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FORENSIC, LITIGATION & VALUATION SERVICES

FORENSIC INVESTIGATION OF
READING AREA WATER AUTHORITY

APRIL 21, 2017


T ABLE OF C ONTENTS

I. Overview .............................................................................................................................. 3
A. Retention and Scope .................................................................................................... 3
B. Qualifying Language ................................................................................................... 4
II. Background .......................................................................................................................... 5
III. Analysis ................................................................................................................................ 8
A. RAWAs Relationship with Miller Environmental and Mr. Miller ............................ 8
1. Relevant Language in Contracts for Contract Management Services ................. 8
2. Relevant Language in RAWA Contracts with Miller Environmental for Meter
Reading Services ................................................................................................ 15
3. Fees Charged by Miller Environmental to RAWA............................................ 18
B. Waived Fees and Customer Billing Issues ................................................................ 32
1. Olivet Boys and Girls Club ............................................................................. 33
2. Masano Auto Group ........................................................................................... 42
3. Stokesay Castle .................................................................................................. 48
4. City Light Ministries .......................................................................................... 51
5. GoggleWorks ..................................................................................................... 52
6. Mr. Ernie Schlegel ............................................................................................. 56
7. Other Billing Issues............................................................................................ 57
C. Other Matters ............................................................................................................. 63
1. Bond and Other Debt Financing / Capital Projects ............................................ 63
2. RAWA Board Approvals of Cash Disbursements ............................................. 70
D. Recommendations for Additional Analysis .............................................................. 72
IV. Conclusion .......................................................................................................................... 74
A. Miller Environmental ................................................................................................ 74
B. Olivet Boys and Girls Club ....................................................................................... 75
C. Masano Auto Group .................................................................................................. 75
D. Stokesay..................................................................................................................... 75
E. City Light Ministries ................................................................................................. 75
F. GoggleWorks............................................................................................................. 75
G. Ernie Schlegel............................................................................................................ 76
H. Other Unbilled Fees................................................................................................... 76
I. Bond Financing ......................................................................................................... 76
J. Unapproved Disbursements ...................................................................................... 76

L IST OF T ABLES

Table 1. RAWA Expenses for Services Provided by Miller Environmental .......................... 19


Table 2. Miller Environmental Executive Director Invoices January 2015 Contract Hours
by Discipline.............................................................................................................. 21
Table 3. Miller Environmental Executive Director Invoices January 2015 Contract
Calculated Average Hours Charged per Week.......................................................... 22

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Table 4. Miller Environmental Invoices Source Water Detail ............................................. 24


Table 5. Estimate of Potential Unsupported Source Water Hours and Fees Paid to Miller
Environmental ........................................................................................................... 27
Table 6. Stokesay Project Costs .............................................................................................. 49
Table 7. GoggleWorks Unbilled Fire Service Fees ................................................................. 55
Table 8. Evergreen Reported v. Actual ................................................................................ 59
Table 9. Hydrojet Estimated Charges ................................................................................... 61
Table 10. Our City-Reading/Panevino/WFMZ Estimated Charges ........................................ 61
Table 11. Improper Billings Total Estimated Undercharged Fees ......................................... 62
Table 12. Principal and Interest Paid on Debt ........................................................................... 64
Table 13. Interest Expense and Changes in Net Position .......................................................... 64
Table 14. Aggregate Maturities of Long Term Debt, as of December 31, 2015....................... 65
Table 15. Debt Issuance Fees .................................................................................................... 66
Table 16. 2011 Bond Closing Disbursements ........................................................................... 67

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I. OVERVIEW

A. RETENTION AND SCOPE

1. In January 2016, law enforcement authorities recommended to the City of

Readings (the City) new Mayor, Mr. Wally Scott (Mayor Scott), that he meet with forensic

professionals from Baker Tilly Virchow Krause, LLP (Baker Tilly) to address concerns

surrounding the Citys contracting process, as well as construction activity and the costs associated

with the Wastewater Treatment Plant (WWTP). After Baker Tilly met with Mayor Scott and

other city officials, Mayor Scott shared concerns about other areas of operations, including

concerns about the Reading Area Water Authority (RAWA).

2. Per our discussion with Mayor Scott, Baker Tilly offered to perform a preliminary

forensic assessment, at no cost to the City, to address potential issues facing the City, RAWA and

the Reading Parking Authority (RPA), as well as assist in the proper scoping needs. Baker Tilly

met with certain members of RAWAs Board (the RAWA Board), senior management, and

RAWAs former solicitor, Mr. Michael Setley (Mr. Setley), to initiate the preliminary forensic

assessment for RAWA. RAWA provided historical financial statements and other financial and

operational records as a basis to perform our preliminary forensic assessment. We provided the

results of our preliminary forensic assessment to RAWA on April 29, 2016.

3. In August 2016, RAWA issued a request for contract forensic accounting services

to evaluate certain RAWA activities, as well as assess and identify any abnormal financial activity,

including the quantification, cause and consequence (past or present) of such activity.

4. During the October 27, 2016 RAWA Board meeting, Baker Tilly was unanimously

approved to provide the contracted forensic accounting services for RAWA.1

1
RAWA Board meeting minutes, dated October 27, 2016.

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B. QUALIFYING LANGUAGE

5. The analysis and findings herein (the Report) are based upon the documentation

provided to date,2 as well as our experience in performing similar financial analyses and forensic

investigations. While we have no obligation to update this Report for information that comes to

our attention after the date hereof, we reserve the right to do so, and may do so if requested.

Further, to the extent a party issues a response to the analysis and findings contained herein, we

will evaluate any such response and may provide our own response or update our analysis and

findings if deemed appropriate.

6. This Report was prepared for the sole use of RAWA. The publication of,

distribution of, or access to this Report is not intended to, and does not, create any right to rely on

the contents hereof by any other party. Further, nothing contained herein shall be construed to

create third-party beneficiary rights in any other party.

7. We did not audit, review, or compile the underlying accounting data and other

information provided to Baker Tilly in the course of our analysis. We have performed this analysis

based upon the documentation and information available to date, which is of the type typically

relied upon by experts in the field.

2
Throughout this report, we directly quote various e-mails, letters, contracts, etc. All quotes reflect the exact wording
as presented in the source documents, and we have not explicitly identified (i.e., use of [sic]) or corrected misspellings,
improper grammar, etc. Separate from Exhibits 1.0 6.1, Baker Tilly has maintained an appendix of the supporting
documentation considered in preparation of this Report.

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II. BACKGROUND

8. RAWA operates and maintains the Citys water system and promotes the following:

The Water Authority was established on May 20, 1994, and is a body
corporate and politic, organized under the Municipal Authorities act.
The Authority has been incorporated pursuant to appropriate action of
the governing body of the City of Reading, Berks County, Pennsylvania
(the City) and exists under and is governed by the Act. The Authority
has the power to, among other things, acquire, hold, construct, improve,
maintain and operate water filtration plants, trunk lines and water
distribution systems.3

9. During the course of our procedures, we met with the following individuals:

a. Mr. William Murray (Mr. Murray), RAWAs Executive Director;4

b. Ms. Suzanne Ruotolo (Ms. Ruotolo), RAWA Administrator;

c. Ms. Sandra Kieffer (Ms. Kieffer), RAWA Accountant;

d. Ms. Jessica Thomas (Ms. Thomas), RAWA Accounts Payable;

e. Mr. Tony Reynolds (Mr. Reynolds), RAWA Distribution

Superintendent;5

f. Mr. Mike Reider (Mr. Reider) RAWA Watershed Manager; and

g. Mr. Edwin Stock (Mr. Stock), RAWA Interim Solicitor.6

10. Current RAWA management raised concerns with the historic leadership and the

historical interactions with related parties. As part of our analysis, we considered whether the

related parties had the potential to influence management or operating decisions that could cause

3
http://www.readingareawater.com/about-us/.
4
Mr. Murray previously served as RAWAs Interim Executive Director until appointment to his present position on
February 21, 2017. RAWA Board meeting minutes, dated February 21, 2017.
5
Water main break in Reading forces boil-water advisory, THE READING EAGLE, (March 22, 2017),
http://www.readingeagle.com/news/article/water-main-break-in-reading-forces-boil-water-advisory&template=
mobileart.
6
Mr. Stock is a partner of Roland Stock, LLC and was appointed as RAWAs interim solicitor on August 9, 2016.
RAWA Board meeting minutes, dated August 9, 2016.

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one of the parties to be prevented from fully enjoying its own separate interests that naturally

occurs without the influence or pressure that can occur when related parties are involved in

transactions.7 As a result, Baker Tilly focused on several individuals and organizations that could

influence transactions at RAWA as follows:

a. Miller Environmental Inc. (Miller Environmental) and Mr. Dean

Miller (Mr. Miller). Miller Environmental, founded in 19948 by Mr.

Miller, among others,9 is located in Reading, PA, and provides water and

wastewater treatment services, including meter reading and billing services,

dewatering and stabilization, process evaluations, and hauled waste

programs, to municipal and industrial clients on a contract basis.10 Mr.

Miller is the principal/president of Miller Environmental and was the former

Executive Director of RAWA and also served as the Plant Manager. Miller

Environmental also provided meter reading services to RAWA.

b. Mr. Michael Setley (Mr. Setley). Mr. Setley was formerly the solicitor

for RAWA.11 Mr. Setleys role as solicitor of RAWA began as early as

7
One characteristic of related parties, as defined in the Financial Accounting Standards Board Accounting Standards
Codification (ASC 850-10-20) is, Other parties with which the entity may deal if one party controls or can
significantly influence the management or operating policies of the other to an extent that one of the transacting parties
might be prevented from fully pursuing its own separate interests.
8
http://www.miller-env.com/corporate-profile.php.
9
See Exhibit 1.0 Miller Environmentals Proposal for Contract Management Services for the Authoritys Water
Treatment Plant, dated September 12, 2000 at 1 and see Exhibit 1.1 Agreement with Miller Environmental for
Contract Management of Facilities, dated September 22, 2000 at 9; Mr. G. Michael Poyner is the CEO of Miller
Environmental. See Exhibit 1.3 Agreement with Miller Environmental Inc. for Contract Management of Authority,
dated January 29, 2015.
10
See Exhibit 1.3 Agreement with Miller Environmental for Contract Management of Authority, dated January 29,
2015; http://www.miller-env.com/index.php and http://www.miller-env.com/corporate-profile.php.
11
During the July 12, 2016 RAWA Board meeting, the RAWA Board unanimously approved the resignation of Mr.
Setley as RAWAs solicitor effective July 31, 2016. RAWA Board meeting minutes, dated July 12, 2016.

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1995.12 Mr. Setley is a now a partner at Georgeadis Setley and is also a

founding principal of Concord Public Financial Advisors, Inc.13,14

c. Concord Public Financial Advisors, Inc. (Concord) served as the

financial advisor on RAWAs bond financing and Mr. Setley also served as

bond counsel on the bond financing transactions.15 In addition, Mr. Setley

is a founding principal of Concord Financial.16 ,17

d. Cardno/BCM (BCM) and Mr. Tom Weld (Mr. Weld). Mr. Weld is

the consulting engineer for RAWA, who is employed by BCM.

e. Mr. Ernie Schlegel was the former Chairman of the RAWA Board.18

12
The earliest instance that we located a reference of Mr. Setley as RAWAs solicitor was within an article dated April
1995. Penn. Proposal dies slow death, GOLF COURSE NEWS (April 1995) at 8,
http://archive.lib.msu.edu/tic/gcnew/article/1995apr.pdf.
13
http://www.georgeadissetley.com/attorneys/michael_a_setley.
14
http://www.concordpublicfinance.com/professionals.
15
Based upon our review of RAWAs 2003, 2007, 2011, and 2015 bond reports.
16
http://www.georgeadissetley.com/attorneys/michael_a_setley.
17
http://www.concordpublicfinance.com/professionals.
18
Mr. Schlegel resigned from the role of Chairman at the June 14, 2016 workshop. RAWA Board workshop meeting
minutes, dated June 14, 2016.

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III. ANALYSIS

11. The following sections address the various procedures performed in connection

with our analysis and related findings. In general, the subsequent sections address transactions

between RAWA and Miller Environmental (including Mr. Miller), RAWAs decision to waive

fees on behalf of certain customers and failure to properly bill certain customers, RAWAs use of

bond financing, and RAWAs approval of cash disbursements.

A. RAWAS RELATIONSHIP WITH MILLER ENVIRONMENTAL AND MR. MILLER

12. In September 2000, Miller Environmental began providing RAWA contracted

management services. Over the years, that relationship expanded to include executive director

services, as well as providing meter reading services.

1. Relevant Language in Contracts for Contract Management Services

13. On September 12, 2000, Miller Environmental submitted a proposal to provide

contract management services to RAWAs water treatment plant (September 12, 2000 Proposal).

The proposal submitted by Miller Environmental referenced a September 8, 2000 meeting at which

the parties purportedly discussed the scope of services requested and a job description for the

management position sought by RAWA.19 Specifically, the proposal, outlining RAWAs

requirements, stated, We have determined that the proposed manager must have a Class A, Type

1 water operators certificate to avoid conflict with certified subordinates which would question

technical decisions made by an individual who does not possess the required level of

certification.20 The September 12, 2000 Proposal also noted, The proposed manager must be a

19
We have not obtained a copy of the Request for Proposal and have also not obtained any evidence that demonstrates
other contractors submitted bids to provide services to RAWA.
20
See Exhibit 1.0 September 12, 2000 Proposal.

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local Berks County resident and must be able to respond to emergencies and after hour requests.

Additionally, the proposal also noted, Finally, we have determined that the successful bidder must

have a local support staff that can meet the aforementioned requirement to fill in during any

unexpected absence of primary manager.21 Based on its submitted proposal, Miller

Environmental expected to provide all of these services to RAWA.

14. The September 12, 2000 Proposal also highlighted that Miller Environmental

operated and maintained 55 other water and wastewater treatment plants in Pennsylvania and

Maryland, including 11 projects located within Berks County, and also included multiple

references.22

15. On September 22, 2000, RAWA contracted with Miller Environmental

(September 2000 Contract) to provide an experienced and qualified water filter plant manager

responsible for the management of all operational, and maintenance activities of [RAWAs] water

filter plant.23 The contract designated this individual with the title of Plant Manager of the

facilities, but referred to the individual as the Contract Manager throughout the contract.24

16. After RAWAs former Executive Director retired,25 RAWA and Miller

Environmental amended the September 2000 Contract on January 22, 2004, to expand the scope

21
See Exhibit 1.0 September 12, 2000 Proposal.
22
See Exhibit 1.0 September 12, 2000 Proposal.
23
See Exhibit 1.1 September 2000 Contract at 1 and 2.1.
24
See Exhibit 1.1 September 2000 Contract at 1.2.
25
RAWAs former executive director, Mr. Anthony Tony Consentino, submitted his letter of resignation/retirement
on November 30, 2003. As of this date, the RAWA Board requested that Mr. Miller fill this position on a temporary
basis, until a permanent Executive Director with the proper licensing can be hired. RAWA Board meeting minutes,
dated November 30, 2003.

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of services to include Executive Director services, in addition to water filter plant responsibilities

(January 2004 Amendment).26

17. On January 29, 2015, RAWA and Miller Environmental entered into a new contract

for Miller Environmental to provide Executive Director services for RAWA effective February 1,

2015 (January 2015 Contract),27 the day that the prior agreement would have automatically

renewed.28 The January 2015 Contract designated this individual with the title of Executive

Director, and referred to the individual as the Contract Executive Director throughout the

contract.29

18. When evaluating the three Contract Management Services contracts into which

RAWA and Miller Environmental entered for purposes of understanding RAWAs relationship

with Miller Environmental, the most relevant contract sections relate to:

a. Scope of services;

b. Contract Term;

c. Compensation; and

d. Other Terms.

26
Specifically, the amendment detailed that The Contract Manager, [Miller Environmental], shall perform additional
duties from time to time, as specifically requested by [RAWA], or its designated representative. Such additional duties
shall be similar to those previously performed by [RAWAs] Executive Director, are expected to be within the
[RAWAs] job description for Executive Director, and are duties outside of the scope of services intended for
management of [RAWAs] water filter plant facilities. See Exhibit 1.2 January 2004 Amendment at 1 and 2.5.
The January 2004 Amendment contained a stated term through January 31, 2005, with automatic one-year renewals
absent written notification of termination by either of the parties.26 The January 2004 Amendment was renewed and
remained in effect until January 2015, when the parties executed a new contract. See Exhibit 1.2 January 2004
Amendment at 4.1 and 4.2.
27
See Exhibit 1.3 January 2015 Contract at 1 and 4.1.
28
See Exhibit 1.2 January 2004 Amendment at 4.1 and 4.2.
29
See Exhibit 1.3 January 2015 Contract at 1.2.

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a. Scope of Services

19. The September 2000 Contract stated the Contract Manager shall remain an

employee of Miller Environmental and perform water filter plant services for RAWA, which

included planning, organizing, coordinating, supervising and directing all internal and external

activities of the water filter plant facilities, and interaction with representatives of the state and

federal governments, and other appropriate parties.30 The contract also outlined 12 specific,

additional responsibilities required of the Contract Manager, including planning and administering

the maintenance of RAWAs water filter plant facilities and recommending capital improvement

projects to RAWA.31

20. The January 2004 Amendment expanded the Contract Managers responsibilities

to include duties similar to those previously performed by [RAWAs] Executive Director.32

These responsibilities were in addition to those already established in relation to the water filter

plant under the September 2000 Contract and would be required of the Contract Manager when

requested specifically by RAWA from time to time.33

21. The January 2015 Contract removed the water filter plant manager responsibilities,

resulting in Miller Environmental only being contracted to perform Executive Director

responsibilities. However, the detailed scope of the Executive Directors responsibilities per the

January 2015 Contract was consistent with the scope of the Plant Manager services outlined in the

September 2000 Contract, but for several word variations and additions. Specifically, the January

2015 Contract stated that the Executive Directors responsibilities would involve planning,

30
See Exhibit 1.1 September 2000 Contract at 2.1-2.2.
31
See Exhibit 1.1 September 2000 Contract at 2.2a 2.2l.
32
See Exhibit 1.2 January 2004 Amendment at 2.5.
33
See Exhibit 1.2 January 2004 Amendment at 2.5.

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organizing, coordinating, supervising, and directing all internal and external activities of the water

authority facilities, and interaction with representatives of the state and federal governments, and

other appropriate parties.34 This contract also outlined 12 specific responsibilities required of the

Executive Director, again consistent with the language contained in the September 2000 Contract.

A notable variation was the addition of the responsibility to direct the operation and maintenance

of the facilities which would include Source Water, Treatment, Distribution, and

Administration, and continue all programs which have been ongoing in each area.35 Based on

discussions with RAWA personnel, we understand that these four divisions relate to three different

plants and/or facilities that RAWA maintains and that the Administration category represents

the administrative costs incurred by the Executive Director in performing his responsibilities.

b. Contract Term

22. The contract between Miller Environmental and RAWA for water filter plant

services was entered into on September 22, 2000, but the Contract Manager was to commence

providing the Services on September 19, 2000.36 The contracts stated termination date was

January 31, 2001, but allowed for perpetual, automatic one-month renewals, until one of the parties

gives 30-day advance written notice of termination.37

23. Absent any notice of termination be either parties, we understand that the

September 2000 Contract continued to automatically renew for continuous one-month terms until

34
Emphasis added to highlight the difference from the September 2000 Contract, which stated activities of the
water filter plant facilities See Exhibit 1.1 September 2000 Contract at 2.2 and Exhibit 1.3 January 2015
Contract at 2.2.
35
Emphasis added to highlight the difference from the September 2000 Contract, which stated Administer the
operation and maintenance of the facilities and did not include the breakout between the four programs/divisions.
See Exhibit 1.1 September 2000 Contract at 2.2 and Exhibit 1.3 January 2015 Contract at 2.2.
36
See Exhibit 1.1 September 2000 Contract at 4.1.
37
See Exhibit 1.1 September 2000 Contract at 4.2.

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the issuance of the January 2004 Amendment, which amended the original contracts term.

Specifically, the January 2004 Amendment stated that the Contract Manager shall commence

providing the services on February 1, 2004 until January 31, 200538 and allowed for

continuous, automatic one-year renewal terms, until one of the parties gives 90-day advance

written notice of termination.39

24. Absent any notice to the contrary, we understand that the January 2004 Amendment

continued to automatically renew for continuous one-year terms until the issuance of the January

2015 Contract, which again amended the contracts term. Specifically, the January 2015 Contract

extended the contract to a three-year term, which stated that the Executive Director shall

commence providing the Services on February 1, 2015 until January 31, 201840 and allowed

for continuous, automatic three year renewal terms, until one of the parties gives 90-day advance

written notice of termination.41

c. Compensation

25. For the water filter plant manager services provided under the September 2000

Contract, RAWA agreed to compensate the Contract Manager at a rate of $48 per man hour,42

which would remain unaffected by the number of daily or weekly hours performed (i.e., no

overtime rate permitted). The contract indicated that this rate constitutes full and complete

payment for all costs assumed by [Miller Environmental] including but not limited to salaries,

benefits, payroll taxes, meetings, consultations and presentations, travel expenses, and all similar

38
See Exhibit 1.2 January 2004 Amendment at 4.1.
39
See Exhibit 1.2 January 2004 Amendment at 4.2.
40
See Exhibit 1.3 January 2015 Contract at 4.1.
41
See Exhibit 1.3 January 2015 Contract at 4.2.
42
See Exhibit 1.1 September 2000 Contract at 5.1.

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expenses.43 As such, we understand that RAWA was not responsible for compensating the

Contract Manager for vacation time or other paid time off. Beginning on October 1, 2001, the

hourly rate was slated to increase 5% annually.44

26. As of the issuance of the January 2004 Amendment, the Contract Managers rate

had increased to $55.57 as a result of the annual 5% rate increases established in the September

2000 Contract.45 The January 2004 Amendment preserved this hourly rate of $55.57 for the water

filter plant services, and also added an hourly rate of $85 per man hour for the Executive Director

services.46 Beginning on February 1, 2005, the two hourly rates were slated to increase 5%

annually.47 The other terms related to compensation remained consistent with the September 2000

Contract.

27. As of the issuance of the January 2015 Contract, the Contract Managers rate had

increased to $90.52 and the Executive Directors rate had increased to $138.46 as a result of the

annual 5% rate increases established in the January 2004 Amendment.48 Consistent with the

transition to only contracted Executive Director services, the January 2015 Contract contained

only one hourly rate of $141.91 starting on February 1, 2015.49 Beginning on February 1, 2016,

43
See Exhibit 1.1 September 2000 Contract at 5.2.
44
See Exhibit 1.1 September 2000 Contract at 5.4.
45
This determination is based on the understanding that the September 2000 Contract automatically renewed for
continuous one month terms until the issuance of the January 2004 Amendment and that the 5% rate increases were
effected each October 1 of every year beginning in 2001. As such, the Contract Managers rate was as follows:
September 19, 2000 September 30, 2001 - $48/hour; October 1, 2001 September 30, 2002 - $50.40; October 1,
2002 September 30, 2003 - $52.92/hour; October 1, 2003 February 28, 2004 - $55.57/hour.
46
See Exhibit 1.2 January 2004 Amendment at 5.1.
47
See Exhibit 1.2 January 2004 Amendment at 5.4.
48
This determination is based on the understanding that the January 2004 Amendment automatically renewed for
continuous one year terms until the issuance of the January 2015 Contract and that the 5% rate increases were effected
each February 1 of every year beginning in 2005.
49
See Exhibit 1.3 January 2015 Contract at 5.1.

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the hourly rate was slated to increase 2.5% annually.50 The other terms related to compensation

remained consistent with the January 2004 Amendment.

d. Other Terms

28. We noted one other contract term that informed our analysis of the Miller

Environmental billings issued to RAWA. Particularly, Article 2.4, which was in effect for all three

contract iterations, indicates that Miller Environmental was required to report to RAWA the use

of any personnel beyond the specific qualified person as designated in writing by [Miller

Environmental] and accepted by [RAWA] entitled as the Contract Manager and/or Contract

Executive Director.51

The use by the Contract Manager/Contract Executive Director of any


additional outside contract personnel in the management of the facilities
shall be justified only if the Contract Manager/Contract Executive
Director can demonstrate that such functions cannot be performed by
existing members of [RAWAs] management and staff and any such
use of additional outside personnel shall be reported along with the
justification for such use to [RAWA].52

2. Relevant Language in RAWA Contracts with Miller Environmental for Meter


Reading Services

29. On October 18, 2002, RAWA wrote a letter to Miller Environmental requesting to

negotiate a contract with Miller Environmental to implement the Water Meter Reading Service

(October 18, 2002 Letter). The letter also states that RAWA was authorized by the solicitor and

50
See Exhibit 1.3 January 2015 Contract at 5.4.
51
See Exhibit 1.1 September 2000 Contract at 1.2 and 2.4 and Exhibit 1.3 January 2015 Contract at 1.2 and
2.4.
52
The language between the September 2000 Contract and the January 2015 Contract is consistent, but for the titles,
which we have combined for presentation purposes: The September 2000 Contract defines Miller Environmentals
role as Contract Manager and the January 2015 Contract defines Miller Environmentals role as Contract Executive
Director. See Exhibit 1.1 September 2000 Contract at 2.4 and Exhibit 1.3 January 2015 Contract at 2.4.

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staff to negotiate the contract and that the meter reading services should reflect a start date of

January 2, 2003.53

30. A comment was made in the November 26, 2002 RAWA Board meeting minutes

in the Solicitors report regarding a proposal from another vendor, Neptune, that the RAWA Board

would need to decide if RAWA intended to continue communication and continue with this project

with Neptune. Neptune had submitted a proposal for meter replacements, meter maintenance and

meter reading services. Mr. Robert Ludgate, Jr., a RAWA Board Member, made a comment that

made it clear the meter reading bid was already awarded to Miller Environmental.54

31. On January 17, 2003, RAWA and Miller Environmental entered into an agreement

for Miller Environmental to provide water meter reading services commencing on March 1, 2003

(2003 Meter Reading Contract).55 This contract was separate from any of the aforementioned

contracts between RAWA and Miller Environmental regarding Mr. Millers services. The 2003

Meter Reading Contract stated that Miller Environmental has submitted a proposal to read water

meters for a period of time to be determined by [RAWA] and acceptance of [Miller

Environmentals] proposal is in the best interest of the [RAWA].56 The contract detailed that

Miller Environmentals scope of services included performing the meter reading activities for

approximately 28,800 water meters per month for three districts within the City and three

neighboring districts outside of the City.57 The three year term contract was stated to terminate as

of February 28, 2006, but allowed for perpetual, automatic three year renewal terms, until one of

53
See Exhibit 1.4 October 18, 2002 Letter.
54
RAWA Board meeting minutes, dated November 26, 2002.
55
See Exhibit 1.5 2003 Meter Reading Contract at 1 and 4.1.
56
See Exhibit 1.5 2003 Meter Reading Contract at 1.
57
See Exhibit 1.5 2003 Meter Reading Contract at 2.1-2.2 for additional scope terms.

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the parties gave 120-day advance written notice of termination.58 The compensation rate for the

meter reading services in 2003 was contracted for $29,624.22 per month, with a 5% annual

increase beginning on March 1, 2004, and continuing on each anniversary date until the expiration

of the contract.59

32. On May 6, 2010, Miller Environmental sent RAWA a letter (the May 2010

Letter) pursuant to Paragraph 8.9 regarding the 2003 Meter Reading Contract stating, we are

required to send a written notice to inform you of any change of our authorized representative for

this Agreement. Our original authorized representative, Mr. DiSantis, is no longer with our firm

and the position of Vice President is currently vacant.60 The letter further states, this is being

done as an administrative and contractual formality on our part and no action is required on your

part, other than to make a note of the above change for future contract correspondence.61

33. On September 29, 2011, the first amendment to the 2003 Meter Reading Contract

was executed (2011 Meter Reading Amendment), which increased the meter reading scope due

to changes that Miller Environmental claims occurred with meter reading technology, quantity of

meters being read, [and] safety considerations and for additional meter readings for

settlement and additional meter readings for North Heidelberg Water Company [which] will be

required.62 The 2011 Meter Reading Amendment did not include any alterations to the

compensation or contract term under the updated scope of services.

58
See Exhibit 1.5 2003 Meter Reading Contract at 4.1-4.3.
59
See Exhibit 1.5 2003 Meter Reading Contract at 5.2.
60
See Exhibit 1.6 May 2010 Letter.
61
See Exhibit 1.6 May 2010 Letter.
62
See Exhibit 1.7 2011 Meter Reading Amendment at 1 and 2.1-2.2 for additional scope terms.

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34. On February 23, 2012, RAWA and Miller Environmental entered into an Amended

and Restated Agreement to provide Water Meter Reading Services commencing on March 1, 2012

(2012 Meter Reading Contract).63 The scope of services remained the same as the 2011 Meter

Reading Amendment, however the contract term and the compensation rate were adjusted. The

three-year contract was stated to terminate as of February 28, 2015, but allowed for perpetual,

automatic three-year renewal terms, until one of the parties gave 90-day advance written notice of

termination.64 As of the issuance date of this contract, the monthly meter reading rate would have

increased to $45,956.89 per month as a result of the annual 5% rate increase established in the

2003 Meter Reading Contract.65 The 2012 Meter Reading Contract reduced that monthly rate to

$44,956.89 to reflect a $1,000 per month reduction to compensate [RAWA] for performance

monitoring personnel expense incurred by [RAWA].66 This rate was contracted to remain

unchanged through February 28, 2015 and allowed for subsequent adjustment per the agreement

of RAWA and Miller Environmental.67

3. Fees Charged by Miller Environmental to RAWA

35. Table 1 summarizes Miller Environmental billings from 2008 through 2016, as

follows:

63
See Exhibit 1.8 2012 Meter Reading Contract at 1 and 4.1.
64
See Exhibit 1.8 2012 Meter Reading Contract at 4.1-4.3.
65
This determination is based on the understanding that the 2003 Meter Reading Contract automatically renewed for
continuous one year terms until the issuance of the January 2015 Contract and that the 5% rate increases were effected
each February 1 of every year beginning in 2005. Had the 5% rate increase continued to take effect on the anniversary
date of the contract on March 1, 2012, the monthly rate would have been $45,956.89. See Exhibit 1.8 2012 Meter
Reading Contract at 5.2 and Exhibit 1.5 2003 Meter Reading Contract at 5.1.
66
See Exhibit 1.8 2012 Meter Reading Contract at 5.2.
67
See Exhibit 1.8 2012 Meter Reading Contract at 5.1-5.4.

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Forensic Investigation of Reading Area Water Authority

Table 1. RAWA Expenses for Services Provided by Miller Environmental68


Plant Manager
and Executive Water Meter
Year Director Reading Services Total
2008 $ 117,085 $ 451,906 $568,991
2009 123,628 474,501 598,129
2010 177,343 498,226 675,569
2011 183,813 523,137 706,950
2012 214,849 538,294 753,143
2013 353,469 539,483 892,952
2014 401,360 539,483 940,843
2015 365,097 539,483 904,580
Total $1,936,644 $4,104,513 $ 6,041,157

36. During the September 29, 2016 RAWA Board meeting, Mr. Stock requested a

resolution to terminate the contract between RAWA and Miller Environmental for the provision

of the contracted Executive Director effective 5:00 p.m. on September 30, 2016. This was done

mutually by RAWA and Miller Environmental. During 2017, RAWA terminated its contract with

Miller Environmental for meter reading services.

a. Miller Environmental Billings for Contract Management Services

37. During the course of its relationship with RAWA, Miller Environmental provided

minimal (if any) support to justify the hours charged to RAWA for Contract Management Services.

Invoices issued by Miller Environmental typically included the total number of hours worked each

day (allocated between plant manager responsibilities and other services) or merely provided

summaries of total hours worked.69 These invoices, as presented to RAWA, lacked sufficient

detail to identify the specific individuals providing services and were assumed to represent hours

68
Based upon RAWAs Audited Report for the years ended December 31, 2008 at 20-21; 2010 at 25; 2011 at 26;
2012 at 29; 2014 at 26-27; and 2015 at 28. Amounts reflect RAWAs expenses for periods in which Miller
Environmental provided services. Amounts may vary from actual cash disbursements due to timing of invoice
payments. See Exhibits 2.0 2.4 for analysis of invoices.
69
Over the years, Miller Environmental changed the information included on the invoices submitted to RAWA (i.e.,
the removal of the plant manager responsibilities in 2015).

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Forensic Investigation of Reading Area Water Authority

worked by Mr. Miller. Not until RAWA began questioning Miller Environmentals final invoices

did it learn that invoiced hours included time for individuals other than Mr. Miller, but the hours

were purportedly adjusted downward in an attempt to reconcile the Executive Director hourly

rate charged and the value of services provided by Miller Environmental personnel other than Mr.

Miller.

38. Table 2 summarizes the Miller Environmental invoices related to the Executive

Director services charged to RAWA from February 2015 through September 2016, the period

during which the January 2015 Contract was in effect. During this period, in recognition of the

terms of the January 2015 Contract,70 Miller Environmental invoiced RAWA under the following

categories: Source Water, Treatment, Distribution and Administration. The information included

on these invoices included the hours charged for services provided (in total rather than by day and

person) under each of the four disciplines.

70
The January 2015 Contract stipulated that Miller Environmental was responsible for directing the operation and
maintenance of the facilities which would include Source Water, Treatment, Distribution, and Administration"
Emphasis added to highlight the difference from the September 2000 Contract, which stated Administer the operation
and maintenance of the facilities and did not include the breakout between the four programs/divisions. See
Exhibit 1.3 January 2015 Contract at 2.2.

20
Forensic Investigation of Reading Area Water Authority

Table 2. Miller Environmental Executive Director Invoices January 2015 Contract


Hours by Discipline71
Source
Service Water Treatment Distribution Administration Total Total
Period72 Rate Hours Hours Hours Hours Hours Amount
Feb. 2015 $141.91 50 11 15 136 211 $29,943
Mar. 2015 141.91 103 9 27 131 269 38,174
Apr. 2015 141.91 128 17 9 58 210 29,801
May 2015 141.91 71 9 13 123 215 30,511
June 2015 141.91 68 17 14 114 213 30,227
Jul. 2015 141.91 60 23 18 108 209 29,659
Aug. 2015 141.91 50 23 18 83 174 24,692
Sept. 2015 141.91 52 31 14 76 173 24,550
Oct. 2015 141.91 54 36 30 89 209 29,659
Nov. 2015 141.91 46 39 48 72 205 29,092
Dec. 2015 141.91 49 54 56 55 214 30,369
Jan. 2016 141.91 42 48 61 97 248 35,194
Feb. 2016 145.45 39 56 53 81 229 33,308
Mar. 2016 145.45 40 52 48 72 212 30,835
Apr. 2016 145.45 48 47 50 64 209 30,399
May 2016 145.45 42 45 47 52 186 27,054
June 2016 145.45 38 50 51 55 194 28,217
Jul. 2016 145.45 44 42 54 55 195 28,363
Aug. 201673 145.45 38 35 40 68 181 26,254
Sept. 201674 145.45 48 22 32 78 179 26,036
Total 1,109 665 697 1,665 4,135 $592,336

39. Table 3 details the total hours charged by Miller Environmental, and calculates the

average weekly hours charged to RAWA, as follows:

71
Amounts subject to rounding. See Exhibits 2.1 2.2.
72
Each month represents the month during which Miller Environmental provided Executive Director services for
RAWA under the January 2015 Contract. Service provided in the noted period was typically invoiced on the first day
of the following month. For example, Miller Environmental invoiced RAWA on March 1, 2015 for services provided
during February 2015.
73
It is our understanding that this invoice has not been paid by RAWA as of the issuance date of this report. See
Exhibits 2.1 2.2.
74
It is our understanding that this invoice has not been paid by RAWA as of the issuance date of this report. See
Exhibits 2.1 2.2.

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Forensic Investigation of Reading Area Water Authority

Table 3. Miller Environmental Executive Director Invoices January 2015 Contract


Calculated Average Hours Charged per Week75
Service
Period76 Hours Hours/ Week77
Feb. 2015 211 53
Mar. 2015 269 67
Apr. 2015 210 53
May 2015 215 54
June 2015 213 53
Jul. 2015 209 52
Aug. 2015 174 44
Sept. 2015 173 43
Oct. 2015 209 52
Nov. 2015 205 51
Dec. 2015 214 54
Jan. 2016 248 62
Feb. 2016 229 57
Mar. 2016 212 53
Apr. 2016 209 52
May 2016 186 47
June 2016 194 49
Jul. 2016 195 49
Aug. 201678 181 45
Sept. 201679 179 45
Total 4,135 52

40. Absent additional detail from Miller Environmental, we are unable to determine the

accuracy or legitimacy of the hours charged. RAWA terminated the Miller Environmental contract

for Executive Director Services, and the August and September 2016 invoices (representing the

final services provided by Miller Environmental) were not paid. During RAWAs internal review

75
See Exhibits 2.1 2.2.
76
Each month represents the month during which Miller Environmental provided Executive Director services for
RAWA under the January 2015 Contract. Service provided in the noted period was typically invoiced on the first day
of the following month. For example, Miller Environmental invoiced RAWA on March 1, 2015 for services provided
during February 2015.
77
Average hours per week based on 4 weeks per month, or 48 work-weeks per year.
78
It is our understanding that this invoice has not been paid by RAWA as of the issuance date of this report. See
Exhibits 2.1 2.2.
79
It is our understanding that this invoice has not been paid by RAWA as of the issuance date of this report. See
Exhibits 2.1 2.2.

22
Forensic Investigation of Reading Area Water Authority

of Miller Environmentals invoices, Mr. Murray asked Miller Environmental for clarification

regarding hours billed on the August and September 2016 invoices.

41. An October 14, 2016 e-mail from Mr. Miller responding to Mr. Murrays

questions about the final invoices explained the invoicing process as follows:

The first page is the invoice that gets sent to the Authority [RAWA]
broken out by each discipline that we were responsible for and hours
charged for each of those disciplines. The second and third page is the
hours which Jesse [Goldberg]80 actually dedicated to source water
protection during that month with some description. If you compare
Page 1 source water protection hours to Page 2 and 3 actual hours you
will see the hours have been reduced for invoicing purposes for source
water protection.81

42. In connection with an internal RAWA review of amounts paid to Miller

Environmental, Mr. Murray met with, and obtained additional detailed monthly hours from, Mr.

Goldberg. The monthly listings were similarly formatted as the two attached to Mr. Millers

explanation e-mail. We compared Mr. Goldbergs/Miller Environmentals recorded hours to the

Source Water section of the Miller Environmental invoices. Table 4 summarizes the hours charged

by Miller Environmental, the invoice amount, and the specific hours recorded for Mr. Goldberg as

follows:

80
We understand, based on discussions, that Mr. Goldberg is a Miller Environmental employee used by Mr. Miller to
perform services related to the Source Water plant for RAWA.
81
See Exhibit 3.0.

