REOFFERING CIRCULAR Book-Entry Only RATINGS: See “Ratings of the Reoffered Bonds” herein At the time of original issuance and delivery of the Reoffered Bonds, Bond Counsel delivered its opinion (the “Original Opinion”) to the effect that, as of the date of issuance of the Reoffered Bonds, under then existing law, and assuming compliance with certain requirements of the Internal Revenue Code of 1986, as amended (the “Code”) and covenants regarding the use, expenditure and investment of proceeds of the Reoffered Bonds, interest on the Reoffered Bonds would be excluded from gross interest of the owners of the Reoffered Bonds for federal income tax purposes. The Original Opinion has not been updated or reissued in connection with the remarketing of the Reoffered Bonds. On September 1, 2010, Bond Counsel will deliver an opinion to the effect that the remarketing of the Reoffered Bonds will not in and of itself adversely affect the exclusion of interest on the Reoffered Bonds from gross income for purposes of federal income taxation. Bond Counsel will not express an opinion regarding the current status of such interest for federal income tax purposes. See “Tax Matters” herein. $25,000,000 THE PITTSBURGH WATER AND SEWER AUTHORITY $10,000,000 Water and Sewer System Subordinate Revenue Refunding Bonds, Series C-1A of 2008 (Term Mode) (CUSIP 725304 RH4) Price: 100% Term Rate: 0.45% $10,000,000 Water and Sewer System Subordinate Revenue Refunding Bonds, Series C-1B of 2008 (Term Mode) (CUSIP 725304 RJ0) Price: 100% Term Rate: 0.45% $5,000,000 Water and Sewer System Subordinate Revenue Refunding Bonds, Series C-1C of 2008 (Term Mode) (CUSIP 725304 RK7) Price: 100% Term Rate: 0.45% Dated: Date of Original Issuance Mandatory Tender Date: September 1, 2011 Due: September 1, 2035 The Pittsburgh Water and Sewer Authority (the “Authority” or “PWSA”) is reoffering its (Variable Rate Demand) Water and Sewer System Subordinate Revenue Refunding Bonds, Series C-1 of 2008 (Term Mode) (the “Series 2008C-1 Bonds”). A portion of the Series 2008C-1 Bonds will be reoffered in three sub-series consisting of $10,000,000 Water and Sewer System Subordinate Revenue Refunding Bonds, Series C-1A of 2008 (Term Mode) (the “Series 2008C-1A Bonds”), $10,000,000 Water and Sewer System Subordinate Revenue Refunding Bonds, Series C-1B of 2008 (Term Mode) (the “Series 2008C-1B Bonds”) and $5,000,000 Water and Sewer System Subordinate Revenue Refunding Bonds, Series C-1C of 2008 (Term Mode) (the “Series 2008C-1C Bonds” and together with the Series 2008C-1A Bonds and the Series 2008C-1B Bonds, the “Reoffered Bonds”). See “REMARKETING PLAN.” The Reoffered Bonds are dated as of the date of the original issuance, June 12, 2008 (“Date of Original Issuance”) and were originally issued pursuant to the Subordinate Trust Indenture, dated as of July 15, 1995, as amended and supplemented (the “Subordinate Indenture”), by and between the Authority and The Bank of New York Mellon Trust Company, N.A., as Trustee (in such capacity, the “Trustee”). The Reoffered Bonds will be issued in book-entry form registered in the name of Cede & Co., the nominee of The Depository Trust Company, New York, New York (“DTC”). The payment of the principal of and premium, if any, and interest on the Reoffered Bonds will be made by the Trustee directly to Cede & Co., as nominee for DTC, a registered owner of the Reoffered Bonds, to be subsequently disbursed to DTC Participants and thereafter to beneficial owners of the Reoffered Bonds, all as described herein. Purchasers of the Reoffered Bonds will not receive physical delivery of certificates representing their ownership interest in the Reoffered Bonds. See “BOOK-ENTRY ONLY SYSTEM”. The Reoffered Bonds will initially be issued in fully registered form in minimum denominations of $5,000. The Reoffered Bonds will be reoffered in the Term Mode and are subject to mandatory tender on September 1, 2011 (the “Term Mode Date”). The Reoffered Bonds will bear interest at the applicable Term Rates established by the Remarketing Agent, payable on March 1, 2011 and on each September 1 and March 1 thereafter. This Reoffering Circular describes the terms and provisions of the Reoffered Bonds while in the Term Mode only. The Reoffered Bonds are limited obligations of the Authority payable from the Receipts and Revenues (as defined in the Subordinate Indenture) pledged thereto and subordinate to the pledge thereon securing the First Lien Bonds issued pursuant to