August 2, 2006

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					                            TEAHAN & CONSTANTINO
Vincent L. Teahan                    COUNSELLORS AT LAW                 MILLBROOK OFFICE
James P. Constantino                 2780 SOUTH ROAD                        41 Front Street,
Marilyn D. Berson                       P.O. BOX 1969                        PO BOX 1181
Richard I. Cantor             POUGHKEEPSIE, NEW YORK 12601-0969           Millbrook, NY 12545
Stephen C. F. Diamond                   (845) 452-1834                     Tel (845) 677-2101
Stephen M. Friedberg                Fax (845) 452-1421                    Fax (845) 677-1054
Ann Gifford
Eliot D. Hawkins              E-Mail:

August 2, 2006

Supervisor Beth Coursen and Members of the Town Board
Town of Pawling
160 Charles Colman Blvd.
 Pawling, NY 12564

         Re: Formation of Whaley Lake Dam Improvement District

Dear Supervisor Coursen and Members of the Town Board:

        I write to report on the status of district formation proceedings as well as to follow
up to the public hearing held on July 5, 2006.

         Next Steps

       The public hearing was closed on July 5th, although the record remained open to
receive written public comment until July 19, 2006. The Town Clerk received one
written statement, which will be provided to the Board at its August 2nd meeting. The
individual raised issues and questions similar to those raised at the public hearing. All
comments are addressed below under “Public Hearing.”

      The Board will be presented with the following Resolutions and Orders at its
August 8, 2006 meeting for vote:

              1. Resolution Declaring itself Lead Agency for purposes of SEQRA Review
                 and Adopting a Negative Declaration – Only DEC responded to the Lead
                 Agency Letter and it consented to the Town Board acting as Lead
                 Agency; Letters also were sent to the NYS Department of Transportation
                 (DOT), State Comptroller and U. S. Army Corps of Engineers (ACOE).

              2. Order Approving the District Subject to Mandatory Referendum Vote –
                 To approve the District, the following findings must be made:
                                                               Supervisor Beth Coursen and
                                                               Members of the Town Board
                                                                            August 2, 2006
                                                                                    Page 2

               a) The notices of public hearing were published, posted and mailed as
                  required by law, and are otherwise sufficient;

               b) All of the property and property owners within the proposed
                  District are benefited thereby;

               c) All of the property and property owners benefited are included within
                  the proposed District; and

               d) It is in the public interest to establish the proposed District
                  pursuant to Section 209-d of the Town Law.

            3. Resolution Scheduling the Vote, Stating the Ballot Question, Providing
               for Registration for District Vote and Appointing Election Inspectors to
               Conduct the Registration and Vote – This Resolution must include the
               date of the vote, the dates and place of personal registration and the
               names of the election inspectors.

        Assuming the above Resolutions and Orders are adopted, the vote will be held on
Saturday, October 7, 2006. If the proposition is approved by a majority of those who
vote, the Town Board must adopt one further Final Order establishing the District. That
Order is filed with the County Clerk and Comptroller’s Office. The District is then
officially formed. The Comptroller’s office has agreed that its approval of the formation
of the District is not required.

       Registration and Voting

        I am attaching a handout that has been prepared for district owners regarding the
registration and voting procedures.

        Town Law governs voter registration and absentee ballots in special town
elections. Registration is optional, at the Town Board’s discretion, but if registration is
required, all voters must personally register.

        The benefits to registration are two-fold. First, it allows the Town, before the
election, to clarify who is able to vote. This should avoid delays and confusion on the day
of the vote and later challenges. For example, Town records may not reflect a recent sale
of a property or may show only one record owner. The new property owner or all
                                                              Supervisor Beth Coursen and
                                                              Members of the Town Board
                                                                           August 2, 2006
                                                                                   Page 3

property owners would be able to come in and register and then vote without a problem.
If a corporation owns the property, the individual authorized by the corporation to vote
will be listed on the registration. Second, personal registration is required if absentee
ballots are going to be available. Without registration, absentee ballots are not allowed
under Town Law.