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Forensic Investigation of Reading Area Water Authority

Table 4. Miller Environmental Invoices Source Water Detail82


Executive Director Invoice
Amount (Source Water) Mr. Goldberg
Service Hours Amount % of Goldberg Detailed Effective
Period Rate Charged Charged Detailed Hours Hours Hourly Rate83
Nov. 2015 $141.91 46 $6,528 33% 140 $46.63
Dec. 2015 141.91 49 6,954 44% 112 62.09
Jan. 2016 141.91 42 5,960 31% 138 43.35
Feb. 2016 145.45 39 5,673 29% 136 41.71
Mar. 2016 145.45 40 5,818 29% 138 42.16
Apr. 2016 145.45 48 6,982 34% 139 50.23
May 2016 145.45 42 6,109 29% 147 41.70
June 2016 145.45 38 5,527 28% 136 40.64
Jul. 2016 145.45 44 6,400 36% 122 52.46
Aug. 201684 145.45 38 5,527 33% 116 47.65

43. Table 4 details the Executive Director rate, hours charged, and the total amount

charged by Miller Environmental for providing Source Water service. Separately maintained

records of Mr. Goldbergs Source Water hours exceed the hours invoiced, which is consistent with

Mr. Millers acknowledgment in his October 14, 2016 e-mail to Mr. Murray that Mr. Miller

reduced Mr. Goldbergs hours for invoicing purposes.85 However, Miller Environmental

charged RAWA for hours worked by Mr. Goldberg at Mr. Millers Executive Director rate. While

Mr. Millers explanation of the reduction to Mr. Goldbergs hours purports to reconcile the

Executive Director rate charged, the actual hours worked, and value provided by Mr. Goldberg,

we did not locate documentation to establish any consistently-applied, objective methodology

employed by Miller Environmental to determine a reasonable percentage of Mr. Goldbergs hours

to charge to RAWA at the Executive Director rate. Instead, an apparently arbitrary adjustment

82
Amounts subject to rounding. See Exhibit 2.3.
83
Calculated as Executive Director total amount charged (Executive Director Rate x Hours Charged) divided by Mr.
Goldberg's detailed hours.
84
It is our understanding that this invoice has not been paid by RAWA as of the issuance date of this report. See
Exhibits 2.1 2.3.
85
E-mail from Mr. Miller to Mr. Murray, dated October 14, 2016. See Exhibit 3.0.

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Forensic Investigation of Reading Area Water Authority

results in the invoicing of a different percentage of Mr. Goldbergs hours each month, and an

effective hourly rate for Mr. Goldberg (based on total hours reported) that changes every month.

44. RAWA employees stated that Mr. Goldberg provided services through Miller

Environmental86 since approximately January 2011,87 which were characterized/reported as

Source Water. The September 2000 Contract and the January 2015 Contract provided specific

language defining the appropriate use of outside contract personnel under the terms of the contract.

The contract language required two levels of approvals to establish and justify the need and then

confirm RAWA could not self-perform. First, Miller Environmental needed to demonstrate that

the function could not be performed by existing members of RAWAs management or staff.

Second, any such use of outside personnel was to be explicitly reported along with the justification

for such use to RAWA.88

45. Our analysis of RAWA records and RAWA Board meeting minutes failed to

demonstrate that Miller Environmental established the need to use outside personnel at RAWA

rather than RAWA personnel. Additionally, the Miller Environmental invoices did not provide

RAWA with information related to Mr. Goldbergs hours charged to RAWA. Instead, invoices

submitted to RAWA only reported total hours charged each month, which would have included

certain hours worked by Mr. Goldberg, but were charged at Mr. Millers Executive Director rate.

46. We have been unable to find any evidence to substantiate that Miller Environmental

sought and/or received approval to hire Mr. Goldberg in light of an inability of RAWAs

management or staff to perform the duties that Mr. Goldberg provided. Absent this express

86
We located e-mail activity in which Mr. Goldberg interacted with RAWA employees with his Miller Environmental
e-mail address.
87
Based on discussion with Mr. Reider, Mr. Goldberg has worked at RAWAs Source Water plant for approximately
five to six years as of December 1, 2016.
88
See Exhibit 1.1 September 2000 Contract at 2.4 and Exhibit 1.3 January 2015 Contract at 2.4

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Forensic Investigation of Reading Area Water Authority

approval, no one at RAWA had oversight or tracked the activity of Mr. Goldberg to substantiate

that the hours worked by Mr. Goldberg were, in fact, hours that RAWA needed to outsource to

Miller Environmental. We reviewed the RAWA Board meeting meetings and did not locate any

request or discussion of Miller Environmental seeking approval for the use of Mr. Goldberg. We

also reviewed the Miller Environmental contract file, which also did not contain any

documentation regarding approval for Mr. Goldbergs services. We did not locate documentation

establishing that Miller Environmental sought, and RAWA granted, approval for Mr. Goldbergs

services despite the May 6, 2010 letter from Miller Environmental to RAWA demonstrating Miller

Environmentals acknowledgment of its contractual responsibilities. In its May 6, 2010 letter to

RAWA, Miller Environmental stated, we are required to send a written notice to inform you of

any change of our authorized representative for this Agreement. Our original authorized

representative, Mr. DiSantis, is no longer with our firm and the position of Vice President is

currently vacant.89 The letter further stated, this is being done as an administrative and

contractual formality on our part and no action is required on your part, other than to make a note

of the above change for future contract correspondence.90 Miller Environmental acknowledged

its obligations to make certain notifications to RAWA. However, with respect to notifying RAWA

regarding the need for, and use of, Mr. Goldberg, Miller Environmental did not follow the same

approach.

47. Based on the lack of evidence demonstrating a need to use non-RAWA personnel,

and Miller Environmentals reporting of this use along with its justification, Miller Environmental

has been unable to establish the appropriateness and reasonableness of Mr. Goldbergs hours

89
See Exhibit 1.6 May 2010 Letter.
90
See Exhibit 1.6 May 2010 Letter.

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Forensic Investigation of Reading Area Water Authority

charged to RAWA at the Executive Director rate for Source Water services. Table 5 estimates the

potential total unsupported charge for Source Water hours for the service period of January 2011

through August 2016, the approximate period during which Mr. Goldberg provided Source Water

services.

Table 5. Estimate of Potential Unsupported Source Water Hours and Fees


Paid to Miller Environmental
Source Water Executive Director
Period Hours91 Rate Amount
Estimated
2011 (Jan. - Dec.) 511 $114 / $120 $ 60,899
2012 (Jan. - Dec.) 511 $120 / $126 63,944
2013 (Jan. - Dec.) 511 $126 / $132 67,141
2014 (Jan. - Dec.) 511 $132 / $138 70,495
2015 (Jan. - Oct.) 426 $138 / $142 60,306
Total Estimated 2,470 $ 322,784

Actual92
2015 (Nov. - Dec.) 95 $142 $ 13,481
2016 (Jan. - Aug.) 331 $142 / $145 47,995
Total Actual 426 $ 61,477

Grand Total 2,897 $ 384,261

48. In addition to Mr. Goldbergs services, we understand based on discussion with Mr.

Reider, that another Miller Environmental employee, Mr. Michael Boyer (Mr. M. Boyer), also

provided services at RAWA. Like Mr. Goldberg, Mr. M. Boyer was not explicitly disclosed on

91
For purposes of estimating potential unsupported Source Water hours, we determined the average hours that Mr.
Miller reported related to Source Water for the service period of November 2015 through August 2016, which
represents the period for which we were provided with reported Source Water hour detail from both Mr. Goldberg
and Miller Environmental. We understand, based on discussion with Mr. Reider, that Mr. Goldberg performed
services on behalf of Miller Environmental at RAWAs Source Water Plant during the period from January 2011
through August 2016. We determined the average monthly hours detailed on invoices and charged for Source Water
(adjusted down from Mr. Goldbergs actual reported hours) during the period November 2015 through August 2016
and applied the average charged hours to the remaining months back to January 2011. The estimated hours were then
multiplied by the Executive Director rate in effect each month. Amounts subject to rounding. See Exhibit 2.3 for
Miller Source Water Hours. We also understand the Mr. Goldberg could have been utilized at RAWA by Mr. Miller
prior to 2001, however, for the purposes of our estimate we did not estimate the amount prior to 2011.
92
See Exhibit 2.3.

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Forensic Investigation of Reading Area Water Authority

any Miller Environmental invoices to RAWA. However, unlike Mr. Goldberg, we have not

located any records supporting the actual hours worked by Mr. M. Boyer or the discipline for

which Mr. M. Boyer would have been responsible (e.g., Source Water Plant in the case of Mr.

Goldberg).93

49. In addition to the lack of evidence of approval for Miller Environmental personnel

working at RAWA, we have questions as to the reasonableness of the total number of hours

invoiced by Miller Environmental to RAWA. For example, Mr. Miller stated he took time off for

vacations during his tenure at RAWA, but the total hours invoiced each month suggest there were

no weeks invoiced to RAWA, on average, at less than 40 hours per week.94 For example, in an e-

mail from Mr. Miller to Mr. Schlegel, Gary Phillips and various other individuals, dated April 1,

2016, Mr. Miller referred to his vacation time, stating, Making you all aware that I have scheduled

vacation started on April 7 and ending April 15. While I will not physically be at 1801 Kutztown

Road during that time, I will have email and some phone availability during that time. Please feel

free to reach out to me if you need to.95

50. Table 2 above listed the May 1, 2016 invoice (for the period April 2016) with 186

total hours, or an average of 47 hours per week for the month of April. While the total hours

invoiced in May 2016 are less than the immediately preceding months, the hours are consistent

with the total monthly hours invoiced in each of the remaining months during the period June 2016

93
We have not estimated the number of hours or the value of Mr. Boyers hours or costs similarly to Mr. Goldberg.
94
Based on total monthly hours divided by four weeks.
95
E-mail from Dean Miller to Ernie Schlegel (and others), dated April 1, 2016.

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Forensic Investigation of Reading Area Water Authority

through September 2016. It does not appear that Mr. Miller adjusted the hours charged to RAWA

on the May 2016 invoice for any vacation time taken during that period.96

51. According to Article 5 of the January 2015 Contract, vacation time is not included

as compensation.97

Compensation provided under this Article constitutes full and complete


payment for all costs assumed by [Miller Environmental] in performing
this Contract Management Agreement, including but not limited to
salaries, benefits, payroll taxes, meetings, consultations and
presentations, travel expenses, and all similar expenses.

52. In addition, as noted in the September 2000 proposal, Miller Environmental

serviced 55 other Water and Sewer clients, and we have not located any Miller Environmental

records to determine whether Mr. Miller also provided those clients with services during the

relevant period. We have located correspondence in which Mr. Miller, using his RAWA account,

solicited other water and sewer service opportunities from third parties for the benefit of Miller

Environmental. Absent a detailed review of records regarding work performed by Miller

Environmental for third parties, the risk exists that Mr. Miller could have worked for other Miller

Environmental clients while charging RAWA.

53. During our analysis of the Miller Environmental invoices, we also noted that most

of the invoices were approved by Mr. Setley, RAWAs Solicitor, and with that approval, no

supporting records were required to substantiate the amount of hours invoiced by Miller

environmental.

54. Based on our analysis of Miller Environmentals invoices submitted to RAWA for

contract management services, there is no evidence that Mr. Miller and Miller Environmental

96
We did not locate documentation establishing that Mr. Miller could charge RAWA for vacation time or other time
not spent working for RAWA.
97 See Exhibit 1.3 January 2015 Contract.

29
Forensic Investigation of Reading Area Water Authority

demonstrated the need to use Miller Environmental personnel (i.e., Messrs. Goldberg and M.

Boyer) or explicitly reported their time and justification for using them to RAWA. We estimate

that RAWA could have paid Miller Environmental approximately $384,261 for unsupported

Source Water services performed by Mr. Goldberg and billed at the Executive Director rate.

Additionally, absent further analysis and additional documentation (including documentation from

Miller Environmental), we are unable to establish the reasonableness of fees charged by Miller

Environmental to RAWA.

a. Miller Environmental Billings for Meter Reading Services

55. As previously noted, RAWA and Miller Environmental entered into an agreement

for Miller Environmental to provide water meter reading services commencing on March 1,

2003.98 Under the terms of the agreement, RAWA initially paid Miller Environmental a monthly

rate of $29,624.22, with a 5% annual increase beginning on March 1, 2004.99 Under a new 2012

Meter Reading Contract effective February 23, 2012, the term was extended through February 28,

2015, at the monthly rate of $44,956.89, with no annual rate increase.100 Per the May 28, 2015

RAWA Board meeting minutes, RAWA notified Miller Environmental that it would be

discontinuing the meter reading contract, presumably upon the completion of the then-current

three-year term (given the ultimate period through which Miller Environmental provided

services).101 Miller Environmental issued the last meter reading invoice to RAWA on November

98
See Exhibit 1.5 2003 Meter Reading Contract.
99
See Exhibit 1.5 2003 Meter Reading Contract.
100
See Exhibit 1.8 2012 Meter Reading Contract.
101
RAWA Board meeting minutes, dated May 28, 2015, which stated, The Authority has given notice to Miller
Environmental concerning the discontinuance of the meter reading service. AFSCME has provided a proposal for the
services, and there will be a meeting held with Justin James, Dean Miller, Ernest Schlegel and Michael Setley to go
over the bringing over of current Miller Environmental employees to RAWA.

30
Forensic Investigation of Reading Area Water Authority

1, 2016, for services to be performed in December 2016.102 The RAWA Board ultimately

terminated Miller Environmentals meter reading contract effective January 31, 2017.103

56. Based on a review of the RAWA Board meeting minutes, there is no explicit,

formal approval of the water meter reading contract with Miller Environmental.104 Rather, the

only indication of approval prior to the contract issuance date is through the October 18, 2002

Letter, from the former Executive Director Anthony Consentino to Miller Environmental, stating

that [RAWA] has authorized the solicitor and the staff to negotiate a contract with Miller

Environmental in accordance with [Miller Environmentals] proposal dated September 27,

2002.105

57. The meter reading invoices issued by Miller Environmental provided no detail

regarding the actual services performed. Rather, the invoices merely stated the monthly contracted

rate and the billing month to which the invoice applied. Per the 2003 Meter Reading Contract,

Miller Environmental was to perform the meter reading activities for approximately 28,000 water

meters per month.106 We noted that the majority of Miller Environmentals invoices were

approved by Mr. Setley, with the remaining approved by Ms. Christine Wheelan (former director

of Human Resources), or contained no notation of approval on the invoice. Absent sufficient detail

regarding the monthly number of meters read and approval by appropriate field or technical

102
See Exhibit 2.4.
103
RAWA Board meeting minutes, dated January 17, 2017.
104
We were only provided with the RAWA Board meeting minutes from April 25, 2002 through November 18, 2003
and from January 1, 2006 through present. As such, we are not aware of any RAWA Board discussion related to
water meter reading prior to April 25, 2002.
105
See Exhibit 1.4 October 18, 2002 Letter.
106
See Exhibit 1.5 2003 Meter Reading Contract at 2.1.

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Forensic Investigation of Reading Area Water Authority

personnel with knowledge of meter reading efforts, there is no evidence that sufficient oversight

existed regarding the actual meter reading services performed by Miller Environmental.

58. RAWA entered a contract with Mr. Millers company, Miller Environmental, for

which there is no explicit, formal RAWA Board approval. Further, there is no evidence of

sufficient oversight by RAWA regarding Miller Environmentals meter reading services. During

the years 2008 through 2016, RAWA paid Miller Environmental approximately $4.1 million for

meter reading services.107 It should be noted that subsequent to terminating the agreement with

Miller Environmental, Mr. Murray estimated that RAWA could save $175,000 to $250,000 per

year by using internal RAWA personnel rather than contracting with a third party.108

B. WAIVED FEES AND CUSTOMER BILLING ISSUES

59. During our transactional testing, we located a number of unusual transactions in

which RAWA waived its normal fees and incurred abnormal costs, including transactions with:

Olivet Boys and Girls Club

Masano Auto Group

Stokesay Castle

City Light Ministries

Goggle Works

107
Based upon RAWAs Audited Report for the years ended December 31, 2008 at 20-21; 2010 at 25; 2011 at 26;
2012 at 29; 2014 at 26-27; and 2015 at 28. Amounts reflect RAWAs expenses for periods in which Miller
Environmental provided services. Amounts may vary from actual cash disbursements due to timing of invoice
payments. See Exhibits 2.0 2.4 for analysis of invoices.
108
RAWA Board meeting minutes, dated January 17, 2017.

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Forensic Investigation of Reading Area Water Authority

1. Olivet Boys and Girls Club

60. Throughout 2014 and 2015, RAWA held discussions with Olivet Boys and Girls

Club (Olivet) regarding a proposed building site at Pendora Park and the need to move a RAWA

water line to develop the property. During this period, parties had general discussions regarding

potential financial assistance provided by RAWA for the project. Ultimately, however, RAWA

provided significant concessions without complete transparency to RAWAs Board.

61. On July 28, 2014, Mr. Peter Butera, Chairman of the Board of Olivet sent an e-mail

to Mr. Schlegel regarding the contemplated project at Pendora Park and the need to move a RAWA

water line.109 Mr. Schlegel forwarded Mr. Buteras e-mail to Mr. Miller, stating, I think this will

get us a lot of traction if we take care of this. The new Olivets is going to help a lot of kids!110

Mr. Miller forwarded the e-mail to Mr. Weld at BCM, stating, Here we go!!!!!!!!!!!!!!!!!!!! What

would be your opinion of probable cost on this? Give me a call.111 In response, Mr. Weld

responded, Our estimate is $115,000, but I would suggest we use at least $130,000, until we

further understand the issues with the culvert.112

62. On July 29, 2014, Mr. Christopher Bowyer (Mr. C. Bowyer), an engineer at

BCM, issued a memorandum to Mr. Weld addressing technical engineering issues associated with

the water line and concerns regarding the project that still required resolution. The memorandum

also included the estimated costs of installing the re-aligned pipeline, assuming no significant

109
E-mail from Mr. Peter Butera to Mr. Schlegel, dated July 28, 2014.
110
E-mail from Mr. Schlegel to Mr. Miller, dated July 28, 2014.
111
E-mail from Mr. Miller to Mr. Weld, dated July 29, 2014.
112
E-mail from Mr. Weld to Mr. Miller, dated July 29, 2014.

33
Forensic Investigation of Reading Area Water Authority

problems or adverse conditions, which approximated $115,000. The memorandum included a

detailed list of products and certain labor costs.113

63. At the July 31, 2014 RAWA Board meeting, the Olivet project was addressed as

part of the Executive Report. The RAWA Board meeting minutes stated:

Mr. Weld is speaking with Olivets Engineer in regards to the plans


submitted to build a building over top of the existing Authority water
line. The cost so far for the Authority to relocate the water line is
approximately $110,000.00 to $130,000.00. The Authority is currently
waiting on a signed document that agrees the Olivets Boys and Girls
Club is agreeing to relocate the water line. There is a zoning hearing
that is scheduled for the following week.114

64. The RAWA Board meeting minutes further stated, Mr. Schlegel asked if the

Authority will be covering the cost of the relocation. Mr. Miller stated that this cost is not

something that Mr. Miller can approve. Mr. Miller added that this is not something the Authority

could relocate; this would have to be done by a contractor due to the size of the lines.115

65. The July 31, 2014 RAWA Board minutes further noted that Mr. Schlegel provided

a background of Olivet and asked the RAWA Board for strong consideration on funding the

relocation of the water line by the Board of Directors.116 In response, the RAWA Board meeting

minutes noted, Mr. Setley stated that if the Authority choses to pay for the relocations, it is above

the $25,000 charitable contribution and the prevailing wages.117

66. On August 4, 2014, Mr. Miller wrote a letter to Mr. Keith Mooney, Esquire, at the

law firm of Barley Snyder, stating RAWA:

113
Memorandum from Mr. C. Bowyer to Mr. Weld, dated July 29, 2014.
114
RAWA Board meeting minutes, dated July 31, 2014.
115
RAWA Board meeting minutes, dated July 31, 2014.
116
RAWA Board meeting minutes, dated July 31, 2014.
117
RAWA Board meeting minutes, dated July 31, 2014.

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Forensic Investigation of Reading Area Water Authority

[I]s in the process of discussions and review of [Olivet Pendora Park]


plans. We believe that we are in conceptual agreement with Olivets
regarding relocation of the water line that currently conflicts with the
proposed building. The Water Authority will continue to work with
Olivets during the planning process as designs become more detailed to
permit the realignment in a manner that is agreeable and acceptable to
Reading Area Water Authority.118

67. Further evidencing RAWAs ongoing planning of the Olivet project, on October

21, 2014, BCM wrote a letter to Mr. Miller stating:

We have reviewed the submitted information related to the referenced


project. It is our understanding that the proposed project is to install
domestic and fire service to a new building located at 1801 Forest Street
in the City of Reading. This will also require the relocation of an
existing 16-inch water main.119

68. The letter listed a number of comments and closed with a recommendation that

stated, Based on our review, by copy of this letter the developer is requested to submit revised

plans for approval, in accordance with the Authoritys Standard Specifications.120

69. Regarding the potential sharing of project costs between RAWA and Olivet, as

evidenced in the December 16, 2014 RAWA Board meeting minutes, Mr. Pablo Tejada and Mr.

Butera from Olivet presented to the RAWA Board their plans for development at Pendora Park.

The RAWA Board meeting minutes noted that Olivet was requesting help from the RAWA Board

on the costs. Mr. Schlegel stated that he will work with the board over the next month to see what

can be done to help the project.121

118
Letter from Mr. Miller to Mr. Keith Mooney, Esquire, dated August 4, 2014.
119
Letter from Mr. C. Bowyer to Mr. Miller, dated October 21, 2014
120
Letter from Mr. C. Bowyer to Mr. Miller, dated October 21, 2014. BCM provided a similar letter on January 14,
2015, in which it provided updated comments based on revised plans, with the final recommendation staying the same
with requesting that Olivet submit revised plans in accordance with the Authoritys Standard Specification. Based
upon letter from Mr. C. Bowyer to Mr. Miller, dated January 14, 2015.
121
RAWA Board meeting minutes, dated December 16, 2014.

35
Forensic Investigation of Reading Area Water Authority

70. On March 24, 2015, BCM sent another letter to Mr. Miller, which was similar to

the October 21, 2014 and January 14, 2015 letters, except the letter indicated that the project would

be conditionally approved, based on the final approval of the fire marshal.122 The letter also

stated that the developer should contact RAWA to make arrangements for any relevant tapping

and/or connection fees.123

71. Beginning in June 2015, correspondence began to more-explicitly address possible

cost concessions on the part of RAWA. For example, on June 1, 2015, Mr. Setley e-mailed Mr.

Weld stating:

The Boys and Girls club is contacting Ernie about somehow sharing costs for the
Pendora Park Project. He would like to know (as would I):
1) What is the likely overall project cost?
2) What portion of that is the cost of the pipe?
3) Are you aware of the results of the bidding?124

72. In response to Mr. Setleys e-mail, Mr. Weld stated:

1) The estimate for the pipe relocation is $110,000.


2) The cost of the materials is estimated is $40,000.
3) I do not know either the contractors price for the pipe
installation or the price for the total project.125

73. Regarding the potential cost sharing, Mr. Miller stated that while the project was

still awaiting final approval by the City Fire Marshal, he believe[d] there was some discussion on

the Water Authority part that the materials be covered by the Water Authority.126 In response,

122
Letter from Mr. C. Bowyer to Mr. Miller, dated March 24, 2015.
123
Letter from Mr. C. Bowyer to Mr. Miller, dated March 24, 2015.
124
E-mail from Mr. Setley to Mr. Weld, dated June 1, 2015.
125
E-mail from Mr. Setley to Mr. Weld, dated June 1, 2015.
126
E-mail from Mr. Miller to Mr. Schlegel and Mr. Weld, dated June 4, 2015.

36
Forensic Investigation of Reading Area Water Authority

Mr. Setley stated, That squares with my understanding. But, as far as Im concerned, it remains

a policy decision to be made by the board.127

74. On June 7, 2015, Mr. Brad White, an Olivet Board member e-mailed Mr. Schlegel

indicating that Mr. Schlegel had agreed to look into a few issues, as follows:

1) Is there any possible way that RAWA could abandon that


line as it only serves on fire hydrant and (1) customer on
cemetery lane.
2) You were going to review the tapping fee any help you can
be on that regard.
3) We are currently in discussions with the city building
inspector regarding the fire suppression system128

75. Regarding Olivets request to abandon the line, Mr. Miller (responding to Mr.

Schlegel and Mr. Luckey, with a carbon copy to Mr. Setley, Mr. White and Ms. Ruotolo) stated:

We should not abandon this line. This line is our secondary means of
getting water into East Reading. If there would be a problem in [the]
future and this line is abandoned we would [have] alot of people in East
Reading out of water including Pa American which conveys water in
Exeter, mount penn, and amity township. I will check on tapping
fees.129

76. Mr. White replied to Mr. Millers e-mail by stating, Not a great surprise but we

felt we need to pursue every angle. The bids came in so high that we are going to have to cut back

in many areas to meet our budgetthanks for looking into these issues. Any help you can be will

be greatly appreciated.130

77. In the July 20, 2015 RAWA Board meeting minutes, the Solicitors Comments

section contained a statement that [a] motion was made to approve the Chairman to execute a

127
E-mail from Mr. Setley to Mr. Miller, Mr. Schlegel, and Mr. Weld, dated June 4, 2015.
128
E-mail from Mr. Brad White to Mr. Schlegel, dated June 7, 2015.
129
E-mail from Mr. Miller to Mr. Schlegel and Mr. Dan Luckey, dated June 8, 2015.
130
E-mail from Mr. Brad White to Mr. Miller, dated June 8, 2015.

37
Forensic Investigation of Reading Area Water Authority

water line escrow agreement with the Olivets Boys and Girls Club for the Pandora Park project

when the form is available by Ms. Maria Rodriguez and seconded by Mr. Ron Hatt. All in favor.

Motion passed unanimously.131 The RAWA Board meeting minutes did not provide further

details regarding the project or the nature of the water line escrow agreement.

78. On July 21, 2015, Mr. C. Bowyer sent an e-mail to Mr. Miller questioning

numerous aspects of the project and stated the following:

Mark obtained a quote from Exeter Supply for material to be provided by


RAWA to the developers contractor, sufficient to install the portion of the water
system that will be owned by RAWA. However, they included materials that
are not being provided by RAWA so I have requested a revised quote. It appears
that the total cost will be $54,079.39. I will forward you the quote as soon as I
receive it.

In the meantime, we need to determine what the procedure will be for moving
forward with this project. Issues to be addressed will include, but not be limited
to, the following:

Prior to construction being authorized:


Will the Solicitor be preparing a Construction Agreement for the project?
Will the developer be required to provide an escrow for the installation of
the piping? (typically includes funds for BCM administration, inspection and
record drawing approval)
Will BCM coordinate the pre-construction meeting?
Will BCM review the contractors insurance certificate? Presumably they
will not be required to submit shop drawings as the materials are being supplied
by RAWA
Developer will need to arrange with RAWA for meter and connection fees
to be paid for.

During Construction:
Will materials be delivered to or picked up from Exeter Supply by RAWA
or directly by the contractor? If by RAWA will they store them or deliver to the
job site?
Will BCM provide construction inspection? If so will funds be put in
escrow?

Please consider these issues, and any others that you foresee, and let us know

131
RAWA Board meeting minutes, dated July 20, 2015.

38
Forensic Investigation of Reading Area Water Authority

what to communicate with the contractor. They are pushing us to get started as
they say that the water line needs to be completed before they start building.132

79. Mr. C. Bowyer subsequently e-mailed Mr. Setley on July 23, 2015, stating:

In discussing this project with Dean he suggested that the questions I


posed to him in the e-mail below should be forwarded to you for
consideration. We have been working on the understanding that
RAWA will be supplying the necessary materials to the developer but
this has never been formally agreed to by the Authority. Although this
does not appear to need a typical Construction Agreement, we need
guidance as to what will be required and how any
construction/inspection escrow will be handled Let us know if you
have any questions.133

80. On July 29, 2015, Mr. Setley responded to Mr. C. Bowyers e-mail, stating,

I have discussed this with the Board Chair. We will want to do an


Escrow Agreement for the labor portion of the project only. RAWA will
pay Cardnos [BCM] fee and will not ask to be reimbursed by Olivets.
The theory is that this is not a contribution but rather a
improvement to RAWAs system. I suppose there are always more
than one way to look at things.134

81. Also on July 29, 2015, Mr. Patrick Dolan of Dolan Construction Inc. e-mailed Mr.

Schlegel regarding timing of the project because Olivet wanted to begin construction to complete

the roof before winter, and the water line needed to be moved before construction on the building

could begin. Mr. Dolans e-mail, among other things, stated:

We understand you are evaluating the materials list and may supply the
material. We are wondering how best to pin down this information. We
would love to understand what RAWA will be doing, and what the
timeframe looks like to be able to supply the material so that we may
plan the work.135

132
E-mail from Mr. C. Bowyer to Mr. Miller, dated July 21, 2015.
133
E-mail from Mr. C. Bowyer to Michael Setley, dated July 23, 2015.
134
E-mail from Mr. Setley to Mr. C. Bowyer, dated July 29, 2015.
135
E-mail from Patrick Dolan to Mr. Schlegel, dated July 29, 2015.

39
Forensic Investigation of Reading Area Water Authority

82. Mr. Schlegel forwarded Mr. Dolans e-mail to Mr. Setley and asked, Do we need

to do a resolution on the materials and Tom's/Cardio's cost as we discussed last week?136 In

response, Mr. Setley stated, I don't think we do. I think we just need to have it reflected in the

Improvements Agreement with Olivets.137 Mr. Setley ultimately characterized the nature of

RAWAs work as:

RAWA will supply the pipe and other water facilities necessary to
complete the water line replacement/ extension as set forth in the Olivet
Plans, as approved by RAWA's engineers, substantially as included on
the attached Quote from Exeter Supply. Olivets contractor will need to
coordinate the delivery or pick-up of the pipe and other facilities with
Exeter Supply. RAWA will also absorb the costs of Cardno Engineering
to review your plans and to inspect the project. These costs are
ordinarily passed on to the project owner. Olivets' contractor shall
install the water lines and facilities at Olivets cost in accordance with
RAWA's specifications and under the inspection of Cardno. Olivets will
be asked to post an escrow for the costs of installation based on a price
submitted to Cardno by your contractor or engineer for its review and
approval. The Escrow will be a under a simple escrow agreement and
not a waterline extension agreement and is intended simply to give
RAWA comfort that the project will be completed in accordance with
the approved specifications.138

83. The escrow agreement between RAWA and Olivet discussed in the e-mails above

was created in August 2015, with an escrow amount of $63,228.139 As outlined in Mr. Setleys

July 29, 2015 e-mail noted above, RAWA required Olivet to place in escrow its installation costs.

Paragraph 1 of the Escrow Agreement stated:

The Club, at its sole expense, shall complete the waterline extension
(the Extension) as shown of' the Plans of Impact Engineering Group,
2014-020 01, 02 & 03 and Approved June 30, 2015 (the Approved

136
E-mail from Mr. Schlegel to Mr. Setley, dated July 29, 2015.
137
E-mail from Mr. Setley to Mr. Schlegel, dated July 29, 2015.
138
E-mail from Mr. Setley to Mr. Schlegel, dated July 29, 2015.
139
Waterline Escrow Extension Agreement, dated August 2015. We noted that a June 1, 2015 e-mail from Thomas
Weld to Michael Setley stated that the estimate for pipe relocation is $110,000The cost of the material is estimated
is $40,000. We have not seen documents reconciling the $110,000 noted by Mr. Weld and the $63,228 escrow
amount.

40
Forensic Investigation of Reading Area Water Authority

Plans). The Club, at its expense, shall construct, install and test the
Extension of said water main from the existing Authority mains to the
Development. The Extension shall be placed and situated within a right-
of-way not less than 30 feet in width to be dedicated to the Authority as
shown on the Approved Plans. Because the Authority had intended to
upgrade its water lines in the area of the Development, the Authority
shall pay for and provide the piping, valves and fittings for the
Extension substantially as provided on the quote from Exeter Supply
attached hereto and will provide engineering review and inspection
services for the benefit of the Authority without cost to the Club. The
Club shall be responsible for, and shall pay, all installation costs,
including the cost of backfilling, all in accordance with the Authority's
specifications.140

84. In November 2016, RAWA returned to Olivet $59,660 of the original escrow

amount of $63,228.141 We understand that the $3,568 difference relates to fees paid to Cardno by

RAWA, which were funded through the amount held in escrow.142

85. RAWA characterized the Olivet project as an improvement,143 or an upgrade

that RAWA already intended to perform.144 It appears that RAWA relied on the position that it

had already intended to incur the costs as a basis for paying for the project materials rather than

making a contribution to Olivet.145 We did not locate documents suggesting that RAWA

contemplated upgrading the subject water line. The RAWA Board meeting minutes do not include

explicit, formal approval of RAWAs granting of concessions to Olivet in the form of material and

labor costs provided at no charge. While the RAWA Board meeting minutes grant approval of the

140
Waterline Escrow Extension Agreement, dated August 2015, at 1.
141
E-mail from Ms. Maria Rodriguez to Ms. Ruotolo, dated November 14, 2016.
142
This is inconsistent with Mr. Setleys assertion that RAWA would pay the amounts due to Cardno. For example,
in two separate e-mails on July 29, 2015, Mr. Setley stated, RAWA will pay Cardnos fee and will not ask to be
reimbursed by Olivets, (e-mail to Mr. C. Bowyer) and RAWA will also absorb the costs of Cardno Engineering to
review your plans and to inspect the project (e-mail to Mr. Schlegel). It is unclear why RAWA ultimately used
escrow funds to pay these fees despite the previous assertions that RAWA would pay these fees.
143
E-mail from Mr. Setley to Mr. C. Bowyer, dated July 29, 2015.
144
Waterline Escrow Extension Agreement, dated August 2015, at 1.
145
E-mail from Mr. Setley to Mr. C. Bowyer, dated July 29, 2015.

41
Forensic Investigation of Reading Area Water Authority

execution of the Escrow Agreement, there is no evidence that the entire RAWA Board reviewed

the language of the Escrow Agreement in its entirety, including the assertion that RAWA had

intended to upgrade its water lines in the area of the Olivet project at Pendora Park.146

86. Despite the absence of explicit, formal approval in the RAWA Board meeting

minutes, RAWA incurred material costs of $61,443147 and labor costs of $3,651,148 which it did

not charge Olivet. Additionally, we noted that RAWA used proceeds from the 2011 bond

financing to pay for the Olivet project.149 The cost of the materials for the project was

approximately 50% higher than the original estimates that BCM presented in its scoping of the

project. Further, Olivet announced the opening of its facility at Pendora Park in or around

September 2016.150 Since that time, through December 2016, RAWAs records indicate that it has

only charged Olivet in one month (November 2016). Any waiver of Olivets monthly service

fees is not explicitly and formally approved in the RAWA Board meeting minutes.

2. Masano Auto Group

87. On July 1, 2015, TMAP Realty, LLC (TMAP Realty) purchased the former

Baldwin Hardware property on behalf of Tom Masano Auto Group (Masano). Masano planned

to develop the property into a new auto mall featuring several car dealerships, repair shop,

collision facility, car wash, corporate offices and other amenities.151 Masano estimated that the

contemplated project would take approximately five years for full completion and would result

146
Waterline Escrow Extension Agreement, dated August 2015, at 1.
147
Based on invoices submitted by Exeter Supply Co., Inc.
148
Based on Job Foremans Daily Reports from the period September 8-23, 2015.
149
See Exhibit 5.1.
150
Olivet Boys & Girls Club opens at Pendora Park, THE READING EAGLE, (September 29, 2016),
http://www.readingeagle.com/news/article/olivet-boys--girls-club-opens-at-pendora-park.
151
Letter from Michael J. Gombar, Jr. to Mr. Miller, dated November 20, 2015.

42
Forensic Investigation of Reading Area Water Authority

in a significant revitalization of the area for the betterment of both the City of Reading and the

entire greater Berks County economic community.152

88. In connection with Masanos acquisition of the subject property and planned

development, on November 3, 2015, Masano contacted the City stating:

Adam,

Can you respectfully request that Dean [Miller] wave our fees for 2
years until we can rework the sprinkler lines.

The RAWA standby bills are throwing my budget way off!

We will address the redo at a time down the road.153

89. We understand that the subject property was originally zoned for industrial use,

which required larger water service mains that bore higher water standby fees. As part of the

renovation of the Property, TMAP Realty and Masano sought a reduction in fees consistent with

the COR Zoning Variance approval for the Property to a commercial business with minimal

water usage.154 TMAP Realty noted that since acquiring the property, it had paid approximately

$9,000 per month to RAWA for charges and feesdespite the fact that no business operations

have been conducted at the Property as plans for the Project are being worked out.155

90. In an effort to waive the water standby charges for two years, Masano first

communicated with the Executive Director of the Reading Redevelopment Authority, Mr. Adam

Mukerji (Mr. Mukerji), who then referred him to Mr. Miller. On November 20, 2015, Masano

152
Letter from Michael J. Gombar, Jr.to Mr. Miller, dated November 20, 2015.
153
E-mail from John J. Masano to Adam Mukerji, dated November 3, 2015. We note that on November 4, 2015, Mr.
Miller stated that he would be setting up a Review Panel Meeting for this which will include at least 1 Board member
possibly 2. (E-mail from Mr. Miller to Adam Mukerji, dated November 4, 2015.)
154
Letter from Michael J. Gombar, Jr. to Mr. Miller, dated November 20, 2015.
155
Letter from Michael J. Gombar, Jr. to Mr. Miller, dated November 20, 2015.

43
Forensic Investigation of Reading Area Water Authority

formally requested that RAWA reduce the water standby fees billed and presented RAWA with

two options:

A full waiver of all RAWA fees and charges for the Property during the
time that the Property is dry and not in use for any business operations.

Alternatively, a reduction of the RAWA fees and charges for the


Property from the current amount to the applicable RAWA costs and
charges that would be incurred in the event that the Property would be
serviced by only an eight (8) inch fire meter and a four (4) inch domestic
water meter. This coincides with the actual intended water
infrastructure for the Property to service the Project provided that
RAWA grants its consent to this request at a later date.156

91. Subsequent to its initial waiver request, on December 10, 2015, TMAP Realty and

Masano made a second waiver request that the subject propertys two eight (8)-inch water service

mainsremain as is without the need to separate the lines for a dedicated domestic water supply

for the Project. TMAP Realty/Masano indicated that outside consultants estimated that the cost

to separate the two lines for fire protection and domestic water would approximate $200,000. As

such, TMAP Realty/Masano requested that RAWA grandfather the subject property and waive

the requirement to separate the lines. In connection with its waiver request, Masano offered

another one of its facilities, a nearby Mercedes Benz dealership, as leverage should Masano fail

to pay its water bill.157

92. Various correspondence provided by RAWA establishes RAWAs

acknowledgment that any decision to grant Masanos waiver requests would require

input/approval from the RAWA Board. Specifically:

156
Letter from Michael J. Gombar, Jr. to Mr. Miller, dated November 20, 2015.
157
Letter from Tom Masano (Masano Architects Group, Inc.) to Mr. Miller, dated December 10, 2015.