the provisions of the First Lien Indenture, as described herein and on a parity with the other Subordinate Bonds issued pursuant to the provisions of the Subordinate Indenture, as described herein. Each sub-series of Reoffered Bonds as specified below is also payable from funds drawn by the Trustee under separate irrevocable direct pay letters of credit (collectively, the “Letters of Credit”) issued by: NORTHWEST SAVINGS BANK ESB BANK WASHINGTON FINANCIAL BANK (formerly Washington Federal Savings Bank) (Series 2008C-1A Bonds) (Series 2008C-1B Bonds) (Series 2008C-1C Bonds) The Letters of Credit will each be confirmed by irrevocable confirming letters of credit (the “Confirming Letters of Credit”) issued by FEDERAL HOME LOAN BANK OF PITTSBURGH The Letters of Credit and the Confirming Letters of Credit will expire on November 9, 2011. The scheduled payment of principal of and interest on the Reoffered Bonds when due is guaranteed under a municipal bond insurance policy originally delivered on June 12, 2008 by ASSURED GUARANTY MUNICIPAL CORP. (FORMERLY KNOWN AS FINANCIAL SECURITY ASSURANCE INC.) See “BOND INSURANCE”. THE REOFFERED BONDS ARE LIMITED OBLIGATIONS OF THE AUTHORITY PAYABLE FROM THE RECEIPTS AND REVENUES (AS DEFINED IN THE INDENTURE) PLEDGED THERETO. NEITHER THE CITY OF PITTSBURGH NOR THE COMMONWEALTH OF PENNSYLVANIA NOR ANY POLITICAL SUBDIVISION (OTHER THAN THE AUTHORITY) THEREOF IS OBLIGATED TO PAY THE PRINCIPAL, REDEMPTION PRICE OF, OR INTEREST ON, THE REOFFERED BONDS, AND NEITHER THE FULL FAITH, CREDIT NOR TAXING POWER OF THE CITY OF PITTSBURGH OR THE COMMONWEALTH OF PENNSYLVANIA OR ANY OTHER POLITICAL SUBDIVISION (OTHER THAN THE AUTHORITY) THEREOF IS PLEDGED TO SUCH PAYMENT. THE AUTHORITY HAS NO TAXING POWER. The Reoffered Bonds are reoffered subject to the receipt of the approving legal opinion of Pepper Hamilton LLP, Bond Counsel. Certain legal matters will be passed upon for the Authority by Thorp, Reed & Armstrong, LLP. The Authority expects that delivery of the Reoffered Bonds in definitive form will be made in New York, New York, on or about September 1, 2010. BOENNING & SCATTERGOOD, INC. Dated: August 27, 2010 THE PITTSBURGH WATER AND SEWER AUTHORITY Dan Deasy, Chairman Robert P. Jablonowski, Vice Chairman Scott Kunka, Treasurer Henry C. Blum, Secretary Margaret L. Lanier, Assistant Secretary/Assistant Treasurer Patrick Dowd, Member Michael P. Kenney, Executive Director AUTHORITY COUNSEL Thorp, Reed & Armstrong, LLP Pittsburgh, Pennsylvania AUTHORITY CONSULTING ENGINEER Chester Engineers Pittsburgh, Pennsylvania FINANCIAL ADVISOR PNC Capital Markets LLC Pittsburgh, Pennsylvania BOND COUNSEL Pepper Hamilton LLP Pittsburgh, Pennsylvania REMARKETING AGENT Boenning & Scattergood, Inc. Pittsburgh, Pennsylvania TRUSTEE AND PAYING AGENT The Bank of New York Mellon Trust Company, N.A. Pittsburgh, Pennsylvania LETTER OF CREDIT PROVIDERS For the Series 2008C-1A Bonds: For the Series 2008C-1B Bonds: For the Series 2008C-1C Bonds: Northwest Savings Bank ESB Bank Washington Financial Bank (Formerly Washington Federal Savings Bank) COUNSEL TO LETTER OF CREDIT PROVIDERS Cohen & Grigsby, P.C. Pittsburgh, Pennsylvania CONFIRMING LETTER OF CREDIT PROVIDER Federal Home Loan Bank of Pittsburgh BOND INSURER Assured Guaranty Municipal Corp. (formerly known as “Financial Security Assurance Inc.”) No dealer, broker, salesperson or other person has been authorized by the Authority to give any information or to make any representation in connection with the Reoffered Bonds or the matters described herein, other than those contained in this Reoffering Circular, and, if given or made, such other information or representation must not be relied upon as having been authorized by any of the foregoing. This Reoffering Circular does not constitute an offer to sell or the solicitation of an offer to buy nor shall there be any sale of the Reoffered Bonds by any person in any jurisdiction in which it is unlawful for such person to make such offer, solicitation or sale. All quotations from and summaries and explanations of provisions of laws herein do not purport to be complete and reference is made to said laws for full and complete statements of their provisions. This Reoffering Circular is not to be construed as a contract or agreement between the Authority and the purchasers or holders of any of the Reoffered Bonds. Any statements made in this Reoffering Circular involving matters of opinion, whether or not expressly so stated, are