We introduce an extension of Hoare logic for call-by-value higher-order functions with ML-like local reference generation. Local references may be generated dynamically and exported outside their scope, may store higher-order functions and may be used to construct complex mutable data structures. This primitive is captured logically using a predicate asserting reachability of a reference name from a possibly higher-order datum and quantifiers over hidden references. We explore the logics descriptive and reasoning power with non-trivial programming examples combining higher-order procedures and dynamically generated local state. Axioms for reachability and local invariant play a central role for reasoning about the examples.
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