44
Forensic Investigation of Reading Area Water Authority

November 4, 2015 Regarding a fee waiver request by Masano, Mr. Miller


informed Mr. Mukerji that he will be setting up a Review Panel Meeting for
this which will include at least 1 Board member possibly 2.158

January 11, 2016 Regarding Masanos waiver requests and Mr. Schlegels
inquiry as to the ETA to close-out the requests, Mr. Miller responded, We
usually havent bent the rules on these thingsI believe youre going to be
asked to.159

February 3, 2016 Regarding Masanos waiver requests, Mr. Setley stated,


I believe we all concluded that, what Masano is really looking for is relief
from certain meter surchargesWhich we all concluded was a policy decision
above our pay grade. Should I suggest to Masano's lawyer that someone at
Masano reach out to the Chairman?160 Mr. Miller responded stating that the
request either needed to go to the Chairman or the Facilities Committee.161 Mr.
Setley further stated, Because it could get political, Id like to send these guys
somewhere. Was Ernie in any of the meetings on this?162

February 3, 2016 In an e-mail to Messrs. Schlegel and Miller, Mr. Setley


stated, I think the real request from Masano is relief from certain monthly non-
consumption charges. Obviously, neither Dean nor I can make a decision on
that matter. I think it makes sense for Masano reps to meet with either the
facilities committee or the finance committee (with you in attendance) to review
what's going on and exactly the relief that is being sought.163

February 4, 2016 Mr. Setley stated, Because they don't want to undertake the
expense that would be required to change those connections (and it seems we
are disinclined to force them to), it becomes a dollars and cents issue. I don't
mean to "bail" on you guys ... but, I think only the Board can make the financial
determination. I certainly support meeting them in the middle somewhere.164

158
E-mail from Mr. Miller to Mr. Adam Mukerji, dated November 4, 2015. A TMAP Realty Customer History note
dated November 17, 2015, states, had review Panel meeting with Masano members, tom lyman, Mike Setley, Ernie
Schlegel, Gery Fisher, Dean and my self concerning the development of this property going forward. They are
requesting that the services be changed to fire services, and they need a smaller domestic service. We advised them
to submit their plans to us for BCM to review. They also wanted rawa to waive all surcharges during the winter
because they will not be at the property doing anything. We asked them to submit everything in writing.
159
E-mail from Mr. Miller to Mr. Schlegel and Mr. Setley, dated January 11, 2016. In response to Mr. Millers e-
mail, Mr. Schlegel asked, What rules are we bending?
160
E-mail from Mr. Setley to Mr. Miller and Mr. Weld, dated February 3, 2016.
161
E-mail from Mr. Miller to Mr. Setley and Mr. Weld, dated February 3, 2016.
162
E-mail from Mr. Setley to Mr. Miller and Mr. Weld, dated February 3, 2016.
163
E-mail from Mr. Setley to Mr. Schlegel and Mr. Miller, dated February 3, 2016.
164
E-mail from Mr. Setley to Mr. Miller, Gery Fisher, Mr. Schlegel, and Ms. Ruotolo, dated February 4, 2016.

45
Forensic Investigation of Reading Area Water Authority

February 5, 2016 Mr. Schlegel, while apologizing to Mr. Setley for the delay
in the decision as to the waiver requests, stated, Please note that our finance
committee would be addressing this at their February 22nd meeting which I will
be attending and we will have an answer there after.165

93. Prior to the February 25, 2016 RAWA Board meeting, Mr. Setley outlined the two

Masano waiver issues (i.e., the standby fees and the water line reconfiguration) to the RAWA

Board of Directors, stating:

Masano is asking for 2 things: 1. Acknowledgement that they do not


need to reconfigure to meet current modern specs ... which we generally
don't require [and] 2. A reduction in standby fees, without abandoning
services. Masano currently pays $6,043 in Water standby fees and
$3,660.75 for sewer standby fees based on 6 connectionsThey are
asking to pay standby fees instead for an 8" fire connection and a 4"
domestic connection (which sounds large... but it was their request).
This would lead to monthly standby fees of $5,113. $3,034 water and
$2,079 sewer. This is a policy decision for the Board to make. But, for
whatever it's worth, I do not find the request to be unreasonable.

Incidentally, Gery asked me to determine if we can adopt some


parameters to deal with these sorts of requests in the future. Dean and
I spoke about that at length yesterday. Unfortunately, we concluded
that these requests are not only as different as apples and oranges,
they are as different as apples and bowling balls. We just cant come
up with parameters that will work. I think these are, and will remain,
case by case decisions for the Board. On the bright side, we dont get
a lot of them.166

94. On February 26, 2016, Mr. Setley indicated to Mr. Michael Gombar, counsel for

Masano, that RAWA has tentatively agreed to grant to your client the relief requested.167 This

decision did not appear in the February 25, 2016 RAWA Board meeting minutes168 or any other

meeting minutes. Based on our discussions with RAWA personnel, we understand that a decision

165
E-mail from Mr. Schlegel to Mr. Setley, dated February 5, 2016.
166
E-mail from Mr. Setley to Mr. Miller, Mr. Fisher, Mr. Miller, Mr. Schlegel, Mr. Ralph Johnson, Ms. Maria
Rodriguez, Mr. Ronald Hatt, Mr. Weld, Mr. Steve Symons, and Ms. Ruotolo, dated February 25, 2016.
167
E-mail from Michael Setley to Michael Gombar and Heidi Masano, dated February 26, 2016.
168
RAWA Board Meeting Minutes, dated February 25, 2016.

46
Forensic Investigation of Reading Area Water Authority

to approve the waiver requests may have been made during the Executive Session. However, we

understand is against RAWAs policies and procedures to make these decisions absent explicit and

formal approval by the RAWA Board.

95. On March 4, 2016, Mr. Miller, on behalf of RAWA, sent a letter to TMAP

Realty/Masano indicating that RAWA agreed to the use of eight-inch meters for fire service and

two-inch meters for domestic service and that the monthly charges would be discounted as follows:

By only using the 8" meters as a fire service this will reduce the monthly
fees from $5474.46 dollars per month to $998.94 dollars per month for
water charges and $3155.76 dollars per month to $0.00 dollars for per
month for sewer charges.169

96. The March 4, 2016 letter from Mr. Miller to TMAP Realty/Masano describes an

approximately $7,600 reduction in the TMAP Realty/Masano monthly fees.170 While various

correspondence acknowledges the need for input/approval by the RAWA Board, we have not seen

evidence establishing that the RAWA Board formally approved this reduction in fees. Further, we

understand that the current RAWA Board and Chairman assert that any waiver of fees granted to

TMAP Realty/Masano was improper, which has resulted in litigation between RAWA and TMAP

Realty/Masano. Based on a review of TMAP Realty/Masanos Customer History report, RAWA

began charging lower rates during March 2016, which continued through September 2016, before

returning to the original rates. During the two months January 2016 through February 2016,

monthly billings averaged $9,776 compared to average monthly billings of $2,735 during the

period March 2016 through September 2016.

169
Letter from Mr. Miller to TMAP Realty and Masano, dated March 4, 2016.
170
We note that total monthly billings to TMAP Realty/Masano during January and February 2016 approximated
$9,800. During the period March 2016 through September 2016, average monthly billings approximated $2,700,
before increasing to approximately $10,200 per month beginning in October 2016. Based upon RAWAs Customer
History records for TMAP Realty/Masano for the period May 1, 2012 through December 31, 2016.

47
Forensic Investigation of Reading Area Water Authority

97. On August 25, 2016, the RAWA Board unanimously agreed to notify Masano that

the relief that were given was not Board authorized, and that they should contact [RAWA] to

revisit the request for proper resolution.171 Additionally, the RAWA Board agreed to request

from Mr. Schlegel the lost revenue of $35,751.90 due to his unauthorized actions.172 Mr.

Schlegel has refuted any wrongdoing.173 On September 21, 2016, the RAWA Board agreed to

adjust Masanos billing to reinstate the appropriate charges beginning with the October 2016

billing.174 Masano has subsequently filed a suit against RAWA for this change, due to prior

promises purportedly made by RAWA,175 and, according to the Reading Eagle, ask[ed] a judge

to require RAWA to honor the terms of Millers March 4 letter to TMAP Realty/Masano.176

3. Stokesay Castle

98. During 2013, RAWA undertook a project at Stokesay Castle (Stokesay) based on

a request to install a new 1.5-inch meter for a domestic water service main and a 6-inch meter for

fire service.177

99. On August 22, 2013, Stokesay submitted two separate applications, which included

charges for the two-inch and six-inch meters of $3,836.04 and $5,452.36, respectively.178 Stokesay

paid these amounts, totaling $9,288.40 on August 30, 2013.179 When the fee amounts charged to

Stokesay were compared to RAWAs fee schedule, it was noted that RAWA waived the tapping

171
RAWA Board meeting minutes, dated August 25, 2016 at 2.
172
RAWA Board meeting minutes, dated August 25, 2016 at 2.
173
RAWA Board meeting minutes, dated September 13, 2016 at 1.
174
RAWA Board meeting minutes, dated September 21, 2016 at 3.
175
RAWA Board meeting minutes, dated December 13, 2016 at 3.
176
Dan Kelly, Reading auto dealer sues to pay lower water bill, THE READING EAGLE, (December 15, 2015),
http://www.readingeagle.com/news/article/reading-auto-dealer-sues-to-pay-lower-water-bill.
177
Applications for Installation Water Supply, dated August 22, 2013.
178
Applications for Installation Water Supply, dated August 22, 2013.
179
Stokesay Check No. 1054.

48
Forensic Investigation of Reading Area Water Authority

fee. Further, based on a review of other information related to project labor and material charges,

we noted that certain costs were also not charged to Stokesay.

Table 6. Stokesay Project Costs


1.5-Inch 6.0-Inch
Meter Meter
(Domestic) (Fire) Total
Amount Billed to Stokesay180
Connection Fee $3,780 $5,096 $8,876
Tapping Fee181 - - -
Administrative Fee 56 56 112
Inspection Charge - 300 300
Total $3,836 $5,452 $9,288

RAWA Fee Schedule (Standard Charges)


Connection Fee $3,780 $5,096 $8,876
Tapping Fee (Not Billed to Stokesay)182 15,085 - 15,085
Administrative Fee 56 56 112
Inspection Charge - 300 300
Total $18,921 $5,452 $24,373

Labor & Materials (Not Billed to Stokesay)183


Labor184 $ 3,388
Materials185 43,248
Total Labor & Materials $46,636

100. We understand that for projects of this nature, RAWA typically installs the tap and

brings the piping to the curb (maximum 12 inches). However, the piping installed at Stokesay was

237 feet, which we understand extended to the main building on the property.186 RAWA personnel

have indicated that it is unusual for RAWA to provide piping services of that length. The

180
Applications for Installation Water Supply, dated August 22, 2013.
181
The detail of charges accompanying the 1.5-inch domestic water service application notes Waived Tapping Fee.
182
RAWAs Connection Fee schedule, as of 2007, indicates that the standard tapping fee for a 1.5-inch domestic water
service application is $15,085.
183
Based on a review of the Customer History record for the period May 1, 2012 through November 30, 2016, we did
not locate charges of this nature or amount applied to the Stokesay account.
184
Based on schedule of Regular and OT hours and costs during the period September 9, 2013 through September
11, 2013.
185
Based on RAWA checks 2592 ($12,356.87), 2676 ($14,145.71), and 2755 ($16,745.54).
186
Job Foremans Daily Report, Materials Used, dated September 9, 2013.

49
Forensic Investigation of Reading Area Water Authority

additional services and materials provided by RAWA resulted in additional labor and material

costs,187 that RAWA did not bill Stokesay, which was also unusual.

101. We have not located any documents or supporting records that explain why RAWA

did the extra work at Stokesay and did not charge for the services. In addition, we have not located

any support that the RAWA Board explicitly authorized a waiver of tapping fees ($15,085) or

labor and materials ($46,637).

102. We also noted that during 2016, RAWA waived late fees totaling $507.77 on

Stokesays account. In a May 19, 2016 e-mail from Mr. Schlegel to Ms. Ruotolo, Mr. Schlegel

noted that RAWA waived $507.77 in late fees as a courtesy to Stokesay. Further, the Stokesay

Customer History record states, Ernie spoke to the owner and he told him he would waive the

late fees and gave him the balance to pay.188 Consistent with the waiver of the tapping fee and

labor and material costs, we have not located any documents or support that the RAWA Board

explicitly authorized a waiver of the late fees.

103. In total, RAWA waived fees and other amounts for Stokesay totaling $62,230,

which were comprised of tapping fees ($15,085), labor and materials ($46,637), and late fees

($508). We have not located any support that the RAWA Board explicitly and formally authorized

a waiver of these fees.

187
In connection with the materials required for the Stokesay project, we noted an e-mail exchange between Susan
Days and Mr. Miller in which Ms. Days stated that Mr. Miller was offeringthe material for the connection for the
water line but we are stopping at the drive way. Do we know how much this will cost? E-mail from Ms. Susan Days
to Mr. Miller, dated August 16, 2013. In response, Mr. Miller stated, That is correct. I am not sure of the cost and I
dont think we should document that. E-mail from Mr. Miller to Ms. Susan Days, dated August 16, 2013.
188
RAWAs Customer History record for Stokesay Castle LLC for the period May 1, 2012 through November 30,
2016.

50
Forensic Investigation of Reading Area Water Authority

4. City Light Ministries

104. During September/October 2014, City Light Ministries, a community outreach

center focused on youth and the homeless, sought relief from Reading regarding the connection

charges to get their donated fire sprinkler system up and running189 Regarding the request for

relief, Eron Lloyd stated, The question is, do we want to provide some relief, as requested, and

maybe some good PR, in supporting this? They are beginning work on the installation next week,

and are hoping for a decision.190 An itemization of the fees associated with the project contained

a total charge $5,513.30.191

105. On November 4, 2014, Mr. Miller e-mailed Thomas Weld at Cardno BCM

regarding the City Light Ministries project stating, This is the project that the Board waived fees

at the Board Meeting last week.192 Further, in a November 15, 2014 e-mail from Mr. Schlegel to

Dan Kelly, a reporter/columnist for the Reading Eagle, Mr. Schlegel stated, It should be noted

that the Reading Area Water Authority contributed to this project by waving its Connection Fee,

Tapping Fee, Administration Fee for a savings just a shade under $5,000.00 to provide water for

fire suppression.193

106. While the November 12, 2014 RAWA Board meeting minutes referred in general

to project approval,194 no RAWA Board meeting minutes explicitly and formally address a waiver

189
E-mail from Mr. Eron Lloyd to Mr. Schlegel and Mr. Gery Fisher, dated October 24, 2014.
190
E-mail from Mr. Eron Lloyd to Mr. Schlegel and Mr. Gery Fisher, dated October 24, 2014.
191
The detail of charges accompanying the four-inch fire service meter application.
192
E-mail from Mr. Miller to Mr. Weld, dated November 4, 2014.
193
E-mail from Mr. Schlegel to Mr. Dan Kelly, dated November 15, 2014.
194
The November 12, 2014 RAWA Board meeting minutes stated, City Light Ministries fire service project is
approved waiting for PennDOT permit.

51
Forensic Investigation of Reading Area Water Authority

of costs or evidence RAWA Board approval of waiver of costs for City Light Ministries, which

Mr. Schlegel characterized as just a shade under $5,000.

5. GoggleWorks

107. In connection with an analysis of credits issued by RAWA to customers, we noted

a significant credit issued to GoggleWorks apartments (GoggleWorks). Based on a review of

various e-mail correspondence, RAWA worked with GoggleWorks to determine a refund due to

GoggleWorks for overbilling resulting from incorrect meter reads,195 which we understand related

to a faulty meter. On March 26, 2015, RAWA issued a check to GoggleWorks for $140,424.40.196

108. Correspondence suggests that RAWA initially relied on GoggleWorks own

estimate of the refund due rather than RAWAs own determination. In a March 20, 2015 e-mail,

Mr. Karl Sheffer of Dallas Data Systems, RAWAs accounting system vendor, stated:

Regarding the Water/Sewer breakdown of this adjustment, I had


calculated the actual amount of what the refund should be based on
actual/corrected readings and usages, but was told to use the customer
supplied overbilling amount of $169,585.85.197 I was not able to back
into this amount because the customer calculated this amount based on
estimated billing of $2,500.00 per month from October 2013 to
October 2014.

However, based on my actual calculations (see attached spreadsheet), I


came to an overbilling amount of $161,389.98 where $68,160.29 was
Water and $93,229.69 was Sewer. This resulted in a Water/Sewer
breakdown of 42% Water and 58% Sewer. I would think that you could
use these same percentages against the customer supplied amount of
$169,585.85 in order to book this correctly.198

195
E-mail from Mr. Karl Sheffer to Ms. Kieffer, Ms. Ruotolo, and Mr. Miller, dated February 24, 2015.
196
Check No. 5314.
197
The final refund issued to GoggleWorks was reduced/offset by an outstanding account balance at that time of
$29,161.45.
198
E-mail from Mr. Karl Sheffer to Ms. Kieffer, dated March 20, 2015.

52
Forensic Investigation of Reading Area Water Authority

109. Although Mr. Sheffer could not recalculate GoggleWorks estimated refund

amount, and determined a lower refund amount on his own, RAWA ultimately issued a refund

based on GoggleWorks estimate. Subsequent to the payment of the refund, Ms. Ruotolo raised

concerns with the refund paid to GoggleWorks. Specifically, on April 1, 2015, Ms. Ruotolo e-

mailed Michael Setley, stating:

I have an issue with what was presented to Goggleworks as a dollar


amount that they feel is due to them.

Unfortunately I was not involved in the meeting or any of the gathering


of information but I am now and what I am seeing is incorrect data
that would lead them to believe they are owed $169,585.85.

I am attaching a spread sheet that it appears the Goggleworks provided


to RAWA. The column that they show TOTAL TO PAY is not what
they have actually paid.

Also attached is a spread sheet that I have done using their original
spread sheet but I renamed the column PAYMENT and actually put
in their payments.

To the right I took out the months in question took what they paid and
subtracted what was agreed upon to bill for those months and come up
with a much lower dollar amount.

I just am at a loss with this, because common sense would be to take


what they paid and subtract what they should have been paid and that
would be their refund.

The amount on their spread sheet doesnt represent the true amount.

I guess my question is can we go back to them with this simplified


information and make them understand?199

110. In response to Ms. Ruotolos concern, Mr. Setley stated, I am meeting with Dean

at 11:00. Let me get his take on it. The fight may not be worth it.200 A subsequent follow-up e-

199
E-mail from Ms. Ruotolo to Mr. Setley, dated April 1, 2015.
200
E-mail from Mr. Setley to Ms. Ruotolo, dated April 1, 2015.

53
Forensic Investigation of Reading Area Water Authority

mail from Mr. Setley to Ms. Ruotolo stated, I know you wont like it. But we need to leave this

one go. Politically, we need to pay them whatever we promised.201 After Mr. Setleys response,

the following exchange occurred:

From Ms. Ruotolo to Mr. Setley:


Okay youre the boss

From Mr. Setley to Ms. Ruotolo:


No!!!!! Ernie is.
From Ms. Ruotolo to Mr. Setley:
Can I just ask one question on Dans email he says he was wondering
why there wasnt an explanation as to why the amount was lower, can
we try to explain it before we give away $46,000 that shouldnt be given
away or should I just shut up? LOL

From Mr. Setley to Ms. Ruotolo:


I would never tell you to shut up. But, I think you should stand
down on this.202

111. Despite Ms. Ruotolos concerns and assertion that RAWA improperly refunded

$46,000 to GoggleWorks, Mr. Setley informed Ms. Ruotolo to leave this one go. Politically, we

need to pay them whatever we promised.203 As part of our analysis, we determined that records

support the refund actually paid by RAWA, and it was not overstated. However, we have not seen

evidence to suggest that other RAWA personnel analyzed GoggleWorks own calculation of the

overcharge at that time and concluded that Ms. Ruotolos calculation was incorrect. Instead,

correspondence suggests that GoggleWorks calculation was accepted without further scrutiny and

validation due to political reasons,204 and Ms. Ruotolo was told to stand down on the issue,205

despite the working assertion at that time that the refund paid by RAWA was overstated.

201
E-mail from Mr. Setley to Ms. Ruotolo, dated April 1, 2015.
202
Various e-mail correspondence between Ms. Ruotolo and Mr. Setley, dated April 1, 2015.
203
E-mail from Mr. Setley to Ms. Ruotolo, dated April 1, 2015.
204
E-mail from Mr. Setley to Ms. Ruotolo, dated April 1, 2015.
205
Various e-mail correspondence between Ms. Ruotolo and Mr. Setley, dated April 1, 2015.

54
Forensic Investigation of Reading Area Water Authority

112. In connection with our analysis of the refund paid to GoggleWorks, it was identified

that the GoggleWorks account was not billed for monthly fire services since 2011. For the period

January 2011 through February 2017, RAWA failed to bill GoggleWorks $20,267, as outlined in

Table 7 below.

Table 7. GoggleWorks Unbilled Fire Service Fees206


No. of Total
Year Rate207 Unbilled Months Unbilled Amount
2011 $197.36 / $224.54 12 $ 2,586
2012 $255.59 12 3,067
2013 $263.26 12 3,159
2014 $271.16 12 3,254
2015 $271.16 / $279.29 / $338.64 12 3,403
2016 $338.64 12 4,064
2017 $338.64 1 339
Total 73 $19,872

113. In summary, evidence suggests that RAWA did not fully investigate a working

assertion that an approximately $140,000 refund paid to GoggleWorks was overstated by

approximately $46,000. Instead, correspondence suggests that GoggleWorks calculation was

accepted without further scrutiny and validation due to political reasons.208 Further, RAWA

failed to bill GoggleWorks monthly fire service fees during the period January 2011 through

February 2017, for a total under-billing of $20,267.

206
We understand, based on discussion with individuals at RAWA, that RAWA had not charged GoggleWorks for
the fire service from January 1, 2011 through January 31, 2017. This is consistent with our review of the available
Customer History report for GoggleWorks for the period of May 1, 2012 through March 31, 2017. During that period,
we noted that the monthly water, meter, sewer service charges were consistent with the rates included on RAWAs
rate schedule and therefore, did not include the additional fire service charges. The Customer History report show
RAWA began charging GoggleWorks for the fire service beginning with the February 2017 service month.
207
Represents fire service charges for a 6 fire service connection based upon the rates included on RAWAs rate
schedules.
208
E-mail from Mr. Setley to Ms. Ruotolo, dated April 1, 2015.

55
Forensic Investigation of Reading Area Water Authority

6. Mr. Ernie Schlegel

114. An unnamed RAWA employee prepared a letter addressing the potential that Mr.

Schlegel did not pay his bill on a timely basis, which resulted in late fees, and requested that the

late fees be waived on his account. The undated and unsigned letter, which was prepared on

RAWA letterhead, stated:

It was brought to the attention in a public meeting that the Chairman


of the Board was suspected of not paying late fees.

After a brief investigation it was determined that Mr. Schlegel


received balance adjustments on 3 occasions between May 2014 and
October 2015.

It also shows that Mr. Schlegel's account was being paid every other
month from November 2013 through October 2015. He generally
paid his bill every other month and should have been charged a late
fee.

A discussion with the customer service representatives came to a


consensus that the chairman would call and ask for adjustments to the
late fees. Which they gave based on his position.

The records indicate 3 adjustments were made to the account during


the above time frame.

Mr. Schlegel generally dealt with the Customer Service


Representatives concerning his account rather than the Customer
Service Manager.

Mr. Schlegel would regularly come into the Customer Service area
and interfere with Customer Service Representatives attempting to do
their job.

115. Mr. Schlegels Customer History report included adjustments of approximately $37

during the period noted in the letter of May 2014 through October 2015.209 Notes contained in the

Customer History report include:

209
RAWAs Customer History report for Mr. Schlegel from May 1, 2012 through April 30, 2017.

56
Forensic Investigation of Reading Area Water Authority

May 12, 2014 ernie called to go over balance removed late fee one time
ph#610XXXXXXX

November 3, 2015 removed late fees show sue removed some of it but not
the rest

November 3, 2015 ernie ph#610-XXX-XXXX called to verify balance told


him late fees were charged in error gave correct balance tracey will make adj

116. Statements made in the letter noted above suggest that Mr. Schlegel approached

customer service representatives directly to request a waiver of late fees, which the employees

purportedly granted due to Mr. Schlegels position on the RAWA Board. While the amount of

fees waived is nominal, the letter and accompanying Customer History report suggest that Mr.

Schlegel did not pay his residential bills in a timely manner, resulting in late fees, but was able to

obtain waivers of those late fees.

7. Other Billing Issues

117. As noted previously, our analysis of a significant refund paid by RAWA to

GoggleWorks caused RAWA to perform further testing of GoggleWorks account, which

identified monthly fire service fees that were not charged to GoggleWorks during the years 2011

through 2017. This finding, along with RAWAs transition of meter reading services from Miller

Environmental to internal personnel, prompted RAWA to perform a review of the meter readings

and usage of all of its commercial customers to assess the accuracy of customer billings.210

Through this process, which began in or around early March 2017,211 we understand that RAWAs

in-house meter reading staff visited each commercial customer property to confirm whether other

210
Karen Shuey, Reading Area Water Authority uncovers $4.2 million in billing errors, THE READING EAGLE (March
11, 2017), http://www.readingeagle.com/news/article/reading-area-water-authority-uncovers-42-million-in-billing-
errors.
211
Karen Shuey, Reading Area Water Authority uncovers $4.2 million in billing errors, THE READING EAGLE (March
11, 2017), http://www.readingeagle.com/news/article/reading-area-water-authority-uncovers-42-million-in-billing-
errors.

57
Forensic Investigation of Reading Area Water Authority

customer billing issues consistent with those noted above occurred with other properties. As a

result of this process, RAWA identified the following three customers that were either under-billed

or not receiving water bills at all, which are discussed in further detail in the subsequent sections:

Evergreen Community Power Plant

Hydrojet Inc.

Our City-Reading/Panevino/WFMZ-TV News

a. Evergreen Community Power Plant

118. Constructed in 2008, the Evergreen Community Power Plant (Evergreen)

provides heating and electric services to the affiliated United Corrstack, LLC paper mill,212 both

of which are located on a 41 acre site in Reading.213 As a result of its review of Evergreens meter

readings, RAWA determined that the water meter for Evergreen had been misread by Miller

Environmental since RAWA began providing the customer with water in April 2009. This error

resulted in RAWAs billing Evergreen only 10% of Evergreens actual water usage. In addition,

Evergreens sewer portion of the bill was similarly understated due to the improper meter reading

performed by Miller Environmental.

119. Based on the records maintained by RAWA regarding Evergreens usage, we

analyzed the billing history to determine the amount that RAWA should have charged Evergreen

during the period April 2009 through March 2017. To determine the proper usage, we used

Evergreens reported meter reading water usage and multiplied that usage by 10 to reflect the

actual usage. We then applied RAWAs water and sewer billing rates to determine the amount

that should have been billed by RAWA. As detailed in Table 8, this analysis reveals that RAWA

212
Both Evergreen and United Corrstack LLC are owned by Interstate Resources, Inc.
http://www.interstateresources.com/default.aspx.
213
http://www.midatlanticchptap.org/profiles/evergreen_project_profile.pdf.

58
Forensic Investigation of Reading Area Water Authority

undercharged Evergreen by approximately $4.52 million through March 2017, due to improperly

reading meters since Evergreen began using RAWAs water service.

Table 8. Evergreen Reported v. Actual214


Reported/Charged In
Error BT Calculation Actual Variance
Water Usage Water Usage Water Usage
Year (gallons) Amount (gallons) Amount (gallons) Amount
2009 792,837 $9,205 7,928,370 $ 86,288 7,135,533 $ 77,083
2010 3,911,607 47,917 39,116,070 425,578 35,204,463 377,661
2011 4,565,847 62,732 45,658,470 521,632 41,092,623 458,900
2012 4,881,973 73,230 48,819,730 643,164 43,937,757 569,934
215
2013 5,771,249 79,233 52,175,160 682,207 46,403,911 602,974
2014 6,121,600 87,118 61,216,000 799,562 55,094,400 712,444
2015 5,657,000 80,787 56,570,000 771,586 50,913,000 690,799
2016 5,886,200 94,231 58,862,000 887,563 52,975,800 793,332
2017 1,775,400 29,604 17,754,000 268,697 15,978,600 239,093
Total 39,363,713 $564,057 388,099,800 $5,086,277 348,736,087 $4,522,220

b. Hydrojet, Inc. and Our City-Reading/Panevino/WFMZ-TV News

120. Based on an analysis of customer meter readings and billing records, RAWA never

charged Hydrojet, Inc. (Hydrojet), Panevino, and WFMZ-TV News (WFMZ) for water

services. Built in 2009, Hydrojet is a 40,000 square foot facility216 located in Reading217 that

develops and produces, among other things, military and aircraft parts, electronics, industrial

214
See Exhibits 4.0 and 4.1.
215
The 2013 Reported/Charged water usage does not equal 10% of the Calculated/Actual usage because the
Reported/Charged amounts for February 2013 were based on an estimate, with actual usage (based on the improper
meter reading) included as part of a two-month billing in the following month (i.e., the March 2013 charge included
both February and March). However, no adjustment was included to reconcile the original February 2013 estimate of
usage to actual. See Exhibit 4.1.
216
http://www.hydrojet.com/hydrojet/hydrojet-overview/.
217
http://www.hydrojet.com/contact/.

59
Forensic Investigation of Reading Area Water Authority

tooling, marine components.218 Panevino, an Italian restaurant,219 and WFMZ, a local news station

covering Lehigh Valley and Berks County,220 are both located in the Albert R. Boscov Plaza in

Reading. Panevino and WFMZ each rent space from Our City-Reading, Inc. (Our City-

Reading), a non-profit corporation focused on the revitalization of Reading and surrounding

community,221 which leases space from the Reading Parking Authority.

121. We understand that through RAWAs internal customer review, it was determined

these commercial companies were never recorded as customers in RAWAs system,222 and,

accordingly, were never billed for their respective water usage. We performed an analysis to

estimate the amount that RAWA should have charged the three companies by prorating, on a

straight-line basis, the actual cumulative usage reported for each company as of March 6, 2017,

over the period during which the companies used RAWAs water services without being

charged.223 We then applied RAWAs water and sewer billing rates to each companys calculated

average monthly usage and also added RAWAs monthly water, sewer, and fire service charges to

determine the amount that RAWA should have billed each company. For purposes of our analysis,

we have used a single calculation for Our City-Reading/Panevino/WFMZ, as we understand that

the two tenants respective usage flows through a single meter at the property, which Our City-

Reading leases from the Reading Parking Authority. As detailed in Table 9 and Table 10, this

218
http://www.hydrojet.com/hydrojet/hydrojet-overview/.
219
http://www.panevinoreading.com/index.php.
220
http://www.wfmz.com/station/about.
221
http://www.ourcityreading.org/ocr/index.htm.
222
RAWA could not produce a customer history report for either Hydrojet or Panevino, which we understand is due
to the fact that both companies water usage had never been reported.
223
Per discussion with Ms. Ruotolo, RAWA installed the water meter at Hydrojet in January 2009 and in May 2011
for Panevino/WFMZ. RAWA has not charged any of these companies for water usage since RAWA installed the
respective water meters.

60
Forensic Investigation of Reading Area Water Authority

analysis reveals that RAWA undercharged Hydrojet and Panevino/WFMZ by $246,388 and

$99,446, respectively.

Table 9. Hydrojet Estimated Charges224


No. of Average Meter Usage Water Usage Service Total
Year Months (gallons) Charges Charges Charges
2009 12 1,145,407 $ 13,301 $ 7,726 $21,027
2010 12 1,145,407 14,031 9,730 23,761
2011 12 1,145,407 14,828 11,121 25,949
2012 12 1,145,407 17,182 13,390 30,572
2013 12 1,145,407 17,395 13,676 31,071
2014 12 1,145,407 17,828 15,275 33,103
2015 12 1,145,407 18,659 16,398 35,057
2016 12 1,145,407 20,623 18,691 39,314
2017 2 190,901 3,511 3,155 6,666
Total 98 9,354,157 $ 137,358 $ 109,162 $ 246,520

Table 10. Our City-Reading/Panevino/WFMZ Estimated Charges225


No. of Average Meter Usage Water Usage Service Total
Year Months (gallons) Charges Charges Charges
2011 8 243,325 $ 3,235 $ 6,010 $ 9,245
2012 12 364,987 5,475 10,212 15,687
2013 12 364,987 5,543 10,426 15,969
2014 12 364,987 5,681 10,877 16,558
2015 12 364,987 5,946 11,437 17,383
2016 12 364,987 6,571 13,115 19,686
2017 3 91,247 1,679 3,315 4,994
Total 71 2,159,507 $ 34,130 $ 65,392 $ 99,522

122. Overall, RAWA undercharged a total of $4.87 million since 2009 from these four

companies for their use of RAWAs water services, as detailed in Table 11.

224
Amounts subject to rounding. See Exhibits 4.0 4.1.
225
See Exhibits 4.0 and 4.3.

61
Forensic Investigation of Reading Area Water Authority

Table 11. Improper Billings Total Estimated Undercharged Fees226


Amount Charged Correct Billing Amount
Company in Error Amount Undercharged
Evergreen $ 564,057 $ 5,086,277 $ 4,522,220
Hydrojet - 246,520 246,520
Our City-Reading/Panevino /WFMZ - 99,522 99,522
Total $ 564,057 $ 5,432,319 $ 4,868,262

123. With respect to Panevino/WFMZ, Our City-Reading Vice Chairman Jim Boscov

stated, I know we never received a bill but I dont know if our accountants assumed [that the

water usage charges were] built into the rent we pay to the parking authority or if they thought the

bill was going directly to the tenant.227 We noted that under the lease agreement between Our

City-Reading (as tenant) and the Reading Parking Authority (as landlord), Our City-Reading bore

responsibility for utilities, including water.228

124. While Our City-Reading has provided at least a preliminary explanation,

Evergreen and Hydrojet have not provided any explanations as to why they paid either a nominal

amount for significant water usage (in the case of Evergreen) or paid nothing at all (in the case of

Hydrojet) to RAWA for the water services the companies utilized.

226
See Exhibit 4.0.
227
Karen Shuey, Reading Area Water Authority uncovers $4.2 million in billing errors, BERKS & BEYOND (March 11,
2017), http://www.readingeagle.com/news/article/reading-area-water-authority-uncovers-42-million-in-billing-
errors.
228
Section 22.01 of the April 25, 2007 Lease Agreement between Reading Parking Authority (as Landlord) and Our
City-Reading, Inc. (as Tenant), states that the, Tenant agrees to make its own arrangements, at Tenant's sole
cost and expense, for any gas, electricity and any other utility including separately metered water and
sewer required in connection with the use and operation of the Demised Premises including any
land planning and construction costs for bringing municipal water and sewer to the Demised Premises.
Tenant agrees to reimburse Landlord for any tap-in, connection, user fees, or capacity charges required for the
Demised Premises if not required for garage operation. Tenant shall pay before delinquency, directly to the
appropriate company or governmental agency, all charges for utilities consumed on the Demised
Premises.

62
Forensic Investigation of Reading Area Water Authority

125. We note that Miller Environmental provided water meter reading services during

this entire period, but we have not performed procedures to determine whether Miller

Environmental was aware of these billing errors. To date, we have not completed a full analysis

of RAWAs commercial customer billing activity to determine whether any other instances of

improper billings exist. These procedures may include, but are not limited to, reconciliations of

RAWAs water consumption records with customer usage and billing records and/or an analysis

of RAWAs water meter installation records to ensure that all new meters installed are

subsequently billed. We recommend that further analysis be performed.

C. OTHER MATTERS

1. Bond and Other Debt Financing / Capital Projects

126. Through our review of RAWAs financial records, we noted that RAWAs year-

end outstanding debt balance for all bonds and notes increased by approximately $38.9 million, or

72%, from 2008 through 2015.229 Specifically, as of December 31, 2008, RAWAs outstanding

debt principal was $54.1 million,230 which increased to $93.0 million outstanding as of December

31, 2015.231

127. During the years 2008 through 2015, RAWA paid approximately $40 million of

principal and interest on its outstanding debt, as outlined in Table 12.

229
Financial reports were only available for the period ending December 31, 2008 through December 31, 2015.
230
RAWA Audited Financial Report, as of December 31, 2008 (2008 Financial Report) at 19.
231
RAWA Audited Financial Report, as of December 31, 2015 (2015 Financial Report) at 23.

63
Forensic Investigation of Reading Area Water Authority

Table 12. Principal and Interest Paid on Debt232


Year Principal Paid Interest Paid
2008 $ 423,879 $ 1,402,686
2009 439,236 1,384,995
2010 1,881,407 1,374,832
2011 3,114,739 1,417,630
2012 5,063,466 3,811,003
2013 2,894,486 3,893,650
2014 2,913,974 3,874,795
2015 3,097,524 3,216,197
Total $ 19,828,711 $ 20,375,788

128. RAWAs aggregate interest maturities on its outstanding debt have increased from

approximately $26.4 million in 2008,233 to $49.9 million in 2015.234 As noted in Table 13, RAWA

has not always had sufficient revenue to fund its total debt service, but has instead paid significant

interest amounts that have contributed to RAWAs recognition of losses/decreases in net position.

Table 13. Interest Expense and Changes in Net Position235


Year Interest Expense Change in Net Position
2008 $ (1,957,754) $ 2,062,130
2009 (1,973,668) 947,971
2010 (1,994,785) (1,145,295)
2011 (2,096,347) (1,538,823)
2012 (4,520,451) 420,670
2013 (4,510,379) 1,893,367
2014 (4,441,883) (1,278,245)
2015 (4,196,513) (1,972,232)
Total $ (25,691,780) $ (610,457)

232
RAWA Audited Financial Report Cash Flow Statement, for the years ending December 31, 2008, and 2010-
2015.
233
2008 Financial Report at 19
234
2015 Financial Report at 25
235
RAWAs Audited Financial Statements, for the years ending December 31, 2008, and 2010-2015.

64
Forensic Investigation of Reading Area Water Authority

129. Given RAWAs current debt structure, the significant debt obligations, which will

impose a significant financial strain for years to come. Table 14 summarizes RAWAs maturities

on long-term debt through 2036.