intended merely as opinion and not as representations of fact. The order and placement of materials in this Reoffering Circular, including the Appendices, are not to be deemed to be a determination of relevance, materiality or importance, and this Reoffering Circular, including the Appendices, must be considered in its entirety. The Authority has deemed this Reoffering Circular to be final for the purposes of Securities and Exchange Commission Rule 15c2-12(b)(3) promulgated under the Securities Exchange Act. Assured Guaranty Municipal Corp. (formerly known as Financial Security Assurance Inc.) (“AGM”) makes no representation regarding the Reoffered Bonds or the advisability of investing in the Reoffered Bonds. In addition, AGM has not independently verified, makes no representation regarding, and does not accept any responsibility for the accuracy or completeness of this Reoffering Circular or any information or disclosure contained herein, or omitted herefrom, other than with respect to the accuracy of the information regarding AGM supplied by AGM and presented under the heading “Bond Insurance” and “Appendix F –Form of Municipal Bond Insurance Policy.” The Remarketing Agent has reviewed the information in this Reoffering Circular in accordance with, and as a part of, its responsibilities to investors under federal securities law, as applied to the facts and circumstances of this transaction, but the Remarketing Agent does not guarantee the accuracy or completeness of such information. THE REOFFERED BONDS HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, NOR HAS THE SUBORDINATE INDENTURE BEEN QUALIFIED UNDER THE TRUST INDENTURE ACT OF 1939, IN RELIANCE UPON EXEMPTIONS CONTAINED IN SUCH ACTS. THE REGISTRATION OR QUALIFICATION OF THE REOFFERED BONDS IN ACCORDANCE WITH APPLICABLE PROVISIONS OF THE SECURITIES LAWS OF THE STATES, IF ANY, IN WHICH THE REOFFERED BONDS HAVE BEEN REGISTERED OR QUALIFIED AND THE EXEMPTION FROM REGISTRATION OR QUALIFICATION IN CERTAIN OTHER STATES CANNOT BE REGARDED AS A RECOMMENDATION THEREOF. NEITHER THESE STATES NOR ANY OF THEIR AGENCIES HAVE PASSED UPON THE MERITS OF THE REOFFERED BONDS OR THE ACCURACY OR COMPLETENESS OF THIS REOFFERING CIRCULAR. ANY REPRESENTATION TO THE CONTRARY MAY BE A CRIMINAL OFFENSE. TABLE OF CONTENTS INTRODUCTION.......................................................................................................................................................1 THE AUTHORITY.....................................................................................................................................................2 DEBT OF THE AUTHORITY...................................................................................................................................3 PLAN OF FINANCE...................................................................................................................................................3 THE REOFFERED BONDS......................................................................................................................................4 REGISTRATION, TRANSFER AND EXCHANGE OF THE REOFFERED BONDS.......................................8 BOOK-ENTRY ONLY SYSTEM..............................................................................................................................9 SECURITY FOR THE REOFFERED BONDS......................................................................................................11 LETTERS OF CREDIT............................................................................................................................................12 BOND INSURANCE.................................................................................................................................................13 FLOW OF FUNDS....................................................................................................................................................15 RATE COVENANT..................................................................................................................................................16 INTEREST RATE SWAP AGREEMENTS...........................................................................................................17 CERTAIN BONDHOLDERS’ RISKS.....................................................................................................................18 