       The downside of registration is that it requires all voters to personally register
before the election. It also entails appointing a registration board and paying the board

       The procedures for registration would be as follows:

   a) Every qualified elector who wishes to vote must register in person.

   b) The registration is with a board of registration appointed by the Town Board. The
      board of registration must consist of 2-4 individuals who are chosen by the Town
      Board from the list of election inspectors for general election purposes. The
      inspectors must get paid at a rate set by the Town Board.

   c) The resolution of the Town Board establishing the registration board must
      establish days when registration can be done. The last day of registration must be
      not more than 15 nor less than 10 days before the date of the special town
      election. It must be held wherever the voting in the special election is going to
      occur. Registration must be for at least 4 consecutive hours between 12 o’clock
      noon and nine o’clock in the evening on each day of registration.

   d) Generally, the registration would consist of the following –

       i) The Town Clerk would provide, from the resolution creating the district,
          Exhibit A, the list of property addresses in the proposed district, with the
          names of the record owners and their addresses.

       ii) Property owners would appear and if their name is listed, sign the register.

       iii) Property owners, whose names are not listed, would have to show proof of
            ownership (such as a deed).

       iv) Corporate officer or agent would have to provide a certified resolution
           showing that s/he is the authorized voter.
                                                              Supervisor Beth Coursen and
                                                              Members of the Town Board
                                                                           August 2, 2006
                                                                                   Page 4

       v) The register is returned to the Town Clerk after each registration session and
          must be available to the public for review.

        Absentee ballot requests can be completed at registration and the absentee ballot
provided to the individual there or if the inspectors have any questions, it can be mailed
thereafter to the voter.

       Map, Plan and Report

       At the August 8th meeting, there will be some minor changes to the Map, Plan
and Report presented. None are of a substantive nature so as to require any new period
for public review or comment. They are to correct some typographical errors, to edit
some language, and to make a few corrections to owner information in response to the
Question of Accuracy forms submitted to the Town Clerk.

       Public Hearing

        Thirteen individuals provided comments to the Board at the July 5th hearing.
Six of the speakers supported establishment of the District. Seven of the speakers raised
issues or questions that were addressed by the Town’s consultants on this project, as well
as members of the District Formation Committee (“Committee”), after the hearing
concluded, at the Questions/Answers Session. As noted above, one individual submitted
written comments and questions to the Board after the hearing was closed but while the
comment period still was open.

    The questions and issues raised are set forth below, with a summary of the response.
Where questions are related and/or one answer addresses the questions, they are grouped

   1. Why is New York State not responsible for the lake? It stocked the lake with
      fish in the past and provided public access to the lake. Why is the Town not
      responsible for the lake? Why can’t the Town fund the improvements? Why
      is Whaley Lake deemed a private lake?

       Neither New York State nor the Town can fund improvements to the lake unless
       they have an ownership interest and can establish that there is some public
       purpose served by expending their funds for this purpose. The public purpose
       would primarily arise if the public had access to the lake. Since it does not, there
                                                           Supervisor Beth Coursen and
                                                           Members of the Town Board
                                                                        August 2, 2006
                                                                                Page 5

   is no public purpose that appears to be served by the dam improvement.
   Moreover, even if there were public use, the State and/or Town would have to be
   willing to fund the improvements. It is unlikely that owners of property around
   the lake could legally compel either to fund the dam improvements.

   In terms of ownership, the Town has no ownership interest. It does not hold title
   to any parcel in the area of the lake that has legal access to the lake. Nor does the
   law grant the Town an ownership interest simply because the lake sits in the
   Town. Even if it had an ownership interest, to expend general Town funds, the
   public interest would still have to be served.

   The law provides that the State is deemed the owner of a body of water only if it
   is what is called “navigable in fact.” That means, in simplistic terms, that it is like
   a public highway. It serves the public as a means for transportation, for
   commercial or private use.

