$9,655,000 MUNICIPALITY OF PENN HILLS

Transcription

1 OFFICIAL STATEMENT BOOK-ENTRY ONLY Bond Rating: Standard & Poor's Corp. AA- (stable) (See Rating herein) In the opinion of Bond Counsel, under existing law and assuming continuing compliance by the Municipality with certain covenants intended to assure continuing compliance with the Internal Revenue Code of 1986, as amended (the Code ), and all applicable regulations thereunder, interest on the Bonds (including any original issue discount property allocable to the owner of a Bond) is excluded from gross income for federal income tax purposes and is not an item of tax preference for purposes of the federal alternative minimum tax imposed on individuals and corporations; however, for the purpose of computing the alternative minimum tax imposed on certain corporations (as defined for federal income tax purposes), such interest is taken into account in determining adjusted current earnings. For the purpose of rendering such opinion, Bond Counsel has assumed compliance by the Municipality with all requirements of the Internal Revenue Code of 1986, as amended, that must be satisfied subsequent to the issuance of the Bonds in order that the interest thereon be, and continue to be, excludable from gross income for federal income tax purposes. Furthermore, in the opinion of Bond Counsel, under existing law, the Bonds are exempt from Pennsylvania personal property taxes and the interest on the Bonds is exempt from Pennsylvania personal income tax and corporate net income tax. For a discussion of other federal tax consequences arising with respect to the Bonds Bond Counsel s opinion is subject to continuing compliance with tax covenants contained in the Ordinance to satisfy certain provisions of the Internal Revenue Code of 1986, as amended. The Municipality has designated the Bonds as qualified tax-exempt obligations within the meaning of 265(b)(3) of the Code and, in the case of certain financial institutions (within the meaning of 265(b)(5) of the Code), a deduction is allowed for 80% of that portion of such financial institution s interest expense allocable to interest on the Bonds. See TAX-EXEMPTION AND CERTAIN OTHER TAX MATTERS. $9,655,000 MUNICIPALITY OF PENN HILLS (Allegheny County, Pennsylvania) General Obligation Bonds, Refunding Series of 2015 Dated: (Date of Delivery) December 2, 2015 First Interest Payment Date: June 1, 2016 Due: December 1 (as shown on the inside cover) Interest Payable: June 1 and December 1 The Municipality of Penn Hills, Allegheny County, Pennsylvania (the "Municipality"), General Obligation Bonds, Refunding Series of 2015 (the Bonds ) will be issued by the Municipality as fully registered bonds, without coupons, in denominations of $5,000 and integral multiples thereof. Interest on the Bonds will be payable semiannually on June 1and December 1 of each year, beginning June 1, The interest on the Bonds will be payable by check mailed to the registered owner thereof (or by wire transfer to registered owners holding more than $1,000,000 in principal amount of Bonds). When issued, the Bonds will be registered in the name of Cede & Co., as registered owner and nominee for The Depository Trust Company ( DTC ), New York, New York. So long as Cede & Co. is the registered owner, reference herein to the registered owner of Bonds shall mean Cede & Co., and not the Beneficial Owners (as defined herein). DTC will act as securities depository of the Bonds, and purchases of beneficial ownership interests in the Bonds will be made in book-entry form only, in denominations of $5,000 or integral multiples thereof. Beneficial Owners will not receive certificates representing their interest in the Bonds. See Book-Entry Only System herein. Principal of, and premium, if any, on the Bonds will be paid by U.S. Bank National Association, Pittsburgh, Pennsylvania, (the Paying Agent ). So long as Cede & Co. is the registered owner, the Paying Agent will pay principal of, and interest on the Bonds to DTC, which will remit such principal and interest to its Participants (as defined herein), which will in turn remit such principal and interest to the Beneficial Owners of the Bonds, as more fully described herein. See Book-Entry Only System herein. The Bonds are subject to optional redemption, as more fully set forth herein. SECURITY: THE BONDS ARE GENERAL OBLIGATIONS OF THE MUNICIPALITY OF PENN HILLS (THE MUNICIPALITY ), PAYABLE FROM ITS TAXES AND OTHER AVAILABLE REVENUES WHICH, IN THE OPINION OF BOND COUNSEL, PRESENTLY INCLUDE UNLIMITED AD VALOREM TAXES WHICH MAY BE LEVIED ON ALL TAXABLE REAL PROPERTY WITHIN THE MUNICIPALITY (SEE SECURITY FOR THE ISSUE HEREIN). THE MUNICIPALITY HAS COVENANTED THAT IT WILL PROVIDE IN ITS BUDGET IN EACH YEAR, AND WILL DULY AND PUNCTUALLY PAY OR CAUSE TO BE PAID FROM THE SINKING FUND ESTABLISHED UNDER THE ORDINANCE (DEFINED BELOW) OF THE MUNICIPALITY UNDER WHICH THE BONDS ARE ISSUED, OR FROM ANY OTHER OF ITS AVAILABLE REVENUES OR FUNDS, THE PRINCIPAL OF AND INTEREST ON EVERY BONDS ON THE DATE, AT THE PLACE AND IN THE MANNER STATED IN THE BONDS. FOR SUCH BUDGETING, APPROPRIATION AND PAYMENT, THE MUNICIPALITY IRREVOCABLY HAS PLEDGED ITS FULL FAITH, CREDIT AND TAXING POWER. QUALIFIED TAX-EXEMPT OBLIGATIONS: The Municipality has designated the Bonds as Qualified Tax-Exempt Obligations within the meaning of 265(b)(3) of the Code. The Municipality reasonably anticipates that it, together with any subordinate entities, will not issue more than $10,000,000 of tax-exempt obligations during the calendar year MATURITY SCHEDULE (See Inside Front Cover) The Bonds are offered, subject to prior sale, withdrawal or modification, when, as and if issued by the Municipality and received by the Underwriter and subject to the approving legal opinion of Law Offices of Thomas Shannon Barry & Associates, Pittsburgh, Pennsylvania, Bond Counsel. Said opinion will be furnished upon delivery of the Bonds. Certain legal matters will be passed upon for the Municipality by Bruce E. Dice, Esquire, Pittsburgh, Pennsylvania, Solicitor for the Municipality. The Bonds are expected to be delivered on or about December 2, The date of this Official Statement is October 21, 2015.

2 $9,655,000 MUNICIPALITY OF PENN HILLS (Allegheny County, Pennsylvania) General Obligation Bonds, Refunding Series of 2015 Dated: (Date of Delivery) December 2, 2015 Due: December 1 (as shown below) Year Amount Coupon Yield Price 2016 $ 40, % 0.700% % , % 1.050% % , % 1.250% % ,430, % 1.300% % ,955, % 1.550% % ,040, % 1.750% % ,110, % 1.950% % i

3 MUNICIPALITY OF PENN HILLS Allegheny County, Pennsylvania SUMMARY STATEMENT This Summary Statement is qualified in its entirety and subject in all respects to more complete information contained in this Official Statement. No person is authorized to detach this Summary Statement or otherwise use it without the entire Official Statement. Issuer Municipality of Penn Hills, Allegheny County, Pennsylvania. Bonds $9,655,000 General Obligation Bonds, Refunding Series of The Bonds are dated December 2, 2015 and will pay interest semi-annually on June 1 and December 1 as more fully shown on the Inside Front Cover. Redemption Provisions Form Application of Proceeds The Bonds maturing on or after December 1, 2021 are subject to redemption in whole or in part, at the option of the Municipality on December 1, 2020 or any date thereafter at 100% of the principal amount thereof plus interest accrued to the date of redemption. The Bonds are not subject to mandatory sinking fund redemption. Book-Entry Only. The proceeds of the Bonds will be used to provide funds: (1) to currently refund a portion of the General Obligation Bonds, Refunding Series of 2010, (2) for various capital projects, and (3) to pay the costs of issuing the Bonds. Security The Bonds are general obligations of the Municipality. The Municipality has pledged its full faith, credit and taxing power to the payment of the principal of and interest on the Bonds. Rating Continuing Disclosure Undertaking The Bonds have received a rating of AA- (stable) from Standard and Poor Corp., New York, New York, ( S&P ), based on the Municipality s financial condition. (See Rating herein.) The Municipality has agreed to provide, or cause to be provided, in a timely manner, certain information in accordance with the requirements of Rule 15c2-12 as promulgated under the Securities Exchange Act of 1934, as amended and interpreted (the Rule). (See Continuing Disclosure Undertaking herein.) ii

