3355000* the Parking Authority of the City Of

PRELIMINARY OFFICIAL STATEMENT DATED MAY 3, 2012 NEW ISSUE Ratings: Standard & Poor’s: “AA-” (Stable Outlook) BOOK-ENTRY ONLY (Assured Guaranty Municipal Corp. Insured) Standard & Poor’s: “A-” (Underlying)(Stable Outlook) (See “Ratings” herein)

In the opinion of Bond Counsel, under existing law, interest on the 2012 Bonds (including any original issue discount properly allocable to an owner thereof) is excluded from gross income for federal income tax purposes and is not an item of tax preference for purposes of the federal alternative minimum tax imposed on individuals and corporations; however, with respect to corporations (as defined for federal income tax purposes), such interest is taken into account in determining adjusted current earnings for the purpose of computing the alternative

minimum tax imposed by Section 55 of the Code on such corporations. Under existing law, the 2012 Bonds are exempt from personal property taxes in Pennsylvania and the interest on the 2012 Bonds is exempt from Pennsylvania personal income tax and from Pennsylvania corporate net income tax. In rendering this opinion, Bond Counsel has assumed continuing compliance by the Authority with certain tax covenants to satisfy certain provisions of the Internal Revenue Code of 1986, as amended. See “TAX EXEMPTION” herein.

nor may nor may any offer to buy be accepted prior $3,355,000* itation of an offer to buy, nor shall there be any shall there be any nor of an offer to buy, itation THE PARKING AUTHORITY OF THE CITY OF WASHINGTON Washington County, Pennsylvania Guaranteed Parking Revenue Refunding Bonds, Series of 2012

Dated: Date of Delivery of the Bonds Interest Payable: May 15 and November 15 ities laws of any such jurisdiction. Due: November 15, as shown on inside front cover First Interest Payment: November 15, 2012

The Guaranteed Parking Revenue Refunding Bonds, Series of 2012, dated as of the Date of Delivery, in the aggregate principal amount of $3,355,000* (the “Bonds” or the “2012 Bonds”) will be issued in fully registered form without coupons and, when issued, will be registered in the name of Cede & Co., as nominee of The Depository Trust Company, New York, New York (“DTC”). So long as Cede & Co. is the registered owner, reference herein to the registered owner of the Bonds shall mean Cede & Co., and not the Beneficial Owners (as defined herein). DTC will act as securities depository of the Bonds, and purchases of beneficial ownership interest in the Bonds will be made in book- entry form only, in denominations of $5,000 or integral multiples thereof. Beneficial Owners will not receive certificates representing their interest in the Bonds. Interest on the Bonds is payable May 15 and November 15 of each year, commencing November 15, 2012, by The Bank of without notice. not be sold The Bonds may New York Mellon Trust Company, N.A., Pittsburgh, Pennsylvania, as trustee for the Bonds (the “Trustee”). So long as Cede & Co. is the registered owner, the Trustee will pay principal of, and interest on the Bonds to DTC, which will remit such principal and interest to its Statement constitute an offer to sell or the solic Statement constitute an offer to sell or the Participants (as defined herein), which will in turn remit such principal and interest to the Beneficial Owners of the Bonds, as more fully ification under the applicable secur described herein. See “BOOK ENTRY ONLY SYSTEM” herein.

The Bonds are subject to redemption prior to maturity as more fully described herein. See “THE BONDS – Redemption” herein.

The Bonds are issued pursuant to a Trust Indenture (the “Original Indenture”) dated as of May 1, 2006 as supplemented and amended by a First Supplemental Trust Indenture dated as of May 1, 2012 (the “First Supplemental Indenture,” and together with the Original Indenture, the “Indenture”) entered into by The Parking Authority of the City of Washington (the “Authority”) and the Trustee and are secured under the Indenture by an assignment and pledge to the Trustee of the Pledged Revenues from the Parking Garage, as defined in the Indenture, and by certain funds held under the Indenture. As additional security, the City of Washington (the “City”), Washington County, Pennsylvania, pursuant to the Guaranty Agreement (the “Guaranty”), among the Authority, the City and the Trustee, has unconditionally guaranteed the payment of the full amount of all principal and interest on the Bonds when due and for such payment has pledged its full faith and taxing power.

The scheduled payment of principal of and interest on the Bonds when due will be guaranteed under an insurance policy to be issued umstances shall this Preliminary Official umstances shall this Preliminary concurrently with the delivery of the Bonds by ASSURED GUARANTY MUNICIPAL CORP.

d be unlawful prior to registration or qual or to registration d be unlawful prior

THE BONDS ARE LIMITED OBLIGATIONS OF THE AUTHORITY PAYABLE SOLELY FROM THE PLEDGED d herein are subject to completion or amendment or other change other subject to completionor are amendment or d herein REVENUES FROM THE PARKING GARAGE AND ARE NOT A DEBT OF WASHINGTON COUNTY, THE COMMONWEALTH OF PENNSYLVANIA OR ANY POLITICAL SUBDIVISION THEREOF, EXCEPT TO THE EXTENT OF THE GUARANTY OF licitation or sale woul licitation or THE CITY, NEITHER THE CREDIT NOR THE TAXING POWER OF WASHINGTON COUNTY, THE COMMONWEALTH OF PENNSYLVANIA NOR ANY POLITICAL SUBDIVISION THEREOF, EXCEPT TO THE EXTENT OF THE GUARANTY OF THE CITY, IS PLEDGED TO PAY THE PRINCIPAL OF, PREMIUM, IF ANY, AND INTEREST ON THE BONDS. THE AUTHORITY HAS NO TAXING POWER.

is delivered in final form. Under no circ Under form. in final is delivered The proceeds of the Bonds will be used for the following purposes: (1) currently refunding the Authority’s Guaranteed Parking Revenue Bonds, Series of 2006; (2) funding a debt service reserve fund; and (3) paying the costs of issuing and insuring the Bonds.

MATURITY SCHEDULE (See Inside Front Cover)

The Bonds are offered when, as and if issued by the Authority and received by the Underwriter, subject to prior sale and subject to the receipt of the approving legal opinion of Buchanan Ingersoll & Rooney PC, Pittsburgh, Pennsylvania, Bond Counsel. Certain additional matters will be passed upon for the Authority by Bergeren & Turturice, Washington, Pennsylvania, Solicitor to the Authority and to the City. The Bonds are expected to be available for delivery through the facilities of DTC in New York, New York on or about June 5, 2012.

Janney Montgomery Scott LLC

Official Statement Dated ______, 2012 ______This Preliminary Official Statement and the information containe the time Preliminary Official Statement so in which such offer, the Bonds in any jurisdiction sale of *Preliminary, subject to change

$3,355,000* The Parking Authority of the City of Washington Washington County, Pennsylvania Guaranteed Parking Revenue Refunding Bonds, Series of 2012

MATURITY SCHEDULE

Principal Year Amount Interest Rate Yield Price CUSIP ** 11/15/2012 11/15/2013 11/15/2014 11/15/2015 11/15/2016 11/15/2017 11/15/2018 11/15/2019 11/15/2020 11/15/2021 11/15/2022 11/15/2023 11/15/2024 11/15/2025 11/15/2026 11/15/2027 11/15/2028 11/15/2029 11/15/2030 Total ______*Preliminary, subject to change

**The above CUSIP (Committee on Uniform Securities Identification Procedures) numbers have been assigned by an organization not affiliated with the Authority and the Authority is not responsible for the selection or use of the CUSIP numbers. The CUSIP numbers are included solely for the convenience of bondholders and no representation is made as to the correctness of such CUSIP numbers. CUSIP numbers assigned to securities may be changed during the term of such securities based on a number of factors including, but not limited to, the refunding or defeasance of such issue or the use of secondary market financial products. The Authority has not agreed to, and there is no duty or obligation to, update this Official Statement to reflect any change or correction in the CUSIP numbers set forth above.

SUMMARY STATEMENT

This Summary Statement is subject in all respects to more complete information contained elsewhere in this Official Statement. No person is authorized to detach this SUMMARY STATEMENT from this Official Statement or otherwise use it without the entire Official Statement.

Issuer ...... The Parking Authority of the City of Washington, Washington County, Pennsylvania (the “Authority)

The Bonds ...... $3,355,000* aggregate principal amount, Guaranteed Parking Revenue Refunding Bonds, Series of 2012 (the “Bonds”). The Bonds are initially dated as of the Date of Delivery, and will mature as shown in the Bond Maturity Schedule shown on the inside of the Cover Page of this Official Statement. Interest on the Bonds will begin to accrue on the Date of Delivery and is payable each May 15 and November 15 thereafter commencing November 15, 2012. (See “THE BONDS” herein.)

Redemption Provisions ...... The Bonds are subject to both mandatory and optional redemption prior to their stated dates of maturity, as more fully described herein (See “THE BONDS – Redemption” herein.)

Form of Bonds ...... Fully registered book-entry-only Bonds.

Application of Proceeds ...... The proceeds to be derived by the Authority from the issuance and sale of the Bonds will be used to finance (1) the current refunding of the Authority’s Guaranteed Parking Revenue Bonds, Series of 2006; (2) funding a debt service reserve fund; and (3) paying the costs of issuing and insuring the Bonds. (See “PURPOSE OF THE ISSUE” and “PLAN OF FINANCING” herein.

Security for the Bonds ...... The Bonds are issued pursuant to a Trust Indenture (the “Original Indenture”) dated as of May 1, 2006, as supplemented and amended by a First Supplemental Trust Indenture dated as of May 1, 2012 (the “First Supplemental Indenture,” and together with the Original Indenture, the “Indenture”) entered into by the Authority and The Bank of New York Mellon Trust Company, N.A., Pittsburgh, Pennsylvania (the “Trustee”) and are secured under the Indenture by an assignment and pledge to the Trustee of the Pledged Revenues from the Parking Garage, as defined in the Indenture, and by certain funds held under the Indenture. As additional security, the City of Washington (the “City”), Washington County, Pennsylvania, pursuant to the Guaranty Agreement (the “Guaranty”) among the Authority, the City and the Trustee, has unconditionally guaranteed the payment of the full amount of all principal and interest on the Bonds when due and for such payment has pledged its full faith, credit and taxing power. THE BONDS ARE LIMITED OBLIGATIONS OF THE AUTHORITY PAYABLE SOLELY FROM THE PLEDGED REVENUES FROM THE PARKING GARAGE AND ARE NOT A DEBT OF WASHINGTON COUNTY, THE COMMONWEALTH OF PENNSYLVANIA OR ANY POLITICAL SUBDIVISION THEREOF, EXCEPT TO THE EXTENT OF THE GUARANTY OF THE CITY, NEITHER THE CREDIT NOR THE TAXING POWER OF WASHINGTON COUNTY, THE COMMONWEALTH OF PENNSYLVANIA NOR ANY POLITICAL SUBDIVISION THEREOF, EXCEPT TO THE EXTENT OF THE GUARANTY OF THE CITY, IS PLEDGED TO PAY THE PRINCIPAL OF, PREMIUM, IF ANY, AND INTEREST ON THE BONDS. THE AUTHORITY HAS NO TAXING POWER. (See “SECURITY FOR THE BONDS” herein.)

Credit Enhancement ...... The scheduled payment of the principal of and interest on the Bonds, when due, will be guaranteed under an insurance policy to be issued concurrently with the delivery of the Bonds by Assured Guaranty Municipal Corp. simultaneously with the delivery of the Bonds. See “BOND INSURANCE” herein.

Bond Ratings ...... The Bonds are expected to receive a credit rating of “AA-” (stable outlook) from Standard & Poor’s Ratings Services (“S&P”) with the understanding that the above- described Assured Guaranty Municipal Corp insurance policy will be issued at the time of settlement of the Bonds. In addition, S&P has assigned an underlying rating of “A-” (stable outlook) to the Bonds.

The Parking Authority of the City of Washington Washington County, Pennsylvania

MEMBERS OF THE AUTHORITY BOARD

Name Office Term Expires Richard Mancini Chairman 1/31/13 Paul Harton Vice Chairman 1/31/13 Troy Breese Secretary/Treasurer 1/31/13 Scott Fergus Member 1/31/13 Vacant Member N/A

AUTHORITY EXECUTIVE DIRECTOR Thomas Kearns

AUTHORITY SOLICITOR Lane Turturice, Esquire Bergeren & Turturice Washington, Pennsylvania

BOND COUNSEL Buchanan Ingersoll & Rooney PC Pittsburgh, Pennsylvania

AUDITOR Cypher & Cypher Cannonsburg, Pennsylvania

TRUSTEE The Bank of New York Mellon Trust Company, N.A. Pittsburgh, Pennsylvania

UNDERWRITER Janney Montgomery Scott LLC Pittsburgh, Pennsylvania

FINANCIAL CONSULTANT VALCO Capital Ltd. Ligonier, Pennsylvania

AUTHORITY ADDRESS 55 West Maiden Street Washington, Pennsylvania 15301

This Official Statement does not constitute an offer to sell or a solicitation of an offer to buy, nor shall there be any sale of the Bonds in any jurisdiction to any person to whom it is unlawful to make such offer in such jurisdiction. No dealer, broker, salesman or any other person has been authorized by the Authority or the Underwriter to give any information or make any representation, other than those contained in this Official Statement, in connection with the offering of or solicitation of offers for the Bonds. If given or made, such information or representation must not be relied upon as having been authorized by the Authority or the Underwriter. Information contained in this Official Statement was obtained in part from officials of the Authority, from trade and statistical services, and from other sources which are deemed to be reliable. Such sources are not guaranteed as to accuracy or completeness. Such information is not intended to be, and should not be relied upon as, a complete report or analysis; it is not to be construed as a representation by the Underwriter or, as to information from sources other than the Authority. All quotations from and summaries and explanations of provisions of laws and documents in this Official Statement do not purport to be complete and reference is made to such laws and documents for full and complete statements of their provisions. Any statements made in this Official Statement involving estimates or matters of opinion, whether or not expressly so stated, are intended merely as estimates or opinions and not as representations of fact. The information and expressions of opinion herein are subject to change without notice; neither the delivery of this Official Statement nor any sale of the Bonds shall under any circumstances create any implication that there has been no change in the affairs of the Authority since the date of this Official Statement. IN CONNECTION WITH THIS OFFERING, THE UNDERWRITER MAY OVERALLOT OR EFFECT TRANSACTIONS WHICH STABILIZE OR MAINTAIN THE MARKET PRICE OF THE BONDS AT A LEVEL ABOVE THAT WHICH OTHERWISE MAY PREVAIL IN THE OPEN MARKET. SUCH STABILIZING, IF COMMENCED, MAY BE DISCONTINUED AT ANY TIME WITHOUT PRIOR NOTICE.

TABLE OF CONTENTS Page

INTRODUCTORY STATEMENT ...... 1 THE AUTHORITY ...... 1 Introduction ...... 1 Authority Structure and Employment ...... 2 Insurance Coverage of the Authority ...... 2 THE BONDS ...... 2 General ...... 2 Registration, Exchange and Transfer ...... 3 Redemption ...... 4 BOOK ENTRY ONLY SYSTEM ...... 5 Disclaimer of Liability for Failures of DTC ...... 6 SECURITY FOR THE BONDS ...... 7 General ...... 7 The Guaranty ...... 7 The Contribution Agreement ...... 7 Debt Service Reserve Fund ...... 7 BOND INSURANCE ...... 8 BOND INSURANCE RISK FACTORS ...... 9 PURPOSE OF THE ISSUE ...... 10 PLAN OF FINANCING ...... 10 SOURCES AND USES OF FUNDS ...... 11 DEBT SERVICE SCHEDULE ...... 12 THE PARKING GARAGE ...... 13 TAX EXEMPTION ...... 16 CONTINUING DISCLOSURE UNDERTAKING ...... 17 LEGAL MATTERS ...... 18 Litigation ...... 18 Legal Opinions ...... 18 FUTURE FINANCING ...... 18 BONDHOLDER RISKS ...... 19 MUNICIPAL BANKRUPTCY LAW ...... 19 UNDERWRITING ...... 20 FINANCIAL CONSULTANT ...... 20

iii

CERTIFICATION OF OFFICIAL STATEMENT ...... 20 RATINGS ...... 20 MISCELLANEOUS ...... 20 Remedies ...... 20 Certain Matters ...... 21

DEMOGRAPHIC AND ECONOMIC INFORMATION RELATING TO THE CITY AND COUNTY OF WASHINGTON...... APPENDIX A FORM OF OPINION OF BOND COUNSEL ...... APPENDIX B AUDITED FINANCIAL STATEMENTS OF THE AUTHORITY FOR THE YEAR ENDED DECEMBER 31, 2010 ...... APPENDIX C AUDITED FINANCIAL STATEMENTS OF THE CITY FOR THE YEAR ENDED DECEMBER 31, 2010 ...... APPENDIX D SUMMARY OF CERTAIN PROVISIONS OF THE INDENTURE ...... APPENDIX E SPECIMEN MUNICIPAL BOND INSURANCE POLICY ...... APPENDIX F

The Table of Contents does not list all of the subjects in this Official Statement and in all instances references should be made to the complete Official Statement to determine the subjects set forth herein.

______

OFFICIAL STATEMENT

$3,355,000* THE PARKING AUTHORITY OF THE CITY OF WASHINGTON Washington County, Pennsylvania Guaranteed Parking Revenue Refunding Bonds, Series of 2012

INTRODUCTORY STATEMENT

This Official Statement, including the Cover Page and the Appendices, is furnished by The Parking Authority of the City of Washington, Washington County, Pennsylvania (the “Authority”), in connection with the offering of the Authority’s $3,355,000* aggregate principal amount of Guaranteed Parking Revenue Refunding Bonds, Series of 2012 (the “Bonds”). The Bonds are being issued pursuant to the Parking Authority Law, 53 Pa. Cons. Stat. §5501 et. seq., as amended (the “Act”), and pursuant to the provisions of (1) the Trust Indenture (the “Original Indenture”) dated as of May 1, 2006, as supplemented and amended by a First Supplemental Trust Indenture dated as of May 1, 2012 (the “First Supplemental Indenture,” and together with the Original Indenture, the “Indenture”), entered into by and between the Authority and The Bank of New York Mellon Trust Company, N.A., a national banking association duly organized and validly existing under the laws of the United States of America, as trustee (the “Trustee”), as more fully described herein; and (2) a Resolution duly adopted by the Authority on May __, 2012 (the “Resolution”). The proceeds of the Bonds will be used for the following purposes: (1) the current refunding of the Authority’s Guaranteed Parking Revenue Bonds, Series of 2006; (2) the funding of a debt service reserve fund; and (3) paying the costs of issuing and insuring the Bonds. The City of Washington (the “City”), the Authority and the Trustee will enter into a Guaranty Agreement dated as of June 5, 2012 (the “Guaranty”), pursuant to which the City unconditionally guarantees the full and timely payment of principal of and interest on the Bonds, and, to secure its obligations thereunder, the City has pledged its full faith, credit and taxing power. The guaranty of the full and prompt payment when due of the principal of and the interest on the Bonds by the City is authorized under the Pennsylvania Local Government Unit Debt Act, Title 53, Part VII, subpart B, of the Pennsylvania Consolidated Statutes (53 Pa. Cons. Stat. §8801, et seq.) known as the Local Government Unit Debt Act (the “Debt Act”) and by the Ordinance of the City duly enacted on May ___, 2012 by the City Council (the “Ordinance”). See “SECURITY FOR THE BONDS – The Guaranty” herein. The scheduled payment of the principal of and the interest on the Bonds when due will be guaranteed under an insurance policy to be issued by Assured Guaranty Municipal Corp. (“AGM”), simultaneously with the delivery of the Bonds. See ‘BOND INSURANCE” herein. This Official Statement contains descriptions of and summaries concerning the Bonds, the Indenture and the Guaranty. Such descriptions and summaries are qualified by reference to the complete text of such documents. Final copies of such documents may be obtained from the Authority and will also be available for inspection at the corporate trust office of the Trustee in Pittsburgh, Pennsylvania. This Official Statement also contains descriptions and summaries concerning the City, the Authority, the Parking Garage and purpose of the financing. Such information was supplied by or is based upon information supplied by City officials and Authority officials, who have approved the inclusion of such information in this Official Statement. Neither the delivery of this Official Statement nor any sale of the Bonds made hereunder shall, under any circumstances, create an implication that there have been no changes in the affairs of the Authority or the City, since the date of this Official Statement or, if earlier, the dates as of which particular information contained in this Official Statement is given.

THE AUTHORITY Introduction

The Authority is a body corporate and politic, organized pursuant to the provisions of the Act, an Ordinance of the Council of the City, and a Certificate of Incorporation issued by the Secretary of the Commonwealth of Pennsylvania (the “Commonwealth”) on October 18, 2005. The Authority is empowered to exercise any and all powers conferred by the Act as may be necessary with respect to the construction, ownership, operation and maintenance, either in whole or in part, of the Parking Garage. Such powers include the power to

acquire, by purchase or condemnation, sites and rights of way necessary in connection with the construction, ownership, operation and maintenance of the Parking Garage. The Authority is also empowered to enter into contracts, agreements, and leases either in the capacity of lessee or lessor, respecting the construction and operation of the Parking Garage.

Authority Structure and Employment

The Authority is comprised of five voting members, all of whom are appointed to five-year staggered terms of office by the Mayor of the City of Washington. The Authority by an Ordinance of the City was established on June 16, 2005. The Authority currently retains Lane Turturice, Esquire, or Bergeren & Turturice as its legal counsel. Additionally, the Authority retains Cypher and Cypher, Cannonsburg, Pennsylvania, Certified Public Accountants, as independent auditor.

Insurance Coverage of the Authority

Pursuant to the provisions of the Indenture, the Authority covenants that it will carry insurance upon, or with respect to, the Parking Garage with a responsible insurance company or companies authorized and qualified to do business under the laws of the Commonwealth against such risks and in such amounts as are usually carried upon, or with respect to, like properties. Such insurance policies shall be non-assessable and shall be for the benefit of the Authority and the Trustee as their respective interests may appear, and such policies, or certificates evidencing the same, shall be deposited with the Trustee, and all losses shall be made payable to and be deposited with and held by the Trustee in trust as security for the Bonds until disbursed as provided for in the Indenture, and the Trustee shall have the sole right to receive the proceeds of such policies and to collect and receipt for claims thereunder. The Authority will take all action and cooperate in the taking of any such action which may be necessary to enable recovery to be made upon such policies, in order that the insurance moneys may be duly and promptly paid to the Trustee.

THE BONDS

General

The Bonds will be issued in the aggregate principal amount of $3,355,000*, in denominations of $5,000 principal amount or any integral multiple thereof, will be dated as of the Date of Delivery and will mature on November 15 in the years and in the amounts shown on the inside cover page, subject, however, to optional and mandatory redemption in accordance with provisions of the Indenture and as hereinafter described. When issued, the Bonds will be registered in the name of Cede & Co., as nominee for The Depository Trust Company (“DTC”), New York, New York. Purchasers of the Bonds (the “Beneficial Owners”) will not receive any physical delivery of the bond certificates, and beneficial ownership of the Bonds will be evidenced only by book entries. See “Book-Entry Only System” herein. So long as Cede & Co., as nominee of DTC, is the registered owner of the Bonds, payments of principal of, redemption premium, if any, and interest on the Bonds, when due, are to be made to DTC and all such payments shall be valid and effective to satisfy fully and to discharge the obligations of the Authority with respect to, and to the extent of, principal, redemption premium, if any, and interest so paid. If the use of the Book-Entry Only System for the Bonds is discontinued for any reason, bond certificates will be issued to the Beneficial Owners of the Bonds and payment of principal of and interest on the Bonds shall be made as described in the following paragraphs: The principal of certificated Bonds, when due upon maturity or upon any earlier redemption, will be paid to the registered owners of the Bonds, or registered assigns upon surrender of the Bonds to the Trustee, acting as paying agent and sinking fund depository for the Bonds, at its designated corporate trust office (or to any successor trustee at its designated office(s)). The Bonds will bear interest payable on May 15 and November 15 of each year (each an “Interest Payment Date”), commencing November 15, 2012. Each Bond shall bear interest from the Interest Payment Date next preceding the date of registration and authentication of such Bonds, unless (a) such Bonds are registered and authenticated as of an Interest Payment Date, in which event such Bonds shall bear interest from said Interest Payment Date; or (b) the Bonds are registered and authenticated after a Regular Record Date (hereinafter defined) and before the next succeeding Interest Payment Date, in which event such Bonds shall bear interest from such

Interest Payment Date, or (c) the Bonds are registered and authenticated on or prior to the Regular Record Date preceding November 15, 2012, in which event such Bonds shall bear interest from the date of issuance and delivery thereof, or (d) as shown by the records of the Trustee, interest on such Bonds shall be in default, in which event such Bonds shall bear interest from the date on which interest was last paid on such Bonds. Interest on each Bond will be payable by check drawn on the Trustee, which shall be mailed to the registered owner whose name and address shall appear, at the close of business on the last day (whether or not a Business Day) of the calendar month next preceding each Interest Payment Date on the registration books maintained by the Trustee, irrespective of any transfer or exchange of the Bonds subsequent to such Regular Record Date and prior to such Interest Payment Date, unless the Authority shall be in default in payment of interest due on such interest payment date. Any interest on any Bond which is payable, but is not punctually paid or provided for, on any Interest Payment Date, (herein called “Defaulted Interest”) shall cease to be payable to the Registered Owner on the relevant Regular Record Date; and such Defaulted Interest shall be paid to the Registered Owner in whose name the Bond is registered at the close of business on a special record date which shall be a Business Day to be fixed by the Trustee, such date to be not more than 15 days nor fewer than 10 days prior to the date of proposed payment. The Trustee shall cause notice of the proposed payment of such defaulted interest and the special record date therefor to be mailed to each such Registered Owner, at his or her address as it appears in the bond register not more than 15 days nor fewer than 10 days prior to such special record date. Whenever the due date for payment of interest, redemption price or principal of the Bonds or the date fixed for redemption of any bond shall be a Saturday, a Sunday, a legal holiday or a day on which banking institutions in the Commonwealth are authorized or required by law or executive order to close, or a day on which the New York Stock Exchange is closed, then payment of such interest, redemption price or principal need not be made on such date, but may be made on the next succeeding day which is not a Saturday, a Sunday, a legal holiday or a day on which banking institutions in the Commonwealth are authorized or required by law or executive order to close, or a day on which the New York Stock Exchange is closed, with the same force and effect as if made on the date for payment of principal, interest or redemption price and no interest shall accrue thereon for any period beginning on such day and ending on the payment date.

Registration, Exchange, and Transfer

Subject to the provisions described below under “Book-Entry Only System,” each of the Bonds is transferable or exchangeable by the registered owner thereof upon surrender of such Bond to the Trustee, accompanied by a written instrument or instruments in form, with instructions, and with guaranty of signature satisfactory to the Trustee, duly executed by the registered owner of such Bond or his attorney-in-fact or legal representative. The Trustee shall enter any transfer of ownership of such Bond in the registration books and shall authenticate and deliver at the earliest practicable time in the name of the transferee or transferees a new fully registered bond or bonds of authorized denominations of the same series, maturity and interest rate for the aggregate principal amount which the registered owner is entitled to receive. The Authority and the Trustee may deem and treat the registered owner of any certificated Bond as the absolute owner thereof (whether or not a Bond shall be overdue) for the purpose of receiving payment of or on account of principal and interest and for all other purposes, and the Authority and the Trustee shall not be affected by any notice to the contrary. No exchange or transfer of Bonds shall be required to be made during the fifteen (15) days immediately preceding the date of mailing of any notice of redemption or at any time following the mailing of any such notice if the Bonds to be transferred or exchanged have been selected or called for redemption in whole or in part. Bonds may be exchanged for a like aggregate principal amount of Bonds or other authorized denominations of the same series, maturity and interest rate. The Bonds shall be transferable or exchangeable by the registered owner thereof upon surrender thereof to the Trustee, at its designated corporate trust office or corporate trust agency office, accompanied by a written instrument or instruments in form, with instructions, and with guaranty of signature satisfactory to the Trustee, duly executed by the registered owner thereof or his attorney-in-fact or legal representative. The Trustee shall enter any transfer of ownership of the Bonds in the registration books of the Authority maintained by the Trustee and shall authenticate and deliver in the name of the transferee or transferees new fully registered Bonds of authorized denominations of the same maturity for the aggregate amount that the transferee or transferees are entitled to receive at the earliest practicable time.

Redemption

Optional Redemption. The Bonds maturing on or after November 15, 2018 shall be subject to redemption, prior to maturity, at the option of the Authority, in whole or in part, in any order of maturities or portion of a maturity selected by the Authority at any time on or after November 15, 2017, at a price equal to 100% of the principal amount of the Bonds to be redeemed and accrued interest thereon to the date fixed for redemption. In the event that less than all of the Bonds of a maturity are to be redeemed, the Bonds of such maturity to be redeemed shall be drawn by lot by the Trustee. Mandatory Redemption. Bonds stated to mature on November 15, ____, November 15, ____ and November 15, _____ are subject to mandatory redemption prior to maturity on November 15 of the years (at a price equal to the principal amount of the Bonds called for mandatory redemption plus accrued interest thereon to the date fixed for such mandatory redemption) and in the principal amounts as set forth in the following schedule, as drawn by lot by the Trustee:

Term Bonds Due Term Bonds Due Term Bonds Due November 15, 20__ November 15, 20__ November 15, 20__ Year Principal Amount Year Principal Amount Year Principal Amount

* * * ______*At Final Maturity.

