This is a Preliminary Official Statement subject to change. However, the Issuer has deemed this Preliminary Official Statement to be final for the purposes of Securities and Exchange Commission Rule 15c2-12(b)(1), except for certain information on the cover and selected pages hereof which has been omitted or estimated in accordance with such Rule and which will be completed in the final Official Statement. This Preliminary Official Statement shall not constitute an offer to sell or the solicitation of an offer to buy nor shall there be any sale of the securities described herein in any jurisdiction in which such offer, solicitation or sale would be unlawful prior to registration or qualification under the securities laws of any such jurisdiction. * Estimated,subject tochange The dateofthisOfficial Statementis_____,2016 and Underwriter the by received and Borough the by issued if and as when, modification, or withdrawal sale, the prior to for subject Solicitor offered, Pennsylvania, are Aliquippa, Bonds Esq., Urick, Richard by Borough Borough, andfortheUnderwriterby Joseph A. the Askar,for Esq.,Beaver, Pennsylvania. The Bondsareexpectedtobedelivered onorabout_____,2016. upon passed be will matters legal Certain Bonds. the of delivery upon subject to the unqualified approving legal opinion of the Law Office of John F. Salopek, Ambridge, Pennsylvania, Bond Counsel. Said opinion will be furnished for thepaymentofprincipalandinterestonBonds. and taxing power, including its power to levy therefor advalorem the BondswillbemadeattimeofpricingBonds. interest intheBonds.See“BOOK-ENTRY-ONLY SYSTEM”herein. beneficial of ownership its of respect in made payments interest or principal receive to order in Participant Indirect or Direct DTC a with account an maintain the mean owners of to book-entry cases interests all in the in Bonds taken and not be the should actual Bonds holder and the registered be of owner of owners will the or Bonds, CEDE holders and & and Co., (“DTC”), Bondholders or DTC, to and Company herein each Trustsuch references Bondholder Bonds, Depository must the The for effect by in is operated system Entry-Only system book-entry-only a under distributed and issued initially be will Bonds representing their ownership interest in the Bonds. So long as CEDE & Co., as nominee of DTC, is the sole registered owner of the Bonds and the DTC Book- System”), Book-Entry-Only “DTC (the certificates Borough-issued receive system not will Bonds the in interests book-entry of purchasers individual and Bonds the for depository securities as this act will DTC Under DTC. for nominee and thereof owner registered sole as Co., & CEDE of name the in registered “THE BONDS”herein. below is in effect with respect to the Bonds, and in certain other circumstances) by wire transfer to such registered owners, as more fully described herein. See described System Book-Entry-Only DTC the (while Paying or the Agent on drawn draft or check by addresses, registered their at same the receive to entitled Beaver scheduled installments of Monaca, interest on the Bonds of (payable May 15 and Borough November 15, beginning the with Book-Entry-Only May 15, 2017) of will DTC be paid by “Bonds”) the mail to the (the registered while owners (or,$9,935,000* Bonds of applicable amount the principal aggregate of System described below is the surrender in effect with in and respect to the 2016, Bonds, presentation pursuant to arrangements of made due from time to Series upon time between the Bonds, Borough thereof and DTC). Obligation owners The regularly General registered the to Association, National Bank U.S. Paying Agent, the of defined) (hereinafter Office TrustCorporate Designated the at payable be will Bonds the of principal maturity.The a within thereof multiple whole any or $5,000 of denomination the in coupons) (without form registered fully in issued be will “Borough”) County,(the Pennsylvania Dated: DateofDelivery (relating Code Borough the of 265 Section of purposes for obligation” tax-exempt “qualified a as Bonds the of deductioneach to designated has tax-exempt obligations”withinthemeaningofsaidSection265. are Bonds the “qualified Counsel Bond of opinion the in and institutions), financial certain by held obligations tax-exempt interestto of allocable expense the opinion of Bond Counsel, interest on the Bonds is exempt under present statutory and case law from the and caselaw,Pennsylvania Corporate exemptfromNet PennsylvaniapersonalpropertyIncome taxes.(See“TAXTax EXEMPTION AND OTHERTAX MATTERS” herein.) and from personal income taxation by the Commonwealth of Pennsylvania, or by any of its political subdivisions, and the Bonds are, under present statutory foreign corporations,interest ontheBondscouldbesubjecttoabranchprofits tax.(See“TAX EXEMPTION ANDOTHER TAX MATTERS” herein.) adjusted current earningsforthepurposeofcomputingalternativeminimumtaxinaccordance withSection55oftheCodeand(ii)respect to imposed onindividualsandcorporations;however:(i)withrespect tocorporations,suchinterest andaccrualsare takenintoaccountindetermining are excludedfrom gross income for Federal income tax purposesand are not items of tax preference for purposes of the Federal alternative minimum tax provisions oftheInternalRevenueCode1986,asamended(the“Code”),interest onandaccrualsoforiginalissuediscountwithrespect totheBonds NEW ISSUE:BOOK–ENTRY ONLY The credit faith, full its pledged County,has Beaver Borough Monaca, the of and Borough Pennsylvania the of obligations general are Bonds The Security: of portion a or all on insurance bond purchase to whether to as decision the and insurance bond with issued be not or may Bonds : The Bond Insurance Redemption: The Bondsaresubjecttoredemptionpriormaturityasmorefullysetforthherein. The The The In In theopinionofBondCounsel,underexistinglawandassumingcontinuingcompliancebyBor PRELIMINARY OFFICIAL STATEMENT DATED AUGUST 22,2016 General ObligationBonds,Seriesof2016 Beaver County, Pennsylvania BOROUGH OF MONACA MATURITY SCHEDULE taxes, unlimited as to rate or amount, on all taxable real property located within the Borough, (See InsideFrontCover) $9,935,000*

Insured Rating(Insured Bondsonly, ifany):S&P “__”* Underlying Rating:S&P “A+”(StableOutlook) ough withcertaincovenantstocomplythe Due: May15,asshownoverleaf (See“BondRating”herein)

$9,935,000* BOROUGH OF MONACA Beaver County, Pennsylvania General Obligation Bonds, Series of 2016

MATURITY SCHEDULE*

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

Annual Principal Interest CUSIP Year Amount* Rate Price (a) Number 2017 $480,000 2018 480,000 2019 485,000 2020 485,000 2021 500,000 2022 510,000 2023 605,000 2024 735,000 2025 750,000 2026 870,000 2027 900,000 2028 620,000 2029 640,000 2030 650,000 2031 660,000 2032 565,000

(a) Based on delivery date of _____, 2016. (b) Premium Bonds. (See “Premium Bonds” herein.) (c) Original Issue Discount Bonds. (See “Original Issue Discount” herein.) (d) Term Bonds

______* Estimated, subject to change

(Inside Front Cover)

ii

THE INFORMATION SET FORTH HEREIN HAS BEEN OBTAINED BY THE BOROUGH OF MONACA, BEAVER COUNTY, PENNSYLVANIA (THE "ISSUER") FROM ITS OWN RECORDS OR FROM OTHER SOURCES IT BELIEVES TO BE RELIABLE BUT IS NOT GUARANTEED AS TO ACCURACY OR COMPLETENESS BY, AND IS NOT TO BE CONSTRUED AS A REPRESENTATION OR WARRANTY OF, THE ISSUER. THE INFORMATION AND EXPRESSIONS OF OPINION HEREIN ARE SUBJECT TO CHANGE WITHOUT NOTICE, AND NEITHER THE DELIVERY OF THIS OFFICIAL STATEMENT NOR ANY SALE MADE HEREUNDER SHALL, UNDER ANY CIRCUMSTANCES, CREATE ANY IMPLICATION THAT THERE HAS BEEN NO CHANGE IN THE AFFAIRS OF THE ISSUER, OR ANY OTHER ENTITY PROVIDING SUBSTANTIAL SECURITY PLEDGED TO THE BONDS, SINCE THE DATE HEREOF. THE ISSUER IS THE AUTHOR OF THIS OFFICIAL STATEMENT AND IS RESPONSIBLE FOR ITS ACCURACY AND COMPLETENESS. THE UNDERWRITER IS NOT THE AUTHOR OF THIS OFFICIAL STATEMENT. IN ACCORDANCE WITH ITS RESPONSIBILITIES UNDER THE FEDERAL SECURITIES LAWS, THE UNDERWRITER IS REQUIRED TO REVIEW THE INFORMATION IN THIS OFFICIAL STATEMENT AND MUST HAVE A REASONABLE BASIS FOR ITS BELIEF IN THE ACCURACY AND COMPLETENESS OF THE OFFICIAL STATEMENT'S KEY REPRESENTATIONS. THIS OFFICIAL STATEMENT, INCLUDING THE FRONT COVER AND OTHER FRONTISPAGES HEREOF AND THE APPENDICES ATTACHED HERETO (IF ANY), DOES NOT CONSTITUTE AN OFFERING OF ANY SECURITY OTHER THAN THE BONDS SPECIFICALLY OFFERED HEREBY. NO DEALER, BROKER, SALESMAN OR OTHER PERSON HAS BEEN AUTHORIZED BY THE ISSUER OR THE UNDERWRITER TO GIVE ANY INFORMATION OR TO MAKE ANY REPRESENTATIONS OTHER THAN THOSE CONTAINED IN THIS OFFICIAL STATEMENT AND, IF GIVEN OR MADE, SUCH OTHER INFORMATION OR REPRESENTATIONS MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED BY EITHER OF THE FOREGOING. THIS OFFICIAL STATEMENT DOES NOT CONSTITUTE AN OFFER TO SELL OR THE SOLICITATION OF AN OFFER TO BUY, NOR SHALL THERE BE ANY SALE OF THE BONDS, BY ANY PERSON IN ANY JURISDICTION IN WHICH IT IS UNLAWFUL FOR SUCH PERSON TO MAKE SUCH OFFER, SOLICITATION OR SALE. IN CONNECTION WITH THIS OFFERING, THE UNDERWRITER MAY OVER-ALLOT OR EFFECT TRANSACTIONS WHICH STABILIZE OR MAINTAIN THE MARKET PRICE OF THE BONDS AT A LEVEL ABOVE THAT WHICH MIGHT OTHERWISE PREVAIL IN THE OPEN MARKET. SUCH STABILIZING, IF COMMENCED, MAY BE DISCONTINUED AT ANY TIME WITHOUT NOTICE. No quotations from or summaries or explanations of the provisions of laws or documents herein purport to be complete, and reference is made to such laws and documents for full and complete statements of their provisions. This Official Statement is not to be construed as a contract or agreement between the Issuer and the purchasers or holders of any of the Bonds. 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 matters of opinion and not as representations of fact. The front cover and other frontispages hereof, including this page, and all Appendices attached hereto (if any) are part of this Official Statement.

* * * * * * * *

iii

TABLE OF CONTENTS

Page Introductory Statement ...... 1 Borough Address ...... 1 Members of Council ...... 1 Other Borough Officials...... 1 Others Associated with the Borough on This Bond Issue...... 1 Current Debt of the Borough...... 2 Purpose of the Bond Issue ...... 2 Computation of the Bond Issue...... 2 Future Financing...... 2 The Bonds ...... 3 Book-Entry-Only System...... 4 Redemption of the Bonds...... 4 Original Issue Discount ...... 5 Premium Bonds ...... 6 The Refunding and Lease Termination Project ...... 6 The Capital Project ...... 6 Security for the Bonds ...... 7 Rights and Remedies of Bondholders...... 7 Bond Rating ...... 7 Municipal Bond Insurance ...... 8 No-Litigation Certificate ...... 8 Tax Exemption and Other Tax Matters...... 8 Deduction for Interest Paid by Financial Institutions ...... 10 Not Arbitrage Bonds...... 10 Legal Matters ...... 11 Approvals...... 11 Legal Investment Status ...... 11 Financial Advisor...... 11 Underwriting...... 11 Continuing Disclosure Undertaking...... 11 Other...... 14 Borough of Monaca:...... Appendix A Description and Economics of the Area...... A-1 The County...... A-3 Statistical Data...... A-7 Taxable Assessed Valuation and Market Value Trend...... A-8 Largest Borough Real Estate Taxpayers ...... A-8 Comparison of Real Estate Assessed Valuation, Millage and Tax Collections...... A-8 Annual Debt Service Requirements ...... A-9 Calculation of Debt Limitation under the Debt Act...... A-10 Summary of General Fund Balance Sheets - At December 31, 2012, 2013, 2014 and 2015...... A-11 Summary Statement of Net Position Water Fund and Sewer Fund – At December 31, 2012, 2013, 2014 and 2015...... A-11 Summary of Revenues, Expenditures and Changes in Fund Balance for the Years Ended December 31, 2012, 2013, 2014 and 2015 - General Fund...... A-12 Summary of Revenues, Expenses and Changes in Fund Net Position – Water Fund and Sewer Fund...... A-13 Summary of General Fund Budgeted Receipts, Expenditures and Balances for the Year Ending December 31, 2016 ...... A-14 Summary o f Receipts and Expenditures for the Year Ending December 31, 2016 - Water Fund and Sewer Fund...... A-15 Pennsylvania Borough Taxes and Rate Limits...... A-16 (Continued on page v) iv

TABLE OF CONTENTS

(Continued from page iv)

Page Borough of Monaca, Audited Financial Statements for the Year Ended December 31, 2015...... Appendix B Book-Entry-Only System...... Appendix C Bond Insurance ...... Appendix D Specimen Municipal Bond Insurance Policy...... Appendix E Form of Continuing Disclosure Certificate...... Appendix F Series of 2016 Bonds Annual Debt Service Requirements...... Appendix G

The Table of Contents does not list all of the subjects in this Official Statement, and in all instances reference should be made to the complete Official Statement to determine the subjects set forth herein. No significance should be attached to the particular order in which subjects appear herein.

v

(This page left blank intentionally.) OFFICIAL STATEMENT Relating to $9,935,000 (Estimated) BOROUGH OF MONACA Beaver County, Pennsylvania General Obligation Bonds, Series of 2016

INTRODUCTORY STATEMENT

This Official Statement, including the cover page and other frontispages hereof and the appendices attached hereto, is furnished in connection with the offering of $9,935,000 (Est.) principal amount of General Obligation Bonds, Series of 2016 (the "Bonds"), of the Borough of Monaca, Beaver County, Pennsylvania (the "Borough"). The Bonds are being issued pursuant to Ordinance No. ___ of the Borough (the "Ordinance") duly enacted on _____, 2016 by the Borough Council of the Borough (the "Council"), its duly constituted governing body, in accordance with Title 53, Part VII, Subpart B, of the Pennsylvania Consolidated Statutes (53 Pa. C.S. §8001 to §8285), known as the Local Government Unit Debt Act (the "Debt Act").

BOROUGH ADDRESS 928 Pennsylvania Avenue Monaca, Pennsylvania 15061 MEMBERS OF COUNCIL*

John Booher ...... President Dan Zigerelli...... Vice President John DiMarzio ...... Member Jeff Michel ...... Member

Brandy Rossi...... Member Gary Rossi...... Member Chris Shotter, Jr...... Member Frank Snyder...... Member Derek Wilson ...... Member OTHER BOROUGH OFFICIALS John P. Antoline ...... Mayor Mario N. Leone, Jr...... Borough Secretary/Manager Richard Bebout ...... Treasurer Richard Urick, Esq...... Solicitor Aliquippa, Pennsylvania OTHERS ASSOCIATED WITH THE BOROUGH ON THIS BOND ISSUE Law Office of John F. Salopek, Esq...... Bond Counsel Ambridge, PA Joseph A. Askar, Esq...... Counsel to the Underwriter Beaver, Pennsylvania U.S. Bank National Association ...... Paying Agent and Sinking Fund Depository Pittsburgh, Pennsylvania M & T Securities, Inc...... Underwriter Baltimore, Maryland CIM Investment Management, Inc ...... Financial Advisor to the Borough Pittsburgh, Pennsylvania

*Due to a recent resignation, there currently exists one vacancy, which is expected to be filled within 30 days of the date hereof.

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CURRENT DEBT OF THE BOROUGH

On October 27, 2009, the Pennsylvania Infrastructure Investment Authority (“PennVest”) approved a loan (the “2009 PennVest Loan”) to the Borough in the amount of $4,500,000 for water system improvement projects, which loan was subsequently made and is currently outstanding in the principal amount of $3,319,499.54 ($3,303,251.26 of which is expected to be outstanding at Closing). 100% of the 2009 PennVest Loan is supported by water revenues.

On December 22, 2011, the Borough issued its $5,635,000 General Obligation Bonds, Series of 2011 (the “2011 Bonds”), $3,715,000 of which are currently outstanding. A portion of the 2011 Bonds (the “Refunded 2011 Bonds”) will be refunded by the Bonds. The 2011 Bonds are supported by the Borough’s sewer, water and general revenues in varying amounts, as will the Bonds refunding the portion being refunded.

On May 22, 2014, the Borough issued its General Obligation Note, Series of 2014 (the “2014 Note”) securing a $2,265,000 loan to the Borough by ESB Bank, Ellwood City, Pennsylvania, $1,965,000 of which is currently outstanding. The 2014 Note is supported by the Borough’s sewer, water and general revenues in varying amounts.

The Borough is also leasing certain essential capital equipment, including water meters and other energy-conserving equipment, pursuant to a certain Lease Purchase Agreement dated November 2, 2009 between the Borough and PNC Equipment Finance, LLC as lessor thereunder (the “2009 Equipment Lease”). The 2009 Equipment Lease, which is currently outstanding in the principal amount of $1,184,500, is being refunded by the Bonds. The 2009 Equipment Lease is supported by the Borough’s sewer, water and general revenues in varying amounts, as will the Bonds refunding it.

PURPOSE OF THE BOND ISSUE

The proceeds of the sale of the Bonds will be used to (1) refund a portion of the 2011 Bonds (the “Refunded 2011 Bonds”) and terminate the 2009 Equipment Lease by prepaying the same (see “The Refunding and Lease Termination Program” herein), (2) fund certain capital water, sewer and road improvement projects in the Borough (see “The Capital Project” herein), and (3) pay the costs and expenses related to the issuance of the Bonds.

COMPUTATION OF THE BOND ISSUE *

Refunding Requirements $ Capital Projects: Sewer Projects 2,100,000 Water Projects 2,470,000 Road Improvement and General Projects 1,415,000 Costs of Issuance of the Bonds including: Legal, Paying Agent, Escrow Agent, Rating, Advertising, Printing, Financial Advisor, Bond Discount, Bond Insurance, Net Original Issue Discount, CUSIP and Miscellaneous ______BOND ISSUE $ 9,935,000 * ______* Estimated, subject to change

FUTURE FINANCING

The Borough is currently planning an approximately $6,000,000 streetscape project and expects to finance about $1,000,000 for the project with general obligation bonds or a bank loan in late 2017 or early 2018, the remaining $5,000,000 being funded via asset sales and grants. Additionally, currently outstanding debt may be refunded if interest rates remain low or decrease.

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THE BONDS

The Bonds will be dated and bear interest accruing on the basis of a 360-day year of twelve 30-day months from the date of the initial delivery of the Bonds to the Underwriter, at the annual rates, and will mature on the dates and in the aggregate principal amounts, set forth on the inside front cover hereof. Interest on the Bonds will be payable on May 15 and November 15 of each year, beginning with May 15, 2017.

The Bonds will be issued only as fully registered Bonds. The Bonds will be issued in the denomination of $5,000 or any natural multiple thereof within a maturity.

Principal of the Bonds is payable when due at the Designated Corporate Trust Office (hereinafter defined) of the Paying Agent upon presentation and surrender of the applicable Bonds. Interest on the Bonds is payable when due by check or draft mailed by the Paying Agent to each person entitled to receive the same at such person's address as it appeared on the registration books for the Bonds maintained by the Paying Agent as Bond registrar (the "Bond Register") at the close of business of the Paying Agent on the Record Date for the payment of such interest. The term "Designated Corporate Trust Office" of the Paying Agent as used in this Official Statement means any corporate trust office of the Paying Agent, or affiliated banking institution or trust company acting in its behalf, designated from time to time by the Paying Agent as the place at which principal of or interest on Bonds is to be payable or at which Bonds are to be presented for payment, transfer or exchange, to the extent such designation is permissible under Pennsylvania law, and, if such designation is not made by the Paying Agent, a place so designated by the Borough. The initial Designated Corporate Trust Office will be the main corporate trust office of the Paying Agent, in Saint Paul, Minnesota

Unless payment of such interest is in default, the person in whose name a Bond is registered at the close of business on the Record Date with respect to any particular interest payment date will be the person entitled to receive the interest thereon payable on such interest payment date, notwithstanding the cancellation of such Bond upon any transfer or exchange thereof subsequent to such Record Date. The "Record Date" corresponding to any particular interest payment date means the first (1st) day (whether or not a business day) of the calendar month in which such interest becomes due.

In the case of interest the payment of which is in default, such interest will be payable to the persons in whose names the applicable Bonds are registered as of the close of business on a special record date for the payment of such interest, established by the Paying Agent in accordance with the terms of the Bonds and the Ordinance.

Transfer and Exchange Bonds may be transferred or exchanged upon the Bond Register upon delivery of such Bonds to the Paying Agent, accompanied by a written instrument or instruments of transfer or exchange in form satisfactory to the Paying Agent. No transfer or exchange of any Bond will be effective until entered on the Bond Register.

In all cases of the transfer or exchange of a Bond, the Paying Agent will enter the transfer of ownership or the exchange on the Bond Register and will authenticate and deliver in the name of the transferee or transferees or the registered owner making the exchange a new fully registered Bond or Bonds of authorized denominations of the same series, maturity and interest rate as the Bond surrendered for transfer or exchange, in each case in the aggregate principal amount which the recipient registered owner is entitled to receive.

Neither the Borough nor the Paying Agent will be required (a) to issue or register the transfer or exchange of any Bonds then being considered for such selection during any period beginning at the opening of business on the fifteenth day next preceding a date of selection of Bonds to be redeemed and ending at the close of business on the day on which the applicable notice of redemption is given, or (b) to issue or register the transfer or exchange of any Bonds which have been selected or called for redemption in whole or in part (other than in connection with the issuance of Bonds in exchange for the unredeemed portions of Bonds duly redeemed in part); nor will either the Borough or the Paying Agent be required to issue or register the transfer or exchange -3- of any Bond subsequent to any record date for the payment of interest thereon and prior to the interest payment date to which it pertains.

Any such transfer or exchange will be made without charge to the transferor or transferee, or the registered owner making the exchange as the case may be, except the Borough may require any taxes or other governmental charges to be paid by such transferor or transferee or registered owner making an exchange as a condition precedent to such transfer or exchange.

NOTE: WHILE THE DTC BOOK-ENTRY-ONLY SYSTEM DESCRIBED BELOW IS IN EFFECT FOR THE BONDS, DTC OR ITS NOMINEE CEDE & CO. WILL BE THE ONLY REGISTERED OWNER OF THE BONDS AND, NOTWITHSTANDING THE FOREGOING, CERTAIN PROCEDURES REGARDING PAYMENT, PRESENTMENT, TRANSFERS AND EXCHANGE WILL BE GOVERNED BY OPERATIONAL ARRANGEMENTS MADE BETWEEN THE BOROUGH AND DTC, WHICH PROCEDURES MAY DIFFER FROM THOSE DESCRIBED ABOVE.

BOOK-ENTRY-ONLY SYSTEM

The Bonds will be initially issued, registered, owned and held pursuant to a book-entry-only system operated by The Depository Trust Company (the "DTC Book-Entry-Only System"). While the DTC Book- Entry-Only System is in effect with respect to the Bonds, no Borough-issued certificates representing ownership of Bonds will be issued to or registered in the name of the purchasers of beneficial ownership interests in the Bonds but, rather, The Depository Trust Company, New York, New York ("DTC"), will act as securities depository for the Bonds under the DTC Book-Entry-Only System.

A brief description of the DTC Book-Entry-Only System, supplied by DTC, is reproduced in Appendix C hereto. For a more complete explanation, reference is made to the “Rules, By-laws and Organization Certificate of the Depository Trust Company”, which may currently be accessed at the Depository Trust & Clearing Corporation's website at http://www.dtcc.com.

IN RESPECT OF BONDS HELD BY DTC AS SECURITIES DEPOSITORY, WHICH WHILE THE DTC BOOK-ENTRY-ONLY SYSTEM IS IN EFFECT FOR THE BONDS WILL BE ALL OUTSTANDING BONDS, NEITHER THE BOROUGH NOR THE PAYING AGENT WILL HAVE ANY RESPONSIBILITY OR OBLIGATION TO DTC'S PARTICIPANTS OR THE PERSONS FOR WHOM THEY ACT (DIRECTLY OR INDIRECTLY) AS NOMINEES WITH RESPECT TO THE PAYMENTS TO OR THE PROVIDING OF NOTICE FOR THE DIRECT PARTICIPANTS OF DTC, THE INDIRECT PARTICIPANTS OF DTC OR THE BENEFICIAL OWNERS OF SUCH BONDS, OR IN RESPECT OF THE FINANCIAL EFFECT ON PARTICULAR BENEFICIAL OWNERS OF ANY PARTIAL REDEMPTION OF BONDS.

Under the Ordinance, payments made by the Paying Agent to DTC or its nominee, while the DTC Book-Entry-Only System is in effect with respect to the Bonds, satisfy the Borough's obligation under the Ordinance to the extent of such payments.

REDEMPTION OF THE BONDS

Optional Redemption The Bonds which mature after _____ are subject to redemption prior to maturity, at the option of the Borough, as a whole on _____ or on any date thereafter, or in part, in any order of maturity (and in any authorized principal amount within a maturity) selected by the Borough and by lot within a maturity as -4- selected by the Paying Agent, on ____ or on any date thereafter, at a redemption price equal to 100% of principal plus accrued interest to the date fixed for redemption.

Mandatory Redemption The Bonds stated to mature on May 15, _____, _____, and _____ are subject to mandatory sinking fund redemption, by lot within the maturity, on the dates and in the aggregate principal amounts set forth below, at a redemption price equal to the principal amount thereof, without premium, plus accrued interest to the date fixed for redemption.

Bonds Maturing May 15, _____ Bonds Maturing May 15, _____

May 15 Aggregate Principal Aggregate Principal Redemption Date Amount of Bonds May 15 Amount of Bonds to be Redeemed Redemption Date to be Redeemed

Bonds Maturing May 15, _____ Aggregate Principal May 15 Amount of Bonds Redemption Date to be Redeemed $

______*By maturity.

Notice of Redemption When requested to redeem Bonds by the Borough, the Paying Agent will give notice of such redemption, by first-class mail, postage prepaid, mailed not less than thirty (30) nor more than sixty (60) days prior to the date therein fixed for such redemption to each holder of Bonds to be redeemed at his registered address as it then appears in the Bond Register. Such notice will be given in the name of the Borough, will identify the Bonds to be redeemed (and, in the case of a partial redemption of any Bonds, the respective principal amounts thereof to be redeemed), will specify the date fixed for the redemption and the redemption price, and will state that from such specified redemption date the Bonds called for redemption will be payable at the Designated Corporate Trust Office of the Paying Agent or at the office of any other paying agent for the Borough, and that on such date interest will forever cease to accrue. The Paying Agent will use "CUSIP" numbers (if then generally in use) in notices of redemption as a convenience to Bondholders, provided that any such notice will state that no representation is made as to the correctness of such numbers either as printed on the Bonds or as contained in any notice of redemption and that reliance may be placed only on the identification numbers printed on the Bonds. Failure to mail any such notice or defect in the mailed notice or in the mailing thereof in respect of any particular Bond will not affect the validity of the redemption of any other Bond.