4 IN CONNECTION WITH THIS OFFERING, THE UNDERWRITER MAY OVER-ALLOT OR EFFECT TRANSACTIONS THAT STABILIZE OR MAINTAIN THE MARKET PRICE OF THE BONDS AT A LEVEL ABOVE THAT WHICH MIGHT OTHERWISE PREVAIL IN THE OPEN MARKET. SUCH STABILIZING, IF COMMENCED, MAY BE DISCONTINUED AT ANY TIME. No dealer, broker, salesman or other person has been authorized by the Municipality of Penn Hills (the "Municipality") or the Underwriter to give any information or to make any representations, other than those contained within 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. 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 has been obtained from the Municipality and other sources that are believed to be reliable, but the Underwriter does not guarantee the accuracy or completeness of the information nor is the information to be construed as a representation by the Underwriter and, except for the information supplied by the Municipality, it is not to be construed as a representation or warranty by the Municipality. The information and expressions of opinion herein are subject to change without notice, and neither the delivery of this Official Statement nor any sale made hereunder shall, under any circumstances, create any implication that there has been no change in the affairs of the Municipality since the date hereof. The Municipality deems this Official Statement final for purposes of Securities and Exchange Rule 15(c)2-12(b)(3). TABLE OF CONTENTS Page Introduction 1 Purpose of the Bonds 1 Composition of the Bond Issue 1 The Refunding Program 2 The Bonds 2 Security for the Bonds 6 Approval 6 Rating 6 Legal Matters 6 Tax Exemption and Other Tax Matters 7 Continuing Disclosure Undertaking 9 Litigation 10 Miscellaneous 10 Appendix A - Appendix B - Economic and Demographic Information Financial Statements The Table of Contents does not list all of the subjects in this Official Statement and in all instances reference should be made to the complete Official Statement to determine the subjects set forth herein. iii

5 MUNICIPALITY OF PENN HILLS Allegheny County, Pennsylvania Municipal Building Frankstown Road Penn Hills, Pennsylvania (412) or (412) BMAYOR Anthony L. DeLuca MEMBERS OF THE MUNICIPAL COUNCIL Anthony L. DeLuca Sara Kuhn Gary N. Underwood Joseph N. Palumbo Dr. J-LaVon Kincaid, Sr. Mayor Deputy Mayor Member Member Member 6BMUNICIPAL ADMINISTRATION Mohammed F. Rayan Nichols J. Futules Edward Schrecengost Diane Gionta Fitzhenry Municipal Manager Controller Finance Director Deputy Clerk SOLICITOR Bruce E. Dice & Associates, P.C. Pittsburgh, Pennsylvania BOND COUNSEL Law Offices of Thomas Shannon Barry & Associates Pittsburgh, Pennsylvania PAYING AGENT U.S. Bank National Association Pittsburgh, Pennsylvania MANAGING UNDERWRITER Piper Jaffray & Co. Pittsburgh, Pennsylvania iv

6 $9,655,000 MUNICIPALITY OF PENN HILLS (Allegheny County, Pennsylvania) General Obligation Bonds, Refunding Series of 2015 INTRODUCTION This Official Statement of the Municipality of Penn Hills, Allegheny County, Pennsylvania (the Municipality ) provides certain information concerning the Municipality, in connection with the issuance $9,655,000 General Obligation Bonds, Refunding Series of 2015 (the Bonds ). The Bonds have been issued pursuant to an Ordinance duly enacted by the Municipality on October 19, 2015 (the Ordinance ). The Bonds are also issued in accordance with applicable provisions of the Local Government Unit Debt Act of the General Assembly of the Commonwealth of Pennsylvania, act of December 19, 1996, P.L. 1158, No. 177, as amended (the Debt Act ), and with the approval of the Department of Community and Economic Development of the Commonwealth of Pennsylvania pursuant to the Debt Act. The Bonds PURPOSE OF THE BONDS The proceeds of the Bonds will be used to provide funds: (1) to currently refund a portion of the General Obligation Bonds, Refunding Series of 2010, (2) for various capital projects, and (3) to pay the costs of issuing the Bonds. COMPOSITION OF THE BOND ISSUE The estimated sources and uses of funds are summarized as follows: SOURCES: Principal Amount of Bonds $9,655, Plus: Net Original Issue Premium 340, TOTAL SOURCES $9,995, USES: Refunding Escrow Deposit for 2010 Bonds $9,371, Costs of Issuance (1) 141, Miscellaneous (Additional Proceeds) 482, TOTAL USES $9,995, (1) Includes bond discount, legal fees, rating fee, document printing, paying agent, CUSIP, registration fees, advertising and miscellaneous. 1

7 THE REFUNDING PROGRAM A portion of the proceeds of the Bonds will be deposited into the 2010 Bonds Sinking Fund held by U.S. Bank National Association, Pittsburgh, Pennsylvania, as Paying Agent and Sinking Fund Depository for the Municipality s $9,370,000 of the General Obligation Bonds, Refunding Series of 2010 (the 2010 Bonds ) in an amount sufficient to pay the redemption price on the December 3, 2015 redemption date of 100% of the principal amount plus accrued interest to the redemption date on $1,390,000 portion of the Bonds stated to mature on December 1, 2019 and all of the remaining outstanding bonds maturing on December 1, 2020 through and including 2022 (collectively, the Prior Bonds ). Description 0BTHE BONDS The Bonds, designated "Municipality of Penn Hills, General Obligation Bonds, Refunding Series of 2015 are limited to $9,655,000 in aggregate principal amount. The Bonds will be issued in fully registered form, without coupons, in $5,000 denominations, or integral multiples thereof within a maturity. Payment of Principal and Interest Principal of the Bonds will be paid to the registered owners thereof or assigns, when due, upon surrender thereof at the principal corporate trust office of the Paying Agent. Interest on each Bond are 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 the Bond is registered and authenticated as of an interest payment date, in which event the Bond shall bear interest from said interest payment date, or unless the Bond is registered and authenticated prior to the Dated Date of this issue, in which event the Bond shall bear interest from said Dated Date, or unless no interest has been paid (and the Bond shall be in default), in which event the Bond shall bear interest from the date on which interest was last paid on the Bond, in all cases, semiannually on June 1 and December 1 of each year, beginning June 1, 2016 until such principal sum is paid. Interest on each Bond is payable by check or draft 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 fifteenth (15 th ) day of the calendar month 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 Municipality 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 owners of the Bond not less than fifteen (15) days preceding such special record date. Transfer, Exchange and Registration of Bonds Bonds are transferable or exchangeable by the registered owners thereof upon surrender of Bonds to the Paying Agent at its principal corporate trust office, accompanied by a written instrument or instruments in form, with instructions, and with guaranty of signature satisfactory to the Paying Agent, duly executed by the registered owner of such Bond or his attorney-in-fact or legal representative. The Paying Agent shall enter any transfer of ownership of Bonds in the registration books and shall authenticate and deliver in the name of the transferee or transferees a new fully registered bond or bonds of authorized denominations of the same maturity and form for the aggregate amount which the registered owner is entitled to receive at the earliest practicable time. The Municipality and the Paying Agent may deem and treat the registered owner of any Bond as the absolute owner thereof (whether or not a Bond shall be overdue) for the purpose of receiving payment of or on account of principal and interest and for all other purposes, and the Municipality and the Paying Agent shall not be affected by any notice to the contrary. 2

8 Book-Entry-Only System The information in this section has been obtained from materials provided by DTC for such purpose. The Municipality (herein referred to as the Issuer ) and the Underwriter does not guaranty the accuracy or completeness of such information and such information is not to be construed as a representation of the Municipality or the Underwriter. The Depository Trust Company ( DTC ), New York, New York, will act as securities depository for the Bonds. The Bonds will be issued as fully-registered securities registered in the name of Cede & Co. (DTC's partnership nominee) or in such other name as may be requested by an authorized representative of DTC. One fully-registered certificate for the Bonds of each maturity will be issued in a principal amount equal to the aggregate principal amount of such maturity, and will be deposited with DTC. 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 DTC holds and provides asset servicing for over 3.6 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 (the 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 (the Indirect Participants ). DTC has Standard & Poor s rating, 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 HUwww.dtcc.comUH and HUwww.dtc.orgUH. Purchases of the Bonds under the DTC system must be made by or through Direct Participants, which will receive a credit for the Bonds on DTC's records. The ownership interest of each actual purchaser of each Bond (the 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 Owners 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 the Beneficial Owners. Beneficial Owners will not receive certificates representing their ownership interests in the Bonds except in the event that use of the book-entry system for the Bonds is discontinued. To facilitate subsequent transfers, all Bonds deposited by Direct Participants with DTC are registered in the name of DTC's partnership nominee, Cede & Co. or such other name as may be requested by an authorized representative of DTC. The deposit of Bonds with DTC and their registration in the name of Cede & Co. or such other DTC nominee do not 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 transmission to them of notices of significant events with respect to the Bonds, such as redemptions, tenders, defaults, and proposed amendments to the security documents. For example, Beneficial Owners of Bonds may wish to ascertain that the nominee holding the Bonds for their 3