Manner of Redemption. So long as Cede & Co., as nominee of DTC, is the registered owner of the Bonds, payment of the redemption price shall be made to Cede & Co. in accordance with the existing arrangements by and among the Authority, the Trustee and DTC and, if less than all of the Bonds of any particular maturity are to be redeemed, the amount of the interest of each DTC Participant, Indirect Participant and Beneficial Owner on such Bonds to be redeemed shall be determined by the governing arrangements among them, subject to any statutory or regulatory requirements as may be in effect from time to time. See “Book-Entry Only System” herein for further information regarding redemption of Bonds registered in the name of Cede & Co. If a Bond is of a denomination larger than $5,000, a portion of such Bond may be redeemed. For the purposes of redemption, a Bond shall be treated as representing that number of Bonds which is obtained by dividing the principal amount thereof by $5,000, each $5,000 portion of such Bond being subject to redemption. In the case of partial redemption of a Bond, payment of the redemption price shall be only upon surrender of such Bond in exchange for Bonds of authorized denominations in aggregate principal amount equal to the unredeemed portion of the principal amount thereof. Notice of Redemption. So long as Cede & Co., as nominee of DTC, is the registered owner of the Bonds, the Authority and the Trustee shall send redemption notices only to Cede & Co. See “BOOK-ENTRY ONLY SYSTEM” herein for further information regarding conveyance of notices to Beneficial Owners. As provided more fully in the Indenture and in the Bonds, notice of redemption of Bonds shall be given by mailing a copy of the redemption notice by first class mail, postage prepaid, at least 30 days prior to the redemption date to the Registered Owners of Bonds to be redeemed at the addresses which appear in the Bond Register. Neither failure to mail such notice nor any defect in the notice so mailed or in the mailing thereof with respect to any one Bond will affect the validity of the proceedings for the redemption of any other Bond. If at the time of mailing of the notice of redemption the Authority shall not have deposited with the Trustee moneys sufficient to redeem all the Bonds called for redemption, such notice may state that it is conditional, that is, subject to the deposit of the redemption moneys with the Trustee no later than the redemption date, and such notice shall be of no effect unless such moneys are so deposited. On the date designated for redemption and upon deposit with the Trustee of funds sufficient for payment of the principal of and accrued interest on the Bonds called for redemption, interest on the Bonds or portions thereof so called for redemption shall cease to accrue and the Bonds or portions thereof so called for redemption shall cease to be entitled to any benefit of security under the Indenture, and Registered Owners of the Bonds so called for redemption shall have no rights with respect to the Bonds or portions thereof so called for redemption, except to

receive payment of the principal of and accrued interest on the Bonds so called for redemption to the date fixed for redemption.

BOOK-ENTRY ONLY SYSTEM

The Depository Trust Company (“DTC”), New York, NY, will act as securities depository for the Bonds. The Bonds will be issued as fully-registered securities registered in the name of Cede & Co. (DTC’s partnership nominee) or such other name as may be requested by an authorized representative of DTC. One fully-registered Bond will be issued for each maturity of the Bonds, in the aggregate principal amount of such maturity, and will be deposited with DTC. SO LONG AS CEDE & CO. IS THE REGISTERED OWNER OF THE BONDS, AS NOMINEE OF DTC, REFERENCES HEREIN TO THE BONDHOLDERS, BONDOWNERS OR REGISTERED OWNERS OF THE BONDS SHALL MEAN CEDE & CO. AND SHALL NOT MEAN THE BENEFICIAL OWNERS OF THE BONDS. DTC, the world’s largest depository, is a limited-purpose trust company organized under the New York Banking Law, a “banking organization” within the meaning of the New York Banking Law, a member of the Federal Reserve System, a “clearing corporation” within the meaning of the New York Uniform Commercial Code, and a “clearing agency” registered pursuant to the provisions of Section 17A of the Securities Exchange Act of 1934. DTC holds and provides asset servicing for over 3.5 million issues of U.S. and non-U.S. equity issues, corporate and municipal debt issues, and money market instruments from over 100 countries that DTC’s participants (“Direct Participants”) deposit with DTC. DTC also facilitates the post-trade settlement among Direct Participants of sales and other securities transactions in deposited securities, through electronic computerized book-entry transfers and pledges between Direct Participants’ accounts. This eliminates the need for physical movement of securities certificates. Direct Participants include both U.S. and non-U.S. securities brokers and dealers, banks, trust companies, clearing corporations, and certain other organizations. DTC is a wholly-owned subsidiary of The Depository Trust & Clearing Corporation (“DTCC”). DTCC, is the holding company for DTC, National Securities Clearing Corporation and Fixed Income Clearing Corporation, all of which are registered clearing agencies. DTCC is owned by the users of its regulated subsidiaries. Access to the DTC system is also available to others such as both U.S. and non U.S. securities brokers and dealers, banks, trust companies, and clearing corporations that clear through or maintain a custodial relationship with a Direct Participant, either directly or indirectly (“Indirect Participants”). DTC has a Standard & Poor’s rating of “AA+.” The DTC Rules applicable to its Participants are on file with the Securities and Exchange Commission. More information about DTC can be found at www.dtcc.com and www.dtc.org. Purchases of the Bonds under the DTC system must be made by or through Direct Participants, which will receive a credit for the Bonds on DTC’s records. The ownership interest of each actual purchaser of each Bond (“Beneficial Owner”) is in turn to be recorded on the Direct and Indirect Participants’ records. Beneficial Owners will not receive written confirmation from DTC of their purchase. Beneficial Owners are, however, expected to receive written confirmations providing details of the transaction, as well as periodic statements of their holdings, from the Direct or Indirect Participant through which the Beneficial Owner entered into the transaction. Transfers of ownership interests in the Bonds are to be accomplished by entries made on the books of Direct and Indirect Participants acting on behalf of Beneficial Owners. Beneficial Owners will not receive certificates representing their ownership interests in the Bonds, except in the event that use of the book-entry system for the Bonds is discontinued. To facilitate subsequent transfers, all Bonds deposited by Direct Participants with DTC are registered in the name of DTC’s partnership nominee, Cede & Co., or such other name as may be requested by an authorized representative of DTC. The deposit of Bonds with DTC and their registration in the name of Cede & Co. or such other DTC nominee do not effect any change in beneficial ownership. DTC has no knowledge of the actual Beneficial Owners of the Bonds; DTC’s records reflect only the identity of the Direct Participants to whose accounts such Bonds are credited, which may or may not be the Beneficial Owners. The Direct and Indirect Participants will remain responsible for keeping account of their holdings on behalf of their customers. Conveyance of notices and other communications by DTC to Direct Participants, by Direct Participants to Indirect Participants, and by Direct Participants and Indirect Participants to Beneficial Owners will be governed by arrangements among them, subject to any statutory or regulatory requirements as may be in effect from time to time. Beneficial Owners of Securities may wish to take certain steps to augment the transmission to them of notices of significant events with respect to the Securities, such as redemptions, tenders, defaults, and proposed amendments to the Bond documents. For example, Beneficial Owners of Securities may wish to ascertain that the nominee holding the Securities for their benefit has agreed to obtain and transmit notices to Beneficial Owners. In the alternative, Beneficial Owners may wish to provide their names and addresses to the registrar and request that copies of notices be provided directly to them.

Redemption notices shall be sent to DTC. If less than all of the Bonds within an issue are being redeemed, DTC’s practice is to determine by lot the amount of the interest of each Direct Participant in such issue to be redeemed. Neither DTC nor Cede & Co. (nor any other DTC nominee) will consent or vote with respect to the Bonds unless authorized by a Direct Participant in accordance with DTC’s MMI Procedures. Under its usual procedures, DTC mails an Omnibus Proxy to the Authority as soon as possible after the record date. The Omnibus Proxy assigns Cede & Co.’s consenting or voting rights to those Direct Participants to whose accounts Bonds are credited on the record date (identified in a listing attached to the Omnibus Proxy). Payments of principal of and interest on the Bonds and, if applicable, redemption premium, will be made to Cede & Co., or such other nominee as may be requested by an authorized representative of DTC. DTC’s practice is to credit Direct Participants’ accounts upon DTC’s receipt of funds and corresponding detail information from the Authority or the Trustee as Paying Agent, on payable date in accordance with their respective holdings shown on DTC’s records. Payments by Participants to Beneficial Owners will be governed by standing instructions and customary practices, as if the case with securities held for the accounts of customers in bearer form or registered in “street name,” and will be the responsibility of such Participant and not of DTC, the Paying Agent, or the Authority, subject to any statutory or regulatory requirements as may be in effect from time to time. Payment of the principal of and interest on the Bonds and, if applicable, redemption premium to Cede & Co. (or such other nominee as may be requested by an authorized representative of DTC) is the responsibility of the Authority or the Paying Agent, disbursement of such payments to Direct Participants will be the responsibility of DTC, and disbursement of such payments to the Beneficial Owners will be the responsibility of Direct and Indirect Participants. DTC may discontinue providing its services as depository with respect to the Bonds at any time by giving reasonable notice to the Authority or the Paying Agent. Under such circumstances, in the event that a successor depository is not obtained, Bond certificates are required to be printed and delivered. The Authority may decide to discontinue use of the system of book-entry transfers through DTC (or a successor securities depository). In that event, Bond certificates will be printed and delivered. The information in this section concerning DTC and DTC’s book-entry system has been obtained from sources that the Authority believes to be reliable, but the Authority takes no responsibility for the accuracy thereof. Disclaimer of Liability for Failures of DTC

THE AUTHORITY, THE FINANCIAL CONSULTANT AND THE TRUSTEE CANNOT AND DO NOT GIVE ANY ASSURANCES THAT DTC, THE DTC PARTICIPANTS OR THE INDIRECT PARTICIPANTS WILL DISTRIBUTE TO THE BENEFICIAL OWNERS OF THE BONDS (I) PAYMENTS OF PRINCIPAL OR REDEMPTION PRICE OF OR INTEREST ON THE BONDS, (II) CERTIFICATES REPRESENTING AN OWNERSHIP INTEREST OR OTHER CONFIRMATION OF BENEFICIAL OWNERSHIP INTERESTS IN BONDS, OR (III) REDEMPTION OR OTHER NOTICES SENT TO DTC OR CEDE & CO., ITS NOMINEE, AS THE REGISTERED OWNER OF THE BONDS, OR THAT THEY WILL DO SO ON A TIMELY BASIS OR THAT DTC, DTC PARTICIPANTS OR INDIRECT PARTICIPANTS WILL SERVE AND ACT IN THE MANNER DESCRIBED IN THIS OFFICIAL STATEMENT. THE CURRENT "RULES" APPLICABLE TO DTC ARE ON FILE WITH THE SECURITIES AND EXCHANGE COMMISSION, AND THE CURRENT "PROCEDURES" OF DTC TO BE FOLLOWED IN DEALING WITH DTC PARTICIPANTS ARE ON FILE WITH DTC. NEITHER THE AUTHORITY, THE FINANCIAL CONSULTANT NOR THE TRUSTEE WILL HAVE ANY RESPONSIBILITY OR OBLIGATION TO ANY DTC PARTICIPANT, INDIRECT PARTICIPANT OR BENEFICIAL OWNER OR ANY OTHER PERSON WITH RESPECT TO: (1) THE BONDS; (2) THE ACCURACY OF ANY RECORDS MAINTAINED BY DTC OR ANY DTC PARTICIPANT OR INDIRECT PARTICIPANT; (3) THE PAYMENT BY DTC OR ANY DTC PARTICIPANT OR INDIRECT PARTICIPANT OF ANY AMOUNT DUE TO ANY BENEFICIAL OWNER IN RESPECT OF THE PRINCIPAL OR REDEMPTION PRICE OF OR INTEREST ON THE BONDS; (4) THE DELIVERY BY DTC OR ANY DTC PARTICIPANT OR INDIRECT PARTICIPANT OF ANY NOTICE TO ANY BENEFICIAL OWNER WHICH IS REQUIRED OR PERMITTED UNDER THE TERMS OF THE ORDINANCE TO BE GIVEN TO BONDHOLDERS; (5) THE SELECTION OF THE BENEFICIAL OWNERS TO RECEIVE PAYMENT IN THE EVENT OF ANY PARTIAL REDEMPTION OF THE BONDS; OR (6) ANY OTHER ACTION TAKEN BY DTC AS BONDHOLDER.

So long as Cede & Co. is the registered owner of the Bonds, as nominee of DTC, references herein to the bondholders or registered owners of the Bonds (other than under the caption “TAX MATTERS”) shall mean Cede & Co. and shall not mean the beneficial owners of the Bonds. Payments made by the Trustee to DTC or its nominee shall satisfy the Authority’s obligations with respect to the Bonds to the extent of such payments.

SECURITY FOR THE BONDS

General

The Bonds are secured by an assignment and pledge under the Indenture of the Pledged Revenues which include: (a) all revenues, rentals, fees, charges and moneys derived by or on behalf of the Authority from or in connection with the Parking Garage; (b) interest and income earned on all funds established under the Indenture; (c) all amounts payable by the City under the Guaranty; and (d) all amounts paid by the City to the Authority pursuant to the Contribution Agreement. THE BONDS ARE LIMITED OBLIGATIONS OF THE AUTHORITY AND NEITHER THE CREDIT NOR THE TAXING POWER OF THE COMMONWEALTH, THE COUNTY OF WASHINGTON OR ANY OTHER POLITICAL SUBDIVISION THEREOF, OTHER THAN THE CITY UNDER THE GUARANTY, IS PLEDGED FOR THE PAYMENT OF THE BONDS, NOR SHALL THE BONDS BE DEEMED AN OBLIGATION OF THE COMMONWEALTH, THE COUNTY OF WASHINGTON OR ANY OTHER POLITICAL SUBDIVISION THEREOF, OTHER THAN THE CITY UNDER THE GUARANTY.

The Guaranty

Under the Guaranty, the City has covenanted to and with the holders or registered owners of the Bonds from time to time outstanding under the Indenture, that the City: (a) shall include the amounts payable with respect to its guaranty for each fiscal year in which such sums shall be payable, in its budget for that fiscal year (less any amounts expected to be available from the Pledged Revenues of the Parking Garage); (b) appropriate such amounts from its general revenues for payment to the Trustee of its obligations under the Guaranty; and (c) duly and punctually pay or cause to be paid from its revenues or funds the amount payable in respect of such Guaranty, at the dates and place and in the manner provided for in the Guaranty, at the corporate trust office of the Trustee. For such budgeting, appropriation and payment, the City pledges irrevocably, its full faith, credit and taxing power. This Guaranty shall remain in effect until the principal and interest on the Bonds has been paid. The debt of the City evidenced by the Guaranty will be incurred under the Debt Act and is expected to be certified as self-liquidating lease rental debt.

Contribution Agreement

In addition to the Guaranty, pursuant to the Contribution Agreement dated as of June 5, 2012, the City agrees to assign and pay over to the Trustee, as agent of the Authority, up to $150,000 annually related to collections of parking meter and fine revenues to be applied to payment of debt service on the Bonds.

Debt Service Reserve Fund

There is created under the Indenture a Debt Service Reserve Fund. The Debt Service Reserve Fund will be funded on the date of issue of the Bonds in an amount equal to the Debt Service Fund Requirements, which with respect to the Bonds is an amount equal to the least of : (a) ten percent (10%) of the principal amount of the Bonds (or, if such Bonds have more than a de minimis amount (as defined in Treas. Reg. Sec. 1.148-1(b)) of original issue discount or premium, the issue price (as defined in Treas. Reg. Sec. 1.148-1(b)) of the Bonds), (b) the Maximum Annual Debt Service on such Bonds, and (c) one hundred twenty-five percent (125%) of the average annual debt service on such Outstanding Bonds. The Trustee, without further direction from the Authority, shall apply money in the Debt Service Reserve Fund toward payment of principal and interest, as applicable, from time to time becoming payable on the Bonds to the extent the Debt Service Fund established under the Indenture at any time shall be deficient for such purpose. In the event that the balance held in the Debt Service Reserve Fund is at any time less than the Debt Service Reserve Requirements, such fund shall be replenished in two semi-annual installments within a one-year period following any deficiency therein

The City also agrees in the Guaranty to pay to the Trustee amounts acquired to cure any deficiency in the Debt Service Reserve Fund for the Bonds resulting from draws by the Trustee on such Debt Service Reserve Fund. See “SECURITY FOR THE BONDS – The Guaranty” herein.

BOND INSURANCE

BOND INSURANCE POLICY

Concurrently with the issuance of the Bonds, Assured Guaranty Municipal Corp. ("AGM") will issue its Municipal Bond Insurance Policy for the Bonds (the "Policy"). The Policy guarantees the scheduled payment of principal of and interest on the Bonds when due as set forth in the form of the Policy included as an exhibit to this Official Statement.

The Policy is not covered by any insurance security or guaranty fund established under New York, California, Connecticut or Florida insurance law.

ASSURED GUARANTY MUNICIPAL CORP.

AGM is a New York domiciled financial guaranty insurance company and a wholly owned subsidiary of Assured Guaranty Municipal Holdings Inc. ("Holdings"). Holdings is an indirect subsidiary of Assured Guaranty Ltd. (“AGL”), a Bermuda-based holding company whose shares are publicly traded and are listed on the New York Stock Exchange under the symbol “AGO”. AGL, through its operating subsidiaries, provides credit enhancement products to the U.S. and global public finance, infrastructure and structured finance markets. No shareholder of AGL, Holdings or AGM is liable for the obligations of AGM.

AGM’s financial strength is rated “AA-” (stable outlook) by Standard and Poor’s Ratings Services, a Standard & Poor’s Financial Services LLC business (“S&P”) and “Aa3” (on review for possible downgrade) by Moody’s Investors Service, Inc. (“Moody’s”). An explanation of the significance of the above ratings may be obtained from the applicable rating agency. The above ratings are not recommendations to buy, sell or hold any security, and such ratings are subject to revision or withdrawal at any time by the rating agencies, including withdrawal initiated at the request of AGM in its sole discretion. In addition, the rating agencies may at any time change AGM’s long-term rating outlooks or place such ratings on a watch list for possible downgrade in the near term. Any downward revision or withdrawal of any of the above ratings, the assignment of a negative outlook to such ratings or the placement of such ratings on a negative watch list may have an adverse effect on the market price of any security guaranteed by AGM. AGM only guarantees scheduled principal and scheduled interest payments payable by the issuer of bonds insured by AGM on the date(s) when such amounts were initially scheduled to become due and payable (subject to and in accordance with the terms of the relevant insurance policy), and does not guarantee the market price or liquidity of the securities it insures, nor does it guarantee that the ratings on such securities will not be revised or withdrawn.

Current Financial Strength Ratings

On March 20, 2012, Moody’s issued a press release stating that it had placed AGM’s “Aa3” insurance financial strength rating on review for possible downgrade. AGM can give no assurance as to any further ratings action that Moody’s may take. Reference is made to the press release, a copy of which is available at www.moodys.com, for the complete text of Moody’s comments

On November 30, 2011, S&P published a Research Update in which it downgraded AGM’s financial strength rating from “AA+” to “AA-“. At the same time, S&P removed the financial strength rating from CreditWatch negative and changed the outlook to stable. AGM can give no assurance as to any further ratings action that S&P may take. Reference is made to the Research Update, a copy of which is available at www.standardandpoors.com, for the complete text of S&P’s comments.

For more information regarding AGM’s financial strength ratings and the risks relating thereto, see AGL’s Annual Report on Form 10-K for the fiscal year ended December 31, 2011.

Capitalization of AGM

At December 31, 2011, AGM’s consolidated policyholders’ surplus and contingency reserves were approximately $3,107,919,136 and its total net unearned premium reserve was approximately $2,171,861,791, in each case, in accordance with statutory accounting principles.

AGM’s statutory financial statements for the fiscal year ended December 31, 2011, which have been filed with the New York State Department of Financial Services and posted on AGL’s website at http://www.assuredguaranty.com, are incorporated by reference into this Official Statement and shall be deemed to be a part hereof.

Incorporation of Certain Documents by Reference

Portions of the following document filed by AGL with the Securities and Exchange Commission (the “SEC”) that relate to AGM are incorporated by reference into this Official Statement and shall be deemed to be a part hereof:

(i) the Annual Report on Form 10-K for the fiscal year ended December 31, 2011 (filed by AGL with the SEC on February 29, 2012).

All information relating to AGM included in, or as exhibits to, documents filed by AGL pursuant to Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended, after the filing of the last document referred to above and before the termination of the offering of the Bonds shall be deemed incorporated by reference into this Official Statement and to be a part hereof from the respective dates of filing such documents. Copies of materials incorporated by reference are available over the internet at the SEC’s website at http://www.sec.gov, at AGL’s website at http://www.assuredguaranty.com, or will be provided upon request to Assured Guaranty Municipal Corp.: 31 West 52nd Street, New York, New York 10019, Attention: Communications Department (telephone (212) 826- 0100).

Any information regarding AGM included herein under the caption “BOND INSURANCE – Assured Guaranty Municipal Corp.” or included in a document incorporated by reference herein (collectively, the “AGM Information”) shall be modified or superseded to the extent that any subsequently included AGM Information (either directly or through incorporation by reference) modifies or supersedes such previously included AGM Information. Any AGM Information so modified or superseded shall not constitute a part of this Official Statement, except as so modified or superseded.

Miscellaneous Matters

AGM or one of its affiliates may purchase a portion of the Bonds or any uninsured bonds offered under this Official Statement and may hold such Bonds or uninsured bonds for investment or may sell or otherwise dispose of such Bonds or uninsured bonds at any time or from time to time.

AGM makes no representation regarding the Bonds or the advisability of investing in the Bonds. In addition, AGM has not independently verified, makes no representation regarding, and does not accept any responsibility for the accuracy or completeness of this Official Statement or any information or disclosure contained herein, or omitted herefrom, other than with respect to the accuracy of the information regarding AGM supplied by AGM and presented under the heading “BOND INSURANCE”.

BOND INSURANCE RISK FACTORS In the event of default of the payment of principal or interest with respect to the Bonds when all or some becomes due, any owner of the Bonds shall have a claim under the applicable Bond Insurance Policy (the “Policy”) for such payments. However, in the event of any acceleration of the due date of such principal by reason of mandatory or optional redemption or acceleration resulting from default or otherwise, other than any advancement of maturity pursuant to a mandatory sinking fund payment, the payments are to be made in such amounts and at such times as such payments would have been due had there not been any such acceleration. The Policy does not insure against redemption premium, if any. The payment of principal and interest in connection with mandatory or optional prepayment of the Bonds by the issuer which is recovered by the issuer from the bond owner as a voidable

preference under applicable bankruptcy law is covered by the insurance policy, however, such payments will be made by the Insurer at such time and in such amounts as would have been due absence such prepayment by the Issuer unless the Bond Insurer chooses to pay such amounts at an earlier date. Under most circumstances, default of payment of principal and interest does not obligate acceleration of the obligations of the Bond Insurer without appropriate consent. The Bond Insurer may direct and must consent to any remedies and the Bond Insurer’s consent may be required in connection with amendments to any applicable bond documents. In the event the Bond Insurer is unable to make payment of principal and interest as such payments become due under the Policy, the Bonds are payable solely from the moneys received pursuant to the applicable bond documents. In the event the Bond Insurer becomes obligated to make payments with respect to the Bonds, no assurance is given that such event will not adversely affect the market price of the Bonds or the marketability (liquidity) for the Bonds. The long-term ratings on the Bonds are dependent in part on the financial strength of the Bond Insurer and its claim paying ability. The Bond Insurer’s financial strength and claims paying ability are predicated upon a number of factors which could change over time. No assurance is given that the long-term ratings of the Bond Insurer and of the ratings on the Bonds insured by the Bond Insurer will not be subject to downgrade and such event could adversely affect the market price of the Bonds or the marketability (liquidity) for the Bonds. See description of “RATINGS” herein. The obligations of the Bond Insurer are contractual obligations and in an event of default by the Bond Insurer, the remedies available may be limited by applicable bankruptcy law or state law related to insolvency of insurance companies. Neither the Issuer or Underwriter have made independent investigation into the claims paying ability of the Bond Insurer and no assurance or representation regarding the financial strength or projected financial strength of the Bond Insurer is given. Thus, when making an investment decision, potential investors should carefully consider the ability of the Issuer to pay principal and interest on the Bonds and the claims paying ability of the Bond Insurer, particularly over the life of the investment. See “Bond Insurance” herein for further information provided by the Bond Insurer and the Policy, which includes further instructions for obtaining current financial information concerning the Bond Insurer.

PURPOSE OF THE ISSUE

Description

The proceeds of the Bonds, together with other available funds, will be used for: (1) currently refunding the Authority’s Guaranteed Parking Revenue Bonds, Series of 2006 (see “PLAN OF FINANCING - The 2006 Refunding”); (2) funding a Debt Service Reserve Fund; and (3) paying the costs and expenses related to the issuance of the Bonds.

PLAN OF FINANCING

The 2006 Refunding

The 2006 Refunding consists of the current refunding of all of the Authority’s outstanding Guaranteed Parking Revenue Bonds, Series of 2006 in the aggregate principal amount of $3,215,000 (the "2006 Refunded Bonds"). Upon issuance of the Bonds, a portion of the proceeds of the Bonds in an amount sufficient to pay the redemption price of the 2006 Refunded Bonds will be irrevocably deposited with the Trustee into the account of the Debt Service Fund applicable to the 2006 Refunded Bonds. The 2006 Refunded Bonds maturing on or after November 15, 2012 are subject to optional redemption in whole on any date after November 15, 2011 at a redemption price of 100% of the principal amount of such 2006 Refunded Bonds, plus interest accrued to the redemption date. It is expected that the 2006 Refunded Bonds will be redeemed on the date of issue of the Bonds.

SOURCES AND USES OF FUNDS

The following sets forth the sources and uses of funds:

Sources of Funds:

Par Amount of Bonds ...... $ Net Original Issue (Discount)/Premium ...... Transfer from Prior Issue Debt Service Reserve Fund ...... Total Sources of Funds ...... $

Uses of Funds:

Deposit to Redeem 2006 Refunded Bonds ...... $ Deposit to Debt Service Reserve Fund ...... Costs of Issuance (1) ...... Total Uses of Funds ...... $

______(1) Includes rating, bond insurance, legal fees, underwriter’s discount, Trustee fees, financial consultant fees, printing of Preliminary and Official Statements, rounding and other related expenses.

DEBT SERVICE SCHEDULE $3,355,000* THE PARKING AUTHORITY OF THE CITY OF WASHINGTON Washington County, Pennsylvania Guaranteed Parking Revenue Refunding Bonds, Series of 2012

Dated: Date of Delivery Due: November 15, as shown below

Mandatory Sinking Fiscal Year Debt Fund Interest Total Principal Service (Year Date Principal Redemption Rate Interest and Interest Ending 12/31)

TOTALS ______*Preliminary, subject to change

THE PARKING GARAGE

General The Authority, the City, the Washington County Industrial Development Authority (the “IDA”), and The Redevelopment Authority of Washington County (the “Redevelopment Authority”) agreed to the joint development of the Authority’s Crossroads Parking Garage, a four level precast, prestressed, concrete parking structure accommodating 816 parking spaces, pursuant to the terms of an Agreement Regarding the Crossroads Parking Garage Agreement (the “Agreement”) (the “2006 Project”), which project was completed in May, 2007. The 2006 Project was part of a major effort to redevelop the City of Washington Central Business District. Pursuant to the Agreement, the Redevelopment Authority was responsible for the construction of the Parking Garage and the Authority owns and operates the Garage. The Parking Garage was financed by a combination of the proceeds of the Authority’s Series of 2006 Bonds, the Commonwealth of Pennsylvania’s Redevelopment Assistance Capital Grant, and the proceeds from a Tax Increment Financing Note, Series of 2006 issued by the IDA, as agent of the Redevelopment Authority. Rates and Charges The Parking Garage contains 800 spaces. The current occupancy rate of the garage is 75% consisting of 500 monthly leases and 100 daily parkers. The current parking rates are as follows: $1.00 for 2 hours and $4 per day; monthly rate - $45.00; County employee monthly rate - $35.00

Financial Statements

The Authority’s financial statements report information about the Authority using accounting methods similar to those used by private sector companies. The Authority’s financial statements are prepared on the accrual basis of accounting. The Statement of Revenues, Expenditures and Changes in Net Assets, as prepared by the independent auditor, reports total operating revenue and expenses and the non-operating revenue and expenses to derive the net income, which is reserved in retained earnings.

