Note 3 – Capitalization

Common Stock

During the three months ended March 31, 2016 and 2015, there were 15,488 common shares (approximately $0.4 million) and 16,172 common shares (approximately $0.4 million), respectively, issued under the Middlesex Water Company Investment Plan.

Long-term Debt

In February 2016, Tidewater closed on a $1.2 million loan with the Delaware State Revolving Fund (SRF) program which allows, but does not obligate, Tidewater to draw against a General Obligation Note to fund the replacement of the water distribution system in a manufactured home community. The interest rate on all draws is 2.0% with a final repayment maturity date of February 1, 2036. Tidewater expects to draw down the loan proceeds during the second quarter of 2016.

In March 2016, the NJBPU approved Middlesex's request to borrow up to $16.0 million through the New Jersey Environmental Infrastructure Trust (NJEIT) under the New Jersey SRF loan program. Middlesex expects to close on this borrowing in November 2016. Proceeds will be used for the Middlesex 2016 RENEW Program, which is our ongoing initiative to eliminate all unlined mains in the Middlesex system.

In 2016, the NJEIT de-obligated principal payments of $0.4 million on several series of SRF loans.

Fair Value of Financial Instruments

The following methods and assumptions were used by the Company in estimating its fair value disclosure for financial instruments for which it is practicable to estimate that value. The carrying amounts reflected in the condensed consolidated balance sheets for cash and cash equivalents, trade receivables, accounts payable and notes payable approximate their respective fair values due to the short-term maturities of these instruments. The fair value of the Company's long-term debt relating to First Mortgage and SRF Bonds (Bonds) is based on quoted market prices for similar issues. Under the fair value hierarchy, the fair value of cash and cash equivalents is classified as a Level 1 measurement and the fair value of the Bonds in the table below are classified as Level 2 measurements. The carrying amount and fair value of the Company's bonds were as follows:

	March 31, 2016				December 31, 2015
	Carrying		Fair		Carrying		Fair
	Amount		Value		Amount		Value
First Mortgage Bonds	$	84,388	$	87,626	$	85,143	$	87,972
SRF Bonds	$	446	$	448	$	457	$	459

For other long-term debt for which there was no quoted market price and there is not an active trading market, it was not practicable to estimate their fair value (for details, including carrying value, interest rate and due date on these series of long-term debt, please refer to those series noted as “Amortizing Secured Note” and “State Revolving Trust Note” on the Condensed Consolidated Statements of Capital Stock and Long-Term Debt). The carrying amount of these instruments was $53.9 million and $54.7 million at March 31, 2016 and December 31, 2015, respectively. Customer advances for construction have carrying amounts of $20.2 million and $20.5 million at March 31, 2016 and December 31, 2015, respectively. Their relative fair values cannot be accurately estimated since future refund payments depend on several variables, including new customer connections, customer consumption levels and future rate increases.