   If the body of water is not navigable-in-fact, it is presumed to be the private
   property of the adjacent landowner. The landowners are not only deemed to have
   rights of access to and use of the lake, but also they are deemed to hold title to
   the center of the lake, unless there is a contrary expression in the deed.

   Based upon this law, ownership of the lake is in the private landowners who own
   parcels adjacent to the lake. Since there is no ownership interest on the part of the
   State or Town, neither can expend funds, unless a municipal purpose, which has
   been defined as “something necessary for the common good and general welfare
   of the people of the municipality,” has been established.

   Finally, the proposed district includes not only those parcels that front the lake,
   but also those with legal rights to access, since both benefit from the dam

2. What is the purpose of forming the district? What is the guarantee that only
   dam repair and maintenance will be funded and that the district will not
   engage in other projects related to the lake?

   The State has adopted special legislation to authorize the creation of the district.
   That law, a copy of which is annexed, is specific that the purpose of the district is
   “for the repair, construction, reconstruction and maintenance of the Whaley Lake
   Dam within such district so as to prevent dam failure or dam breach, for the
   repair, construction, reconstruction and maintenance of the dam spillway in
   Whaley Lake and for the repair and/or replacement of Whaley Lake drain system
                                                         Supervisor Beth Coursen and
                                                         Members of the Town Board
                                                                      August 2, 2006
                                                                              Page 6

   and housing for the drain system.” The Map, Plan and Report includes the same
   limiting language regarding the purpose of the district. The orders and resolutions
   creating the district include the same limiting language. Thus, no other projects
   related to the work are authorized to be funded through the district. Any action by
   the Town, on behalf of the district, to fund other projects could be subject to legal
   challenge by the district owners.

3. What is the difference between the benefit assessment and the assessed value
   of the properties in the district?

   The assessed value of property is established by the Town Assessor, based upon
   the market value of the property. Taxes are paid based upon the assessed value of

   Pursuant to Town Law, a benefit assessment formula (BAF) must be in
   proportion, as nearly as possible, to the benefit that each lot or parcel will derive
   from the district and improvements. The formula could, but in this case does not
   take into account the assessed or market value.

   The Map, Plan and Report, and FAQ attached to this letter, include a detailed
   discussion of the BAF. The BAF has been recommended by the Town’s
   consultants on district formation, Zarecki & Associates, and myself, based upon
   input from the Whaley Lake Dam District Formation Committee, who did a
   thorough evaluation of various factors for use in the BAF.

4. Why is the MTA/MNRR not assessed any benefit units or costs for the

   Pursuant to Public Authorities Law § 1275 and court decisions interpreting that
   section of the law, the MTA is exempt from district assessments.

5. There is a “view tax” on Whaley Lake properties; why are those funds not
   being used for the improvements?

   An increase in assessment based upon view of the lake results in the payment of
   higher property taxes, as does any other increase in assessment. However,
   property taxes are part of the general fund of the Town and can only be used for
   general Town purposes. As discussed above, these funds cannot be used for
   district purposes.
                                                       Supervisor Beth Coursen and
                                                       Members of the Town Board
                                                                    August 2, 2006
                                                                            Page 7

6. What happens if the project costs more than the $2.5 million amount
   authorized to be expended?

   The Town Board, pursuant to Town Law § 209-h can vote to increase the amount,
   after a public hearing, but its approval is subject to permissive referendum. The
   Board also has the option to seek an increase subject to mandatory referendum, as
   it is doing with creation of the district.

7. Why isn’t the project going out to competitive bidding?

   The actual construction will be competitively bid, as required by New York State
   law. However, the work of the attorney (myself) and the engineer is not required
   to be bid, as they are professional services. When this project began, the Town
   Board did obtain proposals from us for the engineering and legal work. As work
   on the District progresses, assuming it is approved, the Town Board has the
   option of seeking proposals from several firms.