Financial Highlights

The Authority’s financial statements for the fiscal year ending December 31, 2010 are included herein as Appendix “C”. The financial statements reflect the following changes in the Authority’s financial position:

 Cash and investments increased to $675,638 or 54.75 percent over 2009  The Crossroads Parking Garage generated $233,216 in revenue or 29.57 percent over 2009

THE PARKING AUTHORITY OF THE CITY OF WASHINGTON Statement of Revenues, Expenditures, and Changes in Net Assets Enterprise Fund

2008 2009 2010 Operating Revenues

Charges for Services Parking Revenues $ 236,445 $ 157,211 $ 223,216 Total Operating Revenues 236,445 157,211 223,216

Operating Expenses

Administrative Expenses 36,016 48,105 40,062

Operations and Maintenance 527,094 509,325 505,009

Interest Expense Bonds 152,923 152,740 149,090

Total Operating Expenses 716,033 710,170 694,161

Operating Income (Loss) (479,588) (552,959) (470,945)

Non-Operating Income and Expense Interest and Dividends 9,424 631 3,827 Other Non Operating Revenues - 107,520 152,318 Total Non Operating Income and Expense 9,424 108,151 156,145

Increase (Decrease) in Net Assets (470,164) (444,808) (314,800)

Net Assets – Beginning of Year 11,980,764 11,510,600 11,065,792

Net Assets – End of Year $11,510,600 $11,065,792 $10,750,992

Net Income

THE PARKING AUTHORITY OF THE CITY OF WASHINGTON BUDGET COMPARISON

2012 Budget 2011 Budget 2011 Actual Ordinary Income/Expense Income Interest Income – Ordinary $2,400.00 $2,400.00 $2,673.19 Total Interest Income 2,400.00 2,400.00 2,673.19

Bond Dividend FSA Bond Ins. Policy 8.73 1.00 0.00 Bond Dividend – Other 0.00 24.00 16.98 Total Bond Dividend 8.73 25.00 16.98

City Bond Guarantee 145,000.00 190,000.00 100,184.80

Parking Revenue Daily Revenue 60,000.00 64,800.00 74,100.75 Monthly Revenue 228,000.00 150,000.00 248,042.68 Lost Card fees 0.00 0.00 (20.00) Total Parking Revenue 288,000.00 214,800.00 322,123.43

Total Income 435,408.73 407,225.00 424,998.40

Expenses Pay Station Expenses Refund overpaid parking 120.00 240.00 141.50 Total Pay StationExpenses 120.00 240.00 141.50

Bond Expense Pledged Revenue Payment 0.00 0.00 0.00 Trustee Service Fee & Expenses 1,600.00 1,272.00 1,200.00 Bond Redemption Cost 115,000.00 110,000.00 110,000.00 Bond Interest Expense 141,080.00 145,205.00 145,205.00 Bond Management Expense 0.00 0.00 372.00 Bond Interest Expense 257,680.00 256,477.00 256,777.00

Payroll Expense 33,271.88 38,051.40 31,014.15 Operating Supplies 4,480.82 2,740.36 (244.11) Parking Garage Equipment 660.00 2,400.00 0.00 Professional Services 5,130.00 4,315.00 3,894.00 Advertising & Communication Expense 420.00 0.00 345.62 Washington Federal Bank Fee 300.00 240.00 (64.78) Void Check Fee 0.00 120.00 0.00 Mileage Reimbursement 0.00 0.00 0.00 Fuel 1,380.00 1,200.00 1,326.16 Insurance 7,600.00 6,601.00 7,258.00 Utilities 39,262.96 42,401.90 34,039.77 Maintenance Materials & Supplies 18,600.00 3,840.00 15,031.92 Maintenance Equipment 600.00 300.00 (20.95) Contract Maintenance & Inspection 10,900.00 22,494.78 11,809.81 Contract Building Maintenance 15,000.00 25,000.00 560.00 Membership Dues 0.00 203.00 0.00 Meeting Expense 300.00 363.54 279.31 Depreciation Expense 0.00 0.00 0.00 Freight 57.00 0.00 0.00 Customer Damage Claim 0.00 0.00 0.00 Total Expense 384,862.66 406,987.98 362,147.40

Net Income 146.07 237.02 62,851.00

TAX EXEMPTION Federal Tax Exemption Bond Counsel is expected to issue its opinion at closing to the effect that, under existing law, interest on and accruals of original issue discount with respect to the 2012 Bonds (a) are excluded from gross income for federal income tax purposes and (b) are not items of tax preference within the meaning of Section 57 of the Internal Revenue Code of 1986, as amended (the “Code”), for purposes of the alternative minimum tax imposed by Section 55 of the Code on individuals and corporations; however, with respect to corporations (as defined for federal income tax purposes), such interest is taken into account in determining adjusted current earnings for the purpose of computing the alternative minimum tax imposed by Section 55 of the Code on such corporations. . Accruals of the original issue discount with respect to a 2012 Bond allocable to an owner of a 2012 Bond under a constant yield method of accrual (a) are not included in gross income for federal income tax purposes, and (b) are added to such owner’s tax basis in the 2012 Bond for the purpose of determining gain or loss for federal income tax purposes upon sale, exchange, redemption and other disposition of the 2012 Bond. The opinions set forth in the preceding two sentences are subject to the condition that the Authority complies with all the requirements of the Code that must be satisfied subsequent to the issuance of the 2012 Bonds in order that interest on and accruals of original issue discount with respect to the 2012 Bonds be (or continue to be) excluded from gross income for federal income tax purposes. Failure to comply with such requirements could cause the interest on and accruals of original issue discount with respect to the 2012 Bonds to be included in gross income retroactively to the date of issuance of the 2012 Bonds. The Authority has covenanted to comply with all such requirements. Ownership of the 2012 Bonds may give rise to collateral federal income tax consequences to certain taxpayers, including, without limitation, financial institutions, property and casualty insurance companies, S corporations with Subchapter C earnings and profits, individual recipients of Social Security or Railroad Retirement benefits and taxpayers who may be deemed to have incurred or continued indebtedness to purchase or carry the 2012 Bonds. Bond Counsel expresses no opinion as to any such collateral federal income tax consequences. Purchasers of 2012 Bonds should consult their own tax advisors as to such collateral federal income tax consequences. Pennsylvania Tax Exemption The opinion of Bond Counsel will also state that, under existing law, the 2012 Bonds are exempt from personal property taxes in Pennsylvania and the interest on the 2012 Bonds are exempt from Pennsylvania personal income tax and corporate net income tax. Original Issue Discount The 2012 Bonds stated to mature on November 15, 20__ and November 15,, 20__ (the “OID Bonds”) are being offered and sold to the public at an original issue discount (“OID”) from the amounts payable at their maturity. OID is the excess of the stated redemption price of a bond at maturity (the face amount) over the “issue price” of such bond. The issue price is the initial offering price to the public (other than to bond houses, brokers or similar persons acting in the capacity of underwriters or wholesalers) at which a substantial amount of bonds of the same maturity are sold pursuant to that initial offering. For federal income tax purposes, OID on each bond will accrue over the term of the OID Bond, and for the OID Bonds, the amount of the accrual will be based upon a single rate of interest, compounded semiannually (the “Yield to maturity”). The amount of OID that accrues during each semiannual period will do so ratably over the period on a daily basis. With respect to an initial purchase of a OID Bond at its issue price, the portion of OID that accrues during the period that such purchaser owns such Bond is added to the purchaser’s tax basis for purposes of determining gain or loss at the maturity, redemption, sale or other disposition of that OID Bond and thus, in practical effect, is treated as stated interest, which is excludible from gross income for federal income tax purposes. Owners of OID Bonds (or book entry interests) should consult their own tax advisors as to the treatment of OID and the tax consequences of the purchase of such OID Bonds (or book entry interests) other than at the issue price during the initial public offering and as to the treatment of OID for state tax purposes. Tax Treatment of Premium The 2012 Bonds stated to mature on November 15, 20__ and November 15, 20__ (the “Premium Bonds”) are being offered and sold to the public at a price in excess of the principal amount thereof. Under the Code, the difference between the principal amount of a Premium Bond and the cost basis of such Premium Bond to an owner thereof is “bond premium.” Under the Code, bond premium is amortized over the term of Premium Bond (i.e., the

maturity date of a Premium Bond or its earlier call date) for federal income tax purposes. An owner of a Premium Bond is required to decrease his or her basis in such Premium Bond by the amount of the amortizable bond premium attributable to each taxable year (or portion thereof) he or she owns such Premium Bond. The amount of the amortizable bond premium attributable to each taxable year is determined on an actuarial basis at a constant interest rate determined with respect to the yield on a Premium Bond compounded on each interest payment date. The amortizable bond premium attributable to a taxable year is not deductible for federal income tax purposes. Owners of Premium Bonds (or book entry interests) (including purchasers of Premium Bonds (or book entry interest) in the secondary market) should consult their own tax advisors with respect to the precise determination for federal income tax purposes of the treatment of bond premium upon sale, redemption or other disposition of Premium Bonds (or book entry interests) and with respect to the state and local consequences of owning and disposing of Premium Bonds (or book entry interests).

CONTINUING DISCLOSURE UNDERTAKING

In accordance with the requirements of Rule 15c2-12 (the “Rule”), promulgated by the Securities and Exchange Commission (the “Commission”), the Authority and the City will agree:

(i) To file annually with the Municipal Securities Rulemaking Board (the “MSRB”) through the MSRB’s Electronic Municipal Market Access (EMMA) in such electronic format as is prescribed by the MSRB and accompanied by such identifying information as prescribed by the MSRB, not later than 275 days following the end of each fiscal year of the Authority, beginning with the fiscal year ending December 31, 2012, the following financial information and operating data with respect to the Authority and the City which the Authority and the City customarily prepare and make public:

(a) a copy of the annual audited financial statements of the Authority and the City prepared in accordance with generally accepted municipal accounting principles in Pennsylvania, and audited in accordance with generally accepted auditing standards;

(b) a copy of the Authority’s budget and the City’s general fund budget for the current fiscal year;

(ii) to file in a timely manner not in excess of ten (10) business days after the occurrence of such event, with the MSRB, in such electronic format as is prescribed by the MSRB and accompanied by such identifying information as prescribed by the MSRB, notice of the occurrence of any of the following events with respect to the Bonds:

(1) principal and interest payment delinquencies; (2) non-payment related defaults, if material; (3) unscheduled draws on debt service reserves reflecting financial difficulties; (4) unscheduled draws on credit enhancements reflecting financial difficulties; (5) substitution of credit or liquidity providers, or their failure to perform; (6) adverse tax opinions, the issuance by the Internal Revenue Service of proposed or final determinations of taxability, Notices of Proposed Issue (IRS Form 5701-TEB) or other material notices or determinations with respect to the tax status of the Bonds or other material events affecting the tax status of the Bonds; (7) modifications to the rights of Holders, if material; (8) Bond calls, if material, and tender offers; (9) defeasances; (10) release, substitution, or sale of property securing repayment of the Bonds, if material; (11) rating changes; (12) bankruptcy, insolvency, receivership or similar event of the Issuer; (13) the consummation of a merger, consolidation, or acquisition involving an obligated person or the sale of all or substantially all of the assets of the obligated person, other than in the ordinary course of business, the entry into a definitive agreement to undertake such an action, or the termination of a definitive agreement relating to any such actions, other than pursuant to its terms, if material; and

(14) appointment of a successor or additional trustee, or the change of name of a trustee, if material. (iii) to file in a timely manner with the MSRB and accompanied by such identifying information as prescribed by the MSRB, notice of a failure of the Authority or the City to provide the required annual financial information set forth in subparagraph (i) above on or before the date specified above. The Authority may from time to time choose to provide notice of the occurrence of certain other events, in addition to those listed above, if, in the judgment of the Authority, such other event is material with respect to the Bonds, but the Authority does not commit to provide notice of the occurrence of any material event except those events listed above. The Authority reserves the right to terminate its respective obligation to provide annual financial information and notices of material events, as summarized above, if and when such Authority is no longer an “obligated person” with respect to the Bonds within the meaning of the Rule. The Authority acknowledges that its undertaking pursuant to the Rule described under this heading is intended to be for the benefit of the holders of the Bonds and shall be enforceable by the holders of such Bonds; provided that the Bondholders’ right to enforce the provisions of this undertaking shall be limited to a right to obtain specific enforcement of the Authority’s obligations hereunder and any failure by the Authority to comply with the provisions of this undertaking shall not be an event of default with respect to the Bonds. Effective July 1, 2009, the MSRB was designated by the SEC to be the central repository for ongoing disclosures by municipal issuers. Disclosure filings and notices are made available to investors through the MSRB’s Electronic Municipal Market Access (EMMA) system which is accessible on the internet at http://emma.msrb.org.

Continuing Compliance

The Authority inadvertently failed to file its annual financial information in each year since 2006. As of February 23, 2012, the Authority has now complied by making the annual financial information filings with the MRSB through EMMA for all years since 2006. The Authority intends to adopt a written post-issuance compliance policy to put in place procedures to provide for the filings required under the Rule in future years. The Authority will be entering into a Continuing Disclosure Certificate in connection with the Bonds in which it will agree to provide continuing disclosure material and notice of material events affecting the Bonds on an ongoing basis following Closing of the Bonds, as more specifically set forth herein.

LEGAL MATTERS

Litigation

There is no litigation of any nature, now pending or threatened seeking to restrain or enjoin the issuance or sale of the Bonds being proposed, or contesting or affecting the validity of the Bonds or any proceedings of the Authority or the City with respect to the issuance or sale thereof, or the payment of the Bonds or existence or powers of the Authority or the City. There are no pending or threatened legal proceedings materially adversely affecting the ability of the Authority or the City under the Guaranty to meet its obligations in connection with the Bond funding. Legal Opinions

Certain legal matters incident to the authorization, issuance and sale of the Bonds will be passed upon by Buchanan Ingersoll & Rooney PC, Pittsburgh, Pennsylvania, Bond Counsel, whose approving legal opinion will be attached to the Bonds. Certain legal matters pertaining to the Authority and the City will be passed upon by their Solicitor, Lane Turturice, Esquire of Bergeren & Turturice, Washington, Pennsylvania.

FUTURE FINANCING

The Authority does not anticipate issuing additional long term debt within the next three years to fund additional capital projects.

BONDHOLDER RISKS

The City will guarantee payment of debt service on the Bonds pursuant to the Guaranty. However, it is anticipated that Pledged Revenues, as defined in the Indenture, from or in connection with the Parking Garage, will be sufficient to pay debt service on the Bonds. The Authority’s ability to derive Pledged Revenues from the use and operation of the Parking Garage in amounts sufficient to pay debt service on the Bonds depends on numerous factors, many of which are not within the control of the Authority. Described below are certain factors that could affect future use and operation of the Parking Garage, and the ability of the Authority to pay debt service on the Bonds from the Pledged Revenues of the Parking Garage.

Operational Risk

Any factor that adversely affects the receipt of Pledged Revenues and the other amounts available for payment of debt service creates a risk that debt service on the Bonds will not be paid when due from Pledged Revenues. The principal source of Pledged Revenues will be all revenues, rentals and moneys derived by or on behalf of the Authority from or in connection with the Parking Garage. A number of factors could have an adverse impact on such revenues, rentals and other moneys, which are beyond the control of the Authority, including adverse changes in the economy of the City, competition from other parking garages, energy costs, governmental rules and policies, and potential environmental and other liabilities.

Other Risk Factors

An investment in the Bonds involves a substantial element of risk. In order to identify risk factors and make an informed investment decision, potential investors should be thoroughly familiar with the entire Official Statement (including the appendices hereto) in order to make a judgment as to whether the Bonds are an appropriate investment. Purchasers of the Bonds are advised to consult their tax advisors as to the tax consequences of purchasing or holding the Bonds.

MUNICIPAL BANKRUPTCY LAW

The undertakings of the Authority and the security for the Bonds should be considered with reference to Chapter IX of the Bankruptcy Act, United States Code Title 2, Section 301, et seq., as amended by Public Law 94- 260, approved April 8, 1978, effective October 1, 1979, and other laws affecting creditor’s rights and municipalities in general. The amendments of P.L. 94-260 replace the former Chapter IX Legislation and permit a State, and if authorized by State law, a political subdivision, public agency or instrumentality that is insolvent or unable to meet its debts, to file with the Bankruptcy Court a list if its creditors; provides that a petition filed under Chapter IX shall operate as a stay of the commencement or continuation of any judicial or other proceedings against the petitioner; grant priority to debts owed for service or materials actually provided within three months of the filing of the petition; direct a petitioner to file a plan for the adjustment of its debts; and provide that the plan must be accepted in writing by or on behalf of creditors holding at least two-thirds in amount and more than one-half in number of the listed claims. Pennsylvania's Financially Distressed Municipalities Act, Act No. 1987-47 (as amended, "Act 47") became effective on September 8, 1987. Under Act 47, upon a determination by the Pennsylvania Secretary of Community Affairs, now Community and Economic Development (the "Secretary") that a municipality is financially distressed (one indication of which is a default in the payment of principal or interest on any bonds or notes) the Secretary shall appoint a coordinator who shall prepare a plan for restoring the financial integrity to the municipality. The coordinator shall file a proposed plan, publish notice of such filing in one or more local newspapers, receive written comments on the proposed plan, hold a public meeting on the proposed plan, make any revisions thereto and submit the final plan to the municipality's governing body. All creditors are entitled to written notice of the plan's final adoption by the municipality's governing body. The intent of Act 47 is to provide for the adjustment of municipal debt by negotiated agreement with creditors. The plan, however, may recommend that the municipality file for relief under Chapter 9 of the United States Bankruptcy Code. Any reference herein to Act 47 or the United States Bankruptcy Code should not be taken as any indication that the Authority or the City intend to proceed under either of those statutes.

UNDERWRITING

The Bonds are being purchased for reoffering by Janney Montgomery Scott LLC, Pittsburgh, Pennsylvania (the “Underwriter”). The Underwriter has agreed to purchase the Bonds at an aggregate purchase price of $______(consisting of the par amount of the Bonds plus/less Net Original Issue Premium/Discount of $______and less Underwriting Discount of $______), plus accrued interest, if any, to the date of Closing. The purchase contract for the Bonds provides that the Underwriter will purchase all the Bonds, if any are purchased, and that the obligation to make such purchase is subject to certain terms and conditions set forth in the purchase contract. The Underwriter may offer and sell certain Bonds to certain dealers and others (including sales for deposit into investment trusts) at prices lower than the public offering price stated on the cover page hereof. The Underwriter may over-allot or effect transactions which stabilize or maintain the market price of the Bonds at levels above those which might otherwise prevail in the open market; such stabilizing, if commenced, may be discontinued at any time without prior notice.

FINANCIAL CONSULTANT

The Authority has retained VALCO Capital Ltd., Ligonier, Pennsylvania, as financial consultant (the “Financial Consultant”) in connection with the financial terms of the Bonds. The Financial Consultant is not obligated to undertake, and has not undertaken to make, an independent verification or to assume responsibility for the accuracy, completeness, or fairness, of the information contained in the Official Statement. The Financial Consultant is an independent consulting firm and is not engaged in the business of underwriting, trading, or distributing municipal securities or other public securities.

CERTIFICATION OF OFFICIAL STATEMENT

The Authority hereby states that the descriptions and statements herein are true and correct in all material respects and it will confirm to the purchasers of the Bonds, by certificates signed by the Chairman of the Authority Board, that to his knowledge such statements, as of the date hereof, are true and correct in all material respects and do not contain any untrue statement of material fact or omit to state a material fact necessary to make the statements herein, in light of the circumstances under which they were made, not misleading.

All other information has been obtained from sources, which the Authority considers to be reliable and it makes no warranty, guaranty or other representation with respect to the accuracy and completeness of such information. RATINGS

Standard & Poor’s Ratings Services (“S&P” or the “Rating Agency”) is expected to assign its municipal bond rating of “AA-” (stable outlook) to this issue of Bonds with the understanding that upon delivery of the Bonds, a policy insuring the payment when due of the principal of and interest on the Bonds will be issued by Assured Guaranty Municipal Corp. (“AGM”). In addition, the Rating Agency has assigned an underlying rating of “A-” (stable outlook) to the Bonds. Such ratings reflect only the views of such organizations and any desired explanation of the significance of such ratings should be obtained from the Rating Agency furnishing the same. Generally, a rating agency bases its rating on the information and materials furnished to it and on investigations, studies and assumptions of its own. There is no assurance such ratings will continue for any given period of time or that such ratings will not be revised downward or withdrawn entirely by the Rating Agency, if in the judgment of such Rating Agency, circumstances so warrant. Any such downward revision or withdrawal of such ratings may have an adverse effect on the market price of the Bonds.

MISCELLANEOUS

Remedies

The remedies available to Registered Owners upon any failure to pay principal of or interest on the Bonds when due include those remedies provided in the Indenture (subject to the right of the Insurer to control remedies) (see APPENDIX E attached hereto – Summary of Certain Provisions of the Indenture), as well as those remedies prescribed by the Debt Act with respect to the Guaranty. Pursuant to the Debt Act, if the City’s failure to make payments under the Guaranty should continue for 30 days, the Registered Owner will (subject to certain priorities) have the right to bring suit for the amount due in the Court of Common Pleas for Washington County, Pennsylvania and may also, upon written request of the owners of 25% in aggregate principal amount of the Bonds appoint a

trustee (who may be the Trustee) to represent Registered Owners. The Debt Act provides that any judgment shall have an appropriate priority upon the moneys next coming into the treasury of the City.

Certain Matters

All information, estimates and assumptions herein have been obtained from officials of the Authority, the City, other governmental bodies, trade and statistical services and other sources which are believed to be reliable, but no representations whatsoever are made that such estimates or assumptions are correct or will be realized. So far as any statements herein involve matters of opinion, whether or not expressly so stated, they are intended as such and not as representations of fact. This Official Statement, including the appendices attached hereto, has been duly approved by the Authority and the City and its distribution has been authorized in connection with the offering for sale of the Bonds.

THE PARKING AUTHORITY OF THE CITY OF WASHINGTON

By: Richard Mancini, Chairman

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APPENDIX A

DEMOGRAPHIC AND ECONOMIC INFORMATION RELATING TO THE CITY OF WASHINGTON AND WASHINGTON COUNTY, PENNSYLVANIA

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THE CITY OF WASHINGTON

The City

The City of Washington is a Third Class City located in Washington County in Southwestern Pennsylvania at the crossroads of Interstates 70 and 79 and Route 19. The City covers an area of 3-1/3 square miles. The City of Washington was founded in 1781 by immigrants from England, Ireland and Scotland.

The City is located approximately 27 miles southwest of Pittsburgh, Pennsylvania and serves as the County seat for Washington County. Divisions of the Baltimore and Ohio Railroad and CXS serve the City, and Interstate 79 provides direct access to the Pittsburgh International Airport. The Washington County Airport is located four miles from the City.

The City’s historic downtown area surrounding the Washington County Courthouse has been recently revitalized, and the City has an active business district authority. The City houses the entire campus of Washington and Jefferson College, a four-year liberal arts undergraduate school, and the Washington Hospital, a 239 bed facility that provides schools of nursing and radiology and offers a family medicine residency program.

Form of Government

The City operates under the Third Class City Code, Council-Manager form of Government under the Optional Charter Plan. Each Council Member, the Mayor, the Controller and the Treasurer are elected at a regular municipal election. The following is a list of various departments and their respective responsibilities.

Accounts & Finance – Oversees the general operation of the City’s financial management and budget.

Tax Department – The Tax Department is managed by the City Treasurer and is responsible for the billing and receiving of Real Estate Taxes, Per Capita Taxes, LST Taxes, Solid Waste / Recycling fees, Permits Fees, Earned Income Taxes and other taxes collected by the City.

Department of Public Works – The Public Works Department is responsible for the operation of the parks, traffic engineering, streets department, engineering and the municipal garage.

Department of Police – The Police Department provides services for the protection of persons and property and the preservation of order in the City.

Department of Fire – The Fire Department provides services for fire protection and emergency services within the City.

City Employment and Labor Relations

As of January 1, 2012 the City had 73 employees represented by unions. 31 police officers and 20 non- uniformed employees are serving under contracts which expire on December 31, 2014. Twenty-two (22) firemen are serving under a contract which expires on December 31, 2015. The City also has nine non-represented employees.

Pension Plan

City employees are covered by one of three pension plans: Police, Firemen and Officers and Employees plans. The plans are characteristically alike in that they are all contributory defined benefit plans and cover only employees. The plans are governed by Pennsylvania Act 205 of 1984. Actuarial reports are prepared every two years.

Annual pension cost and net obligations for the prior two years is summarized below:

Police Firemen Officers/Employees 2010 2009 2010 2009 2010 2009 Annual required contribution $ 585,717 $ 372,274 $ 944,391 $381,069 $87,185 $ 580 (ARC) Interest on net pension (12,077) (10,380) (4,786) (79) (2,825) (2,810) obligation (NPO) A-1

Police Firemen Officers/Employees Adjustment to the ARC 21,129 18,175 6,122 125 3,596 3,794 Annual pension cost 594,769 380,069 945,727 281,115 87,955 1,564

Contributions made 880,971 401,278 1,406,198 439,950 87,184 1,744

Change in NPO (286,202) (21,209) (460,471) (58,835) 771 (180)

NPO, beginning of year 1/1 (150,961) (129,752) (59,823) (988) (35,307) (35,127)

NPO end of year 12/31 $(437,163) $(150,961) $(520,294) $(150,823) $(34,536) $(35,307)

The following table sets forth the funded status of the plans as of January 1, 2011, the most recent valuation date:

Officers/ Police Firemen Employees Actuarial Value of Assets $9803,517 $7,145,254 $4,374,671 Actuarial Accrued Liability 4,979,898 14,586,714 4,487,322 Funded Rates 66.3% 49% 97.5%

Note: As of January 1, 2009, the City implemented a special Act 205 wage tax for the purpose of funding the City’s pension obligations in order to improve the funded status of the plans. Actuarial cash flow projections indicate that the plans could be fully funded in approximately eight years at the current tax rate in effect and assuming reasonable actuarial assumptions.

Source: City of Washington, Audited Modified Cash Basis Financial Statements for the year ended December 31, 2010 and City Officials.

SOURCES OF CITY REVENUES

Taxing Authority and Taxes Levied

The City of Washington may levy taxes subject to the Third Class City Code. All taxes are levied in accordance with the State of Pennsylvania Third Class City Code (P.L. 662), and Act 511, the Local Tax Enabling Act.

Under the Third Class City Code, the City may levy the following taxes:

a. A tax for general revenue purposes on all persons and property taxable according to laws of the Commonwealth for city purposes. (Equal to 25 mills for general revenue purposes plus an additional 5 mills with court approval). b. An annual tax sufficient to pay interest and principal on any indebtedness incurred pursuant to the Debt Act or any prior or subsequent act governing the incurrence of indebtedness of the City. c. The council of any third class city may, by ordinance, in any year levy separate and different rates of taxation for city purposes on all real estate classified as land, exclusive of the buildings thereon, and on all real estate classified as buildings on land. When real estate tax rates are so levied, (i) the rates shall be determined by the requirements of the city budget as approved by council, (ii) higher rates may be levied on land if the respective rates on lands and buildings are so fixed so as not to constitute a greater levy in the aggregate than a rate of 25 mills on both land and buildings, and (iii) they shall be uniform as to all real estate within such classification. d. Where the council of a third class city by a majority action shall, upon due cause shown, petition the court of sessions for the right to levy additional millage, the court, after such public notice as it may direct and after hearing, may order a greater rate than 25 mills but not exceeding five additional mills to be levied. e. 1/10th mill on the dollar on the assessed valuation of property in the City, for the purpose of defraying the costs and expenses of caring for shade trees.

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f. The council of a third class city may annually appropriate, and cause to be raised by taxation funds to pay all expenses incurred for the operation and maintenance of recreation places.

2012 Tax Rate Summary

Tax Rates: City School District County Total Real Estate Tax: Land ...... 107.63 mills 127.00 mills 24.90 259.53 mills Buildings ...... 3.50 mills 127.00 mills 24.90 155.40 mills Real Estate Transfer Tax ...... 5% .5% -- 1.0% Per Capita Tax ...... -- $10.00 -- $10.00 Earned Income Tax (Resident) ...... 1.135% .5% -- 1.635% Earned Income Tax (Non-Resident) 1.635% -- -- 1.635% Local Services Tax ...... $42 $10.00 -- $52.00 Mercantile Tax: Retail ...... 0008 mill 1.499 mill -- 1.4998 mill Wholesale ...... 0005 mill .999 mill -- .9995 mill Business Privilege Tax ...... 004 mills 1.496 mill -- 1.5 mills Mercantile Tax .15 mill .15 mill

Assessed and Market Valuation Trends

Assessed Market Ratio Assessed To Year Valuation Valuation Market Valuations 2000 ...... $57,285,705 $236,883,800 24.18 2001 ...... 57,477,085 237,408,300 24.21 2002 ...... 57,392,115 255,096,500 22.50 2003 ...... 57,425,512 255,039,000 22.52 2004 ...... 57,621,710 277,351,100 20.78 2005 ...... 57,410,120 276,226,200 20.78 2006 ...... 57,084,225 305,056,800 18.71 2007 ...... 59,923,935 304,494,800 18.69 2008 ...... 60,717,655 369,775,900 16.42 2009 ...... 60,479,516 367,888,900 16.44 2010 ...... 60,450,290 388,207,021 15.57 ______Source: Pennsylvania State Tax Equalization Board

Land Use by Assessment

Assessed Percentage Type Value Distribution Residential $31,223,658 51.63% Lots 747,595 1.24 Industrial 784,726 1.30 Commercial 27,716,491 45.83 Agriculture 0 0.00 Land 1,646 0.00 Minerals 5,400 0.01 Total $60, 479,516 100.00% ______Source: Pennsylvania State Tax Equalization Board.