If at the time of mailing notice of redemption the Borough has not deposited for such purpose with the Paying Agent moneys sufficient to redeem all the Bonds (or portions thereof) called for redemption, such notice may state that it is conditional, that is, subject to the deposit of the redemption moneys with the Paying Agent not later than the opening of business on the date fixed for the redemption, and if any redemption notice contains such a statement such notice will be of no effect unless such moneys are so deposited.

ORIGINAL ISSUE DISCOUNT

Those Bonds whose initial reoffering prices are listed as less than 100% on the inside front cover hereof are being issued at an original issue discount. While the accruals of this original issue discount are generally tax-exempt for Federal income tax purposes to the same extent as interest on the Bonds, the affected -5-

Bonds require special tax treatment (see "TAX EXEMPTION AND OTHER TAX MATTERS - Original Issue Discount" herein for a brief description of such treatment).

Unaccrued original issue discount received by a holder thereof upon any redemption of such a Bond will not constitute interest on that Bond and will not be excluded from gross income for Federal income tax purposes.

Holders of such Bonds should consult their own tax advisors as to the tax consequences of the purchase thereof, as to the tax consequences of any sale, transfer, redemption or other disposition of such Bonds prior to their maturity, as to other applications of general tax law to such Bonds and as to the application of state, local and foreign laws to such Bonds.

PREMIUM BONDS

The initial public offering prices of those Bonds whose initial reoffering prices are listed as more than 100% on the inside front cover hereof (the “Premium Bonds”) exceed the amounts payable thereon at maturity (in each case net of any accrued interest). The existence of such excess (“Original Issue Premium”) in respect of any particular Premium Bond may require special tax treatment, and owners of Premium Bonds are urged to consult with their own professional tax advisers as to the effect such Original Issue Premium may have upon their Federal income tax liability, particularly upon any purchase, sale, exchange, redemption or other disposition of Premium Bonds (including the maturity thereof), and as to the state, local and foreign tax consequences of owning such Bonds.

THE REFUNDING AND LEASE TERMINATION PROGRAM

A portion of the proceeds of the Bonds (the “Deposit”) will be deposited in escrow with U.S. Bank National Association, as trustee (the “Escrow Agent”) under an Escrow Deposit Trust Agreement, to be dated the date of Closing, between the Borough and the Escrow Agent (the “Escrow Agreement”) for the purpose of advance refunding of the Refunded 2011 Bonds. Under the Escrow Agreement, the Escrow Agent will purchase certain direct non-callable obligations of the United States (the “Escrow Obligations”) with a portion of the Deposit, the principal and interest receipts on which, together with that portion of the Deposit not so invested, will be sufficient in time and amount to provide for the full and timely payment of the scheduled principal and interest payments due on the Refunded 2011 Bonds on October 1, 2016 and April 1, 2017, and to redeem all remaining Refunded Bonds on April 1, 2017 at the applicable optional redemption price. The Escrow Agent, who is also the Borough’s paying agent for the 2011 Bonds will agree under the Escrow Agreement hold such moneys and Government Obligations and to apply such principal and interest receipts and such uninvested moneys to the timely payment of such debt service and redemption price, and to give due notice of such redemption to the applicable 2011 Bondholders.

A portion of the proceeds of the Bonds will be applied at Closing to the payment of $1,212,335.75 to PNC Equipment Finance, LLC, a subsidiary of PNC Bank, National Association, as lessor under the 2009 Equipment Lease, which payment will cause the termination of the 2009 Equipment Lease and the purchase by the Borough of the leased equipment. Such payment will constitute the current refunding and defeasance of the 2009 Equipment Lease and the purchase by the Borough of the equipment leased thereunder.

THE CAPITAL PROJECT

Approximately $2, 100,000 (Est.) of the net proceeds of the Bonds will be used to make improvements to the Borough’s sanitary sewer system (the “Sewer Project”). Approximately $2, 470,000 (Est.) of the net proceeds of the Bonds will be used to make improvements to the Borough’s water system (the “Water Project”). Approximately $1,415,000 (Est.) of the net proceeds of the Bonds will be used to make improvements to public roadways in the Borough (the “Road Project”).

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SECURITY FOR THE BONDS

The Bonds are general obligations of the Borough and are payable from its tax and other general revenues including ad valorem taxes levied without limit as to rate or amount on all taxable real property located in the Borough. The Borough has covenanted in the Ordinance that it will provide in its budget in each year such amounts are payable, and will appropriate from its general revenues in each such year, the amount required to pay debt service on the Bonds (including any required sinking fund payments) for each such year. The Borough further covenants in the Ordinance that, from the Sinking Fund hereinafter described, or from any other of its revenues or funds, it will pay or cause to be paid the principal of every Bond and the interest thereon on the dates and at the place and in the manner stated in the Bonds, according to the true intent and meaning thereof. For such budgeting, appropriation and payment, the Borough has, in the Ordinance, irrevocably pledged its full faith, credit and taxing power.

Sinking Fund The Borough has established in the Ordinance a sinking fund for the Bonds (the "Sinking Fund") to be held by the Paying Agent as Sinking Fund Depository. The Paying Agent is authorized, without further order from the Borough, to pay from the Sinking Fund the principal of and interest on the Bonds when due and payable. The Debt Act provides that all moneys deposited in a sinking fund within the meaning of the Debt Act and all investments and proceeds of investments thereof are, without further action or filing, automatically subject to a perfected security interest for the owners of the bonds for which the sinking fund is held until such moneys or investments have been properly disbursed or sold. The Sinking Fund is such a sinking fund established for the Bonds.

RIGHTS AND REMEDIES OF BONDHOLDERS

Pursuant to the Debt Act, amounts deposited in the Sinking Fund and all investments and proceeds of investments thereof are automatically subject to a security interest for holders of the Bonds until such moneys or investments have been properly disbursed or sold.

The Debt Act confers on the holder of any Bonds the right, through court action, to (i) compel the Borough to make required Sinking Fund payments and (ii) obtain a judgment for amounts due and owing on the Bonds.

The Debt Act further provides that if the Borough should default in the payment of debt service on the Bonds when due and such default should continue for thirty days, or if the Borough should fail to comply with any provision of the Bonds or in the Ordinance, the holders of 25 percent in aggregate principal amount of outstanding Bonds may appoint a trustee, who may but need not be the Paying Agent and Sinking Fund Depository, to represent the holders of the Bonds.

The Debt Act provides that a such trustee may, and upon written request of the holders of 25 percent in aggregate principal amount of outstanding Bonds must, take such action on behalf of the Bondholders as are permitted by the Debt Act, including, among others, a petition to the Court of Common Pleas of Beaver County to levy the amount due on the Bonds upon all taxable real estate and other property subject to ad valorem taxation in the Borough in the manner more particularly described in the Debt Act. The taking of such action by such trustee would preclude the taking of similar action by individual Bondholders, whether or not previously instituted.

BOND RATING

The rating agency S&P Global Ratings (“S&P”) has assigned its municipal bond rating of “A+” (Stable Outlook) to the Bonds. If the Borough purchases bond insurance for any of the Bonds, it is expected that S&P will assign an additional insured rating to the Insured Bonds prior to their delivery to the Underwriter.

Generally, rating agencies base their ratings on information and materials furnished to them and on investigations, studies and assumptions made by them. Such a rating reflects only the view of the rating agency -7- assigning the same, and an explanation of the significance of such rating may be obtained only from such rating agency. There is no assurance that a particular rating, once assigned, will be maintained for any given period of time or that it may not be revised downward or withdrawn entirely by the rating agency assigning the same if, in its judgment, circumstances so warrant. A downward change in or withdrawal of a rating may have an adverse effect on the market price of the rated bonds.

Neither the Underwriter nor the Borough has undertaken any responsibility after issuance of the Bonds to oppose a revision or withdrawal of any rating assigned to the Bonds.

MUNICIPAL BOND INSURANCE

The Bonds may or may not be issued with bond insurance and the decision as to whether to purchase bond insurance on all or a portion of the Bonds will be made at the time of pricing of the Bonds.

NO-LITIGATION CERTIFICATE

Upon initial issuance of the Bonds and delivery thereof to the Underwriter (the “Closing”), the Borough will certify, and the Borough's Solicitor will opine, that there is then no litigation pending, or to their knowledge threatened, in any court or other tribunal of competent jurisdiction, State or Federal, against the Borough which in any way questions or adversely affects the validity or the security mentioned herein of the Bonds, or the validity of any proceedings or transactions relating to issuance, sale and delivery of the Bonds.

TAX EXEMPTION AND OTHER TAX MATTERS Tax-Exemption; Opinion of Bond Counsel The Internal Revenue Code of 1986, as amended (the "Code") contains provisions relating to the tax- exempt status of interest on obligations issued by governmental entities which apply to the Bonds. These provisions include, but are not limited to, requirements relating to the use and investment of the proceeds of the Bonds and the rebate of certain investment earnings derived from such proceeds to the United States Treasury Department on a periodic basis. These and other requirements of the Code must be met by the Borough subsequent to the Closing in order for interest thereon to be and remain excluded from gross income for Federal income tax purposes. The Borough has made covenants to comply with such requirements.

Bond Counsel will issue its opinion as of the date of Closing to the effect that, under existing law, the interest on and 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 Code for purposes of the Federal alternative minimum tax imposed by Section 55 of the Code on individuals and corporations; however, it should be noted that, 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 Borough comply with all 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 Borough has covenanted to comply with all such requirements. The aforementioned opinion of Bond Counsel will also state that in the opinion of Bond Counsel the Bonds, upon their initial issuance and delivery, will be "qualified tax-exempt obligations" within the meaning of Section 265 of the Code. Bond Counsel expresses no opinion regarding other Federal tax consequences arising with respect to the Bonds. Bond Counsel will also issue an opinion as of the date of Closing to the effect that under the laws of the Commonwealth of Pennsylvania, as then enacted and construed, the Bonds are exempt from personal property taxes in Pennsylvania and the interest thereon is exempt from the Pennsylvania Corporate Net Income Tax and Pennsylvania state and local personal income tax.

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The residence of a holder of Bonds in a state other than Pennsylvania, or such holder's being otherwise subject to taxation by a state other than Pennsylvania, may result in income tax or other tax liabilities being imposed on such holder by such state or one or more of its political subdivisions based on interest on or other income from the Bonds.

Federal Alternative Minimum Tax Calculation Under the Code, the Federal alternative minimum taxable income of a corporation is based in part upon the "adjusted current earnings" of the corporation, which includes interest on the Bonds held by the corporation, even though such interest may not be includable in gross income for calculation of regular Federal income tax liability.

A prospective corporate purchaser of the Bonds may wish to consult its professional tax advisors as to the impact of the foregoing on its Federal corporate income tax liability.

Branch Profits Tax Interest on the Bonds held by a foreign corporation could be subject to a branch profits tax imposed by Section 884 of the Code. A prospective foreign corporate purchaser of the Bonds may wish to consult its professional tax advisors as to the impact of the branch profits tax on its United States tax liability.

Property and Casualty Insurance Company Income Taxes Under the Code, a reduction in the loss reserve deduction for property and casualty insurers may be required if otherwise deductible additions to reserves are made from income not subject to Federal income tax.

In addition, a portion of the dividends received by a property and casualty insurer attributable to Federally tax-exempt income is not deductible by the insurer for Federal income tax purposes.

The Code provides generally that these provisions are effective for tax years beginning after December 31, 1986, and with respect to obligations acquired after August 7, 1986, but any prospective purchaser of Bonds that is a property and casualty insurer should consult its professional tax advisors for a full explanation of the effect of these provisions upon its income tax liability in the event of such a purchase.

Tax on Excess Passive Net Income of S Corporations An S Corporation may be subject to Federal income taxation on passive investment income, including interest on the Bonds, if the S corporation has subchapter C earnings and profits at the close of the taxable year and the S corporation's passive investment income exceeds 25% of its gross receipts for the taxable year.

A prospective purchaser of the Bonds which is an S corporation may wish to consult its professional tax advisors as to the effect of interest derived from the Bonds on its tax liability.

Income Reporting Requirements Under the Code, all taxpayers are required to report on their Federal income tax returns the amount of interest received or accrued during the year that is exempt from Federal income tax. This provision applies to interest on all tax-exempt bonds, including the Bonds.

Taxable Social Security and Railroad Retirement Benefits Calculations Interest on the Bonds is included in modified adjusted gross income in determining the portion of Social Security or Railroad Retirement benefits to be included in an individual taxpayer's gross income for Federal income tax purposes.

A prospective purchaser of the Bonds who is receiving Social Security or Railroad Retirement benefits may wish to consult his professional tax advisor as to the effect interest income derived from the Bonds may have upon his income tax liability. -9-

Original Issue Discount The difference between the initial offering price of the Bonds maturing on May 15 of the years _____ through _____ (collectively, the "OID Bonds"), net of accrued interest, and the amount payable on such Bonds at maturity, net of accrued interest, herein referred to as "OID", is treated as original issue discount for Federal income tax purposes. Because of the possibility of transfers or redemption prior to maturity, the Code provides rules for the accrual of original issue discount on any tax-exempt obligation, such as an OID Bond. OID on the OID Bonds is treated as accruing in the manner provided by the Code with respect to original issue discount on taxable securities, except that certain rules with respect to de minimis original issue discount and acquisition premium that apply to taxable securities will not apply to tax-exempt securities. Generally, an appropriate portion (depending on the holding period of the OID Bond by each purchaser) of the total amount of OID payable at maturity of the OID Bond will, upon disposition or payment of an OID Bond, be treated as a return of capital, rather than as taxable gain, for Federal income tax purposes. The portion so treated will be determined by allocating the OID over the term of the OID Bond through a series of adjustments to the issue price for each accrual period. The adjustment to the issue price for each accrual period is determined by multiplying the adjusted issue price (the issue price as increased by adjustments prior to the beginning of the accrual period) by the appropriate fraction of the applicable yield to maturity of such OID Bond and subtracting the aggregate amount of any current interest payment allocable to such OID Bond and such accrual period.

Accruals of original issue discount with respect to a Bond allocable to an owner of the 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 Bond for the purpose of determining gain or loss for Federal income tax purposes upon sale, exchange, redemption or other disposition of the Bond.

DEDUCTION FOR INTEREST PAID BY FINANCIAL INSTITUTIONS Section 265 of the Code, subject to limited exceptions, denies the interest expense deduction for indebtedness incurred by a bank, thrift institution or other financial institution to the extent such interest expense is allocable to tax-exempt obligations, such as the Bonds, held by the institution. The denial to such institutions of one hundred percent (100%) of the deduction for interest expense allocable to tax-exempt obligations applies to those tax-exempt obligations acquired after August 7, 1986, for taxable years ending after December 31, 1986.

Section 265 of the Code provides an exception to the aforementioned denial in the case of bonds of the type of the Bonds designated by their issuer or is otherwise effectively deemed designated as "qualified tax- exempt obligations" of such issuer if such issuer reasonably expects at the time of its issuance thereof that the aggregate amount of certain types of debt instruments issued by such issuer and certain types of related issuers during the whole of the calendar year in which such designated bonds are issued will not be more than $10,000,000. The Borough (i) has, to the extent not “deemed designated” pursuant to Section 265, designated the Bonds as "qualified tax-exempt obligations" within the meaning of said Section 265, (ii) reasonably expects that the aggregate amount of such types of debt instruments issued and to be issued by the Borough and such types of related issuers during the whole of calendar year 2016 will not be more than $10,000,000 and (iii) will deliver at Closing a certificate to the effect that such expectation remains reasonable.

Notwithstanding the aforementioned status of the Bonds as "qualified tax-exempt obligations" for the purposes of Section 265, Section 291 of the Code (which provides for a similar denial, but of 20% rather than 100% of interest expense deduction) will apply to the Bonds.

NOT ARBITRAGE BONDS The Borough has covenanted in the Ordinance that it will make no use of the proceeds of the Bonds which, if such use reasonably had been expected on the date of issuance of the Bonds, would have caused the Bonds to be arbitrage bonds and will further covenant to comply with the requirements of Section 148 of the Code and the regulations thereunder, during the term of the Bonds. At Closing, officials of the Borough will

-10- execute a certificate of the Borough concerning the use of the proceeds of the Bonds in conformity with regulations under Section 148 of the Code.

LEGAL MATTERS At Closing, Bond Counsel will deliver an approving legal opinion as to the validity of the authorization, issuance and sale of the Bonds and a copy of such legal opinion will be printed on the Bonds. Certain legal matters will be passed upon for the Borough by Richard Urick, Esq., Aliquippa, Pennsylvania, Solicitor for the Borough, and for the Underwriter by Joseph A. Askar, Esq., Beaver, Pennsylvania.

APPROVALS Prior to Closing approval of the issuance of the Bonds by the Borough, and the incurring of the indebtedness of the Borough evidenced by the Bonds, will have been obtained from the Department of Community and Economic Development of the Commonwealth of Pennsylvania pursuant to the Debt Act.

LEGAL INVESTMENT STATUS The Bonds are legal investments for fiduciaries and personal representatives (as defined in the Probate, Estate and Fiduciaries Code hereinafter mentioned) in the Commonwealth of Pennsylvania under the Probate, Estate and Fiduciaries Code of the Commonwealth of Pennsylvania.

FINANCIAL ADVISOR

The Borough has retained CIM Investment Management, Inc., of Pittsburgh, Pennsylvania, as financial advisor (the "Financial Advisor") in connection with the authorization and issuance of the Bonds. The Financial Advisor is not obligated to perform an independent verification of, or to assume responsibility for the accuracy, completeness or fairness of, the information contained in this Official Statement, and has neither performed any such verification nor assumed any such responsibility. CIM Investment Management, Inc. is an independent advisory firm and is not engaged in the business of underwriting, trading, or distributing municipal securities or other public securities.

UNDERWRITING

The Bonds are being purchased by M&T Securities, Inc., Baltimore, Maryland (the “Underwriter”) pursuant to a purchase contract dated ______, 2016, between the Underwriter and the Borough (the “Purchase Contract”). The Underwriter has agreed to purchase the Bonds subject to the terms of the Purchase Contract at an aggregate discount of $______from the initial public offering prices set forth on the inside front cover of this Official Statement. The Purchase Contract provides that the Underwriter will purchase all the Bonds, if any are purchased, in accordance with the terms of the Purchase Contract. The initial public offering prices of the Bonds may be changed by the Underwriter from time to time from the levels set forth on the inside front cover hereof, without any requirement of notice. The Underwriter reserves the right to join with other dealers in offering the Bonds to the public, and Bonds may be offered to such other dealers in connection therewith at prices lower than the prices at which such Bonds are offered to the public.

CONTINUING DISCLOSURE UNDERTAKING In accordance with Rule 15c2-12 under the Securities Exchange Act of 1934, as amended and in effect on the date hereof (the “Rule”), the Borough, as issuer of the Bonds and sole obligated person in respect thereof within the meaning of the Rule, has authorized and directed in the Ordinance the execution and delivery by the Borough of a Continuing Disclosure Certificate (substantially of the form set forth in Appendix E hereto) simultaneously with its delivery of the Bonds to the Underwriter; and has in the Ordinance covenanted with and for the benefit of the holders and beneficial owners of the Bonds to duly perform the acts it certifies it will perform in the said Continuing Disclosure Certificate (together with the said covenant, the “Continuing Disclosure Agreement”). In and by the Continuing Disclosure Agreement, the Borough will covenant to provide to the Municipal Securities Rulemaking Board (the “MSRB”), via its Electronic

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Municipal Market Access System (EMMA), or to such other entity as may be designated by the Securities and Exchange Commission (the “SEC”) as successor in the function, in the form and in the manner stipulated by the MSRB or such successor entity and on an annual basis, (i) a financial report covering the preceding fiscal year of the Borough, which will include at a minimum general purpose financial statements which present fairly, in all material respects, the respective financial position of the governmental funds, the business-type activities, each major fund, and the aggregate remaining fund information of the Borough as of the end of such fiscal year and the respective changes in financial position and, where applicable, cash flows thereof and the respective budgetary comparison for the Borough’s General Fund for such fiscal year in accordance with the modified cash basis of accounting, or prepared on such other basis of accounting adopted by the Borough from time to time so as to bring the presentation of its financial statements more closely into conformity with U.S. generally accepted accounting principles (the “Report” for such fiscal year), commencing with the Report for the Borough's fiscal year ending in 2016. Unless audited, such financial statements will be unaudited. The aforementioned covenant requires Reports to be so provided within 275 days of the end of the fiscal years of the Borough to which they pertain, and that, if any Report so provided does not include independently audited financial statements of the Borough for the fiscal year of the Borough to which such Report pertains (or the Report is not timely provided), the Borough must also provide such independently audited financial statements when and if available.

The Borough will also covenant in the Continuing Disclosure Agreement to provide to the MSRB, or to such other entity as may be designated by the SEC as successor in the function, in the form and in the manner stipulated by the MSRB or such successor entity, (A) in a timely manner, notice of each failure of the Borough to provide or cause to be provided, as so required, any Report or audited financial statements in a timely manner and (B) in a timely manner, but in each case not later than the tenth business day after such occurrence, notice of each occurrence of any of the following events with respect to any of the Bonds (each a “Material Event”): (i) principal and interest payment delinquencies, (ii) non-payment related defaults, if material, (iii) unscheduled draws on debt service reserves reflecting financial difficulties, (iv) unscheduled draws on credit enhancements reflecting financial difficulties, (v) substitution of credit or liquidity providers, or their failure to perform, (vi) 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 any of the Bonds, or other material events affecting the tax status of any of the Bonds, (vii) modifications to rights of the holders of the Bonds, if material, (viii) bond calls, if material, and tender offers, (ix) defeasances, (x) release, substitution or sale of property securing payment of the Bonds, if material, (xi) rating changes, (xii) bankruptcy, insolvency, receivership or similar event of the Borough (or any other entity that is at the time an obligated person within the meaning of the Rule with respect to the Bonds), (xiii) the consummation of a merger, consolidation, or acquisition involving the Borough (or any other entity that is at the time an obligated person within the meaning of the Rule with respect to the Bonds) or the sale of all or substantially all of the assets of the Borough or any such 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 (xiv) appointment of a successor or additional trustee or paying agent or the change of name of a trustee or paying agent, if material*.

*It should be noted that item (iii) is not applicable at this time because it is not anticipated that there will be a debt service reserve for the Bonds. Subject to the operation of the final sentence of the next succeeding paragraph, item (viii) is satisfied with respect to mandatory sinking fund redemption of Bonds (if any) by the filing of this Official Statement with the MSRB. An event described in item (xii) is considered to occur when any of the following occur: the appointment of a receiver, fiscal agent or similar officer for the Borough or other pertinent obligated person in a proceeding under the U.S. Bankruptcy Code or in any other proceeding under state or Federal law in which a court or governmental authority has assumed jurisdiction over substantially all of the assets or business of the Borough or such obligated person, or if such jurisdiction has been assumed by leaving the existing governing body and officials or officers in possession but subject to the supervision and orders of a court or governmental authority, or the entry of an order confirming a plan of reorganization, arrangement or liquidation by a court or governmental authority having supervision or jurisdiction over substantially all of the assets or business of the Borough or such obligated person.

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These covenants, or any part thereof, may be revised from time to time as permitted or required by the Rule, without the consent of Bondholders, and will terminate upon legal defeasance of the Bonds or other arrangement whereby the Borough is released from any further obligations with respect to the Bonds. The Borough will promptly notify the MSRB of any revision or termination of the disclosure covenants. The Borough will also covenant in the Continuing Disclosure Agreement that it will abide by the rules of the MSRB, as promulgated by the MSRB from time to time, as to the manner in which the aforementioned Reports, audited financial statements and notices of Material Events, if any, are to be given to the MSRB.

The sole remedy for a breach by the Borough of its covenants to provide Reports, audited financial statements and notices of events will be an action to compel performance of such covenants. Under no circumstances may monetary damages be assessed or recovered on the basis of such a breach, nor will any such breach constitute an “Event of Default” under the Ordinance or the Bonds, or a “failure to comply with any provision” of the Bonds or in the Ordinance for the purposes of §8263 of the Debt Act (relating to remedies available to Bondholders).

On May 13, 2003, the Borough Council of the Borough enacted Ordinance No. 865, pursuant to which the Borough issued its General Obligation Bonds, Series of 2003 (the “2003 Bonds”) on June 10, 2003, and in which the Borough covenanted with the holders and beneficial owners of the 2003 Bonds to give timely notice of any rating changes with respect to the 2003 Bonds to the MSRB (the “2003 Covenant”). The 2003 Covenant lapsed on December 22, 2011, upon the redemption in full of the 2003 Bonds.

On September 25, 2007, on the occasion of its issuance of its General Obligation Bonds, Series of 2007 (the “2007 Bonds” and, together with the 2003 Bonds and the 2011 Bonds, the “Disclosure Bonds”), the Borough executed a Continuing Disclosure Certificate (the “2007 Certificate”), which stated that the Borough would give timely notice of any rating changes with respect to the 2007 Bonds to the MSRB. The 2007 Bonds were redeemed in full on May 27, 2014.

On December 22, 2011, the Borough executed a continuing disclosure agreement (the “2011 Agreement”) in which it agreed to provide annually to the MRSB a copy of its annual financial statements together with other financial information and operating data (including audited financial statements), to the extent customarily prepared by the Borough and publicly available. While the Borough provided its 2012 audited financial statements annually by filing the same with EMMA (on September 29, 2013), it did not so provide its 2011 audit until it filed the same with EMMA on March 3, 2014, or its 2013 and 2014 audits until it filed the same with EMMA on August 5, 2016. Moreover, the Borough agreed in the 2011 Agreement to give notice to the MSRB of any failure to file such information in a timely manner. The Borough believes that the filing of the 2011 audit on March 3, 2014, and the 2013 and 2014 audits on August 5, 2016, rather than within the fiscal years of the Borough immediately following the fiscal years pertaining to those audits, may constitute a failure to file the same annually. Notices in respect of such failure were filed with EMMA on August 15, 2016.

In the 2011 Agreement, the Borough also undertook to give prompt notice to the MSRB of any rating changes with respect to the 2011 Bonds. On June 27, 2014, the rating agency Standard & Poor’s Ratings Services (now S&P Global Ratings) (“S&P”) raised its long-term rating of the Borough from A/Stable to A+/Stable, however the Borough did not give prompt notice of the same to the MSRB as required by the 2011 Agreement. On August 15, 2016 the Borough gave notice of such rating change to the MSRB by filing notice of the same with EMMA in the manner required by the MSRB. While the Borough is not aware of any other changes to its underlying bond rating by any rating agency that assigned a rating to any of the Disclosure Bonds under contract with the Borough during the past five years, it is aware that, at various times during such period, some ratings assigned by various rating agencies (including rating agencies that may have assigned ratings to Disclosure Bonds) to the claims-paying abilities of various bond insurance companies (including bond insurance companies that may have insured Disclosure Bonds from time to time) may have changed. The Borough has undertaken no investigative effort to determine which rating agencies may have rated Disclosure Bonds from time to time (except under contract with the Borough), which bond insurance companies may have insured Disclosure Bonds (unless by arrangement with the Borough upon the issuance thereof) or the nature of any changes to ratings assigned by any rating agencies to the claims-paying abilities -13- of any bond insurance companies (or of any changes to ratings assigned to any of the Disclosure Bonds by such rating agencies as a result of such rating changes), and, prior to August 15, 2016, had given no notice to the MSRB in respect thereof.