Table 14. Aggregate Maturities of Long Term Debt, as of December 31, 2015236
Year Principal Due Interest Due Total
2016-2020 $16,560,768 $18,186,878 $34,747,646
2021-2025 18,669,997 12,892,267 31,562,264
2026-2030 22,518,236 11,907,725 34,425,961
2031-2035 28,279,291 6,556,484 34,835,775
2036 6,975,000 366,188 7,341,188
Total $93,003,292 $49,909,542 $142,912,834

130. Through our review of the bond issuance reports, we noted that the related parties,

Mr. Setley and Concord Public Financial Advisors, each provided RAWA with guidance and

opinions related to RAWAs debt closings. RAWA issued the two parties fees at closing for the

counseling services provided, as detailed in Table 15.

236
RAWA Audited Financial Report for the year ending December 31, 2015 at 25.

65
Forensic Investigation of Reading Area Water Authority

Table 15. Debt Issuance Fees237


Law Firm Affiliated Other Fees
Series Initial Issue238 Concord with Mr. Setley239 Issued Total Fees
Bonds 2003 Series $ 11,999,417 $ - $ - $ 60,495 $ 60,495
Bonds 2007 Series 25,000,000 40,000 - 84,499 124,499
Note 2009 Series 1,772,854 20,000 26,500 6,000 52,500
Bonds 2011 Series 50,000,000 55,000 41,557 32,000 128,557
Note 2012 Series 2,459,000 18,000 22,676 5,017 45,693
Bonds 2015 Series 25,130,000 45,000 41,557 76,957 163,514
Total $ 114,588,417 $178,000 $ 132,291 $ 264,968 $ 575,259

131. In general, the payment of fees to related parties presents a risk of the insiders

participating in self-dealing focusing on the individual interest over the organizations interest. As

of this date, we have not analyzed all available information to fully establish the nature of the

involvement of related parties with respect to debt issuance and the reasonableness of fees paid.

132. In connection with our review of RAWAs issuance of debt, we focused our

analysis on RAWAs 2011 bond issuance (the largest debt issuance in more than ten years).

RAWA issued the $50 million water revenue bonds on December 19, 2011 (2011 Bond), and

received $38.1 million in its construction capital account. The difference between the $38.1

million deposited into the 2011 Construction Fund and the $50 million bond issuance relates to

fees paid, discounts, and reserves, as detailed in Table 16.

237
Based upon each bond or note series closing disbursements schedule or term sheet. Reflects only the debt
financing for which supporting documentation related to the debt issuance costs was provided and does not reflect all
of RAWAs debt financing costs.
238
Represents the principal amount of the bond per each bond series closing disbursements schedule (2003 Series,
2007 Series, 2011 Series, and 2015 Series). The initial issue of the Water Revenue Note, Series of 2009, represents
the net drawdown (i.e. less repayments), of the $6.55 million maximum drawdown note, which did not occur until
2010 (RAWA Audited Financial Statements, for the year ended December 31, 2010 at 23). The initial issue of the
Water Revenue Note, Series of 2012 represents the proceeds authorized for access by RAWA from the sale of the
note (Authority Officers Certificate re: Closing Disbursements, dated August 6, 2012).
239
Reflects payments to Setley Rauch & Bucolo (2009 Series) and Georgeadis Setley (2011 Series, 2012 Series, and
2015 Series).

66
Forensic Investigation of Reading Area Water Authority

Table 16. 2011 Bond Closing Disbursements240


Closing
Category Purpose Disbursements Initial Issue
2011 Construction Fund Capital Projects $ 38,096,009
2011 Debt Service Reserve Fund Repayment of Principal 3,361,221
Capitalized Interest Interest Payment Reserve 7,518,123
Closing Disbursements:
Georgeadis Setley Bond Counsel and Solicitor $ 41,557
Manufacturers and Traders Trust Co. Trustee Fee 4,000
Standard & Poors Ratings Services Rating Agency Fee 28,000
Concord Financial Advisor Fee 50,000
Official Statement Printing &
Concord 5,000
Production
Total Closing Disbursements 128,557
Underwriters Discount 625,000
Net Original Issue Discount 271,090
Total $ 50,000,000

133. Per the Third Supplemental Trust Indenture (2011 Bond Trust Indenture),

RAWA represented that the purpose for acquiring debt through the 2011 Bond issuance was to

finance the 2011 Project,241 which specifically was to include the following:

finance the costs of certain capital projects of the Authority, including


the improvements, renovations, rehabilitations and upgrades to the
water supply, treatment, pumping and distribution facilities of the
Authority; (2) capitalizing interest on the 2011 Bonds; (3) fund
necessary reserves and other funds; and (4) pay certain costs and
expenses of issuing the Series of 2011 Bonds.242

134. As a condition to receiving the proceeds, RAWA was required to submit a

Consulting Engineers Certificate indicating that the 2011 Bond issuance is required or desirable

to complete the construction or acquisition of Capital Additions constituting the 2011 Project

240
2011 Bond Closing Statement, dated December 19, 2011 at 1 and Exhibit A.
241
2011 Bond Trust Indenture, dated December 15, 2011 at 1.
242
2011 Bond Trust Indenture at 5.

67
Forensic Investigation of Reading Area Water Authority

and that the Proceeds to be derived are necessary to pay Costs, Costs of Acquisition or Costs

of Construction constituting the 2011 Project [which] shall be described in reasonable

detail and also that such Costs reasonably cannot be paid out of then current revenues of the

Water System.243

135. RAWA engaged BCM to issue the Consulting Engineers Certificate through

which BCM certified that the proceeds were necessary to fund the 2011 Project, in satisfaction of

the 2011 Bond Trust Indenture.244 As part of its certification, BCM provided a listing of the

projects and associated costs that comprise the 2011 Project (BCM 2011 Capital Projects

Listing),245 as defined in the 2011 Bond Trust Indenture.

136. The BCM 2011 Capital Projects Listing, prepared in advance of the actual bond

issuance, included 29 different projects totaling $38.47 million,246 which is approximately

$374,000 more than the final bond proceeds deposited into RAWAs 2011 Construction Fund. We

have concerns that the BCM 2011 Capital Projects Listing was not prepared by BCM with a level

of precision and specificity to fully justify the final bond amount. This is evidenced by Mr. Welds

characterization of the listing, stating:

As requested by the RAWA staff, [BCM] prepared a list of possible


projects that could be considered as the bases of a potential bond issue.
[BCMs] original list came short of the target and [BCM was] then
asked to add a few additional projects to the list. All projects that were
provided were ones that had been identified by the staff as projects that
the staff was interested including on future capital plan updates.247

243
2011 Bond Trust Indenture at E.(1) E.(2).
244
See Exhibit 5.0 Consulting Engineers Certificate, dated December 19, 2011 at 1.
245
See Exhibit 5.0 Consulting Engineers Certificate, dated December 19, 2011 at Exhibit A.
246
We noted that the BCM 2011 Capital Projects Listing indicates a total estimated project cost of $38.41 million.
However, the actual sum of each individual project item totals to $38.47 million. For purposes of our review and
analysis, we have utilized the latter estimated project cost total of $38.47 million. See Exhibit 5.0 Consulting
Engineers Certificate, dated December 19, 2011 at Exhibit A.
247
E-mail from Thomas Weld to Bill Murray, dated April 3, 2017.

68
Forensic Investigation of Reading Area Water Authority

137. Based on Mr. Welds description, it appears that the BCM 2011 Capital Projects

Listing heavily relied on input from RAWA and its desires with respect to capital projects.

RAWAs input and selection of capital projects, rather than an independent third-party analysis of

necessary capital projects that would benefit RAWA and the community, ultimately served as the

mechanism for providing the justification for the issuance of the 2011 Bond.

138. As part of our analysis of the 2011 Bond, we obtained RAWAs requisition memos

supporting each withdrawal from the 2011 Construction Fund maintained at M&T Bank, in which

the total 2011 Bond proceeds were deposited. To substantiate the need for all withdrawals, each

requisition memo detailed every vendor payment issued during the month related to a capital

project. RAWA provided monthly listings of payments funded through the 2011 Bond, which we

compiled into a single listing to facilitate our analysis (2011 Bond Payments Listing).248

Through this analysis, we noted that RAWA has expended approximately $26.42 million on 119

different capital projects during the period from May 2012 through December 2016. As of this

date, RAWA has spent only 69% of the total proceeds that were deposited into the 2011

Construction Fund. As of this date, RAWA has not provided sufficient detail as to the remaining

expected spending on current capital projects in progress or spending on expected projects still in

the pipeline. Absent this documentation, we cannot determine whether or not RAWA is

appropriately and sufficiently utilizing its debt financing in a manner that would most effectively

make necessary infrastructure improvements and generate revenue-producing capital assets.

139. Additionally, we noted that the actual projects on the 2011 Bond Payments Listing

do not reconcile with the anticipated projects per the BCM 2011 Capital Projects Listing, which

248
See Exhibits 5.1 5.2.

69
Forensic Investigation of Reading Area Water Authority

served as the basis for justifying the issuance of the 2011 Bond. Specifically, there are projects on

the BCM 2011 Capital Projects Listing that do not appear to relate to any project on the 2011 Bond

Payments Listing, and vice versa. Per conversations with RAWA personnel, we understand that

RAWA does not monitor actual spending and capital projects performed relative to the BCM 2011

Capital Projects Listing and as of the issuance of this report, has not performed a reconciliation

between the two capital project listings.

140. Overall, RAWA carries significant principal and interest payment obligations

resulting from the issuance of various debt, which will present a financial burden for years to come.

Based on our analysis to date of the 2011 Bond, we are concerned as to whether RAWA can

reasonably establish the appropriateness and necessity of the 2011 Bond issuance in its full amount

given Mr. Welds explanation of the development of the BCM 2011 Capital Projects Listing, the

amount of proceeds spent to date, and the apparent lack of accountability and oversight of spending

relative to the BCM 2011 Capital Projects Listing (which served as justification for the 2011 Bond

amount). We recommend further analysis of RAWAs spending of the 2011 Bond proceeds to

date (and expected remaining spending) and further analysis of nature of the involvement of related

parties with respect to debt issuance and the reasonableness of fees paid.

2. RAWA Board Approvals of Cash Disbursements

141. We understand that RAWAs policy requires two signatures, including one RAWA

Board members signature of approval, on all check disbursements issued. Per discussion with

individuals at RAWA, each Friday before a RAWA Board meeting, a report is generated detailing

the specific vendor payments to be signed and approved by the RAWA Board (the Approval

Report). Once signed by a member of the RAWA Board at the meeting, Ms. Thomas was

70
Forensic Investigation of Reading Area Water Authority

responsible for mailing them out. RAWA documents the amount of operating and capital

disbursements approved at each RAWA Board meeting in the minutes.

142. As part of our analysis, we reconciled the 2015 and 2016 disbursements recorded

per RAWAs general ledger to the Approval Report and also to the total amount recorded as

approved per the RAWA Board meeting minutes. Of the disbursements reviewed, we noted

several instances in which the total amount disbursed per RAWAs general ledger differed from

the amount recorded as approved,249 resulting in disbursements issued for which no RAWA Board

approval was recorded. In certain instances, we were unable to determine, per RAWAs general

ledger, the nature of the variance. However, of the majority of the variances observed, we were

able to determine the specific payments issued constituting the difference.

143. For example, we noted that on January 13, 2015, RAWA recorded a batch

disbursement totaling $421,126 to recognize general/operating payments issued to 103 different

vendors. Per the January 13, 2015 RAWA Board meeting minutes, general invoices totaling

$404,683 were authorized by the RAWA Board. As such, there is no indication or record that

$16,443 of disbursements were authorized. Through our analysis, we determined that this variance

was comprised of two payments issued to BCM for $16,418 and to Klines True Value for $25.

We reviewed the canceled check issued to BCM and noted that it included only Mr. Millers

signature, in violation of RAWAs policy. Additionally, we noted that these two payments totaling

$16,443 were not included in the Approval Report dated January 13, 2015 or the next RAWA

Board meetings Approval Report dated January 29, 2015.

249
See Exhibits 6.0 6.1 for additional detail related to the batch disbursements for which we observed variances
from the amount recorded as approved by the RAWA Board per the meeting minutes.

71
Forensic Investigation of Reading Area Water Authority

144. Per discussion with individuals at RAWA, we understand that Mr. Miller had the

ability to sign the checks himself and push them through, as evidenced by the $16,418 payment

issued to BCM that was not recorded as approved per the RAWA Board meeting minutes and

contains no RAWA Board member signature.

145. Based on our analysis, we identified payments totaling $954,575 in 2015,250 and

payments totaling $93,052 in 2016,251 which lacked formal approval in the RAWA Board meeting

minutes.

146. We are concerned that it was possible for payments to be disbursed without a

RAWA Board members review and authorization and that the RAWA Board meeting minutes do

not accurately reflect RAWAs total disbursements. We recommend that the RAWA Board

institute a practice of reviewing all disbursements issued per RAWAs general ledger and bank

statements between meetings to ensure that all disbursements are authorized by a RAWA Board

member and properly recorded as such per the RAWA Board meeting minutes.

D. RECOMMENDATIONS FOR ADDITIONAL ANALYSIS

147. As of the date of this report, Baker Tilly has not completed its forensic investigation

of RAWA. The report as presented details all of the issues that surfaced during its investigation,

however, as noted in the Report, we have significant concerns about following financial and

operational issues:

a. Proper billing of customers during the Miller Environmental meter reading

services;

250
Of this amount, $717,963 and $236,612 were for General and Capital expenditures, respectively. See Exhibit 6.0.
251
Of this amount, $28,896 and $64,156 were for General and Capital expenditures, respectively. See Exhibit 6.1.

72
Forensic Investigation of Reading Area Water Authority

b. Appropriateness of the bond financing resulting in approximately $93

million of debt with approximately $50 million of interest due over the next

twenty years; and

c. RAWA Board approval on payments and the concern that Mr. Miller was

paying vendors without a second signature on the checks, which violated

RAWAs internal policies.

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Forensic Investigation of Reading Area Water Authority

IV. CONCLUSION

148. The following summarizes our conclusions based on information available and

procedures performed to date:

A. MILLER ENVIRONMENTAL

Miller Environmental invoices submitted to RAWA for Contract Management


Services lacked sufficient detail to identify the specific individuals providing
services and were originally assumed to represent hours worked by Mr. Miller.

Absent additional information from Miller Environmental, we are unable to


determine the accuracy or legitimacy of the hours charged, either for Mr. Miller
or other Miller Environmental personnel.

Miller Environmental charged RAWA for hours worked by Mr. Goldberg at


Mr. Millers Executive Director rate.

There is no documentation available to establish any consistently-applied,


objective methodology employed by Miller Environmental to determine a
reasonable amount of Mr. Goldbergs hours to charge to RAWA at the
Executive Director rate.

We did not see evidence that Miller Environmental established the need to
utilize outside personnel rather than using RAWA personnel or that Miller
Environmental explicitly reported the use of these personnel.

We estimated potential unsupported charges for Source Water services during


the period January 2011 through August 2016 approximating $384,000.

The RAWA Board meeting minutes do not explicitly and formally approve the
water reading contract with Miller Environmental.

Based on the information available to date, it is unclear the extent, if any, to


which Mr. Miller, with his management position, was able to influence the
decision to contract with Miller Environmental to perform meter reading
services.

Absent sufficient detail regarding the monthly number of meters read, reported
usage, and approval by appropriate field or technical personnel with
knowledge of meter reading efforts, there is no evidence that sufficient
oversight existed regarding the actual services performed by Miller
Environmental.

74
Forensic Investigation of Reading Area Water Authority

B. OLIVET BOYS AND GIRLS CLUB

It appears that RAWA relied on the position that it had already intended to incur
improvement costs as a basis for paying for project materials on behalf of
Olivet. We did not locate documents suggesting that RAWA contemplated
upgrading the water line that was impacting the Olivet project. RAWAs
supposed existing improvement plan was reflected in the Escrow Agreement as
a basis for paying for project materials.

The RAWA Board meeting minutes do not include explicit, formal approval of
RAWAs granting of concessions to Olivet in the form of material costs, which
total $61,443, and labor costs provided at no charge totaling $3,651.

C. MASANO AUTO GROUP

The RAWA Board meeting minutes do not include explicit, formal approval of
RAWAs granting of concessions to TMAP Realty/Masano in the form of
reduced monthly service rates. The RAWA Board agreed to request from Mr.
Schlegel the lost revenue of $35,751.90 due to his unauthorized actions,252
which Mr. Schlegel has refuted.253 On September 21, 2016, the RAWA Board
agreed to adjust Masanos billing to reinstate the appropriate charges beginning
with the October 2016 billing.254 Masano has filed suit against RAWA for this
change in fees.

D. STOKESAY

The RAWA Board meeting minutes do not include explicit, formal approval of
RAWAs granting of concessions to Stokesay in the form of waived fees
totaling $62,230 related to tapping fees, labor and materials, and late fees.

E. CITY LIGHT MINISTRIES

The RAWA Board meeting minutes do not include explicit, formal approval of
RAWAs granting of concessions to City Light Ministries in the form of a
waiver of costs, which Mr. Schlegel characterized as just a shade under
$5,000.

F. GOGGLEWORKS

Evidence suggests that RAWA did not fully investigate a working assertion that
an approximately $140,000 refund paid to GoggleWorks was overstated by

252
RAWA Board meeting minutes, dated August 25, 2016 at 2.
253
RAWA Board meeting minutes, dated September 13, 2016 at 1.
254
RAWA Board meeting minutes, dated September 21, 2016 at 3.

75
Forensic Investigation of Reading Area Water Authority

approximately $46,000. Instead, correspondence suggests that GoggleWorks


own calculation was accepted without further scrutiny and validation.

RAWA failed to bill GoggleWorks monthly fire service fees during the period
January 2011 through February 2017, which resulted in a total under-billing of
$19,872.

G. ERNIE SCHLEGEL

A letter prepared by an unnamed RAWA employee suggests that Mr. Schlegel


approached customer service representatives directly in order to request a
waiver of late fees, which the employees purportedly granted due to Mr.
Schlegels position on the RAWA Board. While the amount of fees waived is
nominal, the letter and accompanying Customer History report suggest that Mr.
Schlegel did not pay his residential bills in a timely manner, but was able to
improperly obtain waivers of late fees.

H. OTHER UNBILLED FEES

RAWA under-billed Evergreen approximately $4.52 million due to improper


meter readings since Evergreen began using RAWAs service.

RAWA never billed commercial customers Hydrojet and Our City-


Reading/Panevino/WFMZ since the inception of their water use, which resulted
in unbilled fees of approximately $246,000 and $99,500, respectively.

I. BOND FINANCING

RAWA carries significant principal and interest payment obligations resulting


from the issuance of various debt, which will present a financial burden for
years to come. Based on our analysis to date of the 2011 Bond, we are
concerned as to whether RAWA can reasonably establish the appropriateness
and necessity of the 2011 Bond issuance in its full amount given Mr. Welds
explanation of the development of the BCM 2011 Capital Projects Listing, the
amount of proceeds spent to date, and the apparent lack of accountability and
oversight of spending relative to the BCM 2011 Capital Projects Listing (which
served as justification for the 2011 Bond amount).

We recommend further analysis of RAWAs spending of the 2011 Bond


proceeds to date (and expected remaining spending) and further analysis of
nature of the involvement of related parties with respect to debt issuance and
the reasonableness of fees paid.

J. UNAPPROVED DISBURSEMENTS

We noted several instances in which the total monthly disbursements recorded


in RAWAs general ledger differed from the amount approved in the RAWA

76
Forensic Investigation of Reading Area Water Authority

Board meeting minutes, which resulted in disbursements for which there is no


evidence of RAWA Board approval.

Respectfully submitted,

______________________________
James T. OBrien, CPA/CFF
Partner
Baker Tilly Virchow Krause, LLP

77
Exhibit 1 Miller Environmental
Contracts

1.0) September 12, 2000 Proposal


1.1) September 2000 Contract
1.2) January 2004 Amendment
1.3) January 2015 Contract
1.4) October 18, 2002 Letter
1.5) 2003 Meter Reading Contract
1.6) May 2010 Letter
1.7) 2011 Meter Reading Amendment
1.8) 2012 Meter Reading Contract
Exhibit 1.0
Exhibit 1.1
0

AGREEMENT 'WITH
MILLER ENVIRONMENTAL, INC.
FOR CONTRACT MANAGEMEY...,11f OF FACILITIES

This Agreement, m.ade and entered inro this 22nd day of September, 2000, by an.d between
MILLER ENVIRONMENTAL, INC., a corporation incorporated in the Commonwealth of
PennsylvanJa with its principal office at 902 Colonial Drive, Birdsboro, Pennsylvania 19508
(hereinafter referred to as ~MANAGER' 1 ) and READING AREA WATER AUTHORITY
with of.fi.ces at 815 Washington Street, Room 1-21, Reading, Pennsylvania 1.9601 (hereinafter
referred to as "O'VVNER").

RECITALS:

WHEREAS, the OWNER has determined that lt needs the services of an expe.rienced
and qualified water filter plant manager responsible for the management of all operational.~ and
maintenance activWes of the water filter pJant of the OWNER; and

WHEREAS, MANAGER bas all necessary technical expertise and experience to


assume such management responsibility; and

WHEREAS, MANAGER has submitted a proposal dated September 12, 2000 to


manage the faclli.ties and acceptance of MANAGER's proposal ls in the best inte~est of the
OWNER; and

WHEREAS, the OWNER has selected MANAGER and MANAGER has agreed to
perform the services set forth hereunder; and

Miller Environmental, Inc. Reading Area water Authority


page 1 of9 Rev. 111 ,. Sept. 22, 2000
WHEREAS, funds for tb.is Agreement are available to the OWNER from its operating
budget.

NOW THEREFORE, the OWNER and MANAGER hereby agree as follows:

ARTICLE 1: GENERAL

1.1 MANAGER hereby agrees ro perform the servl.ces and to comply with the terms
and conditions as set forth herein, and in consideration of such services, the OWNER hereby
agrees to make payments to MANAGER as specified in Article 5 hereof, and co do or take
such other actions as is required of t11e OWNER hereunder.

1.2 The person(s) responsible for the services to be rendered under this Agreement
on behalf of MANAGER is(are) proposed to be a qualified person(s) as designated in writil;.g
by MANAGER and accepted by tbe OVINER. Such person(s) shall have the title of Plant
Manager of the facilities (hereinafter referred to as the lLContract Manager").

During the period of transition to contract management, MANAGER will assess the OWNER's
needs to assure that personnel for thl.s important assignment are compatible with the OWNER's
needs. MAN AGER shall provide and ensure the availability of a qualified, local, secondary
Contract Manager, in. the event that the primary Contract Manager experiences an unexpected.
absence. Cross~training and br.ie:n.og shall occur on a regular basis to en.':;ure that the secondary
Contract Manager is kept abreast of current procedures and current events.

Mlller Environmental, Inc. Reading Area Water Authority


page 2 of 9 Rev, #1 - Sept. 22, 2000
ARTICLE 2: SCOPE OF SERVICES

2.1 The "Contract Manager. shall be respouslble for the management of all.
operational and maintenance activities of tbe water fllter plant of the OWNER, reporting to the
OWNER, or its designated representative, while remaining an employee of MANAGER.

2.2 The duties of the Contract Manager shalltnvolve, generally; planning,


organizing, coordinating, supervising, and directing all inter.nat and external activities of the
water filter plant facilities, and interaction with representatives of tbe state a ..'1d federa1
governments, and other appropriate parties. These duties shall include, but not be limited to,
the following:

a. Manage, coordinate, and direct the activities of all divisions and sections
witbjn the facilities with fuU charge and supervision of its employees subject to the OWNER's
regulations and other applicable procedures;

b. Plan, organize, and administer the operation and maintenance of the


OWNER's water filter plant facilities;

c. Recormnend policies to the OWNER and supply uecessary information


for policy formulation.

d. Recommend to the OWNER various capital improvement projects and


modifications;

e. Respond to questions and concerns from the public and representatives of


organizations concerning various aspects of the OWNER's prograr,n;

l'vfiller Environmental, Inc. Reading Area Water Authority


page 3 of 9 Rev. #1 ~ Sept. 22, 2000
f. Meet on an as needed basis with the various committees of the OWNER
to report on activities and necessary actions;

g. Appear before departments, boards and commissions, and departments


and agencies of tbe state and federal government as a representative of the OWNER;

b. Formulate schedules listing actions needed to complete program goals;

1. Prepare and recommend to the OWNER an annual operating budget for


the water filter treatm.ent plant and administer same as approved; (if budget preparation
schedule is during the term of this Agreement)

j. Prepare and recommend to the OWNER an annual capital projects


budget for the water filter treatment plant and cooperate in the execution of said capital
projects, including solicitin~ bids, awarding contracts, and administering consrruction of any
facilities contemplated by the approved capital projecrs budget;

k. Administer the operation and mai.menance of the facilities in accordance


with the provisions of all applicable local, state and federal regulations;

I. Submit statu.s reports in a form. acceptable to the OWNER and as


frequently as needed, but no less than once a month.

Miller Environmental, Inc. Reading Area Vr' ater Authority


page 4 of 9 Rev. #1 -Sept. 22, 2000
2. 3 The direction of Consu-lting Engineers with regard to the design and
construction of additions or modifi.caHons to existing facili.tl.es sl1all be as directed by the
OWNER.

2.4 The use by tlle Contract Manager of any additional outside contract personnel in
the management of the facilities sllal1 be justified only if the Contract Manager can demonstrate
that such functions cannot be performed by existing members of the OWNER 1S rnanagement
and staff and any such use of additional outs1de personnel shall be reported along with the
justification for such use to the OWNER.

ARTICLE 3: RESPONSIBILITIES OF THE OWNER

3. 1 The OWNER shall at its own expense provide the person(s) desi.gnated by
MANAGER as the Contract Manager with suitable offices at the faciJity and shall use its best
efforts to secure materials or infonnation requested by MANAGER for the purpose of carrying
out servi.ces under this Agreement, and shall generally offer whatever cooperation MANAGER
requires to perform lts duties and responsibilities hereunder.

3.2 Neither MANAGER nor the Contra:t Manager shall have any responsibility or
liability whatsoever. fol;' any current or future disputes between the OWNER and atiY architects,
engineers, contractors, or other parties relating to design, construction. or operations except
where such a dispute is the result of negligence, willful misconduct or nonfeasance by the
Contract Manager or MANAGER.

3,3 The OWNER agrees not to offer employment to or hire the Contract Manager
designated by MANAGER.

Miller Environmental, Inc. Reading Area Water Authority


page 5 of 9 Rev. #1 Sept, 22, 2000
ARTICLE 4: IERM

4.1 This Agreement sbaJl become effective when signed by the autborized
representatives of both parties hereto. MANAGER shall commence providing the Services on
September 19, 2000. This Agreement shall remain in effect unless ex.tended or terminated as
provided herein so long as payment is provided by the OWNER to MANAGER, ln accordance
witl1 this Agreement, until January 31, 2001.

4.2 This Agreement shall be automatically renewed for subsequent one (l) montb
tenns, unless one of the parties gives written notice to the other at least (30) days prior to the:
termination date contained her.eLn.

ARTICLE 5: COMPENSATION

5.1 The OWNER shall compensate MANAGER for Contract Management services,
at a rate of $48.00 per man hour, portal-to-portal, dur.ing the first year of this Agreement,
payable montllly as billed. The aforementioned rate ts applicable regardless of the amouut of
daiJy hours or weekly hours provided by MANAGER and regardless of whetl1et: the
MANAGER provides on-site services or emergency response services.

5.2 Compensation pr.ov1ded under tr.is Article constitutes full and complete payment
for all costs assumed by MANAGER in performing this Contract Management Agreement,
including but not !Jm.i.ted to salaries, benefits, payroll taxes, meetings, consultations and
presentations, travel expe.uses, and an sl.milar expenses.

5.3 The OWNER shall pay MANAGER for services rendered and expenses
accounted for monthly as billed. ill the event that payment is not made witb.l.n. thirty days from
date of billi.ng, \nterest will be charged at the rate on one percent (1%) per month.

Miller Envirorunental, Inc. Reading Area Water Authority


page 6 of 9 Rev. #1 - Sept. 22, 2000
,
5.4 Beginning on October 1, 2001 , and continuing until this Agreement is
terminated; the compensation paid by OWNER to MANAGER, shaU increase at a rate of tive
(5) percent(%) eacb. year. This annual increase shall take effect on October l't of each year
that this Agreement remaius in effect.

ARTICLE 6: 01'HBRTERMS AND CONDIIIONS

6. J. Each party hereto represents to the other party that Hhas full power and
aut.1ority to enter into and perform this Agreement, that all acticns necessary to such execution
and performance have been taken, and that this Agreement violates no law, regulation, decree,
or other legislative, administrative, or judicial restriction of el.rher of the parties.

6.2 The OWNER agrees to release and inderrmify MANAGER and tbe Contract
Manager and save them harmless (including costs of defense) from any and all liability to the
OWNER, its employees, or third parties for any damage to property, personal injuries, or loss
of life or propercy ~ o.r any other claim resulting from acti.vitles U..l1der this Agreement, except
for negligence, wilful misconduct or nonfeasance by the Contract Manager or MANAGER as
finally found by a court of competr:ntjurisdiction.

6.3 The terms and conditions of thls Agreement shall be binding upon the OWNER
and MANAGER and their respective successors and assigns.

6.4 This Agr.eement incorporates all the understandings of the parties hereto and
supersedes any and all agreementS reached by tlH': parties prior to tl1e execution of this
Agreement, whetl1er oral or writt~n.

Miller Environmental, Inc. Readlng Area \Vater Authority


page 7 of 9 Rev. #1 Sept. 22, ZOOO
6. 5 If any provls.ion of this Agreement is held invalid, the balance of tb.e provisions
of this Agreement shall not be affected thereby if tbe balance of the provisions of this
Agreement would then continue co conform to the requirements of applicable laws.

6. 6 Any waiver of the tenus and conditions of this Agreement by either of the
parties hereto sball not be construed to be a wa.Jver of any other term. or condition of this
Agreement.

6.7 Notwithstanding any such claim, dispute, or legal action, arising out of this
Agreement or services to be provided pursuant to this Agreement, each party snail continue to
perform its obligations ~nder this Agreement in a timely manner, unless otherwise mutua11y
agree.Jd in writing.

6. 8 References herein in the masculine gender sh.all also be construed to apply to the
feminine gender.

6.9 Ex.cept as otherwise specifically provided in this Agreement, whenever under


this Agrl!!ement approvals, notices, authorizations, determinations, satisfactions, or waivers are
required or permitted, such approvals, notices, authorizations, determinations, satisfactions, or
waivers shall be effective and valid only when given in \vriting signed by a duly authorized
officer of the OVINER or MANAGER, and delivered by U.S. certified mail, return receipt
requested, to the principal office of the party to whom it is directed, which until changed by
written n.otice from one parry to the other are as foUows:

Miller EnYiro:o.meo.tal~ Inc. Reading Area \Vater Authority


page 8 of 9 Rev. #1 -Sept. 22, 2000
MANAGER: MiUer EnvironmentaL, Inc.
902 Colonial Drive
Birdsboro, Pennsylvania 19508
Attention: President

OWNER: Reading Area Water Authority


815 Washington Street, Room 1-21
Reading, Pennsylvania 19601
Attention: Executive Director

IN WITNESS VIHEREOF, the parties hereto have executed this Agreement as of the day and
year first above written.

ATTEST: READING AREA 'WATER AurHORITY

By:
~~::::::::====~~~~
Notarial Semi
By: ~/Z~~LJ~~-=-=2"'----
~y Consentino, J,
St.:san C, Scz1Jrek, Notary Public Executive Director
Reacfino, Barks Cou11ty
My eommssioii Expires Aug, 27, 2001
Momber, P~nnsylvanla Aslloclatlon of ~Jo!arles

"'TINESS: MILLER El'I'YIRONMENTAL, INC.

By:~T,~ By: -+-=-J)!J$J~a~.71ifi~.:,_


Dean A. !\filler,
President

l'rfiller Environmental, Inc. Reading Area Water Authority


page 9 of 9 ReY. #1 - Sept. 22, 2000
Exhibit 1.2
Al\t1E~L>2\1ENT #l

AG.REEMENT WITH
l\ULLER ENV1RONMENTAI,, INC.
FOR CO:-ITRACT MANA.GEME~'T OF FACILITIES

)
THIS Al\1ENDMENT, made and entered. into this 2J..!l- day of January 2004, is to modify
an existing Agreement by and between )(fiLLER EN\TIRONMENTALj INC. ("i'rlANAGER")
and the READING AREA Vi ATER AUTHORITY (" O'Y\'NER") for Contract Management cf
Facilities.

RECITALS:

WHEREAS, 0\VNER and M,AKAGER have an ex1sting Agreement dated September


22, 2000, for Contract Management of Facilities . whicl1 specifically pertains to the operational
and maintenance a:::tivities of the OWNER's \Vate: filtration plant.

WHEREAS! since the commencemer..t of the Agreement for Contract Management of


Facilities, M.ANAGER has become i:ntim2.tely famUiar ~yvith many duties performed hy
OWNER1 s Executive:: Director.

\\1-IEREAS, OWNER's Executive Dtrector has recently retired and OWNER may
desire MANAGER to perform certab. duties which were previously performed by OWNER's
Executive Director, on an as requested basis.

vVHEREAS, bot.h parties recog.:1.ize ar::c agree that MANAGER's performance of such
Executive Director's duties are outside of the scope o: services set fortb. and i:ntended by the
September 22, 2000 Agreement for Contract Management of Facilities.

WHEREAS, MANAGER and OWNER desire to amend the existing Agreement dated
September 22, 2000, according to the terms and conditions of this Amendment

WHEREAS, MANAGER anc OWNER have full legal capacity and m:t:hority to
execute this Amendment.

VlHEREAS, funC:s for this Amendment a:-e available to the OWNER from its opera.tLng
budg:;:t.

NO"YV TJIEREFORE, i:tl consideration ofthe Reci~als hereof and the mr:tua: promises
cor:tained herein, the parties hereto, with the intent to be legally bound hereby, agree as
fo11ows:

lvfiller EnvironmeJZtal) Inc. Reading Area Water Authority


page 1 of 3 Original~ January 17, 2004
ARTICLE 2~ SCOPE OF SERVICES

ADD a new paragraph 2.5 1 as follows:

2.5 The Cont:act Manager shall. perform additional duties from time to time, as
specifically requested by OWNER, or its designated representative. Such additional duties
shall be similar to those previously performed by OWNER's Executive Director, are expected
to be within the 0\VKER)sjob description for Executive Director, and are duties outside of
the scope of services ktend.ed fo.r managemen~ of 0\VNER's w~.te.r fi:ter plant facilities.

ARTICLE 4: TERM

REPLACE pa:-agraphs 4.1 and 4.2, as follows:

4. 1 This Am~ndment shall become effe:::tive when sig::J.ed by the authorized


representatives of both parties hereto. MANAGER shal1 cornr.:tcnce providing the services as
amer_ded here:n on February 11 2004. This Agree:nent shall remain in effect unless extended
a:: ten:nina~:;:d as provided herein so lor~g as payment is provided by the OWKER to
MANAGER, in accordar.ce with this Agreement, until January 31, ;2.005.

4.2 This Agreement shall be automatically .renewed for subsequent one (l) year
terms, unless one of the parties gives written notice to the other at least ninety (90) days prior
to the terminati.on date contained herein.

ARTICLE 5: COMPENSATION

REPLACE paragraph 5.1, as follows:

5.1 The OWNER shall compensate MANAGER for services desc.dbad i:n
ARTICLE 2, paragraphs 2.1 through and including paragraph 2.4, at a rate of $55.57 per
man hour. The 0\VNER .shall compensate M.ANAGER for services described in ARTICLE 2,
paragraph 2.5, at a rate of $85.00 per man hour. Both ratr;s are portal-to"portal and repres~Dt
the rates during the first year of this Agreement 1 payable monthly ao billed, The
aforementio:1ed .rates are applicable regardless of tbe amount of dai~y hours or weekly hours
provided by MANAGER a:od regardless of whetl:er the MANAGER provides on-site servicea
or e:nerger..cy response services,

REPLACE paragraph 5.4, as follows:

5.4 Beginning on ?ebmary 1, 2005, and cont!nuing 1.mtil this Agreement is


termJnatcd, the compensation paid by OWNER to MANAGER, sha!J. increase at a rate of fi.ve
(5) percent (%) each year. Thls annual increase shall take effect on Febraary 1 'L of each year
!:hat tl1is Agreement remains in r::ffect.

Miller Euvironmental Inc.


1 Reading Area Water Authority
page 2 of 3 Original- January 17 2004
1
ARTICLE 6: OTHER TERMS AND CONDITIONS

REPLACE paragraph 6.9 and. the s\gnature page, as foEows:

6.9 Except as otherwise specifi.caLy provided in this Agreement, whenever 1..md2::


this Agreement :::..?PtOvals, notices, autboriza~ions, determi.nat:oDs, sat\s:fa::tions, or wcjvers 8JB
required or pernitted, such appro>1als, notices, authorizations, cleterminat:ons, satisfactions, or
waivers shall be effective ar.d valid only when given in wri~ing signed by a duly authori.zecl
ot"icer of the OWNER or .MANAGER, and delivered by U.S. certified mail, return receipt
reg.uested, to the principal office of the party to whom it is directed, which until charLged by
written noti:e from one party to the other are as follows:

MANAGER: 1-fi11er Environmental, Inc.


320 S. 17(11 Street
Reading, Pennsylvania 19602
Attention: Presidcn~

OWNER: Reading .A.rea Water .AuthorHy


815 V/ashington Street, Room .1-21
Reading, Pennsylvania 19601
Attention: Deputy Executive .Directo~

IN W'lTI\ESS \VREREOF, the paities hereto have executed this amended Agreement a$ of
the day and year first abo11e written,

READING AREA WATER AUTHORITY

\VlTNESS: ?itflLLER E\'IVIRO:NMENTAL, INC.

By:

}1!iUer Environmental, htc. Reading Area Water Authority


page 3 of 3 Origi!lal- Januar-y 17, 2004
Exhibit 1.3
AGREEMENT \VITH
MILLER ENVIRONMENTAL, INC.
FOR CONTRACT MANAGEMENT OF AUTHORITY

This Agreement, made and entered into thi;;[t/tfday of January, 2015, by and between
MILLER ENVIRONMENTAL, INC., a corporation incorporated in the Commonwealth of
11
Pennsylvania with its principal oftl.ce at 320 South 1i Street, Reading, Pennsylvania 19602
(hereinafter referred to as "MANAGER") and READING AREA WATER AUTHORITY with
offices at 1801 Kutztown Road, Reading, Pennsylvania 19604 (hereinafter referred to as
"OWNER").