9 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 Paying Agent and request that copies of the notices be provided directly to them. Redemption notices shall be sent to DTC. If less than all of the Bonds (or all Bonds of a particular maturity) are being redeemed, DTC s practice is to determine by lot the amount of the interest of each Direct Participant in such issue (or maturity) to be redeemed. Neither DTC nor Cede & Co. (nor such other DTC nominee) will consent or vote with respect to the Bonds unless authorized by a Direct Participant in accordance with DTC s Procedures. Under its usual procedures, DTC mails on Omnibus Proxy to the Issuer as soon as possible after the record date. The Omnibus Proxy assigns Cede & Co.'s consenting or voting rights to those Direct Participants to whose accounts the Bonds are credited on the record date (identified in a listing attached to the Omnibus Proxy). So long as the Bonds are held by DTC under a book-entry system, payments of the principal of and interest on the Bonds and, if applicable, any premium payable upon redemption thereof, 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 Issuer or the Paying Agent on the 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 Participants and not of DTC, the Paying Agent or the Issuer, subject to any statutory or regulatory requirements as may be in effect from time to time. Payment of the principal of and interest on Bonds and, if applicable, any premium payable upon redemption thereof to Cede & Co. (or such other nominee as may be requested by an authorized representative of DTC) is the responsibility of the Issuer or the Paying Agent, disbursement of such payments to Direct Participants will be the responsibility of DTC and disbursement of such payments to the Beneficial Owners will be the responsibility of Direct and Indirect Participants. DTC may discontinue its services as a securities depository for the Bonds at any time by giving reasonable notice to the Issuer or the Paying Agent. Under such circumstances, in the event that a successor securities depository is not obtained, Bonds are required to be printed and delivered. The Issuer may decide to discontinue use of the system of book-entry transfers through DTC (or a successor securities depository). In that event, Bond certificates will be printed and delivered. Neither the Municipality or the Paying Agent can give any assurances that DTC or the 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. Discontinuance of Book-Entry-Only System DTC may determine to discontinue providing its services with respect to the Bonds at any time by giving notice to the Paying Agent and discharging its responsibilities with respect thereto under applicable law. Under such circumstances, Bond certificates are required to be printed and delivered as described below and in the Ordinance. A Beneficial Owner, upon registration of certificates held in the Beneficial Owner s name, will become the Bondholder. The Municipality may determine to discontinue the system of book-entry transfer through DTC (or a successor securities depository). In such event, Bond certificates will be printed and delivered as described below and in the respective Ordinance. Unless otherwise noted, the information contained in this section has been extracted from a report from DTC entitled Book Entry-Only Municipals. No representation is made by the Municipality or the Underwriter as to the completeness or the accuracy of such information or as to the absence of material adverse changes in such information subsequent to the date hereof. 4

10 In the event that the Book-Entry-Only System is discontinued and the Beneficial Owners become registered owners of the Bonds, the following provisions applicable to registered owners would apply: (i) Bonds may be exchanged for an equal aggregate principal amount of Bonds in other authorized denominations, upon surrender thereof at the designated corporate trust office of the Paying Agent; (ii) the transfer of any Bonds may be registered on the books maintained by the Paying Agent for such purpose only upon the surrender thereof to the Paying Agent together with a duly executed assignment in form satisfactory to the Municipality and the Paying Agent; and (iii) for every exchange or registration of transfer of Bonds, the Paying Agent may impose a charge sufficient to reimburse it for any tax, fee or governmental charge required to be paid with respect to such exchange or registration of transfer of the Bonds. The Municipality and the Paying Agent shall not be required: (a) to issue or transfer or exchange any Bond during a period beginning at the close of business on the Record Date next preceding any Interest Payment Date and ending at the close of business on the Interest Payment Date; or (b) to issue or transfer or exchange any Bond then considered for redemption during the period beginning at the close of business on the fifteenth (15th) day next preceding any date of selection of such Bonds to be redeemed and ending at the close of business on the day on which the notice of redemption is mailed; or (c) to transfer or exchange any portion of any Bond selected for redemption until after the redemption date. Delivery of Certificates; Registered Owners Bond certificates in fully registered form will be delivered to, and registered in the name of DTC or its nominee, Cede & Co., and in the event that the book-entry-only system for the Bonds is discontinued, the DTC Participants or such other persons as such DTC Participants may specify (which may be the DTC Participants or Beneficial Owners), in authorized denominations of $5,000 or integral multiples thereof. The ownership of the Bonds so delivered (and any Bonds thereafter delivered upon a transfer or exchange described below) shall be registered in registration books to be kept by the Paying Agent as Registrar and the Municipality and the Paying Agent shall be entitled to treat the registered owners of such Bonds, as their names appear in such registration books as of the appropriate dates, as the owners thereof for all purposes described herein and in the respective Ordinance. Denominations thereof. The Bonds will be issued in denominations of $5,000 principal or maturity amount or any integral multiple Redemption O Optional Redemption The Bonds maturing on or after December 1, 2021 are subject to redemption at the option of the Municipality in whole or in part on December 1, 2020 or on any date thereafter at 100% of the principal amount thereof plus interest accrued to the date of redemption. Mandatory Redemption The Bonds are not subject to mandatory sinking fund redemption. Manner of Redemption If less than all Bonds of any one maturity are to be redeemed at any particular time, such Bonds to be called for redemption shall be chosen by lot, within such maturity, by the Paying Agent. 5

11 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 denomination thereof by $5,000, each $5,000 portion of such Bond being subject to redemption. In the case of partial redemption of a Bond, payment of the redemption price shall be made only upon surrender of such Bond in exchange for Bonds of authorized denominations, of like form, in an aggregate amount equal to the unredeemed portion. Notice of Redemption Any redemption under the preceding provisions shall be made upon notice of redemption by first class mail not less than thirty (30) days nor more than sixty (60) days prior to the date fixed for redemption, postage prepaid, to all registered owners of the Bonds to be redeemed at their last addresses shown on the Registration Books maintained by the Paying Agent; provided, however, failure to mail such notice or any defect in the notice so mailed or in the mailing thereof shall not affect the validity of the proceedings for such redemption. If the Municipality has mailed the notice of redemption and has provided funds for the payment of the principal of the Bonds called for redemption and interest thereon, interest on such Bonds shall cease to accrue after said redemption date. SECURITY FOR THE BONDS The Bonds, as General Obligation Bonds of the Municipality, are payable from the pledge, for the payment of principal of and interest on the Bonds, of the full faith, credit and taxing power of the Municipality, including unlimited ad valorem taxes levied upon all real property in the Municipality taxable for Municipality purposes. APPROVAL Prior to settlement, approval for the Bonds will have been obtained from the Department of Community and Economic Development of the Commonwealth of Pennsylvania pursuant to the Debt Act. RATING Standard & Poor s Corporation ( S&P ) has assigned its credit rating of AA- (stable), based on the creditworthiness of the Municipality to the Bonds. Such rating reflects only the views of such organization and an explanation of the significance of such rating may be obtained only from S&P at the following address: Standard & Poor s Ratings Services, 55 Water Street, New York, New York There is no assurance that these credit ratings will be maintained for any given period of time, or that they may not be lowered or withdrawn entirely by the rating agency if, in its judgment, circumstances so warrant. Any such downward change or withdrawal of such credit ratings may have an adverse effect on the market price of the Bonds. Legal Opinions LEGAL MATTERS The issuance and delivery of the Bonds are subject to the approving legal opinion of Law Offices of Thomas Shannon Barry & Associates of Pittsburgh, Pennsylvania, Bond Counsel. Certain legal matters will be passed upon by Bruce E. Dice & Associates, P.C., Pittsburgh, Pennsylvania, Solicitor to the Municipality. Bond Counsel's opinions are based on existing law, which is subject to change. Such opinions are further based on factual representations made to Bond Counsel as of the date thereof. Bond Counsel assumes no duty to update or supplement its opinions to reflect any facts or circumstances that may thereafter come to Bond Counsel's attention, or to reflect any changes in law that may thereafter occur become effective. Moreover, Bond Counsel's opinions are not a guarantee of a particular result and are not binding on the IRS or the courts; rather, such opinions represent Bond Counsel's professional judgment based on its review of existing law and in reliance on the representations and covenants that it deems relevant to such opinions. 6