On August 15, 2016, the Borough filed notice with EMMA of a downgrade of the insured rating of the then-outstanding 2007 Bonds by S&P resulting from S&P’s downgrade of its rating of Assured Guaranty Municipal Corp. that occurred on November 30, 2011. On August 15, 2016, the Borough filed notice with EMMA of an upgrade of the insured ratings of the then-outstanding 2007 and 2011 Bonds by S&P resulting from S&P’s upgrade of its rating of Assured Guaranty Municipal Corp. that occurred on March 18, 2014. The Borough does not represent that there have not been other rating changes to Disclosure Bonds by rating agencies other than S&P, or by S&P more than five years ago.

Prior to issuance and delivery of the Bonds to the Underwriter, the Borough will have adopted certain procedures to ensure that the Borough’s continuing disclosure obligations are satisfied in a timely manner in the future.

OTHER

The summaries and descriptions of the provisions of the Debt Act, the Ordinance, the Bonds, the Continuing Disclosure Agreement, Security for the Bonds, Approvals, Tax Matters, Tax Exemption and the other legal matters and procedures hereinbefore set forth are made subject to all the detailed provisions thereof, to which reference is hereby made for further information, and do not purport to be complete statements of any or all such provisions. The Borough will certify and its Solicitor will opine that this Official Statement does not, to their knowledge, contain any untrue statement of a material fact or omit any statement of any material fact required to be stated therein, pertaining to the Borough or this Bond Issue.

For the purpose of paragraph (b)(1) of Rule 15c2-12 of the Securities and Exchange Commission, the Preliminary Official Statement dated ______, 2016 relating to the Bonds is in a form deemed final by the Borough, as of its date.

BOROUGH OF MONACA

By: ______President of Council

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APPENDIX A

BOROUGH OF MONACA

DESCRIPTION AND ECONOMICS OF THE AREA

FINANCIAL INFORMATION

STATISTICAL DATA

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DESCRIPTION AND ECONOMICS OF THE AREA

General The Borough of Monaca is primarily a residential municipality with a self-contained commercial district. The Borough is located along the Ohio River in the geographical center of Beaver County, Pennsylvania, approximately 25 miles northwest of the City of Pittsburgh and approximately 15 miles from the Pittsburgh International Airport by means of Interstate 376.

Monaca is considered a very progressive community under the leadership of its professional manager and elected officials. The Borough and its Manager have received numerous awards and citations for innovations and efficiencies in the operation of its utility systems and infrastructure. Monaca has been featured on the FOX nationwide television Communities of Distinction, filmed in 2013, and more recently in a “Sustainability Pioneers” documentary series in which Monaca will feature as one of the 5 segments.

The Borough has received the first place award by Pennsylvania State Boroughs Association for both the Borough’s website and newsletter for consecutive years since 2009. In 2010, Monaca became the eighth municipality in the Commonwealth of Pennsylvania to be recognized by the National Weather Service as a “Storm Ready Community”. The Borough was the recipient of the 2011 Ohio River Watershed Celebration – Environmental Award/Government Sector. In 2012, the Borough was recognized by both the National Oceanic and Atmospheric Administration and the National Weather Service as the first in the nation to complete a lightning safety toolkit for its baseball program in recognition of Lightning Safety Awareness. The Borough won the American Public Works Association’s 2013 Individual Sustainability Award, its manager was awarded the 2014-2015 Top Performer for Small Municipal Government by Sustainable Pittsburgh and it won the SENSUS Reach Customer Conservation Award in 2015.

The Borough is recognized as a Gold Certified municipality by both Sustainable Pittsburgh and Sustainable Pennsylvania for all its sustainable initiatives.

Development In March, 2012, Shell Chemical Appalachia LLC, a unit of Royal Dutch Shell plc, announced that it had selected a site in Potter Township (adjacent to Monaca) as a possible future location for an ethane cracker plant (a facility that processes the ethane component of oil and gas to produce ethylene, a compound used in the plastics industry). This $2.5B plant could produce as many as 6,000 construction jobs and 400 to 600 permanent jobs as well as residential and commercial development in Monaca. Shell acquired the site in late 2014 and demolition and site preparation has been under way since early 2015. On June 7, 2016, Shell announced its final investment decision to proceed with the project, with main construction of the plant expected to start in about eighteen months and operation to start about four years from now.

Parks and Recreation The Monaca Recreation Department is dedicated to providing wholesome recreation and leisure activities for the enjoyment of all residents in the Community. The newest park, completed in 2010, is the Pumphouse Park, which includes a walking trail along the Ohio River, pavilions and playground equipment.

In December, 2010, the Monaca Volunteer Community Outreach and the Monaca Business District Authority began a “Green Gateways” project to visually enhance the various entrances into Monaca. As part of the project, a new park was constructed at the Monaca Rochester Bridge at the corner of Ninth Street and Atlantic Avenue to provide access for walkers, runners or bikers along the proposed Ohio River Trail.

Public Education – Central Valley School District Monaca is served by the Central Valley School District – the first school district in Pennsylvania to be formed by voluntary merger. The School district serves approximately 2,400 students in grades kindergarten through 12 and has recently added its own cyber academy. A-1

Transportation Two Pennsylvania Turnpike (Interstate 76) exits are located twenty minutes from the Borough, one to the north and one to the northeast. One exit of Interstate Route 79 is about ten miles to the east. The Borough is directly accessible from State Routes 51 and 18. The Borough is bordered by the Township of Center to the south and west and the Ohio River to the north and east. Two bridges are located in the Borough. One connects the Borough with the County seat, the Borough of Beaver, through the Borough of Rochester, and the other connects the Borough with the Boroughs of East Rochester and Freedom on State Route 65.

Commerce While the Borough has its own small, self-contained business district, it is located adjacent to Beaver County’s principal commercial district which comprises the Beaver Valley Mall, two adjacent malls and adjacent hotels and restaurants. The three malls include major retail stores, restaurants and hotels such as J.C. Penney, Boscov’s, Dick’s Sporting Goods, Champs Sports, Macy's, Wal-Mart, two multi-screen movie theaters, CVS drug store, Lowe's Home Center, Eat 'N Park restaurant, Texas Roadhouse restaurant, PetSmart, Applebee's, Staples, Kohl's, Target, Ross, Toys R Us, Marshall’s, Lowes and four new hotels, Holiday Inn Express, Hampton Inn, The Inn at Center Township and Fairfield by Mariott. Also located in the Mall property are approximately ten satellite stores and restaurants, including a National Tire & Battery and the Beaver Valley Auto Mall. The owner of the Beaver Valley Mall has announced it has placed the facility up for sale, but has not said it is closing or will close the mall.

Borough of Monaca Land Use by Assessment (2015) Percentage Assessed Value Distribution Residential ...... $39,817,427 74.68% Trailers ...... 359,950 0.68 Seasonal ...... -0- 0.00 Lots...... 454,395 0.85 Industrial ...... 2,089,150 3.92 Commercial...... 10,580,925 19.85 Agriculture...... 5,700 0.01 Oil/Gas/Minerals ...... 50 0.00 Land ...... 7,900 0.01__ Total ...... $53,315,497 100.00%

Source: Pennsylvania State Tax Equalization Board.

Employment The following is a list of the largest employers located within the Borough:

Number of Employer Employees Anchor Hocking Specialty Glass Co...... 400 Community College of Beaver County...... 350 Rome Metals (an Allegheny Technologies Company)...... 80 Central Valley School District* 54 Beaver Valley Alloy Company (steel and iron casing) ...... 50 Datatel Resources Corp. (business forms) ...... 48 Borough of Monaca...... 45 NF&M International (titanium products)...... 40

*Middle School located within the Borough

Source: Local Officials A-2 Banking Although there are no banks located within Monaca itself, Citizens Bank, N.A., WesBanco Bank, PNC Bank, First Commonwealth Bank, First National Bank and Huntington Bank all have branch offices in various nearby locations.

Utilities Electricity is provided to the Borough by Duquesne Light Company. Gas service is provided by Peoples Gas and Columbia Gas. Telephone service is provided by Verizon, and cable service is provided by Verizon, Comcast, DirecTV and Dish TV. Water service and sewer service are supplied by the Borough of Monaca.

Higher Education The area is served by several colleges within Beaver County, including the Beaver Campus of Penn State University, Community College of Beaver County (“CCBC”), Geneva College, Beaver County Career and Technology Center, and Trinity Episcopal School of Ministry (which offers a 3-year Masters Program). The area is also served by Slippery Rock University, located in adjacent Butler County, and Robert Morris University, located in adjacent Moon Township, Allegheny County. Major colleges and universities located in the City of Pittsburgh are within 40 minutes of automobile travel time from Monaca.

Medical Facilities Heritage Valley Health System was formed in 1996 by consolidation of The Medical Center of Beaver County and Sewickley Valley Hospital (which, although located in Allegheny County, serves the southern part of Beaver County). Heritage Valley Health System operates a 689-bed teaching facility in Brighton Township and, together with the Sewickley facility, serves the majority of Beaver County residents. Skilled and intermediate level nursing is available at the 589-bed Brighton Rehab and Wellness Center (formerly Friendship Ridge), which is located adjacent to Heritage Valley Medical Center in Brighton Township. Kindred Hospital at Heritage Valley is a 35-bed transitional care hospital located in Beaver Borough. Kindred Hospital provides specialized long-term acute care to medically complex patients who require continued care and extended recovery time.

THE COUNTY

Because the Borough, which is highly residential, is central to the entire County of Beaver and is easily accessible to it by an excellent highway system, a brief description of Beaver County is set forth below:

Introduction Beaver County is located in southwestern Pennsylvania, northwest of the City of Pittsburgh, and is bordered on the west by the states of Ohio and West Virginia, on the south by Washington County, on the east by Allegheny County and Butler County, and on the north by Lawrence County. Beaver County encompasses two third-class cities and 52 boroughs and townships.

Beaver County was once dominated by the steel industry, but since the 1990s smaller manufacturing and service industries have been locating in the area. Significant commercial growth is taking place in the geographic center of Beaver County along the Beaver Valley Expressway in Center Township.

In March, 2012, Shell Chemical Appalachia LLC, a unit of Royal Dutch Shell plc, announced that it had selected a site in Potter Township (adjacent to Monaca) as a possible future location for an ethane cracker plant (a facility that processes the ethane component of oil and gas to produce ethylene, a compound used in the plastics industry). This $2.5B plant could produce as many as 6,000 construction jobs and 400 to 600 permanent jobs, as well as residential and commercial development in Monaca. Shell acquired the site in late 2014 and demolition and site preparation has been under way since early 2015. On June 7, 2016, Shell announced its final investment decision to proceed with the project, with main construction of the plant expected to start in about eighteen months and operation to start about four years from now.

In the early 1990s, the Pennsylvania Turnpike Commission built a $200 million extension to the Pittsburgh/Airport/Beaver County expressway, running approximately 17 miles from its intersection with PA

A-3 Route 51 near Beaver Falls in Beaver County to U.S. Route 422 near New Castle in neighboring Lawrence County. This toll road, together with the new 8-mile “Airport Expressway” built around the same time, provides a continuous limited access highway from Pittsburgh west and north to the Pittsburgh International Airport, then north through the center of Beaver County until it meets Interstate 80 some 15 miles east of Youngstown, Ohio (connecting with the Pennsylvania/Ohio Turnpike, Interstate 76, near Big Beaver in Beaver County and with U.S. Route 422 at New Castle along the way). This entire expressway was subsequently designated as part of Interstate 376.

As set forth in the following list, approximately 70% of Beaver County’s land use (measured by applicable assessed valuation) is residential, 15% is commercial and 6% is industrial. The remaining 9% represents a combination of the various other usage categories shown.

County of Beaver Land Use by Assessment (2015)

Assessed Percentage Value Distribution Residential ...... $1,499,816,691 69.17% Trailers...... 42,098,938 1.94 Lots ...... 28,749,119 1.33 Industrial...... 125,140,619 5.77 Commercial ...... 342,607,667 15.80 Agriculture...... 113,518,622 5.24 Land...... 15,298,728 0.70 Oil/Gas/Minerals ...... 1,115,220 0.05 Total...... $2,168,345,608 100.00% ______Source: Pennsylvania State Tax Equalization Board

A-4 Employment Listed below are the twenty-five largest employers in Beaver County along with their Beaver County employment component. Beaver County Employer Principal Office Products/Services Employment Heritage Valley Health System Beaver Integrated health care system 2,242 FirstEnergy Corp. Greensburg Electric distribution company 1,300 Giant Eagle, Inc. Pittsburgh Food, fuel and pharmacy retailer 1,148 Norfolk Southern Corp. Conway Rail services 1,100 County of Beaver Beaver Government 912 Wal-Mart Stores, Inc. Bentonville, AR Retail department/grocery store 900 TML IPSCO Koppel Tubulars Koppel Welded and seamless pipe and connections 767 Commonwealth of Pennsylvania Pittsburgh State government 608 Friendship Ridge Beaver Elder care facility 560 McCarl’s Inc. Beaver Falls Construction 500 Mailing Services of Pittsburgh Freedom Direct mail and print fulfillment 500 ServiceLink Management Co. Aliquippa Mortgage and real estate settlement 459* PA Cyber Charter School Midland Online charter school 450 Geneva College Beaver Falls Higher education 427 McGuire Memorial and The New Brighton Residential and school services and school McGuire Memorial Foundation programs 425 Allegheny Technologies, Inc. Pittsburgh Diversified specialty materials and 400 components Anchor Hocking Specialty Glass Monaca Glassware manufacturer 400 Blackhawk School District Beaver Falls Public education 400 Eaton Coraopolis Power management 398 Community College of Beaver County Monaca Community college 350 Hopewell Area School District Aliquippa Public education 350 Ambridge Area School District Ambridge Public education 324 Passavant Memorial Homes Warrendale Care for special needs individuals 318 Beaver County YMCA New Brighton Regional YMCA 300 Central Valley School District Monaca Public education 296 ______Source: Pittsburgh Business Times 2015-16 Book of Lists. * Substantially all of ServiceLink’s operations have recently been relocated to Moon Township, just over the Beaver County border in Allegheny County Transportation Beaver County is traversed by several major highways including the Pennsylvania Turnpike and the Pittsburgh/Airport/Beaver County Expressway (I-376). The Beaver County Airport, located in Chippewa Township, provides facilities for private and U.S. Air Force aircraft, while the Pittsburgh International Airport provides commercial service. Airport transportation is offered by Pittsburgh Transportation Group/Super Shuttle. Railroad transportation within Beaver County is provided by CSX Corporation and Norfolk and Southern Corporation. The Conway Yard complex of the Norfolk and Southern Corporation, located in Conway Borough in Beaver County, is an extensive and active freight classification yard (among the largest in the United States).

The Beaver County Transit Authority (“BCTA”) provides regular bus transportation throughout Beaver County and express bus service to the City of Pittsburgh. The Port Authority of Allegheny County operates a Park ‘N Ride Lot in the Borough of Ambridge. Charter bus service and tours are offered by Lenzer Coach Lines and McCarter Coach and Tour.

Commerce The Beaver Valley Mall is located in the approximate geographical center of Beaver County in Center Township. The complex has approximately 120 establishments, including major department stores, such as Boscov’s, Macy’s, J. C. Penney, Dick’s Sporting Goods, Champs Sports, Wal-Mart, Toys R Us, Marshall’s and Lowes, and two multi-screen movie theaters. Also located on the Mall property are approximately 10 A-5 satellite stores and restaurants. Four new hotels are located in the area: Hampton Inn, Holiday Inn Express, The Inn at Center Township and Fairfield by Marriott. The owner of Beaver Valley Mall has announced it has placed the facility up for sale, but has not said it is closing or will close the mall

Also, in Center Township, and located just southeast of the Center Township Marketplace, is the Stone Quarry Commons shopping district. This houses several larger, national retailers such as Target, Kohl’s, Ross Dress and Marshall’s stores. Along with these are PetSmart, Cinemark Theater, Aldi’s Grocery and numerous other restaurants and smaller businesses, including the Center Place Medical Offices. Pleasant Drive in the Township is the home of the Hampton Office complex, Veterinary Clinic and Animal Hospital, BCTA Expressway Transit Center, O. C. Cluss Lumber and Building supplies, Abbey Carpet, Center Exit Tire Sales and McDonald’s fast food restaurant.

Located in Chippewa Township on Route 51 is a 24.9 acre shopping center complex with a K-Mart, Home Depot and Giant Eagle, which houses approximately 17 stores and restaurants. Chippewa Township also has a Super WalMart and three automobile dealers: Jeep, Nissan, Hyundai and Kia.

The Pittsburgh International Airport The Pittsburgh International Airport is located in neighboring Allegheny County two miles from the Beaver County border along the Pittsburgh/Airport/Beaver County Expressway (I-376). The hotel, restaurant, car rental, business area and 24-hour cargo facilities stretch north from the Airport towards Beaver County along Business Route 60. The Airport serves the tri-state area region of western Pennsylvania, eastern Ohio and northern West Virginia. It is located approximately 15 miles northwest of the City of Pittsburgh.

Recreation The County owns and operates four parks within its borders, which provide more than 5,000 acres of open space for various outdoor recreational activities including boating, swimming, all-weather tennis courts, ice arena and regatta facilities. Also located in Beaver County is Pennsylvania’s fifth largest state park, Raccoon Creek State Park, which encompasses more than 7,900 acres, including a 100-acre lake.

Cultural institutions in Beaver County include the Merrick Art Gallery in New Brighton, the Brodhead Cultural Center in Monaca and the Lincoln Park Performing Arts Center in Midland. The Merrick Gallery, established in 1880, maintains a permanent exhibit of over 200 nineteenth century paintings by European and American artists. The Brodhead Cultural Center, which is located on a seven-acre site adjacent to the Beaver Campus of Penn State University, is a cooperative effort between Penn State University and the local community. The Brodhead Cultural Center’s functional facilities include an amphitheater, pavilion, exhibit areas, gazebo and museum. Built in 2006, the Lincoln Park Performing Arts Center, an arts, education, and cultural asset for western Pennsylvania and the surrounding tri-state region, with more than 122,000 square feet of performance and classroom space, including a 750-seat proscenium theater and a 180-seat studio theater, is home to the Lincoln Park Performing Arts Charter School and the Henry Mancini Arts Academy. Lincoln Park is a member of the National Alliance for Musical Theatre.

A-6

BOROUGH OF MONACA STATISTICAL DATA

Market Valuation of Real Property within the Borough (2016)...... $205,379,511 Assessed Valuation of Real Property within the Borough (2016)...... $ 53,357,597 Ratio of Assessed Valuation to Market Valuation...... 25.98% Source: State Tax Equalization Board Taxes: Borough School District County Total Real Estate Tax ...... 27 mills 51.15 mills 22.2 mills 100.35 mills Real Estate Transfer Tax ...... 5% -- -- .5% Per Capita Tax...... $10 -- -- $10

Municipal Service Tax...... $47 $5 -- $52 Earned Income Tax...... 5% .5% -- 1.0% Mechanical Devices...... $350 -- -- $350 Population (U.S. Department of Commerce, Bureau of the Census): 2010...... 5,737 2000...... 6,286 1990...... 6,739 1980...... 7,661 1970...... 7,486 Market Value Per Capita (2010 Census)...... $35,799.11 Direct General Fund Debt of the Borough: (a)(b) General Obligation Bonds, Series of 2016 (This issue; estimated)...... $1,935,000.00 General Obligation Note, Series of 2014 ...... 470,000.00 General Obligation Bonds, Series of 2011 (est.) (c) ...... 565,000.00 Total Direct Debt...... $3,030,000.00 Ratio to Market Value ...... 1.48% Ratio to Assessed Value...... 5.68 % Direct Debt Per Capita ...... $528.15 Borough Share of Central Valley School District Net Debt (18.17% based on 2014 Assessed Value after 7% est. State Subsidy)...... $4,521,786.00 Borough Share of County General Obligation Debt (2.49% based on 2014 Assessed Value)...... 3,253,208.00 Total Overlapping Debt...... $7,774,994.00 Total Direct and Overlapping Debt...... $10,804,994.00 Ratio to Market Value ...... 5.26% Ratio to Assessed Value...... 20.25% Debt Per Capita...... $1,883.39

(a) As of the date of initial delivery of the Bonds to the Underwriter. (b) Borough Direct Debt excludes those portions of the Borough’s general obligation debt that are supported by water and sewer revenues, as follows: 2016 Bonds: $7,940,000 (est.) to be supported by water and sewer revenues; 2009 PennVest Loan: $3,303,251.26 supported by water revenues; unrefunded 2011 Bonds: $705,000 supported by water and sewer revenues; and 2014 Note: $1,495,000 supported by water and sewer revenues. (c) Unrefunded Portion: $2,445,000 (est.) principal amount of the 2011 Bonds, of the $ 3,715,000 currently outstanding, are being refunded by the Bonds, leaving $1,270,000 (est.) outstanding after the refunding (of which $705,000 (est.) is supported by sewer and water revenues).

A-7 BOROUGH REAL ESTATE VALUATIONS TAXABLE VALUATION AND MARKET VALUE TREND

Ratio Assessed Assessed Market Valuation Year Valuation Valuation to Market Value 2006...... $52,853,399 $150,669,399 35.08% 2007...... 53,121,362 151,561,100 35.05 2008...... 53,607,087 166,217,574 32.25 2009...... 53,123,207 164,605,100 32.27 2010...... 53,061,659 190,593,534 27.84 2011……………………...... 53,359,997 191,522,993 27.86 2012…………………………. 53,486,597 197,419,199 27.09 2013………………………….. 53,799,447 199,296,196 26.99 2014...... 53,713,997 206,732,130 25.98 2015...... 53,235,547 204,090,727 25.98 2016...... 53,357,597 205,379,511 25.98 Sources: Pennsylvania State Tax Equalization Board and Borough Officials.

LARGEST BOROUGH REAL ESTATE TAXPAYERS The largest real property taxpayers in the Borough, together with 2016 assessed valuations, are shown below.

2016 Assessed Taxpayer Description Valuation Anchor Hocking Glass Co. Glass manufacturer $1,551,433 Monmouth Real Estate Investment Trust 959,900 (NF&M International) Titanium (Datatel Resources) Business forms Colonial Acquisition/Colonial Transfer Trucking, warehousing 716,400 Dioguardi, John and Gina Titanium/ATI Marble 576,450 Beaver Co. Corp for Economic Development Metal fabrication/Metcon warehousing 467,075 Beaver Valley Industrial Park Warehousing 304,100 Fox Monaca CVS Pharmacy 284,100 Beaver Valley Heat Treatment Metal fabricator 208,850 Beaver Valley Alloy Metal fabricator 169,700 Dioguardi & Kisk Titanium/ATI Marble 144,200

Total $5,382,208(a) (a) Equal to 10.1% of total 2016 assessed valuation of the Borough ($53,357,597).

BOROUGH OF MONACA COMPARISON OF REAL ESTATE TAX COLLECTIONS Current and Year-End Current Percent of Delinquent Percent of December 31 Tax Levy Collections Current Levy Collections Current Levy 2010 $1,114,295 $1,032,0984 92.70% $1,099,455 98.67% 2011 1,120,560 1,065,125 95.05 1,125,012 100.40 2012 1,123,218 1,053,119 93.76 1,110,926 98.91 2013 1,183,588 1,091,112 92.19 1,132,083 95.64 2014 1,289,136 1,204,336 93.42 1,286,322 99.78 2015 Sources: Borough Officials, audited financial statements and the Pennsylvania State Tax Equalization Board.

A-8 BOROUGH OF MONACA ANNUAL DEBT SERVICE REQUIREMENTS

General Obligation 2009 2009 G.O. Bonds Bonds, PennVest Equipment Series of 2014 Series of 2016 Year Loan Lease (a) 2011(b) G.O. Note (This Issue)(c) Total (Est.)

2016 $ 237,269.76 159,058.25 $570,568.75 $ 162,419.47 17,049.90 $1,144,767.35 2017 258,064.60 165,027.95 478,350.00 251,715.97 232,994.00 1,386,152.52 2018 259,955.04 169,201.80 436,678.75 291,002.50 251,930.00 1,408,768.09 2019 259,955.04 173,317.40 429,476.25 294,602.56 255,581.00 1,412,932.25 2020 259,955.04 173,307.65 431,395.00 288,164.13 249,082.00 1,401,903.82 2021 259,955.04 173,297.10 437,222.50 286,490.56 247,450.00 1,404,415.20 2022 259,955.04 173,274.00 416,237.50 284,777.47 275,369.50 1,409,613.51 2023 259,955.04 173,321.90 300,825.00 203,950.91 401,613.00 1,339,665.85 2024 259,955.04 173,324.35 198,912.50 125,024.25 534,984.00 1,292,200.14 2025 259,955.04 198,575.00 121,995.13 714,575.50 1,295,100.67 2026 259,955.04 198,062.50 20,248.88 815,649.50 1,293,915.92 2027 259,955.04 201,968.75 819,283.25 1,281,207.04 2028 259,955.04 200,284.38 524,786.75 985,026.17 2029 259,955.04 198,406.25 527,900.00 986,261.29 2030 259,955.04 201,237.50 520,378.25 981,570.79 2031 259,955.04 198,778.13 522,325.50 981,058.67 2032 21,662.87 ______572,825.25 594,488.12 Totals $4,156,367.79 $1,533,130.40 $5,096,978.76 $2,330,391.81 $7,483,777.40 $20,599,047.37

(a) This capital lease of essential equipment will be terminated at Closing upon payment of $1,212,335.75 from Bond proceeds to the lessor, constituting a current refunding of the lease obligation and the purchase of the leased equipment by the Borough.

(b) $2,445,000 (est.) of the $3,715,000 currently outstanding principal amount of the 2011 Bonds will be refunded by the Bonds.

(c) New-Money Portion Only (Estimated): These figures do NOT include the debt service on the portion of the 2016 Bond Issue refunding the 2009 Equipment Lease and partially refunding the 2011 Bonds.

A-9

CALCULATION OF DEBT LIMITATION UNDER THE DEBT ACT

The following is a calculation of the existing debt and borrowing capacity of the Borough pursuant to the Debt Act, as of ______, 2016, assuming delivery of the Bonds and application of the proceeds thereof as contemplated herein.

Non-Electoral And Non-Electoral Lease Rental Outstanding Debt ...... $ 8,983,251.26 $ 8,983,251.26 This Bond Issue (Est.)...... 9,935,000.00 9,935,000.00 Gross Debt...... $18,918,251.26 $18,918,251.26 Less: Exclusions (Est.) (a) ...... (15,888251.26) (15,888,251.26) Net Debt ...... $ 3,030,000.00 $ 3,030,000.00

Borrowing Base (average annual recurring revenues for the years Ended December 31, 2013, 2014 and 2015) (b) ...... $ 2,836,200.33 $ 2,836,200.33

Net Allowable Debt Based on 2.5 (Non-Electoral) and 3.5 (Non-Electoral and Lease Rental) times the Borrowing Base ...... $ 7,090,500.83 $ 9,926,701.17

Remaining Allowable Borrowing Capacity (Est.)...... $ 4,060,500.83 $ 6,896,701.17

(a) $3,303,251.26 principal amount of a 2009 PennVest loan supported by revenues of the Borough’s water system, $7,940,000* principal amount of the 2016 Bonds to be supported by revenues of the Borough’s water and sewer systems, $2,445,000* principal amount of the 2011 Bonds to be refunded by the Bonds, $705,000* principal amount of the unrefunded 2011 Bonds supported by the Borough’s water and sewer systems, and $1,495,000 principal amount of the 2014 Note supported by the Borough’s water and sewer systems.

