicable term measured from the date of the original bonds or notes and must produce present value savings over the debt service of the refunded bonds. Generally, the first principal payment of the refunding bonds cannot be later than the first principal payment of any of the bonds or notes being refunded thereby, however, principal payments made before the first principal payment of any bonds or notes being refunded thereby may be in any amount. Serial bonds may be issued as "qualified bonds"with the approval of the state Municipal Finance Oversight Board composed of the State Treasurer, the State Auditor, the Attorney General and the Director of Accounts, subject to such conditions and limitations (including restrictions on future indebtedness) as may be required by the Board. Qualified bonds may mature not less than 10 nor more than 30 years from their dates and are not subject to the amortization requirements described herein. The State Treasurer is required to pay the debt service on qualified bonds and thereafter to withhold the amount of the debt service paid by the State from state aid or other state payments; administrative costs and any loss of interest income to the State are to be assessed upon the city or town. Bond Anticipation Notes. These generally must mature within two years of their original dates of issuance but may be refunded from time to time for a period not to exceed five years from their original dates of issuance, provided that for each year that the notes are refunded beyond the second year they must be paid in part from revenue funds in an amount at least equal to the minimum annual payment that would have been required if the bonds had been issued at the end of the second year. For certain school projects, however, notes may be refunded from time to time for a period not to exceed seven years, without having to pay any portion of the principal of the notes from revenue funds. The maximum term of bonds issued to refund bond anticipation notes is measured(except for certain school projects) from the date of the original issue of the notes. 16 The Town's Public Works Department provides water and sewer services to commercial, industrial and residential users in the Town. Approximately 95% of the Town is provided with water service and approximately 75% of the Town is provided with sewer service. The Town's water and sewer services are provided through an Enterprise Fund accounting system. The Town sets its water and sewer rates to cover the operating and capital costs of providing these services and, although the water and sewer system is not fully enterprised, operations are self-supporting, inclusive of debt service. The North Andover Housing Authority was established in 1949 to address the housing needs of low and moderate income families in the Town, as well as to administer programs to achieve overall housing objectives in a fiscally responsible manner. The Authority administers publicly-owned units and rental subsidy programs through the use of federal and state funds, working to coordinate the private and public sectors to provide affordable housing for low and moderate income families residing in the Town. TRANSPORTATION AND UTILITIES Modern transportation facilities are available to residents and commercial enterprises in the Town of North Andover. The Town maintains a total of 215 miles of Town roads and 17 miles of state roads. The principal highways serving the Town are interstate Route 495, the "outer belt" around Boston, and interstate Route 93 which connects the North Andover area with Boston. Bus transportation within the Town and throughout the local region is provided by the Merrimac Valley Transit Authority. The Merrimac Transportation Company provides bus transportation between North Andover and Boston and the Massachusetts Bay Transportation Authority provides commuter rail service to Boston. Established truck lines provide service locally and to long distance destinations. Within short trucking distance are railroad terminals, the Port of Boston and Logan International Airport. Freight rail service is provided by the Boston and Maine Railroad. Lawrence Municipal Airport,with paved runways of 5,000 and 3,000 feet, is located in the Town. Gas, electric and telephone services are provided by established private utilities. AUTHORIZATION OF GENERAL OBLIGATION BONDS AND NOTES Serial bonds and notes are authorized by a two-thirds vote of the town meeting. Refunding bonds and notes are authorized by the selectmen. Borrowings for some purposes require State administrative approval. When serial bonds or notes have been authorized, bond anticipation notes may be issued by the officers authorized to issue the serial bonds or notes. Temporary debt in anticipation of the revenue of the fiscal year in which the debt is incurred or in anticipation of authorized federal and state aid generally may be incurred by the Treasurer with the approval of the Selectmen. DEBT LIMITS The General Debt Limit of a city or town consists of a Normal Debt Limit and a Double Debt Limit. The Normal Debt Limit is 5 percent of the valuation of taxable property as last equalized by the State Department of Revenue. A city or town can authorize debt up to this amount without state approval. It can authorize debt up to twice this amount (the Double Debt Limit) with the approval of the Municipal Finance Oversight Board composed of the State Treasurer,the State Auditor,the Attorney General and the Director of Accounts. There are many categories of general obligation debt which are exempt from and do not count against the General Debt Limit. Among others, these exempt categories include revenue anticipation notes and grant anticipation notes; emergency loans; loans exempted by special laws; certain school bonds, sewer bonds, solid waste disposal facility bonds and economic development bonds supported by tax increment financing; and subject to special debt limits, bonds for water (limited to 10 percent of equalized valuation), housing, urban renewal and economic development (subject to various debt limits), and electric, gas, community antenna television systems, and 15 Most towns are governed by open town meetings in which any voter may participate. Others have an elected representative town meeting, often with public officers serving as ex officio members of the town meeting. Provision is usually made for a referendum on actions of the representative town meeting upon petition of a sufficient number of voters. Administrative affairs are generally managed by a board of three or more selectmen, sometimes with the assistance of a town manager or executive secretary. School affairs of cities and towns are administered by an elected school committee except in those towns whose educational functions are carried out entirely through a regional school district. GOVERNING BODIES AND OFFICERS Manner of Selection and Term Office Name Term Expires Selectmen Rosemary Connelly Smedile- Chairman Elected/3 years 2010 Richard A.Nardella Elected/3 years 2011 Tracy M. Watson Elected/3 years 2011 William Gordon Elected/3 years 2012 Daniel P. Lanen Elected/3 years 2012 Town Manager Mark H. Rees Appointed Indefinite Town Accountant/Budget Director Lyne M. Savage Appointed/3 years 2012 Treasurer/Collector Jennifer Yarid Appointed Indefinite Town Clerk Joyce A. Bradshaw Appointed Indefinite Director of Public Works Bruce Thibodeau Appointed Indefinite Director of Community Development& Services Curt Bellavance Appointed Indefinite Town Counsel Urbelis,Fieldsteel &Bailin,LLP Appointed Indefinite SERVICES The Town provides general governmental services for the territory within its boundaries, including police and fire protection, disposal of rubbish, public education in grades kindergarten through twelve, water and sewer service, street maintenance, library services, parks, and recreational facilities. The Town is also a member of the Greater Lawrence Regional Vocational Technical High School District, the Greater Lawrence Sanitary District and the Merrimac Valley Regional Transit Authority. 14 PART II THE TOWN The Town of North Andover (the "Town') is located in Essex County, approximately 24 miles north of Boston. It is bordered on the north by the City of Methuen and the City of Haverhill, on the east by the Town of Boxford, on the west by the Town of Andover and the City of Lawrence, and on the south by the Towns of Middleton and North Reading. North Andover occupies a land area of 26.63 square miles and, according to the 2000 Federal Census, has a population of 27,202. Incorporated as a town in 1855, North Andover is governed by an open town meeting form of government, a five member Board of Selectmen and a Town Manager pursuant to a Home Rule Charter, which went into effect on October 1, 1986. CONSTITUTIONAL STATUS AND FORM OF GOVERNMENT subject o the plenary legislative power of the Commonwealth. As stated b Massachusetts cities and towns are sub t J p Y g p Y the Supreme Judicial Court: A town is not an independent sovereignty. It is merely a subordinate agency of the State government. It is a creature of the Commonwealth, from which are derived all its powers and those of its voters and officers. Cities and towns provide general governmental services at the local level. Municipalities were traditionally authorized to exercise only those powers granted by the State legislature, but Massachusetts adopted a Home Rule Amendment to its Constitution in 1966, under which a city or town may exercise by ordinance or by-law any power which the State legislature could confer upon it, provided that the ordinance or by-law is consistent with the laws enacted by the State legislature. Certain powers are excluded from home rule and may still be exercised only when authorized by State law;these powers include the power to levy taxes,the power to borrow money, and the power to enact private or civil law governing civil relationships except as an incident to the exercise of an independent municipal power. Under the Home Rule Amendment the State legislature may enact general laws relating to a class of two or more municipalities but (except in limited circumstances) may enact a special law relating to a particular city or town only on request of the city or town or on recommendation of the Governor and passage by a two-thirds vote of both houses of the legislature. i An amendment to the State Constitution provides that any law imposing additional costs on two or more cities or towns by regulating aspects of municipal employment will not be effective within a city or town until the city council or town meeting accepts the law. Local acceptance is not required if the legislature has either passed the law by a two-thirds vote or provided that the additional costs would be assumed by the State. Cities and towns may change their form of government by adopting home rule charters or amending existing charters. A town of less than 12,000 population may not change to a city form of government and a town of less than 6,000 inhabitants may not change from the open town meeting form of government to a limited or representative town meeting form. Cities are generally governed by a city council and an elected mayor who has the power to veto council actions; the council may override a mayoral veto by a two-thirds vote of the councilors. Some cities are governed by a city council and an appointed city manager who has no power to veto council actions; some municipalities, although still called "towns," have adopted a similar city form of government with a town council and town manager or administrator. Provision is often made for a referendum on council actions, and for initiation of measures, upon petition of a sufficient number of voters. 13 RATING Application has been made to Standard and Poor's Ratings Services for a rating on the Bonds. Such rating, if obtained, will reflect only the rating agency's view and will be subject to revision or withdrawal, which could affect the market price of the Bonds. CONTINUING DISCLOSURE In order to assist the Underwriters in complying with Rule 15c2-12(b)(5) promulgated by the Securities and Exchange Commission (the "Rule"), the Town will covenant for the benefit of owners of the Bonds to provide certain financial information and operating data relating to the Town by not later than 270 days after the end of each fiscal year, (the "Annual Report"), and to provide notices of the occurrence of certain enumerated events, if material. The covenants will be contained in a Continuing Disclosure Certificate,the proposed form of which is provided in Appendix D. The Certificate will be executed by the signers of the Bonds, and incorporated by reference in the Bonds. Except as described in the following paragraphs, the Town has never failed to comply, in any material respect, with any previous undertakings to provide financial information and operating data or notices of material events in accordance with the Rule. The Town failed to file unaudited financial statements for the fiscal year ended June 30, 2006 by the due date for such filing. Audited financial statements for the fiscal year ended June 30, 2006 were filed on or about April 8, 2008, upon their completion. The Town failed to file unaudited financial statements for the fiscal year ended June 30, 2007 by the due date for such filing. Audited financial statements for the fiscal year ended June 30, 2007 were filed on or about April 17, 2008,upon their completion. 12 Prospective Bondholders should be aware, however, that the Bonds are included in the measure of Massachusetts estate and inheritance taxes, and the Bonds and the interest thereon are included in the measure of certain Massachusetts corporate excise and franchise taxes. Bond Counsel has not opined as to the taxability of the Bonds or the income therefrom under the laws of any state other than Massachusetts. A complete copy of the proposed form of opinion of Bond Counsel is set forth in Appendix C hereto. To the extent the issue price of any maturity of the Bonds is less than the amount to be paid at maturity of such Bonds (excluding amounts stated to be interest and payable at least annually over the term of such Bonds), the difference constitutes "original issue discount," the accrual of which, to the extent properly allocable to each owner thereof, is treated as interest on the Bonds which is excluded from gross income for federal income tax purposes and is exempt from Massachusetts personal income taxes. For this purpose, the issue price of a particular maturity of the Bonds is the first price at which a substantial amount of such maturity of the Bonds is sold to the public (excluding bond houses, brokers, or similar persons or organizations acting in the capacity of underwriters, placement agents or wholesalers). The original issue discount with respect to any maturity of the Bonds accrues daily over the term to maturity of such Bonds on the basis of a constant interest rate compounded semi-annually (with straight-line interpolations between compounding dates). The accruing original issue discount is added to the adjusted basis of such Bonds to determine taxable gain or loss upon disposition (including sale, redemption, or payment on maturity) of such Bonds. Bondholders should consult their own tax advisors with respect to the tax consequences of ownership of Bonds with original issue discount, including the treatment of purchasers who do not purchase such Bonds in the original offering to the public at the first price at which a substantial amount of such Bonds is sold to the public. Bonds purchased, whether at original issuance or otherwise, for an amount greater than the stated principal amount to be paid at maturity of such Bonds, or, in some cases, at the earlier redemption date of such Bonds ('Premium Bonds"), will be treated as having amortizable bond premium for federal income tax purposes and Massachusetts personal income tax purposes. No deduction is allowable for the amortizable bond premium in the case of obligations, such as the Premium Bonds, the interest on which is excluded from gross income for federal income tax purposes. However, a Bondholder's basis in a Premium Bond will be reduced by the amount of amortizable bond premium properly allocable to such Bondholder. Holders of Premium Bonds should consult their own tax advisors with respect to the proper treatment of amortizable bond premium in their particular circumstances. Bond Counsel has not undertaken to determine (or to inform any person) whether any actions taken (or not taken) or events occurring (or not occurring) after the date of issuance of the Bonds may adversely affect the value of, or the tax status of interest on, the Bonds. Further, no assurance can be given that pending or future legislation, including amendments to the Code, if enacted into law, or any proposed legislation, including amendments to the Code, or any future judicial, regulatory or administrative interpretation or development with respect to existing law, will not adversely affect the value of, or the tax status of interest on, the Bonds. Prospective Bondholders are urged to consult their own tax advisors with respect to proposals to restructure the federal income tax. Although Bond Counsel is of the opinion that interest on the Bonds is excluded from gross income for federal income tax purposes and is exempt from Massachusetts personal income taxes, the ownership or disposition of, or the accrual or receipt of interest on, the Bonds may otherwise affect the federal or state tax liability of a Bondholder. Among other possible consequences of ownership or disposition of, or the accrual or receipt of interest on, the Bonds, the Code requires recipients of certain social security and certain railroad retirement benefits to take into account receipts or accruals of interest on the Bonds in determining the portion of such benefits that are included in gross income. The nature and extent of all such other tax consequences will depend upon the particular tax status of the Bondholder or the Bondholder's other items of income or deduction. Except as indicated in the following paragraph, Bond Counsel expresses no opinion regarding any such other tax consequences, and Bondholders should consult with their own tax advisors with respect to such consequences. 11 year to the extent of the estimated distributions for that fiscal year. The sums so paid shall be charged (with interest and administrative costs) against the distributions to the city or town. The foregoing does not constitute a pledge of the faith and credit of the Commonwealth. The Commonwealth has not agreed to maintain existing levels of state distributions, and the direction to use estimated distributions to pay debt service may be subject to repeal by future legislation. Moreover, adoption of the annual appropriation act has sometimes been delayed beyond the beginning of the fiscal year and estimated distributions which are subject to appropriation may be unavailable to pay local debt service until they are appropriated. Bankruptcy. Enforcement of a claim for payment of principal or interest on general obligation bonds or notes would be subject to the applicable provisions of Federal bankruptcy laws and to the provisions of other statutes, if any, hereafter enacted by the Congress or the State legislature extending the time for payment or imposing other constraints upon enforcement insofar as the same may be constitutionally applied. OPINION OF BOND COUNSEL A copy of the legal opinion of the firm of Edwards Angell Palmer &Dodge LLP, of Boston,Massachusetts (see Appendix C),will be furnished to the successful bidders. The opinion will be dated and given on and will speak only as of the date of original delivery of the Bonds to the successful bidders. i The scope of engagement of Bond Counsel does not extend to passing upon or assuming responsibility for the accuracy or adequacy of any statements made in this Official Statement other than matters expressly set forth as their opinion and they make no representation that they have independently verified the same. TAX EXEMPTION In the opinion of Edwards Angell Palmer & Dodge LLP, Bond Counsel to the Town ("Bond Counsel"), based upon an analysis of existing laws, regulations, rulings, and court decisions, and assuming, among other matters, compliance with certain covenants, interest on the Bonds is excluded from gross income for federal income tax purposes under Section 103 of the Internal Revenue Code of 1986 (the "Code"). Bond Counsel is of the further opinion that interest on the Bonds is not a specific preference item for purposes of the federal individual or corporate alternative minimum taxes. However, such interest is included in adjusted current earnings when calculating corporate alternative minimum taxable income. In the opinion of Bond Counsel, the Bonds will be "qualified tax-exempt obligations"for purposes of Section 265(b)(3) of the Code. The foregoing reflects the enactment of the American Recovery and Reinvestment Act of 2009 which includes provisions that modify the treatment under the alternative minimum tax of interest on certain bonds of state and local government entities and that modify Section 265(b)(3) of the Code. Bond Counsel expresses no opinion regarding any other federal tax consequences arising with respect to the ownership or disposition of, or the accrual or receipt of interest on the Bonds. The Code imposes various requirements relating to the exclusion from gross income for federal income tax purposes of interest on obligations such as the Bonds. Failure to comply with these requirements may result in interest on the Bonds being included in gross income for federal income tax purposes, possibly from the date of original issuance of the Bonds. The Town has covenanted to comply with such requirements to ensure that interest on the Bonds will not be included in federal gross income. The opinion of Bond Counsel assumes compliance with these requirements. Bond Counsel is also of the opinion that, under existing law, interest on the Bonds is exempt from Massachusetts personal income taxes, and the Bonds are exempt from Massachusetts personal property taxes. Bond Counsel has not opined as to other Massachusetts tax consequences arising with respect to the Bonds. 