12 Authorized Investments Under the Probate, Estates and Fiduciaries Code, the Bonds are authorized investments for fiduciaries and personal representatives (as defined in that Code) in the Commonwealth of Pennsylvania. Future Financing Negotiability The Municipality does not anticipate issuing any long-term debt in the foreseeable future. The Bonds are investment securities under Article 8 of the Pennsylvania Uniform Commercial Code and are negotiable instruments to the extent provided therein. Pennsylvania Tax Exemption TAX EXEMPTION AND OTHER TAX MATTERS In the opinion of Bond Counsel, under existing law, the Bonds are exempt from personal property taxes in Pennsylvania and the interest on the Bonds are exempt from Pennsylvania personal income tax and corporate net income tax. Federal Tax Exemption As of the date of closing, Bond Counsel will issue an opinion to the effect that under existing law, the interest on the Bonds (including any original issue discount properly allocable to the owner of a Bond) is excluded from gross income for federal income tax purposes. Furthermore, interest on the Bonds is not an item of tax preference for purposes of the federal alternative minimum tax imposed on individuals and corporations; however, with respect to certain corporations (as defined for federal income tax purposes), such interest is taken into account in determining "adjusted current earnings" for the purpose of computing the alternative minimum tax imposed on such corporations. For the purpose of rendering the opinion set forth in this paragraph, Bond Counsel has assumed compliance by the Municipality with requirements of the Internal Revenue Code of 1986, as amended (the "Code"), that must be met subsequent to the issuance of the Bonds in order that interest thereon be and remain excluded from gross income for federal income tax purposes. Failure to comply with such requirements could cause the interest on the Bonds to be included in gross income retroactive to the date of issuance of the Bonds. Bond Counsel expresses no opinion regarding other federal tax consequences arising with respect to the Bonds. Qualified Tax Exempt Obligations The Municipality designated the Bonds as qualified tax-exempt obligations within the meaning of Section 265(b)(3) of the Code and, in the case of certain financial institutions (within the meaning of Section 265(b)(5) of the Code), a deduction is allowed for 80 percent of that portion of such financial institutions interest expense allocable to interest on the Bonds. Original Issue Discount In the opinion of Bond Counsel, under existing law, the original issue discount in the selling price of any Series A Bond sold at an original issue discount (an "OID Bond"), to the extent properly allocable to each owner of such OID Bond, is excluded from gross income for federal income tax purposes with respect to such owner. The original issue discount is the excess of the stated redemption price or principal due at maturity of such OID Bond over its initial offering price to the public, excluding underwriters and other intermediaries, at which price a substantial amount of such OID Bonds was sold. 7

13 Under Section 1288 of the Code, original issue discount on tax-exempt bonds accrues on a compound basis. The amount of original issue discount that accrues to an owner of an OID Bond during any accrual period generally equals (i) the issue price of such OID Bond plus the amount of original issue discount accrued in all prior accrual periods, multiplied by (ii) the yield to maturity of such OID Bond (determined on the basis of compounding at the close of each accrual period and properly adjusted for the length of the accrual period), minus (iii) any interest payable on such OID Bond during such accrual period. The amount of original issue discount so accrued in a particular accrual period will be considered to be received ratably on each day of the accrual period, will be excludable from gross income for federal income tax purposes and will increase the owner's tax basis in such OID Bond. Purchasers of any Bond at an original issue discount should consult their tax advisors regarding the determination and treatment of original issue discount for federal income tax purposes, and with respect to state and local tax consequences of owning such Bonds Original Issue Premium An amount equal to the excess of the purchase price of the Bonds over its stated redemption price or principal due at maturity constitutes a premium on such Bonds. Those maturities of the Bonds sold at such a premium are referred to herein as OIP Bonds. A purchaser of an OIP Bond must amortize any premium over such OIP Bond's term using constant yield principles, based on the OIP Bond's yield to maturity. As premium is amortized, the purchaser s basis in such OIP Bond and the amount of tax-exempt interest received will be reduced by the amount of amortizable premium properly allocable to such purchaser. This will result in an increase in the gain (or decrease in the loss) to be recognized for federal income tax purposes on sale or disposition of such OIP Bond prior to its maturity. Even though the purchaser s basis is reduced, no federal income tax deduction is allowed. Purchasers of any Bond at a premium, whether at the time of initial issuance or subsequent thereto, should consult their tax advisors with respect to the determination and treatment of premium for federal income tax purposes, and with respect to state and local tax consequences of owning such Bonds. Other Tax Matters Except as expressly stated above, Bond Counsel will express no opinion regarding any other state or federal income tax consequences of acquiring, carrying, owning or disposing of the Bonds. Owners of the Bonds should consult their tax advisors regarding the applicability of any collateral tax consequences of owning the Bonds, which may include original issue discount, original issue premium, purchase at a market discount or premium, taxation upon sale, redemption or other disposition and various withholding requirements and which may apply to certain taxpayers, including, without limitation, financial institutions, property and casualty insurance companies, individual recipients of Social Security or Railroad Retirement benefits, certain S corporations with "excess net passive income," foreign corporations subject to the branch profits tax and taxpayers who may be deemed to have incurred or continued indebtedness to purchase or carry the Bonds. Information Reporting Prospective purchasers should be aware that interest paid on tax-exempt obligations will be subject to information reporting in a manner similar to interest paid on taxable obligations. This reporting requirement does not in and of itself affect or alter the excludability of such interest from gross income for federal tax purposes or any other federal tax consequence of purchasing, holding or selling tax-exempt obligations. The Paying Agent on behalf of the Municipality will report annually (or more frequently if required) to owners of record and to the Internal Revenue Service in respect of interest paid on the Bonds. Backup Withholding Payments of interest on the Bonds may under certain circumstances, be subject to backup withholding at a rate equal to the fourth lowest rate of tax applicable under Section 1(c) of the Code, the rates applicable to unmarried individuals (currently at 31%). This withholding generally applies if the owner (i) fails to furnish the Paying Agent such owner s social security number or other taxpayer identification number ( TIN ), (ii) furnishes to the Paying Agent an incorrect TIN, (iii) fails to properly report interest, dividends or other reportable payments as defined in the Code, or (iv) under certain circumstances, fails to provide the Paying Agent or such owner s securities broker with a certified statement, signed under penalties of perjury, that the TIN is correct and that such owner is not subject to 8

14 backup withholding. Prospective purchasers of the Bonds should consult their own tax advisors as to their qualification for exemption for backup withholding and the procedures for obtaining the exemption." THE FOREGOING IS NOT INTENDED AS AN EXHAUSTIVE LIST OF THE PROVISIONS OF FEDERAL TAX LAW WHICH MAY HAVE AN EFFECT OF 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 accordance with Rule 15c2-12 (the Rule ) under the Securities Exchange Act of 1934, as amended, the Municipality has covenanted in the Ordinance for the benefit of the holders and beneficial owners of the Bonds, provide to the Municipal Securities Rulemaking Board ( MSRB ) through its Electronic Municipal Market Access system ( EMMA ) for municipal securities or through any other electronic format or system prescribed by the MSRB for the purposes of Section (b)(5) of the Rule on an annual basis, its general purpose financial statement presented in conformity with generally accepted accounting principles (the Report ), together with updates of the tabular information appearing in Appendix B hereto (to the extent not included in the Report), commencing with the Report tabular information for the fiscal year ending December 31, The Report and tabular information must be provided within 275 days of the end of the relevant fiscal year. If the Report does not include independently audited financial statements, the Municipality must also provide independently audited financial statements when and if available. The Municipality has also covenanted in the Ordinance to provide to MSRB through EMMA: (i) to the Municipal Securities Rule Making Board s ( MSRB ) through its Electronic Municipal Market Access system ( EMMA ) in accordance with the Rule, certain annual financial information and operating data generally consistent with the information contained in the audited Financial Statements. The information shall be provided on or before September 30, 2016 and within 275 days before the end of each relevant fiscal year thereafter, as long as the Bonds remain outstanding or are not defeased, for the fiscal year ending on the preceding December 31; (ii) The following events with respect to the Bonds shall constitute Reportable Events and shall be provided to the MSRB via EMMA in a timely manner not in excess of ten (10) business days after the occurrence of the event: 1. Principal and interest payment delinquencies 2. Non-payment related defaults, if material 3. Unscheduled draws on debt service reserves reflecting financial difficulties 4. Unscheduled draws on credit enhancements reflecting financial difficulties 5. Substitution of credit or liquidity providers, or their failure to perform 6. Adverse tax opinions, the issuance by the Internal Revenue Service of proposed or final determinations of taxability, Notices of Proposed Issue (IRS Form 5701-TEB) or other material notices or determinations with respect to the tax status of the Bonds or other material events affecting the taxexempt status of the Bonds 7. Modifications to rights of holders of the Bonds, if material 8. Bond calls, if material, and tender offers 9. Defeasances 10. Release, substitution or sale of property securing repayment of the Bonds, if material 11. Rating changes 12. Bankruptcy, insolvency, receivership or similar event of the Obligated Person (or any other entity that is an obligated person within the meaning of the Rule with respect to the Bonds) 13. The consummation of a merger, consolidation, or acquisition involving the Obligated Person (or any other entity that is an obligated person within the meaning of the Rule with respect to the Bonds) or the sale of all or substantially all of the assets of the Obligated Person or any such obligated person, other than in the ordinary course of business, the entry into a definitive agreement to undertake such an action or the termination of a definitive agreement relating to any such actions, other than pursuant to its terms, if material 14. The appointment of a successor or additional trustee or the change of name of a trustee, if material; and 15. Failure to make an annual financial information filing on a timely basis. 9

