This is a Preliminary Official Statement and the information contained herein is subject to completion and amendment in a final Official Statement. The securities offered hereby may not be sold nor may offers to buy the securities be accepted prior to the time the Official Statement is delivered in final form. Under no circumstances will this Preliminary Official Statement constitute an offer to sell or the solicitation of an offer to buy, and shall not be any sale of the securities offered hereby, 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. *Preliminary, subjecttochange Official Statement Dated:______,2018 ______, 2018. about or on agent, its or DTC through delivery for available be will Bonds the that expected is It counsel. underwriter’s as Lancaster,Pennsylvania, LLC, WallaceMcNees by NurickUnderwriter & the for upon passed be will LLP,matters Markovitz legal & Certain Barbin Pennsylvania. Gleason, Johnstown, Solicitor,the its for by upon Authority passed be will matters Lynchthe legal Lynch,to Certain and Counsel Authority, Bond Pittsburgh,Pennsylvania. of Interest Due:June1andDecember Dated: DateofDelivery NEW ISSUE–BOOKENTRY ONLY under theIndenture;and(4)payforcosts,feesexpensesrelatedtoforegoingpurposescostof issuingtheBonds. established Fund Reserve Service Debt the to deposit a fund the (3) of Authority; indebtedness outstanding certain refund currently Waterand (2) System, ANY, ORINTEREST ON THE BONDS. THE AUTHORITY HASNO TAXING POWER. COMMONWEALTH OR ANY POLITICAL SUBDIVISION THEREOF BELIABLE FOR THE PAYMENT OF PRINCIPAL OF, PREMIUM,IF THE TOWNSHIPS,COMMONWEALTH THE OR ANYPOLITICALSHALL NOR SUBDIVISION THEREOF; THE TOWNSHIPS, THE OF, PREMIUM,IF ANY, ORINTEREST ON THE BONDS;NORSHALL THE BONDSBEORDEEMED TO BEOBLIGATIONS OF (THE “COMMONWEALTH”) OR ANY POLITICAL SUBDIVISION THEREOF ISPLEDGEDFOR THE PAYMENT OF THE PRINCIPAL THE TOWNSHIPS OF READE AND WHITE (COLLECTIVELY, THE “TOWNSHIPS”), THE COMMONWEALTH OF PENNSYLVANIA pledge to the Trustee of the “Receipts and Revenues” from the Sewer and Water System and(as described herein) and assignment by certain funds an held under the by Indenture. Indenture the under secured and from solely payable are and “Trustee”), (the trustee Company,TradersTrustas and Manufacturers “THE BONDS,”infra). (See date payment interest particular the to respect with Date Record the of as registered is Bond such name(s) whose in person(s) the to mailed check by at its corporate trust office located in Harrisburg, Pennsylvania (or any successor trustee at its designated office(s)) and interest onsuch Bond will bepayable ever is Bonds discontinued, the principal of and redemption premium, if any, the for on each of the Bonds will be payable, when due, upon System surrender of such Bond to the Trustee Only Book-Entry the of use the If Bonds. the of Owners Beneficial the to disbursement subsequent for Participants DTC to the by paymentsDTC Trustee,such to remit any,directly turn if made in premium, be will will DTC payment, and for due when Bonds, the on interest and and paying agent for the Bonds. So long as Cede & Co., as nominee for trusteeDTC, is the registered as owner “Trustee”),of the Bonds, payments (the of the principal Company or,TrustTraders and redemption Manufacturers appointed has for.The Authority provided or themade of duly payment been if has thereof, price redemption redemption for fixed date the maturity,until to prior redemption to subject is Bond such if or, Bonds such of date maturity the Bonds areeverissuedincertificatedform,thewillbesubjecttoregistrationoftransfer, exchangeandpaymentasdescribedherein. herein,“BOOK-ENTRY described See circumstances Bonds. ONLYthe the under on If, interest herein. and SYSTEM” or principal of payment receive to any purchaser is the Beneficial Owner of a Bond, that purchaser must maintain an account with a broker or as a long so dealerFor Bonds. the whoof delivery physical is,receive not will orBonds the of actspurchasers Participants. The DTC through,through, act or aare, who dealers DTCand brokers Participant its through DTC by maintained system only book-entry the under only thereof multiple integral any or $5,000 of denominations in acquired be may Bonds New (“DTC”), Depository TrustYork,Company of The nominee and owner New registered York.the as the Co., of & ownership Cede Beneficial of name the in registered be will Bonds The thereof. multiple integral and $5,000 of denominations in form registered in issued be will “Authority”) (the Authority information concerningfederalandstatetaxmattersrelating further totheBonds,see“TAX For MATTERS” herein. institutions). financial certain of income tax-exempt to relatinginterest and expenses to (relating amended as 1986, of Code Revenue Internal the of Pennsylvania CorporateNetIncomeTax. Commonwealth ofPennsylvaniaandtheinterest ontheBondsisexemptfrom theCommonwealthofPennsylvaniaPersonalIncomeTax andtheCommonwealthof opinion thatunderthelawsofCommonwealthPennsylvaniaaspresently enactedandconstrued,theBondsare exemptfrom personalproperty taxesinthe documents tocomplywithrequirements oftheInternalRevenueCode1986,asamendedandapplicableregulations thereunder. BondCounselisalsoofthe such alternativeminimumtax.ThisopinionofBondCounselissubjecttocontinuingcompliancebythe Authority withitscovenantsintheResolutionandother in the case of corporations (as defined for federal income tax purposes) such interest is taken into account in determining adjusted current earnings for purposes of federal incometaxationandisnotanitemoftaxpreference forpurposesofthefederalalternativeminimumtaximposedonindividualsandcorporations,although The Bonds are offered for delivery when, as and if issued by the Authority and received by the Underwriter subject to the approving legal opinion of opinion legal approving the to subject Underwriter the by received the and by Authority issued if and as when, delivery for offered are Bonds The Proceeds of the Bonds will be used to: (1) undertake the acquisition and construction of certain alterations, additions and improvements to its Sewer its to improvements and additions alterations, certain of construction and acquisition the undertake (1) to: used be will Bonds the of Proceeds THE BONDS ARE LIMITEDOBLIGATIONS OF THE AUTHORITY. NEITHER THE CREDIT NOR THE TAXING and POWEROF Authority the between into entered “Indenture”), (the 2018 ______, of as dated Indenture Trust a to pursuant issued are Bonds The The Bondsare subjecttoredemption prior tomaturityasdescribedherein. until year each of 1 December and 1 June on semiannually thereafter and 2018, 1, December on initially payable is Bonds the of each on Interest ValleyGlendale of “Bonds”) (the $7,125,000* Municipal of amount principal aggregate the in 2018, Waterof and Series Sewer Bonds, The Revenue 265 Section by contemplated effect the with and purposes the for Authority, the by obligations” tax-exempt “qualified as designated been have Bonds The In theopinionofBondCounsel,underexistingstatutes,regulations andjudicialdecisions,interest ontheBondsisexcludedfrom gross incomeforpurposesof MATURITIES, PRINCIPAL AMOUNTS, INTEREST RATES AND INITIAL OFFERING YIELDS/PRICES AND CUSIP PRELIMINARY OFFICIAL STATEMENT DATED JUNE12, 2018 Glendale ValleyGlendale Municipal Authority Sewer and Water RevenueBonds,Seriesof2018 (Cambria County, Pennsylvania) (As shownoninsidecover) $7,125,000*

First Interest Payment:December1,2018 Principal Due: RATING: Moody’s: Ba1(StableOutlook) December1,asshownoninsidecover (See Ratingsherein)

$7,125,000* Glendale Valley Municipal Authority (Cambria County, Pennsylvania) Sewer and Water Revenue Bonds, Series of 2018 Dated: Date of Delivery Principal Due: December 1, as shown below Interest Due: June 1 and December 1 First Interest Payment: December 1, 2018

Maturity Date (December 1) Principal Interest Initial Offering Initial Offering CUSIP Year Amounts Rate Yields Prices Numbers (1) 2018 20,000 2019 10,000 2020 40,000 2021 45,000 2022 120,000 2023 125,000 2024 135,000 2025 140,000 2026 150,000 2027 155,000 2028 160,000 2029 165,000 2030 175,000 2031 185,000 2032 195,000 2033 210,000 2034 215,000 2035 225,000 2036 240,000 2037 250,000 2038 265,000 2039 270,000 2040 290,000 2041 305,000 2042 320,000 2043 330,000 2044 350,000 2045 375,000 2046 390,000 2047 405,000 2048 425,000 2049 440,000

1) The above CUSIP (Committee on Uniform Securities Identification Procedures) numbers have been assigned by an organization not affiliated with the Authority or the Underwriter, and such parties are not responsible for the selection or use of the CUSIP numbers. The CUSIP numbers are included solely for the convenience of bondholders and no representation is made as to the correctness of such CUSIP numbers. CUSIP numbers assigned to securities may be changed during the term of such securities based on a number of factors including, but not limited to, the refunding or defeasance of such issue or the use of secondary market financial products. Neither the Authority nor the Underwriter has agreed to, and there is no duty or obligation to, update this Official Statement to reflect any change or correction in the CUSIP numbers set forth above. *Preliminary, subject to change.

GLENDALE VALLEY MUNICIPAL AUTHORITY AUTHORITY BOARD MEMBERS

Richard Gates ...... Chairman Thomas Roles ...... Vice Chairman Thomas Hollis ...... Secretary Peggy Lidwell ...... Treasurer Tracy Plessinger ...... Asst. Secretary Leo Gates ...... Member

OPERATIONS MANAGER BOND COUNSEL John Patrick Lynch and Lynch Pittsburgh, Pennsylvania CONSULTING ENGINEER TRUSTEE Keller Engineers, Inc. Manufacturers and Traders Trust Company Hollidaysburg, Pennsylvania Harrisburg, Pennsylvania

AUTHORITY SOLICITOR UNDERWRITER Gleason, Barbin & Markovitz LLP M&T Securities, Inc. Johnstown, Pennsylvania Baltimore, Maryland

AUDITOR UNDERWRITER’S COUNSEL Kotzan CPA & Associates McNees Wallace & Nurick LLC Johnstown, Pennsylvania Lancaster, Pennsylvania AUTHORITY ADDRESS 1800 Beaver Valley Road Flinton, PA 16640

IN CONNECTION WITH THIS OFFERING, THE UNDERWRITER MAY OVERALLOT OR EFFECT TRANSACTIONS WHICH STABILIZE OR MAINTAIN THE MARKET PRICE OF THE BONDS OFFERED HEREBY AT LEVELS ABOVE THOSE THAT MIGHT OTHERWISE PREVAIL IN THE OPEN MARKET. ANY SUCH STABILIZING, IF COMMENCED, MAY BE DISCONTINUED AT ANY TIME.

No dealer, broker, salesman or other person has been authorized by the Authority 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 any of the foregoing persons. 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 state in which it is unlawful for such person to make such offer, solicitation, or sale. The information set forth herein has been obtained from the Authority and other sources that are believed to be reliable but is not guaranteed as to accuracy or completeness by, and is not to be construed as, a representation by the Underwriter. The information and expressions of opinion in this Official Statement are subject to change without notice and neither the delivery of this Official Statement nor any sale made under it shall, under any circumstances, create any implication that there has been no change in any of the information set forth in this Official Statement since the date hereof.

If and when included in this Official Statement, the words “expects,” “forecasts,” “projects,” “intends,” “anticipates,” “estimates,” “assumes” and analogous expressions are intended to identify forward-looking statements and any such statements inherently are subject to a variety of risks and uncertainties that could cause actual results to differ materially from those that have been projected. Such risks and uncertainties which could affect the revenues and obligations of the Authority include, among others, changes in economic conditions, mandates from other governments and various other events, conditions and circumstances, many of which are beyond the control of the Authority. Such forward-looking statements speak only as of the date of this Official Statement. The Authority disclaims any obligation or undertaking to release publicly any updates or revisions to any forward-looking statement contained herein to reflect any changes in the Authority’s expectations with regard thereto or any change in events, conditions or circumstances on which any such statement is based.

All summaries herein of documents and agreements are qualified in their entirety by reference to such documents and agreements, and all summaries herein of the Bonds are qualified in their entirety by reference to the form thereof included in the aforesaid documents and agreements.

NO REGISTRATION STATEMENT RELATING TO THE BONDS HAS BEEN FILED WITH THE SECURITIES AND EXCHANGE COMMISSION (THE “COMMISSION”) OR WITH ANY STATE SECURITIES COMMISSION. IN MAKING AN INVESTMENT DECISION, INVESTORS MUST RELY ON THEIR OWN EXAMINATION OF THE TERMS OF THE OFFERING, INCLUDING THE MERITS AND RISKS INVOLVED. THE BONDS HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE COMMISSION OR ANY STATE SECURITIES COMMISSION OR REGULATORY AUTHORITY. THE FOREGOING AUTHORITIES HAVE NOT PASSED UPON THE ACCURACY OR ADEQUACY OF THIS OFFICIAL STATEMENT. ANY REPRESENTATION TO THE CONTRARY MAY BE A CRIMINAL OFFENSE.

TABLE OF CONTENTS

Page INTRODUCTION ...... 1 PURPOSE OF THE ISSUE ...... 2 Estimated Sources and Uses of Bond Proceeds ...... 2 THE BONDS ...... 2 Description ...... 2 Payment of Principal and Interest ...... 3 Transfer, Exchange and Registration of Bonds ...... 3 REDEMPTION OF BONDS ...... 4 Mandatory Redemption ...... 4 Optional Redemption ...... 4 Notice of Redemption ...... 4 Manner of Redemption ...... 5 BOOK-ENTRY ONLY SYSTEM ...... 5 SECURITY AND SOURCES OF PAYMENT FOR THE BONDS ...... 7 General ...... 7 Receipts and Revenues from the Sewer and Water System ...... 7 Rate Covenant ...... 7 Debt Service Reserve Fund ...... 7 PARITY DEBT ...... 8 CERTAIN PROVISIONS OF THE INDENTURE ...... 8 Introduction ...... 8 Pledge ...... 8 Deposit of Bond Proceeds ...... 8 Issuance of Additional Bonds ...... 8 Construction of Capital Improvements Projects ...... 9 Water Rates, Sewer Rates and Other Charges ...... 9 Deposit of Receipts and Revenues with Trustee ...... 9 2018 Clearing Fund ...... 9 Escrow Fund ...... 9 Debt Service Fund ...... 9 Debt Service Reserve Fund ...... 10 Capital Improvements and Redemption Fund ...... 10 Rebate Fund ...... 11 Investment of Funds ...... 11 The Trustee ...... 11 Amendments ...... 12 Defaults and Remedies ...... 12 THE AUTHORITY ...... 12 DESCRIPTION OF THE PROJECT ...... 13 GENERAL SYSTEM DESCRIPTION ...... 14 THE WATER SYSTEM ...... 14 Existing and Anticipated Users of the System ...... 15 Water Rentals or Charges ...... 15

Tapping Fee ...... 15 Customer Characteristics ...... 15 THE SEWER SYSTEM ...... 16 Existing and Anticipated Users of the System ...... 16 Sewer Rentals or Charges ...... 16 Tapping Fee ...... 16 Customer Characteristics ...... 17 FINANCIAL REVIEW ...... 18 FUTURE FINANCING ...... 19 TAX MATTERS ...... 19 Tax Exemption — Opinion of Bond Counsel ...... 19 Corporate Alternative Minimum Tax ...... 19 Branch Profits Tax ...... 19 Additional Tax Consequences ...... 19 Qualified Tax-Exempt Obligations ...... 19 Not Arbitrage Bonds ...... 20 Original Issue Discount ...... 20 Original Issue Premium ...... 20 CONTINUING DISCLOSURE UNDERTAKING ...... 20 RATING ...... 21 UNDERWRITING ...... 21 RELATIONSHIP OF PARTIES ...... 21 LEGAL PROCEEDINGS ...... 21 LEGAL OPINION ...... 21 MISCELLANEOUS ...... 22

APPENDIX A: CERTAIN DEMOGRAPHIC AND ECONOMIC INFORMATION APPENDIX B: FORM OF BOND COUNSEL OPINION APPENDIX C: AUDITED FINANCIAL STATEMENTS OF THE AUTHORITY FOR THE FISCAL YEARS ENDING DECEMBER 31, 2016 AND DECEMBER 31, 2017 APPENDIX D: FORM OF CONTINUING DISCLOSURE CERTIFICATE

OFFICIAL STATEMENT

$7,125,000 Glendale Valley Municipal Authority (Cambria County, Pennsylvania) Sewer and Water Revenue Bonds, Series of 2018

INTRODUCTION

This Official Statement, including the cover page, the inside cover page and the attached appendices, is to provide information regarding the offering by Glendale Valley Municipal Authority (the “Authority”) of $7,125,000* Sewer and Water Revenue Bonds, Series of 2018 (the “Bonds”).

The Bonds are authorized to be issued pursuant to the provisions of the Pennsylvania Municipality Authorities Act, as amended, 53 Pa C.S.A. Section 5601 et seq. (the “Act”), and pursuant to the provisions of a Trust Indenture dated as of ______, 2018 (the “Indenture”), between the Authority and Manufacturers and Traders Trust Company, Harrisburg, Pennsylvania, as t rustee (the “Trustee”).

The Authority previously issued its $8,173,000 aggregate principal amount Sewer Revenue Bond, Series of 2013 (the “RUS Sewer Bond”) and $1,615,000 aggregate principal amount Water Revenue Bond, Series of 2013 (the “RUS Water Bond” and together with the RUS Sewer Bond, the “RUS Bonds”), each as administered by the USDA’s Rural Utilities Service and secured by RUS Bond Resolutions dated December 18, 2012 by a lien on the “Receipts and Revenues” of the Sewer and Water System (as hereinafter defined). The proceeds of the RUS Bonds were used for, inter alia, the acquisition, construction and improvement of the Sewer and Water System. The Bonds will be secured on a parity with the RUS Bonds. See the caption “PARITY DEBT” set forth in this Official Statement for a more complete description. The Authority may in the future issue additional bonds on parity with the RUS Bonds and the Bonds (the “Additional Bonds”) for the purposes and under the conditions set forth in the Indenture.

The Bonds are being issued pursuant to the Act, and pursuant to the Indenture and an authorizing Resolution adopted by the Authority on March 26, 2018 (the “Resolution”).

The Bonds are payable solely from and secured under the Indenture by a pledge to the Trustee of, among other things: (i) Receipts and Revenues from the Sewer and Water System, as described herein, and (ii) certain funds created under the Indenture.

There follows in this Official Statement descriptions and summaries of the Bonds and the Indenture. Such descriptions and summaries are only brief outlines of some of the provisions thereof. In addition, all references to other materials not purporting to be quoted in full are only brief outlines of some of the provisions thereof. All capitalized terms and/or phrases used in this Official Statement and not otherwise defined shall have the meanings set forth in the Indenture. For a complete statement of the provisions of the Indenture, reference is made to the document in its entirety, a copy of which is on file at the corporate trust office of the Trustee in Harrisburg, Pennsylvania.

THE BONDS ARE LIMITED OBLIGATIONS OF THE AUTHORITY. NEITHER THE CREDIT NOR THE TAXING POWER OF THE TOWNSHIPS OF READE AND WHITE (COLLECTIVELY, THE “TOWNSHIPS”), THE COMMONWEALTH OF PENNSYLVANIA (THE “COMMONWEALTH”) OR ANY POLITICAL SUBDIVISION THEREOF IS PLEDGED FOR THE PAYMENT OF THE PRINCIPAL OF, PREMIUM, IF ANY, OR INTEREST ON THE BONDS; NOR SHALL THE BONDS BE OR BE DEEMED TO BE OBLIGATIONS OF THE TOWNSHIPS, THE COMMONWEALTH OR ANY POLITICAL SUBDIVISION THEREOF; NOR SHALL THE TOWNSHIPS, THE COMMONWEALTH OR ANY POLITICAL SUBDIVISION THEREOF BE LIABLE FOR THE PAYMENT OF PRINCIPAL OF, PREMIUM, IF ANY, OR INTEREST ON THE BONDS. THE AUTHORITY HAS NO TAXING POWER.

Neither the delivery of this Official Statement nor any sale of the Bonds made hereunder shall, under any circumstances, create an implication that thereafter there have been no changes in the affairs of the Authority since the date of this Official Statement or the earliest date as of which certain information contained herein is given.

 Preliminary, subject to change. 1 PURPOSE OF THE ISSUE

Proceeds of the Bonds will be used to: (1) undertake the acquisition and construction of certain alterations, additions and improvements to its Sewer and Water System (the “Capital Improvements Project”), (2) currently refund certain outstanding indebtedness of the Authority, consisting of the following (collectively the “Refunding Project”): (a) the Authority’s outstanding General Obligation Note, Series of 2012 in the original aggregate principal amount of $3,426,200 (the “2012 Note”), (b) the Authority’s outstanding Guaranteed Water Project Note, Series of 2016 in the original aggregate principal amount of $250,000 (the “2016 Water Note”), (c) the Authority’s outstanding Guaranteed Sewer Project Note, Series of 2016 in the original aggregate principal amount of $250,000 (the “2016 Sewer Note”), and (d) the Authority’s outstanding loan with the Pennsylvania Infrastructure Investment Authority (“Pennvest”) in the original aggregate principal amount of $695,400 (the “Pennvest Note,” and together with the 2012 Note, the 2016 Water Note and the 2016 Sewer Note, the “Refunded Notes”), (3) fund a deposit to the Debt Service Reserve Fund established under the Indenture, and (4) pay for the cost of issuing the Bonds.

For a further description see the section titled “DESCRIPTION OF THE PROJECT” herein.

Estimated Sources and Uses of Bond Proceeds

The following is a summary of the estimated sources and uses of the proceeds from the issuance of the Bonds.

Source of Funds Bond Proceeds ...... Net Original Issue Premium/(Discount)...... Total Source of Funds......

Use of Funds Construction Fund Deposit...... Escrow Fund Deposit...... Debt Service Reserve Fund Deposit Costs of Issuance(1)...... Total Use of Funds......

(1)Includes legal, printing, rating, underwriter’s discount, trustee fees, and miscellaneous costs.

THE BONDS

Description

The Bonds will be issued in fully registered form in denominations of $5,000 and integral multiples thereof, will be in the aggregate principal amount of $7,125,000, will be dated as of the date of delivery thereof (the “Date of Delivery”) and will bear interest at the rates and mature in the amounts and on the dates set forth in the inside cover of this Official Statement. Interest on the Bonds will be payable initially on December 1, 2018, and thereafter, semiannually on June 1 and December 1 of each year until the maturity date of such Bond or, if such Bond is subject to redemption prior to maturity, until the date fixed for redemption thereof, if payment of the redemption price has been duly made or provided for.

When issued, the Bonds will be registered in the name of Cede & Co., as nominee for The Depository Trust Company (“DTC”), New York, New York. Purchasers of the Bonds (the “Beneficial Owners”) will not receive physical delivery of bond certificates, and beneficial ownership of the Bonds will be evidenced only by book entries. See “BOOK-ENTRY ONLY SYSTEM” herein.

 Preliminary, subject to change. 2 Payment of Principal and Interest

So long as Cede & Co., as nominee of DTC, is the registered owner of the Bonds, payments of principal of, redemption premium, if any, and interest on the Bonds, when due, are to be made to DTC and all such payments shall be valid and effective to satisfy fully and to discharge the obligations of the Authority with respect to, and to the extent of, principal, redemption premium, if any, and interest so paid.

If the use of the Book-Entry Only System for the Bonds is discontinued for any reason, bond certificates will be issued to the Beneficial Owners of the Bonds and payment of principal, redemption price, if any, and interest on the Bonds shall be as described in the following paragraphs.

The principal of the Bonds, when due upon maturity or upon any earlier redemption, will be paid to the registered owners of the Bonds, or registered assigns, upon surrender of the Bonds to the Trustee acting as trustee and paying agent for the Bonds, at its principal corporate trust office in Harrisburg, Pennsylvania (or to any successor trustee at its designated office(s)).

Interest on each of the Bonds will be payable to the registered owner of such Bond from the interest payment date next preceding the date of registration and authentication of the Bond, unless: (a) such Bond is registered and authenticated as of an interest payment date, in which event such Bond shall bear interest from said interest payment date, or (b) such Bond is registered and authenticated after a Record Date (hereinafter defined) and before the next succeeding interest payment date, in which event such Bond shall bear interest from such interest payment date, or (c) such Bond is registered and authenticated on or prior to the Record Date preceding December 1, 2018, in which event such Bond shall bear interest from the Dated Date of the Bonds, or (d) as shown by the records of the Paying Agent, interest on such Bond shall be in default, in which event such Bond shall bear interest from the date to which interest was last paid on such Bond. Interest on a certificated Bond will be payable by check drawn on the Paying Agent, which shall be mailed to the registered owner whose name and address shall appear, at the close of business on the fifteenth (15th) day (whether or not a day on which the Paying Agent is open for business) next preceding each interest payment date (the “Record Date”), on the registration books maintained by the Paying Agent, irrespective of any transfer or exchange of the Bond subsequent to such Record Date and prior to such interest payment date, unless the Authority shall be in default in payment of interest due on such interest payment date. In the event of any such default, such defaulted interest shall be payable to the person in whose name the Bond is registered at the close of business on a special record date for the payment of such defaulted interest established by notice mailed by the Paying Agent to the registered owner of such Bond not less than fifteen (15) days preceding such special record date. Such notice shall be mailed to the person in whose name such Bond is registered at the close of business on the fifth (5th) day preceding the date of mailing.

If the date for payment of the principal of or interest on any Bonds shall be a Saturday, Sunday, legal holiday or a day on which banking institutions in the Commonwealth are authorized or required by law or executive order to close, then the date for payment of such principal or interest shall be the next succeeding day which is not a Saturday, Sunday or legal holiday or a day on which banking institutions are authorized to close, and payment on such date shall have the same force and effect as if made on the nominal date established for such payment.

Transfer, Exchange and Registration of Bonds

Subject to provisions described below under “Book-Entry Only System,” Bonds are transferrable by the registered holder thereof or his duly authorized attorney at the principal trust office of the Trustee, upon surrender of the Bonds, accompanied by a duly executed instrument of transfer, in form and with guarantee of signature satisfactory to the Trustee, subject to such reasonable regulations as the Authority or the Trustee may prescribe, and upon payment of any taxes or other governmental charges incident to such transfer. Upon any such transfer, a new registered Bond or Bonds in the same aggregate principal amount will be issued to the transferee. The person in whose name the Bonds are registered shall be deemed to be the absolute owner hereof for all purposes, whether or not the Bonds shall be overdue, and the Authority and the Trustee shall not be affected by any notice to the contrary.

Neither the Authority nor the Trustee shall be required to transfer or exchange any Bonds for a period of fifteen (15) days next preceding any interest payment date and to and including said interest payment date, or any selection by lot of Bonds to be redeemed, nor to transfer or exchange any Bonds selected, called or being called for redemption.

3 REDEMPTION OF BONDS

Mandatory Redemption

The Bonds stated to mature on ______1 of the years ____ and ____ are subject to mandatory redemption, in part, prior to maturity, by lot within a maturity, at a redemption price equal to 100% of the principal amount, on ______1, of the years and in the amounts set forth below:

Term Bonds due ______1, ____

Year Amount

* * Principal maturity.

Term Bonds due ______1, ____

Year Amount

* * Principal maturity.

In lieu of such mandatory redemption, the Trustee, on behalf of the Authority, may purchase Bonds, from funds on deposit in the Series of 2018 Sinking Fund created under the Indenture, at a price not to exceed the principal amount plus accrued interest.

Optional Redemption

The Bonds maturing on or after ______, 20__, may be redeemed, prior to maturity, at the option of the Authority, from any moneys available, as a whole, on ______1, 20__, or on any date thereafter, or in part, on ______1, 20__, or on any interest payment date thereafter, in any order of their maturities, and by lot in $5,000 increments within a maturity, in each case upon payment of a redemption price of 100% of the principal amount thereof, together with interest accrued thereon to the date fixed for said redemption.

Notice of Redemption

Whenever the Authority shall, by resolution of its Board, determine to redeem all or part of the Bonds in accordance with the right reserved so to do, it shall cause a notice of intention to redeem, signed in the name of the Authority by its Secretary or Assistant Secretary, to be given at least thirty (30) days but not more than sixty (60) days prior to the date thereof to the Trustee. The Trustee in the name of the Authority, shall deliver via first class mail notice to the Registered Holders of the affected Bonds to be redeemed, at the last address of the Registered Holder appearing upon the registration book. At least thirty (30) days before the redemption date, the Authority shall mail such notice to Standard & Poor's Global Ratings Group, Moody's Investors Service, Inc., or such other rating agency and the Representative of the Purchasers of each series of Bonds being redeemed, but failure so to mail any such notices shall not affect the validity of the proceedings for redemption. Such notice shall specify the maturities and the serial numbers of the Bonds so to be redeemed, if less than all are to be redeemed, the date fixed for redemption, the redemption price and the place of payment, and shall further state that, from and after such date, interest thereon will cease to accrue.

On the date designated for redemption, and money for payment of the principal and accrued interest being held by the Trustee, interest on the Bonds and portions thereof so called for redemption shall cease to accrue and such Bonds and portions thereof shall cease to be entitled to any benefit or security under the Indenture, and registered owners of such Bonds or portions thereof so called for redemption shall have no rights with respect to such Bonds, except to receive payment of the principal of and accrued interest on such Bonds to the date fixed for redemption.

If at a time of mailing of a notice of redemption the Authority has not deposited with the Trustee (or, in the case of a refunding, with another bank or depositary acting as refunding escrow agent) money sufficient to redeem all Bonds called for redemption, the notice of redemption may state that is it is conditional, i.e., that it is subject to the deposit of sufficient redemption money with the Trustee not later than the redemption date, and such notice shall be of no effect unless such money is so deposited.

If the redemption date for any Bonds shall be a Saturday, Sunday, legal holiday or a day on which banking institutions in the Commonwealth of Pennsylvania are authorized by law or executive order to close, then the date for payment of the principal, and interest upon such redemption shall be the next succeeding day which is not a Saturday, Sunday legal holiday or a day

4 on which such banking institutions are authorized to close, and payment on such date shall have the same force and effect as if made on the nominal date of redemption.

Manner of Redemption

If a Bond is of a denomination larger than $5,000, a portion of such Bond may be redeemed. For the purposes of redemption, a Bond shall be treated as representing that number of Bonds which is obtained by dividing the principal amount thereof by $5,000, each $5,000 portion of such Bonds being subject to redemption. In the case of partial redemption of a Bond, payment of the redemption price shall be made only upon surrender of such Bond in exchange for Bonds of authorized denominations in aggregate principal amount equal to the unredeemed portion of the principal amount thereof.

BOOK-ENTRY ONLY SYSTEM

The information in this section has been obtained from materials provided by DTC for such purpose. The Authority and the Underwriter do not guaranty the accuracy or completeness of such information, and such information is not to be construed as a representation of the Authority or the Underwriter.