LITIGATION............................................................................................................................................................21 TAX MATTERS........................................................................................................................................................21 THE TRUSTEE.........................................................................................................................................................21 LEGAL OPINIONS..................................................................................................................................................22 INDEPENDENT AUDITORS..................................................................................................................................22 RATINGS OF THE REOFFERED BONDS...........................................................................................................22 CONTINUING DISCLOSURE; DISCLOSURE DISSEMINATION..................................................................22 REMARKETING......................................................................................................................................................24 FINANCIAL ADVISOR...........................................................................................................................................25 CERTAIN RELATIONSHIPS.................................................................................................................................25 MISCELLANEOUS..................................................................................................................................................26 APPENDIX A – Certain Information Regarding the Authority and Water and Sewer System APPENDIX B – Summary of the Indentures APPENDIX C – Authority Financial Statements as of December 31, 2009 and December 31, 2008 APPENDIX D – Certain Information Regarding the City of Pittsburgh APPENDIX E – Consulting Engineer’s Annual Report as of March 2010 APPENDIX F – Form of Municipal Bond Insurance Policy APPENDIX G – Information Regarding the Letter of Credit Banks APPENDIX H – Information Regarding the Confirming Letter of Credit Bank APPENDIX I – Summary of the Letters of Credit and Reimbursement Agreements APPENDIX J – Forms of Letters of Credit and Confirming Letter of Credit APPENDIX K – Form of Bond Counsel Opinion i SUMMARY INFORMATION THIS SUMMARY STATEMENT IS SUBJECT IN ALL RESPECTS TO THE MORE COMPLETE INFORMATION CONTAINED IN THIS REOFFERING CIRCULAR AND OFFERING OF THE REOFFERED BONDS TO THE POTENTIAL PURCHASERS IS MADE ONLY BY MEANS OF THIS REOFFERING CIRCULAR. NO PERSON IS AUTHORIZED TO DETACH THIS SUMMARY FROM THE REOFFERING CIRCULAR OR OTHERWISE TO USE THE SAME WITHOUT THE ENTIRE REOFFERING CIRCULAR. Authority....................... The Pittsburgh Water and Sewer Authority (the “Authority” or “PWSA”). Reoffered Term Mode $10,000,000 Water and Sewer System Subordinate Revenue Refunding Bonds, Series C-1A of 2008 Bonds............................ $10,000,000 Water and Sewer System Subordinate Revenue Refunding Bonds, Series C-1B of 2008 $5,000,000 Water and Sewer System Subordinate Revenue Refunding Bonds, Series C-1C of 2008 Date of Bonds............... Date of Original Issuance Denomination............... $5,000 and integral multiples of $5,000 in excess thereof. Maturity........................ September 1, 2035. Interest.......................... Payable on March 1, 2011 and each September 1 and March 1 thereafter. Security......................... The Reoffered Bonds are secured (along with all other bonds issued pursuant to the Subordinate Indenture, certain Periodic Payments due under Qualified Interest Rate Swap Agreements and obligations due under the Reimbursement Agreements (as defined herein)) by a subordinate lien on the Receipts and Revenues of the Authority after payment of the Current Expenses, payment of principal and interest or the First Lien Bonds (as defined herein), and the function of certain reserves together with certain funds held by the Trustee under the Subordinate Indenture as provided therein. (See “SECURITY FOR THE REOFFERED BONDS – Pledge of Subordinate Receipts and Revenues” herein.) Letters of Credit............ Concurrently with the remarketing of the Reoffered Bonds on November 10, 2009, the Authority caused to be delivered to the Trustee the Series 2008C-1A Letter of Credit, the Series 2008C-1B Letter of Credit and the Series 2008C-1C Letter of Credit as described herein. The Trustee will be entitled under each respective Letter of Credit to (a) draw up to the principal amount of the applicable sub-series of Reoffered Bonds to enable the Trustee to pay the principal amount of such sub-series of Reoffered Bonds when due by reason of maturity, redemption or acceleration, plus (b) an amount equal to interest on the applicable sub-series of Reoffered Bonds for up to 195 days (computed at the Maximum Interest Rate), for payment of interest on the Reoffered Bonds when due, or to pay the Purchase Price of such sub-series of Reoffered Bonds tendered to it and, if applicable, not remarketed by the Remarketing Agent. (See “LETTERS OF CREDIT”). Confirming Letters of Concurrently with the remarketing of the Reoffered Bonds on November 10, 2009, the Authority Credit............................ caused the Confirming Letters of Credit to be delivered to the Trustee. If any of the Letter of Credit Banks fail to honor a properly presented draw on, or repudiates, the Letters of Credit, the Trustee will be entitled to draw under the Confirming Letters of Credit in an aggregate amount of $26,625,000.00 which consists of (a) up to $25,000,000 which amount equals the principal amount of the Reoffered Bonds, in order to pay the principal on the Reoffered Bonds when due or upon redemption or acceleration or to pay the portion of the purchase price thereof corresponding to the principal amount under certain tenders to Holders, plus (b) $1,625,000.00 initially, and for so long as the Reoffered Bonds bear interest in the Term Mode Rate which amount will not exceed 195 days’ interest on the principal amount of the Reoffered Bonds computed at 12% per annum. The Confirming Letters of Credit expire on November 9, 2011, unless earlier terminated or extended pursuant to their terms. (See “SECURITY FOR THE REOFFERED BONDS – Confirming Letters of Credit”). Bond Insurance............. The scheduled payment of the principal of and interest on the Reoffered Bonds when due is insured by a municipal insurance policy originally issued on June 12, 2008 by Assured Guaranty Municipal Corp. (formerly known as Financial Security Assurance Inc.) (See “BOND INSURANCE”). Use of Proceeds............ The proceeds of the Reoffered Bonds will be used to pay the Purchase Price of the Reoffered Bonds. ii Redemption................... The Reoffered Bonds are subject to mandatory tender on September 1, 2011. (See “THE REOFFERED BONDS — Redemption Prior to Maturity” herein.) Bond Ratings................ The following rating on the Reoffered Bonds are based solely upon the creditworthiness of the Confirming Bank: Standard & Poor’s: “A-1+” Trustee & Paying Agent................ The Bank of New York Mellon Trust Company, N.A. iii $25,000,000 THE PITTSBURGH WATER AND SEWER AUTHORITY Water and Sewer System Subordinate Revenue Refunding Bonds, Series of 2008C-1 consisting of: $10,000,000 Water and Sewer System Subordinate Revenue Refunding Bonds, Series C-1A of 2008 (Term Mode) $10,000,000 Water and Sewer System Subordinate Revenue Refunding Bonds, Series C-1B of 2008 (Term Mode) and $5,000,000 Water and Sewer System Subordinate Revenue Refunding Bonds, Series C-1C of 2008 (Term Mode) INTRODUCTION The purpose of this Reoffering Circular, which includes this introductory statement, the cover page, the summary information and the Appendices hereto, is to set forth certain information pertaining to The Pittsburgh Water and Sewer Authority (the “Authority” or “PWSA”), a body corporate and politic duly created and existing under the Pennsylvania Municipality Authorities Act, 53 Pa. C.S.A. §5601 et seq. (the “Act”), and the reoffering by the Authority of its $10,000,000 Water and Sewer System Subordinate Revenue Refunding Bonds, Series C-1A of 2008 (Term Mode) (the “Series 2008C-1A Bonds”); $10,000,000 Water and Sewer System Subordinate Revenue Refunding Bonds, Series C-1B of 2008 (Term Mode) (the “Series 2008C-1B Bonds”); and $5,000,000 Water and Sewer System Subordinate Revenue Refunding Bonds, Series C-1C of 2008 (Term Mode) (the “Series 2008C-1C Bonds, and together with the Series 2008C-1A Bonds and the Series 2008C-1B Bonds, the “Reoffered Bonds”). The Reoffered Bonds are being reoffered pursuant to the Subordinate Trust Indenture, dated as of July 15, 1995 (the “Original Subordinate Indenture”), as amended and supplemented by a First Supplemental Subordinate Indenture, dated as of March 1, 1998 (the “First Supplemental Subordinate Indenture”), and a Second