RECITALS:

WHEREAS, the OWNER has determined that it needs the services of an experienced and
qualified Executive Director responsible for the management of all operational, environmental,
and maintenance activities of the OWNER; and

WHEREAS, MANAGER has all necessary technical expertise and experience to assume
such management responsibility; and

WHEREAS, the OWNER has selected MANAGER and MANAGER has agreed to
perform the services set forth hereunder; and

WHEREAS, funds for this Agreement are available to the OWNER from its operating
budget.

Miller Environmental, Inc. Reading Area Water Authority


page 1 of9 Revision 1 -January , 2015
NOW THEREFORE, the OWNER and MANAGER hereby agree as follows:

ARTICLE 1: GENERAL

1.1 MANAGER hereby agrees to perform the services and to comply with the tem1s
and conditions as set forth herein, and in consideration of such services, the 0\VNER hereby
agrees to make payments to MANAGER as specified in A11icle 5 hereof, and to do or take such
other actions as is required of the OWNER hereunder.

1.2 The person(s) responsible for the services to be rendered under this Agreement on
behalf of MANAGER is(are) proposed to be a qualified person(s) as designated in writing by
MANAGER and accepted by the OWNER. Such person(s) shall have the title of Executive
Director of the OWNER (hereinafter referred to as the "Contract Executive Director").

During the period of transition to contract management, MANAGER will assess the OWNER's
needs to assure that personnel for this important assignment are compatible with the OWNER's
needs. MANAGER shall provide and ensure the availability of a qualified, local, S~:!)'_

Contract Executive Director, in the event that the primary Contract Executive Director
experiences an unexpected absence. Cross-training and briefing shall occur on a regular basis to
ensure that the secondary Contract Executive Director is kept abreast of current procedures and
current events.

Miller Environmental, Inc. Reading Area Water Authority


page 2 of 9 Revision 1 -.January , 2015
ARTICLE 2: SCOPE OF SERVICES

2.1 The Contract Executive Director shall be responsible for the management of all
operational, environmental, and maintenance activities of OWNER, reporting to the OWNER, or
its designated representative, while remaining an employee of MANAGER.

2.2 The duties of the Contract Executive Director shall involve, generally; planning,
organizing, coordinating, supervising, and directing all internal and external activities of the
water authority facilities, and interaction with representatives of the state and federal
governments, and other appropriate parties. These duties shall include, but not be limited to, the
following:

a. Manage, coordinate, and direct the activities of all divisions and sections
within the water authority with full charge and supervision of its employees subject to the
OWNER's regulations and other applicable procedures;

b. Plan, organize, and direct the operation and maintenance ofthe OWNER's
facilities and watershed area;

c. Recommend policies to the OWNER and supply necessary information for


policy fmmulation.

d. Recommend to the OWNER various capital improvement projects and


modifications;

e. Respond to questions and concerns from the public and representatives of


organizations concerning various aspects of the OWNER's program(s);

Miller Environmental, Inc. Reading Area Water Authority


page 3 of 9 Revision 1 -January , 2015
f. Meet on an as needed basis with the various committees of the OWNER to
rep01i on activities and necessary actions;

g. Appear before departments, boards and commissions, and departments and


agencies of the state and federal government as a representative of the 0 \VNER;

h. Formulate schedules listing actions needed to complete program goals;

1. Prepare and recommend to the OWNER an annual operating budget for


the water authority and administer same as approved; (if budget preparation schedule is during
the term of this Agreement)

J. Prepare and recommend to the OWNER an ammal capital projects budget


for the water authority and cooperate in the execution of said capital projects, including soliciting
bids, awarding contracts, and administering construction of any facilities contemplated by the
approved capital projects budget;

k. Direct the operation and maintenance of the facilities in accordance with


the provisions of all applicable local, state and federal regulations; which would include Source
Water, Treatment, Distribution, and Administration, and continue all programs which have been
ongoing in each area.

l. Submit status reports in a fon11 acceptable to the 0\VNER and as


frequently as needed, but no less than once a month.

2.3 The direction of Consulting Engineers with regard to the design and construction
of additions or modifications to existing facilities shall be as directed by the 0\VNER.

Miller Environmental, Inc. Reading Area \-Vater Authority


page 4 of 9 Revision 1 -January , 2015
9
\:/ The use by the Contract Executive Director of any additional outside contract
personnel in the management of the facilities shall be justified only if the Contract Executive
Director can demonstrate that such functions cannot be performed by existing members ofthe
OWNER's management and staff and any such use of additional outside personnel shall be
reported along with the justification for such use to the OW'NER.

ARTICLE 3: RESPONSIBILITIES OF THE OWNER

3.1 The 0\VN'ER shall at its O\Vn expense provide the person(s) designated by
MANAGER as the Contract Executive Director vvith suitable offices at the facility and shall use
its best efforts to secure materials or information requested by MANAGER for the purpose of
carrying out services under this Agreement, and shall generally offer whatever cooperation
MANAGER requires to perform its duties and responsibilities hereunder.

3.2 Neither MANAGER nor the Contract Executive Director shall have any
responsibility or liability whatsoever for any cunent or future disputes between the OWNER and
any architects. engineers, contractors, or other parties relating to design, construction or
operations except where such a dispute is the result of negligence, willful misconduct or
nonfeasance by the Contract Executive Director or MANAGER.

3.3 The OWNER agrees not to offer employment to or hire the Contract Executive
Director designated by MANAGER.

Miller Environmental, Inc. Reading Area Water Authority


page 5 of 9 Revision 1 -January , 2015
ARTICLE 4: TERM

4.1 This Agreement shall become effective when signed by the authorized
representatives of both parties hereto. MANAGER shall commence providing the Services on
February 1, 20 I 5. This Agreement shall remain in effect unless extended or terminated as
provided herein so long as payment is provided by the OWKER to MANAGER, in accordance
with this Agreement, until January 31, 2018.

4.2 This Agreement shall be automatically renewed for subsequent three (3) year
terms, unless one of the parties gives written notice to the other at least (90) days prior to the
termination date contained herein.

ARTICLE 5: COMPENSA TIO?\

5.1 The OWNER shall compensate MANAGER for Contract Executive Director
services, at a rate of $141.91 per man hour, portal-to-portaL during the first year of this
Agreement, payable monthly as billed, based on a starting date ofF ebruary 1, 2015. The
aforementioned rate is applicable regardless of the amount of daily hours or weekly hours
provided by MANAGER and regardless of whether the MANAGER provides on-site services or
emergency response services.

5.2 . Compensation provided under this Article constitutes full and complete payment
for all costs assumed by MANAGER in performing this Contract Management Agreement,
including but not limited to salaries, benefits, payroll taxes, meetings, consultations and
presentations, travel expenses, and all similar expenses.

5.3 The OWNER shall pay MANAGER for services rendered and expenses
accounted for monthly as billed. In the event that payment is not made within thirty days from
date of billing, interest will be charged at the rate on one percent (1 %) per month.

Miller Environmental, Inc. Reading Area \Vater Authority


page 6 of9 Revision 1 -January , 2015
5.4 Begirming on February 1, 2016, and continuing until this Agreement is
tem1inated, the compensation paid by OWNER to MANAGER, shall increase at a rate of two
and one half(2 1/2) percent(%) each year. This annual increase shall take effect on February 1st
of each year that this Agreement remains in effect.

ARTICLE 6: OTHER TERMS AND CONDITIONS

6.1 Each pmiy hereto represents to the other party that it has full power and authority
to enter into and perform this Agreement. that all actions necessary to such execution and
performance have been taken, and that this Agreement violates no law, regulation, decree, or
other legislative, administrative, or judicial restriction of either of the pmiies.

6.2 The OWNER agrees to release and indemnify MANAGER and the Executive
Director and save them hannless (including costs of defense) from any and all liability to the
OWNER, its employees, or third pmiies for any damage to property, personal injuries, or loss of
life or propetiy, or any other claim resulting from activities under this Agreement, except for
negligence, wilful misconduct or nonfeasance by the Executive Director or MANAGER as
finally found by a court of competent jurisdiction.

6.3 The terms and conditions of this Agreement shall be binding upon the OWNER
and MANAGER and their respective successors and assigns.

6.4 This Agreement incorporates all the understandings of the parties hereto and
supersedes any and all agreements reached by the pmiies prior to the execution of this
Agreement, whether oral or written.

Miller Environmental, Inc. Reading Area Water Authority


page 7 of 9 Revision 1 -January , 2015
6.5 If any provision of this Agreement is held invalid. the balance of the provisions of
this Agreement shall not be affected thereby if the balance of the provisions of this Agreement
would then continue to conform to the requirements of applicable laws.

6.6 Any waiver of the terms and conditions of this Agreement by either of the patiies
hereto shall not be construed to be a waiver of any other term or condition of this Agreement.

6. 7 Notwithstanding any such claim, dispute, or legal action, arising out of this
Agreement or services to be provided pursuant to this Agreement, each party shall continue to
perform its obligations under this Agreement in a timely manner, unless otherwise mutually
agreed in writing.

6.8 References herein in the masculine gender shall also be construed to apply to the
feminine gender.

6.9 Except as otherwise specifically provided in this Agreement, whenever under this
Agreement approvals, notices, authorizations, determinations, satisfactions, or waivers are
required or permitted, such approvals, notices, authorizations, determinations., satisfactions, or
waivers shall be effective and valid only when given in writing signed by a duly authorized
oHicer of the OWNER or MANAGER, and delivered by U.S. certified mail, return receipt
requested, to the principal office of the pm1y to whom it is directed, which until changed by
written notice from one party to the other are as follo'vvs:

Miller Environmental, Inc. Reading Area Water Authority


page 8 of9 Revision 1 -January , 2015
MANAGER: Miller Environmental, Inc.
320 South 1t 11 Street
Reading, Pennsylvania 19602
Attention: Chief Executive Officer

OWNER: Reading Area Water Authority


1801 Kutztown Road
Reading, Pennsylvania 19604
Attention: Chairman

IN 'WITNESS WHEREOF, the parties hereto have executed this Agreement as ofthe day and
year first above written.

ATTEST: READING AREA WATER AUTHORITY

WITNESS: :MILLER ENVIRONMENTAL, INC.

By~ I
G. Michael Poy r,
Chief Executive fficer

Miller Environmental, Jnc. Reading Area Water Authority


page 9 of9 Revision 1 -January , 2015
Exhibit 1.4
Exhibit 1.5
AGREEMENT \VITH
MILLER ENVIRONMENTAL, INC.
REGARDING
\VATER METER READING SERVICES

This Agreement, made and entered into this Jl. day of , 2003, by and
between l\1ILLER ENVIRONMENTAL, INC., a corporation i orporate in the Commonwealth
of Pennsylvania, with offices at 320 South 17th Street, Reading, Pennsylvania 19602 (hereinafter
referred to as OPERATOR) and READING AREA WATER AUTHORITY with offices at 815
Washington Street, Reading, Pennsylvania 19601 (hereinafter referred to as OWNER).

RECITALS:

\XlHEREAS, the OWNER has determined that it needs the services of experienced and
qualified personnel, responsible to perform water meter reading services in the OWNER's
service area; and,

WHEREAS, OPERATOR has all necessary technical expertise and experience to assume
such water meter reading responsibility; and,

WHEREAS, OPERATOR has submitted a proposal to read water meters for a period of
time to be determined by the OWNER and acceptance of OPERATOR's proposal is in the best
interest of the OWNER; and,

WHEREAS, the OWNER has selected OPERATOR and OPERATOR has agreed to
perform the services set forth hereunder; and,

WI-IEREAS, nmds for this Agreement are available to the OWNER from its operating
budget.

Reading Area \Vater Auth~rity January 16, 2003


page 1 of 10 Revision# 6
NO\V THEREFORE, the 0~/NER and OPERATOR hereby agree as follows:

ARTICLE 1: General

1.1 OPERATOR hereby agrees to perform the services and to comply with the terms
and conditions as set forth herein, and in consideration of such services, the OWNER hereby
agrees to make payments to OPERATOR as specified in Article 5 hereof, and to do or take such
other actions as is required of the OWNER hereunder.

1.2 The persons responsible for the services to be rendered under this Agreement on
behalf of OPERATOR shall possess the appropriate experience and technical expertise.

ARTICLE 2: Scope of Services

2.1 OPERATOR shall provide the services of capable personnel, who shall perform
the meter reading activities for approximately 28,800 water meters per month. The water meter
reading areas are "City District 1, City District 2, City District 3, Outside City District 1, (Bern
Township) Outside City District 2 (Kenhorst Borough) and Outside City District 3 (Along
transmission lines)" as sho\-Yu on "Meter District Designation Sheets" number one and number
two attached hereto.

2.2 OPERATOR shall be responsible for the activities associated with the water
meter readings. These duties shall include:

a. Plan and direct the activities associated with the OWNER's water meters;

b. Meet on an as needed basis with the OWNER to report on activities and


necessary actions;

Reading Area Water Authol"by January 16, 2003


page 2 of 10 Revision# 6
c. Submit status reports to the OWNER not less than once per month;

d. Perform the routine meter reading activities that would be normally accepted
practice for water meter reading;

e. Perform meter re-reads as requested by OWNER;

f Maintain Self-Read card log book for use by OWNER's staff;

h. Submit Daily Defect Cards of non-functioning meters to OWNER's staff

ARTICLE 3: Responsibilities of the OWNER

3.1 The OWNER shall use its best efforts to secure materials or information
requested by OPERATOR for the purpose of carrying out services under this Agreement, and
shall generally offer whatever cooperation OPERATOR requires to perform its duties and
responsibilities hereunder.

3.2 Neither OPERATOR nor its personnel shall have any responsibility or liability
whatsoever for any current or future disputes between the OWNER and any architects,
engineers, contractors, or other parties relating to design or construction.

3.3 The OWNER agrees not to offer employment to or hire the personnel designated
by OPERATOR.

3.4 The OWNER shall pay directly for all meter reading equipment, equipment
repairs, pre-printed Self Read cards, pre-printed Defect cards or capital improvements.

3.5 OWNER shall provide OPERATOR with initial familiarization of water meter
routes.

Reading Area Water Authority January 16,2003


page 3 of 10 Revision# 6
3.6 OWNER shall prepare six meter reading guns on a daily basis and have them
ready at the start of each work day for use by OPERATOR, Monday through Friday (excluding
holidays).

3. 7 OWNER shall provide OPERATOR with office space for coordination of duties
between OWNER and OPERA TOR

ARTICLE 4: Term

4.1 This Agreement shall become effective when signed by the authorized
representatives of both parties hereto. OPERATOR shall commence providing services on
March 1, 2003. This Agreement shall remain in effect unless extended or terminated as
provided herein so long as payment is provided by OVVNER to OPERATOR, in accordance with
this Agreement, until February 28, 2006.

4.2 If OPERATOR is willing to renew the Agreement for a subsequent three (3) year
term, OPERATOR shall submit such notice, by certified US mail, retum receipt requested, to
OWNER at least 180 days prior to the termination date contained herein. If OWNER does not
want to renew the Agreement for a subsequent three (3) year term, 0\\l}t~R shall submit such
notice by certified US mail, return receipt requested, to OPERATOR at least 120 days prior to
the termination date contained herein.

4.3 This Agreement shall be automatically renewed for subsequent three ( 3 ) year
tenns, unless one of the parties gives written notice to the other of their intention to terminate
per the language contained herein.

ARTICLE 5: Compensation

5.1 The OWNER shall compensate OPERATOR for the services stated herein as

Reading Area \-Vater Authority January 16, 2003


page 4 of 10 Revision# 6
follows:

a. The OWNER shall pay OPERATOR a monthly operating fee of $29,624.22


for the Meter Reading Services as defined in this Agreement, with adjustments and additions as
contained herein, based on a starting date ofMarch 1, 2003.

b. This fee shall be payable and due on the first day of each month for which
services will be rendered, commencing on the date on which OPERATOR assumes
responsibility for the Meter Reading Services, and continuing until the contract expires with
adjustments as contained herein. For any portion of a full operating month, the fee shall be
apportioned appropriately. Additional compensation shall be added to the monthly contract fee
in effect at the time such adjustment was deemed necessary.

c. OWNER shall additionally compensate OPERATOR in accordance with


the following rate schedule for services rendered for after-hours emergency call out services,
portal to portal, with a minimum two (2) hour charge, monthly as billed:

Supervisor $54.00 per man-hour


Meter Reader $36.00 per man-hour

d. OWNER shall additionally compensate OPERATOR in accordance with


the following rate schedule for services rendered outside the scope of services, during normal
working hours, portal to portal, Monday through Friday excluding holidays.

Supervisor S36.00 per man-hour


Meter Reader $24.00 per man-hour

e. In the event a change in the SCOPE OF SERVICES provided by


OPERATOR is necessary to perform the services described herein, the OWNER agrees to pay
OPERATOR for such additional expense at cost plus 15.0% overhead, if the OWNER approves
OPERATOR's request to perform in accordance with the change in scope of services.

Reading Area Water Authority January 16, 2003


page 5 of 10 Revision# 6
5.2 Starting on MaTch 1, 2004 and continuing until this Agreement expires, the fees
and rates set forth above, in Sections 5.la., 5.1c., and 5.1d., paid by 0\VNER to OPERATOR
shall increase at a rate of five ( 5) percent(%) each year. This annual increase shall take effect
on the anniversary date of each year this Agreement remains in effect.

5.3 Compensation provided under this Article constitutes full and complete payment
for all costs assumed by OPERATOR in performing this Agreement; including salaries, printing
and reproduction, meetings, travel expenses, postage, and all similar expenses.

5.4 The OWNER shall pay OPERATOR for services rendered and expenses
-
accounted for monthly as billed. In the event that payment is not made within thirty days from
date of billing, interest will be charged at the rate on one percent (1 %) per month.

ARTICLE 6: Indemnification and Insurance

6.1 OPERATOR shall maintain during the term of this Agreement the following
types and amounts of insmance:
Type of Coverage .tviinimum Limits
Worker's Compensation Statutory

Employer's Liability $100,000

Comprehensive General Liability $1,000,000 each occurrence


and annual aggregate,
combined single limit

Automobile Liability, Bodily Injury, $1,000,000 any one accident


and Property Damage Combined or loss

Umbrella Excess Liability, Combined Single $2,000,000 combined


Limit, Bodily Injury, Death, Property Damage

OPERATOR will provide OWNER with a certificate of insurance evidencing the required
coverage prior to commencement of any work under this Agreement.

Reading Area \Vater Authority January 16, 2003


page 6 of 10 Revision# 6
'.,

6.2 OPERATOR agrees to indemnify OWNER and its elected and appointed officials,
contractors, employees, and agents against liability for claims or damages for personal injury or
property damage to the extent caused by the negligent acts or omissions of OPERATOR, its
employees, subcontractors, or agents in connection with the performance of the Services
hereunder. OWNER agrees to indemnify OPERATOR and its officers, employees,
subcontractors, and agents against liability for claims or damages for personal injury or property
damage to the extent caused by the negligent acts or omissions of OWNER, its officials,
contractor's employees, and agents. In the event that both OPERATOR and OWNER are finally
determined to have jointly caused any liability for claims or damages as aforesaid, such liability
shall be apportioned between the parties in accordance with their relative degrees of fault.

6.3 OWNER will obtain and maintain adequate property insurance for it's interests and
any other insurance coverage required under any financing agreement or regulatory requirements
with respect to the meters or the activities thereof. OWNER will provide OPERATOR with a
certificate of insurance evidencing such coverage upon OPERATOR's request.

6.4 OPERATOR warrants that it will exert the degree of care and skill in the
performance of the Services ordinarily exercised, under similar circumstances, by similar
professionals at the time such Services are rendered. TE-IIS WARRANTY IS IN LIEU OF AND
EXCLUDES ALL OTI-IER WARRANTIES, WHETHER EXPRESSED OR IMPLIED, BY
OPERATION OF LAW OR OTHERWISE, INCLUDING Al'l"Y WARRANTY OF FITNESS
FOR PARTICULAR PURPOSE, IF APPLICABLE.

Reading Area Water Authority January 16, 2003


page 7 of 10 Revision# 6
' '

ARTICLE 7: Termination

7.1 The failure of either party to comply vvith the terms of this Agreement shall
constitute a default Upon default by one party, the other party may send a Notice of
Termination. Such notice shall clearly specifY the nature ofthe default and provide the
defaulting party with ninety (90) days to cure the default. If the default is capable of being cured
within ninety days but is not cured within ninety days, this Agreement shall terminate at
midnight of the ninetieth day following receipt of the Notice. In the case of a default that cannot
be cured within ninety days, this Agreement shall continue for a reasonable period of time
beyond the ninetieth day if the de faulting party has commenced and is diligently pursuing a cure.
Evidence of such cure shall be provided from the party detennined to be in default to the
satisfaction of the other party.

7.2 In the event of termination of this Agreement under the above paragraph, OWNER
shall pay OPERATOR for the Services provided and invoiced by OPERATOR up to the
effective date of tennination.

ARTICLE 8: Other Terms and Conditions

8.1 Each party hereto represents to the other party that it has full power and authority to
enter into and perform this Agreement, that all actions necessary to such execution and
performance have been taken, and that this Agreement violates no law, regulation, decree, or
other let,rislative, administrative, or judicial restriction of either of the parties.

8.2 The OWNER agrees to release and indemnify OPERATOR and the OPERATOR's
employees and save them harmless (including costs of defense) from any and all liability to the
OWNER, its employees, or third parties for any damage to property, personal injuries, or loss of
life or property, or any other claim resulting from activities under this Agreement, except for
negligence, wilful misconduct or nonfeasance by the OPERATOR or OPERATOR's employees
as finally found by a court of competent jurisdiction.

Reading Area Water Authority January 16, 2003


page 8 of 10 Revision# 6
' ' r I "~

8.3 The terms and conditions of this Agreement shall be binding upon the OWNER and
OPERATOR and their respective successors and assigns.

8.4 This Agreement incorporates all the understandings of the parties hereto and
supersedes any and all agreements reached by the parties prior to the execution of this
Agreement, whether oral or written.

8.5 If any provision of this Agreement is held invalid, the balance of the provisions of
this Agreement shall not be affected thereby if the balance of the provisions ofthis Agreement
would then continue to conform to the requirements of applicable laws.

8.6 Any waiver of the terms and conditions of this Agreement by either of the parties
hereto shall not be construed to be a waiver of any other term or condition of this Agreement.

8.7 The parties agree that they waive a trial by jury as to any and all claims, causes of
action, or disputes arising out of this Agreement or services to be provided pursuant to this
Agreement. Notwithstanding any such claim, dispute, or legal action, each party shall continue
to perform its obligations under this Agreement in a timely mrumer, unless otherwise mutually
agreed in writing.

8.8 References herein in the masculine gender shall also be construed to apply to the
feminine gender.

8.9 Except as otherwise specifically provided in this Agreement, whenever under this
Agreement approvals, authorizations, determinations, satisfactions, written notices, or waivers
are required or pennitted, such approvals, authorizations, determinations, satisfactions, written
notices, or waivers shall be effective and valid only when given in writing signed by a duly
authorized officer of the OWNER or OPERATOR, and delivered in the U.S. mail, certified
postage, return receipt requested, to the principal office of the party to whom it is directed,
which until changed by written notice from one party to the other are as follows:

Reading Area Water Authority January 16, 2003


page 9 of 10 Revision# 6
. :

OPERATOR: Miller Environmental, Inc.


320 South 171ft Street
Reading, Pennsylvania 19602
Attention: Vice President

OWNER: Reading Area Water Authority


815 Washington Street
Reading, Pennsylvania 19601
Attention: Executive Director

IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the day and
year first above written.

ATTEST: READING AREA WATER AUTHORITY:

By: )/'...___ ..
JJ{) ~xecutivc Director

WITNESS: MILLER EJ'.i'VIRO~MENTAL, INC.:

By:~
Vice President

Reading Area \Vater Authority January 16, 2003


page 10 of 10 Revision# 6
Exhibit 1.6
Miller~
Environmental Inc.
6008 Farming Ridge Blvd.
Reading, PA 19606
Telephone: (610) 7794845
Facsimile: {610) 7795133
The Water 8"il(twastawater Authority
E-mail: lnfo@miller-env.com
www .mlller-env.com
May 6, 2010

Reading Area Water Authority


815 Washington Street
Reading, P A 19601

Attention: Executive Director Certified US Mail, Return Receipt


Attention: Contract Administrator

Re: Reading Area Water Authority Water Meter Reading Service Agreement
,._ ... .., ;

. GeQtlemert
:,.,. ..
,

Pursuant to paragraph 8.9 of the above Agreement, we are required to send a written not1ce to infohn.
you of any change of our authorized representative for this Agreement. Our original authorized
representative, Mr. DiSantis, is no longer with our firm and the position of Vice President is currently
vacant. Please accept this written notice to inform you that our new representative pilrsuant to
paragraph 8.9 of the above Agreement is as follows, effective immediately:

OPERA TOR: Miller Environmental, Inc.


320 South 17th Street
Reading, Pennsylvania 19602-2209
Attention: Chief Executive Officer

This is being done as an administrative and contractual formality on our part and no action is required
on your part, other than to make a note of the above change for future contract correspondence.
Thank you for your cooperation in this matter and please feel free to contact me with any questions or
commentsyou may have.

We appreCiate the opportunity to be of service to RAW A.

Sincerely,

d 1/2
~!ij<,ckdf~--
h

G. Michael Poyner, J .
Chief Executive Officer
;'' .. ' ' ..

MILLER ENVIRONMENTAL, INC.


The Water and Wastewater Author,ity '320 S. 171h Street
Reading, PA 19602-2209
Telephone: (610) 376-916
Facsimile: (610) 376-916
E-mail: info@mlUer-env.cm
December 13, 2005 www.rniJier-env.com

Reading Area Water Authority


815 Washington Street
Reading, PA 19601
Attn: Executive Director

Re: Contract for Water Meter Reading Services

Gentlemen:

In accordance with our contract dated January 16, 2003, Miller Environmental, Inc. was
to submit notice of our willingness to renew the Agreement for a subsequent three (3)
year tenn, by certified USPS mail, return receipt requested to the Reading Area Water
Authority at least 180 days prior to the termination date. The original termination date is
February 28, 2006. As such, we should have submitted this notice by September 2, 2005.
Our company practice is to monitor all of our contracts for all termination and renewal
dates, annual or specific reporting, and other unique requirements. We identified this
task internally in August and unfortunately despite our checks and balances, this notice
was not prepared and sent at that time. When we looked at annual renewal notices for
January, we discovered our oversight.

We offer our sincere apologies for this oversight. On behalf of the entire Miller
Environmental, Inc. organization, please be assured that we wish to continue our
contractual relationship for water meter reading services. We believe the contract
performance has met or exceeded the expectations when the contract was proposed. In
our opinion, the renewal of the contract will continue to be beneficial to the Authority.

Sincerely,
Exhibit 1.7
Fax: SeD 23 2011 09:dBam POOB/011

AMENDMENT #1
TO
AGREEMENT WITH
MILLER ENVIRONMENTAL, INC.
REGARDING
WATER METER READING SERVICES

This Amendment, made and entered into thl.jj!! day of J'(~ixr:w ll, by and
between :MILLER ENVIRONMENTAL, INC., a corporation incorporated in the
Commonwealth of Pennsylvania, with offices at 320 South 1-,m. Street, Reading, Pennsylvania
19602 (b.ereiuafte:r: referred to as OPERATOR) and READING AREA WATER AUTHORITY
with offices at 815 Washington Street, Reading, Pennsylvania 19601 (hereinafter referred to as
OWNER).

RECITALS:

WHEREAS~ the OWNER and OPERATOR have an existing Agreement with au


effective date ofMarch 1, 2003.

WHEREAS, since March l, 2003, several changes have occurred with meter reading
technology, quantity of meters being read, safety considerations, scope of services and in the
very near future, additional meter readings for settlement and additional meter readiogs :for
North Heidelberg Water Company will be required.

"WHEREAS, the OWNER and OPERATOR desire to amend the March l, 2003
Agreement, by way of thls Amendment # 1, to reflect the aforementioned changes since March
1, 2003.

Reading Area Water Authority June 1,2011


page 1 of4 Amendment #1 - Original
Fax: Sep 23 2011 OS:~8am P009/011

NOW THEREFORE, the OWNER and OPERATOR hereby agree as follows:

AM.END ARTICLE 2, paragraphs 2.1 and 2.2 as follows:

ARTICLE 2: Scope of Services

2.1 OPERATOR shall provide the services of capable personnel, who shall perform
the meter reading activities for the OWNER_

a) OPERATOR shall perform the meter reading activities for "City District 1,
City District 2, City District 3, Outside City District l, (Bern Township) Outside City District 2
(Keohorst Borough) and Outside City District 3 (Along transmission lines)".

b) OPERATOR shall penor:m the meter reading activities for Reading Regional
Airport Authority metered accounts. These all must be manually read and involve confmed
space entry.

c) OPERATOR shall perfonn the meter reading activities for N o.rth Heidelberg
Water Company metered accounts. These all must be manually read.

22 OPERATOR shall be responsible for the activities associated with the water
meter readings. These duties shall include:

a.' Plan and direct the activities associated with. the OWNER's water meters;

b. Meet on an as needed basis with the OWNER to report on acti-vities and


necessary actions;

Reading Area Water Authority June 1, 2011


page2 of 4 Amendment #1 - Original
. "' .. Fax: SeD 23 2011 09:49am PD10/01i

c. Submit status reports to the OWNER not less than once per month;

d. Perform the routine meter reading activities that would be nonnally accepted
practice fo.r "v-ater meter reading;

e. Perform meter re~reads as requested by OWNER;

f. Maintain Self-Read card log book fo:r use by OWNER's staff;

g. Submit Daily Defect Cards of non-functioning meters to OWNER's staff;

h. Handle all data logging activities to acquire additional detail for high, low or
negative meter readings;

L Have all personnel trained for CPR and Confmed Space Entry procedures and
maintain refresher training on an annual basis.

j. Enter wnfmed spaces as needed to acquire meter readings as needed and with
personnel having up to date Confined Space Entry procedure tramging.

k. Perform fmal settlement meter readings~ after receiving proper authorization


to enter properties for inspection for da:rnage, tam.pering aud acquiring the final reading.

Reading Area Water Authority June 1, 2011


page3 of 4 Amendment #1 - Original
Fax; Sep 23 2011 09:d8am P011/011

IN WITNESS WHEREOF, and in accordance with ARTICLE 8: OTHER TERMS &


CONDITIONS, which requires mutually agreed upon changes by written amendment, the
parties hereto have signed this Amendment #1 as of the date set forth above.

ATTEST: READING AREA WATER AUTHORITY:

By:

'VITNESS: MILLER ENVIRONMENTAL, INC.:

~:~cer

Reading Area Water Authority June 1, 2011


page 4 o14 Amendment #1 - Original
Exhibit 1.8
AMENDED AND RESTATED
AGREEMENT \VITH
MILLER ENVIRONl\'IENTAL, L~C.
REGARDI~G

\VATER METER READING SERVICES

f d
This Agreement, made and entered into this
23 day of February, 2012, by and between
MILLER El'fVIRONMENTAL, INC., a corporation incorporated in the Commonwealth of
11
Pennsylvania, with offices at 320 South 1i Street, Reading, Pennsylvania 19602 (hereinafter
referred to as OPERATOR) and READING AREA WATER AUTHORITY with offices at 815
Washington Street, Reading, Pennsylvania 19601 (hereinafter referred to as OWNER).

RECITALS:

WHEREAS, the 0\\'NER has determined that it needs the services of experienced and
qualified personnel, responsible to perform water meter reading services in the OWNER's
service area; and,

WHEREAS, OPERA.TOR has all necessary technical expertise and experience to assume
such water meter reading responsibility; and,

WHEREAS, OPERATOR has submitted a proposal to read water meters for a period of
time to be determined by tbe OWNER and acceptance of OPERATOR's proposal is in the best
interest of the OWNER; and,

\VHEREAS, the 0\VNER bas selected OPERATOR and OPERATOR has agreed to
perf01m the services set forth hereunder;
NOW THEREFORE, the OWNER and OPERATOR hereby agree as follows:

ARTICLE 1: General

1.1 OPERATOR hereby agrees to perform the services and to comply with the terms

and conditions as set forth herein, and in consideration of such services, the Ovv'};ER hereby

agrees to make payments to OPERATOR as specified in Article 5 hereof, and to do or take such

other actions as is required of the OvVNER hereunder.

1.2 The persons responsible for the services to be rendered under this Agreement on

behalf of OPER.I\TOR shall posses the appropriate experience and technical expetiise.

ARTICLE 2: Scope of Services

2.1 OPERATOR shall provide the services of capable personnel, who shall perform

the meter reading activities for the OWNER.

a) OPERATOR shall perform the meter reading activities for "City District 1,

City District 2, City District 3, Outside City District 1 (Bern Township), Outside City District 2

(Kenhorst Borough) and Outside City District 3 (Along transmission lines)".


b) OPER.'-\TOR shall perform the meter reading activities for Reading Regional

Airport Authority metered accounts. These all must be manually read and involve confined

space entry.

c) OPERATOR shall perform the meter reading activities for North Heidelberg

Water Company metered accotmts. These all must be manually read.

2.2 OPER.t\TOR shall be responsible for the activ-ities associated with the water

meter readings. These duties shall include:

a. Plan and direct the activities associated with the 0\VN"tR's water meters;

b. Meet on an as needed basis with the 0\v'NER to report on activities and

necessary actions;

c. Submit status reports to the OWNER not less than once per month;

d. Perform the routine meter reading activities that would be nmmally accepted

practice for water meter reading;

e. Perform meter re-reads as requested by 0\v'NER;

f. Maintain Self-Read card log book for use by 0\\'NER's staff;

g. Submit Daily Defect Cards of non-functioning meters to OW:KER'S staff;

h. Handle all data logging activities to acquire additional detail for high, low or

negative meter readings;


1. Have all personnel trained for CPR and Confined Space Entry Procedures and

maintain refresher training on an annual basis;

J. Enter confined spaces as needed to acquire meter readings as needed and with

personnel having up to date Confined Space Entry procedure training;

k. Perform fmal settlement meter readings, after receiving proper authorization

to enter propetiies for inspection for damages, tampering and acquiring the final reading.

ARTICLE 3: Responsibilities of the 0\VNER

3.1 The 0\VNER shall use its best efforts to secure materials or infmmation requested

by OPERATOR for the purpose of carrying out services under this Agreement, and shall

generally offer whatever cooperation OPERATOR requires to perfom1 its duties and

responsibilities hereunder.

3.2 Neither OPERATOR nor its personnel shall have any responsibility or liability

whatsoever for any current or future disputes between the OWNER and any architects,

engineers, contractors, or other parties relating to design or construction.

3.3 The OWNER agrees not to offer employment to or hire the personnel designated

by OPERATOR.

3.4 The 0\\'NER shall pay directly for all meter reading equipment, equipment
repairs, pre-printed SelfRead cards, pre-printed Defect cards or capital improvements.

3.5 0\v'NER shall provide OPERA TOR with initial familiarization of water meter

routes.

3.6 0\VNER shall prepare six meter reading guns on a daily basis and have them

ready at the start of each work day for use by OPERATOR, Monday through Friday (excluding

(holidays).

3. 7 OWNER shall provide OPERA..TOR with office space for coordination of duties

between Ovv'NER and OPERA.TOR.

ARTICLE 4: Term

4.1 This Agreement shall become effective when signed by the authorized

representatives of both patiies hereto. OPERATOR shall commence providing services on

March 1, 20 12. This Agreement shall remain in effect unless extended or terminated as

provided herein so long as payment is provided by OWNER to OPERA TOR, in accordance with

this At,rreement, until February 28, 2015.

4.2 If OPERATOR is willing to renew the Agreement for a subsequent three (3) year

term, OPERATOR shall submit such notice, by certit1ed U.S. mail, return receipt requested, to

OWNER at least 180 days prior to the tennination date contained herein. If OWNER does not
want to renew the Agreement for a subsequent three (3) year tmm, OWNER shall submit such

notice by certified U.S. mail, return receipt requested, to OPERATOR at least 90 days prior to

the tem1ination date contained herein.

4.3 This Agreement shall be automatically renewed for subsequent three (3) year

terms, unless one of the parties gives written notice to the other of their intention to terminate per

the language contained herein.

ARTICLE 5: Compensation

5.1 The 0\NNER shall compensate OPERATOR for the services stated herein as

iollows:

a. The 0\V)TER shall pay OPERATOR a monthly operating fee of $44,956.89

tor the l\deter Reading Services as defined in this Agreement, with adjustments and additions as

contained herein, based on a starting date ofMarch 1, 2012. This amount reflects a $1,000 per

month reduction to compensate OWNER for pe1formance monitoring perso1mel expense

incurred by OWNER.

b. This fee shall be payable and due on the first day of each month for which

services will be rendered , commencing on the date on which OPERATOR assumes

responsibility for the Meter Reading Services, and continuing until the contract expires with

adjustments as contained herein. For any portion of a full operating month, the fee shall be

apportioned appropriately. Additional compensation shall be added to the monthly contract fee
in effect at the time such adjustment was deemed necessary.

c. OVv"'NER shall additionally compensate OPERATOR in accordance with the

following rate schedule for services rendered for after-hours emergency call out services, portal

to poxtal, with a minimum two (2) hour charge, monthly as billed:

Supervisor $83.77 per man-hour

Meter Reader S55.85 per man-hour

cl. OVY'NER shall additionally compensate OPERATOR in accordance with the

following rate schedule for services rendered outside the scope of services, during normal

working hours, portal to portal, Monday through Friday excluding holidays.

Supervisor $55.85 per man-hour

Meter Reader $37.23 per man-hour

5.2 Compensation provided under this Article constitutes full and complete payment

for all costs assumed by OPER.t\TOR in performing this Agreement; including salaries, printing

and reproduction, meetings, travel expenses, postage and all similar expenses.

5.3 The 0\VNER shall pay OPERATOR for services rendered and expenses

accounted for monthly as billed. In the event that payment is not made within thirty (30) days

from date of billing, interest will be charged at the rate of one percent (1 %) per month.
5.4 The fees set forth herein shall remain unchanged for the initial term of the

Agreement ending February 28, 2015. Thereafter, the fees shall be adjusted annually in

accordance with the Consumer Price Index agreed upon between 0\\'NER and OPERATOR.

ARTICLE 6: Indemnification and Insurance

6.1 OPERATOR shall maintain during the tenn ofthis Agreement the following

types and amounts of insurance:

Type of Coverage Minimum Limits

\Vorll:er' s Compensation Satutory

Employer's Liability $100,000

Comprehensive General Liability $1,000,000 each occurance


and annual aggregate,
combined single limit

Automobile Liability, Bodily Injury, $1,000,000 any one accident


and Property Damage Combined or loss

Umbrella Excess Liability, Combined Single $2,000,000 combined


Limit, Bodily Injury, Death, Propetiy Damage

OPERA. TOR will provide 0\VNER with a cetiificate of insurance evidencing the required

coverage prior to commencement of any work under this Agreement.