(b) Excluding Water and Sewer Revenues.

Source: Debt Statement of the Borough dated ______.

Note: The 2009 Equipment Lease, which is currently outstanding in the principal amount of $1,184,500, and is being refunded by the Bonds, is not “debt” for purposes of the debt limitation provisions of the Debt Act, however the portion of the 2016 Bond Issue replacing it is. ______* Estimated, subject to change

A-10

BOROUGH OF MONACA SUMMARY OF BALANCE SHEETS (MODIFIED CASH BASIS) AT DECEMBER 31, 2012, 2013, 2014, AND 2015 GENERAL FUND

2012 2013 2014 2015 Assets Cash and Cash Equivalents ...... $850,090 $712,190 $690,694 $458,004 Due from Other Funds...... 0 105,542 4,200 4,200 Total Assets...... $850,090 $817,732 $694,894 $462,204

Liabilities Payroll Tax Liability ...... $ 2,808 $ 755 $ 4,441 $ 4,779

Other Current Liabilities ...... 3,370 3,374 3,374 3,374 Total Liabilities ...... $ 6,178 $ 4,129 $ 7,815 $ 8,153

Fund Balance Fund Balance – Unassigned...... $843,912 813,603 $687,079 $454,051

Total Liabilities and Fund Equity...... $850,090 $817,732 $694,894 $462,204

BOROUGH OF MONACA STATEMENT OF NET POSITIONS (MODIFIED CASH BASIS) AT DECEMBER 31, 2012, 2013, 2014 AND 2015 WATER FUND AND SEWER FUND

2012 2013 2014 2015 Assets Current Assets – Water ...... $ 636,714 $ 388,368 $ 388,539 $ 272,299 Current Assets – Sewer ...... 1,394,760 658,888 565,721 323,601 Noncurrent Assets – Water ...... 8,776,606 8,768,102 8,493,104 8,115,638 Noncurrent Assets –Sewer...... 2,676,085 3,360,190 3,479,543 3,696,828 Total Combined Assets ...... $13,484,165 $13,175,548 $12,926,907 $12,408,366

Liabilities Current Liabilities – Water ...... $ 195,060 $ 286,390 $ 418,814 $ 411,699 Current Liabilities – Sewer ...... 241,215 281,687 250,795 275,398 Noncurrent Liabilities – Water ...... 7,124,072 6,739,868 6,378,356 5,966,658 Noncurrent Liabilities - Sewer...... 3,142,099 2,908,115 2,698,020 2,422,622 Total Combined Liabilities ...... $10,702,446 $10,216,060 $ 9,745,985 $12,408,366

Net Position Net Investment in Capital Assets: Water ...... 1,570,563 1,799,684 $ 1,695,934 $ 1,737,281 Sewer ...... (864,391) 218,091 530,728 98,808 Unrestricted – Water ...... 523,625 330,528 388,539 272,299 Unrestricted – Sewer...... 1,551,922 611,185 565,721 323,601 Total Combined Net Position...... 2,718,710 2,959,488 3,180,922 3,331,989 Total Liabilities and Net Position ...... $13,484,165 $13,175,548 $12,926,907 $12,408,366 Source: Audited Financial Statements of the Borough for the Years Ended December 31, 2012, 2013, 2014 and 2015.

A-11

BOROUGH OF MONACA SUMMARY OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES (MODIFIED CASH BASIS) FOR THE YEARS ENDED DECEMBER 31, 2012, 2013, 2014 AND 2015 GENERAL FUND

2012 2013 2014 2015 Revenues Taxes ...... $1,807,730 $1,903,392 $2,007,720 $2,110,290 Licenses and Permits ...... 105,803 90,514 85,921 69,685 Fines and Forfeitures ...... 60,650 64,681 52,017 38,410 Interest and Rents ...... 2,902 8,375 12,838 12,041 Intergovernmental...... 248,240 134,735 183,332 192,208 Charges for Services...... 511,082 538,749 521,713 501,360 Miscellaneous ...... 7,217 12,313 11,160 14,407 Total Revenues ...... $2,743,624 $2,752,759 $2,874,701 $2,938,401

Expenditures General Government ...... $329,333 $330,236 $378,110 $ 349,027 Public Safety...... 784,221 891,141 939,868 957,723 Public Works...... 766,343 815,576 817,203 895,620 Culture and Recreation ...... 106,207 90,531 98,817 119,275 Debt Service...... 213,995 216,872 701,539 222,680 Insurance and Employee Benefits...... 574,933 648,188 732,618 761,171 Miscellaneous ...... 21,466 1,300 10,024 33,074 Total Expenditures...... $2,796,498 $2,993,844 $3,678,179 $3,338,570

Excess (Deficiency) of Revenues Over Expenditures... ($52,874) ($241,085) ($803,478) ($ 400,169)

Other Financing Sources (Uses) Operating Transfers In...... $200,000 $210,000 $220,000 $257,207 Operating Transfers Out...... (100,000) 0 (32,845) ( 97,192) Refund of Prior Years 7,305 776 4,939 7,126 Expenditures……………………. 0 0 (5,439) 0 Unknown……………………………………………….. Note 0 0 498,300 0 Proceeds…………………………………………... Note Issuance 0 0 (8,360) 0 Costs……………………………………. Total Other Financing Sources (Uses)...... $107,305 $210,776 $676,955 $167,141

Net Change in Fund Balance...... $54,431 ($30,309) ($126,524) ($233,028)

Fund Balance, January 1...... $789,481 $843,912 $813,603 $687,079

Fund Balance, December 31 ...... $843,912 $813,603 $687,079 $454,051

Source: Audited Financial Statements of the Borough for the Years Ended December 31, 2012, 2013, 2014 and 2015.

A-12

BOROUGH OF MONACA SUMMARY OF REVENUES, EXPENSES AND CHANGES IN FUND NET POSITION (MODIFIED CASH BASIS) FOR THE YEARS ENDED AT DECEMBER 31, 2012, 2013, 2014 AND 2015 WATER FUND AND SEWER FUND

2012 2013 2014 2015 Operating Revenues Water Revenues ...... $ 908,466 $ 983,612 $1,018,304 $1,064,887 Sewer Revenues...... 815,573 952,833 1,022,425 993,342 Combined Operating Revenues ...... 1,724,039 1,936,445 2,040,729 2,058,229

Operating Expenses: Water ...... 594,259 716,458 824,416 911,639 Sewer...... 489,860 497,201 522,688 567,111 Combined Operating Expenses...... 1,084,119 1,213,659 1,347,104 1,478,750

Combined Operating Income...... 639,920 722,786 693,625 579,479

Non-Operating Expenses (Net): Water ...... (163,532) (167,223) (181,611) ( 145,934) Sewer...... (106,202) (94,529) (94,207) ( 85,271) Combined Non-Operating Expenses ...... (269,734) (261,752) (275,818) ( 231,205)

Other Financing Uses (Net): Water ...... (49,828) (8,755) (58,016) ( 82,207) Sewer...... (143,151) (105,072) (138,357) ( 115,000) Combined Other Financing Uses...... (192,979) (113,827) (196,373) ( 197,207)

Change In Net Position: Water ...... 100,847 91,176 (45,739) ( 74,893) Sewer...... 76,360 256,031 267,173 225,960 Combined Change In Net Position ...... $ 177,207 $ 347,207 $ 221,434 $ 151,067

Combined Net Position – January 1 ...... $2,604,512 $2,781,719 $2,959,488 $3,180,922 Prior Period Adjustment...... -- (169,438) -- -- Combined Net Position – December 31 ...... $2,781,719 $2,959,488 $3,180,922 $3,331,989

Source: Audited Financial Statements of the Borough for the Years Ended December 31, 2012, 2013, 2014 and 2015.

A-13

BOROUGH OF MONACA SUMMARY OF RECEIPTS, EXPENDITURES AND BALANCES BUDGETED FOR THE YEAR ENDING DECEMBER 31, 2016 GENERAL FUND

2016 Budgeted January 1, Estimated Beginning Balance...... $ 182,500

Receipts: Real Property Taxes ...... 1,395,000 Act 511 Taxes...... 662,500 Permits...... 51,500 Fines...... 45,000 Interest ...... 150 Building Rent ...... 24,000 State Revenue...... 129,000 Contracted Services (Refuse Receipts)...... 465,000 Building Permits/Public Safety...... 73,000 Transfers From Water Fund...... 120,000 From Sewer Fund ...... 120,000 Health Inspection Fees...... 2,000 Current Refunds ...... 5,000 Miscellaneous Revenues...... 22,000

Total Receipts and Balance ...... $3,296,650

Expenditures: Administration ...... $ 375,000 Borough Building ...... 50,500 Animal Control ...... 1,200 Recycling ...... 7,000 Health/Sanitation ...... 385,000 Recreation ...... 45,000 Civic Contributions...... 55,000 Town Plaza ...... 8,000 Debt Service...... 321,000 Contingent...... 15,000 Insurance...... 210,000 Employee Benefits...... 505,500 Public Safety...... 872,700 Public Works ...... 445,750

Total Expenditures...... $3,296,650

Source: Borough of Monaca 2016 General Fund Budget

A-14

BOROUGH OF MONACA SUMMARY OF RECEIPTS AND EXPENDITURES BUDGETED FOR THE YEAR ENDING DECEMBER 31, 2016 WATER FUND AND SEWER FUND

2016 Budgeted Receipts Water Revenues ...... $1,400,000 Sewer Revenues...... 1,130,000 Total Combined Revenues...... $2,530,000

Expenditures Water Expenses...... 566,500 Water Debt Service...... 715,000 Water Transfers...... 118,500 Sewer Expenses ...... 516,000 Sewer Capital Improvements ...... 40,000 Sewer Debt Service...... 454,000 Sewer Transfers ...... 120,000

Total Combined Expenditures ...... $2,530,000

Source: Borough of Monaca 2016 Water Fund Budget and Sewer Fund Budget

A-15

PENNSYLVANIA BOROUGH TAXES AND RATES LIMITS

Under the Borough Code, P.L. 1656 of 1965, and Act 511, P.L. 1257 of 1965, Pennsylvania boroughs have authority to levy a number of taxes. The type of levies and the statutory authority and rate limits are given below:

Type of Tax Statutory Rate Limit

1. Real Property Tax a. General Purposes (B.C. Section 1302) ...... 30 mills b. Interest and sinking fund charges on indebtedness (B.C. Section 1302(1)) ...... Sufficient for purpose c. Pensions and retirement (B.C. Section 1302(2)) ...... 0.5 mill d. Shade Trees (B.C. Section 1302(3)) ...... 0.1 mill e. Lighting (B.C. Section 1302(4)...... 8 mills f. Gas, water and electric light (after referendum) (B.C. Section 1302(5))...... 8 mills g. Purchase of fire equipment, etc...... 3 mills After referendum (B.C. Section 1302(6))...... No Limit h. Building fire house, lock-up or municipal building (after referendum) (B.C. Section 1302(7)) ...... 2 mills i. Library (after referendum) (B.C. Section 1302(8)) ...... 3 mills j. Support of ambulance and rescue squads (B.C. Section 1302(9) ...... 0.5 mill k. Special levy for debt by permission of Court of Common Pleas (B.C. Section 1303)...... No Limit l. Street improvements (B.D. Section 1304)...... 5 mills m. Recreation (B.C. Section 2712) ...... No Limit n. Community Colleges (Act 484 of 1963)...... Not to exceed 5 mills of the market value of real property

2. Occupation Tax a. Borough Code (B.C. Section 1302) ...... 30 mills b. Act 511...... No limit if levied on assessed value, 10 at flat rate

3. Per Capita Tax a. Act 511...... $10.00

4. Occupational Privilege Tax a. Act 511 This tax may be levied on residents and non-residents employed in the Borough ...... $10.00

5. Earned Income Tax a. Act 511 This tax is a tax on wages and net profits and may be levied on both residents and non-residents ...... 1%

6. Mercantile License Tax a. Act 511 This tax is available only to the extent imposed 1 mill wholesale and as of November 30, 1988 ...... 1.5 mills retail

A-16

7. Business Privilege Tax a. Act 511 This tax may be levied on professions and services doing business in the Borough. It may be imposed at a flat rate or on a gross receipts basis and is usually applied to professional persona, service occupations, merchants, vendors and similar businesses...... No Limit

8. Real Property Transfer Tax a. Act 511 ...... 1%

9. Amusements (Admissions Tax) a. Act 511 This tax may be levied on admissions to places of amusement, entertainment, recreation, athletic events, etc. (except movie theaters). When overlapping taxing jurisdictions (school districts) levy this tax, the combined rate may not exceed 10% ...... 10%

The levying of this tax by a borough is also limited by Act 50 of 1998 to the rate levied and collected in the borough’s fiscal year ending December 31, 1997, (unless the rate was less than 5% or no such tax was levied, in which case the limitation is at the 5% level)...... 10%

10. Mechanical Devices Tax a. Act 511 This tax may be imposed as a percentage or receipts basis or at a flat rate as a privilege or license tax on jukeboxes, pinball machines, vending machines, etc., ...... No Limit

Act 511 Overall Limits

Boroughs may collect from Act 511 taxes a total amount equal to the product obtained by multiplying the latest total market value of real estate by 12 mills.

Act 511 taxes are subject to sharing with the school district. An exemption to this as far as boroughs are concerned is occupation taxes using a millage or percentage as a basis, as opposed to flat-rate occupation taxes.

Exemptions Act 511 permits exemption from all or part of the liability for occupational privilege, earned income and per capita taxes of persons earning less than $5,000 annually.

Local Service Tax The $10 Occupational Privilege Tax authorized under Act 511 described above may be replaced with a Local Services Tax having a maximum rate of $52 per year.

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APPENDIX B

BOROUGH OF MONACA

AUDITED FINANCIAL STATEMENTS

FOR THE YEAR ENDED

DECEMBER 31, 2015

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BOROUGH OF MONACA

~ ~ ~ ~ ~

FINANCIAL STATEMENTS

FOR THE YEAR ENDED DECEMBER 31, 2015

(This page left blank intentionally.) BOROUGH OF MONACA BEAVER COUNTY, PENNSYLVANIA

FINANCIAL STATEMENTS

WITH REPORTS BY

CERTIFIED PUBLIC ACCOUNTANT

FOR THE YEAR ENDED DECEMBER 31, 2015

(This page left blank intentionally.) BOROUGH OF MONACA BEAVER COUNTY, PENNSYLVANIA

TABLE OF CONTENTS

PAGE

Independent Auditor's Report ...... i-ii

EXHIBIT A – STATEMENT OF NET POSITION – Modified Cash Basis ...... 1

EXHIBIT B – STATEMENT OF ACTIVITIES – Modified Cash Basis ...... 2

EXHIBIT C – BALANCE SHEET – Governmental Funds (Modified Cash Basis) ...... 3

EXHIBIT D - STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES – Governmental Funds (Modified Cash Basis) ...... 4

EXHIBIT E - STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCE, BUDGET AND ACTUAL – Governmental Funds – General Fund (Modified Cash Basis)...... 5

EXHIBIT F – STATEMENT OF NET POSITION – PROPRIETARY FUNDS Water and Sewer Funds (Modified Cash Basis)...... 6

EXHIBIT G - STATEMENT OF REVENUES, EXPENSES AND CHANGES IN FUND NET POSITION – PROPRIETARY FUNDS – Water and Sewer Funds (Modified Cash). . 7

EXHIBIT H – STATEMENT OF CASH FLOWS - PROPRIETARY FUNDS Water and Sewer Funds (Modified Cash Basis) ...... 8

EXHIBIT I - STATEMENT OF NET POSITION – Fiduciary Funds ...... 9

EXHIBIT J – STATEMENT OF CHANGES IN NET POSITION – Fiduciary Funds...... 10

NOTES TO THE FINANCIAL STATEMENTS ...... 11-33

REQUIRED SUPPLEMENTARY INFORMATION:

Schedule of Changes in Net Pension Liability and Related Ratios ...... 34

Schedule of Actuarially Determined Pension Contribution and Related Ratios ...... 35

Schedule of Funding Progress and Contributions and Related Ratios ...... 36

Notes to Required Supplementary Information ...... 37

BOROUGH OF MONACA BEAVER COUNTY, PENNSYLVANIA

TABLE OF CONTENTS

SUPPLEMENTARY INFORMATION:

SCHEDULE 1 – SCHEDULE OF BUDGET AND ACTUAL RECEIPTS – General Fund...... 38-39

SCHEDULE 2 – SCHEDULE OF BUDGET AND ACTUAL DISBURSEMENTS – General Fund...... 40-44

SCHEDULE 3 – COMBINING BALANCE SHEET - Non-Major Governmental Funds...... 45

SCHEDULE 4 – COMBINING STATEMENT OF RECEIPTS, DISBURSEMENTS, AND CHANGES IN FUND BALANCES - Non-Major Governmental Funds...... 46

SCHEDULE 5 – STATEMENT OF BUDGET VS. ACTUAL REVENUES AND EXPENDITURES – SEWER FUND...... 47

SCHEDULE 6 – STATEMENT OF BUDGET VS. ACTUAL REVENUES AND EXPENDITURES – WATER FUND...... 48

Mark C. Turnley

Certified Public Accountant 1000 3rd Avenue New Brighton, PA 15066 (724) 384-1081 FAX (724) 384-8908

Borough Council Borough of Monaca

Independent Auditor's Report

Report on Financial Statements

I have audited the accompanying modified cash financial statements of the governmental funds, the business-type activities, each major fund, and the aggregate remaining fund information of the Borough of Monaca as of and for the year ended December 31, 2015, and the related notes to the financial statements, which collectively comprise the Borough’s basic financial statements as listed in the table of contents.

Management’s Responsibility for the Financial Statements

Management is responsible for the preparation and fair presentation of these financial statements in accordance with the modified cash basis of accounting as described in Note 1; this includes determining that the modified cash basis of accounting is an acceptable basis for the preparation of the financial statements in the circumstances. Management is also responsible for the design, implementation, and maintenance of internal control relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error.

Auditor’s Responsibility

My responsibility is to express opinions on these financial statements based on my audit. I conducted my audit in accordance with auditing standards generally accepted in the United States of America. Those standards require that I plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditor’s judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the Borough’s preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Borough’s internal control. Accordingly, I express no such opinion. An audit also includes evaluating the appropriateness of accounting principles used and the reasonableness of significant accounting estimates made by management, as well as evaluating the overall presentation of the financial statements.

I believe that the audit evidence I have obtained is sufficient and appropriate to provide a basis for my audit opinions.

i

American Institute of Certified Public Accountants Pennsylvania Institute of Certified Public Accountants

Opinions

In my opinion, the financial statements referred to above present fairly, in all material respects, the respective financial position of the governmental funds, the business-type activities, each major fund, and the aggregate remaining fund information of the Borough of Monaca, Beaver County, Pennsylvania as of December 31, 2015 and the respective changes in financial position and, where applicable, cash flows thereof and the respective budgetary comparison for the General Fund for the year then ended in accordance with the basis of accounting as described in Note 1.

Basis of Accounting

I draw attention to Note 1 of the financial statements, which describes the basis of accounting. The financial statements are prepared on the modified cash basis of accounting, which is a basis of accounting other than accounting principles generally accepted in the United States of America. My opinion is not modified with respect to that matter.

Other Matters

Report on Supplementary and Other Information

My audit was conducted for the purpose of forming opinions on the financial statements that collectively comprise Borough of Monaca’s basic financial statements. The supplementary schedules are presented for purposes of additional analysis and are not a required part of the basic financial statements.

The supplementary schedules are the responsibility of management and were derived from and relate directly to the underlying accounting and other records use to prepare the basic financial statements. Such information has been subjected to the auditing procedures applied in the audit of the basic financial statements and certain additional procedures, including comparing and reconciling such information directly to the underlying accounting and other records used to prepare the basic financial statements or to the basic financial statements themselves, and other additional procedures in accordance with auditing standards generally accepted in the United States of America. In my opinion, the supplementary schedules are fairly stated, in all material respects, in relation to the basic financial statements as a whole.

The other information on pages 34-37 has not been subjected to the auditing procedures applied in the audit of the basic financial statements, and accordingly, I do not express an opinion or provide any assurance on such information.

Mark C. Turnley, CPA

August 4, 2016 New Brighton, Pennsylvania

ii BOROUGH OF MONACA EXHIBIT A STATEMENT OF NET POSITION (MODIFIED CASH BASIS) DECEMBER 31, 2015

Governmental Business-Type Activities Activities Total ASSETS Current Assets: Cash and Cash Equivalents $ 678,494 $ 595,900 $ 1,274,394 Total Current Assets $ 678,494 $ 595,900 $ 1,274,394

Noncurrent Assets: Land/Building $ - $ 5,948,016 $ 5,948,016 Equipment and Lines - 13,329,793 13,329,793 Wastewater Treatment Plant - 2,055,219 2,055,219 Construction in Progress - 30,345 30,345 Accumulated Depreciation - (9,596,916) (9,596,916) Unamortized Bond Discount - 46,009 46,009 Total Noncurrent Assets $ - $ 11,812,466 $ 11,812,466

TOTAL ASSETS $ 678,494 $ 12,408,366 $ 13,086,860

LIABILITIES Current Liabilities: Payroll Tax Liability $ 4,779 $ - $ 4,779 Unearned Revenue 48,941 - 48,941 Current Portion Long-Term Debt - 687,097 687,097 Other Current Liabilities 3,374 - 3,374 Total Current Liabilities $ 57,094 $ 687,097 $ 744,191

Noncurrent Liabilities: Bonds Payable $ - $ 2,848,110 $ 2,848,110 Lease Purchase Agreement Payable - 1,160,900 1,160,900 Notes Payable - 5,067,367 5,067,367 Less: Current Portion Long-Term Debt - (687,097) (687,097) Total Noncurrent Liabilities $ - $ 8,389,280 $ 8,389,280

TOTAL LIABILITIES $ 57,094 $ 9,076,377 $ 9,133,471

NET POSITION Net Investment in Capital Assets $ - $ 2,736,089 $ 2,736,089 Unrestricted 621,400 595,900 1,217,300 TOTAL NET POSITION $ 621,400 $ 3,331,989 $ 3,953,389

TOTAL LIABILITIES AND NET POSITION $ 678,494 $ 12,408,366 $ 13,086,860

The accompanying notes are an integral part of these financial statements 1 EXHIBIT B

BOROUGH OF MONACA STATEMENT OF ACTIVITIES (MODIFIED CASH BASIS) FOR THE YEAR ENDED DECEMBER 31, 2015 Net (Expense) Revenue and Program Revenues Changes in Net Position Operating Capital Charges for Grants and Grants and Governmental Business-Type Functions/Programs Expenses Services Contributions Contributions Activities Activities Total Governmental Activities: General Government $ 349,148 $ 11,910 $ - $ - $ (337,238) $ (337,238) Public Safety - Police 825,252 61,521 - - (763,731) (763,731) Public Safety - Fire 55,919 - - - (55,919) (55,919) Public Safety - Other 86,612 34,429 - - (52,183) (52,183) Public Works - Sanitation 440,765 460,997 89,638 - 109,870 109,870 Public Works - Highways 715,646 100 159,221 - (556,325) (556,325) Culture and Recreation 167,054 - 15,920 - (151,134) (151,134) Debt Service 222,680 - - - (222,680) (222,680) Insurance and Employee Benefits 761,171 - 119,738 - (641,433) (641,433) Miscellaneous 48,489 - - - (48,489) (48,489) Total Governmental Activities $ 3,672,736 $ 568,957 $ 384,517 $ - $ (2,719,262) $ (2,719,262)

Business-Type activities: Water & Sewer $ 1,709,972 $ 2,004,469 $ - $ - $ 294,497 $ 294,497 Total Business-Type Activities $ 1,709,972 $ 2,004,469 $ - $ - $ 294,497 $ 294,497

Total Primary Government $ 5,382,708 $ 2,573,426 $ 384,517 $ - $ (2,719,262) $ 294,497 $ (2,424,765)

General Revenues: Taxes: Property Taxes, Levied for General Purposes (net) $ 1,399,404 $ - $ 1,399,404 Act 511 Taxes 710,886 - 710,886 PURTA/Alcohol Beverage tax 4,932 - 4,932 Payment in Lieu of Taxes 2,159 - 2,159 Cable Franchise Fees 49,807 - 49,807 Investment Earnings 158 17 175 Miscellaneous 83,488 53,760 137,248 Interfund transfers 197,207 (197,207) - Total General Revenues $ 2,448,041 $ (143,430) $ 2,304,611 Change in Net Position $ (271,221) $ 151,067 $ (120,154) Net Position — January 1, 2015 892,621 3,180,922 4,073,543 Net Position — December 31, 2015 $ 621,400 $ 3,331,989 $ 3,953,389

The accompanying notes are an integral part of these financial statements 2 BOROUGH OF MONACA EXHIBIT C BALANCE SHEET (MODIFIED CASH BASIS) GOVERNMENTAL FUNDS DECEMBER 31, 2015

NON-MAJOR TOTAL GENERAL GOVERNMENTAL GOVERNMENTAL FUND FUNDS FUNDS ASSETS: Cash and Cash Equivalents $ 458,004 $ 220,490 $ 678,494 Due from Other Funds 4,200 - 4,200 TOTAL ASSETS $ 462,204 $ 220,490 $ 682,694

LIABILITIES AND FUND BALANCES

LIABILITIES: Payroll Tax Liabilities $ 4,779 $ - $ 4,779 Due to Other Funds - 4,200 4,200 Unearned Revenue - 48,941 48,941 Other Current Liabilities 3,374 - 3,374 TOTAL LIABILITIES $ 8,153 $ 53,141 $ 61,294

FUND BALANCES: Assigned $ - $ 167,349 $ 167,349 Unassigned 454,051 - 454,051 TOTAL FUND BALANCES $ 454,051 $ 167,349 $ 621,400

TOTAL LIABILITIES AND FUND BALANCES $ 462,204 $ 220,490 $ 682,694

The accompanying notes are an integral part of these financial statements 3 EXHIBIT D

BOROUGH OF MONACA STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES (MODIFIED CASH BASIS) GOVERNMENTAL FUNDS FOR THE YEAR ENDED DECEMBER 31, 2015

NON-MAJOR TOTAL GOVERNMENTAL GOVERNMENTAL GENERAL FUND FUNDS FUNDS REVENUES Taxes $ 2,110,290 $ - $ 2,110,290 Licenses and Permits 69,685 - 69,685 Fines and Forfeitures 38,410 - 38,410 Interest and Rents 12,041 27 12,068 Intergovernmental 192,208 196,800 389,008 Charges for Services 501,360 13,950 515,310 Miscellaneous 14,407 48,004 62,411 Total Revenue $ 2,938,401 $ 258,781 $ 3,197,182