8. How can district owners ensure that their input continues as the district
   work progresses?

   Town Law has abolished Boards of Commissioners that previously had been
   empowered to administer districts. The Town Board now fulfills that function.
   However, the Town Board has authority under Town Law to establish advisory
   committees.    I strongly recommend that the Town Board establish such an
   advisory committee, if the District is approved. The mission and composition of
   that committee may differ somewhat from the present advisory committee. You
   may wish to seek recommendations from the existing advisory committee on
   appropriate people to serve on the new committee.

9. There is no documentation from DEC establishing that the dam poses an
   imminent threat and needs to be repaired in the manner set forth in the Map,
   Plan and Report. Why is this project then proceeding? (Answer provided by
   Zarecki & Associates)

   Quoting from the attached letter from Alon Dominitz, Chief of Dam Safety, in
   response to the District Committee’s request for clarification of the Whaley Lake
   dam situation, “A high-hazard dam with insufficient spilling capacity is a safety
   issue which must be resolved. In the absence of voluntary compliance…the
   Department will have no alternative but to initiate formal action to compel repair
   or removal of the Whaley Lake Dam.”
                                                        Supervisor Beth Coursen and
                                                        Members of the Town Board
                                                                     August 2, 2006
                                                                             Page 8

   In addition, DEC’s biannual field inspections that started in May 1994, indicated
   that there is a severe problem. Those inspections have raised several areas of
   concern. The items called into question range from seeping (piping) water found
   at the toe of the dam to inadequate spillway design volume and the failing
   structural aspects of the spillway seen during the inspections. The unknown
   condition of the outflow piping structure (valve housing) and the amount of
   sediment that has built up over the years on the heel side (lake side) of the dam
   raises the question not if the dam will fail but when. Other items of concern are
   the access way for maintenance, the over-growth from years of non-maintenance
   and the current design requirements, which the current conditions do not meet.

10. There have been two heavy rain events and no problems with the water level
   going over the dam. Doesn’t that indicate that the proposed work is
   unnecessary? (Answer provided by Zarecki & Associates)

   No. While the recent events that occurred in this area were equivalent to 100-year
   rains, this is not the worst that can occur. At the time Pawling was experiencing
   100-year rains, the area around Middletown in Orange County was experiencing
   500-year rains and Port Jervis, in fact, experienced severe flooding as a result.
   The recent storms that the Whaley Lake Dam has endured may have been large
   storm events, but that does not indicate that the dam conforms to DEC regulations
   and standards or that the dam is sound. The probable maximum flood (PMF)
   used in the dam analysis, as per state regulations and further described in the Dam
   restoration and rehabilitation study conduced in 2000 by Zarecki & Associates,
   leads to the conclusion that the existing spillway, if in pristine condition, would
   fail by roughly 20%. The existing spillway is not in pristine condition and the
   percentage of failure is higher. It is to prevent against such PMF occurrences that
   the dam needs to be repaired and upgraded.

   The purposes of the proposed dam repair and upgrade are to prevent against such
   PMF occurrences and to meet current design requirements. To wait will only
   increase the costs. Additionally it takes many years to complete the dam repair
   process (the Town already has been involved in this process for 9 years) and to
   wait until the dam is in a dangerous condition would not allow the repairs to take
   place in a timely fashion.

11. How does the district coordinate action with DEC? (Answer provided by
    Zarecki & Associates)

   During District formation, the engineers have been in regular communication with
   DEC’s Dam Safety division and have utilized DEC’s guidelines for design of
                                                           Supervisor Beth Coursen and
                                                           Members of the Town Board
                                                                        August 2, 2006
                                                                                Page 9

       dams and the federal guidelines for Dam safety requirements for conducting
       analyses and designing appropriate repairs. DEC will review and approve the
       final engineering design specifications before they are sent out for bid. DEC also
       will continue to conduct its biannual inspections of the dam.

       Question of Accuracy Forms

        Five Question of Accuracy Forms were submitted to the Town Clerk. I have sent
out responses to each owner (copies attached) and the changes will be incorporated into
the Map, Plan and Report and revised Exhibit A to the Resolution that will be presented
to the Board at the August 8th meeting.

                                            Yours truly,

                                            Marilyn D. Berson