10 Court Proceedings. In the opinion of Bond Counsel,Massachusetts cities and towns are subject to suit on their general obligation bonds and notes and courts of competent jurisdiction have power in appropriate proceedings to order payment of a judgment on the bonds or notes from lawfully available funds or, if necessary, to order the city or town to take lawful action to obtain the required money, including the raising of it in the next annual tax levy, within the limits prescribed by law (see "Tax Limitations" herein). In exercising their discretion as to whether to enter such an order, the courts could take into account all relevant factors including the current operating needs of the city or town and the availability and adequacy of other remedies. The Massachusetts Supreme Judicial Court has stated in the past that a judgment against a municipality can be enforced by the taking and sale of the property of any inhabitant. However, there has been no judicial determination as to whether this remedy is constitutional under current due process and equal protection standards. Restricted Funds. Massachusetts statutes also provide that certain water, gas and electric, community antenna j television system, telecommunications, sewer, parking meter and passenger ferry fee receipts community j preservation and affordable housing receipts may be used only for water, gas and electric, community antenna television system, telecommunications, sewer, parking, mitigation of ferry service impacts, community preservation and affordable housing purposes,respectively and accordingly, moneys derived from these sources may be unavailable to pay general obligation bonds and notes issued for other purposes. A city or town that accepts certain other statutory provisions may establish an enterprise fund for a utility, health care, solid waste, recreational or transportation facility and for police or fire services; under those provisions any surplus in the fund is restricted to use for capital expenditures or reduction of user charges. In addition, subject to certain limits, a city or town may annually authorize the establishment of one or more revolving funds in connection with use of certain revenues for programs that produce those revenues; interest earned on a revolving fund is treated as general fund revenue. Also, the annual allowance for depreciation of a gas and electric plant or a community antenna television and telecommunications system is restricted to use for plant or system renewals and improvements, for nuclear decommissioning costs, and costs of contractual commitments, or, with the approval of the State Department of Telecommunications and Energy, to pay debt incurred for plant reconstruction or renewals. Revenue bonds and notes issued in anticipation of them may be secured by a prior lien on specific revenues. Receipts from industrial users in connection with industrial revenue financings are also not available for general municipal purposes. State Distributions. State grants and distributions may in some circumstances be unavailable to pay general obligation bonds and notes of a city or town in that the State Treasurer is empowered to deduct from such grants and distributions the amount of any debt service paid on "qualified bonds" and any other sums due and payable by the city or town to the Commonwealth, or certain other public entities, including any unpaid assessments for costs of any public transportation authority (such as the Massachusetts Bay Transportation Authority (the "MBTA") or a regional transit authority) of which it is a member or for costs of the Massachusetts Water Resources Authority (the "MWRA") if the city or town is within the territory served by the Authority, for any debt service due on obligations issued to the Massachusetts School Building Authority, or for charges necessary to meet obligations under the Commonwealth's Water Pollution Abatement or Drinking Water Revolving Loan Programs, including such charges imposed by another local governmental unit that provides wastewater collection or treatment services or drinking water treatment services to the city or town. If a city or town is (or is likely to be) unable to pay principal or interest on its bonds or notes when due, it is required to notify the State Commissioner of Revenue. The Commissioner shall in turn, after verifying the inability, certify the inability to the State Treasurer. The State Treasurer shall pay the due or overdue amount to the paying agent for the bonds or notes, in trust, within three days after the certification or one business day prior to the due date (whichever is later). This payment is limited, however,to the estimated amount otherwise distributable by the Commonwealth to the city or town during the remainder of the fiscal year (after the deductions mentioned in the foregoing paragraph). If for any reason any portion of the certified sum has not been paid at the end of the fiscal year, the State Treasurer shall pay it as soon as practicable in the next fiscal 9 VERIFICATION OF MATHEMATICAL COMPUTATIONS Prior to the delivery of the Series B Bonds, Barthe & Wahrman, independent accountants, will deliver a report on the mathematical accuracy of certain computations, contained in schedules provided to them by the Financial Advisor, relating to (a) the adequacy of the maturing principal amounts of the United States government obligations held by the escrow agent and interest to be earned thereon to pay all the principal, redemption premium, where applicable, and interest on the Refunded Bonds when due, and (b) the computations of yields relied upon by the Bond Counsel to support its opinion that interest on the Bonds is not included in gross income for Federal income tax purposes. PLAN OF REFUNDING Upon delivery of the Series B Bonds, the Town will enter into an Escrow Agreement with U.S. Bank National Association as Escrow Agent (the "Agent"), to provide for the advance refunding of the Refunded Bonds. Upon receipt of the proceeds of the Series B Bonds, the Agent will deposit into an escrow fund (the "Escrow Fund") established by the Escrow Agreement the amount which will be invested in obligations maturing in amounts and bearing interest at rates sufficient, without reinvestment, to pay, when due, interest on, and upon redemption or maturity, the outstanding principal of and redemption premium on the Refunded Bonds. The Escrow Fund, including the interest earnings on the obligations therein, is pledged solely for the benefit of the holders of the Refunded Bonds and is not available to pay the Series B Bonds offered herein. SECURITY AND REMEDIES Full Faith and Credit. General obligation bonds and notes of a Massachusetts city or town constitute a pledge of its full faith and credit. Payment is not limited to a particular fund or revenue source. Except for "qualified bonds" (see "Serial Bonds and Notes" herein) and setoffs of state distributions (see "State Distributions" herein), no provision is made by the Massachusetts statutes for priorities among bonds and notes and other general obligations, although the use of certain moneys may be restricted. Tax Levy. The Massachusetts statutes direct the municipal assessors to include annually in the tax levy for the next fiscal year "all debt and interest charges matured and maturing during the next fiscal year and not otherwise provided for (and) all amounts necessary to satisfy final judgments". Specific provision is also made for including in the next tax levy payments of rebate amounts not otherwise provided for and payment of notes in anticipation of federal or state aid if the aid is no longer forthcoming. The total amount of a tax levy is limited by statute. However, the voters in each municipality may vote to exclude from the limitation any amounts required to pay debt service on indebtedness incurred before November 4, 1980. Local voters may also vote to exempt specific subsequent bond issues from the limitation (see "Tax Limitations" herein.) In addition, obligations incurred before November 4, 1980 may be constitutionally entitled to payment from taxes in excess of the statutory limit. The Town has voted to exempt the debt service on $18,758,077 of currently outstanding bonds from the limitations of Proposition 2 '/Z. Except for taxes on the increased value of certain property in designated development districts which may be pledged for the payment of debt service on bonds issued to finance economic development projects within such districts, no provision is made for a lien on any portion of the tax levy to secure particular bonds or notes or bonds and notes generally (or judgments on bonds or notes) in priority to other claims. Provision is made, however, for borrowing to pay judgments, subject to the General Debt Limit (see Debt Limits herein). Subject to the approval of the State Director of Accounts for judgments above $10,000, judgments may also be paid from available funds without appropriation and included in the next tax levy unless other provision is made. 8 The Refunded 2002 Bonds maturing in 2010, 2011 and 2012 are partial maturities of the 2002 Bonds and are to be escrowed to maturity. (New CUSIP numbers are to be determined for these maturities.)The remaining Refunded 2002 Bonds are expected to be redeemed with Series B Bond proceeds at a price of 101% of par on April 1, 2012. OPTIONAL REDEMPTION The Series A Bonds maturing in the years 2011 through 2018, inclusive, are not subject to redemption prior to their stated dates of maturity. The Series A Bonds maturing on and after January 15, 2019 are subject to redemption prior to their stated dates of maturity, at the option of the Town, on and after January 15, 2018 either in whole or in part at any time, and if in part, by lot within a maturity, at par plus accrued interest to the date set for redemption. The Series B Bonds maturing in the years 2010 through 2018, inclusive, are not subject to redemption prior to their stated dates of maturity. The Series B Bonds maturing on and after April 1, 2019 are subject to redemption prior to their stated dates of maturity, at the option of the Town, on and after April 1, 2018 either in whole or in part at any time, and if in part,by lot within a maturity, at par,plus accrued interest to the date set for redemption. So long as DTC is the registered owner of the Bonds, notice of any redemption of Bonds, prior to their maturities, specifying the Bonds (or portions thereof) to be redeemed shall be mailed to DTC not more than 60 days nor less than 30 days prior to the redemption date. Any failure on the part of DTC to notify the DTC Participants of the redemption or failure on the part of the DTC Participants or of a nominee of a Beneficial Owner (having received notice from a DTC Participant or otherwise) to notify the Beneficial Owner shall not affect the validity of the redemption. If moneys for the redemption are held by the Paying Agent on the redemption date and if notice of the redemption shall have been duly mailed,then from and after the redemption date interest on the Bonds (or portions thereof) called for redemption shall cease to accrue. Mandatory Redemption Term Bonds, if any are specified by the successful bidder, will be subject to mandatory redemption on January 15 (for the Series A Bonds) or April 1 (for the Series B Bonds) in each year or years immediately prior to the stated maturity of such Term Bonds (the particular Bonds of such maturity to be redeemed to be selected by lot) as indicated on the cover page of the Preliminary Official Statement at the principal amount thereof plus accrued interest to the redemption date. SOURCES AND USES OF FUNDS—SERIES B The following information summarizes the estimated sources and uses of funds, excluding accrued interest: Sources Uses Par Amount of Series B Bonds $ Deposit to Refunding Escrow $ Reoffering Premium Issuance Costs and Other Total Sources Total Uses 7 $350,000 of the Series A Bonds are authorized under Chapter 44, Section 8(7C), of the Massachusetts General Laws, as amended, and a vote of the Town on May 12, 2009 for the purpose of rehabilitating the Rosemont water booster pump station. Debt service for this purpose is expected to be supported by the Town's Water Enterprise Fund. AUTHORIZATION AND USE OF PROCEEDS—SERIES B The Series B Bonds are issued pursuant to Chapter 44, Section 21A, of the Massachusetts General Laws, as amended, and a vote of the Board of Selectmen expected to be taken on December 7, 2009 for the purpose of advance refunding certain outstanding general obligation bonds of the Town dated June 15, 2001 originally issued in the aggregate principal amount of$3,709,000 (the "2001 Bonds") and April 1, 2002originally issued in the aggregate principal amount of $26,640,000 (the "2002 Bonds"). (The Refunded 2001 Bonds and the Refunded 2002 Bonds (as described below) will be known collectively as the "Refunded Bonds.") The Town is undertaking the issuance of the Series B Bonds to effect a restructuring of a portion of the debt supported by the Town's Sewer Enterprise Fund. The 2001 Bonds to be refunded were issued for the purpose of sewer improvements GPR-Phase 3c) and are as follows (the"Refunded 2001 Bonds")— Par Coupon Amount Maturity Rate CUSIP $ 85,000 June 15, 2010 4.10% - $ 85,000 June 15, 2011 4.20 - $100,000 June 15, 2012 4.375 657237 UM3 $100,000 June 15, 2013 4.50 657237 UN1 $1003000 June 15, 2014 4.60 657237 UP6 $100,000 June 15, 2015 4.70 657237 UQ4 $100,000 June 15, 2016 4.75 657237 UR2 The Refunded 2001 Bonds maturing in 2010 and 2011 are partial maturities of the 2001 Bonds and are to be escrowed to maturity. (New CUSIP numbers are to be determined for these maturities.) The remaining Refunded 2001 Bonds are expected to be redeemed with Series B Bond proceeds at a price of 101% of par on June 15, 2011. The Refunded 2002 Bonds to be refunded were issued for the purpose of sewer improvements and are as follows (the"Refunded 2002 Bonds")— i Par Coupon Amount Maturit y Rate CUSIP $230,000 April 1, 2010 4.50% - $230,000 April 1, 2011 4.50 - $230,000 April 1, 2012 4.50 - $230,000 April 1, 2013 4.50 657237 VD2 $230,000 April 1, 2014 4.625 657237 VEO $230,000 April 1, 2015 4.75 657237 VF7 $230,000 April 1, 2016 4.75 657237 VG5 $230,000 April 1, 2017 5.00 657237 VH3 $230,000 April 1, 2018 5.00 657237 VJ9 $230,000 April 1, 2019 5.00 657237 VK6 $230,000 April 1, 2020 5.10 657237 VL4 $215,000 April 1, 2021 5.125 657237 VM2 $215,000 April 1, 2022 5.125 657237 VNO 6 DTC Practices The Town can make no assurances that DTC, Direct Participants, Indirect Participants or other nominees of the Beneficial Owners of the Bonds will act in a manner described in this Official Statement. DTC is required to act according to rules and procedures established by DTC and its participants which are on file with the Securities and Exchange Commission. AUTHORIZATION AND USE OF PROCEEDS—SERIES A $235,000 of the Series A Bonds are authorized under Chapter 44, Section 7(6), of the Massachusetts General Laws, as amended, and a vote of the Town on May 13, 2008 for the purpose of making roadway improvements. Original authorization for this purpose was $325,000. The Town issued $90,000 general obligation bonds for this purpose on June 10,2009. j $72,200 of the Series A Bonds are authorized under 44, Section 7(6), of the Massachusetts General Laws, as amended, and a vote of the Town on May 13, 2008 for the purpose of constructing sidewalks. Original authorization for this purpose was $122,200. The Town issued $50,000 general obligation bonds for this purpose on June 10, 2009. $3,563,000 of the Series A Bonds are authorized under Chapter 44, Section 7(3), of the Massachusetts General Laws, as amended, and a vote of the Town on May 13, 2008 for the purpose of constructing a new Police Department headquarters. Original authorization for this purpose was $4,763,000. The Town issued $1,200,000 general obligation bonds for this purpose on June 10, 2009. $301,022 of the Series A Bonds are authorized under Chapter 44, Section 7(9), of the Massachusetts General Laws, as amended, and a vote of the Town on May 12, 2009 for the purpose of acquiring modular classrooms for the Town's community programs. $250,000 of the Series A Bonds are authorized under Chapter 44, Section 8(15), of the Massachusetts General Laws, as amended, and a vote of the Town on May 13, 2008 for the purpose of constructing sanitary sewer lines. Original authorization for this purpose was $750,000. The Town issued $500,000 general obligation bonds for this purpose on June 10, 2009. Debt service for this purpose is expected to be supported by the Town's Sewer Enterprise Fund. $250,000 of the Series A Bonds are authorized under Chapter 44, Section 8, of the Massachusetts General Laws, as amended, and a vote of the Town on May 13, 2008 for the purpose of rehabilitating water mains. Original authorization for this purpose was $550,000. The Town issued $300,000 general obligation bonds for this purpose on June 10, 2009. Debt service for this purpose is expected to be supported by the Town's Water Enterprise Fund. $175,000 of the Series A Bonds are authorized under Chapter 44, Section 8(7C), of the Massachusetts General Laws, as amended, and a vote of the Town on May 13, 2008 for the purpose of rehabilitating the Foxwood water booster pump station. Original authorization for this purpose was $550,000. The Town issued $300,000 general obligation bonds for this purpose on June 10, 2009. Debt service for this purpose is expected to be supported by the Town's Water Enterprise Fund. $1,250,000 of the Series A Bonds are authorized under Chapter 44, Section 8(4), of the Massachusetts General Laws, as amended, and a vote of the Town on May 12, 2009 for the purpose of constructing the Bear Hill water booster pump station. Debt service for this purpose is expected to be supported by the Town's Water Enterprise Fund. 5 Owner entered into the transaction. Transfers of ownership interests in securities held by DTC 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 such securities, except in the event that use of the book-entry system for such securities is discontinued. To facilitate subsequent transfers, all securities 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 securities 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 securities held by it; DTC's records reflect only the identity of the Direct Participants to whose accounts such securities 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. i Redemption notices on the Bonds 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 the interest of each Direct Participant in such maturity to be redeemed. Neither DTC nor Cede & Co. (nor such other DTC nominee)will consent or vote with respect to securities held by DTC unless authorized by a Direct Participant in accordance with DTC's MMI Procedures. Under its usual procedures, DTC mails an Omnibus Proxy to the issuer of such securities 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 such securities are credited on the record date(identified in a listing attached to the Omnibus Proxy). 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 issuer of such securities or its paying agent, on the payable date in accordance with their respective holdings shown on DTC's records. Payments by Participants to Beneficial Owners will be governed by standing instructions and customary practices, as is the case with securities held for the accounts of customers in bearer form or registered in "street name," and will be the responsibility of such Participant and not of DTC (nor its nominee), the issuer of such securities or its paying agent, subject to any statutory or regulatory requirements as may be in effect from time to time. Payment of 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 issuer of such securities or its paying agent, disbursement of such payments to Direct Participants will be the responsibility of DTC, and disbursement of such payments to the Beneficial Owners will be the responsibility of Direct and Indirect Participants. DTC may discontinue providing its services as depository with respect to the Bonds at any time by giving reasonable notice to the Town or its paying agent. Under such circumstances, in the event that a successor depository is not obtained, physical certificates are required to be printed and delivered to Beneficial Owners. The Town may decide to discontinue use of the system of book-entry-only transfers through DTC (or a successor securities depository). In that event, physical certificates will be printed and delivered to Beneficial Owners. The information in this section concerning DTC and DTC's book-entry system has been obtained from sources that the Town believes to be reliable,but the Town takes no responsibility for the accuracy thereof. 