Supplemental Subordinate Indenture, dated as of June 1, 2008 (the “Second Supplemental Subordinate Indenture, and an Amending Supplement to the Initial and Second Supplemental Indenture dated as of November 1, 2009 (the “Amending Supplement”), and, together with the Original Subordinate Indenture and the First Supplemental Subordinate Indenture, the “Subordinate Indenture”), by and between the Authority and The Bank of New York Mellon Trust Company, N.A., as Trustee (the “Trustee”). The Reoffered Bonds, together with any other bonds issued under the terms of the Subordinate Indenture are referred to herein as the “Subordinate Bonds”. The Reoffered Bonds are limited obligations of the Authority payable from the Subordinate Receipts and Revenues (as defined herein) pledged thereto (i) subordinate to the pledge thereon securing the first lien bonds (the “First Lien Bonds”) issued pursuant to the provisions of the Trust Indenture, dated as of October 15, 1993, as amended and supplemented by a First Supplemental Indenture, dated as of July 15, 1995, a Second Supplemental Indenture, dated as of March 1, 1998, a Third Supplemental Indenture dated as of March 1, 2002, a Fourth Supplemental Indenture dated as of September 15, 2003, a Fifth Supplemental Indenture dated as of June 1, 2005, a Sixth Supplemental Indenture dated as of March 1, 2007 and a Seventh Supplemental Indenture dated as of June 1, 2008, as amended, including as amended by the Amending Supplement to the Initial First Lien Indenture and the Seventh Supplemental Indenture, dated as of October 15, 2009 and a Second Amendment to the Seventh Supplemental Indenture, dated as of August 1, 2010 (collectively, the “First Lien Indenture”) by and between the Authority and the Trustee and (ii) on a parity with the other Subordinate Bonds issued pursuant to the provisions of the Subordinate Indenture, as described herein. - 1 - The Reoffered Bonds will initially be reoffered in the Term Mode as more fully described herein. The Indenture provides for conversion of the Reoffered Bonds to a Weekly Mode or a Fixed Mode. If converted from the Term Mode to the Weekly Mode or the Fixed Mode, the Reoffered Bonds will be purchased from the existing Bondholders pursuant to the mandatory tender provisions of the Indenture on the conversion date. This Reoffering Circular provides information with respect to the Reoffered Bonds in the Term Mode. All capitalized terms not otherwise defined herein shall have the same meanings ascribed to them in the definitions set forth in APPENDIX B ― “SUMMARY OF THE SUBORDINATE INDENTURE - Definitions of Certain Terms.” All references herein to the Act, the Reoffered Bonds, the Subordinate Indenture, the First Lien Indenture, the Letters of Credit, the Confirming Letters of Credit, the Policy, the Reimbursement Agreements, the Remarketing Agreements and the Continuing Disclosure Agreement are qualified in their entirety by reference to the complete texts thereof. Copies of drafts of such documents may be obtained during the initial offering period from the principal offices of the Remarketing Agent and thereafter, executed copies may be obtained from the Trustee. All statements in this Reoffering Circular involving matters of opinion, estimates, forecasts, projections or the like, whether or not expressly so stated, are intended as such and not as representations of fact. No representation is made that any of such statements will be realized. THIS REOFFERING CIRCULAR PROVIDES CERTAIN INFORMATION CONCERNING THE REOFFERED BONDS PRIOR TO THE TERM MODE DATE, THE DATE ON WHICH AN ALTERNATE LIQUIDITY FACILITY IS DELIVERED, THE DATE ON WHICH A LETTER OF CREDIT EXPIRES, OR A CONVERSION DATE ON WHICH THE RATE MODE IS CHANGED TO A WEEKLY MODE OR FIXED MODE. OWNERS AND PROSPECTIVE PURCHASERS OF THE REOFFERED BONDS SHOULD NOT RELY ON THIS REOFFERING CIRCULAR FOR INFORMATION CONCERNING THE REOFFERED BONDS ON AND AFTER ANY SUCH DATE, BUT SHOULD LOOK TO THE REVISIONS, AMENDMENTS, SUPPLEMENTS OR SUBSTITUTIONS THEREOF FOR INFORMATION CONCERNING THE REOFFERED BONDS ON OR AFTER ANY SUCH DATE. THE AUTHORITY The Authority is a body corporate and politic organized and existing under the Act pursuant to Resolution No. 36 of the Council of the City of Pittsburgh (the “City”), duly enacted on February 6, 1984, approved by the Mayor on February 8, 1984, and effective February 16, 1984. The Secretary of the Commonwealth of Pennsylvania approved the Authority’s Articles of Incorporation