EXPENDITURES General Government $ 349,027 $ 121 $ 349,148 Public Safety 957,723 10,060 967,783 Public Works 895,620 260,791 1,156,411 Culture and Recreation 119,275 47,779 167,054 Debt Service 222,680 - 222,680 Insurance and Employee Benefits 761,171 - 761,171 Miscellaneous 33,074 15,415 48,489 Total Expenditures $ 3,338,570 $ 334,166 $ 3,672,736 Excess ( Deficiency) of Revenue over Expenditures $ (400,169) $ (75,385) $ (475,554)

OTHER FINANCING SOURCES (USES) Operating Transfers In $ 257,207 $ 37,192 $ 294,399 Operating Transfers Out (97,192) - (97,192) Refund of Prior Year Expenses 7,126 - 7,126 Total Other Financing Sources (Uses) $ 167,141 $ 37,192 $ 204,333

NET CHANGE IN FUND BALANCES $ (233,028) $ (38,193) $ (271,221)

FUND BALANCE - JANUARY 1, 2015 687,079 205,542 892,621

FUND BALANCE - DECEMBER 31, 2015 $ 454,051 $ 167,349 $ 621,400

The accompanying notes are an integral part of these financial statements 4 EXHIBIT E

BOROUGH OF MONACA STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES, BUDGET AND ACTUAL (MODIFIED CASH BASIS) GOVERNMENTAL FUNDS - GENERAL FUND FOR THE YEAR ENDED DECEMBER 31, 2015

Budgeted Amounts Actual Variance with Final Budget Positive Original Final (Budgetary Basis) (Negative) REVENUES Taxes $ 2,057,500 $ 2,057,500 $ 2,110,290 $ 52,790 Licenses and Permits 84,500 84,500 69,685 (14,815) Fines and Forfeitures 45,000 45,000 38,410 (6,590) Interest and Rents 24,150 24,150 12,041 (12,109) Intergovernmental 133,000 133,000 192,208 59,208 Charges for Services 510,000 510,000 501,360 (8,640) Miscellaneous 15,000 15,000 14,407 (593) Total Revenues $ 2,869,150 $ 2,869,150 $ 2,938,401 $ 69,251

EXPENDITURES General Government $ 340,500 $ 340,500 $ 349,027 $ (8,527) Public Safety 958,900 958,900 957,723 1,177 Public Works 837,750 837,750 895,620 (57,870) Culture and Recreation 108,000 108,000 119,275 (11,275) Debt Service 321,000 321,000 222,680 98,320 Insurance and Employee Benefits 730,500 730,500 761,171 (30,671) Miscellaneous - - 33,074 (33,074) Total Expenditures $ 3,296,650 $ 3,296,650 $ 3,338,570 $ (41,920) Excess ( Deficiency) of Revenues over Expenditures $ (427,500) $ (427,500) $ (400,169) $ 27,331

OTHER FINANCING SOURCES (USES) Operating Transfers In $ 240,000 $ 240,000 $ 257,207 $ 17,207 Operating Transfers Out - - (97,192) (97,192) Refund of Prior Year Expenses 5,000 5,000 7,126 2,126 Total Other Financing Sources (Uses) $ 245,000 $ 245,000 $ 167,141 $ (77,859)

NET CHANGE IN FUND BALANCES $ (182,500) $ (182,500) $ (233,028) $ (50,528)

FUND BALANCE - JANUARY 1, 2015 182,500 182,500 687,079 504,579

FUND BALANCE - DECEMBER 31, 2015 $ - $ - $ 454,051 $ 454,051

The accompanying notes are an integral part of these financial statements 5 EXHIBIT F

BOROUGH OF MONACA STATEMENT OF NET POSITION (MODIFIED CASH BASIS) PROPRIETARY FUNDS - WATER & SEWER FUNDS DECEMBER 31, 2015

WATER FUND SEWER FUND TOTAL ASSETS Current Assets: Cash and Cash Equivalents $ 272,299 $ 323,601 $ 595,900 Total Current Assets $ 272,299 $ 323,601 $ 595,900

Noncurrent Assets: Land/Building $ 5,756,583 $ 191,433 $ 5,948,016 Equipment and Lines 7,212,804 6,116,989 13,329,793 Wastewater Treatment Plant - 2,055,219 2,055,219 Construction in Progress 30,345 - 30,345 Accumulated Depreciation (4,893,999) (4,702,917) (9,596,916) Unamortized Bond Discount 9,905 36,104 46,009 Total Noncurrent Assets $ 8,115,638 $ 3,696,828 $ 11,812,466

TOTAL ASSETS $ 8,387,937 $ 4,020,429 $ 12,408,366

LIABILITIES Current Liabilities: Current Portion - Long-Term Debt $ 411,699 $ 275,398 $ 687,097 Total Current Liabilities $ 411,699 $ 275,398 $ 687,097

Noncurrent Liabilities: Bonds Payable $ 612,990 $ 2,235,120 $ 2,848,110 Lease Purchase Agreement Payable 926,250 234,650 1,160,900 Notes Payable 4,839,117 228,250 5,067,367 Less: Current Portion Long-Term Debt (411,699) (275,398) (687,097) Total Noncurrent Liabilities $ 5,966,658 $ 2,422,622 $ 8,389,280

TOTAL LIABILITIES $ 6,378,357 $ 2,698,020 $ 9,076,377

NET POSITION Net Investment in Capital Assets $ 1,737,281 $ 998,808 $ 2,736,089 Unrestricted 272,299 323,601 595,900 TOTAL NET POSITION $ 2,009,580 $ 1,322,409 $ 3,331,989

TOTAL LIABILITIES AND NET POSITION $ 8,387,937 $ 4,020,429 $ 12,408,366

The accompanying notes are an integral part of these financial statements 6 EXHIBIT G

BOROUGH OF MONACA STATEMENT OF REVENUES, EXPENSES AND CHANGES IN FUND NET POSITION (MODIFIED CASH BASIS) PROPRIETARY FUNDS- WATER & SEWER FUNDS FOR THE YEAR ENDED DECEMBER 31, 2015

WATER SEWER FUND FUND TOTAL OPERATING REVENUES: Water fees $ 1,017,915 $ - $ 1,017,915 Sewer fees - 986,554 986,554 Miscellaneous 46,972 6,788 53,760 Total Operating Revenues $ 1,064,887 $ 993,342 $ 2,058,229

OPERATING EXPENSES: Salaries & wages $ 210,847 $ 183,221 $ 394,068 Engineering fees 38,179 11,975 50,154 Telephone 5,071 1,698 6,769 Equipment maintenance 3,212 - 3,212 Small tools/minor equipment 1,313 1,448 2,761 Schools & conferences 1,020 1,585 2,605 Utilities 71,984 82,420 154,404 Office supplies 1,620 1,202 2,822 Lab supplies 580 4,146 4,726 General 8,747 6,181 14,928 Advertising 3,733 5,625 9,358 Uniform allowance 750 891 1,641 Sludge removal - 27,903 27,903 Chemicals 4,608 11,291 15,899 Vehicle maintenance 2,659 226 2,885 Sanitary maintenance - 10,089 10,089 Vehicle operating 8,634 954 9,588 Minor equipment - 2,523 2,523 Building & grounds maintenance 19,226 26,260 45,486 Depreciation 415,101 172,481 587,582 Pumping equipment & maintenace 34,895 - 34,895 Water disbribution maintenance 53,215 - 53,215 Permits/certifications 430 9,700 10,130 Capital improvements 19,792 - 19,792 Analytical testing 6,023 5,292 11,315 Total Operating Expenses $ 911,639 $ 567,111 $ 1,478,750

TOTAL OPERATING INCOME $ 153,248 $ 426,231 $ 579,479

NON-OPERATNG REVENUE : Interest income $ 11 $ 6 $ 17 Interest expense (145,945) (85,277) (231,222) TOTAL NON-OPERATING REVENUE $ (145,934) $ (85,271) $ (231,205)

OTHER FINANCING SOURCES: Transfers in $ 60,000 $ - $ 60,000 Transfers out (142,207) (115,000) (257,207) TOTAL OTHER FINANCING USES $ (82,207) $ (115,000) $ (197,207)

CHANGE IN NET POSITION $ (74,893) $ 225,960 $ 151,067

NET POSITION - JANUARY 1, 2015 2,084,473 1,096,449 3,180,922

NET POSITION - DECEMBER 31, 2015 $ 2,009,580 $ 1,322,409 $ 3,331,989

The accompanying notes are an integral part of these financial statements 7 EXHIBIT H

BOROUGH OF MONACA STATEMENT OF CASH FLOWS (MODIFIED CASH BASIS) PROPRIETARY FUNDS - WATER & SEWER FUNDS FOR THE YEAR ENDED DECEMBER 31, 2015

CASH FLOWS FROM OPERATING ACTIVITIES: Cash received from user charges $ 2,004,469 Cash received from miscellaneous sources 53,760 Cash paid to employees for services (394,068) Cash paid to vendors for goods and services (497,100)

Net cash provided (used) by operating activities $ 1,167,061

CASH FLOWS FROM CAPITAL AND RELATED FINANCIAL ACTIVITIES: Bond principal payments $ (276,615) Lease purchase agreement payments (87,890) Note principal payments (113,100) PENNVEST principal payments (192,004) Interest payments on debt (228,346) Capital purchases (430,276)

Net cash provided (used) by capital and related financing activities $ (1,328,231)

CASH FLOWS FROM INVESTING ACTIVITIES:

Interest income $ 17

Net cash provided (used) by investing activities $ 17

CASH FLOWS FROM NON-CAPITAL FINANCING ACTIVITIES: Interfund transfers out $ (257,207) Interfunds transfers in 60,000

Net cash provided (used) by non-capital financing activities $ (197,207)

Net increase (decrease) in cash and cash equivalents (358,360)

Cash and cash equivalents - January 1, 2015 954,260

Cash and cash equivalents - December 31, 2015 $ 595,900

RECONCILIATION OF OPERATING INCOME(LOSS) TO NET CASH PROVIDED (USED) BY OPERATING ACTIVITIES:

Operating Income (Loss) $ 579,479

Adjustments to reconcile excess revenues over expenditures provided (used) by operating activities: Depreciation 587,582 Net cash provided (used) by operating activities $ 1,167,061

The accompanying notes are an integral part of these financial statements 8 EXHIBIT I

BOROUGH OF MONACA STATEMENT OF NET POSITION FIDUCIARY FUND DECEMBER 31, 2015

POLICE PENSION FUND

ASSETS Investments $ 2,486,129 TOTAL ASSETS $ 2,486,129

LIABILITIES Other Current Liabilities $ - TOTAL LIABILITIES $ -

NET POSITION Held in Trust for Pension Benefits $ 2,486,129 TOTAL NET POSITION $ 2,486,129

The accompanying notes are an integral part of these financial statements 9 EXHIBIT J

BOROUGH OF MONACA STATEMENT OF CHANGES IN NET POSITION FIDUCIARY FUND FOR THE YEAR ENDED DECEMBER 31, 2015

POLICE PENSION FUND ADDITIONS

Interest/Dividends $ 57,431 Commonwealth 103,313 Miscellaneous 260 Realized/Unrealized Gains (Losses) (55,577) TOTAL ADDITIONS $ 105,427

DEDUCTIONS Benefit Payments $ (49,418) Administrative Expenses (26,085) TOTAL DEDUCTIONS $ (75,503)

CHANGE IN NET POSITION $ 29,924

NET POSITION - JANUARY 1, 2015 2,456,205

NET POSITION - DECEMBER 31, 2015 $ 2,486,129

The accompanying notes are an integral part of these financial statements 10 MONACA BOROUGH NOTES TO FINANCIAL STATEMENTS DECEMBER 31, 2015

NOTE 1 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Monaca Borough was incorporated under the provisions governing the creation of municipal corporations in the Commonwealth of Pennsylvania. Members of the Borough Council are elected by the voting public. These board members administer the day-to-day operations of the Borough. The major functions of the Borough include public safety, maintenance of Borough infrastructure (roads, water and sewer lines), sanitation control, maintenance of parks and other recreational facilities for use by Borough residents and general administrative functions necessary to facilitate Borough resident needs and responsibilities.

The financial statements of Monaca Borough have been prepared in conformity with generally accepted accounting principles (GAAP) as applied to governmental units, except for the Statement of Net Position and Statement of Activities for its Governmental Activities (See GASB Statement Implementation below). The Governmental Accounting Standards Board (GASB) is responsible for establishing GAAP for state and local governments through its pronouncements (Statement and Interpretations). The more significant accounts policies established in GAAP and used by the Borough are discussed below.

REPORTING ENTITY

A reporting entity is comprised of the primary government, component units and other organizations that are included to ensure the financial statements are not misleading. The primary government of the Borough of Monaca consists of all funds, departments, boards and agencies that are not legally separate from the Borough. As defined by GASB Statement No. 14, component units area legally separate entities that are included in the Borough’s reporting entity because of the significance of their operating or financial relationships with the Borough. Monaca Borough has no component units.

BASIS OF PRESENTATION

GOVERNMENT-WIDE FINANCIAL STATEMENTS – The statement of net position (Exhibit A) and the statement of activities (Exhibit B) display information about the Borough as a whole. These statements include the aggregate financial activities of the Borough’s governmental funds, except for fiduciary funds, as these funds cannot be used to fund the general operations of the Borough. GASB Statement No. 34 requires that the government-wide statements be prepared using the economic resources measurement focus (full accrual). That is the same approach used in the preparation of the proprietary funds financial statements but differs from the manner in which governmental fund financial statements are prepared (modified cash). However, the governmental activities of Monaca Borough were prepared using the modified cash basis of accounting (Pre-GASB Statement No. 34), as opposed to the full accrual basis of accounting as required by GASB Statement No. 34. Accordingly, the accompanying government-wide statement of net position and statement of activities for governmental activities are not presented in conformity with generally accepted accounting principles.

GASB Statement No. 34 also required reconciliation statements with brief explanations to better identify the relationship between the government-wide statements (governmental activities) and the statements for governmental funds. The Borough however, does not use the economic resources measurement focus in the preparation of its statement of net position and statement of activities for its governmental activities. The Borough used the modified cash basis of accounting in both the preparation of its fund financial statements and government-wide financial statements. Accordingly, the accompanying financial statements do not include the required reconciliation statements.

11 MONACA BOROUGH NOTES TO FINANCIAL STATEMENTS DECEMBER 31, 2015

NOTE 1 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

BASIS OF PRESENTATION (Continued)

GOVERNMENT-WIDE FINANCIAL STATEMENTS (Continued)

The government-wide statement of activities (Exhibit B) presents a comparison between direct expenses and program revenues for the Borough’s business-type activities and for each function of the Borough’s governmental activities. Direct expenses are those that are specifically associated with a service, program or department and are therefore clearly identifiable to a particular function. Program revenues include charges paid by the recipient of the goods or services offered by the program, and grants, subsidies and contributions that are restricted to meeting the operational or capital requirements of a particular program. The Borough allocates the following program revenues to each functional disbursement category as follows:

• General Government – Licenses and permits, rents, lien letters, and miscellaneous sales of reports and maps

• Public Safety (Police) – Fines and forfeitures, police accident reports, crossing guard reimbursements

• Public Safety (Other) – Building permits, use and occupancy permits, police grants, inspections

• Public Works (Sanitation) – Solid waste collection fees, recycling grant

• Public Works (Highways) – Liquid Fuels monies

• Insurance and Employee Benefits – Municipal pension state aid

Revenues which are not classified as program revenues are presented as general revenues of the Borough. General revenues consist mainly of taxes, unrestricted grants, and miscellaneous receipts not earmarked for a specific function. The comparison of direct expenses with program revenues identifies the extent to which the government function is self-financing or draws from the general revenues of the Borough.

FUND FINANCIAL STATEMENTS – Fund financial statements report detailed information about the Borough. The focus of governmental fund financial statements is on major funds rather than reporting funds by type. Each major fund is presented in a separate column. In Exhibit C, non-major funds are segregated and presented in a single column. Fiduciary funds are reported by fund type.

The accounting and financial reporting treatment applied to a fund is determined by its measurement focus. All governmental fund types are accounted for using a flow of current financial resources measurement focus. The financial statements for governmental funds are a balance sheet, which generally includes only current assets and current liabilities, and a statement of revenues, expenditures and changes in fund balances, which reports on the sources (revenues and other financing sources) and uses (expenditures and other financing used) of current financial resources.

All proprietary fund types are accounted for on a flow of economic resources measurement focus. With this measurement focus, all assets and all liabilities associated with the operation of these funds are included on the statement of net position. The statement of changes in fund net position presents increases (revenues) and decreases (expenses) in total net assets. The statement of cash flows provides information about how the Borough finances and meets the cash flow needs of its proprietary activities.

Fiduciary funds are reported using the economic resources measurement focus.

12 MONACA BOROUGH NOTES TO FINANCIAL STATEMENTS DECEMBER 31, 2015

NOTE 1 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

FUND ACCOUNTING

The Borough uses funds to report on its financial position and the results of its operations during the year. Fund accounting is designed to demonstrate legal compliance and to aid financial management by segregating transactions related to certain Borough functions or activities. A fund is defined as a fiscal and accounting entity with a self-balancing set of accounts. Funds are classified into three categories: governmental, proprietary and fiduciary. Fund categories are defined as follows:

Governmental Funds – Governmental funds focus on the sources, uses and balances of current financial resources. Expendable assets are assigned to the various governmental funds according to the purposes for which they may or must be used. Current liabilities are assigned to the fund from which they will be paid. The difference between governmental fund assets and liabilities is reported as fund balance. The following are the Borough’s major and non-major governmental funds:

MAJOR GOVERNMENTAL FUND:

GENERAL FUND - Established under 'The Borough Code' of the Commonwealth of Pennsylvania and is used for the general operations of the Borough. Income in this fund is derived mainly from assessed revenues such as real estate taxes, local taxes established under Act 511, and other miscellaneous revenues not designated for other restricted fund purposes. These revenues are used for general ongoing government services such as public safety, public works, general administration of the Borough and other miscellaneous operating expenses.

NON-MAJOR GOVERNMENTAL FUNDS:

LIQUID FUELS FUND - Established and restricted under Act 655 of the Commonwealth of Pennsylvania. Funding is received from the Commonwealth and is restricted in use for the maintenance, repair and construction of roads, streets and bridges for which the Borough is responsible.

WATER & SEWER CONTRACT FUND – Established to account for customer water and sewer deposits. Monies are refunded to customers upon satisfaction of any outstanding water and sewer balances due the Borough.

FIRE TRUCK FUND - Established to account for a monies received from the General Fund for the purchase of a fire truck.

POLICE NARCOTICS FUND – Established to account for deposits from forfeited drug money and expenses for the purchase of drugs purchased by undercover patrolmen.

K-9 FUND – Established to account for monies received from donations to be used for expenses related to the police K-9 program.

TOYS FOR TOTS – Established to account for monies received from donations to be used for expenses related to the police Toys for Tots program.

175TH CELEBRATION FUND – Established to account for monies received from donations to be used for expenses related to the Borough’s 175th Anniversary celebration.

13 MONACA BOROUGH NOTES TO FINANCIAL STATEMENTS DECEMBER 31, 2015

NOTE 1 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

FUND ACCOUNTING (Continued)

NON-MAJOR GOVERNMENTAL FUNDS (Continued):

PLAYGROUND EQUIPMENT FUND – Established to account for monies received from donations to be used for the purchase of playground equipment.

CAPITAL PROJECT FUND – Established to account for proceeds from various bond issues to be used for Borough capital projects.

Proprietary Funds - used to account for activities similar to those found in the private sector, where the determination of net income is necessary and useful to sound financial administration. Goods or services from such activities can be provided either to outside parties (enterprise funds) or to other departments or agencies within the Borough (internal service funds). The Borough’s Water and Sewer Funds are responsible for receipting charges for water and sewage services rendered to the Borough’s residents and using these funds to defray the cost of maintaining these systems of services.

Fiduciary Funds – Fiduciary fund reporting focuses on net position and changes in net position. The fiduciary fund category is split into four classifications: pension trust funds, investment trust funds, private-purpose trust funds and agency funds. Trust funds are used to account for assets held by the Borough under a trust agreement for individuals, private organizations, or other governments and are therefore not available to support the Borough’s own programs. Agency funds are custodial in nature and do not involve measuring income or any other results from operations. The Borough has two pension trust funds (police pension and non-uniform pension).

BASIS OF ACCOUNTING

The basis of accounting determines when transactions are recorded in the financial records and reported in the financial statements. Governmental activities in the government-wide financial statements and government funds use the cash basis of accounting. Under the cash method, revenue is recognized at the time cash is received rather than when earned, and expenses are recognized when paid rather than when obligations are incurred. The business-type activities and proprietary funds use the modified cash basis of accounting which recognizes revenue in the same way as the cash basis. The difference is that fixed assets and long-term debt are recognized in the proprietary fund statements. Fiduciary funds use the accrual basis of accounting. Under this method, revenues are recognized when the revenue is earned and expenses are recognized when the obligations are incurred.

ESTIMATES

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

BUDGETS

In December of 2014, Monaca Borough adopted its 2015 annual budget for its General Fund totaling $3,296,650 in accordance with the provisions of the Borough Code. The budget is prepared utilizing the cash basis of accounting. Budgetary transfers among various expenditure line items are performed as approved by Borough Council. The original and adjusted budgetary amounts are reflected in these financial statements (Exhibit E). All annual appropriations of the general fund lapse at year-end. Actual General Fund expenditures exceeded budgeted amounts for 2015. All appropriations lapse at the end of each calendar year. 14 MONACA BOROUGH NOTES TO FINANCIAL STATEMENTS DECEMBER 31, 2015

NOTE 1 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

CASH AND CASH EQUIVALENTS

For purposes of these basic financial statements, cash and cash equivalents include amounts in demand deposit accounts and all highly liquid short-term investments with original maturity terms of less than three months.

INVESTMENTS

Provisions of the Borough Code authorize the following investments:

I. U.S. Treasury Bills. II. Short-term obligations of the Unites States Government or its agencies or Instrumentalities.

III. Deposits in savings accounts, time deposits or share accounts of institutions insured by the Federal Deposit Insurance Corporation (FDIC), Federal Savings and Loan Insurance Corporation and National Credit Union Share Insurance Fund.

IV. Obligations of the United States of America, the Commonwealth of Pennsylvania or any political subdivision of the Commonwealth of Pennsylvania, or any of their agencies or instrumentalities backed by the full faith and credit of these governmental units.

V. Shares of an investment company registered under the Investment Company Act of 1940, whose shares are registered under the Securities Act of 1933. VI. Any investment authorized by 20 Pa. C.S. Ch. 73 relating to fiduciaries investments. Monaca Borough's investment portfolio is in compliance with these provisions at December 31, 2015.

Fiduciary fund investments include monies invested by the Borough with PNC Institutional Investments for its’ police pension plan. The Borough’s non-uniform pension fund investments include assets pooled for investment purposes and, therefore, do not represent specific identifiable investment securities. The assets are administered by the Pennsylvania Municipal Retirement System (PMRS). Investments are stated at fair value. The Borough does not maintain an investment policy that summarizes the investment philosophy of the Borough and establishes investment guidelines and performance objectives for the Police and Non- Uniform Pension Plans.

CAPITAL ASSETS AND DEPRECIATION

The accounting and reporting treatment applied to the capital assets associated with a fund are determined by its measurement focus. Capital assets purchased by governmental funds are recorded as expenditures in the fund financial statements (Exhibit D). All capital assets of the Borough’s business-type activities are recorded at cost (or estimated historical cost). Donated fixed assets are recorded at fair value at the time of receipt. The Borough maintains a capitalization dollar threshold with a minimum of $2,000. The cost of infrastructure is included in the government-wide statement of net position for business-type activities and the proprietary fund financial statements. Routine repair and maintenance costs that do not add to the value of the asset or extend its useful life are charged as an expense.

15 MONACA BOROUGH NOTES TO FINANCIAL STATEMENTS DECEMBER 31, 2015

NOTE 1 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

CAPITAL ASSETS AND DEPRECIATION (Continued)

All reported capital assets, except land and construction in progress, are depreciated using the straight-line method over the following useful lives:

CATEGORY YEARS

Site Improvements 15-20 years Buildings and Improvements 5-40 years Machinery and Equipment 4-15 years Vehicles 4-15 Years Infrastructure 10-40 Years

ACCRUED LIABILITIES AND LONG-TERM OBLIGATIONS

All long-term obligations (bonds, notes and leases) are reported in the government-wide financial statements for business-type activities only. Payables and accrued liabilities are not recorded in the business-type activities as the Borough’s financials are in compliance with the modified cash basis of accounting. Notes and other long-term obligations that will be paid from governmental funds are not recognized as a liability in the fund financial statements when due. Payments for long-term liabilities are reflected as they are paid as expenditures in the governmental funds. The Borough’s General Fund is typically used to liquidate long-term liability obligations.

The Borough of Monaca has not adopted the provisions of Governmental Accounting Standards Board (GASB) Statement No. 34 with regard to capitalizing and depreciating general capital assets and recording long-term obligations in the statement of net position for its governmental activities. Accordingly, the accompanying government-wide statements of net position and activities of the Borough of Monaca do not present the financial position and results of operations in conformity with accounting principles generally accepted in the United States of America.

OPERATING REVENUES AND EXPENSES

Operating revenues are those revenues that are generated directly from the primary activity of the proprietary fund. For the Borough of Monaca, these revenues are water and sewer usage charges and other miscellaneous revenues directly related to the operations of the Borough. Operating expenses are the necessary costs incurred to operate the water and sewer activities. Non-operating revenues of the Borough’s water and sewer funds consist of investment earnings. Non-operating expenses consist of interest expense on loan obligations.

UNEARNED REVENUE

Unearned revenue arises when the Borough receives resources before it has legal claim to them. This occurs when grant monies are received prior to the incurrence of qualifying expenditures. In subsequent periods, when both revenue recognition criteria are met, or when the Borough has a legal claim to the resources, the unearned revenue liability is removed and revenue is recognized.

16 MONACA BOROUGH NOTES TO FINANCIAL STATEMENTS DECEMBER 31, 2015

NOTE 1 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

LONG-TERM DEBT FINANCING COSTS

Bond and note issuance costs are recorded as expenditures in the governmental and proprietary fund financial statements in the year paid. During the 2015 fiscal year, the Borough of Monaca did not incur any bond or note issuance costs.

DEFERRED OUTFLOWS AND INFLOWS OF RESOURCES

In addition to assets and liabilities, the statement of net position and/or the balance sheet will sometimes report a separate section for deferred outflows and/or inflows of resources. These separate financial statement elements represent a decrease and/or increase in net position that applies to a future period and so will not be recognized as an outflow and/or inflow of resources (expenses/expenditures or income/revenue) in the current period.

GOVERNMENT-WIDE NET POSITION

Net position is classified into three categories according to external donor or legal restrictions or availability of assets to satisfy Borough obligations. Net position is classified as follows:

• Net Investment in Capital Assets – This component of net position consists of capital assets net of accumulated depreciation, and reduced by the outstanding balances of debt that is attributable to the acquisition, construction and improvement of the capital assets, plus deferred outflows of resources less deferred inflows of resources related to those assets.

• Restricted Net Position – This component of net position consists of restricted assets reduced by liabilities and deferred inflows related to those assets.

• Unrestricted – Consists of net position that does not meet the definition of ‘restricted’ or ‘net investment in capital assets.

When an expense is incurred that can be paid using either restricted or unrestricted resources (net position), the Borough’s policy is to first apply the expense toward restricted and then toward unrestricted resources.