The Depository Trust Company (“DTC”), New York, NY, will act as securities depository for the Bonds. The Bonds will be issued as fully-registered bonds registered in the name of Cede & Co. (DTC’s partnership nominee) or such other name as may be requested by an authorized representative of DTC. One fully-registered Bond certificate will be issued for each maturity and series of the Bonds, each in the aggregate principal amount of such maturity, and will be deposited with DTC. If, however, the aggregate principal amount of any maturity 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.

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 of the New York Banking Law, a member of the Federal Reserve System, a “clearing corporation” within the meaning of the New York Uniform Commercial Code, and a “clearing agency” registered pursuant to the provisions of Section 17A of the Securities Exchange Act of 1934. DTC holds and provides asset servicing for over 3. million issues of U.S. and non-U.S. equity issues, corporate and municipal debt issues, and money market instruments (from over 100 countries) that DTC’s participants (“Direct Participants”) deposit with DTC. DTC also facilitates the post-trade settlement among Direct Participants of sales and other securities transactions in deposited securities, through electronic computerized book-entry transfers and pledges between Direct Participants’ accounts. This eliminates the need for physical movement of securities certificates. Direct Participants include both U.S. and non-U.S. securities brokers and dealers, banks, trust companies, clearing corporations, and certain other organizations. DTC is a wholly-owned subsidiary of The Depository Trust & Clearing Corporation (“DTCC”). DTCC is the holding company for DTC, National Securities Clearing Corporation and Fixed Income Clearing Corporation, all of which are registered clearing agencies. DTCC is owned by the users of its regulated subsidiaries. Access to the DTC system is also available to others such as both U.S. and non-U.S. securities brokers and dealers, banks, trust companies, and clearing corporations that clear through or maintain a custodial relationship with a Direct Participant, either directly or indirectly (“Indirect Participants”). DTC has a Standard & Poor’s rating of AA+. The DTC Rules applicable to its Participants are on file with the Securities and Exchange Commission. More information about DTC can be found at www.dtcc.com.

Purchases of Bonds under the DTC system must be made by or through Direct Participants, which will receive a credit for the Bonds on DTC’s records. The Ownership interest of each actual purchaser of each Bond (“Beneficial Owner”) is in turn to be recorded on the Direct and Indirect Participants’ records. Beneficial Owners will not receive written confirmation from DTC of their purchase. Beneficial Owners are, however, expected to receive written confirmations providing details of the transaction, as well as periodic statements of their holdings, from the Direct or Indirect Participant through which the Beneficial Owner entered into the transaction. Transfers of ownership interests in the Bonds are to be accomplished by entries made on the books of Direct and Indirect Participants acting on behalf of Beneficial Owners. Beneficial Owners will not receive certificates representing their ownership interests in Bonds, except in the event that use of the book-entry system for the Bonds is discontinued.

To facilitate subsequent transfers, all Bonds deposited by Direct Participants with DTC are registered in the name of DTC’s partnership nominee, Cede & Co., or such other name as may be requested by an authorized representative of DTC. The deposit of Bonds with DTC and their registration in the name of Cede & Co. or such other DTC nominee do not affect any change in beneficial ownership. DTC has no knowledge of the actual Beneficial Owners of the Bonds; DTC’s records reflect only the identity of the Direct Participants to whose accounts such Bonds are credited, which may or may not be the Beneficial Owners. The Direct and Indirect Participants will remain responsible for keeping account of their holdings on behalf of their customers.

Conveyance of notices and other communications by DTC to Direct Participants, by Direct Participants to Indirect Participants, and by Direct Participants and Indirect Participants to Beneficial Owners will be governed by arrangements among them, subject to any statutory or regulatory requirements as may be in effect from time to time. Beneficial Owners of Bonds may wish to take certain steps to augment the transmission to them of notices of significant events with respect to the Bonds, such as redemptions, tenders, defaults, and proposed amendments to the Bond documents. For example, Beneficial Owners of Bonds may wish to ascertain that the nominee holding the Bonds 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.

5

Redemption notices shall be sent to DTC. If less than all of the Bonds within a series and maturity are being redeemed, DTC’s practice is to determine by lot the amount of the interest of each Direct Participant in such series and maturity to be redeemed.

Neither DTC nor Cede & Co. (nor any other DTC nominee) will consent or vote with respect to Bonds unless authorized by a Direct Participant in accordance with DTC’s MMI Procedures. Under its usual procedures, DTC mails an Omnibus Proxy to the Authority as soon as possible after the record date. The Omnibus Proxy assigns Cede & Co.’s consenting or voting rights to those Direct Participants to whose accounts Bonds are credited on the record date (identified in a listing attached to the Omnibus Proxy).

Principal, interest and redemption payments on the Bonds will be made to Cede & Co., or such other nominee as may be requested by an authorized representative of DTC. DTC’s practice is to credit Direct Participants’ accounts upon DTC’s receipt of funds and corresponding detail information from the Authority or the Trustee, on payable date in accordance with their respective holdings shown on DTC’s records. Payments by Participants to Beneficial Owners will be governed by standing instructions and customary practices, as 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, the Trustee, or the Authority, subject to any statutory or regulatory requirements as may be in effect from time to time. Payment of principal, interest and redemption payments on the Bonds to Cede & Co. (or such other nominee as may be requested by an authorized representative of DTC) is the responsibility of the Authority or the Trustee, disbursement of such payments to Direct Participants will be the responsibility of DTC, and disbursement of such payments to the Beneficial Owners will be the responsibility of Direct and Indirect Participants.

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

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

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

NEITHER THE AUTHORITY NOR THE TRUSTEE WILL HAVE ANY RESPONSIBILITY OR OBLIGATION TO ANY DTC PARTICIPANT, INDIRECT PARTICIPANT OR BENEFICIAL OWNER OR ANY OTHER PERSON WITH RESPECT TO: (1) THE BONDS; (2) THE ACCURACY OF ANY RECORDS MAINTAINED BY DTC OR ANY DTC PARTICIPANT OR INDIRECT PARTICIPANT; (3) THE PAYMENT BY DTC OR ANY DTC PARTICIPANT OR INDIRECT PARTICIPANT OF ANY AMOUNT DUE TO ANY BENEFICIAL OWNER IN RESPECT OF THE PRINCIPAL OR REDEMPTION PRICE OF OR INTEREST ON THE BONDS; (4) THE DELIVERY TO ANY BENEFICIAL OWNER BY DTC OR ANY DTC PARTICIPANT OR INDIRECT PARTICIPANT OF ANY NOTICE WHICH IS REQUIRED OR PERMITTED UNDER THE TERMS OF THE INDENTURE TO BE GIVEN TO BONDHOLDERS; (5) THE SELECTION OF THE BENEFICIAL OWNERS TO RECEIVE PAYMENT IN THE EVENT OF ANY PARTIAL REDEMPTION OF THE BONDS; OR (6) ANY OTHER ACTION TAKEN BY DTC AS BONDHOLDER.

The Authority and the Trustee cannot give any assurances that DTC or the Direct or Indirect Participants will distribute payments of the principal or redemption price of and interest on the Bonds paid to DTC or its nominee, as the registered owner of the Bonds, or any redemption or other notices, to the Beneficial Owners or that they will do so on a timely basis, or that DTC will serve and act in the manner described in this Official Statement.

6 SECURITY AND SOURCES OF PAYMENT FOR THE BONDS

General

The Bonds are secured, to the extent provided in the Indenture, by the pledge thereunder of the Receipts and Revenues from the Sewer and Water System and by amounts in, or required to be deposited in, certain funds held by the Trustee under the Indenture. The Indenture permits the Authority to issue Additional Bonds constituting Sewer and Water Revenue Bonds which shall be equally and ratably secured with the Bonds and the RUS Bonds, upon the terms and conditions set forth in the Indenture (See “Summary of Certain Provisions of the Indenture - Additional Bonds”).

The Sewer and Water System is defined in the Indenture as follows:

(i) all sewer properties and all water properties owned by the Authority at the time of execution of the Indenture;

(ii) all capital additions constructed or otherwise acquired; and

(iii) all franchises used or useful to the Authority at such particular time in the rendering of sewer services or water services, by it through the operation of the properties referred to in this definition.

Receipts and Revenues from the Sewer and Water System

Receipts and Revenues from the Sewer and Water System, as defined under the Indenture, shall mean all rates, fees, rents and charges (excluding tap charges and assessments) derived from the Sewer and Water System, as expanded by the Capital Improvements Project or capital additions constructed and interest earned on funds created under the Indenture and deposited to the credit of the Debt Service Fund, established or to be established, levied and collected in connection with, and all other payments, receipts and revenues of whatever kind or character arising from the operation and ownership by the Authority of the Sewer and Water System or any part thereof except nonrecurring sources such as grants.

Rate Covenant

Under the Indenture the Authority covenants that it will adopt and will charge, maintain and collect throughout its service area so long as any Bonds remain outstanding and funds for their payment have not been provided, reasonable and, within reasonable classifications, uniform sewer and water service rates and other charges, including assessments, tapping fees and initial service charges and other unrelated business charges, after making due and reasonable allowances for delinquencies, contingencies and a margin of error in the estimates, together with all other anticipated receipts and revenues of the Authority, including interest and profits earned on investments in other funds hereunder and transferred to the Revenue Fund, shall be at all times at least sufficient with respect to the Sewer and Water System to provide (i) funds to pay the current expenses of the Authority, and (ii) an amount equal to 100% of the debt service requirements with respect to its outstanding Bonds during the then current fiscal year of the Authority; and (iii) such other amounts for reserves which the Authority and the Consulting Engineers shall deem to be advisable for the benefit of the Sewer and Water System or the Bondholders.

The Authority further covenants with the holders of the Bonds that the sewer and water service rates and other charges will be classified in a reasonable way to cover the sewage treatment and water distribution and treatment services so that the sewer and water service rates and other charges will be uniform in application to supply sewage treatment and water distribution and treatment services falling within any reasonable class, firm or corporation served. The Authority also covenants that in addition to the employment of all other enforcement mechanisms provided under the law for the recovery of unpaid and delinquent sewer and water service charges, it will also employ, if legally permitted to do so, and if such method is financially practical, the discontinuance of sewer and/or water service to the delinquent property and will take such legal and administrative actions as are required to effect this enforcement procedure. The Authority also covenants that it will not contract with any public body or customer for the furnishing of sewer and water services at prices less than their reasonable worth or prices less than those approved by the Consulting Engineer.

The Authority further covenants with the holders of the Bonds that if at any time the revenues collected shall not be sufficient to enable the Authority to comply with the provisions of the Rate Covenant described above, it will promptly revise its sewer and water service rates and other charges so that the Authority will be in compliance with the Rate Covenant and any deficiencies in transfers of funds required to be made as described under the Indenture will be remedied before the end of the next ensuing fiscal year.

Debt Service Reserve Fund

The Indenture establishes a Debt Service Reserve Fund securing the Bonds, into which $______, representing fifty percent (50%) of the maximum annual debt service on all bonds outstanding under the Indenture (the “Debt Service Reserve Requirement”), namely, the Bonds, shall be deposited on the settlement date of the Bonds. The Trustee shall be authorized, without any direction from the Authority, to transfer moneys from the Debt Service Reserve Fund to the Debt Service Fund or the Series of 2018 Sinking Fund to the extent that the moneys in the Debt Service Fund or the Series of 2018 Sinking Fund may at any time be insufficient to pay the Bonds and any interest appertaining to the Bonds as the same shall become due or any costs involved therewith or to make the withdrawals and deposits required pursuant to the terms of the Indenture.

7 After first having paid its current expenses and having made the deposits provided for in the Indenture, the Authority shall withdraw from the Revenue Fund and deposit with the Trustee for the credit of the Debt Service Reserve Fund on or before each May 25 and November 25, beginning when required, and in installment amounts which when made will cure any deficiency within twelve (12) months of said payment date, such amounts of the remaining balance in the Revenue Fund as will be sufficient to replenish any deficiency in the Debt Service Reserve Fund resulting from the transfer of moneys therefrom to the Debt Service Fund. Said sum shall be required to be maintained by the Authority in the Debt Service Reserve Fund until such time as said amount shall be increased or decreased in connection with the issuance of Additional Bonds under the Indenture.

PARITY DEBT

The Authority previously issued the RUS Bonds secured by the Receipts and Revenues from the Sewer and Water System. The Bonds are secured on a parity basis with the RUS Bonds.

CERTAIN PROVISIONS OF THE INDENTURE

THE FOLLOWING IS A SUMMARY OF CERTAIN PROVISIONS OF THE INDENTURE. THE SUMMARY SHOULD NOT BE REGARDED AS FULL STATEMENTS OF THE INDENTURE ITSELF, OR OF THE PORTIONS SUMMARIZED. REFERENCE IS MADE TO THE INDENTURE IN ITS ENTIRETY FOR THE COMPLETE STATEMENTS OF THE PROVISIONS THEREOF. A COPY OF WHICH MAY BE REVIEWED AT THE OFFICES OF THE AUTHORITY OR THE TRUSTEE. CAPITALIZED TERMS AND PHRASES NOT OTHERWISE DEFINED HEREIN SHALL HAVE THE MEANINGS ASCRIBED TO THEM IN THE INDENTURE.

Introduction

Under the Indenture, a number of special funds are created and provisions are made for the deposit, investment and withdrawal of money from said funds, and the Indenture defines certain rights of the registered owners of Bonds in the event of a default on the part of the Authority. The Bonds constitute a series of Sewer and Water Revenue Bonds issued under the provisions of the Indenture.

The Indenture provides, also, for the issuance of Additional Bonds of the Authority. Additional Bonds may constitute Sewer and Water Revenue Bonds, secured by a pledge of Receipts and Revenues from the Sewer and Water System.

The Bonds are issued by the Authority pursuant to the Indenture and are secured by an assignment and pledge under the Indenture to the Trustee of the Receipts and Revenues from the Sewer and Water System, which include all rates, fees, rents and charges (excluding tap charges and assessments) derived from the Sewer and Water System, as expanded by the Capital Improvements Project or capital additions constructed and interest earned on funds created under the Indenture and deposited to the credit of the Debt Service Fund, established or to be established, levied and collected in connection with, and all other payments, receipts and revenues of whatever kind or character arising from the operation and ownership by the Authority of the Sewer and Water System or any part thereof except nonrecurring sources such as grants. See “SECURITY AND SOURCES OF PAYMENT FOR THE BONDS – Receipts and Revenues from the Sewer and Water System” herein for a more complete description.

Pledge

The Indenture creates and shall be and constitutes a continuing, irrevocable and exclusive lien upon and pledge of the Receipts and Revenues from the Sewer and Water System to secure the principal of, premium, if any, and interest on the Sewer and Water Revenue Bonds which, from time to time, may be executed, authenticated, issued and delivered thereunder, to the extent provided therein.

Deposit of Bond Proceeds

Proceeds from the sale of the Bonds, upon receipt thereof by the Authority, shall be paid over by the Authority to the Trustee for deposit in certain Funds created under the Indenture; namely the 2018 Clearing Fund.

From the 2018 Clearing Fund, the Trustee, upon order of the Authority, shall (1) pay the costs and expenses of issuance of the Bonds, including, without intending to limit the generality of the foregoing, legal fees and expenses, advertising expenses, printing expenses, recording and filing fees, bond rating fees, fees and expenses of consulting engineers and financial advisors, accounting fees, initial fees of the Trustee and miscellaneous costs, fees and expenses, (2) transfer the amount required to effectuate the Capital Improvements Project to the Construction Fund, (3) transfer the amount required to effectuate the Refunding Project to the Escrow Fund, created and held under the Indenture, and (4) transfer the amount equal to the Debt Service Reserve Requirement for the Bonds to the Debt Service Reserve Fund created and held under the Indenture.

Issuance of Additional Bonds

The Authority may issue, from time to time, Additional Bonds for purposes of (i) paying the cost of completing the acquisition and construction of the various capital projects financed under the Capital Improvements Project, (ii) financing the cost of acquiring and/or constructing capital additions, and (iii) refunding outstanding Bonds or Additional Bonds, but only upon receipt, as applicable under the circumstances, of such certificates, resolutions, documents and opinions as more fully set forth in the Indenture. 8

Proceeds of such Additional Bonds, upon receipt by the Authority, immediately shall be transferred to the Trustee, who shall deposit the same as directed in the supplemental indenture and shall apply such proceeds to the purposes and in the manner specified in such supplemental indenture.

Construction of Capital Improvements Projects

The Indenture provides for the creation of a “Construction Fund,” which shall be held by the Trustee, in trust, and shall consist of funds deposited therein for purposes of paying costs associated with the Authority’s acquisition and construction of its various capital projects financed under the Capital Improvements Project or subsequent capital additions relating to the Water or Sewer System, including the Capital Improvements Project and other Capital Additions and acquisition or construction of property in the nature of Capital Additions. All capital contributions and moneys received under any grant program shall be immediately deposited in the Construction Fund when received by the Authority.

Water Rates, Sewer Rates and Other Charges

The Authority covenants that it will adopt and will charge, maintain and collect throughout its service area so long as any Bonds remain outstanding and funds for their payment have not been provided, reasonable and, within reasonable classifications, uniform sewer and water service rates and other charges, including assessments, tapping fees and initial service charges and other unrelated business charges. See “SECURITY AND SOURCES OF PAYMENT FOR THE BONDS – Rate Covenant” herein.

The Authority further covenants with the holders of the Bonds that the sewer and water service rates and other charges will be classified in a reasonable way to cover the sewage treatment and water distribution and treatment services so that the sewer and water service rates and other charges will be uniform in application to supply sewage treatment and water distribution and treatment services falling within any reasonable class, firm or corporation served. The Authority also covenants that in addition to the employment of all other enforcement mechanisms provided under the law for the recovery of unpaid and delinquent sewer and water service charges, it will also employ, if legally permitted to do so, and if such method is financially practical, the discontinuance of sewer and/or water service to the delinquent property and will take such legal and administrative actions as are required to effect this enforcement procedure. The Authority also covenants that it will not contract with any public body or customer for the furnishing of sewer and water services at prices less than their reasonable worth or prices less than those approved by the Consulting Engineer.

Deposit of Receipts and Revenues with Trustee

The Authority covenants that all receipts and revenues and, except as otherwise provided in the Indenture, the sums received by the Authority from any other source for paying any other part of the cost of the Sewer and Water System shall be deposited in the Revenue Fund. The moneys at any time on deposit in the Revenue Fund shall be subject to a lien and charge in favor of the Trustee and the Registered Holders of the Bonds until disbursed as provided in the Indenture. All tap connection fees and assessments shall also be deposited in the Revenue Fund (unless pledged for financings other than undertaken under the Indenture, in which case shall be deposited to the Capital and Improvement and Redemption Fund and applied as provided in the Indenture).

2018 Clearing Fund

The Indenture provides for the creation of a “2018 Clearing Fund,” into which the proceeds of the sale of the Bonds shall be deposited, including the accrued interest thereon, and from which the amounts stipulated in an Officers' Certificate shall be paid by the Trustee or be deposited by it in the required amounts to the various funds of the Authority held on its behalf by the Trustee. Simultaneously with the delivery of the Bonds to the Trustee for authentication, the Authority shall furnish to the Trustee, along with the other documentation that is usually and necessarily required, an Officers’ Certificate setting forth (i) the amounts of cash to be received by the Authority from the sale of the Bonds, including the accrued interest thereon to the extent payable, and the required amounts to be deposited to the Debt Service Fund, and (ii) the amounts expended or to be expended for the payment by the Trustee on behalf of the Authority of the costs and expenses of issuing the Bonds, and (iii) the amount of money which shall be transferred by the Trustee on behalf of the Authority to the Escrow Fund, Construction Fund, Capital Improvements Fund (if any), and Debt Service Reserve Fund.

Escrow Fund

For purposes of segregating funds for the redemption of the Refunded Notes and effectuating the Refunding Project, the Trustee shall establish an Escrow Fund in the name of the Authority, into which a portion of the proceeds of the Bonds shall be deposited in such amount to effectuate the Refunding Project.

Debt Service Fund

The Indenture provides for the creation of a “Debt Service Fund,” which shall be held by the Trustee, in trust, until applied as provided in the Indenture. The Debt Service Fund initially shall consist of any money transferred by the Trustee from the 2018 Clearing Fund from proceeds of the Bonds, which money shall be applied by the Trustee, without further direction from the Authority, to payment of interest due on the Bonds until such money shall be completely expended.

9 On or before November 25, 2018, as to interest due December 1, 2018 and the first principal installment payable December 1, 2018, and on or before each subsequent May 25 and November 25 thereafter, the Authority shall, having paid its current expenses as provided for in Indenture and so long as the balance in the Revenue Fund shall not be reduced to less than an amount equal to one- quarter (1/4) of the Authority's estimated annual current expenses as set forth in its then current budget, withdraw from the Revenue Fund and deposit with the Trustee for the credit of the Debt Service Fund the amounts hereinafter specified, which amounts shall be applied by the Trustee for the purposes for which the same shall be deposited:

(a) After giving due consideration to the amounts of money needed for future interest payments and the amount of money then on deposit in the Debt Service Fund, an amount equal to the amount necessary to pay, and for the purpose of paying, (i) the interest due on December 1, 2018 and first principal installment on the Bonds due on December 1, 2018 and, (ii) subsequently, the amount of interest earnings credited to the Debt Service Fund, representing a credit for the next succeeding debt service payment, the interest due on the Bonds on the next interest payment date therefor; provided, however, that if any deposit required to be made as aforesaid would, as a result of such deposit, cause the amount on deposit pursuant to this clause (a) to exceed the amount of such interest payment, such deposit shall be reduced to such an extent that such excess shall not occur; and

(b) After giving due consideration to the amounts of money on deposit for future principal payments, and interest earnings credited to the Debt Service Fund representing a credit for purposes of the succeeding debt service payment the amount of money credited as presently being on deposit in the Debt Service Fund, an amount equal to one-half of the principal amount of the Bonds maturing on the next maturity date therefor, provided, however, that if any deposit required to be made as aforesaid would, as a result of such deposit, cause the amount on deposit herein to exceed the principal amount of the Bonds maturing on such date, such deposit shall be reduced to such an extent that such excess shall not occur; and

(c) On the dates specified in any supplemental indenture or indentures relating to Additional Bonds, the amounts required to be deposited on said dates to the credit of the Debt Service Fund pursuant to the provisions of such supplemental indenture or supplemental indentures for the purpose of paying the interest on and the principal of such Additional Bonds.

The Trustee shall pay out of the Debt Service Fund, from time to time, without further authorization from the Authority, and as the same shall become due and payable, the interest upon the Bonds then outstanding. The Trustee shall likewise pay out of the Debt Service Fund, from time to time, without further authorization from the Authority, and as the same shall become due and payable, the principal of the Bonds secured hereby and then outstanding.

Debt Service Reserve Fund

The Indenture provides for the creation of a “Debt Service Reserve Fund,” which shall be held by the Trustee, in trust, until applied as provided in the Indenture. The Debt Service Reserve Fund initially shall consist of the amount that is transferred by the Trustee from the 2018 Clearing Fund from proceeds of the Bonds, which amount shall be equal to the Debt Service Reserve Requirement for the Bonds, and shall be available to pay the interest and principal on the Bonds in case there is a deficiency in the Debt Service Fund and/or the Series of 2018 Sinking Fund in any year, and in the event of such payment, deposits will be made to the Debt Service Reserve Fund pursuant to the Indenture until the balance stated above is restored. Any excess funds on deposit in the Debt Service Reserve Fund shall be transferred to the Debt Service Fund in accordance with the Indenture.

The Trustee shall be authorized, without any direction from the Authority, to transfer moneys from the Debt Service Reserve Fund to the Debt Service Fund or the Series of 2018 Sinking Fund or any sinking, purchase, redemption or analogous fund for any particular series of Bonds as established by any supplement to the Indenture to the extent that the moneys in the Debt Service Fund, the Series of 2018 Sinking Fund, said sinking, purchase, redemption or analogous fund, may at any time be insufficient to pay the Bonds and any interest appertaining to the Bonds as the same shall become due or any costs involved therewith or to make the withdrawals and deposits required pursuant to the terms of the Indenture.

Capital Improvements and Redemption Fund

The Indenture provides for the creation of a “Capital Improvements and Redemption Fund,” which shall be held by the Trustee, in trust, for benefit of holders of the Bonds and for their further security until disbursed as provided in the Indenture.

The moneys at any time on deposit in the Capital Improvements and Redemption Fund, unless restricted by the provisions of any supplemental indenture for purposes of redeeming certain designated Bonds of an additional series issued under the Indenture for assessment purposes, shall be applied by the Trustee to any one or more of the following purposes as the Authority shall direct in writing:

(a) the cost of constructing or acquiring Capital Additions or the payment of indebtedness incurred by the Authority in constructing or acquiring Capital Additions; or

(b) the payment of any liabilities of the Authority arising out of its ownership of the Sewer and Water System for which there is insufficient money in another fund or which are not properly payable out of any other fund established by this Indenture including, among other things, surveys, plans, specifications, studies and reports with respect to the Sewer and Water System or the operation thereof or the feasibility or desirability of acquiring or constructing Capital Additions or property in the nature of Capital Additions, whether or not such surveys, plans, specifications, studies and reports are required to be made pursuant to an order of any agency of the Commonwealth of Pennsylvania or any other body having jurisdiction in the premises; or 10

(c) the redemption or purchase of Bonds; or

(d) the cost of making renewals or replacements to the Sewer and Water System or the making of repairs to the Sewer and Water System to the extent the cost of such renewals, replacements or repairs is not provided in the current budget of current expenses to be paid out of moneys of the Authority in the Revenue Fund, or to make advances to or reimburse any other party for any of the aforesaid purposes.

Rebate Fund

The Indenture provides for the creation o f a “Rebate Fund.” Under the Indenture, t he Authority covenants to calculate and pay directly to the government of the United States of America all amounts due for payment of “arbitrage rebate” under Section 148(f) of the Code with respect to the Bonds. Accordingly, no amounts shall be deposited in the Rebate Fund; provided, however, that the Authority may in the future deposit with the Trustee or direct the Trustee in writing to deposit in the Rebate Fund amounts held in any Fund under the Indenture for any or all series of Bonds (which direction shall specify the procedures for collection and payment of amounts due in respect of arbitrage rebate) if (a) required under any amendments to Section 148(f) of the Code, (b) the Authority fails to make any required arbitrage rebate payments to the government of the United States of America, or (c) the Authority otherwise agrees that the funding of the Rebate Fund is desirable and appropriate. The Rebate Fund is a trust fund, but amounts therein do not constitute part of the Trust Estate. Amounts on deposit in the Rebate Fund may be used, upon written directions from the Authority to the Trustee, solely to make payments to the United States of America under Section 148 of the Code and to pay costs related to the calculation of the amounts due. Upon satisfaction of the Authority’s covenants described above, any amounts remaining in the Rebate Fund shall, upon written directions from the Authority to the Trustee, be transferred by the Trustee to the Capital Improvements and Redemption Fund.

Investment of Funds

Moneys in each of the following Funds under the Indenture shall, from time to time, at the written direction of an officer of the Authority, be invested by the Trustee in specified Investment Obligations as defined in the Indenture, and which shall mature or which shall be subject to redemption at the option of the holder thereof not later than the date or the number of years after the making of such investment or deposit as specified in the following columns:

Fund Period of Investment

Revenue Fund Until the May 25 or November 25 next succeeding the date of investment or deposit.

Debt Service Fund Until the June 1 or December 1 next succeeding the date of investment or deposit.

Debt Service Reserve Fund Shall have an average aggregate weighted term to maturity not to exceed five (5) years.

Series of 2018 Sinking Fund Until the June 1 and December 1 next succeeding the date of investment or deposit.

Capital Improvements and Redemption Fund Unlimited and discretionary with the Authority but not beyond the date reasonably expected to be needed by the Authority

Construction Fund Unlimited and discretionary with the Authority, but not beyond the date reasonably expected to be needed by the Authority.

Accrued interest and premiums, if any, paid at the time of the purchase of such investments shall be paid from available moneys in the particular fund for which such investment is being made. Upon the written direction of the Authority or whenever the moneys in said funds are to be applied and paid out pursuant to any provisions of this Indenture or whenever the Trustee shall deem such action to be advisable, the Trustee may sell all or any part of the obligations in which the moneys in one or more such funds shall be invested or deposited, and the proceeds of such sale shall be deposited to the credit of the respective fund or funds. Obligations so purchased as an investment of moneys in any such fund and any deposits shall be deemed at all times to be a part of said fund until such time as interest earnings are transferred for credit to any other fund of the Indenture. Any loss resulting from such investment or deposit shall be charged to said fund. On December 28th of each year, any interest or profit realized from such investment or deposit in the Debt Service Reserve Fund subject to and provided the Debt Service Reserve Requirements exists and is maintained within said Debt Service Reserve Fund shall be credit to the Revenue Fund. Any interest or profit realized from such investment or deposit in the Debt Service Fund shall be credited to the Revenue Fund each December 28th and any interest or profit realized from such investment or deposit in any of said other Funds shall be credited to the Construction Fund until completion of the Authority’s various capital projects financed under the Capital Improvements Project by certification of the Authority’s Consulting Engineer that said various capital projects under the Capital Improvements Project are substantially completed and thereafter to the Revenue Fund.

The Trustee

The Trustee accepts and agrees to execute the trust created by the Indenture, but only upon the additional terms set forth in the Indenture, to all of which the holders of Bonds agree by acceptance of Bonds.

Recitals, statements and representations in the Indenture, in the Official Statement or in Bonds, save only any Trustee's Certificates upon Bonds, shall be construed as having been made by the Authority and not by the Trustee, and the Trustee shall be 11 under no responsibility for correctness of the same. The Trustee makes no representations as to validity or sufficiency of the Indenture, or as to due execution of acknowledgement of the Indenture in behalf of the Authority, or with respect to Bonds or coupons appertaining thereunto, if applicable, and the Trustee shall incur no responsibility with respect to such matters.

The Trustee shall not be answerable for exercise of discretion or power under the Indenture nor for anything whatsoever in connection with the trust, except only its own willful misconduct or gross negligence.

Amendments

The Authority and the Trustee, from time to time, may enter into such indentures supplemental to the Indenture (which thereafter shall from part thereof) as shall not affect adversely the rights of holders of any bonds outstanding under the Indenture, for any of the following purposes:

(a) to cure any ambiguity, formal defect or omission in the Indenture or any supplemental indenture;

(b) to grant or confer upon the Trustee for the benefit of the Bondholders any additional rights, remedies, powers, authority or security that may lawfully be granted to or conferred upon the Bondholders or the Trustee;

(c) to add to the covenants and agreements of the Authority in the Indenture contained therein on other covenants and agreements thereafter to be observed, or to surrender any right or power herein reserved to or conferred upon the Authority;

(d) to modify any of the provisions of the Indenture or to relieve the Authority of any of the obligations, conditions or restrictions contained in the Indenture, provided that such modification or relief shall, by the express terms of the particular supplemental indenture, not become effective until all Bonds outstanding on the date of the execution and delivery of such supplemental indenture shall no longer be outstanding.