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Ten Largest City Real Estate Taxpayers

The ten largest property taxpayers in the City, together with 2012 market values, are shown below: Market Taxpayer Type of Business Value(a) Beau Street Associates Office Building $15,000,000 Millcraft Center Limited Office Building 4,504,496 235 West Chestnut Street Partners Commercial Apartments 2,252,932 J&A Limited Partnership Commercial/Retail Plaza 2,186,896 Washington Arbors Commercial Apartments 2,050,000 Plaza Building Associates Office Building 1,560,000 Central Washington Enterprises Commercial Office 1,283,984 Chapman Corporation Manufacturing 1,181,252 Washington Westgate Commercial Apartments 1,115,188 Washington Hospital Commercial Building 1,088,828 Total $33,223,576 (a) ______(a) Equal to 8.3% of total market value of the City. City properties are listed and taxed at market value. Source: City Officials

Real Estate Tax Collection Procedures

City property taxes are levied as of January 1 and billed on or about March 1 of each fiscal year. Taxes are payable at a 2% discount to April 30 and at face before two months thereafter, after which, unpaid taxes become delinquent with an addition of a 10% penalty. Unpaid taxes are filed with a contracted tax collector in January of the next calendar year. According to past practice under applicable law, properties liened for unpaid taxes may be sold at a treasurer’s sale, only after the taxes are delinquent for two years.

County property taxes are levied as of January 1 and billed by the County on or about the first week of January of each year. Taxes are payable at a 2% discount to March 31 and at face before two months thereafter, after which, unpaid taxes become delinquent, with an addition of a 10% penalty. Unpaid taxes are filed with a delinquent tax collector in January.

School property taxes, based upon a fiscal year of July 1 through June 30, are levied as of January 1 and billed by the City in early August of each year. Taxes are payable at a 2% discount within thirty days of mailing and at face within sixty days thereafter, after which unpaid taxes become delinquent, with an addition of a 10% penalty. Unpaid taxes are filed with a contracted tax collector in January.

Comparison of City Tax Levies and Collections

Adjusted Year Ended Tax Levy(a) Current Tax Percent Total Tax Total Collections As December 31 Collections(b) Collected Collected(c) % of Current Levy 2007 $2,987,726 $2,758,600 92% $2,934,830 98% 2008 4,378,023 4,043,147 92 4,147,164 95 2009 5,114,432 4,654,200 91 4,798,038 94 2010 5,404,166 4,932,859 91 5,284,770 98 2011 5,357,478 4,912,322 92 5,133,286 96 ______(a) The City levies a two tier rate for land and buildings with 107.63 mills for land and 3.5 mills for buildings. The tax levy has been adjusted to take into consideration discounts allowed. (b) Includes taxes collected through January of the following year. (c) Includes prior years’ liened taxes collected, penalties and interest.

Source: City Officials.

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Population

The following table shows recent population trends for the City of Washington, County of Washington and the Commonwealth of Pennsylvania:

1970 1980 1990 2000 2010 City of Washington 19,827 18,363 15,864 15,268 13,663 Washington County 210,876 217,074 204,584 202,897 207,820 Commonwealth of Pennsylvania 11,800,766 11,864,751 11,881,643 12,281,054 12,702,379 ______Source: U.S. Department of Commerce, Bureau of the Census; Pennsylvania State Data Center.

Age Composition

A breakdown of age composition for the County of Washington and the Commonwealth of Pennsylvania is provided below:

Population Population 65 Total Median Under Population Years Population Age 18 Years 18-64 Years and Over Washington City ...... 13,363 38.2 2,475 9,273 1,915 Washington County ...... 207,820 43.6 42,684 128,770 36,366 Commonwealth of Pennsylvania .... 12,702,379 40.1 2,792,155 7,950,917 1,959,307 ______Source: U.S. Census Bureau, American FactFinder; Age Groups and Sex: 2010 – 2010 Census Summary File 1; QT-P1

Social and Economic Characteristics Average Average Median Household Family Household Median Family Per Capita Size Size Income(1) Income Income(1) City of Washington 2.05 2.92 $31,775 $41,723 $18,829 Washington County ...... 2.42 2.99 49,687 63,690 26,045 Pennsylvania ...... 2.47 3.06 50,398 63,364 27,049 ______Source: U.S. Census Bureau, American FactFinder, Selected Economic Characteristics 2006-2010 American Community Survey 5 Year Estimates – File DP02 and DP03

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Occupied Housing Units

A description of housing units for the City, Washington County and the Commonwealth of Pennsylvania is provided below: Occupied Housing Units Average Housing Median Household Units Total Owner Value Size City of Washington 7,212 6,275 2,550 $92,300 2.30 Washington County 92,469 83,604 64,597 130,300 2.55 Pennsylvania 5,568,820 4,936,030 3,461,678 165,500 2.61 ______Source: American FactFinder, 2010 American Community Survey 1 Year Estimates, Selected Housing Characteristics DP04; 2010 Census Summary File 1 - Household Population and Household Type by Tenure 2010 – QT-H3.

Employment

Major employers located within the County include:

Approximate Number Employer Business of Employees Washington Hospital Health Care & Social Assistance 2,306 Consol PA Coal Company Mining 1,784 Meadows Casino Arts, Entertainment and Recreation 1,500 Monongahela Valley Hospital Health Care & Social Assistance 1,112 Washington County Public Administration 1,073 Giant Eagle, Inc. Retail Trade 887 State System of Higher Education Educational Services 842 Canon McMillan School District Public Education 638 State Government Government 560 Peters Township School District Public Education 524 ______Source: Pennsylvania Department of Labor and Industry (L&I) Center for Workforce Information and Analysis, 4th Quarter 2011 initial data; and County Administrative Officials.

COUNTY OF WASHINGTON

General Description of the Area

Washington County (the “County”) is located southwest of Pittsburgh, with its nearest boundary about 10 miles from the City of Washington located on the western fringes of the Appalachian Plateau. The County is bordered on the west by West Virginia, on the south by Greene County and on the east by Westmoreland and Fayette Counties. The County is 863.6 square miles, ranking 19th in the State.

The County is comprised of 67 political subdivisions, including two third-class cities, one first class township, 32 second class townships and 33 boroughs. The 2010 Census of Population for the County is 207,820.

Industry

Washington County is a blending of business industry and agriculture. Today Washington County continues to grow from an economy once based on traditional industries to a center of high technology and advanced manufacturing. According to the Pennsylvania Department of Labor and Industry for 2010, there were approximately 79,495 employees and as of 2010, and an average wage of $42,459 per year, assuming a 40 hour work week.

Washington County is part of the Southwest Corner of Pennsylvania Workforce Investment Area (WIA) as designated by the Pennsylvania Department of Labor and Industry. The following table shows the breakdown by industry sector in Washington County.

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Employment and Wages by Industry Sector(1)

Employer Approximate Washington Pennsylvania NAICS Industry Sector Units Employment County Wage Wage Agriculture, Forestry, Fishing & Hunting 16 97 $17,424 $28,341 Mining 38 1,512 86,632 68,328 Utilities 14 529 80,385 94,454 Construction 619 6,420 55,408 53,076 Manufacturing 242 8,875 50,413 53,662 Wholesale Trade 337 3,746 59,413 65,535 Retail Trade 683 9,557 23,722 24,972 Transportation 112 2,532 43,511 38,857 Information 60 1,213 66,560 63,553 Finance & Insurance 277 2,140 55,365 72,020 Real Estate & Rental & Leasing 143 1,207 97,517 46,494 Professional & Technical Services 397 2,488 62,611 77,575 Mgt Of Companies & Enterprises 31 1,463 103,250 101,140 Administrative & Waste Services 230 2,758 31,034 31,113 Educational Services 43 819 31,097 48,404 Health Care & Social Assistance 945 12,607 38,032 42,516 Arts, Entertainment & Recreation 73 2,514 22,320 28,034 Accommodation & Food Services 405 6,629 13,673 15,156 Other Services, Except Public Admin. 495 3,022 26,214 27,564 Federal Government 66 586 49,294 64,532 State Government 25 1555 58,412 51,723 Local Government 183 7,227 38,407 43,747 Total All Industries(2) 5,434 79,495 $42,459 $45,732 ______Source: Pennsylvania Department of Labor and Industry (1) 2010 Annual Average (2) County total includes Private, Federal, State and Local Government

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Economic Development

Washington County maintains a stable base of taxes, reduced cost of living and development initiatives. Southpointe development is home to the headquarters of Fortune 500 corporations Mylan and Consol Energy. It is also home to the Penguins Hockey practice facilities at the Iceoplex at Southpointe. Range Resources has also located its headquarters in Washington County for the purpose of exploration and development of Marcellus Shale gas. The Meadows Racetrack and Casino has served as a focal point of retail development and gaming activity in the County. Meadows is the 4th highest gross revenue producer of the ten casinos in Pennsylvania.

Employment Wage Statistics

The table below shows estimated average wage information for Washington County, Pittsburgh MSA and Pennsylvania for the 1st quarter, 2009:

Total Average Average Hourly Average Weekly Average Annual Area Name Employment Wage Wage Wage Washington County 77,199 $19.55 $782 $40,664 Pittsburgh, PA MSA 1,061,316 18.25 730 37,960 Pennsylvania 5,454,466 21.53 861 44,772 ______Source: Labor Market Statistics, Quarterly Census of Employment and Wages Program

Distribution of Employment

The County of Washington is part of the Pittsburgh, PA Metropolitan Statistical Area (“MSA”). The following table illustrates the distribution of employment in the Pittsburgh, PA MSA by standard industrial classification, as reported by the Pennsylvania Department of Labor and Industry, Center for Workforce Information and Analysis.

Classification of Employment Pittsburgh, PA Metropolitan Statistical Area (Allegheny, Armstrong, Beaver, Butler, Fayette, Washington and Westmoreland Counties) December 2011 Nonfarm Jobs

Industry Employment Net Change From: ESTABLISHMENT DATA Dec 2011 Nov 2011 Oct 2011 Dec 2010 Nov 2011 Dec 2010 TOTAL NONFARM 1,164,000 1,163,500 1,162,600 1,137,300 500 26,700 TOTAL PRIVATE 1,035,300 1,034,300 1,034,900 1,007,600 1,000 27,700 GOODS PRODUCING 147,100 150,800 153,100 143,000 -3,700 4,100 Mining, Logging and Construction 8,500 8,500 8,500 7,600 0 900 Construction 49,400 53,500 55,300 46,600 -4,100 2,800 Specialty Trade Contractors 31,700 33,900 34,500 28,700 -2,200 3,000 Manufacturing 89,200 88,800 89,300 88,800 400 400 Durable Goods 65,800 65,500 66,000 65,300 300 500 Primary Metal Mfg. 12,600 12,600 12,600 12,300 0 300 Iron & Steel Mills & ferroalloy Mfg. 6,800 6,800 6,800 6,900 0 -100 Non-Durable Goods 23,400 23,300 23,300 23,500 100 -100 SERVICE PROVIDING 1,016,900 1,012,700 1,009,500 994,300 4,200 22,600 PRIVATE SERVICE-PROVIDING 888,200 883,500 881,800 864,600 4,700 23,600 Trade, Transportation & Utilities 230,100 224,900 219,800 222,400 5,200 7,700 Wholesale Trade 49,900 49,000 49,500 47,200 900 2,700 Retail Trade 135,000 131,500 126,600 131,400 3,500 3,600 Bldg Material and Supplies Dealers 8,300 8,300 8,100 7,900 0 400 Food and beverage stores 26,200 25,900 25,800 26,800 300 -600 Clothing & clothing access. stores 13,100 12,900 11,900 13,500 200 -400 General merchandise stores 26,900 25,700 24,300 25,600 1,200 1,300 Department stores 14,300 13,600 12,500 13,800 700 500 Transp.,Warehousing & Utilities 45,200 44,400 43,700 43,800 800 1,400 Transportation and Warehousing 5,700 5,600 5,600 5,700 100 0

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Industry Employment Net Change From: ESTABLISHMENT DATA Dec 2011 Nov 2011 Oct 2011 Dec 2010 Nov 2011 Dec 2010 Trucking, courier messengers & warehousing 39,500 38,800 38,100 38,100 700 1,400 Information 22,300 22,000 21,500 21,700 300 600 Financial Activities 17,800 17,600 17,800 18,000 200 -200 Finance and insurance 70,600 70,100 69,500 68,900 500 1,700 Credit intermediation and related activities 57,000 56,500 56,000 55,900 500 1,100 Depository credit intermediation 29,200 29,000 28,800 29,000 200 200 Insurance carriers & related 25,500 25,300 25,200 25,100 200 400 activities Real Estate and rental and leasing 20,800 20,800 20,800 20,500 0 300 Professional and Business Services 161,300 160,300 161,200 158,300 1,000 3,000 Professional & Technical Services 70,900 71,200 70,700 70,200 -300 700 Architectural and engineering 17,700 17,900 17,800 17,200 -200 500 services Scientific research and devmt svcs 6,500 6,500 6,500 6,200 0 300 Mgt. of Companies & Enterprises 35,600 35,900 35,800 35,100 -300 500 Administrative and waste services 54,800 53,200 54,700 53,000 1,600 1,800 Administrative and support services 51,900 50,400 51,700 50,200 1,500 1,700 Employment services 15,900 15,700 15,800 16,000 200 -100 Education and Health Services 250,700 251,600 250,700 240,300 -900 10,400 Educational Services 59,700 60,500 60,000 56,800 -800 2,900 Colleges and universities 44,000 44,800 44,400 41,400 -800 2,600 Health care and social assistance 191,000 191,100 190,700 183,500 -100 7,500 Ambulatory health care services 66,800 67,000 66,400 62,500 -200 4,300 Offices of physicians 26,100 26,000 26,100 25,100 100 1,000 Hospitals 55,300 55,300 55,500 54,100 0 1,200 Gen medical & surgical hosp. 49,900 49,900 50,200 49,300 0 600 Nursing & res. care facilities 37,400 37,300 37,400 36,400 100 1,000 Social assistance 31,500 31,500 31,400 30,500 0 1,000 Leisure and Hospitality 106,400 107,300 111,500 105,900 -900 500 Accommodation and Food Services 90,900 90,600 92,500 89,600 300 1,300 Food Services & Drinking places 82,000 81,900 83,400 81,500 100 500 Full service restaurants 37,800 37,300 38,100 39,900 500 -2,100 Limited Service eating places 29,400 29,400 29,700 29,600 0 -200 Other Services 51,300 51,700 51,300 50,800 -400 500 Government 128,700 129,200 127,700 129,700 -500 -1,000 Federal Government 18,600 18,200 18,400 18,700 400 -100 State Government 14,400 14,300 14,000 16,500 100 -2,100 Local Government 95,700 96,700 95,300 94,500 -1,000 1,200 Local Gov’t educational services 59,100 60,200 58,300 58,900 -1,100 200 Local Gov’t excldng educational svcs. 36,600 36,500 37,000 35,600 100 1,000

Data benchmarked to March 2010 ***Data changes of 100 may be due to rounding***

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Trends in Labor Force, Employment and Unemployment

The following chart shows recent trends in employment and unemployment for Washington County and the Commonwealth of Pennsylvania. (Data in thousands):

2007 2008 2009 2010 2011(2) Washington County Civilian Labor Force (000) 103.8 106.2 106.2 105.4 106.9 Employment (000) 99.1 100.6 98.1 96.7 99.5 Unemployment (000) 4.7 5.6 8.1 8.7 7.4 Unemployment Rate 4.5% 5.2% 7.6% 8.2% 6.9%

Pennsylvania Civilian Labor Force (000) 6,330.0 6,441.0 6,414.0 6,340.0 6,351.0 Employment (000) 6,055.0 6,099.0 5,895.0 5,791.0 5,865.0 Unemployment (000) 275.0 342.0 519.0 549.0 485.0 Unemployment Rate 4.3% 5.3% 8.1% 8.7% 7.6% ______Source: Pennsylvania Department of Labor and Industry (1) Seasonally adjusted labor force, employment and unemployment data (2) As of December 2011

Employment

Major employers located within the County include:

Approximate Number Employer Business of Employees Washington Hospital Health Care & Social Assistance 2,306 Meadows Casino Arts, Entertainment and Recreation 1,500 Washington County Public Administration 1,073 Monongahela Valley Hospital Health Care & Social Assistance 1,112 State System of Higher Education Educational Services 842 Giant Eagle, Inc. Retail Trade 887 Consol PA Coal Company Mining 1,784 State Government Government 560 Canon McMillan School District Public Education 638 Peters Township School District Public Education 524 ______Source: Pennsylvania Department of Labor and Industry (L&I) Center for Workforce Information and Analysis, 4th Quarter 2011 initial data; and County Administrative Officials.

Other major regional employers located in close proximity to the County include:

Approximate Number of Employer Business Employees University of Pittsburgh Medical Ctr. Health Care 37,000 United States Government Federal Government 18,660 Commonwealth of Pennsylvania State Government 13,661 West Penn Allegheny Health System Health Care 11,432 University of Pittsburgh Educational Services 11,261 Wal-Mart Stores Retail Trade 10,030 PNC Financial Services Group Inc. Banking and Financial Services 9,150 Giant Eagle Inc. Retail Trade 8,347 Allegheny County Government 7,194 The Bank of New York Mellon Banking and Financial Services 6,668

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Medical Facilities

There are three general service hospitals located in Washington County. Washington Hospital, located in the City of Washington, provides 239 beds and is a teaching hospital with an approved residency program and a professional School of Nursing and School of X-Ray Technology. Canonsburg General Hospital, part of WestPenn Allegheny Health System, provides 120 beds in the northern section of the County and has recently completed construction of a new facility in North Strabane. The Mon Valley Hospital, an acute care hospital in Carroll Township is part of the Mon Valley Hospital System. The 226-bed facility replaced two local acute care facilities.

Transportation

There is a variety of transportation in Washington County, including a network of highways totaling 2,821 miles, which makes overnight travel possible to most cities of the east and midwest. The County is also served by three railroads and two shortlines, as well as 19 trucking companies based in the County, and three bus lines and three taxi companies. Four airports are located in the County, including the Washington County Airport, which serves as a reliever for other airports and is home to 100 aircraft, 37 T-hangars, seven businesses and seven corporate hangars. The airport has a partial electronic guidance system for its 5,000 foot runway.

The Pennsylvania Department of Transportation has completed construction of LR1099; a link from Route 70 to the Monongahela Valley. The Monongahela Valley Expressway leads to the Pittsburgh Metropolitan Area from Morgantown, West Virginia.

Educational Facilities

There are 14 public school districts located within the County (student population approximately 31,000), as well as several private and parochial schools (student population approximately 2,200). The County also has two colleges: Washington and Jefferson College with a student enrollment of 1,519, and California University of Pennsylvania, a member of the Pennsylvania State System of Higher Education, with a student enrollment of 9,400. Both offer undergraduate and post-graduate studies. In addition, several trade and business schools are located within the County.

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CITY FINANCIAL REVIEW

The following schedules are summaries only and are not intended to be a complete report. For more complete information, the individual financial statements included as Appendix D to this Official Statement and the 2012 Budget of the City available at the Offices of the City of Washington, Washington, Pennsylvania should be reviewed in their entirety.

The City’s Annual Audit and Financial Report filed with the Department of Community and Economic Development is audited by a firm of independent certified public accountants. The firm of Palermo/Kissinger & Associates, P.C., located in Washington, Pennsylvania served as the City’s auditor for fiscal year ending December 31, 2010.

The assets of the City of Washington exceeded its liabilities at the close of the fiscal year ending December 31, 2010 by $15,216,596 (representing its net assets). Of this amount, $5,697,827 (or its unrestricted net assets) may be used to meet the government’s ongoing obligations to citizens and creditors. The City’s total net assets increased by $1,384,672. As of December 31, 2010, the City’s Governmental Funds reported combined ending fund balances of $2,753,050. The City’s fiduciary funds reported an ending balance of $20,356,448. The City’s total lease and long term debt increased/decreased by $1,342,427.

Basis of Accounting

The accounting policies of the City conform to generally accepted accounting principles as applicable to governmental units and as prescribed by the Department of Community and Economic Development of the Commonwealth of Pennsylvania.

The City’s basic modified cash basis financial statements include both government-wide (reporting the City as a whole) and fund (reporting the City’s major funds) financial statements. All activities of the City are classified as governmental in both the government-wide and fund financial statements.

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City of Washington Washington County, Pennsylvania Statement of Net Assets – Modified Cash Basis

Years Ended December 31 2008 2009 2010

ASSETS Current Assets: Cash and cash equivalents $ 1,330,131 $ 2,008,883 $ 2,839,558 Amount to be provided for retirement of long term debt 2,015,000 - - Capital assets, net of depreciation 33,168,632 32,496,311 31,736,116 Pension Assets 15,882,000 - -

TOTAL ASSETS $52,395,763 $34,505,194 $34,575,674

LIABILITIES Current Liabilities: Long Term Debt – portion due within one year $ 1,280,927 $ 1,341,460 $ 1,413,696 Other current liabilities 128,371 58,275 86,508

Total Current Liabilities 1,409,298 1,399,735 1,500,204

Long-term liabilities: Long term debt – less portion due within one year 22,450,593 19,273,537 17,858,874 Pension Liabilities 15,882,000 - -

TOTAL LIABILITIES 39,741,891 20,673,272 19,359,078

NET ASSETS Invested in capital assets, net of related debt 12,653,872 20,001,314 19,448,546 Restricted for: Road Projects - - 45,399 Capital Projects - - 429,869 Transit operations - - 794,358 Public safety - - 119,190 Pension obligations - - 77,061 Unrestricted net assets (deficit) - (6,169,392) (5,697,827)

TOTAL NET ASSETS $12,653,872 13,831,922 15,216,596

TOTAL LIABILITIES AND NET ASSETS $52,395,763 $34,505,194 $34,575,674 ______Source: Audited Financial Statements of the City for the years ended December 31, 2008, 2009 and 2010.

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City of Washington Washington County, Pennsylvania Statement of Revenues, Expenditures and Changes in Fund Balances General Fund

Years Ended December 31 2008 2009 2010 REVENUES: Taxes $4,013,679 $4,574,860 $4,934,092 Special assessments - - - Licenses and permits 290,367 305,295 304,697 Fines and Forfeits 130,480 134,164 185,219 Interest, rents & royalties 62,465 38,185 44,273 Grants - 607,100 126,240 Intergovernmental revenues 487,109 65,105 43,315 Contributions and donations - 225,701 228,549 Charges for Services 1,908,505 936,063 985,952 Miscellaneous revenues 44,539 70 - Proeeds from long term deby - 2,402,656 - Proceeds from short term debt 800,000 800,000 800,000 Refund of prior year expenditures - - - Proceeds of general fixed asset distribution 7,851 1,047 504 TOTAL REVENUES 7,744,995 10,090,246 7,652,841

EXPENDITURES: General Government 689,843 725,751 887,042 Public Safety 3,391,051 5,496,600 3,458,116 Public Works -Sanitation 668,826 - - Public Works Highway/roads/ streets 534,554 540,226 614,497 Public Works other 117,940 236,110 317,473 Culture and Recreation 242,487 233,619 238,116 Community Development 14,451 - - Debt Service 2,600,515 5,145,754 2,855,936 Employee benefits 1,848,965 - 1,814,819 Miscellaneous 11,575 - 12,501 TOTAL EXPENDITURES 10,120,207 12,378,060 10,198,500

EXCESS OF REVENUES OVER (UNDER) EXPENDITURES (2,375,212) (2,287,814) (2,545,659)

OTHER FINANCING SOURCES (USES) Proceeds from sale of fixed assets - - Interfund Transfers In 2,575,464 3,234,185 3,307,207 Interfund Transfers Out (293,670) (1,183,604) (463,583) TOTAL OTHER FINANCING SOURCES (USES) 2,281,794 2,050,581 2,843,624

NET CHANGE IN FUND BALANCES (93,418) (237,233) 297,965

FUND EQUITY– Beginning of Year 353,341 259,923 22,690

FUND EQUITY – End of Year $259,923 $ 22,690 $320,655 ______Source: Annual Audit and Financial Reports of the City for the years ended December 31, 2008, 2009 and 2010.

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CITY OF WASHINGTON Washington County, Pennsylvania Summary of General Fund Budgets For the Years Ending December 31, 2011 and 2012

2011 2012 Receipts: Real Property Taxes ...... $5,486,494 $5,410,931 Act 511 Taxes ...... 1,929,000 1,987,000 Licenses and Permits...... 289,000 294,300 Fines and Forfeits ...... 110,000 120,000 Interest, Rents and Royalties ...... 51,000 30,000 Grants/Intergovernment Revenue ...... 130,700 109,700 Department Earnings/Charges-Services ...... 1,100,410 1,101,910 Miscellaneous Revenue Receipts ...... 60,923 10,200 Total Revenue Receipts ...... 9,157,527 9,064,041

Other Financing Sources (Uses): Sale of Property, Equipment and Supplies ...... 1,500 500 Interfund Operating Transfers: Earned Income Tax-Pension ...... 1,056,860 1,226,401 Pension System State Aid ...... 415,000 417,295 Solid Waste Fund ...... 155,717 100,000 Other Transfers ...... 251,332 184,310 Proceeds/Short Term Debt ...... 800,000 800,000 Total Other Financing Sources 2,680,409 2,728,506 Fund Balance ...... 0 539,375 Total Receipts...... 11,837,936 12,331,922

Departmental Expenditures: Public Affairs - Police ...... 2,033,085 2,094,453 Public Affairs - Other ...... 627,793 580,976 Accounts and Finance ...... 390,369 388,303 Public Safety - Fire Protection ...... 1,430,679 1,406,231 Public Safety - Other ...... 80,335 100,900 Public Works ...... 504,686 535,195 Parks and Public Buildings ...... 425,083 428,343 Total Departmental Expenditures ...... 5,491,976 5,534,401

Total Miscellaneous Expenditures: Pension Contribution ...... 1,632,977 1,828,022 Other Miscellaneous Expenditures ...... 1,556,620 1,651,743 Debt Service ...... 2,654,403 2,678,611 Interfund Operating Transfers: General Fund Reserve ...... 134,550 268,183 Capital Improvements Fund ...... 205,873 203,059 Other Transfers ...... 161,537 167,903

Total Expenditures ...... $11,837,936 $12,331,922 ______Source: City of Washington Budget Reports for the years 2011 and 2012.

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CITY BORROWING CAPACITY

The statutory borrowing limit of the City under the Pennsylvania Local Government Unit Debt Act, 53 Pa.C.S.Chs. 80-82, as amended (the “Debt Act”) is computed as a percentage of the City’s “Borrowing Base”. The Borrowing Base, defined in the Debt Act, is calculated as the annual arithmetic average of the “Total Revenues” (as defined by the Debt Act) of the City for the three full fiscal years ended next preceding the date of incurring debt. The City’s present “Borrowing Base”, calculated based upon Total Revenues for the fiscal years ending December 31, 2009, 2010 and 2011 is $9,750,213.

Under the Debt Act as currently in effect, (i) the City may not incur new nonelectoral debt if the aggregate net principal amount of such new nonelectoral debt plus all outstanding net nonelectoral debt would cause total net nonelectoral debt to exceed 250 percent of the Borrowing Base and (ii) the City may not incur new lease rental debt or new nonelectoral debt if the aggregate net principal amount of such new debt plus all outstanding net nonelectoral debt and aggregate net principal amount of lease rental debt would cause the total net nonelectoral plus net lease rental debt to exceed 350 percent of the Borrowing Base. The borrowing base and borrowing capacity of the City are as follows:

Calculation of City Borrowing Base

Fiscal Year Ending December 31: (Unaudited) 2009 2010 2011

Total Revenue received from all sources $ 16,397,843 $16,198,467 $16,185,067

Less: Deductions or Exceptions:

(1) State and Federal subsidies and reimbursements related to a particular project financed by debt - - - (2) Revenues, receipts, assessments pledged for self-liquidating debt 377,014 1,918,667 2,555,892 (3) Interest earnings on sinking funds - - - (4) Grants and gifts in aid 2,619,236 2,963,424 3,808,940 (5) Nonrecurring receipts 3,347,706 848,156 1,091,704

Total Deductions or Exceptions $6,343,956 $5,730,247 $7,456,536

Total Net Revenues $10,053,887 $10,468,220 $8,728,531

Total Net Revenues for the three years ended December 31, 2011 $29,250,638

Borrowing Base - Total Net Revenues Divided by 3 $9,750,213 ______Source: City Officials

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Remaining Net Debt Borrowing Legal Limit Outstanding (1) Capacity

Net Nonelectoral Debt Limit $24,375,532 $12,935,000 $11,440,532 (250% of Borrowing Base)

Net Nonelectoral & Lease Rental $34,125,744 $12,935,000 $21,190,744 Debt Limit (350% of Borrowing Base) ______(1) Includes the Bonds but excludes debt that is deemed to be self-liquidating or excluded under the Debt Act.