GOVERNMENTAL FUND BALANCES

Beginning with calendar year 2011, the Borough of Monaca implemented the terminology for Fund Equity as specified in GASB Statement 54, Fund Balance Reporting and Governmental Fund Type Definitions, however has not yet developed a formal written GASB 54 policy. This statement provides more clearly defined fund balance categories to make the nature and extent of the constraints placed on a government’s fund balance more transparent. The following classifications describe the relative strength of the spending constraints placed on the purposes for which resources can be used:

• Non-spendable fund balance – amounts that are not in spendable form (such as inventory and prepaid expenses) or are required to be maintained intact

• Restricted fund balance – amounts constrained to specific purposes by their providers (such as grantors, bondholders, and high levels of government), through constitutional provisions, or by enabling legislation

17 MONACA BOROUGH NOTES TO FINANCIAL STATEMENTS DECEMBER 31, 2015

NOTE 1 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

GOVERNMENTAL FUND BALANCES (Continued)

• Committed fund balance – amount constrained to specific purposes by the Borough itself, using its highest level of decision-making Borough; to be reported as committed, amounts cannot be used for any other purpose unless the government takes the same highest level action to remove or change the constraint

• Assigned fund balance – amounts the Borough intends to use for a specific purpose; intent can be expressed by the governing body or by an official or body to which the governing body delegates the Borough.

• Unassigned fund balance – amount that are available for any purpose

NOTE 2 - CASH DEPOSITS AND INVESTMENTS

CASH DEPOSITS

At December 31, 2015, Monaca Borough had the following carrying values on its cash and cash equivalent account held at First Commonwealth, Huntington, and Wesbanco Banks:

(Memo only) Bank Balance Book Balance General Fund $ 502,238 $ 458,004 Non-Major Governmental Funds 227,681 220,490 Proprietary Funds 659,765 595,900 TOTAL $ 1,389,684 $ 1,274,394

The difference between the bank balance and the book balance represents year-end reconciling items such as deposits in transit and outstanding checks. The Federal Deposit Insurance Corporation (FDIC) coverage threshold for government accounts is $250,000 per official custodian. This coverage includes checking and savings accounts, money market deposit accounts, and certificates of deposit.

Custodial Credit Risk

Custodial credit risk is the risk that in the event of a bank failure, the Borough’s deposits may not be returned to it. The Borough does not have a separate policy for custodial credit risk in addition to the requirement of the Borough Code. As of December 31, 2015, $883,215 of the Borough’s bank balance total is exposed to custodial credit risk as this amount represents uninsured deposits collateralized with securities held by the pledging financial institution or by its trust department or agent, but not in the Borough’s name. In accordance with Act number 72-1971 Session of the Commonwealth of Pennsylvania, the aforementioned deposits, in excess of $250,000, are collateralized by securities pledged to a pooled public funds account with the Federal Reserve System.

18 MONACA BOROUGH NOTES TO FINANCIAL STATEMENTS DECEMBER 31, 2015

NOTE 2 - CASH DEPOSITS AND INVESTMENTS (Continued)

INVESTMENTS

The fair value and maturity term of the Borough’s investments as of December 31, 2015 is as follows:

Investment Maturities (in Years) No Stated More Than Fair Value Maturity 1-5 6-10 10 Fiduciary Funds (Pension Funds): U.S. Government Securities $ 507,446 $ - $ 257,003 $ 4,243 $ 246,200 Mutual Funds 49,472 49,472 - - - Corporate Debt 531,965 - 309,215 158,620 64,130 Corporate Stock - Common 897,101 897,101 - - - Registered Investment Companies 500,145 500,145 - - - Total Fiduciary Funds $ 2,486,129 $ 1,446,718 $ 566,218 $ 162,863 310,330

Investments classified as U.S. agencies are securities of agencies of the U.S. government that have an implied but not explicit guarantee.

Custodial Credit Risk

For an investment, custodial credit risk is the risk that, in the event of the failure of the counterparty, the Borough will not be able to recover the value of its investments or collateral security that are in the possession of an outside party. Investments in U.S. Government Securities, equity securities and mutual funds are not exposed to custodial credit risk because their existence is not evidenced by securities that exist in physical or book entry form. The Borough does not have a formal investment policy for custodial credit risk.

Interest Rate Risk

The Borough does not have a formal investment policy that limits investment maturities as a means of managing its exposure to fair value losses arising from increasing interest rates. The Borough’s investments in U.S. governmental securities and agencies have maturities of fifteen (15) years or less, with the exception of several investments in United States Agencies, (FNMA,FHLMC), which have maturities of over twenty-five (25) years.

Credit Risk

Credit risk is the risk that an issuer or other counterparty to an investment will not fulfill its obligations. The Borough has no formal investment policy, in addition to the requirements of the Borough Code and the Intergovernmental Cooperation Act, that limits its investment choices based on credit ratings by nationally recognized rating organizations. As of December 31, 2015, the Borough’s investments in the Federal National Mortgage Association and Federal Home Loan Mortgage Corporation were rated AAAm by Standard & Poors and Moody’s Investors Service.

19 MONACA BOROUGH NOTES TO FINANCIAL STATEMENTS DECEMBER 31, 2015

NOTE 3 - PROPERTY TAXES

Monaca Borough levies property taxes February 1st of each calendar year. The calendar dates for payment of these taxes is as follows:

PAYMENT PERIOD

February 1 – March 31, 2015 (Discount period) April 1 – May 31, 2015 (Face period) June 1, 2014 – April 2016 (Penalty period)

Taxpayers are entitled to a 2% discount if taxes are paid prior to April 1st. Collections after May 31st are assessed a 10% penalty. Taxes for 2015, unpaid as of April 15, 2016, were liened with Beaver County. The Borough liened a total of $51,051 in unpaid 2014 property taxes which represents 3.98% of the original assessment for 2014.

The tax millage for the 2015 calendar year is 27 mills on the assessed value of land and buildings, which represents $27 of revenue for every $1,000 of assessed value. The Borough recognized property tax revenue when received during the fiscal year. No provision has been made for amounts estimated to be uncollectible.

NOTE 4– ANALYSIS OF INTERFUND TRANSFERS

Interfund transfers for the year ended December 31, 2015 were comprised of the following amounts:

TO FROM General Fund $ 257,207 $ 97,192 Liquid Fuels Fund 37,192 - Water Fund 60,000 142,207 Sewer Fund - 115,000 $ 354,399 $ 354,399

The Borough’s routine transfers include budgeted amounts from the Water and Sewer Funds to cover expenditures paid by the General Fund. There was also a transfer from the General Fund to the Liquid Fuels Fund to cover costs and a transfer from the General Fund to the Water Fund to cover expenditures paid by the Water Fund.

20 MONACA BOROUGH NOTES TO FINANCIAL STATEMENTS DECEMBER 31, 2015

NOTE 5 – PROPERTY, PLANT, AND EQUIPMENT (PROPRIETARY FUNDS)

A summary of the business-type fixed asset activity for the 2015 calendar year was as follows: Balance Balance 1/1/15 Additions Deletions 12/31/15 Sewer System $ 7,847,570 $ 516,071 $ - $ 8,363,641 Water System 12,961,480 38,252 - 12,999,732 $ 20,809,050 $ 554,323 $ - $ 21,363,373

Less: Accumulated Depreciation $ (9,009,334) $ (587,582) $ - $ (9,596,916) Business-Type Activities Capital Assets, Net $ 11,799,716 $ (33,259) $ - $ 11,766,457

NOTE 6 – PROPRIETARY FUND (BUSINESS-TYPE ACTIVITIES) DEBT OBLIGATIONS

WATER FUND – NOTE PAYABLE

In August 2010, the Borough of Monaca entered into a $4,200,000 loan agreement with the Pennsylvania Infrastructure Investment Borough (PENNVEST) for the improvement of the Borough’s water supply system. The note is secured by the gross revenues generated from the Borough’s water supply system as well as the taxing power of the Borough. The current amortization schedule for the loan calls for monthly principal and interest payments of $19,772.48 at an interest rate of 1.274% per annum through January 2017, and monthly principal and interest payments of $21,662.92 at an interest rate of 2.547% through maturity. The loan is scheduled to mature on January 1, 2032.

A summary of the notes payable debt service requirements as of December 31, 2015 is as follows:

Year End Water Water 31-Dec Principal Interest Total 2016 $ 194,464 $ 42,806 $ 237,270 2017 180,746 77,319 258,065 2018 183,805 76,150 259,955 2019 188,541 71,414 259,955 2020 193,400 66,555 259,955 2021-2025 1,044,376 255,399 1,299,775 2026-2030 1,186,057 113,718 1,299,775 2031-2032 277,478 4,140 281,618 $ 3,448,867 $ 707,501 $ 4,156,368

WATER AND SEWER FUNDS – NOTE PAYABLE - 2014

In May of 2014, the Borough of Monaca issued General Obligation Note – Series of 2014 in the amount of $2,265,000. The purpose of the note was to currently refund General Obligation Bonds – Series of 2007, to currently refund the 2003 Pennvest Loan, to partially fund the cost of the 2014 Capital Program, and to pay the costs of the issuance of the note. Interest is payable semi-annually on May 15 and November 15 at an interest rate of 2.475%. The note is secured by the general taxing power of the Borough and is scheduled to mature on May 15, 2026.

Management has determined that the Water Fund is responsible for 67% and the Sewer Fund is responsible for 11% of the note based on the capital projects to be completed. The debt service schedule for this note is reflected in Note 7. The December 31, 2015 bonds payable obligation of the Water and Sewer Funds is $1,618,500.

21 MONACA BOROUGH NOTES TO FINANCIAL STATEMENTS DECEMBER 31, 2015

NOTE 6 – PROPRIETARY FUND (BUSINESS-TYPE ACTIVITIES) DEBT OBLIGATIONS (Continued)

WATER AND SEWER FUNDS - BONDS PAYABLE - 2011

In December of 2011, the Borough of Monaca issued $5,635,000 in general obligation bonds - Series of 2011 to fund capital projects of the Borough, currently refund the Borough’s General Obligation Bonds, Series of 2003 and advance refund a portion of the Borough’s General Obligation Bonds, Series of 2007. The bonds were issued in denominations of $5,000, with interest payable semi-annually on April 1 and October 1 at rates ranging between .6% and 3.875%. The bonds provide for early redemption options as more fully described in the Official Statement of Issue. The bonds are secured by the general taxing power of the Borough and are scheduled to mature on April 1, 2031.

Management has determined that the Water Fund is responsible for 14.7% and the Sewer Fund is responsible for 53.6% of the debt service obligation of this issue based on the capital projects to be completed. The debt service schedule for this bond issue is reflected in Note 7. The December 31, 2015 bonds payable obligation of the Water and Sewer Funds is $2,848,110.

WATER AND SEWER FUNDS – LEASE PURCHASE AGREEMENT - 2010

In November of 2010, the Borough of Monaca entered into a lease purchase agreement with PNC Equipment Finance, LLC in the amount of $1,596,700 for the purpose of providing energy upgrades to the municipal buildings as described in the Performance Contract of September 22, 2010 with Johnson Controls, Inc. The terms of the lease call for semi-annual principal and interest payments in May and November. Payment of the interest portion of the lease will begin on May 10, 2010 and payment of the principal portion will begin on November 10, 2010. The interest rate on the lease is 4.7% and it is scheduled to be paid in full by November of 2024.

Management has determined that the Water Fund is responsible for 75% and the Sewer Fund is responsible for 19% of the debt service obligation of this lease based on the capital projects to be completed. The debt service schedule for this lease purchase agreement is reflected in Note 7. The December 31, 2015 lease purchase agreement payable obligation of the Water and Sewer Funds is $1,160,900.

NOTE 7 – GOVERNMENTAL ACTIVITY LONG-TERM DEBT OBLIGATIONS

A summary of the debt service requirements for the Borough's General Obligation Note – Series of 2014 and General Obligation Bonds – Series of 2011 (Note 6) as of December 31, 2015 is as follows:

Year End 2014 2011 Dec 31 Principal Principal Interest Total 2016 $ 110,000 $ 455,000 $ 166,389 $ 731,389 2017 205,000 370,000 155,066 730,066 2018 250,000 335,000 142,681 727,681 2019 260,000 335,000 129,079 724,079 2020 260,000 345,000 114,559 719,559 2021-2025 970,000 1,260,000 344,011 2,574,011 2026-2030 20,000 875,000 125,208 1,020,208 2031 - 195,000 3,778 198,778 $ 2,075,000 $ 4,170,000 $ 1,180,771 $ 7,425,771

22 MONACA BOROUGH NOTES TO FINANCIAL STATEMENTS DECEMBER 31, 2015

NOTE 7 – GOVERNMENTAL ACTIVITY LONG-TERM DEBT OBLIGATIONS (Continued)

Management has determined that the General Fund is responsible for 22% of General Obligation Note – Series of 2014 and 31.7% of the debt service obligation of the General Obligation Bonds – Series of 2011 based on the capital projects completed or to be completed.

A summary of the debt service requirements for the Borough’s Lease Purchase Agreement with PNC Equipment Finance, LLC is as follows:

Year End 31-Dec Principal Interest Total 2016 $ 102,200 $ 56,858 $ 159,058 2017 113,100 51,928 165,028 2018 122,700 46,502 169,202 2019 132,700 40,617 173,317 2020 139,000 34,308 173,308 2021-2024 625,300 67,917 693,217 $ 1,235,000 $ 298,130 $ 1,533,130

Management has determined that the General Fund is responsible for 6% of the debt service obligation of the 2010 Lease Purchase Agreement with PNC Equipment Finance, LLC.

LEASE PURCHASE OBLIGATION

On April 28, 2015, the Borough of Monaca entered into a Lease Purchase Obligation with Wesbanco Bank, Inc. in the amount of $29,902 for the purchase of 2015 Ford Utility Police Interceptor. The terms of the lease call for two annual principal and interest payments of $15,350.89 with an interest rate of 1.75%. The lease is secured by the general tax collections and revenues of the Borough of Monaca. The lease is scheduled to mature in April of 2017.

A summary of the debt service requirements for the Borough’s Lease Purchase Obligation with Wesbanco Bank, Inc. is as follows:

Year End 31-Dec Principal Interest Total 2016 $ 14,819 $ 532 $ 15,351 2017 15,083 268 15,351 $ 29,902 $ 800 $ 30,702

23 MONACA BOROUGH NOTES TO FINANCIAL STATEMENTS DECEMBER 31, 2015

NOTE 7 – GOVERNMENTAL ACTIVITY LONG-TERM DEBT OBLIGATIONS (Continued)

The following summarizes the changes in the borough’s long-term debt obligations during the year ended December 31, 2015: Balance Balance Due Within 1/1/15 Additions Deletions 12/31/15 One Year GOVERNMENTAL ACTIVITIES General Obligation Notes $ 488,400 $ - $ 31,900 $ 456,500 $ 24,200 Lease purchase agreement 79,710 - 5,610 74,100 6,132 Lease purchase obligation - 29,902 - 29,902 14,819 General Obligation Bonds 1,450,275 - 128,385 1,321,890 144,235 Total long-term debt - Governmental activities $ 2,018,385 $ 29,902 $ 165,895 $ 1,882,392 $ 189,386

BUSINESS-TYPE ACTIVITIES General Obligation Notes $ 5,372,470 $ - $ 305,104 $ 5,067,366 $ 280,264 Lease Purchase Agreement 1,248,790 - 87,890 1,160,900 96,068 General Obligation Bonds 3,124,725 - 276,615 2,848,110 310,765 Total long-term debt - Business-Type Activities $ 9,745,985 $ - $ 669,609 $ 9,076,376 $ 687,097

NOTE 8 – UNEARNED REVENUE

Unearned revenue totaling $48,941, as reflected on Exhibits A and C for governmental activities is comprised of unspent grant monies received by the Borough.

NOTE 9 - BOROUGH PENSION PLANS

Since the Borough does not present its statements of net position and activities in conformity with generally accepted accounting principles, it has not adopted as yet the accounting and reporting requirements as required by Governmental Accounting Standards Board (GASB) Statement No. 68 – “Accounting and Financial Reporting for Pensions”. However the note disclosures required by GASB No. 68 for the Borough’s non-uniform pension plan only are included in this report. The following is a summary of the Borough’s police and non-uniform pension plans:

POLICE PENSION PLAN - The Borough of Monaca Police Pension Plan is a single-employer defined benefit pension plan controlled by the provisions of Borough Ordinance, adopted pursuant to Act 600. The plan is governed by the Monaca Borough Council who is responsible for the management of plan assets. Borough Council delegated the Borough to manage certain plan assets to PNC Institutional Investments.

Plan membership as of January 1, 2015 was comprised of:

Active employees (non-vested) 8 Retirees and beneficiaries currently receiving benefits 3 Terminated employees entitled to benefits but not yet receiving them 1 Total 12

24 MONACA BOROUGH NOTES TO FINANCIAL STATEMENTS DECEMBER 31, 2015

NOTE 9 - BOROUGH PENSION PLANS (Continued)

POLICE PENSION PLAN (Continued)

The summary of the plans provisions are as follows:

PARTICIPANTS - All eligible members of the Borough of Monaca police department.

ELIGIBILITY - All participants are eligible for retirement benefits provided that they have completed 25 years of aggregate service as a Borough employee and have attained the age of 50.

BENEFITS - Based on one-half of the participant's average monthly salary earned during the final 36 months of employment, plus an additional monthly benefit of $100 for each completed year of service in excess of 25 years to a maximum of $500.

DISABILITY – Based on seventy five percent of the participant’s salary at the time the disability was incurred, offset by social security disability benefits for the same injury.

TERMINATION OR DEATH – The plan provides the surviving spouse fifty percent of a deceased members pension benefit.

FUNDING – Employee contributions and Borough contributions are to be determined by the actuary. The Borough’s contribution of $103,313 was received from Municipal Pension State Aid. Employee contributions to the police pension plan are currently not required.

NON-UNIFORM PENSION PLAN

DESCRIPTION OF PLAN

The Monaca Borough non-uniform pension plan is a single-employer defined benefit pension plan controlled by the provisions of a resolution adopted pursuant to Act 15 of 1974. The plan participates in the Pennsylvania Municipal Retirement System (PMRS), which is an agent multiple-employer public employee retirement system that acts as a common investment and administrative agent for participating municipal pension plans. PMRS issues a separate Comprehensive Annual Financial Report (CAFR). A copy of the CAFR can be obtained by contacting the PMRS accounting office or visiting their website at pmrs.state.pa.us.

25 MONACA BOROUGH NOTES TO FINANCIAL STATEMENTS DECEMBER 31, 2015

NOTE 9 - BOROUGH PENSION PLANS (Continued)

NON-UNIFORM PENSION PLAN (Continued)

PLAN MEMBERSHIP

Plan membership consisted of the following as of December 31, 2014:

Active plan members 16 Retirees and beneficiaries currently receiving benefits 11 Terminated employees entitled to benefits but not yet receiving them 5

Total 32

PLAN BENEFITS

The plan provides retirement and death benefits to eligible plan members and their beneficiaries. Effective January 1, 2009, the plan allows for a normal retirement benefit at age 62 or older with at least 24 years of credited service. Early retirement is available after eight (8) years of service. Monthly pension benefits are detailed in plan documents. Participants are fully vested upon completion of five (5) years of service.

PLAN CONTRIBUTION REQUIREMENTS

Employer contributions are actuarially determined reflecting a payment equal to annual Normal Cost, the expected Administrative Expenses, and an amount necessary to amortize the remaining Unfunded Actuarial Liability as a level dollar amount over a closed period. This contribution is based upon the Minimum Municipal Obligation (MMO) as defined in Act 205. For the calendar year 2015, the Borough contributed $16,425 to the plan. This contribution to the pension plan, subsequent to the measurement date of the Borough’s net pension liability (NPL), is recognized as a component of ‘deferred outflows of resources – pension’ on the statement of net position Employee contributions are currently not required.

PENSION LIABILITIES, PENSION EXPENSE, AND DEFERRED OUTFLOWS OF RESOURCES AND DEFERRED INFLOWS OF RESOURCES RELATED TO PENSIONS

The Borough’s net pension liability (NPL) was measured as of December 31, 2014. The total pension liability (TPL) used to calculate the net pension liability was determined by an actuarial valuation as of that date using a set of actuarial assumptions. These assumptions are based on the PMRS Experience Study for the period covering January 1, 2005 through December 31, 2008 issued by the actuary in July 2010, covering the defined benefit plan participants and all retirees, as well as subsequent Board approved assumption changes, such as the decrease in the regular interest to 5.50% for the January 1, 2013 actuarial valuation.

The following shows the changes in the Total Pension Liability (TPL), the Plan Fiduciary Net Position (fair value of plan assets), and the Net Pension Liability (NPL) as of the Measurement date.

26 MONACA BOROUGH NOTES TO FINANCIAL STATEMENTS DECEMBER 31, 2015

NOTE 9 - BOROUGH PENSION PLANS (Continued)

NON-UNIFORM PENSION PLAN (Continued)

PENSION LIABILITIES, PENSION EXPENSE, AND DEFERRED OUTFLOWS OF RESOURCES AND DEFERRED INFLOWS OF RESOURCES RELATED TO PENSIONS (Continued)

Total Pension Plan Fiduciary Net Pension Liability Net Position Liability ( a ) ( b ) ( c )

Balances at 12/31/13 $ 2,007,686 $ 2,253,570 $ (245,884)

Changes for the year: Service cost 57,880 - 57,880 Interest 110,844 - 110,844 Changes of benefits - - - Changes of assumptions - - - Differences between expected and actual experience 105,785 - 105,785 Contributions - employer - 18,849 (18,849) Contributions - member - 23,383 (23,383) PMRS investment income - 124,441 (124,441) Market value investment income** - (21,730) 21,730 Benefit payments (101,817) (101,817) - PMRS administrative expense - (640) 640 Additional administrative expense - (4,772) 4,772 Net changes 172,692 37,714 134,978 Balances at 12/31/14 $ 2,180,378 $ 2,291,284 $ (110,906)

** Reflects the net investment income/(loss) of ($21,370) and income/(loss) due to the difference between expected and actual asset values of ($105,785) which includes the impact from allocation of assets in support of the underlying retiree liabilities.

The above does not reflect changes in benefits or assumptions after January 1, 2015. Because the beginning and end of year TPL are based upon different actuarial valuation dates, there is a difference between expected and actual experience reported this year. The beginning of year TPL is based upon the January 1, 2014 actuarial valuation with liabilities measured at December 31, 2013. The end of year TPL is based upon the January 1, 2015 actuarial valuation with liabilities measured at December 31, 2014. The TPL as of December 31, 2014 was based upon the following actuarial methods and assumptions:

27 MONACA BOROUGH NOTES TO FINANCIAL STATEMENTS DECEMBER 31, 2015

NOTE 9 - BOROUGH PENSION PLANS (Continued)

NON-UNIFORM PENSION PLAN (Continued)

PENSION LIABILITIES, PENSION EXPENSE, AND DEFERRED OUTFLOWS OF RESOURCES AND DEFERRED INFLOWS OF RESOURCES RELATED TO PENSIONS (Continued)

• Actuarial Cost Method – Entry Age Normal • Rates of Pre-Retirement Mortality – Males RP 2000 with 1 year set back, Females RP 2000 with 5 year set back • Rates of Post-Retirement Mortality – Males and females RP 2000 Sex-Distinct Mortality Table • Disabled Life Mortality Rates: Males and females: RP 2000 with 10 year set forward • Termination Rates Before Retirement: Less than 25 active members – sliding scale 1 year 20% down to 10 plus years at 2.5%. More than 25 active members – sliding scale 1 year 20% down to 10 plus years at 3%. • Disability Incidence Rates: 40% of 1964 OASDI (Social Security) • Workers Compensation: Service related disability benefits payable from municipal plans are offset by 25% of final average salary • Salary Scale: Sliding scale - age 25 (8.3%) down to age 65 (3%) • Rates of Retirement: Under age 46 (5%), age 46-54 (15%), age 55-61 (10%), age 62 (30%), age 63-64 (20%), age 65 (35%), age 66-74 (15%), age 75 (100%) • Marital Status and Spouse’s Age (if applicable): 85%of active members, and are assumed to be married for retirees with the 50% J&S form of payment. Male spouses are assumed to be 3 years older than female spouses • Social Security Projections (if applicable): Social security wage base will increase 3.5% compounded annually. CPI will increase 3% compounded annually, average total wages will increase 3.5% compounded annually • Post-Retirement Cost of Living Increases: 3% per year, subject to plan limitations • Investment Return: 5.5% compounded annually, net of expenses • Administrative expenses: The expense assumption is based upon the expected expenses for the current year

According to Governmental Accounting Standards Board (GASB) Statements No. 67 and 68, PMRS is required to allocate/distribute all funds to the respective participating employers for financial reporting purposes, to determine the respective employer ‘plan fiduciary net position.’ PMRS has determined that net investment income or loss and administrative expenses will be allocated to the employer/municipality accounts pro-rata based on their beginning Fiduciary Net Position balance adjusted for cash flows throughout the year. The ‘Additional administrative expenses’ are the expenses in excess of the ‘PMRS administrative expense’ (i.e. $20 per participant expense paid by each plan). The ‘PMRS investment income’ is based upon the regular and excess interest used to credit accounts annually. The ‘Market value investment income’ reflects the investment income/loss during the year net of PMRS investment income and the income/loss due to the difference between expected and actual asset values, including the impact from allocation of assets in support of the underlying retiree liabilities.

The impact of investment gains or losses for expending is recognized over a period of five years. The impact of experience gains or losses and assumption changes on the TPL are recognized in the collective pension expense over the average expected remaining service live of all active and inactive members of the Plan. There were experience gains or losses between the beginning of the year and end of year liabilities because the liabilities are based upon two different actuarial valuation dates. However, there were no assumption changes as of the Measurement Date.

28 MONACA BOROUGH NOTES TO FINANCIAL STATEMENTS DECEMBER 31, 2015

NOTE 9 - BOROUGH PENSION PLANS (Continued)

NON-UNIFORM PENSION PLAN (Continued)

PENSION LIABILITIES, PENSION EXPENSE, AND DEFERRED OUTFLOWS OF RESOURCES AND DEFERRED INFLOWS OF RESOURCES RELATED TO PENSIONS (Continued)

The following is a schedule of collective deferred inflows and outflows:

Deferred Deferred Outflows of Inflows of Resources Resources Differences between expected and actual experience $ 90,673 $ - Changes of assumptions - - Net difference between projected and actual earnings on pension plan investments 17,384 - TOTAL $ 108,057 $ -

Amounts reported as deferred outflows of resources and deferred inflow of resources related to pensions will be recognized in pension expense as follows:

December 31, 2016 $ 19,458 2017 19,458 2018 19,458 2019 15,112 Thereafter 15,113

The annual pension expense recognized can be calculated two different ways. First, it is the change in the amounts reported on for the Employer’s Statement of Net Position that relate to the plan and are not attributable to employer contributions. That is, the change in Net Pension Liability (NPL) plus the changes in deferred outflows and deferred inflows plus employer contributions.

Alternatively, annual pension expense can be calculated by its individual components. Although not required by GASB, PMRS provides an example of this calculation at pmrs.state.pa.us/yearendrptg.

INVESTMENT ASSET ALLOCATION

The long-term expected rate of return on pension plan investments was determined using a building-block method in which best-estimates of expected future real rates of return are developed for each major asset class, for the portfolio as a whole and at different levels of probability or confidence.