6.2 OPERATOR agrees to indemnify OWNER and its elected and appointed

officials, contractors, employees, and agents against liability for claims or damages for personal

injury or property damage to the extent caused by the negligent acts or omissions of
OPERATOR, its employees, subcontractors, or agents in connection with the performance of the

Services hereunder. 0\VNER agrees to indemnify OPERA..TOR and its officers, employees,

subcontractors, and agents against liability for claims or damages for personal injury or

property damage to the extent caused by the negligent acts or omissions of OvVNER, its officials,

contractor's employees, and agents. In the event that both OPERA.TOR and OWNER are

frnally determined to have jointly caused any liability for claims or damages as aforesaid, such

liability shall be apportioned between the parties in accordance with their relative degrees of

fault.

6.3 0\\l)JER will obtain and maintain adequate property insurance for its interests

and any other insurance coverage required under any financing agreement or regulatory

requirements with respect to the meters or the activities thereof. 0\\'NER will provide

OPERATOR with a certificate of insurance evidencing such coverage upon OPER.A.TOR's

request.

6.4 OPERATOR vvarrants that it will exert the degree of care and skill in the

performance of the Services ordinmily exercised, under similar circumstances, by similar

professionals at the time such Services are rendered. THIS WARRANTY IS IN LIEU OF A:'\D

EXCLUDES ALL OTHER WARRANTIES, WHETHER EXPRESSED OR L\1PLIED, BY

OPERATION OF LAW OR OTHERWISE, INCLUDIKG AKY WARRANTY OF FITNESS

FOR PARTICULAR PURPOSE, IF APPLICABLE.

ARTICLE 7: Termination;
7.1 The failure of either party to comply with the terms of this Agreement shall

constitute a default. Upon default by one party, the other patty may send a Notice of

Termination. Such notice shall clearly specify the nature of the default and provide the

defaulting party with ninety (90) days to cure the default. If the default is capable ofbeing cured

within ninety days but is not cured within ninety days, this Agreement shall terminate at

midnight of the ninetieth clay following receipt of the Notice. In the case of a default that cannot

be cured \Vi thin ninety days, this Agreement shall continue for a reasonable period of time

beyond the ninetieth day if the defaulting party has commenced and is diligently pursuing a cme.

Evidence of such cme shall be provided from the party detennined to be in default to the

satisfaction of the other party.

7.2 In the event of termination of this Agreement under the above paragraph,

OWl\ER shall pay OPERATOR for the Services provided and invoiced by OPERATOR up to

the effective date of termination.

ARTICLE 8: Other Terms and Conditions

8.1 Each party hereto represents to the other party that it has full power and authority

to enter into and perform this Agreement, that all actions necessary to such execution and

performance have been taken, and that this Agreement violates no law, regulation, decree, or

other legislative, administrative, or judicial restriction of either of the parties.

8.2 The OVlNER agrees to release and indemnify OPERATOR and the
OPERATOR's employees and save them harmless (including costs of defense) from any and all

liability to the OWNER, its employees, or third parties for any damage to property, personal

injuries, or loss oflife or prope1iy, or any other claim resulting from activities under this

Agreement, except for negligence, wilful misconduct or nonfeasance by the OPER.A..TOR or

OPER.A.TOR's employees as finally found by a court of competent jurisdiction.

8.3 The terms and conditions of this Agreement shall be binding upon the OvVNER

and OPER...A..TOR and their respective successors and assigns.

8.4 This Agreement incorporates all the understandings of the pmiies hereto and

supersedes any and all agreements reached by the parties prior to the execution of this

Agreement, whether oral or written.

8.5 If any provision of this Agreement is held invalid, the balance of the provisions of

this Agreement shall not be affected thereby if the balance of the provisions of this Agreement

would then continue to confonn to the requirements of applicable laws.

8.6 Any waiver of the terms and conditions of this Agreement by either of the parties

hereto shatl not be construed to be a waiver of any other term or condition of this Agreement.

8.7 The pmties agree that they waive a trial by jury as to any and all claims, causes of

action, or disputes arising out of this Agreement or services to be provided pursuant to this

Agreement. J\otwithstanding any such claim, dispute, or legal action, each party shall continue

to perf01m its obligations tmder this Agreement in a timely manner, unless otherwise mutually

agreed in writing.
8.8 References herein in the masculine gender shall also be construed to apply to the

feminine gender.

8.9 Except as otherwise specifically provided in this Agreement, whenever under this

Agreement approvals, authorizations, dete1minations, satisfactions, written notices, or waivers

are required or permitted, such approvals, authorizations, detenninations, satisfactions, written

notices, or waivers shall be effective and valid only when given in writing signed by a duly

authorized officer ofthe 0\V~cR or OPERATOR, and delivered in the U.S. mail, certiled

postage, return receipt requested, to the principal office of the party to whom it is directed, which

until changed by written notice from one party to the other are as follows:

OPERATOR: Miller Environmental, Inc.


11
320 South 1i Street

Reading, Pennsylvania 19602

Attention: Vice President

0\V.:--.JER: Reading Area \Vater Authority

815 Washington Street

Reading, Pennsylvania, 19601

Attention: Executive Director

f\J WITNESS WHEREOF, the parties hereto have executed this Agreement as of the day and

year first above written.

ATTEST: READI~GAREA \VATERAUTHORITY:


Chairman

vVITNESS: MILLER ENVlRO~lVIENTAL, ~C.:

By: c;~
Exhibit 2 Miller Environmental
Invoice Summaries

2.0) Invoice Summary


2.1) Contracted Management Services (January 2004
Amendment and January 2015 Contract) Invoice
Detail
2.2) Executive Director Services (January 2015
Contract) Invoice Detail
2.3) Executive Director Services (January 2015
Contract) Invoice Detail Source Water
2.4) Meter Reading Services Invoice Detail
Exhibit 2.0
Reading Area Water Authority
Miller Environmental, Inc. - Invoice Summary
For the Service Period December 1, 2012 through December 31, 2016

(1)
Contracted Management Services
Water Meter Reading
(2)
Notes Year Plant Manager Executive Director Total Services Total Amount

Paid
2013 $ 118,905 $ 238,528 $ 357,433 $ 539,483 $ 896,915
2014 129,322 232,838 362,160 539,483 901,643
2015 32,772 365,533 398,305 539,483 937,788
2016 - 243,739 243,739 494,526 738,264
Total Paid $ 280,999 $ 1,080,638 $ 1,361,637 $ 2,112,974 $ 3,474,611

Not Paid
2016 $ - $ 52,289 $ 52,289 $ - $ 52,289
Total Not Paid $ - $ 52,289 $ 52,289 $ - $ 52,289

TOTAL CHARGED $ 280,999 $ 1,132,927 $ 1,413,926 $ 2,112,974 $ 3,526,900

Source: Miller Environmental Inc. invoices and RAWA check copies from 2014-2016 and RAWA Vendor History, including invoice and check detail, for Miller
Environmental Inc. from the invoice dated January 1, 2013 through November 1, 2016.

Notes:

1 - See Exhibits 2.1 - 2.3.

2 - See Exhibit 2.4.

Exhibit 2.0
Prepared by Baker Tilly Page 1 of 1
Exhibit 2.1
Reading Area Water Authority
Miller Environmental, Inc. - Contracted Management Services (January 2004 Amendment and January 2015 Contract) Invoice Detail
For the Service Period from December 1, 2012 through September 30, 2016(1)

Plant Manager (2) Executive Director (3)


Invoice Invoice Service Check Check Issue Billing Hours per Billing Hours per Total Total Hours per Check Total
Date(4) (5)
Notes No. Date Period No. Rate Hours (5) Week (6) Amount Billed Rate (5) Hours (5) Week (6) Amount Billed Hours (5) Week (6) Total Amount Approval Paid

7 47121258 1/1/2013 Dec-12 1485 2/12/2013 $ 82.10 117 29 $ 9,566 $ 125.58 149 37 $ 18,774 266 67 $ 28,340 N/A $ 28,340
7, 8 47011359 2/1/2013 Jan-13 1549 2/28/2013 82.10 113 28 9,237 125.58 156 39 19,590 269 67 28,828 N/A 28,828
7 47021360 3/1/2013 Feb-13 1686 3/28/2013 86.22 131 33 11,252 131.86 139 35 18,329 269 67 29,580 N/A 29,580
7 47031361 4/1/2013 Mar-13 1823 4/25/2013 86.22 108 27 9,312 131.86 142 35 18,724 250 62 28,036 N/A 28,036
47041362 5/1/2013 Apr-13 1994 5/30/2013 86.22 124 31 10,691 131.86 150 37 19,779 274 68 30,470 N/A 30,470
47051363 6/1/2013 May-13 2125 6/27/2013 86.22 123 31 10,562 131.86 172 43 22,680 294 74 33,242 N/A 33,242
47061364 7/1/2013 Jun-13 2263 7/25/2013 86.22 104 26 8,924 131.86 130 32 17,142 233 58 26,066 N/A 26,066
47071365 8/1/2013 Jul-13 2508 8/29/2013 86.22 104 26 8,967 131.86 153 38 20,241 257 64 29,207 N/A 29,207
47081366 9/1/2013 Aug-13 2611 9/26/2013 86.22 102 25 8,751 131.86 169 42 22,284 270 68 31,036 N/A 31,036
47091367 10/1/2013 Sep-13 2783 10/31/2013 86.22 122 31 10,519 131.86 148 37 19,581 270 68 30,100 N/A 30,100
8 47101368 11/1/2013 Oct-13 2880 11/12/2013 86.22 138 35 11,898 131.86 175 44 23,076 313 78 34,974 N/A 34,974
8 47111369 12/1/2013 Nov-13 2965 12/10/2013 86.22 107 27 9,226 131.86 139 35 18,329 246 61 27,554 N/A 27,554
2013 Subtotal (12 months) 1,390 29 $ 118,905 1,823 38 $ 238,528 3,213 67 $ 357,433 $ 357,433

47121370 1/1/2014 Dec-13 3200 1/30/2014 $ 86.22 102 25 $ 8,751 $ 131.86 119 30 $ 15,625 220 55 $ 24,377 Mr. Setley $ 24,377
47011471 2/1/2014 Jan-14 3282 2/11/2014 86.22 140 35 12,071 131.86 162 41 21,361 302 76 33,432 Mr. Setley 33,432
9 47021472 3/1/2014 Feb-14 3502 3/27/2014 90.53 135 34 12,222 138.45 153 38 21,183 288 72 33,404 CW 33,404
9 47031473 4/1/2014 Mar-14 3645 4/24/2014 90.53 156 39 14,123 138.45 170 43 23,537 326 82 37,659 CMW 37,659
9 47041474 5/1/2014 Apr-14 3799 5/29/2014 90.53 140 35 12,629 138.45 155 39 21,460 295 74 34,089 CMW 34,089
8, 9 47051475 6/1/2014 May-14 4025 7/8/2014 90.53 138 35 12,493 138.45 174 43 24,021 312 78 36,514 CW 36,514
9 47061476 7/1/2014 Jun-14 4118 7/31/2014 90.53 169 42 15,254 138.45 97 24 13,360 265 66 28,615 CMW 28,615
9 47071477 8/1/2014 Jul-14 4293 8/28/2014 90.53 115 29 10,411 138.45 174 44 24,104 289 72 34,515 CMW 34,515
9 47081478 9/1/2014 Aug-14 4430 9/25/2014 90.53 101 25 9,098 138.45 171 43 23,675 272 68 32,773 CMW 32,773
9 47091479 10/1/2014 Sep-14 4627 10/30/2014 90.53 115 29 10,366 138.45 128 32 17,652 242 61 28,018 CMW 28,018
8, 9 47101480 11/1/2014 Oct-14 4801 12/10/2014 90.53 132 33 11,905 138.45 194 49 26,859 326 81 38,764 Mr. Setley 38,764
2014 Subtotal (11 months) 1,440 33 $ 129,322 1,695 39 $ 232,838 3,135 71 $ 362,160 $ 362,160

8, 9, 10 47111481 12/1/2014 Nov-14 4934 1/13/2015 $ 90.53 107 27 $ 9,641 $ 138.45 160 40 $ 22,083 266 67 $ 31,724 Mr. Setley $ 31,724
9, 10 47121482 1/1/2015 Dec-14 5012 1/29/2015 90.53 113 28 10,185 138.45 157 39 21,667 269 67 31,852 Mr. Setley 31,852
9, 10 47011583 2/1/2015 Jan-15 5084 2/10/2015 90.53 143 36 12,946 138.45 184 46 25,475 327 82 38,421 Mr. Setley 38,421
8, 10 47021584 3/1/2015 Feb-15 5317 3/26/2015 141.91 211 53 29,943 211 53 29,943 Mr. Setley 29,943
10 47031585 4/1/2015 Mar-15 5493 4/30/2015 141.91 269 67 38,174 269 67 38,174 Mr. Setley 38,174
10 47041586 5/1/2015 Apr-15 5656 5/28/2015 141.91 210 53 29,801 210 53 29,801 Mr. Setley 29,801
10 47051587 6/1/2015 May-15 5804 6/25/2015 141.91 215 54 30,511 215 54 30,511 Mr. Setley 30,511
10 47061588 7/1/2015 Jun-15 5980 7/30/2015 141.91 213 53 30,227 213 53 30,227 Mr. Setley 30,227
10 47071589 8/1/2015 Jul-15 6093 8/27/2015 141.91 209 52 29,659 209 52 29,659 Mr. Setley 29,659
8, 10 47081590 9/1/2015 Aug-15 6239 9/24/2015 141.91 174 44 24,692 174 44 24,692 Mr. Setley 24,692
10 47091591 10/1/2015 Sep-15 6409 10/29/2015 141.91 173 43 24,550 173 43 24,550 Mr. Setley 24,550
8, 10 47101592 11/1/2015 Oct-15 6583 12/14/2015 141.91 209 52 29,659 209 52 29,659 Mr. Setley 29,659
8, 10, 11 47111593 12/1/2015 Nov-15 6643 12/14/2015 141.91 205 51 29,092 205 51 29,092 Mr. Setley 29,092
10 2015 Subtotal (13 months) 362 30 $ 32,772 2,588 50 $ 365,533 2,950 57 $ 398,305 $ 398,305

10, 11 47121594 1/1/2016 Dec-15 6783 1/28/2016 $ 141.91 214 54 $ 30,369 214 54 $ 30,369 Mr. Setley $ 30,369
10, 11 47011695 2/1/2016 Jan-16 6944 2/25/2016 141.91 248 62 35,194 248 62 35,194 Mr. Setley 35,194
10, 11 47021696 3/1/2016 Feb-16 7125 3/31/2016 145.45 229 57 33,308 229 57 33,308 Mr. Setley 33,308
10, 11 47031697 4/1/2016 Mar-16 7277 4/28/2016 145.45 212 53 30,835 212 53 30,835 Mr. Setley 30,835
10, 11 47041698 5/1/2016 Apr-16 7437 5/26/2016 145.45 209 52 30,399 209 52 30,399 Mr. Setley 30,399
10, 11 47051699 6/1/2016 May-16 7583 6/30/2016 145.45 186 47 27,054 186 47 27,054 Mr. Setley 27,054
10, 11 47061600 7/1/2016 Jun-16 7730 7/28/2016 145.45 194 49 28,217 194 49 28,217 Mr. Setley 28,217
10, 11 47071601 8/1/2016 Jul-16 7877 8/25/2016 145.45 195 49 28,363 195 49 28,363 Ms. Ruotolo 28,363
10 2016 Subtotal (8 months) - - $ - 1,687 53 $ 243,739 1,687 53 $ 243,739 $ 243,739

Total Paid 3,192 31 $ 280,999 7,794 44 $ 1,080,638 10,986 62 $ 1,361,637 $ 1,361,637

10, 11, 12 47081602 9/1/2016 Aug-16 8044 Not Paid $ 145.45 181 45 $ 26,254 181 45 $ 26,254 Not Paid $ -

Exhibit 2.1
Prepared by Baker Tilly Page 1 of 2
Reading Area Water Authority
Miller Environmental, Inc. - Contracted Management Services (January 2004 Amendment and January 2015 Contract) Invoice Detail
For the Service Period from December 1, 2012 through September 30, 2016(1)

Plant Manager (2) Executive Director (3)


Invoice Invoice Service Check Check Issue Billing Hours per Billing Hours per Total Total Hours per Check Total
Date(4) (5)
Notes No. Date Period No. Rate Hours (5) Week (6) Amount Billed Rate (5) Hours (5) Week (6) Amount Billed Hours (5) Week (6) Total Amount Approval Paid

10, 11, 12 47091603 10/1/2016 Sep-16 8188 Not Paid 145.45 179 45 26,036 179 45 26,036 Not Paid -

Total Not Paid - - $ - 360 45 $ 52,289 360 45 $ 52,289 $ -

TOTAL CHARGED 3,192 31 $ 280,999 8,153 44 $ 1,132,927 11,345 62 $ 1,413,926 $ 1,361,637

Source: Miller Environmental Inc. invoices and RAWA check copies from January 1, 2014 through 2016 and RAWA Vendor History, including invoice and check detail, for Miller Environmental Inc. from the invoice dated January 1, 2013 through October 1, 2016.

Notes:

Amounts subject to rounding.

1 - We understand that Mr. Miller, on behalf of Miller Environmental, performed Contract Management Services for RAWA since September 2000 under the September 2000 Contract. Analysisrepresents the invoices charged to RAWA for the period from the January 1,
2013 invoice through the October 1, 2016 invoice (service period of December 2012 through September 2016), as this is the period for which invoice data was provided. Specifically,copies of invoice records were provided beginning with the January 1, 2014 invoice.
The data prior to the January 1, 2014 invoice represents the invoice detail from RAWA's Vendor History report.

2 - On January 22, 2004, the January 2004 Amendment expanded the Contract Manager's scope to include Executive Director responsibilities,in addition to Water Filter Plant Management responsibilities. This contract automatically renewed for 1 year terms to begin on
February 1 of each year. See Exhibit 1.2 - January 2004 Amendment at 2.

3 - On January 29, 2015, Miller Environmental and RAWA executed the January 2015 Contract, which removed the water filter plant manager responsibilities,resulting in Miller Environmental only contracted to perform Executive Director responsibilities.This contract
automatically renewed for 3 year terms to begin on February 1 of each year. See Exhibit 1.3 - January 2015 Contract at 1-6.

4 - Yearly subtotals are based on payment date rather than invoice date. Check detail sourced fromRAWA's Paid Invoice Report from January 1, 2013 through December 31, 2015.

5 - For the period during which detailed invoice support was not provided (invoices dated January 1, 2013 - December 1, 2013 are sourced from RAWA's Vendor History), we calculated the appropriate rate based on the annual five percent increase specified in the
contract. We then used the billing rate and the total amount billed to calculate the number of hours charged. See Exhibit 1.2 - January 2004 Amendment at 5.1.

6 - Average hours per week based on 4 weeks per month, or 48 work-weeks per year.

7 - RAWA's Vendor History report indicates that the two payments related to this invoice are each for Contracted Executive Director Services. Based on the documentation provided for other invoices, we have assumed for purposes of this analysisthat the larger value is
related to Executive Director services and the lower value is related to Plant Manager services.

8 - Check issued includes payment to Miller Environmental for Water Meter Reading services in addition to the Contracted Management Services and Contracted Plant Manager. For purposes of this analysis, the payment related to Water Meter Reading services has been
excluded.

9 - These amounts were originally classified incorrectly in RAWA's general ledger. When originally recorded during these months, the Plant Manager expenses were classified as Executive Director services, and vice versa. An entry was recorded during 2015 to correct t
misclassification. We have correctly classified the expenses.

10 - Starting on the February 1, 2015 effective date of the January 2015 Contract, Miller Environmental provided additional detail to support the Executive Director invoices. This detail was broken-out between the following services: Source Water, Treatment,
Distribution, and Administration. See Exhibit 2.2 for detail of the services that Miller Environmental provided under the January 2015 Contract during the invoice period March 1, 2015 through October 1, 2016.

11 - We were provided monthly timesheet records for services provided by Mr. Goldberg at RAWA's Source Water plant during this period. See Exhibit 2.3.

Exhibit 2.1
Prepared by Baker Tilly Page 2 of 2
Exhibit 2.2
Reading Area Water Authority
Miller Environmental, Inc.- Executive Director Services (January 2015 Contract) Invoice Detail
For the Service Period from February 1, 2015 through September 30, 2016

Executive Director Services (1)


Source Water Treatment Distribution Administration
Service Check Issue Billing
(2)
Notes Invoice No. Invoice Date Period Check No. Date Rate Hours Total Billed Hours Total Billed Hours Total Billed Hours Total Billed Total Hours Total Billed Check Total Paid

3 47021584 3/1/2015 Feb-15 5317 3/26/2015 $ 141.91 50 $ 7,096 11 $ 1,490 15 $ 2,058 136 $ 19,300 211 $ 29,943 $ 29,943
47031585 4/1/2015 Mar-15 5493 4/30/2015 141.91 103 14,546 9 1,277 27 3,832 131 18,519 269 38,174 38,174
47041586 5/1/2015 Apr-15 5656 5/28/2015 141.91 128 18,094 17 2,342 9 1,206 58 8,160 210 29,801 29,801
47051587 6/1/2015 May-15 5804 6/25/2015 141.91 71 10,005 9 1,277 13 1,774 123 17,455 215 30,511 30,511
47061588 7/1/2015 Jun-15 5980 7/30/2015 141.91 68 9,650 17 2,412 14 1,987 114 16,178 213 30,227 30,227
47071589 8/1/2015 Jul-15 6093 8/27/2015 141.91 60 8,515 23 3,264 18 2,554 108 15,326 209 29,659 29,659
3 47081590 9/1/2015 Aug-15 6239 9/24/2015 141.91 50 7,096 23 3,264 18 2,554 83 11,779 174 24,692 24,692
47091591 10/1/2015 Sep-15 6409 10/29/2015 141.91 52 7,379 31 4,399 14 1,987 76 10,785 173 24,550 24,550
3 47101592 11/1/2015 Oct-15 6583 12/14/2015 141.91 54 7,663 36 5,109 30 4,257 89 12,630 209 29,659 29,659
3, 4 47111593 12/1/2015 Nov-15 6643 12/14/2015 141.91 46 6,528 39 5,534 48 6,812 72 10,218 205 29,092 29,092
2015 Subtotal (10 months) 681 $ 96,570 214 $ 30,369 205 $ 29,021 989 $ 140,349 2,088 $ 296,308 $ 296,308

4 47121594 1/1/2016 Dec-15 6783 1/28/2016 $ 141.91 49 $ 6,954 54 $ 7,663 56 $ 7,947 55 $ 7,805 214 $ 30,369 $ 30,369
4 47011695 2/1/2016 Jan-16 6944 2/25/2016 141.91 42 5,960 48 6,812 61 8,657 97 13,765 248 35,194 35,194
4 47021696 3/1/2016 Feb-16 7125 3/31/2016 145.45 39 5,673 56 8,145 53 7,709 81 11,781 229 33,308 33,308
4 47031697 4/1/2016 Mar-16 7277 4/28/2016 145.45 40 5,818 52 7,563 48 6,982 72 10,472 212 30,835 30,835
4 47041698 5/1/2016 Apr-16 7437 5/26/2016 145.45 48 6,982 47 6,836 50 7,273 64 9,309 209 30,399 30,399
4 47051699 6/1/2016 May-16 7583 6/30/2016 145.45 42 6,109 45 6,545 47 6,836 52 7,563 186 27,054 27,054
4 47061600 7/1/2016 Jun-16 7730 7/28/2016 145.45 38 5,527 50 7,273 51 7,418 55 8,000 194 28,217 28,217
4 47071601 8/1/2016 Jul-16 7877 8/25/2016 145.45 44 6,400 42 6,109 54 7,854 55 8,000 195 28,363 28,363
2016 Subtotal (8 months) 342 $ 49,422 394 $ 56,946 420 $ 60,675 531 $ 76,696 1,687 $ 243,739 $ 243,739

Total Paid 1,304 $ 145,992 775 $ 87,315 796 $ 89,695 1,938 $ 217,045 4,824 $ 540,047 $ 540,047

4, 5 47081602 9/1/2016 Aug-16 8044 Not Paid $ 145.45 38 $ 5,527 35 $ 5,091 40 $ 5,818 68 $ 9,818 181 $ 26,254 $ -
4, 5 47091603 10/1/2016 Sep-16 8188 Not Paid 145.45 48 6,982 22 3,127 32 4,654 78 11,272 179 26,036 -

Total Not Paid 108 $ 12,509 71 $ 8,218 90 $ 10,472 181 $ 21,090 450 $ 52,289 $ -

TOTAL CHARGED 1,109 $ 158,500 665 $ 95,533 697 $ 100,168 1,665 $ 238,135 4,135 $ 592,336 $ 540,047

Source: Miller Environmental Inc. invoices, RAWA check copies, and RAWA Vendor History, including invoice and check detail, for Miller Environmental Inc. from the invoice dated March 1, 2015 through October 1, 2016.

Notes:

Amounts subject to rounding.

1 - On January 29, 2015, Miller Environmental and RAWA executed the January 2015 Contract, which removed the water filter plant manager responsibilities, resulting in Miller Environmental only contracted to perform Executive Director responsibilities. In
recognition of the terms of the January 2015 Contract, Miller Environmental invoiced RAWA under the following categories: Source Water, Treatment, Distribution and Administration. This contract automatically renewed for 3 year terms to begin on February 1 of
each year. See Exhibit 1.3 - January 2015 Contract at 1-6.

2 - Yearly subtotals are based on payment date rather than invoice date. Check detail sourced from RAWA's Paid Invoice Report from January 1, 2013 through December 31, 2015.

3 - Check issued includes payment to Miller Environmental for Water Meter Reading services in addition to the Contracted Management Services and Contracted Plant Manager. For purposes of this analysis, the payment related to Water Meter Reading services has
been excluded.

Exhibit 2.2
Prepared by Baker Tilly Page 1 of 2
Reading Area Water Authority
Miller Environmental, Inc.- Executive Director Services (January 2015 Contract) Invoice Detail
For the Service Period from February 1, 2015 through September 30, 2016

(1)
Executive Director Services
Source Water Treatment Distribution Administration
Service Check Issue Billing
(2)
Notes Invoice No. Invoice Date Period Check No. Date Rate Hours Total Billed Hours Total Billed Hours Total Billed Hours Total Billed Total Hours Total Billed Check Total Paid

4 - We were provided monthly timesheet records for services provided by Mr. Goldberg at RAWA's Source Water plant during this period. See Exhibit 2.3.

5 - It is our understanding that these invoices have not been paid.

Exhibit 2.2
Prepared by Baker Tilly Page 2 of 2
Exhibit 2.3
Reading Area Water Authority
Miller Environmental, Inc. - Executive Director Services (January 2015 Contract) Invoice Detail - Source Water
For the Service Period November 1, 2015 through August 31, 2016(1)

Executive Director - Invoices - Source Water (2) Mr. Goldberg


Service Hours Hours per % of Goldberg's Hours per Mr. Goldberg Effective
(3)
Detailed Hours (4)
(3) (5)
Notes Invoice No. Invoice Date Period Check No. Check Date Billing Rate Charged Week Total Charged Detailed Hours Week Hourly Rate

6 47111593 12/1/2015 Nov-15 6643 12/14/2015 $ 141.91 46 12 $ 6,528 33% 140 35 $ 46.63
2015 Subtotal (1 month) 46 12 $ 6,528 33% 140 35 $ 46.63

47121594 1/1/2016 Dec-15 6783 1/28/2016 $ 141.91 49 12 $ 6,954 44% 112 28 $ 62.09
47011695 2/1/2016 Jan-16 6944 2/25/2016 141.91 42 11 5,960 31% 138 34 43.35
47021696 3/1/2016 Feb-16 7125 3/31/2016 145.45 39 10 5,673 29% 136 34 41.71
47031697 4/1/2016 Mar-16 7277 4/28/2016 145.45 40 10 5,818 29% 138 35 42.16
47041698 5/1/2016 Apr-16 7437 5/26/2016 145.45 48 12 6,982 35% 139 35 50.23
47051699 6/1/2016 May-16 7583 6/30/2016 145.45 42 11 6,109 29% 147 37 41.70
47061600 7/1/2016 Jun-16 7730 7/28/2016 145.45 38 10 5,527 28% 136 34 40.64
47071601 8/1/2016 Jul-16 7877 8/25/2016 145.45 44 11 6,400 36% 122 31 52.46
2016 Subtotal (8 months) 342 11 $ 49,422 32% 1,067 33 $ 46.32

Total Paid 388 11 $ 55,950 32% 1,207 34 $ 46.35

7 47081602 9/1/2016 Aug-16 8044 Not Paid $ 145.45 38 10 $ 5,527 33% 116 29 $ 47.65

Total Not Paid 38 10 $ 5,527 33% 116 29 $ 47.65

TOTAL CHARGED 426 11 $ 61,477 32% 1,323 33 $ 46.47

Source: Miller Environmental Inc. invoices, RAWA check copies, and RAWA Vendor History, including invoice and check detail, for Miller Environmental Inc. from the invoice dated December 1, 2015 through September 1, 2016 and Mr.
Goldberg hourly timesheets for the period of November 2015 through August 2016.

Notes:

Amounts subject to rounding.

1 - Mr. Goldberg's timesheets related to services provided on behalf of Miller Environmental at RAWA's Source Water plant were provided only for this period.

2 - On January 29, 2015, Miller Environmental and RAWA executed the January 2015 Contract, which removed the water filter plant manager responsibilities, resulting in Miller Environmental only contracted to perform Executive Director
responsibilities. In recognition of the terms of the January 2015 Contract, Miller Environmental invoiced RAWA under the following categories: Source Water, Treatment, Distribution and Administration. This contract automatically
renewed for 3 year terms to begin on February 1 of each year. See Exhibit 1.3 - January 2015 Contract at 1-6.

3 - Average hours per week based on 4 weeks per month, or 48 work-weeks per year.

4 - Calculated as the Executive Director's reported hours divided by Mr. Goldberg's reported hours.

5 - Calculated as Executive Director total amount charged (Executive Director rate x Executive Director reported hours) divided by Mr. Goldberg's detailed reported hours.

Exhibit 2.3
Prepared by Baker Tilly Page 1 of 2
Reading Area Water Authority
Miller Environmental, Inc. - Executive Director Services (January 2015 Contract) Invoice Detail - Source Water
For the Service Period November 1, 2015 through August 31, 2016(1)

Executive Director - Invoices - Source Water (2) Mr. Goldberg


Service Hours Hours per % of Goldberg's Hours per Mr. Goldberg Effective
(3)
Detailed Hours (4)
(3) (5)
Notes Invoice No. Invoice Date Period Check No. Check Date Billing Rate Charged Week Total Charged Detailed Hours Week Hourly Rate

6 - Check issued includes payment to Miller Environmental for Water Meter Reading services in addition to the Contracted Management Services and Contracted Plant Manager. For purposes of this analysis, the payment related to Water
Meter Reading services has been excluded.

7 - It is our understanding that this invoice has not been paid.

Exhibit 2.3
Prepared by Baker Tilly Page 2 of 2
Exhibit 2.4
Reading Area Water Authority
Miller Environmental, Inc. - Meter Reading Services Invoice Detail
For the Service Period February 1, 2013 through December 31, 2016 (1)

Service Invoice Check Issue


Notes Invoice No. Invoice Date Period Approval Invoice Amount Check No. Date(2) Check Total

160213120 1/1/2013 Feb-13 N/A $ 44,957 1254 1/8/2013 $ 44,957


160313121 2/1/2013 Mar-13 N/A 44,957 1549 2/28/2013 44,957
160413122 3/1/2013 Apr-13 N/A 44,957 1712 3/28/2013 44,957
160513123 4/1/2013 May-13 N/A 44,957 1756 4/9/2013 44,957
160613124 5/1/2013 Jun-13 N/A 44,957 1913 5/14/2013 44,957
160713125 6/1/2013 Jul-13 N/A 44,957 2066 6/11/2013 44,957
160813126 7/1/2013 Aug-13 N/A 44,957 2198 7/9/2013 44,957
160913127 8/1/2013 Sep-13 N/A 44,957 2366 8/13/2013 44,957
161013128 9/1/2013 Oct-13 N/A 44,957 2545 9/10/2013 44,957
161113129 10/1/2013 Nov-13 N/A 44,957 2697 10/8/2013 44,957
161213130 11/1/2013 Dec-13 N/A 44,957 2880 11/12/2013 44,957
160114131 12/1/2013 Jan-14 N/A 44,957 2965 12/10/2013 44,957
2013 Subtotal $ 539,483 $ 539,483

160214132 1/1/2014 Feb-14 Mr. Setley $ 44,957 3090 1/14/2014 $ 44,957


160314133 2/1/2014 Mar-14 CW 44,957 3359 2/27/2014 44,957
160414134 3/1/2014 Apr-14 CMW 44,957 3454 3/11/2014 44,957
160514135 4/1/2014 May-14 CMW 44,957 3578 4/8/2014 44,957
160614136 5/1/2014 Jun-14 CMW 44,957 3733 5/13/2014 44,957
160714137 6/1/2014 Jul-14 CMW 44,957 3875 6/10/2014 44,957
160814138 7/1/2014 Aug-14 CMW 44,957 4025 7/8/2014 44,957
160914139 8/1/2014 Sep-14 CMW 44,957 4217 8/12/2014 44,957
161014140 9/1/2014 Oct-14 CMW 44,957 4371 9/9/2014 44,957
161114141 10/1/2014 Nov-14 CMW 44,957 4525 10/14/2014 44,957
161214142 11/1/2014 Dec-14 CMW 44,957 4689 11/12/2014 44,957
3 160115143 12/1/2014 Jan-15 Mr. Setley 44,957 4801 12/10/2014 44,957
2014 Subtotal $ 539,483 $ 539,483

3 160215144 1/1/2015 Feb-15 Mr. Setley $ 44,957 4934 1/13/2015 $ 44,957


3 160315145 2/1/2015 Mar-15 Mr. Setley 44,957 5317 3/26/2015 44,957
3 160415146 3/1/2015 Apr-15 Mr. Setley 44,957 5317 3/26/2015 44,957
160515147 4/1/2015 May-15 Mr. Setley 44,957 5400 4/14/2015 44,957

Exhibit 2.4
Prepared by Baker Tilly Page 1 of 3
Reading Area Water Authority
Miller Environmental, Inc. - Meter Reading Services Invoice Detail
For the Service Period February 1, 2013 through December 31, 2016 (1)

Service Invoice Check Issue


Notes Invoice No. Invoice Date Period Approval Invoice Amount Check No. Date(2) Check Total

160615148 5/1/2015 Jun-15 Mr. Setley 44,957 5585 5/12/2015 44,957


160715149 6/1/2015 Jul-15 Mr. Setley 44,957 5733 6/9/2015 44,957
160815150 7/1/2015 Aug-15 Mr. Setley 44,957 5894 7/14/2015 44,957
160915151 8/27/2015 Sep-15 No Approval 44,957 6166 9/8/2015 44,957
3 161015152 9/1/2015 Oct-15 Mr. Setley 44,957 6239 9/24/2015 44,957
161115153 10/1/2015 Nov-15 Mr. Setley 44,957 6325 10/13/2015 44,957
161215154 11/1/2015 Dec-15 Mr. Setley 44,957 6482 11/10/2015 44,957
3 160116155 12/1/2015 Jan-16 Mr. Setley 44,957 6583 12/14/2015 44,957
2015 Subtotal $ 539,483 $ 539,483

160216156 1/1/2016 Feb-16 Mr. Setley $ 44,957 6703 1/19/2016 $ 44,957


160316157 2/1/2016 Mar-16 Mr. Setley 44,957 6866 2/16/2016 44,957
160416158 3/1/2016 Apr-16 Mr. Setley 44,957 7039 3/16/2016 44,957
160516159 4/1/2016 May-16 Mr. Setley 44,957 7208 4/25/2016 44,957
160616160 5/1/2016 Jun-16 Mr. Setley 44,957 7355 5/16/2016 44,957
160716161 6/1/2016 Jul-16 Mr. Setley 44,957 7513 6/21/2016 44,957
160816162 7/1/2016 Aug-16 Mr. Setley 44,957 7648 7/28/2016 44,957
160916163 8/1/2016 Sep-16 No Approval 44,957 7812 8/16/2016 44,957
161016164 9/1/2016 Oct-16 Ms. Ruotolo 44,957 7963 9/26/2016 44,957
161116165 10/1/2016 Nov-16 No Approval 44,957 8125 10/31/2016 44,957
161216166 11/1/2016 Dec-16 No Approval 44,957 8268 11/8/2016 44,957
2016 Subtotal $ 494,526 $ 494,526

TOTAL CHARGED & PAID $ 2,112,974 $ 2,112,974

Source: Miller Environmental Inc. invoices and RAWA check copies from 2014-2016 and RAWA Vendor History, including invoice and
check detail, for Miller Environmental Inc. from the invoice dated January 1, 2013 through November 1, 2016.

Notes:

Exhibit 2.4
Prepared by Baker Tilly Page 2 of 3
Reading Area Water Authority
Miller Environmental, Inc. - Meter Reading Services Invoice Detail
For the Service Period February 1, 2013 through December 31, 2016 (1)

Service Invoice Check Issue


Notes Invoice No. Invoice Date Period Approval Invoice Amount Check No. Date(2) Check Total

Amounts subject to rounding.

1 - I understand that Miller Environmental Inc. has performed Water Meter Reading Services for RAWA since March 2003 in accordance
with the 2003 Meter Reading Contract. We have not been provided with invoice records prior to the January 1, 2013 invoice. As such, we
have focused our analysis on invoices from January 1, 2013 to October 1, 2016 (service period of February 2013 through December 2016).

2 - Yearly subtotals are based on payment date rather than invoice date. Check detail sourced from RAWA's Paid Invoice Report from
January 1, 2013 through December 31, 2015, RAWA's Bank Statements, and RAWA's General Ledger.

3 - Check issued includes payment to Miller Environmental for Contracted Management Services and Plant Management Services in addition
to Water Meter Reading Services. For purposes of this analysis, the payment related to Contracted Management Services and Plant
Management Services has been excluded.

Exhibit 2.4
Prepared by Baker Tilly Page 3 of 3
Exhibit 3.0 Miller Environmental
Invoice Records and Mr. Goldberg
Timesheet Records Source Water
Bill Murray

From: Dean Miller <deamil@aol.com>


Sent: Friday, October 14, 2016 5:17 AM
To: Bill Murray
Subject: RE: MEI Invoice backup July, August 2016

Hi Bill:

I hope things are going ok.