(e) to make such provision in regard to matters or questions arising under the Indenture as may be necessary or desirable and not inconsistent with this Indenture; or

(f) to close the Indenture against, or to restrict, in addition to the limitations and restrictions therein contained, the issue of Additional Bonds thereunder, by imposing additional conditions and restrictions to be thereafter observed, whether applicable in respect of all Bonds issued and to be issued hereunder or in respect of one or more series thereof, or otherwise.

With the consent of the holders of not less than sixty six and two thirds per centum (66 2/3%) in aggregate principal amount of the Bonds then outstanding, the Authority and the Trustee may from time to time and at any time enter into an indenture or indentures supplemental hereto for the purpose of adding any provision to or changing in any manner or eliminating any of the provisions of the Indenture or of any supplemental indenture or of modifying in any manner the rights of the holders of the Bonds; provided, however, that no such supplemental indenture shall (i) extend the fixed maturity date of any Bond, or reduce the principal amount thereof, or reduce the rate or extend the time of payment of interest thereon, or reduce any premium payable upon the redemption thereof, without the consent of the holder of each Bond so affected, or (ii) permit the creation by the Authority of any lien or encumbrance on the Sewer and Water System, other than the Indenture, or the creation by the Authority of any lien prior to or on a parity with the lien of the Indenture upon any part of the receipts and revenues of the Authority derived from the Sewer and Water System, or (iii) reduce the aforesaid percentage of Bonds, the holders of which are required to consent to any such modification or alteration, without the consent of the holders of all Bonds then outstanding.

Defaults and Remedies

The Act provides remedies to the registered owners of the Bonds in the event of default or failure on the part of the Authority to fulfill its covenants.

An Event of Default, as defined in the Indenture, includes, among other things, failure promptly to pay principal of or interest on the Bonds when due, or failure of the Authority to fulfill any other covenant in the Bonds or the Indenture within 30 days after receipt of written notice of such default from the Trustee.

Under the Indenture, upon the occurrence of an Event of Default as therein defined, the Trustee may, and upon written request of the registered owners of at least 25% in aggregate principal amount of the bonds then outstanding under the Indenture shall, accelerate payment of the bonds and enforce, for the equal benefit of the registered owners of all the bonds outstanding under the Indenture, all rights provided under the Indenture and the Act.

For a more complete statement of rights and remedies of the registered owners of the Bonds and of the limitations thereon reference is made to the Indenture and the Act.

THE AUTHORITY

The Authority is a body corporate and politic duly organized by the Townships under the Act. The Authority was incorporated in January 2001 under the Municipal Authorities Act of 1945, as amended, pursuant to ordinances enacted by each of the Townships. The Authority’s corporate life expires on January 24, 2051. 12

The governing body of the Authority is a board composed of six members. The members are appointed three each by the Reade Township Supervisors and the White Township Supervisors for five-year terms.

The Authority has broad powers under the Act, including among others, the following: to sue and be sued; to enter into leases and contracts; to acquire property by any lawful means, including the exercise of the power of eminent domain; to hold, operate and maintain its property; to issue its negotiable bonds, and to secure their payment and rights of holders thereof under a trust indenture; to charge and collect service charges for the use of its facilities and to revise such service charges. The Act also empowers the Authority to make and enforce rules and regulations for the management of its business and affairs.

Day to day operations are administrated by the full-time office manager and operational manager. The Authority maintains five full-time employees to handle management, billing, testing, maintenance, and repairs. Seasonal part-time employees and independent contractors are utilized on an as-needed basis.

DESCRIPTION OF THE PROJECT

Proceeds of the Bonds will be used to: (1) undertake the Capital Improvements Project, (2) currently refund the Refunded Notes, (3) fund a deposit to the Debt Service Reserve Fund established under the Indenture, and (4) pay for the cost of issuing and insuring the Bonds. A portion of the proceeds derived from the sale of the Bonds will provide the Authority with sufficient monies to redeem the Refunded Notes on ______, 2018 at a redemption price of 100% of the principal amount of and any premium on the respective Refunded Notes, pursuant to the respective optional redemption provisions of the Refunded Notes. The proceeds of the Refunded Notes were used to undertake the acquisition, construction, improvement and equipping of the Sewer and Water System. The Capital Improvements Project will consist of undertakings in five distinct areas. Those smaller projects include: (1) installation of residential water meters in the Glendale Yearound, (2) investigation and development of a new water supply, (3) expansion of an existing pressure boosted zone near Turkey Ridge Road, (4) interconnection of water mains along Oshell and Church Hill Roads, and (5) expansion of sewer collection mains along Dutch Run Oval. Individual discussions of each project follow. The proposed meter project involves the installation of approximately 1,200 residential meters within the Glendale Yearound portions of White and Chest Townships, Cambria County. At present, customers in the newer Fiske and Beaver Valley areas of the GVMA water system are metered and billed individually. Customers within the Glendale Yearound, however, remain unmetered and are charged a monthly flat rate regardless of usage. This situation creates a billing disparity between customers and encourages wasteful water practices. For instance, many customers within the campground area of the development allow water to run continuously in the winter to prevent freezing of poorly insulated pipes. In the summer, drinking water is used to wet dusty roads or to supply landscaped water features. All of this wasted water must be purchased from the neighboring Reade Township Municipal Authority. In addition to the installation of individual service meters, the GVMA plans to make service improvements for those customers in the campground area of the development. Most campground customers are served by a single frost-free hydrant that is shared with a neighboring lot. These shared hydrants make it impossible to stop service to an unpaying customer without denying the neighboring customer service as well. The shared hydrant also creates a cross-connection liability. To correct this, the GVMA is proposing a splitting of those shared connections into two discreet services, each having a shut-off, hydrant, and backflow preventer. Overall, the improvements proposed will give the Authority the ability to increase collections and reduce the expense of lost water. All water supplied by the Glendale Valley Municipal Authority is purchased by intermunicipal agreement from the neighboring Reade Township Municipal Authority. This agreement began in 2012 and has a current term of 10 years. An average of 75,000 to 120,000 gallons are purchased daily, depending on the heavily seasonal demands of the Glendale Yearound. A full third of the GVMA’s annual water budget is paid to RTMA in purchase fees. Additionally, as a sole source, the RTMA has significant leverage in the setting of the purchase rate for the water. As such, the GVMA board has decided to investigate the possibility of developing an independent source, which could benefit rate payers and would allow for the availability of a back-up source. The GVMA has commissioned a project hydrogeologist to identify potential sites for the drilling of a new water supply well. Three such sites were located in White and Reade Townships. Bond proceeds will be used to fund the drilling, testing and permitting of a new water supply well. As an alternative to development of a new well, GVMA is also pursuing the purchase of the RTMA system and its sources. Should a favorable deal be reached, the portion of bond proceeds dedicated to well development would be allocated toward that purchase. Within the Glendale Yearound area, the GVMA maintains a small pressure-boosted distribution system to provide adequate service pressure to the homes in the immediate vicinity of the finished water storage tanks on Turkey Ridge Road. The system is supplied with boosted pressure through a triplex pump system installed in 2017. As a second phase to the project, the GVMA is proposing to install several short interconnecting mains to loop the existing pipes on Morningside, Christopher, and Grand Trunk Roads. This looping will allow the GVMA to provide increased service pressures to approximately 70 additional homes. Those customers are currently at or near the mandated minimum pressure. Service pressure has also been an issue for water customers located at the upper portion of Church Hill Road in White Township. Pressure in this segment of the system is controlled by tank levels within the Reade Township Municipal Authority system and also affected by the operation of a GVMA booster station pumping water to the higher Glendale Yearound system. Despite operational adjustments, low water pressure persisted for customers during certain times of the day. In order to increase pressures to those customers, the GVMA is proposing the interconnection of the Church Hill distribution mains with the transmission main along Oshell Road with approximately 1,100’ of new waterline. The interconnection will allow Church Hill to be incorporated into the Glendale Yearound pressure zone, raising service pressures by approximately 30 psi. 13 When the Glendale Yearound was built by the private developer in the 1970s, there was a small section of the campground area that received water service but no sanitary sewer service. Customers in that section must use the shower and restroom facilities located at the Yearound pool. The section in question is located along the southern end of Dutch Run Oval, near the campground pond. The lack of sewer service has drawn the attention of the Cambria County Sewage Enforcement Agency, and residents have attended Authority meetings to request that mains be extended to serve the ten lots missing service. The GVMA is proposing to extend gravity collection mains approximately 1,200 feet to serve these customers.

GENERAL SYSTEM DESCRIPTION

The Authority owns and operates the wastewater collection and treatment facilities serving portions of Chest, Reade and White Townships and the water distribution facilities serving portions of Chest and White Townships. The existing service area can be split into two distinct districts: the newer Reade/White district and the older Glendale Yearound district.

The Authority oversaw construction of a new regional wastewater collection and treatment system in 2012. The new collection system serves the most populated areas of Reade Township and areas of White Township outside of the Glendale Yearound. These areas include the villages of Beaver Valley, Flinton, Fiske, Fallentimber, Van Ormer, Glasgow, Mountaindale, and Blandburg. The new Beaver Valley treatment facility is a 450,000 gallon/day extended aeration plant sized to receive flows from both the newer Reade/White system and the older Glendale Yearound area. During the same project, the Authority also extended water distribution lines into White Township. This project included three interconnections with the neighboring Reade Township Municipal Authority (RTMA), the current sole provider of drinking water to the GVMA.

The Glendale Yearound facilities date back to the mid-1970s, when they were built exclusively to serve a new housing/recreational development. In 2008, the Authority purchased both the Glendale Yearound water and sanitary sewer systems from the previous private owner. That purchase included existing treatment facilities that have since been abandoned. In late 2014, the Authority completed construction of interconnection mains necessary to redirect flows from the older Yearound sewage treatment facility to the new Beaver Valley facility. Likewise, water transmission mains were constructed to supply the Yearound development with purchased RTMA water from the newly constructed White Township extension. The older, existing Yearound well sources experienced issues with both quality and quantity, so they were abandoned in favor of the purchased RTMA water.

At present, the Authority bills approximately 1,785 individual customers across both districts. The number is broken down as follows:

• 634 Residential and Small Commercial Customers in Reade Township (Sewer Service Only)

• 145 Residential and Small Commercial Customers in White Township (Water and Sewer)

• 2 Commercial Campgrounds in White Township (Water and Sewer)

• 1 School Facility in White Township (Water and Sewer)

• 424 Residential Customers in the Glendale Yearound (Water and Sewer Service)

• 574 Recreational Camp Site Customers in the Glendale Yearound (Water and Sewer Service)

• 5 Dutch Run Oval Camp Site Customers in Glendale Yearound (Water Service Only)

Of significant importance to the Authority service area is its proximity to Prince Gallitzin State Park. The Park is the primary draw for those visiting the Authority’s recreational campground customers and makes the area attractive for home sales and new construction. According to the Department of Conservation and Natural Resources (DCNR) economic significance reporting, Prince Gallitzin State Park visitors generated over $44 million in sales on their trips to the Park in 2010. Additionally, spending resulted in 685 full and part time jobs, over $16 million in labor income, and over $25 million in value added. The Park had an estimated 1.9 million visitors in 2016.

THE WATER SYSTEM

The Authority’s Water System consists of two water storage tanks, a booster pumping station, and approximately 40 miles of distribution and transmission main ranging in size from 2 inches to 10 inches in diameter. The 200,000-gallon steel and 77,000-gallon glass-lined steel storage tanks are located at the same site within the Glendale Yearound development. The booster pump station features two 25 horsepower split-case horizontal pumps with a flow capacity of 375 gallons per minute. The pump station is used to pump water from the lower Beaver Valley service area to the higher Glendale Yearound service area.

The system contains three metered connection points linking the Glendale Valley Municipal Authority system to the Reade Township Municipal Authority system. Currently, all water used and distributed by the GVMA is purchased from the RTMA through an intermunicipal agreement. In 2016 and 2017, the Authority purchased a total of 40,696,000 gallons and 42,045,000 gallons respectively.

14 Existing and Anticipated Users of the System

The existing Water System has 1,151 customers representing 1,207 equivalent dwelling units. The past and projected customers of the Water System are as follows:

Past Projected 2014 1,142 2019 1,153 2015 1,145 2020 1,155 2016 1,148 2021 1,157 2017 1,149 2022 1,159 2018 1,151 2023 1,161 Source: Glendale Valley Municipal Authority

Water Rentals or Charges

The Authority currently bills according to two separate schedules: one for metered customers in the White Township district and one for unmetered customers in the Glendale Yearound district. Upon completion of the proposed Glendale Yearound water meter project in 2018/2019, all water rentals will be computed in accordance with the metered schedule. The schedules are currently in effect by Resolution of the Authority.

Customers in the White Township metered district are currently billed a base water rate of $34.00/equivalent dwelling unit/month with no usage included. A usage charge of $7.75 per 1,000 gallons used is also billed. Equivalent dwelling units for customers other than residential users are calculated annually based upon the prior year’s usage.

Customers in the Glendale Yearound unmetered district are currently billed a flat water rate of $47.50/month for homesites and $31.50/month for campsites. Upon completion of the proposed 2018/2019 Glendale Yearound water meter project, all customers will be billed according to the White Township metered rate, regardless of site style.

The Authority is currently in the fourth year of a six-year schedule to raise revenues and equalize rates across the two districts. The Authority began this process in 2015 with the goal of creating a single, metered rate district while simultaneously generating enough excess income to fund the projects that are currently being undertaken with the subject bond issue. The extended schedule was chosen by the Authority Board to allow a gradual increase to the significantly lower Yearound rates; upon completion of the plan, the Yearound rates will have risen nearly 50% since commencement. This rate schedule has been adjusted annually to address increases in expenses and, most recently, the estimated debt service of the bond. The projected water rates for 2019 and 2020 are $34.00/equivalent dwelling unit/month plus $7.75/1,000 gallons used and $34.00 + $8.00/1,000 gallons respectively. Those rates will be applied to all customers, as the Authority will be completing the meter installation project within the Glendale Yearound with a portion of the bond revenues.

Tapping Fee

Effective October 2012, any property owner desiring to connect to the Authority’s water system shall pay to the Authority prior to connecting thereto a tapping fee of $1,000 per equivalent dwelling unit. All costs associated with physical connection to the system are the responsibility of the property owner.

Customer Characteristics

The Authority estimates that approximately 89.2% of the Water System’s consumption is residential, 7.2% is commercial, and 3.6% is institutional. Data on all customers for the period January 1, 2017 through December 31, 2017 are as follows:

Service Type No of Accounts Consumption (1,000 gallons) Billings Residential 1134 30,023 $577,628 Commercial 16 2,416 $39,702 Institutional 1 1,197 $19,448 Source: Glendale Valley Municipal Authority

Those Authority customers larger than one equivalent dwelling unit, as of December 31, 2017, are listed below:

Customer Annual Consumption Annual Billings (1,000 Gallons) Glendale Valley School District 1,197 $19,488 Noel’s Campground 630 $10,236 Sleepy Valley Campground 497 $8,082 Glendale Yearound POA 395 $6,423 Zimmie’s Campground 203 $3,291 Church Hill Campground 109 $1,773 Sleepy Valley Motel 102 $1,658

15 THE SEWER SYSTEM

The Authority’s Sewer System consists of a treatment facility, five remote pumping stations, and approximately 65 miles of collection and transmission main ranging in size from 2 inches to 12 inches in diameter.

The wastewater treatment facility is an extended aeration plant with additional nutrient removal sized to accommodate an average flow of 450,000 gallons per day. Wastewater from the collection system enters the facility at a bar screen manhole before entering a precast concrete lift station containing three 30 horsepower submersible pumps. That triplex pump system conveys raw wastewater to the influent building located on the upper level of the facility site. The influent building contains a fine screen device and bypass bar screen.

Wastewater flows by gravity from the influent building to the main treatment unit. The unit is a post-tensioned concrete structure containing three independent treatment trains. The unit contains a shared two-part equalization basin before splitting into individual treatment trains, each containing aerobic, anoxic and clarification chambers. The unit also contains a shared sludge storage chamber. Mechanical equipment within the treatment unit includes nine transfer pumps sized from 1 to 3-hp, three chain-driven clarifier scraper units and an array of fine bubble diffusers fed by blowers located within the control building.

Clarified effluent flows from the main treatment unit to a continuous backwash sand filtration unit located in a second sectional, precast concrete structure. Filtered effluent then flows to a third precast structure serving as a finishing tank containing a dual ultraviolet disinfection lamp bank. Final effluent is sampled and metered before surface discharge to Clearfield Creek.

Within the collection system, the five sewage pumping stations each contain primary and back-up pumps ranging in size from 15 horsepower to 50 horsepower. Most customers are served by gravity connections, but approximately 100 homes and businesses are served via grinder pump.

Existing and Anticipated Users of the System

The existing Sewer System has 1,780 customers representing 1,836 equivalent dwelling units. The past and projected customers of the Sewer System are as follows:

Past Projected 2014 1,771 2019 1,782 2015 1,774 2020 1,784 2016 1,777 2021 1,786 2017 1,778 2022 1,788 2018 1,780 2023 1,790 Source: Glendale Valley Municipal Authority

Sewer Rentals or Charges

The Authority currently bills according to two separate schedules: one for metered customers in the Reade/White Township district and one for unmetered customers in the Glendale Yearound district. Upon completion of the proposed Glendale Yearound water meter project in 2018/2019, all sewer rentals will be computed in accordance with the metered schedule. The schedules are currently in effect by Resolution of the Authority.

Customers in the Reade/White Township metered district are currently billed a base sewer rate of $46.00/equivalent dwelling unit/month with no usage included. A usage charge of $4.50 per 1,000 gallons used is also billed. Equivalent dwelling units for customers other than residential user are calculated annually based upon the prior year’s usage.

Customers in the Glendale Yearound unmetered district are currently billed a flat sewer rate of $56.50/month for homesites and $37.50/month for campsites. Upon completion of the proposed 2018/2019 Glendale Yearound water meter project, all customers will be billed according to the Reade/White Township metered rate, regardless of site style.

The Authority is currently in the fourth year of a six-year schedule to raise revenues and equalize rates across the two districts. The Authority began this process in 2015 with the goal of creating a single, metered rate district while simultaneously generating enough excess income to fund the projects that are currently being undertaken with the subject bond issue. The extended schedule was chosen by the Authority Board to allow a gradual increase to the significantly lower Yearound rates; upon completion of the plan, the Yearound rates will have risen nearly 50% since commencement. This rate schedule has been adjusted annually to address increases in expenses and, most recently, the estimated debt service of the bond. The projected sewer rates for 2019 and 2020 are $46.00/equivalent dwelling unit/month plus $4.50/1,000 gallons used and $46.00 + $4.75/1,000 gallons respectively. Those rates will be applied to all customers, as the Authority will be completing the meter installation project within the Glendale Yearound with a portion of the bond revenues.

Tapping Fee

Effective October 2012, any property owner desiring to connect to the Authority’s sewer system shall pay to the Authority prior to connecting thereto a tapping fee of $1,500 per equivalent dwelling unit. All costs associated with physical connection to the system are the responsibility of the property owner.

16 Customer Characteristics

The Authority estimates that approximately 89.7% of the Sewer System’s discharge collection is residential, 8.0 % is commercial, and 2.3% is institutional. Data on all customers for the period January 1, 2017 through December 31, 2017 are as follows:

Service Type No of Accounts Discharge (1,000 gallons) Billings Residential 1,755 46,464 $577,628 Commercial 24 4,135 $82,113 Institutional 1 1,197 $18,600 Source: Glendale Valley Municipal Authority

Those Authority customers larger than one equivalent dwelling unit, as of December 31, 2017, are listed below:

Customer Annual Discharge Annual Billings (1,000 Gallons) Executive Drive Mobile Homes 1,219 $18,600 Glendale Valley School District 1,197 $18,551 Noel’s Campground 630 $9,764 Sleepy Valley Campground 497 $7,709 Glendale Yearound POA 395 $6,126 Zimmie’s Campground 203 $3,139 Sir Barney’s Restaurant 162 $2,470 Pennywrens Restaurant 146 $2,230 Church Hill Campground 109 $1,692 Sleepy Valley Motel 102 $1,581

17 FINANCIAL REVIEW

The following table is a summary only and not intended to be a complete report. For more complete information, the individual financial statements, the 2017 Audit and the 2018 Budget of the Authority should be reviewed at the offices of the Authority at the address reflected in this Official Statement.

1 2 2017 Budgeted 2017 Audit 2018 Budgeted 2017 2017 2017 2018 2018 2017 Total Water Sewer 2018 Total YR = Glendale Yearound Total Combined Combined Total Combined Sewer Actual Actual Sewer R/W = Reade/White Water Total Total Water Total Budget 2017 2017 Budget Budget Budget Actual Budget Budget Income Rate Pmts. 525,000 1,025,000 1,550,000 551,130 1,066,305 1,617,435 590,000 1,079,000 1,669,000 Penalties/Interest 4,500 4,500 9,000 17,000 25,000 42,000 15,000 20,000 35,000 Water On/Off Fees 13,800 1,000 14,800 14,000 1,500 15,500 9,000 3,000 12,000 Tap Fees 3,000 4,500 7,500 1,000 16,500 17,500 2,000 3,000 5,000 White Twp. (Clerical) 2,219 3,781 6,000 1,110 1,890 3,000 1,110 1,890 3,000 Total Income 548,519 1,038,781 1,587,300 584,240 1,111,195 1,695,435 617,110 1,106,890 1,724,000 Expenses Total Loan Pmts. 179,161 635,714 814,875 179,161 635,714 814,875 194,213 606,268 800,481 Total Utilities 15,580 67,160 82,740 19,840 63,568 83,408 17,500 70,810 88,310 Total Main/Repairs 40,070 55,530 95,600 27,151 77,927 105,078 44,070 70,530 114,600 Tot.Outside Services 162,560 45,380 207,940 222,658 32,935 255,593 177,560 49,880 227,440 Total Office Expense 18,020 30,480 48,500 14,203 20,514 34,717 18,400 31,100 49,500 Total Prof.Svcs. 11,666 19,334 31,000 16,053 15,955 32,008 11,040 18,295 29,335 G. Pump Reserve Acct 0 0 0 0 4,600 4,600 0 4,600 4,600 Total Employees 107,405 159,965 267,370 118,476 152,980 271,456 101,410 165,665 267,075 Insurance 13,841 23,587 37,428 13,745 22,427 36,172 13,841 23,587 37,428 Total Expenses 548,303 1,037,150 1,585,453 611,287 1,026,620 1,637,907 578,034 1,040,735 1,618,769 Operating Reserves 216 1,631 1,847 -27,047 84,575 57,528 39,076 66,155 105,231

1 The 2017 Authority audit figures shown here have been adjusted to eliminate those expenses associated with completion of the Authority’s now completed, PennVest-funded capital projects and the associated bridge financing. 2The 2018 Authority budget is prepared, not only to give a guideline for 2018 receipts and expenditures, but also to demonstrate long term operational viability of the Authority system. It is the desire of the Authority board, and therefore this budget, to allocate income and expenses in a fair and equitable way to all customers on the Authority system. a. For purposes of allocating income and expenses, the overall 2017 Authority budget was broken down into two operational divisions. These divisions were as follows: The Authority Water System and Authority Sewerage System. These numbers are combined for both the Yearound and Reade/White divisions to calculate the total income and expense for both the Water & Sewerage divisions. These totals are then combined to calculate the overall combined income and expenses (Combined Total). b. Income and expenses for each division are tracked separately and where possible, expenses are charged to the appropriate division. If there is a shared expense with water & sewer, it is split as follows: Water 38% and Sewer 62%. c. Where services are shared with White Township the breakdown is as follows: Authority -75%. White Township - 25%. The Authority share is then allocated based on the percentages specified in "b" above. 18 FUTURE FINANCING

The Authority may issue additional obligations in the future to finance water infrastructure improvements in the event the Authority’s investigation and development of a new water supply is successful. Such a financing would only be undertaken if the additional borrowing costs were offset by the expected savings the Authority would achieve from reducing or eliminating its current need to purchase water from the Reade Township Municipal Authority.

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 Authority subsequent to the issuance and delivery of the Bonds in order for interest thereon to be and remain exempt from federal income taxes. The Authority has made covenants to comply with such requirements.

In the opinion of Bond Counsel, subject to and assuming continued compliance by the Authority with the requirements of the Code, interest on the Bonds is excluded from gross income for Federal income tax purposes under present statutes, regulations, rulings and court decisions, and since the Bonds are governmental purpose bonds, interest on the Bonds is not a specific preference item and thus the Bonds will not be subject to individual or corporate alternative minimum taxes, except that: (1) to the extent the tax- exempt interest on the Bonds is a component of a corporate holder’s “adjusted current earnings”, a portion of that interest may be subject to an alternative minimum tax; and (2) interest on the Bonds is subject to a “branch profits tax” imposed on foreign corporations engaged in a trade or business in the United States. See discussion of “Alternative Minimum Tax” and “Branch Profits Tax” below.

In the opinion of Bond Counsel, under the laws of the Commonwealth of Pennsylvania as enacted and construed on the date hereof, the Bonds, their transfer and the income therefrom shall at all times be free from taxation for state and local purposes within the Commonwealth of Pennsylvania, but such exemption does not extend to gift, estate, succession or inheritance taxes or any other taxes not levied or assessed directly on the Bonds, their transfer or the income therefrom. More specifically, the Bonds are exempt from personal property taxes in Pennsylvania, and the interest on the Bonds is exempt from Pennsylvania state and local personal income tax.

Corporate Alternative Minimum Tax

The Code includes, for purposes of the corporate alternative minimum tax, a preference item consisting of, generally, one- half of the excess of a corporation’s “adjusted net book income” (i.e., the net income or loss of the taxpayer set forth on the taxpayer’s applicable financial statement with certain adjustments) over its “alternative minimum taxable income” (computed without regard to this particular preference item and the alternative tax net operating loss deduction). For taxable years beginning after December 31, 1989, in lieu of the above, alternative minimum taxable income is increased by seventy-five percent of the amount by which “adjusted current earnings” exceeds alternative minimum taxable income. Thus, to the extent that tax-exempt interest is a component of a corporate holder’s adjusted net book income (or “adjusted current earnings” for taxable years beginning after December 31, 1989), a portion of that interest may be subject to an alternative minimum tax.

Branch Profits Tax

Under Section 884 of the Code, foreign corporations engaged in a trade or business in the United States are subject to a “branch profits tax” equal to thirty percent (30%) of the corporation’s “dividend equivalent amount” for the taxable year. The term “dividend equivalent amount” includes interest on tax-exempt obligations.

Additional Tax Consequences

Prospective purchasers of the Bonds should be aware that (i) with respect to insurance companies subject to tax imposed by Section 831 of the Code, Section 832(b)(5)(B)(i) reduces the deduction for loss reserves by fifteen percent (15%) of the sum of certain items, including interest on the Bonds, (ii) passive investment income, including interest on the Bonds, may be subject to Federal income taxation under Section 1375 of the Code for Subchapter S Corporations that have Subchapter C earnings and profits at the close of the taxable year if greater than twenty-five percent (25%) of the gross receipts of said Subchapter S Corporation is passive investment income, and (iii) Section 86 of the Code may require recipients of certain Social Security and certain Railroad Retirement benefits to include in gross income a portion of such benefits by reason of receipt of interest on the Bonds.

Qualified Tax-Exempt Obligations

The Authority has designated the Bonds as “qualified tax-exempt obligations” within the meaning of Section 265(b)(3) of the Code. The Authority reasonably anticipates that it, together with any subordinate entities, will not issue more than $10,000,000 tax-exempt obligations during the calendar year of 2018.

19

Not Arbitrage Bonds

The Authority has covenanted in the Resolution with the purchasers of the Bonds that it will make no use of the proceeds of the Bonds which, if such use reasonably had been expected on the date of issue of the Bonds, would have caused the Bonds to be “arbitrage bonds”; and has further covenanted in the Resolution to comply with the requirements of Sections 103 and 148 of the Internal Revenue Code of 1986, as amended, and regulations promulgated thereunder from time to time, during the term of the Bonds. Officers of the Authority have executed a certificate concerning the use of the proceeds of the Bonds in conformity with regulations issued under Sections 103 and 141 through 150 of the Code.

Original Issue Discount

The Bonds that mature on ______1, 20__ through 20__ and 20__ through 20__ (the “Tax-Exempt Discount Bonds”) are being offered and sold to the public at original issue discount (“OID”) from the amounts payable at their maturity. OID is the excess of the stated redemption price of a bond at maturity (the face amount) over the “issue price” of such bond. The issue price is the initial offering price to the public (other than to bond houses, brokers or similar persons acting in the capacity of underwriters or wholesalers) at which a substantial amount of bonds of the same maturity are sold pursuant to that initial offering. For Federal income tax purposes, OID on each bond will accrue over the term of the bond, and for the Tax-Exempt Discount Bonds, the amount of accretion will be based on a single rate of interest, compounded semiannually (the “yield to maturity”). The amount of OID that accrues during each semi-annual period will do so ratably over the period on a daily basis. With respect to an initial purchaser of a Tax-Exempt Discount Bond at its issue price, the portion of OID that accrues during the period that such purchaser owns such Bond is added to the purchaser’s tax basis for purposes of determining gain or loss at the maturity, redemption, sale or other disposition of that Tax-Exempt Discount Bond and thus, in practical effect, is treated as stated interest, which is excludable from gross income for federal income tax purposes. Holders of Tax-Exempt Discount Bonds should consult their own tax advisors as to the treatment of OID and the tax consequences of the purchase of such Discount Bonds other than at the issue price during the initial public offering and as to the treatment of OID for state tax purposes.

Original Issue Premium

The Bonds that mature on ______, 20__ (the “Premium Bonds”) were sold at an original issue premium (the “Acquisition Premium”). Under the Code, the premium on the Premium Bonds is an adjustment to basis and must be amortized. No deduction is allowable on account of such premium. The method of amortization may be the method regularly employed by the taxpayer if such method is reasonable, or, in all other cases, must be the method prescribed by applicable Treasury Regulations, which provide that the amortizable bond premium is an amount which bears the same ratio to the bond premium on the Premium Bonds as the number of months in the taxable year during which the bond was held by the taxpayer bears to the number of months from the beginning of the taxable year (or, if the bond was acquired in the taxable year, from the date of acquisition) to the date of maturity. The basis of the Premium Bond is reduced by the amount of the amortizable bond premium. Holders of any Premium Bonds purchased at an Acquisition Premium should consult their own tax advisors as to the actual effect of such Acquisition Premium with respect to their own tax situation and as to the treatment of Acquisition Premium for state tax purposes.

THE FOREGOING IS NOT INTENDED AS AN EXHAUSTIVE LIST OF THE PROVISIONS OF FEDERAL TAX LAW WHICH MAY HAVE AN EFFECT ON INDIVIDUALS AND CORPORATIONS HOLDING THE BONDS OR RECEIVING INTEREST THEREON. PROSPECTIVE PURCHASERS SHOULD CONSULT WITH THEIR TAX ADVISORS REGARDING THE EFFECT OF HOLDING THE BONDS OR RECEIVING INTEREST THEREON ON THEIR AFFAIRS, INCLUDING, BUT NOT LIMITED TO, THE EFFECT OF STATE AND LOCAL TAX LAWS.