29 MONACA BOROUGH NOTES TO FINANCIAL STATEMENTS DECEMBER 31, 2015

NOTE 9 - BOROUGH PENSION PLANS (Continued)

NON-UNIFORM PENSION PLAN (Continued)

INVESTMENT ASSET ALLOCATION (Continued)

There are four steps to the method as follows:

1. Expected future real rates of return are based primarily on the 20 year historic nominal rates of return as reflected by applicable return indexes and may be adjusted for specific asset classes if, in the Board’s opinion, any such asset classes are expected in the future to significantly vary from its 20 year historical returns. These nominal rates of return further assume that investment expenses will be offset by the additional return performance derived from active investment management.

2. The nominal rates of return by asset class are adjusted by a constant rate of expected future annual inflation rate of 3% to produce real rates of return.

3. The real rates of return are further adjusted by weighing each asset class using the PMRS portfolio target asset allocations. The results from steps 1 through 3 are shown below in the table labeled ‘System Nominal and Real Rates of Return by Asset Class’.

4. These weighted real rates of return are then subjected to a probability simulation to understand the likelihood of success in achieving various portfolio return levels. Based on the most recent asset allocation study conducted by Dahab Associates, the minimum acceptable confidence level for the Board has been determined to be 70%. The table labeled ‘Confidence Levels for System Nominal and Real Rates of Return’ identifies simulated portfolio returns at various confidence levels.

System Nominal and Real Rates of Return by Asset Class

Target Nominal Long-Term Asse t Rate of Expected Rate Allocation Return of Return Domestic Equities (Large Cap) 25% 11.7% 8.7% Domestic Equities (Small Cap) 15% 11.4% 8.4% International Equities (Developed Markets) 15% 7.6% 4.6% International Equities (Emerging Markets) 10% 11.1% 8.1% Real Estate 20% 9.7% 6.7% Fixed Income 15% 2.0% -1.0% Total Portfolio 100% 9.2% 6.2%

Confidence Levels for System Nominal and Real Rates of Return

Nominal Long-Term Confidence Rate of Expected Rate Interval Return of Return 95% 4.7% 1.7% 90% 5.7% 2.7% 85% 6.4% 3.4% 80% 6.9% 3.9% 75% 7.4% 4.4% 70% 7.8% 4.8% 50% 9.2% 6.2%

30 MONACA BOROUGH NOTES TO FINANCIAL STATEMENTS DECEMBER 31, 2015

NOTE 9 - BOROUGH PENSION PLANS (Continued)

NON-UNIFORM PENSION PLAN (Continued)

INVESTMENT ASSET ALLOCATION (Continued)

Based on the four part analysis, the Board established the System’s Long-Term Expected Rate of Return at 7.5%.

In addition to determining the System’s Long-Term Expected Rate of Return, PMRS also develops a Long- Term Expected Rate of Return for individual municipalities. The Long-Term Expected Rate of Return for individual participating municipalities is also referred to as the Regular Interest Rate. Under the laws of the Commonwealth of Pennsylvania (Act 15 of 1974), the Board is obligated to apply the Regular Interest Rate to each of the individual participating municipalities’ actuarial asset accounts held by PMRS. Therefore under the law, the Long-Term Expected Rate of Return for individual participating municipalities is equal to the Regular Interest Rate. The rationale for the difference between the System’s Long-Term Expected Rate of Return and the individual participating municipalities’ Regular Interest Rate is describe herein under the section ‘Discount Rate’. As of December 31, 2014, this rate is equal to 5.5%.

The System’s policy in regards to the investment income allocation on invested assets is established and may be amended by the PMRS Board. Plan assets are managed on a total return basis with an emphasis on both capital appreciation as well as the production of income, in order to satisfy the short-term and long- term funding needs of PMRS.

DISCOUNT RATE

While it is often common practice to establish an actuarial Discount Rate that is equal to the Long-Term Expected Rate of return, PMRS is required by law (Act 15 of 1974) to establish a Discount Rate equal to the Regular Interest Rate. The PMRS Board establishes the Regular Interest Rate on the basis of expected stable and consistent earnings on investments to be applied to the accounts of the individual participating municipalities and includes the accounts of plan participants, municipalities, and plan retirees each year. The Board considers the following five quantitative factors in establishing the Regular Interest Rate:

1. Retiree Plan liability as a percentage of total Plan liability, 2. Active Plan participant liability as a percentage of total Plan liability, 3. Smoothed Pension Benefit Guarantee Corporation (PBGC) annuity rates, 4. PMRS System Long-Term Expected Rate of Return, and 5. PMRS administrative expenses

The formula using these factors is as follows:

Regular Interest Rate = (Retiree Liability Percentage x Smoothed PBGC Annuity Rates) + (Active Employee Liability Percentage x System Long-Term Expected Rate of Return) – (Administrative Expenses as a percentage of assets)

The Board may then adjust the Regular Interest Rate derived from the formula due to a variety of qualitative factors such as the desire to minimize Regular Interest Rate volatility, trending of PBGC annuity rates, total PMRS actuarial and market value funding ratios, feedback from existing PMRS municipalities, and recommendations from the System’s investment and actuarial consultants. The Discount Rate adopted by the Board and used to measure the individual participating municipalities’ total pension liability as of December 31, 2014 was 5.5%.

31 MONACA BOROUGH NOTES TO FINANCIAL STATEMENTS DECEMBER 31, 2015

NOTE 9 - BOROUGH PENSION PLANS (Continued)

NON-UNIFORM PENSION PLAN (Continued)

DISCOUNT RATE (Continued)

This required equivalence between the Regular Interest Rate and the actuarial Discount Rate will likely result in a System Long-Term Expected Rate of Return that will be higher than the actuarial Discount Rate and higher than the Long-Term Expected Rate of Return for individual participating municipalities. Should the System experience a prolonged period of investment returns in excess of the Regular Interest Rate, the Board is authorized to allocate any applicable portion of any such excess in accordance with Board policies.

The projection of cash flows for each underlying municipal plan, used to determine if any adjustment to the Discount Rate was required (“depletion testing”), used the following assumptions: 1) member contributions will be made at the current contribution rate, 2) participating plan sponsors contributions will be made at rates equal to the difference between actuarially determined contribution rates and the member rate, and 3) the System’s Long-Term Expected Rate of Return will be used in the depletion testing of projected cash flows. Based on those assumptions, the PMRS pension plan’s fiduciary net position was projected to be available to make all projected future benefit payments of current plan members.

SENSITIVITY OF THE NET PENSION LIABILITY TO CHANGES IN THE DISCOUNT RATE

Changes in the discount rate affect the measurement of the TPL. Lower discount rates produce a higher TPL and higher discount rates produce a lower TPL. Because the discount rate does not affect the measurement of assets, the percentage change in the NPL can be very significant for a relatively small change in the discount rate. The table below shows the sensitivity of the NPL to the discount rate with two additional measures, plus and minus one percent from the rate used for the disclosure.

1% Decrease Discount Rate 1% Increase (4.5%) (5.5%) (6.5%)

Total Pension Liability $ 2,431,071 $ 2,180,378 $ 1,969,043 Plan Fiduciary Net Position 2,291,284 2,291,284 2,291,284 Net Pension Liability $ 139,787 $ (110,906) $ (322,241)

Plan Fiduciary Net Position as a % of the Total Pension Liability 94.2% 105.1% 116.4%

NOTE 10 - COMMITMENTS AND CONTINGENT LIABILITIES

LEGAL MATTERS

The Borough of Monaca is a party to various legal actions normally associated with municipalities, the aggregate effect of which, in management's opinion, would not be material to the financial position of the Borough of Monaca.

The Borough of Monaca's state and federally funded programs are subject to audit by various governmental agencies. The Borough is potentially liable for any expenditures disallowed by the results of these audits. Management is not aware of any material items of noncompliance which would result in the disallowance of program expenditures.

32 MONACA BOROUGH NOTES TO FINANCIAL STATEMENTS DECEMBER 31, 2015

NOTE 11 – RISK MANAGEMENT

The Borough of Monaca is exposed to various risks of loss related to tort; theft of, damage to, and destruction of assets, errors and omissions; injuries to employees; and natural disasters. These risks are covered by commercial insurance purchased from independent third parties. Settled claims for these risks have not exceeded commercial insurance coverage for the past three years.

NOTE 12 – PENDING GASB PRONOUNCEMENTS

In February of 2015, the Government Accounting Standards Board (GASB) issued Statement No. 72, ‘Fair Value Measurement and Application’. The primary objective of this Statement is to clarify the definition of fair value, establish general principles for measuring fair value and enhances disclosure about fair value measurements. The provisions of this Statement are effective for the Borough of Monaca’s December 31, 2016 financial statements.

In June of 2015, the GASB issued Statement No. 76, ‘The Hierarchy of Generally Accepted Accounting Principles for State and Local Governments’. The primary objective of this Statement is to reduce the Generally Accepted Accounting Principles (GAAP) hierarchy to two categories of authoritative GAAP from the four categories under GASB Statement No. 55. The provisions of this Statement are effective for the Borough of Monaca’s December 31, 2016 financial statements.

In August of 2015, the Government Accounting Standards Board (GASB) issued Statement No. 77, ‘Tax Abatement Disclosures’. The primary objective of this Statement is to provide financial statement users with essential information about the nature and magnitude of the reduction in tax revenues through tax abatement programs. The provisions of this Statement are effective for the Borough of Monaca’s December 31, 2016 financial statements.

In December of 2015, the GASB issued Statement No. 79, ‘Certain External Investment Pools and Pool Participants’. The primary objective of this Statement is to address for certain external investment pools and their participants the accounting and financial reporting implications that result from changes in the regulatory provisions. The provisions of this Statement are effective for the Borough of Monaca’s December 31, 2016 financial statements.

The effects of implementing the aforementioned GASB Statements on the Borough of Monaca’s financial statements have not yet been determined.

NOTE 13 – SUBSEQUENT EVENT

Management has evaluated subsequent events through the date the financial statements were available to be issued, which is the date of the independent auditor’s report. Management has determined that there are no events subsequent to December 31, 2015 through the date of the financial statements that would require additional disclosure.

33

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SUPPLEMENTARY SCHEDULES BOROUGH OF MONACA SCHEDULE OF CHANGES IN NET PENSION LIABILITY AND RELATED RATIOS REQUIRED SUPPLEMENTARY INFORMATION (RSI)

Measurement Year 2014

Total Pension Liability-Beginning $ 2,007,686

Service Cost 57,880 Interest 110,844 Differences Between Expected and Actual Experience 105,785 Benefit payments, including Refunds of Members Contributions (101,817) Net Change in Total Pension Liability $ 172,692

Total Pension Liability-Ending $ 2,180,378

Plan Fiduciary Net Position-Beginning $ 2,253,570

Contributions-employer 18,849 Contributions-employee 23,383 PMRS Investment Income 124,441 Market Value Investment Income (21,730) Benefit payments, including Refunds of Employee Contributions (101,817) PMRS Administrative Expense (640) Additional Administrative Expense (4,772) Change in Plan Fiduciary Net Position $ 37,714

Plan Fiduciary Net Position-Ending $ 2,291,284

Net Pension Liability-Ending $ (110,906)

RATIOS: Plan Fiduciary Net Position as a Percentage of Total Pension Liability 105.09%

Covered-employee Payroll $ 748,968

Net Pension Liability as a Percentage of Covered-employee Payroll -14.81%

NOTE: Schedule requires information for past 10 calendar years. Most recent actuarial valuation presents information for calendar year 2014 only.

34 BOROUGH OF MONACA SCHEDULE OF ACTUARIALLY DETERMINED PENSION CONTRIBUTION AND RELATED RATIOS REQUIRED SUPPLEMENTARY INFORMATION (RSI)

12/31/2014

Actuarially Determined Contribution $ -

Contributions 18,849

Contribution Deficiency (Excess) $ (18,849)

RATIOS: Covered-employee Payroll $ 748,968

Contributions as a Percentage of Covered-employee Payroll 2.52%

NOTE: Schedule requires information for past 10 calendar years. Most recent actuarial valuation presents information for calendar year 2014 only.

35 BOROUGH OF MONACA SCHEDULE OF FUNDING PROGRESS AND CONTRIBUTIONS FROM EMPLOYER DEFINED BENEFIT PENSION PLANS DECEMBER 31, 2015

SCHEDULES OF FUNDING PROGRESS: (B-A)/C (A) (B) (B-A) UAAL AS A ACTUARIAL ACTUARIAL ACTUARIAL ACTUARIAL (A/B) (C) % OF VALUATION VALUE OF ACCRUED ACCRUED FUNDED COVERED COVERED DATE ASSETS LIABILITY LIABILITY RATIO PAYROLL PAYROLL POLICE: 1/1/2003 $ 1,365,066 $ 987,966 $ (377,100) 138% $ 240,523 N/A 1/1/2005 1,532,766 1,079,567 (453,199) 142% 341,287 N/A 1/1/2007 1,643,742 1,215,017 (428,725) 135% 354,052 N/A 1/1/2009 1,576,614 1,331,375 (245,239) 118% 468,780 N/A 1/1/2011 1,665,329 1,622,892 (42,437) 103% 536,464 N/A 1/1/2013 1,901,718 1,843,322 (58,396) 103% 566,319 N/A 1/1/2015 2,349,547 2,218,653 (130,894) 106% 593,968 N/A

NON-UNIFORM: 1/1/1999 $ 1,077,104 $ 1,076,660 $ (444) 100% $ 504,067 -0.1% 1/1/2001 1,354,313 1,219,413 (134,900) 111% 507,048 -26.6% 1/1/2003 1,512,740 1,396,614 (116,126) 108% 590,601 -19.7% 1/1/2005 1,609,157 1,466,112 (143,045) 110% 639,438 -22.4% 1/1/2007 1,825,711 1,640,964 (184,747) 111% 575,282 -32.1% 1/1/2009 1,928,387 1,618,683 (309,704) 119% 561,247 -55.2% 1/1/2011 2,052,858 1,735,071 (317,787) 118% 687,594 -46.2% 1/1/2013 2,216,616 1,937,641 (278,975) 114% 718,779 -38.8%

SCHEDULES OF EMPLOYER'S CONTRIBUTIONS:

YEAR ENDED ANNUAL REQ. PERCENTAGE DECEMBER 31 CONTRIBUTION CONTRIBUTED POLICE: 2007 $ 22,180 100% 2008 21,158 100% 2009 26,660 100% 2010 39,466 100% 2011 69,462 100% 2012 81,143 100% 2013 93,542 100% 2014 92,244 100% 2015 103,313 100% NON-UNIFORM: 2007 $ 16,748 100% 2008 13,705 100% 2009 18,420 100% 2010 11,174 100% 2011 1,200 100% 2012 4,592 100% 2013 - 100% 2014 - 100% 2015 16,425 187%

36

BOROUGH OF MONACA NOTES TO OTHER INFORMATION DECEMBER 31, 2015

NOTE 1 - TREND INFORMATION

The comparability of trend information is affected by changes in actuarial assumptions, benefit provisions, actuarial funding methods, accounting policies, and other changes. Those changes usually affect trends in contribution requirements and in ratios that use the actuarial accrued liability as a factor.

Analysis of the dollar amount of the actuarial value of assets, actuarial accrued liability, and unfunded (assets in excess of) actuarial accrued liability in isolation can be misleading. Expressing the actuarial value of assets as a percentage of the actuarial accrued liability provides one indication of the plan's funding status on a going-concern basis. Analysis of this percentage, over time, indicates whether the system is becoming financially stronger or weaker. Generally, the greater this percentage, the stronger the plan.

Trends in unfunded (assets in excess of) actuarial accrued liability and annual covered payroll are both affected by inflation. Expressing the unfunded (assets in excess of) actuarial accrued liability as a percentage of annual covered payroll approximately adjusts for the effects of inflation and aids analysis of the plan's progress made in accumulating sufficient assets to pay benefits when due. Generally, where there is an unfunded actuarial accrued liability, the smaller this percentage, the stronger the plan. However, when assets are in excess of the actuarial accrued liability, the higher the bracketed percentage, the stronger the plan.

NOTE 2 - ACTUARIAL ASSUMPTIONS AND METHODS

The information presented in the preceding required supplementary information section was determined as part of the actuarial valuations dated January 1, 2015. Additional information included as part of these valuations applicable to both the police and non-uniformed pension plans is as follows:

Actuarial Cost Method Entry Age Normal

Asset Valuation 4 Year Smoothing – Police Fair Value – Non-Uniform

Amortization Method Police - Level Dollar, Open Non-Uniform – Level Dollar, Closed

Remaining Amortization Period Police – 15 years Non-Uniform – 14.33 years

Investment rate of return Police - 7.25% per annum Non-Uniform – 6% per annum

Salary Increase 5.5% - Police 5.2% - Non-Uniform

37

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OTHER SUPPLEMENTARY INFORMATION SCHEDULE 1 BOROUGH OF MONACA DETAIL SCHEDULE OF BUDGETED AND ACTUAL RECEIPTS GENERAL FUND FOR THE YEAR ENDED DECEMBER 31, 2015

(MEMORANDUM ONLY) BUDGET ACTUAL PRIOR YEAR TAXES: Real estate - current $ 1,275,000 $ 1,295,755 $ 1,157,568 Real estate - prior 60,000 56,151 46,768 Real estate - delinquent 60,000 47,498 81,986 Real estate transfer tax 30,000 34,910 33,970 Per capita - current 28,000 26,315 27,820 Per capita - prior - 11,240 11,141 Earned income tax 525,000 556,230 571,329 LST tax 66,000 0 69,101 63,243 Mechanical devices tax 13,500 13,090 13,895 TOTAL TAXES $ 2,057,500 $ 2,110,290 $ 2,007,720

LICENSES AND PERMITS: Cable franchise fees $ 50,000 $ 49,807 $ 49,281 Beverage licenses 3,000 2,600 200 Building permits 30,000 16,157 35,173 Business and peddler permits 1,000 1,020 738 Street Openings 500 100 529 TOTAL LICENSES AND PERMITS $ 84,500 $ 69,685 $ 85,921

FINES AND FORFEITURES: Motor vehicle code violations $ 15,000 $ 13,778 $ 16,523 Ordinance violations 18,000 17,018 24,309 State police fines 5,000 3,032 3,092 County fines 7,000 4,581 8,093 TOTAL FINES AND FORFEITURES $ 45,000 $ 38,410 $ 52,017

INTEREST AND RENTS: Interest $ 150 $ 131 $ 138 Building rent 24,000 11,910 12,700 TOTAL INTEREST AND RENTS $ 24,150 $ 12,041 $ 12,838

INTERGOVERNMENTAL: Municipal pension aid 96,500 119,738 109,928 Public utility realty tax 2,500 2,332 2,403 Act 13 - Gas Well - 2,769 2,213 Recycling grant 7,000 65,210 7,147 In lieu of taxes 27,000 2,159 61,640 TOTAL INTERGOVERNMENTAL $ 133,000 $ 192,208 $ 183,332

38 SCHEDULE 1 BOROUGH OF MONACA DETAIL SCHEDULE OF BUDGETED AND ACTUAL RECEIPTS GENERAL FUND FOR THE YEAR ENDED DECEMBER 31, 2015

(MEMORANDUM ONLY) BUDGET ACTUAL PRIOR YEAR CHARGES FOR SERVICES: Accident Reports $ 1,500 $ 1,786 $ 2,253 Reimbursement - Police Services 24,000 21,326 26,380 Rental inspections 17,000 15,265 19,405 Electrical inspections 500 322 - Health inspections 2,000 1,665 1,800 Refuse fee 465,000 460,997 471,875 TOTAL CHARGES FOR SERVICES $ 510,000 $ 501,360 $ 521,713

MISCELLANEOUS: Refunds - prior year expenses $ 5,000 $ 7,126 $ 4,939 G.F. Begin Surplus 182,500 - - Other miscellaneous revenue 15,000 14,407 11,160 TOTAL MISCELLANEOUS $ 202,500 $ 21,533 $ 16,099

OTHER FINANCIAL SOURCES: Note Proceeds $ - $ - $ 498,300 Interfund transfers: Water fund 120,000 142,207 110,000 Sewer fund 120,000 115,000 110,000 TOTAL FINANCIAL SOURCES $ 240,000 $ 257,207 $ 718,300

TOTAL REVENUES AND OTHER FINANCING SOURCES $ 3,296,650 $ 3,202,733 $ 3,597,940

39 SCHEDULE 2 BOROUGH OF MONACA DETAIL SCHEDULE OF BUDGETED AND ACTUAL DISBURSEMENTS GENERAL FUND FOR THE YEAR ENDED DECEMBER 31, 2015

(MEMORANDUM ONLY) BUDGET ACTUAL PRIOR YEAR GENERAL GOVERNMENT: COUNCIL EXPENSES: Salaries and wages $ 24,000 $ 23,565 $ 23,600 Schools and conferences 7,500 7,638 5,526 Advertising 500 625 608 General expense 3,000 5,665 2,933 TOTAL COUNCIL EXPENSES $ 35,000 $ 37,493 $ 32,667

MAYOR EXPENSES: Salaries and wages $ 2,412 $ 2,412 $ 2,412 Memberships 130 260 60 General expense 458 130 10 TOTAL MAYOR EXPENSES $ 3,000 $ 2,802 $ 2,482

BOROUGH MANAGER & SECRETARY EXPENSES: Salaries and wages $ 160,500 $ 173,372 $ 178,666 Maintenance - office equipment 10,000 14,070 15,589 Travel 2,000 1,596 1,775 Schools and conferences 3,000 2,847 3,006 Postage, printing and advertising 5,000 5,370 9,187 Office supplies 5,000 5,420 5,858 Office equipment 8,000 6,988 10,756 General expense 8,000 8,578 12,889 TOTAL BOROUGH MANAGER AND SECRETARY EXPENSES $ 201,500 $ 218,242 $ 237,726

TAX COLLECTION: Tax collector salary $ 17,000 $ 17,000 $ 17,000 General expenses 3,000 2,813 3,574 Tax collector bond 500 539 539 Per capita collection expense 3,500 3,079 3,397 TOTAL TAX COLLECTION $ 24,000 $ 23,431 $ 24,510

SOLICITOR EXPENSES Professional services $ 17,000 $ 13,420 $ 16,763 General expense 3,000 150 44 TOTAL SOLICITOR EXPENSES $ 20,000 $ 13,570 $ 16,807

40 SCHEDULE 2 BOROUGH OF MONACA DETAIL SCHEDULE OF BUDGETED AND ACTUAL DISBURSEMENTS GENERAL FUND FOR THE YEAR ENDED DECEMBER 31, 2015

(MEMORANDUM ONLY) BUDGET ACTUAL PRIOR YEAR GENERAL GOVERNMENT: (Continued)

AUDITOR EXPENSES: Services rendered $ 6,500 $ 6,485 $ 5,422 TOTAL AUDITOR EXPENSES $ 6,500 $ 6,485 $ 5,422

MUNICIPAL BUILDING: Salaries and wages $ 6,000 $ 6,704 $ 7,967 Telephone 8,000 9,699 7,034 Utilities 16,000 17,783 24,976 Janitorial supplies 1,500 1,588 1,192 General expense 9,000 9,731 11,009 General repairs 10,000 1,501 6,319 TOTAL MUNICIPAL BUILDING $ 50,500 $ 47,005 $ 58,496

TOTAL GENERAL GOVERNMENT $ 340,500 $ 349,027 $ 378,110

PUBLIC SAFETY: POLICE PROTECTION: Salaries and wages $ 490,000 $ 468,373 $ 434,107 Overtime 55,000 58,548 87,546 Longevity 5,000 5,214 5,338 Shift differential 4,500 97 3,650 Court Time 70,000 90,325 85,456 Part-time police 75,000 88,165 76,117 Telephone and electric 12,000 12,777 5,451 Schools and conferences 2,000 462 1,708 Office supplies 2,000 2,582 2,407 Minor equipment 10,000 14,231 18,864 Office equipment 10,000 10,132 6,983 General expenses 12,000 14,383 11,764 Uniform allowance 6,500 5,454 6,666 Traffic signal maintenance 2,000 1,260 2,096 Radio maintenance 1,000 340 160 Vehicle maintenance 12,000 10,525 16,289 Vehicle operating expenses 12,000 12,622 16,806 Dues, subscriptions & memberships 1,000 1,053 125 Capital Improvements 15,000 18,650 - Animal control 1,200 - - TOTAL POLICE PROTECTION $ 798,200 $ 815,192 $ 781,531

41 SCHEDULE 2 BOROUGH OF MONACA DETAIL SCHEDULE OF BUDGETED AND ACTUAL DISBURSEMENTS GENERAL FUND FOR THE YEAR ENDED DECEMBER 31, 2015

(MEMORANDUM ONLY) BUDGET ACTUAL PRIOR YEAR PUBLIC SAFETY: (Continued)

FIRE DEPARTMENT: Fire marshall $ 900 $ 900 $ 900 Telephone 2,100 2,165 1,969 Utilities 9,000 8,473 9,010 Donations 12,000 10,932 8,602 Minor equipment 15,000 14,692 9,907 General expenses 1,500 1,227 641 Vehicle maintenance 15,000 7,497 8,935 Vehicle operating expense 8,000 6,602 8,376 Building maintenance 3,000 931 1,938 Capital improvements 6,000 2,500 2,500 TOTAL FIRE DEPARTMENT $ 72,500 $ 55,919 $ 52,778

BUILDING, PLANNING AND ZONING: Code enforcement officer $ 24,000 $ 24,658 $ 31,228 Rental inspector wages 6,000 6,310 7,158 Overtime - 166 147 General expenses 2,000 2,621 3,985 Vehicle operations - 787 1,225 Professional Services 21,000 28,346 16,117 Board Services 500 500 - Engineering Services 2,500 4,085 1,035 Permits/inspections 24,000 11,013 37,383 Codification Services 5,000 6,291 2,556 Vehicle maintenance - - 552 TOTAL BUILDING PLANNING AND ZONING $ 85,000 $ 84,777 $ 101,386

EMERGENCY MANAGEMENT: Minor equipment $ 1,000 $ 1,542 $ 3,259 Hours 1,200 - - General expenses 1,000 292 914 TOTAL EMERGENCY MANAGEMENT $ 3,200 $ 1,835 $ 4,173

TOTAL PUBLIC SAFETY $ 958,900 $ 957,723 $ 939,868

42 SCHEDULE 2 BOROUGH OF MONACA DETAIL SCHEDULE OF BUDGETED AND ACTUAL DISBURSEMENTS GENERAL FUND FOR THE YEAR ENDED DECEMBER 31, 2015

(MEMORANDUM ONLY) BUDGET ACTUAL PRIOR YEAR PUBLIC WORKS: SANITATION: General expense $ - $ - $ 4,002 Health inspector 2,000.0000 - - Contracted services 383,000 376,357 386,439 Recycling expenses 7,000 64,407 - TOTAL SANITATION $ 392,000 $ 440,765 $ 390,441

HIGHWAYS: Salaries and wages $ 250,000 $ 227,297 $ 244,589 Overtime 35,000 28,694 32,182 Office Supplies 250 189 353 Telephone 1,500 1,576 2,230 Utilities 7,500 5,527 5,694 General expenses 12,000 15,597 12,507 Uniform allowance 1,500 1,250 2,204 Small tools 7,000 12,588 6,886 Street maintenance 20,000 34,326 25,590 Street markings 10,000 9,899 7,334 Engineering 6,000 7,075 5,115 Radio maintenance 500 - - Vehicle maintenance 26,000 47,518 35,395 Vehicle operating expenses 20,000 13,307 21,787 Storm sewer maintenance 40,000 21,630 20,578 Building expense 3,500 3,680 4,318 Capital Improvement 5,000 24,701 - TOTAL HIGHWAYS $ 445,750 $ 454,855 $ 426,762