The first page is the invoice that gets sent to the Authority broken out by each discipline that we were responsible for
and hours charged for each of those disciplines.

The second and third page is the hours which Jesse actually dedicated to source water protection during that month
with some description.

If you compare Page 1 source water protection hours to Page 2 and 3 actual hours you will see the hours have been
reduced for invoicing purposes for source water protection.

The same pertains to pages 4 and 5 but for the next month.

Please let me know if this helps.

Thanks,

Dean

From: Bill Murray [mailto:Bill.Murray@readingareawater.com]


Sent: Wednesday, October 12, 2016 11:55 AM
To: Dean Miller <deamil@aol.com>
Subject: RE: MEI Invoice backup July, August 2016

Dean,

Thank you for the information. Can you please explain it? I realize they are Jessie's hours, but I want to understand how
you are charging them on the Invoice.

Thanks, Bill
From: Dean Miller [mailto:deamil@aol.com]
Sent: Wednesday, October 5, 2016 5:04 PM
To: Bill Murray
Subject: MEI Invoice backup July, August 2016

Hello Bill:

Attached please find the information that you requested for our 2 most recent invoices submitted.

Please let me know if you have any questions.

1
Subject: RE: Source Water Invoicing Aug, Sept, 2016

From:DeanMiller[mailto:deamil@aol.com]
Sent:Friday,December23,20166:25AM
To:BillMurray<Bill.Murray@readingareawater.com>
Subject:SourceWaterInvoicingAug,Sept,2016

HiBill:

Gettingbacktoyouonyourrequesttoprovideadditionalinformationonthelast2invoices.

AttachedpleasefindtheinvoicessubmittedforAugust2016andSeptember2016(ExhibitA).

AttachedpleasefindtheReadingAreaWaterAuthorityHoursforJesseGoldbergforSourceWaterforAugust2016
andSeptember2016(ExhibitB).

MeiarbitrarilydecidedontheamountofdiscounttoprovideRAWAfortheSourceWaterefforts,buttypicallywerein
the60to70%range.

Pleaseletmeknowifyouhaveanyquestionsontheselasttwoinvoices.

Ihopeyouareenjoyingthisholidayseason.

HappyHolidays!

Thankyou,

DeanMiller

1
Exhibit 4 Water Meter Billing Issues

4.0) Water Meter Billing Issues Summary


4.1) Water Meter Billing Issues Evergreen
4.2) Water Meter Billing Issues Hydrojet
4.3) Water Meter Billing Issues Our City-Reading /
Panevino / WFMZ
Exhibit 4.0
Reading Area Water Authority
Water Meter Billing Issues - Summary
January 1, 2009 - March 31, 2017

Notes Company Amount Charged in Error Estimated Amount Owed Undercharged

1 Evergreen $ 564,057 $ 5,086,277 $ 4,522,220


2 Hydrojet - 246,520 246,520
3 Panevino / WFMZ - 99,522 99,522

Total $ 564,057 $ 5,432,319 $ 4,868,262

Notes

1 - See Exhibit 4.1.

2 - See Exhibit 4.2.

3 - See Exhibit 4.3.

Exhibit 4.0
Prepared by Baker Tilly Page 1 of 1
Exhibit 4.1
Reading Area Water Authority
Water Meter Billing Issues - Evergreen
April 30, 2009 - March 31, 2017

Reported / Charged - In Error (1) Corrected Actual Usage (2)


Water Sewer Total Adjusted Sewer Total Usage Amount
Notes Date Usage Amount Amount Amount Usage Water Amount Amount Amount Variance Variance

2009
4/30/2009 15,177 $ 69 $ 107 $ 176 151,770 $ 694 $ 1,068 $ 1,762 136,593 $ 1,586
5/31/2009 68,206 311 479 790 682,060 3,119 4,802 7,921 613,854 7,131
6/30/2009 (63,326) (290) (446) (735) (633,260) (2,896) (4,458) (7,354) (569,934) (6,619)
7/31/2009 194,153 888 1,367 2,255 1,941,530 8,195 12,620 20,815 1,747,377 18,560
8/31/2009 20 0 0 0 200 1 1 2 180 2
9/30/2009 321,840 1,472 2,266 3,737 3,218,400 13,302 20,485 33,787 2,896,560 30,050
10/31/2009 85,589 391 603 994 855,890 3,853 5,932 9,785 770,301 8,791
11/30/2009 85,589 391 603 994 855,890 3,853 5,932 9,785 770,301 8,791
12/31/2009 85,589 391 603 994 855,890 3,853 5,932 9,785 770,301 8,791
792,837 $ 3,624 $ 5,580 $ 9,205 7,928,370 $ 33,974 $ 52,314 $ 86,288 7,135,533 $ 77,083

2010
1/31/2010 85,589 $ 403 $ 645 $ 1,048 855,890 $ 3,969 $ 6,354 $ 10,323 770,301 $ 9,275
2/28/2010 299,582 1,411 2,259 3,670 2,995,820 12,785 20,477 33,262 2,696,238 29,592
3/31/2010 176,032 829 1,327 2,156 1,760,320 7,695 12,323 20,018 1,584,288 17,862
4/30/2010 285,600 1,345 2,153 3,499 2,856,000 12,209 19,555 31,764 2,570,400 28,265
5/31/2010 352,749 1,661 2,660 4,321 3,527,490 14,976 23,986 38,962 3,174,741 34,641
6/30/2010 222,585 1,048 1,678 2,727 2,225,850 9,613 15,396 25,009 2,003,265 22,282
7/31/2010 366,738 1,727 2,765 4,493 3,667,380 15,552 24,910 40,462 3,300,642 35,969
8/31/2010 411,405 1,938 3,102 5,040 4,114,050 17,156 27,483 44,639 3,702,645 39,599
9/30/2010 310,390 1,462 2,340 3,802 3,103,900 13,231 21,191 34,422 2,793,510 30,620
10/31/2010 239,814 1,130 1,808 2,938 2,398,140 10,323 16,533 26,856 2,158,326 23,918
11/30/2010 641,748 3,023 4,839 7,861 6,417,480 25,149 40,313 65,462 5,775,732 57,601
12/31/2010 519,375 2,446 3,916 6,362 5,193,750 20,902 33,497 54,399 4,674,375 48,037
3,911,607 $ 18,424 $ 29,494 $ 47,917 39,116,070 $ 163,560 $ 262,018 $ 425,578 35,204,463 $ 377,661

2011
1/31/2011 325,672 $ 1,583 $ 2,558 $ 4,141 3,256,720 $ 13,860 $ 22,199 $ 36,059 2,931,048 $ 31,918
2/28/2011 506,351 2,461 3,977 6,438 5,063,510 20,450 32,771 53,221 4,557,159 46,783
3/31/2011 438,036 2,129 3,440 5,569 4,380,360 18,080 28,966 47,046 3,942,324 41,477
4/30/2011 226,676 1,233 1,780 3,013 2,266,760 9,782 15,666 25,448 2,040,084 22,435
5/31/2011 371,473 2,021 2,917 4,938 3,714,730 18,192 26,252 44,444 3,343,257 39,506
6/30/2011 655,505 3,566 5,768 9,334 6,555,050 29,608 42,722 72,330 5,899,545 62,996
7/31/2011 265,517 1,444 2,337 3,781 2,655,170 13,149 18,975 32,124 2,389,653 28,343
8/31/2011 279,825 1,522 2,463 3,985 2,798,250 13,830 19,958 33,788 2,518,425 29,803
9/30/2011 357,787 1,946 3,149 5,095 3,577,870 17,541 25,312 42,853 3,220,083 37,758
10/31/2011 431,766 2,349 3,800 6,148 4,317,660 20,636 29,778 50,414 3,885,894 44,266

Exhibit 4.1
Prepared by Baker Tilly Page 1 of 4
Reading Area Water Authority
Water Meter Billing Issues - Evergreen
April 30, 2009 - March 31, 2017

Reported / Charged - In Error (1) Corrected Actual Usage (2)


Water Sewer Total Adjusted Sewer Total Usage Amount
Notes Date Usage Amount Amount Amount Usage Water Amount Amount Amount Variance Variance

11/30/2011 420,365 2,287 3,699 5,986 4,203,650 20,179 29,119 49,298 3,783,285 43,312
12/31/2011 286,874 1,779 2,524 4,303 2,868,740 14,165 20,442 34,607 2,581,866 30,304
4,565,847 $ 24,320 $ 38,412 $ 62,732 45,658,470 $ 209,472 $ 312,160 $ 521,632 41,092,623 $ 458,900

2012
1/31/2012 409,987 $ 2,542 $ 3,608 $ 6,150 4,099,870 $ 22,512 $ 31,937 $ 54,449 3,689,883 $ 48,299
2/29/2012 456,028 2,827 4,013 6,840 4,560,280 24,621 34,921 59,542 4,104,252 52,702
3/31/2012 478,620 2,967 4,212 7,179 4,786,200 25,656 36,385 62,041 4,307,580 54,862
4/30/2012 408,530 2,533 3,595 6,128 4,085,300 22,446 31,843 54,289 3,676,770 48,161
5/31/2012 301,728 1,871 2,655 4,526 3,017,280 16,939 24,035 40,974 2,715,552 36,448
6/30/2012 474,961 2,945 4,180 7,124 4,749,610 25,488 36,147 61,635 4,274,649 54,511
7/31/2012 394,527 2,446 3,472 5,918 3,945,270 21,804 30,935 52,739 3,550,743 46,821
8/31/2012 435,542 2,700 3,833 6,533 4,355,420 23,683 33,593 57,276 3,919,878 50,743
9/30/2012 299,512 1,857 2,636 4,493 2,995,120 16,819 23,865 40,684 2,695,608 36,191
10/31/2012 618,504 3,835 5,443 9,278 6,185,040 32,062 45,449 77,511 5,566,536 68,233
11/30/2012 274,374 1,701 2,414 4,116 2,743,740 15,456 21,932 37,388 2,469,366 33,272
12/31/2012 329,660 2,044 2,901 4,945 3,296,600 18,453 26,183 44,636 2,966,940 39,691
4,881,973 $ 30,268 $ 42,961 $ 73,230 48,819,730 $ 265,939 $ 377,225 $ 643,164 43,937,757 $ 569,934

2013
1/31/2013 553,733 $ 3,536 $ 4,873 $ 8,409 5,537,330 $ 29,969 $ 41,252 $ 71,221 4,983,597 $ 62,812
3 2/28/2013 553,733 3,536 4,873 8,409 1,949,415 11,485 15,824 27,309 1,395,682 18,900
3 3/31/2013 389,883 (1,046) (1,442) (2,488) 1,949,415 11,485 15,824 27,309 1,559,532 29,797
4/30/2013 126,700 809 1,115 1,924 1,267,000 7,676 10,576 18,252 1,140,300 16,328
5/31/2013 442,000 2,823 3,890 6,712 4,420,000 24,698 34,012 58,710 3,978,000 51,998
6/30/2013 611,800 3,907 5,384 9,291 6,118,000 32,708 45,015 77,723 5,506,200 68,432
7/31/2013 499,200 3,188 4,393 7,581 4,992,000 27,396 37,718 65,114 4,492,800 57,533
8/31/2013 533,100 3,404 4,691 8,096 5,331,000 28,996 39,915 68,911 4,797,900 60,815
9/30/2013 675,100 4,311 5,941 10,252 6,751,000 35,694 49,116 84,810 6,075,900 74,558
10/31/2013 529,500 3,381 4,660 8,041 5,295,000 28,826 39,682 68,508 4,765,500 60,467
11/30/2013 409,400 2,614 3,603 6,217 4,094,000 23,160 31,899 55,059 3,684,600 48,842
12/31/2013 447,100 2,855 3,934 6,790 4,471,000 24,939 34,342 59,281 4,023,900 52,491
5,771,249 $ 33,319 $ 45,914 $ 79,233 52,175,160 $ 287,032 $ 395,175 $ 682,207 46,403,911 $ 602,974

2014
1/31/2014 588,800 $ 3,873 $ 5,181 $ 9,054 5,888,000 $ 32,574 $ 43,524 $ 76,098 5,299,200 $ 67,044
2/28/2014 496,000 3,262 4,365 7,627 4,960,000 28,064 37,511 65,575 4,464,000 57,948
3/31/2014 528,600 3,477 4,652 8,129 5,286,000 29,648 39,623 69,271 4,757,400 61,142

Exhibit 4.1
Prepared by Baker Tilly Page 2 of 4
Reading Area Water Authority
Water Meter Billing Issues - Evergreen
April 30, 2009 - March 31, 2017

Reported / Charged - In Error (1) Corrected Actual Usage (2)


Water Sewer Total Adjusted Sewer Total Usage Amount
Notes Date Usage Amount Amount Amount Usage Water Amount Amount Amount Variance Variance

4/30/2014 467,400 3,074 3,325 6,399 4,674,000 26,674 34,818 61,492 4,206,600 55,093
5/31/2014 369,600 2,431 2,440 4,871 3,696,000 21,873 28,117 49,990 3,326,400 45,119
6/30/2014 548,200 3,606 4,056 7,662 5,482,000 30,601 40,337 70,938 4,933,800 63,276
7/31/2014 515,100 3,388 3,757 7,145 5,151,000 28,992 38,076 67,068 4,635,900 59,923
8/31/2014 580,000 3,815 4,344 8,159 5,800,000 32,146 42,509 74,655 5,220,000 66,496
9/30/2014 537,300 3,534 3,958 7,492 5,373,000 30,071 39,593 69,664 4,835,700 62,172
10/31/2014 459,000 3,019 3,249 6,268 4,590,000 26,266 34,245 60,511 4,131,000 54,243
11/30/2014 514,200 3,382 3,749 7,131 5,142,000 28,948 38,015 66,963 4,627,800 59,832
12/31/2014 517,400 3,403 3,777 7,181 5,174,000 29,104 38,233 67,337 4,656,600 60,156
6,121,600 $ 40,265 $ 46,852 $ 87,118 61,216,000 $ 344,961 $ 454,601 $ 799,562 55,094,400 $ 712,444

2015
1/31/2015 589,400 $ 3,993 $ 4,605 $ 8,598 5,894,000 $ 32,603 $ 43,151 $ 75,754 5,304,600 $ 67,156
2/28/2015 521,800 3,535 3,969 7,504 5,218,000 30,196 40,070 70,266 4,696,200 62,762
3/31/2015 573,000 3,882 4,451 8,333 5,730,000 32,758 43,706 76,464 5,157,000 68,131
4/30/2015 458,300 3,105 3,372 6,477 4,583,000 27,018 35,562 62,580 4,124,700 56,103
5/31/2015 271,600 1,840 1,615 3,455 2,716,000 16,725 21,861 38,586 2,444,400 35,131
6/30/2015 423,600 2,870 3,045 5,915 4,236,000 25,281 33,098 58,379 3,812,400 52,464
7/31/2015 481,700 3,263 3,592 6,855 4,817,000 28,189 37,223 65,412 4,335,300 58,557
8/31/2015 550,500 3,730 4,239 7,969 5,505,000 31,632 42,108 73,740 4,954,500 65,771
9/30/2015 534,400 3,621 4,088 7,708 5,344,000 30,826 40,965 71,791 4,809,600 64,083
10/31/2015 376,700 2,552 2,604 5,156 3,767,000 22,934 29,768 52,702 3,390,300 47,546
11/30/2015 513,800 3,481 3,894 7,375 5,138,000 29,795 39,502 69,297 4,624,200 61,922
12/31/2015 362,200 2,975 2,467 5,443 3,622,000 26,785 29,830 56,615 3,259,800 51,172
5,657,000 $ 38,847 $ 41,940 $ 80,787 56,570,000 $ 334,742 $ 436,844 $ 771,586 50,913,000 $ 690,799

2016
1/31/2016 559,300 $ 4,594 $ 4,497 $ 9,091 5,593,000 $ 38,888 $ 44,434 $ 83,322 5,033,700 $ 74,231
2/29/2016 460,900 3,786 3,533 7,319 4,609,000 32,917 37,172 70,089 4,148,100 62,770
3/31/2016 525,100 4,313 4,162 8,475 5,251,000 36,813 41,910 78,723 4,725,900 70,248
4/30/2016 317,500 2,608 2,129 4,737 3,175,000 23,575 26,330 49,905 2,857,500 45,168
5/31/2016 349,400 2,870 2,442 5,312 3,494,000 25,866 28,828 54,694 3,144,600 49,382
6/30/2016 547,500 4,497 4,381 8,879 5,475,000 38,172 43,563 81,735 4,927,500 72,856
7/31/2016 520,500 4,276 4,117 8,392 5,205,000 36,534 41,570 78,104 4,684,500 69,712
8/31/2016 549,000 4,510 4,396 8,906 5,490,000 38,263 43,674 81,937 4,941,000 73,031
9/30/2016 449,800 3,695 3,425 7,119 4,498,000 32,244 36,353 68,597 4,048,200 61,478
10/31/2016 573,400 4,710 4,635 9,345 5,734,000 39,744 45,474 85,218 5,160,600 75,873
11/30/2016 515,400 4,234 4,067 8,301 5,154,000 36,224 41,194 77,418 4,638,600 69,117

Exhibit 4.1
Prepared by Baker Tilly Page 3 of 4
Reading Area Water Authority
Water Meter Billing Issues - Evergreen
April 30, 2009 - March 31, 2017

Reported / Charged - In Error (1) Corrected Actual Usage (2)


Water Sewer Total Adjusted Sewer Total Usage Amount
Notes Date Usage Amount Amount Amount Usage Water Amount Amount Amount Variance Variance

12/31/2016 518,400 4,258 4,096 8,355 5,184,000 36,406 41,415 77,821 4,665,600 69,466
5,886,200 $ 48,353 $ 45,878 $ 94,231 58,862,000 $ 415,646 $ 471,917 $ 887,563 52,975,800 $ 793,332

2017
1/31/2017 678,600 $ 5,574 $ 5,890 $ 11,465 6,786,000 $ 46,128 $ 55,371 $ 101,499 6,107,400 $ 90,034
2/28/2017 662,800 5,445 5,729 11,174 6,628,000 45,169 54,158 99,327 5,965,200 88,153
3/31/2017 434,000 3,565 3,400 6,965 4,340,000 31,285 36,586 67,871 3,906,000 60,906
1,775,400 $ 14,584 $ 15,020 $ 29,604 17,754,000 $ 122,582 $ 146,115 $ 268,697 15,978,600 $ 239,093

Grand Total 39,363,713 $ 252,004 $ 312,051 $ 564,057 388,099,800 $ 2,177,908 $ 2,908,369 $ 5,086,277 348,736,087 $ 4,522,220

Source: RAWA's Customer History report for Evergreen; meter reading record for Evergreen dated March 7, 2017; and RAWA's water and sewer billing rate schedules as of the following effective
dates: January 1, 2009, January 1, 2010, May 4, 2011, January 1, 2012, January 1, 2013, January 1, 2014, April 1, 2014, February 1, 2015, December 1, 2015, and January 1, 2017.

Notes

Amounts subject to rounding.

1 - After bringing its water meter service function in-house, RAWA identified that Evergreen's water meter had been improperly read by a factor of 10 since the meter was installed in April 2009.

2 - Corrected actual usage was determined by multiplying Evergreen's usage reported in error by a factor of 10. We then applied RAWA's water and sewer billing rates to the adjusted usage value to
arrive at the amount that RAWA should have charged.

3 - "Reported / Charged - In Error" usage for February 2013 was originally estimated by RAWA by applying the prior month's usage. Total usage for both February and March (2 months) was 389,883,
which is listed as the usage for March 2013. RAWA issued Evergreen a credit in March 2013 for the overbilling in February. For purposes of determining "Corrected Actual Usage" in February and
March 2013, the March 2013 "Reported / Charged - In Error" (389,883 gallons) was divided by two and allocated equally between February and March (and multiplied by 10 to represent the appropriate

Exhibit 4.1
Prepared by Baker Tilly Page 4 of 4
Exhibit 4.2
Reading Area Water Authority
Water Meter Billing Issues - Hydrojet
January 1, 2009 - February 28, 2017

Usage (1) Service Charges


(3)

Period No. of Meter Usage Water /


Notes Beg. Period End Months Allocation (2) Water Sewer Total Meter (4) Sewer (4) Fire (5) Total Total Billing

1/1/2009 12/31/2009 12 1,145,407 $ 5,237 $ 8,064 $ 13,301 $ 2,886 $ 2,251 $ 2,589 $ 7,726 $ 21,027
1/1/2010 12/31/2010 12 1,145,407 5,395 8,636 14,031 3,895 2,341 3,494 9,730 23,761
1/1/2011 12/31/2011 12 1,145,407 5,952 8,876 14,828 4,252 3,055 3,814 11,121 25,949
1/1/2012 12/31/2012 12 1,145,407 7,102 10,080 17,182 5,044 3,822 4,524 13,390 30,572
1/1/2013 12/31/2013 12 1,145,407 7,315 10,080 17,395 5,195 3,822 4,659 13,676 31,071
1/1/2014 12/31/2014 12 1,145,407 7,534 10,294 17,828 5,351 5,125 4,799 15,275 33,103
1/1/2015 12/31/2015 12 1,145,407 7,879 10,780 18,659 5,596 5,783 5,019 16,398 35,057
1/1/2016 12/31/2016 12 1,145,407 9,409 11,214 20,623 6,683 6,014 5,994 18,691 39,314
1/1/2017 2/28/2017 2 190,901 1,568 1,943 3,511 1,114 1,042 999 3,155 6,666

Total 98 9,354,157 $ 57,391 $ 79,967 $ 137,358 $ 40,016 $ 33,255 $ 35,891 $ 109,162 $ 246,520

Source: Meter reading record for Hydrojet dated March 6, 2017; and RAWA's usage and service charge billing rate schedules as of the following effective dates: January 1, 2009,
January 1, 2010, May 4, 2011, January 1, 2012, January 1, 2013, January 1, 2014, April 1, 2014, February 1, 2015, December 1, 2015, and January 1, 2017.

Notes

Amounts subject to rounding.

1 - After bringing its water meter service function in-house, RAWA identified that Hydrojet had not been charged for its use of RAWA's water services since RAWA installed its
water meter in January 2009. Per a meter reading recorded on March 6, 2017, Hydrojet's actual meter usage totaled 9,354,160 gallons since the meter was installed in January 2009.

2 -For purposes of this analysis, "Meter Usage Allocation" was determined by allocating, on a straight-line basis, the actual cumulative usage reported as of March 6, 2017 over the
period for which Hydrojet utilized RAWA's water services without being charged (estimated through February 2017). We then applied RAWA's usage and service charge billing
rates to the estimated monthly usage value to arrive at the amount that RAWA should have charged.

3 - Service charges represent the monthly fixed fees that RAWA charges for water, sewer, and fire services and are not a function of usage.

4 - Standard monthly rate based upon a 4" meter size.

5 - Standard monthly rate based upon an 8" Fire Service Connection.

Exhibit 4.2
Prepared by Baker Tilly Page 1 of 1
Exhibit 4.3
Reading Area Water Authority
Water Meter Billing Issues - Our City-Reading / Panevino / WFMZ
May 1, 2011 - March 31, 2017

Usage (1) Service Charges (3)


Period No. of Meter Usage Water / Total
(2) (4) (4) (5)
Notes Beg. Period End Months Allocation Water Sewer Total Meter Sewer Fire Total Billing

5/1/2011 12/31/2011 8 243,325 $ 1,324 $ 1,911 $ 3,235 $ 2,381 $ 1,833 $ 1,796 $ 6,010 $ 9,245
1/1/2012 12/31/2012 12 364,987 2,263 3,212 5,475 4,065 3,080 3,067 10,212 15,687
1/1/2013 12/31/2013 12 364,987 2,331 3,212 5,543 4,187 3,080 3,159 10,426 15,969
1/1/2014 12/31/2014 12 364,987 2,401 3,280 5,681 4,312 3,311 3,254 10,877 16,558
1/1/2015 12/31/2015 12 364,987 2,511 3,435 5,946 4,510 3,524 3,403 11,437 17,383
1/1/2016 12/31/2016 12 364,987 2,998 3,573 6,571 5,386 3,665 4,064 13,115 19,686
1/1/2017 3/31/2017 3 91,247 750 929 1,679 1,346 953 1,016 3,315 4,994

Total 71 2,159,507 $ 14,578 $ 19,552 $ 34,130 $ 26,187 $ 19,446 $ 19,759 $ 65,392 $ 99,522

Source: Meter reading record for Our City-Reading / Panevino / WFMZ dated March 9, 2017; and RAWA's usage and service charge billing rate schedules as of the
following effective dates: January 1, 2009, January 1, 2010, May 4, 2011, January 1, 2012, January 1, 2013, January 1, 2014, April 1, 2014, February 1, 2015, December
1, 2015, and January 1, 2017.

Notes

Amounts subject to rounding.

1 - After bringing its water meter service function in-house, RAWA identified that Our City-Reading / Panevino / WFMZ had not been charged for use of RAWA's water
services since RAWA installed the water meter in May 2011. Per a meter reading recorded on March 6, 2017, Our City Reading / Panevino / WFMZ's actual meter usage
totaled 2,159,507 gallons since the meter was installed in May 2011.

2 - For purposes of this analysis, "Meter Usage Allocation" was determined by allocating, on a straight-line basis, the actual cumulative usage reported as of March 6, 2017
over the period for which Our City-Reading / Panevino / WFMZ utilized RAWA's water services without being charged (estimated through March 2017). We then applied
RAWA's water and service charge billing rates to the estimated monthly usage value to arrive at the amount that RAWA should have charged.

3 - Service charges represent the monthly fixed fees that RAWA charges for water, sewer, and fire services and are not a function of usage.

4 - Standard monthly rate based upon a 3" meter size.

5 - Standard monthly rate based upon an 6" Fire Service Connection.

Exhibit 4.3
Prepared by Baker Tilly Page 1 of 1
Exhibit 5 2011 Bond

5.0) BCM 2011 Capital Projects Listing


5.1) 2011 Bond Payments Listing Summary by
Project
5.2) 2011 Bond Payments Listing Summary by
Vendor
Exhibit 5.0
0:\!Rauch Files\Loan DocsIRAWA 2011 \Consulting Engineer Cert. v.2

CONSULTING ENGINEER'S CERTIFICATE

I, the undersigned Registered Professional Engineer and authorized representative of


BCM Engineering, a Division of ATC Corporation, certify that BCM Engineering, a Division of
ATC Corporation, is the consulting engineer for the Reading Area Water Authority (the
"Authority"). This Certificate is being delivered pursuant to the terms of that certain Trust
Indenture, dated as of September 15, 2002, as supplemented and amended by that certain First
Supplemental Trust Indenture, dated as of July 1, 2003, as further amended and supplemented by
that certain Second Supplemental Trust Indenture, dated as of July 15, 2007, and as further
amended and supplemented by a Third Supplemental Trust Indenture, dated as of December 15,
2011 (collectively, the "Indenture"), each by and between the Authority and Manufacturers and
Traders Trust Company (the Trustee"). All capitalized terms used herein not defined herein shall
have the meanings given them in the Indenture. Further, I hereby certify, on behalf of BCM
Engineering, a division of ATC Corporation, after due and proper investigation, as follows:

1. Issuance of the Series of 2011 Bonds is required or desirable to complete the


construction or acquisition of Capital Additions constituting the 2011 Project, is necessary or
desirable and/or is required for proper and efficient operation of the Water System and is
reasonable and practicable;

2. Proceeds to be derived from the sale of the Series of 2011 Bonds, together with other
available money, are necessary to pay Costs, Costs of Acquisition or Costs of Construction of
such construction or acquisition constituting the 2011 Project, as such costs are set forth on
Exhibit "A" hereto, and also to provide for payments, if any, to Funds, other than the 2011
Construction Fund, under the Third Supplemental Indenture, and also that such Costs, Costs of
Acquisition or Costs of Construction reasonably cannot be paid out of then current revenues of
the Water System;

3. The amounts estimated to be received by the Authority from collection of water


rentals, rates and other charges under the Certified Resolution furnished to the Trustee, together
with other estimated Receipts and Revenues from the Water System, and together with money
otherwise estimated to be available under provisions of the Indenture for the purposes, will be
sufficient in each Fiscal Year to meet the requirements of Section 5.01 of the Indenture, after
giving effect to issuance of the Series of2011 Bonds constituting Water Revenue Bonds;

4. Plans and specifications for construction constituting the 2011 Project will be
approved by the Consulting Engineer and all governmental agencies having jurisdiction under
then existing laws prior to issuance to Contractors for construction.

1
.. 0:\!Rauch Files\Loan Docs\RAW A 20 II \Consulting Engineer Cen. v.2

5. The Authority intends to enter into such contracts as are required for such
construction, with the exception of contracts of a minor nature and with the exception of
contracts that, in our opinion, the Authority reasonably can enter into at a later time, at prices
that will not exceed funds available for the purpose.

6. If applicable, each contractor has furnished or will be required to furnish to


the Authority contract bonds as contemplated under the terms of the Indenture.

(Signature page follows.)

2
0:\!Rauch Files\Loan Docs\RAWA 20 ll\Consulting Engineer Cert. v.2

IN WITNESS WHEREOF, I have set my hand and affixed my Registered Professional


Engineer's seal herein, this 19th day of December, 2011.

BCM ENGINEERING, A DIVISION OF


ATC CORPORATION

(SEAL)

3
I . -

EXHIBIT A
READING AREA WATER AUTHORITY
2011 PROJECTS

ESTIMATED
PROJECT PROJECT COST

Safe Water Prioritization


Relocation of Water Main, Route 61 $1,900,000
Lake Dredging Operation $3,000,000
Clean & Repair Northwest Reservoir $200,000
Water Main Breaks/Improvements $500,000
Improve Electric Substation Water Plant $410,000
Backflow Prevention for Residual Facility $50,000
Main Pump Station Improvements $610,000
Replace Roof over Filters WTP $280,000
Clean & Repair Finished Water Basins $200,000
High Service #2 Pumping Issues $50,000
Automate Chemical Addition & Monitor $30,000
Improve Fluoride Feed & Monitor $60,000
Replace Flocculation Channel Baffles $80,000
Upgrade Main PLC & Filter Panels $520,000
Replace Filter Media $3,300,000
Water Quality Monitoring Panel Distr. $310,000
Alt. Water Source, Berks Products $250,000
Security Fencing Buttonwood Res. $40,000
Repair Raw Water Conduit $2,000,000
Upgrade Video Security WTP $300,000

Source Water Protection


USGS Gauging Station $50,000
Earthen Dam Improvements $7,000,000

System Improvements
Landfill #6 Construction, Cap #5 $750,000
New Office Complex $600,000
Rolling Stock Replacement $1,250,000
Repair Residual Facility Outfall $150,000
Upgrade Telephone System@ WTP $30,000
Replace Water Meters in System $5,800,000

System Expansion
Rt. 724 System Extension $8,750,000

TOTAL $38,410,000

client\rawaltlw\2011 project list 12-14-11

Page I of I
Exhibit 5.1
Reading Area Water Authority
2011 Bond Payments Listing - Summary by Project
May 2012 through December 2016

No. Project No. of Payments Payment Amount

1 1400 Old Wyomissing Rd 1 $ 912


2 1801 Kutztown Rd 6 20,814
3 1801 Kutztown Rd, Renovations 1 4,238
4 1801 Kutztown Road Bldg 22 126,434
5 18th Ward Booster Station 4 7,843
6 3/4 Ecoder 1 Gal Meter Pit" Meters 1 4,767
7 400 Blk Washington St 4 32,801
8 5/8 Ecoder R9001 Gal Pit Meter Meters 1 52,185
9 Berks Park 78 87 855,111
10 Bingaman St Bridge 5 10,296
11 Bingaman Water Main 2 46,448
12 Bridge Repairs 13 8,129
13 Buttonwood St Bridge 29 669,153
14 Centrifuge 21 263,044
15 Chain Saws & Small Power Tool 1 212
16 Chemicals 1 10,100
17 Clear Wells 18 198,244
18 Clear Wells - Filter Plant 27 874,493
19 Computer & Software 26 129,956
20 Computers 14 110,132
21 Construction in Progress 1 1,291
22 Contract No. 57A Robeson Twp Water Main 2 529,329
23 Contract No. 59A Robeson Twp Water Main 2 55,063
24 Contract No. 60A Landfill Cell #6 2 247,662
25 Contract No. 61A Berks Park 1 10,539
26 Contract No. 62A Berks Park 2 269,462
27 Cost/Lein/Etc 1 84
28 Dam Repairs 3 18,075
29 Dam Repairs- Lake Ontelaunee 17 505,510
30 DEP Dam Permitting 50 904,572
31 DRBC Gauge Station 6 57,497
32 Engineering Fees 10 22,111
33 Equipment 102 793,525
34 Filter Media Replacement 1 4,343
35 Filter Plant Clear Wells 1 3,422
36 Filter Plant Media Replacement 2 14,410
37 Filter Plant Roof Replacement 11 210,064
38 Front Street Construction 5 40,147
39 Front Street Paving 1 1,289
40 Front Street Repaving 2 2,525
41 Gatehouse Maint & Valve 1 8,281
42 Generator Honda (2) Equipment 1 1,960
43 Generator-Lake 1 10,138
44 Groundwater Sampling Berks Park 1 95
45 Hegel Gehl 3 6,670
46 Hegel-Gehl Cleaning & Repair 8 157,078
47 Hegel-Gehl Pump Station 18 255,558

Exhibit 5.1
Prepared by Baker Tilly Page 1 of 3
Reading Area Water Authority
2011 Bond Payments Listing - Summary by Project
May 2012 through December 2016

No. Project No. of Payments Payment Amount

48 L S Power 1 759
49 Lagoon Cleaning 1 1,700
50 Lake Ontelanuee Dredging 22 1,217,799
51 Landfill Cell #6 41 379,225
52 Landfill Cell Permiting 20 145,018
53 Leaseholder Improvements 17 248,449
54 Meters 90 2,077,738
55 New Alum Sludge Landfill #6 1 4,736
56 North Heidelberg 1 179
57 Northwest Res Tank Mix/Clean 19 268,090
58 Northwest Res Tank Repair 2 25,579
59 Northwest Reservoir 4 31,734
60 Northwest Reservoir #2 5 115,235
61 Northwst Resv Mix/Clean 6 26,425
62 Olivet Boys & Girls Club 17 61,443
63 Pear & Walnut St. Reconstruction 7 172,249
64 Pear & Walnut Street 10 25,968
65 Penn St Bridge 19 57,218
66 Permit Inspection Route 61 1 1,474
67 Polymer Pilot Study 21 68,830
68 Rent/Other Property/Buildings 1 2,459
69 Repair Route 73 13 510,206
70 Repaving Rt 61 @ 12 1 531
71 Residual Centrifuge Upgrade 3 270,104
72 Residual Plant Effluent 1 8,609
73 Residual Plant Outfall 6 46,480
74 Residual Plant Outfall Line 16 546,407
75 Robeson Matter Robeson Twp Water Main 1 455
76 Robeson Twp Water Main 35 1,726,974
77 Robeson Twp Water Main Extension 1 22,158
78 Route 183 Main Relocation 1 406
79 Route 61 22 83,005
80 Route 61 & 222 5 2,097,402
81 Route 61 & Route 12 Repaving 5 222,475
82 Route 61 & Route 222 Interchange 4 29,428
83 Route 61 & Tuckerton Rd 3 13,252
84 Route 61 & Water St 29 104,336
85 Route 724 1 2,117
86 Route 724 Main Extension 76 3,551,365
87 Route 724 Water Extension 24 130,267
88 Rt 61 & 12 Repaving 1 37,107
89 Rt 61 & 222 Interchange 1 593
90 Rt 61 & Rt 12 1 775
91 Rte 183 Main Relocation 1 228
92 Rte 61 & Rte 222 Interchange 2 2,223
93 Rte 724 1 1,544
94 Rte 724 Robeson Twp 12 1,163,972

Exhibit 5.1
Prepared by Baker Tilly Page 2 of 3
Reading Area Water Authority
2011 Bond Payments Listing - Summary by Project
May 2012 through December 2016

No. Project No. of Payments Payment Amount

95 Rte 724 Water Main 3 17,017


96 SCADA SYSTEM 1 9,166
97 SCADA System Filter Plant 28 101,567
98 Schien Dump Trailer Vehicles 1 48,105
99 Schuykill Ave Bridge 3 1,835
100 Security System-Filter Plant 2 24,960
101 Sedimentation Basin Collectors 39 1,016,818
102 Shed/Enclose Sampler 1 5,681
103 Sigma SD 900 All Weather Spl 1 6,178
104 Sludge Handling Facilities 1 2,428
105 Solids Facility Expansion 1 321
106 Source Water Protection 35 322,080
107 Switch Gear 1 22,266
108 Switch Gear-Elec Substation 1 5,304
109 Telephone 5 7,716
110 Transformer 1 1,390
111 Transformer Replacement 14 232,810
112 Unanticipated Capital Expense 21 40,719
113 Upgrade Main Plant PLC 36 255,851
114 Vehicles 31 980,909
115 Warren St Bridge 1 1,593
116 Warren St Bridge Water Main 11 245,521
117 Warren St Water Main 2 6,366
118 Warren St. Bridge Water Main 1 54
119 Well Abandonment Landfill #6 1 1,563

Total 1,353 $ 26,418,954

Source: Reading Area Water Authority Requisition and Certificate Memorandums No. 24-
30, 33, and 35-50.