15 Bonds. The SEC requires the listing of (1) through (15), above, although some of the events may not be applicable to the The Continuing Disclosure Certificate will provide Bondholders with certain enforcement rights in the event of a failure by the Municipality to comply with their terms; however, a default under the Continuing Disclosure Certificate does not constitute a default under the Ordinance. The Continuing Disclosure Certificate may be revised from time to time as permitted or required by applicable law, without the consent of the Bondholders, and may be terminated upon the economic defeasance of all outstanding Bonds, or other arrangement, whereby the Municipality is released from any further obligation with respect to the Bonds. Covenants in the Ordinance and the Continuing Disclosure Certificate may also be terminated, without the consent of the Bondholders, at such time as continuing disclosure is no longer required by applicable law. The Municipality will promptly notify the MSRB via EMMA of any revision or termination of the disclosure covenants. The sole remedy for a breach by the Municipality of its covenants to provide financial statements, tabular information and notices of material events is an action to compel performance of such covenants. Under no circumstances may monetary damage be assessed or recovered, nor will any such breach constitute a default under the Bonds. The Municipality will file at a single designation to the Electronic Municipal Market Access (EMMA) system located at Hwww.emma.msrb.orgH. Filings with EMMA shall be in electronic format as pdf files. Bondholders are advised that the Ordinance and the Continuing Disclosure Certificate, copies of which are available at the administrative office of the Municipality, should be read in their entirety for more complete information regarding their content. The Municipality has previously entered into continuing disclosure agreements to provide continuing disclosure for several outstanding bond issues. The Municipality has failed to comply with prior continuing disclosure agreements within the past years in the following respects. In the fiscal years ended 2010 and 2009, the Municipality failed to file annual financial information within the time period(s) specified by the undertakings. These filings were posted to EMMA on December 6, The Municipality has filed in a timely manner with EMMA the annual financial information for fiscal years ending December 31, 2011 through December 31, The Municipality has filed with EMMA the operating data for the fiscal years ended 2014, 2013, 2012, 2011, 2010 and In the fiscal years ended 2010 and 2009, the Municipality failed to file failure to file notices respecting late filings of annual financial information. The failure to file notice filing was posted to EMMA on March 25, Bondholders are advised that the Ordinance and the Continuing Disclosure Certificate, copies of which are available at the administrative office of the Municipality, should be read in their entirety for more complete information regarding their content. The Municipality has implemented procedures through its business office to assure future compliance with its continuing disclosure obligations. Questions relating to the Municipality s continuing disclosure obligations can be addressed to the Municipality of Penn Hills, Municipal Building, Frankstown Road, Penn Hills, Pennsylvania , Att: Finance Director. LITIGATION The Municipality and its Solicitor will certify that there is no litigation of any nature now pending or (to their knowledge) threatened, restraining or enjoining the issuance, sale, execution or delivery of the Bonds or contesting or affecting the validity of the Bonds, or any proceedings of the Municipality taken with respect to the issuance or sale thereof, the pledge or application of any moneys or security provided for the payment of the Bonds, or the existence of the Municipality. The Paying Agent MISCELLANEOUS The principal of, interest and premium, if any, on the Bonds will be payable at the designated corporate trust office of the Paying Agent, provided that interest may be paid by check drawn on the Paying Agent and mailed to the Registered Owner on the appropriate Record Date. 10

16 The obligations and duties of the Paying Agent are described in the Ordinance and the Debt Act and the Paying Agent has undertaken only those obligations and duties which are expressly set out in the Ordinance. The Paying Agent has not independently passed upon the validity of the Bonds, the security therefore, the adequacy of the provisions for payment thereof. Underwriting The Underwriter has agreed to purchase the Bonds from the Municipality at an aggregate purchase price of $9,908, (the aggregate principal amount of the Bonds $9,655, less an underwriter s discount of $86,895.00, plus net original issue premium of $340,780.70). The Bond Purchase Contract provides that the Underwriter will purchase all the Bonds, if any are purchased. The initial public offering prices set forth on the cover page may be changed by the Underwriter and the Underwriter may offer and sell the Bonds to certain dealers (including dealers depositing the Bonds into investment trusts) and others at prices lower than the offering prices set forth on the cover page hereof. Piper Jaffray & Co. and Pershing LLC, a subsidiary of The Bank of New York Mellon Corporation, entered into an agreement (for purposes of this paragraph only, the Agreement ) which enables Pershing LLC to distribute certain new issue municipal securities underwritten by or allocated to Piper Jaffray & Co, including the Bonds. Under the Agreement, Piper Jaffray & Co. will share with Pershing LLC a portion of the fee or commission paid to Piper Jaffray & Co. The Underwriter has entered into distribution agreements with other broker-dealers that have not been designated by the Municipality as Underwriter for the distribution of the Bonds, at the original issue prices. Such agreements generally provide that the Underwriter will share a portion of its underwriting compensation or selling concession with such broker-dealers. The Underwriter has read and participated in the preparation of certain portions of this Official Statement and has supervised the compilation and editing thereof. The Underwriter has not, however, independently verified the factual and financial information contained in this Official Statement and, accordingly, expresses no view as to the sufficiency or accuracy hereof. Other All the summaries of the provisions of the Debt Act, and other laws, the Bonds and the Ordinance hereinabove set forth are made subject to all the detailed provisions thereof, to which reference is hereby made for further information, and do not purport to be complete statements of any or all such provisions. All information, estimates and assumptions herein have been obtained from officials of the Municipality, other governmental bodies, trade and statistical services and other sources which are believed to be reliable, but no representations whatsoever are made that such estimates or assumptions are correct or will be realized. So far as any statements herein involve matters of opinion, whether or not expressly so stated, they are intended as such and not as representations of fact. Appendices attached hereto are expressly incorporated herein as a part thereof. MUNICIPALITY OF PENN HILLS By: /s/ Mohammed F. Rayan Municipal Manager 11

17 APPENDIX A MUNICIPALITY OF PENN HILLS ECONOMIC AND DEMOGRAPHIC DATA

18 (THIS PAGE INTENTIONALLY LEFT BLANK)