4 The Bonds are issuable only in fully registered form without coupons, and, when issued, will be registered in the name of Cede & Co., as Bondowner and nominee for DTC. DTC will act as securities depository for the Bonds. Purchases of the Bonds will be made in book-entry form, in the denomination of$5,000 or any integral multiple thereof with one denomination of$1,222 of the Series A Bonds that will mature in 2011. Purchasers will not receive certificates representing their interest in Bonds purchased. So long as Cede & Co. is the Bondowner, as nominee of DTC, references herein to the Bondowners or registered owner shall mean Cede & Co., as aforesaid, and shall not mean the Beneficial Owners (as defined herein) of the Bonds. (See "Book- Entry-Only System" herein.) Record Date The record date for each payment of interest on the Series A Bonds is the last business day of the month preceding the interest payment date for the Series A Bonds, provided that, with respect to overdue interest or interest on any overdue amount,the Paying Agent may establish a special record date. The record date for each payment of interest on the Series B Bonds is the fifteenth day of the month preceding the interest payment date for the Series B Bonds, provided that, with respect to overdue interest or interest on any overdue amount, the Paying Agent may establish a special record date. The special record date may not be more than twenty (20) days before the date set for payment. The Paying Agent will mail notice of a special record date to the bondholders at least ten (10)days before the special record date. i BOOK-ENTRY TRANSFER SYSTEM The Depository Trust Company ("DTC"), New York, NY, will act as securities depository for the Bonds. The Bonds will be issued in fully-registered form, 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 certificate will be issued for each maturity of the Bonds, and will be deposited with DTC. DTC,the world's largest depository, is a limited-purpose trust company organized under the New York Banking Law, a "banking organization" within the meaning of the New York Banking Law, a member of the Federal Reserve System, a "clearing corporation" within the meaning of the New York Uniform Commercial Code, and a "clearing agency" registered pursuant to the provisions of Section 17A of the Securities Exchange Act of 1934. DTC holds and provides asset servicing for over 3.5 million issues of U.S. and non-U.S. equity, 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 regulated securities. Access to the DTC system is also available to others such as both U.S. and non-U.S. securities brokers and dealers, banks, trust companies, and clearing corporations that clear through or maintain a custodial relationship with a Direct Participant, either directly or indirectly("Indirect Participants"). DTC has Standard&Poor's highest rating: AAA. The DTC Rules applicable to its Participants are on file with the Securities and Exchange Commission. Purchases of book-entry securities under the DTC system must be made by or through Direct Participants, which will receive a credit for such securities on DTC's records. The ownership interest of each actual purchaser of each such security ("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 3 PART I THE BONDS DESCRIPTION OF THE BONDS The Series A Bonds will be dated December 15, 2009, and will mature on January 15 of the years and in the principal amounts as follows: Due Principal Due Principal January 15 Amount January 15 Amount 2011 $486,222 2021 $250,000 2012 480,000 2022 250,000 2013 480,000 2023 250,000 2014 480,000 2024 250,000 2015 425,000 2025 250,000 2016 365,000 2026 250,000 2017 365,000 2027 250,000 2018 365,000 2028 250,000 2019 350,000 2029 250,000 2020 300,000 2030 100,000 The Series A Bonds will bear interest at the rate or rates per annum specified by the successful bidder. The Series A Bonds are subject to optional redemption prior to their stated dates of maturity, as described herein. The Series B Bonds will be dated December 15, 2009, and will mature on April 1 of the years and in the principal amounts as follows: Due Principal Due Principal April 1 Amount* April 1 Amount* 2010 $375,000 2017 $250,000 2011 320,000 2018 255,000 2012 325,000 2019 265,000 2013 330,000 2020 270,000 2014 340,000 2021 280,000 2015 345,000 2022 285,000 2016 350,000 i *Preliminary,Subject to change. The Series B Bonds will bear interest at the rate or rates per annum specified by the successful bidder. The Series B Bonds are subject to optional redemption prior to their stated dates of maturity, as described herein. Principal and semi-annual interest on the Bonds will be paid by U.S. Bank National Association, Boston, Massachusetts, acting as paying agent (the "Paying Agent"). Interest from the date of the Series A Bonds will be payable on July 15, 2010 and semi-annually thereafter on each January 15 and July 15. Interest from the date of the Series B Bonds will be payable on April 1, 2010 and semi-annually thereafter on each October 1 and April 1. So long as The Depository Trust Company ("DTC"), New York, New York, or its nominee, Cede & Co., is the Bondowner, such payments of principal and interest on the Bonds will be made directly to DTC. Disbursements of such payments to the DTC Participants is the responsibility of DTC and disbursement of such payments to the Beneficial Owners is the responsibility of the DTC Participants and the Indirect Participants, as more fully described herein. 2 OFFICIAL STATEMENT TOWN OF NORTH ANDOVER MASSACHUSETTS $10,436,222* GENERAL OBLIGATION BONDS $6,446,222 GENERAL OBLIGATION MUNICIPAL PURPOSE LOAN OF 2009 BONDS, SERIES A $3,990,000* GENERAL OBLIGATION REFUNDING BONDS,SERIES B INTRODUCTION This Official Statement is provided for the purpose of presenting certain information relating to the Town of North Andover, Massachusetts (the "Town") in connection with the sale of $6,446,222 General Obligation Municipal Purpose Loan of 2009 Bonds, Series A Bonds (the "Series A Bonds") dated December 15, 2009 and $3,990,000* General Obligation Refunding Bonds, Series B (the "Series B Bonds"), dated December 15, 2009 (together with the Series A Bonds,the 'Bonds") of the Town. The Bonds are being offered for sale at a public bidding and a Notice of Sale dated November 18, 2009, has been furnished to prospective bidders. Reference is hereby made to the Notice of Sale for the terms and conditions of bidding. The Bonds will be general obligations of the Town for which its full faith and credit are pledged. They are not guaranteed by The Commonwealth of Massachusetts (the "Commonwealth") or any other entity. The security for the Bonds is more fully described under the caption Security and Remedies herein. See also the caption Opinion of Bond Counsel. Questions regarding information contained in this Official Statement or other matters should be directed to the following: Jennifer Yarid, Treasurer/Collector, Town of North Andover, (978) 688-9550; David M. Eisenthal, Vice President, UniBank Fiscal Advisory Services, Inc., (508) 849-4222; or Roger P. Vacco, Edwards Angell Palmer&Dodge LLP, (617)239-0401. The information contained herein has been obtained from the sources indicated or from the Town. *Preliminary, Subject to change. 1 delivery of the Series B Bonds and receipt of payment therefore to the effect that there is no litigation pending or, to the knowledge of the signers thereof, threatened affecting the validity of the Series B Bonds or the power of the Town to levy and collect taxes to pay them; (c) a certificate of the Town Treasurer to the effect that, to the best of her knowledge and belief, both as of the date of sale and of the date of delivery of the Series B Bonds, the Final Official Statement referred to below does not contain any untrue statement of a material fact and does not omit to state a material fact necessary to make the statements made therein, in the light of the circumstances under which they were made, not misleading; and (d) a Continuing Disclosure Certificate in the form described in the Preliminary Official Statement. It is anticipated that CUSIP identification numbers will be printed on the Series B Bonds, but neither the failure to print such numbers on any Series B Bond,nor any error with respect thereto shall constitute cause for a failure or refusal by the purchaser thereof to accept delivery of and pay for the Series B Bonds. All expenses in relation to the printing of CUSIP numbers on the Series B Bonds shall be paid for by the Town; provided, however, that the Town assumes no responsibility for any CUSIP Service Bureau or other charge that may be imposed for the assignment of such numbers. The Town will designate the Series B Bonds as "qualified tax-exempt obligations" for purposes of Section 265(b)(3) of the Internal Revenue Code of 1986, as amended. In order to assist bidders in complying with Rule 15c2-12(b)(5) promulgated by the Securities and Exchange Commission, the Town will undertake to provide annual reports and notices of certain material events. A description of this undertaking is set forth in the Preliminary Official Statement, The Series B Bonds, in definitive form, will be delivered to the purchaser at The Depository Trust Company, or its custodial agent, on or about December 15,2009 against payment in federal reserve funds. Additional information concerning the Town of North Andover and the Series B Bonds is contained in the Preliminary Official Statement dated November 18, 2009 to which prospective bidders are directed. The Preliminary Official Statement is provided for informational purposes only and is not a part of this Notice of Sale. Copies of the Preliminary Official Statement and a suggested form of proposal for the Series B Bonds may be obtained from David M. Eisenthal, Vice President, UniBank Fiscal Advisory Services, Inc., telephone (508) 849-4222. Such Preliminary Official Statement is deemed final by the Town except for the omission of the reoffering prices, interest rates and any other items of the Series B Bonds depending on such matters and the identity of the underwriters. Within seven (7) business days following the award of the Series B Bonds in accordance herewith, 50 copies of a Final Official Statement will be furnished to the successful bidder. Additional copies may be obtained at the purchaser's expense. The right is reserved to reject any or all bids and to reject any bid not complying with this Notice of Sale and, so far as permitted by law,to waive any irregularity with respect to any proposal. TOWN OF NORTH ANDOVER Massachusetts /s/Jennifer Yarid Treasurer Dated: November 18, 2009 xii value savings on the Series B Bonds resulting from payment of insurance premiums or other credit enhancement fees. Immediately following the opening of bids, the Town, acting through its financial advisor, will contact the apparent successful bidder by telephone to obtain the initial reoffering prices of each maturity of the Series B Bonds, the premium to be paid on account of bond insurance, if any, and other information relevant to the sale of the Series B Bonds. The apparent successful bidder shall then immediately deliver to the Town written confirmation by facsimile transmission as to such reoffering prices and bond insurance premium, if any. Upon being supplied with such initial reoffering prices and bond insurance premiums, if any,the Town will determine the amount of Series B Bonds that it may issue under the Internal Revenue Code. The Town will also determine the need to otherwise re-allocate the principal maturities of the Series B Bonds. The Town will consult with the successful bidder before adjusting any maturity. The Town expects to advise the successful bidder as soon as possible, but no later than 5:00 p.m., (Eastern Time), on the date of the sale of the amount, if any, of any changes in either the aggregate principal amount (which changes will be allocated among several maturities of the Series B Bonds in a manner to be specified by the Town) or individual maturities (assuming no changes in the aggregate principal amount of the Series B Bonds). Within the limits set forth herein, the Town reserves the right to adjust the aggregate principal amount of the Series B Bonds, and to adjust the principal amount of individual maturities of the Series B Bonds, even if the aggregate principal amount is unchanged. Any adjustment in either the aggregate principal amount or the individual maturities of the Series B Bonds will be in an amount of$5,000 or an integral multiple thereof and will be made only as necessary to effect the refunding in accordance with the Town's objectives. Those objectives include (1) structuring the Series B Bonds so that debt service will be as close to equal on an annual basis as practicable, (2) meeting state law requirements with respect to present value savings, and (3) issuing a final par amount of Series B Bonds that will be sufficient to fund the refunding escrow plus costs of issuance, given the price bid by the successful underwriter, while avoiding an over issuance of Bonds. Underwriters should be advised that bidding with a large premium will likely result in a corresponding reduction in the par amount of the Series B Bonds. The dollar amount bid by the successful bidder will be adjusted to reflect any adjustment in the aggregate principal amount of the Series B Bonds to be issued. The adjusted bid price will reflect changes in the dollar amount of the underwriter's discount and original issue discount/premium, if any, but will not change the per-bond underwriter's discount as calculated from the bid and reoffering prices required to be delivered to the Town as stated herein. The successful bidder may not withdraw its bid or change the interest rates bid or initial reoffering prices as a result of any changes made to the principal amounts within these limits. The Town has not contracted for the issuance of any policy of municipal bond insurance for the Series B Bonds. If the Series B Bonds qualify for issuance of any such policy or commitment therefore, any purchase of such insurance or commitment shall be at the sole option and expense of the bidder. Proposals shall not be conditioned upon the issuance of any such policy or commitment. Any failure of the Series B Bonds to be so insured or of any such policy or commitment to be issued shall not in any way relieve the purchaser of his contractual obligations arising from the acceptance of his proposal for the purchase of the Series B Bonds. Should the bidder purchase municipal bond insurance, all expenses associated with such policy or commitment will be borne by the bidder, except for the fees paid to Standard &Poor's Ratings Services for the rating of the Series B Bonds. Any such fees paid to Standard&Poor's Ratings Services will be borne by the issuer. It shall be a condition to the obligation of the successful bidder to accept delivery of and pay for the Series B Bonds that it shall be furnished, without cost, with (a) the approving opinion of the firm of Edwards Angell Palmer & Dodge LLP, substantially in the form presented in Appendix C to the Preliminary Official Statement dated November 18, 2009; (b) a certificate in form satisfactory to said firm dated as of the date of xi of such participants and other nominees of beneficial owners. Neither the Town nor the Paying Agent will be responsible or liable for maintaining, supervising or reviewing the records maintained by DTC, its participants or persons acting through such participants. The legality of the Series B Bonds will be approved by Edwards Angell Palmer &Dodge LLP, Boston, Massachusetts,whose opinion will be furnished the purchaser. Electronic proposals will be submitted through i-Deal°. If any provisions in this Notice of Sale conflict with information provided by i-Deal°, this Notice of Sale shall control. Further information about i-Dea including any fees charged, may be obtained from i-Deal° at (212) 849-5000. The Town assumes no responsibility or liability for bids submitted through i-Deal°. The Town assumes no responsibility or liability for bids submitted through i-Deal°. An electronic bid made in accordance with this Notice of Sale shall be deemed an irrevocable offer to purchase the Series B Bonds in accordance with the terms provided in this j Notice of Sale and shall be binding upon the bidder as if made by a signed and sealed written bid delivered to the Town. Other bids, including bids by delivered telegram, should be sealed, marked "Proposal for Series B Bonds" and addressed to Jennifer Yarid,Treasurer/Collector, Town of North Andover, c/o UniBank Fiscal Advisory Services, Inc., 49 Church Street, Whitinsville, Massachusetts 01588. Proposals delivered as specified will be accepted. Blank bid forms with signature may be faxed or otherwise sent to UniBank Fiscal Advisory Services,Inc.,prior to submitting the bids at(508)234-1938 with actual bids telephoned to (508) 849- 4222, at least one half hour prior to the 11:00 A.M. (Eastern time) sale. UniBank Fiscal Advisory Services, Inc. will act as agent for the bidder in submitting the bids but neither UniBank Fiscal Advisory Services,Inc. nor the Town is responsible for any errors with bids submitted in this manner. A good faith deposit is not required. Bidders shall state the rate or rates of interest per annum which the Series B Bonds are to bear in a multiple of 1/8th or 1/20th of 1% but shall not state (a) more than one interest rate for any Series B Bonds having like maturity, and (b) any interest rate which exceeds the interest rate stated for any other Series B Bonds by more than 3%. No bid of less than par and accrued interest to date of delivery will be considered. As between proposals which comply with this Notice, the award will be to the bidder who offers to purchase all the Series B Bonds at the lowest net effective interest rate to the Town. Such interest rate shall be determined on a true interest cost (TIC) basis, which shall mean that rate which, as of December 15, 2009, discounts semi-annually all future payments on account of principal and interest to the price bid, not including interest accrued to the date of delivery, which accrued interest shall be paid by the successful bidder. The award is subject to approval by the Board of Selectmen. On or prior to the date of delivery of the Series B Bonds,the successful bidder shall furnish to the Town a certificate acceptable to Bond Counsel generally to the effect that (i) as of December 2, 2009 (the "Sale Date"),the Purchaser had offered or reasonably expected to offer all of the Series B Bonds to the general public (excluding bond houses, brokers, or similar persons acting in the capacity of underwriters or wholesalers) in a bona fide public offering at the prices set forth in such certificate, plus accrued interest, if any, (ii) such prices represent fair market prices of the Series B Bonds as of the Sale Date, and (iii) as of the date of such certificate, all of the Series B Bonds have been offered to the general public in a bona fide offering at the prices set forth in such certificate, and at least 10% of each maturity of the Series B Bonds actually has been sold to the general public at such prices. To the extent the certifications described in the preceding sentence are not factually accurate with respect to the reoffering of the Series B Bonds, Bond Counsel should be consulted by the bidder as to alternative certifications that will be suitable to establish the"issue price" of the Series B Bonds for federal tax law purposes. If a municipal bond insurance policy or similar credit enhancement is obtained with respect to the Series B Bonds by the successful bidder, such bidder will also be required to certify as to the net present x I NOTICE OF SALE TOWN OF NORTH ANDOVER Massachusetts $3,990,000* GENERAL OBLIGATION REFUNDING BONDS, SERIES B The Town of North Andover, Massachusetts, will receive sealed and electronic proposals until 11:00 A.M. (Eastern Time) on December 2,2009 at UniBank Fiscal Advisory Services,Inc., Whitinsville,Massachusetts,for the purchase of the following described Series B Bonds: $3,990,000* GENERAL OBLIGATION REFUNDING BONDS, Series B payable April 1 of the years and in the amounts as follows: Principal Principal Year Amount* Year Amount* 2010 $375,000 2017 $250,000 2011 320,000 2018 255,000 2012 325,000 2019 265,000 2013 330,000 2020 270,000 2014 340,000 2021 280,000 2015 345,000 2022 285,000 2016 350,000 *Preliminary, Subject to change. The Series B Bonds will be dated December 15, 2009. Interest from the date of the Series B Bonds will be payable on April 1,2010, and semi-annually thereafter on each October 1 and April 1. The Series B Bonds maturing in the years 2010 through 