Exhibit 5.1
Prepared by Baker Tilly Page 3 of 3
Exhibit 5.2
Reading Area Water Authority
2011 Bond Payments Listing - Summary by Vendor
May 2012 through December 2016

No. Vendor No. of Payments Payment Amount

1 Alan A Myers LP 3 $ 327,182


2 Alarm Tech 3 23,454
3 Allied Well Drilling 6 129,267
4 Andrew Hess, Inc 10 27,523
5 Angstadt Inc. 1 3,000
6 Anthony Reynolds 1 45
7 Applied Controls 5 16,694
8 Applied Geoscience & Engineering Inc. 12 77,568
9 Aqua-Terra Environmental Ltd 1 6,850
10 ARS 2 292,842
11 Arthur Aungst Inc 8 1,092,530
12 Asplundh Tree Expert 1 5,693
13 B.P. Paterson Inc. 1 57,483
14 BCM 570 3,556,622
15 Berks County Conservancy 2 7,667
16 Berks County Conservation Dis 1 500
17 Berks Industrial Supply 1 1,272
18 Berks Products 5 2,822
19 Berman Freightliner 1 92,824
20 Best Line Equipment 1 22,790
21 Bethel Township 1 740
22 Blooming Glen Contractors 21 887,000
23 Bob Fisher 1 29,550
24 Bognet 3 11,526
25 BP Paterson 1 10,539
26 BR Kreider & Son Inc. 6 534,494
27 Brice Excavating 5 152,734
28 BSI Electrical Contractors 9 486,344
29 Bulldog Construction 1 44,339
30 Carrot-Top Industries Inc. 1 1,108
31 CDW-G 17 47,485
32 Centrifuge & Pump Service Corp 1 21,595
33 CH Waltz Sons, INC. 3 65,675
34 Colonial Electric 5 657
35 Commonwealth Code Inspection 1 3,329
36 Commonwealth of PA 8 24,800
37 Condon Electric 3 32,962
38 Constructionomics LLC 3 137,708
39 County of Berks 1 544,995
40 Dallas Data Systems Inc 3 58,590
41 Datel Communications Inc. 1 4,118
42 Delaware River Basin 3 52,120
43 Destine Company LLC 2 196,500
44 DN Tank Inc 1 73,388
45 Douglass A Haring & Comp. 1 2,000
46 E. H. Wachs 9 21,957
47 Eddinger Hardware 1 2,601

Exhibit 5.2
Prepared by Baker Tilly Page 1 of 4
Reading Area Water Authority
2011 Bond Payments Listing - Summary by Vendor
May 2012 through December 2016

No. Vendor No. of Payments Payment Amount

48 ELK Environmental Services 1 11,704


49 EM Kutz 2 2,639
50 Exeter Supply 94 1,012,709
51 Fastenal Company 3 85
52 Fromm 5 2,615
53 Fulton Bank 1 26
54 Furniture Soup 2 8,535
55 Georgeadis Setley Attorneys 19 18,577
56 GeoSystems Consultants Inc 1 5,100
57 Goe International 10 519,500
58 Gordon L Todd 1 1,140
59 Grainger 7 18,243
60 Gundy's Wholesale 1 1,506
61 Hach 18 207,609
62 Haverford Systems 3 18,910
63 Heisey Mechanical 1 35,069
64 Highway Materials 1 400
65 Infared Services Inc. 1 1,450
66 Infrared Services Inc 1 1,450
67 Innovative Engineering Inc 7 114,957
68 Intercon Truck Equip. 1 48,105
69 J.M. Young & Sons 2 185,565
70 Jeff Neff 1 1,249
71 Joao & Bradley Construction Co 1 478,645
72 John W Hoffert, PLS 1 2,576
73 KenMyr Controls 6 11,107
74 Kinsley Construction 3 256,093
75 Kochel Equipment Company 12 6,950
76 Kohl Bors 1 4,500
77 Kurtz Bulk Water 1 425
78 Kuzans 1 115
79 L H Companies 1 599
80 Landis C Deck & Sons 1 36,712
81 LCF Construction Inc 2 34,070
82 Leisawitz, Heller, Abramowitch 2 13,006
83 Leon Ray Martin Excavating 1 1,291
84 Levan Machine Company 6 12,998
85 Liberty Maintenance Inc 1 360
86 Lowes 3 10,878
87 Ludgate Engineering Corp 4 5,783
88 M.J. Reider Associates Inc. 2 4,835
89 Main Stream Industries 1 1,140
90 Main Street Industries 1 1,935
91 Manderbach Ford 9 351,566
92 Manderbach Ford Inc. 8 188,344
93 Mar-Allen Concrete 15 1,326,794
94 Medico Industries 1 13,200

Exhibit 5.2
Prepared by Baker Tilly Page 2 of 4
Reading Area Water Authority
2011 Bond Payments Listing - Summary by Vendor
May 2012 through December 2016

No. Vendor No. of Payments Payment Amount

95 Metals Your Way 1 525


96 Met-Ed 2 55,493
97 MGS Trailer Store 1 2,423
98 Miele Inc 1 7,827
99 Myco Mechanical 3 15,454
100 N. Abbonizio Contractors 36 6,002,437
101 New Holland Auto Group 4 230,816
102 Norfolk Southern 3 7,834
103 North Industrial Chemical 1 10,100
104 ON Tank Inc 2 109,993
105 Overhead Door 1 1,250
106 PA Department of Transportation 38 2,171,625
107 PA Safe Drinking Water Fund 1 1,700
108 PC Solutions, Inc 21 115,946
109 Penn Line Service Inc 2 10,768
110 Penndot 3 2,431
111 Pennsylvania Truck 2 60,037
112 Philips Bros Elect. Contractor 2 50,549
113 Phillips Bros Real Estate Corp 1 11,100
114 Phone America 5 7,716
115 Pine Environmental 5 10,968
116 Plasterer Equipment Company 5 259,670
117 Powerco 1 25,321
118 Pro Com Roofing 1 450
119 Pro Maps 2 11,520
120 Pro Max Fence Systems 3 17,026
121 Pyrz Water Supply Co. Inc 1 7,280
122 Radwell International Inc 1 1,998
123 Reading & Northern Real Estate 1 2,459
124 Reading Kubota 1 15,150
125 Reading Tractor & Equipment 13 48,335
126 Ridge Support Technologie/PC 2 4,574
127 Ridge Support Technologies 3 19,802
128 Rio Supply 43 1,357,849
129 Robeson Township 3 5,779
130 Robeson Township Municipal 4 5,925
131 Secretary of the Commonwealth 1 84
132 Security First 2 24,960
133 Sharon Keating 1 11,750
134 Shaw Restoration 1 1,200
135 Spotts, Stevens & McCoy Inc. 80 1,220,308
136 SRGA 1 65,813
137 Staples Advantage 1 497
138 Straub Roof & Construction 1 12,975
139 Township Of Cumru 1 254
140 Tractor Supply Co 2 862
141 Traffic Planning and Design In 2 1,080

Exhibit 5.2
Prepared by Baker Tilly Page 3 of 4
Reading Area Water Authority
2011 Bond Payments Listing - Summary by Vendor
May 2012 through December 2016

No. Vendor No. of Payments Payment Amount

142 TRC 1 7,730


143 Triad Truck Equipment 2 28,345
144 Twiford Electrical Services Inc 1 1,411
145 USA Blue Book 1 523
146 Vermeer North Atlantic Sales 1 30,159
147 Warminster Fiberglass Co 2 11,112
148 Weand Custom Building & Excavation 1 10,000
149 Wesco 1 618
150 Winter 1 41,800
151 Witmer Public Safety 1 5,267
152 Wm. Orr & Sons 1 1,943
153 Wonderware North 6 31,947
154 Wyomissing Glass Llc 1 6,556
155 Xylem 2 38,280
156 Yeager Supply Inc 3 384
157 YSI Inc. 1 7,105
158 Zee Medical 1 11,319

Total 1,353 $ 26,418,954

Source: Reading Area Water Authority Requisition and Certificate Memorandums No. 24-
30, 33, and 35-50.

Exhibit 5.2
Prepared by Baker Tilly Page 4 of 4
Exhibit 6 RAWA Board Approvals
of Cash Disbursements

6.0) Cash Disbursements Detail Differences from


RAWA Board Meeting Minutes 2015
6.1) Cash Disbursements Detail Differences from
RAWA Board Meeting Minutes 2016
Exhibit 6.0
Reading Area Water Authority
Cash Disbursements Detail - Differences from RAWA Board Meeting Minutes
January 1, 2015 through December 31, 2015

(1)
Per General Ledger
Batch Disbursement Per RAWA Board Meeting Minutes
Vendor Payments Net Disbursed
Net Batch Within Batch Date Approved in Total Amount Greater (Less) Than
(2)
Count Expense Type G/L Date Payee / Description Debit Credit Disbursed Disbursement (3) Minutes Approved Approved

1/13/2015 A/P Checks - Wells Fargo 421,126


1/13/2015 Various Payments to 101 Vendors $ 404,683
1/13/2015 Kline's True Value 25
1/13/2015 BCM 16,418
1 General Sub-Total $ - $ 421,126 $ 421,126 $ 421,126 1/13/2015 404,683 $ 16,443

2 Capital 1/13/2015 A/P Checks - Fulton 277,448 $ 277,448 1/13/2015 277,448 -

1/15/2015 A/P Checks - Wells Fargo 9,760


1/15/2015 BERKS COUNTY CLEAN WATER FUND 500
1/15/2015 Berks County Conservation District 6,360
1/15/2015 DEP/COMMWEALTH CLEAN WATER FUND 2,900
3 General Sub-Total $ - $ 9,760 $ 9,760 $ 9,760 None - 9,760

1/20/2015 A/P Checks - Wells Fargo 5,000


1/20/2015 Georgeadis Setley Attorneys 5,000
4 General Sub-Total $ - $ 5,000 $ 5,000 $ 5,000 None - 5,000

5 General 1/29/2015 A/P Checks - Wells Fargo 382,836 $ 382,836 1/29/2015 382,836 -

6 Capital 1/29/2015 A/P Checks - Fulton 60,966 $ 60,966 1/29/2015 60,966 -

2/10/2015 A/P Checks - Wells Fargo 183,736


2/10/2015 Various Payments to 70 Vendors 183,831
2/10/2015 PRWA (95)
7 General Sub-Total $ - $ 183,736 $ 183,736 $ 183,736 2/10/2015 183,831 (95)

8 Capital 2/10/2015 A/P Checks - Fulton 72,261 $ 72,261 2/10/2015 72,261 -

2/26/2015 A/P Checks - Wells Fargo 254,604


2/26/2015 Various Payments to 75 Vendors 234,768
2/26/2015 BCM 19,836

Exhibit 6.0
Prepared by Baker Tilly Page 1 of 9
Reading Area Water Authority
Cash Disbursements Detail - Differences from RAWA Board Meeting Minutes
January 1, 2015 through December 31, 2015

Per General Ledger (1)


Batch Disbursement Per RAWA Board Meeting Minutes
Vendor Payments Net Disbursed
Net Batch Within Batch Date Approved in Total Amount Greater (Less) Than
(2)
Count Expense Type G/L Date Payee / Description Debit Credit Disbursed Disbursement (3) Minutes Approved Approved

9 General Sub-Total $ - $ 254,604 $ 254,604 $ 254,604 2/26/2015 234,768 19,836

10 Capital 2/26/2015 A/P Checks - Fulton 52,668 $ 52,668 2/26/2015 52,668 -

3/10/2015 A/P Checks - Wells Fargo 158,154


3/10/2015 Various Payments to 72 Vendors 158,154
11 General Sub-Total $ - $ 158,154 $ 158,154 $ 158,154 3/10/2015 158,428 (274)

3/10/2015 A/P Checks - Fulton 140,423


3/10/2015 Various Payments to 4 Vendors 140,423
12 Capital Sub-Total $ - $ 140,423 $ 140,423 $ 140,423 3/10/2015 52,668 87,755

3/12/2015 A/P Checks - Wells Fargo 1,000


3/12/2015 Lizandro Polanco & Laura Cooper 1,000
13 General Sub-Total $ - $ 1,000 $ 1,000 $ 1,000 None - 1,000

14 General 3/26/2015 A/P Checks - Wells Fargo 531,780 $ 531,780 3/26/2015 531,780 -

15 Capital 3/26/2015 A/P Checks - Fulton 2,144,936 $ 2,144,936 3/26/2015 2,144,936 -

4/2/2015 A/P Checks - Wells Fargo 1


4/14/2015 A/P Checks - Wells Fargo 414,962
4/14/2015 Various Payments to 82 Vendors 414,941
4/14/2015 Berks County Earth Day Committee 20
16 General Sub-Total $ 1 $ 414,962 $ 414,961 $ 414,961 4/14/2015 414,941 20

17 Capital 4/14/2015 A/P Checks - Fulton 231,223 $ 231,223 4/14/2015 231,223 -

4/20/2015 A/P Checks - Wells Fargo 3,312

Exhibit 6.0
Prepared by Baker Tilly Page 2 of 9
Reading Area Water Authority
Cash Disbursements Detail - Differences from RAWA Board Meeting Minutes
January 1, 2015 through December 31, 2015

Per General Ledger (1)


Batch Disbursement Per RAWA Board Meeting Minutes
Vendor Payments Net Disbursed
Net Batch Within Batch Date Approved in Total Amount Greater (Less) Than
(2)
Count Expense Type G/L Date Payee / Description Debit Credit Disbursed Disbursement (3) Minutes Approved Approved

4/20/2015 Berks Monogramming 258


4/20/2015 Delaware River Basin 2,500
4/20/2015 Reading Parking Authority 120
4/20/2015 UGI 434
18 General Sub-Total $ - $ 3,312 $ 3,312 $ 3,312 None - 3,312

4/30/2015 A/P Checks - Wells Fargo 254,522


4/30/2015 Various Payments to 93 Vendors 249,522
4/30/2015 Georgeadis Setley Attorneys 5,000
19 General Sub-Total $ - $ 254,522 $ 254,522 $ 254,522 4/30/2015 249,522 5,000

20 Capital 4/30/2015 A/P Checks - Fulton 389,336 $ 389,336 4/30/2015 389,336 -

21 General 5/12/2015 A/P Checks - Wells Fargo 228,588 $ 228,588 5/12/2015 228,588 -

22 Capital 5/12/2015 A/P Checks - Fulton 17,096 $ 17,096 5/12/2015 17,096 -

5/20/2015 A/P Checks - Wells Fargo 86,825


5/28/2015 A/P Checks - Wells Fargo 241,000
23 General Sub-Total $ - $ 327,825 $ 327,825 $ - 5/28/2015 327,825 -

24 Capital 5/28/2015 A/P Checks - Fulton 187,899 $ 187,899 5/28/2015 187,899 -

6/1/2015 A/P Checks - Wells Fargo 50


6/1/2015 PA DEP 50
25 General Sub-Total $ - $ 50 $ 50 $ 50 None - 50

26 General 6/9/2015 A/P Checks - Wells Fargo 277,418 $ 277,418 6/9/2015 277,418 -

Exhibit 6.0
Prepared by Baker Tilly Page 3 of 9
Reading Area Water Authority
Cash Disbursements Detail - Differences from RAWA Board Meeting Minutes
January 1, 2015 through December 31, 2015

Per General Ledger (1)


Batch Disbursement Per RAWA Board Meeting Minutes
Vendor Payments Net Disbursed
Net Batch Within Batch Date Approved in Total Amount Greater (Less) Than
(2)
Count Expense Type G/L Date Payee / Description Debit Credit Disbursed Disbursement (3) Minutes Approved Approved

27 Capital 6/9/2015 A/P Checks - Fulton 57,289 $ 57,289 6/9/2015 57,289 -

28 General 6/25/2015 A/P Checks - Wells Fargo 371,717 $ 371,717 6/25/2015 371,717 -

29 Capital 6/25/2015 A/P Checks - Fulton 448,874 $ 448,874 6/25/2015 448,874 -

7/14/2015 A/P Checks - Wells Fargo 407,397


7/14/2015 Various Payments to 81 Vendors 402,397
7/14/2015 Georgeadis Setley Attorneys 5,000
30 General Sub-Total $ - $ 407,397 $ 407,397 $ 407,397 7/14/2015 402,397 5,000

31 Capital 7/14/2015 A/P Checks - Fulton 61,663 $ 61,663 7/14/2015 61,663 -

7/30/2015 A/P Checks - Wells Fargo 289,714


7/30/2015 Various Payments to 88 Vendors 289,582
7/30/2015 Fraser Advanced Info. Systems 133
32 General Sub-Total $ - $ 289,714 $ 289,714 $ 289,714 7/20/2015 289,582 133

33 Capital 7/30/2015 A/P Checks - Fulton 263,484 $ 263,484 7/20/2015 263,484 -

8/7/2015 A/P Checks - Wells Fargo 56,104


8/7/2015 AmeriHealth Casualty Service 17,048
8/7/2015 COMCAST 271
8/7/2015 Frontier 647
8/7/2015 Georgeadis Setley Attorneys 25,945
8/7/2015 John D Bucolo Esq. 750
8/7/2015 Lowes 1,167
8/7/2015 Met-Ed 3,207
8/7/2015 PAWarn 435
8/7/2015 Pitney Bowes 147
8/7/2015 PITNEY BOWES 536
8/7/2015 Republic Services #318 199
8/7/2015 Talley Petroleum Enterprises Inc. 4,983

Exhibit 6.0
Prepared by Baker Tilly Page 4 of 9
Reading Area Water Authority
Cash Disbursements Detail - Differences from RAWA Board Meeting Minutes
January 1, 2015 through December 31, 2015

Per General Ledger (1)


Batch Disbursement Per RAWA Board Meeting Minutes
Vendor Payments Net Disbursed
Net Batch Within Batch Date Approved in Total Amount Greater (Less) Than
(2)
Count Expense Type G/L Date Payee / Description Debit Credit Disbursed Disbursement (3) Minutes Approved Approved

8/7/2015 Tractor Supply Co 30


8/7/2015 Verizon 89
8/7/2015 VoxNet 541
8/7/2015 WELLS FARGO FINANCIAL LEASING 109
34 General Sub-Total $ - $ 56,104 $ 56,104 $ 56,104 None - 56,104

35 General 8/27/2015 A/P Checks - Wells Fargo 414,887 $ 414,887 8/27/2015 414,887 -

36 Capital 8/27/2015 A/P Checks - Fulton 551,498 $ 551,498 8/27/2015 551,498 -

37 General 9/8/2015 A/P Checks - Wells Fargo 182,950 $ 182,950 9/8/2015 182,950 -

38 Capital 9/8/2015 A/P Checks - Fulton 124,806 $ 124,806 9/8/2015 124,806 -

39 General 9/24/2015 A/P Checks - Wells Fargo 386,165 $ 386,165 9/24/2015 386,165 -

40 Capital 9/24/2015 A/P Checks - Fulton 129,984 $ 129,984 9/24/2015 129,984 -

10/13/2015 A/P Checks - Wells Fargo 335,421


10/13/2015 Various Payments to 82 Vendors 332,992
10/13/2015 Anthony Goodman 185
10/13/2015 PITNEY BOWES 2,120
10/13/2015 Precise Corporation 21
10/13/2015 Ricardo Mercado 103
41 General Sub-Total $ - $ 335,421 $ 335,421 $ 335,421 10/13/2015 332,970 2,452

10/13/2015 A/P Checks - Fulton 56,658


10/13/2015 Various Payments to 5 Vendors 56,158
10/13/2015 Berks County Conservation District 500
42 Capital Sub-Total $ - $ 56,658 $ 56,658 $ 56,658 10/13/2015 56,158 500

Exhibit 6.0
Prepared by Baker Tilly Page 5 of 9
Reading Area Water Authority
Cash Disbursements Detail - Differences from RAWA Board Meeting Minutes
January 1, 2015 through December 31, 2015

Per General Ledger (1)


Batch Disbursement Per RAWA Board Meeting Minutes
Vendor Payments Net Disbursed
Net Batch Within Batch Date Approved in Total Amount Greater (Less) Than
(2)
Count Expense Type G/L Date Payee / Description Debit Credit Disbursed Disbursement (3) Minutes Approved Approved

10/29/2015 A/P Checks - Wells Fargo 354,202


10/29/2015 Abbi Company Inc 625
10/29/2015 Andrew Hess, Inc 30
10/29/2015 Aqua Pennsylvania Inc. 1,060
10/29/2015 BCM 3,645
10/29/2015 Berman Freightliner 92
10/29/2015 Brown Engineering 12
10/29/2015 C F Heckman 517
10/29/2015 Carus Corporation 43,798
10/29/2015 COMCAST 114
10/29/2015 Dallas Data System Inc 6,372
10/29/2015 Direct Energy Business 453
10/29/2015 EJB Paving 68
10/29/2015 Engle-Hambright & Davies INC 1,502
10/29/2015 Environmental Service & Equipment Co Inc 13,681
10/29/2015 ERA 188
10/29/2015 Exeter Supply 5,730
10/29/2015 Fastenal Company 18
10/29/2015 FedEx 14
10/29/2015 Fisher Scientific 633
10/29/2015 Fraser 86
10/29/2015 Fraser Advanced Info. Systems 327
10/29/2015 Fromm 89
10/29/2015 Fulton Bank 1,574
10/29/2015 George S. Coyne Chemical Co. 6,140
10/29/2015 Grainger 1,145
10/29/2015 GTS-WELCO-955 27
10/29/2015 Hach 1,078
10/29/2015 Hafer Petroleum Equipment 385
10/29/2015 Hilti 535
10/29/2015 Hyde Villa 454
10/29/2015 WestRock MWV LLC 39,336
10/29/2015 JCI Jones Chemicals Inc 2,720
10/29/2015 Kantners 1,434
10/29/2015 Kathabar Dehumidification Systems 239
10/29/2015 Kuzans 81
10/29/2015 Land Displays Inc 2,700
10/29/2015 Leffler Energy 1,393
10/29/2015 M.J. Reider Associates Inc. 454
10/29/2015 Manderbach Ford Inc. 95
10/29/2015 McCarthy Tire 1,279
10/29/2015 Metals Your Way 775
10/29/2015 Met-Ed 3,230
10/29/2015 Miller Environmental Inc 24,550
10/29/2015 Ontelaunee Municipal Authority 345

Exhibit 6.0
Prepared by Baker Tilly Page 6 of 9
Reading Area Water Authority
Cash Disbursements Detail - Differences from RAWA Board Meeting Minutes
January 1, 2015 through December 31, 2015

Per General Ledger (1)


Batch Disbursement Per RAWA Board Meeting Minutes
Vendor Payments Net Disbursed
Net Batch Within Batch Date Approved in Total Amount Greater (Less) Than
(2)
Count Expense Type G/L Date Payee / Description Debit Credit Disbursed Disbursement (3) Minutes Approved Approved

10/29/2015 Pioneer Crossing Landfill 211


10/29/2015 PLASTERER EQUIPMENT COMPANY 149
10/29/2015 PMHIC 91,796
10/29/2015 Reading Eagle 250
10/29/2015 Reading Tractor & Equipment 44
10/29/2015 PC Solutions, Inc 13,142
10/29/2015 S.A. Comunale 400
10/29/2015 Savage 61 Dodge 256
10/29/2015 Scott Reider 234
10/29/2015 South Reading Blacktop 312
10/29/2015 Standard Key & Lock 63
10/29/2015 Staples Advantage 399
10/29/2015 Talley Petroleum Enterprises Inc. 5,489
10/29/2015 The Fence Company 460
10/29/2015 THE LINCOLN NATIONAL LIFE INS 661
10/29/2015 UNIVAR 22,887
10/29/2015 USA Blue Book 381
10/29/2015 USALCO 30,287
10/29/2015 USDA 2,216
10/29/2015 Verizon 188
10/29/2015 Verizon 114
10/29/2015 Verizon Wireless 1,047
10/29/2015 Wayne Yesner Wholesale & Retail Trees 800
10/29/2015 Weavers 504
10/29/2015 Weikel 245
10/29/2015 Wesco 2,167
10/29/2015 Donna Unger Beaudoin 74
10/29/2015 Joanne Schulze 28
10/29/2015 UGI 353
10/29/2015 US Express Printing 332
10/29/2015 Xylem 8,830
10/29/2015 Yeager Supply Inc 863
43 General Sub-Total $ - $ 354,202 $ 354,202 $ 354,202 10/21/2015 - 354,202

10/29/2015 A/P Checks - Fulton 148,357


10/29/2015 Andrew Hess, Inc 6,322
10/29/2015 BCM 74,567
10/29/2015 Exeter Supply 22,900
10/29/2015 Spotts, Stevens & McCoy INC 44,568
44 Capital Sub-Total $ - $ 148,357 $ 148,357 $ 148,357 10/21/2015 - 148,357

45 General 11/10/2015 A/P Checks - Wells Fargo 277,313 $ 277,313 11/10/2015 277,313 -

Exhibit 6.0
Prepared by Baker Tilly Page 7 of 9
Reading Area Water Authority
Cash Disbursements Detail - Differences from RAWA Board Meeting Minutes
January 1, 2015 through December 31, 2015

Per General Ledger (1)


Batch Disbursement Per RAWA Board Meeting Minutes
Vendor Payments Net Disbursed
Net Batch Within Batch Date Approved in Total Amount Greater (Less) Than
(2)
Count Expense Type G/L Date Payee / Description Debit Credit Disbursed Disbursement (3) Minutes Approved Approved

46 Capital 11/10/2015 A/P Checks - Fulton 32,599 $ 32,599 11/10/2015 32,599 -

11/23/2015 A/P Checks - Wells Fargo 100,945


11/23/2015 COMCAST 114
11/23/2015 Direct Energy Business 2,025
11/23/2015 Fraser 81
11/23/2015 Fulton Bank 1,226
11/23/2015 Leffler Energy 650
11/23/2015 Leffler Energy 1,554
11/23/2015 Mark Kozlowski 183
11/23/2015 Met-Ed 4,326
11/23/2015 Ontelaunee Municipal Authority 345
11/23/2015 PMHIC 88,200
11/23/2015 THE LINCOLN NATIONAL LIFE INS 674
11/23/2015 UGI 1,382
11/23/2015 Verizon 185
47 General Sub-Total $ - $ 100,945 $ 100,945 $ 100,945 11/23/2015 - 100,945

12/11/2015 A/P Checks - Wells Fargo 44,957


12/14/2015 A/P Checks - Wells Fargo 505,638
48 General Sub-Total $ 44,957 $ 505,638 $ 460,682 $ - 12/14/2015 460,682 -

49 Capital 12/14/2015 A/P Checks - Fulton 205,982 $ 205,982 12/14/2015 205,982 -

12/28/2015 A/P Checks - Wells Fargo 139,075


12/28/2015 AmeriHealth Casualty Service 35,838
12/28/2015 COMCAST 114
12/28/2015 Commonwealth of PA 578
12/28/2015 Direct Energy Business 3,897
12/28/2015 Fraser 84
12/28/2015 Fraser Advanced Info. Systems 42
12/28/2015 Fulton Bank 1,463
12/28/2015 Leffler Energy 864
12/28/2015 Met-Ed 4,220
12/28/2015 Pitney Bowes 179
12/28/2015 PMHIC 89,855
12/28/2015 Sprint 63

Exhibit 6.0
Prepared by Baker Tilly Page 8 of 9
Reading Area Water Authority
Cash Disbursements Detail - Differences from RAWA Board Meeting Minutes
January 1, 2015 through December 31, 2015

Per General Ledger (1)


Batch Disbursement Per RAWA Board Meeting Minutes
Vendor Payments Net Disbursed
Net Batch Within Batch Date Approved in Total Amount Greater (Less) Than
(2)
Count Expense Type G/L Date Payee / Description Debit Credit Disbursed Disbursement (3) Minutes Approved Approved

12/28/2015 Travelers 450


12/28/2015 UGI 11
12/28/2015 Verizon 185
12/28/2015 Verizon 114
12/28/2015 Verizon Wireless 1,119
50 General Sub-Total $ - $ 139,075 $ 139,075 $ 139,075 None - 139,075

Total $ 44,958 $ 12,931,650 $ 12,886,691 $ 11,932,116 $ 954,575

(4)
Other Debits
General 3/23/2015 A/P Checks - Wells Fargo 1,880
General 5/15/2015 A/P Checks - Wells Fargo 3,400
General 10/9/2015 A/P Checks - Wells Fargo 3,702
Capital 12/1/2015 A/P Checks - Fulton 750
Total Other Debits $ 9,732 $ - $ (9,732) $ - $ (9,732)

Total Disbursed $ 54,690 $ 12,931,650 $ 12,876,959 $ 11,932,116 $ 944,843

Source: RAWA's general ledger for the period January 1, 2015 through December 31, 2015; RAWA Board meeting minutes for the period January 13, 2015 through December 28, 2015.

Notes

Amounts are subject to rounding.

1 - Represents disbursements from the CDA1 (general expenses) and CDA2 (capital expenses) journals in RAWA's general ledger.

2 - The RAWA Board meeting minutes do not include approvals of disbursements from RAWA's escrow account during 2015. As such, we have excluded all escrow disbursements from our analysis.

3 - For each instance that the batch amount disbursed did not reconcile with the amount reported as approved by the RAWA Board in the meeting minutes, we reviewed the individual vendor payments comprising the total batch disbursement to identify
payments that comprised the variance. Vendor payments highlighted in red are those payments that account for the variance between the amount disbursed the amount recorded as approved.

4 - Other debits represent amounts that reduced the total amount originally disbursed, but were recorded in the general ledger subsequent to the RAWA Board meeting in which the disbursement was approved.

Exhibit 6.0
Prepared by Baker Tilly Page 9 of 9
Exhibit 6.1
Reading Area Water Authority
Cash Disbursements Detail - Differences from RAWA Board Meeting Minutes - 2016
January 1, 2016 through November 23, 2016

Per General Ledger (1)


Batch Disbursement Per RAWA Board Meeting Minutes
Vendor Payments Disbursed Greater
Net Batch Within Batch Date Approved in Total Amount (Less) Than
(2) (3)
Count Expense Type G/L Date Payee / Description Debit Credit Disbursed Disbursement Minutes Approved Approved

1/11/2016 A/P Checks - Wells Fargo 4,419


1/12/2016 A/P Checks - Wells Fargo 340,347
1 General Sub-Total $ 4,419 $ 340,347 $ 335,928 $ - 1/12/2016 335,928 $ -

2 Capital 1/12/2016 A/P Checks - Fulton 331,215 $ 331,215 1/12/2016 331,215 -

3 General 1/28/2016 A/P Checks - Wells Fargo 274,603 $ 274,603 1/28/2016 274,603 -

4 Capital 1/28/2016 A/P Checks - Fulton 255,371 $ 255,371 1/28/2016 255,371 -

2/9/2016 A/P Checks - Wells Fargo 188,966


2/9/2016 Various Payments to 59 Vendors 188,966
5 General Sub-Total $ - $ 188,966 $ 188,966 $ 188,966 2/9/2016 186,966 2,000

6 Capital 2/9/2016 A/P Checks - Fulton 135,728 $ 135,728 2/9/2016 135,728 -

2/19/2016 A/P Checks - Wells Fargo 1,000


2/25/2016 A/P Checks - Wells Fargo 370,662
7 General Sub-Total $ - $ 371,662 $ 371,662 $ - 2/25/2016 371,662 -

8 Capital 2/25/2016 A/P Checks - Fulton 162,036 $ 162,036 2/25/2016 162,036 -

9 General 3/8/2016 A/P Checks - Wells Fargo 235,939 $ 235,939 3/8/2016 235,939 -

10 Capital 3/8/2016 A/P Checks - Fulton 233,402 $ 233,402 3/8/2016 233,402 -

3/22/2016 A/P Checks - Wells Fargo 28,989


3/31/2016 A/P Checks - Wells Fargo 321,935
11 General Sub-Total $ - $ 350,923 $ 350,923 $ - 3/31/2016 350,923 -

Exhibit 6.1
Prepared by Baker Tilly Page 1 of 5
Reading Area Water Authority
Cash Disbursements Detail - Differences from RAWA Board Meeting Minutes - 2016
January 1, 2016 through November 23, 2016

(1)
Per General Ledger
Batch Disbursement Per RAWA Board Meeting Minutes
Vendor Payments Disbursed Greater
Net Batch Within Batch Date Approved in Total Amount (Less) Than
(2) (3)
Count Expense Type G/L Date Payee / Description Debit Credit Disbursed Disbursement Minutes Approved Approved

12 Capital 3/31/2016 A/P Checks - Fulton 226,464 $ 226,464 3/31/2016 226,464 -

13 General 4/12/2016 A/P Checks - Wells Fargo 180,214 $ 180,214 4/28/2016 180,214 -

14 Capital 4/12/2016 A/P Checks - Fulton 9,169 $ 9,169 4/28/2016 9,169 -

15 General 4/28/2016 A/P Checks - Wells Fargo 363,413 $ 363,413 4/28/2016 363,413 -

4/28/2016 A/P Checks - Fulton 500,774


4/28/2016 Various Payments to 7 Vendors 500,774
16 Capital Sub-Total $ - $ 500,774 $ 500,774 $ 500,774 4/28/2016 500,734 40

17 General 5/2/2016 A/P Checks - Wells Fargo 1,856 $ 1,856 None - 1,856

18 General 5/10/2016 A/P Checks - Wells Fargo 151,452 $ 151,452 5/10/2016 151,452 -

19 Capital 5/10/2016 A/P Checks - Fulton 446,972 $ 446,972 5/10/2016 446,972 -

20 General 5/26/2016 A/P Checks - Wells Fargo 300,105 $ 300,105 5/26/2016 300,105 -

21 Capital 5/26/2016 A/P Checks - Fulton 191,659 $ 191,659 5/26/2016 191,659 -

22 General 6/14/2016 A/P Checks - Wells Fargo 318,613 $ 318,613 6/14/2016 318,613 -

23 Capital 6/14/2016 A/P Checks - Fulton 350,400 $ 350,400 6/14/2016 350,400 -

Exhibit 6.1
Prepared by Baker Tilly Page 2 of 5
Reading Area Water Authority
Cash Disbursements Detail - Differences from RAWA Board Meeting Minutes - 2016
January 1, 2016 through November 23, 2016

(1)
Per General Ledger
Batch Disbursement Per RAWA Board Meeting Minutes
Vendor Payments Disbursed Greater
Net Batch Within Batch Date Approved in Total Amount (Less) Than
(2) (3)
Count Expense Type G/L Date Payee / Description Debit Credit Disbursed Disbursement Minutes Approved Approved

24 General 6/30/2016 A/P Checks - Wells Fargo 229,105 $ 229,105 6/30/2016 229,105 -

25 Capital 6/30/2016 A/P Checks - Fulton 444,072 $ 444,072 6/30/2016 444,072 -

26 General 7/12/2016 A/P Checks - Wells Fargo 209,181 $ 209,181 7/12/2016 209,181 -

27 Capital 7/12/2016 A/P Checks - Fulton 145,483 $ 145,483 7/12/2016 145,483 -

7/26/2016 A/P Checks - Wells Fargo 560


7/28/2016 A/P Checks - Wells Fargo 412,327
28 General Sub-Total $ 560 $ 412,327 $ 411,767 $ - 7/28/2016 411,767 -

29 Capital 7/28/2016 A/P Checks - Fulton 96,343 $ 96,343 7/28/2016 96,343 -

30 General 8/9/2016 A/P Checks - Wells Fargo 191,804 $ 191,804 8/9/2016 191,804 -

8/9/2016 A/P Checks - Fulton 181,562


8/9/2016 Various Payments to 5 Vendors 117,446
8/9/2016 ARS 64,116
31 Capital Sub-Total $ - $ 181,562 $ 181,562 $ 181,562 8/9/2016 117,446 64,116

32 General 8/25/2016 A/P Checks - Wells Fargo 302,544 $ 302,544 8/25/2016 302,544 -

33 Capital 8/25/2016 A/P Checks - Fulton 446,259 $ 446,259 8/25/2016 446,259 -

34 General 9/13/2016 A/P Checks - Wells Fargo 286,919 $ 286,919 9/21/2016 286,919 -

Exhibit 6.1
Prepared by Baker Tilly Page 3 of 5
Reading Area Water Authority
Cash Disbursements Detail - Differences from RAWA Board Meeting Minutes - 2016
January 1, 2016 through November 23, 2016

(1)
Per General Ledger
Batch Disbursement Per RAWA Board Meeting Minutes
Vendor Payments Disbursed Greater
Net Batch Within Batch Date Approved in Total Amount (Less) Than
(2) (3)
Count Expense Type G/L Date Payee / Description Debit Credit Disbursed Disbursement Minutes Approved Approved

35 Capital 9/13/2016 A/P Checks - Fulton 174,077 $ 174,077 9/21/2016 174,077 -

9/22/2016 A/P Checks - Wells Fargo 25,000


9/22/2016 Homeserve USA Corp 25,000
36 General Sub-Total $ - $ 25,000 $ 25,000 $ 25,000 None - 25,000

9/29/2016 A/P Checks - Wells Fargo 378,774


9/29/2016 Various Payments to 84 Vendors 378,774
37 General Sub-Total $ - $ 378,774 $ 378,774 $ 378,774 9/29/2016 378,734 40

38 Capital 9/29/2016 A/P Checks - Fulton 380,765 $ 380,765 9/29/2016 380,765 -

39 General 10/11/2016 A/P Checks - Wells Fargo 243,078 $ 243,078 10/27/2016 243,078 -

40 Capital 10/11/2016 A/P Checks - Fulton 473,847 $ 473,847 10/27/2016 473,847 -

41 General 10/27/2016 A/P Checks - Wells Fargo 344,135 $ 344,135 10/27/2016 344,135 -

42 Capital 10/27/2016 A/P Checks - Fulton 71,716 $ 71,716 10/27/2016 71,716 -

43 General 11/8/2016 A/P Checks - Wells Fargo 218,866 $ 218,866 11/8/2016 218,866 -

44 Capital 11/8/2016 A/P Checks - Fulton 251,319 $ 251,319 11/8/2016 251,319 -

Total $ 4,979 $ 11,428,458 $ 11,423,479 $ 11,330,427 $ 93,052

Other Debits(4)
General 3/11/2016 A/P Checks - Wells Fargo 1,645
General 3/16/2016 A/P Checks - Wells Fargo 68
General 6/6/2016 A/P Checks - Wells Fargo 617
General 6/13/2016 A/P Checks - Wells Fargo 4,392

Exhibit 6.1
Prepared by Baker Tilly Page 4 of 5
Reading Area Water Authority
Cash Disbursements Detail - Differences from RAWA Board Meeting Minutes - 2016
January 1, 2016 through November 23, 2016

(1)
Per General Ledger
Batch Disbursement Per RAWA Board Meeting Minutes
Vendor Payments Disbursed Greater
Net Batch Within Batch Date Approved in Total Amount (Less) Than
(2) (3)
Count Expense Type G/L Date Payee / Description Debit Credit Disbursed Disbursement Minutes Approved Approved

General 7/5/2016 A/P Checks - Wells Fargo 2,567


Capital 9/14/2016 A/P Checks - Fulton 1,650
Total Other Debits $ 10,938 $ - $ (10,938) $ - $ (10,938)

Total Disbursed $ 15,917 $ 11,428,458 $ 11,412,541 $ 11,330,427 $ 82,114

Source: RAWA's general ledger for the period January 1, 2016 through November 21, 2016; RAWA Board meeting minutes for the period January 12, 2015 through November 8, 2016.

Notes

Amounts are subject to rounding.

1 - Represents disbursements from the CDA1 (general expenses) and CDA2 (capital expenses) journals in RAWA's general ledger.

2 - The RAWA Board meeting minutes do begin to include approvals of disbursements from RAWA's escrow account until October 27, 2016. As such, we have excluded all escrow disbursements from our analysis.

3 - For each instance that the batch amount disbursed did not reconcile with the amount reported as approved by the RAWA Board in the meeting minutes, we reviewed the individual vendor payments comprising the total batch disbursement to identify
payments that comprised the variance. Vendor payments highlighted in red are those payments that account for the variance between the amount disbursed the amount recorded as approved.

4 - Other debits represent amounts that reduced the total amount originally disbursed, but were recorded in the general ledger subsequent to the RAWA Board meeting in which the disbursement was approved.

Exhibit 6.1
Prepared by Baker Tilly Page 5 of 5

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