and issued a Certificate of Incorporation on February 17, 1984. Articles of Amendment were approved and a Certificate of Amendment was issued by the Pennsylvania Department of State on December 11, 1989, to include, among authorized projects, low head dams and facilities for generating surplus electric power. Articles of Amendment were approved and a Certificate of Amendment was issued by the Pennsylvania Department of State on May 9, 2008, to extend the term of existence of the Authority to May 21, 2045. Under its Articles of Incorporation, the Authority is specifically authorized to acquire, hold, construct, finance, improve, maintain, operate, own and lease, either as lessor or lessee, projects of the following kinds and character: sewers, sewer systems or parts thereof, waterworks, water supply works, and water distribution systems, low head dams and facilities for generating surplus power. The Authority was established in February 1984 by the City for the purpose of assuming responsibility for the operation of the City’s water supply and distribution and wastewater collection systems (the “Water and Sewer System”). Pursuant to a lease and management agreement dated March 29, 1984 between the Authority and the City (the “Lease and Management Agreement”), the Water and Sewer System was leased to the Authority. In 1995, the Lease and Management Agreement was terminated and the Authority was granted an option to acquire the portion of the Water and Sewer System owned by the City pursuant to a Capital Lease Agreement dated as of July 15, 1995 between the Authority and the City (the “Capital Lease Agreement”). (See APPENDIX A — “CERTAIN INFORMATION REGARDING THE AUTHORITY AND WATER AND SEWER SYSTEM ― Capital Lease Agreement with the City of Pittsburgh”.) - 2 - The Water and Sewer System provides water, wastewater collection and transmission service to approximately 250,000 customers. The Water and Sewer System does not include wastewater treatment facilities; such facilities are the responsibility of Allegheny County Sanitary Authority (“ALCOSAN”), a separate and distinct legal entity. Rates and charges established by the Authority are not subject to the approval of any department, board or agency of the Commonwealth of Pennsylvania or the City. See APPENDIX A for a description of the Authority. DEBT OF THE AUTHORITY First Lien Debt In addition to the Reoffered Bonds, the Authority previously issued under the First Lien Indenture seven (7) other series of bonds that have a parity claim to the Receipts and Revenues of the Authority, which together with any additional bonds which are hereafter issued under the First Lien Indenture are referred to herein collectively as the “First Lien Bonds”. Upon issuance of the Reoffered Bonds, the Authority will have $661,230,000 aggregate principal amount of First Lien Bonds Outstanding. Subordinated Debt In addition to the Reoffered Bonds the Authority has outstanding five other series of subordinate revenue bonds issued (“Subordinate Bonds”) pursuant to the Authority’s Subordinate Trust Indenture, dated as of July 15, 1995, as supplemented and amended, by and between the Authority and The Bank of New York Mellon Trust Company, N.A., as successor trustee (the “Subordinate Lien Indenture”) as of September 1, 2010, the Authority had $103,795,000 an aggregate principal amount of Subordinate Bonds Outstanding. In connection with certain outstanding First Lien Bonds and Subordinate Bonds, the Authority has entered into letter of credit and standby purchase agreements, as more fully described under APPENDIX A. The Authority also has other obligations outstanding through the Pennsylvania Infrastructure Investment Authority (“PENNVEST”). See APPENDIX A — “Other Obligations”. PLAN OF FINANCE Remarketing Plan For the Reoffered Bonds The Authority is remarketing the Reoffered Bonds in the Term Mode. On November 10, 2009, (i) Northwest Savings Bank (“Northwest Bank”), issued its irrevocable direct-pay letter of credit providing liquidity and credit support for the Series 2008C-1A Bonds as described herein; (ii) ESB Bank (“ESB Bank”), issued its irrevocable direct-pay letter of credit providing liquidity and credit support for the Series 2008C-1B Bonds as described herein; (iii) Washington Financial Bank, formerly Washington Federal Savings Bank (“Washington Federal”), issued its irrevocable direct-pay letter of credit providing liquidity and credit support for the Series 2008C-1C Bonds as