CITY OF WASHINGTON OUTSTANDING BONDED INDEBTEDNESS AS OF MAY 1, 2012

Outstanding Debt Prior to Issuance of the Bonds Final Original Outstanding Bond/Note Issue Maturity Amount of Issue Principal G.O. Bonds and Notes (Non-Electoral) 2005 G.O. Pension Bonds, Series A (Taxable) 2019 7,775,000 4,860,000 2005 G.O. Bonds, Series B 2022 3,240,000 3,235,000 2012 G.O. Bonds 2023 9,700,000* 9,700,000*

Total General Obligation Bonds and Notes $ $20,715,000 $ 17,795,000

Lease Rental Debt Washington Parking Authority, Gtd. Parking Revenue Bonds, Series of 2006 2030 3,535,000 3,215,000

Total Outstanding Non-Electoral Debt and Lease Rental Debt Before Issuance of the Bonds $ 24,250,000 $ 21,010,000

Less - Debt Certified as Self-Liquidating Washington Parking Authority, Gtd. Parking Revenue Bonds, Series of 2006 2030 (3,535,000) (3,215,000)

Less – Debt Excluded Pursuant to Section 8022(c) of the Debt Act. 2005A Taxable G.O. Bonds (Pension Bonds) 2019 (7,775,000) (4,860,000)

Total Debt Excluded $ (11,310,000) $ (8,075,000)

Total Net Non-Electoral and Lease Rental Debt Before Issuance of the Bonds $ 12,940,000 $ 12,935,000

______*Estimated, subject to change. Direct Debt of the City excludes $1,096,020 principal amount outstanding of a 1997 Pennvest loan, $3,825,439 principal amount outstanding of Series of 2002B Bonds, $1,475,000 principal amount outstanding of Series A of 2007 Notes and $2,154,683 principal amount of outstanding 2009 General Obligation Loan which debt is being refunded by the City’s Series of 2012 Bonds.

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Outstanding Debt After Issuance of the Bonds (1) Final Original Outstanding Bond/Note Issue Maturity Amount of Issue Principal

G.O. Bonds and Notes (Non-Electoral) 2005 G.O. Pension Bonds, Series A (Taxable) 2019 7,775,000 4,860,000 2005 G.O. Bonds, Series B 2022 3,240,000 3,235,000 2012 G.O. Bonds 2023 9,700,000* 9,700,000*

Total General Obligation Bonds and Notes $ 21,715,000 $ 17,795,000

Lease Rental Debt Washington Parking Authority, Gtd. Parking Revenue Bonds, Series of 2012 2030 3,355,000* 3,355,000*

Total Outstanding Non-Electoral Debt and Lease Rental Debt After Issuance of the Bonds $ 25,070,000* $ 21,150,000*

Less - Debt Certified as Self-Liquidating Washington Parking Authority, Gtd. Parking Revenue Bonds, Series of 2012 2030 (3,355,000)* (3,355,000)*

Less – Debt Excluded Pursuant to Section 8022(c) of the Debt Act. 2005A Taxable G.O. Bonds (Pension Bonds) 2019 (7,775,000) (4,860,000)

Total Debt Excluded $ (11,130,000)* $ (8,215,000)*

Total Net Non-Electoral and Lease Rental Debt After Issuance of the Bonds $ 13,940,000 $ 12,935,000 ______*Estimated, subject to change. Direct Debt of the City excludes $1,096,020 principal amount outstanding of a 1997 Pennvest loan, $3,825,439 principal amount outstanding of Series of 2002B Bonds, $1,475,000 principal amount outstanding of Series A of 2007 Notes and $2,154,683 principal amount of outstanding 2009 General Obligation Loan which debt is being refunded by the City’s Series of 2012 Bonds. (1) Represents outstanding debt including the Bonds as of the date of closing for the Bonds (June 5, 2012).

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SUMMARY OF FINANCIAL FACTORS

Market Value of Taxable Real Estate – 2010(1) ...... $ 388,207,021 Assessed Valuation of Taxable Real Estate – 2010(1) ...... $ 60,450,290 Ratio of Assessed Valuation to Market Value ...... 15.57%

Population 2000 U.S. Census ...... 15,268 2010 U.S. Census ...... 13,663

Direct Debt: General Obligation Debt(2) ...... $ 17,795,000 Lease Rental Debt ...... $ 3,355,000* Total Direct Debt ...... $ 21,150,000

Total Direct Debt ...... $ 21,150,000 Less: Self-Liquidating and Excluded Debt ...... $ (8,215,000)* Total Net Direct Debt...... $ 12,935,000

Ratio of Net Direct Debt to: Market Value of Real Estate ...... 3.33% Assessed Valuation of Real Estate ...... 21.40% Population (2010) ...... $ 947

Overlapping Debt School District – General Obligation(3) ...... $ 12,568,575 County – General Obligation(4) ...... $ 1,691,782 Total Overlapping Debt ...... $ 14,260,357

Total Net Direct and Overlapping Debt (Total Debt) ...... $ 27,195,357

Ratio of Total Debt to: Market Value of Taxable Real Estate – 2010 ...... 7.01% Assessed Valuation of Taxable Real Estate – 2010 ...... 44.99% Population (2010) ...... $ 1,990

Ratio of Population (2010) to: Market Value of Real Estate ...... $ 28,413 Assessed Valuation of Real Estate ...... $ 4,424

(1) Assessed valuation as reported by the City. Market Value based upon the 2010 Common Level Ratio as reported by the Pennsylvania State Tax Equalization Board. (2) Includes self-liquidating debt and the Bonds. (3) City’s proportionate share (84.95%) based on assessed valuations of real estate of the $20,667,617 outstanding debt of Washington School District, as of May 1, 2012 net of state reimbursement. (4) City’s proportionate share (4.06%) based on assessed valuations of real estate of the $41,669,526 outstanding general obligation and lease rental debt of Washington County as of May 1, 2012.

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APPENDIX B

FORM OF OPINION OF BOND COUNSEL

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[The proposed form of the legal opinion of Buchanan Ingersoll & Rooney PC, bond counsel, is set forth below. The actual opinion will be delivered on the date of delivery of the bonds referred to therein and may vary from the form to reflect circumstances both factual and legal at the time of delivery.]

June __, 2012

RE: The Parking Authority of the City of Washington, Guaranteed Parking Revenue Bonds, Series of 2012

To the Purchasers of the Above-Captioned Bonds:

We have acted as Bond Counsel in connection with the issuance by The Parking Authority of the City of Washington, Washington County, Pennsylvania (the “Issuer”) of its Guaranteed Parking Revenue Bonds, Series of 2012 in the aggregate principal amount of $______(the “Bonds”), pursuant to the Commonwealth of Pennsylvania's (the “Commonwealth”) Parking Authority Law, as re-enacted and codified by Act No. 22, approved June 19, 2001, 53 Pa. C.S. § 5501 et seq., as amended (the “Act”), and a Trust Indenture dated as of May 1, 2006, (the “Original Indenture”), as supplemented and amended by a First Supplemental Trust Indenture dated as of May 1, 2012 (the “First Supplemental Indenture,” and collectively with the Original Indenture, the “Indenture”), by and between the Issuer and The Bank of New York Mellon Trust Company, N.A., Pittsburgh, Pennsylvania, as trustee (the “Trustee”). As Bond Counsel we have examined originals or certified copies of the Indenture; the form of the Bonds; the Guaranty Agreement, dated as of June __, 2012 (the “Guaranty Agreement”), among the City of Washington, Washington County, Pennsylvania (the “City”), as guarantor, the Authority and the Trustee, issued pursuant to the Local Government Unit Debt Act, Act of July 12, 1972, P.L. 781, No. 185, reenacted April 28, 1978, P.L. 124, No. 52, as amended (the “Debt Act”) and an Ordinance enacted by the City on May 3, 2012 (the “Ordinance”); the transcript of the proceedings of the City filed with and approved by the Department of Community and Economic Development of the Commonwealth of Pennsylvania (the “Department”); such constitutional and statutory provisions and such other certificates, instruments and documents as we have deemed necessary or appropriate in order to enable us to render an informed opinion as to the matters set forth herein. We have also reviewed and relied upon the opinion of Berggren & Turturice, LLC, the City Solicitor, dated June __, 2012, as to certain matters relating to the City, and the opinion of Berggren & Turturice, LLC, the Issuer’s solicitor, dated June __, 2012, as to certain matters relating to the Issuer. As expressly stated in the form of the Bonds and in the Indenture, the Bonds are limited obligations of the Issuer payable solely from the trust estate pledged as the source of payment for the Bonds under the Indenture. Neither the general credit nor the taxing power of the Commonwealth or any political subdivision or instrumentality thereof (other than the City under the Guaranty Agreement) is pledged for the payment of the principal of or interest on the Bonds. The Issuer has no taxing power. As to questions of fact material to our opinion, we have relied upon the representations of the Issuer contained in the proceedings relating to the issuance of the Bonds and other certifications furnished to us and we have not undertaken to verify the same by independent investigation. Based on such examination and in reliance on said opinions of counsel to the City and the Issuer, respectively, and the certifications and representations of fact contained in the proceedings relating to the issuance of the Bonds, which we have not verified independently, we are of the opinion, as of the date hereof and under existing law, as follows: 1. The Issuer is validly existing as a body corporate and politic duly created, organized and existing under the Act with the corporate power to authorize, execute and deliver the Bonds and to enter into the Fourth Supplemental Indenture and to carry out its obligations thereunder.

June __, 2012 Page 2

2. The First Supplemental Indenture has been duly authorized, executed and delivered by the Issuer and, assuming due authorization, execution and delivery by the Trustee, constitutes a valid and binding obligation of the Issuer. 3. The Bonds have been duly authorized, executed, issued and delivered by the Issuer and are valid and binding limited obligations of the Issuer entitled to the benefits and security of the Indenture. 4. The Indenture creates the lien on the Pledged Revenues (as defined in the Indenture) which it purports to create. 5. The Guaranty is a valid and binding general obligation of the City incurred in accordance with the Debt Act, and the Department has issued its approval for the City to incur the indebtedness evidenced by the Guaranty as required by the Debt Act. 6. Under the laws of the Commonwealth, as presently enacted and construed, the Bonds are exempt from personal property taxes in the Commonwealth and interest on the Bonds is exempt from Commonwealth personal income tax and corporate net income tax. 7. Under existing law, the interest on and proper accruals of original issue discount with respect to the Bonds (a) are excluded from gross income for federal income tax purposes and (b) are not items of tax preference within the meaning of Section 57 of the Internal Revenue Code of 1986, as amended (the “Code”), for purposes of the alternative minimum tax imposed by Section 55 of the Code on individuals and corporations; however, with respect to corporations (as defined for federal income tax purposes), such interest and accruals are taken into account in determining adjusted current earnings for the purpose of computing the alternative minimum tax imposed by Section 55 of the Code on such corporations. The opinions set forth in the preceding sentence are subject to the condition that the Issuer comply with all the requirements of the Code that must be satisfied subsequent to the issuance of the Bonds in order that interest on and accruals of original issue discount with respect to the Bonds be (or continue to be) excluded from gross income for federal income tax purposes. Failure to comply with such requirements could cause the interest on and accruals of original issue discount with respect to the Bonds to be included in gross income retroactively to the date of issuance of the Bonds. The Issuer has covenanted to comply with all such requirements. We express no opinion regarding other federal tax consequences arising with respect to the Bonds. It is to be understood that the rights of the owners of the Bonds and the enforceability of the Bonds and the Indenture may be subject to bankruptcy, insolvency, reorganization, moratorium or other similar laws affecting creditors’ rights heretofore and hereafter enacted to the extent constitutionally applicable and that their enforcement may also be subject to the exercise of judicial discretion in appropriate cases. This opinion letter is limited to the matters set forth herein and is rendered solely for the benefit of the addressee hereof in connection with the initial issuance of the Bonds. No opinion may be inferred or implied beyond the matters expressly stated herein, and our opinions expressed herein must be read in conjunction with the assumptions, limitations, exceptions and qualifications set forth herein. In particular, we express no opinion herein as to the accuracy, adequacy or completeness of the Official Statement, and make no representation that we have undertaken to or that we have independently verified any of the contents of the Official Statement. This opinion is subject to future changes in applicable law and we do not undertake any obligation to update any of the opinions expressed in this letter. The law covered by the opinions expressed herein is limited to the laws of the Commonwealth of Pennsylvania and the federal law of the United States of America. Very truly yours,

______

APPENDIX C

AUDITED FINANCIAL STATEMENTS OF THE AUTHORITY FOR THE FISCAL YEAR ENDED DECEMBER 31, 2010

______

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THE PARKING AUTHORITY OF THE CITY OF WASHINGTON

WASHINGTON, PENNSYLVANIA

ANNUAL FINANCIAL REPORT AS OF DECEMBER 31,2010 THE PARKING AUTHORITY OF THE CITY OF WASHINGTON

TABLE OF CONTENTS

PAGE

INDEPENDENT AUDITOR'S REPORT

MANAGEMENT'S DISCUSSION AND ANALYSIS - REQUIRED SUPPLEMENTARY INFORMATION i-iv

BASIC FINANCIAL STATEMENTS

STATEMENT OF NET ASSETS - ENTERPRISE FUND 1

STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN NET ASSETS - ENTERPRISE FUND 2

STATEMENT OF CASH FLOWS - ENTERPRISE FUND 3

NOTES TO THE BASIC FINANCIAL STATEMENTS 4-12

SCHEDULE OF ADMINISTRATIVE EXPENSES 13

SCHEDULE OF OPERATIONS AND MAINTENANCE 14 Independent Auditor's Report

To the Board of the Parking Authority of the City of Washington Washington County, Pennsylvania

Gentlemen:

We have audited the accompanying financial statements of the business-type activities of the Parking Authority of the City of Washington as of and for year ended December 31, 2010, which collectively comprise the Authority's basic financial statements as listed in the table of contents. These financial statements are the responsibility of the Parking Authority of the City of Washington's management. Our responsibility is to express an opinion on these financial statements based on our audit.

We conducted our audit in accordance with auditing standards generally accepted in the United States of America. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion.

In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of the business-type activity of the Parking Authority of the City of Washington as of December 31, 2010 and the changes in financial position and cash flows thereof for the year then ended in conformity with accounting principles generally accepted in the United States of America. The Management's Discussion and Analysis section on Pages i through iv is not a required part of the basic financial statements but is supplementary information required by accounting principles generally accepted in the United States of America. We have applied certain limited procedures, which consisted principally of inquiries of management regarding the methods of measurement and presentation of the required supplementary information. However, we did not audit the information and express no opinion on it.

Our audit was conducted for the purpose of forming opinions on the financial statements that collectively comprise the Parking Authority of the City of Washington basic financial statements. The accompanying schedule of administrative and operations and maintenance expenses are presented for purposes of additional analysis and are not a required part of the basic financial statements. The schedule of administrative and operations and maintenance expenses have been subjected to the auditing procedures applied in the audit of the basic financial statements and, in our opinion, are fairly stated in all material respects in relation to the basic financial statements taken as a whole.

Cypher & Cypher ~ta~L Certified Public Accountants

January 31, 2011 Canonsburg, Pennsylvania Management's Discussion & Analysis

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Management Discussion and Analysis

The Authority

The Parking Authority of the City of Washington is a domestic nonprofit corporation, organized and existing under the laws of the Commonwealth of Pennsylvania. The Parking Authority of the City of Washington was incorporated on July 5, 2005, under the Nonprofit Corporation Law of 1988 and was created pursuant to Parking Authority Law, 53 Pa. C.S. 5505 et seq.

The governing body of the Authority is a board of five members who are each appointed for a three-year term. The officers of the Authority are the Chairman, Vice Chairman and SecretarylTreasurer. The Authority employs one person, the Executive Director, who carries out the daily administrative duties for the Authority as well as any other daily business necessary to operate the Authority and the Crossroads Parking Garage.

Financial Highlights

The enclosed financial statements reflect the following changes in the Authority's financial position.

• Cash and investments increased to $675,638 or 54.75 percent over 2009.

• The Crossroads Parking Garage generated $223.216 in revenue or 29.57 percent over 2009.

Financial Statements

The government's financial statements report information about the Authority using accounting methods similar to those used by private-sector companies. The accounting method used is accrual. The Statement of Revenue, Expenditures and Changes in Net Assets, as prepared by the independent auditor, reports total operating revenue and expenses and the non-operating revenue and expense to derive the net income, which is reserved in retained earnings. Assets, Liabilities and Net Assets

Statement of Net Assets As of December 31

2010 2009

Current and Other Assets $ 387,149 $ 417,400 Non Current Assets 13,694,066 14,093,644

Total Assets $14,081,215 $14,511,044

Current and Other Liabilities $ 115,223 $ 120,252 Non Current Liabilities 3,215,000 3,325,000

Total Liabilities $ 3,330,223 $ 3,445,252

Invested in Capital Assets 9,961,157 10,265,978 Restricted 207,811 192,843 Unrestricted 582,024 606,971

Equity $10,750,992 $11,065,792

Total assets for the period ending December 31,2010 were $14,081,215 with cash and cash equivalents and receivables representing .0478 percent of all total assets.

The value of capital assets included in non-current assets total $15,049,651 with accumulated depreciation of $1,763,504 resulting in net capital assets of $13,286,157.

Primary liabilities of the Authority in 2010 were debt service of $3,325,000 for the Guaranteed Parking Revenue Bond issue with interest payments totaling $149,090 paid on May and November 15,2010.

ii Statement of Activities

The following schedule discloses the revenues and expenses for the current period.

Statement of Revenues, Expenditures, and Changes in Net Assets For the Year Ended December 31

2010 2009 Revenues:

Charges for Services $ 223,216 $ 157,211 Interest Income 3,775 201 Dividend Income 52 430 Non-Operating Revenue 152,318 107,520 Grant Revenue

Total Revenue $ 379,361 $ 265,362

Expenditures:

Administrative $ 40,062 $ 48,105 Operation & Maintenance 505,009 509,325 Interest Expense 149,090 152,740 Non-Operating Expenditures

Total Expenditures 694,161 710,170

Change in Net Assets $ (314,800) $ (444,808)

Interest and dividend income on funds held in bank accounts totaled $3,827.

The administrative expenses totaled $40,062 compared to $48,105 in 2009 representing a difference of $8,043 or a 16.72 percent decrease. The operation and maintenance expenses decreased by $4,316 from 2009 with the majority due to the decrease in maintenance contracts for the elevators and automated ticket machine.

Explanation of Expenditure Category Content:

Administrative - Activities related to administering policy for the general office business. Included in the category are executive director salary and benefits, telephone, advertising, bank fees and trustee charges.

11l Operation & Maintenance - Activities related to operating the Crossroad Parking Garage, maintaining property, buildings and equipment in effective working condition and in a good state of repair. Expenditures posted included electric, maintenance and repairs, maintenance contracts, cleaning services, and property and liability insurances.

Debt Service - Interest payments on outstanding bonds.

Explanation of Revenue Category Content:

Primary sources of revenue are parking fees which totaled $223,216 in 2010 and $157,211 in 2009.

Because of the loss of revenue in 2010, the City of Washington provided the Authority with $152,318 for payment towards the bond interest payment.

Debt Administration

The following reflects the Authority's long-term debt obligations:

Guaranteed Parking Revenue Bonds

$3,325,000

Semi-annual interest payments totaling $149,090 on the bonds were made in 2010 and $152,740 in 2009 from the General Fund.

Future Considerations/Factors

The Crossroads Garage was built for the general needs of the City of Washington. In the fall of 2007, the major tenant of the garage filed for bankruptcy and in January 2009 completely evacuated the building. The Authority anticipates a substantial loss of revenues. In 2010, the Authority increased revenues by $66,005 through advertising and pursuing other business in the City of Washington.

Contacting the Authority Financial Management

Our financial report is designed to provide our board members and creditors with a general overview of the Authority's finances. If you have any questions about this report or need additional information please contact the Executive Director of the Authority.

IV Basic Financial Statements

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The Parking Authority of the City of Washington Statement of Net Assets - Enterprise Fund As of December 31, 2010 and 2009

2010 2009 ASSETS Current Assets Operating Checking Account $ 387,149 $ 32,225 Accounts Receivable 385,175 387,149 417,400 Other Assets Restricted Debt Related Investment 288,489 273,469 Bond Issuance Cost 143,304 143,304 Accumulated Amortization (23,884) (19,107) 407,909 397,666 Fixed Assets Land 664,965 664,965 Parking Garage 12,826,978 12,826,978 Machinery & Equipment 1,127,158 1,105,396 Streetscape and Land Improvement 430,560 417,353 Accumulated Depreciation (1,763,504) (1,318,714) 13,286,157 13,695,978 TOTAL ASSETS $ :1408:1 2:15 $ :145:1:1 044 LIABILITIES CURRENT LIABILITIES Accounts Payable $ 3,859 $ 13,898 Payroll Liabilities 1,364 1,354 Current Portion of Noncurrent Liabilities 110,000 105,000 Total Current Liabilities 115,223 120,252 Noncurrent Liabilities Bonds Payable 3,325,000 3,430,000 Less: Current Portion of Noncurrent Liabilities (110,OOO) (105,000)

Total Noncurrent Liabilities 3 1215 1000 31325 1000 Total Liabilities 3,330,223 3,445,252 Net Assets - Note 4 Invested in Capital Assets, Net of Related Debt 9,961,157 10,265,978 Restricted Net Assets Restricted for Debt Service 207,811 192,843 Unrestricted Net Assets Unrestricted 582,024 606,971 Total Net Assets :l0 I50 992 :l:l 065 I92

TOTAL LIABILITIES AND NET ASSETS ~ 141081 1215 ~ 14 1511 1044

1 The Parking Authority of the City of Washington Statement of Revenues, Expenditures, and Changes in Net Assets - Enterprise Fund Year Ended December 31,2010 and 2009

% %

Operating Revenues

Charges for Services Parking Revenues $ 223,216 100.00 $ 157,211 100.00 Total Operatiing Revenues 223,216 100.00 157,211 100.00

Operating Expenses

Administrative Expenses 40,062 17.95 48,105 30.60

Operations and Maintenance 505,009 226.24 509,325 323.98

Interest Expense Bonds 149,090 66.79 152,740 97.16

Total Operating Expenses 694,161 310.98 710,170 451.73

Operating Income (Loss) (470,945) -210.98 (552,959) -351.73

Non-Operating Income and Expense Interest and Dividends 3,827 1.71 631 0.40

Other Non Operating Revenues 152 1318 68.24 1071520 68.39

Total Non Operating Income and Expense 1561145 69.95 108 1151 68.79

Increase (Decrease) in Net Assets (314,800) -141.03 (444,808) -282.94

Net Assets - Beginning of Year 1t065}92 11 1510 1600

Net Assets - End of Year $ 10 17501992 $ 11 1065 1792

The notes to the financial statements are an inteqral part of this report. 2 The Parking Authority of the City of Washingotn Statement of Cash Flows - Enterprise Fund Year Ended December 31,2010 and 2009 2010 2009

Cash flows from operating activities Cash received from customers $ 595,184 $ 157,211 Cash paid to employees for services (11,925) (11,921 ) Cash paid to suppliers for goods and services (80,402) (85,541) Cash paid for interest on long term debt (149,090) (152,740) Net cash provided (used) by operating activities 353,767 (92,991 )

Cash flows from capital and related financing activities Other non operating revenues 152,318 107,520 Net cash provided (used) by capital and related financing activities 152,318 107,520

Cash flows from investing activities Cash payments for the purchase of property (34,968) Purchase of restricted debt related investment (15,020) 89,090 Interest and dividends on investments 3,827 631 Net cash provided (used) by investing activities (46,161 ) 89,721

Cash flows from financing activities Cash received from the issuance of long term debt Capitalized closing costs related to long term debt Principal payments on long term debt (105,OOO) (100,OOO) Net cash provided (used) by financing activities (105,000) (100,000)

Net increase (decrease) in cash 354,924 4,250

Cash and equivalents, beginning of year 32,225 27,975

Cash and equivalents, end of year $ 387,149 $ 32,225

Reconciliation of net income to net cash provided by operating activities Operating Income $ (470,945) $ (552,959) Adjustments to reconcile net income to net cash provided by operating activities Depreciation and Amortization 449,566 444,708 (Increase) decrease in accounts receivable 385,175 Increase (decrease) in accounts payable (10,039) 13,750 (Increase) decrease in other assets 1,510 Increase (decrease) in accrued liabilites 10 Total Adjustments 824,712 459,968

Net cash provided (used) by operating activities $ 353 1767 ~ (92 1991}

The notes to the financial statements are an integral part of this report. 3 ------

THE PARKING AUTHORITY OF THE CITY OF WASHINGTON Notes to the Basic Financial Statements December 31, 2010

Note 1 - Summary of Significant Accounting Policies The accounting policies of the Parking Authority of the City of Washington conform to generally accepted accounting principles as applicable to governmental units. The following is a summary of the more significant policies:

The Parking Authority of the City of Washington is a corporate and political body incorporated under the laws of the Commonwealth of Pennsylvania by the County of Washington, Pennsylvania. A five member appointed Board governs the Authority. The City of Washington appoints two members of the Board, the Washington School Board appoints two members and the County of Washington appoints one member. The Authority does not have the power of taxation. It has the power to incur long term debt. However, lenders have required the City of Washington to guarantee the debt issues. While the Parking Authority is a component unit of the City of Washington, the Authority's financial statements reflect only the financial position, results of operations, and cash flows of the Authority and the statements are not incorporated into the combined financial statements of the City.

A. Reporting Entity A reporting entity is composed of the primary government, component units, and other organizations that are included to insure the financial statements are not misleading. The primary government of the Authority consists of all funds, departments, boards and agencies that are not legally separate from the Authority. For the Parking Authority of the City of Washington, this includes the parking operations of the Authority.

B. Basis of Presentation The financial statements of the Parking Authority of the City of Washington have been prepared in conformity with U.S. Generally Accepted Accounting Principles (GAAP) as applied to governmental units. The Governmental Accounting Standards Board (GASB) is the accepted standard-setting body for establishing governmental accounting and financial reporting principles.

The Authority also applies Financial Accounting Standards Board (FASB) statements and interpretations issued on or before November 30, 1989 to its business-type activities provided they do not conflict with or contradict GASB pronouncements. Governmental units have the option of following subsequent private-sector accounting guidance for their business-type activities. The Authority has elected not to follow subsequent private-sector accounting guidance.

Following are the more significant of the Authority's accounting policies.

4 The Authority's basic financial statements consist of fund financial statements which provide a detailed level of financial information.

1. Fund Financial Statements During the fiscal year, the Authority segregates transactions related to certain Authority functions or activities in separate funds in order to aid financial management and to demonstrate legal compliance. Fund financial statements are designed to present financial information of the Authority at this detailed level.

C. Fund Accounting The Authority uses funds to maintain its financial records during the fiscal year. A fund is defined as a fiscal and accounting entity with a self-balancing set of accounts. The Authority has one category of funds: proprietary.

1. Proprietary Funds Proprietary fund reporting focuses on the determination of operating income, changes in net assets, financial position, and cash flows. The following is the Authority's proprietary fund:

Enterprise Fund The Enterprise Fund may be used to account for any activity for which a fee is charged to external users for goods or services.

Parking Operations The Parking Operations General Fund is used to account for parking operations of the parking garage owned by the Authority (a) that are financed and operated in a manner similar to private business enterprises where the intent of the governing body is that the costs (expenses, including depreciation) of providing goods or services to the users on a continuing basis be financed or recovered primarily through user charges: or (b) where the governing body has decided that periodic determination of revenues earned, expenses incurred, and/or net income is appropriate for capital maintenance, public policy, management control, accountability or other purposes. This fund is the Authority's only enterprise fund and it is reported as a major fund.

Proprietary funds distinguish operating revenues and expenses from nonoperating items. Operating revenues and expenses generally result from providing services and producing and delivering goods in connection with the proprietary fund's principal ongoing operations. The principal operating revenues of the Authority's enterprise fund are parking usage charges. Operating expenses for the Authority's enterprise fund include parking facility repairs, supplies, administrative costs, and depreciation on capital assets. All revenues or expenses not meeting this definition are reported as nonoperating revenues and expenses.