CONTINUING DISCLOSURE UNDERTAKING

In order to assist the Underwriter in complying with the requirements of Rule 15c2-12, as amended (“Rule 15c2-12”), promulgated under Securities Exchange Act of 1934, as amended, the Authority will execute the Continuing Disclosure Certificate (the “Certificate”) in substantially the form of Appendix D to this Official Statement, which should be read in its entirety. The Authority has not previously entered into any undertakings to provide continuing disclosure of financial information and operating data in connection with a publicly offered debt issue.

Under the terms of the Certificate, the Authority will undertake to file with the MSRB financial and other information concerning the Authority, all as set forth in Appendix D. The Authority’s obligations with respect to continuing disclosure, as it relates to the Bonds, shall terminate upon the prior redemption or payment in full of all of the Bonds.

The MSRB has been designated by the SEC to be the central and sole repository for continuing disclosure information filed by issuers of municipal securities since July 1, 2009. Information and notices filed by municipal issuers (and other “obligated persons” with respect to municipal securities issues) are made available through the MSRB’s Electronic Municipal Market Access (EMMA) System, which may be accessed on the internet at http://www.emma.msrb.org.

The Authority may modify from time to time the specific types of information provided or the format of the presentation of such information, to the extent necessary as a result of a change in legal requirements or change in the nature of the Authority; provided that any such modification will be done in a manner consistent with the Rule and will not, in the opinion of the Authority (which may rely on an opinion of counsel) substantially impair the interest of the holders of the Bonds. The Authority acknowledges

20 that its undertaking pursuant to the Rule described under this heading is intended to be for the benefit for the holders of the Bonds. Breach of the undertaking will not be a default under the Resolution.

The Authority reserves the right to terminate its obligation to provide annual financial information and notices of material events, as set forth above, if and when such Authority no longer remains an “obligated person” with respect to the Bonds within the meaning of the Rule. The Authority acknowledges that its undertaking pursuant to the Rule described under this heading is intended to be for the benefit of the holders of the Bonds and shall be enforceable by the holders of such Bonds; provided that the Bondholders’ right to enforce the provisions of this undertaking shall be limited to a right to obtain specific enforcement of the Authority’s obligations hereunder and any failure by the Authority to comply with the provisions of this undertaking shall not be an event of default with respect to the Bonds.

RATING

Moody’s has assigned a rating of “Ba1” (stable outlook) to the Bonds. This rating reflects only the view of the Rating Agency, and an explanation of the significance of such rating may be obtained from the Rating Agency furnishing the same. There is no assurance that any initial rating assigned to the Bonds will continue for any given period of time or that such rating will not be revised downward, suspended or withdrawn entirely by the Rating Agency furnishing the same. Any such downward revision, suspension or withdrawal of a rating may have an adverse effect on the availability of a market for or the market price of the Bonds. A securities rating is not a recommendation to buy, sell or hold securities and may be subject to revision or withdrawal at any time.

UNDERWRITING

The Bonds are being purchased by the Underwriter from the Authority in accordance with the terms of a purchase contract for the Bonds between the Underwriter and the Authority (the “Purchase Contract”). The purchase price for the Bonds is $______(such amount being equal to the principal amount of Bonds of $______, less an Underwriter’s Discount of $______and [plus][minus] net original issue [premium][discount] of $______).

The obligation of the Underwriter to purchase the Bonds is subject to the terms and conditions set forth in the Purchase Contract. 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 price, set forth on the cover page of this Official Statement, may be changed by the Underwriter from time to time without any requirement of prior notice. The Underwriter reserves the right to join with other dealers in offering the Bonds to the public, and said Bonds offered to other dealers may be at prices lower than those offered to the public.

The Underwriter has provided this paragraph for inclusion in this Official Statement. The Underwriter and its affiliates is a full service financial institution engaged in various activities, which may include securities trading, commercial and investment banking, financial advisory, investment management, principal investment, hedging, financing and brokerage activities. The Underwriter and its affiliates may have, from time to time, performed and may in the future perform, various investment banking services for the Authority, for which they may have received or will receive customary fees and expenses. In the ordinary course of their various business activities, the Underwriter and its affiliates may make or hold a broad array of investments and actively trade debt and equity securities (or related derivative securities) and financial instruments (which may include bank loans and/or credit default swaps) for their own account and for the accounts of their customers and may at any time hold long and short positions in such securities and instruments. Such investment and securities activities may involve securities and instruments of the Authority.

RELATIONSHIP OF PARTIES

M&T Securities, Inc., the Underwriter of the Bonds, is a subsidiary of Manufacturers and Traders Trust Company, the Trustee and Paying Agent for the Bonds.

LEGAL PROCEEDINGS

There is no litigation of any nature now pending or threatened seeking to restrain or enjoin the issuance or sale of the Bonds, or contesting proceedings of the Authority with respect to the issuance or sale thereof, or the pledge of any security provided for the payment of the Bonds or the existence or powers of the Authority. There is no pending or threatened legal proceedings materially adversely affecting the ability of the Authority to meet its obligations in connection with the Bonds.

LEGAL OPINION

The Bonds are offered with the approving legal opinion of Lynch and Lynch, Esquire, Bond Counsel to the Authority, of Pittsburgh, Pennsylvania. Certain legal matters will be passed upon for the Authority by its Solicitor, Gleason, Barbin & Markovitz LLP, Johnstown, Pennsylvania. Certain legal matters will be passed upon for the Underwriter by McNees Wallace & Nurick LLC, Lancaster, Pennsylvania, as underwriter’s counsel.

21 MISCELLANEOUS

The information set forth in this Official Statement has been obtained from the Authority and from other sources believed to be reliable. Insofar as any statement herein includes matters of opinion or estimates about future conditions, it is not intended as representation of fact, and there is no guarantee that it is, or will be, realized. Summaries or descriptions of provisions of the Bonds, the Indenture, and all references to other materials not purporting to be quoted in full are only brief outlines of some of the provisions thereof. Reference is hereby made to the complete documents, copies of which will be furnished by the Authority upon request. The information assembled in this Official Statement is not to be construed as a contract with holders of the Bonds.

The Authority has authorized the distribution of this Official Statement.

GLENDALE VALLEY MUNICIPAL AUTHORITY

By: [Insert Name/Title] Date: ______

22

APPENDIX A CERTAIN DEMOGRAPHIC AND ECONOMIC INFORMATION

[ THIS PAGE INTENTIONALLY LEFT BLANK ] THE GLENDALE VALLEY MUNICIPAL AUTHORITY

Glendale Valley Municipal Authority was created under the provisions of the Pennsylvania Municipal Authorities Act of 1945, as amended and superseded by Act 22-2001. A Certificate of Incorporation was issued by the Secretary of the Commonwealth of Pennsylvania on January 24, 2001. The Authority is an enterprise-operating entity providing for the construction and/or purchase of a system for the transmission and treatment of water in White Township, Cambria County and sewage in White and Reade Townships, Cambria County. The Authority, a governmental entity, is deemed exempt from federal income tax. The Authority’s corporate life expires on December 1, 2061.

On September 30, 2008, the Authority entered into an agreement to purchase the Glendale Yearound Water Company and the Glendale Yearound Sewer Company, both operating utilities regulated by the Pennsylvania Public Utility Commission. Both plants were decommissioned in 2015, and the systems were interconnected with the Authority’s main operating systems.

Component units are legally separate organizations for which the Authority is financially accountable. The Authority is financially accountable for an organization if the Authority (a) appoints a voting majority of the organization’s governing board; (b) is able to impose its will on the organization; or (c) there is a potential for the organization to provide specific financial benefits to, or impose specific financial burden on, the Authority. Additionally, the Authority is required to consider the organizations for which the nature and significance of their relationship with the Authority are such that exclusion would cause the Authority’s financial statements to be misleading. The Authority has no component units.

The governing body of the Authority is a board composed of six members. The members are appointed three each by the Reade Township Supervisors and the White Township Supervisors for five-year terms.

The Authority has broad powers under Act, including among others, the following: to sue and be sued; to enter into leases and contracts; to acquire property by any lawful means, including the exercise of the power of eminent domain; to hold, operate and maintain its property; to issue its negotiable bonds, and to secure their payment and rights of holders thereof under a trust indenture; to charge and collect service charges for the use of its facilities and to revise such service charges. The Act also empowers the Authority to make and enforce rules and regulations for the management of its business and affairs.

Day to day operations are administrated by the full-time office manager and operational manager. The Authority maintains five full-time employees to handle management, billing, testing, maintenance, and repairs. Seasonal part-time employees and independent contractors are utilized on an as-needed basis.

The Authority entered into an intermunicipal agreement with the neighboring Reade Township Municipal Authority on July 6, 2012. The agreement was for the purchase of bulk drinking water by the Glendale Valley Municipal Authority from the Reade Township Municipal Authority. The agreement outlines a purchased volume ranging from 30,000 to 110,000 gallons per day, delivered at metered at three distinct interconnection points. The purchase price is negotiated annually based upon the calculated cost to produce during the prior year. In 2016, the Authority purchased 40,696,000 gallons for a total price of $189,236. In 2017, the Authority purchased 42,045,000 gallons for a total price of $210,225.

THE COUNTY OF CAMBRIA Introduction The County of Cambria, Commonwealth of Pennsylvania (the “County”), was created on March 26, 1804 from parts of Bedford, Huntingdon, and Somerset Counties, with the County seat located in Ebensburg.

The County is located in south central Pennsylvania, approximately 72 miles east of Pittsburgh, 149 miles west of Harrisburg and 249 miles west of Philadelphia. The County, which encompasses approximately 693 square miles, is bounded by the Counties of Clearfield to the north, Blair to the east, Bedford, Somerset, and Westmoreland to the south, and Indiana to the west.

The City of Johnstown is the County’s principal city with an estimated population of 20,576 as of July 1, 2014. The city was settled in 1770 and is historically known for the “Johnstown Flood”, which occurred on May 31, 1889 after the South Fork Dam collapsed due to heavy rains. During the late 19th and early 20th centuries, Johnstown became the leading producer of steel in the United States, out-producing such steel giants as the Cities of Pittsburgh, Pennsylvania and Cleveland, Ohio. Like many cities in the steel producing communities in the region, post-1970s, Johnstown and the surrounding metropolitan area experienced a period of economic and population decline. The County has been active in addressing such economic challenges, including recent steps to attract technology companies to the region. This transition to a technology-oriented economy includes the construction of a 100,000 square-foot Technology Complex, which has attracted such firms as Concurrent Technologies, Northrop Grumman and Lockheed Martin. In addition, in 2013, the Cambria County Economic Development Authority was established to assist in the implementation of a Foreign Trade Zone. See “Form of Government” below for a discussion on the County’s continuing efforts to address population decline. Also see www.cambriacountypa.gov for further information concerning the County.

A-1 Form of Government The County is governed by a three-member Board of Commissioners (the “Commissioners”) who are noted on the inside cover page hereto.

The County Code, Act of August 9, 1955, P.L. 323, No. 130, as amended (the “County Code”), classifies Pennsylvania’s sixty-seven counties into eight classes according to population; Cambria County is classified as a fourth- class county. The County operates under the provisions of the County Code and other relevant acts.

Since 2000, the County’s population has declined by approximately 7.7%. In 2012, the County fell below the population level required to be classified as a fourth-class county and is likely to remain so through 2020. Given this occurrence, the County is expected to be reclassified to a fifth-class county in 2021. While it is impossible to predict the effect of such declining population on property tax and other County revenues, the County does not believe such revenues will be materially affected nor will it materially affect any Federal and Commonwealth funding.

REAL PROPERTY TAX COLLECTION

Tax Collection Procedures and Record Real estate taxes are billed on or about March 1 each year. A discount of 2% is allowed on all property taxes paid within two-months (by April 30). After the discount period expires, a two-month period is allowed for payment of taxes at par. Taxes paid after this period ending on July 1, are subject to a 10% penalty, plus interest and fees. In January of the following year, local tax collectors submit a list of names of all taxpayers who have not paid their current real estate taxes to the County Tax Claim Bureau. All delinquent real estate taxes are subsequently paid to the County Tax Claim Bureau, which in turn remits a quarterly list of delinquent collections to the County. Failure to pay taxes due could also lead to foreclosure and sale of the delinquent property.

The following tables review the County’s assessed valuation, tax rate, current and total collections for the years 2010 through and including 2016 (budgeted).

Real Property Tax Collections

Current Year Total Collections Current Plus Collections Assessed Amount of Current Year Percent of Tax Delinquent Percent of (2) (3) (4) Year Valuation Tax Rate Levy Collections Levy Collections Tax Levy

(1) 2016 $1,278,439,260 34.50 $44,106,154 $40,972,410 92.90% $42,842,510 97.14%

2015 1,276,606,040 29.50 37,659,878 35,256,347 93.62% 37,641,336 99.95%

2014 1,235,029,819 29.50 36,433,380 33,472,387 91.87% 35,927,305 98.61%

2013 1,233,431,434 29.50 36,386,227 33,430,791 91.88% 35,807,533 98.41%

2012 1,227,562,554 29.50 36,213,095 33,268,274 91.87% 35,520,450 98.09%

2011 1,223,769,540 29.50 36,101,201 33,176,311 91.90% 35,373,833 97.99%

2010 1,210,132,290 29.50 35,698,903 30,011,669 84.07% 32,145,459 90.05%

(1) Budgeted. (2) Tax Rate in mills. (3) Exonerations, deferred revenue, discount, credit vouchers and refunds deducted. (4) Includes all prior years delinquent taxes and penalties collected.

Source: County Officials.

A-2 LARGEST TAXPAYERS The twelve largest taxpayers in the County and current assessed valuations for 2016 are shown below. The aggregate assessed value of these twelve taxpayers totals approximately 6.9% of total assessed valuation of the County.

Twelve Largest Real Property Taxpayers, 2016

Company Industry Assessed Value

DLP Conemaugh Memorial (1) Healthcare $46,554,400 ADAR Johnstown LLC Commercial 7,414,880

Wal-Mart (2) Retail 6,484,700 Johnstown Shopping Center, LLC Real Estate 6,237,070 Ebensburg Associates, LLC Commercial 3,562,070 Graystone Court Villas Real Estate 3,363,370 FiberBlade, LLC Industrial 2,710,500 DLP Conemaugh Miners Industrial 2,581,670 PAX Mall Realty Co., LP Commercial 2,521,440 Metropolitan Life Insurance Co. Commercial 2,452,760 Laurel Wood Associates, LLC Commercial 2,160,240 BI Ebensburg, LLC Commercial 1,973,830 TOTAL $88,016,930

(1) In 2014, Duke LifePoint Healthcare, LLC (“Duke”), a for‐profit provider of hospital and health care services, bought and acquired the assets of Conemaugh Health Systems (“Conemaugh”), a non‐profit corporation. In recent years preceding that sale of its assets, Conemaugh had been party to certain Payment in Lieu of Taxes (PILOT) Agreements with the County and other taxing bodies in respect of certain of its real estate holdings and operations. Such PILOT Agreements provided the County with a modest amount of revenue. However, as a result of the sale, some fifty separate parcels of real estate within the County now owned by Duke have become subject to ad valorem real estate taxation. The $46,554,400 assessed value amount set out in the table represents the County’s presently determined assessed valuations for all of the Duke properties, combined. However, Duke has filed various and sundry appeals of the County’s assessed valuations and is currently paying its real estate taxes under protest. Under State law, during the pendency of such appeals and protests, the County is required to, and has, escrowed into reserve 25% of the amount of real estate taxes paid by Duke. During fiscal year 2015, that amount totaled $349,497.42. No assurances can be made at the present time regarding the outcomes of Duke’s various assessment appeals and tax protests, the resultant final assessed valuation of all of Duke’s properties, or the amount of annual tax revenue which can reasonably be expected to be collected from Duke. Notwithstanding the foregoing, the County does anticipate that inclusion of the Duke properties among taxable parcels within the County will have a positive effect on the County’s tax base.

Source: Cambria County Assessor’s Office. HISTORY OF TAX RATES

The County collects taxes for general purposes and other assigned purposes.

Dedicated Tax Millage Rates

Parks and Total County General Community Play County Year Levy Purposes Debt Service College Grounds Library 2016 34.50 27.50 5.00 1.00 0.50 0.50 2015 29.50 23.50 4.125 0.875 0.50 0.50 2014 29.50 23.50 4.125 0.875 0.50 0.50 2013 29.50 23.50 4.00 1.00 0.50 0.50 2012 29.50 23.50 4.00 1.00 0.50 0.50 2011 29.50 23.50 4.00 1.00 0.50 0.50 2010 26.90 20.90 4.00 1.00 0.50 0.50

Source: Cambria County A-3

Real Property Assessment Data

Year Market Value(1) Assessed Value Common Level Ratio(1)

2016(2) $1,278,439,260

2015(2) $1,276,606,040 2014 $4,713,854,270 $1,235,029,819 26.2% 2013 $4,436,803,719 $1,233,431,434 27.8% 2012 $3,788,773,315 $1,227,562,554 32.4% 2011 $3,557,469,593 $1,223,769,540 34.4% 2010 $3,623,150,569 $1,210,132,290 33.4%

(1) Market Values were calculated using the Pennsylvania Tax Equalization Board’s “Common Level Ratios”.

(2) The Pennsylvania Tax Equalization Board has not yet released the 2015 and 2016 data Source:

Cambria County Assessor’s Office and Pennsylvania Tax Equalization Board.

LABOR RELATIONS

Glendale Valley Municipal Authority employees are not unionized. The Authority believes that labor relations are in good standing with no material labor matters to disclose.

PENSION PROGRAM

The employees of the Authority may participate in a single employer cash balance pension plan administered by the Pennsylvania Municipal Retirement System (PMRS). GASB Statement No. 68, Accounting and Financial Reporting for Pensions, requires government employers, such as the Authority, to recognize a liability (or asset) for the net pension liability (or asset). The standard further requires the Authority to recognize pension expense and report deferred outflows of resources and deferred inflows of resources related to pensions. For purposes of measuring the net pension liability (asset), deferred outflows of resources and deferred inflows of resources related to pension expense, information about the fiduciary net position, of the Plan and additions to/deductions from the Plan’s fiduciary net position have been determined on the same basis as they are reported by the Plan. For this purpose, benefits payments (including refunds of employee contributions) are recognized when due and payable in accordance with the benefit terms, and investments are reported at fair value. At December 31, 2016, the Authority reported a liability of $1,689 for its net pension liability. The net pension liability was measured as of December 31, 2015, and the total pension liability used to calculate the net pension liability was determined by rolling forward the Plan’s total pension liability as of December 31, 2014 to December 31, 2015. For further information, please refer to Page 19 Note 12 of the Financial Statements Year ended December 31, 2016 of Appendix B of this Official Statement.

Source: Glendale Valley Municipal Authority’s Independent Auditor’s Report 2016, as prepared by Kotzan CPA& Associates P.C.

COUNTY DEMOGRAPHICS

Population The table shows the County’s population trends for the County, Pennsylvania and the United States. Table shows the County’s age composition compared to Pennsylvania and the United States. Cambria County’s population has steadily decreased since 2000.

A-4

Recent Population Trends

2000 2010 2011 2012 2013 2014 Cambria County 152,598 143,679 144,489 143,305 142,448 140,835 Pennsylvania 12,281,054 12,702,379 12,660,739 12,699,589 12,731,381 12,758,729 United States 281,421,906 308,745,538 306,603,772 309,138,711 311,536,594 314,107,084

% Change: 2000-2014 % Change: 2010-2014 Cambria County (7.71%) (1.98%) Pennsylvania 3.89% 0.44% United States 11.61% 1.74%

Source: U.S. Census Bureau, American Community Survey. Population Age Composition

2010 2011 2012 2013 2014 Cambria County Under 18-Years 28,160 27,867 27,344 26,993 26,637 18 – 64 Years 88,265 87,864 86,848 85,764 83,028 65 Years or Older 27,022 26,837 27,349 27,742 28,067 Pennsylvania Under 18-Years 2,785,316 2,761,343 2,737,905 2,715,645 2,700,893 18 – 64 Years 7,962,156 8,001,208 7,983,654 7,966,826 7,951,795 65 Years or Older 1,963,000 1,978,759 2,042,916 2,091,330 2,134,521

Source: U.S. Census Bureau, American Community Survey.

Income The table below illustrates income trends at various levels within Cambria County. The County’s per-capita income has not kept pace with Pennsylvania’s and national rates but household and family income levels have remained at pace with respect to national levels.

Income Levels

% Change 2010 2011 2012 2013 2014 (2010-2014) Cambria County Per-Capita Income $21,278 $21,925 $22,307 $22,659 $23,191 8.99% Median Household Income $40,494 $39,892 $39,724 $41,730 $42,304 4.47% Median Family Income $52,914 $51,770 $52,802 $54,630 $55,390 4.68% Pennsylvania Per-Capita Income $27,049 $27,824 $28,190 $28,502 $28,912 6.89% Median Household Income $48,314 $49,910 $51,225 $52,548 $53,115 9.94% Median Family Income $61,890 $63,283 $65,109 $66,646 $67,521 9.10% United States Per-Capita Income $27,334 $27,915 $28,051 $28,155 $28,555 4.47% Median Household Income $49,276 $50,054 $51,371 $53,046 $53,482 8.54% Median Family Income $60,609 $61,455 $62,527 $64,719 $65,443 7.98%

Source: U.S. Census Bureau, American Community Survey. A-5 Poverty The County’s poverty level in 2014 was slightly below the national level and slightly above Pennsylvania’s statewide level.

Percentage Individuals below Poverty Level

Cambria County 14.9% Pennsylvania 13.5% United States 15.6%

Source: U.S. Census Bureau, American Community Survey.

Housing Vacancy The County’s estimated vacancy rate in 2014 was below comparable national levels and similar to Pennsylvania’s.

Largest Employers The County’s ten largest employers are as follows:

Ten Largest Employers

Employer Product/Service DLP Partner Conemaugh LLC Healthcare Pennsylvania State Government Government Federal Government Government Cambria County Government Wal-Mart Associates Inc. Retail Saint Francis University Education DLP Conemaugh Physician Practices Healthcare University of Pittsburgh Education Concurrent Technologies Corp Technological Services Sheetz Inc. Retail

Source: Center for Workforce Information & Analysis – 3rd Quarter 2015 – 4/12/2016

A-6 Labor Force and Unemployment The size of Cambria County’s labor force has remained relatively constant, declining slightly over the last year. The County’s unemployment rate has historically been lower than the national average but slightly above Pennsylvania’s. The County’s unemployment rate currently is 6.9%, this is a 25% decrease from 2010 levels, which reached 9.2%. The table below shows the trends for labor force and employment rates.

Labor Force and Employment Rates for Cambria County (2011 – 2016)

2011 2012 2013 2014 2015 2016(1) Cambria County Civilian Labor Force (000) 66,200 66,000 64,600 63,000 62,400 62,200 Employment (000) 60,400 60,200 59,000 58,600 58,400 58,200 Unemployment (000) 5,800 5,800 5,600 4,400 4,000 4,100 Unemployment Rate 8.7% 8.8% 8.7% 7.0% 6.4% 6.5% Pennsylvania Civilian Labor Force (000) 6,395.0 6,465.0 6,442.0 6,378.0 6,428.0 6,479.0 Employment (000) 5,888.0 5,957.0 5,964.0 6,009.0 6,164.0 6,142.0 Unemployment (000) 507.0 508.0 478.0 370.0 264.0 338.0 Unemployment Rate 7.9% 7.9% 7.4% 5.8% 4.1% 5.2% United States Civilian Labor Force (000) 153,186 154,871 155,389 155,922 157,245 158,488 Employment (000) 139,323 142,065 143,929 146,305 149,703 151,075 Unemployment (000) 13,863 12,806 11,460 9,616 7,542 7,413 Unemployment Rate 9.0% 8.3% 7.4% 6.2% 4.8% 4.7% (1) As of April 2016

Source: Pennsylvania Department of Labor and Industry.

Education Public elementary and secondary education in Cambria County is provided by 14 school districts, listed as follows: Cambria County School Districts

School Enrollment (4) Blacklick Valley School District 657 Cambria Heights School District 1,419 Central Cambria School District 1,667 Conemaugh Valley School District 790 Ferndale Area School District 679 Forest Hills School District 1,897

Glendale School District (1) 819 Greater Johnstown School District 3,003 Northern Cambria School District 1,129

Penn Cambria School District (2) 1,715 Portage Area School District 918 Richland School District 1,619 Westmont Hilltop School District 1,522

Windber Area School District (3) 1,164

(1) Also in Clearfield County. (2) Also in Blair County. (3) Also in Somerset County. (4) Based on the 2014-15 School Year Source: Pennsylvania Department of Education.

A-7 Higher education is offered through 9 universities, colleges, community colleges and trade schools, listed as follows:

Higher Education in Cambria County

School Enrollment (1)

University of Pittsburgh at Johnstown 3,000 Saint Francis University 2,668 Mount Aloysius College 2,500 Pennsylvania Highland Community College 1,942 Commonwealth Technical Institute (Johnstown) 508 Greater Johnstown Career and Technology Center 440 Cambria-Rowe Business College 142 Pennsylvania Academy of Cosmetology Arts and 58 Science (Johnstown) Conemaugh Valley Memorial Hospital (Johnstown) 162

(1) Estimated

Source: Cappex (www.cappex.com)

Recreation

Prince Gallitzin State Park, is located near Glendale Valley Municipal Authority within the forested hills of the Allegheny Plateau and surrounds the sprawling Glendale Lake. Vistas offer scenic views of the 1,635-acre lake with its 26 miles of shoreline, which is a favorite of anglers and boaters. Campers flock to the large campground and also enjoy hiking and other outdoor activities. The varied habitats of the park make it a home for many types of wildlife, and a rest stop in the spring and fall migrations.

Summary of Economic Significance for Prince Gallitzin State Park: Visitation data and spending averages were used to generate estimates for the economic significance of visitor spending across the entire PA State Park system and for individual parks within the system. The Money Generation Model 2 (MGM2) adopted by the National Park Service as well as other state park systems was used to calculate these estimates.

Prince Gallitzin State Park, both local and non-local visitors spent an estimated $48,649,000 on their trips to this park in 2010. This spending resulted in $44,387,000 in sales, 685 Jobs, $16,265,000 in labor income and $25,734,000 in value added.

Cambria County has one county-owned recreation park. Duman Park consists of 71-acres of wooded and open spaces and adjoins the 19-acre state-owned Duman Lake. The lake is regularly stocked with trout by the state during fishing season.

The County also boasts the Johnstown Incline Plane, which is the steepest vehicular incline in the world. Historically, the Incline Plane was used during the Johnstown floods to transfer people to higher ground as well as supplies and contains exhibits illustrating its use during the floods. The Johnstown Flood Museum also displays relics and visuals of the 1880’s era and the “Great Flood”.

Most visitors to Cambria County come to use its rural setting for fishing, hunting, camping and hike within the two state parks, Prince Gallitzin and Laurel Ridge.

Medical Facilities Cambria County is served by two primary hospitals and has several urgent care facilities spread through the County.

A-8

Institution Type of Service Licensed Beds

Conemaugh Valley Memorial, Level 1 Trauma, emergency department, 555 Johnstown, PA level 3 intensive care nursery and helipad. Conemaugh – Miners Hospital, Family and Primary care, helipad 30 Hastings, PA

Source: Conemaugh Health System and Cambria County’s Chief Clerk’s Office.

Transportation

Public Transportation: Public transportation is provided by CamTran, which serves Cambria County and Windber Borough. CamTran also owns and operates the historic Johnstown Incline Plane.

Ridership on the transit system was over 1.2 million in fiscal year 2015 where urban routes accounted for 1.1 million riders and rural routes accounted for 129,000. The Incline Plane transported over 43,000 passengers in 2015, mostly tourists visiting Johnstown.

In July of 2013, CamTran took over services provided by Cambria County Area Agency on Aging and in October 2014 opened a new facility that includes administrative offices, operations center and maintenance facility. CamTran added their first compressed natural gas (CNG) bus in 2015. Through a public-private between PennDOT and Trillium, construction of a CNG fueling station will be completed in 2016. A second CNG fueling station will be construed at the CamTran+ rural division transportation center in 2017.

CamTran offers a variety of transportation service options for the County’s large rural population. They operate seven rural fixed routes, a park-and-ride service located in Ebensburg and a “Reserve-a-Ride” service that allows customers to call ahead and schedule their ride directly with CamTran, this is a door-to-door service for rural residents.

Airport: The County also has the John Murtha, Johnstown-Cambria County Airport, which serves as the hub for over 45,000 air operations a year for the military, scheduled commercial flights and corporate aircraft. A new terminal building was built in 1999 where United Airlines and Silver Airways provide service. John Murtha Airport provides direct service to Washington, DC and Altoona, Pennsylvania three times a day.

Roadways: The County is also well served by major commuter routes. US Route 219 dissects the County going north south while US Route 22 dissects the County going east west. Route 22 is the direct route to Pittsburgh and the recent road expansion has created a continuous four to five lane highway to Pittsburgh, which previously was predominately single-lane. The road expansion has brought the recent opening of a Hoss’s Steakhouse at the intersection of Route 22 and Route 219. Route 56 connects Johnstown to Route 22, which connects the County to Interstate 99 and the Pennsylvania Turnpike.

Railroads: The County is rail served by Amtrak with trains leaving daily for Pittsburgh and Philadelphia and by the Norfolk Southern mainline which is predominately used for transporting coal out of the region.

Utilities and Communications Pennsylvania Electric Company and A First Energy Company provide electricity to the County. Peoples Natural Gas Company also serves the County for natural distribution. There are several water and sewer authorities in the County that are overseen at the municipal level.

The County is served by two newspapers, the Tribune-Democrat (daily) and Mainline News [daily/weekly] publication of community news). Johnstown, Pennsylvania, is home to eight (8) FM radio stations, two (2) AM radio stations. The County is also served by several television stations, including WJAC (NBC), WATM (ABC), WTAJ (CBS) and WWCP (FOX).

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APPENDIX B FORM OF BOND COUNSEL OPINION

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LYNCH AND LYNCH Attorneys at Law ______

307 Fourth Avenue- Suite 507 Pittsburgh, Pennsylvania 15222

Thomas S. Lynch Telephone (412) 391-8600

______

______, 2018

$______GLENDALE VALLEY MUNICIPAL AUTHORITY, SEWER AND WATER REVENUE BONDS, SERIES OF 2018

To the Purchasers of the Above-Described Bonds.

Ladies and Gentlemen:

We have acted as Bond Counsel in connection with the issuance by the Glendale Valley Municipal Authority (the "Authority") of $______, principal amount, of its Sewer and Water Revenue Bonds, Series of 2018 (the "Series of 2018 Bonds"), issued in fully registered form in denominations of $5,000 or any integral multiple thereof.