19 THE MUNICIPALITY OF PENN HILLS ECONOMIC AND DEMOGRAPHIC DATA Description In terms of population, Penn Hills is the largest municipality in Allegheny County, excepting the City of Pittsburgh. Penn Hills borders the City of Pittsburgh to the east. Other municipalities which surround Penn Hills include the Boroughs of Oakmont, Churchill, Plum, Verona and Wilkinsburg, the Township of Wilkins and the home rule Municipality of Monroeville. Penn Hills is a middle-to-upper income residential community whose residents are served by an active business district along Pennsylvania Routes 791 and 380, although primarily served by the large commercial districts of adjacent Monroeville and Wilkins Township. Many residents are employed in downtown Pittsburgh, which is accessible by the limited-access, four lane Penn-Lincoln highway (Interstate 376), the Allegheny River Boulevard (State Route 130) and Rodi Road (State Route 791). The Municipality was incorporated as a township in 1851, and in January, 1976, the Municipality became a home rule charter municipality. The Municipality is governed by a mayor who is a member of a five-member Council. Council Members are elected to serve four-year, staggered terms. A municipal manager is appointed by the members of Council and handles the day to day operation of the Municipality. The Manager is assisted by seven department directors including a Finance Director, a Controller and a full-time Planning Commission. Hospital and Health Care Facilities The residents of Penn Hills are afforded excellent hospital facilities. Located within 15 miles of Penn Hills are the Forbes Regional Hospital, the East Suburban Health Center, UPMC Hospital (opened in July, 2012) in adjacent Monroeville and the Forbes Health System in adjacent Wilkinsburg. All facilities are acute-care medical surgical facilities. Various hospitals located in the City of Pittsburgh are also available. Long term care is provided by three (3) nursing home facilities located in Penn Hills. They are Seneca Manor Assisted Living, Alterra sterling house (senior living community) and Grainger House of Penn Hills (Assisted Living Concepts, Inc). Numerous nursing home facilities are located throughout the area, including the Presbyterian home in adjacent Oakmont. Transportation Also, on September 30, 2010 Reproductive Health Specialists opened a new facility on Rodi Road. The Municipality is served by Pennsylvania Routes 130, 380 and 791. Interstate 376 traverses the southern tip of the Municipality and provides four-lane, limited access highway transportation to Downtown Pittsburgh to the Greater Pittsburgh Airport. The Pennsylvania Turnpike (Interstate 76) runs along the Municipality s eastern border. State Routes 130 and 380 provide direct routes to the eastern part of the City of Pittsburgh. Public bus transportation is provided by the Port Authority Transit of Allegheny County. Education Public education is provided by the Penn Hills School District. There are approximately 21 colleges and universities which offer undergraduate and graduate level programs in the Pittsburgh Area, some are: University of Pittsburgh (Main Campus), Community College of Allegheny County (4 Campuses), Carnegie-Mellon University, Duquesne University, Robert Morris University, Point Park University, La Roche College and Carlow College. A-1

20 2B Parks and Recreation The Municipality operates over 200 acres of community parks, neighborhood parks and playgrounds. Friendship Park is a facility which includes a football field, a soccer field and three baseball fields. The Penn Hills Community Park is a mixture of wooded slopes and plain areas with natural features including the Plum Creek stream valley, varieties of vegetation and wildlife and a scenic lookout point. The part facilities consist of lighted ballfields, a concession building, a stocked fishing pond, tennis courts, picnic pavilions, hiking trails and a mile-long exercise trail. Duff Park provides tennis courts, play equipment, a picnic pavilion and a cross-country course. The Universal Park provides tennis and basketball courts, ballfields and bocci courts. The neighborhood parks and playgrounds offer recreational facilities to the surrounding communities in a more local setting. Utilities The Municipality owns and operates two sewage treatment and distribution system and provides sewage service to 20% of the Municipality; the other 80% of the population is served by the Allegheny County Sanitary Authority. Water is provided by the Wilkinsburg-Penn Joint Water Authority and the Municipal Authority of the Borough of Oakmont. Duquesne Light Company provides electricity. Natural gas is provided by People s Natural Gas Company and Equitable Gas Company. Police and Fire Protection The Municipality maintains a police department which is currently staffed by 53 policemen. An additional four (4) officer are included in the 2015 Budget. Fire protection is furnished by the Penn Hills Volunteer Fire Department consisting of 214 active members. Labor Relations Labor relations between the Municipality and its unions can be characterized as friendly, and all current labor agreements are characterized as mutually favorable. Municipal employees are represented as outlined below: Date of Number of Contract 1B1BName of Union Personnel Included Employees Expiration Teamsters Local 249 Public Works 22 12/31/2018 Municipal Employees Org. WPCD 15 12/31/2017 Municipal Employees Org. Building / Office Employees 28 12/31/2016 Prof. Assoc. Paramedics Paramedics 25 12/31/2016 Police Bargaining Unit Police 49 12/31/2018 School Guards School Guards 78 12/31/2016 Pension Fund Both Police and Employee Pension Funds are insured, defined benefit plans. Actuarial 2BFund Assets Valuation Date Police $27,753,121 1/1/2013 Non-Uniformed Employees $11,739,631 1/1/2013 A-2

21 The Municipality's contributions to the above pension funds are listed below: 3BYear Contribution 2002 $1,164, ,711, ,465, , , , , ,085, ,028, ,623, ,842, ,693, ,002,120 Population The table below shows population comparisons for the Municipality: Penn Hills, Municipality of 51,479 46,809 34,311 Allegheny County 1,336,449 1,281,666 1,223,348 Commonwealth of Pennsylvania 11,881,643 12,281,054 12,702,379 Source: U.S. Department of Commerce - Bureau of Census. Taxing Powers and Procedures Pursuant to its Home Rule Charter, the Municipality is empowered to levy real estate taxes for general municipal purposes up to the maximum allowed for second class townships as follows: road, bridges and general - 14 mills; lighting - 5 mills; municipal building construction - one-half of the general millage; fire protection - 3 mills; fire hydrants - 2 mills; ambulance and rescue -.5 mills and debt - unlimited. Pursuant to the Act of December 31, 1965, as amended, the "Local Tax Enabling Act", the Municipality may levy various taxes, including the following, at the following limited rates: 1. Per Capital or other similar head tax, not over $ Gross receipts tax on wholesale dealers, not over 1 mill.* 3. Gross receipts tax on retail dealers and restaurant proprietors, not over 1 1/2 mills.* 4. On wages, salaries, commissions and other earned income of individuals, not over 1.25%. 5. On admissions to amusements, except motion picture theaters, not over 10%. 6. On retail sales of tangible personal property, not over 2%. 7. Flat rate occupation taxes, not over $ Occupational privilege taxes, not over $52.00 / $47.00 Municipal - $5.00 School 9. On transfer of real property, not over 1%. *Limited to rates in effect November 30, 1988 by the Local Tax Reform Act. Alternatively, the Municipality may levy a real property transfer tax not in excess of 1% on certain real estate transfers pursuant to the Act of May 5, 1981, as amended by Act No. 77 of 1986, the "State Realty Transfer Tax Act". When two political subdivisions impose any one of the above taxes on the same person, subject, business, transaction or privilege, located within both political subdivisions, then the tax levied during the time of such duplication shall be one-half of the rate above limited. The aggregate amount of all taxes imposed under this Act may not exceed 12 mills times the total market value of real estate in the Municipality as certified by the State Tax Equalization Board. A-3

22 LIMITATION ON MERCANTILE AND BUSINESS PRIVILEGE TAXES In November, 1988, the Pennsylvania General Assembly enacted S.B. 442, known as "The Local Tax Reform Act" (Act No , approved December 13, 1988, codified at 72 P.S et seq. (the "Tax Act")). The general purposes of the Tax Act were to reduce local dependency on ad valorem real estate taxes by providing income tax alternatives, and to eliminate "nuisance" taxes. As a result of provisions within the Tax Act for the levying of real estate taxes at non-uniform rates between residential/farm and business properties, its full implementation was conditioned on voter approval of an amendment to the Pennsylvania Constitution. On May 16, 1989, the voters of Pennsylvania defeated this amendment. Accordingly, most observers concluded that the entire Tax Act was null and void. However, in Borough of West Chester v. Taxpayers of the Borough of West Chester, 129 Pa. Comm. 545, 566 A.2d 373 (1989), taxpayers challenged the validity of a newly levied tax on gross business receipts on the grounds that new, or increased rates of, mercantile and business taxes based upon the gross receipts of businesses, had been abolished by 533 of the Tax Act. In ruling in favor of the taxpayers, the Commonwealth Court found that 533 explicitly states that it applies after November 30, 1988, notwithstanding any other provisions of the Tax Act -- including the effective date provisions of 3112 that required the constitutional amendment. The Commonwealth Court has confirmed its reasoning in two subsequent cases. See, Penn Traffic Company v. City of Dubois, 626 A.2d 1257 (1993) appeal denied, 637 A.2d 294, Burrell School District v. City of Lower Burrell, 147 Pa. Comm. 471, 608 A.2d 605 (1992), appeal denied, 533 Pa. 602, 617 A.2d 1275 (1992). Notwithstanding these decisions, the Commonwealth Court has since held that new or increased business privilege and mercantile taxes imposed at a flat rate are not prohibited by the Tax Act. Smith and McMaster, P.C. v. Newtown Borough, 669 A.2d 452 (1995). Therefore, pursuant to 553 of the Tax Act, as interpreted by the Commonwealth Court, only mercantile and business privilege taxes (based on gross receipts) at rates which had been levied on or before November 30, 1988 are preserved. No new or increased taxes of this type may be levied. Current Tax Rates Municipality Taxes: Real Estate Tax (Mills) Allegheny County (Mills) Real Estate Transfer 1.5% Earned Income 1.25% LST $47.00 Mercantile Tax: Retail 1.50% 5.44 mills 4.73 mills Wholesale 1.00% Business Privilege 1 mill School District Taxes: Real Estate Tax (Mills) mills Real Estate Transfer.5% Earned Income.5% LST $5.00 Mercantile Tax: Retail 1.5% Wholesale 1.0% Business Privilege 1 mill Source: Municipality of Penn Hills A-4