5 D. Measurement Focus

1. Fund Financial Statements The enterprise fund is accounted for using a flow of economic resources measurement focus. All assets and all liabilities associated with the operation of this fund are included on the statement of net assets. The statement of changes in revenues, expenses and changes in net assets presents increases (e.g., revenues) and decreases (e.g., expenses) in total net assets. The statement of cash flows reflects how the Authority finances and meets the cash flow needs of its enterprise fund.

E. Basis of Accounting Basis of accounting determines when transactions are recorded in the financial records and reported on the financial statements. The enterprise fund uses the accrual basis of accounting. Differences in the accrual and modified accrual bases of accounting arise in the recognition of revenue, the recording of deferred revenue and in the presentation of expenses versus expenditures.

1. Revenues - Exchange and Nonexchange Transactions Revenue resulting from exchange transactions, in which each party gives and receives essentially equal value, is recorded on the accrual basis when the exchange takes place. On the modified accrual basis, revenue is recorded in the fiscal year in which the resources are measurable and become available. Available means the resources will be collected within the current fiscal year or are expected to be collected soon enough thereafter to be used to pay liabilities of the current fiscal year. For the Authority, available means expected to be received within sixty days of year end.

Nonexchange transactions, in which the Authority receives value without directly giving equal value in return, include grants, entitlements and donations. On the accrual basis, revenue from grants, entitlements and donations is recognized in the fiscal year in which all eligibility requirements have been satisfied. Eligibility requirements include timing requirements, which specify the year when the resources are required to be used or the fiscal year when use is first permitted; matching requirements, in which the Authority must provide local resources to be used for a specified purpose; and expenditure requirements, in which the resources are provided to the Authority on a reimbursement basis. On the modified accrual basis, revenue from nonexchange transactions must also be available before it can be recognized.

2. Deferred Revenues Deferred revenues arise when assets are recognized before revenue recognition criteria have been satisfied.

Grants and entitlements received before the eligibility requirements are met are recorded as deferred revenue.

3. Expenses/Expenditures On the accrual basis of accounting, expenses are recognized at the time they are incurred.

6 F. Encumbrances Encumbrances at year-end are reported in the fund financial statements as reservations of fund balance since they do not constitute expenditures or liabilities, but serve as authorization for expenditures in the subsequent year. As of December 31, 2008, the Authority has no encumbrances.

G. Cash and Investments The Authority is permitted to invest funds consistent with sound business practices in the following types of investments and deposit accounts:

Obligations of (a) the United States of America or any of its agencies or instrumentalities backed by the full faith and credit of the United States of America, (b) the Commonwealth of Pennsylvania or any of its agencies or instrumentalities backed by the full faith and credit of the Commonwealth of Pennsylvania, or (c) any political subdivision of the Commonwealth of Pennsylvania or any of its agencies or instrumentalities backed by the full faith and credit of the political subdivision.

Act 20, a Pennsylvania law enacted in June of 1995, expands the allowable investment vehicles to include certain money market mutual funds rated as "AAA" whose investments are limited to those mentioned in the previous paragraph.

Deposits in checking accounts, time deposits or share accounts of institutions insured by the Federal Deposit Insurance Corporation to the extent that such accounts are so insured and, for any amounts above the insured maximum, provided that approved collateral as provided by law therefore shall be pledged by the depository.

Investments are stated at fair value.

For purposes of the statement of cash flows, the proprietary fund considers all highly liquid investments with maturity of three months or less when purchased and pooled funds investments subject to daily withdrawal to be cash equivalents.

Deposits Below is a summary of the Authority's deposits which are insured by the Federal Depository Insurance Company, and those which are not insured or collateralized in the Authority's name, but collateralized in accordance with Act 72 of the Pennsylvania State Legislature, which requires the financial institution to pool collateral for all government deposits and have the collateral held by an approved custodian in the institution's name.

FDIC Pooled Bank Carrying Insured Collateral Balance Amount

Cash and Deposits $ 389,020 $ -0- $ 389,020 $ 387,148

7 Investments The Authority's investments at December 31, 2010 consist of:

Cost Amount Fair Value

Bank of New York - J.P. Morgan Trust Company, N.A. $ 288,489 $ 288,489

Total $ 288,489 $ 288,489

The issuance of the Guaranteed Parking Revenue bonds, series of 2006, required that proceeds be deposited with J.P. Morgan Trust Company, N.A. as per the Bond Indenture.

H. Capital Assets Capital assets, which include property, plant, equipment and infrastructure assets (e.g., sidewalks and similar items), are defined by the Authority as assets with an initial individual cost of more than $1,000 and an estimated useful life in excess of one year. Management has elected to include certain homogeneous asset categories with individual assets less than $1,000 as composite groups for financial reporting purposes. In addition, capital assets purchased with long-term debt may be capitalized regardless of the thresholds established. Such assets are recorded at historical cost or estimated historical cost if purchased or constructed. Donated capital assets are recorded at estimated fair market value at the date of donation. The costs of normal maintenance and repairs that do not add to the value of the asset or materially extend asset lives are not capitalized.

Major outlays for capital assets and improvements are capitalized as projects are constructed. Interest incurred during the construction phase of capital assets of business type activities is included as part of the capitalized value of the assets constructed.

All capital assets, except land, are depreciated. Improvements are depreciated over the remaining useful lives of the related capital assets. Depreciation is computed using the straight-line method over the following useful lives.

Description Estimated Lives Land Improvements 10- 15 years Buildings and Building Improvements 20 - 50 years Infrastructure 20 - 25 years Vehicles 5 - 10 years Machinery and Equipment 5 - 10 years

I. Long-Term Liabilities In the proprietary funds in the fund financial statements, long-term debt and other long-term obligations are reported as liabilities in the applicable proprietary fund type statement of net assets.

8 J. Estimates The preparation of financial statements, in conformity with generally accepted accounting principles, requires management to make estimates and assumptions that affect certain reported amounts and disclosures. Accordingly, actual results could differ from those estimates.

K. Fund Equity At December 31, 2010 there were no reserves in the Authority's parking operations proprietary fund. See Note 4 for additional details on the Authority's fund equity.

L. Extraordinary and Special Items Extraordinary items are transactions or events that are both unusual in nature and infrequent in occurrence. Special items are transactions or events that are within the control of management and are either unusual in nature or infrequent in occurrence. Neither of these types of transactions occurred during the fiscal year.

Note 2 - Changes in Ca(2ital Assets Capital asset activity for the year ended December 31, 2010 was as follows:

Beginning Ending Balance Additions Retirements Balance Business-type Activities Depreciable assets: Land, Garage, and Equipment $ 15,014,692 $ 34,968 $ $ 15,049,660 Totals at historical cost 15,014,692 34,968 15,049,660 Less accumulated depreciation for: Garage and Equipment {1,318,714~ (444,789~ (1 ,763,503~ Total accumulated depreciation {1,318,714~ {444,789~ p,763,503~ Business-type activities capital asset, net $ 13,695,978 $ (409,821 ) $ $ 13,286,157

Depreciation expense for 2010 was $444,789, resulting in a net book value decrease of $444,789 for the business activities.

9 Note 3 - General Long-Term Debt

Changes in the Authority's long-term obligations during the year 2010 were as follows:

Amounts Beginning Ending Due Within Balance Additions Reductions Balance One Year Business-Type Activities: Bonds, loans & leases payable Parking Revenue Bonds $ 3,430,000 $ $ (105,000) $ 3,325,000 $ 110,000 Total Business-Type Activities 3,430,000 (105,000) 3,325,000 110,000 Less bond discount & deferred amount on refunds Total bonds, loans and leases payable $ 3,430,000 =$==== $ (105,000) $ 3,325,000 $ 110,000

On May 1, 2006, the Authority issued Guaranteed Parking Revenue Bonds, Series of 2006, for the purpose of (1) financing the Crossroads Parking Garage of the Authority, (2) capitalizing the interest on the note, and (3) paying the costs of issuing the note. The note consists of an original principal amount of $3,535,000, at variable interest at the rate of 3.65% to 4.60%, with final payment due on 11-15-2030.

The amounts necessary to amortize all of the notes and bonds outstanding for the next five years and to maturity are:

Princi~al Interest Total 2011 $ 110,000 $ 145,205 $ 255,205 2012 141,080 141,080 2013 230,000 141,080 371,080 2014 131,880 131,880 2015-2019 810,000 596,540 1,406,540 2020-2024 670,000 460,475 1,130,475 2025-2029 585,000 264,250 849,250 2030 920,000 42,320 962,320 Total $ 3,325,000 $ 1,922,830 $ 5,247,830

10 Note 4 - Net Assets The calculation of the breakdown of the various categories of net assets is as follows:

The amounts included in invested in capital assets, net of related debt, include the balance of fixed assets and are reduced by the amount of outstanding debt incurred to acquire, construct, or improve those assets. In this case, the amount was calculated by reducing the balance of capital assets by the amount of debt outstanding to acquire these assets. The calculation follows:

Invested in Capital Assets, Net of Related Debt

Capital Assets, Net of Depreciation $13,286,157

Less: Debt Outstanding Related Crossroads Parking Garage (3,325,000)

$ 9,961,157

The amounts included in the restriction of the debt reserve fund included the year end balance of the debt services reserve fund bank account, less the interest earned since the inception of the account as these amounts have not been designated as restricted. The calculation is as follows:

Restricted for Debt Service Reserve Fund

Balance per Bank $ 288,489

Less: Interest Earned (80,678)

$ 207,811

Note 5 - Capitalized Interest Amounts totaling $388,394 were incurred as interest expense for the 2006 bond issues. These amounts were capitalized to the construction account for the Crossroads Parking Garage project in accordance with generally accepted accounting principles.

11 Note 6 - Commitments and Contingencies The Authority participated in a state assisted grant program in 2006. The program is subject to program compliance audit by the grantor agency or their representative. The audit of this program for and including year ended December 31, 2006, 2007 and 2008 have not yet been conducted. Accordingly, the Authority's compliance with applicable grant requirements will be established at some future date. The amount, if any, of expenditures that may be disallowed by the granting agency cannot be determined at this time although the Authority expects such amounts to be immaterial.

Note 7 - Risk Management The Authority is exposed to various risks of loss related to certain torts, thefts, damages, catastrophic loss of assets, errors and omissions, injury to employees and natural disasters. The Authority manages most of its risk with the purchase of commercial insurance coverage.

The Authority estimates that the amount of actual or potential claims against the Authority, as of December 31, 2010, will not materially affect the financial condition of the Authority and will be covered under the present insurance coverage.

Note 8 - Risk of Operations The Authority was created to construct and operate the Crossroads Parking Garage for general parking needs of the City of Washington. A substantial part of this need was to be generated by the construction of the Nationwide Building which is located adjacent to the parking garage. During 2008, the garage lost the principal tenant, Land America, who filed bankruptcy in late 2007. Due to the bankruptcy, Land America sold off departments and downsized their operations which resulted in a 64% loss in revenues. The Authority is currently soliciting the interest of other businesses in the area to utilize the garage.

12 The Parking Authority of the City of Washington Schedule of Administrative Expenses Years ended December 31, 2010 and 2009

2010 % 2009 %

Administrative Wages $ 27,189 12.18 $ 25,813 16.42 Payroll Taxes 969 0.43 1,005 0.64 Financial Advisor Expense 5,000 3.18 Professional Fees 1,000 0.45 Office Supplies 618 0.28 304 0.19 Postage 197 0.09 101 0.06 Telephone 2,976 1.33 2,357 1.50 Audit and Accounting 2,953 1.32 9,019 5.74 Bank Fees 100 0.04 Mileage 90 0.04 977 0.62 Public Officials Insurance 1,000 0.45 Outside Services 45 0.02 98 0.06 Workmen's Compensation Insurance 1,618 0.72 1,762 1.12 Meeting Expense 194 0.12 Trustee Charges 1,272 0.57 1,272 0.81 Dues and Publications 35 0.02 203 0.13

Total $ 40 1062 17.95 ~ 48,105 30.60

13 The Parking Authority of the City of Washington Schedule of Operations and Maintenance Years ended December 31,2010 and 2009

2010 % 2009 %

Electric $ 33,128 14.84 $ 34,949 22.23 Water & Sewage 552 0.25 455 0.29 Maintenance and Repairs 2,526 1.13 3,349 2.13 Maintenance Contracts 10,574 4.74 18,749 11.93 Inspections 145 0.09 Cleaning Supplies and Service 452 0.20 44 0.03 Snow Removal 2,325 1.48 Refunds 97 0.04 49 0.03 Customer Claim 340 0.15 Equipment 660 0.30 222 0.14 Other Operational Expenses 2,087 0.93 361 0.23 Fuel 796 0.36 628 0.40 Property and Liability Insurance 3,219 1.44 3,341 2.13 Vehicle Insurance 977 0.44 Freight 35 0.02 Depreciation 444,789 199.26 439,931 279.8 Amortization 4,777 2.14 4,777 3.04 Total $ 505,009 226.24 ~ 509,325 323.9

14 January 31, 2011

Board of Directors of The Parking Authority of the City of Washington We have audited the financial statements of The Parking Authority of the City of Washington for the year ended December 31, 2010, and have issued our report thereon dated January 31, 2011. Professional standards require that we provide you with the following information related to our audit. Our Responsibility under U.S. Generally Accepted Auditing Standards As stated in our engagement letter dated December 31, 2010, our responsibility, as described by professional standards, is to express an opinion about whether the financial statements prepared by management with your oversight are fairly presented, in all material respects, in conformity with U.S. generally accepted accounting principles. Our audit of the financial statements does not relieve you or management of your responsibilities. (Other Information in Documents Containing Audited Financial Statements) Planned Scope and Timing of the Audit We performed the audit according to the planned scope and timing previously communicated to you in our meeting about planning matters on January 12, 2011. Significant Audit Findings Qualitative Aspects of Accounting Practices Management is responsible for the selection and use of appropriate accounting policies. In accordance with the terms of our engagement letter, we will advise management about the appropriateness of accounting policies and their application. The significant accounting policies used by The Parking Authority of the City of Washington are described in Note 1 to the financial statements. No new accounting policies were adopted and the application of existing policies was not changed during 2010. We noted no transactions entered into by the Authority during the year for which there is a lack of authoritative guidance or consensus. There are no significant transactions that have been recognized in the financial statements in a different period than when the transaction occurred. Accounting estimates are an integral part of the financial statements prepared by management and are based on management's knowledge and experience about past and current events and assumptions about future events. Certain accounting estimates are particularly sensitive because of their significance to the financial statements and because of the possibility that future events affecting them may differ significantly from those expected. There were no significant accounting estimates in 2010. Difficulties Encountered in Performing the Audit We encountered no significant difficulties in dealing with management in performing and completing our audit. Corrected and Uncorrected Misstatements Professional standards require us to accumulate all known and likely misstatements identified during the audit, other than those that are trivial, and communicate them to the appropriate level of management. Management has corrected all such misstatements. In addition, none of the misstatements detected as a result of audit procedures and corrected by management were material, either individually or in the aggregate, to the financial statements taken as a whole. Disagreements with Management For purposes of this letter, professional standards define a disagreement with management as a financial accounting, reporting, or auditing matter, whether or not resolved to our satisfaction, that could be significant to the financial statements or the auditor's report. We are pleased to report that no such disagreements arose during the course of our audit. Management Representations We have requested certain representations from management that are included in the management representation letter dated January 31, 2011. Management Consultations with Other Independent Accountants In some cases, management may decide to consult with other accountants about auditing and accounting matters, similar to obtaining a "second opinion" on certain situations. If a consultation involves application of an accounting principle to the Authority's financial statements or a determination of the type of auditor's opinion that may be expressed on those statements, our professional standards require the consulting accountant to check with us to determine that the consultant has all the relevant facts. To our knowledge, there were no such consultations with other accountants. Other Audit Findings or Issues We generally discuss a variety of matters, including the application of accounting principles and auditing standards, with management each year prior to retention as the Authority's auditors. However, these discussions occurred in the normal course of our professional relationship and our responses were not a condition to our retention. This information is intended solely for the use of the Board of Directors of The Parking Authority of the City of Washington and management of The Parking Authority of the City of Washington and is not intended to be and should not be used by anyone other than these speCified parties.

Sincerely yours, ~ta~L Cypher & Cypher Certifies Public Accountants

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APPENDIX D

AUDITED FINANCIAL STATEMENTS OF THE CITY OF WASHINGTON, PA. FOR THE FISCAL YEAR ENDED DECEMBER 31, 2010

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APPENDIX E

SUMMARY OF CERTAIN PROVISIONS OF THE TRUST INDENTURE

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SUMMARY OF CERTAIN PROVISIONS OF THE INDENTURE The following are summaries of certain provisions of the Indenture. The summaries should not be regarded as full statements of the document itself or the portions summarized. For complete statements of the provisions of the document summarized, references are made to the Indenture in its entirety, copies of which will be available at the designated office of the Trustee. “Act” means the Act of Assembly of the Commonwealth of Pennsylvania known as the “Parking Authority Law,” 53 Pa. Cons. Stat. §5501, et seq., together with all supplements and amendments thereto. “Additional Bonds” means Bonds authorized under the Indenture of any series other than the 2006 Bonds, duly authenticated and delivered pursuant to any of the provisions of the Indenture and secured on a parity basis in the Pledged Revenues. It shall not apply to bonds issued under any other indenture entered into by the Authority. “Administrative Fees and Expenses” means the reasonable and necessary fees and expenses of the Authority, including the reasonable compensation and expenses of the Trustee. “Authorized Denominations” with respect to the 2012 Bonds, means $5,000 and any integral multiple in excess thereof. “Authorized Newspaper” means a newspaper customarily published at least once a day for at least five days in each calendar week, printed in the English language and of general circulation in the City of Washington, Washington County, Pennsylvania. Successive publications may be made in the same or in different Authorized Newspapers and may be made on the same or on different days of each week. “Board” means the governing body of the Authority. “Bonds” or “Parking Revenue Bonds” means the 2006 Bonds, the 2012 Bonds and any Additional Bonds which, as to principal and interest, are payable from the Pledged Revenues. “Bondholder,” “holder,” “owner” or any similar term means the Registered Owner of any Bond. “Business Day” means any day other than a Sunday, a Saturday, legal holiday or any other day on which any banking institutions in the Commonwealth are authorized or required by law or executive order to be closed or on which the New York Stock Exchange is closed. “Capital Additions” means all new or additional property, chargeable to plant or equipment account under sound municipal accounting practice, including, without limitation, lands, rights of way, easements and other interests in real property and all permanent improvements, additions, enlargements, extensions and betterments to, or of, the Parking Garage or parts thereof, and extraordinary repairs, renewals or replacements made to preserve the Parking Garage from extraordinary conditions beyond the control of the Authority and which cannot reasonably be paid for out of the current revenues of the Parking Garage, in each case made, constructed or acquired by the Authority since the date hereof and which are used or useful in connection with the Parking Garage, including any costs and expenses in connection therewith, and including property in process of construction to the extent actually constructed, and including any property now or hereafter actually constructed pursuant to Section 4.1. “Certified Resolution” means a copy of a resolution certified by the Secretary or an Assistant Secretary of the Authority, under its corporate seal, to have been duly adopted by the Board and to be in full force and effect on the date of such certification. “Certified Ordinance” means a copy of an ordinance or of a resolution, as appropriate, of the Council of the City, certified by the City Clerk to have been duly enacted, published and recorded as required by law, and to be in full force and effect on the date of such certification. “Commonwealth” means the Commonwealth of Pennsylvania. “Contribution Agreement” means the Contribution Agreement, as supplemented and amended, pursuant to which the City agrees to assign and pay over to the Trustee, as agent of the Authority, up to $150,000 annually related to collections of parking revenues to be applied to payment of debt service on Bonds. “Consulting Engineers” means a firm or a person or persons, who shall be Independent, registered as professional engineers in the Commonwealth who are qualified to pass upon engineering questions relating to parking facilities, and who' have a favorable reputation for skill and experience in the construction or operation thereof, as the case may be, and appointed by the Board., “Consulting Engineers' Certificate” means a statement certified by the Consulting Engineers.

“Cost” or “Cost of Construction” shall include, without intending to limit any proper definition thereof under sound municipal accounting practice: (a) obligations incurred and payments made or required to be made by the Authority for labor and to contractors, builders, suppliers and material men in connection with the Parking Garage; (b) to the extent provided for in the Indenture or any Supplemental Indenture, (1) interest on Bonds, or notes or other obligations issued to finance construction during such period as the Indenture or Supplemental Indenture may provide, and (2) the reasonable expenses of the Authority (including Authority's working capital and compensation and expenses of the Trustee) for the same period; (c) the cost of acquiring by purchase or lease, and the amount of any award or final judgment in, or settlement or compromise of, any proceeding to acquire by condemnation, lands, property, rights, rights-of-way, franchises, easements and other interests as may be deemed necessary or convenient in connection with the Parking Garage and partial payments thereon, and the amount of any damages incident to or consequent upon construction or payments for the restoration of property damaged or destroyed in connection with construction; (d) the cost of acquiring by purchase or lease any property, real, personal or mixed, tangible or intangible, or any interest therein,' including equipment, and capital costs, necessary or desirable for carrying out the purposes of the Authority relating to the Parking Garage (including the cost of acquisition of properties in place which are capable of being operated as a part of the Parking Garage), and all fees and expenses incident thereto including, without limitation, the costs of abstracts of title, title insurance, title opinions and of surveys and reports; (e) the cost of contract bonds and premiums on insurance of all kinds during construction which are not paid by contractors or otherwise provided for, and taxes or other municipal or governmental charges, if any, lawfully levied or assessed during construction upon any part of the Parking Garage; (f) fees and expenses of engineers or architects for studies, surveys, reports, estimates of costs and revenues and plans and specifications and preliminary investigations therefor and for supervising construction or acquisition, as well as the performance of all other duties of engineers or architects in connection with any such construction or acquisition or the financing thereof; (g) all expenses of audits, compensation and expenses of the Trustee, including legal fees and expenses, financing charges and compensation of the financial adviser, if any, cost of printing the Indenture or any supplement thereto and of preparing and issuing Bonds and legal fees, including those of bond counsel, bond insurance premiums and all costs, fees and expenses incurred or estimated to be incurred by the Authority in connection with such construction or acquisition and the issuance of Bonds to finance construction or acquisition; (h) reimbursement to municipalities or governmental agencies for advances or loans made, or obligations incurred, by them for any of the above items or for any other costs incurred or for work done by them at the request or with the approval of the Authority in connection with the Parking Garage which are properly chargeable to cost of construction or acquisition; and (i) reimbursement to the Authority or to pay any indebtedness incurred by the Authority, including the payment of obligations of the Authority with interest thereon, for any of the above items or for any other costs which are properly chargeable to the cost of construction or acquisition. “Debt Service Requirements” means, for any period of time, the aggregate of the scheduled payments to be made (other than from amounts irrevocably deposited with the Trustee or otherwise held for the benefit of Bondholders under terms sufficient to pay all or a portion of the principal or redemption price of and interest on, as the same shall become due or payable upon redemption, Bonds which would otherwise be considered Outstanding, including funds held in connection with an advance refunding or a cross-over refunding) in respect of principal of and interest on Bonds during such period. In addition, for the purposes of the computation of Debt Service Requirements, the Authority may subtract from interest due on Bonds, any accrued interest and capitalized interest which is available and is to be applied to make such interest payment in the year such interest becomes due. “Debt Service Reserve Requirements” means, with reference to a particular period and with respect to (A) the 2006 Bonds, the lesser of (i) the Maximum Annual Debt Service Requirement with respect to the 2006 Bonds in any Fiscal Year during which such 2006 Bonds are Outstanding, calculated by the Authority's accountant initially at the time of issuance thereof and annually thereafter, or (ii) ten percent (10%) of the principal amount thereof, less original issue discount plus original issuance premium with respect thereto, if any, but not including accrued interest thereon; (B) with respect to the 2012 Bonds, an amount equal to the least of: (a) ten percent (10%) of the principal amount of such 2012 Bonds (or, if such 2012 Bonds have more than a de minimis amount (as defined in Treas. Reg. Sec. 1.148-1(b)) of original issue discount or premium, the issue price (as defined in Treas. Reg. Sec. 1.148-1(b)) of the Bonds), (b) the Maximum Annual Debt Service on E-2

such 2012 Bonds, and (c) one hundred twenty-five percent (125%) of the average annual debt service on such Outstanding 2012 Bonds; and (C) with respect to any Additional Bonds, the amounts set forth in the Supplemental Indenture providing for the issuance of such Additional Bonds. “Event of Default” means any of the events described in Section 10.1 of the Indenture. “Fiscal Year” with reference to the Authority means a period of 12 months beginning January 1 of each year and shall also mean the period from the date of actual execution hereof to December 31, unless and until changed by a Certified Resolution delivered to the Trustee. “Generally Accepted Accounting Principles” shall mean those accounting principles applicable in the preparation of financial statements as promulgated by the National Council on Governmental Accounting in the case of the Authority or such other body or bodies recognized as authoritative by the American Institute of Certified Public Accountants or any successor body. “Government Obligations” means direct general obligations of, or obligations (including zero coupon or similar accrual certificates or instruments) the timely payment of principal and interest on which are unconditionally guaranteed by the United States of America (including obligations issued or held in book entry form on the books of the Department of the Treasury of the United States of America). “Indenture” means the Trust Indenture (the “Original Indenture”) dated as of May 1, 2006, as supplemented and amended by a First Supplemental Trust Indenture dated as of May 1, 2012 (the “First Supplemental Indenture”), as amended or supplemented at the time in question, between the Authority and the Trustee. “Independent” means a Person who, if he is an individual, shall not be and, if a partnership, corporation or other entity, shall not have a partner, director, officer or substantial stockholder who is, a member of the Board, or an officer or employee of the Authority or the City, but such Person may be regularly retained by the Authority or the City. “Independent Public Accountant” means a person who is (or firm comprised of persons who are) a certified public accountant under the laws of the Commonwealth and who is in fact Independent. “Independent Public Accountant's Certificate” means a statement certified by the Independent Public Accountant. “Insurance Consultant” means a person who is (or firm comprised of persons who are) qualified to survey risks and to recommend insurance coverage for the 2006 Project and for parking facilities, and has a favorable reputation for skill and experience in such surveys and such recommendations, who may be a broker or agent with whom the Authority transacts business. “Insurance Consultant's Certificate” means a statement certified by the Insurance Consultant. “Insurer” means, with respect to the 2012 Bonds, Assured Guaranty Municipal Corp. (“AGM”), a New York stock insurance company (or any successor thereto or assignee thereof). AGM is hereby recognized as, and has the rights granted to the “Insurer” of the 2012 Bonds as provided in the Indenture. “Interest Payment Date” with respect to the 2012 Bonds means each May 15 and November 15, commencing November 15, 2012 and continuing until the final payment of principal of, premium, if any, and interest on the 2012 Bonds. “Investment Obligations” means any of the following: (a) Government Obligations; (b) bonds, debentures or notes or other evidence of indebtedness payable in cash issued by any one or a combination of any of the following or similar federal agencies whose obligations represent the full faith and credit of the United States of America: Export Import Bank of the United States, Farmer's Home Administration, General Services Administration, Federal Housing Administration, U.S. Maritime Administration, Small Business Administration, Public Housing Authority, Government National Mortgage Association; (c) Bonds, notes or other evidences of indebtedness rated “AAA” by Standard & Poor's Corporation and “Aaa” by Moody's Investors Service, Inc. issued by the Federal National Mortgage Association or the Federal Home Loan Mortgage Corporation with remaining maturities not exceeding three years; (d) U.S. dollar denominated demand deposit or trust accounts, federal funds and banker's acceptances with domestic commercial banks, including the Trustee and any of its affiliates, which have a rating on their short term certificates of deposit on the date of purchase of “A-1” or “A-1+” by Standard & Poor's Corporation and “P-1” by Moody's Investors Service, Inc. and maturing or available no more than 360 days after the date of purchase. (Ratings on holding companies are not considered as the rating of the bank);