The Series of 2018 Bonds are issued pursuant to and secured by the Authority's Trust Indenture, dated as of ______, 2018 (the "Indenture"), to Manufacturers and Traders Trust Company (the "Trustee"). The net proceeds of the sale of the Series of 2018 Bonds will be used to (i) undertake the acquisition and construction of certain alterations, additions and improvements to its Sewer and Water System (the “Capital Improvements Project”), (ii) currently refund certain outstanding indebtedness of the Authority, consisting of the following (collectively, the “Refunding Project”): (1) General Obligation Note, Series of 2012, (2) Guaranteed Water Project Note, Series of 2016, (3) Guaranteed Sewer Project Note, Series of 2016, and (4) a 2015 loan with the Pennsylvania Infrastructure Investment Authority (the “Pennvest Loan”), and (iii) fund a deposit to the Debt Service Reserve Fund established under the Indenture; and (iv) pay for the cost of issuing the Series of 2018 Bonds. Receipts and revenues from the Sewer and Water System will be applied to and will be sufficient to pay the principal and interest and premium (if any) on the Series of 2018 Bonds. The Authority has pledged and assigned its interests in said receipts and revenues to the Trustee for the benefit of

the Registered Holders of all bonds issued under the Indenture, including the Series of 2018 Bonds.

By the terms of the Indenture, the Authority covenants to make no use of the proceeds of the Series of 2018 Bonds which would cause the Series of 2018 Bonds to be "arbitrage bonds" under Sections 103 and 148 of the Internal Revenue Code of 1986, as amended (the "Code"), and the Authority covenants with the Registered Holders of the Series of 2018 Bonds that it will make no investment or other use of the proceeds of said Series of 2018 Bonds which, if such use or investment had been reasonably expected on the date of issuance of said Series of 2018 Bonds, would have caused said Series of 2018 Bonds to be "arbitrage bonds" under Sections 103 and 148 of the Code and the regulations thereunder, and further covenants that it will comply with the requirements of said Sections and regulations throughout the term of the Series of 2018 Bonds. The Authority has certified that it does not expect that the proceeds of the Series of 2018 Bonds will be used in a manner that would cause said obligations to be "arbitrage bonds".

In the manner and upon the terms and conditions provided in the Indenture, the Series of 2018 Bonds may be redeemed at various times prior to maturity at the option of the Authority or pursuant to the requirements of the Indenture.

The Authority previously issued its $8,173,000 aggregate principal amount Sewer Revenue Bond, Series of 2013 (the “RUS Sewer Bond”) and $1,615,000 aggregate principal amount Water Revenue Bond, Series of 2013 (the “RUS Water Bond” and together with the RUS Sewer Bond, the “RUS Bonds”), which are both secured by RUS Bond Resolutions dated December 18, 2012, respectively by a lien on the “Receipts and Revenues” of the Sewer and Water System. The Series of 2018 Bonds issued under the Trust Indenture are secured on a parity basis with the RUS Bonds.

Additional sewer and water revenue bonds of the Authority, in addition to the Series of 2018 Bonds, may also be issued under the Indenture by the Authority and authenticated by the Trustee upon compliance by the Authority with the terms and provisions set forth in the Indenture. Under the provisions of the Indenture, all such additional sewer and water revenue bonds of the Authority shall rank equally as to security with all bonds previously issued under the Indenture.

Neither the credit nor the taxing power of the Townships of Reade and White (collectively, the “Townships”), the Commonwealth of Pennsylvania (the “Commonwealth”) or of any political subdivision thereof and other than the Authority as hereinbefore provided, is pledged for the payment of the principal of, the interest on, or the premium (if any) payable upon the redemption of, said Series of 2018 Bonds; nor shall said Series of 2018 Bonds be deemed obligations of the Townships, the Commonwealth or of any political subdivision thereof; nor shall

2 the Townships, the Commonwealth or any political subdivision thereof, other than the Authority as hereinbefore provided, be liable for the payment of the principal of, the interest on, or the premium (if any) payable upon the redemption of, said Series of 2018 Bonds; and neither the Trustee nor any receiver appointed to operate and maintain any of the facilities of the Authority and to collect revenues arising therefrom for the benefit of the bondholders, shall be authorized to sell, assign, mortgage or otherwise dispose of any assets of whatever kind or character belonging to the Authority.

In our capacity as Bond Counsel, we have examined such documents, such records of the Authority, and such other instruments, including original counterparts or certified copies of the Indenture and other documents listed in the Closing Memorandum in respect of the Series of 2018 Bonds filed with the Trustee, as well as Sewer and Water Revenue Bond, Series of 2018, No. IR-1 duly authenticated by the Trustee, as we deemed necessary to enable us to express the opinions set forth below.

Based on the foregoing, it is our opinion that:

1. The Authority is validly organized under the laws of the Commonwealth with full power and authority to execute and deliver the Indenture and to issue and sell the Series of 2018 Bonds.

2. The Authority has the right and authority under the laws of the Commonwealth to charge and collect reasonable sewer and water service rates, rents, charges and surcharges for the use of the facilities of the Sewer and Water System and has validly covenanted in the Indenture that it has adopted and will charge, maintain and collect throughout its service area reasonable and, within reasonable classifications, uniform sewer and water service rates, rents, charges and surcharges for the use of the facilities of the Sewer and Water System, which (after making due and reasonable allowances for delinquencies and for contingencies and a margin of error in the estimates), together with all other anticipated receipts and revenues of the Authority, including earned interest and profits from investments made under the Indenture, shall be at all times at least sufficient with respect to the Sewer and Water System to provide funds to pay the current expenses of the Authority and to pay the debt service requirements with respect to its outstanding bonds.

3. The Indenture has been duly authorized, executed and delivered by the Authority, and the covenants of the Authority thereunder are valid and binding obligations in accordance with their terms.

4. The issuance and sale of the Series of 2018 Bonds have been duly authorized by the Authority. The Series of 2018 Bonds have been duly executed

3 and delivered by the Authority, have been authenticated by the Trustee, are valid and binding obligations of the Authority, and are entitled to the benefits and security of the Indenture.

5. Under the laws of the Commonwealth as enacted and construed on the date hereof, the Series of 2018 Bonds, and the interest income therefrom, are free from taxation within the Commonwealth, but this exemption does not extend to gift, estate, succession or inheritance taxes or gain from the sale, exchange or other disposition thereof or any other taxes not levied or assessed directly on the Series of 2018 Bonds, or the income therefrom. More specifically, the Series of 2018 Bonds are exempt from personal property taxes in Pennsylvania, and the interest on the Series of 2018 Bonds is exempt from Pennsylvania state and local personal income tax.

6. The Series of 2018 Bonds in fully registered form, subject to the provisions for registration provided therein, have all the qualities of negotiable instruments under the law merchant and the negotiable instruments law of the Commonwealth.

7. Subject to and assuming continued compliance by the Authority with the applicable requirements of the United States Internal Revenue Code of 1986, as amended (the "Code"), it is our opinion that the interest on the Series of 2018 Bonds is not includable in gross income for Federal income tax purposes under existing statutes, regulations, rulings and court decisions (based upon our examination of the law and our review of the appropriate certification by the Authority, the facts, estimates and circumstances in existence as of the date of the issuance of said Series of 2018 Bonds, in our opinion, are sufficiently set forth in said certification to satisfy the criteria which are necessary under the Code to support the conclusion that said Series of 2018 Bonds are not "arbitrage bonds", and that no matters have come to our attention which make unreasonable or incorrect the representations made in said certification). Furthermore, under the Code, since the Series of 2018 Bonds are governmental purpose bonds, interest on the Series of 2018 Bonds is not a specific preference item and thus the Series of 2018 Bonds will not be subject to the alternative minimum tax for individuals or corporations, except that: (1) to the extent the tax-exempt interest on said Series of 2018 Bonds is a component of a corporate holder's "adjusted current earnings", a portion of that interest may be subject to an alternative minimum tax; (2) interest on said Series of 2018 Bonds is subject to a "branch profits tax" imposed on foreign corporations engaged in a trade or business in the United States; (3) with respect to insurance companies subject to tax imposed by Section 831 of the Code, Section 832(b)(5)(B)(i) reduces the deduction for loss reserves by fifteen (15%) percent of the sum of certain items, including interest on the Series of 2018 Bonds; (4) passive investment income, including interest on the Series of 2018 Bonds, may be subject to federal income taxation under Section 1375 of the Code for Subchapter S Corporations that have Subchapter C earnings and profits at the close of the

4 taxable year if greater than twenty five (25%) percent of the gross receipts of said Subchapter S Corporation is passive investment income; and (5) Section 86 of the Code may require recipients of certain Social Security and certain Railroad Retirement benefits to include in gross income a portion of such benefits by reason of receipt of interest on the Series of 2018 Bonds.

In providing such opinions, we have relied on representations of the Authority with respect to matters solely within the knowledge of the Authority which we have not independently verified, and have assumed continuing compliance with the provisions of the Bond Documents pertaining to those Sections of the Code which affect the exclusion from gross income of interest on the Series of 2018 Bonds for federal income tax purposes. In the event that such representations are determined to be inaccurate or incomplete or the Authority fails to comply with the foregoing provisions of the Bond Documents, interest on the Series of 2018 Bonds could become includable in gross income from the date of original delivery, regardless of the date on which the event causing such inclusion occurs.

8. We express no opinion herein with respect to the accuracy or completeness of the Official Statement prepared in respect of the Series of 2018 Bonds, but, nevertheless, we have reviewed said Official Statement in preliminary and in final form and we have no reason to believe that said Official Statement contains any untrue statement of a material fact which, in our opinion, should be included or referred to therein in order to make the statements therein not misleading. The statements and descriptions set forth in the Official Statement of the provisions of the Series of 2018 Bonds and the Indenture, to the extent they are not purported in said Official Statement to be quoted in full, are brief statements and descriptions only of certain portions thereof, are not purported to be complete or comprehensive, and in all respects are qualified in their entirety by express reference to the provisions of the complete documents, copies of each of which are on file with the Trustee.

We call your attention to the fact that the Series of 2018 Bonds are payable only out of the pledged revenues of the Authority and certain other revenues and moneys available therefor as provided in the Indenture, and that the Series of 2018 Bonds do not pledge the credit or taxing power of the Commonwealth or any other political subdivision thereof, other than the Authority as aforementioned.

Very truly yours,

LYNCH and LYNCH

By______Thomas S. Lynch

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APPENDIX C AUDITED FINANCIAL STATEMENTS OF THE AUTHORITY FOR THE FISCAL YEARS ENDING DECEMBER 31, 2016 AND DECEMBER 31, 2017

[ THIS PAGE INTENTIONALLY LEFT BLANK ] Glendale Valley Municipal Authority Flinton, Pennsylvania

Audit Report

December 31,2016 Table of Contents

Independent Auditors' Report ...2

Basic Financial Statements:

Statement of Net Position ...4

Statement of Revenues, Expenses, and Changes in Net Position ..,6

Statement of Cash Flows 7

Notes to Financial Statements ...9

Other Information:

Schedule of Revenues, Expenses and Changes in Net Position - Budget to Actual .24

Supplemental Infonnation:

Pension Schedules .25

Independent Auditors' Report on Internal Control over Financial Reporting and on Compliance and Other Matters Based on an Audit of Financial Statements Performed in Accordance vítlh Government Auditing Standards...... 27

Schedule ofFindings and Responses .29 Dennis P. Koøan, CPA, CFF KOTZAN CPA6L Brenda A. Pawlowski, CPÁ, CFE ASSOCIATES, P.C. Kimberly A. Dorchalq CP,\ CGFM

CSRTIFIED PuBuc Acmnrrn¡¡rs &. Busxms Coxsu-rnm MEMBERAICPA. PICPA

Independent Auditors' Report

To the Members of the Board Glendale Valley Municipal Authority 1800 Beaver Valley Road

Flinton, Pennsylvania 1 6640

Report on the Financial Statements

We have audited the accompanying statement of net position of Glendale Valley Municipal Authority as of December 31,2016 and the related statements of revenues, expenses and changes in net position and cash flows for the year then ended, and the related notes to the financial statements, which collectively comprise the Authority'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 accounting principles generally accepted in the United States of America; this includes the design, implementation, and maintenance ofinternal control relevant to the preparation and fair presentation offinancial statements that are free from material misstatement, whether due to fraud or error.

Auditorso Responsibility

Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with auditing standards generally accepted in the United States of America and the standards applicable to financial audits containedin Government Auditing Standards, issued by the Comptroller General of the United States. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from 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 auditors' 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 entity'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 entity's internal control. Accordingly, we express no such opinion. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management, as well as evaluating the overall presentation of the financial statements.

V/e believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.

Opinion

In our opinion, the financial statements referred to above present faidy, in all material respects, the financial position of Glendale Valley Municipal Authority as of December 31, 2016 and the changes in financial position and cash flows for the year then ended in accordance with accounting principles generally accepted in the United States of America.

2

Budfield street Professional Building . 334 Budfieid Street ' Suite 180 ' Johnstown, PA L5904 81,4-269-4912' Fax: 8t4-266-9517 www.kotzancpa.com Other Matters

Required Supplementary Informqtion

Accounting principles generally accepted in the United States of America require that the historical pension information on pages 25 and 26 be presented to supplement the basic financial statements. Such information, although not a part of the basic financial statements, is required by the Governmental Accounting Standards Board, who considers it to be an essential part of financial reporting for placing the basic financial statements in an appropriate operational, economic, or historical context. We have applied certain limited procedures to the required supplementary information in accordance with auditing standards generally accepted in the United States of America, which consisted of inquiries of management about the methods of preparing the information and comparing the information for consistency with management's respons€s to our inquiries, the basic financial statements, and other knowledge we obtained during our audit of the basic financial statements. We do not express an opinion or provide any assurance on the information because the limited procedures do not provide us with sufficient evidence to express an opinion or provide any assurance.

Glendale Valley Municipal Authority has not presented the Management's Discussion and Analysis that accounting principles generally accepted in the United States of America require to supplement, although not to be a part of, the basic financial statements. Such information, although not a part of the basic financial statements, is required by the Governmental Accounting Standards Board, who considers it to be an essential part of the financial reporting for placing the basic financial statements in an appropriate operational, economic, or historical context. Our opinion on the basic financial statements is not affected by this missing information.

Other Information

Our audit was conducted for the purpose of forming an opinion on the financial statements that collectively comprise the Glendale Valley Municipal Authority's basic financial statements. The Schedule of Revenues, Expenses and Changes in Net Position - Budget to Actual is presented for the purpose of additional analysis and is not a required part of the basic financial statements.

The Schedule of Revenues, Expenses and Changes in Net Position - Budget to Actual has not been subjected to the auditing procedures applied in the audit of the basic financial statements and, accordingly, we do not express an opinion or provide any assurance on it.

Other Reporting Require d by Gov ernment Audítíng Støndørds

In accordance with Government Auditing Standards, we have also issued our report dated May 15, 2017 on our consideration of Glendale Valley Municipal Authority's internal control over financial reporting and on our tests of its compliance with certain provisions of laws, regulations, contracts, and grant agreements and other matters. The purpose of that report is to describe the scope of our testing of internal control over financial reporting and compliance and the results of that testing, and not to provide an opinion on internal control over financial reporting or on compliance. That report is an integral part of an audit performed in accordance with Government Auditing Standards in considering Glendale Valley Municipal Authority's internal control over financial reporting and compliance. hol"r* (fA a^tl ,{sçn"'k"} ' P'L KotzanCPA & Associates, P.C Johnstown, Pennsylvania llfay 15,2017

3

Budfield Street Professional Building . 334 Budfield Street ' Suite 180 ' Johnstown, PA t5904 81.4-269 -49L2' Fax: 874-266-9517 www.kotzancpa.com Glendale Valley Municipal Authority Statement of Net Position December 31,2016

Sewer Water Total Assets

Current assets: Cash and cash equivalents s 35,967 $ 91,148 I l27,ll5 Customer accounts receivable, net 173,200 79,385 252,595 Other accounts receivable 1,243 1,243 2,496 Grants receivable, capital 47,394 184,1 l0 231,504 Prepaid expenses 5,732 5,732 11,464 Current portion ofprepaid rent 3,953 3,953 7,906 Internal receivablesþayables, net 189,862 (189,862) 0

Total current assets 457,351 I 709 633,060

Noncurrent assets: Depreciable capital assets, net 18,531,523 3,980,376 22,511,899 Land 17,050 45,060 62,110 Easements 2,917,512 0 2,917,512 Construction in progress 0 6,787 6,787 Prepaid rent, net ofcurrent portion 125,507 125,507 251,014

Total noncurrent assets 21,591,592 t57 730 25,749,322

Total assets 22,048,943 4,333,439 26,382,382

Deferred Outflows of Resources Pension contributions subsequent to measurement date 1,835 1,835 3,670 Difference between projected and actual investment earnings 643 643 1,286

Total deferred outflows of resources 2,478 2,478 4,956

Total assets and deferred outflows ofresources s 22,051,421 ïl33sw $ 26,387,338

See accompanying notes to the financial statements.

4 Glendale Valley Municipal Authority Statement of Net Position December 31,2016

Sewer Water Total Liabilities Current liabilities: Accounts payable $ 3,694 $ 23,242 g 26,936 Payroll liabilities 2,015 2,014 4,029 Accrued interest 71,095 21,749 92,844 Current portion ofcapital lease 4,602 2,821 7,423 Current portion oflong-term debt 475.036 327,910 802,946

Total current liabilities 556,442 377 736 934,t78 Noncurrent liabilities: Net pension liability 845 844 1,689 Long-term debt, net ofcurrent portion 10,024,909 2,165,657 12,190,566

Total noncurrent liabilities 10,025,754 2,166,501 12,192,255

Total liabilities 10,582,196 2,544,237 13,126,433 Deferred Inflows of Resources Difference between expected and actual experience 413 413 826

Total deferred intflows of resources 413 413 826

Net Position: Invested in capital assets, net ofrelated debt 10,961,538 1,535,836 12,497,374 Unrestricted 507,274 255,431 762,705

Total net position 11,468,812 1,791,267 13,260,079

Total liabilities, deferred inflows of resources, and net position $22,051,421 ï#3:2n $26,387,338

See accompanying notes to the financial statements. 5 Glendale Valley Municipal Authority Statement of Revenues, Expenses and Changes in Net Position For the Year Ended December 31,2016

Sewer Water Total Operating revenues:

Charges: Sewer usage charges s 1,490,282 $ 0 s 1,490,282 Water usage charges 0 585 799 585,799

Total charges 1,490,282 585,799 2,076,081

Less: bad debts (24e.960) (222,398) (472,3s8)

Net charges 1,240,322 363,401 1,603,723

Tap fees 7,500 4,000 11,500

Total operating revenues 1,247,822 367,401 1,615,223

Operating expenses:

Employee costs 141,613 I 15,833 257,446 Power purchased 51,478 12,553 64,031 'Water purchased 0 179,701 179,701 Chemicals and water testing 19,137 3,724 22,861 Occupancy costs 18,895 4,847 23,742 Office expense 18,266 ll,167 29,433 Rent expense 3,953 3,953 7,906 Operations and maintenance 99,359 81,964 181,323 Insurance 23,247 14,248 37,495 Professional fees 15,825 10,332 26,157 Depreciation and amortization 6tt,33t 207,071 818,402 Other general operating expenses 26,140 13,358 39,498

Total operating expenses t,029,244 658,75r 1,687,995

Operating income (loss) 218,578 (29t350) (72,772)

Non-operating revenues (expenses):

Interest expense (337,217) (81,767) (418,984) Loss on the disposition of assets 0 (2,452) (2,452) Capital grants 9,735 55,384 65,119

Total non-operating revenues (expenses) (327,482\ (28,835) (356,317)

Change in net position (108,904) (320,185) (429,089)

Net position, beginning of year, restated 11,577,716 2,111,452 13,689,168

Net position, end of year $ I1,468,812 $lJet267_ s13,260,079

See accompanying notes to the financial statements.

6 Glendale Valley Municipal Authority Statement of Cash Flows For the Year Ended December 31,2016

Sewer Water Total Cash flows from operating activities: Cash received from providing service I 1,074,644 $ 6t2,031 $ 1,686,675 Cash payments to suppliers for goods and services (268,564) (322,186) (590,750) Cash payments to employees (142,ss6) (116,776) (259,332)

Net cash provided by (used for) operating activities 663,524 173,069 836,593 Cash flows from noncapital fïnancing activities Principal payments on noncapital financing 0 (24,037) (24,037) Interest payments on noncapital financing 0 (2,299) (2,299)

Net cash provided by (used for) noncapital financing activities 0 (26,336) (26,336\ Cash flows from capital and related fïnancing activities: Cash received from capital grants 0 58,398 58,399 Proceeds from capital financing t68,l2l 234,375 402,496 Purchase of capital assets (48,032) (72,014) (120,046) Principal payments on long-term debt (445,498) (241,230) (686,728) Principal payments on capital leases (26,910) (15,686) (42,596) Interest payments on long-term debt (339,042) (80,359) (419,401)

Net cash provided by (used for) capital and related financing activities (691,36t) (116,516) (807,877)

Net increase (decrease) in cash and cash equivalents (27,837) 30,217 2,390

Cash and cash equivalents, beginning ofyear 63,804 60,931 124,735 Cash and cash equivalents, end ofyear s 35,967 q____e1,148. $_lZJn

See accompanying notes to the financial statements. 7 Glendale Valley Municipal Authority Statement of Cash Flows For the Year Ended I)ecember 31,2016

Sewer Water Total Reconciliation of operating income (loss) to net cash provided by (used for) operating activities: Operating income (loss) $ 218,578 s (291,350) $ (72,772)

Adjusûnents to reconcile net operating income (loss) to net cash provided by (used for) operating activities: Depreciation and amortization 611,331 207,071 818,402 Amortization of rent expense 3,953 3,953 7,906 (Increase) decrease in accounts receivable 104,464 (33,012) 71,452 (Increase) decrease in internal receivables/payables (277,642\ 277,642 0 (Increase) decrease in prepaid expense 2,195 2,195 4,390 (Increase) decrease in deferred outflows þension) (812) (812) (t,624) Increase (decrease) in accounts payable 1,588 7,513 9,101 Increase (decrease) in payroll liabilities (t,307) (1,307) (2,614) Increase (decrease) in net pension liability '163 763 1,526 Increase (decrease) in deferred inflows þension) 413 413 826 Total adjustments 444,946 464,419 909,365

Net cash provided by (used for) operating activities g 663,524 $ 173,069 $ 836,593

See accompanying notes to the financial ståtements.

8 Glendale Valley Municipal Authority Notes to Financial Statements December 31,2016

Note I -Reporting Entity

Glendale Valley Municipal Authority was created under the provisions of the Pennsylvania Municipal Authorities Act of 1945, as amended and superseded by Act 22-2001. A Certificate of Incorporation was issued by the Secretary of the Commonwealth of Pennsylvania on January 24, 2001. The Authority is an enterprise-operating entity providing for the construction and/or purchase of a system for the transmission and treatment of water in White Township, Cambria County and sewage in V/hite and Reade Townships, Cambria County. The Authority, a governmental entity, is deemed exempt from federal income tax.

On September 30, 2011, the Authority entered into an agreement to purchase the Glendale Yearound Vy'ater Company and the Glendale Yearound Sewer Company, both operating utilities regulated by the Pennsylvania Public Utility Commission. Both plants were decommissioned in 2015, and the systems were interconnected with the Authority's main operating systems.

Component units are legally separate organizations for which the Authority is financially accountable. The Authority is financially accountable for an organization if the Authority (a) appoints a voting majority of the organization's governing board; (b) is able to impose its will on the organization; or (c) there is a potential for the organizafion to provide specific financial benefits to, or impose specific financial burden on, the Authority. Additionally, the Authority is required to consider other organizations for which the nature and significance of their relationship with the Authority are such that exclusion would cause the Authority's financial statements to be misleading. The Authority has no component units.

Note 2 - Summary of Signifìcant Accounting Policies

The financial statements of the Authority have been prepared in conformity with accounting principles generally accepted in the United States of America as applied to governmental units. The Governmental Accounting Standards Board (GASB) is the accepted standard-setting body for establishing governmental accounting and financial reporting principles. The more significant of the Authority's accounting policies are described below.

A. Basis of Presentation

The Authority's financial statements are presented on the accrual basis in accordance with accounting principles generally accepted in the United States of America. The Authority applies all Governmental Accounting Standards Board (GASB) pronouncements.

Funds

Proprietary funds focus on the determination of changes in net position, financial position and cash flows and are classified as either internal service or enterprise funds. Internal service funds account for the financing of services provided by one department or agency to other departments or agencies of the Authority. There are no internal service funds. Enterprise funds may be used to account for any activity for which a fee is charged to external users for goods and services. The Authority operates as an enterprise tund.

9 Glendale Valley Municipal Authority Notes to Financial Statements December 31,2016

Enterprise funds are used to account for operations that are (a) financed and operated in a manner similar to private business enterprises where the intent of the governing body is that the cost (expenses, including depreciation) of providing goods or services to the general public on a continuing basis be financed or recovered primarily through user charges; or (b) where the governing body has decided that periodic determination of revenues earned, expenses incurred, and/or net income is appropriate for capital maintenance, public policy, management control, accountability, or other purposes.

B. Measurement Focus

The enterprise fund is accounted for on a flow of economic resources measurement focus. All assets, deferred outflows of resources, liabilities (whether current or noncuffent) and deferred inflows of resources associated with the operation of the Authority are included on the statement of net position. The statement ofchanges in net position presents increases (revenues) and decreases (expenses) in net total position. The statement of cash flows provides information about how the Authority finances and meets the cash flow needs of its enterprise activity.

C. Basis of AccountÍng

Basis of accounting determines when transactions are recorded in the financial records and reported on the financial statements. The Authority's financial statements are prepared using the accrual basis of accounting.

Revenue is recorded on the accrual basis when the exchange takes place. Expenses are recognized at the time they are incurred.

D. Budget

Thirty days prior to the beginning of each fiscal year, the Authority is required to submit an annual budget and projected cash flow to the United States Department of Agriculture (USDA) - Rural Utilities Service (RUS). Variances between budget figures and actual amounts can often be attributed to the recording of actual amounts on the accrual basis of accounting while cash basis reporting is used for budget purposes.

E. Cash and Cash Equivalents

Cash as reflected on the Authority's December 31,2016 statement of net position totals $127,115 in demand deposits with a local financial institution, which are covered by the Federal Deposit Insurance Corporation (FDIC) or are collateralized with governmental securities in accordance with state requirements.

F. Accounts Receivable

Customer Accounts receivable represent billed and unbilled amounts for water and sewer services provided to the service area, as well as tap fees of 63,621 due from customers. Accounts receivable is presented net of an allowance for doubtful accounts of $301,352 at December 31,2016.

Receivables from and payables to external parties are reported separately and are not offset in the financial statements unless a right of offset exists.

10 Glendale Valley Municipal Authority Notes to Financial Statements December 31,2016

G. InternalReceivablesÆayables

The other receivables/payables reflected on the financial statements represent inter-division receivables at year end. The inter-division receivables are the result ofa consolidated billing/collection procedure and an inter-division invoice payment procedure. Inter-division reconciliations are made at year end.

H. Prepaid Expenses

Payments made to vendors for services that will benefit periods beyond December 31,2016 are recorded as prepaid items using the consumption method. A current asset for the prepaid amount is recorded at the time of the purchase and an expense is reported in the year in which services are consumed. The Authority has recorded prepaid expenses (including prepaid rent) of 5262,478 at December 31, 2016, with $11,464 reflected as current and $251,014 as noncurrent.

I. Capital Assets

Capitalized assets utilized by the Authority are reported on the statement of net position. All capital assets are capitalized at cost (or estimated historical cost) and updated for additions and retirements during the year. Donated fixed assets are recorded at their fair market values as of the date received. Improvements arc capitalized; the costs of normal maintenance and repairs that do not add to the value of the asset or materially extend an asset's life are not. Interest during the period of construction is depreciated as part of the cost of the project. The Authority does not yet have a formal capitalizationpolicy.

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

Description Estimated Lives Water and Sewer Systems 40 years Meter Equipment 15 years Purchased Yearound System 10 years Equipment 10 years Software 5 years

J. Deferred Outflows/Inflows of Resources

Deferred Outflows of Resources

The Authority reports decreases in net assets that relate to future periods as deferred outflows of resources in a separate section of its statement of net position. The deferred outflows of resources reported in this year's financial statements include a deferred outflow of resources for contributions made to the Authority's single-employer cash balance pension plan between the measurement date of the net pension liability from the plan and the end of the Authority's current fiscal year ($3,670). They further include a deferred amount arising from the difference between the pension plan's projected and actual earnings on investments ($1,286), which is amofüzed to pension expense over a total of five years, including the current year. See further detail on deferred outflows of resources related to the pension plan at Note 12.

l1 Glendale Valley Municipal Authority Notes to Financial Statements December 31,2016

Deferred Inflows of Resources

The Authority's statement of net position reports a separate section for deferred inflows of resources. This separate financial statement element reflects an increase in net assets that applies to a future period(s). Deferred inflows of resources are reported on the Authority's financial statement for the difference between actual and expected pension plan experience ($826). These deferred inflows are amortized to pension expense over a total of eight years, including the current year. See further detail on deferred inflows of resources related to the pension plan at note 12.

K. Contributed Capital

The Authority records grants, entitlements, shared revenues and the fair market value of donated property in accordance with GASB Statement No. 33, Accounting and Financial Reporting for Nonexchange Transactions. This statement requires governments to recognize capital contributions to proprietary funds as revenues, instead of contributed capital. Grants and entitlements totaling $65,119 were recognized as revenues by the Authority for the year ended December 31,2016.

L. Net Position

Net position comprises the various net earnings from operating and non-operating revenues, expenses and contributions of capital. Net position is classified in the following three components: invested in capital assets, net of related debt; restricted; and unrestricted net position. Invested in capital assets, net of related debt, consists ofall capital assets, net ofaccumulated depreciation and reduced by outstanding debt that is attributable to the acquisition, construction and improvement of those assets; debt related to unspent proceeds or other restricted cash and investments is excluded from the determination. Restricted net position consists of assets for which constraints are placed thereon by external parties, such as lenders, grantors, contributors, laws, regulations and enabling legislation, including self-imposed legal mandates. Un¡estricted net position consists ofall other liquid assets not included in the above categories.

When both restricted and unrestricted resources are available for use, it is the Authority's policy to use restricted resources first, then unrestricted resources as they are needed.

M. Revenues and Expenses

Operating revenues and expenses consist of those revenues and expenses that result from the ongoing principal operations of the Authority. Operating revenues consist primarily of charges to provide water and sewer services to customers of the Authority. Non-operating revenues and expenses consist of those revenues and expenses related to financing and investing types ofactivities and result from non-exchange transactions or other activities.

N. Estimates

The preparation of the financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. Actual results may differ from those estimates.

t2 Glendale Valley Municipal Authority Notes to Financial Statements December 31,2016

O. Concentration of Credit Risk

The Authority extends credit to customers, substantially all of whom are local residents and generally requires no collateral.

P. Pension Plan

The employees of the Authority may participate in a single employer cash balance pension plan administered by the Pennsylvania Municipal Retirement System (PMRS). GASB Statement No. 68, Accounting and Financial Reportingþr Pensions, requires government employers, such as the Authority, to recognize a liability (or asset) for the net pension liability (or asset). The standard further requires the Authority to recognize pension expense and report deferred outflows ofresources and deferred inflows of resources related to pensions.