2018, inclusive, are not subject to redemption prior to their stated dates of maturity. The Series B Bonds maturing on and after April 1, 2019 are subject to redemption prior to their stated dates of maturity, at the option of the Town, on and after April 1, 2018 either in whole or in part at any time, and if in part, by lot within a maturity, at par plus accrued interest to the date set for redemption. Term Bonds, if any, shall be subject to mandatory redemption on April 1 in the year or years immediately prior to the stated maturity of such Term Bonds (the particular Series B Bonds of such maturity to be redeemed to be selected by lot), as indicated in the foregoing maturity schedule at the principal amount thereof plus accrued interest to the redemption date,without premium. The Series B Bonds will be issued by means of a book-entry system with no physical distribution of Bond certificates made to the public. One Bond certificate for each maturity will be issued to The Depository Trust Company, New York, New York, ("DTC"), and immobilized in its custody. Ownership of the Series B Bonds in principal amounts of$5,000 or integral multiples thereof, will be evidenced by the book-entry system with transfers of ownership effected on the records of DTC and its participants pursuant to rules and procedures adopted by DTC and its participants. The winning bidder, as a condition to delivery of the Series B Bonds, shall be required to deposit the Bond certificates with DTC, registered in the name of Cede & Co. Principal of and interest on the Series B Bonds will be payable to DTC or its nominee as registered owner of the Series B Bonds. Transfer of principal and interest payments to participants of DTC will be the responsibility of DTC; transfer of principal and interest payments to beneficial owners by participants of DTC will be the responsibility ix Such Preliminary Official Statement is deemed final by the Town except for the omission of the reoffering prices, interest rates and any other items of the Series A Bonds depending on such matters and the identity of the underwriters. Within seven (7) business days following the award of the Series A Bonds in accordance herewith, 100 copies of a Final Official Statement will be furnished to the successful bidder. Additional copies may be obtained at the purchaser's expense. The right is reserved to reject any or all bids and to reject any bid not complying with this Notice of Sale and, so far as permitted by law,to waive any irregularity with respect to any proposal. TOWN OF NORTH ANDOVER Massachusetts /s/Jennifer Yarid Treasurer Dated:November 18, 2009 I I i viii as to alternative certifications that will be suitable to establish the "issue price" of the Series A Bonds for federal tax law purposes. If a municipal bond insurance policy or similar credit enhancement is obtained with respect to the Series A Bonds by the successful bidder, such bidder will also be required to certify as to the net present value savings on the Series A Bonds resulting from payment of insurance premiums or other credit enhancement fees. The Town has not contracted for the issuance of any policy of municipal bond insurance for the Series A Bonds. If the Series A Bonds qualify for issuance of any such policy or commitment therefore, any purchase of such insurance or commitment shall be at the sole option and expense of the bidder. Proposals shall not be conditioned upon the issuance of any such policy or commitment. Any failure of the Series A Bonds to be so insured or of any such policy or commitment to be issued shall not in any way relieve the purchaser of his contractual obligations arising from the acceptance of his proposal for the purchase of the Series A Bonds. Should the bidder purchase municipal bond insurance, all expenses associated with such policy or commitment will be borne by the bidder, except for the fees paid to Standard &Poor's Ratings Services for the rating of the Series A Bonds. Any such fees paid to Standard &Poor's Ratings Services will be borne by the issuer. It shall be a condition to the obligation of the successful bidder to accept delivery of and pay for the Series A Bonds that it shall be furnished, without cost, with (a) the approving opinion of the firm of Edwards Angell Palmer & Dodge LLP, substantially in the form presented in Appendix C to the Preliminary Official Statement dated November 18, 2009; (b) a certificate in form satisfactory to said firm dated as of the date of delivery of the Series A Bonds and receipt of payment therefor to the effect that there is no litigation pending or, to the knowledge of the signers thereof, threatened affecting the validity of the Series A Bonds or the power of the Town to levy and collect taxes to pay them; (c) a certificate of the Town Treasurer to the effect that, to the best of her knowledge and belief, both as of the date of sale and of the date of delivery of the Series A Bonds, the Final Official Statement referred to below does not contain any untrue statement of a material fact and does not omit to state a material fact necessary to make the statements made therein, in the light of the circumstances under which they were made, not misleading; and (d) a Continuing Disclosure Certificate in the form described in the Preliminary Official Statement. It is anticipated that CUSIP identification numbers will be printed on the Series A Bonds, but neither the failure to print such numbers on any Series A Bond, nor any error with respect thereto shall constitute cause for a failure or refusal by the purchaser thereof to accept delivery of and pay for the Series A Bonds. All expenses in relation to the printing of CUSIP numbers on the Series A Bonds shall be paid for by the Town; provided, however,that the Town assumes no responsibility for any CUSIP Service Bureau or other charge that may be imposed for the assignment of such numbers. The Town will designate the Series A Bonds as "qualified tax-exempt obligations" for purposes of Section 265(b)(3) of the Internal Revenue Code of 1986. In order to assist bidders in complying with Rule 15c2-12(b)(5) promulgated by the Securities and Exchange Commission, the Town will undertake to provide annual reports and notices of certain material events. A description of this undertaking is set forth in the Preliminary Official Statement. The Series A Bonds, in definitive form, will be delivered to the purchaser at The Depository Trust Company, or its custodial agent,on or about December 15, 2009 against payment in federal reserve funds. Additional information concerning the Town and the Series A Bonds is contained in the Preliminary Official Statement dated November 18, 2009 to which prospective bidders are directed. The Preliminary Official Statement is provided for informational purposes only and is not a part of this Notice of Sale. Copies of the Preliminary Official Statement and a suggested form of proposal for the Series A Bonds may be obtained from David M. Eisenthal, Vice President, UniBank Fiscal Advisory Services, Inc., telephone (508) 849-4222. vii and its participants. The winning bidder, as a condition to delivery of the Series A Bonds, shall be required to deposit the Bond certificates with DTC, registered in the name of Cede & Co. Principal of and interest on the Series A Bonds will be payable to DTC or its nominee as registered owner of the Series A Bonds. Transfer of principal and interest payments to participants of DTC will be the responsibility of DTC; transfer of principal and interest payments to beneficial owners by participants of DTC will be the responsibility of such participants and other nominees of beneficial owners. Neither the Town nor the Paying Agent will be responsible or liable for maintaining, supervising or reviewing the records maintained by DTC, its participants or persons acting through such participants. The legality of the Series A Bonds will be approved by Edwards Angell Palmer&Dodge LLP,Boston, Massachusetts,whose opinion will be furnished the purchaser. Electronic proposals will be submitted through i-Deal°. If any provisions in this Notice of Sale conflict with information provided by i-Deal°, this Notice of Sale shall control. Further information about i-Deal°, including any fees charged, may be obtained from i-Deal° at (212) 849-5000. The Town assumes no responsibility or liability for bids submitted through i-Deal®. An electronic bid made in accordance with this Notice of Sale shall be deemed an irrevocable offer to purchase the Series A Bonds in accordance with the terms provided in this Notice of Sale and shall be binding upon the bidder as if made by a signed and sealed written bid delivered to the Town. Other bids, including bids by delivered telegram, should be sealed, marked "Proposal for Series A Bonds" and addressed to Jennifer Yarid, Treasurer/Collector,Town of North Andover, c/o UniBank Fiscal Advisory Services, Inc., 49 Church Street, Whitinsville, Massachusetts 01588. Proposals delivered as specified will be accepted. Blank bid forms with signature may be faxed or otherwise sent to UmBank Fiscal Advisory Services,Inc.,prior to submitting the bids at(508)234-1938 with actual bids telephoned to (508) 849- 4222, at least one half hour prior to the 11:00 A.M. (Eastern time) sale. UniBank Fiscal Advisory Services, Inc. will act as agent for the bidder in submitting the bids but neither UniBank Fiscal Advisory Services,Inc. nor the Town is responsible for any errors with bids submitted in this manner. A good faith deposit is not required. Bidders shall state the rate or rates of interest per annum which the Series A Bonds are to bear in a multiple of 1/8th or 1/20th of 1% but shall not state (a) more than one interest rate for any Series A Bonds having like maturity, and (b) any interest rate which exceeds the interest rate stated for any other Series A Bonds by more than 3%. No bid of less than par and accrued interest to date of delivery will be considered. As between proposals which comply with this Notice, the award will be to the bidder who offers to purchase all the Series A Bonds at the lowest net effective interest rate to the Town. Such interest rate shall be I determined on a true interest cost (TIC) basis, which shall mean that rate which, as of December 15, 2009, discounts semi-annually all future payments on account of principal and interest to the price bid, not including interest accrued to the date of delivery, which accrued interest shall be paid by the successful bidder. The award is subject to approval by the Board of Selectmen. On or prior to the date of delivery of the Series A Bonds,the successful bidder shall furnish to the Town a certificate acceptable to Bond Counsel generally to the effect that (i) as of December 2, 2009 (the "Sale Date"), the Purchaser had offered or reasonably expected to offer all of the Series A Bonds to the general public (excluding bond houses, brokers, or similar persons acting in the capacity of underwriters or wholesalers) in a bona fide public offering at the prices set forth in such certificate, plus accrued interest, if any, (ii) such prices represent fair market prices of the Series A Bonds as of the Sale Date, and(iii) as of the date of such certificate, all of the Series A Bonds have been offered to the general public in a bona fide offering at the prices set forth in such certificate, and at least 10% of each maturity of the Series A Bonds actually has been sold to the general public at such prices. To the extent the certifications described in the preceding sentence are not factually accurate with respect to the reoffering of the Series A Bonds, Bond Counsel should be consulted by the bidder vi NOTICE OF SALE TOWN OF NORTH ANDOVER Massachusetts $6,446,222 GENERAL OBLIGATION MUNICIPAL PURPOSE LOAN OF 2009 BONDS, SERIES A The Town of North Andover, Massachusetts, will receive sealed and electronic proposals until 11:00 A.M. (Eastern Time) on December 2,2009 at UniBank Fiscal Advisory Services, Inc., Whitinsville, Massachusetts, for the purchase of the following described Series A Bonds: $6,446,222 GENERAL OBLIGATION MUNICIPAL PURPOSE LOAN OF 2009 BONDS, Series A payable January 15 of the years and in the amounts as follows: Principal Principal Year Amount Year Amount 2011 $486,222 2021 $250,000 2012 480,000 2022 250,000 2013 480,000 2023 250,000 2014 480,000 2024 250,000 2015 425,000 2025 250,000 2016 365,000 2026 250,000 2017 365,000 2027 250,000 2018 365,000 2028 250,000 2019 350,000 2029 250,000 2020 300,000 2030 100,000 The Series A Bonds will be dated December 15,2009. Interest from the date of the Series A Bonds will be payable on July 15, 2010, and semi-annually thereafter on each January 15 and July 15. The Series A Bonds maturing in the years 2011 through 2018, inclusive, are not subject to redemption prior to their stated dates of maturity. i The Series A Bonds maturing on and after January 15, 2019 are subject to redemption prior to their stated dates of maturity, at the option of the Town, on and after January 15, 2018 either in whole or in part at any time, and if in part,by lot within a maturity, at par plus accrued interest to the date set for redemption. Term Bonds, if any, shall be subject to mandatory redemption on January 15 in the year or years immediately prior to the stated maturity of such Term Bonds (the particular Series A Bonds of such maturity to be redeemed to be selected by lot), as indicated in the foregoing maturity schedule at the principal amount thereof plus accrued interest to the redemption date, without premium. The Series A Bonds will be issued by means of a book-entry system with no physical distribution of Bond certificates made to the public. One Bond certificate for each maturity will be issued to The Depository Trust Company, New York, New York, ("DTC"), and immobilized in its custody. Ownership of the Series A Bonds in principal amounts of$5,000 or integral multiples thereof with one principal amount of$1,222 of the Series A Bonds that will mature in 2011, will be evidenced by the book-entry system with transfers of ownership effected on the records of DTC and its participants pursuant to rules and procedures adopted by DTC v SERIES B-ISSUE SUMMARY STATEMENT Issuer: Town of North Andover,Massachusetts Date of Sale: Wednesday,December 2, 2009 at 11:00 a.m. (Eastern time) Method of Sale: Electronic and Sealed Bids Location of Sale: UniBank Fiscal Advisory Services,Inc.,49 Church St.,Whitinsville,MA. Issue: $3,990,000* General Obligation Refunding Bonds, Series B —Book-Entry-Only(See "Book-Entry Transfer System",herein.) Dated Date of Bonds: December 15,2009 Maturity Date of Bonds: Serially on April 1,2010 through 2022, as detailed herein. Credit Ratings: Standard&Poor's Ratings Services rating is pending. Redemption: The Series B Bonds are subject to redemption prior to their stated dates of maturity as described herein. Security: The Series B Bonds are valid general obligations of the Town of North Andover, Massachusetts and the principal of and interest on the Series B Bonds are payable from taxes which may be levied upon all property within the territorial limits of the Town and taxable by it, subject to the limit imposed by Chapter 59, Section 21C of the General Laws. Basis of Award: Lowest true interest cost(TIC) as of the dated date. Tax Exemption: Refer to Tax Exemption and Appendix C — "Proposed Forms of Legal Opinions of Bond Counsel"herein. Continuing Disclosure: Refer to Continuing Disclosure and Appendix D — "Proposed Form of Continuing Disclosure Certificate"herein. Bank Qualification: The Town will designate the Series B Bonds as "qualified tax-exempt obligations" for purposes of Section 265(b)(3) of the Internal Revenue Code of 1986,as amended. Paying Agent: U.S. Bank National Association,Boston,Massachusetts Escrow Agent: U.S. Bank National Association,Boston,Massachusetts Verification Agent: Barthe&Wahrman,P.A.,Bloomington,Minnesota Legal Opinion: Edwards Angell Palmer&Dodge LLP,Boston,Massachusetts Delivery and Payment: It is expected that the Series B Bonds will be delivered to The Depository Trust Company, or its custodial agent, against payment to the account of the Town in federal reserve funds on or about December 15,2009. Issue Contacts: Jennifer Yarid,Treasurer,Town of North Andover,Massachusetts Telephone#(978)688-9550 David M. Eisenthal,Vice President,UniBank Fiscal Advisory Services,Inc., Telephone#(508) 849-4222 Roger P.Vacco,Esq.,Edwards Angell Palmer&Dodge LLP,Boston,Massachusetts, Telephone#(617)239-0401 Additional Information: Refer to the Preliminary Official Statement dated November 18,2009. *Preliminary, Subject to change. iv SERIES A-ISSUE SUMMARY STATEMENT Issuer: Town of North Andover,Massachusetts Date of Sale: Wednesday,December 2,2009 at 11:00 a.m. (Eastern time) Method of Sale: Electronic and Sealed Bids Location of Sale: UniBank Fiscal Advisory Services, Inc., 49 Church St.,Whitinsville,MA. Issue: $6,446,222 General Obligation Municipal Purpose Loan of 2009 Bonds, Series A — Book-Entry-Only(See"Book-Entry Transfer System",herein.) Dated Date of Bonds: December 15,2009 i Maturity Date of Bonds: Serially on January 15,2011 through 2030, as detailed herein. Credit Ratings: Standard&Poor's Ratings Services rating is pending. Redemption: The Series A Bonds are subject to redemption prior to their stated dates of maturity, as described herein. Security: The Series A Bonds are valid general obligations of the Town of North Andover, Massachusetts and the principal of and interest on the Series A Bonds are payable from taxes which may be levied upon all property within the territorial limits of the Town and taxable by it subject to the limitations imposed by Chapter 59, Section 2 1 C of the General Laws. Basis of Award: Lowest true interest cost(TIC)as of the dated date. Tax Exemption: Refer to Tax Exemption and Appendix C — "Proposed Forms of Legal Opinions of Bond Counsel"herein. Continuing Disclosure: Refer to Continuing Disclosure and Appendix D — "Proposed Form of Continuing Disclosure Certificate"herein. Bank Qualification: The Town will desienate the Series A Bonds as "qualified tax-exempt obligrations" for purposes of Section 265(b)(3) of the Internal Revenue Code of 1986,as amended. Paying Agent: U.S. Bank National Association,Boston, Massachusetts Legal Opinion: Edwards Angell Palmer&Dodge LLP, Boston,Massachusetts Delivery and Payment: It is expected that the Series A Bonds will be delivered to The Depository Trust Company, or the office of its custodial agent, against payment to the account of the Town in federal reserve funds on or about December 15,2009. Issue Contacts: Jennifer Yarid, Treasurer, Town of North Andover, Massachusetts Telephone#(978)688-9550 David M. Eisenthal,Vice President,UniBank Fiscal Advisory Services,Inc., Telephone#(508) 849-4222 Roger P. Vacco, Esq., Edwards Angell Palmer & Dodge LLP, Boston, Massachusetts,Telephone# (617)239-0401 Additional Information: Refer to the Preliminary Official Statement dated November 18,2009. iii Table of Contents Page Page Issue Summary Statement (Series A)........... iii Revenue Anticipation Borrowing............20 Issue Summary Statement(Series B) ........... iv Contracts................................................20 Notice of Sale (Series A) .............................v Overlapping Debt...................................21 Notice of Sale (Series B)..............................ix Retirement System..................................21 Official Statement........................................ 1 Other Post-Employment Benefits .......23 Introduction................................................. 1 Property Taxation...................................23 Part I. The Bonds......................................... 2 Valuations..........................................24 Description of the Bonds........................2 Tax Rates...........................................25 Record Date........................................... 3 Largest Taxpayers..............................25 Book-Entry Transfer System.................. 3 Tax Levies..............................................25 Authorization and Use of Calculation of Tax Levies.......................27 Proceeds— Series A ............................. 5 Tax Collections and Abatements.............29 Authorization and Use of Town Finances .......................................30 Proceeds— Series B.............................. 6 Budget Comparison................................31 Optional Redemption............................. 7 State Aid.................................................31 Mandatory Redemption.......................... 7 State School Building Assistance .......32 Sources and Uses of Funds—Series B.... 7 Community Preservation Act..............33 Verification of Mathematical Tax Increment Financing........................34 Computations....................................... 8 Motor Vehicle Excise.............................34 Plan of Refunding.................................. 8 Undesignated Fund Balance....................35 Security and Remedies........................... 8 Investments............................................35 Opinion of Bond Counsel....................... 10 Stabilization Fund...................................36 Tax Exemption ...................................... 