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(e) Commercial paper which is rated at the time of purchase in the single highest classification, “A- 1+” by Standard & Poor's Corporation and “P-1” by Moody's Investors Service, Inc. and which matures not more than 270 days after the date of purchase; (f) Pre-refunded municipal obligations defined as follows: any bonds or other obligations of any state of the United States of America or of any agency, instrumentality or local governmental unit of any such state (i) which are not callable at the option of the obligor prior to maturity or as to which irrevocable notice has been given by the obligor to call such bonds or obligations on the date specified in the notice, and (ii) which are rated, based on an escrow, in the highest rating category of Standard & Poor's Corporation and Moody's Investors Service, Inc., or any successors thereto, or (iii) which are fully secured as to principal and interest and redemption premium, if any, by a fund consisting only of cash or Government Obligations which fund may be applied only to the payment of such principal of and interest and redemption premium, if any, on such bonds or other obligations on the maturity date or dates thereof or the specified redemption date or dates pursuant to such irrevocable instructions, as appropriate, and (iv) which fund is sufficient, as verified by a nationally recognized independent certified public accountant, to pay principal of and interest and redemption premium, if any, on the bonds or other obligations described in this paragraph (f) on the maturity date or dates thereof or on the redemption date or dates specified in the irrevocable instructions referred to in subclause (i) of this paragraph (f), as appropriate; (g) money market funds rated AAAm or AAAmg or better by Standard & Poor's, including, without limitation, the JPMorgan Money Market Mutual funds or any other mutual fund for which the Trustee or an affiliate of the Trustee serves as investment manager, administrator, shareholder servicing agent, and/or custodian or subcustodian, notwithstanding that (i) the Trustee or an affiliate of the Trustee receives fees from such funds for services rendered, (ii) the Trustee charges and collects fees for services rendered pursuant to the Indenture, which fees are separate from the fees received from such funds, and (iii) services performed for such funds and pursuant to the Indenture may at times duplicate those provided to such funds by the Trustee or its affiliates. “Maximum Annual Debt Service Requirement” means at the time of calculation the maximum Debt Service Requirements for any one Fiscal Year during the remaining life of all Outstanding Bonds. “Municipal Bond Insurance Policy” means the insurance policy issued by the Insurer guaranteeing the scheduled payments of principal and interest on the 2012 Bonds, when due. “Notice By Mail” or “notice” of any action or condition “By Mail” means a written notice meeting the requirements of the Indenture mailed by first class mail, postage prepaid, or by overnight delivery. Such written notice shall be sufficiently given and shall be deemed conclusively given for all purposes when mailed to Bondholders at the addresses shown on the registration books maintained by the Trustee and to others whose addresses appear herein or have been filed with the Trustee, whether or not the same receive the notice. “Officers' Certificate” means a statement certified by the Chairman or Vice-Chairman and by the Secretary or Treasurer of the Authority under its corporate seal. “Opinion of Counsel” means an opinion or opinions in writing signed by an attorney-at-law, who may be counsel to the Authority. “Outstanding”, when used with reference to Bonds, means as of any particular time all Bonds authenticated and delivered under the Indenture, except (a) Bonds cancelled at or prior to such time; (b) Bonds deemed to have been paid under Section 14.2 of the Indenture; (c) Bonds in substitution for which other Bonds have been authenticated and delivered pursuant to Article II of the Indenture; and except that, for the purpose of any reference to the holders of a particular percentage of the Bonds Outstanding, there shall be excluded Bonds held or owned by the Authority. “Parking Garage” includes, the public parking facility, named the Crossroads Parking Garage, containing approximately 816 spaces, all for the purpose of providing for adequate off-street parking of automobiles, together with any additions, extensions and improvements hereinafter from time to time acquired or constructed, including, as of any particular time, the parking lots and all property and franchises appurtenant thereto, used or useful in connection therewith, and all rentals, replacements and repairs thereof and all Capital Additions now or hereafter required, held, owned or constructed by or for the Authority in connection with the foregoing. “Person” includes a partnership, association, corporation, governmental body, political subdivision, municipality authority or any other group or entity. “Pledged Revenues” means (a) with respect to the 2006 Bonds, the 2012 Bonds and any Additional Bonds secured by the Guaranty and any supplements thereto, all amounts payable by the City under the Indenture, (b) with respect to all Bonds issued pursuant the Indenture and all supplements thereof, all amounts payable by the Authority under the Indenture and all revenues, rentals, fees, charges and moneys derived by or on behalf of the Authority from or in connection with the

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Parking Garage, including interest and income earned on all funds under the Indenture; and (c) all amounts paid by the City to the Authority pursuant to the Contribution Agreement. “Redemption Price” where used with respect to a Bond, means the principal amount of such Bond plus the applicable premium, if any, payable upon redemption thereof pursuant to the Indenture. “Registered Owner” means the Person or Persons in whose name or names the particular Bond shall be registered as to principal and interest on the books of the Authority kept for that purpose in accordance with the Indenture and the Bonds. “Regular Record Date” means with respect to the 2012 Bonds, the last day (whether or not a Business Day) of the calendar month next preceding each Interest Payment Date “Remaining Life” means, with respect to any series of Bonds, a period beginning on the date in question and ending on the earliest date when all Parking Revenue Bonds of such series then outstanding will be retired either by payment at maturity or prior to maturity through mandatory sinking fund payments made at regular intervals. “Supplemental Indenture” or “indenture supplemental hereto” shall mean any indenture amending or supplementing the Indenture which may be entered into in accordance with the provisions of the Indenture. “2006 Bonds” or the “2006 Refunded Bonds” means the Authority’s Guaranteed Parking Revenue Bonds, Series of 2006, currently outstanding in the aggregate principal amount of $3,215,000. “2012 Bonds” means the Authority’s Guaranteed Parking Revenue Bonds, Series of 2012. “Trustee” means The Bank of New York Mellon Trust Company, N.A.

THE INDENTURE

The 2012 Bonds are being issued under and subject to the provisions of the Indenture, to which reference is made for complete details of the terms of the 2012 Bonds. Limited Obligations; Pledge and Assignment The Bonds are limited obligations of the Authority payable solely and only from the Pledged Revenues. Under the Indenture, the Pledged Revenues include(a) all revenues, rentals, fees, charges and moneys derived by or on behalf of the Authority from or in connection with the Parking Garage, including interest and income earned on all funds held under the Indenture, (b) all amounts payable by the City under the Guaranty and (c) all amounts paid by the City under the Contribution Agreement. No recourse shall be had for the payment of the principal of the interest on, or the premium, if any, payable under the redemption of, any Bond, or for any claim based thereon or on the Indenture or any supplemental Indenture, against the Commonwealth or any political subdivision thereof except the City under the Guaranty, it being expressly agreed that the Indenture and any Supplemental Indenture and the Bonds are solely corporate limited obligations of the Authority payable out of the rentals and revenues from the Parking Garage pledged by the Indenture and from such moneys as may be made available for that purpose and do not pledge the credit or taxing power of the Commonwealth or any political subdivision thereof except the City under the Guaranty. Funds and Accounts Revenue Fund. A Revenue Fund has been established under the Indenture, into which is to be deposited and held (i) all Pledged Revenues whether received by the Authority or by the Trustee directly; (ii) all interest and income received upon deposits and investments of moneys in the several funds created pursuant to the Indenture; and (iii) any and all other moneys received by the Trustee that are not required to be deposited into another fund under the Indenture. The moneys in the Revenue Fund shall be held by the Trustee in trust, secured or invested (provided such investment is not prohibited by any other provision of the Indenture) as provided in the Indenture, and shall be applied for the purposes and in the order of priority as set forth in the Indenture and, pending such application, shall be subject to a lien and charge in favor of, and for the further security of, the holders of the Bonds, until paid out. The Authority covenants and agrees that it will pay over to the Trustee all Pledged Revenues from the operation of the Parking Garage upon the first business day of the week next succeeding the collection or receipt thereof accompanied by a statement of an officer authorized by resolution of the Authority showing the amounts collected, and that, until so paid over, the Authority will segregate all such Pledged Revenues separate from any funds of the Authority not relating to the Parking Garage and hold them in trust for the purposes of the Indenture. Upon receipt of such Pledged Revenues, the Trustee shall deposit them in the Revenue Fund.

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The Trustee shall from time to time, upon requisitions of the Authority, transfer from the Revenue Fund to the Authority such amounts as may be necessary to pay or reimburse the Authority for all Administrative Fees and Expenses or to pay such reasonable expenses of the Authority of inspecting, operating, maintaining and repairing the Parking Garage.. Each such requisition shall contain an itemized statement of the expenses of the Authority for. said purposes in reasonable detail and shall certify that the aggregate of the amounts then requisitioned plus those previously requisitioned during the then current Fiscal Year, do not exceed the amount of the then current annual budget. The Authority covenants and agrees that all moneys so transferred by the Trustee to the Authority shall be used exclusively for the purposes requisitioned, shall be kept separate from the revenues received under this Section and that any balance not so used shall be redeposited by the Authority in the Revenue Fund. To the extent that there is a balance of moneys remaining in the Revenue Fund in any Fiscal Year, after the required transfers to the Debt Service Fund and the Debt Service Reserve Fund have been made, the Authority shall direct the Trustee, in writing, to transfer such balance to the Bond Redemption and Improvement Fund. Debt Service Fund. A Debt Service Fund has been established under the Indenture with an account for the 2012 Bonds. The Trustee shall transfer, without direction from the Authority, from the Revenue Fund to the Debt Service Fund: (a) on November 1, 2006 and on or before May 1 and November 1 of each Fiscal Year thereafter, so long as any 2012 Bonds remain Outstanding, an amount which, together with, any other available moneys then in the Debt Service Fund, will be equal to pay the semiannual installment of interest becoming due on all 2012 Bonds on the next succeeding May 15 or November 15; and (b) on or before November 1 of each Fiscal Year, so long as any 2012 Bonds remain Outstanding, an amount equal to the aggregate principal amount of 2012 Bonds at the time outstanding which mature or are subject to mandatory sinking fund redemption by their express terms on the next succeeding November 15. The moneys so transferred to the Debt Service Fund shall be held in trust by the Trustee, deposited, secured and invested as provided in the Indenture, and are irrevocably pledged for the payment of the principal of, and interest on, all Outstanding Bonds, subject to the prior claims of any Bonds of any series to any special sinking fund account which may be provided therefor. If at the time of payment there are insufficient moneys for such purposes, the Trustee is directed to supply the deficiency from the following Funds, withdrawing from each in the following order: Debt Service Reserve Fund and Bond Redemption and Improvement Fund. Debt Service Reserve Fund. A Debt Service Reserve Fund has been established under the Indenture which has been funded at closing with proceeds of the 2012 Bonds in an amount equal to the Debt Service Reserve Requirements on the 2012 Bonds. Immediately after making the transfers to the Debt Service Fund, the Trustee shall transfer, without direction from the Authority, from the Revenue Fund to the Debt Service Reserve Fund, a sum which, together with such other moneys as may be deposited therein, shall be necessary to bring the total in the Debt Service Reserve Fund up to an amount equal to the Debt Service Reserve Requirements on Bonds then Outstanding, such replenishment being made in not more than two semi-annual installments within a one-year period following any deficiency therein. The Trustee shall also transfer from the Revenue Fund to the Debt Service Reserve Fund such additional amounts, on such dates, as may be provided in any Supplemental Indenture. The Trustee may, from time to time, without direction from the Authority, use the moneys in the Debt Service Reserve Fund to make up any deficiency in the Debt Service Fund. Bond Improvement and Redemption Fund. A Bond Improvement and Redemption Fund has been established under the Indenture which shall be held in trust by the Trustee, deposited and secured or invested as provided in the Indenture, and shall be subject to a lien and charge in favor of, and as security for, the holders of Outstanding Bonds, until used or applied as hereinafter provided in the Indenture. Apart from any deposits of proceeds of Bonds specified in a Supplemental Indenture, funding will occur only to the extent that there is a balance of moneys remaining in the Revenue Fund in any Fiscal Year after the required transfers to the Debt Service Fund and the Debt Service Reserve Fund have been made. Whenever there is a deficiency in the Debt Service Fund or Debt Service Reserve Fund and there is insufficient money in the Revenue Fund to make up such deficiency, then the Trustee shall forthwith transfer sufficient amount or amounts from the said Bond Redemption and Improvement Fund to make up such deficiency and in the above order of priority. Moneys in the Bond Redemption and Improvement Fund may be used or applied by the Authority from time to time (provided there is no deficiency in any of the funds above referred to and no event of default has occurred which is

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continuing), but only to the extent of the money available therein, and upon delivery to the Trustee of an Officers' Certificate hereinafter provided for, for any of the following purposes in addition to the purposes specified in the preceding paragraph: (a) for and toward the Cost of such repairs, renewals, replacements, alterations or improvements of the Parking Garage as cannot reasonably or properly be paid for or made in the ordinary operation of the Parking Garage; (b) for or toward the Cost of Capital Additions; (c) for the purposes of redeeming Bonds in such aggregate amount as the Authority may from time to time direct in writing, or to supplement the moneys in any or all other Funds in paying all such Bonds then remaining Outstanding, all of which Bonds shall thereupon be cancelled by the Trustee, or for the purchase, at any time, by the Authority, or the Trustee at the written direction of the Authority, of any of the Bonds issued under the Indenture at not more than the Redemption Price for the redemption of such Bonds from the Bond Redemption and Improvement Fund on the Interest Payment Date next succeeding the date of such purchase; and (d) to pay, as and when the same shall become due and payable, any expenses, debts, liabilities and obligations of the Authority incurred in connection with the operation, maintenance or improvement of the Parking Garage and for the payment of which provision shall have not otherwise been made, including the payment of costs, expenses, or such part thereof, if any, as the Board shall determine not to fund, which may be incurred in connection with the issuance of Additional Bonds, including, in the case of Additional Bonds issued for refunding purposes, redemption premiums, accrued interest and the expenses of redemption, or to make up any deficiencies in insurance proceeds to pay the cost of repairing, replacing or reconstructing damaged or destroyed property. Investment of Funds Moneys in the Revenue Fund, Debt Service Fund, Debt Service Reserve Fund and in the Bond Redemption and Improvement Fund may be retained uninvested as trust funds and so secured as aforesaid or, if the Authority shall so request in writing, to the fullest extent possible, be wholly or partially deposited and redeposited by the Trustee in Investment Obligations, subject to the following respective limitations: (a) Revenue Fund - such Investment Obligations shall mature or shall be subject to redemption or withdrawal at the option of the holder thereof not later than the date upon which such moneys must be transferred pursuant to the provisions of this or any Supplemental Indenture; (b) Debt Service Fund - investment of moneys deposited therein as capitalized or funded interest shall be invested only in Government Obligations. Any such Government Obligations shall mature or shall be subject to redemption or withdrawal at the option of the holder thereof not later than the day before such moneys shall be so required for the payment of principal of, and interest on, the Bonds; and (c) Debt Service Reserve Fund and Bond Redemption and Improvement Fund - such Investment Obligations shall be subject to redemption or withdrawal at the option of the holder thereof not later than five years after the date of such deposit or investment. The interest and income received from time to time upon such Investment Obligations and any profit realized or loss sustained from the sale thereof shall be initially added or charged to the appropriate Fund, and such interest, income, profit or loss shall be considered part of the appropriate Fund for computation of any surplus or deficiency in any such Fund; provided, that the interest or income received from time to time upon Investment Obligations and any profit realized from the investment of moneys in any Fund in which there is not a deficiency shall be applied as follows: (a) Revenue Fund – remain in that Fund; (b) Debt Service Fund and Debt Service Reserve Fund – transferred to the Revenue Fund; and (c) Bond Redemption and Improvement Fund – remain in that Fund. Additional Bonds Capital Additions. The Authority may from time to time issue Additional Bonds for the purpose of paying the Cost of Capital Additions, or for the purpose of reimbursing expenditures of or of paying any indebtedness incurred by the Authority for any such purposes, and the Trustee shall authenticate and deliver such Additional Bonds to, or upon the written order of, the Chairman or Vice-Chairman of the Authority, upon receipt of: (a) a Certified Resolution or Resolutions (1) authorizing the issuance of a specified principal amount of Additional Bonds and stating the purpose of issue and the series, numbers, rate or rates of interest, maturities and provisions for redemption (if any) of such Additional Bonds; (2) authorizing the execution and delivery of a Supplemental Indenture and, if authorized, a supplemental Guaranty; (3) describing briefly and authorizing the acquisition of any additional

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real estate, easements, rights of way and franchises as may be required; (4) if such Capital Additions include construction, approving the plans and specifications for such construction, or otherwise providing for the preparation and approval of such plans and specifications, and authorizing such construction; and (5) requesting the authentication and delivery of such Additional Bonds; (b) an Officers' Certificate stating (1) the amount of the proceeds of the sale of said Additional Bonds and of any other moneys to be available for such construction or acquisition; (2) the amount of such proceeds to be paid into any Project Fund and any amounts which are to be paid into any other funds under the Indenture or Supplemental Indenture; (3) the amount of Debt Service Requirements upon all Bonds Outstanding after the issuance of the Additional Bonds and including any mandatory payments to be made to the Debt Service Reserve Fund with respect to such Additional Bonds as provided in any Supplemental Indenture; (4) except when Additional Bonds are being issued for the payment of the Cost of completion of the construction of Capital Additions, that no Event of Default has occurred which is continuing; and (5) that all conditions precedent provided for in the Indenture and said Supplemental Indenture relating to the authentication and delivery of the Additional Bonds have been complied with; (c) (i) a Consulting Engineers' Certificate stating that, in the opinion of the signers, (1) such parking facilities construction, or construction or acquisition of Capital Additions, as the case may be, is required or desirable for the proper and efficient operation of the Parking Garage; (2) the amount of the proceeds of the sale of said Additional Bonds, together with any other available moneys (as shown in the Officers' Certificate delivered to the Trustee pursuant to paragraph (b) above) are necessary and will be sufficient to pay or reimburse the estimated Cost of such construction or acquisition or to pay indebtedness incurred therefor, which Cost shall be described in reasonable detail in said Certificate; and (3) any plans and specifications made available to the Trustee under paragraph (d) below are complete and are approved by them and have been approved by governmental authority as may then be required by law; (d) copies of any plans and specifications (except drawings and maps) for any construction of Capital Additions, certified by the Secretary of the Authority to have been approved or authorized by Resolution, which shall be made available to the Trustee at its written request; (e) a Certified Ordinance authorizing the execution and delivery by the City, if authorized, of a supplemental Guaranty; (f) a Supplemental Indenture, duly executed by the Authority, (1) setting forth the terms, provisions and form of said Additional Bonds; (2) confirming the assignment and pledge under the Indenture of the Pledged Revenues; (3) providing for any additional amounts to be paid into certain of the Funds provided for in Articles V and VI or for the creation of additional funds or both; and (4) containing any appropriate provisions not inconsistent with the Indenture, which Supplemental Indenture the Trustee is authorized to execute and deliver upon receipt of the documents and proceeds prescribed by this Section; (g) an Opinion of Counsel to the effect that (1) the purposes for which the Additional Bonds are to be issued are authorized purposes under this Section and, if any Capital Additions with respect to which such Additional Bonds are to be issued are to be acquired or constructed by the Authority, the Authority has corporate power and lawful authority, to acquire, construct, own, hold and operate any such Capital Additions; (2) the Resolutions and Ordinances (if any) referred to in paragraphs (a) and (e) above have been duly and lawfully adopted or enacted and are in full force and effect; (3) with respect to any lands, rights of way, easements or other interests in real property included in any Capital Additions to be acquired or constructed by the Authority, the Authority has properly acquired or has taken certain enforceable preliminary steps or otherwise has legal power to acquire, good and marketable title in fee simple thereto, or such lesser title as may be appropriate for the purposes intended and permitted under the Act, free and clear of all liens and encumbrances, excepting easements, restrictions in the line of title, encumbrances and defects of title which, in the opinion of the signers, will not materially interfere with or adversely affect the use and operation of the Parking Garage (as to which there may be a separate Opinion of Counsel); (4) any approvals and consents of any governmental authorities which are required in connection with such construction or acquisition of Capital Additions or for the legal issuance of said Additional Bonds have been obtained or provision for obtaining them have been made; (5) the Supplemental Indenture has been duly and properly executed and is a valid, binding and enforceable instrument in accordance with its terms (subject, as to the enforceability of remedies, to any applicable bankruptcy, insolvency, moratorium or other laws or equitable principles affecting the enforcement of creditors' rights generally); (6) all conditions precedent provided for in the Indenture and said Supplemental Indenture relating to the authentication and delivery of said Additional Bonds have been complied with; (7) the Additional Bonds constitute valid, binding and enforceable obligations of the Authority in accordance with the terms thereof (subject, as to the enforceability of remedies, to any applicable bankruptcy, insolvency, moratorium or other laws or equitable principles affecting the enforcement of creditors' rights), and are entitled to the benefits and security of the Indenture and said Supplemental Indenture as therein and herein provided; and (8) if the Additional Bonds are to be additionally secured by the guaranty of the City, that the instrument by which the guaranty is made has been duly and properly executed and is a valid, binding and

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enforceable instrument in accordance with its terms (subject, as to the enforceability of remedies, 'to any applicable bankruptcy, insolvency, moratorium or other laws or equitable principles affecting the enforcement of creditors' rights generally); and (h) if such Additional Bonds are to be additionally secured by the guaranty of the City, a copy of the instrument pursuant to which such guaranty is made. The proceeds of sale of the Additional Bonds shall immediately upon receipt be transferred to the Trustee, which shall thereupon deposit the same in the Project Fund (earmarked, if appropriate, in a separate account for each series of Bonds) and in other Funds as set forth in item (2) of the Officers' Certificate delivered pursuant to paragraph (b) above or as may be provided in the Supplemental Indenture. Refunding Bonds. The Authority may from time to time issue Additional Bonds for the purpose of paying and redeeming all or a portion of any series of Outstanding Bonds and of paying all or any part of the costs and expenses in any way incidental to such redemption and the financing thereof, including any redemption premium and accrued interest, and the Trustee shall authenticate and deliver such Additional Bonds to, or upon the written order of, the Chairman or Vice-Chairman of the Authority, upon receipt of: (a) a Certified Resolution or Resolutions substantially to the same effect as provided in above with respect to capital additions so far as applicable, and exercising the right of the Authority to pay and redeem the Bonds, setting forth the date fixed for such payment and redemption and authorizing all necessary action in connection therewith; (b) evidence satisfactory to the Trustee that notice of redemption of the Bonds to be redeemed has been properly mailed or waived pursuant to the Indenture (and, if waived, a signed copy or copies of such waiver shall be delivered to the Trustee) or that provision satisfactory to the Trustee has been made for mailing, if any, thereof; (c) an Officers' Certificate stating (1) the amount of the proceeds of sale of said Additional Bonds; (2) that the proceeds of sale of said Additional Bonds, together with specified amounts, if any, in other Funds (which are available therefor), including any income on any or all thereof, and other specified moneys available or to become available are necessary and will be sufficient to pay all amounts payable on such payment and redemption including incidental costs and expenses, and the costs and expenses incident to the financing which are to be paid out of said proceeds; (3) that no Event of Default has occurred which is continuing, or, in the alternative, that the issuance of Additional Bonds will prevent or cure an Event of Default; (4) the amount of the Debt Service Requirements upon the Additional Bonds for each Fiscal Year; (5) all conditions precedent provided for in the Indenture and Supplemental Indenture relating to the authentication and delivery of such Additional Bonds have been complied with; (d) a Supplemental Indenture substantially as provided for above in the case of capital additions so far as applicable; (e) an Opinion of Counsel substantially to the effect provided for above in the case of Additional Bonds for capital additions so far as applicable; (f) a verification report of an independent certified public accountant stating that the Trustee (and/or any escrow agent as shall be appointed in connection therewith) will hold in trust sufficient moneys and/or Government Obligations to effect payment of the Outstanding Bonds being refunded at maturity or earlier redemption; provided, however, that such verification report will not be required in the case of a current refunding of bonds if the gross amount of moneys required to pay the redemption prior of the refunded bonds is deposited with the Trustee and no earnings on such deposits or other funds held be the Trustee are required to pay such redemption price. The proceeds of sale of the Additional Bonds shall, upon receipt, be transferred to the Trustee and shall be held by the Trustee in trust, for, and applied, together with other applicable funds, to the redemption of the Bonds to be redeemed. The cost and expenses incident to the redemption and financing shall be paid by the Trustee out of such proceeds or other available money upon requisition of the Authority, and any remaining balance of such proceeds shall be deposited in the Bond Redemption and Improvement Fund. Covenants of the Authority Payment of Bonds. The Authority will promptly pay, or cause to be paid, but only from the Pledged Revenues and from such other moneys as may be made available for that purpose, the principal of, and interest on, every Bond issued under the Indenture and secured hereby at the place and on the dates and in the manner herein and in said Bonds, according to the true intent and meaning thereof. Maintenance of Parking Garage. The Authority at all times will: (a) maintain the Parking Garage and every part thereof in good repair, working order and condition;

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(b) continuously operate the same; (c) from time to time make all necessary and proper repairs, renewals and replacements and ordinary improvements thereto in order to maintain adequate service; and (d) comply with all present and future laws, rules, regulations, permits, orders and requirements lawfully made, of any competent public authority now or hereafter existing, applicable to the Authority with respect to the Parking Garage and take such actions and proceedings as may be required, from time to time, to preserve its corporate existence, rights and franchises. Insurance Requirements. The Authority will carry insurance, not otherwise provided for, upon, or with respect to, the Parking Garage in a responsible insurance company or companies authorized and qualified to do business under the laws of the Commonwealth against such risks and in such amounts as are usually carried upon, or with respect to, like properties. Such insurance policies shall be non-assessable and shall be for the benefit of the Authority and the Trustee as their respective interests may appear, and such policies, or certificates evidencing the same, shall be deposited with the Trustee, and all losses shall be made payable to and be deposited with and held by such Trustee in trust as security for the Bonds until disbursed as hereinafter provided, and the Trustee shall have the sole right to receive the proceeds of such policies and to collect and receipt for claims under the Indenture. The Trustee is hereby authorized in its own name and as trustee of an express trust to demand, collect, and receipt bills for the insurance money which may become due and payable under any such policies. Sale or Lease of Parking Garage. The Authority will not sell, lease, pledge or otherwise dispose of or encumber the Parking Garage, or any part thereof, or any of the revenues and rentals therefrom, excepting for the lien of the Indenture, and as in this section permitted, and, subject to the provisions of the following section, will promptly pay any liens or judgments constituting liens thereon or on any part thereof. The Authority may from time to time sell, lease, release, exchange, encumber or otherwise dispose of, any property included in the Parking Garage if the Authority shall have filed with the Trustee a Consulting Engineers' Certificate describing such property and stating that in the opinion of the signers such sale or other disposition is in the best interests of the Authority and will not adversely affect the security of the Bonds or impair the operation of the Parking Garage. Such Consulting Engineers' Certificate shall also state the fair value, if any, of such property to the Authority and that arrangements have been made for the sale or exchange thereof for a consideration, past or present, not less than any such fair value. The cash proceeds, if any, of any such sale or other disposition shall be paid to the Trustee and shall be deposited in the Bond Redemption and Improvement Fund. Taxes and Assessments. The Authority will pay all taxes and assessments, including income, profits, property or excise taxes, if any, or other municipal or governmental charges lawfully imposed upon the Authority, or the Parking Garage or upon any part thereof, or upon any franchises, businesses, or transactions in connection with the Parking Garage for the payment or collection of which the Authority may be liable or accountable under any lawful authority whatever by reason of its ownership of, or its earnings, profits or receipts from, the Parking Garage, and will observe and comply with all valid requirements of any municipal or other governmental authority relative to the Parking Garage. The Authority will not create or suffer to be created any lien or charge thereon or any part thereof or upon said rentals and revenues, except the lien and charge of the Indenture and the Bonds, and that it will, but only out of said revenues or other available moneys, pay or cause to be discharged, or will make adequate provision to satisfy and discharge, within 60 days after the same shall accrue, any such lien or charge, and also all lawful claims and demands for labor, materials, supplies or other objects which, if unpaid, might by law become a lien upon the Parking Garage or any part thereof or said rentals and revenues; provided, however, that nothing in this section shall require the Authority to pay or cause to be discharged, or make provision for, any such lien or charge, so long as the validity thereof shall be contested in good faith and by appropriate legal proceedings. Consulting Engineers. The Authority will continuously employ Consulting Engineers for the performance of the duties imposed on them by the Indenture, who may be removed by the Authority at any time upon the employment of successor Consulting Engineers. It shall be the duty of the Consulting Engineer, in addition to the other duties prescribed elsewhere in the Indenture, to prepare and file with the Trustee on or before 60 days prior to the beginning of each Fiscal Year, a report (the “Consulting Engineer Report”) setting forth the following: (a) Its advice and recommendations as to the proper maintenance, repair and operation of the Parking Garage during the next Fiscal Year; and (b) Its finding as to whether the properties of the Parking Garage have been maintained in good repair and sound operating condition and their estimate of the amount, if any, required to place such properties in such condition and the details of such expenditures and the approximate time required therefore Audit. The Authority will employ an Independent Public Accountant to perform the auditing and accounting functions under the Act and the Indenture. The Authority will at all times maintain an accurate system of accounts and keep