23 4B MAJOR REAL ESTATE TAXPAYERS Largest Taxpayers: 2015 Taxpayer Principal Business Assessed Value Penn Hills Associates Giant Eagle (Rodi Road) $7,159,600 St. Margaret Nursing Home Corp. Nursing Home 5,480,600 Associated Investors Investment Company 5,341,700 MarieSten LP Apartments 3,839,200 Seneca Hills Assisted Living Assisted Living 3,723,700 Antestenis Lesia Integrity Living Trust Office Park 3,625,000 Kappa Frankstown Associates LLC Real Estate (Walgreens) 3,372,900 Grainger Aid Propco LLC Assisted Living 3,298,900 East Side Commons LP Office Furniture Warehouse 3,200,000 Technology Properties 1 LLC Office Building 3,000,000 7BSource: Municipality of Penn Hills. $42,041,600 REAL ESTATE VALUATION HISTORY Below are the real property values in the Municipality for the years 2002 through Assessed Market 4BYear Value Value Ratio 2002 $1,532,571,000 $1,532,571, % ,521,876,000 1,521,876, % ,514,723,000 1,514,723, % ,528,555,000 1,528,555, % ,525,382,110 1,525,382, % ,519,155,360 1,519,155, % ,520,377,310 1,520,377, % ,516,726,259 1,516,726, % ,516,740,735 1,516,740, % ,529,967,410 1,529,967, % ,509,011,500 1,509,011, % ,592,718,365 1,592,718, % ,586,179,645 1,586,179, % Source: Municipality of Penn Hills As of 12/31/2014. A-5

24 REAL ESTATE TAX COLLECTION HISTORY Years Ending December Assessed Valuation $1,586,179,645 $1,592,718,365 $1,509,011,500 $1,529,967,410 $1,516,740,735 Millage 5.4 mills 5.4 mills 5.6 mills 5.3 mills 5.1 mills Levy $8,635,162 $8,670,759 $8,450,464 $8,185,326 $7,735,378 Current Collection $7,741,767 $7,805,908 $7,497,433 $7,200,226 $6,914,039 Delinquent Taxes $660,919 $752,392 $660,564 $620,854 $565,703 Total Collections $8,402,686 $8,558,300 $8,157,997 $7,821,080 $7,479,742 % Current Collections to Current Levy 89.65% 90.03% 88.72% 88.0% 89.4% % Total Collections to Current Levy 97.31% 98.70% 96.54% 95.6% 96.7% Source: Municipality of Penn Hills. Five Year Average of % Current Collected to Current Levy % Five Year Average of % Total Collection to Current Levy % LARGEST EMPLOYERS 2015 Number of Employer Principal Business Employees Penn Hills School District Education 796 Quality Service Cleaning Service 530 Municipality of Penn Hills Government 264 Home Depot Home Improvement Center 185 Paula Teacher & Assoc. Hospital Equipment 204 Turner Dairy Farms Dairy 171 Giant Eagle Markets Grocery 155 Hickman Foods Grocery 130 Pennysaver Publication 71 Source: Employers and Municipality Officials. A-6

25 MUNICIPALITY OF PENN HILLS INDEBTEDNESS Borrowing Capacity The borrowing capacity of the Municipality is regulated by the Debt Act, which establishes the debt limits for local government units, including school districts and municipalities. Under the Debt Act, the Municipality may incur debt in an unlimited amount when such debt is approved by a majority of its voters at a municipal, general or primary election. Nonelectoral debt, or debt not approved by the Municipality's electorate, may not exceed 250% of the Municipality's borrowing base, as that term is defined in the Debt Act, after the deduction of any authorized exclusion from nonelectoral debt, as calculated below. The aggregate net lease rental debt plus net nonelectoral debt incurred on behalf of the Municipality may not exceed 350% of the Municipality's borrowing base after the deduction of authorized exclusions from lease rental and nonelectoral debt. BORROWING BASE MUNICIPALITY OF PENN HILLS (as of October 19, 2015) Fiscal Year: 12/31/ /31/ /31/2014 All monies received: $39,840,094 $39,875,027 $40,878,086 Deductions: 1. Subsidies or reimbursements from U.S.A. or Commonwealth of Pennsylvania measured by the cost of, or given or paid on ($0) ($0) ($0) account of projects financed by debt. 2. Project revenues, rates, receipts, user charges, special assessments and special levies pledged or budgeted for specific self-liquidating debt or for payments under leases, ($0) ($0) ($0) guaranties, subsidy contracts or other forms of agreements which could constitute lease rental debt except that such payments are payable solely from such sources. 3. Interest from funds pledged or budgeted for the payment or security of outstanding debt ($0) ($0) ($0) and interest on bond or note proceeds, if similarly pledged. 4. Grant and gifts in aid of or measured by the construction or ($0) ($0) ($0) acquisition of specific projects. 5. Proceeds from disposition of capital assets and other nonrecurring items including bond or note proceeds not considered income under ($0) ($0) ($0) generally accepted municipal accounting principles. Total Deductions ($0) ($0) ($0) Total Revenues $39,840,094 $39,875,027 $40,878,086 Total Net Revenues $120,593,207 The Borrowing Base (i.e. the annual arithmetic average of the total revenues for the three full fiscal years) is $40,197,736. A-7

26 5B MUNICIPALITY OF PENN HILLS Allegheny County, Pennsylvania DEBT STATEMENT PURSUANT TO SECTION 8110 LOCAL GOVERNMENT UNIT DEBT ACT (As of October 21, 2015) 1. Gross Indebtedness of the Municipality is: A. Electoral and Nonelectoral 5Bi. Electoral $ 0.00 ii. Non-Electoral G.O. Bonds, Series A of ,275, G.O. Bonds (Federally Taxable), Series B of ,230, G.O. Bonds, Series C of ,730, G.O. Bonds, Series of ,970, G.O. Bonds, Refunding Series A of ,665, G.O. Bonds, Refunding Series B of ,330, G.O. Notes, (Federally Taxable) Series A of ,365, G.O. Bonds, Refunding Series of ,750, G.O. Notes, Federally Taxable, Refunding Series C of ,363, G.O. Notes Tax-Exempt Refunding Series D of ,937, G.O. Notes, Series of , G.O. Bonds, Series B of , G.O. Bonds, Series B of , Total Electoral and Nonelectoral $51,173, B. Lease Rental Debt PA Finance Auth., Gtd. Revenue Bonds, Series A of 2004 $1,006, PA Finance Auth., Gtd. Revenue Bonds, Series B of ,271, PA Finance Auth., Gtd. Revenue Bonds, Series B of ,836, PA Finance Auth., Gtd. Revenue Bonds, Series B of ,132, Total Lease Rental Debt $11,246, C. Total Gross Incurred Debt $62,419, II. CREDITS & EXCLUSIONS Less: 1. Sinking funds, reserve accounts, Bond proceeds $ Self-liquidating and self-sustaining Debt (Excluded under Sections 8024,8025,8026) ($ 8,622,099.94) 3. Debt No longer outstanding after Settlement of the debt being incurred) G.O. Bonds, Refunding Series of 2010 ($9,370,000.00) III. The Aggregate Principal Amount of Bonds or Notes being issued G.O. Bonds, Refunding Series of 2015 (This Issue) $9,655, IV. Net Indebtedness Nonelectoral $51,458, Lease Rental $11,246, Nonelectoral plus Lease Rental $62,704, V. The Borrowing Base is $40,197, Applicable debt limitation: (a) Nonelectoral (250% of the borrowing base: 300% for counties) $100,494, (b) Nonelectoral plus lease rental (350% of the borrowing base; 400% for counties) $140,692, A-8