TOTAL PUBLIC WORKS $ 837,750 $ 895,620 $ 817,203

CULTURE AND RECREATION: CIVIC CONTRIBUTIONS: Civic contributions $ 25,000 $ 33,243 $ 25,484 CC building maintenance 30,000 42,402 30,081 Town plaza 8,000 8,242 9,981 TOTAL CIVIC CONTRIBUTIONS $ 63,000 $ 83,887 $ 65,547

RECREATION: Recreation board $ 20,000 $ 21,654 $ 14,034 Capital improvements 10,000 - (293) Grounds maintenance 15,000 13,734 19,530 TOTAL PARKS AND RECREATION $ 45,000 $ 35,388 $ 33,271

TOTAL CULTURE AND RECREATION $ 108,000 $ 119,275 $ 98,818

43 SCHEDULE 2 BOROUGH OF MONACA DETAIL SCHEDULE OF BUDGETED AND ACTUAL DISBURSEMENTS GENERAL FUND FOR THE YEAR ENDED DECEMBER 31, 2015

(MEMORANDUM ONLY) BUDGET ACTUAL PRIOR YEAR

DEBT SERVICE: Debt principal $ 321,000 $ 165,896 $ 640,936 Debt interest - 54,233 59,803 Bond redemption - 2,000 - Note issue costs - - 8,360 Fiscal agent fees - 550 800 TOTAL DEBT SERVICE $ 321,000 $ 222,680 $ 709,899

MISCELLANEOUS: Insurance - multi-peril $ 105,000 $ 99,886 $ 103,859 Workers compensation insurance 105,000 128,056 127,198 Contingency expenses 15,000 15,000 10,024 Life insurance 12,000 13,055 10,015 Hospitalization 297,000 282,278 282,969 Pension 96,500 129,514 111,113 Social security 85,000 84,355 82,577 Unemployment compensation 15,000 9,028 14,887 Central Valley SD portion of PILOT - 33,074 - TOTAL MISCELLANEOUS $ 730,500 $ 794,245 $ 742,642

OTHER FINANCING USES: Interfund transfers - Liquid Fuels Fund $ - $ 37,192 $ 25,000 Interfund transfers - Water Fund - 60,000 1,026 Interfund transfers - Construction Fund - - 6,459 Unknown - - 5,439 TOTAL FINANCING USES $ - $ 97,192 $ 37,924

TOTAL DISBURSEMENTS $ 3,296,650 $ 3,435,761 $ 3,724,463

44 SCHEDULE 3

BOROUGH OF MONACA COMBINING BALANCE SHEET NON-MAJOR GOVERNMENTAL FUNDS FOR THE YEAR ENDED DECEMBER 31, 2015

WATER TOTAL AND PLAY NON- LIQUID SEWER FIRE POLICE 175TH GROUND CAPITAL MAJOR FUELS CONTRACT TRUCK NARC. CANINE TOYS FOR CELEBRATION EQUIP. PROJECT GOVERN. FUND FUND FUND FUND FUND TOTS FUND FUND FUND FUND FUNDS

ASSETS:

Cash and Cash Equivalents $ 79,483 $ 28,804 $ 8,500 $ 2,164 $ 5,315 $ 694 $ 2,487 $ 86,574 $ 6,469 $ 220,490 TOTAL ASSETS $ 79,483 $ 28,804 $ 8,500 $ 2,164 $ 5,315 $ 694 $ 2,487 $ 86,574 $ 6,469 $ 220,490

LIABILITIES AND FUND BALANCES: LIABILITIES: Due to General Fund $ - $ - $ - $ - $ - $ - $ - $ 4,200 $ - $ 4,200 Unearned Revenue ------48,941 - 48,941 TOTAL LIABILITIES $ - $ - $ - $ - $ - $ - $ - $ 53,141 $ - $ 53,141

FUND BALANCES: Undesignated-Unreserved $ 79,483 $ 28,804 $ 8,500 $ 2,164 $ 5,315 $ 694 $ 2,487 $ 33,433 $ 6,469 $ 167,349 TOTAL FUND BALANCES $ 79,483 $ 28,804 $ 8,500 $ 2,164 $ 5,315 $ 694 $ 2,487 $ 33,433 $ 6,469 $ 167,349

TOTAL LIABILITIES AND FUND BALANCES $ 79,483 $ 28,804 $ 8,500 $ 2,164 $ 5,315 $ 694 $ 2,487 $ 86,574 $ 6,469 $ 220,490

45 SCHEDULE 4

BOROUGH OF MONACA COMBINING STATEMENT OF RECEIPTS, DISBURSEMENTS AND CHANGES IN FUND BALANCES NON-MAJOR GOVERNMENTAL FUNDS FOR THE YEAR ENDED DECEMBER 31, 2015

WATER AND PLAY LIQUID SEWER FIRE POLICE TOYS FOR 175TH GROUND CAPITAL FUELS CONTRACT TRUCK NARC. CANINE TOTS CELEBRATION EQUIP. PROJECT FUND FUND FUND FUND FUND FUND FUND FUND FUND TOTAL REVENUES:

Liquid Fuels Allocation $ 156,452 $ - $ - $ - $ - $ - $ - $ - $ - $ 156,452 Antoline Park Grant ------15,920 15,920 Commonwealth of PA - Recycling Grant ------24,428 24,428 Donations - - - - 10,555 3,098 34,351 - - 48,004 Interest 21 ------6 27 Water and Sewer Deposits - 13,950 ------13,950 TOTAL REVENUES $ 156,473 $ 13,950 $ - $ - $ 10,555 $ 3,098 $ 34,351 $ 15,920 $ 24,434 $ 258,781

OTHER FINANCING SOURCES:

Interfund transfers $ 37,192 $ - $ - $ - $ - $ - $ - $ - $ - $ 37,192 TOTAL OTHER FINANCING SOURCES $ 37,192 $ - $ - $ - $ - $ - $ - $ - $ - $ 37,192 TOTAL REVENUES AND OTHER FINANCING SOURCES $ 193,665 $ 13,950 $ - $ - $ 10,555 $ 3,098 $ 34,351 $ 15,920 $ 24,434 $ 295,973

EXPENDITURES:

General Government $ - $ 116 $ - $ - $ - $ - $ 5 $ - $ - $ 121 Public Safety - - - - 7,656 2,404 - - - 10,060 Public Works 129,982 ------130,809 260,791 Parks & Recreation ------31,859 15,920 - 47,779 Refunds - 15,415 ------15,415 TOTAL EXPENDITURES $ 129,982 $ 15,531 $ - $ - $ 7,656 $ 2,404 $ 31,864 $ 15,920 $ 130,809 $ 334,166

OTHER FINANCING USES:

Interfund transfers $ - $ - $ - $ - $ - $ - $ - $ - $ - $ - TOTAL OTHER FINANCING USES $ - $ - $ - $ - $ - $ - $ - $ - $ - $ - TOTAL EXPENDITURES AND OTHER FINANCING USES $ 129,982 $ 15,531 $ - $ - $ 7,656 $ 2,404 $ 31,864 $ 15,920 $ 130,809 $ 334,166

EXCESS REVENUES OVER (UNDER) EXPENDITURES $ 63,683 $ (1,581) $ - $ - $ 2,899 $ 694 $ 2,487 $ - $ (106,375) $ (38,193)

FUND BALANCE - January 1, 2015 15,800 30,385 8,500 2,164 2,416 - - 33,433 112,844 205,542

FUND BALANCE - December 31, 2015 $ 79,483 $ 28,804 $ 8,500 $ 2,164 $ 5,315 $ 694 $ 2,487 $ 33,433 $ 6,469 $ 167,349

46 SCHEDULE 5

BOROUGH OF MONACA STATEMENT OF BUDGET VS. ACTUAL - SEWER FUND FOR THE YEAR ENDED DECEMBER 31, 2015

BUDGET ACTUAL VARIANCE OPERATING REVENUES: Residential $ 800,000 $ 781,856 $ (18,144) Industrial 95,000 86,091 (8,909) Plant Intake 77,500 116,107 38,607 Sewer Taps 10,000 2,500 (7,500) Miscellaneous 2,450 6,788 4,338 Total Operating Revenues $ 984,950 $ 993,342 $ 8,392

OPERATING EXPENSES: Salaries & wages $ 189,000 $ 183,221 $ (5,779) Engineering fees 18,000 11,975 (6,025) Telephone 1,000 1,698 698 Small tools/minor equipment 5,000 1,448 (3,552) Schools & conferences 1,000 1,585 585 Utilities 80,000 82,420 2,420 Office supplies 2,000 1,202 (798) Lab supplies 10,000 4,146 (5,854) General 8,000 6,181 (1,819) Advertising 2,000 5,625 3,625 Uniform allowance 1,000 891 (109) Sludge removal 30,000 27,903 (2,097) Chemicals 16,000 11,291 (4,709) Vehicle maintenance 2,500 226 (2,274) Sanitary maintenance 30,000 10,089 (19,911) Vehicle operating 2,000 954 (1,046) Minor equipment 8,000 2,523 (5,477) Building & grounds maintenance 30,000 26,260 (3,740) Depreciation - 172,481 172,481 Permits/certifications 7,000 9,700 2,700 Capital Improvements 100,000 - (100,000) Analytical testing 25,000 5,292 (19,708) Total Operating Expenses $ 567,500 $ 567,111 $ (389)

TOTAL OPERATING INCOME $ 417,450 $ 426,231 $ 8,781

NON-OPERATNG REVENUE : Interest income $ 50 $ 6 $ 56 Interest expense (302,500) (85,277) (387,777) TOTAL NON-OPERATING REVENUE $ (302,450) $ (85,271) $ (387,721)

OTHER FINANCING SOURCES: Transfers out $ (115,000) $ (115,000) $ (230,000) TOTAL OTHER FINANCING USES $ (115,000) $ (115,000) $ (230,000)

CHANGE IN NET POSITION $ - $ 225,960 $ (608,940)

NET POSITION - JANUARY 1, 2015 - 1,096,449 1,096,449

NET POSITION - DECEMBER 31, 2015 $ - $ 1,322,409 $ 487,509

47 SCHEDULE 6

BOROUGH OF MONACA STATEMENT OF BUDGET VS. ACTUAL - WATER FUND FOR THE YEAR ENDED DECEMBER 31, 2015

BUDGET ACTUAL VARIANCE OPERATING REVENUES: Residential $ 875,000 $ 897,488 $ 22,488 Industrial 140,000 117,927 (22,073) Sewer Taps 10,000 2,500 (7,500) Miscellaneous 40,000 46,972 6,972 Total Operating Revenues $ 1,065,000 $ 1,064,887 $ (113)

OPERATING EXPENSES: Salaries & wages $ 194,000 $ 210,847 $ 16,847 Engineering fees 18,000 38,179 20,179 Telephone 6,500 5,071 (1,429) Equipment maintenance 6,000 3,212 (2,788) Small tools/minor equipment 6,000 1,313 (4,687) Schools & conferences 1,800 1,020 (780) Utilities 68,000 71,984 3,984 Office supplies 2,000 1,620 (380) Lab supplies 500 580 80 General 8,000 8,747 747 Advertising 4,500 3,733 (767) Uniform allowance 750 750 - Chemicals 3,500 4,608 1,108 Vehicle maintenance 6,000 2,659 (3,341) Vehicle operating 17,000 8,634 (8,366) Building & grounds maintenance 24,000 19,226 (4,774) Depreciation - 415,101 415,101 Pumping equipment & maintenace 50,000 34,895 (15,105) Water disbribution maintenance 50,000 53,215 3,215 Permits/certifications 2,500 430 (2,070) Capital Improvements 65,000 19,792 (45,208) Analytical testing 5,000 6,023 1,023 Total Operating Expenses $ 539,050 $ 911,639 $ 372,589

TOTAL OPERATING INCOME $ 525,950 $ 153,248 $ (372,702)

NON-OPERATNG REVENUE : Interest income $ 50 $ 11 $ 61 Interest expense (579,000) (145,945) (724,945) TOTAL NON-OPERATING REVENUE $ (578,950) $ (145,934) $ (724,884)

OTHER FINANCING SOURCES: Transfers in $ - $ 60,000 $ 60,000 Transfers out (115,000) (142,207) (257,207) TOTAL OTHER FINANCING USES $ (115,000) $ (82,207) $ (197,207)

CHANGE IN NET POSITION $ (168,000) $ (74,893) $ (1,294,793)

NET POSITION - JANUARY 1, 2015 - 2,084,473 2,084,473

NET POSITION - DECEMBER 31, 2015 $ (168,000) $ 2,009,580 $ 789,680

48

APPENDIX C

BOOK-ENTRY-ONLY SYSTEM

(Schedule A of DTC’s current form of Issuer Letter of Representations For Book-Entry-Only Municipal Bonds)

(This page left blank intentionally.) SCHEDULE A (To Blanket Issuer Letter of Representations) SAMPLE OFFERING DOCUMENT LANGUAGE DESCRIBING BOOK-ENTRY-ONLY ISSUANCE (Prepared by DTC--bracketed material may be applicable only to certain issues)

1. The Depository Trust Company ("DTC"), New York, NY, will act as securities depository for the securities (the "Securities"). The Securities 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 Security certificate will be issued for [each issue of] the Securities, [each] in the aggregate principal amount of such issue, and will be deposited with DTC. [If, however, the aggregate principal amount of[any] issue exceeds $500 million, one certificate will be issued with respect to each $500 million of principal amount, and an additional certificate will be issued with respect to any remaining principal amount of such issue.]

2. DTC, the world's largest securities depository, is a limited-purpose trust company organized under the New York Banking Law, a "banking organization" within the meaning oft he New York Banking Law, a member ofthe 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 17 A 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. DTC C 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.

3. Purchases of Securities under the DTC system must be made by or through Direct Participants, which will receive a credit for the Securities on DTC 's records. The ownership interest of each actual purchaser of each Security ("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 Securities 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 Securities, except in the event that use of the book-entry system for the Securities is discontinued.

4. To facilitate subsequent transfers, all Securities deposited by Direct Participants with DTC are registered in the name ofDTC's partnership nominee, Cede & Co., or such other name as may be requested by an authorized representative of DTC. The deposit of Securities 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 ofthe Securities; DTC's records reflect only the identity ofthe Direct Participants to whose accounts such Securities 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.

BLOR 06-2013 SCHEDULE A (To Blanket Issuer Letter of Representations)

5. 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 Security 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.]

[6. Redemption notices shall be sent to DTC. Ifless than all of the Securities 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.]

7. Neither DTC nor Cede & Co. (nor any other DTC nominee) will consent or vote with respect to Securities unless authorized by a Direct Participant in accordance with DTC's MMI Procedures. Under its usual procedures, DTC mails an Omnibus Proxy to Issuer 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 Securities are credited on the record date (identified in a listing attached to the Omnibus Proxy).

8. Redemption proceeds, distributions, and dividend payments on the Securities 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 Issuer or Agent, on payable date in accord ance with their respective holdings shown on DT C's records. Payments by Participants to Beneficial Owners will be governed by standing instructions and customary practices, as is 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, Agent, or Issuer, subject to any statutory or regulatory requirements as may be in effect from time to time. Payment of redemption proceeds, distributions, and dividend payments to Cede & Co. (or such other nominee as may be requested by an authorized representative of DTC) is the responsibility of Issuer or 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.

[9. A Beneficial Owner shall give notice to elect to have its Securities purchased or tendered, through its Participant, to [Ten der/Remarketing] Agent, and shall effect delivery of such Securities by causing the Direct Participant to transfer the Participant's interest in the Securities, on DTC's records, to [Tender/Remarketing] Agent. The requirement for physical delivery of Securities in connection with an optional tender or am andatory purchase will be deemed satisfied when the ownership rights in the Securities are transferred by Direct Participants on DTC's records and followed by a book-entry credit of tendered Securities to [Tender/Remarketing] Agent's DTC account.]

10. DTC may discontinue providing its services as depository with respect to the Securities at any time by giving reasonable notice to Issuer or Agent. Under such circumstances, in the event that a successor depository is not obtained, Security certificates are required to be printed and delivered.

11. Issuer may decide to discontinue use of the system of book-entry-only transfers through DTC (or a successor securities depository). In that event, Security certificates will be printed and delivered to DTC.

12. The information in this section concerning DTC and DTC's book-entry system has been obtained from sources that Issuer believes to be reliable, but Issuer takes no responsibility for the accuracy thereof.

BLOR 06-2013

APPENDIX D

BOND INSURANCE

(This page left blank intentionally.)

[If the Borough purchases bond insurance for any of the Bonds, a description of the same will be provided here]

(This page left blank intentionally.)

APPENDIX E

SPECIMEN MUNICIPAL BOND INSURANCE POLICY

(This page left blank intentionally.)

[If the Borough purchases bond insurance for any of the Bonds, a specimen bond insurance policy will be reproduced here]

(This page left blank intentionally.) APPENDIX F

FORM OF CONTINUING DISCLOSURE CERTIFICATE

(This page left blank intentionally.) FORM OF CONTINUING DISCLOSURE CERTIFICATE

$9,935,000 (Est.) Borough of Monaca Beaver County, Pennsylvania General Obligation Bonds, Series of 2016 (hereinafter, the “Bonds”)

CONTINUING DISCLOSURE CERTIFICATE OF THE BOROUGH OF MONACA

The Borough of Monaca,. Beaver County, Pennsylvania (the “Borough”) hereby certifies to M&T Securities, Inc., Baltimore, Maryland, in its capacity as a participating underwriter of the primary offering of the Bonds (the “Underwriter”), and to and for the benefit of the holders and beneficial owners from time to time of the Bonds, as follows:

1. This Certificate is the “Continuing Disclosure Certificate” described in Section _____ of Ordinance No.______(the “Ordinance”) duly enacted on August 23, 2016 by the Borough Council of the Borough (the “Borough Council”), its duly elected governing body, which Ordinance constitutes a “debt ordinance” within the meaning of the Local Government Unit Debt Act (53 Pa. C.S. §8001 to §8285) (the “Debt Act”) authorizing the issuance, sale and delivery of the Bonds by the Borough. The execution of this Certificate is authorized by the Ordinance.

2. The Borough is an “obligated person” with respect to the Bonds within the meaning of Rule 15c2-12 (as in effect on the date hereof, the “Rule”) under the Securities Exchange Act of 1934, as amended, for whom financial information or operating data is or should be presented in the Borough's Official Statement dated August __, 2016, for the Bonds (the “Official Statement”), and is the only such obligated person.

3. This Certificate, together with the continuing disclosure covenants of the Borough made in the Ordinance, constitutes a “written agreement or contract for the benefit of holders of the Bonds” within the meaning of and meeting the requirements therefor set forth in paragraph (b)(5) of the Rule and, together with said covenants, constitutes the “Continuing Disclosure Agreement” described in the Official Statement.

4. To the extent provided herein, the Borough will amend the undertakings herein set forth, in such manner as the Underwriter shall reasonably require to ensure compliance with paragraph (b)(5) of the Rule, or continued marketability of the Bonds as the same may be affected by paragraph (c) of the Rule.

5. The Borough has not, during the five years immediately preceding the date of the Official Statement or since, failed to comply in any material respect with any previous undertaking in any written contract or agreement of the particular type specified in paragraph (b)(5)(i) of the Rule except as disclosed in the Official Statement.

6. The Borough will provide the following information and notices to the following entities by the times and in the manner hereinafter set forth:

The Borough will provide to the Municipal Securities Rulemaking Board (the “MSRB”), or to such other entity as may be designated by the Securities and Exchange Commission (the “SEC”) as successor in the function, in the form and in the manner stipulated by the MSRB or such successor entity and on an annual basis, (i) a financial report covering the preceding fiscal year of the Borough which will include general purpose financial statements that present fairly, in all material respects, the respective financial position of the governmental funds, the business-type activities, each major fund, and the aggregate remaining fund information of the Borough as of the end of such fiscal year and the respective changes in financial position and, where applicable, cash flows thereof and the respective budgetary comparison for the Borough’s General Fund for such fiscal year in accordance with the modified cash basis of accounting, or prepared on F-1 such other basis of accounting adopted by the County from time to time so as to bring the presentation of its financial statements more closely into conformity with U.S. generally accepted accounting principles (the “Report” for such fiscal year), commencing with the Report for the Borough's fiscal year ending in 2016. Unless audited, such financial statements will be unaudited. The Borough will so provide Reports within 275 days after the fiscal years of the Borough to which they pertain end; and, should any Report required to be so provided hereunder be not timely so provided, or should such Report be timely so provided but fail to include independently audited financial statements of the Borough for the fiscal year of the Borough to which such Report pertains, the Borough will so provide such independently audited financial statements when and if available. Therefore: if the Borough’s audited financial statements are not available by the time the Report is required to be filed pursuant to this Section 6, the Report shall contain unaudited financial statements in a format similar to the financial statements contained in the Official Statement, and the audited financial statements shall be filed in the same manner as the Report when and if they become available. The Borough will provide to the MSRB, or to such other entity as may be designated by the SEC as successor in the function, in the form and in the manner stipulated by the MSRB or such successor entity, (A) in a timely manner, notice of every failure of the Borough to provide or cause to be provided in the manner and to the extent provided herein a Report or any audited financial statements in a timely manner and (B) in a timely manner, but in each case not later than the tenth business day after such occurrence, notice of each occurrence of any of the following events with respect to the Bonds: (i) principal and interest payment delinquencies, (ii) non-payment related defaults, if material, (iii) unscheduled draws on debt service reserves reflecting financial difficulties, (iv) unscheduled draws on credit enhancements reflecting financial difficulties, (v) substitution of credit or liquidity providers, or their failure to perform, (vi) 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, (vii) modifications to rights of the holders of the Bonds, if material, (viii) bond calls, if material, and tender offers, (ix) defeasances, (x) release, substitution or sale of property securing payment of the Bonds, if material, (xi) rating changes, (xii) bankruptcy, insolvency, receivership or similar event of the Borough (or any other entity that shall be at the time an obligated person within the meaning of the Rule with respect to the Bonds), (xiii) the consummation of a merger, consolidation, or acquisition involving the Borough (or any other entity that shall be at the time an obligated person within the meaning of the Rule with respect to the Bonds) or the sale of all or substantially all of the assets of the Borough or any such 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 (xiv) appointment of a successor or additional trustee or the change of name of a trustee, if material. For purposes of this Certificate, an event described in (xii) above shall be deemed to occur when any of the following occur: the appointment of a receiver, fiscal agent or similar officer for the Borough or other pertinent obligated person in a proceeding under the U.S. Bankruptcy Code or in any other proceeding under state or federal law in which a court or governmental authority has assumed jurisdiction over substantially all of the assets or business of the Borough or such obligated person, or if such jurisdiction has been assumed by leaving the existing governing body and officials or officers in possession but subject to the supervision and orders of a court or governmental authority, or the entry of an order confirming a plan of reorganization, arrangement or liquidation by a court or governmental authority having supervision or jurisdiction over substantially all of the assets or business of the Borough or such obligated person. To the extent the Official Statement states, under the caption "Continuing Disclosure", that the Borough will make disclosures in addition to or in advance of those set forth above, the Borough will make such additional or earlier disclosures in the manner described in the Official Statement. All documents provided to the MSRB pursuant to the terms hereof will be provided in the form and in the manner stipulated by the MSRB and will be accompanied by identifying information as prescribed by the MSRB from time to time (Currently, filings required hereby to be made with the MSRB are required to be made in word-searchable electronic form through the Electronic Municipal Market Access system for municipal securities disclosure established by the MSRB and accessible at http://emma.msrb.org/).

The Borough shall have the right hereunder to amend from time to time or to terminate, in whole or in part, any of the foregoing undertakings, unilaterally and without the consent of the holders or beneficial owners of the Bonds, by execution of a written instrument of amendment hereto, duly authorized by resolution of F-2

the Borough Council, provided that (1) the action is an amendment which requires the Borough to provide more information, or to disseminate information earlier, more widely or more often, than was set forth in this Certificate (as amended by all prior amendments, if any, and as in effect immediately prior to the subject amendment) without diminishing in any way its obligations hereunder as set forth in this Certificate as so in effect immediately prior to the amendment or (2) the following conditions are satisfied: (a) the amendment or termination is in connection with a change in circumstances that arises from a change in or clarification of legal requirements, change of law or change in the identity, nature or status of an obligated person (within the meaning of the Rule) with respect to the Bonds, or the type of business conducted; (b) such undertakings, as amended, would, in the opinion of independent nationally recognized bond counsel, have complied with the requirements of the Rule at the time of the original issuance of the Bonds, after taking into account any amendments or further interpretation of the Rule, as well as any change in circumstances; and (c) the amendment or termination either (i) is approved by the holders of the Bonds in the same manner as provided in the Ordinance for modifications thereof which require the consent of the greatest proportion of such holders that is less than 100% or (ii) does not, in the opinion of independent nationally recognized bond counsel, materially impair the interests of the holders or beneficial owners of the Bonds. The Borough will give prompt notice of any such amendment or termination to the MSRB, or to such other entity as may be designated by the SEC as successor in the function, in the form and in the manner stipulated by the MSRB or such successor entity. In addition, the Borough will describe such amendment in the next Report or submission of audited financial statements, as the case may be, and will include, as applicable, a narrative explanation of the reason for the amendment and its impact on the type (or, in the case of a change of accounting principles, on the presentation) of financial information or operating data being provided by the Borough. If the amendment relates to the accounting principles to be followed in preparing Reports or audited financial statements, (i) the Borough will give prompt notice of such change to the MSRB, or to such other entity as may be designated by the SEC as successor in the function, in the form and in the manner stipulated by the MSRB or such successor entity, and (ii) the Report or audited financial statements, as the case may be, for the fiscal year of the Borough in which the change is made will present a comparison (in narrative form and also, if feasible, in quantitative form) between the Report or audited financial statements as prepared on the basis of the new accounting principles and the Report or audited financial statements prepared on the basis of the former accounting principles.

The due preparation and transmittal of all reports, notices and other disseminations of information required hereby, the form, presentation and timing thereof and the timely collection of data therefor is the obligation of the Borough alone. The Borough may retain the services of a dissemination agent, which may but need not be its paying agent for the Bonds, to administer or aid in the performance by the Borough of the Borough's obligations hereunder; however the retention of any such dissemination agent will not relieve the Borough of its obligation to perform its continuing disclosure undertakings as herein described.

(SEAL) BOROUGH OF MONACA

ATTEST: By:______President of the Borough Council

______Secretary

Dated: September __, 2016

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(This page left blank intentionally.) APPENDIX G

SERIES OF 2016 BONDS ANNUAL DEBT SERVICE REQUIREMENTS

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APPENDIX G

$9,935,000* BOROUGH OF MONACA Beaver County, Pennsylvania General Obligation Bonds, Series of 2016

ANNUAL DEBT SERVICE REQUIREMENTS

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

Interest Payable: May 15 and November 15, beginning May 15, 2017

Year Annual Ending Principal Sinking Interest May 15 Amount Fund Rate Interest Total

2016 2017 2018 . 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 2031 2032

. .

* Estimated; subject to change.