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proper books of record and account relating to the Parking Garage. The Independent Public Accountant shall make an annual examination and complete audit of the accounts, books, and records of the Authority relating to the Parking Garage. Said audit shall include an audit in respect of the receipt and application by the Trustee of the moneys received by it pursuant to the provisions of the Indenture and a statement whether, in the opinion of the signer, the provisions of the Indenture have been complied with. A signed copy of the audit with financial statements shall be delivered to the Trustee, the Authority, and the Consulting Engineers within 90 days after such annual audit. Upon written request, the Authority shall furnish copies of such audit to any Bondholder or agent or representative of such Bondholder. Application of Pledged Revenues. The Authority will apply or cause to be applied all the Pledged Revenues in the manner and in the order of priority and at the time or times herein provided. The Authority will not enter into any contract or take any action by which the rights of the Trustee or the Bondholders may be impaired, provided that any action taken in accordance with the Indenture shall not be considered to impair such rights. Tax Covenant. The Authority will make no use of the proceeds of any Bonds issued under the Indenture at any time during the term thereof which, if such use had been reasonably expected upon the date of issuance of any such Bonds, would have caused such Bonds to be arbitrage bonds within the meaning of Section 148 of the Internal Revenue Code of 1986, as amended (the “Code”), and applicable regulations issued under the Indenture, or otherwise would have caused the interest on the Bonds not to be excluded from gross income of the holders thereof for federal income tax purposes. The Trustee shall have no liability for investments or deposits made in accordance with the Authority's written directions. Licenses and Permits. The Authority shall obtain and maintain all material licenses or governmental permissions, necessary in accordance with the requirements of all federal, state and local statutes, codes, laws, acts, ordinances, orders, judgments, decrees, rules, regulations, licenses, approvals and authorizations, including without limitation, those relating to zoning, land use, environmental protection and employment practices applicable from time to time to the Parking Garage and the performance by the Authority of its obligations under any agreement entered into by the Authority. Events of Default The occurrence of the following events is hereby declared an “Event of Default”: (a) payment shall not be made of any interest upon any Bond on any Interest Payment Date; or (b) payment of any part of the principal of, or premium, if any, on, any of the Bonds shall not be made at maturity or when the same shall become due upon call for redemption, or by acceleration or otherwise; or (c) the Authority shall fail or refuse to comply with any provisions of the Act, or shall be rendered incapable of fulfilling its obligations under the Indenture; or (d) the Authority shall discontinue or unreasonably delay or fail to carry on with reasonable dispatch the construction referred to in any Supplemental Indenture, or any contractor or any surety shall fail or neglect to perform its contract in accordance with the terms thereof or otherwise provide for the completion of such construction in accordance with the terms of said contract; or (e) any part of the Parking Garage necessary for its efficient operation shall be destroyed or damaged or taken and shall not be promptly repaired, rebuilt or replaced for any reason whatsoever; or (f) an order or decree shall be entered with the consent or acquiescence of the Authority appointing a receiver or receivers of the Parking Garage or any part thereof or of the receipts and revenues thereof, or if such order or decree, having been entered without the consent or acquiescence of the Authority, shall not be vacated or discharged or stayed on appeal within 30 days after entry; or (g) the Authority shall default in the due and punctual performance (irrespective of any revenues or other moneys not being available for such purpose) of any other of the covenants, conditions, agreements or provisions contained in the Bonds or in the Indenture relating thereto, on the part of the Authority required to be performed and any such default shall have continued for a period of 30 days after written notice specifying such default and requiring the same to be remedied shall have been given to the Authority by the Trustee, which may give such notice in its discretion and shall give such notice upon written request of holders of not less than 25% in aggregate principal amount of such Bonds then Outstanding; or (h) there shall be a default by the City under the Guaranty or any supplement thereof. Remedies Upon the happening and during the continuance of any Event of Default, then and in every such case, the Trustee may, and upon written request of the holders of not less than 25% in aggregate principal amount of the Bonds affected E-11

thereby and then Outstanding shall (in both cases, subject to the right of the Insurer to control remedies), by notice in writing delivered to the Authority declare the principal of all such Bonds then Outstanding (if not then due and payable) and the interest accrued thereon to be due and payable immediately, and upon such declaration the same shall become and be immediately due and payable at the place of payment provided therein, anything in the Indenture or in such Bonds contained to the contrary notwithstanding. The foregoing provision, however, is subject to the condition that if, at any time after the principal of such Bonds shall have been so declared to be due and payable and before the entry of final judgment or decree in any suit, action or proceeding instituted on account of such event of default and before the completion of the enforcement of any other remedy under the Indenture, all arrears of interest upon all, such Bonds then Outstanding under the Indenture (with interest on overdue installments of interest at the highest rate of interest borne by any of the Bonds of the same series) and the principal of all such Bonds then Outstanding which have matured (except the principal of any such Bonds not then due by their terms and the interest accrued on such Bonds since the last interest payment date) and the charges, compensation, disbursements, advances and liabilities of the Trustee, and all other amounts then payable by the Authority. under the Indenture (except as aforesaid) shall have been paid or shall have been provided for by deposit with the Trustee of a sum sufficient to pay the same, and every other default known to the Trustee in the performance of any covenant, condition, agreement or provision contained in such Bonds or in the Indenture (except as aforesaid) on the part of the Authority required to be performed shall have been remedied or provision therefor satisfactory to the Trustee shall have been made, then and in every such case, the holders of a majority in aggregate principal amount of such Bonds not then due by their express terms and then Outstanding, by written notice delivered to the Authority and to the Trustee, may waive all defaults and rescind and annul such declaration and its consequences, but no such rescission or annulment shall extend to or affect any subsequent default or impair any right or remedy consequent thereon. Trustee May Take Possession of Parking Garage Upon An Event of Default. Upon the happening and during the continuance of any event of default specified in the Indenture, the Trustee shall have the right to exercise and enforce each and every right granted to it by law or hereby, and the Authority, upon demand of the Trustee, shall forthwith surrender to the Trustee the actual possession of, and the Trustee may take possession of, all or any part of the Parking Garage as for condition broken, and the Authority shall forthwith assign, or cause to be assigned to the Trustee any and all agreements relating to the and the Trustee in its discretion may, with or without force or with or without process of law, and before or after declaring the principal of the Bonds immediately due, and without any action on the part of any holders of such Bonds, by its agents or attorneys, enter upon, take and maintain possession of all or any part of the Parking Garage, together with all records, documents, books, papers and accounts relating thereto and may as the attorney in fact or agent of the Authority, or in its own name as Trustee, hold, manage and operate the Parking Garage and collect all amounts which shall be or shall become payable by reason of such operation, and, after paying out of said amounts all expenses for operation and maintenance of the Parking Garage, and the costs of such repairs, replacements, alterations and useful improvements as may to it seem proper and judicious, and all taxes, assessments or charges or liens upon the Parking Garage, together with reasonable attorneys' fees and expenses, and after retaining reasonable compensation for amounts collected as Trustee for its services in that behalf, and such further sums as may be sufficient to reimburse and indemnify the Trustee against any liability, loss or damage on account of any matter or thing done in good faith and in pursuance of the duties of the Trustee under the Indenture and to pay back any moneys advanced or paid out by the Trustee, pursuant to the Indenture, together with interest thereon; shall apply the residue, if any, as provided in the Indenture. Rights of Trustee to Protect Bondholders. Upon the happening and during the continuance of any Event of Default, then and in every such case the Trustee in its discretion may and, upon written request of the holders of at least 25% in aggregate principal amount of the Bonds then Outstanding affected thereby or concerned therewith, and upon receipt of indemnity to it satisfactory, shall proceed to protect and enforce its right and the rights of the holders of such Bonds under the laws of the Commonwealth or under the Indenture by the exercise of any proper legal or equitable right or remedy as the Trustee being advised by counsel shall deem most effectual to protect and enforce such rights, and without limitation of the foregoing shall in its own right: (a) by mandamus or other suit, action or proceeding at law, or in equity, enforce all rights of such Bondholders, including the right to require the Authority to charge and collect rentals and other charges adequate to carry out the terms of the Indenture and with respect to the pledge under the Indenture of the revenues, rentals and moneys of the Authority from the Parking Garage, and to require the Authority to carry out any other agreements with or for the benefit of such Bondholders and to perform its duties under the Act; (b) bring suit upon such Bonds; (c) by action or suit in equity require the Authority to account as if it were the trustee of an express trust for such Bondholders;

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(d) by action or suit in equity enjoin any acts or things which may be unlawful or in violation of the rights of such Bondholders; and (e) exercise any or all other rights and remedies provided for by the Act or by any other law, and by any suit, action or special proceeding in equity or at law either for the specific performance of any covenant or agreement contained herein or in aid or execution of any power herein granted. Application of Funds. Any moneys received by the Trustee or by any receiver which are subject to the assignment and pledge herein contained shall, after payments under Section 10.3, be applied: First: to the payment of the compensation, counsel fees and expenses of the Trustee and of the receivers, if any, and all costs and disbursements allowed by the court, if there be any court action; Second: to the payment of the whole amount of principal and interest which shall then be owing or unpaid upon the Bonds entitled to such moneys and in case such amounts shall be insufficient to pay in full the whole sum so due and unpaid, then to the payment of such principal and interest ratably, without preference or priority of principal over interest or of interest over principal or of any installment of interest over any other installment of interest, except as provided in the Indenture; and Third: to the payment of the surplus, if any, to the Authority or to whoever is lawfully entitled to receive the same, or as a court of competent jurisdiction may direct. Any payment with respect to the Bonds as aforesaid shall be made only upon presentation of the several Bonds as the case may be, for stamping thereon the payments if only partially paid and for surrender thereof if fully paid. Direction of Proceedings. Anything in the Indenture to the contrary notwithstanding, the holders of 25% in aggregate principal amount of the Bonds then Outstanding and with respect to which an Event of Default has occurred, shall have the right by an instrument in writing executed and delivered to the Trustee to direct the method and place of conducting all remedial proceedings to be taken by the Trustee under the Indenture; provided that any such direction shall not be contrary to law or the provisions of the Indenture and that the Trustee shall have the right to decline to follow any such direction which, in the opinion of the Trustee, would be unjustly prejudicial .to the rights under the Indenture of the holders of such Bonds not parties to such direction. Bondholders Rights. No holder of any of the Bonds shall have any right to institute any suit, action or proceeding in equity or at law for the enforcement of the Indenture or for execution of any trust under the Indenture, or for any other remedy under the Indenture, unless such holder previously shall have given to the Trustee written notice of an Event of Default, nor unless also the holders of not less than 25% of the Bonds then Outstanding and affected thereby or concerned therewith shall have made written request to the Trustee, after the right to exercise such powers or rights of action shall have accrued, and shall have afforded the Trustee a reasonable opportunity either to proceed to exercise the powers hereinabove granted or to institute such action, suit or proceeding in its or their name, nor unless also there shall have been offered to the Trustee security and indemnity satisfactory to it against the costs, expenses and liabilities to be incurred therein or thereby, and the Trustee shall have refused or neglected to comply with such request within a reasonable time; and such notification, request and offer of indemnity are hereby declared in every such case, at the option of the Trustee, to be conditions precedent to the execution of the powers and trusts of the Indenture and to any action or cause of action for the enforcement of the Indenture or for any other remedy under the Indenture, it being understood and intended that no one or more holders of any Bonds shall have any right in any manner whatever by his or their action to affect, disturb or prejudice the security of the Indenture, or to enforce any right under the Indenture, except in the manner herein provided, and that all proceedings at law or in equity shall be instituted and maintained in the manner herein provided and for the ratable benefit (subject to all of the terms, conditions and provisions of the Indenture) of all holders of such Outstanding Bonds. Remedies Not Exclusive. No remedy herein conferred upon or reserved to the Trustee or to the holders of the Bonds is intended to be exclusive of any other remedy or remedies, and each and every such remedy shall be cumulative and in addition to every other remedy now or hereafter existing at law or in equity or by statute. No Extension of Waiver. No waiver of any default under the Indenture, whether by the Trustee or by the Bondholders, shall extend to or affect any subsequent default or shall impair any rights or remedies consequent thereon. No delay or omission of the Trustee or of any holder of such Bonds entitled to exercise any right or power accruing upon any default shall impair any such right or power or shall be construed to be a waiver of any such default or an acquiescence therein; and every power and remedy given by the Indenture may be exercised from time to time and as often as may be deemed expedient by the Trustee, or, in an appropriate case, by the Bondholders. The Trustee Acceptance of Trust. The Trustee agrees to execute the trusts created by the Indenture upon the additional terms set forth therein, to all of which the parties to the Indenture and the Bondholders agree.

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Limitations of Responsibility. The Trustee may execute any of the trusts or powers granted under the Indenture and perform the duties required of it, by or through attorneys, agents, receivers or employees, and shall be entitled to the advice of counsel concerning all matters arising under the Indenture, and the Trustee shall not be answerable for the default or misconduct of any such Person selected by it with reasonable care. The Trustee shall not be answerable for the exercise of any discretion or power under the Indenture nor for anything whatever in connection with the trust under the Indenture, except only its own gross negligence or bad faith. Limitations of Responsibility. The Trustee may execute any of the trusts or powers granted under the Indenture and perform the duties required of it, by or through attorneys, agents, receivers or employees, and shall be entitled to the advice of counsel concerning all matters arising under the Indenture, and the Trustee shall not be answerable for the default or misconduct of any such Person selected by it with reasonable care. The Trustee shall not be answerable for the exercise of any discretion or power under the Indenture nor for anything whatever in connection with the trust under the Indenture, except only its own gross negligence or bad faith. Resignation of Trustee. The Trustee may, subject to any contract entered into with the Authority, resign and be discharged of the trusts under the Indenture by executing an instrument in writing resigning such trusts, specifying the date when such resignation shall take effect, and filing the same with the Secretary of the Authority not less than 60 days before the date specified in such instrument when such resignation shall take effect, and by giving notice of such resignation by Mail not less than three weeks prior to the date specified in such notice when such resignation shall take effect to the Bondholders. Such resignation shall take effect on the day specified in such notice or upon any earlier appointment of a successor trustee as hereinafter provided; provided, that such resignation shall not be effective, notwithstanding anything herein to the contrary, unless and until a successor Trustee has been appointed. Any Trustee under the Indenture may be removed at any time by an instrument in writing executed by the holders of at least a majority in aggregate principal amount of the Outstanding Bonds and filed with the Trustee. Appointment of Successor Trustee. In case at any time the Trustee or any Trustee hereafter appointed shall resign or shall be removed or be dissolved, or if its property or affairs shall be taken under the control of any state or federal court or administrative body because of insolvency or bankruptcy or for any other reason, a vacancy shall forthwith and ipso facto exist in the office of Trustee. If the office of Trustee shall become vacant for any of the foregoing reasons or for any other reason, a successor may be appointed by the holders of at least a majority in aggregate principal amount of the Outstanding Bonds by an instrument or instruments in writing filed with the Secretary of the Authority and signed by such Bondholders or by their attorneys in fact duly authorized. Copies of each instrument shall be promptly delivered by the Authority to the predecessor Trustee and to the Trustee so appointed. Until a successor Trustee shall be appointed by the Bondholders as herein, authorized, the Authority, by an instrument authorized by Certified Resolution, may appoint a Trustee to fill such vacancy. After any appointment by the Authority, it shall cause notice of such appointment to be published once in each of three successive calendar weeks in an Authorized Newspaper. Any Trustee so appointed by the Authority shall immediately and without further act be superseded by a Trustee appointed by the Bondholders in the manner hereinbefore provided. The Authority covenants that whenever necessary to avoid or fill vacancy in the office of Trustee, it will in the manner above provided appoint a Trustee so that there shall at all times be a Trustee eligible under the Indenture. Qualification of Successor. Each successor in the trust appointed pursuant to the Indenture shall be an incorporated bank or national association or trust company, organized company, organized under the laws of the United States or of the Commonwealth of Pennsylvania, authorized under such laws to exercise corporate trust powers and having a combined capital and surplus of not less than $10,000,000 and being subject to supervision or examination by a Federal or state authority if there be such a bank or trust company willing and able to accept the office on reasonable and customary terms. Court Appointment of Successor Trustee. In case at any time the Trustee shall resign and no appointment of a successor Trustee shall be made pursuant to the foregoing provisions of the Indenture prior to the date specified in the notice of resignation as to the date when such resignation shall take effect, the retiring Trustee, at the Authority's expense, may forthwith apply to a court of competent jurisdiction for the appointment of a successor Trustee. If in a proper case no appointment of a successor Trustee shall be made pursuant to the foregoing provisions of the Indenture within six months after a vacancy shall have occurred in such office of Trustee, at the Authority's expense, any Bondholder may apply to a court of competent jurisdiction to appoint a successor Trustee. Such court may thereupon after such notice, if any, as it may prescribe, appoint a successor Trustee. Other Provisions Affecting the Trustee. The permissive rights of the Trustee to do thing enumerated in the Indenture shall not be construed as a duty. The Trustee shall be under no obligation to exercise any of the rights or powers vested in it by the Indenture at the request or direction of any Bondholder pursuant to the Indenture, unless such Bondholder shall offer the Trustee indemnity acceptable to the Trustee against the costs, expenses and liabilities which might be incurred in complying with such request or direction. Except as otherwise expressly provided under the Indenture, the Trustee shall

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not be required to give or furnish any notice, demand, report, reply, statement, advice or opinion to any bondholder, the Authority or any other Person, and the Trustee shall not incur any liability for its failure or refusal to give or furnish the same unless obligated or required to do so by express provisions of the Indenture. The Trustee shall not be liable with respect to any action taken or omitted to be taken at the direction of the holders of a majority in aggregate principal amount of the Bonds Outstanding permitted to be given by them under the Indenture. Amendments And Modifications Consent of Bondholders. Modifications or amendments of the Indenture or of any Indenture supplemental hereto and of the rights and obligations of the Authority and of the holders of the Bonds may be made by Supplemental Indenture, authorized by Certified Resolution, with the consent of the holders of not less than 66-2/3% in aggregate principal amount of the Bonds then Outstanding or, in case one or more but less than all of the series of Bonds then Outstanding are affected by or concerned with any such modification or amendment, then with the consent of the holders of not less than 66-2/3% in aggregate principal amount of the Bonds of all of the series so affected then Outstanding; provided, however, that, without the consent of the holders of all of the Bonds of each .of the series affected then Outstanding, no such modification or amendment shall be made so as to (a) alter the date fixed in any of the Bonds for the payment of the principal of, or interest on, such Bonds, or otherwise modify the terms of payment of the principal at maturity of, or interest on, the Bonds or impose any conditions with respect to such payment or affect the right of any Bondholder to institute suit for the enforcement of any such payment on or after the respective due dates expressed in the Bonds; (b) alter the amount of principal of, or the rate of interest or premium, if any, payable on, any of the Bonds; (c) affect the rights of the holders of less than all the Bonds of any series then Outstanding; (d) permit the creation by the Authority of any lien prior to or, except for Bonds issued under the provisions of the Indenture, on a parity with the lien of the Indenture upon the trust estate under the Indenture; or (e) reduce the percentage above stated in this paragraph and provided, further, that modifications and amendments of the Indenture or of any Indenture supplemental hereto, which affect only technical changes in the terms of, or procedures established under, the Indenture and which do not affect the substantive rights of the holders of, or impair the security for, the Bonds, may be made by supplemental Indenture, authorized by Certified Resolution, with the written consent of the Trustee and upon the receipt by the Trustee of such Officers' Certificate, Opinion of Counsel or other documentation as may be deemed satisfactory by the Trustee. A modification or amendment of the provisions of the Indenture with respect to any fund under the Indenture shall not be deemed a modification of the terms of payment of principal or interest. It shall not be necessary for the consent of the Bondholders under this provision to approve the particular form of any proposed Supplemental Indenture, but it shall be sufficient if such consent shall approve the substance thereof. Upon the request of the Authority,. accompanied by the Certified Resolution and the filing with the Trustee of the evidence of the consent of Bondholders, above provided for, the Trustee shall join with the Authority in the execution of any such supplemental Indenture unless the same adversely affects the Trustee's own rights, duties or immunities under the Indenture in which case the Trustee may in its discretion but shall not be obliged to enter into such Supplemental Indenture. Amendments to Preserve Tax Exemption. The Indenture may be amended without the consent of Bondholders in order to preserve the exemption from federal income taxation of interest on the 2006 Bonds, the 2012 Bonds and any Additional Bonds originally issued with the intention of being tax exempt. Such amendments may include, inter alia, amendments establishing separate accounts and additional funds to facilitate the segregation of funds in connection with arbitrage or rebate restrictions imposed by federal legislation, regulations or rulings. Any such amendment shall be executed only upon delivery to the Trustee of an opinion of nationally recognized bond counsel that such amendment, except as to any impairment of security or rights resulting from said segregation of funds, would not adversely affect the security or rights of the owners of the 2006 Bonds, the 2012 Bonds or such Additional Bonds. Defeasance Release of Lien. Whenever all Bonds Outstanding under the Indenture and all sums payable under the Indenture by the Authority shall have been paid, or provision satisfactory to the Trustee therefor made, then the right, title and interest of 'the Trustee in and to the Pledged Revenues shall cease, determine and become void, and thereupon the Trustee upon the written request of the Authority shall release, cancel and discharge the lien of the Indenture and reassign the trust estate, except that part thereof as is to be applied to the payment of Bonds, as aforesaid, to the Authority, and shall execute and deliver to the Authority such instruments and take such action as shall be requisite to evidence the release, cancellation and discharge of the lien of the Indenture and effect said reassignment. The Trustee shall take any such action only upon receipt of an Officers' Certificate and an Opinion of Counsel, each stating in substance that in the opinion of the respective signers all conditions precedent provided for in the Indenture relating thereto have been complied with Sufficient Funds. If the Authority shall deposit with, or to the satisfaction of the Trustee make available to, the Trustee funds in the necessary amounts to pay the principal of, and interest on, the Bonds to maturity or to a date fixed for redemption, including, at the option of the Authority, interest or income to be earned on the deposit or investment of such funds, which funds may be either (i) Government Obligations or cash (insured at all times by the Federal Deposit Insurance

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Corporation or otherwise secured as to principal and interest by. Government Obligations, which, when due, will be sufficient to pay the principal of and interest on such Bonds at maturity or on the date fixed for redemption; or (ii) moneys sufficient to make the payments due on the Bonds, with irrevocable direction so to apply the same, whether at or prior to the maturity or the redemption date so fixed, then interest on such Bonds shall cease to accrue on such maturity date or date fixed for redemption, as applicable, such Bonds shall be deemed to be paid and no longer Outstanding under the Indenture and, thereafter, from the date of such deposit, the holders of such Bonds shall be restricted to the funds so deposited for payment thereof; provided, however, in the case of redemption, the notice requisite to the validity of such redemption shall have been published, waived or given or irrevocable instructions shall have been given to the satisfaction of the Trustee, to give such notice. Funds for Redemption Held in Trust. All funds deposited with, or held by, the Trustee pursuant to the defeasance provisions shall be held in trust and applied by it to the payment, either directly or indirectly through any paying agent, to the holders of the particular Bonds, for the payment or redemption of which such funds shall be held by, or shall have been deposited with, the Trustee, of all sums due and to become due thereon for principal and interest and premium, if any; subject, however, to the right of the Authority to direct, by writing duly signed by the Chairman or Secretary and accompanied by a certified copy of the resolution of the Board of the Authority authorizing such Chairman or Secretary to so direct, that the interest or income on such Government Obligations not needed to provide payment for the Bonds shall be paid to the Authority or its assignee.

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APPENDIX F

SPECIMEN MUNICIPAL BOND INSURANCE POLICY

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MUNICIPAL BOND

INSURANCE POLICY

ISSUER: Policy No: -N

BONDS: $ in aggregate principal amount of Effective Date: Premium: $

ASSURED GUARANTY MUNICIPAL CORP. ("AGM"), for consideration received, hereby UNCONDITIONALLY AND IRREVOCABLY agrees to pay to the trustee (the "Trustee") or paying agent (the "Paying Agent") (as set forth in the documentation providing for the issuance of and securing the Bonds) for the Bonds, for the benefit of the Owners or, at the election of AGM, directly to each Owner, subject only to the terms of this Policy (which includes each endorsement hereto), that portion of the principal of and interest on the Bonds that shall become Due for Payment but shall be unpaid by reason of Nonpayment by the Issuer.

On the later of the day on which such principal and interest becomes Due for Payment or the Business Day next following the Business Day on which AGM shall have received Notice of Nonpayment, AGM will disburse to or for the benefit of each Owner of a Bond the face amount of principal of and interest on the Bond that is then Due for Payment but is then unpaid by reason of Nonpayment by the Issuer, but only upon receipt by AGM, in a form reasonably satisfactory to it, of (a) evidence of the Owner's right to receive payment of the principal or interest then Due for Payment and (b) evidence, including any appropriate instruments of assignment, that all of the Owner's rights with respect to payment of such principal or interest that is Due for Payment shall thereupon vest in AGM. A Notice of Nonpayment will be deemed received on a given Business Day if it is received prior to 1:00 p.m. (New York time) on such Business Day; otherwise, it will be deemed received on the next Business Day. If any Notice of Nonpayment received by AGM is incomplete, it shall be deemed not to have been received by AGM for purposes of the preceding sentence and AGM shall promptly so advise the Trustee, Paying Agent or Owner, as appropriate, who may submit an amended Notice of Nonpayment. Upon disbursement in respect of a Bond, AGM shall become the owner of the Bond, any appurtenant coupon to the Bond or right to receipt of payment of principal of or interest on the Bond and shall be fully subrogated to the rights of the Owner, including the Owner's right to receive payments under the Bond, to the extent of any payment by AGM hereunder. Payment by AGM to the Trustee or Paying Agent for the benefit of the Owners shall, to the extent thereof, discharge the obligation of AGM under this Policy.

Except to the extent expressly modified by an endorsement hereto, the following terms shall have the meanings specified for all purposes of this Policy. "Business Day" means any day other than (a) a Saturday or Sunday or (b) a day on which banking institutions in the State of New York or the Insurer's Fiscal Agent are authorized or required by law or executive order to remain closed. "Due for Payment" means (a) when referring to the principal of a Bond, payable on the stated maturity date thereof or the date on which the same shall have been duly called for mandatory sinking fund redemption and does not refer to any earlier date on which payment is due by reason of call for redemption (other than by mandatory sinking fund redemption), acceleration or other advancement of maturity unless AGM shall elect, in its sole discretion, to pay such principal due upon such acceleration together with any accrued interest to the date of acceleration and (b) when referring to interest on a Bond, payable on the stated date for payment of interest. "Nonpayment" means, in respect of a Bond, the failure of the Issuer to have provided sufficient funds to the Trustee or, if there is no Trustee, to the Paying Agent for payment in full of all principal and interest that is Due for Payment on such Bond. "Nonpayment" shall also include, in respect of a Bond, any payment of principal or interest that is Due for Payment made to an Owner by or on behalf of the Issuer which has been recovered from such Owner pursuant to the

Page 2 of 2 Policy No. -N

United States Bankruptcy Code by a trustee in bankruptcy in accordance with a final, nonappealable order of a court having competent jurisdiction. "Notice" means telephonic or telecopied notice, subsequently confirmed in a signed writing, or written notice by registered or certified mail, from an Owner, the Trustee or the Paying Agent to AGM which notice shall specify (a) the person or entity making the claim, (b) the Policy Number, (c) the claimed amount and (d) the date such claimed amount became Due for Payment. "Owner" means, in respect of a Bond, the person or entity who, at the time of Nonpayment, is entitled under the terms of such Bond to payment thereof, except that "Owner" shall not include the Issuer or any person or entity whose direct or indirect obligation constitutes the underlying security for the Bonds.

AGM may appoint a fiscal agent (the "Insurer's Fiscal Agent") for purposes of this Policy by giving written notice to the Trustee and the Paying Agent specifying the name and notice address of the Insurer's Fiscal Agent. From and after the date of receipt of such notice by the Trustee and the Paying Agent, (a) copies of all notices required to be delivered to AGM pursuant to this Policy shall be simultaneously delivered to the Insurer's Fiscal Agent and to AGM and shall not be deemed received until received by both and (b) all payments required to be made by AGM under this Policy may be made directly by AGM or by the Insurer's Fiscal Agent on behalf of AGM. The Insurer's Fiscal Agent is the agent of AGM only and the Insurer's Fiscal Agent shall in no event be liable to any Owner for any act of the Insurer's Fiscal Agent or any failure of AGM to deposit or cause to be deposited sufficient funds to make payments due under this Policy.

To the fullest extent permitted by applicable law, AGM agrees not to assert, and hereby waives, only for the benefit of each Owner, all rights (whether by counterclaim, setoff or otherwise) and defenses (including, without limitation, the defense of fraud), whether acquired by subrogation, assignment or otherwise, to the extent that such rights and defenses may be available to AGM to avoid payment of its obligations under this Policy in accordance with the express provisions of this Policy.

This Policy sets forth in full the undertaking of AGM, and shall not be modified, altered or affected by any other agreement or instrument, including any modification or amendment thereto. Except to the extent expressly modified by an endorsement hereto, (a) any premium paid in respect of this Policy is nonrefundable for any reason whatsoever, including payment, or provision being made for payment, of the Bonds prior to maturity and (b) this Policy may not be canceled or revoked. THIS POLICY IS NOT COVERED BY THE PROPERTY/CASUALTY INSURANCE SECURITY FUND SPECIFIED IN ARTICLE 76 OF THE NEW YORK INSURANCE LAW.

In witness whereof, ASSURED GUARANTY MUNICIPAL CORP. has caused this Policy to be executed on its behalf by its Authorized Officer.

ASSURED GUARANTY MUNICIPAL CORP.

By Authorized Officer

Form 500NY (5/90)