27 MUNICIPALITY OF PENN HILLS BONDED INDEBTEDNESS Gross Principal DIRECT DEBT: Outstanding General Obligation Bonds, Refunding Series of 2015 (This Issue) $9,655, General Obligation Bonds, Series A of ,275, General Obligation Bonds (Federally Taxable), Series B of ,230, General Obligation Bonds, Series C of ,730, General Obligation Notes, Series of ,970, General Obligation Bonds, Refunding Series A of ,665, General Obligation Bonds, Refunding Series B of ,330, Federally Taxable General Obligation Notes, Series A of ,365, General Obligation Bonds, Refunding Series of ,380, General Obligation Notes, Federally Taxable Refunding Series C of ,363, General Obligation Notes, Tax-Exempt Refunding Series D of ,937, PA Finance Auth., Gtd. Revenue Bonds, Series A of ,006, PA Finance Auth., Gtd. Revenue Bonds, Series B of ,271, PA Finance Auth., Gtd. Revenue Bonds, Series B of ,836, PA Finance Auth., Gtd. Revenue Bonds, Series B of ,132, G.O. Notes, Series of , G.O. Bonds, Series B of , G.O. Bonds, Series B of , Total Direct Debt $62,704, Less Self-Supporting Debt: Total Self-Supporting Debt ($ 8,622,099.94) TOTAL NET DIRECT DEBT $54,082, OVERLAPPING DEBT: Municipality Share (100%) of Penn Hills School District $167,355, Municipality Share (1.97% Based on Assessed Value) of Allegheny County General Obligation Debt (1) 16,845, TOTAL OVERLAPPING DEBT $184,200, TOTAL NET DIRECT AND OVERLAPPING DEBT $238,283, DEBT RATIOS:(2) Net Direct Debt to Market Value 3.40% Net Direct Debt to Assessed Valuation 3.40% Net Direct Debt Per Capita $1, Net Direct and Overlapping Debt to Market Value 15.02% Net Direct and Overlapping Debt to Assessed Valuation 15.02% Net Direct and Overlapping Debt Per Capita $6, (1) 1.97% on ratio of 2014 County ($80,504,529,273) and Municipality assessed values. Total Net County Debt as of September 2015 was $855,118,750. (2) 2014 Market Value = $1,586,179, Assessed Valuation = $1,586,179,645 Population 2010 = 34,311 Source: Municipality's Financial Statements, Allegheny County and Controllers offices. A-9

28 APPENDIX B MUNICIPALITY OF PENN HILLS FINANCIAL STATEMENTS

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30 MUNICIPALITY OF PENN HILLS (Allegheny County, Pennsylvania) GENERAL FUND BUDGETED REVENUE 2015 Budget Beginning Balance: General Fund $6,339, Sewer Usage Fund 2,977, Highway Aid Fund 129, Capital Improvements Fund 794, Total Beginning Balance $10,240, Revenues: General Fund $27,926, Sewer Usage Fund 12,497, Highway Aid Fund 910, Capital Improvements Fund 202, Total Revenues $41,536, Total Revenues and Beginning Balance $51,776, Expenditures: General Fund $32,464, Sewer Usage Fund 14,727, Highway Aid Fund 1,039, Capital Improvements Fund 997, Total Expenditures $49,228, Fund Balance January 1 $10,240, Fund Balance December 31 $2,548, Source: Municipality Annual 2015 Budget Report. B-1

31 MUNICIPALITY OF PENN HILLS (Allegheny County, Pennsylvania) BALANCE SHEET TOTAL GOVERNMENTAL FUNDS DECEMBER 31, 2014* 2013* 2012* 2011* 2010* Assets: Cash and cash equivalents $8,518,915 $8,024,593 $7,045,533 $5,771,988 $5,672,553 Investments ,415 74,415 - Restricted assets: Cash held in escrow Receivables (net, where applicable, of Allowance for uncollectibles): Taxes Community development loans Other Due from other governmental agencies Due from other funds Prepaid items Total Assets $8,518,915 $8,024,593 $7,119,948 $5,846,403 $5,672,553 Liabilities and Fund Balance: Liabilities: Accounts payable Accrued liabilities Due to other governmental agencies Due to other funds Deferred revenues Returnable deposits held in escrow Total Liabilities Fund Balance: Reserved for encumbrances Prepaid items Liquid Fuels Tax Projects $95,232 $41,419 $149,166 $ 199,433 - Rehabilitation 30,226 30,211 30,194 30,179 - HUD Projects 1,990 1,388 1,519 14,025 - Public Safety 17,446 15,594 41, ,611 - Library Services 497, , , ,412 - Capital Projects 996, , , ,262 - Encumbrances Unreserved, reported in: General Fund 6,880,020 7,235,373-4,662,481 $3,502,259 Capital Projects Funds ,386,291 Special Revenue Funds ,003 Debt Service Fund Total Fund Balance $8,518,915 $8,024,593 $7,119,948 $5,846,403 $5,672,553 Total Liabilities and Fund Balance $8,518,915 $8,024,593 $7,119,948 $5,846,403 $5,672,553 Source: Municipality of Penn Hills Annual Audit and Financial Reports. *(Cash Basis) B-2

32 MUNICIPALITY OF PENN HILLS (Allegheny County, Pennsylvania) STATEMENT OF REVENUES, EXPENDITURES AND CHANGE IN FUND BALANCE - ALL GOVERNMENTAL FUND TYPES 2014* 2013* 2012* 2011* 2010* Revenues: Taxes $22,789,233 $22,918,304 $21,443,422 $19,736,816 $19,154,747 Licenses and Permits 961, , , , ,477 Fines and forfeits 88, , , , ,411 Intergovernmental revenues 3,167,557 2,900,670 3,502,795 4,048,921 4,482,518 Charges for services 1,923,214 2,133,414 2,192,351 1,973,976 1,979,617 Interest and rent 54,106 53,439 54,588 73,553 79,889 Other 96,646 19,352 44,979 88,818 30,973 Total Revenues $29,080,326 $29,054,021 $28,303,173 $26,931,022 $26,664,632 Expenditures: Current: General Government $3,003,634 $2,780,733 $2,546,582 $2,618,122 $2,159,502 Public Safety 13,575,517 12,629,582 11,929,669 11,978,074 10,315,431 Highways and streets 4,481,895 4,068,588 4,188,686 3,590,412 3,601,938 Sanitation 2,421,743 2,261,689 2,220,926 2,235,351 2,599,097 Culture Recreation 1,902,401 1,925,204 1,871,982 1,856,483 1,760,980 Community development 523, , , , ,323 Capital Projects 61, , ,129 1,326,462 3,996,161 Debt Service: Principal retirement 9,815,346 6,029,626 5,697,928 4,486,241 4,148,000 Bond Issue Costs 294, , ,307 Interest 1,183,025 1,620,078 1,706,413 1,907,670 1,853,042 Total Expenditures Paid $37,262,485 $32,138,700 $30,963,988 $30,842,532 $31,263,781 Excess (Deficiency) of Revenues Over Expenditures ($8,182,159) ($3,084,679) ($2,660,815) ($3,911,510) ($4,599,149) Other Financing Sources (Uses): Proceeds from Issuance of bonds Proceeds from Note payable $ 123,234 Proceeds from refunding bonds $18,860, $ 1,990,000 2,385,000 Deposit to Refunded Bond Esc. Agt. (14,171,493) - - (1,864,445) (2,222,693) Proceeds from Sale of Assets Issuance discounts Refunds $66,557 $63,300 $43,398 63,377 29,077 Operating Transfers in 8,370,910 7,820,763 7,779,196 6,748,497 7,257,181 Operating Transfers out (4,449,493) (3,894,739) (3,887,234) (2,852,069) (3,025,776) Total Other Financing Sources(Uses) $8,676,481 $3,989,324 $3,934,360 $4,085,360 $4,546,023 Net Change in Fund Balance $494,322 $904,645 $1,273,545 $173,850 ($53,126) Fund Balance, at beginning of year $8,024,593 $7,119,948 $5,846,403 $5,672,553 $5,726,679 Fund balance at end of year $8,518,915 $8,024,593 $7,119,948 $5,846,403 $5,672,553 Source: Municipality of Penn Hills Annual Audit and Financial Reports. *(Cash Basis) B-3

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