10 Collective Bargaining.............................36 Rating.................................................... 12 Physical and Economic Characteristics...36 Continuing Disclosure............................ 12 Principal Employers ...............................37 Part II. The Town ........................................ 13 Employment and Payrolls.......................37 Governing Bodies and Officers.............. 14 Building Permits.....................................37 Services................................................. 14 Economic Development..........................38 Transportation and Utilities.................... 15 Other Data..............................................40 Authorization of General Obligation Litigation................................................44 Bonds and Notes................................ 15 Debt Limits............................................ 15 Appendix A. Audited Financial Statements Types of Obligations.............................. 16 of the Town............................................A-1 Debt....................................................... 17 Appendix B. Fiscal 2008 Audit.....................B-1 Authorized Unissued and Prospective Appendix C. Proposed Forms of Financing............................................. 18 Legal Opinions of Bond Counsel................C-1 Five Years Outstanding Debt .............. 18 Appendix D Proposed Form of Continuing Bond Debt, Valuations, Income........... 19 Disclosure Certificate.................................D-1 Annual Debt Service........................... 19 Appendix E. Bid Form (Series A).................E-1 Appendix F. Bid Form(Series B).................F-1 The information and expressions of opinion in this Official Statement are subject to change without notice. Neither the delivery of this Official Statement nor any sale of the Bonds shall, under any circumstances, create any implication that there has been no material change in the affairs of the Town since the date of this Official Statement. ii Standard&Poor's Ratings Services: (See"Rating") 'OT'IC;E:OF SALT;'ANI)PRE LilMI,NARY OFF ICIAL STATEMENT DATED tiOVEA1BER 18,2009 In the opinion of Edwards Angell Palmer&Dodge LLP,Bond Counsel,based upon an analysis of existing law and assuming,among - other matters,compliance with certain covenants,interest on the Bonds is excluded from gross income for federal income tax purposes under the Internal Revenue Code of 1986. Interest on the Bonds is not a specific preference item for purposes of the federal individual or corporate alternative minimum taxes,and such interest is included in adjusted current earnings when calculating corporate alternative minimum taxable _ income. Under existing law, interest on the Bonds is exempt from Massachusetts personal income taxes, and the Bonds are exempt from Massachusetts personal property taxes. The Bonds will be designated as "qualified tax-exempt obligations" for purposes of Section 265(b)(3)of the Code. Bond Counsel expresses no opinion regarding any other tax consequences related to the ownership or disposition of,or the accrual or receipt of interest on,the Bonds. See"Tax Exemption"herein. $10,436,222* TOWN OF NORTH ANDOVER Massachusetts I f SERIES A $6,446,222 :r o GENERAL OBLIGATION MUNICIPAL PURPOSE LOAN OF 2009 BONDS,SERIES A Dated: December 15,2009 Due: January 15,2011-2030 7 MATURITIES Principal Interest Price/ Principal Interest Price/ - - Year Amount Rate Yield Year Amount Rate Yield 2011 $486,222 2021 $250,000 2012 480,000 2022 250,000 2013 480,000 2023 250,000 2014 480,000 2024 250,000 2015 425,000 2025 250,000 -. 2016 365,000 2026 250,000 2017 365,000 2027 250,000 " 2018 365,000 2028 250,000 2019 350,000 2029 250,000 2020 300,000 2030 100,000 -_' Principal of the Series A Bonds will be payable January 15 of the years in which the Series A Bonds mature. Interest from the date ' of the Series A Bonds will be payable on July 15,2010 and semi-annually thereafter on each January 15 and July 15. The Series A Bonds are subject to redemption prior to their stated maturities,as described herein. SERIES B $3,990,000* GENERAL OBLIGATION REFUNDING BONDS,SERIES B Dated: December 15,2009 Due: April 1,2010-2022 c MATURITIES Principal Interest Price/ Principal Interest Price/ _ Year Amount* Rate Yield Year Amount* Rate Yield J -•4 2010 $375,000 2017 $250,000 2011 320,000 2018 255,000 s 2012 325,000 2019 265,000 >, 2013 330,000 2020 270,000 - - 2014 340,000 2021 280,000 2015 345,000 2022 285,000 2016 350,000 ,j *Preliminary,Subject to change. C Principal of the Series B Bonds will be payable April 1 of the years in which the Series B Bonds mature. Interest from the date of ^f the Series B Bonds will be payable on April 1, 2010 and semi-annually thereafter on each October I and April 1. The Series B Bonds are a subject to redemption prior to their stated maturities,as described herein. _°--' The Bonds are issuable only in fully registered form without coupons and,when issued,will be registered in the name of Cede& Co.,as Bondowner and nominee for The Depository Trust Company("DTC"),New York,New York. DTC will act as securities depository for the Bonds. Purchases of the Bonds will be made in book-entry form, in the denomination of$5,000 or any integral multiple thereof with one s: denomination of$1,222 of the Series A Bonds that will mature in 2011(see"Book-Entry Transfer System"herein). The legality of the Bonds will be approved by Edwards Angell Palmer&Dodge LLP of Boston,Massachusetts,Bond Counsel to - " the Town. UniBank Fiscal Advisory Services,Inc.,serves as financial advisor to the Town. It is expected that the both series of the Bonds,in ti definitive form,will be delivered to The Depository Trust Company,or its custodial agent,on or about December 15,2009 against payment in federal reserve funds. ELECTRONIC AND SEALED BIDS RECEIVED 11:00 A.M.(Eastern Time) Wednesday,December 2,2009 UniBank Fiscal Advisory Services,Inc. TOWN OF NORTH ANDOVER OFFICE OF BOARD OF SELECTMEN 120 MAIN STREET NORTH ANDOVER, MASSACHUSETTS 01845 of NoRT{{1 ? 4,<,�.o °'a�°o Telephone 978 68 8-95 10 Tracy M. Watson, Chairman ,� � p ( ) Rosemary Connelly Smedile, Clerk ° , A FAX (978)688-9556 William F. Gordon * a Daniel P. Lanen Richard A. Nardella 9SS^c HUSEt TOWN OF NORTH ANDOVER NOTICE OF PUBLIC HEARING PROPERTY CLASSIFICATION In accordance with Chapter 40, Section 56, and other applicable provisions of the Massachusetts General Laws, notice is hereby given that the Board of Selectmen will conduct a Public Hearing on Tuesday, December 8, 2009, 7:30 p.m, at Town Hall, 120 Main Street, North Andover, MA, for the purpose of obtaining oral/written comments from citizens regarding classification and taxation of property according to use. Any citizens having questions regarding this public hearing should contact the Office of the Town Manager at (978) 688-9510. Tracy M. Watson, Chairman Board of Selectmen Eagle-Tribune— 11/24/09 LEGAL NOTICE TOWN OF NORTH ANDOVER NOTICE OF PUBLIC HEARING PROPERTY CLASSIFICATION In accordance with Chapter 40,Section 56, and other applicable provisions of the Mass=_ achusetts General Laws, notice is hereby given that the Board of Selectmen will conduct a Public Hearing on Tuesday. December 8, 2009,7:30 p.m.at Town Hall, 120 Main Street, North.Andover, MA,for the purpose of obtain- ing oral/written com- ments from citizens regarding classification and taxation of property according to use. Any citizens having ques- tions regarding this public hearing should contact the Office of the Town Manager at(08) 688-9510. Tracy M.Watson, Chairman Board of Selectmen ET—11/24/09 | � �� �} 1 F �4� �4 �� ����c��' Factor 1,3s neoTawmme *n.m o/p Tax Rate $16.69 Factor 1.32 ESTIMATED Res.Tax Rate $12.76 ESTIMATED CIP Tax Rate $17.69 ESTIMATED � All Residential+ Residential Res Part Mixed Use Comm Ind pt Mxm Quartile Range moo/an"ome/tax Quartile Range Comm/Industrial. Istovom/v +ou/part Mixed Use m Chapter Land Median Value(pm9) *1.000-m27e.200 *202.600 m1000-$20.000 m1.000 Tax Bill(pvn9) *o.00n w17 Median Value(FYI 0) $1.000-*254.900 *162.500 m100-$41.*00 m1.000 chapter land Tax Bill(pvIO) $2,072 $m oiff.Median Value pnO-Fmo -$40.100 $0 oxr Tax Bill FYI orFYoo -$311 $1 m Tax Bill Difference -13.04m 5.99% 2nd Quartile Median Value(Fvo9) wxre.00n'*nn^xoo $324,500 m28.000'176100 m108.700 Tax Bill(pm9) *o.om $1.814 Median Value(FY1m m257.»00'$348,700 $300.300 $43.200'w86,800 $118,300 Tax Bill(Fv10) *3.829 $2,093 ciff.median ValuepnO-F, -$24,200 $9,600 onr Tax Bill FYI O-pmo *13 mur m Tax Bill Difference 0.33% 15.35m 3rd Quartile Median Value(FYn9) mxn.^oo-mmo.uuo y455.900 $177.300'**13.900 $236,800 Tax Bill(FYn9) $5.361 $3,952 Median Value(p,10) $3*8.700-o501.600 $436,200 *153.200-$407.800 $269,900 Tax Bill(pv1m $5,562 m*.ns oxr Median wyuvpn0-pvn -$19J00 x33.100 o/ff.Tax Bill FYI 0-pm9 *zon mnuc %Tax Bill Difference 3.73% 20a1w 4th Quartile Median Value(pm9) $543,900-$33,157,000 $656,700 x414.600 *27.173,400 *ono.000 Tax Bill(nv9) $7,723 $15,158 Median Value(FY 0) *501.600-$32.757.000 o622100 $430,400-$26,089,100 m912.100 Tax Bill(FYI 0) $7,932 m16.136 Diff.Median vomupn0-pvoo -$34,600 $3,900 o/ff.Tax Bill FYI O-pvoo muom mo// w Tax Bill Difference 2.71m 6.45% Median Single Family House Median Value(FY09) $473,700 Tax Bill(FY09) $5,571 Median Value(FYI 0) $447,800 Diff,Median Value FY10-FY09 -$25,900 Diff.Tax Bill FY10-FY09 $139 %Tax Bill Difference 2.49% 1 � � � � FY09 Factor 1.35 Res.Tax Rate $11.76 mp Tax Rate woao FYIO Factor 1.36 ESTIMATED Res.Tax Rate $12.68 ESTIMATED CIP Tax Rate $18.10 ESTIMATED All Residential+ Residential Res Part Mixed Use Comm Ind nm, Quartile Range mau/un`mmoxax Quartile Range Comm/industrial. 1st Quartile +nm/part Mixed Use u Chapter Land Median Value(pYno) *1.000-w276.200 $202,600 $1000420.000 *1.000 Tax Bill(FYo9) *u.oxv un Median Value(FYI 0) *1.000'$25 .mm $162.500 m100-$41,40 m1,000 chapter land Tax Bill(Fn0) w2,06 $18 oxr Median wuu°FYno-F,o -$40.100 wo mff.Tax Bill pvm-nme -$ouo *1 m Tax Bill Difference -13.52m 8.4em 2nd uv mm Median Value(FY09) $276,300-$37 .mm m324.500 u28.000-176100 $108.700 Tax Bill(pmm $3,816 $1.814 Median Value(FY10) $257,$00-$348,700 $300,300 $43.200'm186.800 $118,300 Tax Bill(pvIO) $3,808 m2.1*1 oxr Median vo/uapvI O-nmo -$24,200 $9,600 oiff.Tax Bill pv10-pmo -$o monr m Tax Bill Difference 'u.xum 18o3m 3rd Quartile Median Value(FYn9) *or/.*oo'$mo.uou $455.900 $177.300'**13.900 $236,800 Tax Bill(rm9) *5.361 $3,952 Median Value(FYI 0) $348.700-m501,60 **xomm $153,200-$40 7,800 $269,900 Tax Bill(pv10) o5.531 m*.00e oiff.Median Value nn0-Fv09 -$19.700 $33.100 mu Tax Bill pn0-pYno m170 y933 m Tax Bill Difference 3,16% 23,61m 4th Quartile Median Value(Fm9) $543,900-$33,157,000 $656.700 m*w.soo $27.173,400 $908.200 Tax Bill(F,00) *7.723 w15.158 Median Value(F,10) $50 1,600'$3m.ro7,ono *622.100 $*30,400-m26,089,100 *912,100 Tax Bill(F,1m *r.oxo $16,509 ciff.wedian ValuepY10-FY0o -$34,600 $3,900 oxt Tax Bill pv10-FYoo $165 m1.351 m Tax Bill Difference 2.14m 8.91m Median Single Family House Median Value(FY09) $473,700 Tax Bill(FY09) $5,571 Median Value(FYI 0) $447,800 Diff,Median Value FYI O-FY09 -$25,900 Diff,Tax Bill FY10-FY09 $107 1%Tax Bill Difference 1,93% 1 | FY09 Factor 1.35 Res.Tax Rate $11.76 CIP Tax Rate $16.69 FY10 Factor 1,40 ESTIMATED Res.Tax Rate $12.58 ESTIMATED CIP Tax Rate $18.77 ESTIMATED All Residential+ Residential Res Part Mixed Use Comm Ind Pt Mxd Quartile Range Median value/tax Quartile Range Comm/Industrial. 1st Quartile +C&I part Mixed Use&Chapter Land Median Value(FY09) $1,000-$276,200 $202,600 $1000-$20,000 $1,000 Tax Bill(FY09) $2,383 $17 Median Value(FY10) $1,000-$254,900 $162,500 $100$41,400 $1,000 chapter land Tax Bill(FY10) $2,044 $19 Diff.Median Value FY10-FY09 -$40,100 $0 Diff.Tax Bill FY10-FY09 -$338 $2 %Tax Bill Difference -14.20% 12.46% 2nd Quartile Median Value(FY09) $276,300-$377,300 $324,500 $28,000-176100 $108,700 Tax Bill(FY09) $3,816 $1,814 Median Value(FY10) $257,300-$348,700 $300,300 $43,200-$186,800 $118,300 Tax Bill(FY10) $3,778 $2,220 Diff.Median Value FY10-FY09 -$24,200 $9,600 Diff.Tax Bill FY10-FY09 $38 $406 %Tax Bill Difference -1.00% 22.39% 3rd Quartile Median Value(FY09) $377,400-$543,800 $455,900 $177,300-$413,900 $236,800 Tax Bill(FY09) $5,361 $3,952 Median Value(FY10) $348,700-$501,600 $436,200 $153,200-$407,800 $269,900 Tax Bill(FY10) $5,487 $5,066 Diff.Median Value FY10-FY09 -$19,700 $33,100 Diff.Tax Bill FY10-FY09 $126 $1,114 %Tax Bill Difference 2.35% 28.18% 41h Quartile Median Value(FY09) $543,900$33,157,000 $656,700 $414,600-$27,173,400 $908,200 Tax Bill(FY09) $7,723 $15,158 Median Value(FYI 0) $501,600-$32,757,000 $622,100 $430,400-$26,089,100 $912,100 Tax Bill(FY10) $7,826 $17,120 i Diff.Median Value FY10-FY09 $34,600 $3,900 Diff.Tax Bill FY10-FY09 $103 $1,962 %Tax Bill Difference 1.34% 12.95% Median Single Family House Median Value(FY09) $473,700 Tax Bill(FY09) $5,571 Median Value(FY10) $447,800 Tax Bill(FY10) $5,633 Diff.Median Value FY10-FY09 -$25,900 Diff.Tax Bill FY10-FY09 $63 Tax Bill Difference 1.12% FY09 Factor 1.35 Res.Tax Rate $11.76 CIP Tax Rate $16.69 FY10 Factor 1.45 ESTIMATED Res.Tax Rate $12.48 ESTIMATED CIP Tax Rate $19.44 ESTIMATED All Residential+ Residential Res Part Mixed Use Comm Ind Pt Mxd Quartile Range Median value/tax Quartile Range Comm/Industrial. 1st Quartile +C&I part Mixed Use&Chapter Land Median Value(FY09) $1,000-$276,200 $202,600 $1000420,000 $1,000 Tax Bill(FY09) $2,383 $17 Median Value(FY10) $1,000-$254,900 $162,500 $100441,400 $1,000 chapter land Tax Bill(FY10) $2,028 $19 Diff.Median Value FY10-FY09 -$40,100 $0 Diff.Tax Bill FY10-FY09 -$355 $3 %Tax Bill Difference -14.88% 16.48% 2nd Quartile Median Value(FY09) $276,300-$377,300 $324,500 $28,000-176100 $108,700 Tax Bill(FY09) $3,816 $1,814 Median Value(FY10) $257,300-$348,700 $300,300 $43,200-$186,800 $118,300 Tax Bill(FY10) $3,748 $2,300 Diff.Median Value FY10-FY09 -$24,200 $9,600 Diff.Tax Bill FY10-FY09 -$68 $486 %Tax Bill Difference -1.79% 26.76% 3rd Quartile Median Value(FY09) $377,400-$543,800 $455,900 $177,300-$413,900 $236,800 Tax Bill(FY09) $5,361 $3,952 Median Value(FY10) $348,700-$501,600 $436,200 $153,200-$407,800 $269,900 Tax Bill(FY10) $5,444 $5,247 Diff.Median Value FY10-FY09 -$19,700 $33,100 Diff.Tax Bill FY10-FY09 $82 $1,295 %Tax Bill Difference 1.54% 32.76°h 4th Quartile Median Value(FY09) $543,900-$33,157,000 $656,700 $414,600-$27,173,400 $908,200 Tax Bill(FY09) $7,723 $15,158 Median Value(FY10) $501,600-$32,757,000 $622,100 $430,400-$26,089,100 $912,100 Tax Bill(FY10) $7,764 $17,731 Diff.Median Value FY10-FY09 434,600 $3,900 Diff.Tax Bill FY10-FY09 $41 $2,573 %Tax Bill Difference 0.53% 16.98% Median Single Family House Median Value(FY09) $473,700 Tax Bill(FY09) $5,571 I Median Value(FY10) $447,800 Tax Bill(FY10) $5,589 Diff.Median Value FY10-FY09 -$25,900 r Diff.Tax Bill FY10-FY09 $18 %Tax Bill Difference 0.32% i FY09 Factor 1.35 Res.Tax Rate $11.76 CIP Tax Rate $16.69 FYI O Factor 1.50 ESTIMATED Res.Tax'Rate $12.38 ESTIMATED CIP Tax Rate $20.11 ESTIMATED All Residential+ Residential Res Part Mixed Use Comm Ind Pt Mxd Quartile Range Median value/tax Quartile Range Comm/Industrial 1st Quartile +C&I part Mixed Use&Chapter Land Median Value(FY09) $1,000-$276,200 $202,600 $1000420,000 $1,000 Tax Bill(FY09) $2,383 $17 Median Value(FY10) $1,000-$254,900 $162,500 $100-$41,400 $1,000 chapter land Tax Bill(FY10) $2,012 $20 Diff.Median Value FY10-FY09 -$40,100 $0 Diff.Tax Bill FY10-FY09 -$371 $3 %Tax Bill Difference -15.56% 20.49% 2nd Quartile Median Value(FY09) $276,300-$377,300 $324,500 $28,000-176100 $108,700 Tax Bill(FY09) $3,816 $1,814 Median Value(FY10) $257,300-$348,700 $300,300 $43,200-$186,800 $118,300 Tax Bill(FY10) $3,718 $2,379 Diff.Median Value FY10-FY09 -$24,200 $9,600 Diff.Tax Bill FY10-FY09 X98 $565 %Tax Bill Difference -2.58% 31.13% 3rd Quartile Median Value(FY09) $377,400-$543,800 $455,900 $177,300-$413,900 $236,800 Tax Bill(FY09) $5,361 $3,952 Median Value(FY10) $348,700-$501,600 $436,200 $153,200-$407,800 $269,900 Tax Bill(FY10) $5,400 $5,428 Diff.Median Value FY10-FY09 -$19,700 $33,100 Diff.Tax Bill FY10-FY09 $39 $1,475 %Tax Bill Difference 0.72% 37.33% 4th Quartile Median Value(FY09) $543,900-$33,157,000 $656,700 $414,600-$27,173,400 $908,200 Tax Bill(FY09) $7,723 $15,158 Median Value(FYI 0) $501,600-$32,757,000 $622,100 $430,400-$26,089,100 $912,100 Tax Bill(FY10) $7,702 $18,342 Diff.Median Value FY10-FY09 -$34,600 $3,900 Diff.Tax Bill FY10-FY09 -$21 $3,184 %Tax Bill Difference -0.27% 21.01% Median Single Family House Median Value(FY09) $473,700 Tax Bill(FY09) $5,571 i Median Value(FY10) $447,800 ? Tax Bill(FY10) $5,544 Diff.Median Value FY10-FY09 -$25,900 '< Diff.Tax Bill FY10-FY09 -$27 %Tax Bill Difference -0.48% M ern,mac]L Valley Chamber of C ommer ~e -------- The Best Investment For Your Business ---------- | 264 Essex Street^ Lawrence,Mk\U)84U-/5}6^Phone: V78'686-0m0^ Fax: 978'794-0953 � vp*iw. � tober 23, 2009, ED 0(J Ms. Tracy M. Watson L Chairwoman OFFICE OF TOWN MANAGER North Andover Board ofSelectmen North Andover Town Hall, 120 Main Street North Andover, MA01845 Re: Tax Classification Dear Chairwoman Watson: On behalf of the Chamber of Commerce members from North Andover, please accept this letter in support of the Chamber's position that we respectfully submit, that property taxes continue to remain one of the addressable costs of doing business within North Andover. The business and industrial community,within North Andover, continue to face increasing competition for retail, 1 hurio jobs ao�ae�vices manufacturing e . The competition for an active downtown, manufacturing and professional services remain ever present. As such, the reduction of property taxes serves to assist these companies to remain viable and to keep literally thousands of jobs,while still paying a fair property tax. The ever rising costs to business and industry not only affect the large companies,but in nearly all cases, small and n-Lid-size manufacturing and retail companies face even greater pressure in making payrolls and paying leaae/zoortgageobligadona. The property tax cost is one area where a reduction can, and will, assist companies in remaining competitive and assist their continued operation. The Chamber,bn recognition oftbeaeando8zexrelaheJ/acbo/a, reapectfoDyzeqneytUbatdheIovvoo[Nnrdh Andover reduce the business and industry tax classification rate dmvovvmzd from the current rate. Thank you for your consideration. Jo ep J- 0 Cc: Town Manager Mark Rees | � ESTIMATED FY 2010 TOTAL VALUES 12/3/2009 FY 09 RES RATE 11.76 RES 3,670,178,348 TAX LEVY FY 09 CIP RATE 16.69 C.T.P. 562,880,709 56,739,534 TOTAL UNCLASS 86,70% TAXES EST RES EST C.T.P. VALUE 4,233,059,057 LEVY % 13.30% SHIFTED FY 10 RATE FY 10 RATE RESIDENT TO RES DIFF C.I.P. DIFF RESIDENTIAL % OF FY 10 C.I.P. C. T. P. % OF 10 CIP RATE 1ows09 RATE 1OVS09 FACTOR TAX LEVY TOTAL LEVY TAX LEVY LEVY 1.00 $49,194,733 86.70% 0.0000% 7,544,801 13,30% $0 13.40 $1.64 13.40 -3.29 1.01 $49,119,285 86.57% -0.1534% 7,620,249 13.43% $75,448 13.38 $1.62 13.54 -$3.15 1.02 $49,043,837 86.44% -0.3067% 7,695,697 13.56% $150,896 13.36 $1.60 13.67 -$3.02 1,03 $48,968,389 86.30% -0.4601% 7,771,145 13.70% $226,344 13.34 $1.58 13.81 -$2.88 1.04 $48,892,941 86.17% -0.6135% 7,846,593 13.83% $301,792 13.32 $1.56 13.94 -$2.75 1,05 $48,817,493 86.04% -0.7668% 7,922,041 13.96% $377,240 13.30 $1.54 14.07 -$2.62 1.06 $48,742,045 85.90% -0.9202% 7,997,489 14,10% $452,688 13.28 $1.52 14.21 -$2.48 1.07 $48,666,597 85.77% -1.0736% 8,072,937 14.23% $528,136 13.26 $1.50 14.34 -$2.35 1.08 $48,591,149 85.64% -1.2269% 8,148,385 14.36% $603,584 13.24 $1.48 14.48 -$2.21 1.09 $48,515,701 85.51% -1.3803% 8,223,833 14.49% $679,032 13.22 $1.46 14.61 -$2.08 1.10 $48,440,253 85.37% -1.5337% 8,299,281 14.63% $754,480 13.20 $1.44 14.74 -$1.95 1.11 $48,364,805 85.24% -1.6870% 8,374,729 14.76% $829,928 13.18 $1.42 14.88 -$1.81 1.12 $48,289,357 85.11% -1.8404% 8,450,177 14.89% $905,376 13.16 $1.40 15.01 -$1.68 1.13 $48,213,909 84.97% -1.9938% 8,525,625 15.03% $980,824 13.14 $1.38 15.15 -$1.54 1.14 $48,138,461 84.84% -2.1471% 8,601,073 15.16% $1,056,272 13.12 $1.36 15.28 -$1.41 1.15 $48,063,013 84.71% -2.3005% 8,676,521 15.29% $1,131,720 13.10 $1.34 15.41 -$1.28 1.16 $47,987,565 84.58% -2.4539% 8,751,969 15.42% $1,207,168 13.07 $1.31 15.55 -$1.14 1.17 $47,912,117 84.44% -2.6072% 8,827,417 15.56% $1,282,616 13.05 $1.29 15.68 -$1.01 1.18 $47,836,669 84.31% -2.7606% 8,902,865 15.69% $1,358,064 13.03 $1.27 15.82 -$0.87 1.19 $47,761,221 84.18% -2.9140% 8,978,313 15.82% $1,433,512 13.01 $1.25 15.95 -$0.74 1.20 $47,685,773 84.04% -3.0673% 9,053,761 15.96% $1,508,960 12.99 $1.23 16.08 -$0.61 1.21 $47,610,325 83.91% -3.2207% 9,129,209 16.09% $1,584,408 12.97 $1.21 16.22 -$0.47 1.22 $47,534,877 83.78% -3.3741% 9,204,657 16.22% $1,659,856 12.95 $1.19 16.35 -$0.34 1.23 $47,459,429 83.64% -3.5274% 9,280,105 16.36% $1,735,304 12.93 $1.17 16.49 -$0.20 1.24 $47,383,980 83.51% -3.6808% 9,355,554 16.49% $1,810,752 12.91 $1.15 16.62 -$0.07 1.25 $47,308,532 83.38% -3.8342% 9,431,002 16.62% $1,886,200 12.89 $1.13 16.75 $0.06 1.26 $47,233,084 83.25% -3.9875% 9,506,450 16.75% $1,961,648 12.87 $1.11 16.89 $0.20 1.27 $47,157,636 83.11% 4.1409% 9,581,898 16.89% $2,037,096 12.85 $1.09 17.02 $0.33 1.28 $47,082,188 82.98% -4.2942% 9,657,346 17.02% $2,112,544 12.83 $1.07 17.16 $0.47 1.29 $47,006,740 82.85% -4.4476% 9,732,794 17.15% $2,187,992 12.81 $1.05 17.29 $0.60 1.30 $46,931,292 82,71% -4.6010% 9,808,242 17.29% $2,263,440 12.79 $1.03 17.43 $0.74 1.31 $46,855,844 82.58% -4.7543% 9,883,690 17.42% $2,338,888 12.77 $1.01 17.56 $0.87 1.32 $46,7801,396 82.45% -4.9077% 9,959,138 17.55% $2,414,336 12.75 $Q;9,9 1,7.69 $100 1.33 $46,704,948 82.31% -5.0611% 10,034,585 17.69% $2,489,784" 12.73 $0.97 17.83 $1.14 1.34 $46,629,500 82.18% -5.2144% 10,110,034 17.82% $2,565,232 12.70 $0.94 17.96 $1.27 1.35 $46,554,052 82.05%a -5.3678% 10,185,482 17.95% $2,640,680 12.68 $0.92 18.10 $1.41 1.36 $46,478,604 81,92% -5.5212% 10,260,930 18.08% $2,716,128 12.66 $0.90 18.23 $1.54 1.37 $46,403,156 81.78% -5.6745% 10,336,378 18.22% $2,791,576 12.64 $0.88 18.36 $1.67 1.38 $46,327,708 81.65% -5.8279% 10,411,826 18.35% $2,867,024 12.62 $0.86 18.50 $1.81 1.39 $46,252,260 81.52% -5.9813% 10,487,274 18.48% $2,942,472 12.60 $0.84 18.63 $1.94 1.40 $46,176,812 81.38% -6.1346% 10,562,722 18.62% $3,017,920 12.58 $0.82 18.77 $2.08 1.41 $46,101,364 81.25% -6.2880% 10,638,170 18.75% $3,093,368 12.56 $0.80 18.90 $2.21 1.42 $46,025,916 81.12% -6.4414% 10,713,618 18.88% $3,168,817 12.54 $0.78 19.03 $2.34 1.43 $45,950,468 80.98% -6.5947% 10,789,066 19.02% $3,244,265 12.52 $0.76 19.17 $2.48 1.44 $45,875,020 80.85% -6.7481% 10,864,514 19.15% $3,319,713 12.50 $0.74 19.30 $2.61 1.45 $45,799,572 80.72% -6.9015% 10,939,962 19.28% $3,395,161 12.48 $0.72 19.44 $2.75 1.46 $45,724,124 80.59% -7.0548% 11,015,410 19.41% $3,470,609 12.46 $0.70 19.57 $2.88 1.47 $45,648,676 80.45% -7.2082% 11,090,858 19.55% $3,546,057 12.44 $0.68 19.70 $3.01 1.48 $45,573,228 80.32% -7.3616% 11,166,306 19.68% $3,621,505 12.42 $0.66 19.84 $3.15 1.49 $45,497,780 80.19% -7.5149% 11,241,754 19.81% $3,696,953 12.40 $0.64 19.97 $3.28 1.50 $45,422,332 80.05% -7.6683% 11,317,202 19.95% $3,772,401 12.38 $0.62 20.11 $3.42 ESTIMATED VALUES AT 12/03/2009 %OF FY 2009 LEVY LIMIT FY 09 LEVY LIMIT 51,654,403 FROM DOR ADD 2.6% 1,291,360 FROM DOR 2.50% NEW GROWTH 623,715 FROM LA 13 1.21% FY 2010 LEVY LIMIT 53,569,478 FY 2010 EXCLUDED DEBT= 3,170,056 FROM FY 09 DE-1 @ 11/19/2009 TOTALS= 56,739,534 MAXIMUM ALLOWABLE LEVY TOTAL FY2010 ESTIMATED VALUES: CLASS 1 TOTAL 3,670,178,348 3,670,178,348 CIP TOTAL 562,880,709 562,880,709 TOTALS= 4,233,059,057 3,670,178,348 562,880,709 FY 2010 ESTIMATED LEVY= 56,739,534 SHIFT%= 1.35 LEVY SHARE LEVY SHARE WITHOUT WITH TAX CLASSIFICATION CLASSIFICATION LEVY RES PORTION= 86.70% 82.05% 46,554,052 CIP PORTION 13.30% 17.95% 10,185,482 %CHANGE FROM NON-CLASSIFIED SHARE OF LEVY FY 2009 ESTIMATED TAX RATES= RES 12.68 94.63% CIP 18.10 135.00% FY 2010 FY 2010 ESTIMATED ESTIMATED RESIDENTIAL C.I.P. TAX RATE TAX RATE 12.68 18.10 PAGE 2 RESIDENTIAL C.I.P. TOTAL VALUE I FY 2009 3,910,976,309 544,147,021 4,455,123,330 FROM 09 RECAP FY 2010 ESTIMATED 3,670,178,348 562,880,709 4,233,059,057 TOTAL$CHANGE_ -240,797,961 18,733,688 -222,064,273 %CHANGE_ -6.16% 3.44% 4.98% RES CIP FY 2009 TAX RATES SHIFT 1.35= 11.76 16.69 FY 2010 PROPOSED TAX RATE= 12.68 18.10 FY 09 PROPOSED CLASS LEVEL= 94.63% 135.00% $DIFF IN TAX RATE FY 10 vs.FY 09= $0.92 $1.41 %DIFF IN TAX RATE FY 10 vs.FY 09= 7.86% 8.42% ESTIMATED VALUES AT 12/03/2009 %OF FY 2009 LEVY LIMIT FY 09 LEVY LIMIT 51,654,403 FROM DOR ADD 2.5% 1,291,360 FROM DOR 2.50% NEW GROWTH 623,715 FROM LA 13 1.21% FY 2010 LEVY LIMIT 53,569,478 FY 2010 EXCLUDED DEBT= 3,170,056 FROM FY 09 DE-1 @ 11/19/2009 ---------------------- TOTALS= 56,739,534 MAXIMUM ALLOWABLE LEVY TOTAL FY2010 ESTIMATED VALUES: CLASS 1 TOTAL 3,670,178,348 3,670,178,348 CIP TOTAL 562,880,709 562,880,709 TOTALS= 4,233,059,057 3,670,178,348 562,880,709 FY 2010 ESTIMATED LEVY= 56,739,534 SHIFT%= 1.00 LEVY SHARE LEVY SHARE WITHOUT WITH TAX CLASSIFICATION CLASSIFICATION LEVY RES PORTION= 86.70% 86.70% 49,194,733 CIP PORTION 13.30% 13.30% 7,544,801 %CHANGE FROM NON-CLASSIFIED SHARE OF LEVY FY 2009 ESTIMATED TAX RATES= RES 13.40 100.00% CIP 13.40 100.00% FY 2010 FY 2010 ESTIMATED ESTIMATED RESIDENTIAL C.I.P. TAX RATE TAX RATE 13.40 13.40 PAGE 2 RESIDENTIAL C.I.P. TOTAL VALUE FY 2009 3,910,976,309 544,147,021 4,455,123,330 FROM 09 RECAP FY 2010 ESTIMATED 3,670,178,348 562,880,709 4,233,059,057 TOTAL$CHANGE_ -240,797,961 18,733,688 -222,064,273 %CHANGE_ -6.16% 3,44% -4.98% RES CIP FY 2009 TAX RATES SHIFT 1.35= 11.76 16.69 FY 2010 PROPOSED TAX RATE= 13.40 13.40 FY 09 PROPOSED CLASS LEVEL= 100.00% 100.00% $DIFF IN TAX RATE FY 10 vs.FY 09= $1.64 -$3.29 %DIFF IN TAX RATE FY 10 vs.FY 09= 13.98% -19.69% FY09 Factor 1.35 Res.Tax Rate $11.76 CIP Tax Rate $16.69 FY10 Factor 1.00 ESTIMATED Res.Tax Rate $13.40 ESTIMATED CIP Tax Rate $13.40 ESTIMATED All Residential+ Residential Res Part Mixed Use Comm Ind Pt Mxd Quartile Range Median value/tax Quartile Range Comm/Industrial. 1st Quartile +C&I part Mixed Use&Chapter Land Median Value(FY09) $1,000-$276,200 $202,600 $1000420,000 $1,000 Tax Bill(FY09) $2,383 $17 Median Value(FYI 0) $1,000-$254,900 $162,500 $100-$41,400 $1,000 chapter land Tax Bill(FY10) $2,178 $13 Diff.Median Value FY10-FY09 -$40,100 $0 Diff.Tax Bill FY10-FY09 -$205 -$3 %Tax Bill Difference -8.61% -19.71% 2nd Quartile Median Value(FY09) $276,300-$377,300 $324,500 $28,000-176100 $108,700 Tax Bill(FY09) $3,816 $1,814 Median Value(FY10) $257,300-$348,700 $300,300 $43,200-$186,800 $118,300 Tax Bill(FY10) $4,024 $1,585 Diff.Median Value FY10-FY09 -$24,200 $9,600 Diff.Tax Bill FY10-FY09 $208 -$229 %Tax Bill Difference 5.45% -12.62% 3rd Quartile Median Value(FY09) $377,400-$543,800 $455,900 $177,300-$413,900 $236,800 Tax Bill(FY09) $5,361 $3,952 Median Value(FY10) $348,700-$501,600 $436,200 $153,200-$407,800 $269,900 Tax Bill(FY10) $5,845 $3,617 Diff.Median Value FY10-FY09 -$19,700 $33,100 Diff.Tax Bill FY10-FY09 $484 -$336 %Tax Bill Difference 9.02% -8.49% 4th Quartile Median Value(FY09) $543,900-$33,157,000 $656,700 $414,600-$27,173,400 $908,200 Tax Bill(FY09) $7,723 $15,158 Median Value(FYI 0) $501,600-$32,757,000 $622,100 $430,400-$26,089,100 $912,100 Tax Bill(FY10) $8,336 $12,222 i Diff.Median Value FY10-FY09 -$34,600 $3,900 Diff.Tax Bill FY10-FY09 $613 -$2,936 %Tax Bill Difference 7.94% -19.37% Median Single Family House # Median Value(FY09) $473,700 Tax Bill(FY09) $5,571 Median Value(FY10) $447,800 Tax Bill(FY10) $6,001 Diff.Median Value FY10-FY09 -$25,900 Diff.Tax Bill FY10-FY09 $430 Tax Bill Difference 7.72% FY09 Factor 1.35 Res.Tax Rate $11.76 CIP Tax Rate $16.69 FY10 Factor 1.20 ESTIMATED Res.Tax'Rate $12.99 ESTIMATED CIP Tax Rate $16.08 ESTIMATED All Residential+ Residential Res Part Mixed Use Comm Ind Pt Mxd Quartile Range Median value/tax Quartile Range Comm/Industrial 1st Quartile +C&i part Mixed Use&Chapter Land Median Value(FY09) $1,000-$276,200 $202,600 $1000420,000 $1,000 Tax Bill(FY09) $2,383 $17 Median Value(FY10) $1,000-$254,900 $162,500 $100$41,400 $1,000 chapter land Tax Bill(FY10) $2,111 $16 Diff.Median Value FY10-FY09 -$40,100 $0 Diff.Tax Bill FY10-FY09 -$272 -$1 %Tax Bill Difference -11.40% -3.65% 2nd Quartile Median Value(FY09) $276,300-$377,300 $324,500 $28,000-176100 $108,700 Tax Bill(FY09) $3,816 $1,814 Median Value(FY10) $257,300-$348,700 $300,300 $43,200-$186,800 $118,300 Tax Bill(FY10) $3,901 $1,902 Diff.Median Value FY10-FY09 -$24,200 $9,600 Diff.Tax Bill FY10-FY09 $85 $88 %Tax Bill Difference 2.22% 4.85% 3rd Quartile Median Value(FY09) $377,400-$543,800 $455,900 $177,300-$413,900 $236,800 Tax Bill(FY09) $5,361 $3,952 Median Value(FY10) $348,700-$501,600 $436,200 $153,200-$407,800 $269,900 Tax Bill(FY10) $5,666 $4,340 Diff.Median Value FY10-FY09 -$19,700 $33,100 Diff.Tax Bill FY10-FY09 $305 $388 %Tax Bill Difference 5.69% 9.81% 4th Quartile Median Value(FY09) $543,900-$33,157,000 $656,700 $414,600-$27,173,400 $908,200 Tax Bill(FY09) $7,723 $15,158 Median Value(FY10) $501,600-$32,757,000 $622,100 $430,400-$26,089,100 $912,100 Tax Bill(FY10) $8,081 $14,667 Diff.Median Value FY10-FY09 $34,600 $3,900 Diff.Tax Bill FY10-FY09 $358 -$491 %Tax Bill Difference 4.64% -3.24% Median Single Family House Median Value(FY09) $473,700 Tax Bill(FY09) $5,571 Median Value(FY10) $447,800 Tax Bill(FY10) $5,817 Diff.Median Value FY10-FY09 -$25,900 Diff.Tax Bill FY10-FY09 $246 Tax Bill Difference 4.42% FY09 Factor 1.35 Res.Tax Rate $11.76 CIP Tax Rate $16.69 FY10 Factor 1.26 ESTIMATED Res.Tax Rate $12.89 : ESTIMATED CIP Tax Rate $16.76 ESTIMATED All Residential+ Residential Res Part Mixed Use Comm Ind Pt Mxd Quartile Range Median value/tax Quartile Range Comm/Industrial. 1st Quartile +C&I part Mixed Use&Chapter Land Median Value(FY09) $1,000-$276,200 $202,600 $1000-$20,000 $1,000 Tax Bill(FY09) $2,383 $17 Median Value(FY10) $1,000-$254,900 $162,500 $100$41,400 $1,000 chapter land Tax Bill(FY10) $2,095 $17 Diff.Median Value FY10-FY09 -$40,100 $0 Diff.Tax Bill FY10-FY09 -$288 $0 %Tax Bill Difference -12.09% 0.36% 2nd Quartile Median Value(FY09) $276,300-$377,300 $324,500 $28,000-176100 $108,700 Tax Bill(FY09) $3,816 $1,814 Median Value(FY10) $257,300-$348,700 $300,300 $43,200-$186,800 $118,300 Tax Bill(FY10) $3,871 $1,982 Diff.Median Value FY10-FY09 -$24,200 $9,600 Diff.Tax Bill FY10-FY09 $55 $167 %Tax Bill Difference 1.43% 9.22% 3rd Quartile Median Value(FY09) $377,400-$543,800 $455,900 $177,300-$413,900 $236,800 Tax Bill(FY09) $5,361 $3,952 Median Value(FY10) $348,700-$501,600 $436,200 $153,200$407,800 $269,900 Tax Bill(FY10) $5,623 $4,521 Diff.Median Value FY10-FY09 -$19,700 $33,100 Diff.Tax Bill FY10-FY09 $261 $569 %Tax Bill Difference 4.87% 14.39% 4th Quartile Median Value(FY09) $543,900$33,157,000 $656,700 $414,600-$27,173,400 $908,200 Tax Bill(FY09) $7,723 $15,158 Median Value(FY10) $501,600-$32,757,000 $622,100 $430,400-$26,089,100 $912,100 Tax Bill(FY10) $8,019 $15,278 Diff.Median Value FY10-FY09 $34,600 $3,900 Diff.Tax Bill FY10-FY09 $296 $120 %Tax Bill Difference 3.83% 0.79% Median Single Family House Median Value(FY09) $473,700 Tax bill(FY09) $5,571 i Median Value(FY10) $447,800 Tax Bill( Y10) $5,772 Diff.Median Value FY10-FY09 -$25,900 Diff.Tax Bill FY10-FY09 $201 Tax Bill Difference 3.62% FY09 Factor 1.35 Res.Tax Rate $11.76 CIP Tax Rate $16.69 FY70 Factor 1.30 ESTIMATED Res.Tax Rate $12.79 ESTIMATED CIP Tax Rate $17.43 ESTIMATED All Residential+ Residential Res Part Mixed Use Comm Ind Pt Mxd Quartile Range Median value/tax Quartile Range Comm/Industrial. 1st Quartile +C&I part Mixed Use&Chapter Land Median Value(FY09) $1,000-$276,200 $202,600 $1000420,000 $1,000 Tax Bill(FY09) $2,383 $17 Median Value(FY10) $1,000-$254,900 $162,500 $100$41,400 $1,000 chapter land Tax Bill(FY10) $2,078 $17 Diff.Median Value FY10-FY09 -$40,100 $0 Diff.Tax Bill FY10-FY09 -$304 $1 %Tax Bill Difference -12.77% 4.43% 2nd Quartile Median Value(FY09) $276,300-$377,300 $324,500 $28,000-176100 $108,700 Tax Bill(FY09) $3,816 $1,814 Median Value(FY10) $257,300-$348,700 $300,300 $43,200-$186,800 $118,300 Tax Bill(FY10) $3,841 $2,062 Diff.Median Value FY10-FY09 -$24,200 $9,600 Diff.Tax Bill FY10-FY09 $25 $248 %Tax Bill Difference 0.65% 13.66% 3rd Quartile Median Value(FY09) $377,400-$543,800 $455,900 $177,300-$413,900 $236,800 Tax Bill(FY09) $5,361 $3,952 Median Value(FY10) $348,700-$501,600 $436,200 $153,200-$407,800 $269,900 Tax Bill(FY10) $5,579 $4,704 Diff.Median Value FY10-FY09 -$19,700 $33,100 Diff.Tax Bill FY10-FY09 $218 $752 %Tax Bill Difference 4.06% 19.03% 4th Quartile Median Value(FY09) $543,900-$33,157,000 $656,700 $414,600-$27,173,400 $908,200 Tax Bill(FY09) $7,723 $15,158 Median Value(FY10) $501,600-$32,757,000 $622,100 $430,400-$26,089,100 $912,100 Tax Bill(FY10) $7,957 $15,898 Diff.Median Value FY10-FY09 $34,600 $3,900 Diff.Tax Bill FY10-FY09 $234 $740 %Tax Bill Difference 3.03% 4.88% Median Single Family House Median Value(FY09) $473,700 Tax Bill(FY09) $5,571 Median Value(FY10) $947,800 Tax Bill(FY10) $5,727 Diff.Median Value FY10-FY09 -$25,900 Diff.Tax Bill FY10-FY09 $157 %Tax Bill Difference 2.81% ESTIMATED VALUES AT 12/03/2009 % OF FY 2009 LEVY LIMIT FY 09 LEVY LIMIT 51,654,403 FROM DOR ADD 2.5% 1,291,360 FROM DOR 2.50% NEW GROWTH 623,715 FROM LA 13 1.21% FY 2010 LEVY LIMIT 53,569,478 FY 2010 EXCLUDED DEBT = 3,170,056 FROM FY 09 DE-1 @ 11/19/2009 TOTALS = 56,739,534 MAXIMUM ALLOWABLE LEVY TOTAL FY2010 ESTIMATED VALUES: CLASS 1 TOTAL 3,670,178,348 3,670,178,348 CIP TOTAL 562,880,709 562,880,709 TOTALS = 4,233,059,057 3,670,178,348 562,880,709 FY 2010 ESTIMATED LEVY = 56,739,534 SHIFT % = 1.00 LEVY SHARE LEVY SHARE WITHOUT WITH TAX CLASSIFICATION CLASSIFICATION LEVY I RES PORTION = 86.70% 86.70% 49,194,733 CIP PORTION 13.30% 13.30% 7,544,801 % CHANGE FROM NON-CLASSIFIED SHARE OF LEVY FY 2009 ESTIMATED TAX RATES = RES 13.40 100.00% CIP 13.40 100.00% FY 2010 FY 2010 ESTIMATED ESTIMATED RESIDENTIAL C.I.P. TAX RATE TAX RATE 13.40 13.40 PAGE 2 RESIDENTIAL C.I.P. TOTAL VALUE FY 2009 3,910,976,309 544,147,021 4,455,123,330 FROM 09 RECAP FY 2010 ESTIMATED 3,670,178,348 562,880,709 4,233,059,057 TOTAL $ CHANGE _ -240,797,961 18,733,688 -222,064,273 % CHANGE _ -6.16% 3.44% -4.98% RES CIP FY 2009 TAX RATES SHIFT 1.35 = 11.76 16.69 FY 2010 PROPOSED TAX RATE = 13.40 13.40 FY 09 PROPOSED CLASS LEVEL = 100.00% 100.00% $ DIFF IN TAX RATE FY 10 vs. FY 09 = $1.64 -$3.29 % DIFF IN TAX RATE FY 10 vs. FY 09 = 13.98% -19.69% ESTIMATED VALUES AT 12/03/2009 % OF FY 2009 LEVY LIMIT FY 09 LEVY LIMIT 51,654,403 FROM DOR ADD 2.5% 1,291,360 FROM DOR 2.50% NEW GROWTH 623,715 FROM LA 13 1.21% FY 2010 LEVY LIMIT 53,569,478 FY 2010 EXCLUDED DEBT= 3,170,056 FROM FY 09 DE-1 @ 11/19/2009 TOTALS = 56,739,534 MAXIMUM ALLOWABLE LEVY TOTAL FY2010 ESTIMATED VALUES: CLASS 1 TOTAL 3,670,178,348 3,670,178,348 CIP TOTAL 562,880,709 562,880,709 TOTALS = 4,233,059,057 3,670,178,348 562,880,709 FY 2010 ESTIMATED LEVY = 56,739,534 SHIFT % = 1.00 LEVY SHARE LEVY SHARE WITHOUT WITH TAX CLASSIFICATION CLASSIFICATION LEVY RES PORTION = 86.70% 86.70% 49,194,733 CIP PORTION 13.30% 13.30% 7,544,801 % CHANGE FROM NON-CLASSIFIED SHARE OF LEVY FY 2009 ESTIMATED TAX RATES = RES 13.40 100.00% CIP 13.40 100.00% FY 2010 FY 2010 ESTIMATED ESTIMATED RESIDENTIAL C.I.P. TAX RATE TAX RATE 13.40 13.40 PAGE 2 RESIDENTIAL C.I.P. TOTAL VALUE FY 2009 3,910,976,309 544,147,021 4,455,123,330 FROM 09 RECAP FY 2010 ESTIMATED 3,670,178,348 562,880,709 4,233,059,057 TOTAL $ CHANGE _ -240,797,961 18,733,688 -222,064,273 % CHANGE _ -6.16% 3.44% -4.98% RES CIP FY 2009 TAX RATES SHIFT 1.35 = 11.76 16.69 FY 2010 PROPOSED TAX RATE = 13.40 13.40 FY 09 PROPOSED CLASS LEVEL = 100.00% 100.00% $ D I FF IN TAX RATE FY 10 vs. FY 09 = $1.64 -$3.29 % DIFF IN TAX RATE FY 10 vs. FY 09 = 13.98% -19.69% i I ESTIMATED VALUES AT 12/03/2009 % OF FY 2009 LEVY LIMIT FY 09 LEVY LIMIT 51,654,403 FROM DOR ADD 2.5% 1,291,360 FROM DOR 2.50% NEW GROWTH 623,715 FROM LA 13 1.21% FY 2010 LEVY LIMIT 53,569,478 FY 2010 EXCLUDED DEBT = 3,170,056 FROM FY 09 DE-1 @ 11/19/2009 TOTALS = 56,739,534 MAXIMUM ALLOWABLE LEVY TOTAL FY201 0 ESTIMATED VALUES: CLASS 1 TOTAL 3,670,178,348 3,670,178,348 CIP TOTAL 562,880,709 562,880,709 TOTALS = 4,233,059,057 3,670,178,348 562,880,709 FY 2010 ESTIMATED LEVY = 56,739,534 SHIFT % = 1.35 LEVY SHARE LEVY SHARE WITHOUT WITH TAX CLASSIFICATION CLASSIFICATION LEVY RES PORTION = 86.70% 82.05% 46,554,052 CIP PORTION 13.30% 17.95% 10,185,482 % CHANGE FROM NON-CLASSIFIED SHARE OF LEVY FY 2009 ESTIMATED TAX RATES = RES 12.68 94.63% CIP 18.10 135.00% FY 2010 FY 2010 ESTIMATED ESTIMATED RESIDENTIAL C.I.P. TAX RATE TAX RATE 12.68 18.10 PAGE 2 RESIDENTIAL C.I.P. TOTAL VALUE FY 2009 3,910,976,309 544,147,021 4,455,123,330 FROM 09 RECAP FY 2010 ESTIMATED 3,670,178,348 562,880,709 4,233,059,057 TOTAL $ CHANGE _ -240,797,961 18,733,688 -222,064,273 % CHANGE _ -6.16% 3.44% -4.98% RES CIP FY 2009 TAX RATES SHIFT 1.35 = 11.76 16.69 FY 2010 PROPOSED TAX RATE = 12.68 18.10 FY 09 PROPOSED CLASS LEVEL = 94.63% 135.00% $ DIFF IN TAX RATE FY 10 vs. FY 09 = $0.92 $1.41 % DIFF IN TAX RATE FY 10 vs. FY 09 = 7.86% 8.42% ESTIMATED FY 2010 TOTAL VALUES 12/3/2009 FY 09 RES RATE 11.76 RES 3,670,178,348 TAX LEVY FY 09 CIP RATE 16.69 C.I.P. 562,880,709 56,739,534 TOTAL UNCLASS 86.70% TAXES EST RES EST C.I.P. VALUE 4,233,059,057 LEVY % 13.30% SHIFTED FY 10 RATE FY 10 RATE RESIDENT TO RES DIFF C.I.P. DIFF RESIDENTIAL % OF FY 10 C.I.P. C. I. P. % OF 10 CIP RATE 1Ov809 RATE 1OVS09 FACTOR TAX LEVY TOTAL LEVY TAX LEVY LEVY 1.00 $49,194,733 86.70% 0.0000% 7,544,801 13.30% $0 13.40 $1.64 13.40 -3.29 1.01 $49,119,285 86.57% -0.1534% 7,620,249 13.43% $75,448 13.38 $1.62 13.54 -$3.15 1.02 $49,043,837 86.44% -0.3067% 7,695,697 13.56% $150,896 13.36 $1.60 13.67 -$3.02 1.03 $48,968,389 86.30% -0.4601% 7,771,145 13.70% $226,344 13.34 $1.58 13.81 -$2.88 1.04 $48,892,941 86.17% -0.6135% 7,846,593 13.83% $301,792 13.32 $1.56 13.94 -$2.75 1.05 $48,817,493 86.04% -0.7668% 7,922,041 13.96% $377,240 13.30 $1.54 14.07 -$2.62 1.06 $48,742,045 85.90% -0.9202% 7,997,489 14.10% $452,688 13.28 $1.52 14.21 -$2.48 1.07 $48,666,597 85.77% -1.0736% 8,072,937 14.23% $528,136 13.26 $1.50 14.34 -$2.35 1.08 $48,591,149 85.64% -1.2269% 8,148,385 14.36% $603,584 13.24 $1.48 14.48 -$2.21 1.09 $48,515,701 85.51% -1.3803% 8,223,833 14.49% $679,032 13.22 $1.46 14.61 -$2.08 1.10 $48,440,253 85.37% -1.5337% 8,299,281 14.63% $754,480 13.20 $1.44 14.74 -$1.95 1.11 $48,364,805 85.24% -1.6870% 8,374,729 14.76% $829,928 13.18 $1.42 14.88 -$1.81 1.12 $48,289,357 85.11% -1.8404% 8,450,177 14.89% $905,376 13.16 $1.40 15.01 -$1.68 1.13 $48,213,909 84.97% -1.9938% 8,525,625 15.03% $980,824 13.14 $1.38 15.15 -$1.54 1.14 $48,138,461 84.84% -2.1471% 8,601,073 15.16% $1,056,272 13.12 $1.36 15.28 -$1.41 1.15 $48,063,013 84.71% -2.3005% 8,676,521 15.29% $1,131,720 13.10 $1.34 15.41 -$1.28 1.16 $47,987,565 84.58% -2.4539% 8,751,969 15.42% $1,207,168 13.07 $1.31 15.55 -$1.14 1.17 $47,912,117 84.44% -2.6072% 8,827,417 15.56% $1,282,616 13.05 $1.29 15.68 -$1.01 1.18 $47,836,669 84.31% -2.7606% 8,902,865 15.69% $1,358,064 13.03 $1.27 15.82 -$0.87 1.19 $47,761,221 84.18% -2.9140% 8,978,313 15.82% $1,433,512 13.01 $1.25 15.95 -$0.74 1.20 $47,685,773 84.04% -3.0673% 9,053,761 15.96% $1,508,960 12.99 $1.23 16.08 -$0.61 1.21 $47,610,325 83.91% -3.2207% 9,129,209 16.09% $1,584,408 12.97 $1.21 16.22 -$0.47 1.22 $47,534,877 83.78% -3.3741% 9,204,657 16.22% $1,659,856 12.95 $1.19 16.35 -$0.34 1.23 $47,459,429 83.64% -3.5274% 9,280,105 16.36% $1,735,304 12.93 $1.17 16.49 -$0.20 1.24 $47,383,980 83.51% -3.6808% 9,355,554 16.49% $1,810,752 12.91 $1.15 16.62 -$0.07 1.25 $47,308,532 83.38% -3.8342% 9,431,002 16.62% $1,886,200 12.89 $1.13 16.75 $0.06 1.26 $47,233,084 83.25% -3.9875% 9,506,450 16.75% $1,961,648 12.87 $1.11 16.89 $0.20 1.27 $47,157,636 83.11% -4.1409% 9,581,898 16.89% $2,037,096 12.85 $1.09 17.02 $0.33 1.28 $47,082,188 82.98% -4.2942% 9,657,346 17.02% $2,112,544 12.83 $1.07 17.16 $0.47 1.29 $47,006,740 82.85% -4.4476% 9,732,794 17.15% $2,187,992 12.81 $1.05 17.29 $0.60 1.30 $46,931,292 82.71% -4.6010% 9,808,242 17.29% $2,263,440 12.79 $1.03 17.43 $0.74 1.31 $46,855,844 82.58% -4.7543% 9,883,690 17.42% $2,338,888 12.77 $1.01 17.56 $0.87 1.32 $46,780,396 82.45% -4.9077% 9,959,138 17.55% $2,414,336 12.75 $0.99 17.69 $1.00 1.33 $46,704,948 82.31% -5.0611% 10,034,586 17.69% $2,489,784 12.73 $0.97 17.83 $1.14 1.34 $46,629,500 82.18% -5.2144% 10,110,034 17.82% $2,565,232 12.70 $0.94 17.96 $1.27 1.35 $46,554,052 82.05% -5.3678% 10,185,482 17.95% $2,640,680 12.68 $0.92 18.10 $1.41 1.36 $46,478,604 81.92% -5.5212% 10,260,930 18.08% $2,716,128 12.66 $0.90 18.23 $1.54 1.37 $46,403,156 81.78% -5.6745% 10,336,378 18.22% $2,791,576 12.64 $0.88 18.36 $1.67 1.38 $46,327,708 81.65% -5.8279% 10,411,826 18.35% $2,867,024 12.62 $0.86 18.50 $1.81 1.39 $46,252,260 81.52% -5.9813% 10,487,274 18.48% $2,942,472 12.60 $0.84 18.63 $1.94 1.40 $46,176,812 81.38% -6.1346% 10,562,722 18.62% $3,017,920 12.58 $0.82 18.77 $2.08 1.41 $46,101,364 81.25% -6.2880% 10,638,170 18.75% $3,093,368 12.56 $0.80 18.90 $2.21 1.42 $46,025,916 81.12% -6.4414% 10,713,618 18.88% $3,168,817 12.54 $0.78 19.03 $2.34 1.43 $45,950,468 80.98% -6.5947% 10,789,066 19.02% $3,244,265 12.52 $0.76 19.17 $2.48 1.44 $45,875,020 80.85% -6.7481% 10,864,514 19.15% $3,319,713 12.50 $0.74 19.30 $2.61 1.45 $45,799,572 80.72% -6.9015% 10,939,962 19.28% $3,395,161 12.48 $0.72 19.44 $2.75 1.46 $45,724,124 80.59% -7.0548% 11,015,410 19.41% $3,470,609 12.46 $0.70 19.57 $2.88 1.47 $45,648,676 80.45% -7.2082% 11,090,858 19.55% $3,546,057 12.44 $0.68 19.70 $3.01 1.48 $45,573,228 80.32% -7.3616% 11,166,306 19.68% $3,621,505 12.42 $0.66 19.84 $3.15 1.49 $45,497,780 80.19% -7.5149% 11,241,754 19.81% $3,696,953 12.40 $0.64 19.97 $3.28 1.50 $45,422,332 80.05% -7.6683% 11,317,202 19.95% $3,772,401 12.38 $0.62 20.11 $3.42 FY09 Factor 1.35 Res.Tax Rate $11.76 C I P Tax Rate $16.69 FY10 Factor 1.35 ESTIMATED Res. Tax Rate $12:68 ESTIMATED CIP--Tax;Rate $18:10 ESTIMATED All Residential+ Residential Res Part Mixed Use Comm Ind Pt Mxd Quartile Range Median value/tax Quartile Range Comm/Industrial. 