For purposes of measuring the net pension liability (asset), deferred outflows of resources and deferred inflows of resources related to pension expense, information about the fiduciary net position of the Plan and additions toldeductions from the Plan's fiduciary net position have been determined on the same basis as they are reported by the Plan. For this pu{pose, benefits payments (including refunds of employee contributions) are recognized when due and payable in accordance with the benefit terms, and investments are reported at fair value.

Note 3 - Cash and Cash Equivalents and Investments

The deposit and investment policy of the Authority adheres to state statutes and prudent business practice. Cash equivalents are defined as short-term, highly liquid investments that are readily convertible to known amounts of cash. Cash and cash equivalents consist of demand deposits with a local hnancial institution. The market values of deposits are equal to the cost of the deposits.

Amounts on deposit in financial institutions, which are described as cash and cash equivalents in the Authority's financial statements, are covered by federal depository insurance or collateralized in açcordance with the Perursylvania Security for Public Deposits Act ("the Act"). Under the Act, banks holding public deposits in excess of the amounts insured by the FDIC limit must pledge collateral in the amount of 120% of excess deposits to a collateral pool.

Cash

Custodial Credit Risk - Deposits

Custodial credit risk is the risk that in the event of a bank failure, the Authority's deposits may not be returned to it. The Authority does not have a policy for custodial credit risk. However, as previously noted, the Authority's deposits in excess of the FDIC limit are collateralized in accordance with the Perursylvania Security for Public Deposits Act. As of December 31, 2016, none of the Authority's bank balances were exposed to custodial risk.

t3 Glendale Valley Municipal Authority Notes to Financial Statements December 31,2016

Reconciliation to Financial Statements

Insured amount $156,353 Less: Outstanding checks (37,807) Plus: Deposits in transit 8.169 Carrying amount - bank balance 126,715 Plus: Cash on hand 400 Total cash per financial statements g1u]15

Note 4 - Customer Accounts Receivable

Accounts receivable of $252,585 consists of the following:

Individual customers - billed g 424,243 Individual customers - unbilled 129"694 553,937 Allowance for doubtful accounts (301.3s2\ Net receivables s 252-585

Note 5 - Other Accounts Receivable

Other receivables of $2,486 consist of amounts owed to the Authority for reimbursement of various expenditures.

Note 6 - Grants Receivable/Reimbursement of Capital Assets

The Authority derives certain revenues from reimbursements of capital costs and project expenditures by federal and state agencies. The amount due from the Pennsylvania Infrastructure Investment Authority (PENNVEST), at December 31, 2016 is $23 I ,504. The amount of revenue recognized for 2016 is $65,1 19.

t4 Glendale Valley Municipal Authority Notes to Financial Statements December 31,2016

NoteT-CapitalAssets

Capital asset activity for the year ended December 31, 2016 was as follows: Balance Balance lll/2016 Additions Deletions t2l3t/2016 Capital assets, not being depreciated: Construction in progress $0 $ 6,787 $ 0 s 6,787 Land 62,110 0 0 62,110 Easements 2,916,000 1.5r2 0 2,917,512 Total non-depreciable assets 2,978,110 8,299 0 2,996,409

Capital assets, being depreciated: Infrastructure - Sewer 21,213,265 40,040 0 21,253,305 Infrastructure - Water 5,019,697 54,402 (10,01 6) 5,064,083 Improvements 25,116 0 0 25,116 Equipment 129,588 7,500 0 137,088 Software 4,059 0 0 4,059 Total depreciable assets 26,391,724 101,942 (10,016) 26,483,6s0

Accumulated depreciation: Infrastructure - Sewer 2,190,034 602,519 0 2,792,553 Infrastructure - Water 934,526 201,670 (7,564) 1,128,632 Improvements 1,727 628 0 2,355 Equipment 30,702 13,450 0 44,152 Software 3,924 135 0 4,059 Total accumulated depreciation 3,160,913 818,402 (7,564) 3,971,7 5l

Total capital assets being depreciated, net 23,230,811 (716,460) (2,452) 22,51t,899

Total capital assets, net s26,208,921 $ (708,161) 9___p4Ð S2ry2ç9!

Depreciation €xpense for the year ended December 31,2016 was $818,402

Construction in Progress

The Authority's cumulative capitalized costs in connection with new water and sewer projects are reflected in construction in progress and transferred to the ass€t accounts upon completion. No interest was capitalized or included in construction in progress in20l6.

NoteS-PrepaidRent

The amount recorded as Prepaid Rent represents an amount advanced to V/hite Township for the Authority's share of the construction of a building that houses both the Township and Authority offices. The Authority's share of the construction was $316,238, and with construction complete and the building occupied, the Authority began amortizing the amount paid to rent expense, starting in October 2009, using the straight-line method. Rent expense tot¿led $7,906 for the year ended December 31,2016. l5 Glendale Valley Municipal Authority Notes to Financial Statements December 31,2016

Note 9 - Long-Term Obligations

A summary of changes in long-term debt during the year ended December 31,2016, was as follows:

Balance Balance 11112016 Additions Reductions 12/3t/2016

Yearound Note, Series of 2011 (a) s 2,685,676 $ 0 $ (197,449) g 2,488,227 USDA-RUS Sewer Revenue Bond þ) 8,116,466 0 (116,380) 8,000,096 USDA-RUS WaterRevenue Bond (c) 1,582,014 0 (22,700) 1,559,314 Yearound Interconnect Note (2016) - Sewer (d) 0 168,l2l 0 l6g,l2l Yearound Interconnect Note (2016) - Water (e) 0 226,070 (r83) 225,997 Yearound Interconnect Note (2014) - Sewer (f) 155,108 0 (155,108) 0 Yearound Interconnect Note (2014) - V/ater (g) 158,824 8,305 (167,129) 0 Pennvest Sewer Loan (h) 516,737 0 (27,779) 488,959 RTMA Capacity Fee Note (i) 86,956 0 (24,037) 62,919

Total long-term debt $ 13,301,781 S 402,496 $ (710,765) 12,993,512

Less current maturities of long-term debt (802,946\

Long-term debt, net of current maturities $ 12,190,566

Maturities of the long-term debt will require the following principal and interest payments based on amounts outstanding at December 31,2016:.

Year Ended Principal Interest Total 2017 $ 802,946 s 402,032 $ 1,204,978 2018 422,637 384,747 807,384 2019 423,424 370,566 793,990 2020 424,602 356,446 781,048 2021 439,042 342,006 781,048 2022-2026 2,438,864 1,332,065 3,770,929 2027-2031 1,177,527 1,166,659 2,344,186 2032-2036 1,215,126 989,581 2,204,707 2037-2041 1,419,910 785,796 2,204,706 2042-2046 1,656,871 547,835 2,204,',l06 2047-2051 1,934,739 269,96',7 2,204,706 2052-2053 638,824 20,032 658,856

8 12,993,st2 s6,967,732 s 19,961,244

t6 Glendale Valley Municipal Authority Notes to Financial Statements December 31,2016

(a) Yearound Note. Series of 2011 On October 3,2011, the Authority entered into an agreement with M&T Trust Company for a Revenue Note, Series of20ll,torefundandextendtheYearoundtermnote,andtoinclude5l,S26,225forupgradeprojects. January3l, 2012 was the actual funding date. The amount of the note is $3,426,200 for a ten-year term, with an estimated maturityofJanuary3l,2022,andaninterestrateof 3.89%. Thenoterequiressemi-annualpaymentsofprincipal and interest of $150,865. The note is secured by the revenues generated by the Yearound systems. The balance as of December 31, 2016 was 82,488,227 .

(b) USDA-RUS Sewer Revenuc Bond On March 27, 2013, the Authority entered into an agreement with the United States Department of Agriculture - Rural Utilities Service (RUS) for a Guaranteed Sewer Revenue RUS Bond to refinance the principal on the interim M&T Trust Company Sewer Project Note (Loan Bl). The amount of the bond is $8,173,000, for a 40 year term, with an estimated maturity of March 2053, Payments on the note are due semi-annualTy, at an interest rate of 3.125yo, and are guaranteed by the full faith and credit of the Authority, as well as of the Townships of White and Reade. The balance as of December 31,2016 was $8,000,086.

(c) USDA-RUS Water Revenue Bond On February 6, 2013, the Authority entered into an agreement with the United States Department of Agriculture - Rural Utilities Service (RUS) for a Guaranteed Water Revenue RUS Bond to refinance the principal on the interim M&T Trust Company Water Project Note (Loan Al). The amount of the bond is $1,615,000, for a 40 year term, with an estimated maturity of February 2053. Payments on the note are due semi-annually, at an interest rate of 3.125o/o, and are guaranteed by the full faith and credit of the Authority, as well as of the Township of V/hite. The balance as of December 31,2016 was $1,559,314.

(d) Interconnection N In May of 2016, the Authority entered into a loan agre€ment with M&T Trust Company for a Guaranteed Sewer Interconnection Project Refinancing Note in the amount of $250,000, in the form of a revolving line of credit, at a qualified tax-exempt rate, which is variable and based upon the Trust Company's prevailing one-month LIBOR, plus 1.42%o, and is payable monthly. The rate at December 31,2016 was2.l7o/o. The maturity date is June 1, 2017.

The proceeds were used to refinance the 2014 Sewer Interconnection Project Note (see f). The note is secured by remaining monies from the approved PENNVEST grant (5524,600) and loan ($695,400). The balance as of December 31,2016 was $168,121.

(e) Water Interconnection Project Note (2016) In May of 2016, the Authority entered into a loan agreement with M&T Trust Company for a Guaranteed W'ater Intercor¡rection Project Refinancing Note in the amount of $250,000, in the form of a revolving line of credit, at a qualified tax-exempt rate, which is variable and based upon the Trust Company's prevailing one-month LIBOR, plus 1.42o/o, and is payable monthly. The rate at December 31,2016 was2.l7o/o. The maturity date is June 1,2017.

The proceeds were used to refinance the 2014 Water Interconnection Project Note (see g). The note is secured by remaining monies from the approved PENNVEST grant ($1,290,000). The balance as of December 31, 2016 was s225,887.

(f) Sewer Interconnection Project Note (2014) In September 2014,the Authority entered into a loan agreement with M&T Trust Company for a Guaranteed Sewer Interconnection Project Note in the amount of $500,000, in the form of a non-revolving line of credit, at a qualihed tax-exempt rate, which is variable and based upon the Trust Company's prevailing one-month LIBOR, plus 1.05%, and is payable monthly. The original maturity date was March 2016,with an extension to June 2016.

t7 Glendale Valley Municipal Authority Notes to Financial Statements December 31,2016

The proceeds were used as interim financing, for the construction of the Yearound sewer interconnection project and was secured by the approved PENNVEST grant ($524,600) and loan ($695,400). The balance as of December 31, 2016 was $0.

In May 2016,lhe note \Mas refinanced with M&T Trust Company for a $250,000 one-year note (see (d)), maturing in June 2017 , at an interest rate at the one-month LIBOR, plus I .42Yo, payable monthly.

(g) Water Interconnection P .iect Note (2014) In September 2014, the Authority entered into a loan agreement with M&T Trust Company for a Guaranteed Water Interconnection Project Note in the amount of $500,000, in the form of a non-revolving line of credit, at a qualified tax-exempt rate, which is variable and based upon the Trust Company's prevailing one-month LIBOR, plus 1.05%, and is payable monthly. The original maturity date was March 2016, with an extension to June 2016.

The proceeds were used as interim financing, for the construction of the Yearound water interconnection project and was secured by the approved PENNVEST grant ($1,290,000). The balance as of December 31,2016 was $0.

In May 2016,the note was refinanced with M&T Trust Company for a $250,000 one-year note (see (e)), maturing in June 2017, at an interest rate at the one-month LIBOR, plus 1.42, payable monthly.

(h) Pennvest Sewer Loan In April 2014, the Authority was approved for a loan from the Pennsylvania Infrastructure Investment Authority (Pennvest) for funding the Glendale Yearound Sewer Intercormect Project. The maximum amount available under the loan agreement is $695,400, with interest only payments due monthly at aî interest rate of l%io dunng construction and monthly payments of principal and interest at lYo for 240 months after completion of the project. The balance of the loan at December 31,2016 was $488,958.

(i) RTMA Capacity Fee Note In December 2015, the Authority entered into a loan agreement with M&T Trust Company for the Series 2015 Revenue Note in the amount of $100,000, for the payment of a one-time capacity fee to the water supplier, Reade Township Municipal Authority (RTMA), for adding the Glendale Yearound customers to the water system. Payments are due semi-annually for four (4) years with a fixed interest rate of 2.8o/o. The balance of the loan at December 31,2016 was $62,919.

Note 10 - Capital Lease

The Authority has entered into certain capital lease agreements, under which the related equipment will become the property of the Authority when all terms of the lease agreements are met. The terms of the leases are 36 months, and the stated interest rates are 3.785% and 3.88%. The gross amount of assets capitalized under capital leases is 5123,433 þlus fees of $350), and the related accumulated amofüzation is $39,792. Amortization of leased equipment under capital leases is included with depreciation expense. Future minimum lease payments are as follows:

l8 Glendale Valley Municipal Authority Notes to Financial Statements December 31,2016

Balance Balance t/Il2016 Additions Reductions t2/3t/20t6

Lease for Ford trucks (2) $ 35,451 $ 0 $ (35,451) $0 Lease for trailer and vacuum pump 14,568 0 (7,t45) 7,423

Total capital lease obligations $ 50,019 $ 0 $ (42,596) 7,423 Less current maturities of capital lease obligations (7,423) Long-term capital lease obligations, net of current portion $ 0

Note 11 - Retirement Plan

Pension plan information is presented in accordance with GASB No. 68, Accounting and Finøncial Reporting for Pensions. The most recent valuation available is dated as of January 1,2016, for the 2015 plan year. This valuation was prepared based on assumptions and conditions as they existed on the date of the valuation as described below. The effects of changes, if any, in assumptions or conditions occurring after the valuation date, on the valuation and information provided in this note, have not been determined.

Plan Description Ths Glendale Valley Municipal Authority pension plan is a single-employer cash balance pension plan controlled by the provisions of Resolution No. 2014-1. The plan participates in the Perursylvania Municipal Retirement System (PMRS), which is an agent multiple-employer public employee retirement system that acts as a coilrmon investment and administrative agent for participating municipal pension plans. PMRS issues a separate Comprehensive Annual Financial Report which is available on the PMRS website.

The plan provides retirement, disability and death benefits to plan members and their beneficiaries. Cost-of-living allowances are provided at the discretion of the plan. Plan membership consisted of five active members and no inactive members as of January 1,2016, the most recent valuation date.

Contributions Act 205 requires that annual contributions be based upon the plan's minimum municipal obligation (MMO). The MMO is based upon the Authority's required contribution of two percent (2%) of each member's compensation. The Authority's contributions to the plan for the year ended Decemb er 31, 2016 was $3,670. In accordance with the plan's governing resolution, members are not required to contribute, but can voluntarily contribute up to 20o/o of compensation to the plan. Member contributions for the year ended December 31,2016 were $8,499.

Note 12 - Pension Assets, Pension Expense, and Deferred Outflows of Resources and Deferred Inflows of Resources Related to Pensions

At December 31, 2016, the Authority reported a liability of $1,689 for its net pension liability. The net pension liability was measured as of December 31,2015, and the total pension liability used to calculate the net pension liability was determined by rolling forward the Plan's total pension liability as of December 31,2014 to December 31,2015.

l9 Glendale Valley Municipal Authority Notes to Financial Statements December 31,2016

For the year ended December 31,2016, the Authority recognized pension expense of 54,496. At December 31, 2016, the Authority reported deferred outflows of resources and deferred inflows of resources related to pensions from the following sources:

Deferred Outflows Deferred Inflows ofResources ofResources Difference between expected and actual experience $ 0 $ 826 Changes in assumptions 0 0 Net difference between projected and actual investment earnings 1,286 0 Contributions subsequent to the measurement date 3,670 0 $ 4,956 $ 826

$3,670 reported as deferred outflows of resources related to pensions resulting from the Authority's contributions subsequent to the measurement date will decrease the net pension liability of the plan in the year ended December 31,2017. The other amounts reported as deferred outflows of resources and deferred inflows of resources related to pensions will be recognized in the pension expense as follows:

Year Ended December 3l

2017 $ 212 2018 212 2019 2ll 2020 179 2021 (l l8) Thereafter (236) $ 460

Actuarial assumptions

The total pension liability as of Decernber 31, 2014 was determined by rolling forward the Plan's total pension liability as of the December 31, 2014 actuarial valuation to December 31, 2015 using the following actuarial assumptions, applied to all periods included in the measurement:

a Actuarial cost method - Entry Age Normal - level o/o of pay a Investment return - 5.50% compounded annually, net of expenses.

a Salary increases - The average total wages of all workers will increase 3.3o/o, compounded annually

a Mortality rates were based on the RP-2000 Combined Healthy Annuitant Tables (male and female), with age set back of five years for females. For disabled annuitants, the RP-2000 Combined Disabled Tables (male and female), with age set forward ten years for both males and females.

20 Glendale Valley Municipal Authority Notes to Financial Statements December 31,2016

The actuarial assumptions used in the December 31,2015 valuation were based on the experience study that was performed for the four-year period ending December 31,2013. The study was issued by the actuary in July 2015, as well as subsequent Board-approved assumption changes.

The long-term expected rate of return on pension plan investments was determined using a building-block approach. These ranges are combined to produce the long-term expected rate of return by weighting the expected future real returns by the target asset allocation percentage and adding expected inflation.

The pension plan's policy in regard to the allocation of invested plan assets is established and may be amended by PMRS. Plan assets are managed with a long-term objective of achieving and maintaining a fully funded status for the benefits provided through the pension.

Long-Term Target Expected Real Asset Class Allocation Rate of Return Domestic Equities (large cap) 25.0% 69% Domestic Equities (small cap) 15.0% 6.8% International Equities (developed markets) 15.0% 4.0% International Equities (emerging markets) 10.0% 7.6% Real Estate 20.0% 7.1% Fixed Income 15.0o/r 2.4%

The above was PMRS' adopted asset allocation policy and best estimates of arithmetic rates of return for each asset class as of December 31,2015.

Discount rate

The discount rate used to measure the total pension liability was 5.50%. The projection of cash flows used to determine the discount rate assumed that contributions from plan members will be made at the current contribution rate and that contributions from employers will be made at statutorily determined amounts. Based on those assumptions, the pension plan's fiduciary îet position was projected to be available to make all projected future benefit payments for current plan members. Therefore, the long-term expected rate of return on pension plan investments was applied to all periods of projected benefit payments to determine the total pension liability.

Changes in Authority's Net Pension Liability (Asset)

The table below shows the changes in the total pension liability, the Plan fiduciary net position (i.e. fair value of Plan assets), and the net pension liability (asset) as of the measurement date.

2t Glendale Valley Municipal Authority Notes to Financial Statements I)ecember 31,2016

Increase (Decrease Total Pension Plan Fiduciary Net Pension Liability Net Position Liability (Asset) lal tbl tal - tbl

Balance, December 31, 2014 $ 11,521 $ 11,357 $ 164 Changes for the year: Service cost 12,987 0 12,987 Interest 869 0 869 Changes in benefits 0 0 0 Changes in assumptions 0 0 0 Difference between expected and actual experience (e44) 0 (e44) Contributions - employees 0 3,204 (3,204) Contributions - PMRS assessment 0 100 (100) Contributions - employer 0 8,844 (8,844) PMRS investment income 0 864 (864) Market value investment income 0 (1,489) 1,489 Transfers 0 0 0 Benefit payments (e43) (e43) 0 PMRS administrative expense 0 (100) 100 Additional adminisfative expense 0 36 Net changes 1 ,969 10,444 1,525

Balance December 31, 2015 s 23,490 $ 21,801 $ 1,689

Sensitivity of the Authority's net pension liabilitv to changes in the discount rate

The following presents the net pension liability, calculated using the discount rate of 5.50%o, as well as what the net pension liability would be if it were calculated using a discount rate that is one percentage point lower (4.50%) or one percentage point higher (6.50%) than the current rate:

Current Discount 1olo Decrease Rate lolo Increase 4.500/o 550% 650%

Authority's net pension liability (asset) $6,387 $1,689 $(3,009)

Pension plan fiduciary net position

Detailed information about the PMRS' fiduciary net position is available in the PMRS Comprehensive Annual Financial Report which is available on the PMRS website.

22 Glendale Valley Municipal Authority Notes to Financial Statements December 31,2016

Note 13 - Risk Management

The Authority is exposed to various risks of loss related to torts; theft of, damage to, and destruction of assets; errors and omissions; and natural disasters. The Authority has purchased various insurance policies to safeguard its assets from risk of loss. Insurance coverage appears to be consistent with previous years. During the year ended December 31,2016 and the two previous fiscal years, no settlements exceeded insurance coverage.

Note 14 - Commitments and Contingencies

Grant Programs

The Authority participates in state and federally assisted grant and loan programs. These progr¿ìms are subject to program compliance audits by the grantors or their representatives. The Authority is potentially liable for any expenditures which may be disallowed pursuant to the terms of these programs. Management is not aware of any material items of noncompliance which would result in the disallowance of program expenditures.

Litigation

The Authority is subject to various legal proceedings and claims which may arise in the ordinary course of its business. In the opinion of management, the amount of ultimate liability with respect to these actions, if any, will not have a material adverse effect on the financial position, operations or cash flow of the Authority.

Note 15 - Economic Dependency

The Authority is economically dependent on the Reade Township Municipal Authority who provides water to supply the Authority's Vy'hite Township and Glendale Yearound regions. The water rate fees paid for the year ended December 31,2016 were $179,701.

Note 16 - Prior Period Adjustment

During the current year, it was determined that certain prior year operating grants receivables totaling 513,035 were not collectible, thus overstating prior year receivables. Therefore, the Authority's beginning net position of 513,702,203, as originally reported, has been reduced to $13,689,168.

23 Glendale Valley Municipal Authority Schedule of Revenues, Expenses and Changes in Net Position Budget to ,A.ctual For the Year Ended December 31,2016

Budget Va¡iance Original Favorable and Final Actual (Unfavorable) Operating revenues:

Total operating revenues s 1,586,732 s 1,615,223 S 2g,4gl

Operating expenses:

Employee costs 259,160 257,446 1,714 Power purchased 60,930 64,031 (3,101) Water purchased 135,200 179,701 (44,501) Chemicals and water testing 20,000 22,861 (2,861) Occupancy costs 24,850 23,742 1,109 Office expense 33,500 29,433 4,067 Rent expense 0 7,906 (7,906) Operations and maintenance 134,040 181,323 (47,283) Insurance 37,428 37,495 (67) Professional fees 34,000 26,157 7,843 Depreciation and amortization 0 818,402 (818,402) Other general operating expenses 21,000 39,498 (18,498)

Total operating expenses 760,108 1,687,995 (927,887\

Operating income (loss) 826,624 (72,772) (899,396)

Non-operating revenues (expenses):

Debt service (8t3,293) (418,984) 394,309 Loss on the disposition ofassets 0 (2,452) (2,452) Grants - capital 0 65,1 19 65 119

Total non-operating revenues (expenses) (813,293) (3s6,317) 456,976

Change in net assets $ 13,331 (429,08e) rc@

Net position, beginning of year, restated 13,689,168

Net position, end of year 913,260,079

See accompanying notes to the financial statements. 24 Glendale Valley Municipal Authority Pension Schedules For the Year Ended December 31,2016

Total Pension Liability 2016 20t5

Service cost s t2,987 $ I1,288 Interest cost 869 233 Changes of benefit terms 0 0 Differences between expected and actual experience (e44) 0 Changes in assumptions 0 0 Transfers 0 0 Benefit payments (e43) 0 Net change in total pension liability lt,969 I ,521

Total pension liability, beginning of year t1 2t 0 Total pension liability, end of year (a) s23,490 $ l l,s2l

Plan Fiduciary Net Position

Contributions - employer I 3,204 $ 3,684 Contributions - PMRS assessment 100 0 Contributions - employee 8,844 7,724 PMRS investment income 864 109 Market value investment income (1,489) (1se) Transfers 0 0 Benefit pa)ments, including refunds of members contributions (e43) 0 PMRS administrative expense (l0o) (120) Additional administrative expense (36) (4) Net change in plan fiduciary net position 10,444 lt,234

Plan fiduciary net position, beginning of year 11,357 123 Plan fiduciary net position, end ofyear (b) $ 21,801 $ 11,357

Plan net pension liabilÍty (asset), end of year (a) - (b) s___u!2 q____tÍ1.

Plan fiduciary net position as a percentage of total pension liability 92.8% 98.6%

Covered employee payroll $ 207,086 $ 178,586

Plan net pension liability (asset) as a percentage of covered employee payroll 0.82% 0.09%

Note: Schedule is intended to show information for 10 years. Additional years will be displayed as they become available.

25 Glendale Valley Municipal Authority Pension Schedules For the Year Ended December 31,2016

Schedule of the Net Pension Liabilitv lAsset)

Net Pension Plan Net Liability Position as a (Asset) asaYo Net Pension Yo ofTotal Covered ofCovered Year Ended Total Pension Plan Net Liability Pension Employee Employee December 3l Liabiliw Position (Asset) LiabiliW Payroll Pavroll 2016 s 23-490 $ 21,801 s 1.689 923% $ 207.086 0.82% 2015 $ 11.521 s r 1.3s7 $ 164 98.6% $ 178.586 0.09%

Schedule of Contributions

Contributions Recognized by Plan as a%o of Statutorily Contributions Contribution Covered Covered Required Recognized by Deficiency Employee Employee Valuation Date Contribution the Plan lExcess) Pawoll Pawoll December 31.2015 s 4.243 $ 3.304 $ 939 $ 207.086 1.600/o December 31.2014 3"684 $ 3.684 0 $ 178"586 2.06%

Schedule of Pension fnvestment Returns

December 31, 2015 - Annual money weighted rate of return, net of investrnent expense 0.10o/o December 31.2014 - Annual money weiehted rate of return. net of investment expense 5.70%

Schedules above are intended to show inf-ormation tbr l0 years. Additional years wrll be dtsplayed as it becomes available.

26 Dennis P. Koøan, CPA, CFF KOTZAN CPA 6L Brenda A. Pawlowski, CP,A, CFE ASSOCTATES, P.C. Kirnberly ,4- Dorchak, CP,\ CGFM

CÌnrmmo Punuc Aomurnq¡rrs &. Busn'¡nss Co¡¡sr¡-r¡¡ns M¡¡TI¡BRAICPA. PICPA

Independent Auditors' Report on Internal Control over Financial Reporting and on Compliance and Other Matters Based on an Audit of Financial Statements Performed in Accordance with Government Audìtíng Standørds

To the Members of the Board Glendale Valley Municipal Authority 1800 Beaver Valley Road

Flinton, Pennsylvania 1 6640

We have audited, in accordance with the auditing standards generally accepted in the United States of America and tlre standards applicable to financial audits contained in Government Auditing Standards issued by the Comptroller General of the United States, the financial statements of Glendale Valley Municipal Authority as of and for the year ended December 31,2016, and the related notes to the financial statements, and have issued our report thereon dated INday 15,2017.

Internal Control Over Financial Reporting

In planning and performing our audit of the financial statements, we considered Glendale Valley Municipal Authority's internal control over financial reporting (internal control) to determine the audit procedures that are appropriate in the circumstances for the purpose of expressing our opinion on the financial statements, but not for the purpose of expressing an opinion on the effectiveness of Glendale Valley Municipal Authority's internal control. Accordingly, we do not express an opinion on the effectiveness of the Authority's internal control.

A deficiency in internal control exists when the design or operation of a control does not allow management or employees, in the normal course of performing their assigned functions, to prevent, or detect and correct, misstatements on a timely basis. A material weakness is a deficiency, or a combination of deficiencies, in internal control, such that there is a reasonable possibility that a material misstatement of the entity's financial statements will not be prevented, or detected and corrected on a timely basis. A significant deficiency is a deficiency, or combination of deficiencies, in internal control that is less severe than a malenal weakness, yet important enough to merit attention by those charged with governance.

Our consideration of internal control was for the limited purpose described in the frst paragraph of this section and was not designed to identifu all deficiencies in internal control that might be material weaknesses or significant deficiencies and therefore, material weaknesses or significant deficiencies may exist that were not identified. We did identify a certain deficiency in internal control, described in the accompanying schedule of findings and responses, that we consider to be a material weakness - #2016-001.

Compliance and Other Matters

As part of obtaining reasonable assurance about whether Glendale Valley Municipal Authority's financial statements are free from material misstatement, we performed tests of its compliance with certain provisions of laws, regulations, contracts and grant agreements, noncompliance with which could have a direct and material effect on the determination of financial statement amounts. However, providing an opinion on compliance with those provisions was not an objective of our audit, and accordingly, we do not express such an opinion. The results of our tests disclosed no instances of noncompliance or other matters that are required to be reported under Government Auditing Standards.

27

Budfield Street Professional Building . 334 Budfield Street . Suite 180 ' Johnstown, PA 15904 874-269-4912 ' Fax 8t4-266-95I7 www.kotzartcpa.com Glendale Valley Municipal Authority's Response to Findings

Glendale Valley Municipal Authority's response to the finding identified in our audit is described in the accompanying schedule of frndings and questioned costs. Glendale Valley Municipal Authority's response was not subjected to the auditing procedures applied in the audit of the financial statements and, accordingly, we express no opinion on it.

Purpose of this Report

The purpose of this report is solely to describe the scope of our testing of internal control and compliance and the results of that testing, and not to provide an opinion on the effectiveness of the entity's internal control or on compliance. This report is an integral part of an audit performed in accordance with Government Auditing Standards in considering the entity's internal control and compliance. Accordingly, this communication is not suitable for any other purpose. hçir'" {fA Øtt }s**'oi'u ' !'L ' Kotzan CPA & Associates, P.C. Johnstown, Pennsylvania INday 15,2017

28 Glendale Valley MunÍcipal Authority Schedule of Findings and Responses For the Year Ended December 31,2016

Section I - Summary of Auditors'Results

Financial Statements

Type of auditors' report issued; unmodified

Internal control over financial reporting: Material weakness(es) identifi ed? X Yes No Significant deficiency identified not considered to be material weaknesses? Yes X None reported

Noncompliance material to financial statements noted? Yes XNo

Section II - Financial Statement Findings

INTERNAL CONTROL OT/ER FINANCIAL REPORTING

Findine #2016-001

CONDITION

Audit adjustments that were material to the financial statements were required in order for the financial statements to be fairly presented in accordance with generally accepted accounting principles. The most significant adjustments involved recording the grant funding receivable on the PENNVEST project; adjusting payroll liabilities; adjusting capital asset accounts for improperly included and excluded amounts; recording depreciation and amortization; adjusting the allowance for uncollectible accounts; adjusting the loans and capital leases for principal and interest paid, as well as for new debt incurred; and adjusting accounts payable for amounts due to vendors at year end.

CRITERIA:

An indicator of a material weakness is when the auditor identifies material misstatements in the financial statements that were not detected by the entity's internal control.

CAUSE:

The cause of this internal control deficiency can be attributed to two factors: l) the complexities related to the construction phases of the projects; and 2) the maintenance of the financial records on the modified cash basis of accounting.

