Issue: Public Improvement (Serial) Bonds, 2012; Rating: A2; Sale Amount: $2,095,750; Expected Sale Date:12/04/2012; Rating Description: General Obligation

Opinion

Moody's Investors Service has assigned an initial A2 rating to the Village of Fishkill's (NY) $2 million Public Improvement (Serial) Bonds, 2012. The bonds are secured by the village's general obligation pledge as limited by the Property Tax Cap -- Legislation (Chapter 97 (Part A) of the Laws of the State of New York, 2011). The bond proceeds along with $50,000 of cash on hand will redeem $2.1 million of bond anticipation notes scheduled to mature on December 14, 2012. The notes were originally issued to finance a wastewater treatment facility upgrade.

SUMMARY RATING RATIONALE

The initial A2 rating reflects the village's reduced financial position including a multi-year decline in reserves and a limited tax base with large taxpayer concentration and above-average wealth levels. The rating also incorporates a modest debt burden with slow principal amortization.

Effective January 1, 2012, all local governments in New York State are subject to a property tax cap which limits levy increases to 2% or the rate of inflation, whichever is lower. While school district debt has been exempted from the cap, debt has not been exempted for all other local governments. Moody's believes that the risks associated with the property tax cap remain unchanged and we do not foresee making a rating distinction between debt not subject to the cap. For more information regarding the property tax cap please reference the Special Comment "New York Local Governments' Debt Under New Property Tax Cap to Be Rated the Same as Unlimited Tax General Obligation Debt" released May 14, 2012.

STRENGTHS

- Above average wealth levels

CHALLENGES

- Limited revenue raising flexibility due to state's tax cap

- Budget pressure from rising fixed costs including debt service, pension and health costs

WHAT COULD MAKE THE RATING GO UP

- Expansion of the tax base

- Trend of stable and sufficient reserve levels

- Improved financial position in the water and sewer funds

WHAT COULD MAKE THE RATING GO DOWN

- Prolonged imbalance of operating budget

- Continued decline of the General Fund balance

- Decrease in tax base or demographic profile

The principal methodology used in this rating was General Obligation Bonds Issued by U.S. Local Governments published in October 2009. Please see the Credit Policy page on www.moodys.com for a copy of this methodology.

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Nicholas Lehman Analyst Public Finance Group Moody'sInvestors Service, Inc.60 State Street Suite 700 Boston, MA 02109 U.S.A. JOURNALISTS: 212-553-0376 SUBSCRIBERS: 212-553-1653 Geordie Thompson VP - Senior Credit Officer Public Finance Group JOURNALISTS: 212-553-0376 SUBSCRIBERS: 212-553-1653 Releasing Office: Moody's Investors Service, Inc.250 Greenwich StreetNew York, NY 10007 U.S.A. JOURNALISTS: 212-553-0376 SUBSCRIBERS: 212-553-1653(C) 2012 Moody's Investors Service, Inc. and/or its licensors and affiliates (collectively, "MOODY'S"). All rights reserved.

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