1st Quartile + C &I part Mixed Use&Chapter Land Median Value (FY09) $1,000-$276,200 $202,600 $1000-$20,000 $1,000 Tax Bill (FY09) $2,383 $17 Median Value (FY10) $1,000-$254,900 $162,500 $100-$41,400 $1,000 chapter land Tax Bill (FY10) $2,061 $18 Diff. Median Value FY10-FY09 -$40,100 $0 Diff. Tax Bill FY10-FY09 -$322 $1 %Tax Bill Difference -13.52% 8.45% 2nd Quartile Median Value (FY09) $276,300-$377,300 $324,500 $28,000- 176100 $108,700 Tax Bill (FY09) $3,816 $1,814 Median Value (FY10) $257,300-$348,700 $300,300 $43,200-$186,800 $118,300 Tax Bill (FY10) $3,808 $2,141 Diff. Median Value FY10-FY09 -$24,200 $9,600 Diff. Tax Bill FY10-FY09 -$8 $327 %Tax Bill Difference -0.22% 18.03% 3rd Quartile Median Value (FY09) $377,400-$543,800 $455,900 $177,300-$413,900 $236,800 Tax Bill (FY09) $5,361 $3,952 Median Value (FY10) $348,700-$501,600 $436,200 $153,200-$407,800 $269,900 Tax Bill (FY10) $5,531 $4,885 Diff. Median Value FY10-FY09 -$19,700 $33,100 Diff. Tax Bill FY10-FY09 $170 $933 %Tax Bill Difference 3.16% 23.61% 4th Quartile Median Value (FY09) $543,900-$33,157,000 $656,700 $414,600-$27,173,400 $908,200 Tax Bill (FY09) $7,723 $15,158 Median Value(FY10) $501,600-$32,757,000 $622,100 $430,400-$26,089,100 $912,100 Tax Bill (FY10) $7,888 $16,509 Diff. Median Value FY10-FY09 -$34,600 $3,900 Diff. Tax Bill FY10-FY09 $165 $1,351 %Tax Bill Difference 2.14% 8.91% Median Smgle'Family House Median Value'(FY0.9) $473,700 Tax Bill(FY09)"" $5,571 Median Value(FY10) $447,800 Tax Bill'(FY10) $5,678 Diff Median Value FY10-FY09:" -$25,900 Diff Tax Bill FY10-FY09 $10T Tax;Bill Difference DEPARTMENT OF REVENUE BUREAU OF ACCOUNTS CLASSIFICATION TAX ALLOCATION NORTH ANDOVER City/Town/District Fiscal Year: 2010 Return to: Bureau of Accounts, Boston, Springfield, Worcester 1.The selected Residential Factor is ------------------- 0.950923 If you desire each class to maintain 100% of its full values tax share, indicate a residential factor of"1"and go to question 3. 2.In computing your residential factor,was a discount granted to Open Space? Yes No X If Yes,what is the percentage discount? 3.Was a residential exemption adopted? Yes No X If Yes, please complete the following Class 1 Total Assessed Value = 3,670,178,348 X 0 = Class 1 Total Parcel Count* 0 Selected Res. Residential Exemption % Exemption " Include all parcels wtih a Mixed-Use Residential designation Applicable number of parcels to receive exemption 0 Net value to be exempted 0 4.Was a small commercial exemption adopted? Yes No X % Selected 0 If Yes, please complete the following No.of parcels eligible 0 Total value of parcels 0 Total value to be exempted Print Date: 12/10/2009 1:30 pm Page 1 of 2 taxfla5 5.The following information was derived from the LA-7. Please indicate in column D percentages (accurate to 4 digits to the right of the decimal point)which result from your selected residential fartnr (If a rPSiriPntial fartnr of"1"has hPPn sPIP&Pri vnu may IPAVP.Cnlumn n hlank) A B C D Certified Full and Percentage Full Value New Percentage Class Fair Cash Value Shares of Total Tax Levy Shares of Total Tax Assessments Levy Residential 3,670,178,348.00 86.7028 % 82.4477% Open Space 0.00 0.0000 % 0.0000% Commercial 286,494,949.00 6.7680 % 8.9337 Industrial 168,247,500.00 3.9746 % 5.2465% Personal Property 108,138,260.00 2.5546 % 3.3721 % TOTAL 4,233,059,057.00 100.0000 % 100.0000% 6. 1 hereby attest that notice was given to taxpayers that a public hearing on the issue of adopting the tax levy percentages for fiscal year 2010 would be held on 12/08/2009 (date), 7:00 P.M. (time), at Selectmen's Room Town Hall (place), by Legal Notice published in Eagle Tribune on 11/24/2009 (describe type of notice). Joyce A Bradshaw Town Clerk North Andover,978-688-9501 1 12/9/2009 11:59 AM City/Town/District Clerk 7. We hereby attest that on 12/08/2009 (date), 7:00 P.M. (time), at Selectmen's Room town Hall (place) a public hearing on the issue of adopting the percentages for fiscal year 2010, that the Board of Assessors presented information and data relevant to making such determination and the fiscal effect of the available alternatives at the hearing and that the percentages set forth above were duly adopted in public session on (date). 8.The LA-5 excess capacity is calculated as 24,102.10 We have been informed by the Assessors of excess levy capacity of 16,542.64 For cities: City Councilors,Aldermen, Mayor For towns: Board of Selectmen For districts: Prudential Committee or Commissioners Lyne Savage Accountant North Andover,978-688-9523 12/10/2009 9:19 AM Richard Nardella BOS signature on file submitted under authorization of BOS (Date) (Comments) Lyne Savage Accountant North Andover 978-688-9523 12/10/2009 9:18 AM Tracy Watson Chairman of BOS signature on file submitted under authorization of BOS (Date) (Comments) Lyne Savage Accountant North Andover.978-688-9523 12/10/2009 9:18 AM William Gordon BOS signature on file submitted under authorization of BOS (Date) (Comments) Print Date: 12/10/2009 1:30 pm Page 2 of 2 taxfla5 Rees, Mark From: Bob Ercolini [bob1cpa @yahoo.com] Sent: Thursday, December 03, 2009 6:47 PM To: Rees, Mark Subject: Tax Classification Rate for+ % Increase for all Classes Attachments: NA Tax Classification WkSt FY 20100001.pdf; Tax Classification 2010 WorkSheet 12309.xls Mark I have attached PDF and the actual Excelk worksheet I used to calculate the tax rate needed to effect an equal% increase in taxes for all classes from 2009 to 2010. The calcualtion excludes new growth sinc eit would distort the increase. The calculated tax classification ra of 1.316 wo d effect a 1.89%increase to all prior year taxpayers, by tax class in total. The result also yields a slightly higher tax for new growth taxes. If you have any questions, please call. Bob Ercolini 'I i �I 12/4/2009 1 9 f f I I V Total Taxes By Class 2010(without regard to new growth)Plus Variance of 1858 has to be added to Respective Class Residential 46,860,806 83.51%FY 2009 Plus Increase at 1.89%) j CIP 9,253,155 16.49%FY 2009 Phis Increase at 1.89%) 'total 56,113,961 100.00% Plus New Growth 633,544 See revised number below for new growth taxes based on rates required to effect 1.89%increase for each class without regard to new growth Total Levy 56,747,505 See revised number below for new growth taxes based on rates required to effect 1,89%increase for each class without regard to new growth Valuations FY 2010 see schedule above Residential 3,649,973,099 86.95% CIP 547,727,199 13.05% Total 4,197,700,298 100.00% I Required Tax Rate ,Residential $ 12.84 This is calculated by dividing taxes for class with 1.89%increase above,by assessed valuation divided by 1,040 CIP 16.89 This is calculated by dividing taxes for class with 1.89%increase above,by assessed valuation divided by 1,004 i New Growth Residential 19,213,029 44.03% CIP 24,421,740 55.97% 43,634,769 100.00% New Growth Tax using rates Once above tax rate is determine per above for each class the new growth taxes can be determined for the growth in assessment Residential 246,670 37.42% CIP 412,574 62.58% 659,244 100.00%Actual New Growth Taxes Tax Classification rate required to achieved equal increase in taxes for all classes without regard to new growth taxes: C1P 16.89 Numerator Residential 12.84 Denominator I I Numerator/Denominator 1.316 Tax Classification Rate needed to achieve equal%increase in taxes for all classes i I I i i i i f I l 'er Draft Fiscal 2008 worksheet 12/3/08 @12:35 PM FY 2009 $ % $ % $ % $ % $ % $ Valuations Abatements Other Total Adj. Taxes Rate Tax Growth Taxes Per 'rior Valuations Adjustments Sub Total +-Reval Value CFY New Growth Levy 'iscal Basis FY 2009 Per 1,000 PFY fear 4,001,584,703 88.25% (8,113,100) 82.38% 5,903,300 59.86% 3,999,374,903 88.20% (106,819,615) 90.865/6 3,892,555,288 88.13% 3,910,976,509 18 421,221 48.22% 11.75 216,449 47,018,620 532,880,764 1135% (1,735,000) 17.62% 3,958,900 40.14% 535,104,664 11.80°/ (10,741,678) 9.14% 524,362,986 11.87% 544,147,021 19,784,035 51.781/. 16.69 330,196 8,893,780 4,534,465,467 100.00% 9,848,100) 100.00% 9,862,200 100.00% 4,534,479,567 100.00% 117,561,293 100.00% 4,416918,274 100.00% 4,455,123,530 38,205,256 100.00% 546,645 55,912400 'Y 2010 41,846,816 Per worksheet $ % $ % $ % $ % $ % $ % 23,425,595 CIP Valuations Abatements Other Total Adj. 3,641,560 Difference CIP 'rior Valuations Adjustments Sub Total +-Reval Value CFY 'iscal Basis year 3,910,976,509 87.79°/ (8,195,800) 73.14% 9,780,100 100.00% 3,912,560,809 87.85% (262,587,710) 102.57% 3,649,973,099 86.95% 3,669,186,128 19,213,029 11.76 225,945 45,993,0841 544.147,021 12.21% (3,009,617) 26.86% 0 0.00% 541.137.404 12.15% 6.589.795 -257% 547.727,199 1305% 563.576.759 2442 740 16_69 407.599 9.081.814 4,455,123,530 100.00% 11,205,417 100.00% 9,780,100 100,009/6 4,453,698,213 100.00% 255,997,915 100.00% 4,197,700,298 100.00% 4,232,762,887 43,634,769 633,544 55,074,898 Town of North Andover FY 2010 Tax Rate Recap FY 2008 Valuation DOR Fiscal 2009 Totals: Residential 4,001,584,703 88.25% CIP 532,880,764 11.75% Totals: 4,534,465,467 100.00% FY 2009 Valuation DOR Fiscal 2010 Totals: Residential 3,910,976,509 86.25% CIP 544,147,021 12.00% Totals: 4,455,123,530 98.25% FY 2010 Valuation DOR Fiscal 2010 Totals: Residential 3,669,186,128 86.69% CIP 563,576,759 13. % Totals: 4,232,762,887 100.0000% � Tax Rate FY 2009 Residential 11.76 CIP 16.69 Per Signed Tax Recap FY 2009 Levy By Class Residential 45,993,084 83.51% CIP 9,081,814 16.49% Total 55,074,898 100.00% Less Override 3,422,353 FY 2009 (3,422,353) Net Taxes w/o Override per Recap 51,652 545 Per 12/1/09 9:47AM Wk Sheet 51,654,403 (1,858)Variance FY 2010 Base 51,654,403 Assume 12/1/09 OK Plus Override FY 2010 3,170,056 IFY 2010 3,170,056 Plus 2.5%on 12/1/09 Wk Sheet 1.291,360 1,291,360 FY Levy Existing Prop. 56,115,819 101.89%(%FY 2010 Taxes over FY 2009 Taxes-wit Net Increase Taxes 2010 from 2009 1,039,063 1.89% 1,039,063 Actual%Increase Actual$Increase by Class time%Increase: IResidential 867,722 83.51% CIP 171,341 16.49% Total 1,039,063 100.00% i Rees, Mark From: Boles, Garrett Sent: Monday, December 07, 2009 12:10 PM To: Rees, Mark Subject: RE: Tax Classification Rate for+ % Increase for all Classes Attachments: LA4.pdf; LEVY_LIMIT.pdf; FY10_TXR_ALL.xls I looked at the two submissions, The valuation totals for FY 2010 are wrong. (See the attached approved LA 4) Backing out the New Growth and Debt Service is nonsense. They are part of the Tax Rate and Allowable Tax Levy. (see attached Levy Limit Worksheet). I do not know what the 1,858 variance is. In the real world the Tax Levy is going up more than 3.02%. This is the percent difference between the proposed FY 2010 Tax Levy of$56,739,534 and the FY 09 Tax Levy of$55,074,897.53. The 1.89% actual increase" is wrong and understates the real difference I just cited. His FY 2010 LA 13 Analysis has the wrong valuation totals and new growth totals. I guess the question I have to ask is what is the point of this math exercise? He appears to be saying that at a tax rate shift of 1.316, both RES and CIP Rates would increase at approximately the same percentage. This mayr1 e true t(you look at the "FY 10 TXR All" portion of my tax rate handout, you will see that at a shift f 1.32, S Rate goes up$.99 and the CIP Rate goes up $1.00, a one cent difference. I believe I poin d t � out at our last staff meeting. From: Rees, Mark Sent: Friday, December 04, 2009 3:22 PM To: Boles, Garrett Subject: FW: Tax Classification Rate for + % Increase for all Classes Garrett, when you get a chance, please look over this material from Bob Ercolini and let me know if you think his math and his conclusions are correct. Thanks, Mark Mark H. Rees Town Manager Town of North Andover 120 Main Street North Andover, MA 01845 email: mrees@townofnorthandover.com Phone: 978-688-9510 Fax: 978-688-9556 From: Bob Ercolini [ma i Ito:bobicpa @yahoo.com] Sent: Thursday, December 03, 2009 6:47 PM To: Rees, Mark Subject: Tax Classification Rate for + % Increase for all Classes Mark I have attached PDF and the actual Excelk worksheet I used to calculate the tax rate needed to effect an equal % increase in taxes for all classes from 2009 to 2010. The calcualtion excludes new growth sinc eit would distort the increase. 12/8/2009 MASSACHUSETTS DEPARTMENT OF REVENUE DIVISION OF LOCAL SERVICES ASSESSMENT/CLASSIFICATION REPORT FY2010 NORTH ANDOVER as of January 1,2009 City/Town/District ACCT/ CLASS 1 CLASS 2 CLASS 3 1 CLASS 4 CLASS 5 PROPERTY PARCEL Residential Open Space Commercial Industrial I Personal Property TYPE COUNT Assessed Value Assessed Value Assessed Value Assessed Value Assessed Value 101 6,173 2,895,211,700 102 I 1,915 390,244,300 f ;� MISC 103,109 28 18,639,900 .. (- , - - - _ - 104 423 148,161,400 105 43 16,623,900 j 111-125 i �- 48 97,423,100 " -- � � - I - ---- _ a 130-32,106 492 55,613,200 7 200-231 0 0 300-393 490 , 272,666,300 I �.' 400-452 84 168,247 500 i CH 61 LAND 7 0 13,500 CH 61A LAND 145 0 588,181 I CH 61B LAND 9 0 1,500,955 012-043 38 48,260,848 0 11,726,013 0 501 334 - - - - -- - 5,399,170 502 480 19,501,980 503 0 - -- - - t - 0 504,550-2 4 - 38,691,020 505 3 17,984,000 506 1 _ 25,438,300 508 - -- --- 5 - - -- - _ _ - 1,123,790 TOTALS 10,7221 3,670,178,3481 0 286,494,949 168,247,500 108,138,260 REAL AND PERSONAL PROPERTY TOTAL VALUE 4,233,059,057 EXEMPT VALUE 422,961,000 NOTE :The information was Approved on 12/04/2009. Submitted by: Board of Assessors Garrett C.Boles, Town Assessor.North Andover, 11/102009 1A0 PM sianatures on fie.submitted under aulhorrztion of the board of assessors 978-688-9566 (Board of Assessors) (Date) (Comments) ..................................................................................................................................................................................................................... Date:12/7/2009 11:01 am Page 1 of 1 LA4(6/98) THE COMMONWEALTH OF MASSACHUSETTS DEPARTMENT OF REVENUE FISCAL 2010 TAX LEVY LIMITATION FOR NORTH ANDOVER FOR BUDGET PLANNING PURPOSES I.TO CALCULATE THE FY 2009 LEVY LIMIT A. FY 2008 Levy Limit 49,874,728 Al.ADD Amended FY 2008 Growth 0 B.ADD(IA+IA1)*2.5% 1,246,868 C.ADD FY 2009 New Growth 532,807 D.ADD FY 2009 Override 0 E. FY 2009 Subtotal 51,654,403 I. $51,654,403 F. FY 2009 Levy Ceiling 111,378,088 FY 2009 Levy Limit II.TO CALCULATE THE FY 2010 LEVY LIMIT A. FY 2009 Levy Limit from I. 51,654,403 Al.ADD Amended FY 2009 Growth B.ADD(IIA+IIA1)*2.5% 1,291,360 C.ADD FY 2010 New Growth 623,715 D.ADD FY 2010 Override 0 E. FY 2010 Subtotal 53,569,478 II. $53,569,478 F. FY 2010 Levy Ceiling 105,826,476 FY 2010 Levy Limit III.TO CALCULATE THE FY 2010 MAXIMUM ALLOWABLE LEVY A. FY 2010 Levy Limit from II. 53,569,478 B. FY 2010 Debt Exclusion(s) 3,170,056 C. FY 2010 Capital Expenditure Exclusion(s) 0 D. FY 2010 Other Adjustment 0 E. FY 2010 Water/Sewer 0 F. FY 2010 Maximum Allowable Levy $56,739,534 NOTE:The information is preliminary and is subject to change. Print Date:12/3/2009 9:45 am Page 1 of 1 taxFll ESTIMATED FY 2010 TOTAL VALUES 12/3/2009 FY 09 RES RATE 11.76 RES 3,670,178,348 TAX LEVY FY 09 CIP RATE 16.69 C.I.P. 562,880,709 56,739,534 TOTAL UNCLASS 86.70% TAXES EST RES EST C.I.P. VALUE 4,233,059,057 LEVY % 13.30% SHIFTED FY 10 RATE FY 10 RATE RESIDENT TO RES DIFF C.I.P. DIFF RESIDENTIAL % OF FY 10 C.I.P. C. I. P. % OF 10 CIP RATE lOvsO9 RATE lOvsO9 FACTOR TAX LEVY TOTAL LEVY TAX LEVY LEVY 1.00 $49,194,733 86.70% 0.0000% 7,544,801 13.309 $0 13.40 $1.64 13.40 -3.29 1.01 $49,119,285 86.57% -0.1534% 7,620,249 13.43% $75,448 13.38 $1.62 13.54 -$3.15 1.02 $49,043,837 86.44% -0.3067% 7,695,697 13.56% $150,896 13.36 $1.60 13.67 -$3.02 1.03 $48,968,389 86.30% -0.4601% 7,771,145 13.70% $226,344 13.34 $1.58 13.81 -$2.88 1.04 $48,892,941 86.17% -0.6135% 7,846,593 13.83% $301,792 13.32 $1.56 13.94 -$2.75 1.05 $48,817,493 86.04% -0.7668% 7,922,041 13.96% $377,240 13.30 $1.54 14.07 -$2.62 1.06 $48,742,045 85.90% -0.9202% 7,997,489 14.10% $452,688 13.28 $1.52 14.21 -$2.48 1.07 $48,666,597 85.77% -1.0736% 8,072,937 14.23% $528,136 13.26 $1.50 14.34 -$2.35 1.08 $48,591,149 85.64% -1.2269% 8,148,385 14.36% $603,584 13.24 $1.48 14.48 -$2.21 1.09 $48,515,701 85.51% -1.3803% 8,223,833 14.49% $679,032 13.22 $1.46 14.61 -$2.08 1.10 $48,440,253 85.37% -1.5337% 8,299,281 14.63% $754,480 13.20 $1.44 14.74 -$1.95 1.11 $48,364,805 85.24% -1.6870% 8,374,729 14.76% $829,928 13.18 $1.42 14.88 -$1.81 1.12 $48,289,357 85.11% -1.8404% 8,450,177 14.89% $905,376 13.16 $1.40 15.01 -$1.68 1.13 $48,213,909 84.97% -1.9938% 8,525,625 15.03% $980,824 13.14 $1.38 15.15 -$1.54 1.14 $48,138,461 84.84% -2.1471% 8,601,073 15.16% $1,056,272 13.12 $1.36 15.28 -$1.41 1.15 $48,063,013 84.71% -2.3005% 8,676,521 15.29% $1,131,720 13.10 $1.34 15.41 -$1.28 1.16 $47,987,565 84.58% -2.4539% 8,751,969 15.42% $1,207,168 13.07 $1.31 15.55 -$1.14 1.17 $47,912,117 84.44% -2.6072% 8,827,417 15.56% $1,282,616 13.05 $1.29 15.68 -$1.01 1.18 $47,836,669 84.31% -2.7606% 8,902,865 15.69% $1,358,064 13.03 $1.27 15.82 -$0.87 1.19 $47,761,221 84.18% -2.9140% 8,978,313 15.82% $1,433,512 13.01 $1.25 15.95 -$0.74 1.20 $47,685,773 84.04% -3.0673% 9,053,761 15.96% $1,508,960 12.99 $1.23 16.08 -$0.61 1.21 $47,610,325 83.91% -3.2207% 9,129,209 16.09% $1,584,408 12.97 $1,21 16.22 -$0.47 1.22 $47,534,877 83.78% -3.3741% 9,204,657 16.22% $1,659,856 12.95 $1.19 16.35 -$0.34 1.23 $47,459,429 83.64% -3.5274% 9,280,105 16.36% $1,735,304 12.93 $1.17 16.49 -$0.20 1.24 $47,383,980 83.51% -3.6808% 9,355,554 16.49% $1,810,752 12.91 $1.15 16.62 -$0.07 1.25 $47,308,532 83.38% -3.8342% 9,431,002 16.62% $1,886,200 12.89 $1.13 16.75 $0.06 1.26 $47,233,084 83.25% -3.9875% 9,506,450 16.75% $1,961,648 12.87 $1.11 16.89 $0.20 1.27 $47,157,636 83.11% -4.1409% 9,581,898 16.89% $2,037,096 12.85 $1.09 17.02 $0.33 1.28 $47,082,188 82.98% -4.2942% 9,657,346 17.02% $2,112,544 12.83 $1.07 17.16 $0.47 1.29 $47,006,740 82.85% -4.4476% 9,732,794 17.15% $2,187,992 12.81 $1.05 17.29 $0.60 1.30 $46,931,292 82.71% 4.6010% 9,808,242 17.29% $2,263,440 12.79 $1.03 17.43 $0.74 1.31 $46,855,844 82.58% -4.7543% 9,883,690 17.42% $2,338,888 12.77 $1.01 17.56 $0.87 1.32 $46,780,396 82,45% -4.9077% 9,959,138 17.55% $2,414,336 12.75 $0.99 17.69 $1.00 1.33 $46,704,948 82.31% -5.0611% 10,034,586 17.69% $2,489,784 12.73 $0.97 17.83 $1.14 1.34 $46,629,500 82.18% -5.2144% 10,110,034 17.82% $2,565,232 12.70 $0.94 17.96 $1.27 1.35 $46,554,052 82.05% -5.3678% 10,185,482 17.95% $2,640,680 12.68 $0.92 18.10 $1.41 1.36 $46,478,604 81.92% -5.5212% 10,260,930 18.08% $2,716,128 12.66 $0.90 18.23 $1.54 1.37 $46,403,156 81.78% -5.6745% 10,336,378 18.22% $2,791,576 12.64 $0.88 18.36 $1.67 1.38 $46,327,708 81.65% -5.8279% 10,411,826 18.35% $2,867,024 12.62 $0.86 18.50 $1.81 1.39 $46,252,260 81.52% -5.9813% 10,487,274 18.48% $2,942,472 12.60 $0.84 18.63 $1.94 1.40 $46,176,812 81.38% -6.1346% 10,562,722 18.62% $3,017,920 12.58 $0.82 18.77 $2.08 1.41 $46,101,364 81.25% -6.2880% 10,638,170 18.75% $3,093,368 12.56 $0.80 18.90 $2.21 1.42 $46,025,916 81.12% -6.4414% 10,713,618 18.88% $3,168,817 12.54 $0.78 19.03 $2.34 1.43 $45,950,468 80.98% -6.5947% 10,789,066 19.02% $3,244,265 12.52 $0.76 19.17 $2.48 1.44 $45,875,020 80.85% -6.7481% 10,864,514 19.15% $3,319,713 12.50 $0.74 19.30 $2.61 1.45 $45,799,572 80.72% -6.9015% 10,939,962 19.28% $3,395,161 12.48 $0.72 19.44 $2.75 1.46 $45,724,124 80.59% -7.0548% 11,015,410 19.41% $3,470,609 12.46 $0.70 19.57 $2.88 1.47 $45,648,676 80.45% -7.2082% 11,090,858 19.55% $3,546,057 12.44 $0.68 19.70 $3.01 1.48 $45,573,228 80.32% -7.3616% 11,166,306 19.68% $3,621,505 12.42 $0.66 19.84 $3.15 1.49 $45,497,780 80.19% -7.5149% 11,241,754 19.81% $3,696,953 12.40 $0.64 19.97 $3.28 1.50 $45,422,332 80.05% -7.6683% 11,317,202 19.95% $3,772,401 12.38 $0.62 20.11 $3.42 TOWN OF NORTH ANDOVER OFFICE OF BOARD OF SELECTMEN 120 MAIN STREET NORTH ANDOVER, MASSACHUSETTS 01845 Tracy M. Watson, Chairman Telephone (978)688-9510 William F. Gordon f NoRT1{q o tt, ° ,,•do FAX (978)688-9556 Daniel P. Lanen �? b`:'_ 0< Richard A. Nardella ° , A Rosemary Connelly Smedile 1/,4�O•n°+'•thy '. SSAC"us TOWN OF NORTH ANDOVER PUBLIC HEARING NOTICE The North Andover Board of Selectmen will hold a public hearing on Tuesday, December 8, 2009, at 7:30 p.m. in the Selectmen's Meeting Room, Town Hall, 120 Main Street, North Andover, MA, to receive comments on proposed amendments to the Personnel Policy for non union personnel in accordance the Dec. 9, 2002, Special Town Meeting. A copy of the proposed amendments is available for review in the Town Manager's Office. Eagle-Tribune — 12/2/09 LEGAL NOTICE TOWN OF NORTH ANDOVER PUBLIC HEARING NOTICE The North Andover Board of Selectmen will hold a public hearing on Tuesday, December 8, 2009,at 7;30 p.m.in the Selectmen's Meeting Room, Town Hall, 120 Main Street, North Andover, MA, to receive comments on proposed amendments to the'Per- sonnel Policy for non union personnel in accor- dance the Dec.9,2002, Special Town Meeting.A copy of the proposed amendments is available for review in the Town Managers Office.. ET—12/2/09 NORTH iO- ova—At y` DRAT/D TSn`�y 9SSACHUSEt INTEROFFICE MEMORANDUM TO: Board of Selectmen DATE: November 18, 2009 FROM: Mark Rees Town Manager SUBJ: Amendment to Town's Personnel Policy Per the Town's Personnel Policy, "the Town Manager shall, from time to time,propose and the Board of Selectmen may adopt Amendments to this Personnel Policy in accordance with the provisions of Article 11 of the Town of North Andover Special Town Meeting of December 12, 2002." It is proposed that Article VI—Leaves of Absence, Section A—Family and Medical Leave Act accordance with the changes see attached i n a g es made to the legislation (FMLA),be amended( ) earlier this calendar year regarding military family leave. In accordance with the Special Town Meeting vote, the Board of Selectmen is required to hold a public hearing before formally voting on the proposed amendment. Attachment i A. Family and Medical Leave Act including Military Family Leave (FMLA) (1)An employee who has been employed for twelve(12) consecutive months or who has worked 1,250 hours in the last twelve months is entitled to up to a total of twelve(12)weeks of family medical leave in one calendar year. (2)Family medical leave may be requested and must be granted for: (a) The birth of a child and to care for the child, or the adoption of a child under eighteen(18) (or over eighteen(18) if the child has a physical or mental disability and is unable to care for itself) and to care for that child; or (b) The care for the employee's spouse,parent, or child with a serious health condition. Child is defined as including biological, adopted, or foster children, stepchildren, or child of a person with legal guardianship or who has day-to-day responsibility to care for and financially support a child, even if there is no biological or legal relationship; or (c) The serious health condition of the employee that makes the employee unable to perform the functions of his or her position. Serious health condition is defined in accordance with the Family Medical Leave Act, 29 CFR Sec. 825.114. (3)Military Fancily Leave. Eligible employees may take up to 12 weeks of leave in any 12-month period for other Qualifying Exigencies connected with military service, and may take up to 26 weeks of leave in a single 12-month period if needed to care for a family member who is a Covered Service Member with a serious illness or injury incurred in the line of duty while on active duO7. (a) Qualifying Exigency Leave— Up to 12 weeks of FMLA Leave is available for certain exigencies arising out of the fact that a covered military member is on active duty or called to active duty status in support of a contingency operation. The exigencies that may qualify for leave are: (1)Short-notice deployment, (2) Military events and related activities; (3) Childcare and school activities; (4) Financial and legal arrangements; (5) Counseling, (6)Rest and recuperation; (7) Post-deployment activities; and(8)Additional activities not encompassed in the other car(,Ill ories, but agreed to by the employer and employee. Qualifying exigency leave is a mailable to a family member of a military member in the Reserves or National Guard, it does not extend to family members of military members in tine regular armed forces. (b) Covered Service Member Care Leave—Leave to care for a family member who is a covered service member is limited to a one-time leave of up to 26 weeks within a single 1' month period. An eligible employee must be needed to care for a family we)nber injured in the course of duty while on active duty with the military. The lea�,e is available on a one-time basis for an injury or incident befalling that family meniber. For purposes of this leave only, the definition of family member is extended to encompass "next of kin"to the extent not already encompassed by the applicable definition of family member under the FMLA. (c)Definition of Covered Service Member—A "covered service member"is a current member of the Armed Forces, including a member of the National Guard or Reserves, who is undergoing medical treatment, recuperation, or therapy, is otherwise in outpatient status, or is otherwise on the temporary disability retired list,for a serious injury or illness. A serious injury or illness is one that was incurred by ra service member in the line of duty on active duty that may render the service member medically unfit to perform the duties of his or her office,grade, rank, or rating. (3)(4) Except for caring for a newborn or adopted child,when necessary, leave may be consecutive, intermittent or on a reduced hour schedule. In the event of pregnancy, family medical leave will begin on the date of birth of the child unless the employee begins her leave on an earlier date when her physician deems her disabled. (4)(S) An employee must notify the Town Manager,in writing, of their request for family medical leave,with a copy to their Division Director, at least 30 days in advance of the intended date upon which leave will commence and terminate, unless prevented by an emergency situation from giving that length of notice. (3) (6) It is the obligation of the employee intending to use FLMA leave to provide the employer with sufficient information to determine that a requested leave qualifies for leave under this policy. The Town may request that employees on leave for a serious health condition to provide medical certification and/or records necessary, including an executed authorization to obtain medical records pertaining to the temporary physical disability, within the time required under the law. The employee may also be requested to provide medical recertification at various interval s. (6) (7) Eligible employees may be required to complete medical certification forms that verify the employee's fitness for duty and ability to actively resume employment. Completed forms miich be provided to their supervisors before employees will be permitted to return to worl:. 'I ic Town reserves the right to request additional medical documentation or require a fitness-for-duty examination, as may be necessary and consistent with applicable laws. 0 (S) When requesting family medical leave,the employee should state which type of accruecl 1 cave to be utilized, if any. Although not required to do so, an employee on FMLA, shal l '.,c �i llowed to use accrued sick leave for the duration, and may use any accrued personal and , 1 ion leave if sick leave is exhausted, for a total of twelve weeks. An employee recl f accrued ]cave to care for a family member shall be approved to utilize accrued sick leave i�1,i- the first 30 days, or six weeks, and shall be pro-rated one day of vacation or personal leave fu r each additional week of leave requested. The other four days may continue to be deducted from accrued sick leave. Usage of leave under FMLA excludes application to sick leav(, hauAs. (") (9) The Town of North Andover will continue the employee's health benefits cove. s during leave. If the Employee is in a paid status during all or part of the FMLA leave per o', employee contributions for continued medical benefits at the regular employee rate will be (I tc!ed. For any period of FMLA leave where the employee is in an unpaid status,the emp is;cc can continue medical insurance coverage by making timely payments at the employee contri . ti on rate. The employee will continue to accrue holiday, vacation and sick leave credits durin g l�a i d leave. In the event that the employee exhausts all accrued leave, there will be no fitrtbcr .•ccrual of holiday, sicl: or vacation leave. Seniority,however, will accrue during the entitled to be restored to the r., same or an such leave is e tel � . ..i. ��leave. An employee taking eq.: !c position as held by the employee when the leave commenced, the same status,pay, an , 1 of service credit, and will be entitled to any other benefits the employee would have acc. ,! ! !�. d he/she not taken family leave. (10) So that an employee's return to work can be properly scheduled, an employee on Evil l _.�,,c is requested to provide the Town with at least two (2) day advance notice of the & intends to return ,o work. An employee who has notified the Town of his/her intent to 1111 FMLA leave will be reinstated to the same or an equivalent position upon her re liployment,with the same status,pay, length of service credit and seniority as the pc ,i, ,, 2employee held prior to the leave. If an employee's job was changed temporarily becaWc o leer pregnancy prior to leave (e.g.,her hours were reduced or her duties were changed as .m :.(c� i lmodation), she wi Il be restored to the same or similar position held prior to such te. cliange, as possibl If an employee fails to report to work promptly at the end of the FIT, c, the Town will ;,ssume that the employee has voluntarily resigned. a ) (]]) The Town may designate extended leave as Family Medical Leave,when api.,: Nothing in this policy shall be construed to conflict with either the federal Family and cal Leave Act or the Massachusetts Maternity Leave Act(MGL, c149, §105D). I I L ' COMMUNITY DEVELOPMENT DIVISION MEMORANDUM I TO: Mark Rees,Town Manager FROM: Curt Bellavance, Director Bruce Thibodeau, DPW Director DATE: December 2, 2009 SUBJ: Update on Recent Grant Opportunities The following grant opportunities are available: 1. Clean Energy Choice funds Our office has filed an application to access the Clean Energy Choice funds to support a solar/photo voltaic project on the roof of the high school. The grant request is for$16,576. STATUS: Applied for$16,500 to install a 2 Kw solar array at High School. 2. Collins Grant The Edward J. Collins,Jr. Center for Public Management is pleased to announce a program to facilitate the provision of grant writing assistance to municipalities that are seeking competitive grants from programs funded by the American Recovery and Reinvestment Act. This service is being provided free of charge to local governments. The Center has designed a simple process for municipalities to follow to secure grant writing assistance. The process consists of 4 steps: • Identify a project and point person • Contact Michael Herbert at 617-287-7486 or VNch eLherb u1008 @�mb,egdU • Center will discuss the proposed project to ascertain if eligible • Center will refer the municipality to Regional Planning Agency, who will actually provide the grant writing assistance. STATUS: In process and working with Collins Center 3. Energy Efficiency and Conservation Block Grant(EECBGI The Energy Efficiency and Conservation Block Grant (EECBGi) have various grants available with approximately$42,200,000(See below for each sub-group amount). The grants are available to support the development of projects that will reduce municipal energy use and greenhouse gas emissions. For Communities with less than 35,000 people the following grants are available: 1600 Osgood Street,North Andover,Mossadiusetts 01845 Ykt,., 070 400 OK 91 P:.„d 070 100 OCAS W.1 � Competitive Grants up to$150,000 • Solar pv(applying for this particular grant) • Other clean technology • Performance contract buy-downs • Thermal Conservation measures for all oil or propane heated buildings � STATUS: Applying for grant|n order to expand the solar array at high school. |f grant is awarded,size of solar array could be increased from% Kvvtm2OKw. � Owner's Agent Technical Assistance-$825,000 • All cities and towns eligible • Awards provided in the form of services capped Gt a value of$5O,000 • Owners agents will be contracted to DOER through gcompetitive solicitation and provided to municipalities for: */ Renewable Energy projects */ Performance Contract projects ~y DEADLINE is 12/7/09at5prn � STATUS: Program established in order to create third party power agreements. Approval mf third party power agreement would need Town Meeting approval which cannot be completed by grant deadline of December 7, 20O9. Building Inspector Training for Stretch Code and Energy Code-$175,000 • Free training for all municipal building inspectors • State is currently selecting firm to do training • Communities will be notified of training sessions STATUS: State and/or Regional Agency will hold training courses on a regional level. � Energy Information Reporting System-$700,000 • Web based energy management system tOtrack energy use and GHG emissions in municipal buildings (including schools), vehicles, street lights and traffic lights • Funding will allow for more training and a shorter implementation period • Communities will be notified of this opportunity. STATUS: The Town Sustainability Committee is working with Peregrine Energy Group to develop a system;funding provided through Clean Energy Choice. 4. Recovery Zone Economic Development Bonds($23,084,000 for Essex County) This was authorized for the purpose of financing public infrastructure and facilities, and capital expenditures on property in Recovery Zones. RZEDBs are not available to finance privately owned or used projects.TheRZED8isa taxable bond for which the federal government will reimburse the issuing municipality for 45 percent of the interest paid, resulting in a borrowing cost which should be competitive or superior to tax-exempt bonds. The NZEDB Program im available to municipalities that are located within a Recovery Zone and have public infrastructure projects inoupportofeconomn|c development. Activities may include capital investments in public projects, pub||cinhastructure projects, and for job training and education,as it relates to economic development. 1600 Osgood Street,Morth Andover,MossUdhuaeUs 01845 � mk.°" mru/wmuCnI r°" 070 400 mCxn w.k ....^.,^°..~.�.^.+�.~�..",,"� � � Allowable Uses: • Construction or improvement of public infrastructure and public facilities that will promote development or other economic activity in the Recovery Zone. • Site remediation or site preparation activities necessary to advance the public infrastructure project. • Eligible infrastructure includes, but is not limited to:sewers, utility extensions, streets, roads, � curb-cuts, parking facilities,and water treatment systems. � Eligible Projects: An eligible public project must show that it: • Promotes development or economic activity • Is"shovel ready"and eligible tn commence construction within 12O days(i.e.design and permitting are complete or nearly complete) • Supports the creation or retention offu||tirne jobs Preference will be given to projects that: • Have a significant regional or statewide economic benefit • Have secured municipal approval for bond authorization prior 8w application � � • Are reasonably likely to result in the commitment of private investment • Further one or more of the following objectives: • Support job creation ln key Massachusetts industry sectors • Support the creation of new workforce housing • Support clean energy production oruse • Reduce energy consumption and/or greenhouse gas emissions • Promote mobility and/or reduce congestion • Support development within Growth Districts • Support redevelopment projects inGatevvayP|uucities • Support other smart growth development p 'ects � ^ � STATUS: The Community Development Office and Department of Public Works identified the Osgood Street/Route 125 sewer project as the most likely candidate toreceive grant funding. The grant isa rolling grant which is now available. Project should create jobs and be "shovel ready". The Bond must b$awarded by January 1, 2O11, which makes the project timnesenoitiveanddependentwnTnvvn Meeting approval. * Recovery Zone Facility Bonds($34,62S,000) Facility Bonds may be issued toqualified businesses (except residential mental and categorically excluded uses such as massage parlors) located in recovery zones for construction, renovation, reconstruction or acquisition of property after the designation of the recovery zone. The original use of the property has io commence with the taxpayer and substantially all of that use has to occur within the recovery zone. &1asmDeveloprneVt,the State's economic development authority, will issue the RZF8S as tax-exempt "conduit" bonds, for which the private projects will be solely responsible for debt service. Facility bonds can be used for depreciable capital projects (e.g., 6ui|dings and equipment). � Construction, renovation, reconstruction of Recovery Zone Property defined as depreciable property used in the active conduct ofa qualified business(excluding certain prohibited activities such as gambling,golf courses or country clubs) |60V Osgood Street,North Andover,Massachusetts 01845 mk.~^ ornuomnm/ c., 070 xm*oCxv w". ......... � | | w Commercial real estate and equipment are both eligible as Recovery Zone Property � Other Considerations: � • Rental housing is not gnallowable use • The original use of the property in the Recovery Zone must commence with the borrower � • Substantially all of the use of the property has to occur within the Recovery Zone � Eligible Projects: An eligible project must show that it: • Promotes development or economic activity • Is"shovel ready"and eligible to commence construction within 120 days(i.e. design and permitting are complete or nearly complete) • Can demonstrate the availability of private capital to purchase ur back the bonds • Supports the creation or retention offu||dnnejobs Preference will be given to proiects that: • Have a significant regional or statewide economic benefit • Have the support of the municipality in which the project|s|ocated • Further one or more of the following objectives: °/ Support job creation in key Massachusetts industry sectors ~/ Support clean energy production mruse */ Reduce energy consumption and/or greenhouse gas emissions °/ Promote mobility and/or reduce congestion • Support development within Growth Districts *~ Support redevelopment projects|nGotexxayP|usdtieu v' Support other smart growth development projects STATUS: This ism private bond program. The Community Development Office has already begun tm speak about the program and its benefits with several potential business owners interested in expanding. Our office will continue to promote the Facility Bonds program to North Andover businesses via phone calls,emnai|s, meetings, etc. The Selectmen may he called upon to show support ofa particular project inthgfuture;TovvnsupportvVou|dbecritica|. � 1600 Osgood Street,North Andover,Massachusetts 01845 � oI^.. 070 400oml c-. 070 400 uCm mW. ......+~..^:.^��°^�"...~~ TOWN OF NORTH ANDOVER OFFICE OF BOARD OF SELECTMEN 120 MAIN STREET NORTH ANDOVER, MASSACHUSETTS 01845 pORTH ,.4 ;a sh Tracy M. Watson,Chairman TEL. (978)688-9510 3a 4..,,_ ._� ' °L William F. Gordon o a FAX(978)688-9556 Daniel P.Lanen Richard A.Nardella `y9,°R^r.°';, y* Rosemary Connelly Smedile "ssgCHU t, A F T Town of North Andover Board of Selectmen —Meeting Schedule January through June 2010 Monday, January 11, 2010 Monday, January 25, 2010 Monday, February 8, 2010 Monday, February 22, 2010 Monday, March 8, 2010 Monday, March 22, 2010 Monday, April 12, 2010 Monday, April 26, 2010 Monday, May 10, 2010 Tuesday, May 11, 2010—Annual Town Meeting Monday, May 24, 2010 Monday, June 7, 2010 i Monday, June 21, 2010 Please note all meetings begin at 7:00 P.M. at Town Hall, 120 Main Street, Meeting Room, 2nd Floor, North Andover. A notice will be posted at Town Hall, and the Town of North Andover Website under the Municipal Calendar Section and the Public Notice Section. The Chair may call additional meetings if necessary. If you have any questions, please contact Adele J. Johnson at 978-688-9510 or e-mail at tmsecretary@townofnorthandover.com `�`„„ 2010 1� r M, r JANUARY IMPORTANT DATES JULY r' , JANUARY S M T W T F S ,% t S M T W T i, `1it1r 1(fb F S ( 46,0,,��2 w. FEBRUARY 1 2 3 3 4 5 6 7 8 9 5 Anniversary of the Constitution(M) 4 5 6 7 8 9 10 10 Q1, 12 13 14 15 16 14 v lentine's Day ay(us) 11 12 13 14 15 16 17 i c .C..u.,� .� _.. 17 19 20 21 22 23 14 Lunar New Year 18 19 20 21 22 23 24 24 6 27 28 29 30 "1-5"'"Easstteern o od x�Le) ` nt begins 25 26 27 28 29 30 31 ,,;� ' to („ 17Y,L-I a,,t m 31 17 Ash Wednesday 22 Washington's Birthday(US) FEBRUARY MARCH Day(M) 76 L4 Lae r1 P, S M TIN T F S 14 Daylight Saving Time begins AUGUST 17 St.Patrick's Day 20 Spring begins S M T W T F S 6� 1 2 3 4 5 6 21 Benito Juarez'Birthday(M) 1 2 3 4 5 6 7 7 �8" 9 10 11 12 13 28 Palm Sunday 8 9 10 11 12 13 14 - IL �S 14 ' 17 18 19 20 3o Passover' APRIL 15 16 17 18 19 20 21 21 �', 23 24 25 26 27 4„ d Friday _ . 22 23 24 25 26 27 28 28 4 Eastern Orthodox Easter 29 30 31 5 Easter Monday(C) 11 Holocaust Remembrance Day 21 Administrative Professionals Day(C,US) MARCH MAY Labor Day(M) SEPTEMBER S M T W T F S 5 Battle of Puebla(M) S M T W T F S 9 Mother's Day(C,US) 1 2 3 4 5 6 10 Mother's Day(M) 1 2 3 4 7 (1) 9 10 11 12 13 15 Armed Forces Day(US) 5 6 7 8 9 10 11 24 Victoria Q I 14 1 16 17 18 19 20ewfk6#rrve&(0y 12 13 14 15 16 17 18 21 23 24 25 26 27 JUNE 19 20 21 22 23 24 25 28 29 13 31 20 Father's'syDay) 26 27 28 29 30 21 Summer begins 24 St.Jean Baptiste(Ou6bec) JULY APRIL 1 Canada Day OCTOBER 4 Independence Day(US) S M T W T F S AZ GUSc Holiday(C) S M T W T F S 1 2 3 11 First of Ramadan 1 2 40 5 6 7 8 9 10 SEPTEMBER 3 4 5 6 7 8 9 6 Labor Day Hashanah' 10 11 12 13 14 15 16 11 12�13 14 15 16 17 s Rosh Hashanah• 18 ` ' 0 21 22” "3 24 1 PatriotlDay(US) 17 18 19 20 21 22 23 25 26.E 27 28 29 30 15 Declaration of Independence(M) 24 25 26 27 28 29 30 16 Independence Day(M) 31 18 Yom Kippur' 23 Autumn begins MAY OCTOBER NOVEMBER 11 Columbus Day,Observed(US) S M T W T F S 12 Day of theiRace(M) S M T W T F S 1 16 National Boss Day(US) 1 2 3 4 5 6 2 3 4 5 6 7 8 31 Halloweentions Day 7 8 9 10 11 12 13 9 C 41 12 13 14 15 NOVEMBER 14 15 16 17 18 19 20 16 17 18 19 20 21 22 1 All Saints Day(M) 21 22 23 24 25 26 27 2 Day of the Dead(M) 23 )25 26 27 28 29 2 Election Day(US) 28 29 30 30 4 7 Daylight Saving Time ends 11 Veterans Day(US) 11 Remembrance Day(C) JUNE 16 (Eid)al Adha 20 Revolution Anniversary(M) DECEMBER S M T W T F S DECEMBER iving(US) S M T W T F S 1 2 3 4 5 2 Hanukkah' 1 2 3 4 6 7) 8 9 10 11 12 7 Fierst of Mbuharrrramembrance Day(US) 5 6 7 8 9 10 11 13 14 15 16 17 18 19 12 Virgin of Guadalupe(M) 12 13 14 15 16 17 18 20 1 22 23 24 25 26 26 1 Wintery begins 19 20 21 22 23 24 25 27 28 29 30 25 Christmas 26 27 28 29 30 31 26 Boxing Day(C) 26 Kwanzaa begins