EFFECT:

The effect of the aforementioned misstatements, if not corrected through audit adjustments, would have been the material misstatement of the financial statements, including: material overstatement of fixed assets and understatement of expenses, materially understated allowances and expenses, and materially understated receivables and revenues. These misstatements, however, did not affect the drawdown of funds for the projects.

29 Glendale Valley Municipal Authority Schedule ofFindings and Responses For the Year Ended December 31,2016

RECOMMENDATION:

We recommend that management adjust the general ledger for the proposed audit adjustments. Further, we recommend that management perform a frequent and careful review of the Authority's financial statements to ensure l) amounts recorded as receivables closely agree to the list of customer receivables from the billing system; 2) disbursements after year end are properly included in, or excluded from, accounts payable; and 3) fixed asset balances (including depreciation and amortizalion) are reviewed to verifr proper classification oftransactions.

In addition, consideration should be given to obtaining additional accounting training for the staff.

MANAGEMENT RESPONSE:

Management agrees with the recommendations. Management will adjust the general ledger for the proposed audit adjustments. Further, management has implemented procedures to periodically review the amounts recorded as accounts receivable to the subsidiary ledger and billing report. Any differences noted will be investigated and adjusted, if necessary. In addition, management will monitor all disbursements after year end, focusing attention on the service/receipt dates noted on invoices to ensure proper recording of accounts payable. Management will also review all amounts posted to the fixed asset accounts and record an estimate for depreciation throughout the year.

Finally, the Board will consider the possibility of additional accounting training for the staff.

30 [ THIS PAGE INTENTIONALLY LEFT BLANK ] Glendale Valley Municipal Authority Flinton, Pennsylvania

Audit Report

December 31,2017 Table of Contents

Independent Auditors' Report ..2

Basic Financial Statements:

Statement of Net Position ..4

Statement of Revenues, Expenses, and Changes in Net Position...... 6

Statement of Cash Flows 7

Other Information:

Schedule of Revenues, Expenses and Changes in Net Position - Budget to Actual ...... 24

Supplemental Information:

Independent Auditors' Report on Internal Control over Financial Reporting and on Compliance and Other Matters Based on an Audit of Financial Statements Performed in Accordance vítth Government Auditing Standards...... 27

Schedule ofFindings and Responses .29 KormNI CPA 6¡- As socIATËs, P.C. årnM6re*Il1p,,.,,rcp* CF.R'IlrrrtT) FgBl¡c Acco¡;xlrs'rs &å Busi¡;Ess CÕNs'Jr;rtrx'rs

IJrenda A. Pawlawski, CP& Cm Kiñberry,q." I)orchak, CPA' CGI)vI

Independent Auditors' Report

To the Members of the Board Glendale Valley Municipal Authority 1800 Beaver Valley Road Flinton, Pennsylvania I 6640

Report on the Financial Statements

We have audited the accompanying statement of net position of Glendale Valley Municipal Authority as of December 31, 2017 and the related statements of revenues, expenses and changes in net position and cash flows for the year then ended, and the related notes to the financial statements, which collectively comprise the Authority'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 accounting principles generally accepted in the United States of America; this includes 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 effor.

Auditors' Responsibility

Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with auditing standards generally accepted in the United St¿tes of America and the standards applicable to financial audits contained in Government Audíting Standards, issued by the Comptroller General of the United States. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from 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 auditors' judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or enor. In making those risk assessments, the auditor considers internal control relevant to the entity'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 entity's internal control. Accordingly, we express no such opinion. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management, as well as evaluating the overall presentation of the financial statements.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.

Opinion

In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Glendale Valley Municipal Authority as of December 31,2017 and the changes in financial position and cash flows for the year then ended in accordance with accounting principles generally accepted in the United States of America.

2

Budûeld Street Professiqrn¿l Building ' 334 Budñeld Street . Suife 180 . Johnstown, P,t L5904 8L4-269 -4912' Yax: 814-266-9577 www:kotzancpå.com Other Matters

Required Supp I em entary Information

Accounting principles generally accepted in the United States of America require that the historical pension information on pages 25 and 26 be presented to supplement the basic financial statements. Such information, although not a part of the basic financial statements, is required by the Governmental Accounting Standards Board, who considers it to be an essential part of financial reporting for placing the basic financial statements in an appropriate operational, economic, or historical context. Vy'e have applied certain limited procedures to the required supplementary information in accordance with auditing standards generally accepted in the United States of America, which consisted of inquiries of management about the methods of preparing the information and comparing the information for consistency with management's responses to our inquiries, the basic financial statements, and othcr knowledge we obtained during our audit of the basic financial statements. We do not express an opinion or provide any assurance on the information because the limited procedures do not provide us with sufficient evidence to express an opinion or provide any assurance.

Glendale Valley Municipal Authority has not presented the Management's Discussion and Analysis that accounting principles generally accepted in the United States of America require to supplement, although not to be a part of, the basic financial statements. Such information, although not a part of the basic financial statements, is required by the Governmental Accounting Standards Board, who considers it to be an essential part of the financial reporting for placing the basic financial statements in an appropriate operational, economic, or historical context. Our opinion on the basic fìnancial statements is not affected by this missing information.

Other Reporting Require d by Government Audítíng Standørds

In accordance with Government Auditing Standards, we have also issued our report dated April 4, 2018 on our consideration of Glendale Valley Municipal Authority's internal control over financial reporting and on our tests of its compliance with certain provisions of laws, regulations, contracts, and grant agreements and other matters. The purpose of that report is to describe the scope of our testing of internal control over financial reporting and compliance and the results ofthat testing, and not to provide an opinion on internal control over financial reporting or on compliance. That report is an integral part of an audit performed in accordance with Government Auditing Standards in considering Glendale Valley Municipal Authority's internal control over financial reporting and compliance. 4'gapcPRr O*.åv^?,L KotzaìtPA & Associates, P.C. Johnstown, Pennsylvania April4, 2018

J Glendale Valley Municipal Authority Statement of Net Position December 31,2017

Sewer Water Total Assets

Current assets: Cash and cash equivalents s 47,607 $ 98,873 $ 146,480 Customer accounts receivable, net 179,780 86,112 265,992 Other accounts receivable 1,255 1,255 2,510 Grants receivable 20,717 63,992 g4,5gg Prepaid expenses 5,940 5,940 I l,gg0 Current portion ofprepaid rent 3,953 3,953 7,906 Internal receivablesþayables, net 240,405 0

Total current assets 499,657 19,610 519,267

Noncurrent assets: Depreciable capital assets, net 17,921,797 3,994,259 21,9t6,056 Land 17,050 45,060 62,110 Easements 2,943,512 0 2,943,512 Construction in progress 0 2,500 2,500 Prepaid rent, net ofcurrent portion 12t,554 t2l 54 243 108

Total noncurrent assets 21,003,913 4,163,373 25,167,286

Total assçts 21,503,570 4,lg2,gg3 25,686,553

Deferred Outllows of Resources Pension contributions subsequent to measurement date I 54 1,855 3,709 Difference between projected and actual investment eamings s08 508 1,016

Total deferred outflows of resources 2,362 2,363 4,725

Total assets and deferred outflows ofresources $ 21,505,932 qg_85,346 s2s,691,278

See accompanying notes to the financial statements.

4 Glendale Valley Municipal Authority Statement of Net Position December 31,2017

Sewer Water Total Liabilities Current liabilities: Accounts payable $ 9,413 $ 30,248 $ 39,661 Payroll liabilities 3,848 3,848 7,696 Accrued interest 69,573 21,250 90,823 Current portion of long-term debt 485,124 337,470 822,594

Total current liabilities 567,958 392,816 960,774 Noncurrent liabilities: Net pension liability 937 937 1,874 Long-term debt, net ofcurrent portion 9,714,091 2,060,694 I I.774,785

Total noncurrent liabilities 9,715,028 2,061,631 11,776,659

Total liabilities 10,282,986 2,454,447 12,737,433

Deferred Inflows of Resources Difference between expected and actual experience 354 354 708

Total deferred inflows of resources 354 354 708

Net Position:

Invested in capital assets, net ofrelated debt 10,683,144 l,6gl,g5g 12,365,003 Unrestricted 539,448 49,696 588,134

Total net position l1 1,730,545 t2,953,137

Total liabilities, deferred inflows of resources, and net position $ 21,505,932 $ 4,185,346 $ 25.691 ,278

See accompanying notes to the financial statements.

5 Glendale Valley Municipal Authority Statement of Revenues, Expenses and Changes in Net Position For the Year Ended December 31,2017

Sewer Water Total Operating revenues:

Charges: Sewer usage charges $ 1,126,532 $ 0 s 1,126,532 Water usage charges 0 604,241 604,241

Total charges 1,126,532 604,241 1,730,773

Less: bad debts (31,837) (21,00r) (52,838)

Net charges 1,094,695 583,240 1,677,935

Tap fees 16,500 1,000 17,500

Total operating revenues 1,1 I 1,195 584,240 1,695,435

Operating expenses:

Employee costs 152"980 tt8,476 27t,456 Power purchased 47,552 9,5L6 57,068 Water purchased 0 2ll,72l 2lI,72l Chemicals and water testing 17,764 5,374 23,138 Occupancy costs 20,171 5,563 25,734 Offrce expense 16,561 10,250 26,gll Rent expense 3,953 3,953 7,906 Operations and maintenance 77,927 54,151 132,078 Insurance 22,427 13,745 36,172 Professional fees 15,955 16,053 32,008 Depreciation and amortization 6l1,501 208,142 819,643 Other general operating expenses 20,016 10,324 30,340

Total operating expenses 1,006,807 667,268 1,674,075

Operating income (loss) 104,388 (83,028) 21,360

Non-operating revenues (expenses):

Interest expense (327,739) (80,459) (408,198) Capital grants 0 102,765 102,765

Total non-operating revenues (expenses) (327,739) 22,306 (305,433)

Change in net position (223,35r) (60,722) (284,073)

Net position, beginning of year, restated $11,445,943 $1,791,267 t3,237 ,210

Net position, end of year s 11,222,592 $ 1,730,545 s12,953,t37

See accompanying notes to the financial statements.

6 Glendale Valley Municipal Authority Statement of Cash Flows For the Year Ended December 31,2017

Sewer Water Total Cash flows from operating activities: Cash received from providing service $ 1,042,060 $ 628,044 $ 1,670,104 Cash payments to suppliers for goods and services (232,861) (326,596) (559,457) Cash payments to employees (150,998) (116,492\ (267.490\

Net cash provided by (used for) operating activities 658,20t 184,956 843,157 Cash flows from noncapital fìnancÍng activities Principal payments on noncapital financing 0 (24,715) (24,715) Interest payments on noncapital financing 0 (2,279) (2,279)

Net cash provided by (used for) noncapital financing activities 0 (26,994) (26,994) Cash flows from capital and related fìnancing activities: Cash received from capital grants 3,808 222,993 226,80t Proceeds from capital financing 5,048 0 5,048 Purchase of capital assets (15,775) (157,043) (172,818) Principal payments on long-term debt (305,779) (134,687) (440,466) Principal payments on capital leases (4,602) (2,821) (7,423) Interest payments on long-term debt (329,261) (78,679) (407,940) Net cash provided by (used for) capital and related financing activities (646,561) (150,237) 7e8)

Net increase (decrease) in cash and cash equivalents 11,640 7,'725 19,365 Cash and cash equivalents, beginning ofyear 35,967 91 148 127 115

Cash and cash equivalents, end ofyear $ 47,607 $ 98,873 $ 146,480

See accompanying notes to the financial statements.

7 Glendale Valley Municipal Authority Statement of Cash Flows For the Year Ended December 31,2017

Sewer Water Total Reconciliation of operating income (loss) to net cash provided by (used for) operating activities:

Operating income (loss) $ 104,388 $ (83 ,028) $ 21,360 Adjustments to reconcile net operating income (loss) to net cash provided by (used for) operating activities: Depreciation and amortization 6l1,501 208,142 819,643 Amortization of rent expense 3,953 3,953 7,906 Exchange of easement for tap fee (12,000) 0 (12,000) Expensing ofprior year feasibility studies 0 3,305 3,305 (Increase) decrease in accounts receivable (6,592) (6,739) ( l3,331) (Increase) decrease in internal receivables/payables (50,543) 50,543 0 (Increase) decrease in prepaid expense (208) (208) (416) (Increase) decrease in deferred outflows (pension) Lt6 ll6 232 Increase (decrease) in accounts payable 5,720 7,004 12,724 Increase (decrease) in payroll liabilities 1,933 1,834 3,667 Increase (decrease) in net pension liability 92 93 185 Increase (decrease) in deferred inflows (pension) (5e) (5e) (ll8) Total adjustments 553,813 267,984 821 797 Net cash provided by (used for) operating activities $ 658,201 $ 184,956 $ 843,157

Supplemental disclosure of noncash capital and related linancing activities:

Construction projects financed with loans $ 0$64,000$64,000

Exchange of easement for tap fee $ 12,000 $ 0 $ 12,000

See accompanying notes to the financial statements.

8 Glendale Valley Municipal Authority Notes to Financial Statements December 31,2017

Note 1 -Reporting Entity

Glendale Valley Municipal Authority was created under the provisions of the Pennsylvania Municipal Authorities Act of 1945, as amended and superseded by Act 22-2001. A Certificate of Incorporation was issued by the Secretary of the Commonwealth of Pennsylvania on January 24, 2001. The Authority is an enterprise-operating entity providing for the construction and/or purchase of a system for the transmission and treatment of water in White and Chest Townships, Cambria County and sewage in White, Chest, and Reade Townships, Cambria County. The Authority, a governmental entity, is deemed exempt from federal income tax.

On September 30, 2011, the Authority entered into an agreement to purchase the Glendale Yearound Vy'ater Company and the Glendale Yearound Sewer Company, both operating utilities regulated by the Pennsylvania Public Utility Commission. Both plants were decommissioned in 2015, and the systems were interconnected with the Authority's main operating systems.

Component units are legally separate organizations for which the Authority is financially accountable. The Authority is financially accountable for an organization if the Authority (a) appoints a voting majority of the organization's governing board; (b) is able to impose its will on the organizaiion; or (c) there is a potential for the organization to provide specific financial benefits to, or impose specific financial burden on, the Authority. Additionally, the Authority is required to consider other organizations for which the nature and significance of their relationship with the Authority are such that exclusion would cause the Authority's financial statements to be misleading. The Authority has no component units.

Note 2 - Summary of Signifïcant Accounting Policies

The financial statements of the Authority have been prepared in conformity with accounting principles generally accepted in the United States of America as applied to governmental units. The Governmental Accounting Standards Board (GASB) is the accepted standa¡d-setting body for establishing governmental accounting and financial reporting principles. The more significant of the Authority's accounting policies are described below.

A. Basis of Presentation

The Authority's financial statements are presented on the accrual basis in accordance with accounting principles generally accepted in the United States of America. The Authority applies all Governmental Accounting Standards Board (GASB) pronouncements.

Proprietary Funds (Entemrise Fund)

Proprietary funds focus on the determination of changes in net position, financial position and cash flows and are classified as either internal service or enterprise funds. Internal service funds account for the financing of services provided by one department or agency to other departments or agencies of the Authority. There are no internal service funds. Enterprise funds may be used to account for any activity for which a fee is charged to external users for goods and services. The Authority operates as an enterprise tund.

9 Glendale Valley Municipal Authority Notes to Financial Statements December 31,2017

Enterprise funds are used to acçount for operations that are (a) financed and operated in a manner similar to private business enterprises where the intent of the governing body is that the cost (expenses, including depreciation) of providing goods or services to the general public on a continuing basis be financed or recovered primarily through user charges; or (b) where the governing body has decided that periodic determination of revenues earned, expenses incurred, and/or net income is appropriate for capital maintenance, public policy, management control, accountability, or other purposes.

B. Measurement Focus

The enterprise fund is accounted for on a flow of economic resources measurement focus. All assets, deferred outflows ofresources, liabilities (whether current or noncunent) and deferred inflows ofresources associated with the operation of the Authority are included on the statement of net position. The statement ofchanges in net position presents increases (revenues) and decreases (expenses) in net total position. The statement of cash flows provides information about how the Authority finances and meets the cash flow needs ofits enterprise activity.

C. Basis of Accounting

Basis of accounting determines when transactions are recorded in the financial records and reported on the financial statements. Thc Authority's financial statements are prepared using the accrual basis of accounting.

Revenue is recorded on the accrual basis when the exchange takes place. Expenses are recognized at the time they are incurred.

D. Budget

Thirty days prior to the beginning of each fiscal year, the Authority is required to submit an annual budget and projected cash flow to the United States Department of Agriculture (USDA) - Rural Utilities Service (RUS). Variances between budget figures and actual amounts can often be attributed to the recording of actual amounts on the accrual basis of accounting while cash basis reporting is used for budget purposes.

E. Cash and Cash Equivalents

Cash as reflected on the Authority's December 31, 2017 statement of net position totals $146,480 in demand deposits with a local financial institution, which are covered by the Federal Deposit Insurance Corporation (FDIC) or are collateralized with governmental securities in accordance with state requirements.

For the purpose of the statement of cash flows, the Authority çonsiders all un¡estricted highly liquid investments with a maturity of three (3) months or less to be cash equivalents.

F. Accounts Receivable

Customer Accounts receivable represent billed and unbilled amounts for water and sewer services provided to the service area, as well as tap fees of $62,010 due from customers. Accounts receivable is presented net of an allowance for doubtful accounts of $276,463 at December 31,2017.

l0 Glendale Valley Municipal Authority Notes to Financial Statements December 31,2017

Receivables from and payables to external parties are reported separately and are not offset in the financial statements unless a right of offset exists.

G. InternalReceivables/Payables

The other receivables/payables reflected on the financial statements reprosent inter-division receivables at year end. The inter-division receivables are thc result ofa consolidated billing/collection procedure and an inter-division invoice payment procedure. Inter-division reconciliations are made at year end.

H. Prepaid Expenses

Payments made to vendors for services that will benefit periods beyond December 31,201'1 are recorded as prepaid items using the consumption method. A current asset for the prepaid amount is recorded at the time of the purchase and an expense is reported in the year in which services are consumed. The Authority has recorded prepaid expenses (including prepaid rent) of 5262,894 at December 31,2017, with $19,786 reflected as current and $243,108 as noncurrent.

I. Capital Assets

Capitalized assets utilized by the Authority are reported on the statement of net position. All capital assets are capitalized at cost (or estimated historical cost) and updated for additions and retirements during the year. Donated fixed assets are recorded at their fair market values as of the date received. Improvements are capitalized; the costs of normal maintenance and repairs that do not add to the value of the asset or materially extend an asset's life are not. Interest during the period of construction is depreciated as part of the cost of the project. The Authority does not yet have a formal capitalizationpolicy.

All reported capital assets, except land, easements, and construction in progress, are depreciated. Depreciation is computed using the straightJine method over the following estimated useful lives:

Description Estimated Lives Water and Sewer Systems 40 years Meter Equipment 15 years Purchased Yearound System 10 years Equipment 10 years Software 5 years

J. Deferred Outflows/Inflows of Resources

Deferred Outflows of Resources

The Authority reports decreases in net assets that relate to future periods as deferred outflows of resources in a separate section of its statement of net position. The deferred outflows of resources reported in this year's financial statements include a deferred outflow of resources for contributions made to the Authority's single-employer cash balance pension plan between the measurement date of the net pension liability from the plan and the end of the Authority's current fiscal year ($3,709). They further include a deferred amount arising from the difference between the pension plan's projected and actual earnings on investments ($1,016), which is amofüzed to pension expense over a total of five years, including the current year. See further detail on deferred outflows of resources related to the pension plan at Note 12.

1t Glendale Valley Municipal Authority Notes to Financial Statements December 31,2017

Deferred Inflows of Resources

The Authority's statement of net position reports a separate section for deferred inflows of resources. This separate financial statement element reflects an increase in net assets that applies to a future period(s). Deferred inflows of resources are reported on the Authority's financial statement for the difference between actual and expected pension plan experience ($708). These deferred inflows are amofüzed to pension expense over a total of eight years, including the current year. See further detail on deferred inflows of resources related to the pension plan at note 12.

K. Contributed Capital

The Authority records grants, entitlements, shared revenues and the fair market value of donated property in accordance with GASB Statement No. 33, Accounting and Financiql Reporting þr Nonexchange Transactions. This statement requires governments to recognize capital contributions to proprietary funds as revenues, instead of contributed capital. Grants and entitlements totaling $102,765 were recognized as revenues by the Authority for the year ended December 31,2017.

L. Net Position

The Authority's net position comprises the various net earnings from operating and non-operating revenues, expenses and contributions of capital. Net position is classified in the following three components:

a Invested in capital assets, net of related debt - Consists of all capital assets, net of accumulated depreciation and reduced by outstanding debt that is attributable to the acquisition, construction and improvement of those assets, and adjusted for any deferred inflows and outflows of resources attributable to capital assets and related debt. Debt related to unspent proceeds or other restricted cash and investments is excluded from the determination.

a Restricted net position - Consists of restricted assets reduced by liabilities and deferred inflows of resources related to those assets, for which constraints are placed thereon by external parties, such as lenders, grantors, contributors, laws, regulations and enabling legislation, including self-imposed legal mandates. a Unrestricted net position - Consists of the net amount of assets, defened outflows of resources, liabilities, and deferred inflows of resources that are not included in the determination of net investment in capital assets or the restricted component of net position.

When both restricted and unrestricted resources are available for use, it is the Authority's policy to use restricted resources first, then unrestricted resources as they are needed.

M. Revenues and Expenses

Operating revenues and expenses consist of those revenues and expenses that result from the ongoing principal operations of the Authority. Operating revenues consist primarily of charges to provide water and sewer services to customers of the Authority. Non-operating revenues and expenses consist of those revcnues and expenses related to financing and investing types ofactivities and result from non-exchange transactions or other activities.

t2 Glendale Valley Municipal Authority Notes to Financial Statements December 31,2017

N. Estimates

The preparation of the financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. Actual results may differ from those estimates.

O. Concentration of Credit Risk

The Authority extends credit to customers, substantially all of whom are local residents and generally requires no collateral.

P. Pension Plan

The employees of the Authority may participate in a single employer cash balance pension plan administered by the Pennsylvania Municipal Retirement System (PMRS). GASB Statement No. 68, Accounting qnd Financial Reportingfor Pensions, requires government employers, such as the Authority, to recognize a liability (or asset) for the net pension liability (or asset). The standard further requires the Authority to recognize pension expense and report deferred outflows ofresources and deferred inflows of resources related to pensions.

For purposes of measuring the net pension liability (asset), deferred outflows of resources and deferred inflows of resources related to pension expense, information about the fiduciary net position of the Plan, and additions toldeductions from the Plan's fiduciary net position have been determined on the same basis as they are reported by the Plan. For this purpose, benefits payments (including refunds of employee contributions) are recognized when due and payable in accordance with the benefit terms, and investments are reported at fair value.

Note 3 - Cash and Cash Equivalents and Investments

The deposit and investment policy of the Authority adheres to state statutes and prudent business practice. Cash equivalents are defined as short-term, highly liquid investments that are readily convertible to known amounts of cash. Cash and cash equivalents consist of demand deposits with a local financial institution. The market values of deposits are equal to the cost ofthe deposits.

Amounts on deposit in financial institutions, which are described as cash and cash equivalents in the Authority's financial statements, are covered.by federal depository insurance or collateralized in accordance with the Pennsylvania Security for Public Deposits Act ("the Act"). Under the Act, banks holding public deposits in excess of the amounts insured by the FDIC limit must pledge collateral in the amount of l20Yo of excess deposits to a collateral pool.

Cash

Custodial Credit Risk - Deposits

Custodial credit risk is the risk that in the event of a bank failure, the Authority's deposits may not be returned to it. The Authority does not have a policy for custodial credit risk. However, as previously noted, the Authority's deposits in excess of the FDIC limit are collateralized in accordance with the Pennsylvania Security for Public Deposits Act. As of December 31,2017, none of the Authority's bank balances were exposed to custodial risk. l3 Glendale Valley Municipal Authority Notes to Financial Statements December 31,2017

Reconciliation to Financial Statements

Insured amount $ 169,404 Less: Outstanding checks (32,468) Plus: Deposits in transit 9.t44 Carrying amount - bank balance 146,080 Plus: Cashonhand 400 Total cash per financial statements $14é.480

Note 4 - Customer Accounts Receivable

Accounts receivable of $265,892 consists of the following

Individual customers - billed $ 401,880 Individual customers - unbilled 140.475 542,355 Allowance for doubtful accounts (276.463) Net receivables $_%5.W2

Note 5 - Other Accounts Receivable

Other receivables of $2,510 consist of amounts due to the Authority for reimbursement of various expenditures.

Note 6 - Grants Receivable/Reimbursement of Capital Assets

The Authority derives certain revenues from reimbursements of capital costs and project expenditures by federal and state agencies. Grants receivable of $84,599 represents federal funding passed through the Pennsylvania Infrastructure Investment Authority (PENNVEST), at December 31,2017. The capital grant revenue recognized for 2017 is$'102,765.

t4 Glendale Valley Municipal Authority Notes to Financial Statements December 31,2017

Note 7-CapitalAssets

Capital asset activity for the year ended December 31,2017 was as follows:

Balance Balance l/l/2017 Additions Deletions Transfers t2l3!2017 Capital assets, not being depreciated: Construction in progress $ 6,787 $ 211,504 $ (3,305) $ (212,486) $ 2,500 Land 62,110 0 0 0 62,110 Easements 2,917,512 26,000 0 0 2,943,512 Total non-depreciable assets 2,986,409 237,504 (3J05) (21 2,486) 3,008,122

Capital assets, being depreciated: Infrastructure - Sewer 21,253,305 1,77 5 0 0 21,255,090 Infrastructure - Water 5,064,083 0 0 2 2,486 5,276,569 Improvements 25,116 0 0 0 25,116 Equipment 137,088 9,539 0 0 146,627 Software 4,059 0 0 0 4,059 Total depreciable assets 26,483,650 tt,3t4 0 212,486 26,707,450

Accumulated depreciation: Infrastructure - Sewer 2,792,553 602,563 0 0 3,395,116 Infrastructure - Water 1,128,632 202,664 0 0 1,331,296 Improvements 2,355 628 0 0 2,983 Equipment 44,152 13,788 0 0 57,940 Software 4,059 0 0 0 4,059 Total accumulated depreciation 3,971,751 819,643 0 0 4,791,394

Total capital assets being depreciated, net 22,511,899 (808,329) 0 212,486 2t.916,056

Total capital assets, net $ 25,498,308 $ (570,825) s_li¡!Ð $ 0 $ 24,924,178

Depreciation expense for the year ended December 31,2017 was $819,643.

Construction in Progress

The Authority's cumulative capitalized costs in connection with new water and sewer projects are reflected in construction in progress and transferred to the asset accounts upon completion. No interest was capitalized or included in construction in progress in2017.

Note 8 -Prepaid Rent

The amount recorded as Prepaid Rent represents an amount advanced to White Township for the Authority's share of the construction of a building that houses both the Township and Authority offices. The Authority's share of the construction was $3 16,238, and with construction complete and the building occupied, the Authority began amofüzrng the amount paid to rent expense, starting in October 2009, using the straight-line method. Rent expense totaled 97,906 for the year ended December 31,2017. l5 Glendale Valley Municipal Authority Notes to Financial Statements December 31,2017

Note 9 - Long-Term Obligations

A summary of changes in long-term debt during the year ended December 31,2017, was as follows:

Balance Balance l/l/2017 Additions Reductions tzl3t/2017

Yearound Note, Series of 201I (a) $ 2,488,227 $ 0 $ (205,367) s 2,282,860 USDA-RUS Sewer Revenue Bond (b) g,ooo,og6 0 (t20,046) 7,880,040 USDA-RUS Water Revenue Bond (c) r,559,314 0 (23,414) 1,535,900 Yearound Interconnect Note (2016) - Sewer (d) t68,l2l 0 0 168,l2l Yearound Interconnect Note (2016) - Water (e) 225,997 64,000 (58,000) 231,887 Pennvest Sewer Loan (f) 488,958 5,048 (33,639) 460,367 RTMA Capacity Fee Note (g) 62,919 0 (24,7ls\ 38,204

Total long-term debt $ 12,993,512 $ 69,049 $ (465,191) 12,597,379 Less current maturities of long-term debt (822 ,594)

Long-term debt, net of current maturities $ 11,774,785

Maturities of the long-term debt will require the following principal and interest payments based on amounts outstanding at December 31,2017:

Year Ended Principal Interest Total 2018 s 822,594 $ 388,395 $ 1,210,989 2019 423,383 370,617 794,000 2020 424,551 356,498 781,049 2021 438,990 342,058 7gl,04g 2022 1,571,844 283,698 1,955,542 2023-2027 1,101,180 1,295,414 2,396,594 2028-2032 1,179,703 1,132,942 2,311,545 2033-2037 1,253,395 951,312 2,204,707 2038-2042 r,463,598 74t,109 2,204,707 2043-2047 1,709,053 495,654 2,204,707 2048-2052 1,995,672 209,034 2,204,706 2053 214,416 3,354 217 770

$ 12,597,379 qq,569,985_ $ 19,167,364

t6 Glendale Valley Municipal Authority Notes to Financial Statements December 31,2017

(a) Yearound Note. Series of 201I On October 3,2011, the Authority entered into an agreement with M&T Trust Company for a Revenue Note, Series of 2011, to refund and extend the Yearound term note, and to include $1,826,225 for upgrade projects. January 31, 2012 was the actual funding date. The amount of the note is 53,426,200 for a ten-year term, with an estimated maturity of January 31, 2022, and an interest rate of 3.89%. The note requires semi-annual payments of principal and interest of$150,865. The note is secured by the revenues generated by the Yearound systems. The balance as of December 31,2017 was $2,282,860.

(b) USDA-RUS Sewer Revenue Bond On March 27, 2013, the Authority entered into an agreement with the United States Department of Agriculture - Rural Utilities Service (RUS) for a Guaranteed Sewer Revenue RUS Bond to refinance the principal on the interim M&T Trust Company Sewer Project Note (Loan Bl). The amount of the bond is $8,173,000, for a 40 year term, with an estimated maturity of March 2053. Payments on the note are due semi-arurually, at an interest rate of 3.125yo, and are guaranteed by the full faith and credit of the Authority, as well as of the Townships of V/hite and Reade. The balance as of Decemb er 31, 2017 was $7,880,040.

(c) USDA-RUS Water Revenue Bond On February 6,2013, the Authority entered into an agreement with the United States Department of Agriculture - Rural Utilities Service (RUS) for a Guaranteed Water Revenue RUS Bond to refinance the principal on the interim M&T Trust Company Water Project Note (Loan Al). The amount of the bond is $1,615,000, for a 40 year term, with an estimated maturity of February 2053. Payments on the note a¡e due semi-annually, at an interest rate of 3.125o/o, and are guaranteed by the full faith and credit of the Authority, as well as of the Township of White. The balance as of December 31,2017 was $1,535,900.

