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2002-10-11 GERALD A. VERGILIS* KENNETH M. STENGER ALBERT P. ROBERTS LOUIS J. VIGLOTTI JOAN F. GARRETT** THOMAS R. DAVIS VERGILIS, STENGER, ROBERTS, PERGAMENT & VIGLOTTI, LLP ATTORNEYS AND COUNSELORS AT LAW,",";\.. .' J"")/lQ\ E'L _ [j 7 7.).. 1136 ROUTE 9 !.JuC:]/'{7"-/ t1'-L--' WAPPINGERS FALLS, NEW YORK 12590 (845) 298-2000 FAX (845) 298-2842 Gel" f"jC . ') 1. ~~; Lt. -.,. OF COUNSEL: IRA A. PERGAMENT LEGAL ASSISTANTS: AMY E. DECARLO LISA MARTELL e-mail: VSRP@BestWelutel ~,~ ~. ;!&,{,;.; . ''I ~ PHILIP GIAMPORTONE KAREN P. MACNISH ~',', --j-':-' \ ."y. i, ISl..r\':) ...1-. H. :>..H " \\JtOPINi~;: "I '-"f'I..!l'.' ~ )1- " ..: I, ~. 0.. ~, .; -'i I ~ ~- POUGHKEEPSIE OFFICE 276 MAIN MALL POUGHKEEPSIE. NY 12601 (845) 452-1046 * ADM1Tl'ED TO PRACTICE IN NY & FLA. **ADM1Tl'ED TO PRACTICE IN NY & CONN. ADDRESS REPLY TO: ( ) POUGHKEEPSIE ( ) WAPPINGERS October 11, 2002 Sedore & Company, CPA's, P.C. P.O. Box 918 62 East Main Street Wappingers Falls, New York 12590 Attention: James L. Sedore, Jr., CPA Re: Town of Wappinger Pending or Threatened Litigation File No. 12951.0060 Dear Mr. Sedore: Pursuant to the letter request dated April 15, 2002, from Joseph Ruggiero, Supervisor of the Town of Wappinger, the following is the status of material Pending or Threatened Litigation, Claims and Assessments against the Town of Wappinger, as known to the best of my knowledge through October 1,2002. . Please be advised that the undersigned was originally appointed attorney to the Town of Wappinger, effective January 1, 1990, and has been subsequently reappointed yearly thereafter until present. PENDING OR THREATENED LITIGATION (Excluding Unasserted Claims and Assessments): I am pleased to report that as of December 31,2001, there were no material Pending or Threatened Litigation which the Town of Wappinger is a named party, except for miscellaneous tort actions and Tax Certiorari actions. With respect to miscellaneous tort actions, there are a number of claims pending against the Town which are defended by 1 0:\ W APPING E\ Town Board\PendingLitigation(.0060)\ I 00802.doc the Town's insurance carrier. The undersigned is not familiar with the number, the nature, or the status of any of these actions, or their probability of success. With respect to Tax Certiorari actions, please be advised that the Town has retained Emanuel F. Saris, Esq. to defend those actions on behalf of the Town and I am advised that Mr. Saris will be sending a separate letter with respect to same. Alpine Improvements, LLC v. Town of Wappinger (Challenging Benefit Assessment): I must, however, report in May 2002, the Town of Wappinger was sued by Alpine Improvements, LLC. The nature of the suit was to challenge the Benefit Assessment Formula for the Tri-Municipal Sewer Transmission! Treatment Improvement Area Phase 3A Improvements, an Improvement Area created pursuant to Article 12-c of the Town Law. It is important to note that this is an Article 12-c Improvement Area, as opposed to a Sewer District which can be established pursuant to Article 12 or 12-a of the Town Law. Article 12-c permits a Town to make water or sewer improvements and charge the costs thereof to: 1. the properties or parcels benefited; 2. partially to the parcels benefited and partially Town-wide; 3. Town-wide. The Town has determined that only the properties benefited will pay for the costs of improvements. The benefit formula adopted by the Town first requires that the assessed valuation of all properties in the Improvement Area be totaled. The total assessment is then pro-rated between Residential Properties and Industrial, Commercial and Institutional Properties. Benefit Units are then assigned Residential Properties as follows: . House with up to two (2) acres . One Vacant Lot up to two (2) acres . Vacant Land over two (2) acres = 1 Benefit Unit 0.8 of a Benefit Unit 0.2 of a Benefit Unit = Once Residential Property Benefit Units are determined, then the number ofIndustrial, Commercial and Institutional Benefit Units are extrapolated; the number of resulting Industrial, Commercial and Institutional Benefit Units are then pro-rated based on the assessed values of the Industrial, Commercial and Institutional Properties. Using the aforementioned fommla, Alpine's allegation is that the benefit to them is so disproportionate as to render the formula unconsciousable. 