described herein; and (iv) Federal Home Loan Bank of Pittsburgh (the “Confirming Bank”) issued its irrevocable confirming letters of credit. Pursuant to a Remarketing Agreement, by and between the Authority and Boenning & Scattergood, Inc. (the “Remarketing Agreement”), Boenning & Scattergood, Inc. has been appointed Remarketing Agent for the Reoffered Bonds (the “Remarketing Agent”). Estimated Sources and Uses of Funds1 Sources of Funds: Remarketing Proceeds $25,000,000 Uses of Funds: Deposit to Remarketing Proceeds Purchase Account $25,000,000 1 The Authority intends to pay costs related to the reoffering of the Reoffered Bonds from funds on hand. These costs include legal fees, financial advisory fees, ratings, letter of credit fees, printing, and remarketing agent fees. - 3 - Bond Insurance The scheduled payment of the principal of and interest on the Reoffered Bonds when due is insured by a municipal bond insurance policy originally issued on June 12, 2008 by Assured Guaranty Municipal Corp. (formerly known as “ Financial Security Assurance Inc.”) (“AGM”). See “BOND INSURANCE.” THE REOFFERED BONDS General The Reoffered Bonds are dated as of the date of original issuance and will bear interest beginning September 1, 2010. The Reoffered Bonds will initially be issued in fully registered form in the denomination of $5,000 or any integral multiple of $5,000 above such amount. The Reoffered Bonds shall bear interest from the Interest Payment Date to which interest has been paid next preceding the date of authentication, unless the date of authentication (i) is an Interest Payment Date to which interest has been paid, in which event the Reoffered Bonds shall bear interest from the date of authentication, or (ii) is on or prior to the Regular Record Date for the first Interest Payment Date for the Reoffered Bonds, in which event such Reoffered Bonds shall bear interest from the Conversion Date, or (iii) is after a Regular Record Date and on or before the succeeding Interest Payment Date, in which event the Reoffered Bonds shall bear interest from the succeeding Interest Payment Date. Interest on the Reoffered Bonds shall be paid on each Interest Payment Date. Each Reoffered Bond shall bear interest on overdue principal at the rate of 6% per annum during the period such principal is overdue. Both principal and interest shall, however, be payable out of the Receipts and Revenues of the Authority derived from the Water and Sewer System and shall be payable at the designated corporate trust office of the Trustee in lawful money of the United States of America. Principal of and interest payable at Maturity will be payable to the owner of the Reoffered Bonds at the designated trust office of the Trustee upon the surrender for cancellation of the Reoffered Bonds. Notwithstanding the foregoing, interest payable on the Reoffered Bonds on any Interest Payment Date shall accrue from and including the last interest Payment Date on which interest has been paid through and including the day next preceding the next Interest Payment Date. The foregoing notwithstanding, no interest shall accrue on any Reoffered Bonds prior to their date of initial reoffering and delivery or after the maturity thereof or after the redemption date for such Reoffered Bond (provided the redemption price is paid or provided for in accordance with the provisions of the Subordinate Indenture). The Bondholder of any Reoffered Bond purchased following the mandatory tender of such Reoffered Bond shall be entitled to interest on such Reoffered Bond accruing from such mandatory tender date. See “REGISTRATION, TRANSFER AND EXCHANGE OF THE REOFFERED BONDS” and “BOOK- ENTRY ONLY SYSTEM” for a description of provisions relating to the registration, transfer and exchange of the Reoffered Bonds. Rate Modes The Reoffered Bonds shall bear interest at the Weekly Rate, the Fixed Rate or the Term Rate, as described below. The sub-series of the Reoffered Bonds shall initially be reoffered in the Term Mode and may be converted to a Weekly Mode or Fixed Mode, as provided in the Indenture. This Reoffering Circular provides information with respect to the Reoffered Bonds while bearing interest at a Term Rate only. Interest Payment Dates and Computation of Interest Accrual Interest shall be payable in arrears, commencing on March 1, 2011 and on each September 1 and March 1 thereafter. Interest at the Term Rate shall be computed on the basis of a 360-day year of twelve 30 day months. - 4 -