(d) Sewer Interconnection Proiect Note (2016) In May of 2016, the Authority entered into a loan agreement with M&T Trust Company for a Guaranteed Sewer Intercon¡ection Project Refinancing Note in the amount of $250,000, in the form of a revolving line of credit, at a qualified tax-exempt rate, which is variable and based upon the Trust Company's prevailing one-month LIBOR, plus l.42o/o, and is payable monthly. The rate at December 31,2017 was 2.7325%o. The maturity date is June l, 2018.

The proceeds were used to refinance the 2014 Sewer Interconnection Project Note. The note is secured by remaining monies from the approved PENNVEST grant ($524,600) and loan ($695,400). The balance as of December 31,2017 was $168,121.

(e) Water Interconnection Project Note (2016) In May of 2016, the Authority entered into a loan agreement with M&T Trust Company for a Guaranteed Water Interconnection Project Refinancing Note in the amount of $250,000, in the form of a revolving line of credit, at a qualified tax-exempt rate, which is variable and based upon the Trust Company's prevailing one-month LIBOR, plus 1.42%o, and is payable monthly. The rate at December 31,2017 was 2.7325o/o. The maturity date is June l, 2018.

The proceeds were used to refinance the 2014 Water Interconnection Project Note. The note is secured by remaining monies from the approved PENNVEST grant ($1,290,000). The balance as of December 31,2017 was $231,887.

t7 Glendale Valley Municipal Authority Notes to Financial Statements I)ecember 31,2017

(f) Pennvest Sewer Loan In April 2014, the Authority was approved for a loan from the Pennsylvania Infrastructure Investment Authority (Pennvest) for funding the Glendale Yearound Sewer Interconnect Project. The maximum amount available under the loan agreement is $695,400, with interest only payments due monthly at an interest rate of 1% during construction and monthly payments of principal and interest ai lo/o for 240 months after completion of the project. The balance of the loan at December 31,2017 was $460,367.

(g) RTMA Capacity Fee Note In December 2015, thc Authority entered into a loan agreement with M&T Trust Company for the Series 2015 Revenue Note in the amount of $100,000, for the payment of a one-time capacity fee to the water supplier, Reade Township Municipal Authority (RTMA), for adding the Glendale Yearound customers to the water system. Payments are due semi-annually for four (4) years with a fixed interest rate of 2.8Yo. The balance of the loan at December 31,2017 was $38,204.

Note 10 - Capital Lease

The Authority has entered into a capital lease agreement, under which the related equipment will become the property of the Authority when the term of the lease agreement is met. The term of the lease is 36 months, and the stated interest rate is 3.88%. The gross amount of assets capitalized under the capital lease is 521,260 þlus fees of $175), and the related accumulated amortization is $6,996. Amortization of leased equipment under capital leases is included with depreciation expense. The lease was paid off in2017 as follows:

Balance Balance !112017 Additions Reductions l2l3t/2017 Lease for trailer and vacuum pump S 7,423.00 $ 0 $lzt?l!E $ 0

Note 1l -Retirement PIan

Pension plan information is presented in accordance with GASB No. 68, Accounting and Finqncial Reporting for Pensions. The most recent valuation available is dated as of January I , 2017 , for the 2016 plan year. This valuation was prepared based on assumptions and conditions as they existed on the date of the valuation as described below. The effects of changes, if any, in assumptions or conditions occurring after the valuation date, on the valuation and information provided in this note, have not been determined.

Plan Description

The Glendale Valley Municipal Authority pension plan is a single-employer cash balance pension plan controlled by the provisions of Resolution No. 2014-1. The plan participates in the Pennsylvania Municipal Retirement System (PMRS), which is an agçnt 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 which is available on the PMRS website.

The plan provides retirement, disability and death benefits to plan members and their beneficiaries. Cost-of-living allowances are provided at the discretion of the plan. Plan membership consisted of five active members and no inactive members as of January 1,2017, the most recent valuation date.

l8 Glendale Valley Municipal Authority Notes to Financial Statements December 31,2017

Contributions

Act 205 requires that annual contributions be based upon the plan's minimum municipal obligation (MMO). The MMO is based upon the Authority's required contribution of two percent (2%) of each member's compensation. The Authority's contributions to the plan for the year ended December 31,2017 were $3,709. In accordance with the plan's governing resolution, members are not required to contribute, but can voluntarily contribute up to 20Yo of compensation to the plan. Member contributions for the year ended December 31, 2017 were $8,271.

Note 12 - Pension Assets, Pension Expense, and Deferred Outflows of Resources and Deferred Inflows of Resources Related to Pensions

At December 31, 2017 , the Authority reported a liability of $ I ,874 for its net pension liability. The net pension liability was measured as of December 31,2016, and the total pension liability used to calculate the net pension liability was determined by rolling forward the Plan's total pension liability as of December 31, 2015 to December 31,2016.

For the year ended December 31,2017, the Authority recognized pension expense of $4,126. At December 31, 2017, the Authority reported deferred outflows of resources and deferred inflows of resources related to pensions from the following sources:

Deferred Outflows Deferred Inflows ofResources ofResources Difference between expected and actual experience $ 0 $ 708 Changes in assumptions 0 0 Net difference between projected and actual investment eamings 1,016 0 Contributions subsequent to the measurement date J 709 0 $ 4,725 $ 708

$3,709 reported as deferred outflows of resources related to pensions resulting from the Authority's contributions subsequent to the measurement date will decrease the net pension liability of the plan in the year ended December 31,2018. The other amounts reported as deferred outflows of resources and deferred inflows of resources related to pensions will be recognized in the pension expense as follows:

Year Ended December 3l

201 8 $ 227 2019 226 2020 194 2021 (103) 2022 (l 18) Thereafter (lr8) $ 308

t9 Glendale Valley Municipal Authority Notes to FÍnancial Statements December 31,2017

Actuarial assumptions

The total pension liability as of December 31, 2016 was determined by rolling forward the Plan's total pension liability as of the December 31, 2015 actuarial valuation to December 31, 2016 using the following actuarial assumptions, applied to all periods included in the measurement:

a Actuarial cost method - Entry Age Normal - level o/o of pay

a Investment return - 5.25Yo compounded annually, net of expenses.

a Salary increases - The average total wages of all workers will increas e 3 .3Yo, compounded annually

Mortality rates were based on the RP-2000 Combined Healthy Aruluitant Tables (male and female), with age set back of five years for females. For disabled aruruitants, the RP-2000 Combined Disabled Tables (male and female), with age set forward ten years for both males and females.

The actuarial assumptions used in the December 31,2016 valuation were based on the experience study that was performed for the four-year period ending December 31,2013. The study was issued by the actuary in July 2015, as well as subsequent Board-approved assumption changes.

The long-term expected rate of return on pension plan investments was determined using a building-block approach. These ranges are combined to produce the long-term expected rate of return by weighting the expected future real returns by the target asset allocation percentage and adding expected inflation.

The pension plan's policy in regard to the allocation of invested plan assets is established and may be amended by PMRS. Plan assets are managed with a long-term objective of achieving and maintaining a fully funded status for the benefits provided through the pension.

Long-Term Target Expected Real Asset Class Allocation Rate of Return Domestic Equities (large cap) 25.0% 6.4% Domestic Equities (small cap) 15.0% 7.0% International Equities (developed markets) 15.0% 3.7% International Equities (emerging markets) t0.0% 7.9% Real Estate 20.0% 7.0% Fixed Income 15.0% 2.4%

The above was PMRS' adopted asset allocation policy and best estimates of arithmetic rates of return for each asset class as of December 31,2016.

20 Glendale Valley Municipal Authority Notes to Financial Statements I)ecember 31,2017

Discount rate

The discount rate used to measure the total pension liability was 5.25%o. The projection of cash flows used to determine the discount rate assumed that contributions from plan members will bc made at the current contribution rate and that. contributions from employers will be made at statutorily determined amounts. Based on those assumptions, the pensionplan's fiduciary îet position was projected to be available to make all projected future benefit payments for current plan members. Therefore, the long-term expected rate of return on pension plan investments was applied to all periods of projected benefit payments to determine the total pension liability.

Chanses in Authority's Net Pension Liability (Asset)

The table below shows the changes in the total pension liability, the Plan fiduciary net position (i.e. fair value of Plan assets), and the net pension liability (asset) as of the measurement date.

Increase (Decrease) Total Pension Plan Fiduciary Net Pension Liability Net Position Liability (Asset) Ial Ib lal - lbl

Balance, December 31, 2015 s 23,490 $ 21,801 $ 1,689 Changes for the year: Service cost I I,838 0 I 1,838 Interest 1,528 0 1,528 Changes in benefits 0 0 0 Changes in assumptions 0 0 0 Difference between expected and actual experience 0 0 0 Contributions - employees 0 3,669 (3,669) Contributions - PMRS assessment 0 120 (120) Contributions - employer 0 8,169 (8,169) PMRS investment income 0 1,491 (1,491) Market value investment income 0 (7s) 75 Transfers 0 0 0 Benefit payments 0 0 0 PMRS administrative expense 0 (120) I 20 Additional administrative expense 0 (73) 73 Net changes I 3,366 l3,l8l 185

Balance December 31, 2016 $ 36,856 $ 34,982 $ 1,874

2t Glendale Valley Municipal Authority Notes to Financial Statements December 31,2017

Sensitivit)¡ of the Authorit]¡'s net pension liabiliqs to changes in the discount rate

The following presents the net pension liability, calculated using the discount rate of 5.25Yo. as well as what the net pension liability would be if it were calculated using a discount rate that is one percentage point Iower (4.25o/o) or one percentage point higher (6.25%) than the current rate:

Current Discount lolo Decrease Rate lolo Increase 4.2s% 5.25% 6.25%

Authority's net pension liability (asset) s9,245 $ 1,874 $(5,497)

Pension plan fiduciarv net position

Detailed information about the PMRS' f,rduciary net position is available in the PMRS Comprehensive Arurual Financial Report which is available on the PMRS website.

Note 13 - Risk Management

The Authority is exposed to various risks of loss related to torts; theft of, damage to, and destruction of assets; errors and omissions; and natural disasters. The Authority has purchased various insurance policies to safeguard its assets from risk of loss. Insurance coverage appears to be consistent with previous years. During the year ended Dçcember 31,2017 and the two previous fiscal years, no settlements exceeded insurance coverage.

Note 14 - Commitments and Contingencies

Grant Programs

The Authority participates in state and federally assisted grant and loan programs. These programs are subject to program compliance audits by the grantors or their representatives. The Authority is potentially liable for any expenditures which may be disallowed pursuant to the terms of these programs. Management is not aware of any material items of noncompliance which would result in the disallowance of program expenditures.

Litigation

The Authority is subject to various legal proceedings and claims which may arise in the ordinary course of its business. In the opinion of management, the amount of ultimate liability with respect to these actions, if any, will not have a material adverse effect on the financial position, operations or cash flow ofthe Authority.

Note 15 - Economic Dependency

The Authority is economically dependent on the Reade Township Municipal Authority who provides water to supply the Authority's White Township and Glendale Yearound regions. The water rate fees paid for the year ended December 31, 2017 were S2ll,72l.

22 Glendale Valley Municipal Authority Notes to Financial Statements December 31,2017

Note 16 - Restatement of Net Position

Net position was restated effective January 1,2017 to correct for overstated grants receivable resulting in a decrease in net positionof $22,869.

23 Glendale Valley Municipal Authority Schedule of Revenues, Expenses and Changes in Net Position Budget to Actual For the Year Ended December 31,2017

Budget Variance Original Favorable and Final Actual (Unfavorable) Operating revenues:

Total operating revenues $ 1,587,300 $ 1,695,435 $ l0g,l35

Operating expenses:

Employee costs 267,370 271,456 (4,086) Power purchased 61,930 57,068 4,962 Water purchased 160,000 2ll,72t (51,721) Chemicals and water testing 20,400 23,138 (2;738) Occupancy costs 20,810 25,734 (4,924) Office expense 27,500 26,gll 689 Rent expense 0 7,906 (7,906) Operations and maintenance 120,140 132,078 (l1,938) Insurance 37,428 36,172 1,256 Professional fees 31,000 32,008 (1,008) Depreciation and amortization 0 8t9,643 (819,643) Other general operating expenses 24,000 30,340 (6,340)

Total operating expenses 770,578 1,674,075 (903 ,497)

Operating income (loss) 8t6,722 21,360 (795,362)

Non-operating revenues (expenses):

Debt service (814,875) (408,198) 406,677 Grants - capital 0 102,765 102,765

Total non-operating revenues (expenses) (814,875) (305,433) 509,442

Change in net assets $ 1,847 (284,073) $ (285,920)

Net position, beginning of year, restated 13,237,2r0

Net position, end of year s12,953,137

See accompanying notes to the financial statements. 24 Glendale Valley Municipal Authority Pension Schedules For the Year Ended December 31,2017

Total Pension Liability 2017 2016 20ts

Service cost $ 11,838 s 12,987 $ I1,288 Interest cost 1,528 869 233 Changes of benefit terms 0 0 0 Differences between expected and actual experience 0 (e44) 0 Changes in assumptions 0 0 0 Transfers 0 0 0 Benefit payments 0 (e43) 0 Net change in total pension liability 13,366 ll,969 ll,52l

Total pension liability, beginning of year 23,490 ll,52l Total pension liability, end of year (a) _i_]Éëq _q2ry29 t_ltl?!

Plan Fiduciary Net Position

Contributions - employer $ 3,669 $ 3,204 $ 3,684 Contributions - PMRS assessment 120 100 0 Contributions - employee 8,169 8,844 7,724 PMRS invesfrnent income 1,491 864 109 Market value investment income (7s) (1,489) (l5e) Transfers 0 0 0 Benefit payments, including refunds of members contributions 0 (e43) 0 PMRS administrative expense (120) (100) (120) Additional administrative expense (73) (36) (4) Net change in plan fiduciary net position 13,181 10,444 11,234

Plan fiduciary net position, beginning of year 21,801 u 57 123 Plan fiduciary net position, end ofyear (b) q__]1¿!z $__4,!91 $ 11,357

Plan net pension liability (asset), end of year (a) - (b) q___!,q21 $.1É!2 $ t64

Plan fiduciary net position as a percenúage of total pension liability 94.9o/o 92.8% 98.6%

Covered employee payroll s 183,463 $ 207,086 $ 178,586

Plan net pension liability (asset) as a percentage of covered employee payroll 1.02% 0.82% 0.09%

Note: Schedule is intended to show information for l0 years. Additional years will be displayed as they become available.

25 Glendale Valley Municipal Authority Pension Schedules For the Year Ended December 31,2017

Schedule of the Net Pension Liabilitv (Asset)

Net Pension Plan Net Liability Position as a (Asset) asa%o Net Pension Yo of Toâl Covered ofCovered Year Ended Total Pension Plan Net Liability Pension Employee Employee December 3l Liabilitv Position (Asset) Liabilitv Pavroll Payroll 2017 $ 36"856 $ 34.982 $ 1.874 94.9% $ 183,463 t.02% 20r6 $ 23.490 s 21.801 $ 1,689 92.8% $ 207,086 0.82% 2015 $ 11.521 $ r 1,357 $ t64 98.6% $ 178.586 0.09%

Schedule of Contributions

Contributions Recognized by Plan as ao/o of Statutorily Contributions Contribution Covered Covered Required Recognized by Deficiency Employee Employee Valuation Date Contribution the Plan (Excess) Payroll Payroll December 31,2016 $ 3,789 $ 3.789 $ 0 $ 183.463 2.07% December 31.2015 s 4.243 s 3.304 $ 939 s 207.086 1.600/o December 31.2014 $ 3.684 s 3.684 s 0 s 178.586 2.060/o

Schedule of Pension Investment Returns

December 3l , 2016 - Annual money weighted rate of return, net of investment expense 8.70o/o December 31, 2015 - Annual money weighted rate of return, net of investment expense 0.10% December 31,2014 - Annual money weighted rate of return, net of investment expense 5.70o/o

are to yeafs. years it becomes available.

26 KorzAN CPA 6L As soc IATES, P.C. Mr:.,r*,R^rcpÀ"prcpÁ €nrn¡rr:r¡ Pr¡mtc "{ccÕrtNTr'Nr:'s &. BrrsI}ÌEss CÕNstiËrÄN'ns

Brenda A. Parvlowski, CPA CFE Kimberiy .{. Dorchaþ CP,{ CGËM

Independent Auditors' Report on Internal Control over Financial Reporting and on Compliance and Other Matters Based on an Audit of Financial Statements Performed in Accordance with Government Audítíng Standards

To the Members of the Board Glendale Valley Municipal Authority 1800 Beaver Valley Road Flinton, Pennsylvania 16640

We have audited, in accordance with the auditing standards generally accepted in the United States of America and the standards applicable to financial audits contained in Government Auditing Standards issued by the Comptroller General of the United States, the financial statements of Glendale Valley Municipal Authority as of and for the year ended December 31,2017, and the related notes to the financial statements, and have issued our report thereon dated April4, 2018.

Internal Control Over Financial Reporting

In planning and performing our audit of the financial statements, we considered Glendale Valley Municipal Authority's internal control over financial reporting (internal control) to determine the audit procedures that are appropriate in the circumstances for the purpose of expressing our opinion on the financial statements, but not for the purpose of expressing an opinion on the effectiveness of Glendale Valley Municipal Authority's internal control. Accordingly, we do not express an opinion on the effectiveness of the Authority's internal control.

A deficiency in internal control exists when the design or operation of a control does not allow management or employees, in the normal course of performing their assigned functions, to prevent, or detect and correct, misstatements on a timely basis. A material weqkness is a deficiency, or a combination of deficiencies, in internal control, such that there is a reasonable possibility that a material misstatement of the entity's financial statements will not be prevented, or detected and corrected on a timely basis. A significant deficiency is a deficiency, or combination of deficiencies, in internal control that is less severe than a material weakness, yet important enough to merit attention by those charged with governance.

Our consideration of internal control was for the limited purpose described in the first paragraph of this section and was not designed to identify all deficiencies in internal control that might be material weaknesses or significant deficiencies and therefore, material weaknesses or significant deficiencies may exist that were not identified. We did identify a certain deficiency in internal control, described in the accompanying schedule of findings and responses, that we consider to be a material weakness - #2017-001.

Compliance and Other Matters

As part of obtaining reasonable assurance about whether Glendale Valley Municipal Authority's financial statements are free from material misstatement, we performed tests of its compliance with certain provisions of laws, regulations, contracts and grant agreements, noncompliance with which could have a direct and material effect on the determination of financial statement amounts. However, providing an opinion on compliance with those provisions \¡/as not an objective of our audit, and accordingly, we do not express such an opinion. The results of our tests disclosed no instances of noncompliance or other matters that a¡e required to be reported under Government Auditing Støndards. 27

Budfield Street Professional Euilding " 334 Budñetd S*eet . Suite 180 . Johnstown, PA 159{,4 814-269-4912' Fax: 814-266-9517 www:kotzancpã^.com Glendale Valley Municipal Authority's Response to Findings

Glendale Valley Municipal Authority's response to the finding identified in our audit is described in the accompanying schedule of findings and responses. Glendale Valley Municipal Authority's response was not subjected to the auditing procedures applied in the audit of the financial statements and, accordingly, we express no opinion on it.

Purpose of this Report

The purpose of this report is solely to describe the scope of our testing of internal control and compliance and the results of that testing, and not to provide an opinion on the effectiveness of the entity's internal control or on compliance. This report is an integral part of an audit performed in accordance with Government Auditing Standørds in considering the entity's internal control and compliance. Accordingly, this communication is not suitable for any other purpose.

{""^,CCPAr rot &òPÃ & Associates,"*".^**?C' p.C. Johnstown, Pennsylvania April4, 2018

28 Glendale Valley Municipal Authority Schedule of Findings and Responses For the Year Ended December 31,2017

Section I - Summary of Auditorsr Results

Financial Statements

Type of auditors' report issued: unmodified

Internal control over hnancial reporting: Material weakness(es) identifi ed? X Yes No Significant deficiency identified not considered to be material weaknesses? Yes X None reported

Noncompliance material to financial statements noted? Yes XNo

Section II - Financial Statement Findings

INTERNAL CONTROL OT/ER FINANCIAL KEPORTING

Findine #2017-001

CONDITION

Audit adjustments that were material to the financial statements were required in order for the financial statements to be fairly presented in accordance with generally accepted accounting principles. Material adjustments included adjusting the grant funding receivable and revenue on the PENNVEST project; adjusting payroll liabilities; adjusting capital asset accounts; recording depreciation anð. amortization; adjusting the allowance for uncollectible accounts; adjusting the loans and capital leases for principal and interest paid, as well as for new debt incurred; adjusting customer accounts receivable; reclassifying revenue from water to sewer; and adjusting accounts payable for amounts due to vendors at year end.

CRITERIA:

An indicator of a material weakness is when the auditor identifies material misstatements in the financial statements that were not detected by the entity's internal control.

CAUSE

The cause of this internal control deficiency can mostly be attributed to three factors: l) the complexities related to the construction phases of the projects (including the recording of the grants); 2) the maintenance of the financial records on the modified cash basis of accounting; and (3) the incorrect coding of revenues in the billing system.

29 Glendale Valley Municipal Authority Schedule of Findings and Responses For the Year Ended December 31,2017

EFFECT:

The effect of the aforementioned misstatements, if not corrected through audit adjustments, would have been the material misstatement of the financial statements, including misstated accounts and grants receivable and corresponding revenue; allowances and corresponding expenses; fixed assets and corresponding expenses; long-term debt; and beginning net position. The misstatements resulted in a combined overstatement of $804,756. Further, the water revenues were materially overstated while the sewer revenues were materially understated.

RECOMMENDATION

We recommend that management adjust the general ledger for the proposed audit adjustments effective December 31,2017. Further, we recommend that management perform a frequent and careful review of the Authority's financial statements to ensure 1) amounts recorded as receivables closely agree to the list of customer receivables from the billing system; 2) disbursements after year end are properly included in, or excluded from, accounts payable; 3) fixed asset balances (including depreciation and amortization) are reviewed to veriff proper classification of transactions; and 4) the coding of revenues in the billing system is corrected. Moreover, opportunities for accounting training and guidance should be considered for Authority staff.

MANAGEMENT RESPONSE:

Management agrees with the recommendations. Management will adjust the general ledger for the proposed audit adjustments. Further, management has implemented procedures to periodically review the amounts recorded as accounts receivable to the subsidiary ledger and billing report. Any differences noted will be investigated and adjusted, if necessary. In addition, management will monitor all disbursements after year end, focusing attention on the service/receipt dates noted on invoices to ensure proper recording of accounts payable. Management will also review all amounts posted to the fixed asset accounts and record an estimate for depreciation throughout the year. Finally, the Board will consider the possibility of additional accounting training for the staff.

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APPENDIX D FORM OF CONTINUING DISCLOSURE CERTIFICATE

[ THIS PAGE INTENTIONALLY LEFT BLANK ] FORM OF CONTINUING DISCLOSURE CERTIFICATE

This Continuing Disclosure Certificate (the “Disclosure Certificate”) is executed and delivered by the GLENDALE VALLEY MUNICIPAL AUTHORITY (the “Authority”), in connection with the issuance of its Sewer and Water Revenue Bonds, Series of 2018 (the “2018 Bonds”) dated as of ______, 2018. The Authority makes the following certifications and representations as an inducement to the Underwriter and others to purchase the 2018 Bonds:

SECTION 1. Purpose of the Disclosure Certificate. This Disclosure Certificate is being executed and delivered by the Authority for the benefit of the Holders of the 2018 Bonds and in order to assist the Underwriter in complying with Securities and Exchange Commission Rule 15c2-12(b)(5).

SECTION 2. Definitions. In addition to the definitions set forth in the Resolution and the Trust Indenture dated as of ______, 2018 by and between the Authority and Manufacturers and Traders Trust Company, as trustee, which apply to any capitalized term used in this Disclosure Certificate unless otherwise defined in this Section, the following capitalized terms shall have the following meanings:

“Annual Report” shall mean any Annual Report provided by the Authority pursuant to, and as described in, Sections 3 and 4 of this Disclosure Certificate.

“Business Day” shall mean a day other than a Saturday, a Sunday, or a day on which the New York Stock Exchange is closed or a day on which banks located in the Commonwealth are authorized or required by law or executive order to close.

“Commonwealth” shall mean the Commonwealth of Pennsylvania.

“EMMA” shall mean the Electronic Municipal Market Access (EMMA) System created by the Municipal Securities Rulemaking Board (MSRB).

“Listed Events” shall mean any of the events listed in Section 5 of this Disclosure Certificate.

“Official Statement” shall mean the final official statement relating to the 2018 Bonds prepared by or on behalf of the Authority and distributed in connection with the offering and sale of the 2018 Bonds by the Underwriter.

“Rule” shall mean Rule 15c2-12(b)(5) adopted by the Securities and Exchange Commission under the Securities Exchange Act of 1934, as the same may be amended from time to time.

“State Repository” shall mean any public or private repository or entity designated by the Commonwealth as a state repository for the purpose of the Rule. As of the date of this Disclosure Agreement, there is no State Repository.

“Underwriter” shall mean any underwriter of the 2018 Bonds required to comply with the Rule in connection with the offering of the 2018 Bonds.

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SECTION 3. Provision of Annual Reports. (a) The Authority shall, within 275 days following the close of each of its Fiscal years, beginning with the Fiscal year ending December 31, 2018, file with EMMA an Annual Report that is consistent with the requirements of Section 4 of this Disclosure Certificate. The Annual Report may be submitted as a single document or as separate documents comprising a package, and may cross-reference other information as provided in Section 4 of this Disclosure Certificate; provided, however, that if the audited financial statements of the Authority for the most recent completed Fiscal year are not available to be included in the Annual Report when filed, such audited financial statements may be filed separately from the balance of the Annual Report, as provided in the following paragraph.

If the audited financial statements of the Authority for the most recent Fiscal year are not available as of the date on which the Annual Report is to be filed, the audited financial statements shall be provided separately to EMMA as soon as they are available, and the Annual Report, when filed, shall contain a statement to that effect and a statement of the date by which the Authority reasonably expects the audited financial statements to become available.

(b) If the Authority is unable to provide an Annual Report to EMMA within the time set forth in subsection (a) immediately above, the Authority will send a notice to EMMA advising the secondary marketplace of such fact and, if appropriate, the date by which the Authority expects to file the Annual Report.

SECTION 4. Content of Annual Reports. The Authority’s Annual Report shall contain or incorporate by reference the following financial information and operating data with respect to the Authority:

 Its general purpose financial statements for such Fiscal year presented in conformity with generally accepted accounting principles, beginning with the Authority's Fiscal year ending December 31, 2018; and

 Its annual budget for its Fiscal year next succeeding that covered by the immediately preceding bullet point, beginning with the Authority's Fiscal year ending December 31, 2018.

Any or all of the items listed above maybe incorporated by reference from other documents, including official statements of debt issues of the Authority or related public entities which have been submitted to EMMA or the Securities and Exchange Commission. If the document incorporated by reference is a final official statement, it must be available from the Municipal Securities Rulemaking Board. The Authority shall clearly identify each other document so incorporated by reference.

SECTION 5. Reporting of Significant Events. The Authority will provide in a timely manner not to exceed ten business days after occurrence, to the MSRB via EMMA on such form and in such format as shall be required by the MSRB for such filings, notice of any of the following events with respect to the 2018 Bonds, within the meaning of the Rule:

(a) principal and interest payment delinquencies;

(b) non-payment related defaults, if material;

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(c) unscheduled draws on debt service reserves reflecting financial difficulties;

(d) unscheduled draws on any credit enhancements reflecting financial difficulties;

(e) substitution of credit or liquidity providers, or their failure to perform;

(f) 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 2018 Bonds, or other material events affecting the tax status of the 2018 Bonds;

(g) modifications to rights of the owners, if material;

(h) optional or unscheduled redemptions of any 2018 Bonds, if material;

(i) defeasance of the 2018 Bonds or any portion thereof;

(j) release, substitution or sale of property securing repayment of the 2018 Bonds, if material;

(k) rating changes;

(l) tender offers;

(m) bankruptcy, insolvency, receivership or similar event of the Authority;

(n) consummation of a merger, consolidation, or acquisition, or certain asset sales, involving the Authority, or entry into or termination of a definitive agreement relating to the foregoing, if material; and

(o) appointment of a successor or additional paying agent or trustee or the change of name of the paying agent or trustee, if material.

The foregoing fifteen events are quoted from the Rule.

The Authority may from time to time choose to provide notice of the occurrence of certain other events, in addition to those listed above, if, in the judgment of the Authority, such other event is material with respect to the 2018 Bonds, but the Authority does not undertake to commit to provide any such notice of the occurrence of any material event except those events listed above.

SECTION 6. Dissemination Agent. The Authority may, at any time and from time to time, appoint or engage another person (the “Dissemination Agent”) to assist it in carrying out its obligations under this Disclosure Certificate, and may discharge such Dissemination Agent, with or without appointing a successor, and without notice to holders of the 2018 Bonds.

SECTION 7. Method of Filing. The Authority may satisfy its obligations hereunder to file any notice, document or information by (a) transmitting such filings or giving written direction to the Dissemination Agent to transmit such filing (at the Authority's expense) to

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EMMA, or (b) by filing the same with any dissemination agent or conduit, including any “central post office” or similar entity, assuming or charged with responsibility for accepting notices, documents or information for transmission to EMMA, to the extent permitted by the SEC or SEC staff or required by the SEC. For the purpose of (a) and (b), permission shall be deemed to have been granted by the SEC staff if and to the extent the agent or conduit has received an interpretive letter, which has not been revoked, from the SEC staff to the effect that using the agent or conduit to transmit information to EMMA will be treated for the purposes of the Rule as if such information were transmitted directly to EMMA.

SECTION 8. Termination of Disclosure Obligation. The Authority’s obligations under this Disclosure Certificate shall terminate upon the prior redemption, defeasance or payment in full of all of the 2018 Bonds.

SECTION 9. Amendments. The Authority reserves the right to modify, from time to time, the specific types of information to be included in its Annual Report or the format of the presentation of such information, to the extent necessary or appropriate, as a result of a change in legal requirements or a change in the nature of the Authority; provided, however, that the Authority agrees that any such modification will be done in a manner not inconsistent with the Rule, as the Authority may be advised by nationally recognized bond counsel or other legal counsel with appropriate knowledge and experience with the requirements of the Rule.

SECTION 10. Default. In the event of a failure of the Authority to comply with any provision of this Disclosure Certificate, any holder of 2018 Bonds may take such actions as may be necessary and appropriate, including seeking mandate or specific performance by court order, to cause the Authority to comply with its obligations under this Disclosure Certificate. A default under this Disclosure Certificate shall not be deemed an event of default with respect to the 2018 Bonds, and the sole remedy under this Disclosure Certificate in the event of any failure of the Authority to comply with this Disclosure Certificate shall be an action to compel performance.

IN WITNESS WHEREOF, the Authority has executed this Disclosure Certificate as of the date first above written.

GLENDALE VALLEY MUNICIPAL AUTHORITY, CAMBRIA COUNTY, PENNSYLVANIA

By:______(Vice) Chairman

By:______(Assistant) Secretary

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