2 0:\ W APPINGE\ Town Board\PendingLitigation( .0060)\ I 00802.doc Alpine is the owner of the BJ's/ Stop & Shop Shopping Center on Route 9. Its benefit assessment approximates $127,037 a year for capital charges (exclusive of quarterly Operation and Maintenance charges). There is considerable legal precedent supporting a Town's authority to determine the methodology for charging back the costs of an Improvement Area. In addition, 12-c Improvements can be levied on the basis of either Benefit Units or Ad Valorem levies. Concededly, the Town's methodology is a hybrid with Benefits Units established for Residential users and assessed values used to allocate an equivalent number of Residential Benefit Units for Industrial, Commercial and Institutional users. It must be noted the costs to the Industrial, Commercial and Institutional users are essentially the same as if the entire Improvement Area was assessed on an Ad Valorem basis. Benefit Assessments charged to the Improvement Districts have recently been the subject of much litigation. The Court of Appeals in the Garden Homes decision (1995 N.Y.S.2d 516; 720 N.Y.S.2d 779) recently overturned decades of precedent by requiring a municipality to notify (mail) property owners of pending benefit assessment charges. Fortunately, last year notices were sent to all affected property owners, including Alpine. I do not know where this lawsuit could ultimately lead because Section 247 of the Town Law provides that if any such benefit assessment is held invalid or illegal, then the Town Board shall make a new assessment in the manner provided for by the original apportionment or, if such new assessment can not be legally made, then the Town Board shall assess such lands in proportion to the benefit each parcel will derive from the improvement. I might add that the subject benefit formula has been utilized by the Town in all of its water and sewer improvements for over thirty years. This particular formula was specifically identified in the Petition to Audit and Control for permission to establish the Phase 3A Improvement (as was done in the Phase 1 and 2 Improvements). While I do not believe that Alpine can be completely successful (if at all) in this litigation, any reduction in their Benefit Assessments will result in a corresponding increase to the other properties within the Improvement Area. Joseph Boyce v. Town of Wappinger (Notice of Claim): I also must report that a Notice of Claim has been filed against the Town of Wappinger by Joseph Boyce. Mr. Boyce has, in effect, alleged selective enforcement of the Town Zoning Code when the Town commenced enforcement proceedings against him for failure to obtain an Amended Site Plan Approval. This claim is being handled by the Town's insurance carrier, however based on the information supplied to me, it is unlikely that this action will have an unfavorable outcome against the Town. 3 0:1 W APPINGEIT OWl"! BoardIPcndingLltigation(.0060)\ 1 00802.doc UNASSERTED CLAIMS AND ASSESSMENTS: The undersigned knows of no unasserted claims or assessments considered to be probable of assertion and! or if asserted, would have a possibility of an unfavorable material outcome. However, in the course of performing legal duties for the Town of Wappinger with respect to a matter recognized to involve an unasserted possible claim or assessment that may call for financial statement disclosure, and I have formed a professional conclusion that the Town should disclose or consider disclosure concerning such possible claim or assessment, as a matter of professional responsibility to the Town of Wappinger, I will so advise the Town and will consult with the Town concerning the question of such disclosure and the applicable requirements of Statement of Financial Accounting Standards No.5. There are no other potential liabilities or loss contingencies that are required to be disclosed or accrued in the financial statements, other than the abovementioned matters. There are no other potential liabilities or loss contingencies that are required to be disclosed or accrued in the financial statements. All contingent liabilities set forth above are as of the date of this correspondence. The scope ofthis letter includes litigation commenced against the Town to present, except as noted above. To the best of the knowledge of the undersigned, there are no actions that have been commenced against the Town, or threatened to be commenced the Town, nor are there any actions pending which would subject the Town to any monetary payment or financial loss. Very truly yours, VERGILIS, STENGER, ROBERTS, PERGAMENT & VIGLOTTI, LLP ''//0/ "".-~/~ .~~/ ~ AL~~T p~ - .. APRlbg cc: Hon. Joseph Ruggiero, Supervisor Thomas Rothman, Esq. 4 0:\ W APPING E\ Town Board\PendingLitigation(,0060)\ I 00802 ,doc .. ........ ...,., Materials Requested for Audit Date ALL FUNDS: DATE RECEIVED 1. List of all bank accounts and/or investments in the name of the Town of Wappin~er - List of new accounts during year. 2. Copy of 12/31/01 bank reconciliations for all bank accounts including Town Justice Courts and Town Clerk. Have January 2002 bank statements and canceled checks available. 3. Schedule of Due To/Due From Other Funds at 12/31/01. 4. Schedule of Interfund Transfers for all Funds at 12/31/01. 5. Copy of adopted budget and most current modified budget for year ended 12/31/01. 6. Copy of NYS Annual Update Document. 7. Copy of 941 's, W-3, WT-4B, prepared for 2001 with reconciliation to .1 accounts. Have 1099s issued for 2001 available. 7a. Master list of Town employees and pay rate. 8. Copy of any new and/or revised financial policies, i.e. regarding investments or procurement; also new/revised personnel policies, including updates to the deferred compensation plan. 9. Copy of any new and/or revised contracts and/or leases covering employees, unions, services or purchases. 10. List of first and last check numbers for all disbursement accounts. 11. Have vendor payments to date(for 2001 year) report available. 12. Schedule of leases with total expenditures for year. 13. Copy of 2001 trial balance with 2001 year-to-date general ledger available. 1 '-' "WI DATE RECEIVED GENERAL FUND: 14. Schedule of receivables: Accounts, and Federal and State as of 12/31/01. Have January and February 2002 cash receipts available. 15. Schedule of Accounts Payable at 12/31/01. Have January and February 2002 check registers available. 16. Schedule of Accrued Salaries at 12/31/01, if any. Include calculation and documentation. . 17. Schedule of Accrued Liabilities at 12/31/01, if any. Include calculation and documentation. 18. Schedule of Deferred Revenue at 12/31/01, if any. Include calculation and documentation. 19. Copy of 2001 Tax Warrant with breakdown of taxes by fund. Include documentation of chargebacks, and copy of Collector's settlement with Dutchess Co. 20. Copy of Town Clerk's monthly report for 12/01 ; Copy of Town Justice Court NYS report for 12/01; Copy of financial reports submitted to the Town Board by any other departments.. 21. Schedule of Encumbrances at 12/31/01 and supporting documents. . 22. Schedule of Prepaid Expense at 12/31/01, if any. 23. Copy of voucher and invoice for retirement system billing. WATER DISTRICTS: 24. Schedule of Water Rents Receivable as of 12/31/01 - all districts. 25. Reconciliation of Water Rent Revenue (billings and collections) schedule to trial balance for 2001. 2 '-" ., DATE RECEIVED 26. Copy of combining trial balance and modified budget, detailed and reconciled to A UD. 27. Schedule of Accounts Payable, Accrued Liabilities, and Accrued Payroll as of 12/31/01, as above. SEWER FUND: 28. Schedule of Sewer Rents Receivable at 12/31/01. 29. Reconciliation of Sewer Rent Revenue (billings and collections) schedule to trial balance for 2000. 30. Copy of combining trial balance and modified budget. 31. Schedule of Accounts Payable, Accrued Liabilities, & Accrued Payroll at 12/31/01. LONG TERM DEBT ACCOUNT GROUP: 32. Schedule of transactions for year: a) Copies of any new issuances during year; b) Copy of debt service schedule for new issuances; c) Reconciliation of principal and interest paid by fund and by Issue. 33. Reference item (9) terms of any new or modified leases. 34. Schedule of compensated absences. 35. Schedule of principal and interest payments for each of the next five years and thereafter. 3 '-' .... DATE RECEIVED FIXED ASSET ACCOUNT GROUP: 36. Schedule of additions and/or disposals for year (Cost over $500 and have a useful life of greater than one year). 37. Asset Valuation Report at 12/31/01. TRUST AND AGENCY: 38. Payroll Liability accounts - copy of payroll showing liability and copy of voucher/check showing payment. 39. Other Agency Liabilities - Schedule of balances and analysis of receipts and collections. (Escrow accounts; Guarantee & Bid deposits) 40.. Trust Liabilities - Schedule showing prior year balance, current transactions and current balance. CAPITAL PROJECTS: 41. Schedule of Accounts Payable and Retainage Payable at 12/31/01. Have January and February 2001 check registers available, as above. 42. Schedule of BANs Payable, including copy of authorizing resolution and BAN certificate for new and renewal notes. 43. Combining trial balance reconciled to ADD. 44. List of draw-downs for various projects. MISCELLANEOUS: 45. Joint Ventures - copy of current year financial statement, copy of any new /modifications of contract. 4